TaxTMI 
TaxTMI 
2021 (1) TMI 358
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....sed as not pressed. Consequently, the assessee is seeking exclusion of three comparable companies and inclusion of one comparable company. The details of the same are discussed in the later part of this order. 3. The facts relating to the case are stated in brief. The assessee herein is a subsidiary of M/s. Meritor Inc., USA., which is engaged in the manufacture of automotive components and systems. The assessee is engaged in the business of developing software titled as "computer radiated designing and development of commercial vehicle systems". The assessee is developing specific software for its Associated Enterprises, i.e., it is captive software developer. Since the assessee had entered into international transactions with its Associated Enterprises (AEs), the AO referred the matter of determination of Arms Length Price (ALP) of the international transaction to the Transfer Pricing Officer (TPO). 4. The transfer pricing adjustment made by the TPO/AO relates to the Software development services of the assessee. The turnover of the assessee for the assessment year under consideration is Rs. 19.71 crores. The assessee followed TNM method as most appropriate method and profit le....
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....comparable companies, which were retained by Ld DRP. The Ld. A.R. submitted that the assessee seeks exclusion of following 3 comparable companies also from the list of comparable companies confirmed by Ld DRP:- 1. Acropetal Technologies Ltd. (seg) 2. E-Info Chips Ltd. 3. Persistent Systems & Solutions Ltd. The Ld. A.R. submitted that all the above said three companies have been held to be not good comparable companies for Software Development segment by various decisions of the Tribunal. The Ld A.R furnished copies of various case laws relied upon by him. 8. On the contrary, the Ld. D.R. submitted that all the above said companies should be examined independently by the Tribunal without having recourse to the past decisions rendered by the Tribunal. He supported the order passed by Ld DRP. 9. We heard the parties on this issue. The Ld A.R submitted that M/s. Acropetal Technologies Ltd, E-zest Solutions, E-infochips Ltd. and ICRA Techno Analytics Ltd. have been excluded by the coordinate bench in the case of in the case of M/s. Applied Materials India P. Ltd. (IT(TP)A No. 17 & 39/Bang/2016 dated 21.9.2016. (A) Acropetal Technologies Ltd:- 9.1 We heard rival contentions on....
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....ng Officer included this company in the list of comparables. On being called upon to explain as to why it should not be considered as a comparable, the assessee contended that there was functional dissimilarity inasmuch as this company was engaged in software development and IT enabled services and also Products. The Transfer Pricing Officer observed that the revenues of this company from Products was only 15% of total revenue and hence the same qualified to be eligible for comparison. The DRP did not allow any relief. 10.2. After considering the rival submissions and perusing the relevant material on record, we find that the Annual report of this company is available in the paper book with its Profit and loss account at page 1025. Schedule of Income indicates its operating revenue from software development, hardware maintenance, information technology, consultancy etc. Revenue from hardware maintenance stands at Rs. 3.92 crore, which has been considered by the Transfer Pricing Officer himself as sale of products. Such sale of products constitutes 15% of total revenue. There is no segmental information available as regards the revenue from sale of products and revenue from softwa....
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....omposite data of revenue as well as margins of this company pertaining to the sale of software services and products cannot be considered as comparable with the software development services segment of the assessee. In view of the above facts and circumstances, we do not find any error or illegality in the directions of the DRP in excluding this company from the list of comparables. This ground of CO is dismissed." We notice that the co-ordinate bench has excluded this company in the case of Applied Materials India Private Limited (supra) by following the decision rendered in the case of Electronics for Imaging India P. Ltd. (supra). Consistent with the view taken in the above said cases, we direct exclusion of this comparable company. 10. The assessee also seeks inclusion of one company, named M/s. CG Vak Software & Exports Ltd. The Ld A.R. submitted that this company has been held to be a good comparable in the case of Aspect Technology Centre India P. Ltd. (IT(TP)A 187/Bang/2016 dated 30-07-2020). 10.1. We heard Ld D.R and perused the record. We notice that the Bangalore bench of Tribunal has directed for inclusion of M/s. CG Vak Software & Exports Ltd, in the case of Aspect ....