TaxTMI 
TaxTMI 
2022 (6) TMI 1367
X X X X Extracts X X X X
X X X X Extracts X X X X
....Assessing Officer, National Faceless Appeal Centre, Delhi dated 29.01.2021 for the assessment year 2017-18. 2. The assessee is a company and GCI Global Ventures, Mauritius owns 95% of the equity share capital of the assessee which is in turn a wholly owned subsidiary of Brillio LLC USA. The assessee is engaged in rendering software developer and support [SWD] services to third parties as well as to its Associated Enterprises [AEs]. 3. In terms of Sec.92B(1) of the Act, the transaction of providing SWD Services were "international transaction" i.e., a transaction between two or more associated enterprises, either or both of whom are non-residents, in the nature of purchase, sale or lease of tangible or intangible property, or provision....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ional Net Margin Method [TNMM] to be the Most Appropriate Method [MAM]. The Operating Profit to Operating Cost [OP/OC] has been determined as the Profit Level Indicator [PLI] in the TNMM analysis. The assessee has undertaken the benchmarking as follows:- Particulars Exports AEs Non-AEs Non-AE IT Staffing Domestic Total INCOME Software Sales and Services Domestic - - - 43,31,97,179 43,31,97,179 Exports 1,60,07,64,665 32,41,l3,131 34,27,409 - 1,92,83,05,205 Other operating income &nbs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ers. The assessee has entered into large value of international transactions and therefore a reference was made to the Transfer Pricing Officer [TPO] for determination of ALP. The TPO rejected the tax payer's TP study stating that the assessee has used internal CUP method to arrive at the conclusion that SWD services provided is at arm's length and that CUP method is applicable only in a scenario where the exact nature of the transactions can be replicated. On this basis, the TPO proceeded to make a fresh search of comparables whereby he arrived at median margin of 26.1% and made a TP adjustment of Rs.17,18,13,781. 8. Aggrieved, the assessee filed its objections before the DRP. The DRP confirmed the TP adjustment stating that the decisio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....used TNMM as the MAM. 11. On the other hand, the ld. DR submitted that the DRP has considered the TPO's observations with regard to comparability criteria for internal benchmarking and has also distinguished the applicability of the decision of the Hon'ble Tribunal in assessee's own case for earlier assessment years. Therefore, those decisions cannot be applied for the year under consideration and the facts need to be looked into afresh. 12. We have considered the rival submissions and perused the material on record. We notice that the TPO in his order has made contradicting observations about the MAM followed by the assessee for determination of ALP. In para 6.2 the TPO has stated that the assessee has followed TNMM as MAM, whereas i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....12-13 in ITA Nos. 518/Bang/2016 & 354/Bang/2016 by order dated 19.1.2018 has upheld the internal TNMM used by the assessee for determination of the ALP for international transactions. The relevant extract of this decision is as follows:- "7. Having carefully examined the orders of lower authorities and the documents placed before us, we find that the assessee has placed the relevant evidence with respect to scope of work, nature of services rendered for AE and non- AE in the same countries. But these aspects were not examined by the TPO. Therefore, we set aside the order of the AO passed consequent to the order of the DRP and restore the issue to the AO/TPO to re-examine the issue of determination of ALP for international transacti....