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2016 (11) TMI 1356 - ITAT BANGALORE

2016 (11) TMI 1356 - ITAT BANGALORE - TMI - Transfer pricing adjustment - RPT filter application - Held that:- Where the DRP has applied 0% RPT filter and as per the settled position of law by now, the RPT filter should be applied at the rate of 15%, we set aside the order of the AO/TPO and restore back the matter to the file of the AO/TPO for a fresh decision by applying RPT filter of 15%. We also hold that since the matter is going back to the file of the AO/TPO and much development has taken .....

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Vikram Vijayaraghavan, Advocate ORDER PER SHRI A.K.GARODIA, AM These are cross appeals filed by the assessee and the revenue which are directed against the assessment order passed by the AO u/s 143 (3) r.w.s.144C of the IT Act, 1961 dated 30-01-2015, as per the directions of the DRP. 2. The grounds raised by the revenue are as under; 1) The order of the learned DRP is opposed to law and the facts and circumstances of the case 2) The learned DRP erred in holding that the size and turnover of the .....

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ment of 1 % based on the decision of the IT AT, Hyderabad in the case of Hello Soft Pvt Ltd . 5) The learned DRP erred in directing the AO to follow the ratio of the Hon'ble Court in the case of Tata Elxsi Limited 349 ITR 98 and exclude Communication and travel expenses incurred in foreign currency from the total turnover also while computing the deduction u/s 10A of the I.T. Act as the decision of the High Court is binding, without appreciating the fact that there is no provision in section .....

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% RPT. The order of the Hon'ble DRP is in itself contradictory. It has discussed why 0% RPT should not be taken on the other hand the Hon'ble DRP itself has directed the TPO to adopt the same. 8) For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the DRP be reversed and that of the AO be restored. 9) The appellate craves to leave, to add, to alter, to amend or delete any of the grounds that may be urged at the time of hearing .....

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That on the facts and circumstances of the case and in law, 1.The learned AO, based on directions of the Hon'ble DRP, erred in assessing the total income at ₹ 3,65,49,702 as against returned income of ₹ 5,15,771 computed by the Appellant; Transfer Pricing Adjustment On the facts and in the circumstances of the case and in law: 2.The learned AOI Transfer Pricing Officer ("TPO") has erred in law and facts in confirming the addition made by the AOITPO to the total income .....

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connection with the impugned international transaction and holding that the Appellant's international transaction is not at arm's length; 4.The learned AOI TPO erred, in law and in facts, by determining the arm's length marginal price using only FY 2010-11 data which was not available to the Appellant at the time of complying with the transfer pricing documentation requirements; 5.The learned AO/TPO erred in rejecting certain comparable companies by applying the following quantitativ .....

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than March 31 or companies whose financial statements were for a period other than 12 months); and c. The learned AO/TPO erred in rejecting certain comparable identified by the appellant using export earnings greater than75% of the sales as a comparability criterion. 6.The Hon'ble DRP erred, in law and in facts, by suo-moto modifying the related party transactions ("RPT") filter of 'more than 25 percent' to 'equal to 0 percent' and thereby rejecting certain compani .....

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/TPO has erred, in law and in facts, by rejecting certain comparable companies identified by the Appellant using employee cost greater than 25% of the total revenues as a comparability criterion in determining the arm's length price of the software development services transaction; 9.The learned AO/TPO has erred, in law and in facts, by accepting I rejecting companies based on unreasonable comparability criteria; Companies rejected by TPO based on unreasonable comparability criteria Companie .....

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i) CG-VAK Software and Exports Limited Companies rejected for having export sales more than 75% export sales j) Goldstone Technologies Limited Companies rejected for financial irregularities k) Sat yam Computer Services Ltd Other reasons I) Silver Line Technologies Limited m) R Systems International Ltd Company accepted by TPO based on unreasonable comparability criteria a) M/s Kals Information Systems Ltd which was rejected by the Tribunal in the Appellant's own case for A Y 2009-10 Withou .....

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nt submits that each of the above grounds is independent and without prejudice to one another. The Appellant craves leave to add, alter, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal, so as to enable the Hon'ble Tribunal to decide on the appeal in accordance with the law . 4. It was agreed by both sides that DRP has applied 0% RPT filter, whereas this is the settled position by now that the RPT filter should .....

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