TaxTMI 
TaxTMI 
2023 (4) TMI 21
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....claring return income of Rs. 52,52,39,980/ . The return was duly processed u/s 143(1) of the IT Act, 1961. Thereafter the case of the assessee was selected for the scrutiny under CASS. Notice u/s 143(2) of the IT Act, 1961 was issued. 2.2 In response to the statutory notices, representative of assessee appeared before the Ld.AO and filed requisite details. The Ld.AO observed that assessee had international transaction with its associated enterprises. Accordingly the case was referred to the transfer pricing officer u/s. 92CA for determining the arms length price of such international transactions. 2.3 On receipt of the reference u/s. 92CA, the Ld.TPO called upon assessee to file the economic details of the international transaction it has had with its AE for the year under consideration. From the TP report observed that following were the international transactions. 2.4 The Ld.TPO noted that assessee computed its margin by using OP/OC as PLI at 11.09% for software development service segment. Assessee had used TNMM as most appropriate method for benchmarking the transaction. In the TP study, assessee had used 7 comparables with an average margin of 10.91% and thus held its....
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....sessment order was passed by incorporating the disallowance u/s. 40(a)(i) as made in the draft assessment order in addition to the adjustment reworked u/s. 92CA. 2.14 On receipt of the final assessment order, assessee has preferred this appeal before this Tribunal. 3. The Ld.AR at the outset submitted that Ground nos. 1-3 are general in nature and does not require any adjudication. 4. In respect of Ground no. 4, it is submitted that this issue has been raised for excluding the sub-contracting charges from the operating cost as they are a pass-through cost. 4.1 The Ld.AR submitted that assessee places reliance on the decision of Hon'ble Delhi Tribunal in case of DCIT vs. Cheil Communications India Pvt. Ltd. reported in (2011) 11 taxmann.com 205. 4.2 However, the Ld.AR fairly admitted that this issue has been considered against assessee in assessee's own case for A.Y. 2014- 15 reported in (2022) 141 taxmann.com 421. We refer to the relevant observation which is reproduced as under: "18. The ld. AR submitted that the determination of net cost margin excluding the sub-contract charges is decided against the assessee by the Tribunal in assessee's own case for....
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.... outsourcing activity of both assessee as well as the comparables. Accordingly, the issue is decided against the assessee." 19. Respectfully following the above decision of the coordinate bench of the Tribunal, we see no reason to interfere with the decision of the lower authorities and hence these grounds of the assessee are dismissed." 4.3 Respectfully following the above view, we see no reason to interfere with the view taken by the authorities below and the same is upheld. Accordingly this ground raised by assessee stands dismissed. 5. Ground no. 5: The Ld.AR submitted that sub-ground no. 5.1 - 5.11 is not pressed by assessee as they are general in nature. 5.1 He submitted that in Ground no. 5.12, assessee seeks exclusion of 10 comparables being a) RS Software b) L&T Infotech Ltd. c) Nihilient Technologies Ltd. d) Intex Software Pvt. Ltd. e) Persistent Systems Ltd. f) Infobeans Technologies Ltd. g) Thirdware Solutions Ltd. h) Infosys Ltd. i) Aspire Systems India Pvt. Ltd. j) Cybage Software Pvt. Ltd. 5.2 He submitted that the two comparables raised by assessee in....
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....such as cloud computing, infrastructure management, analytics & information management, etc., and that No segmental details are available. The LdAR submitted that this company is also engaged in trading IT related products has cost of brought out items and has won awards and recognitions for innovative products. He relied on pages 969, 979, 922, 986 of the annual report paper book in support. The Ld.AR submitted that this company is a market leader and enjoys significant benefits on account of ownership of marketing intangibles, intellectual property rights and business rights and brand value. As a result of this high brand value, the company enjoys a high bargaining power in the market. He relied on pages 943, 946, 920, 1011 of the annual report paper book in support. Referring to page 1023, 1015 the Ld.AR submitted that this company has significant onsite activities. Further, he submitted that during the year under consideration, this company has extraordinary event, whereby Information Systems Resources Centre Private Limited amalgamated with the Company. He thus prayed for exclusion of this company from the final list. 14. Infobeans Technologies Ltd.: ....
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....aced before us. 16. We note that the decision of Hon'ble Delhi Tribunal in case of Global Logic India Ltd.,(supra) considered these comparables for assessment year 2016-17 and has held them to be functionally not similar with a captive service provider like that of the assessee before us. Further The assessee in Global Logic India Ltd.,(supra) is also as captive service provider as observed by Hon'ble Delhi Tribunal therein. Hon'ble Tribunal observed as under: COMPARABLE COMPANIES SOUGHTTO BE EXCLUDED BY THE TAXPAYER LARSEN & TOUBRO INFOTECH LTD. (L&T) 14. The taxpayer sought to exclude L&T from the final set of comparables chosen by the ld. TPO for the purpose of benchmarking its international transactions qua SDS on the grounds inter alia that it is functionally dissimilar; that its segmental data is not available; that L&T is a huge brand with ownership of intangibles and on account of extra ordinary event; and on the ground that this company was rejected in taxpayer's own case in Global Logic India Ltd. v. Dy. CIT [2020] 117 taxmann.com 39 (Delhi - Trib.). 15. However, on the other hand, ld. DR for the Revenue opposed the contentions raised by the....
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.... second segment industry cluster which includes Hi Tech and consumer electronics, consumer, retail and Pharma, energy and process, auto Mobile and aerospace, plant equipment and industrial machinery, utilities and E &C. The third segment, is telecom segment which refers to product engineering services (PES) which has been discontinued in this year. Regarding the PES, in Director's report, (available on page S-1225 of the Annual Report or page 96 of PB-2), it is reported as under : "TRANSFER OF PRODUCT ENGINEERING SERVICES (PES) BUSINESS TO L&T TECHNOLOGY SERVICES LIMITED (LTTSL) AND WINDING UP OF GDA TECHNOLOGIES INC. (GDA INC.) As part of business restructuring undertaken within L&T Group, it was decided to consolidate the engineering services business under a separate subsidiary of L&T, L&T Technology Services Ltd. (LTTSL). Pursuant to this, the Company initiated and completed transfer of its Product Engineering Services (PES) Business Unit to LTTSL effective January 1, 2014, PES Business Unit was transferred by way of slump sale for total sales consideration of Rs. 489.53 crs based on ITA No. 4740/Del./2018 fair valuation, GDA Technologies Inc., USA (GDA Inc.), a wh....
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....Services Ltd. w.e.f. January 1, 2014 as part of the business restructuring undertaken within the Larsen & Toubro group. Though the initiation started from 1-1-2014 but the whole effect of the transaction was during the year under consideration. Further, Larsen & Toubro Infotech Ltd. during the year under consideration acquired Information Systems Resource Centre Private limited ("ISRC") thereby making it wholly owned subsidiary and because of such extraordinary event of acquisition, the said concern cannot be held to be a valid comparable and thus has to be excluded from the final set of comparable. Accordingly, we hold so." 20. In view of the facts inter alia that L&T is into various segments having no segmental financials, having huge brand value and intangibles is not a suitable comparable vis-à-vis taxpayer which was working as a captive entity and that contention raised by the ld. DR that under TNMM minor dissimilarities do not affect the overall comparability is not sustainable because though it is a taxpayer's own comparable but there being no estoppel against statute and that taxpayer can rectify its mistake at any stage of the proceedings. Secondly, it ....
