TaxTMI 
TaxTMI 
2026 (9) TMI 2026
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....e AO, based on the fact that the assessee was having international transactions, had referred the case to the AO for determining the ALP as per section 92CA of the Act. 3. The Ld.TPO had considered the various filters adopted by the assessee including the method adopted as the most appropriate method of TNMM. The assessee had selected 12 comparables in respect of Software Development Services and 5 comparables in respect of Market Support Services. The Ld.TPO rejected the comparables selected by the assessee after conveying the defects to the assessee. The Ld.TPO applied his method and selected the comparables and finally determined the ALP by making a TP adjustment in respect of Software Development Services at Rs. 4,55,25,149/- and in respect of Market Support Services segment at Rs. 1,30,61,872/- and a total adjustment of Rs. 5,85,87,021/-. The AO based on the order of the Ld.TPO had issued a draft assessment order. The assessee filed their objections before the Ld.DRP. The Ld.DRP considered the objections filed by the assessee and issued directions to the Authorities. The Ld.TPO, pursuant to the directions of the Ld.DRP had recomputed the ALP at Rs. 1,34,76,048/-. Then the A....
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....indings of the Ld.TPO and after perusing the various records such as Annual report, had correctly arrived the conclusion that the comparables selected by the Ld.TPO is liable to be excluded. The Ld.AR also took us through the findings given by the Ld.DRP and submitted that the Revenue had not pointed out how the direction of the Ld.DRP is not correct. The Ld.AR also submitted that the Ld.DRP correctly analysed the issue and also relying on the orders of the Tribunal, had excluded the comparables and therefore the direction of the Ld.DRP is a well considered and a speaking order and not to be interfered by this Tribunal. 8. We have heard the arguments of both sides and perused the materials available on record. 9. We have perused the Ground nos. 5 to 13 raised by the Revenue. Ground nos. 5 and 6 are only general grounds and therefore not adjudicated. As far as Ground no. 7, the Revenue had contended the following comparables are liable to be included: a) Sasken Communication Technologies Ltd. b) ICRA Techno Analytics Ltd. c) Persistent Systems & Solutions Ltd. d) Persistent Systems Ltd. 10. The Revenue had contended that the above compara....
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....hout any materials and therefore the said findings could be found fault with unless some materials are placed by the Revenue. We therefore confirm the direction of the Ld.DRP insofar as Sasken Communication Technologies Ltd. and ICRA Techno Analytics Ltd. are concerned. 14. Insofar as Persistent Systems & Solutions Ltd., the main contention of the Revenue is that the said comparable has been accepted by the assessee before the Ld.TPO and therefore the Ld.DRP is not right in excluding the said company. We do not think that this argument is correct. In our considered view, the assessee can challenge the comparables before the Ld.DRP even though the same was admitted by the assessee before the Ld.TPO. Anyhow the comparables should meet out the various filters and the ALP should be computed strictly in accordance with law and therefore if the objection before the Ld.DRP is against the facts, then the Revenue can challenge the exclusion. The findings given by the Ld.DRP in respect of the said company is as follows: "It is noticed from the annual report that the entire receipt of '5044 million are shown from 'Sale of software services & Product', and there is no s....
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....Sale of software services & Product'. There is no segmental information available for sale of software services & product. It is also noticed from Note-1 of Schedule-15 that the company is predominantly engaged in outsourced software product development services. The company offers complete product life cycle services. It is also noticed from the Note H to Schedule 15 in regard to revenue recognition that the company in addition to software services also earns income from licensing of products, Royalty on sale or products, income from maintenance contract etc., In the annual report, the difference between the OPD (Outsource Product Development) has been highlighted according to which, in IT services, projects starts with well defined requirements, and vendors use time and money as variables to arrive at a reasonable cost estimate for the project. After completion, the project goes into maintenance mode. In product development, requirements are less clearly defined, state most product developers are given ship-dates for the products that are typically determined by the external factors. Once the ship-dates are defined, the budget for the products is frozen. In product developmen....
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....ude the above company from comparables." 20. From the said facts, we noticed that the said company is having a brand value and also earned revenue of Rs. 21,140 crores. The size and brand value will have impact and therefore the Ld.DRP had correctly excluded the company. The view expressed by the Ld.DRP has been accepted by this Tribunal in a numerous orders and therefore we are also accepting the finding of the Ld.DRP and dismiss the Ground no. 8 raised by the Revenue. 21. Insofar as the Ground number 9 is concerned, there is no error in applying the onsite filter for SWD segment for excluding the comparables. The Revenue also not demonstrated, how the onsite filter could not be applied to SWD segment. In such circumstances, the ground raised by the Revenue is not sustainable. 22. Insofar as the Ground no. 10 is concerned, we are of the view that to arrive a correct computation of ALP, the Ld.DRP can apply a new filter. The Revenue should demonstrate how the application of new filter is wrong and against the provisions. When the new filter is also a filter approved by the various judicial decisions, it could not be said that the new filter cannot be applied. In a recent j....