TaxTMI 
TaxTMI 
2020 (2) TMI 1642
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....roviding information technology services. It filed its Return of income for year under consideration on 29/11/14 declaring total income at "nil". The case was selected for scrutiny and notice under section 143 (2) was issued. Subsequently notice under section 142 (1) along with questionnaire was issued upon assessee in response to which representatives of assessee appeared before Ld.AO and filed requisite details as called for. Ld.AO observed that assessee had international transaction with associated enterprises exceeding Rs.15 crores, and accordingly case was referred to transfer pricing officer for determining arm's length price of international transaction. 3. Upon receipt of reference, Ld.TPO called upon assessee to file economic deta....
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....Sl. No. Comparables selected Margin 1. Infosys Ltd 36.13% 2. Larsen and Toubro Infotech Ltd 27.36% 3. Mindtree Ltd 20.43% 4. Persistent systems Ltd 35.10% 5. R S software (India) Ltd 24.23% 6. Cigniti technologies Ltd 27.62% 7. SQS India BSFI Ltd 22.25% 8. Thirdware solutions Ltd 50.45% Total 29.40% 7. Ld.TPO computed average margin of comparables at 29.48% as against 7.80% of assessee, thereby proposing an adjustment being shortfall amounting to Rs.41,00,84,082/-. 8. Ld. TPO also made following observations: * that operational arrangement of assessee with its associated enterprise AE is of a routine contract software development service provider: * Ld. TPO rejected TNMM as most appropriate method a....
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.... also held that, since assessee did not have any provision for doubtful debts during the year under consideration, objection in relation to treating it as operating item in respect of comparables was rejected. 11. Upon receipt of directions from DRP, Ld.AO passed impugned assessment order, against which assessee is in appeal before us. Ld.AR submitted that assessee do not wish to press Grounds 1, 2.1, 2.2., 2.3. Accordingly, these ground stands dismissed as not pressed. 12. At the outset, Ld.AR submitted that entire transfer pricing analysis carried out by Ld.TPO is without understanding the business model of assessee. He narrated the business model of assessee as under: 13. At the outset, Ld.AR submitted that assessee is the holding c....
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....that, Ld.TPO on wrong assumption of facts, carried out transfer pricing analysis, and selected inappropriate comparables which do not match with the functional profile of assessee. He submitted that even DRP also failed to appreciate contentions of assessee, and simply upheld observations of Ld. TPO without dealing with objections raised. 16. Ld. CIT DR though referred to orders passed by authorities below, could not controvert functional profile of assessee, having regards to agreements entered into by assessee which is placed in the paper book. We have perused submissions advanced by both sides and having regards to the records before us. 17. Admittedly, ongoing through agreements entered into by assessee at page 659 of paper book, it ....
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.... services to the parties situated outside India. Ld.TPO is also directed to grand working capital adjustments in comparables in actual where ever necessary, for computing correct margins of comparables. Needless to say, that assessee shall be granted proper opportunity of being represented. Accordingly, we set aside Grounds 2.4- 2.6 to Ld.AO/TPO for statistical purposes. Corporate Tax issues: 21. Ld.AR submitted that, assessee do not wish to press Ground no. 3.2 accordingly these ground with its sub grounds raised stands dismissed. Ground no.3.3 along with its sub grounds are against 14 A disallowance. 22. It is submitted that assessee did not have any exempt income during the year under consideration. Only dividend earned by assessee....