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....-1-2016. So, we order to exclude Thirdware from the final set of comparables. INFOBEANS TECHNOLOGIES LTD. (INFOBEANS) 44. The taxpayer sought exclusion of Infobeans as a comparable again on ground of functional dissimilarity, it also being into providing services viz. software engineering services primarily in Custom Application Development (CAD), Content Management Systems, Enterprise Mobility, Big Data Analytics, UX & UI, Automation Engineering Services, as is evident from its financials, available on page 123 of the annual report paper book. 45. The taxpayer also brought on record profile of the Infobeans at pages 58 to 60 of the appeal memo wherein it is claimed by the Infobeans that it is providing wide range of services under four verticals i.e. services, automation, enterprise and industries and under the automation services verticals, the company is providing advanced robotic process automation services. Since Infobeans is into diversified activities it cannot be a suitable comparable vis-à-vis the taxpayer which is a routine software development services provider. Infobeans has been excluded as a comparable on account of functional dissimi....
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....rofessional services to ISVs and enterprises, IP products, IT services, development of software products and offers complete product life cycle services without there being separate segmental information disclosed in its Annual Report for such activities . He placed reliance on page 1421, 1592, 1608, 1641 of the annual report paper book. It is submitted that Persistent Systems made significant investments towards research and development activities in the relevant previous year. Persistent has collaborated with researchers from IGIB, JNU, IISER-Pune and NCL to develop SanGeniX - an DNA sequencing using Next Generation Sequencing (NGS) technology), eSkIN-will help discovery of new pharmaceutical and cosmetic products to empower pharmaceuticals and cosmetic companies to predict the effects of their products on human skin). He placed reliance on page 1421 of the annual report paper book. Persistent has established "persistent labs" which focuses on latest technologies viz., gesture computing, machine learning etc. Using the innovations of Persistent labs. The Ld.AR further submitted that this company partnered with IBM and have added an engineering team that is building products and t....
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....ed reliance on 1904, 1944, 1984 of annual report paper book. The company owns significant brand value and focuses immensely on brand building. The Ld.AR submitted that, this company heavily focuses on research and development activity and incurs significant expenditure for this account and for the financial year relevant to assessment year under consideration, the company incurred research and development expenses of Rs. 415 crores. He placed reliance on page 1942 of annual report paper book. The Ld.AR submitted that, this company for the year under consideration has earned abnormally high profit with margin of 38.61%, which makes it incomparable with the assessee. The Ld.AR submitted thus submitted that this company is not functionally similar with that of assessee who is a captive service provider to its AE. It is also submitted that these comparables are not functionally similar with that of the assessee as has been observed by Coordinate Bench of this Tribunal in following cases: 1. Decision of Hon'ble Mumbai Tribunal in case of Red Hat India Pvt. Ltd. vs. Addl. CIT reported in (2022) 136 taxmann.com 52. 2. Decision of coordinate bench of thi....
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.... placed before us. We note that this company earns its revenue from power generation and it has nothing to do with the rendering of software development service. In fact, we note that this company is a full fledged entrepreneur in the business of power generation and therefore is not comparable functionally with a captive software service provider like assessee. Nothing is been placed by the Revenue contrary to the above observation. We therefore respectfully following the above view, direct the Ld.AO/TPO to exclude Aspire System India Pvt. Ltd. from the final list. 23. Nihilent Technologies Limited It is submitted that, this company is functionally dissimilar to the assessee and therefore ought to be rejected from the final list of comparables. It is submitted that, services rendered by this company are wide in range and diversified. The Ld.AR submitted that, the company is engaged in diversified activities. It is submitted that, it renders services in the nature of consulting, software development and product development, provision of business consulting in the area of the enterprise transformation, change and performance management, digital transformat....
