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TMI Blog2010 (11) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... l purpose. X X X X Extracts X X X X X X X X Extracts X X X X ..... ness income of the assessee as per the order of the TPO dt. 12th Oct., 2009. In response thereto, the assessee filed a detailed submission vide letter dt. 9th Nov., 2009. The submissions made by the assessee were not accepted by the AO in view of the detailed discussion and reasons given by the TPO in his order. Therefore, in view of the findings of the TPO vide his order dt. 12th Oct., 2009 and as per provisions of s. 92CA(4) of the Act, an amount of Rs. 5,29,19,406 was added to the business income of the assessee company by the AO and a draft assessment was made on 20th Nov., 2009 as per provisions contained in s. 144C(1) of the Act. A copy of the draft assessment order was served upon the assessee personally through the assessee's Authorized Representative on 23rd Nov., 2009. The assessee then filed objections against the draft assessment order before the DRP on 22nd Dec., 2009. DRP vide order dt. 30th March, 2010 confirmed the order of the TPO/draft assessment order of the AO. For the ready reference, the order of the DRP is reproduced below:- "Order under s. 144C of the IT Act, 1961:- A petition under s. 144C of the IT Act, 1961 was filed on 22nd Dec., 2009 bearing No. 7 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctronic data' in the nature of engineering designs, drawings, calculations and other relevant data-sheet relating to project engineering and commercial solutions for power plant, refinery, petrochemical plant etc. For carrying out such work, the assessee employs technical personnel. Instead of preparing the engineering designs, drawings, calculations and other relevant data-sheet etc. manually, the assessee utilizes computer systems/software, but that does not change the character/nature of engineering design, drawings etc. nor is the characterization of the assessee's function altered by the form of output engineering designs, drawings, calculations and other relevant data transmitted to AEs in the form of 'customized electronic data'. TPO has chosen proper companies for benchmarking and has given opportunities to assessee. In these proceedings also, director of the company and chartered accountants were heard at length. The issues were discussed in detail benchmarking of TPO is held to be in order. These directions are being issued to AO to pass order under s. 144C." 5. In conformity with the directions of the DRP, an amount of Rs. 5,29,19,406 was added to the assessee's bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and executed by the assessee during the relevant year. In this connection, the learned counsel for the assessee has invited our attention to the order dt. 2nd June, 2005 of the Tribunal, Delhi Bench 'B', New Delhi in the assessee's own case pertaining to the asst. yr. 2000-01, where in the context of assessee's claim of deduction under s. 80HHE, the Tribunal has observed that one of the services notified in the Board's Notification dt. 26th Sept., 2000 is that of engineering and design, and it was the case where the assessee was engaged in engineering and design which is customized is transmitted electronically. He therefore, submitted that the Tribunal has admitted the fact that the assessee was engaged in the engineering and design business which was customized and was transmitted electronically and since these services were notified for the purpose of s. 10A, s. 10B and s. 10HHE, the assessee was entitled to deduction under s. 80HHE of the Act. He further made a reference to Board's Notification No. SO 890(E), dt. 26th Sept., 2000 where for the purpose of ss.10A, 10B as well s. 80HHE, the engineering and design product or services were notified to be in the nature of information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat of the assessee and contended before the DRP that the assessee was engaged in export of customized electronic data in the nature of engineering designs, drawings, calculations and other relevant data-sheet relating to project engineering and commercial solutions for power plant, refinery, paper chemical plant etc. and for carrying out such work, the assessee employs technical personnel. It was further clarified before the DRP that instead of preparing the engineering designs, drawings, calculations and other relevant data-sheet etc. manually, the assessee utilized computer systems/software and hence that does not change the character/nature of activities undertaken by the assessee, which continue to remain in the nature of engineering design/drawings etc., nor is the characterization of the assessee's function altered by the form of output i.e., engineering designs, drawings, calculations and other relevant data transmitted to AEs in the form of customized electronic data. All these contentions and submissions of the assessee have been rejected by the DRP by merely observing as under:- "TPO has chosen proper companies for benchmarking and has given opportunities to assessee. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... development though the assessee selected the comparables by considering the assessee to be engaged in the business of rendering support in respect of engineering designs and drawings. 13. In the present case various designs, drawings and invoices produced before us, had not been examined into by the authorities below. It is claim of the assessee that the assessee has only utilized computer system and software for the purpose of preparing engineering designs, drawings, calculations and other relevant data-sheet instead of doing them manually. Therefore, unless the functional profiles of the assessee company are examined minutely and in detail, it is very difficult to say that the assessee is engaged in the business of software development. All these exercises had not been properly done by the TPO or DRP. We therefore, restore the matter back to the file of the AO/TPO for fresh adjudication after considering the assessee's activities or works and then to select the comparables having identical or similar functional profile to that of the assessee and then to determine the ALP in the light of the various guidelines laid down by Tribunal in the case of Mentor Graphics (Noida) (P) Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X
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