TMI Blog2019 (5) TMI 1699X X X X Extracts X X X X X X X X Extracts X X X X ..... 010-11. 2. Briefly stated, the facts of the matter are as under: 2.1 The assessee company, a wholly owned subsidiary of Solidcore, US, is engaged in providing software development services to its Associated Enterprises (AE); i.e., its holding company. In the case on hand, the case was taken up for scrutiny for this Assessment Year and the Assessing Officer (AO) made a reference to the Transfer Pricing Officer (TPO) for determination of the Arm s Length Price (ALP) of the international transactions entered into by the assessee with its AE in the period under consideration. The TPO, vide order under section 92CA of the Act dated 30.01.2014 proposed TP adjustment of ₹ 91,79,599/- in respect of the assessee s international transactions with its AEs in the software development services segment. The draft order of assessment for Assessment Year 2010-11 was concluded under section 143(3) r.w.s. 144C of the Act vide order dated 17.03.2014 determining the assessee s income at ₹ 1,38,48,766/-; which included the TP adjustment of R .91,79,599/-. The assessee filed its objections thereto before the DRP; who vide directions issued under section 144C(5) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for hearing and is before us for adjudication. 3.0 In the cross objections, the assessee has raised the following grounds: 1. On facts and circumstances of the case and in law, the respondent wishes to rely upon the directions (dated 15 December, 2014) passed under section 144C (5) of the Income-tax Act, 1961 by the Hon'ble Dispute Resolution Panel ( DRP ) and grounds of appeal filed in Form 35A before the Hon'ble DRP which was disregarded by the Assessing officer ( Ld. AO )/ Transfer Pricing Officer ( Ld. TPO ) while filing an appeal before the Hon'ble Tribunal. 2. On facts and circumstances of the case and in law, the Ld. AO/ Ld. TPO erred in objecting to the upper limit for sales turnover filter without providing any empirical analysis. In doing so, the Ld. AO / Ld. TPO erred in not appreciating that the software/business process outsourcing industry is clearly demarcated based on size. 3. Subject to the above, the Hon'ble DRP has erred in not adjudicating on the other grounds apart from the turnover filter, raised by the Assessee in case of the following comparable companies: a. Infosys Technologies Limited ( I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the endorsement of the Registry on Form 36A in the case on hand and the reason for not listing of the C.O. along with Revenue s appeal for Assessment Year 2010-11 certainly cannot be attributed to the assessee. The Hon ble Kerala High Court in the case of City Centre Builders and Developers (supra) had held that the C.O. has to be treated as an independent appeal and has to be decided irrespective of the fact that Revenue s appeal has been dismissed, for whatever grounds. The above principle has been followed, inter alia, by the ITAT, Bombay Bench in the case of M/s. DBS Bank Ltd., Vs. DDIT (supra); wherein at paras 3.3.1 and 3.3.2 thereof, it was held as under: 3.3.1 We have heard both parties and perused and carefully considered the judicial pronouncements referred to (supra). Section 253(4) of the Act deals with the filing of COs. Rule 22 of the IT(AT) Rules, 1963 also lays dawn the procedure to be adopted for treatment of COs. The provisions of section 253(4) and Rule are extracted hereunder: - Section 253(4) - The Assessing Officer or the assessee, as the case may be, on receipt of notice that an appeal against the order of the Deputy Commissioner (Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icated. In this view of the matter, we reject the preliminary objection of the learned D.R. for Revenue in respect of the maintainability of the assessee's CO for A.Y. 1995-96. 4.2.2 The principle laid down in the aforesaid decision of the ITAT, Mumbai Bench in DBS Bank Ltd., (supra), in our considered view, applies squarely to the assessee s case. In this view of the matter, we uphold the assessee s contentions that the C.O. is an independent appeal and proceed to consider and adjudicate the issue raised therein. 5. Ground Nos. 1 to 3 of C.O. 5.1 As regards ground Nos. 1 to 3 raised by the assessee in the C.O. (supra), the learned AR for the assessee at the outset of the hearing before us submitted that these grounds are not being pressed by the assessee. In view of ground Nos. 1 to 3 of C.O. (supra) not be ng pressed by the assessee, they are rendered infructuous and are accordingly dismissed as not pressed. 6. Ground No.4 Kals Information System Ltd., (Seg) ( Kals ) 6.1 In this ground (supra), the assessee seeks exclusion of this company Kals from the TPO s set of comparables. According to the learned AR, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of software professionals on online products. Thus, when this company is having revenue from software services as well as software product. the same cannot be considered as comparable with software development service providing company. 7. The DRP has directed the AO to exclude this company from the list of comparables by taking note of the fact that there were inventories in the books of accounts of this company which shows that this company is in the software product business. Further, by following the decision of this Tribunal in the case of Trilogy e-business Software India Ltd. v. DCIT, ITA No.1054/Bang/2011 dated 23.11.2012, this company was found to be not comparable with that of the assessee. 8. We have heard the Id. DR as well as Id AR and considered the relevant material on record. The Id. DR has not disputed the fact that comparability of this company has been examined by this Tribunal in a series of decisions including in the case of Trilogy e-business Software India Ltd. (supra) We further note that in the balance sheet of this company as on 31 3.2010, there are inventories of ₹ 60,47,977. Therefore, when this company is in the business of sof ..... X X X X Extracts X X X X X X X X Extracts X X X X
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