9911796707
TMI Blog2012 (7) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... loyee requires vary from function to function – Held that:- Rates charged by the assessee company are identical to the rates charged by the third parties in the same line of business for the same job and the assessee has proved the same with evidence - TPO has not brought out any material on record to prove that the per hour rate charged by the assessee company is lower than that charged by the third parties in the same line of business - Assessing Officer has not given any reason that TNM is the best method and the CUP method is not appropriate - adjustment has been made by the Assessing Officer himself. No reference was made to the TPO - dismiss the adjustment made by the TPO / Assessing Officer – Revenue’s appeal dismissed. - ITA no. 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. The reasons stated for the delay in filing the cross objections are that, on professional advice from the present Counsel, these cross objections were filed. It was pleaded by the learned Counsel that a lenient view be taken, as it will lead the assessee to a great hardship and irreparable injury. Reliance was placed on certain case laws. 5. Learned Departmental Representative, on the other hand, opposed the contentions of the learned Counsel. 6. On careful consideration of the rival contentions and the reasons given for condonation of delay, we are of the considered opinion that the assessee has not demonstrated that it had a reasonable cause for filing the cross objections with a delay of 243 days. Advice, consequent to change of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced as under: 1. The CUP analysis undertaken by the assessee fails in the present scenario due to lack of strict comparability between the uncontrolled transaction and the assessee s international transactions. 2. In view of this, this office has undertaken a search to identify companies engaged in software development, which is akin to the assessee s business activity. 3. In a net margin analysis a strict functional comparability is not required and the third party transactions can be compared if the overall functions are similar. As the assessee is engaged in the software development, i.e, development of business intelligence / ERP products which is nothing but software development companies engaged in the software dev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome of the assessee under section 92CA(1) of the Income Tax Act, 1961. Penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961 are initiated separately. 9. Aggrieved, the assessee carried the matter before the first appellate authority, wherein the Commissioner (Appeals) deleted the addition. Further aggrieved, the Revenue is in appeal before the Tribunal on the following grounds:- 1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the addition of ₹ 2,47,09,042, being made under section 92CA by the Transfer Pricing Authority calculating Arms Length Price of the assessee s transaction by TNM method rejecting CUP method ignoring the fact that in a net margin analysis a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther pointed out that for executing the job which the assessee got from the AE, it had to outsource a part of this job as the assessee did not possess the requisite skills. He submitted that the outsourceing was done to reputed companies such as L T Software, TCS, etc. He submitted that these are unconnected third parties and the assessee paid these unconnected parties a rate of ₹ 1,250, per hour in the case of L T Software and ₹ 625, per hour for TCS, which was for the same job and these payments are taken as comparables. Thus, he submitted that the assessee applied the CUP method as a most appropriate method. He further relied on the decision of Mumbai Bench of the Tribunal in Serdia Pharmaceuticals India P. Ltd. v/s ACIT, [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... personnel, with a certain set of skills that were required for developing certain software, had outsourced this job to L T Software, TCS, etc. These companies have charged the assessee @ ₹ 1,250, per hour and ₹ 625 per hour for the total number of man hours spent by their personnel in performing the task outsourced to them. 15. The rates charged by them to AE, are comparable to the rate charged by the L T Software and TCS to the assessee for the very same job work. The undisputed facts are that L T Software and TCS are giants in the software industries and are companies with high reputation. The amounts paid to them, represent fair market value. When the assessee adopts these rates as comparable under CUP method no fault can ..... X X X X Extracts X X X X X X X X Extracts X X X X
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