TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 25
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....ed Enterprises (AEs). Therefore, the matter was referred to the TPO for determination of the Arms' Length Price (ALP) of the international transactions. The TPO rejected the TP study of the assessee and conducted his own search for the comparables for both SDS and ITeS and proposed adjustments to the ALP. Further, he also proposed adjustment towards interest on receivables. Thus, the total of the adjustment proposed was Rs. 122,56,40,217/- u/s 92CA of the Act. Accordingly, the draft assessment order was proposed by the AO. The assessee raised its objections to the said proposal before the DRP and the DRP vide directions dated 11.9.2018 gave certain directions to the TPO which resulted in enhancement of the adjustment u/s 92CA of the Act from Rs. 122,56,40,217/- to Rs. 128,64,17,966/-. In compliance thereof, the final assessment order has been passed, against which, the assessee is in appeal before us by raising the following grounds: "CONCISE GROUNDS OF APPEAL 1. On the facts and in the circumstances of the case and in law, the Learned Transfer Pricing Officer i.e. the Deputy Commissioner of Income-tax (Transfer Pricing Officer)-3, (hereinafter referred to as 'the Ld. TP....
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.... iSummation Technologies Private Limited * Akshay Software Technologies Limited * Goldstone Technologies Limited * Sankhya Infotech Limited 5. On the facts and in the circumstances of the case and in law, the Ld. TPO erred in and the Hon'ble DRP further erred in upholding/confirming the action of the Ld. TPO in rejecting the following companies engaged in Information Technology Enabled services as a comparables, without appreciating that the said companies were functionally comparable to the Appellant: * Allsec Technologies Limited * Informed Technologies Limited * Jindal Intellicom Limited * Caliber Point Business Solutions Limited * Ace BPO Services Private Limited 6. Without prejudice to the above grounds on rejection of functionally dissimilar comparable companies, on the facts and in the circumstances of the case and in law, the Ld. TPO erred by incorrectly computing the margin of following comparable companies: * E-Infochips Ltd * Thirdware * Persistent Systems Limited * Tata Elxsi Limited * Infosys BPO * Microland Limited 7. On the facts and in the circumstances of the case and in law, the Ld. TPO erred in and the Hon'ble DRP further....
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....ards Ground Nos.7 & 8, it is submitted that the assessee does not wish to press the same and they are accordingly rejected. 4. As regards the transaction of software development services of Rs. 8,87,48,15,645/- is concerned, brief facts are that the assessee provided software development services relating to employer services to its group companies. In its TP study, the assessee selected 22 companies as comparable to the assessee and arrived at the arithmetic mean of such comparables at 9.73% and since the margin of the assessee was higher at 18%, it reported its transactions to be at ALP. The TPO, however, did not accept the assessee's contention and rejected all the comparables selected by the assessee except for four companies i.e. (i) L&T Infotech; (ii) Mindtree Ltd., (iii) Persistent Systems Ltd and (iv) R.S. Software (India) Ltd. Thereafter, he proceeded to select the comparables from the Prowers and Capitaline Databases and selected 13 companies as comparable to the assessee whose average margin was 35.44%. The assessee objected to the comparables selected by the TPO. The assessee also proposed additional comparable companies. However, the TPO did not accept the assessee's ....
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.... term deposits. 7. Thus, the TPO proposed the adjustment of Rs. 75,36,53,673/-. 8. On receipt of the TP order, the draft assessment order was proposed by the AO to bring this amount to tax. Aggrieved, the assessee preferred its objections to the DRP. The DRP directed exclusion of 3 Companies i.e. SQS India BFSI Ltd, Tech Mahindra Ltd, Cigniti Technologies Ltd from the final list of comparables. As regards the additional companies proposed by the assessee as comparable to the assessee, the DRP accepted only one company i.e. CG-VAK Software & Software Exports Ltd as comparable to the assessee. It however, directed the TPO to examine whether Sagar Soft India Ltd, satisfied the filters other than functional similarity adopted by him. Thus, the DRP has granted partial relief to the assessee. 9. In grounds of appeal No.2 and 4, the assessee is seeking exclusion and inclusion of some comparable companies. At the time of hearing, the learned Counsel for the assessee submitted that though the assessee has raised its objections against 9 companies, the assessee is not objecting to Mindtree Ltd and RS Software (India) Ltd as being comparable to the assessee. Therefore, their comparabili....
