M/s Mformation Software Technologies India Pvt Ltd , Bangalore V. Office of the Commissioner of Income Tax (A)-4, Bangalore

MA 7/BANG/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4185 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-05-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 10-02-2022
• Result in Favour of: Revenue
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER MP No.7/Bang/2022 [in IT(TP)A No. 450 /Bang/2017 Assessment year : 2010-11 M/s. MFormation Software Technologies India Pvt. Ltd., KH No.37/11/37/28, Village Kapashera, CNG Station, New Delhi – 110 037. PAN: AAECM 0999F Vs. The Income Tax Officer, Ward 12(1), Bangalore. APPLICANT RESPONDENT Applicant by : Smt. Rashmi, R., Advocate Respondent by : Shri Priyadarshi Mishra, Addl. CIT(DR)(ITAT), Bengaluru. Date of hearing : 01.04.2022 Date of Pronouncement : 27.05.2022 O R D E R Per Chandra Poojari, Accountant Member This miscellaneous petition is filed by the assessee seeking rectification of the order of the Tribunal dated 6.10.2021 in IT(TP)A No. 450 /Bang/2017 with regard to exclusion of certain comparable companies. 2. The assessee in its appeal had sought exclusion of the following comparables vide ground No.7 :- MP No.7/Bang/2022 Page 2 of 4 (i) ICRA Techno Analytics Ltd. (ii) KALS Information Systems Ltd. (iii) Thinksoft Global Services Ltd. 3. During the course of hearing of the appeal, the assessee pressed the first two comparables for adjudication i.e., ICRA Techno Analytics Ltd. and KALS Information Systems Ltd., but did not press the 3 rd comparable viz., Thinksoft Global Services Ltd. 4. However, the Tribunal in the said order adjudicated only about the exclusion of ICRA Techno Analytics Ltd. from the list of comparables in the software services segment and inadvertently did not adjudicate on the comparability of KALS Information Systems Ltd. Thus, the ld. AR submitted that the comparability of KALS Information Systems Ltd. may be adjudicated. The ld. DR had no serious objection to the same. 5. We have heard both the parties and perused the material on record. Admittedly, the issue of comparability of KALS Information Systems Ltd. was inadvertently not decided by the Tribunal in its order dated 6.10.2021. 6. Accordingly, para 8 of the order dated 06.10.2021 is modified and substituted to read as under:- “8. During the course of hearing, the assessee sought exclusion of two comparables i.e., ICRA Techno Analytics Ltd. and KALS Information Systems Ltd. and the other comparable, viz., Thinksoft Global Services Ltd. was not pressed. As such, the grounds with regard to Thinksoft Global Services Ltd. is dismissed as not pressed.” MP No.7/Bang/2022 Page 3 of 4 7. Now we consider the issue regarding comparability of KALS Information Systems Ltd. This issue is squarely covered by the decision of this Tribunal in the case of Electronic Imaging India Pvt. Ltd., 70 taxmann.com 299 (Bang. Trib.) wherein in paras 20 to 23 it was held as under:- “(3) KALS Information Systems Ltd. 21. The assessee raised objections against this company on the ground that this company is engaged in the development of software and software products. Further, this company consists of STPI unit and also having a training centre engaged in training of software professionals on online products. Thus, when this company is having revenue from software services as well as software product, the same cannot be considered as comparable with software development service providing company. 22. The DRP has directed the AO to exclude this company from the list of comparables by taking note of the fact that there were inventories in the books of accounts of this company which shows that this company is in the software product business. Further, by following the decision of this Tribunal in the case of Trilogy E-Business Software India (P.) Ltd. v. Dy. CIT [2013] 140 ITD 540/29 taxmann.com 310 (Bang. - Trib.), this company was found to be not comparable with that of the assessee. 23. We have heard the ld. DR as well as ld. AR and considered the relevant material on record. The ld. DR has not disputed the fact that comparability of this company has been examined by this Tribunal in a series of decisions including in the case of Trilogy e-business Software India (P.) Ltd. (supra). We further note that in the balance sheet of this company as on 31.3.2010, there are inventories of Rs. 60,47,977. Therefore, when this company is in the business of software products, the same cannot be compared with a pure software development services provider. Accordingly, we do not find any error or illegality in the impugned findings of the DRP.” MP No.7/Bang/2022 Page 4 of 4 8. In view of the above order of the Tribunal and taking a consistent view in the facts and circumstances of the present case, we direct the AO/TPO to exclude KALS Information Systems Ltd. from the list of comparables in the software services segment. 9. In the result, the miscellaneous petition of the assessee is allowed. Pronounced in the open court on this 27 th day of May, 2022. Sd/- Sd/- ( N V VASUDEVAN ) ( CHANDRA POOJARI ) VICE PRESIDENT ACCOUNTANT MEMBER Bangalore, Dated, the 27 th day of May, 2022. /Desai S Murthy / Copy to: 1. Applicant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore.