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M/s. Infineon Technologies India Pvt. Ltd. Versus Dy. Commissioner of Income Tax, Circle 11 (4) , Bangalore

TPA - selection of comparable - Held that:- Assessee is engaged in the business of provision of software development services of electronic integrated circuits and firmware development of integrated circuits to its parent company and also provides marketing support services to its parent company, thus companies functionally dissimilar with that of assessee need to be deselected from final list of comparable. - Risk adjustment - Held that:- Risk adjustment must be granted, if warranted in th .....

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ee justifying its claim for risk adjustment and to take into account the same along with all the relevant material and to decide the percentage of risk adjustment in accordance with law. - Interest under Section 234B - Held that:- The charging of interest is consequential and mandatory and the Assessing Officer has no discretion in the matter. This proposition has been upheld by the Hon'ble Apex Court in the case of Anjum H Ghaswala (2001 (10) TMI 4 - SUPREME Court) and we, therefore, uphold .....

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ICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER For The Appellant : Shri K.R. Vasudevan, Advocate. For The Respondent : Shri D. Sudhakara Reddy, CIT-III (D.R.) ORDER Per Shri Jason P. Boaz, A.M. : This appeal by the assessee is directed against the order of assessment for Assessment Year 2008-09 by the DCIT, Circle 11(4), Bangalore passed under Section 143(3) rws 144C of the Income Tax Act, 1961 (in short 'the Act') vide order dt.31.12.2013, in pursuance of the directions issued b .....

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ncome of ₹ 7,14,36,670. The case was taken up for scrutiny. In the period under consideration, the assessee had reported the following international transactions :- Sl. No. Type of Transactions Paid (Rs.) Received (Rs.) 1. Purchase of Fixed Assets-Testing Equipment. 16957440 2. Software R&D and IT 1478729220 3. Marketing support services. 23211099 4. Reimbursement of Expenses. 123402721 Total 140360161 1501970319 Total International transactions ₹ 1,64,23,30,480 2.2 In view of th .....

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ions in respect of the software development services rendered by the assessee. The Assessing Officer then issued a draft order of assessment under Section 143(3) rws 144C of the Act dt.25.3.2013 determining the income of the assessee at ₹ 31,30,33,121 which included, inter alia, the proposed T.P. Adjustment of ₹ 24,15,96,448. 2.3 Aggrieved by the aforesaid draft order of assessment dt.25.3.2013 for the Assessment Year 2009-10, the assessee filed its objections thereto before the DRP, .....

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order of assessment for Assessment Year 2009-10 dt.31.12.2013, the assessee is in appeal before this Tribunal. Before proceeding to deal with the grounds of appeal, the brief facts relating to the Transfer Pricing issue is summarized hereunder :- 3.2 The assessee is engaged in the business of provision of software development services of electronic integrated circuits and firmware development of integrated circuits to its parent company. It also provides marketing support services to its parent .....

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e study conducted and the comparability analysis carried out, the assessee selected a set of 13 comparable companies to the assessee with a Mean Margin of 9.80%. As the margin earned by the assessee with its Associated Enterprises (AEs) was at 6.56% which was within the margin of + / - 5%, the assessee concluded that the price of its international transactions are at Arm s Length. 3.4 While accepting TNMM as the MAM, the TPO rejected the assessee's T.P. Study for various reasons set out in t .....

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ia) Ltd. 1,49,57,12,634 1,36,01,02,589 9.97% 5. Tata Elxsi Ltd. (Seg.) 3,78,43,03,000 3,14,63,15,000 20.28% 6. Sasken Communication Technologies Ltd. (Seg.) 4,05,31,20,000 3,18,69,97,000 27.91% 7. Persistent Systems Ltd. 5,19,69,10,000 3,67,52,70,000 41.40% 8. Zylog Systems Ltd. 7,34,93,51,475 6,81,69,98,160 7.81% 9. Mindtree Ltd. (Seg.) 7,93,22,79,326 5,74,06,73,058 5.52% 10. L & T Infotech 19,50,83,81,374 15,64,12,76,626 24.72% 11. Infosys Ltd. 2,02,64,00,00,000 1,39,17,00,00,000 45.61% Av .....

