TaxTMI 
TaxTMI 
2018 (6) TMI 1568
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....r scrutiny and notice u/s 143(2) of the Act was issued and served on assessee on 07.09.2012. Thereafter, notice u/s 142(1) of the Act along with questionnaire was issued and served on the assessee. AO noticed that during the year under consideration, assessee had entered into international transactions with its Associated Enterprises (A.Es) aggregating to Rs. 28,13,74,447/- which falls within the ambit of Secs.92A and 92B of the Act. He therefter made a reference u/s 92CA(1) of the Act to the Transfer Pricing Officer (TPO) for determining the Arms Length Price (ALP). 3. Thereafter, TPO/AO passed order u/s 92CA(3) of the Act vide order dt.19.01.2015 wherein he did not accept the bench marking of the international transactions done by the assessee with it's A.Es. TPO proposed upward adjustment of Rs. 2,48,67,246/- in respect of international transactions relating to software development and technical support by the assessee to its holding company Redknee Inc. Thereafter, a draft assessment order was passed by the AO u/s 143(3) r.w.s. 144C(1) of the Act vide order dt.20.02.2015 and the total income was determined at Rs. 2,48,71,230/-. Aggrieved with the adjustment of Rs. 2,48,67,24....
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....w and on the facts and in circumstances of the case in selection of outlier company viz. E Infochips Limited. 5. Non-consideration of Risk adjustment to the Appellant The learned DCIT, pursuant to the directions of the Hon'ble DRP has erred on the facts and in circumstances of the case in non-granting risk adjustment to the Appellant. 6. Transfer pricing adjustment without giving benefit of +/- 5 per cent The learned DCIT has erred in law and on the facts and in circumstances of the case in not granting the benefit of +/- 5 percent as per proviso to section 92C(2) of the Act. 7. Initiation of penalty proceedings The learned DCIT, erred on the facts and in law in proposing to initiate penalty proceedings section 271 (1)(c) of the Act, without considering the facts of the case. 8. Levying of interest 15.1 The learned DCIT, has erred on the facts and In law by levying interest under sections 234B and 234C of the Act. 15.2 The Appellant pleads that the shortfall in advance tax and excess refund has resulted in view of the transfer pricing adjustment which have been objected in the grounds above. ....
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....sessee directed to exclude Larsen & Tourbo Infotech Limited, Mindtree Limited and Infosys Technologies Limited from the list of comparables and directed inclusion of EInfochips Ltd. The TPO/AO thereafter, following the directions of DRP, computed the Arms Length Price (ALP) of international transactions and determined the revised TP adjustment at Rs. 1,71,78,297/-. Aggrieved by the order of TPO, assessee is now in appeal before us. 6. Before us, the Ld.A.R. reiterated the submissions made before AO/TPO & DRP and further with respect to inclusion of E-Infochips Limited as comparable by DRP, submitted that E-Infochips Limited has been wrongly considered to be a comparable with the assessee. He submitted that E-Infochips Limited not only provides software services but is also engaged in manufacturing and trading of printed circuit electronic boards and for which no segmental data is available. He further submitted that the business activity of EInfochips Limited is mainly in the nature of product designing. On the other hand, he submitted that assessee does not undertake any research and development and hence, E-Infochips Limited cannot be compared with the assessee company. He fur....
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.... thereafter submitted that Hon'ble Mumbai Bench of the Tribunal in the case of Ness Technologies (India) Private Limited Vs. DCIT for A.Y. 2011-12 in ITA Nos.696/Mum/2016 and IT(TP)A No.1006/Mum/2016 dt.11.11.2016 has given finding that EInfochips Limited, apart from providing software development services is also engaged in selling software products, manufacturing EVM and VDB Electronic Boards and all the activities being considered as single reportable business segment, it is an undertaking in IT enabled services and cannot be compared to a concern engaged in rendering pure software development services and accordingly directed its exclusion. He therefore submitted that E-Infochips Limited be excluded from the list of comparables. He thereafter submitted that if the E-Infochips Limited is excluded from the comparable companies, the margins of the assessee will fall within + 5% range as compared to the margins of comparables and therefore the international transactions will be at Arms Length Price and in such a situation, no adjustment to ALP would be made and therefore the adjudication of other grounds would not be necessary. 7. Ld.D.R. on the other hand, pointed to the findin....