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....aw materials, spare parts and components consumed (Line Items) Value consumed 1,78,21,068 5,06,44,253 15,99,348 8,65,362 Percentage of consumption 91.76% 98.32% 8.24% 1.68% Value of imports of raw materials 3,35,87,489 4,31,64,414 d) This company has revenue from information consultancy INR 29.70 crores and the relevant extract from page 123 of Paper Book Volume 2 is given below: Revenue information technology consultancy: 29,70,84,153 35,70,87,748 Hence, it is not a comparable. e) This company has incurred research & development expenditure of INR 2.34 crores and the relevant extract page 121 of Paper Book Volume 2 is given below: Research Development expenditure: (F) 2,34,16,061 (G) 2,40,48,644 f) This company has reflected inventory of physical products for INR 2.78 crores in the balance sheet. The relevant information is provided in pages 28 and 77 of Paper Book Volume 2. g) This company has internally generated intangible assets for a sum of INR 56.65 lakhs. The relevant information is provided in page 65 of Paper Book Volume 2 h) This Company has abnormal profits of 81.91 % i) T....
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....T, 1TES and sale of products for which segmental information is not available. The assessee herein does not have ITES. Hence no comparison could be made for want of segmental data. We also find [hat the co-ordinate bench decision of Delhi Tribunal in the case of Alcatel Lucent India Ltd. v. Dy. CIT .2016] 74 taxmann.com 105 (Delhi-Trib) dated 24.8.2016 for the Asst Year 2011-12 had rejected this comparable for being engaged in diversified services and for want of information of segmental data. We find that this decision has been approved by the Hon'ble Delhi High Court in the case of PCIT v. Alcatel Lucent India Ltd. in ITA No. 515/2017, dated 18.7.2017. The Id AR stated that the Id DRP in Asst Year 2013-14 (i.e succeeding assessment year) had accepted that the said comparable is not functionally comparable with the assessee's profile. We find this fact to be correct from the record of Asst Year 2013-14 which is also before us along with this appeal. Hence we have no hesitation in holding that E-Infochips Ltd is not functionally comparable to the assessee and accordingly we direct the Id TPO to exclude the same from the final list of comparables. Accordingly, the Ground No.....
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....ct its exclusion from comparables. Before us, it is assessee's contention that if EInfochips Limited is excluded from the final set of corn parables, the margin of the assessee would fall within 2: 5% range vis-a-vis margin of the residual comparables and thus in view of proviso to Sec.92C(2) of the Act, no addition would survive and therefore even other grounds raised would be rendered infructuous. We therefore, direct the AO to re-compute the margins of comparables by excluding E-Infochips Ltd from the list of comparables and thereafter compute the TP adjustment, if any, in the hands of the assessee. Thus, the grounds of the assessee are allowed for statistical purposes". (3) ITAT Bangalore Bench in the case of Metric Stream Infotech (India) (P) Ltd, vs. Asstt. CIT in ITA No.493/Bang/2016 dated 10-07-2018 "9. As far as E-lnfochips Ltd. is concerned, this Tribunal in the case of Electronic Imaging India Pvt. Ltd. supra) vide para 9 of its order had held that this company was a software development and ITeS providing company and software development product company. The Tribunal held that no segmental data of this company was available and therefore it is difficult to compu....
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.... of any software products, this company, in our considered opinion, ceases to be comparable. It is obvious that from the common pool of income from both the streams of software products and software services, one cannot deduce the revenue from software services and no one knows the impact of revenue from Products on the overall kitty of profit, which may be significant. Since no segmental data of this company is available indicating operating profit from software development services, we order to exclude this company from the list of comparables". (5) Delhi High Court in the case of Pr.CIT vs. Saxo India Ltd in ITA No.682/2016 dated 28.09.2016. "4. The assessee appealed to the ITAT, which upon its detailed consideration of the materials, accepted the plea with respect to four comparables and directed that they should be excluded. The assessee's contention with respect to E-Infochips, Persistent Systems & Solutions Ltd, Larsen & Toubro Infotech Ltd and Sasken Communications Technologies Ltd were accepted. The revenue is aggrieved by these as well as exclusion of Wipro Technology Services Limited. 5. It is argued on behalf of the revenue that the rationale adopted by the IT AT ....
