TaxTMI 
TaxTMI 
2022 (7) TMI 1339
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....law and in fact by treating Dun & Bradstreet Technologies & Data Services Pvt.as functionally similar to the Appellant. 4. On the fact and circumstances of the case, the learned AO I TPO have erred in law and in fact by treating for R S Software (India) Limited as functionally similar to the Appellant. 5. On the fact and circumstances of the case, the learned AO I TPO have erred in law and in fact by treating Cybage Software Pvt. Ltd.as functionally similar to the Appellant. 6. On the fact and circumstances of the case, the learned AO I TPO have erred in law and in fact by treating Thirdware Solution Ltd.as functionally similar to the Appellant. 7. On the fact and circumstances of the case, the learned AO I TPO have erred in law and in fact by treating Infobeans Technologies Ltd.as functionally similar to the Appellant. 8. On the fact and circumstances of the case, the learned AO I TPO have erred in law and in fact by treating Aspire Systems (India) Pvt. as functionally similar to the Appellant. 9. On the fact and circumstances of the case, the learned AO I TPO have erred in law and in fact by treating Persistent Systems ltd.as functionally similar to the Appellant. 1....
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....ces of the case, the learned AO I TPO have erred in law and in fact by application of 75% export filter to the set of comparable companies and rejecting Appellant's 25% export filter. 24. On the facts and circumstances of the case, the learned AO I TPO have erred in law and in fact by application of 75% forex spending filter. 25. On the facts and circumstances of the case, the learned AO I TPO have erred in law and in fact by incorrectly applying peculiar and extra ordinary economic circumstances filter. 26. On the facts and circumstances of the case, the learned AD I TPO have erred in law and in fact by application of 50% gross intangible to sales filter. 27. On the facts and circumstances of the case, the learned AO I TPO have erred in law and in fact by incorrect application of different accounting year filter. 28. On the facts and circumstances of the case, the learned AO I TPO have erred in law and in fact inappropriate application of employee cost filter. Comparable Specific 29. On the facts and circumstances of the case, the learned AO I TPO have erred in law and in fact by rejecting the KALS Information Systems Ltd only on the basis of turnover filter, de....
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....ve erred in law and in fact by not providing the details pertaining to the yearly margin computations for the companies selected as comparable to arrive at three year weighted average margins. 42. On the facts and circumstances of the case, the learned AO I TPO have erred in law and in fact by not providing the unadjusted and working capital adjusted margin computations for the companies selected as comparable. Opportunity of being Heard 43. On the facts and circumstances of the case, the learned AO I TPO have erred in law and in fact by not providing the computations in relation various search filters applied for companies selected as comparable and thereby depriving the Appellant of any opportunity of being heard in case of any factual error as to such computations, if any. levy of penalty 44. The learned AO has erred in law and in fact by issuing notice for levy of penalty under section 270A of the Act for under reporting of income. Prayer The Appellant craves leave to add, alter, supplement, amend, vary, withdraw, or otherwise modify the ground mentioned herein above at or before the time of hearing. All the aforesaid grounds of appeal are independent, in the ....
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....e by the assessee and he held that this company was engaged in software services. Further, the T.P.O observed that even the ld. D.R.P has included this company in assessee's case for A.Y. 2014-15. Before the D.R.P the assessee made detailed submissions which are at page 69 of the D.R.P's order. The D.RP has given their findings at page 93 para (f) upholding the order of the T.P.O. 5.3 The ld. A.R at the time of hearing on this issue placed heavy reliance on the decision of the Co-ordinate Bench Pune in assessee's own case for A.Y. 2014-15 in ITA No. 15/PUN/2019 dated 23-09-2021 and submitted that he is referring to this judgment though pertaining to the A.Y. 2014-15 but it contains absolutely identical facts as that with relevant assessment year 2016-17. Referring to paper book page 1128 Vol. II, the ld. A.R demonstrated that there has been an acquisition by this company which is as follows: "Acquisitions: In October 2015, your Company, through Accelerite, acquired assets of Aeopana IoT platform from Intel and in February 2016, the CloudPlatfom assets from Citrix. As part of the Aepona acquisition, your Company acquired development centers in Belfast, UK and in Colombo, Sri La....
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....uding all Intellectual Property Rights will vest in RI. On-going through the above clauses of the Agreement, it becomes clear that the nature of the international transaction is that of provision of contract research and development services to its AE, which are utilized by the latter in its business of software products and solutions. With the above backdrop of the nature of activity carried on by the assessee, we now proceed to determine the comparability or otherwise of the companies challenged before us ad seriatim. 5.5 Regarding Persistent Systems Ltd., the Bench held as follows: "(1) PERSISTENT SYSTEMS LTD. : 6. The TPO included this company in the list of comparables. The assessee‟s objections about the functional dissimilarity did not weigh with the TPO. The assessee remained unsuccessful before the DRP as well. 7. Having heard both the sides and gone through the relevant material on record, we observe from the Annual report of this company, a copy of which has been placed at page 77 of the paper book, that it acquired a company called CloudSquads, Inc through stock acquisition in February, 2014. Without examining the functional similarity or dissimilarity of t....
