TMI Blog2023 (4) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... istent Systems Ltd. from the list of comparables. Nihilent Ltd. - This comparable fails the functionality test and this company Nihilent Ltd. is not functionally similar to assessee s case as held by the coordinate bench of the Tribunal in the case of M/s. SanDisk India Device Design Centre Pvt. Ltd. [ 2022 (6) TMI 1299 - ITAT BANGALORE] . Thus we direct the AO/TPO to exclude this company Nihilent Ltd. from the list of comparables. OFS Technologies Ltd. - This comparable fails the functionality test and deserves to be excluded. Determining the Arm s length margin by applying Rule 10CA of the I.T. Rules, 1961 - As there are sufficient comparables available in the present facts of the case for the year under consideration, we uphold the applicability of Rule 10CA of the I.T. Rules subject to our findings herein below and the question of excluding high margin companies cannot be agreed with. Accordingly, this ground of appeal of the assessee in Ground No.7.9 is dismissed. We direct the AO/TPO to verify the functional similarities of these 3 comparables being 1) Threesixty Logica Pvt. Ltd. 2) Cybage Software Ltd. and 3) Concilient Technologies Ltd. and then to apply Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t taking due cognizance of the facts and legal contentions provided by the Appellant and erred in adopting a biased and prejudiced approach to the transfer pricing assessment. The Hon'ble DRP erred in upholding the actions of the Ld. TPO/ NFAC. 2. Transfer pricing order is void ab initio as transfer pricing proceedings were not conducted in a faceless manner The transfer pricing order dated January 22, 2021, issued under section 9A(3) of the Act, is liable to be struck down, as the transfer pricing proceedings were not conducted in a faceless manner, as required vide CBDT Notifications dated August 13, 2020 read with Notification September 12, 2019. The Hon'ble DRP erred in upholding that transfer pricing assessment ought not to be conducted in a faceless manner. 3. Assessment order is bad in law as assessment was not completed in conformity with the directions of the Hon'ble DRP 3.1. The final assessment order dated February 21, 2022 passed by the Ld. NFAC is bad in law as the assessment was not completed in conformity with the directions of the Hon'ble DRP as prescribed under section 144C(13) of the Act. 3.2. The Ld. NFAC/ Ld. TPO has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection of comparables selected in the Appellant's TP Study 6.1. The Ld. TPO/ NFAC and the Hon'ble DRP erred in rejection of the following comparables selected by the Appellant in its TP Study: 6.1.1.Sankhya Infotech Ltd. 6.1.2.Evoke Technologies Pvt. Ltd 6.1.3.Sasken Communication Technologies Ltd. 6.1.4.RS Software Ltd. 6.1.5.Nucleus Software Export Limited 6.2. The Hon'ble DRP erred in directing exclusion of Kals Information Systems Ltd. as a comparable to the Appellant. 7. Erroneous selection/ rejection of Comparable companies 7.1. The Hon'ble DRP, after having upheld the application of different financial year filter and reaching at a finding that R Systems International Limited fails the different financial year filter, erroneously upheld R Systems as a comparable by wrongly mentioning that the Appellant has not objected the use of different financial year filter. Upper Turnover filter 7.2. The Ld. TPO/ NFAC erred in not applying an upper-turnover filter to identify comparable companies, which led to wrongful selection of Mindtree Limited and Infosys Limited as comparables. The Hon'ble DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O/ NFAC. Brand profits 7.8. The Ld. TPO/ NFAC erred in selecting Mindtree Limited and Infosys Limited as a comparable even though they earn brand profits unlike the Appellant. The Hon'ble DRP erred in upholding the actions of the Ld. TPO/ NFAC. Abnormally high margins 7.9. The Ld. TPO/ NFAC erred in selecting Threesixty Logica Testing ,.Services Private Limited. Infosys Limited, Cyba e Software Private Limited and Consilient Technologies Private Limited as comparables even though they earn abnormally high margins. The Hon'ble DRP erred in upholding the actions of the Ld. TPO/ NFAC. Fluctuating margins 7.10. The Ld. TPO/ NFAC erred in selecting Infobeans Technologies Limited and OFS Technologies Limited as comparable even though they have earned fluctuating margins over a period of three years for which weighted average is computed. The Hon'ble DRP erred in upholding the actions of the Ld. TPO/ NFAC. Rectification of margins 7.11. Without prejudice to the above, the Ld. TPO/ NFAC erred in not rectifying the margin of Kals Information Systems Limited, Harbinger Systems Private Limited, Great Software Laboratory Private Limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d only ground No.7.1 and exclusion of 3 comparables in ground No.7.6 and ground No.7.9 only. Other grounds are not argued and prayed that the grounds which are not argued keep it as open. Accordingly, we adjudicate only grounds, which are argued before us and kept open the other grounds, which are not argued before us. 3. Ground No.7.1 is reproduced as follows:- 7.1. The Hon'ble DRP, after having upheld the application of different financial year filter and reaching at a finding that R Systems International Limited fails the different financial year filter, erroneously upheld R Systems as a comparable by wrongly mentioning that the Appellant has not objected the use of different financial year filter. 