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TMI Blog2012 (7) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals), Mumbai, respectively. The assessee also preferred cross objection, which arose out of ITA no.3065/Mum./2008, for assessment year 2003-04. As the issue being common in all these appeals, for the sake of convenience, these appeals were heard together and are being disposed off by way of this consolidated order. 2. Before us, the learned Departmental Representative, Mr. Ajit Kumar Jian, representing the Revenue, submitted that there is only one issue that arises in all these appeals preferred by the Revenue. 3. The cross objection preferred by the assessee is barred by limitation, as the same is filed with a delay of 243 days. We first proceed to adjudicate the issue of limitation. 4. Before us, the learned Counsel, Mr. V. Chandras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incubating several neutral e-market places, technology companies and service providers in the B2B space (Internet E-commerce and software development). Vistaar provided technology and operational support to Vistaar Technologies Inc. on various projects for the shipping, chemical industry and software development services for building enterprise products. 3. The case was referred to the Addl. Commissioner of Income Tax (Transfer Pricing), Mumbai on 05.11.2004 u Is 92 CA(1) of the Income Tax Act, 1961 for computation of Arms Length price in relation to international transactions for the year under reference. The AddL. CIT Transfer Pricing - III), Mumbai vide order u/s 92 CA(3) of the Income Tax Act, 1961 dated 23.03.2006 determined the arm' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee's transactions and the arms length margin of 9.05% therefore, taken for calculating the Arm's Length price. The assessee has incurred a cost of Rs. 8,20,62,240/- for provision of services to its associated enterprises. Accordingly, the assessee should have earned a revenue of Rs. 8,94,88,872/- (82062240 + 9.05%). As against this, the assessee earned a revenue of Rs. 6,47,79,830/-. In view of this, an adjustment of Rs. 2,47,09,042/- is being made to this international transaction. It is hereby clarified that the findings and discussions made in this order are applicable only in respect of reference received for A. Y 2003-04 and not for subsequent assessment years". In view of the above, as has been determined by the Addl. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y from function to function. He supported the method adopted by the TPO i.e., TNM method. Referring to the order of the first appellate authority, he disputed the findings that TNM is not the most appropriate method. He referred to the assessee's paper book Page-10 and argued that this is not a case where the assessee has provided only manpower but a case where the assessee had developed the software. He referred to Form-26, in 3CEB report and facts mentioned therein. He relied on the order of the TPO. 11. Learned Counsel for the assessee, on the other hand, submitted that the assessee is developing specified software which only the AE can use and none else. He referred to the contract between the parties and submitted that it is clearly p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed fallacies in the application of CUP method. 12. Coming to the assessment year 2004-05, it was submitted that there is one additional ground i.e., the rate of depreciation. In other words i.e., the year 2005-06, 2006-07 and 2007-08, the issue of determination of ALP is the sole ground. 13. Rival contentions heard. On a careful consideration of the facts and circumstances of the case and on a perusal of the papers on record, as well as the case laws cited before us, we hold as follows:- 14. The assessee is a subsidiary of a U.S. company and has provided software development services. As per clause-4 of the agreement, which is placed at Paper book Annexure-A, it is stated that the billing shall be linked to comparable market rates in Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable; v) The Assessing Officer has not given any reason that TNM is the best method and the CUP method is not appropriate; vi) The TPO has not dealt with the arguments of the assessee that the assessee is not a normal software service company and is in fact engaged in B.I/ERP Project Development which is a kind of R&D activity for which the Revenue would arise only after development of the project fully; vii) The TPO ignored the agreement of the assessee with the AE that it has been given absolute right for exploitation of the project in the Indian region and nearby territory after its development; 16. Thus, we uphold the aforesaid findings of the Commissioner (Appeals) and dismiss the ground of the Revenue. 17. For assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X
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