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2022 (10) TMI 1153 - AT - Income TaxTP Adjsutment - ALP of provision of software development services - MAM selection - TPO Rejecting the segmental profitability analysis computed by the Appellant while computing the arm's length price of Appellant's provision of software development services transactions using Transactional Net Margin Method (TNMM') - HELD THAT:- As relying assessee own case for the AY 2005-06 we decide the issue in favour of the assessee and direct the AO/TPO to consider the segmental profitability analysis computed by assessee with regard to software development services transactions using TNMM method. Ordered accordingly. Comparable companies selected by the Appellant in the comparability analysis - Akshay Software Technologies Ltd., Sagar Soft India Ltd. and Sasken Communication Technologies Ltd. - These companies have not been included in the comparable on the reason that these companies were not appeared in TPO search matrix and documentation was available on this comparable. In our opinion, it is appropriate to remit this issue to the file of AO to consider it afresh to see whether all the filters applied by the TPO is satisfied. Accordingly, this ground is remitted back to the file of AO for fresh consideration. Accordingly, all three comparables are remitted to AO for fresh consideration on similar lines. Turnover filter to be applied between Rs.1 crore to Rs.200 crores and if the comparable from the software development segment exceeds Rs.200 crores, the same to be excluded from the list of comparables. Companies functinally dissimilar with that of assessee need to be deselected . TP adjustment determined by AO in respect of interest on outstanding receivables - Tribunal consistently taking a view that if the credit period granted to the AE is more than 90 days that should be a TP adjustment towards notional interest @ LIBOR+2% - we remit this issue to the file of AO/TPO to pass order in conformity with the above direction of Tribunal as in the case of Swiss Re Global Business Solutions India Pvt. Ltd. Cited [2022 (1) TMI 1275 - ITAT BANGALORE] by allying LIBOR+2% in this case also.
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