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2016 (3) TMI 1201 - ITAT PUNE

2016 (3) TMI 1201 - ITAT PUNE - TMI - TPA - selection of comparable - Held that:- As the assessee had declared income from software development, training and product both in the domestic and export market and is off-site developer,companies dissimilar with that of assessee need to be deselected from final list of compatibles. - Also where the R&D filter is more than 3% not to be taken in the final list of comparables. - Working of profit before depreciation and the allowability of its ad .....

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provisions of the Act are clear in not allowing any deduction on any TP adjustment made under sections 10A and 10B of the Act. Where the section itself provides that no deduction under section 10A of the Act is to be allowed on any transfer pricing adjustment, then corollary to the same is that transfer pricing adjustment can be made in the case of concerns which are claiming deduction under sections 10A and 10B of the Act - ITA No.1425/PN/2010 - Dated:- 16-3-2016 - MS. SUSHMA CHOWLA, JM AND .....

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d consequently the learned AO have: 1. General ground challenging the transfer pricing adjustment of ₹ 123,984,018 consequential to non consideration/acceptance of comparability analysis as documented in the transfer pricing study report Erred in making transfer pricing adjustment to its international transactions in the nature of provision of software development services and sales support services and not considering/ accepting the comparability analysis documented in the Transfer Pricin .....

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parable companies available at the time of transfer pricing assessment but not available at the time of compliance with the transfer pricing regulations by the Appellant. 4. Use of multiple year data Erred in not considering multiple year data i.e. data for Financial Year (hereinafter referred to as FY ) 2005-06 and two prior years, in respect of comparable companies for determining the arm's length price of international transactions pertaining to provision of software development services .....

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velopment services. 6. Rejection of loss making companies Erred in rejecting certain comparable companies from the comparable set identified by the Appellant, on the basis that such companies are loss making companies and the Appellant cannot incur losses as it is a cost protected entity. 7. Rejection of certain comparable companies identified by the Appellant in the transfer pricing study report Erred in rejecting certain comparable companies from the comparable set identified by the Appellant .....

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insufficient (ie less than 25 per cent of total earnings), without appreciating the fact that the entire earnings of GTL is from exports and hence, the foreign exchange earnings of GTL exceeds 25 per cent of its total earnings. 9. Accepting certain companies as comparable for FY 2005-06 in relation to provision of software development services Erred in considering ICSA (India) Ltd, Aztecsoft Ltd and Helios and Matheson Information technology Ltd as companies comparable to the Appellant's ac .....

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ices. 11. Non acceptance of Operating Profit Before Depreciation, Interest and Tax (hereinafter referred to as 'OPBDIT') as Profit Level Indicator (hereinafter referred to as 'PLI') for comparison purpose in connection with provision of software development services Without prejudice to the above grounds, the honourable DRP and consequently the learned AO have erred in not accepting the alternative argument that OPBDIT should be considered as PLI for the purpose of comparison of .....

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een the functional and risk profile of comparable companies vis-a-vis the risk profile of the Appellant. 13. Applicability of +/-5% range Erred in computing the transfer pricing adjustment from the arm's length price without giving benefit of the option available to the Appellant under proviso to section 92C(2) of the Act of adopting as arm's length price, a price which varies by not more than 5 per cent from the arm's length price. 14. Initiation of penalty proceedings under sec 271 .....

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pricing adjustment is sustained, the learned AO erred in levying interest under section 234B of the Act to the extent that the addition is computed based on the updated financial data for the comparable companies. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing of the appeal, so as to enable the Honourable Income Tax Appellate Tribunal to decide this appeal according to law. 3. The issue raised .....

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oncerns are included and some of the concerns picked up by the Transfer Pricing Officer (TPO) / Assessing Officer are excluded. Further, the assessee stressed that adjustment had to be made on account of accelerated depreciation and risks. 5. Both the Authorized Representatives made their submissions in respect of the same, which we shall deal with while deciding the issue at hand. 6. Briefly, in the facts of the present case, the assessee was wholly owned subsidiary of BMC Software, US. The uni .....

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TPO noted that the assessee was engaged in providing software development services to the tune of ₹ 80,96,60,358/- to its associate enterprises and sales support services to BMC-USA of ₹ 69,89,833/-. Since the assessee was solely engaged in providing software development services and sales support services to BMC, USA in respect of software products of BMC, USA, the TPO observed that the assessee could be classified as a captive software development service provider and as sales sup .....

