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2015 (8) TMI 980 - ITAT BANGALORE

2015 (8) TMI 980 - ITAT BANGALORE - [2015] 41 ITR (Trib) 246 (ITAT [Bang]) - Transfer pricing adjustment - selection on comparable - Held that:- Respectfully following the decision of Trilogy E-Business Software India P. Ltd. (2013 (1) TMI 672 - ITAT BANGALORE), we hold that the following companies should be excluded from the list of comparable companies, i.e. Flextronics Software Systems Ltd.,iGate Global Solutions Ltd., Mindtree Ltd., Persistent Systems Ltd., Sasken Communication Technologies .....

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ations P. Ltd. case [2008 (6) TMI 299 - ITAT PUNE-A ]

Method of computation of deduction under section 10A - Held that:- Taking into consideration the decision rendered by the hon'ble High Court of Karnataka in the case of CIT v. Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] we are of the view that it would be just and appropriate to direct the Assessing Officer to exclude telecommunication charges and travelling expenses incurred in foreign currency both from export turn .....

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der before the Dispute Resolution Panel - Held that:- A perusal of the above provisions of section 144C of the Act makes it clear that the draft assessment order of the Assessing Officer will attain finality to the extent that the assessee does not object to the proposals in the draft assessment order. The Dispute Resolution Panel is at liberty to consider any issue after due opportunity to the Assessing Officer and the assessee. The directions issued by the Dispute Resolution Panel are binding .....

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he Appellant : Shri Prashanth G.S., CA For the Respondent : Shri C.H.Sundar Rao, CIT-I(DR) ORDER N. V. Vasudevan (Judicial Member).- 2. I. T. (TP)A. No. 1277/Bang/2012 is an appeal by the assessee against the order dated September 28, 2010 the Income-tax Officer, Ward 11(1), Bangalore passed under section 143(3) read with section 144C of the Income-tax Act, 1961 (Act), in relation to the assessment year 2008-09. 3. Ground No. 1 is general in nature and calls for no specific adjudication. 4. Grou .....

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ompanies chosen by the Transfer Pricing Officer and the addition made by the Assessing Officer in the draft assessment order which was confirmed by the Dispute Resolution Panel are identical to the case decided by the Tribunal in ITA No.1054/Bang/2011 for AY 07-08 in M/S. Triology E-Business Software India Pvt.Ltd. Vs. DCIT, Circle 12(4), Bangalore and 3DPLM Software Solutions Ltd. v. Deputy CIT 42 taxmann.com 333 (Bang-Trib). It was also submitted that the business profile of the assessee and t .....

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pute that the said transaction was an international transaction with an associated enterprise and therefore the price received by the assessee for rendering such services has to pass the arm's length price (ALP) test as laid down in section 92 of the Act. During the financial year 2005-06, the assessee provided software development services to its associated enterprise and was remunerated on a "cost plus" basis. The total value of international transaction with respect to the provi .....

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#39;s length price. The operating profits to total cost was adopted as the profit level indicator ("PLI"). The profit level indicator of the assessee was arrived at 12.28 per cent. The assessee in its transfer pricing analysis had selected 14 comparable companies and arrived at arithmetic mean of the profit margin of the said comparable companies at 16 per cent. and claimed that the price it charged was at arm's length. 7. The Transfer Pricing Officer arrived at a final set of 20 c .....

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65 per cent. After factoring the working capital adjustment of 4.59 per cent., the adjusted arithmetic mean was determined at 19.06 per cent. The computation of the arm's length price by the Transfer Pricing Officer in this regard was as follows : "12.5 Computation of arm's length price : The arithmetic mean of the profit level indicators is taken as the arm's length margin. (Please see annexure B for details of computation of profit level indicator of the comparables). Based on .....

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5 The above shortfall of ₹ 1,56,54,745 is being treated as an adjust ment to the price shown by the taxpayer in its books of account." 9. Against the said adjustment proposed by the Transfer Pricing Officer which was incorporated in the draft assessment order by the Assessing Officer, the assessee filed objections before the Dispute Resolution Panel. The Dispute Resolution Panel rejected those objections and confirmed the transfer pricing adjustment suggested by the Transfer Pricing O .....

