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2014 (5) TMI 1184 - AT - Income TaxTP adjustment - transactions with the parent company - adjustment made by rejecting M/s KPIT Cummins as a comparable - also after excluding foreign exchange as a relevant factor for the purpose of determining arm's length price - M/s KPIT Cummins has not been accepted to be a comparable since the assessee had taken into consideration its 'rest of the world revenue' - HELD THAT:- Neither at the first nor at the second chance, the TPO ever gave a comprehensive show cause to the assessee before rejecting the comparable. The assessee's argument that in succeeding assessment years, the very entity as a comparable stands accepted; has also not been specifically denied by the Revenue. In addition to this, no distinction on facts of the impugned and succeeding assessment year is pointed out. It emanates that the TPO's and Assessing Officer's orders dated 28.10.2011 26.9.2012 respectively, are prior in point of time than the TPO's order dated 31.10.2012 and assessment order dated 26.3.2013 for succeeding assessment year. In these circumstances, the aforesaid documents are admitted as a part of record. In addition to this, the fact also remains that from proceedings of assessment year 2009-10, acceptance of M/s KPIT Cummins as a comparable is not forthcoming - interest of justice would be met in case the issue is remitted back to the TPO for afresh proceedings Inclusion of foreign exchange as a relevant factor in computation of ALP in transfer pricing proceedings - TPO as well as the DRP in the present case are of the view that such a factor has to be excluded - HELD THAT:- As decided in M/S. FOUR SOFT LTD. HYDERABAD VERSUS THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE 1(3), HYDERABAD. [2011 (9) TMI 634 - ITAT HYDERABAD] there is no justification for any adjustment to the price declared by the assessee, since the assessee's margin would fall within the arms length range. We therefore, hold that no adjustment is required to be made on the margin declared by the assessee for the international transaction of the AEs in relation to software development services - we direct the TPO to take into consideration foreign exchange factor in computing assessee's ALP. The question is accordingly decided against the Revenue.
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