Appeal allowed for fresh ALP computation, transfer pricing adjustment made, comparables excluded. Deduction claim dismissed.

The appeal was partly allowed for statistical purposes, directing the Assessing Officer/TPO to compute the arms length price afresh in conformity with the Tribunal's observations. The final assessment order added Rs.10,12,67,762/- as a transfer pricing adjustment. The Tribunal excluded certain comparables selected by the TPO and rejected the assessee's selected comparables. The claim of deduction under Section 10A was dismissed for not being raised before the DRP. The issue of interest under Section 234B was not adjudicated due to the direction for fresh computation of ALP.

---

---

Issues Involved:
1. Transfer Pricing Adjustment
2. Selection of Comparables
3. Rejection of Certain Comparables
4. Application of Differential ALP Adjustment
5. Claim of Deduction under Section 10A
6. Computation of Interest under Section 234B

Issue-wise Detailed Analysis:

1. Transfer Pricing Adjustment:
The assessee, engaged in providing testing services, filed its return declaring an income of Rs.70,19,691/- under normal provisions and book profit of Rs.6,94,02,058/- under section 115JB. The TPO rejected the assessee's TP study and selected 15 comparables, leading to an adjustment of Rs.14,29,00,905/-. The DRP directed that adjustments should not exceed the global profits earned by the group from those transactions, following the ITAT Delhi bench's decision in Global Vintage Pvt. Ltd. The final assessment order added Rs.10,12,67,762/- as a transfer pricing adjustment.

2. Selection of Comparables:
The TPO selected certain companies as comparables which the assessee objected to:
- Avani Cincom Technologies: The assessee argued it engaged in product sales and services, lacking appropriate segmental break-up. The Tribunal rejected the objection as it was not raised before the DRP.
- Infosys Limited & Wipro Limited (Segment): The Tribunal directed their exclusion due to high turnover, brand value, economies of scale, and owning intangibles, making them non-comparable to the assessee.
- KALS Information Systems Limited: The Tribunal excluded it as it was engaged in software product development, following decisions from other ITAT benches.

3. Rejection of Certain Comparables:
The assessee's selected comparables were rejected by the TPO:
- ICRA Techno Analytics Limited, Aditya Birla Minacs IT Services Ltd., Aditya Birla Minacs Technologies Ltd., CG-VAK Software and Exports Limited, Indium Software (India) Limited, Thinksoft Global Services Limited: The Tribunal dismissed the objections as the assessee did not raise them before the DRP.

4. Application of Differential ALP Adjustment:
The assessee contended that the TP adjustment should be restricted to the extent of transactions with AE (93%). The Tribunal dismissed this ground as it was not raised before the DRP.

5. Claim of Deduction under Section 10A:
The assessee raised various issues regarding the claim of deduction under section 10A. The Tribunal dismissed these grounds as they were not raised before the DRP and no reasonable cause was shown for their consideration at this stage.

6. Computation of Interest under Section 234B:
The Tribunal noted that the levy of interest under section 234B is mandatory and consequential. Since the computation of ALP was directed to be done afresh, the issue of charging interest under section 234B was not adjudicated.

Conclusion:
The appeal was partly allowed for statistical purposes, directing the Assessing Officer/TPO to compute the arms length price afresh in conformity with the Tribunal's observations. The order was pronounced in the open court on 22.11.2013.

---