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25,668 Price recovered 14,78,79,220 Shortfall being adjustment u/s.92CA 24,15,96,448 Based on the above computation, the TPO proposed an adjustment of ₹ 24,15,96,448 to the ALP of the assessee's international transactions with its AEs, which was incorporated in the final order of assessment for Assessment Year 2009-10 dt.31.12.2013 after having been upheld by the DRP. The assessee's taxable income as per this order of assessment was determined at ₹ 31,30,33,121, in view of th .....

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y the tax payer u/s 92CA of the Income Tax Act. 2. The learned AO/ learned TPO erred in rejecting the Transfer Pricing ( TP ) documentation maintained by the Appellant on invoking provisions of sub-section (3) of 92C of the Act contending that the information or data used in the computation of the arm s length price is not reliable or correct. In doing so: a. the learned AO/ learned TPO erred in rejection of comparability analysis carried in the TP documentation and in conducting a fresh compara .....

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he Appellant - Abnormally fluctuating margins for the period from financial year (FY) 2004-05 to FY 2010-11. 2 Infosys Limited - Has high sales turnover as compared to the Appellant - Revenue is driven by brand value as against that of the Appellant 3 Larsen and Toubro Infotech Limited - Engaged in product development, infrastructure management services along with software development services and hence no segmental information is available. - Has high sales turnover as compared to the Appellant .....

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patents and earns returns from it. 7 Tata Elxsi Limited - Engaged in hardware design which is not similar to the Appellant. - Has high sales turnover as compared to the Appellant 8 Zylog Systems Limited - Engaged in value added research and development of software products which is not similar to the Appellant. - Has high sales turnover as compared to the Appellant c. The learned AO / learned TPO erred in not applying the turnover filter in selecting the comparable companies. 3. The learned AO .....

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providing an appropriate adjustment towards the risk differential, even when the full- fledged entrepreneurial companies are selected as Comparable companies. B. Corporate Tax Interest under Section 234B of the Act The learned AO has erred in levying interest under sections 234B amounting to ₹ 49,322,847. The levy of interest under sections 234B of the Act is consequential in nature. 4.2 The assessee has also raised the following additional grounds :- 4.2.1 I. Vide letter dt.12.6.2015, the .....

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companies to the assessee. The learned Authorised Representative also submitted that he would put forth submissions only on the comparability of the individual companies selected by the TPO in the final set of comparables and also on the inclusion of two of the companies selected by the TPO. 5.2 In this context, it was submitted that only the following grounds of appeal in respect of TP Issues are being pressed and would require consideration and adjudication by the Bench :- i) Grounds at S.No.5 .....

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course of proceedings before us, the learned Authorised Representative submitted that the facts of the case on hand are similar, inter alia, to the case of M/s. Airbus India Operations Pvt. Ltd. in IT(TP) A No.35/Bang/2014 for Assessment Year 2009-10 in which the co-ordinate bench of this Tribunal vide its order dt.10.10.2014 has rendered its ruling. It was submitted that the set of comparables chosen by the TPO in the cited case (supra) is exactly the same as those selected in the case on hand .....

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ent services. Also, the various other parameters of comparability are also similar, in that the TPO has adopted TNMM as the MAM in these cases, the PLI has been adopted at Operating Profit (OP) to Total Cost (TC) and the set of comparable companies selected by the TPO are exactly the same in these cases. In view of the fact that the TPO has adopted similar comparability analysis and considered the same set of comparable companies in the case on hand also, we find merit in the contentions of the .....

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e to the assessee in the case on hand, as laid down by the co-ordinate bench of this Tribunal in the case of M/s. Airbus India Operations Pvt. Ltd. (supra). 1. Bodhtree Consulting Ltd. 2. Infosys Technologies Ltd. 3. Kals Information Systems (Seg.) 4. Persistent Systems Ltd. 5. Mindtree Ltd. 6. Tata Elxsi Ltd. (Seg.) 7. L&T Infotech Ltd. 8. Sasken Communication Technologies Ltd. 9. Zylog Systems Ltd. We now proceed to determine the comparability of each of the above companies objected to by .....

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s per details in its website and therefore being functionally dis-similar from the assessee in the case on hand, it ought to be excluded from the list of comparables to the assessee. In support of this proposition, the learned Authorised Representative for the assessee placed reliance on the decision of the co-ordinate bench of this Tribunal in the co-ordinate bench of this Tribunal in the case of Airbus India Operations Pvt. Ltd. in IT(TP)A No.35/Bang/2014 dt.10.10.2014. 7.2.1 We have heard the .....

