TMI Blog2021 (3) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... 1498/Bang/2017 - - - Dated:- 9-3-2021 - SHRI N. V. VASUDEVAN , VICE PRESIDENT AND SHRI B R BASKARAN , ACCOUNTANT MEMBER Assessee by : Shri. Darpan Kirpalani , Advocate Revenue by : Shri. Pradeep Kumar , CIT(DR) (ITAT) , Bengaluru ORDER Per N. V. Vasudevan , Vice President This appeal by the assessee is directed against the order dated 21.04.2017 of DCIT, Circle 4(1)(2), Bangalore (hereinafter referred to as the Assessing Officer, AO in short) passed u/s.143(3) read with Section 144C(13) of the Income Tax Act, 1961 (Act) in relation to AY 2013-14. 2. There is a delay of 2 days in filing this appeal which has been explained by the assessee as due to the Managing Director of the assessee not being available in Bangalore due to official work. The delay being a nominal delay, the same is condoned accepting the reasons given for condonation of delay. 3. The assessee in engaged in the business of provision of Software Development Services (SWD services), to its wholly owned holding company. In terms of the provisions of Sec.92-A of the Act, the assessee and its wholly owned holding company were Associated Enterprises ( AEs ). In terms of Sec.92B(1) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ALP was referred to by the AO, accepted TNMM as the MAM and also used the same PLI for comparison i.e., OP/TC. He also selected comparable companies from database. The TPO on his own identified 7 companies as comparable with the Assessee company and worked out the average arithmetic mean of their profit margins as follows: SI. No. Name of the taxpayer OP/OC 1 CG-VAK Software Exports Ltd 20.54% 2 I C R A Techno Analytics Ltd. 17.10% 3 Larsen Toubro Infotech Ltd. 26.06% 4 Mindtree Ltd. (Seg) 18.19% 5 Persistent Systems Ltd. 28.27% 6 R S Software (India) Pvt Ltd 17.41% 7 Tech Mahindra Ltd (Seg) 18.72% Unadjusted average margin 20.90% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rounds of appeal reads as follows: 5. On the facts and circumstances of the case the learned AO erred in eliminating companies with a turnover of Rs.i crore and below but including medium, large and very large companies with huge scale size of operations, while carrying out comparability analysis. a) Larsen Tourbo Infotech Ltd b) Persistent Systems Ltd. c) Tech Mahindra Ltd d) Mindtree Ltd e) RS Software India Pvt Ltd 10. We have heard the rival submissions. As far as ground No.2 raised by the Revenue is concerned the question boils down on application of turnover filter in choosing comparable companies. The turnover of the Assessee is ₹ 119.38 Crores whereas the turnover of the 5 companies mentioned in Ground No.5 are above ₹ 2000 Crores. The turnover of these 5 companies are as follows: Sl. No. Comparables Operating Turnover for FY 2012-13 (INR crores) 1 Larsen Turbo Infotech Limited 3,609.32 2 Persistent System Limited 996.75 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the DRP excluding 5 companies from the list of comparable companies chosen by the TPO on the basis that the 5 companies turnover was much higher compared to that the Assessee. 17.8. In view of the above conclusion, there may not be any necessity to examine as to whether the decision rendered in the case of Genisys Integrating (supra) by the ITAT Bangalore Bench should continue to be followed. Since arguments were advanced on the correctness of the decisions rendered by the ITAT Mumbai and Bangalore Benches taking a view contrary to that taken in the case of Genisys Integrating (supra), we proceed to examine the said issue also. On this issue, the first aspect which we notice is that the decision rendered in the case of Genisys Integrating (supra) was the earliest decision rendered on the issue of comparability of companies on the basis of turnover in Transfer Pricing cases. The decision was rendered as early as 5.8.2011. The decisions rendered by the ITAT Mumbai Benches cited by the learned DR before us in the case of Willis Processing Services (supra) and Capegemini India Pvt.Ltd. (supra) are to be regarded as per incurium as these decisions ignore a binding co-ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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