DCIT v. Quark Systems (P.) Ltd.

38 SOT 307Income Tax Appellate Tribunal2010#540 most cited

What is DCIT v. Quark Systems (P.) Ltd. authority for?

An assessee is not estopped or precluded from seeking the exclusion of a company from its Transfer Pricing study comparables, even if initially selected, if it can demonstrate valid reasons for non-comparability.

179

judgments rely on this decision, according to BharatTax’s citation analysis of 366,470 Indian tax judgments — from 2015 to 2026.

Also referred to as

DCIT v. Quark Systems (P.) Ltd. · Section 92CA(3) · Section 92C(2) · Section 92D · Transfer Pricing comparables · exclusion of comparable companies · assessee not estopped · TP study comparable selection · benchmarking analysis · functional analysis

Also reported as

132 TTJ 14 ITR (Trib) 606

Sections most often in play

Section 143(3)Section 234BSection 92CA(3)Section 142(1)Section 143(2)Section 14ASection 271(1)(c)Section 271AA

Issues it is cited on

contemporaneous datamultiple year datacaptive service providerfunctional analysissection 92c(2)working capital adjustmentfar analysissection 92drelated party transactioncomparable companiestested partybenchmarking analysis

Judgments citing DCIT v. Quark Systems (P.) Ltd.

DCIT, Bangalore vs. M/S Kodiak Networks India Pvt. Ltd., Bangalore

In the result, the appeal by the Revenue and cross-objection by the Assessee are partly allowed

ITA 532/BANG/2013[2005-06]Status: DisposedITAT Bangalore30 Jul 2015AY 2005-06

Bench: Shri N.V. Vasudevan & Shri Abraham P. George

For Appellant: Shri Padamchand Khincha, C.AFor Respondent: Shri Dr. Shankar Prasad, K., JCIT(DR)
Section 92Section 92CSection 92E

…ed objection for including the same as a comparable before the lower authorities, or the assessee had chosen in its TP study a company which it seeks to exclude as a comparable. The Special Bench of Chandigarh Tribunal in DCIT v. Quark Systems P. Ltd. (2010) 38 SOT 307 has held that the Tribunal is a fact finding body and therefore has to take into account all the relevant material and determine the question as per the statutory regulations and that tax payer is not estopped from pointing out a mistake in the assessment, though such mistake is a result of evidence adduced by the tax payer. We therefore proceed…

Serial Innovations India Private Limited, Bangalore vs. DCIT, Bangalore

In the result, grounds of appeal raised by the assessee against the transfer pricing adjustment are treated as partly allowed

ITA 1330/BANG/2011[2007-08]Status: DisposedITAT Bangalore30 Jun 2015AY 2007-08

Bench: Smt. P. Madhavi Devi & Shri Abraham P George

For Appellant: Shri Hardev Singh, CAFor Respondent: Shri Farhat Hussain Qureshi, CIT(DR)
Section 10ASection 143(3)Section 2(45)

…n of the same. 13. The learned counsel for the Assessee in support of the admission of additional ground of appeal placed reliance on the decision of the Hon’ble Special Bench of the Tribunal at Chandigarh Bench in the case of DCIT v. Quark Systems Pvt. Ltd. 38 SOT 207 wherein it was held that a taxpayer is not estopped from pointing out a mistake in the assessment though such mistake is the result of evidence adduced by the taxpayer. The learned counsel further submitted that the aforesaid companies were held to be software product companies and therefore not comparable with software development service provide…

M/S Netdevices India Private Limited, Bangalore vs. ITO, Bangalore

In the result, the assessee’s appeal is treated as partly allowed

ITA 1485/BANG/2010[2006-07]Status: DisposedITAT Bangalore30 Jun 2015AY 2006-07

Bench: Smt. P. Madhavi Devi & Shri Abraham P George

For Appellant: Shri Pravin Kishore Prasad, AdvocateFor Respondent: Shri C.H.Sundar Rao, CIT(DR)
Section 10ASection 143(3)Section 92C

…IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER and SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER IT(TP)A No.1485/Bang/2010 (Assessment year: 2006-07) M/s.NetDevices India Pvt. Ltd., Silver Oak-A Wing, Manyata Ambassy Business Park, Nagawara village, Kasaba Hobli, Outer Ring Road, Bangalore-560045. … Appellant PAN:AACCN2025R Vs. Income-tax Officer, Ward 12(1), Bangalore. … Respondent Appellant by: Shri Pravin Kishore Prasad, Advocate. Respondent by: Shri C.H.Sundar Rao, CIT(DR). Date of hearing : 18/06/2015 Date of pronouncement: 30/06/2015. O R D E R Per S…