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not comparable to a software development service provider as it was into development of software products, etc. The relevant portion of the co-ordinate bench; order at paras 21 and 22 thereof is extracted hereunder :- 21. KALS INFORMATION SYSTEMS LTD.: This company is listed at Sl.No.3 in the final list of comparables chosen by the TPO which is set out in para-4 of this order. The comparability of this company with a software development services company such as the Assessee for AY 09-10 was con .....

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wing were the relevant observations of the Tribunal:- (d) KALS Information Systems Ltd. 46. 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 the annual repot, the salary cost debited under the software development expenditure was ₹ 45,93,351. The sa .....

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egarding 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 185-186 of the Paper Book, it is explained that the said company is engaged in development of software products and services and is not comparable to software development services provided by the assessee. The appellant has submitted an extract on pages 185-186 of the Paper Book from the website of the company to estab .....

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ration to the submission made on behalf of the Assessee. We find that the TPO has drawn conclusions on the basis of information obtained by issue of notice u/s.133(6) of the Act. This information which was not available in public domain could not have been used by the TPO, when the same is contrary to the annual report of this company as highlighted by the Assessee in its letter dated 21.6.2010 to the TPO. We also find that in the decision referred to by the learned counsel for the Assessee, the .....

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r which the aforesaid company was considered by the TPO as comparable with a software development service provider such as the Assessee for identical reasons, we direct the TPO to exclude the aforesaid company from the list of comparable companies for the purpose of computation of ALP. 7.2.2 Following the above cited decision of the co-ordinate bench of this Tribunal in the case of Airbus India Operations Pvt. Ltd., for Assessment Year 2009-10 (supra) and taking note of the fact that the facts a .....

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Representative for the assessee submitted that this company i.e. Bodhtree is engaged in providing a gamut of services in the software product development segment, and was engaged in providing open end to end web solutions, consultancy and design and development of software using latest technology and therefore should be excluded as a comparable to the assessee in the case on hand who is purely a software development service provider. In support of its above contentions, the assessee placed relia .....

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pany i.e. Bodhtree has been considered and decided by the co-ordinate bench of this Tribunal in the case of Airbus India Operations Pvt. Ltd. for Assessment Year 2009-10 (supra); wherein it has been held that this company being a software product company cannot be considered as comparable to a assessee that is a software development service provider and has held as under at paras 15 & 16 thereof :- 15. BODHTREE CONSULTING LTD.: This company is listed at Sl.No.3 in the final list of comparabl .....

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his company was also included by the assessee. The assessee, however, submits before us that later on it came to the assessee s notice that this company is not being considered as a comparable company in the case of companies rendering software development services. In this regard, the ld. counsel for the assessee has brought to our notice the decision of the Mumbai Bench of the Tribunal in the case of Nethawk Networks Pvt. Ltd. v. ITO, ITA No.7633/Mum/2012, order dated 6.11.2013. In this case, .....

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he case of Nethawk Networks Pvt. Ltd. (supra) is in relation to A.Y. 2008-09. It was affirmed by the learned counsel for the Assessee that the facts and circumstances in the present year also remains identical to the facts and circumstances as it prevailed in AY 08-09 as far as this comparable company is concerned. Following the aforesaid decision of the Mumbai Bench of the Tribunal, we hold that Bodhtree Consulting Ltd. cannot be regarded as a comparable. In this regards, the fact that the asse .....

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oftware development service provider such as the Assessee for identical reasons, we direct the TPO to exclude the aforesaid company from the list of comparable companies for the purpose of computation of ALP. 8.2.2 Following the above cited decision of the co-ordinate bench of this Tribunal in the case of Airbus India Operations Pvt. Ltd. for Assessment Year 2009-10 (supra) and taking into the facts and circumstances under which this company was considered and later excluded from the list of com .....

