TaxTMI 
TaxTMI 
TaxTMI 
2015 (3) TMI 604
X X X X Extracts X X X X
X X X X Extracts X X X X
.... which was shown at Rs. 26,18,37,705. For determining the Arm's Length Price (ALP) of such transactions, during the assessment proceedings, the A.O. has made a reference to the Addl. CIT (Transfer Pricing) (in short "TPO") u/s. 92CA(1) of the Act. In response to this, TPO vide his order dated 30.05.2008 passed u/s.92CA(3) of the Act, while adopting Transaction Net Margin Method (TNMM) as the most appropriate method in this case, has determined the ALP of such transactions with its AEs at Rs. 31,36,49,588 thereby suggesting for addition of Rs. 5,18,11,883 to the price declared by assessee. Later, on the basis of the said order of TPO, the A.O. completed the assessment, after making addition of Rs. 5,18,11,883, thereby determining total income at Rs. 11,80,86,603. 4. Being aggrieved, assessee preferred appeal before the CIT(A) has contested various issues under the transfer pricing adjustment made by the A.O. in the assessment order. Learned CIT(A) more or less rejected all the grounds pertaining to TP addition, but accepted only one company as not comparable and directed the TPO to re-determine the adjustment. 5. We have heard the Ld. Counsel for the assessee and also learned D.R.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hose cases. (i) Cordys Software India P. Ltd., vs. DCIT, Circle 1(2), Hyderabad ITA.No.1451/Hyd/2010 dated 13.06.2014 (ii) ITA.No.472, 553 & 1775/Hyd/2011 in the case of Ness Innovative Business Services P. Ltd., vs. DCIT, Circle 16(1), Hyderabad dated 18.06.2014; and (iii) Invensys Development Centre (India) P. Ltd., vs. Addl. CIT, Hyderabad ITA.No.1256/Hyd/2010 dated 28.02.2014. 8. The Learned D.R. however, relied on the orders of Ld. CIT(A). 9. As far as the selection of these 7 comparables are concerned, these companies were considered already in the above referred cases and held that they are not comparable. As seen from the order of TPO, the TPO has selected same 16 comparables as considered in those cases. The 7 companies being objected now are already held to be not comparable in above case. Facts being same those directions do apply to the assessee as well. 9.1 For the sake of record, the decision in the case of Ness Innovative Business Services P. Ltd., vs. DCIT, Circle 16(1), Hyderabad vide ITA.No.472, 553 & 1775/Hyd/2011 dated 18.06.2014 on the above 7 comparables are extracted as under: "1. Bodhtree Consulting Ltd. The learned counsel submitted that this compan....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dicates clearly that the company is into sof tware products (services are supplementary to products licensing) * The TP off ice has in subsequent year rejected this company as comparable relying on the same 133(6) response. The following rulings have analysed and rejected this company as it has sof tware products : - ITO Vs. Colt Technology Services India Pvt. Ltd. (ITA No. 609/Del/2011) - Integrated Decisions & Systems India (P) Ltd. Vs. DCIT ( ITA No. 27/JP/2011) - ACIT Vs. Sonata Sof tware ( ITA No. 3514/Mum/2010) - DCIT Vs. M/s Hellosof t India Pvt. Ltd. ( ITA No. 645/Hyd/09) - Invensys Development Centre India P. Ltd. in ITA no 1256/Hyd/2010 dt.20-02-2014 4. Foursof t Ltd. The learned counsel submitted that this company is functionally different as evident from various disclosures in the annual report (Directors report, Management discussion and website information) indicates clearly that the company is into sof tware products. The following rulings have analysed and rejected this company as it has derived income from sof tware license and AMC's: - Intoto Sof tware India Pvt. Ltd. ( ITA No. 1196/Hyd/2010) - DCIT Vs. M/s Hellosof t India Pvt. Ltd. ( ITA No. 645/Hyd/0....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Further due to scale of operations, Infosys enjoys economies of scale, which results in lower cost of infrastructural facilities and overheads. Further, he submitted that the issue of comparability of Infosys to a small captive service provider is no longer res-integra. The following cases have specifically anlaysed in detail the comparability of Infosys on various parameters to a similar size sof tware service provider and rejected it: - Intoto Sof tware India Pvt. Ltd. ( ITA No. 1196/Hyd/2010) - Virtusa India Pvt. Ltd. Vs. DCIT (ITA No. 1962/H/2010) - Patni Telecom Solutions Pvt. Ltd. Vs. ACIT (ITA No. 1846/Hyd/2012) - Adaptec (India) Pvt. Ltd. Vs. DCIT ( ITA No. 1801/Hyd/2009) - DCIT Vs. M/s Hellosof t India Pvt. Ltd. ( ITA No. 645/Hyd/09) - Trilogy E Business Services Sof tware Ltd. Vs. DCIT ( ITA No. 1054/Bang/2011 - Para 20) - Telcordia Technologies India P Ltd. (ITA No. 7821/Mum/2011 - Para 7.4) - Cordys Sof tware India Pvt. Ltd. Vs. ACIT (ITA No. 1972/H/2011) - Agnity India Technologies Vs. ITO ( ITA No. 3856/Del/2010) - Agnity India Technologies Pvt. Ltd. Vs. ITO (High Court decision - ITA 1204/2011) - Invensys Development Centre India P. Ltd. in ITA no 1256/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....annot be lost sight for. It has been held in many cases by this Tribunal as well as the Higher Forums that to compare a company with another company, both the companies have to be brought on par with each other af ter making the necessary adjustments wherever necessary and possible. However, where there are extraordinary events such as this, then those events have to be taken note of and where no adjustment can be made on account of this extraordinary event, then such company cannot be considered as a comparable. The objections to this company by Assessee are made for the f irst time before the Tribunal. The Tribunal being the f inal fact f inding authority is bound to take note of the objections of Assessee. As the material relied upon by the learned Counsel for Assessee clearly denotes that there is an extraordinary event which has resulted in the high operating margin of the company, we deem it f it and proper to remand this issue to the f ile of the Assessing Off icer/TPO for reconsideration. If it is found that there is an amalgamation of Exensys Sof tware Limited and Holool India Limited and formed as one entity viz.,Exensys Sof tware Solutions Limited. during the relevant pr....