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mpanies are more than ₹ 200 crores as can be seen from the chart given as annexure-1 to this order and cannot be compared with the assessee whose turnover is less than ₹ 30 crores : (1) Flextronics Software Systems Ltd. (2) iGate Global Solutions Ltd. (3) Mindtree Ltd. (4) Persistent Systems Ltd. (5) Sasken Communication Technologies Ltd. (Seg.) (6) Infosys Technologies Ltd. (7) Tata Elxsi Ltd. Our attention was drawn to the observations of the Tribunal in the case of Trilogy E-Busin .....

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ibunal on application of the turnover filter while selecting comparable companies for comparability analysis held as follows (page 477) : (1) Turnover filter 11. Learned counsel for the assessee submitted that the Transfer Pricing Officer has applied a lower turnover filter of ₹ 1 crore, but has not chosen to apply any upper turnover limit. In this regard, it was submitted by him that under rule 10B(3) to the Income-tax Rules, it was necessary for comparing an uncontrolled transaction with .....

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as his submission that size was an important facet of the comparability exercise. It was submitted that significant differ ences in size of the companies would impact comparability. In this regard our attention was drawn to the decision of the Special Bench of the Income-tax Appellate Tribunal Chandigarh Bench in the case of Deputy CIT v. Quark Systems P. Ltd. 38 SOT 207, wherein the Special Bench had laid down that it is improper to proceed on the basis of lower limit of ₹ 1 crore turnove .....

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n absolute value or in proportion to the activities of the parties might affect the relative competitive positions of the buyer and seller and therefore comparability.' 12. The Institute of Chartered Accountants of India transfer pricing guidelines note on this aspect lay down in para 15.4 that a transaction entered into by a ₹ 1,000 crores company cannot be compared with the transaction entered into by a ₹ 10 crores company. The two most obvious reasons are the size of the two c .....

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nnot be compared with the transaction entered into by a ₹ 10 crore company. The two most obvious reasons are the size of the two companies and the relative economies of scale under which they operate.' 13. It was further submitted that the Transfer Pricing Officer's range (Rs. 1 crore to infinity) has resulted in selection of companies like Infosys which is 277 times bigger than the assessee (turnover of ₹ 13,149 crores as compared to ₹ 47.47 crores of the assessee). It .....

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ce (page 497) : '9. Having heard both the parties and having considered the rival contentions and also the judicial precedents on the issue, we find that the Transfer Pricing Officer himself has rejected the companies which are making losses as comparables. This shows that there is a limit for the lower end for identifying the comparables. In such a situation, we are unable to understand as to why there should not be an upper limit also. What should be upper limit is another factor to be con .....

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are excluded from comparables, then the super profit making companies should also be excluded. For the purpose of classification of companies on the basis of net sales or turnover, we find that a reasonable classification has to be made. Dun and Bradstreet and NASSCOM have given different ranges. Taking the Indian scenario into consideration, we feel that the classification made by Dun and Bradstreet is more suitable and reasonable. In view of the same, we hold that the turnover filter is very .....

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late Tribunal in the following cases : 1. Kodiak Networks (India) Private Limited v. Asst. CIT (I. T. A. No. 1413/Bang/2010) ; 2. Genesis Microchip (I) Private Limited v. Deputy CIT (ITA No.1254/Bang/20l0). 3. Electronic for Imaging India Private Limited (ITA No. 1171/ Bang/2010). It was finally submitted that companies having turnover more than ₹ 200 crores ought to be rejected as not comparable with the assessee. 16. The learned Departmental representative, on the other hand pointed out .....

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puted having regard to the arm's length price. Section 92B provides that 'international trans action' means a transaction between two or more associated enter prises, either or both of whom are non-residents, in the nature of purchase, sale or lease of tangible or intangible property, or provision of services, or lending or borrowing money, or any other transaction having a bearing on the profits, income, losses or assets of such enterprises, and shall include a mutual agreement or a .....