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.... was available to determine the profitability of the concerned comparable". (6) ITAT Delhi Bench in the case of Cadence Design Systems (I) (P) Ltd vs. Asstt.,CIT (2018) 93 Taxmann.com 227 (Delhi). Para 38. For similar reasons stated above, we are of the considered opinion that in so far as the assessee is a captive software development service provider, M/s. E-0-Infochips Ltd is not a good comparable and while upholding the stand of the assessee, we direct the library ever to delete this from the list of comparables". (7) ITAT Hyderabad Bench in the case of M/s. Infor India (P) Ltd in ITA No.161 and 2307/Hyd/2018 dated 6.8.2019 85. As regards E-Infochips Ltd is concerned, the contention of the assessee is that it is functionally different as it is engaged to software development of software products and ITeS and that there is no segmental data. The TPO & DRP have rejected the objections of the assessee. The learned Counsel for the assessee has referred to the disclosure of segments explanatory wherein the company has disclosed itself as primarily engaged in software development and ITeS services and products, as reportable as per AS17. Further, at page 897, there is an in....
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....ven below: "The company's operation comprises of software development, implementation and support services. Primary segmental reporting is based on geographical areas, viz., domestic = India (product and services) and Institutional = Rest of the World Exports -Software Services). In primary segment, revenue and all expenses, which relates to a particular geographical segment, are reported. Fixed Assets, Current Assets, Loans and Advances, Current Liabilities and Provisions are classified based on specific geographical segment's business. The company maintain separate books of account for the reported segments. Wherever the costs are directly identifiable with the reported segment, it has been booked to that segment. Wherever common expenses are incurred, those expenses have already been considered for allocation and relevant entries in the books of account have been passed. Hence there are no unallocable expenses. Further, cash, investment (net of provision) and Bank balances are reported at the enterprise level. Current assets and current liabilities relating to the specific business segments are identified and reported. Those, which are not identifiable, are reported ....
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....dia (P) Ltd. (iii) CIT vs DE Shaw India Software (P) Ltd. (iv) PCIT vs T Erricson India (P) Ltd. (v) Intoto Sotware India (P) Ltd vs ITO (vi) Planet Online (P) Ltd. (vii) Dialogic Network (India) (P) Ltd. (viii) Pubmatic India (P) Ltd. (ix) Infor India Pvt. Ltd. Vs DCIT ITA No.2307/HydI2018 (x) Kony India (P) Ltd ITA No. 2305/Hyd/2018 15. The learned DR, however, relied upon the findings of the TPO as well as the DRP and prayed that this company be held as comparable to the assessee. 16. Having regard to the rival contentions and the material on record, we find that in the cases relied upon by the learned Counsel for the assessee, the assessees therein had also raised similar objections and the Tribunal has held Thirdware Solutions to be not comparable to the assessee. We find that the assessee before us is carrying on similar activities as the companies in those cases and therefore, the decisions taken by the Tribunal in those cases are applicable to the assessee before us. For the sake of ready reference, the relevant paras of the Tribunal orders are reproduced hereunder: (1) ITA No.520/Mum/2012 - Infor Global Solutions Ltd vs. Dy.CIT xi) THIRDWARE SOLUTIONS....
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....xpressed in the other decisions cited before us by the learned Authorised Representative. Since, many of these decisions relate to very same assessment year, following the ratio laid down in these decisions, we hold that this company cannot be a comparable to the assessee". (2) ITA Nos.1196 & 1197/Hyd/2010 - Intoto Software India Private Ltd. Vs. ACIT 23. The other companies which are objected to by the assessee are Flextronics Software Limited, Foursoft Limited and Thirdware Software Solution Limited. As far as these three companies are concerned, the learned Counsel appearing on behalf of the assessee submitted that they are into both software as well as product development. He submitted that the TPO has taken note of the fact these companies are also into product development but has selected these companies as comparables by applying the filter of more than 70% of its revenue being from software development services. The learned Counsel submitted that the functions of these companies are different from the assessee who was into sole activity of software development for its associated enterprise. He submitted that the TPO has allocated the expenditure in the proportion of t....
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.... of the TPO's Order, the said company has derived income from software licence also and AMCs. 26. As far as Thirdware Software Solution Limited is concerned, we find from the information furnished by the said company that though the said company is also into product development, there are no softrware products that the company invoiced during the relevant financial year and the financial results are in respect of services only. Thus, it is clear that there is no sale of software products during the year but the said company might have incurred expenditure towards the development of the software products. 27. As far as Flexitronics Software Limited is concerned, we find that at page 90 of his Order, the TPO has also observed that the said company has incurred expenditure for selling of products and has incurred R & D expenditure for development of the products. The above facts clearly demonstrate that there is functional dissimilarity between the assessee and these companies and without making adjustment for the dissimilarities brought out by the TPO himself, these companies cannot be taken as comparable companies. The method adopted by the TPO to allocate expenditure propor....
