TaxTMI 
TaxTMI 
2020 (12) TMI 1110
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....d 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. 7. The learned AU/learned TPO/Hon'ble DRP erred in applying related party filter of ....
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.... 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 case are as under: 2. Assessee is a company, engaged in the business of rendering software development services. It filed its return of income for year under consideration on 28/11/2012 declaring total income of Rs. 9,12,52,550/-. The case was selected scrutiny and notice under section 143(2) was issued to assessee i....
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....es 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 these comparables are excluded assessee is well within the margin of +/ -5% and no adjustment would required to be made in the hands of assessee. 12. Accordingly, all other comparables mentioned in these grounds, along with other grounds, stands dismissed as not argued. Assessee is however granted liberty to contest these grounds/comparables in appropriate years. Ld.AR submitted that, these comparables deserves to be excluded for being functionall....
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....ounsel 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 of the 3 companies out of the aforesaid 4 companies which the Assessee seeks to exclude from the list of comparable companies chosen by the TPO viz., Infosys Ltd., Larsen & Toubro Infotech Ltd. and Persistent Systems Ltd., were considered by the ITAT Delhi Bench in the case of Agilis Information Technologies India (P) Ltd. v. ACIT (2018) 89 taxmann.com 440 (Delhi-Trib.) for the same AY 2012-13. In this regard it was submitted that the functional profile of the Assessee is same as that of....
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..... 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/2015 order dated 23.9.2015 and the decision of Hon'ble Delhi High Court in the case of SaxoIndia Pvt. Ltd. (supra). The findings in this regard are contained in Paragraphs 4.14 to 4.16 of its order. 30. Respectfully following the decision of the Tribunal we hold that the aforesaid 3 companies be excluded from the final list of comparable companies for the purpose of arriving at the arithmetic mean of comparable companies for the purpose of comparison with the profit margins. In this regard we are also of the view th....
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....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 that the software for financial product is much more complex than a geospatial software. Therefore, the panel holds that the Genesys is a valid comparable." 34. The learned counsel for the Assessee submitted that the DRP has completely proceeded on wrong facts which does not either emanate from the order of the TPO or the submissions of the Assessee. He reiterated submissions made before the TPO and DRP. The learned DR relied on the order of the DRP/TPO. 35. We have given a careful consideration to the rival submissions. It is clear from the material brought to the ....