TMI Blog2022 (5) TMI 1491X X X X Extracts X X X X X X X X Extracts X X X X ..... company is 8.12% - TPO has merely incorporated the margin at 11.16% and has not verified the claim of the assessee. Therefore, in the interest of justice and equity, we confirm the directions of the DRP and restore the matter to the AO / TPO to examine the issue afresh. It is ordered accordingly. TP adjustment in Marketing Support Segment - TPO, while giving effect to the directions of the DRP, had deleted the TP adjustment in marketing support segment - AO, in the final assessment order, has included TP adjustment for marketing support segment. The matter is restored to the AO / TPO to examine the issue raised in ground and take a decision in accordance with law. TP adjustment for the software distribution segment - AR has placed on record the TPO s order passed pursuant to the DRP s directions, wherein the entire TP adjustment in this segment was deleted (refer page 18 of the TPO s order giving effect to DRP s directions). AO is directed to look into the issue raised in ground 12 and take a decision in accordance with law. It is ordered accordingly. - IT(TP)A No.106/Bang/2022 - - - Dated:- 13-5-2022 - Shri George George K, JM Shri Laxmi Prasad Sahu, AM Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bution segment Determined the transaction at ALP and no adjustment made thereon. Nil 2.2 Post the above order, the AO passed the final assessment order u/s 143(3) r.w.s. 144C(3) r.w.s. 144B of the I.T.Act dated 31.01.2022. In the order, the AO has retained same TP adjustment at Rs.14,02,20,085 as in draft assessment order dated 31.03.2021 despite relief given in the transfer pricing order giving effect to DRP s directions. Aggrieved by the final assessment order, the assessee filed the instant appeal before the ITAT. 2.3 The assessee has raised 14 grounds, however, during the course of hearing, the learned AR had only pressed grounds 5, 6(iii), 7 and 8 (in respect of Transfer Pricing Adjustment of software development segment), ground 11 (pertaining to the TP adjustment in marketing support segment), ground 12 (in respect of TP adjustment of software distribution segment). The grounds argued by the learned AR, we shall adjudicate as under: Grounds relating to TP adjustment in software development segment (Ground 5, 6(iii), 7 and 8). Ground 5 3. The above ground reads as follows:- The learned AO has erred in m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fotech Pvt. Ltd. v. ACIT, Circle 1(1), Mysuru (TS-676-ITAT-2021 Bang-TP) 4.1 The learned Departmental Representative was duly heard. 4.2 We have heard rival submissions and perused the material on record. Admittedly, the assessee s turnover in the software development segment is Rs.45.35 crore. The turnover of for Larsen Toubro Infotech Limited, Mindtree Limited, Persistent Systems Limited, Tata Elxsi Limited, Nihilent Limited, Infosys Limited and Cybage Software Private Limited, are far exceeding Rs.200 crore for the relevant assessment year. The TPO/DRP has excluded the companies having turnover of less than Rs.1 crore, however, the TPO / DRP has not put upper limit of the turnover for exclusion of comparables having high turnover. The Bangalore Bench of the Tribunal in the case of Autodesk India (P) Ltd. v DCIT, Circle 11(1), Bangalore (supra) has held as follows:- 17.7. We have considered the rival submissions. The substantial question of law (Question No.1 to 3) which was framed by the Hon'ble Delhi High Court in the case of Chryscapital Investment Advisors (India) Pvt.Ltd., (supra) was as to whether comparable can be rejected on the ground that they have exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decisions referred to by the learned counsel for the Assessee supports the plea of the learned counsel for the Assessee. The decisions rendered in the case of M/S.NTT Data (supra), Societe Generale Global Solutions (supra) and LSI Technologies (supra) were rendered later in point of time. Those decisions follow the ratio laid down in Willis Processing Services (supra) and have to be regarded as per incurium. These three decisions also place reliance on the decision of the Hon ble Delhi High Court in the case of Chriscapital Investment (supra). We have already held that the decision rendered in the case of Chriscapital Investment (supra) is obiter dicta and that the ratio decidendi laid down by the Hon ble Bombay High Court in the case of Pentair (supra) which is favourable to the Assessee has to be followed. Therefore, the decisions cited by the learned DR before us cannot be the basis to hold that high turnover is not relevant criteria for deciding on comparability of companies in determination of ALP under the Transfer Pricing regulations under the Act. For the reasons given above, we uphold the order of the CIT(A) on the issue of application of turnover filter and his action i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e TPO has merely incorporated the margin at 11.16% and has not verified the claim of the assessee. Therefore, in the interest of justice and equity, we confirm the directions of the DRP and restore the matter to the AO / TPO to examine the issue afresh. It is ordered accordingly. 6.2 In the result, ground is allowed for statistical purposes. Ground relating to TP adjustment in Marketing Support Segment (Ground 11) 7. It is submitted that the TPO had made TP adjustment under marketing support segment in the final assessment order of Rs.2,53,32,409. The learned AR has placed on record the TPO s order passed pursuant to the DRP s directions, wherein, the TP adjustment for the marketing support segment was entirely deleted. The learned AR has also stated that the assessee had filed rectification application with the AO, however, the same is pending. Therefore, it was requested that the Tribunal may direct the AO to delete TP adjustment relating to marketing support segment. 7.1 We have heard rival submissions and perused the material on record. The TPO, while giving effect to the directions of the DRP, had deleted the TP adjustment in marketing support segment (refer p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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