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TMI Blog2015 (5) TMI 754X X X X Extracts X X X X X X X X Extracts X X X X ..... pricing adjustment. 4. The assessee in the present case is a company, which is into developing, publishing, marketing and distributing interactive entertainment software games, that are playable by consumer on a variety of hardware platforms and over the internet. It is mainly engaged in providing a contract software development services, back office support services and marketing support services to its Associated Enterprises. It is a wholly owned subsidiary of Electronics Arts (India Holding) Inc, USA. The return of income for the year under consideration was filed by it on 15.10.2010 declaring total income of Rs. 35,89,206 under the normal provisions of the Act and book profit of Rs. 76,96,515 under S.115JB of the Act. During the course of assessment proceedings, it was noticed by the Assessing Officer that the assessee company has entered into the following international transactions with its Associated Enterprises during the year under consideration- A.E. Nature of transaction Amount (Rs.) Electronic Arts Inc. Provision of software development services 33,44,53,634 Electronic Arts Inc. Provision of back office support services 8,94,18,867 Electronic Arts Asia Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was more appropriate to consolidate all the international transactions of the assessee company with its AE for the purpose of Transfer Pricing Analysis and such analysis should be done by taking into consideration the margin earned by the assessee at entity level. He accordingly, confronted the assessee with his observations in this regard, seeking the latter's explanation/objections and after taking into consideration the objections raised by the assessee, he proceeded to do the exercise of transfer pricing analysis. While doing so, he calculated the OP/OC of the assessee company at entity level at 10.26% and after taking into consideration the new search for selecting the appropriate comparables as well as on the basis of anaysis of data base, the relevant annual reports and other information collected by him, the TPO filanally selected the following 18 entities as comparables with Arithmetic Mean of their OP/OC at 22.69%. Sl. No. Company Name OP/OC 1. Avani Cimcon Technologies Ltd. 3.39 2. CAT Technologies Ltd. 13.04 3. Comp-U-Learn Tech India Ltd. 19.96 4. E-Infochips Bangalore Ltd. 72.32 5. Evok Tech 18.61 6. E-Zest Solutions Ltd. 22.1 7. Infosys Tec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income of the assessee on account of TP adjustment in the assessment made by him, vide order dated 18.2.2015 passed under S.143(3) read with S.92CA(3) and S.144C(5) of the Act. Aggrieved by the same, assessee has preferred this appeal before the Tribunal. 9. The learned counsel for the assessee, at the outset, submitted that although the transfer pricing analysis done in the TP report submitted by the assessee in respect of each type of transaction separately was rejected by the Transfer Pricing Officer without assigning any reasons, the assessee is not really interested to challenge the action of the TPO on this aspect of the matter. He contended that the limited issue which the assessee wants to raise is about the inclusion of one entity, namely, M/s. E-Infochips Bangalore Ltd. in the list of final comparables. He contended that this entity is not functionally comparable to the assessee company and the relevant data in respect of the said entity not being fully available in the public domain, the same is liable to be excluded from the list of comparables, while working out the Arm's Length Price of the relevant transactions of the assessee company with its AE. In this regard, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 27.3.2014), wherein the decision of the Tribunal to exclude an entity from the list of comparables taking into consideration the dissimilarity between the product company and the software services company was upheld by Their Lordships. 11. In order to support and substantiate the case of the assessee that the relevant financial data of M/s. E-Infochips Bangalore Ltd. is not available in the public domain, the learned counsel for the assessee invited our attention to the relevant portion of the annual report of the said entity placed at page 296 of the paper-book. He pointed out that the income earned by the said entity from software services as well as the expenses incurred on software development are given in the Profit & Loss Account with a mention that further details of the same are given in Schedule 7 and 8I. He submitted that the information stated to be given in Schedule 7 and 8, however, is not available in the public domain. He submitted that similarly Schedule 9 giving details of administrative and other expenses as mentioned in the Profit & Loss Account of M/s. E-Infochips Bangalore Ltd. is not made available in the public domain. He also pointed out from the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer/TPO as comparable should be excluded from the list of final comparables for the purposes of transfer pricing analysis on the ground of functional differences as well as on the ground of insufficient information available in respect of the said entity in public domain. In order to support and substantiate his contention of functional dissimilarity, the learned counsel for the assessee has heavily relied on the contents of the website www.einfochip.com., the print out of relevant portion of which is placed on record before us. On the basis of the said contents, he has made an attempt to point out that M/s. E-Infochips Bangalore Ltd. is functionally different form the assessee company in as much as the said company is mainly into development of new products whereas the assessee company is mainly providing software development services. After having gone through the website www.einfochip.com., we however find that the same is in respect of the entire group of e-Infochips, of which M/s. E-Infochips Bangalore Ltd. is only a part. The functional profile given on the said website thus is that of the entire group and not just of the M/s. E-Infochips Bangalore Ltd. The con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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