TMI Blog2017 (6) TMI 1295X X X X Extracts X X X X X X X X Extracts X X X X ..... 015 relating to assessment year 2010-11 passed under section 143(3) r.w.s. 92CA(3) and 144C(5) of the Incometax Act, 1961 (in short the Act‟). The assessee also filed Cross Objections against the appeal of Revenue. 2. The cross appeals filed by the Revenue and the assessee and Cross Objections filed by the assessee were heard together and are being disposed of by this consolidated order for the sake of convenience. 3. First, we shall take up the appeal filed by the Revenue, wherein the following grounds of appeal have been raised:- 1. The order of the Dispute Resolution Panel u/s 144C(5) of the Income-tax Act is contrary to law and to the facts and circumstances of the case. 2. On the facts and in the circumstances of the case and in law, the Dispute Resolution Panel has erred in including CAT Technologies Ltd., R S Software (India) Ltd in the final set of comparables. 3. On the facts and in the circumstances of the case and in law, the Dispute Resolution Panel has erred in excluding FCS Software Ltd., Infosys Technologies Ltd. from the final set of comparables. 4. For this and such other reasons as may be urg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es which were selected by him and the comments of the assessee, wherein the assessee had objected to the TPO‟s inclusion in respect of all five comparables. The TPO rejected objections of the assessee and included the following concerns as comparable:- Sr. No. Name of Company 1 Acropetal Technologies Ltd. (Seg) 2 Kals Information System Ltd. 3 Third-ware Solutions Ltd. 4 Infosys 5 FCS Software Solutions Ltd. 7. In reply to the show cause notice, the assessee carried out fresh search and requested for inclusion of certain concerns totaling seven. However, the TPO rejected all the said concerns and finally selected 13 companies in the final set of comparables whose average of adjusted PLI worked out 24.82%. The PLI of assessee for the year under consideration was 15.21% and consequently, the TPO proposed an adjustment of ₹ 10,92,90,108/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at because of high turnover and brands, the said concerns were not comparable. 11. We have heard the rival contentions and perused the record. The limited issue which arises by way of appeal filed by the Revenue is against the inclusion/exclusion of certain comparables in the final list of comparables. First, we shall take up the comparables which have been excluded on the directions of DRP i.e. FCS Software Solutions Ltd. and Infosys Technologies Ltd. Both these concerns have high turnover and also Infosys Technologies Ltd. has brand value and also owns intangibles and consequently, they have been directed by the DRP to be excluded. 12. We find that similar issue of exclusion of Infosys Technologies Ltd. and FCS Software Solutions Ltd. were held to be product companies which have functionally not comparable to the concerns engaged in providing software services to its associated enterprises, by the Tribunal in TIBCO Software India Pvt. Ltd. Vs. DCIT and vice versa in ITA No.276/PUN/2015 ITA No.334/PUN/2015 and CO No.04/PUN/2016, relating to assessment year 201011, order dated 31.01.2017. Following the same parity of reasoning, where the assessee befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,159 84,939,375 Medical Transcription Receipts 6,768,275 8,374,194 79,277,550 93,557,676 15. The DRP in view thereof, where the receipt from software development and consulting constituted more than 90% of the total receipts of the company, held that the net margins from other activities had entity level would not affect the overall net margins of the company. The DRP thus, directed the Assessing Officer to adopt the net margins of the said company as comparable if other filters approved by DRP were satisfied. The TPO giving effect to the directions of DRP has not objected as to whether other filters which were approved by the DRP were not satisfied. Consequently, we find no merit in the issue raised by the Revenue in this regard, wherein more than 90% of the receipts of the said company were from software development and consulting services. Hence, the said concern is functionally comparable to the assessee and is to be included in the final set of comparables. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal are mutually exclusive and without prejudice to one another. 18. The learned Authorized Representative for the assessee pointed out that the ground of appeal No.1 has become infructuous as the said claim has been allowed vide order passed under section 154 of the Act. In respect of ground of appeal No.2 i.e. against initiation of penalty proceedings under section 271(1)(c) of the Act, the learned Authorized Representative for the assessee admitted that the said ground of appeal is premature. Consequently, both the grounds of appeal raised by the assessee in its appeal are dismissed. 19. The assessee in CO No.09/PUN/2017 has raised the following grounds of objections:- 1. On the facts and in the circumstances of the case, the learned Assessing Officer ( AO') has erred in objecting to the order of the Hon ble Dispute Resolution Panel, Pune [DRP], wherein the Hon ble DRP has a) directed to include CAT Technologies Limited and RS Software India Private Limited in the final set of comparables. b) directed to exclude FCS Software Limited and Infosys Technologies Limited from the final set of comparables 2 . ..... X X X X Extracts X X X X X X X X Extracts X X X X
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