TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 1437
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.... were issued. The Assessing Officer found that there are international transactions exceeding the limit and the matter was referred to the Transfer Pricing Officer for determination of ALP with prior approval of the Commissioner of Income Tax, Bangalore-3. The TPO has considered the financial results as per the profit and loss account and PLI worked out on OP/OC at 14.80% and the assessee has applied the TNMM as Most Appropriate Method. The TPO has issued Notice to submit the documents as per Section 92D along with the financial statements, Annual Report and copies of agreements. As per the TP study, the assessee has chosen five comparables in respect of software development activity and applied filters. Whereas the TPO has rejected the TP Study and finally selected the comparables at page 15 para 9 of the order as under : 4. The TPO granted Working Capital and Risk Adjustment. And finally computed the Arm's Length Price (ALP) in software development segment referred at page 19 para 12.4 as under : 5. The TPO has passed the order under Section 92CA of the Act dt.1.1.2014.Subsequently draft assessment order was passed with Transfer Pricing Adjustment and disallowance of adjustment....
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....TO (supra). iv) ICRA Techno Analytics Limited - where the turnover is Rs.15.84 Crores and RPT of 23.28%,the company is functionally different as it is engaged in the business of IT Products, Engineering and KPO Services, Segmental results of software development are not available. It fails the RPT filter and functionally not comparable. The ld.AR relied on the decision of Applied Materials India Pvt. Ltd. Vs. ACIT [IT(TP)A No.17/Bang/2016 Dt.21.09.2016 for A.Y. 2011-12] at pages 32 to 34 para 17.1 & 17.2 as under : " (ii) Icra Techno Analytic Ltd. 17.1 We have heard the learned D.R. as well as learned A.R. and considered the relevant material on record. The DRP has rejected this company by recording the fact as under : " We examined the annual report from which it is evident that the entire revenue has been shown under service segment which indicates that the revenue from software development, consultancy, licensing and sub-licensing, annual maintenance charges for software support. WEB development and hosting has been reported in one segment, thus in absence of segmental information, we concur with the view of the DRP in preceding year and accordingly direct the Assess....
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....of Common scope Networks India Pvt. Ltd. Vs. ITO (supra) at paras 8 & 9 as under : 9. The learned Departmental Representative has filed written submissions and relied on the decision in the case of M/s.Telsima Communications Pvt. Ltd. Vs. DCIT [IT(TP)A No.304/Bang/2016 Dt.22.02.2019 Asst Year 2011-12 at page 15 para 7.3.2 as under in respect of Acropetal technologies ltd. " 7.3.2 From the above, it is seen that the assessee had objected to the inclusion of 'Acropetal' on different issues before different authorities. The TPO and DRP have not addressed the issues raised before them. Before us, the assessee has objected to the inclusion of this company on various issues, listed above; some of which are being raised for the first time. In the judicial decision cited by the assessee, 'Acropetal' has been excluded from the set of comparables by the co-ordinate bench of this Tribunal on the ground that the service revenue from software development services is less than 75% of the operating revenue; which ground was never taken by the assessee before the authorities and has been raised by the assessee for the first time before us. 7.3.2 Taking into account the facts and circumstance....
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....en that before the DRP, the assessee has raised objections on the inclusion of this company as a comparable on various issues, but the DRP has not rendered any findings on the same. 9.3.2 We find tha thte Co-ordinate Bench of this Tribunal in the decision of Finastra Software Solutions (I) Ltd., (supra) cited by the assessee (supra) has excluded this company 'E-infochips' from the set of comparables by relying on the decision in the case of Applied Materials (P) Ltd., (IT(TP)A No.17 and 39/Bang/2016 dated 21.09.2016). However, the issue on which this company has been excluded from the set of comparables is not clear from the judicial pronouncement cited by the assessee. Since the assessee has raised certain issues for exclusion of this company from the list of comparables for the first time before us, and the authorities below have not rendered any finding on the functional comparability of this company 'Einfochips' vis-à-vis the assessee in the case on hand, we deem it appropriate to remand the issue of comparability of this company, Einfochips Ltd., back to the file of the TPO, for examination / verification of the facts and adjudication on the issues raised by the asse....