TMI Blog2011 (3) TMI 565X X X X Extracts X X X X X X X X Extracts X X X X ..... the operating cost. We feel that a nominal modification is called for in this rate of operating profit, accepting certain valid contentions of the learned representative regarding the competence level of its employees; the remuneration payable to them and the effect of the safe environment in which the assessee was functioning. - IT APPEAL NO. 1184 (BANG.) OF 2010 - - - Dated:- 14-3-2011 - O.K. NARAYANAN, SMT. P. MADHAVI DEVI, JJ. H.V. Gowthama for the Appellant. Ranmoy Das for the Respondent. ORDER Dr. O.K. Narayanan, Vice President. This appeal is filed by the assessee. The relevant assessment year is 2006-07. The appeal is directed against the assessment order of the DCIT, Circle-11(1), Bangalore, dated 29-9-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered the contentions in the light of the details submitted by the assessee's representative, assessment order, the directions of the Disputes Resolution Panel and the order of the Transfer Pricing Officer. With reference to the international transactions of software, the assessee has agreed with its associate concern's formula of cost plus profit. The profit factor has been agreed to be 10 per cent. But on a detailed study of the activities carried on by the assessee company and its working results and the results of the comparable cases, the TPO came to a finding that the operating margin (ALP margin) worked out to 20.68 per cent of the operating cost. On the basis of the Profit Level Indicator (PLI), the TPO computed the ALP at Rs. 5,95,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er and the Dispute Resolution Panel, we find that the price declared by the assessee for its international transactions cannot be accepted as Arms Length Price. Therefore, the addition is called for and it is justified. 7. Now regarding the quantum of addition, the Transfer Pricing Officer has worked out the operating profit at 20.68 per cent of the operating cost. We feel that a nominal modification is called for in this rate of operating profit, accepting certain valid contentions of the learned representative regarding the competence level of its employees; the remuneration payable to them and the effect of the safe environment in which the assessee was functioning. Therefore, as a fair measure of price difference, we modify the Arms L ..... X X X X Extracts X X X X X X X X Extracts X X X X
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