TaxTMI 
TaxTMI 
2015 (4) TMI 147
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....r the Companies Act, 1956. The assessee is registered with Software Technology Park of India (STPI) as 100% EOU. Assessee provides software development services to its clients in various countries including its associated enterprises (AE) overseas. For the AY under dispute assessee filed its return of income on 27/10/2007 declaring total income of Rs. 41,08,995/- after claiming deduction u/s 10A of the Act. The financial results of the assessee for the FY 2006-07 as per the annual report is as under: Discretion Amount Operating Revenue Rs. 45,38,93,898 Operating Cost Rs. 39,19,54,735 Operating profit (PBIT) Rs. 6,19,39,163 Operating Profit to Cost Ratio 15.80% To benchmark the price charged by the assessee for the interna....
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....(OP)/Cost B 125.57% 3 Arms length total sales (AXB/100) C 49,21,77,561 4 Total operating revenues D 45,38,93,898 5 Sales with related parties E 18,29,92,020 6 Sales with unrelated parties (D-E) F 27,09,01,878 7 Arms length price of sales Made to AES (C-F) G 22,12,75,683 8 Adjustment (G-E) H 3,82,83,663 2.1 After receiving the order of the TPO, the Assessing Officer framed the draft assessment order by adding the amount of Rs. 3,82,83,663/-being TP adjustment u/s 92CA of the Act. The Assessing Officer also modified the deduction claimed u/s 10A of the Act by reducing the communication and freight expenses amounting to Rs. 1,47,17,752/- from the export turnover. Being aggrieved of the draft assessment order,....
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....td., 1054/Bang/11 4. Bearing Point Business Consulting Pvt. Ltd., 1124/Bag/11 5. Software India P. Ltd., 1196/H/10 6. Virtusa (India) P. Ltd., 1962/H/11 (ii) The learned Departmental Representative on the other hand supported the order of the TPO/DRP. (iii) We have heard the parties and perused the materials on record. Assessee's contention that aforesaid company is having revenue from both product and services and segment wise data is not available could not be controverted by the department. Further it is seen that the coordinate bench of this Tribunal in case of Sumtotal Systems India Ltd. (supra) following another decision of the coordinate bench in case of Virtusa India (P.) Ltd. (supra) as well as some other rulings of the di....
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....ugh the panel accepting assessee's contention found this company is not to be a comparable, but, ultimately they have retained the same. (ii) The learned Departmental Representative supported the order of the TPO/DRP. (iii) We have considered the submissions of the parties and perused the materials on record as well as the orders of the TPO and DRP. From the materials on record, it is quite evident that the aforesaid company is not comparable to the assessee as the functions are not similar. Further, on a perusal of the order of the DRP, it is to be seen that two of the members of the panel on considering the fact that in many other cases Celestial Labs Ltd., was not treated as comparable on the ground that it is not involved in devel....
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....ight of the orders of the coordinate bench cited before us by the learned AR, we are of the view that both these companies cannot be considered as comparables to the assessee for the reasons stated by the coordinate bench in the cited rulings. Respectfully following the view expressed by the coordinate bench as aforesaid, we direct the Assessing Officer/TPO to exclude the aforesaid companies from the list of comparables. 4. Mega Soft Ltd. (i) Objecting to the aforesaid company, the learned AR submitted that this company cannot be considered as comparable to the assessee, as it is predominantly a product development company and the margin from software development services is only 23.11%. Further, the learned AR submitted that during the y....