TaxTMI 
TaxTMI 
2020 (12) TMI 1110
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..../- with respect to the international transactions rendered by the taxpayer u/s 92CA of the Income-tax Act, 1961. 2. The learned AU/learned TPO/Hon'ble DRP erred in rejecting the TP documentation maintained by the Appellant by invoking provisions of sub-section (3) of 92C of the Act. 3. The learned AU/learned TPO/Hon'ble DRP erred in rejecting comparability analysis carried in the TP documentation and in conducting a fresh comparability analysis by introducing various filters while determining the Arm's Length Price ("ALP"). 4. The learned AU/learned TPO/Hon'ble DRP erred in not considering the previous two years financial data of the comparable companies while determining the ALP. 5. The learned AO/learned TPO/Hon'ble DRP erred in applying different financial year ending filter while selecting the comparable companies, thereby not considering the fact that the relevant data for the concerned financial year could be deduced from the corresponding financials 6. The learned AU/learned TPO/Hon'ble DRP erred in applying export earning filter of 75% instead of 25% of the total sales, leading to a narrower comparable set....
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....rs in the computation of working capital adjustment: a. by not providing the basis of computation of margin of the Appellant b. in considering the wrong SBI PLR while computing the working capital adjustment 14. The Hon'ble DRP erred in directing the learned AO to consider forex gain or loss as operating in nature while computing the margin of the Appellant. 15. The learned AO/learned TPO/Hon'ble DRP erred in not allowing appropriate adjustment towards to the risk differential existing between the Appellant vis-à-vis independent comparable companies. 16. The learned AO/learned TPO/Hon'ble DRP has erred in levying interest under section 234B of the Act. 17. The learned AO/learned TPO/Hon'ble DRP has erred in levying interest under section 234C of the Act. The appellant craves leave to add, alter, rescind and modify the grounds herein above or produce further documents, facts and evidence before or at the time of hearing of this appeal. For the above and any other grounds which may be raised at the time of hearing, it is prayed that necessary relief may be provided." Brief facts of the c....
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....ggrieved by proposed adjustment, assessee raised objections before DRP. DRP in para 2.9, 2.10, 2.11, 2.12, 2.15, 2.16 directed Ld.AO to exclude Datamatics Global Services Ltd, Genesis international Corporation Ltd, ICRA Techno analytics Ltd, Infosys Ltd, Sasken Communications Technologies Ltd, Spry Resources India Ltd., from final list of comparables. However, in the conclusion DRP ultimately held that a larger set of comparable takes care of the differences between the comparables as compared to be smaller set selected based on strict comparability and accordingly held the comparables selected by Ld.TPO to be appropriate. 9. Ld.AO on receipt of DRP directions passed final assessment order making transfer pricing addition in hands of assessee at Rs. 3,55,53,274/-. Aggrieved by order of Ld.AO, assessee is in appeal before us now. 10. At the outset, Ld.AR submitted that, assessee wishes to restrict its argument in respect of following 5 comparables raised in ground 10 and ground 11 for exclusion: Genesis international services Ltd ICRA Techno Analytics Ltd Infosys Ltd Larsen and Toubro Infotech Ltd Persistent Systems Ltd. 11. He submitted that, in the event....
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....assessee for exclusion have been considered by Coordinate bench of this Tribunal in case of AMD India Pvt. Ltd vs ITO reported in (2020) 114 taxmann.com 703. He submitted that, assessee therein, has also been characterised to be rendering contract software development services to its AE. It has also been stated that, functional profile of assessee present appeal and that in decision cited by Ld.AR are same, and following is relevant observations therein: "8. The learned counsel for the brought to our notice a decision of the ITAT Bangalore Bench in the case of CGI Information Systems & Management Consultants (P.) Ltd. v. Asstt. CIT [2018] 94 taxmann.com 97 wherein 4 out of the aforesaid five comparable companies viz., (a) Genesys International Corpn. Ltd. (b) Infosys Ltd., (c) Larsen and Toubro Infotech Ltd. and ( d) Persistent Systems Ltd. were excluded by the ITAT. The functional profile of the Assessee in this appeal and that of the Assessee in the decision cited by the learned counsel for the Assessee is the same. The following were the relevant observations of the Tribunal:- "28. The learned counsel for the Assessee submitted before us that the comparability ....
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....ing company and engaged in development and sale of software products and also owns intangible assets and therefore not comparable with a software development service provider such as the Assessee in that case. (b) Larsen & Toubro Infotech Ltd., was excluded from the list of comparable companies by relying on the decision of the Delhi Bench of ITAT in the case of Saxo India (P) Ltd. v. ACIT (2016) 67 taxmann.com 155 (Del-Tri). The discussion is contained in paragraphs 4.8 to 4.10 of the Tribunal's order. The Tribunal held that L & T Infotech Ltd., was a software product company and segmental information on SWD services was not available. The Tribunal also noticed that the appeal filed by the revenue against the tribunal's order was dismissed by the Hon'ble Delhi High Court in ITA No.682/2016. (c) Persistent Systems Ltd., was excluded from the list of comparable companies on the ground that this company was a software product company and segmental information on SWD services was not available. The Tribunal in coming to the above conclusion referred to the decision rendered by ITAT Delhi Bench in the case of Cash Edge India (P.) Ltd. v. ITO ITA No.64/Del/....
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....one segment viz., GIS based services and therefore there is no requirement of segmental reporting. It was also submitted that this company owns substantial intangibles equivalent to 10.42% of its total turnover. 32. The TPO however has regarded this company as a comparable company by observing that this company develops software for mapping and geospatial services and operates a few development centres in India. The company is predominantly into software development services. The intangibles in the possession f the company are only the GIS database which is only depreciation. It does not add significant value to the company. 33. The objections as put forth before the TPO were reiterated before the DRP. The DRP in paragraph 6.2.2 & 6.2.3 of its directions dealt with this issue as follows: "6.2.2 The functions of the Assessee company have been examined in detail. A financial product on which the settlement system of bank runs is a real time system. It is very complex. Any bug or problem in it can crash the entire banking system of several nations. The Assessee's claim of providing only basis software services is rejected. 6.2.3 The Panel holds ....