DCIT, Bangalore vs. M/S Trident Microsystems India Pvt. Ltd., Bangalore

In the result, the appeal by the Revenue is dismissed

ITA 192/BANG/2015[2010-11]Status: DisposedITAT Bangalore29 Jun 2015AY 2010-11

Bench: Shri N.V. Vasudevan & Shri Abraham P. George

For Appellant: Shri T.S.N. Murthy, CIT-III(DR)For Respondent: None
Section 143(3)Section 92Section 92C

…xercise. It was submitted that significant differences in size of the companies would impact comparability. In this regard our attention was drawn to the decision of the Special Bench of the ITAT Chandigarh Bench in the case of DCIT v. Quark Systems Pvt. Ltd. 38 SOT 207, wherein the Special Bench had laid down that it is improper to proceed on the basis of lower limit of 1 crore turnover with no higher limit on turnover, as the same was not reasonable classification. Several other decisions were referred to in this regard laying down identical proposition. We IT(TP)A No.192/Bang/2015 Page 7 of 15 are not referr…

ITO vs. M/S Aamd India Pvt. Ltd

In the result, the appeal by the Revenue is dismissed, while the appeal by the assessee is partly allowed

ITA 457/BANG/2013[2008-09]Status: DisposedITAT Bangalore23 Jun 2015AY 2008-09

Bench: Shri N.V. Vasudevan & Shri Abraham P. George

For Appellant: Shri Padamchand Khincha, CAFor Respondent: Shri T.S.N. Murthy, CIT-III(DR)
Section 143(3)Section 234BSection 250Section 92C(3)

…development services. 6. We have considered the request for admission of additional ground and are of the view that plea of the assessee deserves to be accepted, as it has been held by the Chandigarh Special Bench of the Tribunal in Quark Systems Pvt. Ltd., 38 SOT 307 (SB) (Chd) that the taxpayer can reject a company selected by it in its TP study as not being comparable, even if such a plea is raised for the first time before the Tribunal. The Special IT(TP)A Nos.437 & 457/Bang/2015 Page 8 of 54 Bench further held that the taxpayer is not estopped from pointing out that a particular company cannot be taken a…

Amd India Pvt. Ltd., Bangalore vs. ITO

In the result, the appeal by the Revenue is dismissed, while the appeal by the assessee is partly allowed

ITA 437/BANG/2013[2008-09]Status: DisposedITAT Bangalore23 Jun 2015AY 2008-09

Bench: Shri N.V. Vasudevan & Shri Abraham P. George

For Appellant: Shri Padamchand Khincha, CAFor Respondent: Shri T.S.N. Murthy, CIT-III(DR)
Section 143(3)Section 234BSection 250Section 92C(3)

…development services. 6. We have considered the request for admission of additional ground and are of the view that plea of the assessee deserves to be accepted, as it has been held by the Chandigarh Special Bench of the Tribunal in Quark Systems Pvt. Ltd., 38 SOT 307 (SB) (Chd) that the taxpayer can reject a company selected by it in its TP study as not being comparable, even if such a plea is raised for the first time before the Tribunal. The Special IT(TP)A Nos.437 & 457/Bang/2015 Page 8 of 54 Bench further held that the taxpayer is not estopped from pointing out that a particular company cannot be taken a…

ITO, Bangalore vs. M/S Sunquest Information Systems P. Ltd., Bangalore

In the result, the appeal by the Revenue and cross-objection by the Assessee are partly allowed

ITA 1302/BANG/2011[2005-06]Status: DisposedITAT Bangalore11 Jun 2015AY 2005-06

Bench: Shri N.V. Vasudevan & Shri Abraham P. George

For Appellant: Shri T. Suryanarayana, AdvocateFor Respondent: Shri C.H.Sundar Rao, CIT-I (DR)
Section 92Section 92CSection 92E

…xercise. It was submitted that significant differences in size of the companies would impact comparability. In this regard our attention was drawn to the decision of the Special Bench of the ITAT Chandigarh Bench in the case of DCIT v. Quark Systems Pvt. Ltd. 38 SOT 207, wherein the Special Bench had laid down that it is improper to proceed on the basis of lower limit of 1 crore turnover with no higher limit on turnover, as the same was not reasonable classification. Several other decisions were referred to in this regard laying down identical proposition. We are not referring to those decisions as the decision o…

