TaxTMI 
TaxTMI 
2016 (6) TMI 1473
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....el for the Assessee at the outset submitted that he had filed a petition seeking admission of additional evidence. Ld. AR submitted that assessee by mistake in its TP study, had made a wrong allocation of the revenue from software development services between AE and Non-AE. As per the Ld. AR, services provided by the assessee fell within the software development services stream. Revenues were incorrectly bifurcated between AE and non-AE, due to a mistake, as per the Ld. AR. Further as per the Ld. AR, TPO went by the bifurcation done by the assessee and proceeded with the transfer pricing analysis, relying on the figures of revenue stream worked out by the assessee. Final recommendations made by the TPO were based on the revenues from softwa....
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....sp; Software Development Services 399,187,679 96,725,461 1,918,471,860 2,414,385,000 Total Operating Income 399,187,679 96,725,461 1,918,471,860 2,414,385,000 Expenses Software Development Expenses 1,590,437,000 Other Operating and Administration Expenses 330,500,000 Depreciation 111,155,000 Financial Expenses (Bank charges) Total Operating Expenses 431,817,632 .107,724,897 1,492,549,471 2,032,092,000 O....
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....s. However, the expenditure having been allocated based on turnover, the operating profit to operating cost ratio in the AE segment will under go substantial change if there is a change in the revenues shown in the AE segment. It is therefore fundamentally important that correct revenue is adopted for the AE as well as the non-AE segments for the TP study. TPO had proceeded to make the TP analysis based on the segmental results given by the assessee originally. This, in our opinion could lead to functionally wrong results. We are therefore of the opinion that the issue regarding Transfer pricing requires a fresh look by the lower authorities so that the revenue stream is correctly bifurcated between AE and non-AE segment. This being a thres....