3.1 The Ld. A.R. submitted that the Ld. DRP in para no.3.1.7 in page 6 7 of its order observed with regard to exclusion of comparables, which are having different ending of financial year as follows: 3.1.7 The different financial year ending filter is applied to rule out the effect of differences in economic and market conditions at different time period. Further. there is no rationale in retaining such companies as comparables when the companies having same f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial yar filter. Accordingly, Ld DRP did not find merit in the objection and hence he rejected the same. 3.4 According to the Ld. A.R., the above findings of the Ld. DRP is contrary to its earlier findings in para 3.1.7 reproduced above and prayed that R. Systems International Ltd. to be excluded from the list of comparables. 4. The Ld. D.R. supported the order of the lower authorities. 5. We have heard the rival submissions and perused the materials available on record. There is no dispute that R. Systems International Ltd. is following different financial year and the assessee objected inclusion of the comparable which is having different financial year. Being so, as recorded by the Ld. DRP itself, R. Systems International Ltd. fails the financial year filter. Accordingly, we direct the TPO/AO to exclude R. Systems International Ltd. as a comparable to the assessee s case. Accordingly, this company R. Systems International Ltd. is to be excluded from the list of comparables. This ground No.7.1 of the appeal of the assessee is allowed. 6. Ground No.7.6 of the appeal of the assessee is reproduced as follows:- Functionally not comparable 7.6. The Ld. TPO/ NFAC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he information at page 265 of the annual report, it has reported income from software services of Rs.17201.52million and software licenses of Rs.128.12 million aggregating to Rs.17329.64 million. Thus, the income from software licenses constitutes a meagre 0.73% of its operating revenue. 8.1 The Ld. D.R. further submitted that the company during the previous year proceedings has also categorically clarified in its reply u/s 133(6) that it is predominantly engaged in software product development services only. The relevant extract of the reply is as under: - Persistent System Limited is predominantly engaged in the business of providing outsourced software product development services to customers across the globe from following industry verticals: Infrastructure and systems, 'Telecom and Wireless, Life science and Healthcare and Financial services. The company reports segment information based on the above industry verticals. The nature of services provided under each of these segments differs only in terms of the industry and specific requirements of customers in each of these industries. The essential activity across all business segments can be considered to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the year (2012-13), of Rs.262.84 million, was mainly on account of acquisition of various IPs during the year and the same is shown in the intangible Asset Schedule of the consolidated financial statement at page115 as under: - (Intangible assets of Group 2012-13) 8.5 The ld DR stated that all these clearly show that the IP related and product revenue pertain to ether group entities and does not pertain to M/s. Persistent Systems Ltd, which is being compared. It is also to note that this company has clarified in its reply given u/s 133(6), that M/s Persistent Systems Ltd is predominantly engaged in the business of rendering software development services; the revenue reported is primarily on account of rendering of software development services only. The relevant extract is as under In respect of the information you have requested under 3(a) and 3(c) in respect of software products and innovations, overseas subsidiary companies of Persistent Group have acquired certain Intellectual Property (IP) products and generating some revenue from licensing and support of these products. In case of PSL India, which is predominantly engaged in the business of rendering s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annual report), he noted that this company does not fail the RPT filter adopted by the TPO. He further noted that the assessee has computed by aggregating the transactions, on the revenue and expense side, without taking corresponding parity in the denominator. Such a computation is totally skewed. The RPT if the revenue is considered on both numerator and denominator the percentage comes to 22.2%. On the other hand, the