AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (6) TMI 1039
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....17,82,53,916/-. The return was subsequently revised declaring a total income of Rs. 19,89,23,287/-. The international transaction entered into by the assessee pertained to provision of IT enabled services. The assessee had selected TNMM for computation of Arm's Length Price (ALP) and the ALP computed by the taxpayer was Rs. 50,96,699,481/-. In respect of these services, the assessee had selected seven comparables whose average margin was 19.24% as against the assessee's margin of 15%. Since the margin fell within +/-5% range, the assessee was of the view that the transaction was at arm's length. 2.1 A reference was made to the Transfer Pricing Officer (TPO) who did not agree with the various filters used by the assessee for the transfer pricing study and he used certain more filters and required the assessee to submit the comparables on the basis of new filters. The assessee selected a set of 14 comparables and the TPO, out of the fourteen, accepted nine comparables. The TPO also included two more comparables out of the accepted/rejected matrix. Thus, the TPO selected a final set of 11 comparables whose average margin was 22.26% as against the assessee's margin of 7.14%. The TPO p....
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....e directions of Ld. DRP on rejection of M/s Genesys International Limited from the final comparable set based on the mere premise that the said comparable is considered by the Respondent in its Transfer Pricing ('TP') documents without appreciating the fact that the said comparable is functionally different to the activities carried out by the Respondent and in doing so, also erred in disregarding the judicial precedence that the taxpayer cannot be estopped from rejecting the comparables considered by it in the TP documentation; 4. The Ld. DRP erred in confirming the Ld. AO/ Ld. TPO's approach of determining the arm's length price ('ALP') of the international transactions pertaining to provision of Information Technology ('IT') enabled services. In doing so, the Ld. DRP has grossly erred in: 4.1 disregarding the ALP as determined by the Respondent in the TP documentation maintained by it in terms of section 92D of the Act read with Rule 10D of the Income-tax Rules, 1962 ('Rules') as well as fresh search and in particular modifying/ rejecting the filters applied by the Respondent; 4.2 agreeing with the Ld. TPO's action of holding that only current year (i.e FY 2008- 09) dat....
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....A of the Act read with rule 8D of the Rules. 6.1 The Ld. AO has erred in law and on the facts and circumstances of the case while mentioning that the Respondent has not kept separate books of accounts in respect of expenditure incurred for earning the exempt income; although there is no requirement as such in the Act for the same. 6.2 The Ld. DRP / AO has erred in law' and on the facts and circumstances of the case in ignoring the fact that substantial dividend income is earned from investment in subsidiaries for which no funds has been borrowed by the company and further no management or administration cost is incurred to monitor the same. 6.3 Without prejudice to the above, the Ld. AO has erred in disregarding the fact that the disallowance of Rs. 14,34,861 pertains to the STPI / EOU units of the Respondent and addition made to the income of the Respondent of Rs. 14,34,861 should be entitled for enhanced deduction under Section 10A /1OB of the Act. 7. The Ld. AO has erred in law and on the facts and circumstances of the case in adding notional expenditure of Rs. 14,34,861 per provisions of section 14A of the Act while calculating book profit per section 115JB of t....
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.... cannot be cannot be taken as a comparable to the assessee company. It was also submitted that Genesys was engaged in doing pioneering research in the area of image intelligence and recognition, mobile mapping as well as LIDAR whereas the assessee was not involved in any research and development activity. The Ld. AR also submitted that Genesys operated as a full-fledged risk taking entrepreneur whereas the assessee was a limited risk provider as it rendered services to the customers of the Exl group only and is assured of a specified return on its costs. The Ld. AR also submitted that Genesys had a super normal growth of 77% in terms of total income by sales and 107% in terms of net profit with respect to the preceding assessment year which was evident from the annual report whereas the assessee had only a normal year of operation. It was further submitted that Genesys had significant intangibles in the form of computer software and GIS data base which was evident from the annual report whereas the assessee did not own any significant intangibles and placed leverage only on the valuable intellectual property rights owned by the holding company. It was also submitted that Genesys st....
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.... and the issue had been restored to the file of the TPO/Assessing Officer for fresh adjudication by the ITAT in assessment year 2010-11. 5.1 It was also submitted that deduction u/s 10A/10B of the Act should be allowed on recomputed profits and gains from business and profession if disallowance u/s 14A is upheld. 5.2 The Ld. AR also submitted that in the final assessment order, the Assessing Officer, while computing book profits u/s 115JB of the Act, had made an adjustment of Rs. 14,34,861/- computed u/s 14A of the Act which was not legally tenable. Reliance was placed on the judgment of the Hon'ble Delhi High Court in the case of Pr. CIT vs. Bhushan Steel Ltd. in ITA No. 593/2015 dated 29.09.2015 wherein the Hon'ble Delhi High Court had held that disallowance u/s 14A r/w Rule 8D cannot be added while computing book profits u/s 115JB of the Act. 5.3 Ld. AR also submitted that in case the department's ground challenging exclusion of Genesys International Corporation Ltd. was dismissed, ground nos. 1 to 5 of the assessee's C.O. will become academic in nature and need not be adjudicated upon. 6. In response, the Ld. CIT DR placed reliance on the findings of the TPO and the directi....