TMI Blog2021 (3) TMI 1411X X X X Extracts X X X X X X X X Extracts X X X X ..... cisions. Since, the aforesaid decisions cited before us pertain to the very same assessment year and there is no major change in the factual position, following these decisions, we reject this comparable. Acropatel Technologiies Ltd - TPO in case of the present assessee, while selecting comparable companies, he has applied certain filters, which include Income from software development services more than 75% of the operating revenue and Employee cost to operating revenues more than 25%. On perusal of the annual report of the company placed in the paper book, the contention of learned Senior Counsel appears to be correct. Further, it is observed, while considering similar objections raised on behalf of the assessee in case of Accenture Services Pvt Ltd [ 2018 (7) TMI 1877 - ITAT MUMBAI ] Tribunal has excluded this company from being treated as comparable as it does not qualify the aforesaid filters. The same view has been re-iterated by the co-ordinate bench in case of Dialogic Networks (India) Pvt Ltd [ 2018 (7) TMI 1878 - ITAT MUMBAI ] Following the aforesaid decisions of the co-ordinate bench, we direct the assessing officer to exclude this company from the list of comparab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee proceeded to select comparables by applying certain filters. In such search and selection process, the assessee selected certain comparables having average PLI of 14.33%. The PLI of the assessee having been shown at 27.42%, the price charged for transaction with AE was claimed to be at arm s length. Though, the TPO accepted TNMM as the most appropriate method with PLI of OP/OC; however, he did not accept the search and selection process of comparables adopted by the assessee as well as computation of its own margin. After rejecting the TP study report citing unreliability, the TPO proceeded to select comparables independently and in the process, he short listed nine companies as comparables with average PLI of 32.14%, whereas, he computed the PLI of the assessee at 13.65%. Applying PLI of the comparables, he computed the arm s length price of the services provided to the AEs. The resultant shortfall of Rs.4,48,60,208/- was proposed as upward adjustment to the price charged. On the recommendations of the TPO, assessing officer added back the aforesaid adjustment to the income. Though, against the aforesaid addition assessee raised objections before learned DRP; however, it was un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the work of water treatment and sewage disposal undertaken by the assessee. He submitted, since this company is comparable to the assessee, it cannot be rejected. He submitted, the decision rendered in case of UCB India Pvt Ltd vs Addl. CIT (supra) being factually distinguishable, will not apply. 8. We have considered rival submissions and perused materials on record. Admittedly, the TPO, in his own words has stated that the assessee is providing software development and design services. Whereas, a perusal of the material on record, which also includes the annual report of Celestial Biolabs Ltd, it is noticed that this company is into product development. It is also to be noted, though this company is providing various kinds of services and also developing products; however, segmental details of the services provided and products developed are not available in public domain. Considering these aspects, the co-ordinate bench of this Tribunal in case of UCB India Pvt Ltd vs Addl.CIT (supra) has rejected this company as comparable to a software development service provider. The same view has again been expressed by the Tribunal in Dialogic Network India Pvt Ltd vs ACIT (supra). Eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s comparable. III. ACROPATEL TECHNOLOGIES LIMITED 12. Objecting to selection of this comparable, the learned Senior Counsel for the assessee submitted, this company does not pass certain quantitative filters applied by the TPO himself. He submitted, the total revenue earned from information technology segment is less than 75%, employee cost as a percentage of total expenses is less than 25% and the on-site development expenses as a percentage of total expenses is more than 60%. To substantiate this claim, learned Senior Counsel drew our attention to the annual report of the company placed in the paper book. Thus, he submitted, since the company does not qualify the filters applied by the TPO, it cannot be selected as a comparable. In support of such contention, he relied upon the following decisions:- i. Accenture Services Pvt Ltd vs ACIT IT(TP) A No.7686/Mum/2012 dt 20-07-2018 ii. Dialogic Networks (India) Pvt Ltd vs the ACIT ITA No.7280/Mum/2012 dt 27-07-2018 13. The learned Departmental Representative submitted, if the objection of the assessee is with regard to non-qualification of certain filters by the company, it can be restored back to the AO/TPO for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the margin of the company. 17. The learned Departmental Representative submitted, the assessee did not raise this issue either before the TPO or before the learned DRP. Therefore, he cannot be allowed to raise this issue at this stage. Further, he submitted, as long as cases are comparable and pass the filters, further adjustment, unless it abnormally affects the margin, cannot be allowed. He submitted, when TNMM would apply, broad functional comparability is only required to be seen. 18. We have considered rival submissions and perused materials on record. In our considered opinion, assessee s contention that certain adjustments have to be made in computing the margin of this company, requires consideration. In case of Dialogic Networks (India) Pvt Ltd vs the ACIT (supra) which is for the very same assessment year, the Tribunal while accepting similar claim made by the assessee, has directed the assessing officer to compute the margin of this company at 15%. Therefore, following the aforesaid decision of the co-ordinate bench, we direct the assessing officer to compute the margin of this company at 15%. 19. In course of hearing, it has been submitted before us by lear ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
