TaxTMI 
TaxTMI 
2014 (12) TMI 759
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....t year, the assesseehad undertakenthe International transactions which are as under:- S. No. Nature of international transactions Method used Value (in Rs.) 1. Software Development Services TNMM 375,37,39,674 2. Purchase of fixed assets TNMM 2,80,38,672 3. IT enabled services TNMM 229,43,35,483 4. Recharge of salaries TNMM 22,88,66,501 5. Reimbursement of expenses TNMM 20,49,12,611 3. Out of the above international transactions undertaken by the assessee, Sl.Nos.2, 4 & 5 were accepted by the TPO at arm's length and no upward adjustment was made. With reference to the Software Development Services and IT enabled services, the assessee adopted transactional net margin method (TNMM) as a most appropriate method with operating profits to the total cost asits profit levelled indicator for Bench marking its transaction. The assessee applied various quantity filters for computing the comparability analysis for the aforesaid two segments and arrived at the following results:- No. of comparable Margin of assessee Margin of comparable Software development services 35 13% 11% IT enabled services 14 15% 9% 3.1 Base....
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....t of the assessee to interfere with the findings of the TPO. Only after discussing in detail, the TPO arrived at the conclusion of selecting of comparable for both the segments. Due opportunity of being heard appears to have been given to the assessee and the TPO has discussed in detail, all the objections raised by the assessee. Thus, we find no compelling reasons to interfere with the order of TPO and the Assessing Officer and, hence, the same are confirmed." 6.1 With reference to limiting depreciation claimed on computer accessories, the finding of the DRP reads as under:- "3. In the draft assessment order passed u/s 144C of the IT Act, the Assessing Officer has disallowed excess claim of depreciation on the Computer accessories by observing that the same may be allowed @ 15% and not @ 60%. The assessee has objected to this addition by submitting that this is not correct since the computer accessories are part and parcel of computers. In this issue the observation of the Assessing Officer appears to be correct hence we decline from interfering with the order of the Assessing Officer. 6.2 Based on the DRP's directions, final assessment order was passed on 26.10.2010. ....
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....5.1 That the Ld. AO and the Ld. Panel erred in disallowing/adding back an amount of Rs. 14,90,216/- on account of depreciation on UPS, printer and wireless data card claimed by the Appellant. 5.2 That the Ld. AO and the Ld. Panel erred in treating UPS, printer and wireless data card acquired during the year as being part of the general block of 'plant & machinery' for the purpose of computing depreciation instead of treating them as part of computer block eligible for depreciation @ 60%. 5.3 That the Ld. AO and the Ld. Panel erred in computing the depreciation on UPS, printer and wireless data card @ 15%. 6. That the Ld. AO and Ld. Panel erred in not allowing deduction under section 10A of the Act on disallowance of depreciation on computer of Rs. 14,90,216/-. 7. That the Ld. AO erred in charging interest under section 234B of the Act amounting to Rs. 9,24,29,654/-. 8. That the Ld. AO erred in charging interest under Section 234C of the Act. 9. That the Ld. AO erred on facts and in law in initiating the penalty proceedings against the Appellant under section 271(1) (c) of the Act." 7.1 However, in the course of argument before us, the ld. counsel for the assess....
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.... without much discussion/deliberation. 9.3. We have heard rival submissions and perused the materials on record. The Annual report/website of Infosys provides information on the diverse nature of services provided by it as Infosys is the largest publicly held software development company in India. It service profile includes consulting application design, development, re-engineering and maintenance, systems integration, package evaluation and implementation, business process management. The company has diverse domain expertise in areas such as engineering enterprises financial services, healthcare, technology, manufacturing, retail and distribution, telecom, transportation, utilities and energy. Unlike the assessee, Infosys is extremely diversified and undertakes a wide range of services apart from software development. Since the revenue and profitability for software development cannot be ascertained from the data in the annual report, Infosys cannot be included as comparable. Moreover, Infosys had, during the FY 2005-06, earned almost 49.8 % of its software service income from onsite services as against the assessee which had earned its entire income from provision of services....
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....any is functionally dissimilar to that of the assessee on account of diversified operation. Moreover, during the relevant financial year, Nucleus Netsoft&Gis India Ltd underwent restructuring exercise on account of amalgamation which impacted the financial statement of the company. However, since the assessee had neither raised any objection of Nucleus Netsoft&Gis India Ltd being included as comparable company before the TPO nor the DRP considered the assessee's objection, we deem it appropriate in the interests of natural justice and equity to restore this issue to the file of TPO for consideration. It is ordered accordingly. Ground No.4.5: 11. In this ground, the assessee raises the issue of not granting working capital adjustment by the TPO and DRP. The TPO denied the assessee's claim for working capital adjustment by observing as under: "8.11. The requisite information for making the working capital adjustment has not been furnished by the assessee in the case of the comparable. It is evident from above findings that the assessee has not furnished position of payables and receivables of these comparable at beginning and end of the year. The assessee has not made availa....
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.... with the settled economic principle. The relevant portion of the assessee's objection before the DRP reads as under: "In this regard, so as to explicitly/ indisputably rebut the learned TPO's claim of non-availability of 'sufficient and accurate' data and for your honour's ready reference, a computation of the working capital adjusted cost plus mark-up of the 35 comparable companies in the contract software development segment and 14 comparable companies in the IT enabled services segment, to the holding days of the assessee (and also the up-dated unadjusted mark up on cost on a without prejudice basis) as submitted vide submission dated December 23, 2008 is provided vide Exhibit 1 and 2 respectively. Also the working capital adjusted mark up on cost of the 4 companies in the contract software development services segment and 5 companies in the IT enabled services segment, selected by the learned TPO for determining the arm's length margin is attached herewith as Exhibit 3 and 4 respectively. The said computation demonstrates that not only 'accurate and sufficient' data is indeed available, but, also that it has been applied in due accordance with the settled economic principle....