TaxTMI 
TaxTMI 
2018 (4) TMI 638
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....xpedient and necessary" to refer the matter to the Ld. Transfer Pricing Officer ("TPO") for computation of the arm's length price as is required under section 92CA(1)of the Income Tax .Act.1 961 "(Act"). 3. That on facts and circumstances of the case and in law, the Ld. AO/TPO/and DRP erred in making an addition of Rs. 8,72,16,303/- by recomputing the arm's length price of the international transactions under section 92CA (3) by: 3.1 Re-computing the net margin of Appellant as the tested party under TNMM by considering Retention bonus of Rs. 3,32,24,931/- as an 'operating expense' even though 4/5 of said expenditure has been disallowed as 'capital expenditure' under section 37of the Act. 3.2 Wrongly computing the margin of comparable companies selected by him. 3.3. Rejecting the comparables selected by the Appellant on the basis of additional/modified quantitative filters on surmises which lack valid and reasonable basis; 3.4 The Ld.DRP erred in setting an arbitrary norms for fixing the filter on account of filter of related party transactions (RPT) for the purpose of selecting comparable entities. 3.5 The Ld.TPO/AO/DRP have err....
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....ving the allowance of Rs. 10,78,032 i.e. 1 /5th of the disallowance made on account of Recruitment & Training expenditure in A.Y. 2008-09, being expenses to be amortized over period of five years. 6.2. That on the facts and circumstances of the case and in law, the Ld. AO erred in not giving the allowance of Rs. 42,03,697 i.e. 1 /5th of the addition made on account of Retention Bonus in A.Y. 2008-09, being expenses to be amortized over period of five years. 7. That on facts and circumstances of the case and in law, the Ld. AO/ Ld. TPO/Ld. DRP erred in selecting the current year (i.e. financial year 2008-09) data for comparability despite the fact that at the time of preparation of Transfer Pricing Documentation by the Appellant, the complete data for financial year 2008-09 was not available within the public domain 8. The Ld. AO erred in determining interest u/s 234B and 234C of the Income Tax Act. The Appellant craves leave to add, to alter, rescind and modify all or any of the afore-stated grounds of appeal or produce further documents, facts and evidence before or at the time of hearing of this appeal. For the above and any other grounds which may be r....
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....rescribed under Section 92D of the Act read with Rule 10D of the Income Tax Rules, 1962. The TPO vide order dated 30.01.2013 proposed to make an adjustment of Rs. 11,48,86,737/- to the taxable income of the assessee. A draft Assessment order u/s 144C dated 20.03.2013 was passed. The assessee preferred objections before the Dispute Resolution Panel (DRP). The DRP issued certain directions and final Assessment Order was passed on 09.01.2014 after incorporating the directions of the DRP. The Assessing Officer made addition of Rs. 8,72,16,303 towards the Transfer Pricing Adjustment. The Assessing Officer made further addition on account of Recruitment & training for Rs. 49,77,837/- and Retention bonus for Rs. 3,32,24,931/-. 4. Being aggrieved by the Assessment Order u/s 143(3) read with Section 144C of the Income Tax Act, the assessee filed the present appeal. 5. The Ld. AR submitted that ground No. 3.1 has to be dismissed as the same has been taken elaborately in Ground No. 5. Thereafter, Ld. AR submitted that Ground No. 3.9 regarding working capital profile, the assessee is only contesting working capital profile and not that of risk profile. Therefore, Ground No. 3.9 will be c....
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....tracts. However, in Assessment Year 2008-09, the share of this activity in the total turnover was only 1.54%. As regards Thirdware Solutions Ltd. the same deals with sale of licenses Software, Services Export and Revenue from subscription. Thus, the Thirdware Solutions is not exclusively dealing with the Software Services. Infact, the TPO himself stated that majority of expenses are in the form of Software Service Charges and Salaries, but he has not considered exact expenses for the Software Charges and Salaries. This has not come up from the annual report to deal with the assessee company as a comparable as there is no segmental results provided by the said company. Thus, we direct the TPO/A.O to exclude this comparable as it is not having similar functions to that of the assessee company and also there is no segmental record given in the annual report of that company. Thus, we partly allowed Additional Ground No. 1. 8. As regards Additional Ground No. 2 read with Original Ground No. 3.2 regarding operating foreign exchange fluctuation, the Ld. AR submitted that in the Assessment Year 2008-09, the same issue has been dealt by the Tribunal in assessee's own case being ITA No. 6....
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....gaged in providing software development services to its group companies and to arrive at ALP of the international transactions, the ld. TPO/DRP resorted to comparability by selecting different sets of comparable companies and after applying the various filters, the ld. TPO selected 10 comparable companies as mentioned in para 8.7 of his order, the appropriate transfer pricing adjustment can only to be made qua the international transaction undertaken by the assessee company during the year under assessment on the basis of its comparability vis-à-vis comparable companies, by providing working capital adjustment to the assessee in view of the provisions contained under Rule 10B(1)(e) also. So, we are of the considered view that the matter is required to be restored to the TPO to provide the assessee company the benefit of working capital adjustment for transfer pricing adjustment." Thus, the issue is squarely covered by the order of the Tribunal. We therefore, restored the issue to file of the TPO/AO, after providing reasonable opportunity to the assessee by following principle of natural justice and decide the issue on merit. Therefore, Ground No. 3.9 is partly allowed for....