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s i.e. function performed, risk assumed and asset utilized. The assessee had selected 12 companies as comparables for benchmarking its international transactions, which are enlisted at page 4 of the TPO s order. Based on the margins of said concerns, the weighted average margins of comparable companies was 5.40% though the assessee was billing at cost plus 10% for rendering software development services. However, the operating margin of the assessee was worked out to 5.89% for the year under con .....

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onal transactions pertaining to provision of software development services. Similar exercise of selection of concerns was also carried out by the TPO in respect of international transactions of sales support services provided by the assessee to its associate enterprises. The objections of the assessee with regard to concerns picked up by the TPO and those rejected by the TPO are reproduced in the order of TPO under para 7.1. In the final analysis, the TPO rejecting the explanation of assessee, w .....

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out to 24.25% as against the OP/TC of the assessee company at 9.39%. Consequently, addition of ₹ 8,79,554/- was proposed. The total addition made in the hands of assessee was to the tune of ₹ 12,39,84,018/-. The DRP upheld the directions of TPO. Thereafter, the Assessing Officer while passing order under section 143(3) r.w.s. 144C(13) of the Act had rejected the contentions of the assessee and made an addition to the extent of ₹ 12,39,84,018/-. 7. The assessee is in appeal aga .....

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stlecone India Limited (Formerly known as Mahindra Consulting Limited) -2.92% NC NC -2.92% 3 Datamatics Limited NA -5.87% NA -5.87% 4 Future Software Limited 2.88% NA NA 2.88% 5 Goldstone Technologies Limited 9.62% 4.65% NA 7.48% 6 Maars Software International Limited 5.52% 3.25% NA 4.27% 7 Melstar information Technologies Limited NC -0.15% NA 0.15% 8 Orient Information Technologies Limited 14.52% 14.90% NA 14.76% 9 Quintegra Solution Limited NA 6.93% 10.73% 8.59% 10 R S Software (India) Limited .....

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) Ltd. (segmental) 31.88 4 R S Software (India) Ltd. 15.34 Average 24.97 10. The learned Authorized Representative for the assessee pointed out that looking at the analysis carried on by the assessee and thereafter by the TPO, some of the companies which were selected by the assessee in its TP study report should be included while benchmarking the international transactions of software development services provided by the assessee to its associate enterprises. The first such company was Orient I .....

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e there was a loss declared by the said concern. The learned Departmental Representative for the Revenue was of the view that the issue needs to be gone into deeper to find out the nature of loss. He fairly accepted that only because of loss, it should not be rejected. However, the loss incurred by the said concern Orient Information Technologies Limited was to be looked into. Our attention was drawn to the Directors Report and the other attached documents placed at pages 65.5 to 65.24 of Paper .....

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Representative for the Revenue was not raised by the TPO and hence, merits not to be applied. He further pointed out that the assessee ruled out the cost plus entity and hence, the chances of losses were Nil, but merely because the company was not doing well, could not be the basis for rejection of the said concern as comparable. Since the TPO period and again allows the adjustment for risk management. Similarly, adjustment for depreciation should be allowed. 13. The learned Departmental Represe .....

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r the Revenue and the learned Authorized Representative for the assessee is to come to a finality. He was of the view that the facts supported the case of TPO. In this regard, reliance was placed on the ratio laid down by the Hon ble Delhi High Court in CIT Vs. M/s. Jansampark Advertising And Marketing (P) Ltd. in ITA No.525/2014, judgment dated 11.03.2015. 14. We shall deal with the arguments of learned Authorized Representatives at the relevant point of time in the paras hereinafter. 15. The n .....

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rized Representative for the assessee referred to the financial statements of the said concern, which are placed at page 12.2 of the Paper Book and pointed out that the total exports were to the tune of ₹ 34.90 crores and the same was 100% of the total sales. He questioned on what basis the TPO was saying that it was only 25%. He further pointed out that the TPO had accepted the said concern as comparable in assessment years 2005-06 and 2007-08. 17. The learned Departmental Representative .....

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otal earning. However, the perusal of financial statements of the said concern at page 12.2 of the Paper Book for the year ending 31.03.2006 reflects that the total sales of the said concern were on account of export of software and services to the tune of ₹ 34,90,47,247/- i.e. the said concern had earned foreign exchange to the tune of 100% of its total sales. In this regard, we find no merit in the order of Assessing Officer / TPO in rejecting the said concern i.e. Goldstone Technologies .....

