AI Drafter 
TaxTMI 
TaxTMI 
2020 (8) TMI 832
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.... Circle 4(1)(1), Bengaluru, passed u/s. 143(3) r.w.s. 144C of the Income-tax Act, 1961 [the Act] in relation to assessment year 2011-12. 2. The main issue to be decided in this appeal is with regard to the correctness of the determination of Arm's Length Price [ALP] in respect of international transaction entered into by the assessee with its Associate Enterprise [AE]. The assessee is an Indian company and is a 100% owned subsidiary of LG Electronics, South Korea. The assessee provides software development [SWD] services to its AE. It was not in dispute that the rendering of SWD services by the assessee to its AE is an international transaction and that the income arising from the said international transaction has to be determined k....
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....es Ltd. 4.58% 30.32% 2. e-Zest Solutions 21.03% 20.96% 3. E-Infochips Ltd. 56.44% 56.68% 4. Evoke Technologies Ltd. 8.11% 10.42% 5. ICRA Techno Analytics Ltd. 24.83% 24.68% 6. Infosys Ltd. 43.39% 44.51% 7. Larsen & Toubro Infotech Ltd 19.83% 21.85% 8. Mindtree Ltd. (Seg) 10.66% 11/62% 9. Persistent Systems & Solutions Ltd. 22.12% 23.10% 10. Persistent Systems Ltd. 22.84% 23.52% 11. R S Software India Ltd. 16.37% 18.32% 12. Sasken Communication Technologies Ltd. 24.13% 26.31% 13. Tata Elxsi Ltd. 20.91% 20.96% Arithmetic Mean 24.82% 25.24% Less: Workin....
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.... 2. The Hon'ble DRP is correct in holding that M/s Acropetal Technologies Ltd, E-Zest Solutions Ltd, E-Infochips Ltd, ICRA Techno Analytics, Infosys Technologies Ltd, Larsen & Toubro Infotech Ltd, RS Software, Evoke Technologies, Mind tree Ltd, & Tata Elxsi cannot be taken as comparables, being functionally different when it satisfies all the qualitative and quantitative filters applied by the TPO. 3. The Hon'ble DRP Bangalore, instead of relying on decision of ITAT, ought to have decided the comparability of these companies on the basis of specific facts brought on record by the TPO in the case of the assessee. 4. Whether a comparable may be considered as engaged in Software product business merely because ....
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.... rejecting companies as per the directions of the Hon'ble DRP which are otherwise acceptable to both the Appellant and the learned TPO: 1) R S Software (India) Limited 2) Evoke Technologies" 8. Out of 10 comparables that were excluded by the DRP, the assessee and the revenue seek inclusion of R S Software India Ltd. and Evoke Technologies Ltd. in Gr.No.2 of the grounds of appeal by the revenue and ground No.15 of the grounds of appeal by the Assessee in its appeal. The ld. counsel for the assessee and the revenue has no objection for inclusion of the aforesaid two companies and hence ground No.2 raised by the revenue and Gr.No.15 raised by the Assessee in respect of the aforesaid two companies is allowed. 9. Apar....
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....as into development of computer products. The Tribunal also held that L&T Infotech Ltd. had RPT at 18.66% and since the RPT was beyond the threshold limit of 15%, this company was directed to be excluded from the list of comparable companies. The Tribunal further excluded Tata Elxsi Ltd. from the list of comparables on the ground that this company was engaged in diversified activities and was not a pure SWD services provider such as the assessee. In para 9 of the aforesaid order, the Tribunal held e-Infochips Ltd., was earning revenue both from the software services and software products and though the break-up of revenue from the two segments were available, but the break-up of Operating Cost and Net Operating revenue and segmental details....
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....l are purely supportive of ground No.2 and are general grounds with no specific reference to instances of comparables excluded and hence dismissed. 16. Now we shall take up the appeal of the assessee. The assessee in ground No.13 seeks exclusion of 3 companies viz., Persistent Systems & Solutions Ltd., Sasken Communication Technologies Ltd. and Persistent Systems Ltd. Exclusion of these 3 companies was considered by the Tribunal in the case of Electronics for Imaging (I) Pvt. Ltd. (supra). In para 8 of the order, this Tribunal held that Persistent Systems & Solutions Ltd. was a company engaged in SWD services and products with no segmental details and excluded it. Similarly, Persistent Systems Ltd. was also excluded on the ground that it....