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....company cannot be a valid comparable visà- vis assessee, who is a low risk entity working on cost + markup model. Hence, Nihilent is ordered to be excluded as a comparable. Nihilent Ltd. 46. The assessee sought exclusion of Nihilent Ltd. as a comparable on the ground that it is functionally dissimilar vis-à-vis assessee. This objection was also raised before the Ld. DRP but rejected. The assessee relied upon website of the company which is made available at page A 412 of the paper book wherein Nihilent Ltd. is shown to be engaged in providing advanced analytics, artificial intelligence, blockchain, business intelligence, data signs, cloud services etc. The annual financials of this company available at page A412 & A413 of the paper book shows that it is rendering Enterprise transformation and change management, Digital transformation services and Enterprise IT services but segmental financials are not available as is apparent from its financials available at page A305, A412 & A413 of the paper book. When this company is into various segments but segmental financials are not available it cannot be a valid comparable vis-àvis assessee which is a....
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.... the Ld.AO/TPO to exclude Cybage Software Pvt.Ltd., from the final list. 25. R.S Software (I) Pvt.Ltd: It is submitted that, this company is engaged in diversified activities, which are not similar to the services rendered by the assessee. The company is into custom application development, quality assurance and testing, application maintenance and support, strategic consulting, in respect of which, segmental details are unavailable. The company is engaged in development of platform services and is rendering data analytics services, which are different from the routine SWD services rendered by the assessee. The data analytics services rendered by the company will fall within the definition of KPO services, which are incomparable to the services rendered by the assessee. It is submitted that this company conducts research and development work in the areas of real time analytics, MDM, proximity, payments, digital commerce, mobile payments, testing, automation, personalised loyalty in payments and merchant management in payments laboratory. On the contrary, the Ld.DR relied on the orders passed by the authorities below. We have per....
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....layed receivables and therefore no separate adjustment is required in such circumstances. 9.5 On the contrary Ld.CIT.DR submitted that interest on receivables is an international transaction and Ld.TPO rightly determined its ALP. In support of her contentions, she placed reliance on decision of Hon'ble Delhi Tribunal order in Ameriprise India Pvt. Ltd. vs. ACIT in 2015- TII-347-ITAT-DEL-TP, wherein it is held that, interest on receivables is an international transaction and the transfer pricing adjustment is warranted. He stated that Finance Act, 2012 inserted Explanation to Section 92B, with retrospective effect from 1.4.2002 and sub-clause (c) of clause (i) of this Explanation provides that: (i) the expression "international transaction" shall include-- ...... (c) capital financing, including any type of long-term or shortterm borrowing, lending or guarantee, purchase or sale of marketable securities or any type of advance, payments or deferred payment or receivable or any other debt arising during the course of business;....' . 9.6 Ld.CIT.DR submitted that expression 'debt arising during the course of business' refers to trading debt arising from sale ....
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....erest. He, therefore, concluded by summing up that interest on outstanding trade receivables is an international transaction and its ALP has been correctly determined. We have perused the submissions advanced by both the sides in the light of the records placed before us. 9.8 Ld.TPO computed interest on outstanding receivables at the rate equal to 4.985% on the receivables that exceeded 6 months. It has been argued by Ld.AR that authorities below disregarded business/commercial arrangement between the assessee and its AE's, by holding outstanding receivables to be an independent international transaction. 9.9 This Bench referred to decision of Special Bench of Kolkotta Tribunal in case of in case of Instrumentation Corpn. Ltd. v. Asstt. DIT in ITA No. 1548 and 1549 (Kol.) of 2009, dated 15- 7-2016, held that outstanding sum of invoices is akin to loan advanced by assessee to foreign AE., hence it is an international transaction as per explanation to section 92 B of the Act. We also perused decision relied upon by Ld.AR. In our considered opinion, these are factually distinguishable and thus, we reject argument advanced by Ld.AR. 9.10 Alternatively, it has been argue....