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....sults are not available. So, when this company's substantial revenue is from other various business segments like sale of licence, software services and segmental results are not available, this company cannot be a valid comparable for benchmarking the international transaction, hence ordered to be excluded". (5) ITA No.1810/Hyd/2012- Intoto Software India P.Ltd vs. ITO 7. Thirdware Solutions Ltd 15.3. We have heard the rival submissions and perused and carefully considered the material on record. It is seen from the material on record that the company is engaged in product development and earns revenue from sale of licenses and subscription. However, the segmental profit and loss accounts for software development services and product development are not given separately. Further, as pointed out by the learned Authorised Representative, the Pune Bench of the Tribunal in the case of EGain Communications Pvt. Ltd. (supra) has directed that since the income of this company includes income from sale of licenses, it ought to be rejected as a comparable for software development services. In the case on hand, the assessee is rendering software development services. In this factual....
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....clude this company from the list of comparables". (7) ITA No.7280/Mum/2012 - Dialogic Networks (India) Pvt. Vs. ACIT 37. The thirteenth comparable under dispute is Thirdware Solutions Ltd. This company is engaged in application implementation, application management and application development. Accordingly company is not a pure software development company. This company is also engaged in trading of software which is evident from the financials of the company. It is also engaged in the purchase and sale of license as is apparent from page 167 of Paper book. We noted that this company has not disclosed any segmental information in the annual report. We therefore agree with the contention of the assessee's counsel that this company is functionally different and cannot be taken to be comparable to assessee. Our aforesaid view is duly supported by the decision of Bangalore Bench of this Tribunal in the case of Infor (Bangalore) P. Ltd Vs ACIT (ITA 1550/Rang/2012) (AY 2008-09) wherein it was held as under:- "31 Coming to Thirdware Solutions Ltd (seg), findings of the Tribunal in the above mentioned case of 3DPLM Software Solutions Ltd(supra), appear at Para nos. 15.1 to 15.3 w....
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....w of the matter and following the afore cited decision of the Rune Tribunal (supra). we direct that this company be omitted from the list of comparables for the period under consideration in the case on hand. '' No contrary decision was brought to our knowledge. We therefore hold that this company be excluded from comparable as selected by TPO and we direct the AO accordingly". (8) ITA No.655/PUN/2017- M/s. PubMatic India Private Limited. Vs. ACIT 20. Now, coming to the next concern i.e. Thirdware Solutions Ltd., which is functionally dissimilar as it was deriving revenue from sale of license and software services export from SEZ units and revenue from subscription, etc. Our attention was drawn to the financials of said concern placed at pages 708 onwards of Paper Book and it was pointed out that the company had imported raw materials and was also owning intangibles and hence, made it in-comparable to the assessee. In the absence of any segmental details being available, we find merit in the plea of assessee. 21. The Pune Bench of Tribunal in Approva Systems Pvt. Ltd. Vs. DCIT in ITA No.1921/PUN/2014, relating to assessment year 2010- 11, order dated 25.01.2017had exc....
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.... that the answer to this question will depend on the facts and circumstances of each case inasmuch as potential comparable earning abnormally high profit margin should trigger further investigation in order to establish whether it can be taken as comparable or not. Such investigation should be to ascertain as to whether earning of high profit reflects a normal business condition or whether it is the result of some abnormal conditions prevailing in the relevant year. The profit margin earned by such entity in the immediately preceding year/s may also be taken into consideration to find out whether the high profit margin represents the normal business trend. The FAR analysis in such case may be reviewed to ensure that the potential comparable earning high profit satisfies the comparability conditions. If it is found on such investigation that the high margin profit making company does not satisfy the comparability analysis and or the high profit margin earned by it does not reflect the normal business condition, we are of the view that the high profit margin making entity should not be included in the list of comparable for the purpose of determining the arm's length price of an ....
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....cluded from final list of comparables." (9) ITA No.2307/Hyd/2018- M/s. Infor (India) P Ltd Vs. ACIT 77. As regards Tata Elxsi Ltd, Thirdware Solutions Ltd and Persistent Systems Ltd are concerned, we find that their comparability to the assessee has been considered in the assessee's own case for the A.Y 2007-08 and it is submitted that there is no change of activities of either the assessee or the comparables during the relevant A.Y before us i.e. A.Y 2014-15. 78. The learned DR has not rebutted this contention of the assessee. Therefore, respectfully following the decision of the Coordinate Bench at Mumbai in ITA No.520/Mum/2012 dated 4.12.2018, in the case of Infor Global Solutions India (P.) Ltd. v.Deputy Commissioner of Income Tax, we direct the exclusion of these three companies from the final list of comparables. For the sake of ready reference, the relevant paras are reproduced hereunder: "29. We have considered rival submissions and perused materials on record. The primary and fundamental reason on the basis of which assessee seeks rejection of the aforesaid comparable is, it is also engaged in the development of product and segmental details are not available....
