TMI Blog2021 (9) TMI 1418X X X X Extracts X X X X X X X X Extracts X X X X ..... are Pvt. Ltd. is concerned, it is also been submitted by Ld. AR that direction may be given to the Ld. AO to consider correct margins of the comparables that is finally retained in the final list. Accordingly we direct the Ld. AO/TPO to adopt correct margins of the comparables in accordance with law. - IT (TP) A. No. 182/Bang/2021 - - - Dated:- 28-9-2021 - SHRI B.R BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER Assessee by : Shri Ajit Kumar Jain, C.A Revenue by : Shri Pradeep Kumar, CIT (DR) ORDER PER BEENA PILLAI, JUDICIAL MEMBER 1. The present appeal has been filed by assessee against order dated 30/03/2021 passed by the Ld. ACIT, National e-assessment centre Delhi for assessment year 2016-17 on following grounds of appeal: Based on the facts and circumstances of the case, OLF (India) Software Private Limited (hereinafter referred to as the Appellant') respectfully craves leave to prefer an appeal against the order passed by National e-Assessment Centre (NeAC') dated 30 March 2021 in pursuance of directions issued by Dispute Resolution Panel (DRP'), Bangalore, dated 26 February 2021 under Section 253 of the Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing of the appeal, so as to enable the Ld. AO to decide this appeal according to law. Brief facts of the case are as under: 2. The assessee is a company and is engaged in the business of back-end software development services. It filed its return of income for year under consideration on 29/11/2016 declaring total income of Rs. 2,87,79,980/-. The case was selected for scrutiny and notice under section 143(2) was issued to assessee. Subsequently notice under section 142(1) was also issued. From the details filed, the Ld. AO observed that, assessee had international transaction with associated enterprise exceeding Rs. 15 crores and accordingly the case was referred to transfer pricing officer under section 92CA of the Act. 2.1. Upon receipt of the reference, the Ld. TPO called for economic analysis of the international transaction entered into by assessee with its associated enterprise in form 3 CEB. On perusal of the Transfer Pricing report, the Ld. TPO observed the functions performed by assessee as under: 2.1. Profile: OLF (India) software Pvt. Ltd. formally k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.20% 2.76% 36.64% 14.50% 3 C G-V A K Software Exports Ltd. 19.60% 19.87% 13.81% 18.50/0 4 R S Software (India) Ltd. - 2.09% 32.75% 24.14% 20.87% 5 Larsen Toubro Infotech Ltd. 26.29% 24.22% 23.54% 24.83% 6 Nihilent Ltd. 15.94% 29.19% 35.72% 26.36% 7 Inteq Software Pvt. Ltd. 7.53% 32.14% 45.00% 28.20% 8 Persistent Systems Ltd. 26.92% 31.34% 35.64% 30.89% 9 Infobeans Technologies Ltd. 34.98% 20.78% 41.95% 32.42% 10 Thirdware ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee stands dismissed as not pressed. 2.13. Before we undertake the comparability analysis it is necessary to understand the functions performed, assets owned and risks assumed by assessee in the software development service segment. Functional analysis carried out by the Ld. TPO has been reproduced in the earlier part of this order. Insofar as the assets owned and risk assumed, we note from the TP study at age 29 of the paper book that it owns tangible assets for running the business like computers and peripherals, furniture fixtures office equipment. As regards the risk assumed, we note that assessee has been undertaking foreign exchange fluctuation risk as the remuneration received is in foreign exchange. 2.14. At page 31 assessee has been characterised to be a captive service provider that assumes less than nominal risk associated with the business of providing software development services to its AE's. 2.15. Based on the above we shall now undertake the comparability of assessee with the alleged comparables sought for exclusion 2.16. It has been submitted by the Ld. AR that all these comparables do not satisfy the turnover filter applied by the Ld. TPO and at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. Infosys Technologies Ltd. is not functionally comparable since it owns significant intangible and has huge revenues from software products. It was further observed that the break-up of revenue from software services and software product is not available. 6.1 It was stated that there is no change in facts. Accordingly, following the decision rendered in the assessee's own case in AY 2008-09, we direct exclusion of M/s. Infosys Ltd. 7. In AY 2008-09, the co-ordinate bench has excluded M/s. Persistent Systems Ltd. also by following the decision rendered in the case of 3DPLM Software Solutions Ltd. (supra), where in it was held that M/s. Persistent Systems Ltd. is engaged in product development and product design services while the assessee is a software development service provider. Further, the segmental details were not available. 7.1 It was stated that there is no change in facts. Accordingly, following the decision rendered in the assessee's own case in AY 2008-09, we direct exclusion of M/s. Persistent Systems Ltd. 8. We also notice that in AY 2008-09, the co-ordinate bench has excluded M/s. Thirdware Solutions Ltd. also by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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