TaxTMI 
TaxTMI 
2016 (2) TMI 931
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....ispute Resolution Panel - (a) E-Infochips Bangalore ltd. (b) Kals information Systems ltd. (c) Tata Elxsi Ltd.(Srg) 3. Facts of the case in brief are that the assessee company, engaged in the business of software development and export services, filed its return of income on 25.9.2010 admitting a total income of Rs. 2,71,72,072 under normal provisions and Rs. 2,35,78,050 under S.155JB. During the course of assessment, the assessee furnished a report in Form No.3CEB in accordance with the provisions of S.92E, according to which the assessee had international transactions with its associated enterprises. The Assessing Officer therefore, made a reference to the Transfer Pricing Officer as per the provisions of S.92CA for determination of Arm's Length Price. The Transfer Pricing Officer, in the course of his transfer pricing study selected eighteen comparables and arrived at the Arithmetic Mean Margin of OP/TC of the comparables post working capital adjustment at 20.59% in the following manner- Name of the Company selected OP/OC % 1. Avani Cimcon Technologies Ltd., - 2.34 2. CAT Technologies Ltd., - 6.83 3. Evoke Technologies Pvt Ltd.,....
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.... submissions and perused the impugned orders of the lower authorities and other material on record. As noted hereinabove, the only grievance of the assessee in this appeal is against the inclusion of the following companies in the list of comparables, for the purposes of determining the Arm's Length Price. (a) E-Infochips Bangalore ltd. (b) Kals information Systems ltd. (c) Tata Elxsi Ltd.(Seg) Admittedly, comparable nature of the above three companies in similar circumstances, has come up for consideration before this Tribunal in the case of Pegasystems Worldwide India Pvt. Ltd., Hyderabad (ITA No.1758/Hyd/2014 of the assessee & ITA no.1936/Hyd/2014 of the Revenue for the assessment year 2010-11, wherein the Tribunal has accepted the objections of the assessee in that case against the inclusion of the above three companies, after discussing the same in para 8, para 10 and para 12 of its order dated 16.10.2015, extracted below- E infochips Bangalore Ltd., : 8. This company is selected by TPO even though Assessee objected to the same (vide page 34 and 35 of the order of TPO). Assessee objected that the information for FY. 2009-10 was n....
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....omparable was rejected on the basis of lack of segmental information. Assessee relied on para 10 of the Coordinate Bench order, which is as under: "Para 10 - 'With respect to E-Infochip Bangalore Ltd., we find that in the annual accounts of the company, with respect to the segment information it is stated that the company is primarily engaged in software development and I.T enabled services which is considered the only reportable business segment as per Accounting Standard AS-17 "segment reporting" prescribed in Companies (Accounting Standard) Rules, 2006. We thus find that no segmental information is available ..........................Considering the aforesaid facts, we are of the view that the aforesaid two companies needs to be excluded while working out the comparability analysis and therefore uphold the plea of the Assessee in excluding the margins of the aforesaid 2 companies". 8.2. Ld. DR, however, referred to the extracts made by TPO in the order to submit that Assessee is a comparable company with that of Assessee. 8.3. After considering the rival contentions and perusing the annual reports placed on record, we are of the opinion that this compa....
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....elopment of software and software products since its inception'. The company consisting of STPI unit engaged in development of software and software products and a training centre engaged in training of software professionals on on-line projects. This indicates that company is engaged in development of software and products and its inventory also indicates that Assessee has been using its readymade libraries for sales. This company was rejected in earlier year on functional analysis by ITAT in the case of Planet Online Pvt. Ltd., in ITA No. 464/Hyd/2014 where in it was held that company is engaged in development of software products. Since its annual report states the same facts in this assessment year also, we are of the opinion that the company cannot be selected as a comparable as it was engaged in development of software and software products. Accordingly, Assessee's objections are accepted and AO is directed to exclude the company." "Tata Elxsi Ltd (Seg): 12. Before TPO, Assessee contended that the above said company is functionally different as it specialized in embedded software development technology. It was also objected before TPO that in earlier year th....