TaxTMI 
TaxTMI 
2013 (2) TMI 322
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....de service charges received from M/s. Sonata Information & Technology Ltd. at Rs. 8,65,99,355/- while computing deduction u/s. 10A. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the claim of unbilled software income of Rs. 2,92,82,531/-. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the assessee is eligible for disallowance of Rs. 8,02,72,632/- on account of transfer pricing adjustment in respect of International transaction entered into with Associated Enterprise Offshore Digital Service Inc. (ODSI)" 3. At the very outset, the Ld. Counsel for the assessee submitted that issues involved in ground No. 1, 2 & 3 of the present appeal have already been decided in favour of the assessee by the Tribunal in earlier years. 4. For ground No. 1, the Ld. Counsel for the assessee pointed out that a similar issue had arising since assessment year 1998-99 to 2004-05. Referring to the judgment of the Tribunal in assessee's own case in ITA Nos. 495 & 496/M/02 for assessment years 1998-99 and 1999-2000 in which the Tribunal has categorically held that the assessee is eligi....
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....und No. 4 relates to the TP adjustment in respect of International transaction entered into with Associated Enterprise Offshore Digital Service Inc (ODSI). 11. Briefly stated the facts of the case are that during the course of the assessment proceedings, the Assessing Officer noticed that the assessee has entered into various International transaction in the previous year relevant to the assessment year under consideration. The AO found that all these transactions are detailed in the audit report in Form No. 3CEB filed with return of income. Invoking the provisions of Sec. 92CA(1). The AO referred the matter to the Transfer Pricing Officer (TPO) for determining Arm's Length Price in relation to international transactions. After receiving the report of the TPO, the AO noticed that the TPO has not accepted the ALP of international transaction relating to the transaction of the assessee with ODSI. The TPO has made an adjustment of Rs. 8,02,72,632/-. The AO followed the order of the TPO and made a total adjustment of Rs. 8,02,72,632/- with the income of the assessee on account of Transfer pricing. 12. Before the Ld. CIT(A), the assessee strongly objected to the adjustments made b....
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....sel relied upon the decision of the Hon'ble Supreme Court in the case of Radhasoami Satsang v. CIT [1992] 193 ITR 321. The Ld. Counsel submitted that internal comparables are more reliable than the external comparables and therefore CUP/CPM method are more appropriate as they are direct and use internal data for comparison. The Ld. Counsel relied upon the decision of the Tribunal in the case of Asstt. CIT v. MSS India (P.) Ltd. [2009] 32 SOT 132 (Pune), Sapient Corpn. (P.) Ltd. v. Dy. CIT [2011] 46 SOT 56 Adobe Systems India (P) Ltd. v. Addl. CIT [2011] 44 SOT 49 (Delhi) (URO). The Ld. Counsel further pointed out that the comparables used by the TPO for the application of TNMM method, the TPO has included 5 such companies where either two case of super profit or super turnover. Specifically pointing out the Ld. Counsel submitted that at item No. 17 & 18 which relates to Satyam Computers and Infosys, the sales are to the tune of Rs. 3464.22 and 6859.66 millions and the operating profit to the total cost of these two companies are 30.31 and 43.49 respectively. The Ld. Counsel submitted that such high turnover companies cannot be taken as comparables. Moreover, the financial statement....
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.... standard methods i.e. CUP Resale Price Method(RPM) and Cost Plus Method (CPM) cannot be reasonably applied. We find substance in the argument of the Counsel that on the facts of the case CUP/CPM adopted by the assessee is the most appropriate method. It would not be out of place to refer to the 19 comparables used by the TPO. S. No. Company name Financial year Sales OP to total cost 1. Bodhtree Consulting Ltd. 200506 3.87 24.85 2. Akshay Software Technologies Ltd. 200506 5.89 7.72 3. Lanco Global Systems Ltd. 200506 6.11 13.78 4. Expenys Software Solutions Ltd. 200506 7.3 70.68 5. Sankhya Infotech Ltd. 200506 12.99 27.35 6. Sasken Network Systems Ltd. 200506 14.44 16.52 7. Gebbs Infotech Ltd. 200506 14.74 16.52 8. VJIL Consulting Ltd. 200506 15.6 6.68 9. Four Soft Ltd. 200506 15.94 24.7 10. Thirdware Solution Ltd. 200506 29.11 66.11 11. Geometric Software Solutions Co. Ltd. 200506 95.44 20.34 12. Tata Elxsi Ltd. (Seg) 200506 146.46 24.35 13. Visual Soft Technologies Ltd. (Seg) 200....