TaxTMI 
TaxTMI 
2012 (5) TMI 3
X X X X Extracts X X X X
X X X X Extracts X X X X
....rred in assessing the total income at Rs. 3,70,84,666/- as against returned income of Rs. 14,39,049/- computed by the assessee. 2. on the facts and in the circumstances of the case and in law, based on directions of DRP, the learned AO has erred in law by holding that the communication expenses (i.e internet charges) attributable to the delivery of computer software outside India should be reduced from export turnover while computing the deduction u/s 10A of the Act. 3. on the facts and in the circumstances of the case and in law, the learned AO has erred in law by not considering that, if the communication expenses (i.e internet charges) attributable to the delivery of computer software outside India are reduced from export turnover, an equal amount should also be reduced from total turnover for computing the deduction u/s 10A of the Act. 4. the learned AO/Transfer Pricing Officer (TPO) erred in making an addition of Rs. 3,54,18,922/- to the total income of the appellant on account of adjustment in the arm's length price of the software research and development services transaction entered by the appellant with its associated enterprise; 5. the learned AO/TPO erred in disr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onsidering the provisions written back as part of the operating income while computing the operating margin; 13. learned AO/TPO erred in not making suitable adjustments on account of differences in the risk profile of the appellant vis-à-vis the comparables, while conducting comparability analysis; 14. the learned AO/TPO erred in determining the adjustment in respect of the arm's length price without appreciating that the adjustment to arm's length price, if any, should be limited to the lower end of the 5% range as the appellant has the right to exercise this option under the proviso to sec. 92C of the Act. 15. the learned AO erred in levying interest of Rs. 65,26,005/- and Rs. 10,536/- u/s 234B and 234C of the Act respectively; 16. the learned AO erred, in law, and in facts, in initiating penalty proceedings u/s 271(1)(c) of the Act." 4-5. Ground No.1 is general in nature. Coming to the ground Nos.2 and 3, we find that it is relating to the reduction of export turnover by communication expenses i.e internet charges attributable to the delivery of computer software outside India and not reducing the same from total turnover also. for the purpose of computing de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Assessing Officer drafted the assessment order adding a sum of Rs. 3,55,93,801/- to the returned income as per the provisions of sec. 92CA of the Income-tax Act. 10. Against this adjustment of ALP in the draft assessment order, the assessee company filed an application before the Dispute Resolution Panel (DRP) along with its objections and submissions. The DRP after considering the assessee's contentions directed the AO to re-determine the ALP after taking into consideration the margin of Megasoft Ltd., one of the final comparables, at 51.73% on cost as against 52.74% on cost adopted by the TPO. With regard to the other issues, the DRP confirmed the order of the AO, which is made on the basis of the order of the TPO and accordingly, the ALP was re-determined and the adjustment u/s 92CA was made at Rs. 3,54,18,922/-. 11. Aggrieved by the said adjustment, the assessee is in appeal before us. 12. The learned counsel for the assessee Shri R Vijay Raghavan, while reiterating the assessee's submissions before the authorities below has submitted that the international transaction of the assessee with its AE during the relevant financial year is relating to software research ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee under the proviso to sec. 92C(2) of the Act. 14. He submitted that after receipt of the order of the TPO, the assessee had submitted its various objections before the Assessing Officer but without taking the same into consideration the AO has determined the ALP by proposing the draft assessment order and aggrieved by the draft assessment order, the assessee preferred an appeal to the DRP but the DRP also without considering the assessee's submissions, summarily accepted the contentions of the TPO. 15-16. The learned counsel for the assessee has also filed detailed written submissions before us and the learned DR has also filed his counter arguments. Taking all these arguments into consideration, we find that the basic objection of the assessee is that the TPO has rejected the filters adopted by the assessee and has adopted untenable filters for arriving at the comparables and in his detailed submission before the TPO as well as the Tribunal, the assessee has brought out the various factors that would justify the adoption of comparables by the assessee. He has also brought out the distinguishing factors relating to the comparables adopted by the TPO to demonstrate before....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3 5.27 0 5.27% 19. Megasoft Ltd. 56.15 52.74 0 52.74% 20. iGate Global Solutions Ltd. (Seg) 527.91 15.61 0 15.61% Average 20.68% 20.71% 18. Out of these companies, the assessee is mainly aggrieved by the adoption of Infosys Technologies Ltd., KALS Information System Ltd., Accel Transmatic Ltd. and Floctronics Software System Ltd. We find that the TPO has given his reasons for adopting these companies as comparables on the basis of the data obtained by him on account of notices issued u/s 133(6) of the Income-tax Act. However, the learned counsel for the assessee has brought before us various differences which will have to be taken into account while considering these companies as comparables. The information acquired by the TPO u/s 133(6) was no doubt provided to the assessee. However, the assessee was not allowed to rebut the said information by way of any evidences. Now similar issues had arisen under similar facts before us in the case of Genesis Integrating System India Pvt. Ltd., Bangalore and this Tribunal vide orders dated 5.8.2011 had answered the various issues raised by the assessee therein and has also issued guidelines for a....