TaxTMI 
TaxTMI 
2025 (6) TMI 1935
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....ive filters / Application of new quantitative filters 2. On the facts and circumstances of the case, the Ld. AO/TPO erred in modifying the quantitative filters applied by the Appellant as well as introducing additional quantitative filters to modify the set of comparable companies identified by the Appellant in its TP Study report. 2.1. On the facts and circumstances of the case, the Ld. AO/TPO erred in application of a filter wherein only the companies with income from services to operating revenue greater than 75% are selected. 2.2. On the facts and circumstances of the case, the Ld. AO/TPO erred in application of employee cost filter, thereby rejecting companies having employee cost to operating cost ratio of less than 25%. 2.3. On the facts and circumstances of the case, the Ld. AO/TPO erred in modifying the turnover filter of 'INR 1 crore to INR 1000 crores' applied by the Appellant to 'INR 11.69 crores to INR 1,169.4 crores', thereby rejecting companies having a turnover lower than INR 11.69 crores as well as companies having a turnover greater than INR 1,169.4 crores. 2.4. On the facts and circumstances of the case....
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....e company: * by erroneously treating it as functionally similar to the Assessee; * by disregarding the fact that the company fails the foreign expenditure filter, wherein companies with Branch Office Abroad/On site operations with significant forex spending are rejected; applied by the Ld. TPO. 3.4. On the facts and circumstances of the case, the Ld. AO / TPO erred in selecting Gwynniebee India Pvt. Ltd., as a comparable company: * by erroneously treating it as functionally similar to the Appellant; * by disregarding the fact that the company has unreliable financial statements for the year under consideration on one hand the financial statements disclose that the Company is only providing services to its holding company and its entire trade receivables is due from its holding Company and on the other hand the RPT schedule has not disclosed transaction with its Associated Enterprise. 3.5. On the facts and circumstances of the case, the Ld. AO/TPO erred in selecting Infobeans Technologies Ltd., as a comparable company: * by erroneously treating it as functionally similar to the Appellant; * by disregarding the f....
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.... Limited., as a comparable company: * by disregarding the fact that the Company is functionally similar to the Appellant; * by disregarding the fact that the company does not fail the export turnover filter applied by the Ld. TPO. 3.13. On the facts and circumstances of the case, the Ld. AO / TPO has erred in rejecting Akshay Software Technologies Ltd.: * by disregarding the fact that the Company is functionally comparable to the Appellant; * by erroneously applying the forex expenditure filter; * by disregarding the fact that the Ld. TPO in the Appellant's own case for AY 2011-12 had included the said Company in the list of comparable companies, which was confirmed by DRP 3.14. On the facts and circumstances of the case, the Ld. AO/ TPO erred in rejecting KALS Information Systems Ltd.: * by disregarding the fact that the Company is functionally comparable to the Appellant; * by erroneously modifying the turnover filter of 'INR 1 crore to INR 1000 crores applied by the Appellant to 'INR 11.69 crore to 1169.4 crores'. 3.15. On the facts and circumstances of the case, the Ld. AO/....
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....any factual error as to such computations, if any. Levy of penalty 11. The Ld. AO has erred in law and in fact by issuing notice for levy of penalty under section 270A of the Act for under reporting of income. Prayer The Appellant craves leave to add, alter, supplement, amend, vary, withdraw, or otherwise modify the ground mentioned herein above at or before the time of hearing. All the aforesaid grounds of appeal are independent, in the alternative and without prejudice to one another." 3. Brief facts of the case are that the assessee is a Private Limited Company incorporated as a subsidiary of Optiva Inc., Canada and is working to support the Global operations of Optiva group in the field of Software development and Support services. Assessee company filed its e-return of income for A.Y. 2018-19 on 30.11.2018 declaring taxable income at Rs. 21,84,52,590/-. Return processed u/s. 143(1)(a) of the Act on 01.10.2019. Thereafter, case selected for scrutiny under CASS followed by validly serving statutory notices u/s. 143(2)/142(1) of the Act. During the year, assessee undertook international transactions with its Associated Enterprises a....
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....t of comparables in assessee's own case as the comparables are functionally different. Further, if the above comparables are excluded the revised median will be much lower and would justify that the international transactions carried out by the assessee with its Associated Enterprises are at Arm's Length Price. 6. On the other hand, ld. Departmental Representative supported the orders of the lower authorities. 7. We have heard the rival contentions and perused the record placed before us. The only issue for consideration is whether the following comparables are to be excluded from the final set of comparables for the purpose of calculating ALP of the international transactions carried out by the assessee with its Associated Enterprises : Sl.No. Name of comparable company 1 Cybage Software Pvt. Pvt. Ltd. 2 Nihilent Ltd. 3 Infobeans Technologies Ltd. 4 E-Infochips Pvt. Ltd. 5 Ninestars Information Technologies Ltd. 8. We observe that the assessee is engaged in the field of Software Development and Support services to its Associated Enterprises. In the written submissions, Ld. Counsel for the assessee has referred to various decisions of th....
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....ormation Technologies Ltd. is the world's leading digital transformation solution company and the number one offshore global media media monitoring solutions provider. Thus, from the Annual Report of Ninestars, it is clear that the company is engaged in provision of software development services. Even if the company is catering to customers in publication, communication and other industries to which the assessee is not catering to, it does not affect its comparability. What is to be seen is whether the assessee and the companies selected as comparables are providing services which fall under the same category (software development services, in the present case), M/s.Persistent Systems Limited [A] and it is not material whether the companies selected are catering to the same industry/segment(s) as the assessee. Since the company is found to be engaged in provision of software development services, the contentions of the assessee regarding functional non- comparability are rejected. Also the assessee is also engaged in product development and related activities and hence we find that this comparable has been rightly selected as functionally comparable to the assessee under TNMM m....