TaxTMI 
TaxTMI 
2017 (11) TMI 1057
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.... fulfilled the arm's length principles laid down in Chapter X of the Income-tax Act. 3. The learned Commissioner of Income-tax (Appeals) LTU erred in rejecting the comparables with less than 15 per cent. of related party transactions upon the total turnover since the said limit of 15 per cent. cannot be held to be significant to influence the profitability of the comparables. 4. The learned Commissioner of Income-tax (Appeals) LTU erred in holding that the comparables with even a single rupee related party transactions have to be rejected inasmuch as a single rupee transaction can never impact the profitability and consequently cannot also impact the comparability. 5. The learned Commissioner of Income-tax (Appeals) LTU erred in choosing not to apply the decision of the honourable Income-tax Appellate Tribunal Bangalore Bench (binding on the Commissioner of Income-tax (Appeals) LTU) in the case of Genisys Integrating Systems (India) (P.) Ltd. to Visual Soft Technology (a comparable company) and therefore ought to have rejected the same since the turnover of the said comparable company is Rs. 185.43 crores falling in the first category of Rs. 1 to Rs. ....
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....Thirdware Solution Ltd. Geometric Software Solutions Co. Ltd. and Flextronics. 11. The learned Commissioner of Income-tax (Appeals) erred in not dealing with the submissions of the appellant in respect of super profits filter applied in the case of Exensys Software Solutions Ltd. and Thirdware Solutions Ltd. 12. Having regard to the fact that the appellant had in specific raised a ground with respect to risk adjustments in ground No. 25, although not separately argued during the course of the hearing, the learned Commissioner of Income-tax (Appeals) LTU ought not to have accepted the Transfer Pricing Officer's/Assessing Officer's decision in this regard. 13. The learned Commissioner of Income-tax (Appeals) erred in not allowing the adjustment of +/- 5 per cent. to the international transactions as per the proviso to sub-section (2) of section 92C as it then stood. 14. The learned Commissioner of Income-tax (Appeals) erred in not accepting the appellant's contention that expenditure incurred in foreign currency need not be reduced from export proceeds from the export of computer software in computing the deduction under section 10A sin....
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.... and page 183." Supplementary/additional grounds of appeal "1. That the learned Joint Director (Transfer Pricing)-II/Assessing Officer erred in rejecting the appellant's plea to exclude companies incurring more than 3 per cent. of the total sales on research and development from the list of comparable companies in determining the arm's length price. 2. That the learned Joint Director (Transfer Pricing)-II/Assessing Officer ought to have rejected Flextronics Software Systems Limited as a comparable company since the expenditure incurred on research and development by that company was 6.9 per cent. as per the finding of the Transfer Pricing Officer himself on page 183 of the Transfer Pricing Officer's order dated October 13, 2008." 4. In its cross-appeal, the Revenue has raised the following grounds of appeal before us : "1. The learned Commissioner of Income-tax (Appeals) has erred in disallowing the Assessing Officer's action of excluding Rs. 11,40,000 insurance expenses in foreign currency from the export turnover for providing services outside India. 2. The learned Commissioner of Income-tax (Appeals) has erred in allowing....
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.... margin, etc., ipso facto does not lead to the conclusion that a company which is otherwise comparable on FAR analysis can be excluded. It was observed by the hon'ble High Court that the Transfer Pricing Officer tried to iron out the effect of such events on the profitability margin and price of the comparable which are otherwise functionally similar to the assessee. Further the Bench also pointed out that the Tribunal is now adopting the 25 per cent. RPT filter and 15 per cent. RPT filter depending upon the availability of comparables, following the decision of the Tribunal in the matter of Deputy CIT v. ACI Worldwide Solutions (P.) Ltd. (I. T. (TP) A. No. 262/Bang/2015, dated July 26, 2017). On account of application of 25 per cent. RPT filter, several comparables will be available which were earlier deleted on account of 0 per cent. RPT filter. These comparables are required to be examined on the FAR analysis and therefore, in our view, the entire transfer pricing issue is required to be remitted back to the file of the Transfer Pricing Officer. On this, the learned authorised representative had agreed. However, the learned Departmental representative has submitted that the ....