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isions of section 92 of the Act. Section 92C provides the manner of computation of arm's length price in an international transaction and it provides : '92C. (1) The arm's length price in relation to an international transaction shall be determined by any of the following methods, being the most appropriate method, having regard to the nature of transaction or class of transaction or class of associated persons or functions performed by such persons or such other relevant factors as .....

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arm's length price shall be taken to be the arithmetical mean of such prices : Provided further that if the variation between the arm's length price so determined and price at which the international transaction has actually been undertaken does not exceed five per cent. of the latter, the price at which the international transaction has actually been undertaken shall be deemed to be the arm's length price. (3) Where during the course of any proceeding for the assessment of income, .....

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e information or data used in computation of the arm's length price is not reliable or correct ; or (d) the assessee has failed to furnish, within the specified time, any information or document which he was required to furnish by a notice issued under sub-section (3) of section 92D, the Assessing Officer may proceed to determine the arm's length price in relation to the said international transaction in accordance with sub-sections (1) and (2), on the basis of such material or informati .....

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realised by the enterprise from an international transaction entered into with an associated enterprise is computed in relation to costs incurred or sales effected or assets employed or to be employed by the enterprise or having regard to any other relevant base ; (ii) the net profit margin realised by the enterprise or by an unrelated enterprise from a comparable uncontrolled transaction or a number of such transactions is computed having regard to the same base ; (iii) the net profit margin re .....

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rgin referred to in sub-clause (iii) ; (v) the net profit margin thus established is then taken into account to arrive at an arm's length price in relation to the international transaction. (2) For the purposes of sub-rule (1), the comparability of an international transaction with an uncontrolled transaction shall be judged with reference to the following, namely : (a) the specific characteristics of the property transferred or services provided in either transaction ; (b) the functions per .....

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the geographical location and size of the markets, the laws and Government orders in force, costs of labour and capital in the markets, overall economic development and level of competition and whether the markets are wholesale or retail. (3) An uncontrolled transaction shall be comparable to an international transaction if- (i) none of the differences, if any, between the transactions being compared, or between the enterprises entering into such transactions are likely to materially affect the .....

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wo years prior to such financial year may also be considered if such data reveals facts which could have an influence on the determination of transfer prices in relation to the transactions being compared.' 19. A reading of the provisions of rule 10B(2) of the Rules shows that uncontrolled transaction has to be compared with international transaction having regard to the factors set out therein. Before us there is no dispute that the transactional net margin method is the most appropriate me .....

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turnover is ₹ 47,46,66,638. It would therefore fall within the category of companies in the range of turnover between ₹ 1 crore and ₹ 200 crores (as laid down in the case of Genisys Integrating Systems (India) Pvt. Ltd. v. Deputy CIT ITA No.1231/Bang/2010). Thus, companies having turnover of more than ₹ 200 crores have to be eliminated from the list of comparables as laid down in several decisions referred to by learned counsel for the assessee. Applying those tests, the .....

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se of Trilogy E-Business Software India P. Ltd. (supra), we hold that the following companies should be excluded from the list of comparable companies. 1. Flextronics Software Systems Ltd. 2. iGate Global Solutions Ltd. 3. Mindtree Ltd. 4. Persistent Systems Ltd. 5. Sasken Communication Technologies Ltd. (Seg.) 6. Infosys Technologies Ltd. 7. Tata Elxsi Ltd. 13. The Assessing Officer is directed to compute the arithmetic mean by excluding the aforesaid companies from the list of comparables. 14. .....

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The following were the relevant observations of the Tribunal on the aforesaid comparable companies in the case of Trilogy E-Business Software India P. Ltd. : 16. "(d) KALS Information Systems Ltd. 21. As far as this company is concerned, the contention of the assessee is that the aforesaid company has revenues from both software development and software products. Besides the above, it was also pointed out that this company is engaged in providing training. It was also submitted that as per .....

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tionally different from software companies. The relevant extract are as follows : '16. Another issue relating to selection of comparables by the Transfer Pricing Officer is regarding inclusion of KALS Information System Ltd. The assessee has objected to its inclusion on the basis that functionally the company is not comparable. With reference to pages 185 and 186 of the paper book, it is explained that the said company is engaged in development of software products and services and is not co .....

