2011 (3) TMI 530

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... Ground No. 4.2. reads as under :- "4.2. Assessing Officer/TPO erred on facts and in law in not rejecting 3 DPLM Software as a comparable even though it is having significant related party transactions of 97 per cent of total revenue and also wages/sales ratio of the said company is 45.96 per cent which is not comparable to that of the appellant at 59.02 per cent." 3. It is submitted by the Learned counsel for the assessee that 15 parties were included by the assessee in the list of comparables, out of which, four parties were considered by the TPO in the list of comparable and both lists included one party i.e., 3 DPLM Software Consultant Ltd. having OP/TC rate of 44.34 per cent. It is submitted that if this party is excluded out of four .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... cluded 15 comparable including this company i.e., 3 DPLM Software Ltd., having OP/TC rate of 44.34 per cent. Out of these 15 comparable, the TPO has accepted four comparables i.e., 3 DPLM Software Ltd., M/s Soft Ware Ltd., M/s Lanco Global and M/s NSEIT. The average mean had been worked out by the TPO at 21.56 per cent. We also find that if this one comparable i.e., 3 DPLM Software is excluded from the four comparables selected by the TPO, the average mean of the remaining three comparables will be 13.97 per cent which is within plus minus 5 per cent of the operating profit margin of the assessee at 11.6 per cent. Now, regarding the claim of the assessee for exclusion of this comparable, it is the submission of the assessee that RPT of this .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... the list of comparables selected by the TPO and the average mean should be worked out after excluding this comparable and if the same is within plus minus 5 per cent of the profit margin declared by the assessee then no transfer pricing adjustment is required to be made. This ground of the assessee is allowed for statistical purposes. 6. It was submitted by the ld. counsel of the assessee that remaining grounds of the assessee may not be adjudicated upon at this stage and may be left open because the assessee is sure that it will succeed on this issue alone that the RPT in the case of 3 DPLM Software Ltd., is very high and hence that comparable has to be excluded and if that is done then no transfer pricing adjustment is required and ther .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X