TMI Blog2016 (6) TMI 1473X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee originally. This, in our opinion could lead to functionally wrong results. The issue regarding Transfer pricing requires a fresh look by the lower authorities so that the revenue stream is correctly bifurcated between AE and non-AE segment. This being a threshold bifurcation before proceeding with the TP study, we are of the opinion that additional evidence has to be admitted. We therefore admit the additional evidence and remit the matter back to the file of TPO/ AO for consideration afresh. All the issues raised by the assessee in relation to TP pricing are kept open. AO / TPO is directed to redo the TP analysis after correctly working out the revenue streams for AE and non-AE segments with regard to the software devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r The Revenue : Shri. Sibichen K. Mathew, CIT - DR ORDER PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : This is an appeal directed against assessment order dt.29.09.2011 passed u/s.143(3) r.w.s.144C of the Income-tax Act, 1961 ( the Act in short), pursuant to DRP directions. 02. Assessee has altogether raised twelve grounds of which grounds 1 to 8 are on TP issues. Ld. Counsel for the Assessee at the outset submitted that he had filed a petition seeking admission of additional evidence. Ld. AR submitted that assessee by mistake in its TP study, had made a wrong allocation of the revenue from software development services between AE and Non-AE. As per the Ld. AR, services provided by the assessee fell within the software deve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However as per the Ld. DR it was true that if the revenue was incorrectly bifurcated between the AE and non-AE, the TP study and analysis would give erroneous results. 04. We have heard the rival contentions. In the original TP study made by the assessee, revenue stream was divided between AE and non-AE as under : Particulars AE - Aztec - Disha AE -Aztec Soft Inc Non-AEs Amount Rs. Income Software Development Services 399,187,679 96,725,461 1,918,471,860 2,414,385,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Margin on Cost -7.56% -10.21% 28.54% 18.81% 05. Contention of the assessee is that the total revenue from the AEs as per the above comes to ₹ 49,59,13,140/-, whereas the actual revenue from AE segment was different. New segmental results given as additional evidence is reproduced below : Particulars Non AE Segment AE Segment Entity Income Provision of software development services 1,982,567,640 431,817,632 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PBT as computed (in thousands)-[A+B-C-D] 422,621 PBT as per Annual report (in thousands) 422,621 06. Total income from software development service remains more or less the same in both studies. However, the expenditure having been allocated based on turnover, the operating profit to operating cost ratio in the AE segment will under go substantial change if there is a change in the revenues shown in the AE segment. It is therefore fundamentally important that correct revenue is adopted for the AE as well as the non-AE segments for the TP study. TPO had proceeded to make the TP analysis based on the segmental results given by the assessee originally. This, in o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention of the assessee that communication expenditure and telecommunication expenditure have to be included in export turnover cannot be accepted. Nevertheless as mentioned by us whatever is reduced from total turnover should also be deducted from export turnover for working out the deduction u/s.10A of the Act. AO is directed to do so. Ground 9 is partly allowed. 09. Vide ground 10, grievance raised by the assessee is that loss brought forward from the earlier years, were not allowed to be set off. Counsel for the assessee submitted that loss for the earlier years after giving effect to the appellate decisions had to be set off against the current business income of the assessee. 10. Per contra, Ld. DR submitted that assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X
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