TaxTMI 
TaxTMI 
2022 (3) TMI 1468
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....tances of the case, the learned Assessing Officer was not justified in making the arm's length price adjustment (ALP) of Rs. 2,26,10,544 in respect of provision for software development services, and that the Transfer Pricing Officer erred in recommending the said ALP adjustment and the Dispute Resolution Panel erred in confirming the said ALP adjustment. The twelve grounds of appeal, set out in summarized grounds of appeal, are primarily arguments in support of this grievance. 3. To adjustment on this issue in appeal, only a few material points need to be taken note of. The assessee is a private limited company operating in software development industry and is primarily engaged in providing customized software developments services as per....
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....signed the audit report on the basis of information provided by the management to him. Hence, its authenticity is not beyond doubt. It has only been created considering the Transfer Pricing auditing in mind by showing the transaction with the AE in good light. * Allocation of expenses have been arbitrarily done resulting in skewed result like AE segment PLI 13.79 - 15.39% and the non-AE segment PLI 8.01-9.44% and the entity level PLI being 7.14%. Based on the above discussions the segmental audit report of the assessee is rejected and the benchmarking has been done at the entity level and the arm's length adjustment is computed. 4. Aggrieved, assessee raised the objections before the Dispute Resolution Panel but without any success by ....
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.... reason enough to reject the segmental accounts as a whole. Rejecting the internal TNMM on the basis of such a sweeping generalization cannot meet a judicial approval. Similarly, the segmental accounts showing different PLIs in different segments, i.e. 13.79%-153.9% as against 8.01%-9.44%, cannot be reason enough to reject the segmental accounts. Having said that, the observations regarding "allocation of expenses have been arbitrarily done resulting in skewed result", in our considered view, need to be examined on merits by calling for further explanations of the assessee and taking a call on those explanations in a fair and reasonable manner in accordance with the law and by giving yet another opportunity of hearing we are thus of the con....