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f IT services in industries like financial services, manufacturing, education, healthcare and high technology and it was also reported by the Director that the said concern was delivering full range of service offerings covering the software services, spectrum of application development and maintenance, product services, testing and professional services, held it to dissimilar. The TPO held that the said company was undertaking significantly different functions compared to the assessee. Further, .....

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dopts the said yardstick of different accounting year, but in the final analysis, accepted the submissions of the assessee. However, the company was rejected being operational in different field. The learned Authorized Representative for the assessee also pointed out that the said concern was accepted by the DRP in assessment year 2008-09. 21. The learned Departmental Representative for the Revenue strongly objected to the contention of assessee and pointed out that the perusal of page 66.45 of .....

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Tribunal in M/s. SunGard Solutions (India) Pvt. Ltd. Vs. DDIT in ITA No.122/PN/2011, relating to assessment year 2006 -07, order dated 30.09.2014. Further, it was an end to end company and hence, functionally not comparable to the assessee. 22. The assessee is aggrieved by the exclusion of Quintegra Solution Limited from the final list of comparables. It has been pointed out by both the Authorized Representatives that admittedly, the said concern had a financial year comprising of 15 months as .....

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Solutions (India) Pvt. Ltd. Vs. DDIT (supra), wherein, similar proposition was laid down. Merely because DRP has accepted this concern as comparable in assessment year 2008-09 cannot be basis for its selection in this year because of different accounting period. 23. Another issue raised by the assessee was with regard to exclusion of Maars Software International Limited. The TPO held the said company not to be functionally similar as in the Directors Report, the company was stated to be software .....

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ferent from off-site developer. Our attention was drawn to the financials of the said concern especially at pages 61.27 and 61.28, wherein both the foreign exchange earnings and expenditure in foreign exchange is reported, which clearly shows on-site development. The learned Departmental Representative for the Revenue pointed out that in TIBCO Software India Pvt. Ltd. Vs. DCIT in ITA No.2536/PN/2012, relating to assessment year 2008-09, order dated 11.02.2015, where both Akshay Software Technolo .....

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ntative for the Revenue could not improve upon the case of TPO i.e. the said concern was on-site developer. He further pointed out that on-site was a software development service and hence, comparable. Further, it was pointed out by him that the learned Departmental Representative for the Revenue relied on the ratio laid down in TIBCO Software India Pvt. Ltd. Vs. DCIT (supra), relating to assessment year 2008-09 and hence, not to be relied on. 26. In the first instance, we would like to meet the .....

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where no fresh ground of appeal is being raised by the Revenue. The Hon ble Delhi High Court in CIT Vs. M/s. Jansampark Advertising And Marketing (P) Ltd. (supra) pointed out that the obligation to make proper enquiries and reach finding of facts does not end with the Assessing Officer, but the obligation moves upwards to CIT(A) and also ITAT, where it comes to their notice that there has been default in such respect on the part of Assessing Officer. In such an event, the Hon ble Delhi High Cou .....

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followed up on. In the hierarchy of the authorities, the AO is placed at the bottom rung. The two layers of appeals, before the matter engages the appellate jurisdiction of this court, are authorities vested with the jurisdiction, power and obligation to reach appropriate findings on facts. Noticeably, it is only the appeal to the High Court, under Section 260-A, which is restricted to consideration of substantial question of law , if any arising. As would be seen from the discussion that follo .....

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wn by the Hon ble Delhi High Court and while deciding the present issue of transfer pricing as to whether a concern is comparable to the assessee, the full factual aspects of the said concern are to be looked into while deciding the issue. We find no merit in the objections raised by the learned Authorized Representative for the assessee in this regard. The issue raised before us is whether a concern Maars Software International Limited was functionally similar or functionally not comparable to .....

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count, the assessee had declared income from software development, training and product both in the domestic and export market. However, the perusal of details at page 61.27 of the Paper Book reflects that under Segmental reporting, the assessee had declared the revenue on account of on-site overseas at ₹ 498.624 Millions. Under the income declared in the Profit & Loss Account, the income under the sub-head export the amount declared was ₹ 498.624 Millions i.e. though in the Prof .....

