TaxTMI 
TaxTMI 
2017 (9) TMI 1642
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....the Affidavit explaining the cause of delay of 3 days. It has been explained by the assessee that the Director of the assessee was out of India during the period and when he came back there was Saturday and Sunday & therefore the appeal could be filed only on Monday i.e. 8.4.2014. The learned Authorised Representative of the assessee has pleaded that delay of 3 days is neither intentional nor wilful but due to the circumstances which were beyond the control of the assessee. 4. The learned Departmental Representative has though objected the condonation of delay however has not disputed the fact that out of 3 days there were Saturday and Sunday. 5. We have considered the rival submissions as well as the relevant material on record. The assessee has explained the cause of delay due to the on-availability of Director who was in US during the month of March and April and return only on 4.4.2014. We are satisfied that the assessee had a reasonable cause for not presenting the appeal within the period of limitation. Hence we condone the delay of 3 days in filing the appeal. 6. The assessee has raised the foliowing grounds : 1. passing the Order which is bad in law. 2. passing the ord....
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....Rs. 16,733/- interest under section 234D. 7. The only issue raised by the assessee in this appeal is regarding Transfer Pricing Adjustment and comparables selected by the Transfer Pricing Officer (TPO). The assessee provides software development services and customer support service to its Associated Enterprises (AEs). The income of the assessee from software development services was reported at Rs. 20,89,72,949 and from customer support services was reported at Rs. 2,88,40,357. The TPO accepted the international transactions in customer support service segment at arm's length therefore the dispute in this appeal is only regarding the TP Adjustment in the software development services segment. The assessee selected 21 companies in its TP Study having 14.13% mean margin and claimed its international transactions at arm's length. The TPO rejected the TP Study Analysis of the assessee and carried out a fresh search and finally selected 11 comparable companies as under: Sl. No. Company Name Operating Margin on cost WC Adjusted margins as per TPO 1 KALS Information Systems Ltd. 13.89% 16.64% 2 Akshay Software Technologies Ltd. 8.11% 11.55% 3 Bodhtree Consulting Lt....
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....entative has submitted that the decision of the Tribunal in the case of another assessee cannot be taken as a precedent in the matter of TP without an independent FAR analysis of each and every case. Thus he has contended that the comparability of the companies has to be decided on the basis of independent FAR analysis of each assessee and therefore the earlier order cannot be applied without exercise of FAR analysis. The learned Departmental Representative has further contended that in the case of Persistent System Limited, the Tribunal in the case of Fair Isaac India Software (P.) Ltd. (supra) has took the IPR as a reason whereas the value of the intangible is only about Rs. 1 Crore whereas the turnover of the said company is Rs. 530 Crores therefore, the intangible owned by the said company is insignificant and will have no impact on the margins. He has relied upon the orders of the authorities below. 11. We have considered the rival submissions as well as the relevant material on record. We find that in the case of Fair Isaac India Software (P.) Ltd. (supra), the TPO has selected an identical set of 11 companies for the purpose of determining the ALP of the said company. Thus ....
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....se of Ameriprise India (P.) Ltd. (supra) while confirming the finding of the Tribunal has held in para 4 as under: '4. The ITAT has in the impugned order noted the fact that the foreign exchange gain earned by the assessee is in relation to the trading items emanating from the international transactions. Since the foreign exchange loss directly resulted from trading items, it could not be considered as a non-operating loss. Further, it is noted by the Dispute Resolution Panel that the service agreement between the AE and the assessee stated that for the specified products and services provided by the assessee, it shall raise invoices on Ameriprise USA on the basis of a cost plus pricing methodology. The ITAT was therefore right in holding that the Assessing Officer was not justified. In considering the foreign exchange loss as a non- operating cost.' Accordingly, we direct the TPO/A.O. to consider the foreign exchange profit/loss arising from the export of services as operating in nature. As a matter of principle of consistency and parity this has to be considered as operating in nature in the case of comparables as well. 16. The revenue has raised the following grounds ....
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....gh working capital adjustment. He has relied upon the decision 31.08.2015 of the co-ordinate Bench of this Tribunal in the case of ARM Embedded Technologies (P.) Ltd. v. Dy. CIT [2015] 64 taxmann.com 445 (Bang. - Trib.) and submitted that the Tribunal after considering all the facts and relevant details of the revenue of this company have reached to the conclusion that this company is functionally comparable and cannot be excluded merely on the ground of working capital adjustment exceeded 4%. He has further pointed out that in the other income of this company a major part is on account of foreign exchange gain and therefore the interest income is very less in comparison to the revenue from operations of this company which is more than Rs. 92 Crores. He has relied upon the decision of the co-ordinate Bench of this Tribunal in the case of ARM Embedded Technologies (P.) Ltd. (supra). 21. We have considered the rival submissions as well as the relevant material on record. At the outset, we note that the TPO initially proposed to include this company in the set of comparables however this company was rejected by the TPO on the ground that the working capital adjustment of this company....
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....rs 543,310 Profit on sale of fixed assets 6,276,773 Exchange gain (Net) 26,536,978 Miscellaneous income 10,000 35,738,801 We cannot say that the 'other income' arose out of any financial services done by the assessee and would take away the sheen of its software services income. The amount, in our opinion, was insignificantly small and not enough to warrant a conclusion that its operating margins had come not from its core operational activities." It is clear from the details and facts as considered by the coordinate bench of this Tribunal that the revenue from the software services of this company was more than Rs. 92 Crores in comparison to the other income of Rs. 35 lakhs. Further the major part of the other income is on account of foreign exchange gain and not interest income. Therefore this contention of the ld. DR that this company is not functionally comparable is not supported by the relevant facts of this company when this company is satisfying the filter of revenue from the software development services applied by the TPO. Following the earlier order of this Tribunal in the case of ARM Embedded Technologies (P.) Ltd. (supra), we do not fi....