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s aspect, the assessee succeeds.' Based on all the above, it was submitted on behalf of the asses see that KALS Information Systems Ltd. should be rejected as a comparable. 22. We have given a careful consideration to the submission made on behalf of the assessee. We find that the Transfer Pricing Officer has drawn conclusions on the basis of information obtained by issue of notice under section 133(6) of the Act. This information which was not available in public domain could not have been .....

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ssee that this company is not comparable." 17. The facts and circumstances under which the aforesaid companies were considered as comparable is identical in the case of the assessee as well as in the case of Trilogy E-Business Software India P. Ltd. (supra). Respectfully following the decision of the Tribunal referred to above in the case of Trilogy E-Business Software India P. Ltd. (supra), we direct that KALS Information Systems Ltd., be excluded from the list of 14 comparables arrived at .....

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cted as a comparable by the Transfer Pricing Officer. Before us, the assessee has objected to the inclusion of this company as a comparable on the grounds that it is into software product development and therefore functionally different from the assessee. In this regard, the learned authorised representative submitted that- (i) This company is engaged in the development of software products. (ii) This company has been held to be functionally different and therefore not comparable to software ser .....

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2011) and CSR India P. Ltd. v. ITO in IT(TP)A No. 1119/Bang/2011 and by the Delhi Bench of the Tribunal in the case of Transwitch India P. Ltd. (I. T. A. No. 6083/ Del/2010). (iv) The factual position and circumstances pertaining to this company has not changed from the earlier assessment year 2007-08 to the period under consideration, i.e., assessment year 2008-09 and therefore on this basis, this company cannot be considered as a comparable in the case on hand. (v) The relevant portion of the .....

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ce provider and therefore this company, i.e., Lucid Software Ltd., ought to be omitted from the list of comparables. 16.2 Per contra, the learned Departmental representative supported the action and finding of the Transfer Pricing Officer in including this company in the list of comparables. 16.3. We have heard the rival submissions and perused and carefully considered the material on record. It is seen from the details on record that the company, i.e., Lucid Software Ltd., is engaged in the dev .....

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ate Tribunal in the case of Transwitch India P. Ltd. (supra) have held, that since this company, is engaged in the software product development and not software development services, it is functionally different and dis-similar and is therefore to be omitted from the list of comparables for software development service providers. The assessee has also brought on record details to demonstrate that the factual and other circumstances pertaining to this company have not changed materially from the .....

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e purpose of comparison while determining the arm's length price of the international transaction in question. 20. As far as the comparable chosen by the Transfer Pricing Officer viz., M/s. Avani Cincom Technologies Ltd., comparable chosen by the Transfer Pricing Officer is concerned, this Tribunal in the case of 3DPLM Software Solutions Ltd. v. Deputy CIT [2014] 3 ITR (Trib)-OL 305 (Bang) held that this company is not functionally comparable with a software development service provider. The .....

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fficer had rejected the objections of the assessee on the ground that this comparable company has categorised itself as a pure software developer, just like the assessee, and hence selected this company as a comparable. For this purpose, the Transfer Pricing Officer had relied on the information submitted by this company in response to enquiries carried out under section133(6) of the Act for collecting information about the company directly. 7.2. Before us, the learned authorised representative .....

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the basis of which the Transfer Pricing Officer included this company in the final list of comparable companies, has not been shared with the assessee. In support of this contention, the learned authorised representative placed reliance on the following judicial decisions : (i) Trilogy E-Business Software India P. Ltd. v. Deputy CIT (I. T. A. No. 1054/Bang/2011) (ii) Telcordia Technologies India P. Ltd. v. Asst. CIT (I. T. A. No.7821/Mum/2011) It was also submitted that this company has been hel .....

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t : (i) The extract from the website of the company clearly indicates that it is primarily engaged in development of software products. The extract mentions that this company offers customised solutions and services in different areas ; (ii) The website of this company evidences that this company develops and sells customisable software solutions like 'DX Change, CARMA', etc. 7.4. The learned authorised representative submitted that a co-ordinate Bench of the Tribunal in its order in Cur .....

