TaxTMI 
TaxTMI 
2016 (8) TMI 1161
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....nt, without appreciating the fact that the direction actually amounts to setting aside of the draft order, which is beyond the mandate given to DRP vide provisions by Section 144C(8). 3.On the facts and in the circumstances of the case, the Dispute Resolution Panel erred in directing the TPOI AO to exclude the comparables M/s ICRA Techno Analytics Ltd.; M/s KALS Information Systems Ltd.; M/s Infosys Ltd.; M/s Persistent System Ltd.; M/s Sundaram Business Services Ltd.: M/s HCCA Business Services Pvt. Ltd.; M/s Killick Agencies & Marketing Ltd., mainly on basis of other cases for other FYs, without considering the facts discussed by the TPO for selection of the comparables in the case of assessee, without appreciating the fact that these are qualifying the qualitative and quantitative filters applied by the TPO. 4.On the facts and in the circumstances of the case, the Dispute Resolution Panel erred in directing the TPOI AO to exclude the comparables M/s Tata Elxsi Ltd., without appreciating the fact that the selection of comparables in a case depends on assessee specific FAR analysis and this is functionally comparable company which qualifies all the qualitative and quantitati....
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....g documentation of the Appellant 3.1 The Honorable DRP and the learned TPO has erred in law and on facts in rejecting the Transfer Pricing ("TP") documentation which has been prepared by the Appellant in the manner as contemplated under the relevant provisions of the Act and the Income-tax Rules, 1962 ("the Rules"). 3.2 The Honorable DRP has erred in law and on facts in upholding the learned TPO's finding that there are defects in the Appellant's determination of arm's length price and in holding that the transfer pricing study undertaken by the Appellant is "unreliable or incorrect", under section 92C(3) of the Act. 3.3 Pursuant to the above grounds, the Honorable DRP and the learned TPO have erred in law and on facts in undertaking a new search and arriving at a fresh set of comparable companies for benchmarking the transactions. 4. Use of multiple year data The Honorable DRP and learned TPO have erred in law and on facts in rejecting the use of multiple year data, without considering that the past year data had an influence on the determination of arm's length price and that the Appellant had considered contemporaneous data available at the time wh....
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....ropriate risk adjustments to the margins of the com parables. 6.2 The Honorable DRP has erred in law and on facts in upholding the learned TPO's action of incorrect application of the principles of working capital formula prescribed by the Organization for Economic Cooperation and Development ("OECD") and the United Nations Practice Manual for Developing Countries Model Convention to carry out working capital adjustment to the operating profit margins of the comparable companies. 6.3 The Honorable DRP has erred in not directing the learned AOITPO to rectify the errors made in computing the working capital adjustment. Corporate tax matters 6.4 The Honorable DRP / learned AO has erred, in law and on facts, in granting credit under section 115JAA of the Act amounting to Rs. 6,023,724 after computing surcharge and education cess on the tax payable. 6.5 The Honorable DRP / learned AO has erred, in law and on facts in not including surcharge and education cess as part of the credit under section 115JAA of the Act. 6.6 The learned AO has erred on facts, in holding that the Appellant was granted a refund of Rs. 2,356,520, whereas the actual refund granted was Rs. 1,663,0....
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.... that para-37 of the judgment is relevant. 9. Regarding M/s Sundaram Business Services Ltd., he submitted that this company is having negative margin as per TPO also of 10.65% and therefore, he has no objection if this comparable is reinstated by allowing the appeal of revenue on this issue. 10. Regarding assessee's appeal in respect of M/s Informed Tech. India Ltd., he submitted that the asseSsee is not pressing for exclusion of this company. 11. Regarding M/s Accentia Tech. Ltd., he submitted that this issue is covered in favour of the assessee by the Tribunal order rendered in the case of M/s Novo Nordisk India Pvt. Ltd., in IT(TP)A No.146(Bang)/2015 and he pointed out that para-30 to 33 of the Tribunal order are relevant. 12. He further submitted that the assessee is requesting for inclusion of one comparable i.e. M/s Microland Ltd. and he submitted that this company had profits in the earlier two years and incurred a loss only in the financial year 2009-10 and therefore, this company is not incurring persistent losses and therefore, this should not be excluded. He has drawn our attention to para-983,989 & 990 of the paper book containing annual report of this compa....
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....before DRP on page-239 of the paper book was to re-consider the margin of this company at 9.58% but the DRP suo-moto excluded this company. We find that on page-14 of its order, it is noted by the DRP that as per the note H to Schedule-15 in regard to revenue recognition that the company in addition to software services also earns income from licensing of products, royalty on sale of products, income from maintenance contract etc., It is also noted by the DRP that there is no segment information available for sale of software services and product. In the light of these facts, it was held by DRP that this company should be excluded from the list of final comparables. Under these facts, we find no infirmity in the order of the DRP for directing exclusion of this comparable. Accordingly, appeal of the revenue in respect of this segment i.e. software development segment is dismissed. 19. Now we take up the second segment i.e. ITES segment. In this segment, the TPO has adopted10 comparables out of which DRP has rejected 4 comparables for which the revenue is in appeal before us and the assessee is in appeal for exclusion of one comparable i.e. M/s Acentia Technologies Ltd., and inclu....
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.... Ltd. Regarding this comparable, we find that this is noted by the DRP on page-24 of its order that only 36.91% of the turnover is from exports and therefore, this company is failing 75% export earning filter since both sides agreed that this filter i.e. 75% export earning filter should not be applied, we reverse the order of DRP on this comparable and hold that this comparable company i.e. M/s Sundaram Business Services Ltd., should be reinstated as a comparable. Accordingly, the appeal of the revenue regarding this segment is partly allowed. 24. Regarding this segment i.e. ITES, the assessee is seeking exclusion of one comparable i.e. M/s Acentia Technologies Ltd., and it has been stated that this issue regarding this company is covered in favour of the assessee by the Tribunal order rendered in the case of M/s Novo Nordisk India Pvt. Ltd., (Supra). Since the ld. DR of the revenue could not point out any difference in facts, by respectfully following this Tribunal order, we hold that this company should be excluded from the list of final comparables. 25. Regarding this segment, the assessee has also raised a ground for exclusion of M/s Informed Technologies Ltd. but in cour....