TaxTMI 
TaxTMI 
TaxTMI 
2015 (4) TMI 1172
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.... of consumables 1,18,265 TNMM 5 Receipt of loan 1,10,88,000 TNMM 6 Repayment of loan 6,30,709 TNMM Total 31,72,64,609 He therefore made a reference u/s.92CA(1) to the TPO. The TPO thereafter issued notice u/s.92CA(2) of the I.T. Act to the assessee along with a detailed questionnaire to make its submissions/produce documents to support the ALP computed by it in Form No.3CEB. From the various details furnished by the assessee, the TPO noted that the assessee company was incorporated on 10-05-1993 and started its commercial production on 01-01-1994. The assessee Affinity Express (India) Pvt. Ltd., (in short 'AEIPL') is a 100% export oriented unit and is a subsidiary of CVJV. Further, during the F.Y. 2005-06 CVJV has been taken over by Affinity Express Inc, USA (AEXP, USA) and as a result holds 100% in CVJV. AEIPL basically provides 2 types of services to its AE, i.e. Digitizing services and data conversion/creation services. Both the services fall under the ambit of IT enable service. Under the Digitization service, the company is engaged in the business of developing and exporting of computerized embroidery design, emblem, art works, drawings, badges and....
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....y its line of business is completely different but also its FAR is different than that of the assessee and consequently it is not a comparable company for benchmarking international transaction of the assessee. It was argued that M/s. Bodhtree Consulting Ltd. had hived of its e-paper business to its subsidiary company viz., Pressmart Media Ltd. for the year ended March 2007. Since the business of PML is in the field of e-paper which is in the industry of Information Technology Enabled Services (ITES), it would be appropriate to consider the subsidiary company as comparable in the assessee's case which is also in ITES industry. However, the argument of the assessee that M/s. Bodhtree Consulting Ltd. is not functionally comparable was not accepted by the TPO and was retained as a comparable. 6. The assessee brought to the notice of the Ld.CIT(A) the following paragraph in the Director's report in the annual report of the company: "Bodhtree has only one segment, namely software development. Being a software solutions company, it is engaged in providing open and end-to-end web solutions, software consultancy, design and development of solutions, using the latest technologies." 7. T....
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....comparables taken by the TPO in the comparables including M/s. Bodhtree Consulting Ltd. are engaged in similar type of services, i.e. software development and IT related services. Further, the assessee itself has not objected to the comparability of the other 3 comparables viz., M/s. Ace Software Exports Ltd., M/s. C.S. Software Enterprises Ltd. and M/s. Vama Industries Ltd. He submitted that the TPO had rightly included M/s. Bodhtree Consulting Ltd. as comparable. The Ld. CIT(A) without any justifiable grounds has directed the AO to exclude the same from the list of comparables which is not proper. He accordingly submitted that the order of the CIT(A) be reversed on this issue. 11. The Ld. Counsel for the assessee on the other hand strongly supported the order of the CIT(A). He submitted that from A.Y. 2006-07 till date M/s. Bodhtree Consulting Ltd. was never included as a comparable except for the impugned assessment year. Therefore, following the rule of consistency itself, M/s. Bodhtree Consulting Ltd. should be excluded from the list of comparables and the order of the Ld.CIT(A) be upheld. For the above proposition, the Ld. Counsel for the assessee relied on the decision of t....
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....rdingly submitted that the order of the Ld.CIT(A) be upheld. 14. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. The only dispute in the grounds raised by the revenue is regarding the exclusion of M/s. Bodhtree Consulting Ltd. as a comparable which has been included by the TPO as a comparable. We find the Ld.CIT(A) directed the AO to exclude the same from the list of comparables on the ground that M/s. Bodhtree Consulting Ltd. is engaged into software development whereas the assessee company renders IT enabled services. The submission of the Ld. Counsel for the assessee that from A.Y. 2006-07 till date M/s. Bodhtree Consulting Ltd. was never considered as comparable except for the impugned assessment year could not be controverted by the Ld. Departmental Representative. Therefore, we find merit in the submission of the Ld. Counsel for the assessee that following the rule of consistency itself M/s. Bodhtree Consulting Ltd. should be excluded from the list of comparables. Although it is the settle....