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e it has been deleted from the set of comparables in the case of Trilogy E-Business Software India P. Ltd. v. Deputy CIT [2013] 23 ITR (Trib) 464 (Bang). No doubt this company has been deleted as a comparable in the case of Trilogy EBusiness Software India P. Ltd. and this can be a good guidance to decide on the comparability in the case on hand also. This alone, however, will not suffice for the following reasons : (i) The assessee needs to demonstrate that the FAR analysis and other relevant f .....

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year 2007- 08, the year for which the decision in case of Trilogy E-Business Software India P. Ltd. v. Deputy CIT (supra) was rendered are also applicable to the year under consideration, i.e., assessment year 2008-09. 9.5.3 It is a well-settled principle that the assessee is required to perform FAR analysis for each year and it is quite possible that the FAR analysis can be different for each of the years. That being so, the principle applicable to one particular year cannot be extrapolated aut .....

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7-08. The assessee, in our view, has not demonstrated that the facts of Trilogy E-Business Software India P. Ltd. are identical to the facts of the case on hand and that the profile of the assessee for the year under consideration is similar to that of the earlier assessment year 2007-08. In view of facts a discussed above, we deem it fit to remand the matter back to the file of the Assessing Officer/Transfer Pricing Officer to examine the comparability of this company afresh by considering the .....

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as per the search process conducted by the Transfer Pricing Officer, but only as an additional comparable for the reason that it was selected as a comparable in the earlier year, i.e., assessment year 2007-08 on the basis of information obtained under section 133(6) of the Act. In this regard, the learned authorised representative took us through the relevant portions of the transfer pricing order under section 92CA of the Act and the show cause notices for both earlier year, i.e., assessment y .....

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the earlier year and hence the findings rendered by the co-ordinate Benches of the Tribunal in the assessee's own case for the assessment year 2007-08 (supra) and in other cases like Trilogy E-Business Software India P. Ltd. v. Deputy CIT (supra) are applicable to the year under consideration as well. 7.5. Per contra, the learned Departmental representative supported the order of the Transfer Pricing Officer/Dispute Resolution Panel for inclusion of this company Avani Cincom Technologies Lt .....

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reon into consideration before deciding to include this company in its final list of comparables. Non-furnishing the information obtained under section 133(6) of the Act to the assessee has vitiated the selection of this company as a comparable. 7.6.2. We also find substantial merit in the contention of the learned authorised representative that this company has been selected by the Transfer Pricing Officer as an additional comparable only on the ground that this company was selected in the earl .....

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and hence is not comparable. Therefore the finding excluding it from the list of comparables rendered in the immediately preceding year is applicable in this year also. Since the functional profile and other parameters by this company have not undergone any change during the year under consideration which fact has been demonstrated by the assessee, following the decisions of the co-ordinate Benches of this Tribunal in the assessee's own case for the assessment year 2007-08 in I. T. A. No. 84 .....

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r Pricing Officer viz., M/s. Celestial Biolabs Ltd., is concerned, this Tribunal in the case of 3DPLM Software Solutions Ltd. v. Deputy CIT [2014] 3 ITR (Trib)-OL 305 (Bang) held that this company is not functionally comparable with a software development service providers. The following were the relevant observations of the Tribunal in this regard (page 321) : 9. Celestial Biolabs Ltd. 9.1. This comparable was selected by the Transfer Pricing Officer for inclusion in the final list of comparabl .....

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ection raised in respect of the employee cost filter issue, the Transfer Pricing Officer rejected the objections by observing that the employee cost filter is only a trigger to know the functionality of the company. 9.2. Before us, the learned authorised representative contended that this company is not functionally comparable, as the company is into bio-informatics software product/services and the segmental break- up is not provided. It was submitted that : (i) This company is engaged in the d .....

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a) at paragraph 47 thereof had observed about this company that : 'As explained earlier, it is a diversified company and therefore cannot be considered as comparable functionally with that of the assessee. There has been no attempt to identify and eliminate and make adjustment of the profit margins so that the difference in functional comparability can be eliminated. By not resorting to such a process of making adjustments, the Transfer Pricing Officer has rendered this company as not qualif .....

