TaxTMI 
TaxTMI 
2016 (6) TMI 1271
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....tion 143(3) read with section 144C of the Income-tax Act, 1961 (hereinafter referred to as the "Act") on the following grounds: TRANSFER PRICING 1.The learned AO based on the directions received from Hon'ble Dispute Resolution Panel ("DRP") erred in law and on facts, in upholding the adjustment to the transfer price proposed by the learned Transfer Pricing Officer ("TPO"). 2.The learned AO/DRP/TPO erred in law and on facts by making an addition of Rs. 10,624,431 to the taxable income of the Appellant and in holding that the transactions between the Appellant and its associated enterprise with respect to software research and development services were not at arm's length. 3.The learned AO/DRP/TPO erred in law and on facts by failing to appreciate the fact that associated enterprise of the Appellant incurred losses during the year under contention. This further substantiates the fact that the Appellant has not shifted profits outside India. 4.The learned AO/DRP/TPO erred in law and on facts by failing to appreciate the Appellant's commercial judgment about the application if arm's length principle which is tied to the business realities. 5.The learne....
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....e companies such as Infosys Technologies Limited and Wipro Limited as comparables. ITPO ered d l ani nw foa 15. The learned AO/DRPITPO erred by concluding that the data used by the Appellant for the Transfer Pricing study was not contemporaneous. 16 The learned AO/DRPITPO erred in law and on facts by rejecting usage of multiple year data by the Appellant and using only the current year (i.e. financial year 2006-07) data for computation of arm's length price. 17. The learned AO/DRPITPO erred by ignoring the provisions of Rule 10 of the Rules, international commentaries and judicial pronouncements, which advocate usage of multiple year data of comparable companies for the purpose of determination of the arm's length price. 18. The learned AO/DRPITPO erred in law and on facts by not taking into consideration foreign exchange fluctuation gain/loss and provision for doubtful debts while computing the operating margin of the comparable companies and the Appellant. 19 The learned AO/DRPITPO erred in law and on facts by not providing a relief on account of differences in risk profile of the Appellant and the potential comparables. 20. The learned AO/DRP/TPO erred ....
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....bunal decisions on the issue. 29. Without prejudice, the learned AOIDRP erred in law and on facts in reducing the abovementioned expenses of Rs. 357,922 only from the export turnover and not from the total turnover for the purposes of computing section 10A relief, thereby disregarding various jurisdictional Tribunal and other decisions on the issue. 30. The learned AO/DRP also erred in not relying on the decision of the Special Bench of the Chennai Tribunal in the case of Sak Soft Limited v. ITO (ITA No. 691 & 1953/Mds/2007) wherein it has been held that if the telecommunication, freight and insurance expenses are reduced from the export turnover then the same would also have to be reduced from the total turnover in order to compute the deduction under section 10A. 31. The learned AO has erred, in law and on facts, in charging interest under section 234B and 234C of the Act. The above grounds are independent and without prejudice to each other. For the above and any other grounds, which may be advanced at the time of hearing, your Appellant prays that the order of the learned AO may be please set aside . The Appellant prays for leave to add, alter, amend and / or modify an....
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.... Solutions Ltd. He submitted that in these two cases also, the assessee company was engaged in the software development services as in the present case and therefore, these two Tribunal orders are squarely applicable to the present case and hence, these 15 comparables, as per these two Tribunal orders should be excluded in the present case. 6. The ld. DR of the revenue supported the orders of the authorities below. 7. We have considered the rival submissions. We find that in the present case, it is noted by the TPO on page no.2 & 3 of his order that the assessee company is engaged in rendering services to the AE relating to designing of integrated circuits and the testing of integrated circuits along with customer support. It is also noted by the TPO that the international transactions are mainly of Rs. 15,03,62,370/-for software services apart from re-imbursement of expenses of Rs. 21.45 lacs and 22.61 lacs. In the case of M/s Hewlet Packard (Ind.) Software Operation Ltd.(Supra) also, the international transaction included mainly the services rendered as software development services of Rs. 5854.51 lacks. Similarly, in the case of M/s Meritor LVS India (P) Ltd., (Supra) also....
