TaxTMI 
TaxTMI 
2018 (1) TMI 141
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....is of 10.40% and justified on the basis of the comparables selected by assessee. However, the TPO on a reference from the AO conducted fresh search and bench marked the net operating profit margin at 17.03% after giving 3.78% relief on account of working capital adjustment. The 18 comparable companies selected by the TPO are as under: Sr. No. Name of the Company NCP after WCA% 1. Acropetal Technologies Limited (Seg) 30.09 2. Akshay Software Technologies Limited -0.52 3. C T I L Limited 0.5 4. Evoke Technologies Private Limited 6.22 5. E-Zest Solutions Limited 34.71 6. ICRA Techno Analytics Limited 21.87 7. Igate Global Solutions Limited 21.39 8. Infosys Limited 40.06 9. Kals Information Systems Limited (Seg) 5.29 10. Larsen and Toubro Infotech Limited 16.04 11. Mindtree Limited 8.76 12. Persistent Systems and Solutions Limited 18.77 13. Persistent Systems Limited 23.73 14. R S Software (India) Limited 13.85 15. Sankhya Infotech Limited 9.74 16. Sasken Communication Technologies Limited 24.88 17. Tata Elxsi Limited 10....
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.... 428 Part IV Product Description, Software Development; 4.1.1. It was submitted that he argument of the DRP on consultancy charges is misplaced, as nowhere in the annual report has the company termed this increase as abnormal, in these circumstances there is no reason to doubt that this expense is normal in nature. 4.1.2. Ld. Counsel stated that assessee initially relied on website while objecting before DRP. However, annual report clearly states only software development services. The TPO/DRP have relied only on annual reports for other comparables and not website. Ld. Counsel argued that in light of this inconsistency, company should be retained as comparable. ii. Persistent Systems & Solutions Ltd. (Merged) : 4.2. Ld. Counsel for assessee submitted that this company is engaged in diversified services such as software consultancy, software product development and system integration services, all activities in which the assessee herein is not engaged in. The same is evident from: (i) PB pg. 993, 994 - Focusses on software product development; (ii) PB pg. 1023 - Income from licensing of products; Based on the above, Ld. Counsel prayed that thi....
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....ven challenged the DRP order before the ITAT. The facts of this company is same for AY. 2012-13 and AY. 2011- 12 which is evident from the comparison of the following pages with the order of the Hon'ble DRP for AY. 2012-13; (i) PB pg. 1314, 1336, 1339, 1346 and 1350; Based on the above, Ld. Counsel prayed that this company be rejected as a comparable. 4.4.1. Ld. Counsel relied on the following case law: i. Aleatel Lucent India Ltd., Vs. DCIT (ITA No. 6856/Del-2015) Para (viii) page 46; ii. Symantee Software and Services India Private Limited Vs. DCIT (ITA NO. 614/Mds-2016) Para (12) page 18; 5. It was the submission of Ld. Counsel that after excluding the three companies and retaining only one company i.e., Evoke Technologies Private Limited, the arithmetic mean of assessee-company is more and within the range and therefore, no addition need be made. 6. Alternately, Ld. Counsel submitted that if TPO's 18 comparables are considered approved by the DRP, then, assessee is asking for exclusion of only three companies, which should have been excluded and those are (1 ) Infosys Limited and (2) L&T on turnover basis and (3) Persistent Systems and....
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....d. Counsel placed on record the order of the DRP for AY. 2012-13 in which the DRP excluded Sasken Communication Technologies Limited, wherein it was clearly stated that the said company derives revenue from product and technology licensing and installation and commissioning services along with software services. It is also noted that receipts from software product services is higher than the receipts from software services. Following the Co-ordinate Bench decision in the case of Planet Online Pvt. Ltd., the DRP excluded Sasken Communication Technologies Limited in later year. The facts being same for this year also, the DRP should have excluded this company. We are unable to understand how this company is retained for this assessment year. As far as the objections with reference to Persistent Systems and Solutions Limited it is noticed that the Co-ordinate Bench in earlier year has excluded and further other Co-ordinate Benches also excluded on functionality basis. 9.1. As far as Evoke Technologies Private Limited is concerned, the same company was excluded in later year also by the DRP on which, assessee has not objected. Therefore, that leaves us with no comparables for this y....