9911796707
TMI Blog2017 (9) TMI 1831X X X X Extracts X X X X X X X X Extracts X X X X ..... s also perform activities related to software services. 2. The learned Commissioner of Income Tax (Appeals) has erred on the facts and circumstances of the case and in law in including the following comparables, which were rejected by the TPO, without considering that the functions, assets & risk profile and prevailing market conditions for off-shore and onside companies are different. i) Quintegra Solutions Ltd. ii) R.S. Software (I) Ltd. iii) Zylog Systems Ltd. iv)Thinksoft Global Services Ltd. 3. For these and such other grounds as may be urged at the time of hearing, the order of the learned CIT(A) may be vacated and that of Assessing Officer be restored. 4. The appellant craves to add, alter or amend any or all the grounds of appeal during the course of appellate proceedings before ITAT Pune Bench, Pune." 3. The assessee in CO No.45/PUN/2017 has raised following grounds of objections:- Based on the facts and circumstances of the case, the learned Assessing Officer (AO) has : Rejecting certain companies considered in the comparable set by the TPO 1. erred on the facts and in circumstances of the case, and in law, by objecting the well-reasoned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case and in law, in ignoring certain additional companies which can also be taken as comparables to the Respondent based on the updated data. Selection of companies having abnormal normal profits 9. erred on the facts and in circumstances of the case and in law, in accepting companies earning abnormal profit during the FY 2009-10. Incorrect computation of operating margins of certain comparable companies 10. erred on the facts and circumstances of the case, in incorrectly computing the operating margins of the certain comparable companies. Non consideration of workings submitted by the Respondent for working capital adjustment 11. erred on the facts and in circumstances of the case and in law, in correctly computing the working capital adjustment required in case of the Respondent. Denial of adjustment for risk differences 12. erred on the facts and in circumstances of the case, and in law, in comparing full fledged risk bearing entities with the Respondent's captive operations without making any risk adjustment for differences between the functional and risk profile of comparable companies considered as comparable vis a vis the risk profile of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for total consideration of Rs. 306,97,13,935/-. The assessee in the transfer pricing study report had selected TNMM method as most appropriate method to benchmark its international transactions relating to provision of software development services and CUP method in respect of other international transactions i.e. receipt of interest on FD, payment of bank charges and payment of interest on term loans. The assessee had made selection of comparable companies totaling 21 and had arrived at the average PLI of the comparables at 11.26%, whereas the PLI of assessee worked out to 18.51%. Therefore, the assessee claimed that international transactions were at arm's length price. However, the TPO objected to the transfer pricing analysis done by the assessee. One of the issues was the use of single year‟s data and application of incorrect margins in respect of certain companies. The TPO also proposed additional filters to be adopted and also turnover filter. The TPO rejected 15 comparables out of 21 comparables selected by the assessee and the assessee in reply, objected to the rejection of 10 comparables and further requested to include additional three concerns. The TPO thereaf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. 9. The first objection of assessee in respect of FCS Software India Ltd. is the non-availability of business segment profitability, where the said concern is earning revenue from IT consulting (42%), education (30%) and infrastructure management (21%). Further, the said company had earned revenue from sale of software development services and products and the concern was engaged in software product development. In this regard, the learned Authorized Representative for the assessee fairly pointed out that the Tribunal in assessee‟s own case in assessment year 2008-09 had held that the company‟s experiencing abnormal fluctuations in margins should be rejected from the comparables set and FCS Software Solutions Ltd. was so rejected. The learned Authorized Representative for the assessee further pointed out that the Tribunal in the appeals relating to assessment year 2010-11 in the case of TIBCO Software India Pvt. Ltd. Vs. DCIT in ITA No.276/PUN/2015 and cross appeal in ITA No.334/PUN/2015, order dated 31.01.2017, ACIT Vs. M/s. Synechron Technologies Pvt. Ltd. in ITA No.536/PUN/2015 and cross appeal in ITA No.622/PUN/2015, order dated 16.06.2017 and in DCIT Vs. Exfo E ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
