TMI Blog2016 (12) TMI 1745X X X X Extracts X X X X X X X X Extracts X X X X ..... company e-filed its Return of Income for the A.Y. 2009-10 on 15.03.2011 declaring a total income of ₹ 2,40,41,041/-. The Return of Income filed was processed u/s. 143(1) of the I.T. Act on 31.3.2011. 3. The case was selected for scrutiny manually, as the assessee's international transaction entered with its Associated Enterprises during the year was more than ₹ 15 crores. Notices u/s. 143(2) was issued on 28.9.2010 and served on the assessee. Subsequently, notice u/s. 142(1) was issued. 4. As the Arm Length Price declared by the assessee company was more than ₹ 15 crores, the case was referred to the DCIT (Transfer Pricing)-V, Bangalore to determine the correctness of Arm Length Price declared by assessee with the prior approval of the Commissioner of Income-tax, Bangalore-III, Bangalore. The Transfer Pricing Officer vide order u/s. 92CA of the Act dated 16.1.2013 has determined at an adjustment of ₹ 2,04,50,189/- to the Arms Length Price declared by the assessee. 5. Accordingly, a draft assessment order was passed on 15.3.2013 u/s. 143(3) r.w.s. 144C of the Act proposing to make addition of ₹ 2,04,50,189/- on account of TP adjustment amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on comparables and rejection of TP analysis of the appellant 5.1 The learned TPO erred in rejecting the comparables selected by the appellant on unjustifiable grounds and Hon'ble DRP erred in upholding the same. 5.2 The learned TPO erred in rejecting the transfer pricing analysis undertaken by the appellant on unjustifiable grounds and Hon'ble DRP erred in upholding the same. 5.3 The learned TPO erred in rejecting the TP documentation maintained by the appellant as per the Rules and erred on facts treating the filters applied by the appellant as defective. 6. Grounds relating to TP analysis of the TPO 6.1 The learned TPO has erred in doing a fresh transfer pricing analysis despite the absence of any defects in the transfer pricing analysis submitted by the appellant and Hon'ble DRP has erred in upholding the same. 6.2 The learned TPO erred on facts by not appreciating that on or before the due date of filing return, the relevant financial year data of comparable companies was not available in public domain and by undertaking a fresh search for comparability analysis (FY 2008-09) after September 30, 2009, which is beyond the date of compliance ie., Sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LGS Global Ltd 26.44 11 MAARS Software International Ltd 0.41 12 Quintegra Solutions Ltd. 21.75 13 RS Software (India) Ltd 6.74 14 Thirdware Solutions Ltd 21.01 15 VGL Softech Ltd 14.28 16 VMF Soft Tech Ltd 2.65 17 Visu International Ltd 22.6 Average 1345 7. Comparables adopted by the TPO are as follows: Sl. No. Name of the Company Margin % (OP/OC) 1 Kals Information Systems Ltd 13.89 2 Akshay Software Technologies Ltd 8.11 3 Bodhtree Consulting Ltd 62.27 4 RS Software India Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnover M/s. Mcafee Software (India) Pvt. Ltd. v. DIT 7 Infosys Limited 2,02,64,00,00,000 2,12,19,774 2,12,19,77,370 High turnover M/s. Mcafee Software (India) Pvt. Ltd. v. DIT 8 Bodhtree Consulting Ltd 16,05,75,212 2,12,19,774 2,12,19,77,370 Diff. in Functionality M/s. Logica Pvt. Ltd. IT(TP)ANo.1621/B/2014 following Cisco Systems (India) Pvt. Ltd. IT(TP) No.271/B/2014 9 RS Software India Ltd 1,49,57,12,634 NA NA Retained NA 10 Kals Info Sys Ltd 2,14,04,686 NA NA Retained NA 11 Akshay Software Technologies Ltd., 12,23,21,483 NA NA Retained NA 9. We find that the Companies mentioned from seri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee had itself proposed this company as comparable, in our opinion, should not be the basis on which the said company should be retained as a comparable, when factually it is shown that the said company is a software product company and not a software development services company. (Emphasis Supplied) Similar view has been upheld by the Hon'ble Bangalore ITAT in the case of Cisco Systems (India) (P.) Ltd. v. Dy. CIT [2014] 66 SOT 82 (URO) 12. Hence Bodhtree Consulting Ltd., is to be excluded from the list of comparables. 13. The Assessee requests R.S. Software and Akshay Software selected by himself as the Company passes all filters applied by TPO and hence to be retained. Further we note that R.S. Software (India) Ltd is in software development services. It is engaged in business of providing software solutions for electronic payments industry. Verticals of the Company is merchant banking. Major Assets undertaken by this company are manpower, computers and technology. 14. W ..... X X X X Extracts X X X X X X X X Extracts X X X X
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