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.... to very same assessment year, following the ratio laid down in these decisions, we hold that this company cannot be a comparable to the assessee". 17. Thus, we direct the TPO to exclude this company i.e. Thirdware Solutions from the final list of comparables. 18. Infobeans Technologies Ltd Assessee's objections to this company are as follows: a) This company is not totally engaged in software development services but it is also engaged in export of goods. The relevant extract from page 783 and 795 of Paper Book Volume 3 is given below: Earnings in foreign Exchange a) Export of goods/services calculated on FOB Basis 329,659,883 216,854,891 Total 329,659,883 216,854,891 b) This company is also engaged in providing service relating to Storage and virtualization, media and publishing and E-commerce. c) There are no segmental details in the annual report between services and goods therefore, it cannot be compared with the assessee d) This company is engaged in sale of goods as can be inferred from the MODVAT deposit INR 25,000 and Sales Tax deposit INR 10,000. e) This company cannot be compared as it has earned super profits i.e. 42.09% f) Without p....
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.... was declared. The segmental details of two activities carried on by the said concern were not available and in the absence of the same, the concern could not be equated as functionally comparable to a concern which was providing software development services to its associated enterprises. Applying the same set of reasoning as in the paras hereinabove, we hold that Infobeans Systems Pvt. Ltd. is not comparable to the assessee". 22. Respectfully following the same, we direct that Infobeans be excluded from the final list of comparables in this case also. 23. Infosys Ltd Assessee's objections to this company are as under: a) This company is functionally different and during the relevant previous year, it had extra-ordinary events. This Company is engaged in multi activities and therefore is functionally not comparable to the assessee. It is submitted that Infosys had acquired a company, namely, Lodestone Holding AG on 22 October 2012 and the impact on the current year profit was INR 220 Cr. Further, Infosys Consulting India was merged with Infosys Limited w.e.f. 23 August 2013. The relevant extracts from Annual report pages 180 and 205 187 20130fPa er Book Volume 2 are reproduce....
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....in as declared by the respondent-assessee. This is the finding recorded by the Tribunal. The Tribunal in the impugned order has also observed that the assessee had furnished details of workables in respect of 23 companies and the mean of the comparables worked out to 10%, as against the margin of 17% shown by the assessee. Details of these companies are mentioned in para 5 of the impugned order". 26. Respectfully following the same, we direct the exclusion of this company from the final list of comparables. 27. As regards Persistent Systems Ltd, the objections of the assessee are as under: a) The Company is functionally not comparable. It is engaged in selling of the following: i. Software products (IP); ii. Platforms (Solutions & Integration); and iii.services (product engineering) b.There are no segmental details between software products and services. 28. In the case of Tata Elxsi, the assessee has taken the following objections: a) It is not functionally comparable to the assessee. In the financial statements of the company, the nature of business carried out by Tata Elxsi is given below: i) Corpoprate Information "Tata Elxsi Ltd was incorporated in 1989. The....
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....he comparability of this company by taking the revenue from Indian Branch only. Thus, the ground for Maveric Systems Ltd is rejected and for Evoke Technologies Ltd is allowed for statistical purposes. 32. Since the issue is similar, we direct the AO/TPO to reconsider the comparability of this company to the assessee by taking the revenue from Indian Branch only. 32. As regards Sagarsoft Ltd is concerned, it is the case of the assessee that the DRP has already directed the AO/TPO to consider the same, but the AO/TPO has not taken it as a comparable while passing the final assessment order. Since the Revenue is not in appeal against the directions of the DRP, we direct the TPO to give effect to the order of the DRP. Thus, ground of appeal No. 4 is partly allowed for statistical purposes. 33. As regards the transaction of I.T. enabled Services, in its TP Study, the assessee had adopted 11 companies as comparables, but the TPO rejected all the companies and selected 8 companies as comparable whose average margin was 35.46%. The assessee objected to the selection of the said comparables, but the TPO rejected the same and arrived at a final set of 7 companies as comparables to the as....