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ot be comparable to the assessee whose turnover is approx. ₹ 150 Crores :- 1) Tata Elxsi Ltd. 2) Sasken Communication Technologies Ltd. 3) Persistent Systems Ltd. 4) Zylog Systems Ltd. 5) Larsen & Toubro Infotech Ltd. 6) Infosys Technologies Ltd. 7) Mindtree Ltd. In support of its contention, the assessee placed reliance on the decision of the co-ordinate bench of this Tribunal in the case of Airbus India Operations Pvt. Ltd. for Assessment Year 2009-10 (supra). 9.2.1 We have heard the .....

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hereof. 16. The ld. counsel for the assessee brought to our notice that out of the 11 comparable companies chosen by the TPO, the following companies will have to be excluded as the turnover of these companies are more than ₹ 200 crores and cannot be compared with the Assessee whose turnover is less than ₹ 200 crores: (1) Mindtree Ltd. (2) Persistent Systems Ltd. (3) Sasken Communication Technologies Ltd. (4) Infosys Technologies Ltd. (5) Tata Elxsi Ltd. (6) Larsen & Toubro Infot .....

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ver is less than ₹ 200 Crores. The learned DR relied on the order of the TPO/DRP. 17. We have considered the submission of the learned counsel for the Assessee and the learned DR. In the case of Trilogy E-Business Software India (P) Ltd. (supra), this Tribunal on application of the turnover filter while selecting comparable companies for comparability analysis held as follows:- (1) Turnover Filter The ld. counsel for the assessee submitted that the TPO has applied a lower turnover filter o .....

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en market. Further it is also necessary to see that wherever there are some differences such differences should be capable of reasonable accurate adjustment in monetary terms to eliminate the effect of such differences. It was his submission that size was an important facet of the comparability exercise. It was submitted that significant differences in size of the companies would impact comparability. In this regard our attention was drawn to the decision of the Special Bench of the ITAT Chandig .....

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the OECD TP Guidelines, 2010 wherein it has been observed as follows:- Size criteria in terms of Sales, Assets or Number of Employees: The size of the transaction in 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 ICAI TP Guidelines note on this aspect lay down in para 15.4 that a transaction entered into by a ₹ 1,000 crore company cannot be compared with the trans .....

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nce to the enterprise. For instance, a transaction entered into by a ₹ 1,000 crore company cannot 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 TPO 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 ₹ 1 .....

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ons were brought to our notice:- 9. Having heard both the parties and having considered the rival contentions and also the judicial precedents on the issue, we find that the TPO himself has rejected the companies which .ire (sic) 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 consi .....

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re 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 & Bradstreet & Bradstreet and NASSCOM have given different ranges. Taking the Indian scenario into consideration, we feel that the classification made by Dun & Bradstreet is more suitable and reasonable. In view of the same, we hold that the turno .....

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ak Networks (India) Private Limited Vs. ACIT (ITA No.1413/Bang/2010) 2. M/s Genesis Microchip (I) Private Limited Vs. DCIT (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 ld. DR, on the other hand pointed out that even the assessee in its own TP study has taken companies having turnover of more th .....

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ansaction between two or more associated enterprises, 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 arrangement between two or more associated enterprises for the allocation or apportionment of, or any contribution to, any cos .....

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that 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 the Board may prescribe, namely :- (a) comparable uncontrolled price method; (b) resale price method; (c) cost plus method; (d) profit split method; (e) transactional n .....

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ich 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, the Assessing Officer is, on the basis of material or information or document in his possession, of the opinion that- (a) the price charged or paid in an international transaction has not been .....

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which he was required to furnish by a notice issued under subsection (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 information or document available with him: 18. Rule 10B of the IT Rules, 1962 prescribes rules for Determination of arm s length price under section 92C:- 10B. (1) For the purposes of sub-section (2) of section 9 .....

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r 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 referred to in sub-clause (ii) arising in comparable uncontrolled transactions is adjusted to take into account the differences, if any, between the international transaction and the compa .....

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. (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 performed, taking into account assets employed or to be employed and the risks assumed, by the respective parties to the transactions; (c) the contractual terms (whether or not such terms are form .....

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hether 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 price or cost charged or paid in, or the profit arising from, such transactions in the open market; or (ii) reasonably accurate adjustments can be made to eliminate the material effects of such d .....

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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 TNMM is the most appropriate method for determining the ALP of the international transaction. The disputes are with regard to the comparability of the comparable relied upon by the TPO. 20. In this regard we find that the provisions of law pointed out by the .....