expenses are taken which comes to 5.2%. Thus, the company satisfies the RPT filter adopted by the TPO. Thus, ld DR stated that the ld DRP did not find merit in the plea raised and accordingly he rejected the same. 8.8 The ld DRP stated in his report that as the company is primarily engaged in software development services and earns the revenue from this activity there is no need of providing segmental information as per AS 17. With regard to the peculiar circumstances, at the outset, the ld DRP noted that there was no acquisition by this company, which is being compared. As per the information, both the acquisitions of PRM Cloud Solutions and Genwi are by its subsidiaries. Such acquisition by the subsidiary will not have any direct impact on the revenue or prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions and perused the materials available on record. In our opinion, this comparable fails the functionality test and this company Persistent Systems Ltd. is not functionally similar to assessee s case as held by the coordinate bench of the Tribunal in the case of M/s. SAP Labs India Pvt. Ltd. in IT(TP)A No.606/Bang/2021 dated 21.7.2022,wherein held as under: 12.1 In assessee s own case for A.Y. 2012-13 in ITA No. 684/Bang/2017 by order dated 23/07/2021, Coordinate Bench of this Tribunal had excluded Infobeans Technologies Ltd., L T Infotech Ltd. and Persistent Systems Ltd. by observing as under: 6.1 At the outset, the Ld.AR submitted that, above comparables have been considered by coordinate bench of this Tribunal in case of NXP India Pvt.ltd. vs DCIT in ITA No. 692/B/2017 by order dated 27/04/2020. It has been submitted that NXP India Pvt.Ltd., was also characterised to be a captive software service provider to its AE. 6.2 The Ld.CIT.DR though objected, could not controvert the observations of this Tribunal in case of NXP India Pvt. Ltd., (supra). 7. We have perused submissions advanced by both sides in light of records placed before us. We note that the functio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke a typical IT services project, where requirements are fixed while time and money are variable, a software product development project starts with fixed time and money, thus leaving requirements as the only variable. Essentially, the product development team's task is to produce the best set of requirements within a fixed time and budget. Persistent Systems has emerged as a leader in the OPD segment a segment which is fast growing. OPD and outsourced IT services: the difference. How is OPD different from outsourced IT services is an oft asked question. In IT services, projects start with well-defined requirements, and vendors use time and money as variables to arrive at a reasonable cost estimate for-the project. After completion, the project goes into maintenance mode. In product development, requirements are less clearly defined. Instead, most product developers are given ship-dates for the product that are typically determined by external factors. Once the ship-dates are identified, the budgets for the product are frozen. In product development projects, all requirements can never be completely fulfilled in a particular version. As a result, most produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p for consideration before the Tribunal in the case of NXP Semi Conductors India Put. Ltd. u. DCIT in IT(TP)A No.1634/Bang/2014 order dated 27.07.2015, wherein it was held as under:- 10.4.1 We have heard both parties and perused and carefully considered the material on record; including the judicial decisions cited and placed reliance upon. We find that a coordinate bench of the Tribunal in the case of Cisco Systems Services B. V., India Branch (supra). for Assessment Year 2009-10 had held that this company be excluded from the final set of comparables on the ground that it is functionally dissimilar and different from a purely software service provider and at Para 20 of the order has held as under :- 20. We have perused the orders and heard the contentions. There is no dispute that the M/s. Cisco Systems India (P) Ltd. (supra) is an affiliate of the assessee company and engaged in similar business like that of the assessee namely rendering software services development etc. Though the said company was having other business also, with regard to its software development segment, this Tribunal held Bodhtree Consulting Ltd., Infosys Ltd., Kals Intbrmation Systems Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. in ITA No.3856 (Del)/201() at pars i2 thereof, that Infosys Technologies Ltd. being a giant company and market leader assuming all risks leading to higher profits cannot be considered as comparable to captive service providers assuming limited risk ; (iii) the company has generated several inventions and filed for many patents in India and USA ; (iv) the company has substantial revenues from software products and the break up of such revenues is not available ; (v) the company has incurred huge expenditure for research and development; (vi) the company has made arrangements towards acquisition of IPRs in AUTOLAY', a commercial application product used in designing high performance structural systems. In view of the above reasons, the learned Authorised Representative pleaded that, this company i.e. Infosys Technologies Ltd., be excluded form the list of comparable companies. 