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.45 crores. The above results of the said concern reflect that it to be an onsite developer. On the other hand, the assessee before us is providing software development services to its associate enterprises and is off-site developer, which admittedly, is different from on-site developer. On the other hand, the concern Maars Software International Limited has total receipts from on-site overseas development i.e. on account of training and products and hence, the said concern is not functionally c .....

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and product. After considering the financials of the said concern, the Tribunal held that the said concern was not functionally similar to a concern which was engaged in providing software development services to its associate enterprises. The relevant finding of the Tribunal in paras 34 to 36, which read as under:- 34. The next plea of the assessee was that the lower authorities have unjustly excluded M/s. Maars Software International Limited from the final set of comparables. In this context, .....

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rn was from SAP consulting and implementation, which is quite different from the functions undertaken by the assessee. 35. On this aspect, assessee has attempted to assail the reasons being advanced by the TPO. With regard to the difference in functions, the point made by the assessee was that the factum of the said concern earning major income from SAP consulting and implementation was not supported with any facts and figures; that, it was a mere passing reference in the Annual Report of the sa .....

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mplementation mainly in USA and Middle East. In fact, in the paragraph containing overview of the operations, the aforesaid statement is the only assertion which elucidates the activities being undertaken by the said concern. No doubt, in the financial statement namely Profit & Loss Account, the income / revenue has been classified as income from software development, training and product so however, evidently no detailed bifurcation thereof is available. The entire set of financial statemen .....

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development services, leave alone the details showing the actual activities of software development. Therefore, in our view, the TPO justifiably excluded the said concern because it is only the information available in public domain, which can be the basis to effectuate comparable analysis. The assertions in the Directors report, which do not find any contradiction in the other financial statements accompanying such Directors report, have to be relied upon. Thus, on this point itself, we find n .....

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similar and it was observed that the business model of the said assessee i.e. provision of of-shore to its associate enterprises stood on different footing than on-site services being rendered by M/s. Akshay Software Technologies Limited . The Tribunal further held as under:- 40. …..The assertions of the assessee that its arrangement with associated enterprise does not rule out provision of on-site services does not distract from the fact that the tested transactions undertaken by the as .....

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the facts of the present case, where the assessee before us is providing off-shore services to its associate enterprises, its margins could not be compared with a concern, which is engaged in on-site development. Accordingly, we hold that Maars Software International Limited is functionally very different from the assessee before us and the said concern is to be excluded from the final list of comparables. 30. The next objection of the assessee was to the concerns which were selected by the TPO .....

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ptualizing, developing and manufacturing of embedded software, where the value addition was completely different. Further, the said concern was spending 4.5% of its revenue on R & D, whereas, the assessee had not incurred any R & D expenditure. The learned Authorized Representative for the assessee also pointed out that there was substantial job work undertaken by the said concern and hence not comparable to the functions of assessee before us. Another objection of the learned Authorized .....

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ce, the said company was comparable to the assessee company. 31. The learned Authorized Representative for the assessee pointed out that the TPO had failed to consider the nature of operations and the objections raised by the assessee in this regard. With regard to the Directors Report, it was pointed out that it only talks of increase in turnover. The learned Authorize d Representative for the assessee stressed that because of exceptional growth of said concern during the year, the same was not .....

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Pvt. Ltd. Vs. ACIT in ITA No.160 5/PN/2011, relating to assessment year 2007- 08, order dated 30.04.2013, where the TPO had accepted the cut off of 3%, but the Tribunal had held that ICSA (India) Ltd. was not comparable on account of its R&D expenses, which were above the filter of 3% adopted for the purpose of comparability analysis. Another point raised by the learned Authorized Representative for the assessee was that most of work of ICSA (India) Ltd. was outsourcing. 32. The learned Depa .....

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e for the Revenue pointed out that where there is outsourcing, margins go down, but in the case of said concern profits are substantial. 33. The learned Authorized Representative for the assessee in rejoinder submitted that the contention of the learned Departmental Representative for the Revenue is incorrect that the software is software i.e. embedded or not. Our attention was drawn to the segmental at page 62.39 of the Paper Book, where as against the revenue of ₹ 76.63 crores, the purch .....

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mparables on the said basis of R&D expenditure being more than 3% of revenue. However, we find that the Tribunal in Bindview India Pvt. Ltd. Vs. DCIT (supra) and thereafter, in PTC Software (India) Pvt. Ltd Vs. ACIT (supra), have laid down the proposition that where the R&D filter is more than 3% as against the assessee who has not incurred any R&D expenditure, then the said concern is not to be taken in the final list of comparables. The relevant finding of the Tribunal in PTC Softw .....

