AI Drafter 
TaxTMI 
TaxTMI 
2019 (4) TMI 2128
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....d over the consideration of turnover as the benchmark. However, the assessee objects to the consideration of the following 6 cases on the ground that they are functionally different from the assessee: 6.6 The objections of the assessee for excluding the cases given in the first table and for including the cases in the second table have merit in view of the directions of the Hon'ble ITAT, Bangalore in the following cases: 6.7 The TPO is directed to exclude these cases as the comparables taken as mentioned above are functionally quite different from the assessee's functions. 6.8 On a careful consideration, we find that the comparable cases to be included are given in the table below. This is also based on the decision of the Hon'ble ITAT, Bangalore in the 4 cases cited above. The TPO's action is, otherwise, fully justified. The list of cases to be included in this regard is given below: 6.9 On a careful examination of the objections of the assessee in the light of the submissions, we find that they are wellfounded. We, therefore, direct the TPO to include the 8 cases mentioned above as comparable and recalculate the correct transfer....
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.... out that Infosys Technologies was picked up as a comparable in the AY 2006-07 also by the department while analysing the international transactions pertaining to software development services in a large number of cases In one such case of Altair Enqineering India Pvt Ltd., Bangalore, the Hon'ble DRP confirmed the finding of the TPO though the turnover of the said assessee was only Rs.802 crores. The average PLI of the comparables, which included Infosys Technologies Ltd. as worked out by the TPO was 20 68% on cost. The said appellant went in appeal before the Hon'ble ITAT and the B -Bench of the Hon'ble ITAT Bangalore, upheld the TPOs PU to the extent of 20% and granted relief only at 0.68% on grounds not related to the comparables taken by the TPO. in the case of the assessee also for the AY 2006-07 , Infosys Technologies Ltd., was considered as a on record how such functional difference and risk has influenced the result of the comparable by the TPO. Thus, the aforesaid decision of the Hon'ble ITAT,Bangalore, may be said to be applicable to the assessee also In a recent case of Syniantec Software Solutions Pvt.Ltd. vs. ACIT , the Hon'ble ITAT,Mumbai,....
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....PO without any discretions of the objections of the assessee in respect of both the segments. We expect the DRP to give a reasoned and cogent finding while dealing with the contention of the assessee with respect to exclusion / inclusion of the comparables. As the order was silent on material aspects, therefore we remand the whole of the TP issue pertaining to inclusion / exclusion to the file of the DRP with a direction to pass a reasoned and speaking order. Needless to say while doing so the DRP shall also follow the procedure as provided under the Act and Rules in adjudicating the grievance of the assessee. 09. In the result, appeals of the assessee is allowed for statistical purpose. Order pronounced in the open court on 5th day of April, 2019. ============= Document 1 A. Grounds of appeal against the erroneous DRP Direction That on the facts and in the circumstances of the case and in law and based on the directions of the DRP 1. 2. the learned DRP has erred in law and in fact by committing various errors/mistakes apparent on record while issuing its directions; the learned DRP has erred in law and in fact by not passing speaking direc....
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....ing the export sales less than 75% of the sales as a comparability criterion [This ground is specific to the transaction relating to provision for software development services only]; the learned AO/ TPO has erred, in law and in facts, by rejecting certain comparable companies identified by the Appellant using the export sales less than 25% of the sales as a comparability criterion [This ground is specific to the transaction relating to provision for IT enabled services only]; 11. the learned AO/ TPO has erred, in law and in facts, by not applying a higher. threshold while applying the turnover filter; 12. the learned AO/ TPO has erred, in law and in facts, by accepting/rejecting certain companies based on unreasonable comparability criteria; 13. 14. the learned AO/ TPO has erred, in law and in facts, by wrongly computing the operating margins of some of the comparable companies identified in the transfer pricing order; the learned AO/TPO has erred, in law and in facts, by not considering foreign exchange gain/loss as operating in nature while computing the margins of the comparable companies identified in the transfer pricing o....
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.... Infosys BPO Ltd b) Eclerx Services Ltd c) Accentia Technologies Ltd d) Acropetal technologies Ltd (Seg) e) ICRA Online Ltd (Seg) Document 3 No. Company Name 1. ICRA Techno Analytics Ltd. 2. Infosys Technologies Ltd. 3. 4. Tata Elxsi Ltd. KALS Information Systems Ltd. Document 4 i) M/s Genisys Microchip (1) P. Ltd. v DCIT [ITA.No.1254/Bang/2010 ii) M/s Kodiak Networks (I) P. Ltd. v. ACIT [ITA.No.1413/Bang/2010 iii) M/s Electronic for Imaging India P. Ltd. [ITA.No.1171/Bang/2010 iv) M/s Trilogy E-Business Software India P.Ltd. v. DCIT[ITA.1054/Bang/2011 dt.23/11/2012 Document 5 No. Company Name 1. Akshay Software Technologies Ltd 2. Goldstone Technologies Ltd 3. LGS Global Ltd. 4. Crazy Infotech Ltd 5. PSI Data Systems Ltd Document 6 6. Reliance Infosolutions Private Limited 7. Synetairos Technologies Ltd 8. Teledata Marine Solutions Limited Document 7 Sl. Company name No. 1. Remarks Akshay Software | As per the information available in the annual report, the company Technologies Ltd. fails the onsite revenues filter applied by the TPO. Hence rejected as comparable. 2. Melsta....
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....ay also contain many forward looking statements. Thus, the TPO relied only on the information / data available in the annual report combined with the information collected, if any, from the company The TPO writes that as per the reply received from the company, it is mainly a software development service company for the FY 2007-08 and it qualifies all the filters applied by the TPO. Thus the company is proposed as a comparable.. Further, the software products mentioned by the taxpayer are used by the company for rendering software development services. Many software development companies use in- house developed libraries frame works for rendering software development services and the presence of these in-house developed software tools in no way changes the characteristic of the services as these tools are not sold as a product. Thus as can be seen from above reply, the company rendered mainly software development services for the FY 2007-08.. Therefore we agree with the view of the TPO that this company is retained as a comparable as its predominant revenues (75% of revenues) for the FY 2007-08 are from rendering software developme....