Broadcom Communications Technologies Private Limited, Bangalore vs. DCIT, Bangalore

In the result the appeal by the Assessee is partly allowed

ITA 1276/BANG/2011[2007-08]Status: DisposedITAT Bangalore11 Jun 2015AY 2007-08

Bench: Shri N.V. Vasudevan & Shri Abraham P. George

For Appellant: Ms. Shreya Loyalka, CA
Section 143(3)Section 92

…re development service provider such as the Assessee, the Assessee now seeks exclusion of this company from the list of comparable companies. The Assessee places reliance on the decision of the Special Bench Chandigarh in the case of Quark Systems Pvt. Ltd. 38 SOT 307 (SB) (Chdg.) for the proposition that the taxpayer can reject a company selected by it in its TP study as not being comparable even if such a plea is raised for the first time before the IT(TP)A No.1276/Bang/2011 Page 3 of 54 Tribunal. The learned DR opposed the prayer for admission of additional grounds of appeal. 3. We are of the view that the…

Broadcom India Private Limited, Bangalore vs. DCIT, Bangalore

In the result the appeal by the Assessee is partly allowed

ITA 1164/BANG/2011[2007-08]Status: DisposedITAT Bangalore11 Jun 2015AY 2007-08

Bench: Shri N.V. Vasudevan & Shri Abraham P. George

For Appellant: Ms. Shreya Loyalka, CA
Section 143(3)Section 92

…re development service provider such as the Assessee, the Assessee now seeks exclusion of this company from the list of comparable companies. The Assessee places reliance on the decision of the Special Bench Chandigarh in the case of Quark Systems Pvt. Ltd. 38 SOT 307 (SB) (Chdg.) for the proposition that the taxpayer can reject a company selected by it in its TP study as not being comparable even if such a plea is raised IT(TP)A No.1164/Bang/2011 Page 3 of 50 for the first time before the Tribunal. The learned DR opposed the prayer for admission of additional grounds of appeal. 3. We are of the view that t…

E4E Business Solutions India Private Limited, Bangalore vs. DCIT, Bangalore

In the result the appeal by the Assessee is partly allowed

ITA 819/BANG/2011[2007-08]Status: DisposedITAT Bangalore26 May 2015AY 2007-08

Bench: Shri N.V. Vasudevan & Shri Abraham P. George

For Appellant: Shri. Smt.Shreya Loyalka, CAFor Respondent: Shri C.H. Sundar Rao, CIT-I(DR)
Section 143(3)

…rporation Limited was earlier selected by the Appellant and notwithstanding that the abovementioned comparables were contended before the lower authorities on different parameters.” 11. In DCIT Vs. Quark Systems (P) Ltd. ITAT, CHANDIGARH SPECIAL BENCH (2010) 38 SOT 307 had to deal with argument as to whether the Assessee or the revenue having chosen a company as comparable is entitled to seek exclusion of the very same company before the Tribunal. The Special Bench held as follows:- “Contention that DM was taken as one of the comparables by the taxpayer and no objection to its inclusion was raised before the TP…

M/S. Tesco Hindustan Service Centre Pvt. Ltd., Bangalore vs. DCIT, Bangalore

In the result the appeal by the Assessee is partly allowed

ITA 1317/BANG/2010[2006-07]Status: DisposedITAT Bangalore26 May 2015AY 2006-07

Bench: Shri N.V. Vasudevan & Shri Abraham P. George

For Appellant: Shri K.R. Vasudevan, AdvocateFor Respondent: Shri.C.H. Sundar Rao, CIT-I(DR)
Section 143(3)Section 92Section 92C

…xercise. It was submitted that significant differences in size of the companies would impact comparability. In this regard our attention was drawn to the decision of the Special Bench of the ITAT Chandigarh Bench in the case of DCIT v. Quark Systems Pvt. Ltd. 38 SOT 207, wherein the Special Bench had laid down that it is improper to proceed on the basis of lower limit of 1 crore turnover with no higher limit on turnover, as the same was not reasonable classification. Several other decisions were referred to in this regard laying down identical proposition. We are not referring to those decisions as the decision o…