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....ld be excluded in addition to other 11 comparables, which were directed to be excluded as per Tribunal order in the case of M/s Hewlet Packard (Ind.) Software Operation Ltd., (Supra). We therefore, direct the AO/TPO to exclude 14 comparables including 11 comparables as per Tribunal order in the case of M/s Hewlet Packard (Ind.) Software Operation Ltd., (Supra) and three comparables as per Tribunal order in the case of M/s Meritor LVS India (P) Ltd., (Supra), as noted above. One comparable M/s Megasoft Ltd., should be considered for inclusion as per its segmental results only. The AO/TPO should pass necessary order as per law and as per above discussion after providing an opportunity of being heard to the assessee. These four grounds are disposed of in this manner. 8. Regarding Corporate Tax issue raised by the assessee as per ground No.25 to 30, it was submitted that this issue is covered in favour of the assessee by the judgment of the Hon'ble jurisdictional High Court rendered in the case of M/s Tata Elxsi Ltd., (349 ITR 98). 9. The ld. DR of the revenue supported the orders of authorities below on this issue. 10. We have considered the rival submissions. We find that in....
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....argin of the final comparable companies pursuant to the directions issued by the DRP to verify and carry out necessary rectification in relation to the above. 5.That on the facts and circumstances of the case and in law, the AO/TPO have erred in arbitrarily rejecting certain comparable companies considered by the appellant for benchmarking its international transaction relating to software development services and have further erred in not including the said comparable companies in conformity with the directions issued by the DRP. 6. That on the facts and circumstances of the case and in law, the AO/TPO have erred in arbitrarily including certain comparable companies for computing the arm's length price in relation to the software development services and have further erred in not excluding the said comparable companies in conformity with the directions issued by the DRP. 7. That on the facts and circumstances of the case and in law, the AO has erred in holding that the broadband charges are attributable to the delivery of computer software outside India and should be reduced from the export turnover while computing the deduction under sec.10A of the Act. 8. That on the....
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....sales is less than 1 Crore by stating that they may not lead to a proper comparability as these companies may not be representing the industry trend. 7. The Hon'ble DRP has erred to appreciate that more the comparable low cost/sales base makes their results unreliable. 8. The Hon'ble DRP has erred in relying on the decision of Hon'ble High Court of Karnataka in the case of CIT Vs M/s Tata Elxsi Ltd., wherein the legislature intentionally included the definition of Export Turn Over and did not include definition of Total Turn Over for the purpose of computation of deduction u/s 10A. Moreover, the decision of the Hon'ble High Court has not been accepted by the department and further appeal before Hon'ble Supreme Court has been filed, which is pending for decision. 9. The Hon'ble DRP erred in directing the AO to exclude the expenditure incurred by the assessee towards telecom lease line expenditure and travel expenses from both export turnover and total turnover for the purpose of computation of deduction u/s 10A of the IT Act. The appellant craves leave to add, alter, amend and/or delete any of the grounds mentioned above". 13. At the very outset, it was submitted by t....
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....of the Hon'ble Delhi High Court rendered in the case of M/s ESPN Star Sports Mauritius S.N.C. ET Compagnie (Now known as Ess Adventuring (Mauritius) S.N.C. ET Compagnie in W.P (c) 2384/2015 & CM NO.4277/2015 dated 23-03-2016 and submitted a copy of this judgment. He also placed reliance on the Tribunal's order rendered in the case of M/s Lionbridge Technologies Ltd., Vs DCIT in ITA No.1041/Mum/2015 dated 29-05-2015. 15. Learned DR of the revenue submitted in reply that this is not a fact that the A.O. in his final order has disregarded the directions of DRP. He pointed out that as per the final assessment order, the A.O. says in para 4.4 that DRP has confirmed the draft assessment order. He submitted that under these facts, it should be held that there is an apparent mistake in the final assessment order and the same is rectifiable u/s 154 and therefore, the matter should be restored to the A.O. for passing the rectification order. 16. We have considered the rival submissions, material available on record and various judgments cited by the learned AR of the assessee. There is no dispute that as per the directions of DRP, some comparables were to be excluded and some were to b....