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Vistaar Systems Pvt. Ltd. Versus ACIT, Circle-10 (1) , Mumbai

2015 (6) TMI 23 - ITAT MUMBAI

TP adjustment - adjustment of ₹ 51,20,400/- to the value of international transactions by accepting the CUP method - Held that:- By applying the rate difference of ₹ 150/- per hour to the number of hours charged to AE at 34,136, the CIT(A) arrived at adjustment of ₹ 51,20,400/- as against adjustment of ₹ 73,46,647/- made by AO. We found that in assessee’s own case in A.Y.2003-04 to 2007-08 vide order dated 25-5-2012 the Tribunal had deleted the adjustment made by TPO by a .....

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st adjustment of ₹ 73,46,647/- made by TPO. Detailed finding recorded by CIT(A) at para 2 of his order has not been controverted by ld. AR by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the findings recorded by the CIT(A) resulting into addition of ₹ 51,20,400/-. - Decided against assesse.

Adjusting the brought forward losses against the income of section 10A unit, before deduction u/s.10A - held that:- As relying on cas .....

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- SHRI R.C.SHARMA AND SHRI AMIT SHUKLA, JJ. For The Assessee : Shri V.Chandrasekhar & Shri Harshad Shah For The Revenue : Shri N.Padmanaban ORDER PER R.C.SHARMA (A.M.) : These are the cross appeals filed by the assessee and Revenue against the order of CIT(A) dated 29-6-2011 for the assessment year 2008-09, in the matter of order passed u/s.143(3) of the I.T.Act. 2. The assessee in its appeal (ITA No.5979/M/2011) has taken following grounds :- 1. The order of the authorities below in so far .....

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Tax (Appeal) has erred in making a adjustment of ₹ 51,20,400/- to the value of international transactions by accepting the CUP method adopted by Appellant but rejecting the appellant's adjustments to Comparable Uncontrolled Prices on law and facts of the case. 4. Without Prejudice the learned Commissioner of Income Tax (Appeal) has erred in confirming learned Assessing Officer's order of adjusting the brought forward losses against the income of section 10A unit, before deduction u .....

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appeal were not pressed by ld. AR, the same are, therefore, dismissed in limine as not pressed. 5. We have heard rival contentions and perused the record. Facts in brief are that the assessee is 99.997% subsidiary of USA based company and is into software development having a Software Technological Park as EOU in Vashi, Navi-Mumbai approved on 11.8.2000. In the course of scrutiny assessment u/s.143(3), the AO observed that perusal of the return of income and the audited accounts enclosed therew .....

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the international transaction was rejected by the department and TNMM method was applied after detailed discussions made in those orders. It was observed in those orders that the assessee had failed to explain or provide details whether the third party transactions are comparable to its international transactions in every respect which is an essential prerequisite for adopting the CUP method. In view of the above, the AO made TP adjustment of ₹ 73,46,697/-. 6. By the impugned order CIT(A) .....

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red for the purpose of comparability. It is the submission of the assessee and bench mark analysis conducted by the appellant that the rates, the skill set and job description for the Junior Developer and Senior Developer is comparable to the services provided by the TCS. The TCS provides such services at ₹ 1000 per hour and the rates charged to the AE for the junior level developer as per the agreement of the appellant with its AE and as mentioned in the transfer pricing report is ₹ .....

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ior Developer and the comparable rate taken by the appellant which is rate charged by the TCS - ₹ 1000 per hour. The number of hours charged to the AE for Junior Developer is at 34,136 hours. As mentioned above, there is difference in the comparable rate vis-a-vis the rate charged to the AE of ₹ 150/- per hour. Accordingly, an adjustment of an amount of ₹ 51,20,400/- (Rs.150 x number of hours for junior developer billed at 34136 hours) is required to value of this international .....

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ethod as mentioned above is required to arrive at the ALP of the appellant's international transaction. Therefore, the appellant gets a relief of ₹ 22, 26,247/- in this ground of appeal. Accordingly, this ground of appeal is partly allowed. 7. Regarding ground No.3, the assessee is aggrieved for TP adjustment of ₹ 51,20,400/- retained by CIT(A) by rejecting assessee s adjustment to comparable uncontrolled price. 7.1 Ld. AR placed on record order of Tribunal in assessee s own case .....

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amounts paid to them, represent fair market value. When the assessee adopts these rates as comparable under CUP method no fault can be found. In view of the above discussion, we uphold the following findings of the first appellate authority. i) The rates charged by the assessee company are identical to the rates charged by the third parties in the same line of business for the same job and the assessee has proved the same with evidence. ii) The TPO has not brought out any material on record to p .....

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see 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; 7.2 We have considered rival contentions, carefully gone through the o .....

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by assessee from its AE as mentioned in the transfer pricing report is ₹ 850/- per hour. By applying the rate difference of ₹ 150/- per hour to the number of hours charged to AE at 34,136, the CIT(A) arrived at adjustment of ₹ 51,20,400/- as against adjustment of ₹ 73,46,647/- made by AO. We found that in assessee s own case in A.Y.2003-04 to 2007-08 vide order dated 25-5-2012 the Tribunal had deleted the adjustment made by TPO by accepting CUP as most appropriate method .....

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de by TPO. Detailed finding recorded by CIT(A) at para 2 of his order has not been controverted by ld. AR by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the findings recorded by the CIT(A) resulting into addition of ₹ 51,20,400/-. 8. The next grievance of the assessee was that the AO was not justified in adjusting the brought forward losses against the income of section 10A unit, before deduction u/s.10A. 8.1 We have considered rival con .....

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