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2016 (1) TMI 1300 - AT - Income TaxTPA - comparability - Held that:- Assessee provides software development services to the group and is stated to have been compensated at cost plus 15% mark up on such cost. It also provides software developments services to third parties. Thus companies functionally dissimilar with that of assessee need o be deselected from final list of comparable. Erroneous adoption of operating margin and arithmetic mean of comparable companies by the learned Transfer Pricing Officer - It was submitted that the TPO did not calculate the PLI of the assessee properly and excluded certain costs from the operating cost. Thereby as against the assessee’s margin at 11.72%, TPO determined the margin at 10.21%. Even though learned counsel relied on various case-law, it was fairly admitted that this issue becomes academic, if Ground No.4 is considered favourably. Consequently, we direct the TPO to keep in mind the objections of the assessee, while working out the PLI of the assessee company in the re-assessment proceedings. Exclude the TP adjustment on the non-AE transactions - Held that:- The entire cost was taken by the TPO for making adjustment, thereby invoking the TP proceedings on non-AE transactions as well. Therefore, we direct the Assessing Officer/Transfer Pricing Officer to exclude the TP adjustment on the non-AE transactions and re-work out the costs pertaining to the AE transactions and restrict the adjustment if any, only to the AE transactions. With these directions, this ground is considered as allowed. Non-granting full TDS credit - Dispute Resolution Panel directed the Assessing Officer to examine and give full credit or take suitable action but the Assessing Officer did not give full credit - Held that:- After considering the submissions of the learned counsel and the direction given by the Dispute Resolution Panel, we are of the opinion that the Assessing Officer did not follow the directions of the Dispute Resolution Panel while giving credit, as claimed by the assessee at ₹ 55,70,991. We therefore, reiterate the direction given by the Dispute Resolution Panel to examine the issue and give credit of TDS to the assessee.
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