AI Drafter 
TaxTMI 
TaxTMI 
2020 (6) TMI 154
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....ent towards the ALP at Rs. 3,57,69,069/-. In accordance with the TPO order, the AO proposed the draft assessment order dated 24.03.2014 proposing an addition of Rs. 3,57,69,069/- towards TP adjustment and also an addition of Rs. 6,78,371/- being the disallowance from out of the head repairs to computers and other equipment on the ground that the same cannot be allowed as revenue expenditure. Aggrieved, the assessee preferred its objections to the DRP. The DRP granted partial relief by excluding two companies i.e. M/s Infosys Technologies Ltd and L&T Info Ltd. on the filter of high turnover and brand value, while it confirmed the other companies taken by the TPO. Against the relief granted by the DRP, the Revenue is in appeal before us and against the confirmation of the balance of the draft assessment order, the assessee is in appeal before us. The assessee has raised the following grounds of appeal: Grounds of Appeal for ITA No.400/Hyd/2015: Based on the facts and circumstances of the case and in law, the learned Assessing Officer ("AO") / learned Transfer Pricing Officer ("TPO") and the Hon'ble Dispute Resolution Panel ('DRP') erred in: TRAN....
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.... Technologies Private Limited; b) Computing the net margins of CAT Technologies Ltd by excluding Advertisement expenses written off considering it as inoperative expenses. c) Not allowing unallocable cost in the computation of net margins for the following: i) Kals Information Systems Ltd (Seg); and ii) Tata Elxsi Ltd (Seg). Foreign Exchange Loss 7. Not appreciating the fact that foreign exchange loss of Rs.l,30,72,615 is an extraordinary item for the year and hence adjustment should be provided for the same. Negative working capital adjustment 8. Making a negative working capital adjustment without appreciating the fact that the company does not bear any working capital risks. Adjustment for risk differences 9. Not adjusting the net margins of the comparable companies taking into account the functional and risk differences between the international transaction of the Appellant and the comparable companies in accordance with the provisions of Rule 10B(1)(e). CORPORATE TAX ISSUES 10. Disallowing the expenditure incurred towards maintenance and replacement of computer parts and....
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....panies also. 7. The learned DR, however, objected to the admission of the additional ground stating that the objections of the assessee are on factual aspects of the comparable companies which were never taken before the AO/TPO or before the DRP and therefore, they cannot be taken at this point of time. In support of this contention, he placed reliance upon the decision of the Hon'ble Karnataka High Court in the case of Pr. CIT Bangalore vs. Softbrands India (P) Ltd reported in (2018) 94 taxmann.com 426 (Karnataka) and the decision of the Hon'ble Andhra Praesh High Court in the case of CIT vs. Begum Noor Banu reported in (1993) 69 Taxmann 565 (A.P). 8. The learned Counsel for the assessee however, submitted that the decisions relied upon by the learned DR are distinguishable on facts and since Transfer Pricing analysis itself is factual, the additional ground raised by the assessee is also factual and the Tribunal being the final fact finding authority, the Tribunal may admit the same and adjudicate the said ground. 9. Having regard to the rival contentions and the material on record and particularly the admissibility of the additional ground and the decisions reli....
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....find that the assessee has selected 21 companies its TP study, out of which TPO has accepted 7 companies as comparables. Thereafter, the TPO conducted an independent study and arrived at 19 companies as comparable including the above 7 companies taken by the assessee. These 7 companies include not only Persistent Systems Ltd. and Sasken Communication Technologies Ltd. but also Zylong Systems Ltd. and Mind Tree Ltd., which were also selected by the assessee in its TP Study. Out of the total 19 companies selected by the TPO, now before us, only 5 companies are accepted by the assessee. Out of the balance 13 companies, the DRP has directed exclusion of two companies i.e. Infosys Ltd and L&T Infotech Ltd on the ground of high turnover as well as brand value. 12. We have gone through the T.P order and also DRP's directions and have also considered the argument of the learned Counsel for the assessee that most of these companies are not comparable to the assessee in the light of the various decisions of the Tribunal in similar cases. We find that the assessee has returned a margin of 9.02% as against the average margin of the final comparables adopted by the TPO at 22.69%. It is the c....