QAD India (P) Ltd. v. Dy. CIT

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The Tax Publishers2016 TaxPub(DT) 4902 (Mum-Trib) QAD India (P) Ltd. v. Dy. CIT INCOME TAX ACT, 1961 --Business expenditure--Disallowance of professional fess for not paying in relevant year and non-deduction of tax thereonRelevant amount offered to tax in subsequent year----Where assessee had made provisions of professional fees and claimed it as deduction and AO disallowed on the ground that it had not been paid and no TDS was deducted on it, however, assessee contended that said amount had already been offered to tax in subsequent assessment year, the case was remanded back to verify genuineness of claim. --Assessee made provisions of professional fees and claimed it as deduction. AO disallowed assessee's claim firstly on the ground that it had not been actually paid during the year and secondly the assessee had not deducted tax at source on such payment. According to assessee, the said amount had already been offered as income in the subsequent assessment year and if the disallowance was sustained in this year, it would amount to addition of same income twice. *Held:* According to assessee, the amount in question had already been offered as income in the subsequent assessment year and if assessee had already offered the amount in dispute, it could not be taxed twice. Therefore, AO was directed to verify assessee's claim and if that amount had been offered as income, then no disallowance of the said amount should be made in the impugned assessment year. Income Tax Act, 1961, Section 37(1) *REFERRED :* FAVOUR : Case remanded. A.Y. : 2009-10 INCOME TAX ACT, 1961 --Transfer pricing--Determination of ALPSelection of comparables--Functionally similar companies--Where assessee was engaged in providing software development service to its AE, then a company developing its own software products and a company engaged in providing open and end-to-end web solution, and a company having RPT of 60.93 per cent in terms of total sales, could not be accepted as comparable while determining ALP of assessee company. --Assessee company was engaged in providing software development service to its AE and benchmarked its international transaction with its AE by applying TNMM as the most appropriate method. For comparative analysis, assessee had used 13 companies as comparables on the basis of multiple year data and determined ALP. TPO/AO in assessment selected new 20 companies as comparables and made certain addition to the assessee's ALP. Assessee objected regarding inclusion of certain companies as comparable.Held: Assessee was engaged in providing software development service to its AE. For computing ALP, a company developing its own software products, a company engaged in providing open and end-to-end web solution, and a company having RPT of 60.93 per cent in terms of total sales, could not be accepted as comparable while determining ALP of assessee-company. Therefore, matter was remanded back to TPO to consider afresh. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2016 TaxPub(DT) 4902 (Mum-Trib)

QAD India (P) Ltd. v. Dy. CIT

INCOME TAX ACT, 1961

--Business expenditure--Disallowance of professional fess for not paying in relevant year and non-deduction of tax thereonRelevant amount offered to tax in subsequent year----Where assessee had made provisions of professional fees and claimed it as deduction and AO disallowed on the ground that it had not been paid and no TDS was deducted on it, however, assessee contended that said amount had already been offered to tax in subsequent assessment year, the case was remanded back to verify genuineness of claim. --Assessee made provisions of professional fees and claimed it as deduction. AO disallowed assessee's claim firstly on the ground that it had not been actually paid during the year and secondly the assessee had not deducted tax at source on such payment. According to assessee, the said amount had already been offered as income in the subsequent assessment year and if the disallowance was sustained in this year, it would amount to addition of same income twice. Held: According to assessee, the amount in question had already been offered as income in the subsequent assessment year and if assessee had already offered the amount in dispute, it could not be taxed twice. Therefore, AO was directed to verify assessee's claim and if that amount had been offered as income, then no disallowance of the said amount should be made in the impugned assessment year.

Income Tax Act, 1961, Section 37(1)

REFERRED :

FAVOUR : Case remanded.

A.Y. : 2009-10

INCOME TAX ACT, 1961

--Transfer pricing--Determination of ALPSelection of comparables--Functionally similar companies--Where assessee was engaged in providing software development service to its AE, then a company developing its own software products and a company engaged in providing open and end-to-end web solution, and a company having RPT of 60.93 per cent in terms of total sales, could not be accepted as comparable while determining ALP of assessee company. --Assessee company was engaged in providing software development service to its AE and benchmarked its international transaction with its AE by applying TNMM as the most appropriate method. For comparative analysis, assessee had used 13 companies as comparables on the basis of multiple year data and determined ALP. TPO/AO in assessment selected new 20 companies as comparables and made certain addition to the assessee's ALP. Assessee objected regarding inclusion of certain companies as comparable.Held: Assessee was engaged in providing software development service to its AE. For computing ALP, a company developing its own software products, a company engaged in providing open and end-to-end web solution, and a company having RPT of 60.93 per cent in terms of total sales, could not be accepted as comparable while determining ALP of assessee-company. Therefore, matter was remanded back to TPO to consider afresh.