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TMI Blog2011 (1) TMI 933X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order u/s 143(3) read with section 144C of the IT Act. It has been urged that Assessing Officer /DRP has erred in making the addition of Rs. 10,40,75,727/- to the income of the assessee on account of adjustment in the Arms Length Price of international transaction entered by the assessee with associated enterprise. It has been urged that TPO/Assessing Officer has erred by accepting companies earning super normal profits. 3. The brief facts of the case are that the assessee Adobe Systems India Private Limited (hereinafter called Adobe India or the Assessee) is a wholly and subsidiary of Adobe Systems Inc., USA. It is engaged in providing software development services and marketing support services to its associated enterpris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard is that these are super normal profit making companies and should be excluded from comparables set. As there is tendency skew the results and cannot be considered as representative of the industry. Against the above contention of the assessee TPO only dealt with Jayamaruthi Software Systems Limited and GDA Technologies Limited and did not deal with Cranes Software International Limited. The assessee's submission as regards the GDA Technologies was as under:- "This company did not appear in the search conducted by the assessee in its transfer pricing documentation. As per the products details available in Prowess database, for F.Y 2005-06, the company has earned its entire income from "Computer hardware and software". &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s...in the final selection of comparable ....is a clear pointer to the fact that the selection made was faulty...The OECD guideline on this point is as underhttp:// 1.47 Where the application of one or more methods produces a range of figures, a substantial deviation among points in that range may indicate that the data used in establishing the some of the points may not be as reliable as the data used to establish the other points in the range or that the deviation may result from features of the comparable data that require adjustments" Inferring from the above ruling, we requests your goodself to not consider companies displaying abnormal profits since they deviate from the normal trend displayed by the data set." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Annexure 2) and website of the company states as under:- "Over the last few years, the Company has established itself as a key player in the software products market catering to the needs of the global scientific and engineering community." "Cranes Software International Limited is a company that provides Enterprise Statistical Analytics and Engineering Simulation Software Products and Solutions across the globe. The Company's business interest span Products, Productized Solutions, Services and R&D in future technologies." "Cranes Software offers a range of proprietary products - SYSTAT, SigmaPlot, SigmaStat, SigmaScan, TableCurve 2D, TableCurve 3D, PeakFit, NISA, XID, XIP, Survey ASYST, iCaptella, &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a listed company and the results are audited. The ground that a company is making a supernormal profit, is not accepted on the ground that this comparable is showing consistent growth at about same level in the preceding years also. Hence, there is no abnormality in its performance. In respect of M/s GDA Technologies Ltd. (Sr. No. 15), the assessee has submitted the accounts of M/s GDA Technology Inc., USA (the parent Company of M/s GDA Technologies Ltd.) to show that the said Indian company i.e. M/s GDA Technologies Ltd, has sufficient Relates party transactions. However, the annual report of the Indian company as well as the information available with 'Capital line' database and 'Prowess' data base do not show such details of related ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ushed the contention by ignoring the documents submitted by the assessee and holding that data available with him does not show details of related party transaction. It is undisputed that these three companies have shown supernormal comparable profits as compared to the other comparable. There exclusion from the list of comparable is quite correct. By excluding these three companies from the comparables and showing the computation on the basis of TPO data the arithmetic mean of OP/OC to 17.15% which falls within the +-5% range as permitted by section 92(C)(2). Hence, we find considerable cogency in the arguments of the ld. counsel of the assessee in this regard. 5.1 We further find that assessee has made voluminous submissions inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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