Mindteck (India) Limited, Bangalore vs. ITO, Bangalore

In the result, appeal by the Assessee is partly allowed

ITA 1082/BANG/2011[2007-08]Status: DisposedITAT Bangalore14 May 2015AY 2007-08

Bench: Shri N.V. Vasudevan & Shri Abraham P. George

For Appellant: Shri Sampath Raghunathan, AdvocateFor Respondent: Shri C.H. Sundar Rao, CIT-I(DR)
Section 143(3)Section 234ASection 271(1)Section 92CSection 92E

…xercise. It was submitted that significant differences in size of the companies would impact comparability. In this regard our attention was drawn to the decision of the Special Bench of the ITAT Chandigarh Bench in the case of DCIT v. Quark Systems Pvt. Ltd. 38 SOT 207, wherein the Special Bench had laid down that it is improper to proceed on the basis of lower limit of 1 IT(TP)A No.1082/Bang/2011 Page 9 of 36 crore turnover with no higher limit on turnover, as the same was not reasonable classification. Several other decisions were referred to in this regard laying down identical proposition. We are not refer…

ACIT, Bangalore vs. Symbol Technologies India Pvt. Ltd., Bangalore

In the result the appeal by the Assessee and the Revenue are partly allowed

ITA 391/BANG/2012[2005-06]Status: DisposedITAT Bangalore27 Mar 2015AY 2005-06

Bench: Shri N.V. Vasudevan & Shri Jason P. Boaz

For Appellant: Shri Eric Mehta & Smt. Shilpa S., CAsFor Respondent: Dr. P.K. Srihari, Addl. CIT (DR)
Section 10ASection 92Section 92CSection 92E

…d from objecting to the company being selected as a comparable if it has been mistakenly considered as a comparable by the assessee. In support of such contention, the learned AR relied upon the decision of the ITAT Special Bench in the case of Quark Systems (38 SOT 207). We have heard submissions of the parties and perused the materials on record. So far as Infosys Technologies Ltd. is concerned the issue of comparability of the aforesaid company ITA Nos.391 & 296/Bang/2012 Page 21 of 26 has been considered by different Benches of the Tribunal including the Hyderabad Benches. It is to be noted that the consist…

M/S Symbol Technologies India Private Limited, Bangalore vs. ACIT, Bangalore

In the result the appeal by the Assessee and the Revenue are partly allowed

ITA 296/BANG/2012[2005-06]Status: DisposedITAT Bangalore27 Mar 2015AY 2005-06

Bench: Shri N.V. Vasudevan & Shri Jason P. Boaz

For Appellant: Shri Eric Mehta & Smt. Shilpa S., CAsFor Respondent: Dr. P.K. Srihari, Addl. CIT (DR)
Section 10ASection 92Section 92CSection 92E

…d from objecting to the company being selected as a comparable if it has been mistakenly considered as a comparable by the assessee. In support of such contention, the learned AR relied upon the decision of the ITAT Special Bench in the case of Quark Systems (38 SOT 207). We have heard submissions of the parties and perused the materials on record. So far as Infosys Technologies Ltd. is concerned the issue of comparability of the aforesaid company ITA Nos.391 & 296/Bang/2012 Page 21 of 26 has been considered by different Benches of the Tribunal including the Hyderabad Benches. It is to be noted that the consist…

M/S Cypress Semiconductor Technology India Private Limited, Bangalore vs. DCIT, Bangalore

In the result, the appeal by the Assessee is allowed

ITA 1167/BANG/2010[2006-07]Status: DisposedITAT Bangalore27 Mar 2015AY 2006-07

Bench: Shri N.V. Vasudevan & Shri Jason P. Boaz

For Appellant: Shri T. Suryanarayan, AdvocateFor Respondent: Shri Farahat Hussain Qureshi, CIT-II(DR)
Section 143(3)Section 92Section 92C

…xercise. It was submitted that significant differences in size of the companies would impact comparability. In this regard our attention was drawn to the decision of the Special Bench of the ITAT Chandigarh Bench in the case of DCIT v. Quark Systems Pvt. Ltd. 38 SOT 207, wherein the Special Bench had laid down that it is improper to proceed on the basis of lower limit of 1 crore turnover with no higher limit on turnover, as the same was not reasonable classification. Several other decisions were referred to in this regard laying down identical proposition. We are not referring to those decisions as the decision o…

M/S. First Apex Software Technologies Pvt. Ltd., Bangalore vs. DCIT, Bangalore

In the result the appeal by the Assessee is partly allowed

ITA 1311/BANG/2010[2006-07]Status: DisposedITAT Bangalore20 Mar 2015AY 2006-07

Bench: Shri. N. V. Vasudevan & Shri. Jason P.Boazi.T(Tp).A No.1311/Bang/2010 (Assessment Year : 2006-07)

