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TMI Blog2014 (12) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... f Freescale Semiconductor Inc. USA. The Company was incorporated on March 24, 2005 and provides services mainly to its associate enterprises. It has a STPI unit at Noida and another STPI unit located at Bangalore on which it is claiming deduction under section It is also has an office in Bangalore which provides market of its associated enterprises. In the return of income, appellant claimed deduction under section lOA of the amounting to Rs. 19,32,lO.124/-. The segmental workings as per the TP report of the software division and Market Support: Services division arc given in Table 1 below: Table 1 : Description Software development services Market support services total Operating revenue (equal to international transactions) 1,897, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies. In the process, TPO used power u/s 133(6) to gather additional information from some of the comparable companies. TPO issued a detailed show cause notice to the appellant. The appellant replied to such show cause notices. The 1 PO considered the reply filed by the appellant before passing the order. TPO used single year data and allowed working capital adjustments. The TPO merged both the segments of the appellant by stating that the market support service segment is not having significant transaction and they are interrelated. TPO followed the order of the earlier years of his predecessors so far as clubbing of these two segments are concerned. The margins as determined by the TPO are given in the Table 2 below: Description Softwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udice to his rights to raise this issue during proceedings in future years. The reason for not pressing this ground for the current year was smallness of the amount. Thus this ground is dismissed with a rider that the decision shall not be a precedent. All other grounds relate to inclusion of certain comparables by the TPO, as upheld by the Ld.CIT(Appeals). 5. The Ld.D.R. Mr.Peeyush Jain, on the other hand, opposed the contentions of the assessee. He submitted that: (a) On the issue of employee cost filter, the TPO had laid down that all companies which have employee cost which is greater than 25% of their total revenues would be taken as comparables and this view of the TPO was upheld by the Delhi Bench of the Tribunal in the case of Nav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an not lead to a conclusion that the comparable should be eliminated. He relied on the decision of the Hyderabad Bench of the Tribunal in the case of Deloitte Consulting India Pvt.Ltd. in ITA 1082, 1084/H/10 vs. DCIT. He further submitted that comparables cannot be eliminated on the ground of high turnover and for this proposition he relied on the judgement of Delhi High Court in the case of Agnity India Technologies (P) Ltd. 262 CTR (Delhi) 291. (d) On the issue of elimination of Persistent Systems India Ltd. On the ground that there are extra ordinary circumstances (acquisitions), he argued that if the acquisition or merger is of a company which is in the same line of business, then there should not be any difference and the elimination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of "Motorola"(supra) for the reason that the facts as well as the order of the T.P.O. are identical. 8.1. We now consider each comparable by referring to the order of the ITAT in the case of "Motorola"(supra). (i) Accel Transmatic Ltd.:- The Tribunal in the case of Motorola Sales (supra) at para 89 restored the issue to the file of the TPO to consider the inclusion/exclusion of this comparable depending upon the finding of RPT. Consistent with the view taken therein, we restore the matter to the file of AO for following the decision of the Tribunal in the case of Motorola (supra). (ii) Avani Cimcon Technologies Ltd:- The Tribunal directed exclusion of this comparable for the reason that it own certain softwares developed by it and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company cannot include a comparable as there is a clear contradiction in the contents of the annual report and the information obtained u/s 136, hence this comparable has to be excluded for the same reason. (vii) Infosys Technologies Ltd.:- The reasons given in this comparable has to be excluded by following the decision of the Jurisdictional High Court in the case of CIT vs. Agnity India Technologies Pvt.Ltd.(2013) 262 CTR (Del) 291. (viii) Ishir Infotech Ltd.:- Consistent with the view taken in Motorola (supra) we restore the matter to the file of the AO to provide information obtained u/s 133(6) to the assesse and thereafter decide the issue de novo. (ix) Helios & Matheson Information Technologies Ltd.:- For the reasons given whil ..... X X X X Extracts X X X X X X X X Extracts X X X X
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