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2015 (3) TMI 566 - AT - Income TaxTransfer pricing adjustment - selection of comparable - Held that:- Exensys Software Solutions Ltd.- there is an extra-ordinary event which resulted in high operating margin of that company and we, therefore, direct the AO to exclude this company from the list of comparables. In the above referred case of Intoto Sof tware India Pvt. Ltd., complete details were not placed on record, therefore, the matter was sent to AO for verif ication whereas in this case assessee has objected even before the AO/ CIT(A), therefore, there is no need to set aside the issue to the f ile of the AO for examination as was done in the case of Intoto Software (2013 (10) TMI 599 - ITAT HYDERABAD). We are, therefore, of the opinion that on the basis of facts placed on record, the case of Exensys Sof tware Solutions Ltd. cannot be taken as comparable. Similarly, the other cases, Bodhtree consulting Ltd, Four Soft Ltd, Infosys, Sankhya Infotech Ltd., Thirdware Solutions Ltd, Tata Elexi (seg) etc, are also to be excluded as they are considered and analysed in various cases relied on about functional ity and why the same are not comparable to the companies like assessee. Bodhtree consulting Ltd also fails RPT filter as contended. In view of this, we are not discussing above comparables in detail, but, suffice to say that assessee’s submissions are valid. The AO is directed to exclude the above comparables and re-work out the arm’s length margin accordingly. As far as Flextronics Software Limited is concerned, we find that in case of Intoto Software India Pvt. Ltd., (2013 (10) TMI 599 - ITAT HYDERABAD) the co-ordinate Bench of this Tribunal having found it to be functionally different as it is into product development has directed excluding it for comparability analysis. Respectfully following the decision of the coordinate bench of this Tribunal in case of M/s Intoto Software India Pvt.Ltd. (supra) we also direct the Assessing Officer/ TPO to exclude this company. Risk adjustment/working capital adjustment - Held that:- Since TPO himself has concluded that risk adjustment to the extent of 0.85% can be allowed, we direct him to allow the risk adjustment to that extent. It may be pertinent to mention here that in case of assessee in the subsequent AY i.e. AY 2007-08, considering similar risk profile, the Tribunal has allowed risk adjustment of 1%. Keeping in view the aforesaid facts, we direct Assessing Officer/TPO to allow risk adjustment at 0.85% while computing ALP. In view of the aforesaid, Assessing Officer/TPO is directed to compute ALP afresh in terms with direction given hereinbefore and thereafter treat the shortfall, if any, as the adjustment to be made to ALP.
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