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246 to 327 of the Paper book. The TPO noticed that in the transfer pricing study undertaken by the assessee the said concern was excluded/rejected by applying the quantitative filter of Research and Development expenditure being in excess of 3% of sales. The TPO has not differed with the adoption of the quantitative filter for R&D expenses, so however, according to him the research and development expenditure incurred by the said concern for the F.Y. 2006 -07 is 6,71,86,184/- which is 2.02% .....

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solutions; and, (ii) Products and Projects related to power sector. The TPO considered the software services segment as a comparable to assessee s segment of IT-services and therefore he included the said concern in the list of comparables. 22. In this context, the Ld. Counsel has referred to the Annual Financial Statements of the concern to point out that the total research and development expenditure of ₹ 6,71,86,184/- incurred by the said concern is in relation to the embedded solutions .....

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which gives the break-up of the sales in different segments and after considering the R&D expenses of ₹ 6,71,86,184/- vis-à-vis the sales in software services/embedded services segment, the percentage comes to 3.84%. The Ld. Counsel pointed out that the percentage of 2.04% of R&D expenditure computed by the TPO was after considering the total turnover of the said concern including that of the product and projects related to power sector segment. It is submitted that the afor .....

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idently, the TPO has not disputed the adoption of quantitative filter of 3% of R&D expenses. However, the TPO computed the R&D expenditure at 2.02% of the total sales which is ostensibly incorrect in as much as the expenditure in question has been incurred only for the software services/embedded services segment (which has been adopted as comparable segment) and it cannot be compared vis-à-vis the total turnover which includes the products and projects related to power sector segm .....

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is 4.5% of the revenue and following the parity of reasoning as laid down by the Pune Bench of Tribunal in PTC Software (India) Pvt. Ltd Vs. ACIT (supra) we hold that there is no justification for the inclusion of said concern in the final set of comparables considering that the R&D expenditure was above filter of 3%. The other objection raised by the assessee that the said concern is not functionally similar and the year of operation was exceptional year considering its growth is not being .....

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ncern was above the filter applied by the assessee company i.e. ₹ 120 crores and the said concern had extremely high profits and also this was an exceptional year of revenue and profits. The learned Authorized Representative for the assessee also referred to the nature of services undertaken by the said concern and it was pointed out that the same was functionally different. 37. Another objection raised by the learned Authorized Representative for the assessee was that Orient Information T .....

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e 63.62 of the Paper Book, it is reported that it has strong US presence and was engaged in on-site and off-shore activities. Further, if foreign earnings and foreign outgo were taken, then similar basis is to be applied as for exclusion of Maars Software International Limited. 38. The learned Departmental Representative for the Revenue pointed out that the said concern was engaged in on-site development. 39. We have already considered the issues in the paras hereinabove while directing the TPO .....

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re International Limited from the final list of companies, we hold that even Helios and Matheson Information technology Ltd. is to be excluded while benchmarking the international transactions of the assessee. We are not excluding the said concern for its turnover but since it is functionally dissimilar. 40. Another set of arguments raised by the assessee were with regard to turnover filter to be applied. As per the assessee, in view of turnover filter applied by it in its TP study report, certa .....

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and INR 150 crores. The learned Departmental Representative for the Revenue strongly objected to the proposition raised by the assessee in this regard. In view of legal position settled by various decisions of Tribunal in this regard, we uphold the order of Assessing Officer in adopting the range of turnover to be between INR 25 crores to INR 150 crores. The two concerns which were introduced by the TPO were Helios and Matheson Information Technology Ltd. , which had turnover of INR118.33 crores .....

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ord, we find in the paras hereinabove that Helios and Matheson Information Technology Ltd. , Maars Software International Limited and Quintegra Solution Limited being not functionally similar, have to excluded and despite the fact that it falls within the range, but because its functions were dissimilar, the said concerns are not to be included in the final set of comparables. Further, we also held that Helios and Matheson Information Technology Ltd . being engaged in on-site development service .....

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. is also to be included in the final set of comparables. In view thereof, applying the said turnover filter range of ₹ 25 crores to ₹ 150 crores, we direct the Assessing Officer / TPO to include both the concerns i.e. Aztecsoft Ltd. and Orient Information Technologies Ltd. in the final set of comparables. It may be pointed out that the concern Helios and Matheson Information Technology Ltd ., which was included by the TPO is being excluded being functionally dissimilar and is not be .....

