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TMI Blog2014 (10) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... : Smt. M. S. Verma, CIT ORDER Per R. K. Panda, AM : This appeal filed by the assessee is directed against the order passed u/s.143(3) r.w.s. 144C of the Income Tax Act for the Assessment Year 2008-09. 2. Facts of the case, in brief, are that the assessee is a Private Limited Company in which the public is not substantially interest. It is engaged in the business of software development services. The assessee filed its return of income on 25-09-2008 disclosing total income at ₹ 1,65,88,178/-. The assessee during the impugned assessment year has entered into international transaction with Associate Enterprises (AEs) at ₹ 17,78,87,505/- the details of which are as under : Sr.No. Associated Enterprises Nature of International Transaction Amount in Rs. Method adopted 1 Bitwise, Inc, USA Provision of software services 17,74,35,971 TNMM 2 Bitwise, Inc, USA Reimbursement of expenses 4,51,534 CUP TOTAL 17,78,87,505 2.1 The Assessing Officer made a reference u/s.92CA(1) of the I.T. Act to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eport has not adopted the current year data on the ground that the same was not available. According to the TPO, as per the proviso to Rule 10B(4), earlier 2 years data can also be used when it is shown that such earlier year data has an influence in determining the price. Further, the earlier data can be used provided the condition is satisfied and also is in addition to the current year data. However, the assessee did not give any reason as to how the earlier data had an influence over the pricing either in the case of the assessee or in the case of uncontrolled enterprises. He, therefore, used the current year data only, i.e. the data for the F.Y. 2007-08. Since the assessee did not object to the same, the TPO went ahead in adopting the current year data for the companies to be selected. 2.4 The TPO noted that use of data pertaining to F.Yrs. 2005-06 and 2006-07 to arrive at the average margin of the comparables is not permissible. The TPO selected companies with income from software development services whose revenues from software development services has more than 75% of their operating revenues. Similarly, he also selected the companies with less than 25% related party tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Helios and Matheson information Tech. 36.33 7 Kals Information System 41.94 8 LGS Global Ltd 26.66 Arithmetic Mean 33.49 (267.94/8) 3.1 The TPO thereafter made an adjustment of ₹ 3,20,93,437/- to the international transaction relating to provision of software development services, the details of which are as under : Description Rs. Price charged (operating revenue of the assessee) [B] 17,74,35,971 Operating Cost (OC) 15,69,62,524 Arms Length Mean Margin (OP/OC) [D] 33.49 Arms Length Price (ALP) of the international transaction [A] (ALP=OC*(1+D)) 20,95,29,408 5% range on lower side ( the assessee's transaction falls outside the range) 19,90,52,937 Adjustment over operating income [A-B] (Shortfall being adjustment u/s 92CA) 3,20,93,437 4. The Assessin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id / TDS amounting to ₹ 58,06,211 while deciding the final tax liability(Claimed ₹ 58,11,483/ - allowed ₹ 5,272). 8. The appellant craves leaves to add, modify, alter, amend, or withdraw all or any of the Grounds of Appeal herein and to submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing . 6. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer/TPO/DRP and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. It was stated by the Ld. Counsel for the assessee that the TPO rejected the comparables given by the assessee on the ground that the Annual Reports are not available. However, all those Annual Reports are available in public domain and therefore, the TPO should not have rejected those comparables. He further submitted that by using the Assessing Officer s own filtering process there were 9 new comparables which ought to have been selected. However, the TPO never asked the assessee to produce Annual Reports of those 9 companies as such and therefore his rejection of those comparables ..... X X X X Extracts X X X X X X X X Extracts X X X X
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