TMI Blog2016 (9) TMI 1313X X X X Extracts X X X X X X X X Extracts X X X X ..... Chandra Poojari (Accountant Member) The appeal of the Revenue is directed against the direction of the Dispute Resolution Panel, Chennai (DRP) passed u/s.144C of the Act dated 16.12.2014 pertaining to assessment year 2010-11 and the assessee fled a Cross Objections in support of the order of DRP. 2. The Revenue in its appeal challenging the direction of the DRP excluding the following comparables considered by the TPO. i) Kals Information Systems Ltd. ii) Spry Resources India Pvt Ltd. iii) Taksheel Solutions Ltd., 3. The facts of the issue are that in the Transfer Pricing Adjustments, the TPO had arrived at Arm s Length Price (ALP) of operating margin of comparable companies at 23.87% as against operation profit on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as stated in the order that segmental information shows the revenues and results from the services and sale of software products separately. The profit from services segment alone was considered for benchmarking and therefore has not accepted the assessee s objections. Considering the above facts, TPO s action of inclusion of this comparable is justified. (d) Spry Resources India Pvt Ltd In respect of this comparable, assessee contends that revenue is earned from software consultancy and sale of software products whereas the assessee company is engaged in development of captive software. Segmental information is not available. TPO has stated the profit Loss account for the year ended 31.3.2010 of this comparable showed that it has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ows that it is predominantly providing only software development service. According to ld.D.R, the Delhi Bench of Tribunal in M/s.Agllent Tech. Information Ltd. (A.Y 2008-09) upheld that the company should be considered as a comparable. The Departmental Representative has further submitted that as follows. (ii) Spry Resources India Pvt Ltd. The DRP s direction to exclude the said comparable is based on the reason that the financials of the comparable company does not show the breakup of revenue from sale of software and from provision of software services. According to ld.D.R, the comparable is into providing software development service only and the observation in the financial on the method of recognition of revenue with res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for income from sale of products and rendering of services. More so, assessee cannot be compared with the activities of Spry Resources India Pvt Ltd., as their functional different. 6.2 Regarding Taksheel Solutions Ltd., ld.A.R submitted that it is an employee cost to turnover ratio is 2.83% as against 56.4% of the assessee. Hence, it cannot be compared. Further, he submitted that the turnover of Spry Resources India Pvt Ltd., Taksheel Solutions Ltd., is very meager as against the turnover of ₹ 1,000/- crores of assessee s company. 7. We have heard both the parties and perused the material on record. In this case, in our opinion as rightly observed by the DRP, no segmented data of Kals Information Systems Ltd. is available on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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