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TMI Blog2017 (9) TMI 1831X X X X Extracts X X X X X X X X Extracts X X X X ..... ation (30%) and infrastructure management (21%). However, no breakup of business segment profitability is available and in the absence of the same, the margins of said concern cannot be compared. Another aspect is the activity of education being imparted by the said concern in the field of IT education to corporate companies and institutions, Central and State Government Departments, etc., the said concern thus, is functionally different from the activities undertaken by the assessee and cannot be included in the final list of comparables. Accordingly, we uphold the order of CIT(A) in this regard. The modified ground of appeal No.1 raised by the Revenue is thus, dismissed. The modified ground of appeal No.2 raised by the Revenue becomes academic in nature, in view of the pleading of learned Authorized Representative for the assessee after the dismissal of modified ground of appeal No.1 raised by the Revenue. - ITA No. 1251/PUN/2015, CO No. 45/PUN/2017 - - - Dated:- 29-9-2017 - MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM For the Assessee : Shri Rajendra Agiwal Shri Rishabh Baid For the Revenue : Shri Avdesh Kumar ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the annual report. Inclusion of companies rejected by the TPO from the comparable set 2. erred on the facts and in circumstances of the case, and in law, by objecting the appropriate order given by CIT(A) to consider certain companies (i.e Quintegra Solutions Limited, R.S Software ( India) Limited, Zylog Systems Limited and Thinksoft Global Services Limited) as comparable to the Respondent and rejection of application of onsite filter used by the TPO for screening of companies. Further, based on the facts and circumstances of the case, the Hon ble CIT(A) and consequently the learned AO and learned TPO has : Non-consideration of contemporaneous data 3. erred on the facts and circumstances of the case, and in law, in conducting an analysis based on information currently available for determining arm s length price but which was not available at the time of complying with transfer pricing regulations. Non-consideration of multiple year data 4. erred on the facts and in circumstances of the case and in law in not considering multiple year data ( i.e Financial Year 2009-10 and prior two years) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Applying transfer pricing provisions of the Respondent, being a tax holiday unit 13. erred on the facts and circumstances of the case, and in law, in applying transfer pricing provisions to the Respondent, enjoying tax holiday, without appreciating the fact that there cannot be any motive of shifting profits outside india. The Respondent craves, to consider each of the above grounds of cross objections independent and without prejudice to each other and craves, leave to add, alter, delete or modify all or any of the above grounds of cross objections. 4. The learned Authorized Representative for the assessee at the outset pointed out that if the issue raised by the Revenue in modified ground of appeal No.1 is dismissed i.e. FCS Software India Ltd. is not included as part of comparables being a product company and because of abnormal results and also being functionally different as against to the activities of assessee in providing captive services to its associated enterprises in the field of software development, then all the grounds of appeal raised by the Revenue would become academic. He further pointed out that grounds raised in Cross Objecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional three concerns. The TPO thereafter, took into consideration the submissions of assessee and eventually selected 13 concerns as comparable and the margins of said concerns were also re-worked and after allowing working capital adjustment, the OP/Cost of the said concerns was worked out. The arithmetic mean of the margins of comparables worked out at 26.38% as against the margins shown by the assessee at 18.51%. Accordingly, an upward adjustment of ₹ 20,39,77,971/- was proposed to the arm's length price of international transactions which was adopted by the Assessing Officer while passing assessment order under section 143(3) r.w.s. 144C(13) of the Act. 7. The CIT(A) analyzed the issue raised by the assessee and directed the Assessing Officer to include Quintegra Solutions Ltd., R.S. Software (I) Ltd., Zylog Systems Ltd. and Thinksoft Global Services Ltd. in the final list of comparable companies, in case it satisfies all the filters used by the TPO in his order. The CIT(A) accepted the plea of assessee for rejection of comparable FCS Software India Ltd. He noted that the Profit and Loss Account of said concern only gives narration as income from software d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in ITA No.622/PUN/2015, order dated 16.06.2017 and in DCIT Vs. Exfo Electro Optical Engg. India Pvt. Ltd. in ITA No.1347/PUN/2015, order dated 07.07.2017 has directed exclusion of the said concern. 10. The learned Departmental Representative for the Revenue placed reliance on the order of TPO. 11. We have heard the rival contentions and perused the record. The limited issue which needs adjudication in the present appeal is in relation to the modified ground of appeal No.1, wherein the Revenue is aggrieved by exclusion of FCS Software India Ltd. from the list of comparables. The learned Authorized Representative for the assessee pointed out that the CIT(A) had directed exclusion of FCS Software Solutions Ltd. and Infosys Technologies Ltd. from the final list of comparables and in case FCS Software Solutions Ltd. is directed to be not comparable to the assessee, then the arm's length margin would fall to 23.07%, which was within +/-5% range allowed by the Income Tax Act i.e. where the margins of assessee is 18.51%. The Revenue is not in appeal against the order of CIT(A) in directing exclusion of Infosys Technologies Ltd. from the list of comparables. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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