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....x Services Ltd.: 4.1 The ld. AR objecting to the aforesaid company being treated as comparable, submitted that the said company has diversified services and KPO Services. He submitted that in the following rulings ITAT rejected the said company as comparable: 1. HSBC Electronic Data Processing India Pvt. Ltd., ITA No. 247&295/Hyd/14. 2. M/s Capital IQ Information Systems (India) Pvt. Ltd., ITA No. 124/Hyd/14. 3. TNS India Pvt. Ltd., ITA No. 604 & 419/Hyd/14. 4. Excellence Data Research , ITA No. 159/Hyd/14 5. Hyundia Motor Engg. P. Ltd., ITA No. 255/H/14 6. OSI Systems Pvt. Ltd., ITA No. 683&542/H/14 4.2 In the case of Capital IQ Information Systems India Pvt. Ltd., (supra), the coordinate bench has held as under: "18.2 We have considered the issue and examined the Annual report and the objections of the assessee. As seen from the annual report, the above company is involved in diverse nature of services and there was no segmental data for diversified service port folio. Moreover, this company can be considered as KPO and we are of the opinion that this company is not comparable to assessee's services. We, therefore, direct the AO/TPO to exclude this company."....
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.... Engineering P. ltd in ITA Nos. 1743/Hyd/2014 (AY.2010- 11) & ITA No. 1917/Hyd/2014 (AY.2010-11) dt. 13-11-2015, has decided the issue as under: "TCS e-SERVE LIMITED 11.2.1. As regards TCS e-Serve Limited is concerned, we find that it possesses brand value as is evident from the Schedule-N (Operation and Other expenses) to the P & L A/c of the annual report for the financial year 2009-10 of Rs. 46,065 thousands and also that it possesses intangibles in the form of software licenses which have not been taken note of by the authorities below while adopting its margin. It is also the case of the assessee that this company has a turnover of Rs. 1405.10 crores which is 25 times of the turnover of the assessee and hence, is not comparable to the assessee. The Ld. Counsel for the assessee had also placed reliance upon the TPO's order in the case of M/s. IGS Imaging Services India Ltd., to hold that there are exceptional circumstances during the relevant financial year due to which this company is not comparable to the assessee. The Ld. Counsel for the assessee also submitted that the segmental details of this company are not available and hence, has to be excluded on this count als....
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....ai Motors India Engineering P. ltd in ITA Nos. 1743/Hyd/2014 (AY.2010-11) & ITA No. 1917/Hyd/2014 (AY.2010-11) dt. 13-11-2015, has decided the issue as under: "16. As regards M/s. Eclerx Services Ltd., is concerned, we find that this company was also directed to be excluded by following the decision of ITAT in assessee's own case for the A.Y. 2009-2010 on the ground that it is a KPO. The Ld. Counsel for the assessee has drawn our attention to the annual report of the said company to demonstrate that the facts and circumstances and the nature of the activities carried on by the said company in the A.Y. 2010-11 are also same. 17. Ld. D.R. has not been able to rebut this factual aspects of the said company with any evidence to the contrary. The only ground relied on by the Revenue is that in the case of Agilent Technologies International P. Ltd., the ITAT, Delhi Bench has upheld selection of M/s. Eclerx Services Ltd. A copy of the said order is filed before us. Assessee's contentions therein that the KPO services are distinct from BPO services and are not comparable, has been rejected by the Tribunal. However, since a uniform and consistent stand has to be taken in the ca....
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....les. 44 In the result, Ground No.5 is partly allowed for statistical purposes. 45. As regards Ground No.6 with regard to the correct margin of the comparable companies, we find that the assessee is seeking correct computation of margins of E-Infochips Ltd, Thirdware Solutions Ltd, Persistent Systems Ltd and Tata Elxsi Ltd with regard to software development services and Infosys BPO Ltd and Microland with regard to ITeS services are concerned. We therefore, remit the issue to the file of the AO/TPO for computation of the correct margins of these companies. 46. Ground Nos. 7 & 8 were not pressed by the assessee and therefore, these grounds are rejected. 47. As regards Ground No.9 with regard to the working capital adjustment, it is the case of the assessee that the provision of bad and doubtful debts should be considered as operating expenses while computing the PLI. He submitted that the transactions can be considered as a comparable only after making adjustments to eliminate the differences that are likely to affect the cost and profit margin on controlled and uncontrolled transactions. In support of this contention, he placed reliance upon the I.T. Rules 1(10)B(i)(e) of the I.....