11.3 Per contra, opposing the contentions of the assessee, the learned Departmental Representative submitted that comparability cannot be decided merely on the basis of scale of operations and the brand attributable profit margins of this company have not been extraordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord sufficient evidence to establish that this company is functionally dis-similar and different from the assessee and hence is not comparable and the finding rendered in the case of Trilogy EBusiness Software India Pvt. Ltd. (supra) for Assessment Year 2007-08 is applicable to this year also. We are inclined to concur with the argument put forth by the assessee that Infosys Technologies Ltd is not functionally comparable since it owns significant intangible and has huge revenues from software products. It is also seen that the break up of revenue from software services and software products is not available. In this view of the matter, we hold that this company ought to be omitted from the set of comparable companies. It is ordered accordingly. The decision rendered as aforesaid pertains to A.Y. 2008-09. It was affirmed by the learned counsel for the Assessee that the facts and circumstances in the present year also remains identical to the facts and circumstances as it prevailed in AY 08-09 as far as this comparable company is concerned. Respectfully following the decision of the Tribunal referred to above, we hold that Infosys Ltd. be excluded from the list of comparable compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... velopment activity. Data analytic services also used only in certain software and tools, writes codes task. Like in other software application, these tools also facilitate and enable business of enterprises for enough management and decisions. Therefore, the Ld. DRP observed that there cannot be any distinction between high end software activity and lowend activity so long as it falls within the purview of software development services. It was observed that under TNMM, such differences are tolerable and there is no requirement that services for activities performed are identical. It is informed that the services are similar and fall within the same domain of software development. Accordingly, Mind Tree Ltd. was included in the list of comparables while determining the ALP of international transactions with A.Es. Against this assessee is in appeal before us. 5.1. We have heard the rival submissions and perused the materials available on record. This company Mind Tree Ltd. was considered as not comparable in the case of Yahoo Software Development India Pvt. Ltd. in IT(TP)A No.2657/Bang/2018 2365/Bang/2019 dated 28.2.2020 by Bangalore Bench of Tribunal, wherein it was held as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Tribunal, we are inclined to direct the AO/TPO to exclude this company from the list of comparables. Directed accordingly. Respectfully following the same, we direct the Ld.AO to exclude this comparable. III. Infosys Ltd.:- 7.The Ld. A.R. submitted that this company has to be excluded from the list of comparables on the following reasons:- Infosys is functionally dissimilar and ought to be rejected. No segmental details are available in the annual report and hence the company should be rejected. The company also derives income from licensing of software products. Infosys is engaged in R D activities. Infosys has presence of brand. Infosys has invested in IP. Infosys fails upper turnover filter. 7.1 Ld. DRP in his report observed that after having considered the submissions, and on perusal of the annual report of the company, this company is engaged in providing IT technology services comprising Application developing and maintenance Independent validation, testing services, Business service management, consulting and systems integration services. All these activities fall within the gamut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in functions, reducing attrition rate, increasing the offshore mix, improving delivery expertise etc., As per information in page 14 of annual report, 97.8% ' of revenues was from repeat business. At page 67 of the annual report, it is discussed, -Clients often cite our industry expertise, comprehensive end-to-end solutions, ability to scale, superior quality and process execution, global delivery model, experienced management team, talented professionals, track record and competitive pricing as reasons for awarding contracts'. Thus, the growth in revenue is not on account of its brand or any exceptional event, and hence cannot be a reason for rejecting this company, which is otherwise found to be functionally comparable. 