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6. The Assessee is in the business of rendering software development services. It has STPI (software technology Parks of India) in Bangalore and Hyderabad, which are eligible for deduction u/s.10A of the Income Tax Act, 1961 (Act). Ground No.2 raised by the Revenue project the grievance of the Revenue regarding the action of the CIT(A) in excluding expenses incurred on telecommunication from export turnover as well as total turnover. The Assessee had incurred a sum of Rs. 17,07,43,928 in respect of the Bangalore STPI Unit and Rs. 11,82,59,570 in respect of the Hyderabad STPI Unit towards telecommunication charges, which were incurred in connection with providing call centre services to various Dell entities overseas. The telecommunication charges were considered as part of 'export turnover' while computing the deduction under section 10A of the Act. The AO excluded the said telecommunication charges amounting to Rs. 28,90,03,498 from the 'export turnover' while computing the deduction under section 10A of the Act. The plea of the Assessee was that the definition of "export turnover" under the Act excludes only freight, telecommunication charges or insurance attributable to the delivery of the IT(TP)A Nos. 85 & 1026/B/14, 1838/B/13 & CO No.21/B/16 articles or things or computer software outside India, from the export turnover. The Assessee argued that for an expense to be considered as "attributable" to some activity, it should have been specifically and exclusively incurred and identifiable with that activity. It was submitted that the payment made by the Assessee towards telecommunication charges was stated to be for obtaining specific bandwidth capacity for facilitating the "connectivity" activities. This bandwidth was used by the company for downloading of data/software for carrying out the primary business activity of providing call centre support to the customers of various Dell overseas entities worldwide. Thus, the telecommunication charges, in the instant case, are not specifically attributable to the delivery of the articles or things outside India and, hence, the telecommunication charges incurred in providing these services from India, would form part of the 'export turnover' for computing deduction under section 10A of the Act.

31. Another question that came up for consideration before the CIT(Appeals) was with regard to accepting Sankhya Infotech Ltd. which was a comparable chosen by the TPO, which was rejected as not comparable by the CIT(Appeals) on the basis that the said company was not only a software development service provider, but also developing software products, therefore it cannot be regarded as a comparable company with the assessee which was a pure software development service provider. On the decision of the CIT(Appeals), the grievance of the revenue is that in coming to the aforesaid conclusion that Sankhya Infotech Ltd. was a software product company, the CIT(Appeals) has placed reliance IT(TP)A Nos. 85 & 1026/B/14, 1838/B/13 & CO No.21/B/16 only on the report of Director and has not pointed out any financial details from the Profit & Loss account and Balance Sheet, which would show that this company was a software product company.

43. In view of the above conclusion, the grounds raised in CO for excluding Flextronics Software Ltd., Satyam Computer Services Ltd. and Infosys Technologies Ltd., from the list of comparable companies on the ground of functional and other dissimilarities has become academic and hence is not being adjudicated and left open.

44. As far as Ground Nos .7 & 8 raised regarding exclusion by CIT(A) of M/s. Sankhya Infotech Ltd. as comparable company is concerned, the learned DR reiterated the stand as taken by the revenue in the grounds of appeal. The learned counsel for the Assessee placed reliance on the decision rendered in the case of Electronics for Imaging India Pvt. Ltd. (supra) and M/S. Net Devices India Pvt.Ltd. (supra) wherein M/s. Sankhya IT(TP)A Nos. 85 & 1026/B/14, 1838/B/13 & CO No.21/B/16 Infotech Ltd. was regarded as a company in software products also and not pure software development service provider such as the Assessee and hence cannot be regarded as comparable in cases of companies rendering pure software development services.

45. We have considered the rival submissions. It is no doubt true, as contended in Ground No.8 by the revenue that the basis of concluding that M/s. Sankhya Infotech Ltd. is a software product company also and hence cannot be compared with a company providing software development service alone is based on the observations in a Annual/ Directors report but in paragraph 18.1.3 of the Tribunal's order in the case of M/s. Net Devices India Pvt.Ltd. (supra), the Tribunal has observed that there is no segmental data available between software products, services, software training etc. Thus it is amply clear that this company is not a pure software development service provider such as the Assessee. In such circumstances, we find no grounds to interfere with the order of the CIT(A). In view of the above conclusion, the grounds raised in CO to exclude this company from the list of comparable companies by applying employees cost filter has become academic and hence is not being adjudicated and left open.