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iate enterprises, there was no risk taken by the assessee. However, risk adjustment was to be allowed in the case of comparables. The learned Authorized Representative for the assessee pointed out that the TPO nowhere in its order had stated that the comparables were risk mitigated. The learned Authorized Representative for the assessee in this regard placed reliance on the ratio laid down by Pune Bench of Tribunal in Schlumberger Global Support Centre Limited Vs. DDIT in ITA No.86/PN/2013, rela .....

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l was such, wherein it is being reimbursed the services at cost plus mark-up and there was no possibility of incurring any losses since it was providing the services to its associate enterprises totally. With regard to the comparables, the claim of the assessee before us is that they are normal risk bearing entities and the TPO at no place has given a finding that comparable concerns picked up were risk mitigated. In such circumstances, various Benches of Tribunal in the case of captive service .....

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be made as per the methodology prescribed by Delhi Bench of Tribunal in M/s. Sony India (P) Ltd. Vs. DCIT (2008) 114 ITD 448. In view of the provisions of section 10B of the Act, we restore this issue back to the file of Assessing Officer / TPO to compute risk adjustment after affording reasonable opportunity to the assessee to work out and justify to the satisfaction of Assessing Officer, the risk adjustment it would be entitled to. We hold so. The issue raised is thus, allowed for statistical .....

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ssee company were calculated on the basis of Indian GAAP, but depreciation rates under US laws were highe r and hence, it affected the margins of assessee company as it was adopting Cost Plus Method. In this regard, reliance was placed on the ratio laid down by Mumbai Bench of Tribunal in consolidated order dated 25.01.2012 with lead order in ACIT Vs. M/s. Agility Logistics Pvt. Ltd. in ITA No.2000/Mum/2010, relating to assessment year 2004-05. 47. The learned Departmental Representative for the .....

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were raised which have not been considered. 49. We have heard the rival contentions and perused the record. For benchmarking its international transactions, the assessee has applied TNMM method, which admittedly takes care of many dissimilarities. The case of the assessee before us is that since it was pricing its services at cost with mark-up, hence, its margins are to be calculated by taking profits before depreciation. Since the margins of the assessee are calculated on the basis of Indian G .....

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ventually even out over period of time. As per the assessee, OPBDIT should be used as PLI for the purpose of comparing operating margins of BMC India with the operating margins of comparable companies. In view of our deciding other aspects of transfer pricing adjustment, we are of the view that final adjustments, if any, would fall within + / - 5% range and no adjustment is to be made to international transaction entered into by the assessee. Accordingly, we do not address the issue of exclusion .....

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010 and CO No.216/Mum/2010, relating to assessment year 2005-06, order dated 04.11.2015. 51. The learned Departmental Representative for the Revenue on the other hand, pointed out that if there is no question of any TP adjustment, then why the section 10A of the Act itself provides that no such deduction is to be allowed on TP adjustment. The learned Departmental Representative for the Revenue pointed out that the Special Bench in Aztec Software and Technology Services Ltd. Vs. ACIT reported in .....

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. Tata Consultancy Services Ltd. (supra). In view of the ratio laid down by the coordinate Pune Bench of Tribunal in ACIT Vs. MSS India Pvt. Ltd. (supra), we find no merit in the claim of assessee. Further, in any case, the provisions of the Act are clear in not allowing any deduction on any TP adjustment made under sections 10A and 10B of the Act. Where the section itself provides that no deduction under section 10A of the Act is to be allowed on any transfer pricing adjustment, then corollary .....

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zed Representative for the assessee was that the comparables picked up by the TPO were not in the field and hence, were functionally dissimilar. Our attention was drawn to the explanation filed before the TPO in this regard. 54. The learned Departmental Representative for the Revenue on the other hand, placed reliance on the order of TPO and pointed out that all the companies which were functionally different, were rejected by the TPO. 55. We have heard the rival contentions and perused the reco .....

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e comparables was worked out at 23.15%. The TPO while benchmarking first international transaction of provision of software services, has rejected loss making companies. However, the case of assessee before us was that the approach of TPO was not consistent and while benchmarking international transaction of provision of sales support services, the companies which had incurred losses have been taken as comparable. But we find that loss making companies have been excluded by TPO. The final set of .....

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