TaxTMI 
TaxTMI 
TaxTMI 
2019 (10) TMI 1552
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....ated Enterprises ('AEs') under Section 92CA(3) of the Income-Tax Act, 1961 ('the Act'). 2. On facts and in law, the Ld. TPO, the Ld. AO and the Hon'ble DRP erred in determining the arm's length price at 21.14 percent [being Net Cost Plus Mark-up ('NCP') margin] under Transactional Net Margin Method ('TNMM') even though Appellant's intercompany pricing of NCP margin of 13.99 percent and 15.41 percent was determined to be at arm's length by the learned Commissioner of Income Tax (Appeals) and Ld. TPO in immediately preceding year (AY 2010-11) and immediately succeeding year (AY 2012-13) and there has been no change in the facts and circumstances in AY 2011-12 vis-a-vis aforesaid years. 3. On the facts and in law, the Ld. TPO, the Ld. AO and the Hon'ble DRP erred in selecting certain alleged companies as comparable, without appreciating that in cognizance of Rule 10B(2), the functional, asset and risk profile of these alleged companies are dissimilar to that of the Appellant and thereby erred in disregarding various judicial pronouncements. 4. On facts and in law, the Hon'ble DRP erred in confirming the action of the Ld. TPO, when conducting the comparability analysis, by mod....
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....ice to each other. The Appellant craves leave to alter, amend and/ or withdraw all or any of the grounds of appeal herein or add any further grounds as may be considered necessary and to submit such statements, documents and papers as may be considered necessary either before or during the appeal hearing." 3. The issue raised in the present appeal is against the Transfer Pricing Adjustment made in the hands of the assessee. The limited issue which has been addressed by the learned AR for the assessee before us is in connection with the comparables finally selected to benchmark the international transaction of the assessee. Hence we proceed to decide the appeal accordingly. 4. Briefly in the facts of the case, the assessee had furnished the return of income declaring total income of Rs. 5,86,47,271/-. The assessee was engaged in sale of Software licenses and rendering support services to customers in India of the AE. The said services included rendering marketing, promotional and customer liasoning and after sale services of the computer aided engineering systems to the parent company. The assessee had entered into various international transactions totaling Rs. 42,15,45,837/-....
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....rits to be excluded. 7. We have heard the rival contentions and perused the record. The issue which arises in the present appeal is against the Transfer Pricing Adjustment made in the hands of the assessee of Rs. 1.71 Crores. The assessee is aggrieved by the final selection of the companies as comparables on various grounds. The only issue raised is with regard to the marketing and sales support services provided by the assessee to its AE. The assessee had selected TNMM method as the most appropriate method and had applied PLI OP/OC. The margins of the assessee was 11.57%. The selection process was revised by the TPO on applying different set of filters and also by using data for the contemporaneous period. The TPO thus arrived at the final set of 15 comparables, whose arithmetic mean PLI worked out to 24.09%. The final list of comparables selected by the TPO reads as under:- Sl. No. Company Name OP/TC (%) 1. Apar Chematek Lubricants Ltd. 42.31 2. Apitco Ltd. 25.17 3. Concept Communication Ltd. 4.73 4. Crystal Hues Ltd. 11.69 5. Cyber Media Research & Services Ltd. 10.60 6. DHFL Property Services Ltd. 14.86 7. Global Procurement Consultants Ltd. 30.86....
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....d., have also accordingly held. 12. Now coming to the next concerns i.e. Info Edge (India) Ltd. The learned AR for the assessee in this regard pointed out that the said concern was engaged in Internet based service delivery, operating in four service verticals through web portals in respective vertical, namely, (i) Naukri.com for recruitment related services; (ii) Jeevansathi.com for matrimony related services; (iii) 99 acres.com for real estate related services and (iv) Shiksha.com for education related services. It was further stated by the learned AR for the assessee that the assessee was providing marketing and sale support services to the companies to whom the AE of the assessee sells the products. Hence the said concern was not functionally comparable to the assessee. It was also pointed out that Info Edge (India) Limited possesses certain intangible assets and on this account also the concern cannot be said to be comparable. Again reliance was placed on the decision of Delhi Bench in Kobelco Cranes India (P.) Ltd., (supra). The learned DR for the Revenue placed reliance on the orders of the authorities below. 13. We have heard the rival contentions and are of the view that....