TaxTMI 
TaxTMI 
2015 (10) TMI 1077
X X X X Extracts X X X X
X X X X Extracts X X X X
...., and the against the provisions of law which is liable to be set aside. 2. On the facts and in the circumstances of the case & in law, the order of deleting the addition of Rs. 53,23,591/- on account of upward adjustment of Arm's Length Price of the Internation Transaction ignoring the facts that...... (a) The upward adjustment was made by the TPO based upon the date of Comparables. (b)The CIT(A) has simply accepted the contention of the assessee without discussing the relevant date based on M/s Datamatics Technologies Ltd. and Infotech Enterprises Ltd., for which he has directed to exclude the names of these companies to arrive at the mean of OP/TC Ratio. (c) The CIT(A) has not established that the above two ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... also made a detailed analysis of international transactions. The respondent assesseecompany had adopted Cost Plus Method (CPM) as the most appropriate method for determining the arm's length price. The international transactions entered into by it are at arm's length. Due to availability of reliable data, the respondent assessee-company has made itself as the tested party, i.e., assessee's operating profit margin over the cost has been compared with the margin of other comparable companies in India engaged in similar function. The operating profits to total cost was adopted as the profit level indicate ("PLI"). In the transfer pricing study, the respondent assessee-company had chosen the following 12 comparables and their weighted average ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the respondent assessee-company and chosen his own comparables, which are as follows: Name of the company Adjusted OP/TC% Ace Software Exports Ltd. 11.66% Allsec Technologies Ltd. 2.79% Datamatics technologies Ltd. 30.93% Genesys Internation Corp. Ltd. 29.45% Infotech Enterprises Ltd. 26.65% Karvy Consultants Ltd. 8.03% MCS Ltd. 1.62% Max Healthscribe Ltd. 1.77% Ask Me Info Hub Ltd. (-)6.28% Average OP/TC 11.85% The TPO computed the Arm's length price as follows: "13. COMPUTATION OF THE ARM'S LENGTH PRICE (ALP): In the manner discussed above, the arithmetic mean of operating profit over the total cost margins of the comparables for the financial year 2001-0....
X X X X Extracts X X X X
X X X X Extracts X X X X
....011 deleted two comparables chosen by TPO i.e. (1) Datamatics Technologies Ltd, and (2) Infotech Enterprises Ltd. on the ground that these parties had substantial related party transactions. The relevant paragraph of the CIT(A)'s order is reproduced below: "I have carefully considered the facts and submissions filed by the appellant. After considering the facts, documentary evidences placed on records and arguments presented by the AR, I am satisfied that the two comparables used by the TPO i.e. 1) Datamatics Technologies Ltd.; and 2) Infotech Enterprises Limited have substantial related party transactions and therefore cannot be used for determination of arms's length price of the international transaction. Hon'ble ITAT has held in the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ther hand, the ld. Authorized Representative relied upon the order of the CIT(A). 10. We heard the rival submission and perused the material on record. The CIT(A) deleted the two comparables, namely, M/s Datamatics Technologies Ltd. and Infotech Enterprises Ltd. on the ground that these companies had substantial related party transactions. The provisions of Section 92 provides that income arising from international transaction is to be computed having regard to ALP. Section 92F(ii) defines "arm's length price" to mean a price which is applied or proposed to be applied in a transaction between persons other than associated enterprises, in uncontrolled conditions. To compute ALP the results of the international transaction are benchmarked ....