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TMI Blog2015 (4) TMI 1201X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case are that the assessee-company which is engaged in the business of development and export of software, had filed its return of income declaring 'nil' income. During the assessment proceedings u/s 143(3) of the Incometax Act, 1961 [hereinafter referred to as 'the Act' for short] the Assessing Officer (AO) observed that the assessee had entered into international transaction with its Associated Enterprise(AE) to carry out business like software development and IT enabled services. Therefore, the AO, after obtaining the approval of the CIT referred the matter to the Addl. Director of Income-tax (Transfer Pricing), Bangalore to examine the transactions between the assessee-company and its Affiliates and to suggest any adjustme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... segmental data filed by the assessee cannot be accepted. Thereafter, search for suitable comparables in the database prowess was made and after applying the related party transaction filter, TPO adopted certain companies as comparables and arrived at the net average margin at 18.44% and made suitable adjustment to the ALP. The learned counsel for the assessee submitted that the assessee had clearly stated before the TPO that the assessee had not entered into any transactions with its AE in Bio-Division and therefore the entity level margin of the assessee should not have been considered by the TPO. He submitted that the said ground was taken before the CIT(A) as well and the CIT(A) had called for a remand report from the TPO but the TPO di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red separately from the margins of the Bio-Division which has sustained loss. It is not in dispute, as is evident from the record, that Bio division had incurred a loss and also that there were no transactions with related parties in bio division. As regards international transactions with unrelated parties, ALP of such transactions need no determination. Admittedly there are international transactions with AE of the assessee in the software development division only. According to the assessee, net margin of software development is 11% which is within + or - 5% of the net margin of the comparable companies and therefore, it has to be accepted. We are of the opinion that only international transactions with Associated enterprises have to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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