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.... statistical purposes. 10. Ground nos. 7 & 8 are general in nature and do not require any adjudication. 11. Ground no. 9 is raised by assessee in respect of the disallowance u/s. 40(a)(i) towards the salary cost reimbursed by assessee to AE on cost to cost basis. 11.1 It is submitted by the Ld.AR that section 195 has no application in respect of the reimbursement of salary cost. He placed reliance on the following decisions. • Decision of Hon'ble Karnataka High Court in case of DIT(IT) vs. Abbey Business Services India (P.) Ltd. reported in [2020] 122 taxmann.com 174 • Decision of Hon'ble Karnataka High Court in case of M/s. Flipkart Internet Pvt. Ltd. vs. DCIT (IT) in W.P. No. 3619/2021(T-IT) by order dated 24.06.2022 • Decision of Hon'ble Pune Tribunal in case of M/s. Faurecia Automotive Holding vs. DCIT (IT) in ITA No. 784/PUN/2015 by order dated 08.07.2019 • Coordinate Bench of this Tribunal in case of M/s. Toyota Boshoku Automotive India Pvt. Ltd. vs. DCIT in IT(TP)A No. 1646/Bang/2017 by order dated 13.04.2022 and • Coordinate Bench of this Tribunal in the case of Goldman Sachs Services Pvt. Ltd. vs. DC....
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....below. 11.4 We have perused the submissions advanced by both sides in the light of records placed before us. 11.5 We note that the evidences filed by assessee has not been considered by the revenue authorities. 11.6 We therefore remand this issue to the Ld.AO to consider the claim in accordance with the decision of Hon'ble Karnataka High Court in case of M/s. Flipkart Internet Pvt. Ltd. vs. DCIT (IT) (supra) and Coordinate Bench of this Tribunal in the above referred cases M/s. Toyota Boshoku Automotive India Pvt. Ltd. vs. DCIT (supra) Goldman Sachs Services Pvt. Ltd. vs. DCIT(supra) having regard to the evidences filed by the assessee. 11.7 We also direct that in the event, TDS has been deducted u/s. 192 of the Act, no disallowance can be made u/s. 40(a)(i). Section 40(a)(i) can be invoked only when there has been non-deduction of tax at source. Assessee has relied on the decision of Coordinate Bench of this Tribunal in case of ACIT vs. AON Specialist Services Pvt. Ltd. reported in (2020) 116 taxmann.com 368. We accordingly direct the Ld.AO to carry out necessary verification in accordance with the decisions referred to hereinabove. Needless to say that proper oppor....
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....f the Act. The Ld. Panel erred in upholding the same. Determination of arm's length price of international transactions The Ld. AO/ Ld. TPO/ Ld. Panel erred in rejecting the value of international transaction of provision of software development services, as recorded in the books of account, as the arm's length price. The Ld. AO/Ld. TPO/ Ld. Panel erred in law by redetermining arm's length price by incorrectly rejecting the arm's length price determined by the Appellant. (in INR) NA NA 249,480,134 Document 2 SI. No Grounds of Appeal 3.3 3.3.1 3.3.2 3.3.3 4 4.1 4.1.1 4.1.2 4.1.3 The Ld. AO/ Ld. TPO/ Ld. Panel erred in law in holding that the comparability analysis undertaken by the Ld. TPO on its own conjectures and surmises is based on data which was not available to the Appellant and thereby incorrectly rejecting the Appellant's comparability analysis. The Ld. AO/ Ld. TPO/ Ld. Panel erred in law in by incorrectly computing the arm's length price using multiple-year data not in accordance with the prescribed rules in undertaking the comparability analysis. The Ld. AO/ Ld. TPO/ Ld. Panel erred in l....
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....e Income-tax Rules, 1962. The Ld. AO/ Ld. TPO/ Ld. Panel had erred in facts and in law by excluding scrap sales and including bank charges while computing the Net Cost Plus Mark-up ('NCP') of the Appellant. Comparability Analysis adopted by the Ld. TPO for determination of arm's length price The Ld. AO/ Ld. TPO/ Ld. Panel erred in facts and in law by benchmarking the transactions of software development services of the Appellant with companies operating as full-fledged entrepreneurs thereby not considering the differences in the functions performed, assets employed, and risk undertaken by the Appellant vis-Ã -vis the companies selected as being comparable. The Ld. AO/ Ld. TPO/ Ld. Panel erred in law in applying arbitrary filters to arrive at a fresh set of companies as comparables to the Appellant, without establishing functional comparability. The Ld. AO/ Ld. TPO/ Ld. Panel, while applying the lower turnover filter to reject companies having turnovers less than INR 1 crore, erred in not applying an appropriate upper limit to reject high turnover companies and arbitrarily accepting companies without considering the turnover and s....
