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2016 (11) TMI 1304 - ITAT PUNETPA - selection of comparable - Held that:- We uphold the order of CIT(A) in excluding the companies whose turnover was more than ₹ 200 crores. Transfer pricing adjustment - bench marking technique - whether margins of provision of software development services and provision of on-site services by the assessee to its associate enterprises have to be computed cumulatively? - Held that:- Where the mark-up earned by the assessee is different from two activities carried on by it that established that the activities undertaken were different on account of functional and risk perspective. Since the assessee in the present case was being remunerated at separate mark-up for each of the activity, then both the activities have to be considered separately while benchmarking arm's length price of transactions perse. Merely because the same set of comparables have been utilized does not justify the case of assessee. The Assessing Officer is directed to benchmark the international transactions of provision of software development services i.e. off-site services independently from on-site services provided by way of consultancy services provided by the assessee. The Assessing Officer is also directed to adopt the segmental details of comparables, if available for benchmarking the international transactions of assessee. Accordingly, this aspect of transfer pricing adjustment, if any, is remitted back to the file of Assessing Officer, who is directed to adopt only the margins of software consultancy services i.e. off-site services in order to compute the addition, if any, on account of transfer pricing adjustment. Reopening of assessment - reference made to the TPO for determining the arm's length price of international transactions - Held that:- When no assessment proceedings were pending in relation to the relevant assessment year, the Assessing Officer was precluded from making a reference to the TPO under section 92CA(1) of the Act for the purposes of computing the arm's length price in relation to the international transaction. Consequently, order passed by the TPO under section 92CA(3) proposing an adjustment of ₹ 2,60,00,882/- to the arm's length price of the international transaction was a nullity in law and void ab initio. In view of the above-said facts and circumstances, such an order passed by the TPO was not a valid material for the Assessing Officer to entertain a belief that certain income chargeable to tax had escaped assessment within the meaning of section 147 of the Act. Consequently, we hold that the reasons recorded for reopening the assessment under section 147 of the Act do not meet the requirements of the section and hence the Assessing Officer had no jurisdiction to issue notice under section 148 of the Act
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