Appeal partly allowed with detailed directions on comparable companies, some issues remanded for further examination.

The assessee's appeal was partly allowed for statistical purposes, with the Tribunal providing detailed directions on the inclusion and exclusion of specific comparable companies. The Revenue's appeal was allowed, with the Tribunal upholding the TPO's order on certain companies. Some issues were remanded for further examination by the AO/TPO.

---

---

Issues Involved:
1. Transfer Pricing Adjustment
2. Use of Financial Data for Comparable Companies
3. Export Earnings Filter
4. Turnover Filter
5. Super Normal Profit Companies
6. Rejection of Functionally Comparable Companies
7. Financial Year End Differences
8. Rejection and Inclusion of Comparable Companies
9. Risk Profile Adjustment
10. Levy of Interest and Penalty Proceedings
11. Remand of Comparable Company Examination

Detailed Analysis:

Transfer Pricing Adjustment:
The assessee contested the transfer pricing adjustment made by the TPO, arguing that the pricing of their international transactions was at arm's length. The TPO determined the average PLI of comparable companies at 26.19% against the assessee's 10.77%, resulting in an upward adjustment of Rs. 10,31,89,058.

Use of Financial Data for Comparable Companies:
The assessee argued against the use of single-year financial data for comparable companies, advocating for the inclusion of multiple years' data. The TPO, however, used only the financial year ending 31 March 2012 data, which the assessee claimed was not available during their compliance with transfer pricing regulations.

Export Earnings Filter:
The assessee applied a 25% export earnings filter, while the TPO modified this to 75%. The assessee did not press this ground during the hearing.

Turnover Filter:
The TPO applied a turnover filter of Rs. 1 Crore to Rs. 500 Crores, rejecting the assessee's filter of Rs. 1 Crore to Rs. 200 Crores. This ground was also not pressed by the assessee during the hearing.

Super Normal Profit Companies:
The TPO included companies with super normal profits as comparables, which the assessee contested. This ground was not pressed by the assessee.

Rejection of Functionally Comparable Companies:
The assessee's transfer pricing study rejected companies with persistent losses, but the TPO rejected companies solely based on incurring losses during AY 2012-13. This ground was not pressed by the assessee.

Financial Year End Differences:
The TPO rejected companies with different financial year ends than the assessee. This ground was not pressed by the assessee.

Rejection and Inclusion of Comparable Companies:
- Thinksoft Global Services Limited: The TPO rejected this company due to the unavailability of its annual report in the public domain. The assessee provided the annual report, showing it satisfied all comparability criteria. The Tribunal directed the AO/TPO to include Thinksoft Global Services Limited as a comparable company.
- Cybermate Infotek Limited: The Tribunal excluded this company due to its involvement in product development and lack of segmental details, following previous Tribunal decisions.
- Infobeans Systems Private Limited: Excluded due to an extraordinary event of demerger and involvement in product sales, following Tribunal precedents.
- Cybercom Datamatics Information Solutions Limited: Remanded to AO/TPO for detailed examination of the company's annual report to determine functional comparability.

Risk Profile Adjustment:
The assessee argued for adjustments to account for differences in risk profiles between them and comparable companies. This ground was not pressed by the assessee.

Levy of Interest and Penalty Proceedings:
The assessee contested the levy of interest under section 234B and initiation of penalty proceedings under section 271(1)(c). This ground was deemed premature and consequential, requiring no adjudication.

Remand of Comparable Company Examination:
The CIT(A) remanded the examination of Thinksoft Global Services Limited to the AO, which the assessee contested as beyond CIT(A)'s powers. This ground was dismissed as not pressed.

Revenue's Appeal:
1. Cigniti Technologies Ltd.: The CIT(A) directed the AO/TPO to consider this company as comparable, ignoring the AMD/Sales filter applied by the TPO. The Tribunal upheld the TPO's order as the assessee did not contest this appeal.
2. Presidential Systems and Solutions Ltd.: The CIT(A) directed AO/TPO to consider this company as comparable despite significant turnover differences and Safe Harbour Rules criteria. The Tribunal upheld the TPO's order as the assessee did not contest this appeal.

Conclusion:
The assessee's appeal was partly allowed for statistical purposes, while the Revenue's appeal was allowed. The Tribunal provided detailed directions on the inclusion and exclusion of specific comparable companies and remanded certain issues for further examination by the AO/TPO.

---