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....functionally similar to the Appellant and the Ld. Panel grossly erred in not adjudicating their exclusion on the basis that the companies not having featured in the TPO's search matrix, their inclusion would amount to cherry picking. The Ld. AO/ Ld. TPO erred in including certain companies as comparables, despite these companies being functionally dissimilar to the Appellant. (5.12.1) The Ld. AO/ Ld. TPO/ Ld. Panel erred in arbitrarily including Rheal Software Pvt. Ltd as comparable despite being functionally dissimilar to the Appellant. 5.12.2 The Ld. AO/ Ld. TPO/Ld. Panel erred in arbitrarily including CG-VAK Software & Exports Ltd as comparable despite being functionally dissimilar to the Appellant. 5.12.3 The Ld. AO/Ld. TPO/ Ld. Panel erred in arbitrarily including R S Software (India) Ltd as comparable despite being functionally dissimilar to the Appellant. 5.12.4 The Ld. AO/ Ld. TPO/ Ld. Panel erred in arbitrarily including Larsen & Toubro Infotech Ltd as comparable despite being functionally dissimilar to the Appellani. Tax effect пр (in INR) Document 5 Sl. No 5.12.5 Grounds of Appeal The Ld. AO/ Ld. TPO....
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....of Appeal Tax effect (in INR) 6.1.1 6.1.2 7 7.1 The Ld. AO/ Ld. TPO/ Ld. Panel erred in law in fact by treating on an arbitrary basis, that the realization of an invoice beyond 30 days would be treated as delayed receivables. The Ld. AO/ Ld. TPO, while giving effect to the Directions of the Ld. Panel, erred in incorrectly imputing interest on 'unbilled revenue' without appreciating the fact that the same is not invoiced by the Appellant as on 31 March 2016. Non-allowance of appropriate adjustment to the comparable companies by the Ld. Panel and Ld. AO/ Ld. TPO The Ld. AO/ Ld. TPO/ Ld. Panel erred in law and on facts in not allowing appropriate adjustments under Rule 10B to account for, inter alia, differences in (i) accounting practices, (ii) marketing expenditure adjustment, (iii) research and development expenditure adjustment, (iv) working capital, and (iv) risk profile between the Appellant and the comparable companies. NA 8 Variation of 3% from the arithmetic mean NA 8.1 The Ld. AO/ Ld. TPO/ Ld. Panel erred in law in not granting the benefits of proviso to section 92C(2) of the Act available to the A....
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.... Act and therefore, could not be made liable for tax deduction, once again, u/s 195 of the Act. The Ld. Panel and the Ld. AO grossly erred in holding that no employer-employee relationship existed between the Appellant and the seconded employees. The Ld. Panel and the Ld. AO erred in not following the decision of the Hon'ble High Court of Karnataka in the case of Abbey Business Services India Private Limited vs. DIT (2020) 122 taxmann.com 174 (Karnataka), wherein the Hon'ble High Court, inter alia, held that reimbursement of costs relating to the seconded employees was not FTS under the Act and the relevant tax treaty and hence was not to be subjected to tax deduction u/s 195 of the Act. Erroneous denial of claim of education cess paid on income-tax of INR 5,241,584 The Ld. AO erred in not considering the additional claim for deduction of education cess raised by the Appellant in the assessment proceedings without providing any reason. The Ld. AO erred in not allowing the claim of education cess of INR 5,241,584 Tax effect (in INR) 1,814,007 not pressed mend paid by the Appellant during the year under consideration as a....
