TaxTMI 
TaxTMI 
2015 (4) TMI 1324
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....imited company. It is a 100% subsidiary of an American company. The assessee is engaged in the business of developing software solutions for the banking industry. During the previous year, the assessee had entered into an international transaction with its AE viz., transaction of rendering software development services. The consideration received by the assessee for rendering of such services has to therefore satisfy the ALP of the transaction in question filed an audit report u/s. 92E in Form 3CEB certifying the price charged in the international transaction as at arm's length. 3. The method adopted by the assessee company justifying the price charged was the "Cost Plus" method. The said method was adopted as it was engaged in rendering....
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....termining arm's length price (ALP). Nine companies were selected as comparables (instead of twelve companies as originally proposed) and average net profit margin to cost of these comparables was calculated at 18.27%. A negative adjustment of 2 was allowed for differences between the assessee and the comparables towards level of working capital and risk level. ALP of the international transaction was accordingly determined at Rs. 5,78,48,120. For this purpose, total operating expenditure of Rs. 4.97.53,264 was increased by 16.27% being the mark-up determined. The amount charged by the assessee in respect of the above transaction was Rs. 5,08,31,553. The TPO therefore suggested a variation to the loss returned by Rs. 70,16,567/- being the di....
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....ction to the order of CIT(Appeals) retaining the aforesaid four companies as comparables. The request of the ld. counsel for the assessee was that the assessee had sought inclusion of the following two companies as comparables before the CIT(A):- (1) Ace Software Exports Ltd., and (2) Cressanda Solutions Ltd. The annual report of these two companies were also furnished by the assessee before the CIT(Appeals). A write up giving business description of the above two comparable companies which was filed by the Assessee before CIT(A) is at page 369 of the Assessee's paper book. 9. In the impugned order of the CIT(Appeals), the above submissions were not considered by the CIT(Appeals) at all. We are therefore of the view that it woul....
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....ies. In our view, the request of the assessee is proper and deserves to be accepted in the light of the decision of the Pune Bench cited by the ld. counsel for the assessee supra. We accordingly direct the TPO to allow appropriate adjustments while working out the margins of the assessee as well as comparable cases. 15. All the other grounds raised by the assessee in the grounds of appeal were not pressed. 16. In the result, the appeal by the assessee is partly allowed. Pronounced in the open court on this 10th day of April, 2015. ============= Document 1 Assessment Year 2003-04 SI. Name of the Company Depreciation Page number of No Rate Annual Report 1 Ace software Exports Limited Schedule XIV ....