2018 (8) TMI 1852

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....venues, thereby seeking exact comparability while searching for comparable companies of the assessee under TNMM method, whereas requirement of law and international jurisprudence require seeking similar comparable companies. Also, the nature of activity, i.e., software development remains the same, irrespective of the company engaged in providing onsite or offshore services. 3. The DRP erred in directing the AO to exclude M/s. Acropetal Technologies Ltd., from the list of final comparables also for the reason that clear segmental information of the employee cost and export earning filter was not available without appreciating that proper segmental information is available on Prowess database as well as audited financials. 4. The DRP erred in directing the AO to exclude M/s. Mindtree Ltd., from the list of comparables holding it to be functionally dissimilar also for the reason that there were extraordinary event of merger when it has not been proved that such merger has any material effect on profit margin. 5. The DRP erred in directing to exclude E-infochips Ltd., from the list of comparables holding that no segmental information is available and that it fails 75% service....

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....own by the Hon'ble Court in the case of Tata Elxsi Limited 349 ITR 98 and exclude communication expenses (dataline charges) from the total turnover also, while computing the deduction u/s 10A of the I.T. Act, without appreciating the fact that there is no provision in section 10A that such expenses should be reduced from the total turnover also, as clause (iv) of the explanation to section 10A provides that such expenses are to be reduced only from the export turnover. 11. The DRP erred in not appreciating the fact that the jurisdictional High Court's decision in the case of Tata Elxsi Limited 349 ITR 98 has not been accepted by the department and an appeal has been filed before the Hon'ble Supreme Court. 12. For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the DRP be reversed and that of the Assessing Officer be restored. 13. The appellate craves leave to add, to alter, to amend or delete any of the grounds that may be urged at the time of hearing of the appeal." 3. The revised grounds raised by the assessee are as under:- "In conformity with Rule 8 of Income-tax Appellate Tribunal Rules, 196....

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....er of the Ld. TPO and the directions of the Ld. DRP erred on facts and law while including Persistent Systems Limited as a comparable whereas the same should have been excluded for the reasons of functional dissimilarity. [corresponding to ground no. 4 (vi)] 11. The Ld. AO in pursuance of the order of the Ld. TPO and the directions of the Ld. DRP erred on facts and law while including Sasken Communication Technologies Limited as a comparable whereas the same should have been excluded for the reasons of functional dissimilarity. [corresponding to ground no. 4 (vi)] 12. The Ld. AO in pursuance of the order of the Ld. TPO and the directions of the Ld. DRP erred on facts and law while excluding Intertec Communications Ltd as a comparable by applying employee cost greater than 25% of total revenue as a comparability criterion. [corresponding to ground no. 4 (vii)] 13. The Ld. AO in pursuance of the order of the Ld. TPO and the directions of the Ld. DRP erred on facts and law while excluding MYM Technologies Ltd as a comparable for having different financial year end (i.e. companies having financial year other than March 31). [corresponding to ground no. 4 (vii)] 14. The Ld. ....

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....uded 10 comparables and the revenue in its appeal is challenging all these 10 exclusions. He submitted that the assessee agrees for inclusion of 3 comparables out of 10 exclusions ordered by DRP and these three comparables are 1) Evoke Technologies Pvt. Ltd., 2) Mindtree Limited (Seg.) and 3) R S Software (India) Ltd. He submitted that the issue regarding exclusion of remaining seven comparables excluded by DRP ad 3 comparables not excluded by DRP but exclusion being requested by the assessee i.e. total 10 exclusions is covered in favour of the assessee by the tribunal order rendered in the case of Commscope Networks India Pvt. Ltd. in IT (TP) A No. 166/Bang/2016 dated 22.02.2017 available on pages 2349 to 2367 of the Case law paper book. He drawn our attention to Para 9 of this tribunal order and pointed out that as per this Para, exclusion of 1) Accropetal Technologies Ltd. (Seg.), 2) E - Zest Solutions Ltd., 3) E - Infochips Ltd., 4) ICRA Techno Analytics Ltd., 5) Infosys Ltd., 6) Larsen & Toubro Infotech Ltd., 7) Persistent System & Solutions Ltd., 8) Persistent Systems Ltd., 9) Sasken Communication Technologies Ltd. and 10) Tata Elxsi Ltd. had been approved by the tribunal. He....

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....hold its exclusion on account of RPT filter. Exclusion of Acropetal Technologies Ltd. (Seg) is covered in favour of the assessee by the same tribunal order rendered in the case of Applied materials India Pvt. Ltd. vs. ACIT (Supra). Respectfully following the same, we uphold its exclusion. Exclusion of 1) e - Zest Solutions Ltd., 2) Infosys Ltd., 3) Larsen & Toubro Infotech Ltd., 4) Persistent Systems & Solutions Ltd., 5) Persistent Systems Ltd., 6) Sasken Communication Technologies Ltd. and 7) Tata Elxsi Ltd. are also covered in favour of the assessee by the same tribunal order rendered in the case of Applied materials India Pvt. Ltd. vs. ACIT (Supra). Respectfully following the same, we uphold the exclusion of these Seven comparables also. Exclusion of E - Infochips Ltd. is covered in favour of the assessee by the tribunal order rendered in the case of Saxo India Pvt. Ltd. vs. ACIT in ITA No. 6148/Del/2015 dated 05.02.2016 Para 10.1 & 10.2 available at pages 221 to 223. Respectfully following the same, we uphold its exclusion. In this manner, we uphold the exclusion of six comparables excluded by DRP out of 9 comparables excluded by DRP and exclude 4 comparables retained by DRP an....