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TMI Blog2020 (12) TMI 1191X X X X Extracts X X X X X X X X Extracts X X X X ..... documentation by the learned TPO and in upholding the adjustment to the transfer price of the Appellant in respect of its Software development services. 3. That on the facts and circumstances of the case, the learned AO and the learned Panel erred in; 4. Upholding the rejection of comparability analysis of the Appellant in the TP documentation and accepting the comparability analysis performed by the learned TPO in the TP Order; 5. Upholding rejection of comparable companies selected by the Appellant from the search process provided by the learned TPO as part of show cause notice which passes the TPO's test of comparability; 6. Inclusion of companies (M/s. Persistent Systems Limited & M/s. Sasken Communication Technologies Limited) that are functionally different from Appellant and otherwise fails the test of comparability; 7. Disregarding the application of multiple year/prior year data as used by the Appellant in the TP documentation and holding the current year (i.e., Financial Year 2010-11) data for companies should be considered for comparability; 8. Upholding the learned TPO's approach of using data as at the time of assessment proceedings, instead of that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Appellant." 3. At the time of hearing, the learned Authorised Representative has not pressed Ground Nos. 1, 2 to 5, 7 to 10 of main grounds. The learned Authorised Representative also not pressed the additional Ground Nos. 3, 5 & 6. 3.1 Regarding the admission of additional ground, the learned Authorised Representative submitted that admission of these additional grounds does not require any investigation of fresh facts and which may be admitted in view of the judgment of Hon'ble Supreme Court in the case of NTPC Ltd. Vs. CIT 229 ITR 383 (SC) and also placed reliance on the decision of Special Bench of Chandigarh in the case of DCIT Vs. Quark Systems Pvt. Ltd. 38 SOT 307 wherein it was held that one of the independent comparable which has been included by the assessee as also by the TPO while computing the ALP has been wrongly included in the comparables admitted by the Tribunal; the tax payer is not estopped from pointing out mistake in the assessment though such mistake is the result of evidence adduced by the tax payer. On the other hand, the learned Departmental Representative strictly opposed the admission of additional grounds and submitted that there is no reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome from the sale of products only 9.4% of the total revenue in the assessment year under consideration and it has to be excluded as comparable. On the other hand, the ld. DR submitted that its revenue is 75% from software services as per the Annual Report and it has to be included in the list of comparables. 5.5 We have heard the rival contentions, perused and carefully considered the material on record. It was considered as not comparable in the case of LG Software India Pvt. Ltd. (supra) in the Assessment Year 2011-12 on the reason that the company is functionally distinguishable to the assessee's company since Sasken Communication Technologies is dealing with the Media Products and R & D activities with no break up of segmental information. Accordingly, we direct the TPO/Assessing Officer to exclude this company from the list of comparables. 6. The additional ground Nos. 1, 2 & 4 are for exclusion and inclusion of the following companies- (i) E-Zest Solutions Limited (for exclusion) (ii) LGS Global Limited (for inclusion) (iii) Evoke Technologies Pvt. Ltd. (for inclusion) 6.1 (i) E-Zest Solutions Limited-The learned Authorised Representative submitted that this com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not a good comparable, then the ALP should be worked out on the basis of 4 comparables i.e.; 1) Evoke Technologies Pvt. Ld. 2) Mindtree Ltd. (Seg) 3) R S Software (India) Ltd. and 4) Larsen & Toubro Infotech Ltd. In this manner the TPO/A.O. should decide the issue regarding TP Adjustment as per law." Accordingly in view of the above order of the Tribunal, we remit the issue to the file of Assessing Officer/TPO with similar directions indicated in E-Zest Solutions Limited above. 6.4 (iii) Regarding Evoke Technologies Limited, this company was selected by the TPO, however, excluded by the DRP suo moto. It was submitted by the ld. AR that because of the margins are low, it cannot be excluded from the list of comparables. For this purpose, he relied on the order of Bangalore Bench of Tribunal in the case of Sterling Commerce Solutions India Pvt. Ltd. Vs. DCIT (IT(TP) A No. 1410/Bang/2015 Dt. 26.02.2020). 6.5 We have heard the rival contentions, perused and carefully considered the material on record. We find merit in the argument of ld. AR. In view of the order of the co-ordinate Bench of this Tribunal in the case of Sterling Commerce Solutions India Pvt. Ltd. Vs. DCIT (supra) in p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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