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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 the ld. counsel for the assessee. Applying those tests, the following companies will have to be excluded from the list of 26 comparables drawn by the TPO viz., Turnover Rs. (1) Flextronics Software Systems Ltd. 848.66 crores (2) iGate Global Solutions Ltd. 747.27 crores (3) Mindtree Ltd. 590.39 crores (4) Persistent Systems Ltd. 293.74 crores (5) Sasken Comm .....

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comparable companies as the turnover of these companies are more than ₹ 200 Crores compared to the turnover of the Assessee which is only ₹ 31.83 Crores. The AO is directed to compute the Arithmetic mean by excluding the aforesaid companies from the list of comparable. 19. The next submission of the learned Counsel for the Assessee was that though, Infosys Technologies Ltd., & Tata Elxsi Ltd. (seg.) have to be excluded by applying the Turnover filter, they are also additionally .....

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sys Ltd.:- As far as this company is concerned, it is not in dispute before us that this company has been considered to be functionally different from a company providing simple software development services, as this company owns significant intangibles and has huge revenues from software products. In this regard, we find that the Bangalore Bench of the Tribunal in the case of M/s. TDPLM Software Solutions Ltd. v. DCIT, ITA No.1303/Bang/2012, by order dated 28.11.2013 with regard to this compara .....

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contended that this company is not functionally comparable to the assessee in the case on hand. The learned Authorised Representative drew our attention to various parts of the Annual Report of this company to submit that this company commands substantial brand value, owns intellectual property rights and is a market leader in software development activities, whereas the assessee is merely a software service provider operating its business in India and does not possess either any brand value or .....

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e's case, as the assessee does not own any intangibles and hence Infosys Technologies Ltd. cannot be comparable to the assessee ; (ii) the observation of the ITAT, Delhi Bench in the case of Agnity India Technologies Pvt. Ltd. in ITA No.3856 (Del)/2010 at para 5.2 thereof, that Infosys Technologies Ltd. being a giant company and market leader assuming all risks leading to higher profits cannot be considered as comparable to captive service providers assuming limited risk ; (iii) the company .....

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entative pleaded that, this company i.e. Infosys Technologies Ltd., be excluded form the list of comparable companies. 11.3 Per contra, opposing the contentions of the assessee, the learned Departmental Representative submitted that comparability cannot be decided merely on the basis of scale of operations and the brand attributable profit margins of this company have not been extraordinary. In view of this, the learned Departmental Representative supported the decision of the TPO to include thi .....

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ned to concur with the argument put forth by the assessee that Infosys Technologies Ltd is not functionally comparable since it owns significant intangible and has huge revenues from software products. It is also seen that the break up of revenue from software services and software products is not available. In this view of the matter, we hold that this company ought to be omitted from the set of comparable companies. It is ordered accordingly. The decision rendered as aforesaid pertains to A.Y. .....

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e before us that in assessee s own case for the A.Y. 2007-08, this company was not regarded as a comparable in its software development services segment in ITA No.1076/Bang/2011, order dated 29.3.2013. Following were the relevant observations of the Tribunal:- II. UNREASONABLE COMPARABILITY CRITERIA : 19. The learned Chartered Accountant pleaded that out of the six comparables shortlisted above as comparables based on the turnover filter, the following two companies, namely (i) Tata Elxsi Ltd; a .....

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ctivity only could be computed. The company has also in its response to the notice u/s.133(6) stated that it cannot be considered as comparable to any other software services company because of its complex nature. Hence, Tata Elxsi Ltd., is to be excluded from the list of comparables. (ii) Flextronics Software Systems Ltd. : The learned TPO has considered this company as a comparable based on 133(6) reply wherein this company reflected its software development services revenues to be more than 7 .....

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ftware services provider could not be compared to a company having such a unique revenue model, wherein the revenues of the company from software/product development services depends on the success of the products sold by its clients in the marketplace. Hence, it would be inappropriate to compare the business operations of the assessee with that of a company following hybrid business model comprising of royalty income as well as regular software services income, for which revenue break-up is not .....

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cts emerge : 1. The company's software development and services segment constitutes three sub-segments i) product design services; ii) engineering design services and iii) visual computing labs. 2. The product design services sub-segment is into embedded software development. Thus this segment is into software development services. 3. The contribution of the embedded services segment is to the tune of ₹ 230 crores in the total segment revenue of ₹ 263 crores. Even if we consider .....