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....al Report of this company which is annexed at paper book page 2295 and demonstrated that for this company also during the relevant assessment year, there was an extraordinary event in respect of amalgamation. The Hon'ble High Court of Gujarat vide its order dated 29-03-2016 sanctioned the scheme of amalgamation of Smart Guard Systems Pvt. Ltd. (SGSPL) and nGin Technologies Pvt. Ltd. (NTPL) with e-Infochips Ltd. (the transferee company) w.e.f. 01-04-2015 i.e. F.Y. 2015-16 relevant to A.Y. 2016-17. The ld. D.R also conceded to these facts on record. 6.4 Having heard the parties, we observe that there has been an extraordinary event by way of amalgamation in respect of this company during the year. Taking the same view as with regard to M/s. Persistent Systems Ltd., which has been excluded due to acquisition, similarly in this case of e-Infochips since there was an amalgamation, it cannot be comparable company with respect to the assessee. We therefore, direct the A.O/T.P.O to exclude this company from the final set of comparables. Thirdware Solutions Ltd. 7. The ld. A.R submitted that they are not pressing this comparable. Hence this issue is dismissed as not pressed. Aspire S....
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....ced heavy reliance on the decision of the Tribunal in assessee's own case for A.Y. 2014-15 (supra) wherein in respect of R.S. Software Ltd., it was held as follows: 11. This company was included by the assessee itself in the list of comparables. However, during the course of the proceedings before the authorities it was claimed that the company was not comparable. Both the authorities jettisoned the assessee‟s contention. 12. As regards the preliminary objection of the ld. DR that the assessee cannot unchoose a company during the course of proceedings which was suo motu chosen as comparable in its Transfer pricing study report, we find enough judicial precedents permitting an assessee to claim withdrawal of company from the list of comparables which was inadvertently included by it in the list of comparables. The Hon‟ble jurisdictional High Court in CIT Vs. Tata Power Solar Systems Ltd. (2017) 298 CTR 197 (Bom.) has reiterated this view which was also taken by the Hon‟ble Punjab & Haryana High Court in CIT Vs. Quartz Systems India (P) Ltd. (2011) 244 CTR 542 (P&H). Thus, in principle, there can be no quarrel over the proposition that an assessee can claim remo....
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....e in payments and a significant pedigree in dispute management. Our competence has been built around a comprehensive understanding of the dispute lifecycle from the perspective of the network, issuer and acquirer. RS Software uses a proprietary set of tools to accelerate development and integration of the dispute management system. This comprises of the following. *A reference architecture created for dispute/chargeback processing. *A requirements and features checklist for dispute/chargeback solutions. *Business test cases for the comprehensive testing of a dispute/chargeback system. *Industry-best practices for managing disputes/chargebacks. ......." 15. When we compare the nature of work carried out by R.S. Software Ltd. with the contractual R&D of software activity carried on by the assessee, we find both to be poles apart. In view of such functional dissimilarity, we order to exclude this company from the list of comparables." 9.2 Respectfully following the same, we direct the A.O/T.P.O to exclude this company from the final list of comparables. Nihilent Limited. 10.1 The submissions of the assessee were that this company is functionally different and they are into R ....
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....fore, the sale of products for this year is NIL. The company is dominantly engaged in providing software development services to its clients. Hence, the objections were rejected and the company was held to be comparable. 11.2 The ld. D.R.P has upheld the decision of the A.O/T.P.O at para 8.2(b) at page 87 of their order. The ld. A.R at the time of hearing brought to our notice the Annual Report of this company at page 1986 of the Paper Book it is totally functionally different with regard to the assessee. He even took us through the related party schedule at page 2104 of the paper book. He further submitted on functionality difference that the Co-ordinate Bench Bombay for the same assessment year 2016-17 has held that this company should be excluded from the list of comparables. The Co-ordinate Bench Bombay in ITA No. 1379/Mum/2021 for A.Y. 2016-17 dated 25-02-2022 on this issue observed and held as follows: 47. The assessee sought to exclude Dun & Bradstreet as a comparable on the ground that it is functionally dissimilar being into providing predictive analysis, software development and related technology services and solution and on the ground that this company earns abnormal....
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....rejected as not functionally comparables viz. (i) SQS India BFSI Ltd. and (ii) Cigniti Technologies Ltd. These were rejected since their main business was software testing. Similarly, even Puresoftware also into software testing. Therefore, this should also have been excluded. 12.3 We observe from the Annual Report and the other related documents that Puresoftware Ltd., is into varied activities of software services and software development and from the P & L a/c of the company they have stock-in-trade and inventory also. Furthermore though this company is a testing company has been retained by the T.P.O while on the other hand he has excluded Cigniti Technologies Ltd., and SQS India BFSI Ltd., who are also into the business of software testing. Hence we find that there has been inconsistency an in the approach of the T.P.O. We therefore, direct the A.O/T.P.O to exclude this company from the final set of comparables. Exilant Technologies Pvt. Ltd. 13.1 The assessee submitted that this company is not comparable since it is into development of new intellectual property and it is substantially a product company. The T.P.O however held that this company is into technology software a....
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...., the ld. D.R strongly supported the view of the T.P.O. 14.4 Having heard the parties and examining the relevant documents on record, firstly, there are no guidelines to relax the forex filter to 50% from 75% and in what scenario the selection of filter of 54% is more logical was not explained by the assessee. Thus, we are in conformity with the view taken by the T.P.O rejecting the objection of the assessee and this company as rejected by the T.P.O from the final list of comparables is upheld. Infobeans Technologies Ltd. 15.1 The assessee contends that this company is functionally different and that it has got no segmental data. 15.2 Per contra, the ld. T.P.O held that this is a service company primarily rendering software services and it does not hold any specific inventory. Further, as per the annual report of this company, 99.20% of its revenue are from software services, therefore, no segmental data is required. The company is thus held to be comparable. 15.3 The D.R.P has dealt with this comparable at page 90 clause (d) and given its finding at page 92 of their order. The ld. A.R submitted that this company should be excluded for functionality difference and in support th....