TaxTMI 
TaxTMI 
2015 (10) TMI 2647
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....ssee company, which is wholly owned subsidiary of Virtusa Corporation, USA (with 99.99% shareholding) is engaged in providing software development services primarily to it's A.E. The assessee has two software development centers in Chennai and Hyderabad, both of which are registered under the STPI scheme of Government of India as 100% export oriented units. It filed its return of income for the relevant assessment year and as per the 3CEB Report, the A.O. noticed that the assessee has entered into international transactions with it's A.E. 2.1. The A.O. therefore, referred the determination of the arms length price ("ALP") of the international transactions to the TPO under section 92CA of the I.T. Act. The financials of the taxpayer i.e.,....
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....tems & Solutions Ltd., (Merged) 14. R S Software (India) Ltd., 15. Sasken Communication Technologies Ltd., 16. Tata Elxsi Ltd., (Seg.) 17. Thinksoft Global Services Ltd., 8. Zylog Systems Ltd., 19. Persistent Systems Ltd., 2.2. The assessee submitted its objections to the comparable companies selected by the TPO. However, the TPO rejected the assessee's contentions and proceeded to compute the average margin of the comparables at 22.69% by adopting TNMM as the most appropriate method. Thereafter, after making the working capital adjustment, the adjusted arms length margin was arrived at 21.74% and arrived at the shortfall of Rs. 13,05,57,916 under section 92CA of the Act. 2.3. Based on the....
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.... ground No.7 is consequential in nature and ground No.8 is premature. As regards the other grounds, he has submitted that the assessee is not pressing any of the other grounds seriously except ground No.3 and particularly the inclusion of e-Infochips Bangalore Ltd., only. 4. Taking the same into consideration, we proceed to decide as to whether e-Infochips Bangalore Ltd., is comparable to the assessee. It is the contention of the assessee that while the assessee is into only providing software development services to it's A.E., e-Infochips Bangalore Ltd., is functionally different as it is engaged in rendering of both I.T. and ITES Services. He has submitted that the financials of e-Infochips Bangalore Ltd., also does not give segmental ....
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....p of the income from software development and I.T. enabled services. Further, from the information provided by the assessee before us as is available in the Ministry of Corporate Affairs, Government of India, e-Infochips Bangalore Ltd., is in the status of "amalgamated" during the relevant financial year. This information is fresh information which was not available before the authorities below. For the sake of clarity and ready reference, the information relating to this company which is reproduced by the TPO in his order at page 36 and the information produced by the assessee company before us at pages 10 and 11 of the paper book filed by the assessee before us are reproduced hereunder respectively for ready reference. "(Page 36 of the....
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....e, it is not possible to give the quantitative details of sales and certain other information as required under paragraph 3.4C and 4D of part-II of Schedule-VI to the Companies Act, 1956. In view of the above, the contention of the taxpayer is rejected and the company is retained as a comparable." (Page 10 and 11 of the paper book filed by the assessee) "16. Segment Information : Information about Primary Segments : 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 issued by mandatory Accounting Standards prescribed in Companies (Accounting Sta....
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.... Appeal) 7. Coming to the Revenue's appeal against the directions of the DRP to exclude Infosys Technology Ltd., L & T Infotech Ltd., and Tata Elxsi Ltd., from the final list of comparables, we find that the DRP has directed that these companies to be excluded on the ground of functional dissimilarity. The assessee has relied upon the decision of this Tribunal in assessee's own case for the A.Y. 2007-08 wherein the Tribunal has directed that Infosys Technology Ltd., be excluded from the list of comparables on account of functional dissimilarity and owning of significant intangibles and brand value. As regards L & T Infotech Ltd. is concerned, this Tribunal has directed that L & T Infotech Ltd., be excluded as segmental data is not availa....