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TMI Blog2020 (11) TMI 939X X X X Extracts X X X X X X X X Extracts X X X X ..... ancing the income of the Appellant by INR 2,05,42,843 under section 143(3) of the Income-tax Act, 1961 ('the Act'). 2. The Ld. AO and Ld. DRP have erred on facts and in law in enhancing the income of the Appellant by INR 88,20,574 by holding that the Appellant's international transaction pertaining to provision of software development services does not satisfy the arm's length principle envisaged under the Act and doing so grossly erred in: 2.1 disregarding multiple year/ prior years' data as used by the Assessee in the TP documentation and holding that current year (i.e. FY 2009-10) data for comparable companies should be used despite the fact that the same was not necessarily available to the Assessee at the time of preparing its TP documentation; 2.2 rejecting comparability analysis in the TP documentation/ Assessee's fresh search and in conducting a fresh comparability analysis based on application of the additional/ revised filters in determining the ALP and rejecting, in particular, the following filters applied by the Assessee in its TP documentation/ fresh search; 2.2.1 rejecting companies having turnover of less than INR 5 crore in the final comparables' set fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case shows that Assessee Company is engaged in the business of trading in and servicing of analytical and testing and measurement equipment and research and development on software. It is a wholly owned subsidiary of Agilent Technologies International Europe BV and is engaged in the provision of software development services and IT enabled services to its overseas group companies. It has entered into several international transactions. In nutshell the company is primarily engaged in facilitating sales of groups products in the Indian market. For this purposes it purchase products from various factories of Agilent group. It also provides software development and marketing services to its associated enterprise. 4. Assessee filed its return of income on 28/9/2010 declaring total income of Rs. 95,232,170/-. The learned transfer pricing officer on examination of those international transactions proposed an adjustment of Rs. 158,58,881 u/s 92CA of the act determining the ALP of the international transaction amounting to Rs. 169,398,894 at Rs. 185,257,775/- . The learned transfer pricing officer further made an adjustment on account of an outstanding dues receivable from the associated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icing officer in the order giving effect to the direction of the learned dispute resolution panel has also given working capital adjusted margin for computing the ALP. In view of this, no separate adjustment can be made in the hands of the assessee. He further submitted that for the same assessment year the identical issue is covered in case of another group entity and a related party of the appellant company by the coordinate bench in favour of that assessee. He also referred to several other judicial precedents on this issue. 7. The learned department representative referred to page number 32 of 58 of the order of the learned dispute resolution panel with respect to Tata Elxsi Limited and submitted that the total revenue of the comparable has been considered. He further submitted that the learned dispute resolution panel has held that this company provides software development services which are similar to the IT services provided by the assessee. He also submitted that only the learned transfer pricing officer has included the software segment of that comparable company for benchmarking. With respect to Infosys technologies Ltd he referred to para number seven of the order of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comparable with the assessee company is software development division. For this proposition we look at page number 165 of the paper book wherein the software development division revenue of the assessee is only Rs. 16.80 crores whereas the turnover of the comparable company i.e. Infosys technologies Ltd compared by the learned transfer pricing officer is Rs. 21,140 crores. It is also submitted before us that the asset base of the assessee company is merely 42.7 crores whereas the asset base of Infosys technologies Ltd is Rs. 4188 crores. The assessee has not incurred any expenditure on brand whereas the comparable company has incurred an expenditure of Rs. 57 crores. The learned departmental representative could not controvert the above dissimilarity between the asset base, turnover of the company, the brand utilised by the comparable. Thus, In view of such a huge turnover of the comparable company, relying on the decision of the honourable Bombay High Court in case of CIT versus Pentair water private limited and of honourable Delhi High Court in case of CIT versus Agnity India technologies Ltd in ITA number 1204/2011 dated 10 July 2013 the above comparable is directed to be exclud ..... X X X X Extracts X X X X X X X X Extracts X X X X
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