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TMI Blog2015 (7) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... rightly done by the ld. CIT (A), so we concur with his decision to exclude M/s. Satyam from the list of comparables, so the Revenue’s ground is dismissed. Thus by excluding M/s. Satyam from the list of comparables, the mean of the assessee falls within ± 5% of 22.15%. Hence, we do not see any reason to interfere with the impugned order passed by the Ld. CIT(A), hence, we uphold the same. Therefore, the issues in dispute raised by the Revenue are rejected. - Decided in favour of assessee. - ITA No.4340/Del/2012 - - - Dated:- 22-7-2015 - Shri S.V.Mehtora and Shri A. T. Varkey, JJ. For the Petitoner : Shri K. M. Gupta, Adv For the Respondent : Adv. Judy James, Standing Councel ORDER PER A.T.VARKEY, JUDICIAL MEMBER: This appeal filed by the Revenue arises out of the order passed by the Ld. CIT(A)-XX, New Delhi dated 30.5.2012 pertaining to assessment year 2005-06. 2. The grounds raised in the Revenue s appeal read as under:- 1. That the Commissioner of Income Tax (Appeals) erred in law and on facts of the case in deleting the addition of ₹ 74,80,644/- made on the basis of Arm s Length Price determined by the Transfer Pricing Officer u/s. 92C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposed to the assessee and their corresponding OP/TC margins are as under :- Sl.No. Name of the Company Data Source OP/TC (%) 1. Sonata Software Ltd. P 14.94% 2. Infosys Technologies Ltd P 43.05% 3. Geometric Software Solutions Co. Ltd. P 20.32% 4. Larsen Toubro Infotech Ltd. P 10.30% 5. Satyam Computer Services Ltd. P 28.41 % Mean 23.20% Computation of Arm s length price s of the International Transaction: The arm s length price s of the International transaction related to software development services is computed in the following : Total revenue as shown in TPR = Rs.153,031,100 Revenue rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by ₹ 74,80,644/-. 5. In view of the said transfer pricing order,of the TPO, the assessee was asked some questions by the AO vide questionnaire dated 27.11.2008 as under:- 16. Please refer to the order TPO dated 29.10.2008 u/s. 92CA(3) of the I.T. Act, 1961 a copy of which has been issued to you by him. As per the said order the arms length price of the international transaction related to software development and designing services has been determined as under:- S.No. International Transaction Book Value Difference Loaded Arm s Length Price Difference (%) 1 Software Development Services 124156267 7352709 131508976 5.59% 2 Designing services 2160275 127935 2288210 5.59% Total 126216542 7480644 - - Since the difference computed at percentage of the Arm s Lengt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9%), the Motherson Group, India (29.6%) and the remaining are held by others. The Company is engaged in providing customized software and engineering design services to its customers and caters to both domestic and export markets. The export sales of the Assessee are primarily from software development service and the design services form only a small proportion of export sales. The Assessee has an Export Oriented Unit ( EOU ) registered under Software Technology Park Scheme of India (STPI) and enjoys a tax holiday under section 10B of the Act in respect of the profits of the EOU. 12.1 We further find that during the year the company has entered in the following International transactions:- Table 1 : Particulars Amount (in Rs.) Software Development Services rendered 124,156,267 Design services 2,160,275 Reimbursement of expenses 201,739 12.2 The assessee had selected 87 comparables using Operating Profit/ Total Cost (OP / TC) as the Profit Level Indicator (PLI). The mean margin of the comparables was at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - makes a mention of the fact that the financial statements of preceding years should not be relied upon. An extract from page no. 23 of the report reads as follows:- M/s Price Waterhouse, the erstwhile auditors of the Company communicated vide a letter dated January 13, 2009, that their audit reports issued on the financial statements of the Company from the quarter ended June 30, 2000 until the quarter ended September 30, 2008 should no longer be relied upon. Further, in view of the financial irregularities identified, the statements for the said period furnished under clause 41 of listing agreement with Indian stock exchanges did not reflect the true position. In addition there was a violation of the ESOP Guidelines issued by SEBI in respect of Accounting and Disclosure requirements relating to ASOP-A for which the Company is in the process of seeking condonation. 12.6 We further find that the Ld. CIT(A) has noted that in the case of Agnity Technologies Private Limited vs. Income Tax Officer, Ward 12(1), New Delhi decided by ITAT, Delhi 2010 (IDT2)GJX 1031 - TDEL has upheld the decision of the DRP which had excluded M/s. Satyam from the list of comparables. Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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