AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (9) TMI 1669
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....d product like Cycle Management Solutions. It is the holding company of Delmia Corporation, USA. The assessee was established as 100% export oriented Unit registered under STPI. It is mainly engaged in the provision of software developer and other related services primary to its group companies. The international transactions reported in the Audit Report in Form 3CEB by the assessee during the year were as under :- International transaction Value (Rs) Software development and consultancy 33,60,14,698 Recovery of expenses 1,28,87,202 Purchase of software licenses 31,88,736 3. Assessee had shown its net margin on OP/OC at 15.29% in the following manner :- Particulars Amount (INR) Operating Income 34,32,61,561 Operating Costs 29,77,30,334 Operating Profit (Op. Income -Op. Expenses 4,55,31,227 Operating Net margin (OP/TC) 15.29% To benchmark its margin, the assessee carried out Transfer Pricing analysis by selecting Transactional Net Margin Method (TNMM) as most appropriate method and searched for uncontrolled comparables by using "prowess" and "Capitaline Neo Data base". The assessee selected fol....
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.... 2 Thinksoft Global Services Limited 15.83% Thereafter, DRP gave direction to give adjustment for working capital. After giving effect to the DRPs direction, the computation of Arm's length Price was determined in the following manner :- Description Amount (INR) Arm's length Mean Margin 24.32% Price charged in international transactions 34,32,61,561 Operating Cost 29,77,30,334 Operating Profit on Costs 4,55,31,227 Arm's Length Margin based on DRP directions 24.01% Revised Arm's Length Price 36,92,15,387 Transfer Pricing Adjustment as per directions 2,58,53,826 6. Before us, the Ld. Counsel submitted that most of the comparables are either not objected to or have been accepted by the assessee. Out of the 13 Final Comparables, the assessee is only challenging six comparables before us, namely: S/No. Company Name Unadjus- Ted Mar- Gins FY 08-09 as per TPO Order As per DRP Director Based on Assessee's Arguments for rejection Unadjus- ted Adjusted as per AO order 1 Bodhtree Consulting Ltd 62.27% 62.27% 63.08% Fluctuating Margin & Func....
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....rs, we find that in AY 2008-09, the Tribunal has rejected the assessee's contention for excluding the said comparable and directed the AO to include the said comparable after observing and holding as under :- "We gave heard both parties and perused and carefully considered the material on record. Admittedly, there is no disputing the fact that the assessee had never objected to the inclusion of this company in the set of comparables in earlier proceedings before the TPO and the DRP. It is also seen that even in the grounds of appeal raised before us, the assessee has not raised any grounds challenging the inclusion of this company in the list of companies. In fact in the assessee's own case for Assessment Year 2007-08, this company was selected as a comparable by the assessee itself. We, therefore, find no merit in the contentions raised by the learned Authorised Representative of the assessee in respect of this company at this stage of proceedings. It is also seen from the submissions made before us that the assessee has only pointed out fluctuating margins in the results of this company over the years. This, in itself, cannot be reason enough to establish differ....
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....ble party for comparing the profit ratio from product and services. Thus, on these facts, we are unable to treat this company as fit for comparability analysis for determining the arm's length price for the assessee, hence, should be excluded for the list of comparable portion". As can be seen from the extracts of the Annual Report of this company produced before us, the facts pertaining to Tata Elxsi have not changed from Assessment Year 2007-08 to Assessment Year 2008-09. We, therefore, hold that this company is not to ... Per contra, the General Departmental Representative supported the stand of the TPO in including company in the list of comparable". Thus, there being no material change in facts, we direct the AO not to include Tata Elxi Ltd in the list of comparables sand accordingly, the assessee's plea on this issue is accepted. 9 Infosys Technologies Limited (Infosys) :- Before us, the Ld. Counsel submitted that the Infosys company has been directed to be excluded from the list of comparables due to various reasons and accordingly, in this year also the same should be excluded, to which Ld. DR admitted that in the earlier years this has been excluded....
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.... the Assessing Officer to reject the said company from the final list of comparables. 11. Larson & Toubro Infotech Limited. :- Before us, the Ld. Counsel submitted that this company cannot be held to be comparable for the reason that it has a huge turnover of more than Rs. 1,950 crores, whereas the assessee's turnover is only Rs. 34.23 crores. Thus, on this ground alone this company cannot be held to be comparable. On the other hand, the Ld. DR strongly relied upon the order of the TPO as well as DRP. 11.1 After considering the submission and on perusal of the material on record, we find that L&T Infotech Ltd. have huge turnover of Rs. 1,905.83 crores which itself proves that the Assets deployed and Risks assumed are quite different as compared to the assessee. In the case of Airbus Operation India P Ltd in ITA No. 35/Bang/2014, the Tribunal has rejected this comparable on the ground of turnover only. That apart, it is seen from the records that L&T is mainly engaged in product development, infrastructure management services along with software development services. There are no segmental informations in respect of such activities in the 'public domain'. Thus, on all these....