9911796707
TMI Blog2024 (11) TMI 1198X X X X Extracts X X X X X X X X Extracts X X X X ..... available, and they were functionally comparable to the assessee and satisfied all the filters applied by the learned TPO" i) Kals Information Systems Ltd ii) Akshay Software Technologies Ltd iii) Batchmaster Software Private Ltd iv) DCIS NOT COM Solutions India Pvt Ltd v) Evoke Technologies Pvt Ltd vi) Sasken Technologies Ltd vii) E-Zest Solutions Ltd And the learned Assessing Officer and the Hon'ble DRP have erred in confirming the same. Ground No.3 The learned TPO has erred on facts and law by comparing the Assessee with the following 16 companies in the software development segment, which have an entirely different functional and risk profile on account of factors like high turnover, significant RPT, onsite revenues, etc: i) Great Software Laboratory P Ltd ii) Gwynniebee India Pvt Ltd iii) Exilant Technologies Pvt Ltd iv) Larsen & Toubro Infotech Ltd v) Nihilent Technologies Ltd vi) Tata Elxis Ltd vii) Infobeans Technologies Ltd viii) Wipro Ltd ix) Persistant Systems Ltd x) Aptus xi) Software Labs Pvt Ltd xii) Cygnet Infotech Pvt Ltd xiii) Infosys Ltd xiv) Pagetraffic Web Tech Pvt Ltd xv) Gislen Software Pvt Ltd xvi) Cybage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s at Arms' Length. The TPO rejected 12 comparables out of 16 comparables selected by the assessee and carried out a fresh process of selecting the comparables wherein a asset of 21 comparables were selected by the TPO for determining the ALP having 35 percentile at 19.7% and 66% percentile at 25.70%. Thus, the median of the comparables selected by the TPO comes to 24.58%. The TPO accordingly proposed transfer pricing adjustment to the tune of Rs. 1,27,07,337/-. The Assessing Officer frames draft assessment order in terms of the order of the TPO which was challenged by the assessee by filing objections before the DRP. Consequent to the directions of the DRP, the final list of total comparables was 24 for the purpose of re-computation of the ALP and accordingly, the Assessing Officer has made a TP adjustment on the basis of those 24 comparables. 5. Being aggrieved by the order of the Assessing Officer, the assessee has now contended that the rejection of 8 comparables by the TPO is unjustified when the assessee has produced all the relevant details to show the functional comparability of these entities with the assessee who is providing captive software development services to its A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... echnologies Private Limited (viii) DCIS DOT COM Solutions India Private Limited (ix) Maveric Systems Limited (x) Orangescape Technologies Limited (xi) Sasken Communication Technologies Limited (xii) Infomile Technologies Limited (xiii) E-Zest Solutions Limited 4.1. The TPO while rejecting the TP objection of the assessee held that these comparables were not appearing in the search matrix of the appellant TP Study Report. It was submitted by the assessee by referring to the TP order that the contention of the TPO was incorrect and the DRP has not considered the submission of the assessee that the data of these comparables were available in the public domain. Our attention was drawn to the order of the TPO." 9. The Tribunal has finally remanded this issue to the record of the TPO in para 6 as under: "6. We have heard the rival submissions and perused the material on record. Unfortunately, the assessee has sought inclusion of these companies in the TP Study Report, however, for the reasons best known to the TPO, it was stated that these companies were not meeting the search matrix and accordingly, they were rejected by the TPO. Since the assessee has shown us that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res 10.Great Software Laboratory Pvt Ltd Rs. 127 crores 13. He further submitted that this Tribunal in assessee's own case for the A.Y 2016-17 has considered an identical issue and remanded the matter to the record of the TPO with a direction to exclude the company whose turnover is more than 10 times of the assessee company as well as the companies whose turnover of 1/10th of the turnover of the assessee. Thus, the learned AR has submitted that the TPO may be directed to apply the said filter of the turnover as directed by this Tribunal for the A.Y 2016-17. 14. The learned DR, on the other hand, submitted that in the software development service business, the turnover filter is not relevant in the absence of any huge fixed cost attributable to the service provided by the assessee. He has further submitted that the TPO has applied the filter of minimum turnover of Rs. 1 crore which is just and proper. He has relied upon the orders of the TPO. 15. We have considered the rival submissions as well as the relevant material available on record. There is no dispute that while selecting the comparable companies, the TPO has applied one filter of turnover but only minimum turnover fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has submitted that an identical issue has been considered by this Tribunal in assessee's own case for the A.Y 2016-17 and thus, prayed that the TPO/Assessing Officer may be directed to consider the interest on the deferred receivables @ 6% after allowing a standard credit period of 60 days. 19. On the other hand, the learned DR has relied upon the orders of the authorities below. 20. We have considered the rival submissions as well as the relevant material available on record. At the outset, we note that an identical issue has been considered by this Tribunal in assessee's own case for the A.Y 2016-17 in Para 16 which reads as under: "16. We have heard the rival arguments and perused the material available on record. Admittedly, this Tribunal in the case of Satyam Ventures Engineering Services Vs. ACIT, Zeta Interactive Systems India Private Limited, M/s. Apache Footware India Private Limited etc has decided the issue in favour of the Revenue by holding that the SBI bank rate of 6% with a credit period of 60 days is to be applied for determining the interest on delayed trade receivables. In the present case, says the assessee has agreed for application of has very deposited ..... X X X X Extracts X X X X X X X X Extracts X X X X
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