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e., AY 2006-07. When the same was accepted by the TPO as a comparable, the same was not objected to it by the taxpayer. As the facts mentioned by the taxpayer are the same and these were there in the earlier FY 2005-06, there is no reason why the taxpayer is objecting to it. How the company is functionally similar in the earlier FY 2005-06 but the same is not functionally similar for the subsequent FY 2006-07 even when no facts have been changed from the preceding year. Thus the taxpayer is argu .....

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ollowing the aforesaid decision of the Tribunal, we hold that M/S.Tata Elxsi Ltd. should not be regarded as a comparable. 20. Respectfully following the decision of the Tribunal referred to above and taking note of the fact that the facts and circumstances under which the aforesaid company was considered by the TPO as comparable with a software development service provider such as the Assessee for identical reasons, we direct the TPO to exclude the aforesaid two companies from the list of compar .....

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the assessee in the case on hand, which was only approx. ₹ 150 Crores, we hold and direct the A.O./TPO to exclude these seven companies form the list of comparables to the assessee. 10. Ground No.5 : Risk Adjustment. 10.1 The assessee contends that it is a low risk service provider whereas the comparable companies chosen by the TPO are risk bearing entities and hence the difference in the risk profile needs to be adjusted for proper comparability. The assessee also submits that the details .....

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chnologies India Pvt. Ltd. (supra) and Bearing Point Business Consulting Pvt. Ltd. (supra) thereof have held that, in principle, risk adjustment must be granted, if warranted in the facts of the case, for bringing the comparables on par with the assessee company. Following the above decision and of the co-ordinate bench (supra), we also hold that in principle, the assessee must be granted risk adjustment, if so required in the peculiar facts of the case for bringing the comparable companies on p .....

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No.5 is treated as allowed for statistical purposes. CORPORATE TAX 11. Charge of Interest u/s. 234B of the Act 11.1 In this Ground, the assessee denies itself liable to be charged interest under Section 234B of the Act. The charging of interest is consequential and mandatory and the Assessing Officer has no discretion in the matter. This proposition has been upheld by the Hon'ble Apex Court in the case of Anjum H Ghaswala (252 ITR 1) and we, therefore, uphold the action of the Assessing Offi .....

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comparable companies should be adjusted for differences in depreciation cost of the comparable companies and the tested party. In support of the above contention the learned Authorised Representative placed reliance on the decision of the co-ordinate bench of this Tribunal in the case of 24/7 Customer.com Pvt. Ltd. in ITA No.227/Bang/2010 dt.9.11.2012. 12.2 We have heard both parties and perused and carefully considered the material on record, including the judicial decision cited by the assesse .....

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plication seeking leave to urge additional grounds under Rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963 which are as under : Ground 1 : Transfer Pricing It is most humbly prayed that this Hon'ble Tribunal to permit the appellant to raise the following additional ground in continuation of the existing grounds of appeal and be read as Ground No.1.7 after Ground No.1.6 Ground No.1.7 Depreciation adjustment - The depreciation cost as a percentage of the gross block of the appellant d .....

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llip;… 19.4 We have heard both parties and considered the rival submissions. We find force in the submissions of the learned Departmental Representative. Whether an adjustment towards depreciation is warranted or not may be, issue of principle. But whether the principle needs to be applied to a particular case or not would depend on the peculiar facts of that case. It cannot be anybody s case that an adjustment has to be necessarily granted whenever and wherever there is difference in dep .....

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ives credence to the view of the learned Departmental Representative that this claim is only an afterthought, pursuant to the learned CIT (Appeals) confirming the adjustments proposed by the TPO. 19.6 Besides this, the adjustment for depreciation, sought for by the assessee, does not appear to be tenable even on merits. It has been stated in the additional grounds raised that while the depreciation of the assessee is 25% of its gross block, it is 10% of the gross block for the comparables. It is .....

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timates made of useful life of the assets. Depreciation provided under the Income Tax Rules or the minimum depreciation provided under the Companies Act may not be really exhibiting the actual position. Over a period of time, the difference of depreciation provided under different methods would almost be the same except for marginal difference. In the written down value (WDV) method, the depreciation for the initial year would be more, whereas in straight line method, depreciation in the initial .....

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