TMI Blog2019 (5) TMI 1973X X X X Extracts X X X X X X X X Extracts X X X X ..... nits and also revenue from subscriptions, etc. The said concern had imported raw materials and was also owning intangibles and in the absence of any segmental details, was held to be not functionally comparable.Thirdware Solutions Ltd. is to be excluded from final list of comparables. Decided in favour of assessee. - ITA No. 224/PUN/2017 - - - Dated:- 17-5-2019 - Ms. Sushma Chowla, JM And Shri D. Karunakara Rao, AM For the Assessee : S/Shri Chinmay Nagawat and Vinay Baldota. For the Revenue : Shri Manoj Kumar Gautam. ORDER PER SUSHMA CHOWLA, JM: The appeal filed by assessee is against the order of DCIT, Circle 6, Pune, dated 29.11.2016 relating to assessment year 2012-13 passed under section 143(3) r.w.s. 144C of the Income-tax Act, 1961 (in short the Act ). 2. The learned Authorized Representative for the assessee at the outset pointed out that in case ground of appeal No.7 is decided, then the margins shown by assessee would be within +/- 5% of mean margins of comparables and there is no need to adjudicate any other issue raised vide other grounds of appeal. So, we first take up the ground of appeal No.7 for adjudication, which reads as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be excluded is Cybermate Infotek Ltd., which was engaged in providing both software development services and was also a product company and segmental details were not available and in the absence of the same, the margins of said concern could not be applied to benchmark arm's length price of international transactions undertaken by concern which was exclusively providing software development services to its associated enterprises. The Tribunal on analyzing the functionality of said concern also applied the ratio laid down by the Hon ble High Court of Delhi in Prl.CIT Vs. Saxo India Pvt. Ltd. in ITA No.682/2016, for assessment year 2011-12, judgment dated 28.09.2016 and held as under:- 10. We proceed to decide the present appeal in line with the arguments put forward by the learned Authorized Representative for the assessee. The learned Departmental Representative for the Revenue has objected to the submissions made by the assessee. The first concern which is sought to be excluded by the assessee is Cybermate on the ground that it was engaged in providing both software development services and was a product company and in the absence of segmental details, the same cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 012, relating to assessment year 2008-09, order dated 24.09.2014 had excluded Cybermate as not comparable to the company providing software development support services to associated enterprises. The learned Authorized Representative for the assessee has pointed out that profile of concern Cybermate for assessment year 2008-09 and in the year under appeal i.e. assessment year 2012-13 is the same and hence, the said proposition is to be applied. We find merit in the plea of assessee in this regard. 13. We further find that Pune Bench of Tribunal in MSC Software Corporation India (P.) Ltd. Vs. ACIT (2017) 80 taxmann.com 55 (Pune-Trib) while deciding the case of exclusion of a product company had held as under:- 18. On perusal of record and the order of Tribunal in John Deere India Pvt. Ltd. Vs. ACIT (supra), we find that the concern E-zest Solutions Ltd. is a product company and is engaged in both the provision of software services and sale of software services. On the other hand assessee is engaged in Software development services where the segmental details are not available, accordingly, E-zest Solutions Ltd. is functionally not comparable. Accordingly, we hold that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ras hereinabove in respect of Cybermate, we hold that Cybercome is also to be excluded from final set of comparables. 9. Accordingly, we hold that Cybercom Datamatics Information Solutions Ltd. also cannot be included in final list of comparables while benchmarking international transactions of assessee of providing software development services to its associated enterprises. 10. The third concern by the inclusion of which the assessee is aggrieved is Infobeans Systems Pvt. Ltd. The Tribunal in M/s. PubMatic India Private Limited Vs. ACIT (supra) also took note of functionality analysis of the said concern, which was earning foreign exchange from export of goods on FOB basis, while deciding similar issue also noted the extraordinary event of demerger during the year and held as under:- 16. The third concern which the assessee wants to be excluded is Infobeans Systems Pvt. Ltd. on the ground that the said concern was earning foreign exchange from export of goods on FOB basis. Hence, the same was not comparable with a concern engaged in software development services. Our attention was drawn to the financials of the said concern placed at page 624 onwards, wherein in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad filed revised accounts. The extraordinary event which had taken place makes the said concern as not comparable to the assessee. In this regard, we find support from the ratio laid down by the Pune Bench of Tribunal in M/s. Aptara Technologies Pvt. Ltd. Vs. ACIT in ITA No.259/PN/2015 and cross appeal in ACIT Vs. M/s. Aptara Technologies Pvt. Ltd. in ITA No.579/PN/2015, relating to assessment year 2010-11, order dated 31.05.2016 and in Cummins Turbo Technologies Limited Vs. DDIT in ITA No.784/PN/2014, relating to assessment year 2009-10, order dated 30.03.2016. Accordingly, we direct the Assessing Officer to exclude Infobeans Systems Pvt. Ltd. from final set of comparables. 13. On this ground also, Infobeans Systems Pvt. Ltd. is to be excluded from the final set of comparables as held in earlier decision of Pune Bench of Tribunal. 14. Coming to the next concern Thirdware Solutions Ltd., the Tribunal in M/s. PubMatic India Private Limited Vs. ACIT (supra) noted that the said concern was deriving revenue from sale of license and software services export from SEZ units and also revenue from subscriptions, etc. The said concern had imported raw materials and was also owning i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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