Appeal partially allowed, certain comparables excluded, others retained. Dismissed grounds: jurisdictional error, penalty, interest computation. TP adjustment modified.

The appeal was partly allowed, with the Tribunal directing the exclusion of certain comparables and retaining others. The grounds related to jurisdictional error, penalty proceedings, and interest computation were dismissed due to lack of arguments or pressing of those grounds. The final determination of the TP adjustment was modified based on the exclusion of specific comparables.

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Issues Involved:
1. Jurisdictional error in the reference made by the AO to the TPO.
2. Determination of the arm's length price (ALP) of international transactions.
3. Selection and rejection of comparable companies by the TPO.
4. Initiation of penalty proceedings under Section 271(1)(c) of the Act.
5. Charging and computing interest under Sections 234A, 234B, and 234C of the Act.

Issue-wise Detailed Analysis:

1. Jurisdictional Error:
The assessee contended that the reference made by the AO to the TPO suffered from a jurisdictional error as the AO did not record any reasons in the assessment order to conclude that it was "expedient and necessary" to refer the matter to the TPO for computation of the arm's length price. However, this ground was not pressed during the hearing and was thus dismissed.

2. Determination of ALP:
The AO determined the ALP of the assessee's international transactions at Rs. 21,307,974 as opposed to Rs. 18,263,276 determined by the assessee, leading to an addition of Rs. 3,044,698. The assessee adopted the Transactional Net Margin Method (TNMM) and selected 10 comparable companies with an average margin of 13.60%, which was later updated to 10.57%. The TPO, however, selected different comparables and determined an adjusted PLI of 33.92%, resulting in the proposed adjustment.

3. Selection and Rejection of Comparable Companies:
The assessee contested the inclusion of six comparables selected by the TPO:
- Accentia Technologies Limited: The assessee argued it was functionally dissimilar and had extra-ordinary events. However, the Tribunal found it functionally similar to the assessee and retained it as a comparable.
- Fortune Infotech Ltd.: The Tribunal excluded this company as it failed the declining sales filter applied by the TPO himself.
- Igate Global Solutions Ltd.: This company was excluded due to its significantly higher turnover compared to the assessee.
- Infosys BPO Ltd.: Excluded due to its massive turnover, which was 616 times more than the assessee's.
- TCS E-Serve International Ltd. and TCS E-Serve Ltd.: Both were excluded due to their substantially higher turnovers and brand value associated with the Tata Group.

4. Initiation of Penalty Proceedings:
The assessee challenged the initiation of penalty proceedings under Section 271(1)(c) of the Act. However, no arguments were advanced on this ground during the hearing, and it was dismissed.

5. Charging and Computing Interest:
The assessee contested the charging and computing of interest under Sections 234A, 234B, and 234C of the Act. Similar to the penalty proceedings, no arguments were presented, and this ground was also dismissed.

Conclusion:
The appeal was partly allowed, with the Tribunal directing the exclusion of certain comparables and retaining others. The grounds related to jurisdictional error, penalty proceedings, and interest computation were dismissed due to lack of arguments or pressing of those grounds. The final determination of the TP adjustment was modified based on the exclusion of specific comparables. The order was pronounced in the open court on 15/01/2021.

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