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A. No. 6083/Del/2010. (v) The facts pertaining to this company has not changed from the assessment year 2007-08 to the assessment year 2008-09 and therefore this company cannot be considered for the purpose of comparability in the instant case and hence ought to be rejected. In support of this contention, the assessee has also referred to and quoted from various parts of the annual report of the company. 9.3. Per contra, the learned Departmental representative supported the inclusion of this co .....

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see were with respect to the immediately previous assessment year, and there cannot be an assumption that it would continue to be applicable for this year as well, the same parity of reasoning is applicable to the Transfer Pricing Officer as well who seems to have selected this company as a comparable based on the reasoning given in the Transfer Pricing Officer's order for the earlier year. It is evidently clear from this, that the Transfer Pricing Officer has not carried out any independent .....

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ifferent from the assessee in the case on hand and is therefore not comparable and also that the findings rendered in the cited decisions for the earlier years, i.e., assessment year 2007-08 is applicable for this year also. We agree with the submissions of the assessee that this company is functionally different from the assessee. It has also been so held by co-ordinate Benches of this Tribunal in the assessee's own case for the assessment year 2007-08 (supra) as well as in the case of Tril .....

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I. T. A. No. 1054/Bang/2011 [2013] 23 ITR (Trib) 464 (Bang), we hold that this company ought to be omitted from the list of comparables. The Assessing Officer/Transfer Pricing Officer are accordingly directed." 23. In view of the above, the aforesaid company should also be excluded for the purpose of comparison while determining the arm's length price of the international transaction in question. 24. As far as the comparable chosen by the Transfer Pricing Officer viz., M/s. E-Zest Solu .....

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the assessee had objected to the inclusion of this company as a comparable on the ground that it was functionally different from the assessee. The Transfer Pricing Officer had rejected the objections raised by the assessee on the ground that as per the information received in response to notice under section 133(6) of the Act, this company is engaged in software development services and satisfies all the filters. 14.2. Before us, the learned authorised representative contended that this company .....

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technology enabled services normally categorised as knowledge process outsourcing ('KPO') services. It is further submitted that this company has not provided segmental data in its annual report. The learned authorised representative submits that since the annual report of the company does not contain detailed descriptive information on the business of the company, the assessee places reliance on the details available on the company's website which should be considered while evaluati .....

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in I. T. A. No. 1961(Hyd)/2011 dated November 23, 2012, and prayed that in view of the above reasons, this company, i.e., e-Zest Solutions Ltd., ought to be omitted from the list of comparables. 14.3. Per contra, the learned Departmental representative supported the inclusion of this company in the list of comparables by the Transfer Pricing Officer. 14.4. We have heard the rival submissions and perused and carefully considered the material on record. It is seen from the record that the Transfe .....

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re development services, this company, i.e., e-Zest Solutions Ltd., is rendering product development services and high end technical services which come under the category of knowledge process outsourcing services. It has been held by the co-ordinate Bench of this Tribunal in the case of Capital IQ Information Systems (India) P. Ltd. v. Deputy CIT (International Taxation) [2013] 25 ITR (Trib) 185 (Hyd) that knowledge process outsourcing services are not comparable to software development service .....

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Officer. Before the Transfer Pricing Officer, the assessee objected to the inclusion of this company in the list of comparables on the ground that its turnover was in excess of ₹ 500 crores. Before us, the assessee has objected to the inclusion of this company as a comparable for the reason that apart from software development services, it is in the business of product development and trading in software and giving licences for use of software. In this regard, the learned authorised repres .....

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providers, as its income includes income from sale of licences which has increased the margins of the company. The learned authorised representative prayed that in the light of the above facts and in view of the aforecited decision of the Tribunal (supra), this company ought to be omitted from the list of comparables. 15.2. Per contra, the learned Departmental representative supported the action of the Transfer Pricing Officer in including this company in the list of comparables. 15.3. We have .....

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ns Pvt. Ltd. (supra) has directed that since the income of this company includes income from sale of licences, it ought to be rejected as a comparable for software development services. In the case on hand, the assessee is rendering software development services. In this factual view of the matter and following the aforecited decision of the Pune Tribunal (supra), we direct that this company be omitted from the list of com parables for the period under consideration in the case on hand." 25 .....

