TaxTMI 
TaxTMI 
2019 (8) TMI 888
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....oice/fax mail, communications surveillance and recording etc. The assessee is a subsidiary of Comverse Technology Inc USA which holds 99.90% of the capital. The assessee was incorporated in the year 1999 to provide pre-sales support and post sales support services primarily to the customers of Comverse Network Systems Ltd. 2.1 The return of income for the captioned year was filed declaring an income of Rs. 90,00,050/-. Since the assessee's case was covered under the scrutiny category, as per the guidelines of the CBDT, scrutiny proceedings were initiated. Since the assessee had undertaken international transactions during the year, a reference was made to the Transfer Pricing Officer(TPO) u/s 92CA(3) of the Income Tax Act, 1961 (hereinafter called 'the Act') in respect of the following international transactions:- i) Sales and post sales support - Rs. 100,213,264/- ii) Purchase of fixed assets - Rs. 1,021,316/- iii) Cost reimbursement recharges of Expenses paid - Rs. 2,68,177/- 2.2 The assessee had chosen Transactional Net Margin Method (TNMM) as the Most Appropriate Method with OP/TC as the Profit Level Indicator (PLI) and had arrived at a ....
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.... of the Act) and in pursuance of the order passed by the Hon'ble Commissioner of Income-tax (Appeals) ('CIT(A)') under section 250(6) of the Act on the following grounds: Each of the ground is referred to separately, which may kindly be considered independent of each other. That on the facts and circumstances of the case and in law, 1. The Hon'ble CIT(A) has erred in upholding the addition of INR 15,610,332 made by the learned AO / TPO to the total income of the Appellant by confirming the learned AO's rejection of economic analysis undertaken by the Appellant in accordance with the provisions of the Act read with the Income-tax Rules, 1962 ('the Rules'), and modifying the same for the determination of the Arm's Length Price ('ALP') of the Appellant's international transaction to hold that the same is not at arm's length. 2. The Hon'ble CIT (A) has erred in upholding the learned AO's action of not providing an opportunity to the Appellant of being heard before referring the transfer pricing issues to the learned TPO. 3. The Hon'ble CIT (A) / AO has erred in: (a) Using data for a single year instead of multiple year data; and ....
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.... erred in levying interest under section 234B of the Act." 3.0 The Ld. Authorised Representative (AR) submitted that the assessee wanted inclusion of five comparables viz.:- i) CMC Limited ii) FL Smidth Limited iii) Harton Communication Limited iv) Himachal Futuristics Communication Limited v) Powerplant Performance Improvement Limited 3.1 It was further submitted by the Ld. AR that the assessee was praying for exclusion of three comparables viz. TCE Consulting Engineers Limited, Tera Software Limited and Vital Communications Limited. 3.2 The arguments of the Ld. AR vis-a-vis the inclusion of the comparables were as under:- i) CMC Limited The Ld. AR submitted that the assessee had selected this comparable in the transfer pricing study but the same had been excluded by the TPO and the Ld. Commissioner of Income Tax (Appeals) had upheld the exclusion without giving any reasoning. He drew our attention to the impugned order and submitted that no finding had been given by the Ld. Commissioner of Income Tax (Appeals) in this regard. ii) FL Smidth Limited It was submitted by the Ld. AR that the asse....
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....ocessed steel and metal, mining and chemicals and engineering consultancy services which were dissimilar to the services provided by the assessee company. It was also submitted that this company had been held to be functionally dissimilar by the ITAT in assessee's own case for assessment year 2010-11. 2) Tera Software Limited The Ld. AR submitted that this comparable was included by the TPO on the ground that it was functionally similar to the assessee company but this company provided software solutions and services and was focussed on providing egovernance solutions and further this company was engaged in executing various computer literacy projects in schools for state governments. The company was also into trading of various kinds of computer items whereas the assessee was a pre and post sales service provider. It was submitted that this company should be excluded from the final set of comparables. 3. Vital Communications Limited It was submitted that this company was included by the TPO on the ground that this was functionally similar to the assessee company whereas this company provided software solutions and services and also provided e-co....