2013 (10) TMI 469

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....ed by the Revenue reads as under:- "The ld.CIT(A) has erred on facts and in law in deleting the addition of Rs.1,27,87,016/- on account of transfer pricing adjustment." 3. The facts of the case are that the assessee has disclosed the operating profit at 13.68%. The TPO worked out the operating profit at 23.40%. He proposed the adjustment of Rs. 1,27,87,016/- by determining the arm's length price on TNMM basis applying the operating profit at 23.40% as against 13.68% disclosed by the assessee. On appeal, learned CIT(A) found that while determining the arm's length price, the TPO considered five comparables which included Infosys Technologies Ltd. and Satyam Computer Services Ltd. He found that both the above comparables were considered....

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....by reducing the arm's length margin to 25.6%. It is argued that the case of the assessee is not comparable with Infosys Technologies Ltd., the reason being that the latter is giant in the area of development of software and it assumes all risks, leading to higher profit. On the other hand, the assessee is a captive unit of its parent company in the USA and it assumes only limited currency risk. Having considered these points, we are of the view that the case of aforesaid Infosys and the assessee are not comparable at all as seen from the financial data etc. of the two companies mentioned earlier in this order. Therefore, we are of the view that this case is required to be excluded. Once that is done, it is the accepted position of both the ....