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....% 35.72% 26.36% 7.53% 32.14% 45.00% 28.20% 8 Persistent Systems Ltd. 26.92% 31.34% 35.64% 30.89% 9 Infobeans Technologies Ltd. 34.98% 20.78% 41.95% 32.42% 10 Thirdware Solution Ltd 23.89% 44.39% 44.68% 36.90% 11 Infosys Ltd. 38.22% 41.30% 36.28% 38.61% 12 Aspire Systems (India) Pvt. Ltd. 34.26% 47.56% 38.04% 39.28% 13 Cybage Software Pvt. Ltd. 62.90% 68.68% 68.82% 66.45% 35th Percentile Median 65th Percentile 24.83% 28.20% 32.42% Document 11Traceback (most recent call last): File "C:\inetpub\vhosts\taxmanagementindia.com\httpdocs\python_image_text_project\google\direct_extract_text.py", line 19, in from google_doc_api import process_single_document File "C:\inetpub\vhosts\taxmanagementindia.com\httpdocs\python_image_text_project\google\google_doc_api.py", line 345 elif mime_type in ["image/gif"]: IndentationError: expected an indented block after 'if' statement on line 341 Document 12 These third party service providers furnish timesheets to Applied India where the same would be approved by the Managers in India. If a particular cost center does not have a manager then the same i....
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....able performance. For this purpose, the team of Applied India works closely with the team of the sub-contractors who ultimately ensure that the developed software serves its purpose. âš« Step 5: Testing Once the developed software is re-engineered, it becomes important for Applied India to test it on a system to ensure that the final outcome works. The testing activity is generally carried out by the team of Applied India. âš« Step 6: Bug-fixing . As a result of the testing activity, certain bugs may be identified in the software developed which would need fixing. This activity is generally carried out by the team which has done the basic development. Step 7: QA Quality Assurance or QA is one of the most important part of the entire software development life cycle where the team of Project Managers and Group Heads of Applied India ensure that the final product which is exported to Applied Inc. is in line with the international standards of the Applied Group. It is the responsibility of the Applied India's team to take corrective actions if there is any deviation from the quality standards of Applied India. Step 8: Final Expor....
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....ment activities on its account that leads to development of non-routine intangibles. Applied India uses computer software to carry out its business activities. Document 15 5.2.3 Applied India employed following tangible and intangible assets for the use in its business activities as on 31 March 2017: Table 4: Assets (net block) employed as on 31 March 2017 Particulars Amount (INR) Tangible Assets Computers 283,023,892 Leasehold improvements Networking Equipment Office Equipment Furniture & Fixtures 107,363,780 112,798,881 64,177,034 29,001,078 Total Assets 596,364,665 Source: Audited Financial Statement FY 2016-17 Risk undertaken The following sections provide an overview of the significant risks borne by Applied India vis-Ã -vis its AEs involved in the period under review: Risk Category and Description Table 5: Risk Profile Market Risk: The market risk comprises the risk caused by a shortfall in demand for the products and services offered by the company, which could lead either to a loss of market shares or a decrease in the company's profit margin. In this regard, it is disting....
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.... could be subject to significant liability for personal injury Contract Risk: Contract risks arise when a company enters into a contract and thus has to bear the liabilities associated with such contracts. Price Risk: Price risk is the risk that future income streams are sensitive to market prices. Exposure of Applied India Exposure of AES Applied India is subject to this risk in respect of its international transactions with AEs. Applied India invoices AEs in foreign currency and is thus exposed to foreign currency fluctuation risk. However, as Applied India invoices AES on a cost plus basis, the exchange fluctuation risk borne by Applied India is limited. Applied India provides software development service to AEs based on contracts. The software development services rendered by Applied India are based on the specifications received from AEs. Applied India does not assume any risk with respect to the ultimate success or failure of the activities. In the event that AEs determine that the services provided by Applied India do not meet the specifications prescribed and rework is required, the entire cost....