TaxTMI 
TaxTMI 
2022 (5) TMI 1491
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....O vide order dated 26.01.2021 u/s 92CA of the I.T.Act, proposed the following TP adjustments:- Name of the Segment Average margin TP adjustment Software development segment 20 comparables with median of 26.18% Rs.6,92,14,199 Marketing support services segment 5 comparables withmean of 15.88% Rs.2,53,32,409 Software Distribution segment 5 comparables with mean of 17.85% Rs.4,56,73,477 Total Rs.14,02,20,085 2.1 The AO passed the draft assessment order u/s 143(3) of the I.T.Act on 31.03.2021, incorporating the TP adjustment of Rs.14,02,20,085 as made by the TPO. Aggrieved by the draft assessment order, the assessee filed objections before the DRP on 21.04.2021. Pursuant to the directions of the DRP, an order giving effect to it was passed by the TPO dated 21.01.2022 making the following TP adjustments: Name of the Segment Average margin TP adjustment Software development segment 20 comparables with median of 24.33% Rs.6,15,49,522 Marketing support services Determined the transaction at ALP and no adjustment made thereon. Nil Software Distribution segment Determined the transaction at ALP and no adjustment made thereon. Nil 2.2 Post the above o....
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....of Rs.6,92,14,199 determined by him in the order passed u/s 92CA(3) of the I.T.Act (order dated 26.01.2021). The AO is directed to examine the issue raised in ground 5, and accordingly, reduced the TP adjustment made pursuant to the DRP's directions. It is ordered accordingly. 3.3 In the result, ground 5 is allowed for statistical purposes. Ground 6(iii) 4. By raising ground 6(iii), the assessee is seeking to exclude seven comparables on the grounds that the turnover of the said companies far exceeds Rs.200 crore, and therefore, the said companies cannot be compared with that of the assessee, where the turnover under the software development segment is only Rs.45.35 crore. In this context, the learned AR relied on the following judicial pronouncements:- (i) Autodesk India (P) Ltd. v. DCIT, Circle 11(1), Bangalore (2018) 96 taxmann.com 263 (Bangalore Trib.) (ii) Cenduit (India) Services Pvt. Ltd. v. DCIT, Circle 2(1)(1), Banglaore (TS-19-ITAT-2022 Bang-TP). (iii) M/s.Software Paradigms Infotech Pvt. Ltd. v. ACIT, Circle 1(1), Mysuru (TS-676-ITAT-2021 Bang-TP) 4.1 The learned Departmental Representative was duly heard. 4.2 We have heard rival submissions and perused the m....
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.... may not be any necessity to examine as to whether the decision rendered in the case of Genisys Integrating (supra) by the ITAT Bangalore Bench should continue to be followed. Since arguments were advanced on the correctness of the decisions rendered by the ITAT Mumbai and Bangalore Benches taking a view contrary to that taken in the case of Genisys Integrating (supra), we proceed to examine the said issue also. On this issue, the first aspect which we notice is that the decision rendered in the case of Genisys Integrating (supra) was the earliest decision rendered on the issue of comparability of companies on the basis of turnover in Transfer Pricing cases. The decision was rendered as early as 5.8.2011. The decisions rendered by the ITAT Mumbai Benches cited by the learned DR before us in the case of Willis Processing Services (supra) and Capegemini India Pvt.Ltd. (supra) are to be regarded as per incurium as these decisions ignore a binding co-ordinate bench decision. In this regard the decisions referred to by the learned counsel for the Assessee supports the plea of the learned counsel for the Assessee. The decisions rendered in the case of M/S.NTT Data (supra), Societe Genera....
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....ubmissions and perused the material on record. The issue is restored to the files of the AO / TPO. The AO / TPO shall comply with the directions of the DRP and exclude M/s.R Systems International Limited, if it is found that the said company has prepared financials for the year ending December 2016. It is ordered accordingly. 5.3 In the result, ground 7 is allowed for statistical purposes. Ground 8 6. In the above ground, the assessee is seeking to rectify the margin of comparable M/s.Harbinger Systems Private Limited. It is submitted that the TPO has taken the margin at 11.16%, whereas, the correct margin of this company is 8.12%. It was stated that the variation in the margin is due to incorrect treatment by the TPO of certain items such as forex gain, bad debts, donation, etc. 6.1 We have heard rival submissions and perused the material on record. The DRP in its directions at page 31 had specifically directed the TPO to examine this aspect. However, the TPO has merely incorporated the margin at 11.16% and has not verified the claim of the assessee. Therefore, in the interest of justice and equity, we confirm the directions of the DRP and restore the matter to the AO / TPO t....