TaxTMI 
TaxTMI 
2014 (6) TMI 324
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....t, 1961 in respect of international transaction of software development research and other services rendered by the appellant to its parent company, viz., Open Solutions Inc. 2. That the AO and DRP erred in confirming the action of the TPO in selecting the following companies which were not functionally comparable to the assessee for the purposes of benchmarking the international transaction entered into by the appellant:- a) Cat Technologies Ltd. b) Goldstone Technologies Ltd. c) Infosys Ltd. d) Tata Elxsi Ltd. e) Tata Consultancy Services Ltd. f) L&T Infotech g) Persistent Systems Ltd. 3. That the AO and DRP erred in confirming the action of the TPO in not computing the PLI of Mindtree Ltd. and Goldstone Technologies Limited on segmental basis without appreciating that both these companies were engaged in various other businesses apart from rendition of software development services. 3. The brief facts of the case are as under:- Open Solutions Software Service Private Limited is a wholly owned subsidiary of Open Solutions Inc. USA. It is engaged in providing software development and related services to its Associated Enterprises (AE). The services pr....
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....Ld. Counsel of the assessee submitted that assessee has made elaborate submissions with respect to the comparables mentioned in ground nos. 2 and 3 above before the TPO. Assessee has submitted that these were not functional comparables and it was inter-alia submitted that segmental data were not available. It was contended that some of the companies were engaged in various other business, apart from software development services. Ld. AO & DRP have not properly dealt with the assessee's submissions and by way of a very cryptic order, they have rejected the submissions of the assessee. Accordingly, Ld. Counsel of the assessee contended that these comparables selected by the TPO should be rejected. 6.1 Ld. DR on the other relied upon the orders of the authorities below. However, he agreed that the comparables as agitated by the assessee as above may be sent back to the TPO for reconsideration, in light of the assessee's submissions. 6.2 We have carefully considered the submissions. We find that the assessee has agitated that TPO has selected comparables which were not functional comparables. Some of these companies were engaged in various other business apart from rendering of s....
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....al company proposed to launch 3 to 4 portal during the current financial year in the different fields. Outsourcing the development, management and ongoing maintenance of technology platforms and solutions has become increasingly important. Your company's strength lies in its innate ability to understand the requirements of its clients and to continuously build the competencies and capabilities to provide integrated IT and BPO solutions unique to client specific needs and industry demands. Your company has achieved good market reputation in the domain area of HR, BPO, which is a high growth business area in the outsourcing space. BPO seeks to leverage the benefits of service delivery globalization, process design and technology to drive efficiency and cost effectiveness in customer business process. Your company leverages strategic partnerships with global leaders in technology and business solutions, with the goal of providing clients with end to end business solutions. Thus, it is evident from the above that the functions performed by Cat Technologies are in the nature of TIES/BPO i.e., which are completely different from the software development services provided by the ....
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....in software development services but also sale of products, assurance services, cloud consulting, industrial services etc. Revenue from manufacturing (Rs. 2,245 crores) and retail and distribution (Rs. 2,121 crores) out of total revenue of Rs. 22,404 crores. Also made various acquisitions / divestments during the relevant previous year. Turnover of Rs. 22,404 crore v. Rs. 31.86 crores of the assessee. RPT of 59% as against 25% applied by the TPO himself. Revenue of Rs. 10,801 crores from just one associated enterprise, i.e., Tata America International Corporation. Consolidated results of 55 subsidiaries taken by the TPO." 7.1 TPO has rejected the assessee's objections pertaining to above comparable by holding as under:- "Taxpayer has argued for rejection of this comparable on the grounds of non-comparable services -IT Infrastructure services, business process outsourcing, IT enabled services, engineering and industrial services. It is seen from page 55-56 of Annual report that out of total sales of Rs. 27,385 crores, only Rs. 1919 crores is from BPO, 2225 crores form IT infrastructure services. So out of total turnover, these segments constitute only 15% of the total reven....