TaxTMI 
TaxTMI 
2022 (10) TMI 1317
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....ransactions entered by the assessee which were further approved by the DRP. 4. He submitted that during the course of hearing, before the Tribunal, the Learned AR had submitted that AO/TPO/DRP have erred in selecting Persistent Systems Ltd. and Sasken Communication Technologies Ltd. as comparable companies. It was his contention that during the course of hearing, it was pointed out before the Hon'ble Tribunal that the said Companies are not comparable and for which apart from the other contentions, support was also drawn from the audited financial statements of those companies. He submitted that certain inadvertent errors have crept in order of the Tribunal in respect of Persistent Systems Ltd. and Sasken Communication Technologies Ltd. 5. With respect to the Persistent Systems Ltd., Learned AR pointed to para 12 of the order which is the finding of Hon'ble ITAT. He submitted that at Para 12 of the order, the Hon'ble ITAT had relied on the order of the Co-ordinate Bench of Tribunal in assessee's own case for A.Y. 2010-11 and had noted that in A.Y. 2010-11 Persistent Systems Ltd. was engaged in software services and products and there was no segmental information. He submitted....
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....rsistent Systems as a comparable company, Para 12 & 21 are contradictory. For the sake of completeness, we reproduce herein the relevant para: "12. We have carefully considered the rival contentions with respect to the above comparable and find that the orders of the coordinate bench in ITA No. 7078/Del/2014 for AY 2010-11 vide para No. 8 has excluded the Persistent Systems Pvt. Ltd from the comparable analysis. In that order it was held that Persistent Systems as software services and products in its income segment, however, there is no segmental information available. The ld. DR could not show us any reason that FAR of the assessee for AY 2010-11 is different in this year. Therefore, respectfully following the decision of the coordinate bench in assessee's own case we direct the ld. TPO/AO to exclude the Persistent Systems Ltd. from the comparable analysis. "8. Before us the Ld., Counsel submitted that Persistent Systems Ltd. (PSL) is functionally dissimilar from the assessee, because this company is not only into software development services but also into software products like, Wave Relay (R), Android Kit, Integration Board Gen4, Quad Radio Router, ....
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....aper book which is the business responsibility report of Persistent Systems Ltd. At SI No. 8 he submitted that the company is engaged in outsourced software product development and IT Products. Therefore, he submitted that this issue is squarely covered in favour of the assessee. 14. The learned departmental representative vehemently supported the order of the learned TPO and direction of the learned dispute resolution panel with respect to this comparable. 15. We have carefully considered the rival contentions and found that Page No. 636, 646 and 704 referred to by the Ld. AR are belonging to the consolidated financial statement of Persistent Systems Ltd which has not at all were used by the ld. TPO for comparable analysis. In fact the TPO has used Persistent Systems Ltd on standalone basis as comparable. It clearly shows that the revenue from operation at page No. 778 and further corresponding note No. 21 at page No. 798 clearly show that revenue is only derived from sale of software services. Therefore, it is apparent that there is no sale of any product in this year. Therefore, the finding of the coordinate bench in assessment year 201....
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....dated 28 September 2016 in ITA number 682/2016. No doubt, for the comparability analysis in case of that assessee, persistent Systems Ltd was held to be not a good comparable and therefore same was excluded. 19. On comparing the functions of the assessee in that case we note that it was engaged in the business of design and development of customized software application and was also providing technical support services. The assessee is engaged in providing software development research and related services to its associated enterprises. From the above observation of the coordinate bench in that case as well as the functional profile of the assessee available before us, we do not find any similarity. Further the issue was decided in ITA number 6148/del/2015 for assessment year 2011 - 12, we do not have any financial statements are available of assessee in that case or of persistent Systems Ltd for that financial year i.e. 2010 - 11. 20. Further, the comparability analysis is always required to be decided on the basis of the functions performed by the assessee, assets employed by the assessee to perform those functions and risk assumed by the assessee for those func....