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TMI Blog2015 (4) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.66 percent of its shares. The assessee is a software development centre for Lucent group, whereby it provides software development and support services to Lucent Inc. on behalf of its group companies who cater to the telecom industry. The assessee reported the following international transactions:- (Amount in Rs.) (i) Software Development Services 265,14,63,000 (ii) Administrative Support Services 20,66,26,000 Total 285,80,89,000 3. The assessee followed Transactional Net Marginal Method (TNMM) as the most appropriate method with the Profit Level Indicator (PLI) of Operating Profit/Operating Cost (OP/OC) to benchmark its international transactions. The assessee computed its OP/OC at 14.89% with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s relevant to note that the area of dispute in the present appeal is confined to inclusion or exclusion of these two cases. The assessee is satisfied on all other issues. It is relevant to note that the assessee suo motu included these two cases in its Transfer pricing study. However, it was argued before the authorities below that these cases were not comparables. The Special Bench of the Tribunal in Dy. CIT v. Quark Systems (P.) Ltd. [2010] 38 SOT 307 (Chd.)(SB) has held that if the assessee has wrongly included some cases in the list of comparables, which position has not been disturbed by the TPO, then there can be no embargo on pleading by the assessee for the exclusion of such a case. In the light of the above Special Bench decision, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 of the TP order) 14.89% (please refer to page 60 of the Paperbook) Ownership of branded/proprietary products - Develops/owns proprietary products like Finacle. Also, the company derives substantial portion of its revenue from sale of its proprietary products (including its flagship banking product suite 'Finacle') (Please refer pg 30 of the Annual Report) - Infosys has substantial intangible assets valued by the company at Rs. 69,552 crores comprising brand value itself at Rs. 22,915 crores (as on March 31, 2008) as provided in the annual report for 2008 (Please refer pg 146 of the Paper book) None Expenditure on Advertising/sales promotion and brand building Rs.499 Crores (Please refer pg 60 of the Paper Book) Nominal exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50 times), the learned DR contended that this case should continue to be included in the list of comparables. After pleading for the continued inclusion of this case on the basis of differences as pointed out and without prejudice to his main stand, the ld. DR stated that the question about the matching of facts of Agnity India Technologies (P.) Ltd.'s case (supra) with that of the assessee as tabulated by the assessee in its written submissions (reproduced above in this order) could not be readily answered because certain details were required to be examined at length in this regard. 7. We are unable to accept the main argument put forth by the learned DR pleading for the inclusion of Infosys Technologies Limited. The obvious reason i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Infosys Technologies Limited has been held to be excludible not only on the strength of difference in the revenue of two companies but also on several other factors as have been tabulated in the judgment by Hon'ble Delhi High Court. It is noticed that the assessee took up such objections before the authorities below also and argued for the exclusion of such case. It can be seen from the orders passed by them that the assessee's objections in this regard have not been appropriately dealt with. Though we hold in principle that the judgment of the Hon'ble Delhi High Court in Agnity India Technologies (P.) Ltd.'s case (supra) appears to be prima facie applicable, we equally appreciate the contention of the ld. DR that the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r accordingly and direct him to consider the comparability or otherwise of this case on the strength of the relevant data of this company after allowing a reasonable opportunity of being heard to the assessee.
9. Since the learned AR restricted his arguments only to justify the exclusion of these two cases, we are not taking up the other grounds raised in the memorandum of appeal.
10. In the final analysis, we set aside the impugned order and remit the matter to the file of the TPO for computing the ALP of the international transactions afresh in the light of our above discussion.
11. In the result, the appeal is allowed for statistical purposes.
Decision pronounced in the open Court on 23rd April, 2014. X X X X Extracts X X X X X X X X Extracts X X X X
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