7.4The perusal of the details in the annual report by Ld. DRP showed that the company has incurred R D expenditure to the tune of Rs.605 crores, which constitute meagre 1.3% of its total operating revenue, and which is much less than the generally acceptable tolerable limit of 3% of the total revenue. It was also noted that out of this, only Rs.15 crore was capital in nature and the remaining Rs.590 crore represented revenue expenditure, which go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unctional dissimilarities brought to our notice:- Functionally dissimilar - owns intellectual properties, incurs significant R D costs onsite activity. - Engaged in diversified business activities. - Involved in development of software products in addition to software services. - Owns intellectual property rights. - Incurs significant research and development costs. - Carries out significant activities based on onsite business. - Owns products such as Finacle, Edge Verve and other product based solutions. Extra-ordinary event of merger with Infosys Consulting India Ltd. Segmental profit loss account not available. Commands substantial brand value 40. The DRP, however, has not thought it fit to exclude this company by observing that this company has substantial pre-dominant revenue from software services and the growth was not attributable to any brand value. Presence of onsite activity and the expenses on R D have all been brushed aside. In our view, the difference pointed out by the ld. counsel for the assessee before us show that this company cannot be compared with that of the assessee basically because of its business m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this company under software development segment. We also note that this company is basically into application development for web and mobile and provides customised services to its offshore clients comprising. Entire revenue received by this comparable ease under one single segment of sale of software. This company also owns software licenses. 14.3.3. In our considered opinion this comparable cannot be considered to be functioning in 100% risk mitigated environment and is a fullfledged enterprise. Such a comparable cannot be compared with a captive service provider like assessee. Accordingly we direct this comparable to be excluded from finalist. 12.4 The Ld.DR has not brought any distinguishing facts or any contrary decision in order to take a different view. Therefore respectfully following the above view, we direct the Ld.AO/TPO to exclude the following comparables. a) Mindtree Ltd. b) Persistent Systems Ltd. c) Infobeans Technologies Ltd. d) Larsen Tubro Infotech Ltd. e) Infosys Ltd. Accordingly ground no. 4.8 raised by assessee stands partly allowed. 9.1 Keeping in view of the above order of the coordinate bench of the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AS 17 Segment . Thus, the ld DRP opined that it is functionally comparable to the assessee which renders software development services and other allied services. Thus, the contentions of the assessee that it is engaged in diverse 'activities and not functionally comparable is without merit. Besides, there is no information in the annual report to indicate that this company is engaged in product development or to indicate that it has revenue stream from product sales. The assessee also could not point to any such information in the annual report. The ld DRP also noted at page 73 of the annual report, the independent auditor has certified, 'the company does not have any purchase of inventories or sales of goods since it is a service company primarily rendering software services'. In view of these, the ld DRP held that this company is functionally comparable to the assessee and the pleas raised in this regard were rejected by him. As the company is primarily engaged in software development services and earns the revenue from this activity there is no need of providing segmental information as per AS 17. 11.1 The ld DR further stated that the assessee has argued before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrolled transaction shall be comparable to an international transaction if none of the differences, if any, between enterprises entering into business transactions or likely to materially affect the profit arising from such transactions in the open market. Hence, these pleas were rejected by the ld DRP. In view of the above, the ld DRP upheld the selection of this comparable. 12. We have heard the rival submissions and perused the materials available on record. This comparable fails the functionality test and this company Nihilent Ltd. is not functionally similar to assessee s case as held by the coordinate bench of the Tribunal in the case of M/s. SanDisk India Device Design Centre Pvt. Ltd. in IT(TP)A No.288/Bang/2021 dated 30.6.2022, wherein held as under: 17.9 In respect of Nihilent Ltd., Infobeans Technologies Ltd. and Aspire Systems (India) Pvt. Ltd., Hon ble Mumbai Tribunal in case of Red Hat India Pvt. Ltd. vs. Addl. CIT (supra) observed as under: Comparable Sought to be excluded by the assessee Aspire System India Pvt. Ltd. (Aspire) 40. The assessee sought exclusion of Aspire from the final set of comparables for benchmarking SDS segment on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Development (CAM), enterprise mobility and Big Data Analytics (BDA). 