AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (12) TMI 1071
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....and apply the clear directions of Hon'ble DRP and grossly erred on facts and in law by not rejecting EInfochips Limited from the final set of comparable companies. 4. Ld.TPO/A.O. failed to appreciate and apply the clear directions of Hon'ble DRP and grossly erred on facts and in law by not rejecting Acropetal Technoloiges Ltd. from the final set of comparable companies. 5. Ld.TPO/A.O./DRP erred on facts and in law in making an upward adjustment of arm's length price of the Appellant's international transactions with its A.Es. 5.1. Ld.TPO/A.O./DRP erred on facts and in law in rejecting the applicability of functional filters applied in the search process by the Appellant and challenged the same. 5.2. Ld.TPO/A.O./DRP erred on facts and in law in concluding that the Appellant bears various risks without providing any logical justification of the same. 5.3. Ld.TPO/A.O./DRP erred on facts and in law in not demonstrating the basis for concluding that the comparability analysis conducted in the TP Report of the Appellant is inappropriate and inadequate. 5.4. Ld.TPO/A.O./DRP erred in disregarding the provisions of law by considering data only for financial year 2....
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.....Whether on the facts and circumstances of the case and in law, whether the order of the Ld. DRP was right in not appreciating the functional analysis of comparable based on the TP study, submission made by the assessee and information available in public domain. 3. Whether on the facts and circumstances of the case and in law the Ld. DRP was right in rejecting Infosys Technologies Ltd. as a being an industry giant. 4.That the order of the Ld. DRP is erroneous and is not tenable on facts and in law. 5. That the appellant craves leave to add, alter, amend or forgo any ground(s) of appeal either before or at the time of hearing of the appeal. 2. Brief facts of case are as under: Assessee filed its return of income on 19/09/11 declaring total income of Rs. 2,03,120/-. The return was processed under section 143(1) of Income Tax Act, 1961 (the Act) and case was selected for scrutiny. Notice under section 143(2) was issued along with questionnaire and notice under section 142 (1) of the Act to assessee. In response to statutory notices, Representative of assessee appeared before Ld.AO and filed details as called for. 2.1. Ld.AO observed that assessee was incorporated on 30/....
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....cted certain comparables, finalised list of 11 comparables with average margin of 24.30% by using OP/TC as PLI. 2.7. Ld.AO, thus computed arm's length price of international transaction undertaken by assessee at Rs. 25,48,01,757/-, thereby making adjustment of Rs. 1,83,28,563/-. 3. Aggrieved by order of Ld.TPO, assessee preferred objections before DRP. Only objection raised before DRP was in respect of comparables finally considered by Ld.TPO. DRP upon verifying relevant details filed by assessee, directed Ld.TPO to verify 'Wipro Technology Services Ltd', and to exclude, 'Infosys Technologies Ltd'. 3.1. Ld.AO thus passed impugned final assessment order wherein 'Wipro Technology Services Ltd' was retained, excluded 'Infosys Technologies Ltd' and computed adjustment at Rs. 1,52,76,175/-. 4. Aggrieved by final assessment order passed by Ld.AO, assessee is in appeal before us now. 5. Ld. Counsel submitted that Ground No. 1, 2 are general in nature and therefore do not require any adjudication. Ld.Counsel submitted that Ground No. 4-5.5, 5.7, 5.10-5.12 are not pressed, as per directions of assessee. 6. Accordingly these grounds are dismissed, as 'not pressed'. 7. Ld.Counsel subm....
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....tandards followed by its AE. It is observed that qualitycontrol activities involved establishing and enforcing minimum standards to ensure that inferior goods/services are not sold to consumers. This process involves testing and analysing finished products/services. Quality-control can be perused by employing combination of automated quality-control equipment and qualified inspectors. In TP study it has been recorded that assessee is responsible for day-to-day project management and end deliverables with respect to modules of software being developed by it, and technical personnel performance test with software that has been developed. Assessee also maintains and generates documentation for the codes. 8.II. Assets employed: In TP study, at page 999 of paper book volume 3, it is submitted that assessee owns routine assets like furniture fixtures, office equipment, computers etc. It is also recorded that assessee does not own any intangibles, and does not undertake any research and development on its account, that leads to development of non-routine intangibles. Assessee uses trademarks, processes know-how and technical data software operating/quality standards etc., developed an....
