TaxTMI 
TaxTMI 
2015 (11) TMI 1723
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....s engaged in rendering of research, design and development services to ATI Canada in connection with the development of consumer technologies. ATI Technologies has entered into research and development agreement with ATI Canada and ATI Barbados dated April 2005. 2.2 AMD Group was founded on 1st May 1969 by a group of former Fairchild semiconductor executives. The AMD group began as a manufacturer of logic chips, and entered the RAM chip business in 1975. AMD US is a part of the AMD Group, based out of Sunnyvale, California, United States. AMD US develops computer processors and related technologies for commercial and consumer markets. The main products of AMD US includes microprocessors, motherboard chipsets, embedded processors and graphics processors for servers, workstations and personal computers, and processor technologies for handheld devices, digital television, and game consoles. Some of the platforms and technologies developed by AMD Group are - AMD chipsets: AMD Live; AMD Quad FX Platform; Commercial Platform; Desktop Platforms; Embedded systems; Flash technology and Mobile platforms. 2.3. During the relevant FY, assessee as per 3CEB report, disclosed the following inte....
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....es for the purpose of calculating ALP of international transactions. Similarly, DRP has also excluded M/s Mind Tree, as this company had extraordinary events like mergers and acquisitions during the year. By considering the various orders of ITAT, DRP directed TPO to exclude such companies which had extraordinary events like mergers and acquisitions. Accordingly, TPO/AO was directed to exclude the said three companies from the list of comparables finally selected by TPO. 3.2 DRP considered the submissions of assessee as against variable cost of depreciation among various comparable companies vis-à-vis the assessee. Since, assessee estimated the life span of the assets to 3 years and 5 years, depreciation cost risen very high whereas in the comparable cases, it is very less and total average comes to 5.18% whereas the percentage of depreciation to the total cost in the assessee came to 11.35%. DRP has accepted assessee's contention by considering the decisions of coordinate benches at Hyderabad, which are listed below: 1. M/s BA Continuum India Pvt. Ltd. 2. Market Tools Research Pvt. Ltd. 3. M/s Qualcore Logic Ltd. 3.3 AO had given effect to the above directions of DR....
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....RP was not justified in directing the TPO to consider PBIT/Cost as the PLI without appreciating the fact that eliminating the depreciation on assets like building from the Cost without eliminating the alternative expenditure like rent paid for the building taken on lease from the cost would be prejudicial." 6. In short, revenue is in appeal before us against allowing the depreciation to be part of variable cost among various comparable companies and direction of DRP to AO for excluding Infosys, L&T and Mindtree as comparables. 7. Ld. DR submitted that DRP is not correct in excluding three companies i.e. L&T, Infosys and Mindtree as the same are functionally comparable. 8. Ld. AR submitted that use of higher turnover filter has an impact on the comparables. He relied on the following case laws: 1. E-gain Communication Pvt. Ltd. (ITAT Pune) 2. Quark Systems Pvt. Ltd., (ITAT Chandigarh) 3. Aginity India Technologies (ITAT Delhi) 4. Deloittee Consulting P. Ltd. (ITAT Hyderabad 5. Genesys Integrating Systems IP Ltd., (ITAT Bangalore) 9. We have heard both the sides and perused the material on record as well as the decisions cited by ld. AR. 9.1 The issue of capping of upp....
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....le companies 1. Avani Cimcon Technologies Ltd. 0.16 2.74 5.73% 2. CAT Technologies Ltd. 0.92 7.21 12.80% 3. Com-U-Learn Tech India Ltd. 0.93 11.93 7.77% 4. E-Infochips Bangalore 0.79 24.98 3.15% 5. Evoke Technologies Pvt. Ltd. 0.15 9.16 1.68% 6. E-Zest Solutions Ltd. 0.38 8.48 4.50% 7. Kals Information Systems Ltd. (Seg.) 0.10 1.79 5.51% 8. Kuliza Tech 0.22 7.87 2.78% 9. Persistent Systems 32.50 386.97 8.40% 10. Persistent Systems & Solutions Ltd. (merged) 0.24 5.99 3.98% 11 RS Software (India) Ltd. 7.12 147.28 4.83% 12 Sasken Communication Technologies Ltd. 21.29 334.89 6.36% 13 Tata Elxsi Ltd. (segmental) 14.85 288.11 5.15% 14 Thinksoft Global Services Ltd. 1.28 67.04 1.91% 15 Zylog Systems Ltd. 28.42 660.65 4.30% Average deprecation rate 5.26% Table showing depreciation policy of the comparable companies and the appellant Sl.No. Particulars Remarks A1E AMD Research & Development Centre India Pvt. Ltd. Depreciation at an accelerated rate i.e. higher than the rate prescribed as per Schedule XIV to the Companies Act, 1956. 1. Avani Cimcon Te....
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....r of AO in arriving TP adjustment at Rs. 5,72,74,207 without giving opportunity to assessee for such TP adjustment and finalizing the assessment order, assessee is in appeal before us raising the following grounds of appeal: "1. On the facts and in the circumstances of the case and in contrary to law, the final assessment order ('the Order') issued under section 143(3) read with section ('r.w.s.') 144C of the Income-tax Act, 1961 ('the Act') by Learned Deputy Commissioner of Income-tax, Circle 1(1), Hyderabad ('Ld. AO') dated 19 January 2015 is bad on facts and in law; void-ab-initio, infructuous and is liable to be quashed as the said order is in violation of section 144C(10) of the Act, in so far, as it is contradictory to and ignorant of the directions issued by the Hon'ble Dispute Resolution Panel ('DRP'). 2. On the facts and in the circumstances of the case and in contrary to law, the Ld. AO erred in making transfer pricing ('TP') adjustment of Rs. 5,72,74,207,the order of the Ld. AO is erroneous to the extent of not incorporating the binding directions of the Hon'ble DRP while finalizing the order under section 143(3....
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....ies that were functionally not comparable, have abnormal profits, have peculiar economic circumstances/extraordinary situations, have significant intangibles, have high on-site development expenditure, have research and development activities, holds significant inventory, as compared to the Appellant: i) Comp-U-Learn Tech India Limited; ii) Kals Information Systems Limited; iii) Sasken Communication Technologies Limited; iv) Tata Elxsi Limited; v) Persistent Systems Limited; vi) E-Infochips Bangalore Limited; vii) E-Zest Solutions Limited; . viii) Evoke Technologies Private Limited; ix) Kuliza Technologies Private Limited; x) Mindtree Limited 6.5 The Ld. AO/Ld. TPO erred and the Hon'ble DRP further erred in upholding the order of the Ld. AO/Ld. TPO in using non contemporaneous data and substituting the same with Appellant's analysis and further erred in not considering proviso to Rule 10B( 4) of the Rules by not applying the multiple-year data while computing the margin of comparable companies so selected, on his own conjectures and surmises. 6.6 The Ld. AO/Ld. TPO erred and the Hon'ble ORP further erred in upholding the order of the' L....