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relevant observations of the Tribunal in this regard (page 338) : "19. Softsol India Ltd. 19.1. This company was selected by the Transfer Pricing Officer as a comparable. The assessee objected to the inclusion of this company as a comparable on the grounds that this company is functionally different and dis-similar from it. The Transfer Pricing Officer rejected the assessee's objections on the ground that as per the company's reply to the notice under section 133(6) of the Act, the .....

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ground that the 'related party transactions' (RPT) is in excess of 15 per cent. The learned authorised representative submitted that for the current period under consideration, the related party transactions is 18.3 per cent. and therefore this company requires to be omitted from the list of comparables. 19.2. Per contra, the learned Departmental representative supported the action of the Transfer Pricing Officer in including this company in the list of comparables as this company was a .....

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of 24/7 Customer.Com.Pvt. Ltd. v. Deputy CIT in I. T. A. No. 227/Bang/2010 . As the facts for this year are similar and material on record also indicates that related party transactions is 18.3 per cent., following the aforecited decisions of the co-ordinate Benches (supra), we hold that this company is to be omitted from the list of comparables to the assessee in the case on hand." 27. In view of the above, the aforesaid company should also be excluded for the purpose of comparison while .....

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s at arm's length. He prayed for a limited direction to the Transfer Pricing Officer on the lines set out above and determine the arm's length price. It also submitted that the other issues raised by the assessee in the grounds of appeal need not be gone into. 29. We are of the view that the prayer sought for by learned counsel for the assessee is acceptable and accordingly, the Transfer Pricing Officer is directed to compute the arm's length price after excluding the comparable comp .....

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ds travelling totalling in all ₹ 78,82,985 from export turnover on the ground that these expenses are incurred in rendering technical services rendered to clients outside India and therefore to be excluded from the export turnover while computing deduction under section 10A. The assessee prayed that the aforesaid expenditure are not of the nature set out in Explanation 2(iv) to section 10A of the Act which defines "export turnover". The assessee also made an alternate prayer that .....

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prayer was rejected by the Assessing Officer as well as the Dispute Resolution Panel. 31. We have heard learned counsel for the assessee and the learned Departmental representative on the issues raised in ground No. 6. Taking into consideration the decision rendered by the hon'ble High Court of Karnataka in the case of CIT v. Tata Elxsi Ltd. [2012] 349 ITR 98 (Karn), we are of the view that it would be just and appropriate to direct the Assessing Officer to exclude telecommunication charges .....

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11 passed by the Assessing Officer, the Assessing Officer disallowed a sum of ₹ 23,47,709 which was a payment made by the assessee to M/s. Pivotal Corporation, a non-resident, without deduction of tax at source. According to the assessee the payment in question was reimbursement of expenses incurred by the non-resident on behalf of the assessee and therefore there was no obligation to deduct tax at source as the payment does not constitute income of the non-resident. The Assessing Officer .....

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allenge the aforesaid. The first question is whether the assessee is entitled to do so. 34. We have considered the submission of learned counsel for the assessee on ground No. 5 who reiterated that the payment in question was a reimbursement and therefore there was no obligation to deduct tax at source. We find that the Assessing Officer in the draft assessment order dated February 17, 2011 the Assessing Officer has referred to the fact that the proposal to disallow the sum for non-deduction of .....

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ber, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee. (2) On receipt of the draft order, the eligible assessee shall, within thirty days of the receipt by him of the draft order,- (a) file his acceptance of the variations to the Assessing Officer ; or (b) file his objections, if any, to such variation with,- (i) the Dispute Resolution Panel ; and (ii) the Assessing Officer. (3) The Assessing Officer shall complete the assessment on the bas .....

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te Resolution Panel shall, in a case where any objec tion is received under sub-section (2), issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment. (6) The Dispute Resolution Panel shall issue the directions referred to in sub-section (5), after considering the following, namely :- (a) draft order ; (b) objections filed by the assessee ; (c) evidence furnished by the assessee ; (d) report, if any, of the Assessing Officer, Val .....

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