For Appellant: Shri. Rishi Harlalkar, C.AFor Respondent: Shri.Farhat Hussain Qureshi, CIT (DR)
Section 143(3)Section 92Section 92C

…xercise. It was submitted that significant differences in size of the companies would impact comparability. In this regard our attention was drawn to the decision of the Special Bench of the ITAT Chandigarh Bench in the case of DCIT v. Quark Systems Pvt. Ltd. 38 SOT 207, wherein the Special Bench had laid down that it is improper to proceed on the basis of lower limit of 1 crore turnover with no higher limit on turnover, as the same was not reasonable classification. Several other decisions were referred to in this regard laying down identical proposition. We are not referring to those decisions as the decision o…

Tektronix Engineering Development India Private Limited, Bangalore vs. DCIT, Bangalore

In the result, the assessee's appeal for Assessment Year 2006-07 is partly allowed

ITA 1465/BANG/2010[2006-07]Status: DisposedITAT Bangalore20 Feb 2015AY 2006-07

Bench: Shri N.V. Vasudevan & Shri Jason P. Boazi.T.(T.P) A. No.1465/Bang/2010 (Assessment Year : 2006-07) Tektronix Engineering Devt. Vs. Dy. Commissioner Of Income Tax, India P. Ltd., Circle 12(4), Bangalore. Samrah Plaza, 1St Floor, 4/2, St. Marks Road, Bangalore-560 001 Pan Aaact 7289F Appellant Respondent.

For Appellant: Shri Sriram Seshadri, AdvocateFor Respondent: Shri C.H. Sundar Rao, CIT (D.R)
Section 10ASection 133(6)Section 143(3)Section 144C(5)Section 92C

…xercise. It was submitted that significant differences in size of the companies would impact comparability. In this regard our attention was drawn to the decision of the Special Bench of the ITAT Chandigarh Bench in the case of DCIT v. Quark Systems Pvt. Ltd. 38 SOT 207, wherein the Special Bench had laid down that it is improper to proceed on the basis of lower limit of 1 crore turnover with no higher limit on turnover, as the same was not reasonable classification. Several other decisions were referred to in this regard laying down identical proposition. We are not referring to those decisions as the decision o…

Broadcom India Research Private Limited, Bangalore vs. DCIT, Bangalore

In the result the appeal by the Assessee is partly allowed

ITA 1180/BANG/2011[2007-08]Status: DisposedITAT Bangalore28 Jan 2015AY 2007-08

Bench: Shri N.V. Vasudevan & Shri Abraham P. George

For Appellant: Shri Sreeram Seshadri, AdvocateFor Respondent: Shri.C.H. Sundar Rao, CIT-I (DR)
Section 143(3)Section 92Section 92C

…sel for the Assessee in support of the IT(TP)A No. 1180/Bang/2011 Page 7 of 65 admission of additional ground placed reliance on the decision of the Hon’ble Special Bench in the case of the ITAT Chandigarh Bench in the case of DCIT v. Quark Systems Pvt. Ltd. 38 SOT 207 wherein it was held that a taxpayer is not estopped from pointing out a mistake in the assessment though such mistake is the result of evidence adduced by the taxpayer. The learned counsel further submitted that the aforesaid two companies were held to be software product companies and therefore not comparable with software development service pro…

Mindteck (India) Limited, Bangalore vs. ITO, Bangalore

In the result, appeal by the Assessee is partly allowed

ITA 1548/BANG/2010[2006-07]Status: DisposedITAT Bangalore09 Jan 2015AY 2006-07

Bench: Shri N.V. Vasudevan & Shri Abraham P. George

For Appellant: Shri Raghunathan, AdvocateFor Respondent: Shri C.H. Sundar Rao, CIT-I(DR)
Section 133(6)Section 143(3)Section 92CSection 92E

…differences in size of the companies would impact comparability. In this regard our attention was drawn to the decision of the Special Bench of the ITAT Chandigarh Bench in the case of DCIT v. Quark Systems IT(TP)A No.1548/Bang/2010 Page 10 of 40 Pvt. Ltd. 38 SOT 207, wherein the Special Bench had laid down that it is improper to proceed on the basis of lower limit of 1 crore turnover with no higher limit on turnover, as the same was not reasonable classification. Several other decisions were referred to in this regard laying down identical proposition. We are not referring to those decisions as the decision o…