50. Perusal of financials available at page A303, A418 to A421, Infobeans shows that it is into diversified services but its segmental financials are not available without which it is difficult to compute the correct profit margin of the relevant segment. So Infobeans is also ordered to be excluded as a comparable being not a comparable to the assessee. 17.10 Perusal of the annual report, filed before us in respect of the above two comparables, we note that the segmental financials are not available in respect of Nihilent and Infobeans and the RPT in respect of Aspire Systems India Pvt. Ltd. is more than 25% being the threshold limit considered by the Ld.TPO. Nothing has been placed before us by the Ld.DR in order to take a different view. Respectfully following the Hon ble Mumbai Tribunal, we direct the Ld.TPO to exclude Nihilent, Infobeans and Aspire Systems from the final set. 12.1 Keeping in view of the above order of the Tribunal, we direct the AO/TPO to exclude this company Nihilent Ltd. from the list of comparables. OFS Technologies Ltd. 13. The ld AR for the assessee submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... margin pertaining to only F.Y. 2015-16 and 2016-17 ought to be considered. 14.1 The ld D.R stated that at the outset, the company is functionally comparable to the assessee and also passes the employment cost filter. Therefore, the company has to be included in the list of comparables and the Panel upholds the inclusion of this comparable. However, considering the plea of the assessee that the company fails the employment cost filter for the F.Y. 2014-15, the ld DRP directed the TPO to verify the plea of the assessee. If it fails the employment cost filter for the above year, the TPO was directed to consider the margin only for the F.Ys. 2015-16 and 2016-17. 14.2 The ld. DR further stated that the assessee argued before the ld DRP that the company fails export turnover filter for the F.Y. 2014-15 and hence if the company is considered as comparable the margins pertaining to F.Y. 2015-16 and F.Y. 2016-17 are only to be considered. On verification of the annual reports, it was seen that the company's export turnover is below the threshold limit of 75% adopted by the TPO. The TPO, was therefore directed by the ld DRP to verify and if the export turnover is below 75% for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ware Ltd. 3) Consilient Technologies Ltd. Threesixty Logic Testing Services Pvt. Ltd. 17. The Ld. A.R. submitted that this company earns abnormally high margins and the margin as per TPO s order is 41.94%. The company is engaged in the business of providing software testing and QA services. The annual report for FY 2016-17 was not available in the public domain. Therefore, the ld. AR relied on the annual report for FY 2017-18, FY 2015-16 and FY 2014-15. 18. The Ld. D.R. relied on the observations of Ld. TPO/DRP. Cybage Software Pvt. Ltd. 19. The Ld. A.R. submitted that this company earns abnormally high margins and the margin as per TPO s order is 57.82%. This company is functionally not comparable as this company is engaged in IT consulting and support services. Annual report does not have details of the activities carried out by Cybage. In the absence of the details, as per the website, Cybage is engaged in diversified activities and there is no segmental information available. 20. The Ld. D.R. relied on observations of Ld. TPO/DRP. Concilient Technologies Ltd. 21. The ld. A.R. for the assessee submitted that this company earns abnor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h circumstances, arithmetic mean has to be calculated. 23.2 As there are sufficient comparables available in the present facts of the case for the year under consideration, we uphold the applicability of Rule 10CA of the I.T. Rules subject to our findings herein below and the question of excluding high margin companies cannot be agreed with. Accordingly, this ground of appeal of the assessee in Ground No.7.9 is dismissed. 24. At this juncture, we also note that the 3 comparables considered in ground No.7.9 has been challenged by the assessee on functionality in ground No.7.6, which has not been argued before us in view of ground No.7.9. Since we have decided ground No.7.9 against assessee on principle issue, we direct the AO/TPO to verify the functional similarities of these 3 comparables being 1) Threesixty Logica Pvt. Ltd. 2) Cybage Software Ltd. and 3) Concilient Technologies Ltd. and then to apply Rule 10CA of the I.T. rules in accordance with law. In the event these comparables found to be not functional, they may be excluded. Ordered accordingly. 25. No other arguments were made with regard to any other grounds. Accordingly, not considered. 26. In the result, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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