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....nt and ITES services which includes maintenance and information technology considered consultancy is a part of the services rendered by assessee to its AE. He submitted that the comparables selected is only having one segment which is software development and the revenue generated under the segment is about 86% which satisfies the filters. 11. We have perused submissions advanced by both sides in the light of records placed before us. 11.1. From Schedule of income at page 182 of paper book volume 1, wherein break-up of revenue earned by this company, during year is listed, it is observed that this company receives revenue from software development, hardware maintenance, information technology consultancy, information technology services. It is also observed that this company provides customised software development services for PC embedded devices and mobile to cater typical customers from consumer electronics, health care, automotive and surveillance industry. It is observed that this company is into sale of products which is evident from page 147 of paper book. On perusal of annual report placed in paper book it also appears that this company is into hardware designing and has ....
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....echnology Services Ltd., was held by Citi Corp. Banking Corporation, USA upto 20th January, 2009. Wipro Ltd., parent company of which executed agreement with Citi Group Inc., for acquiring Citi Technology Services Ltd., now called Wipro Technology Services Ltd. On 21.1.2009, Wipro Ltd. signed master agreement with Citi Group Inc., for delivery of Technology Infrastructure Services and application development and maintenance services for the period of six years, which also includes year under consideration. This shows that income from software development support and maintenance services was earned by Wipro Technology Services Ltd., from Citi Group Inc., by means of master service agreement entered into between Wipro Ltd., its parent company and Citi Group Inc., a third person. 13.4. It is observed that issues raised by Ld.CIT,DR in respect of comparability of this comparable has been dealt with by coordinate bench of Delhi Tribunal in Saxo India Pvt.Ltd vs. ACIT (supra) as under: "We have noticed above from the language of Rule 10B(1)(e)(ii) that it is the net profit margin realized from a comparable uncontrolled transaction, which is considered for the purposes of benchmarking....
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....s that the transaction of earning revenue from software development support and maintenance services by Wipro Technology Services Ltd., is an international transaction because of the application of section 92B(2) i.e., there exists a prior agreement in relation to such transaction between Citigroup Inc. (third person) and Wipro Ltd. (associated enterprise). In the light of this structure of transaction, it ceases to be uncontrolled transaction and, hence, Wipro Technology Services Ltd., disqualifies to become a comparable uncontrolled transaction for the purposes of inclusion in the final list of comparables under Rule 10B(1)(e)(ii). We, therefore, direct removal of this company from the list of comparables." 13.5. Respectfully following the same, we direct exclusion of this company from final list of comparables. 14. Now coming to comparable that was excluded by Ld.TPO, ld.TPO has rejected the company on account of different financial year ending vis-a-vis the assessee. The ld.AR submitted that companies whose financial data was available for relevant period, were considered in view of rule 10 D (4), which provides that information to be used must be contemporaneous. The Ld.AR ....
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.... by Coordinate Bench of this Tribunal in the case of DCIT vs. McKinsey knowledge Centre India Private Limited in ITA No. 2195/Del/2011, wherein it has been held that if a company is functionally comparable, it cannot be rejected merely on ground that, data for entire financial year was unavailable, in case data can be reasonably extrapolated. This Tribunal further observed that Rule 10 B (4) cannot be interpreted in such a rigid manner so as to defeat its basic objective. The relevant extract of the ruling are reproduced below: " 23. ..... However, in our considered opinion, if a comparable is functionally same as that of the tested party then the same cannot be rejected merely on the ground that data for entire financial year is not available. If from the available data on record the results were financial year can be reasonably extrapolated, then the comparable cannot be excluded solely on this ground. The learn ADR as referred to rule 10 B (4) which only mandates that the data which is to be utilised for analysing the comparability of uncontrolled transactions with an international transaction, has to be financial year only in which the international transaction has been enter....