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TMI Blog2018 (1) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... h, ARs For The Revenue : Smt. T.H. Vijaya Lakshmi, CIT-DR ORDER PER B. RAMAKOTAIAH, A.M. : This is an appeal by Assessee for the AY. 2011-12. Assessee is contesting transfer pricing adjustments made in the assessment order by the Transfer Pricing Officer [TPO]. 2. Brief facts of the case are that assessee-company is a group company of Delaware Corporation and is wholly owned subsidiary of Electronic Arts Games (India) Private Limited, Inc. assessee is engaged in providing contract software services, back office support services, corporate IT support services and marketing support services to its Associated Enterprises [AE]. Assessee has furnished transfer pricing report along with return and submitted that assessee's PLI i.e., OP/TC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. The DRP in its order, rejected 15 comparable companies, out of the 18 comparable companies selected by the Ld.TPO. On giving effect to this direction, the mean margin of the retained comparable companies i.e., Persistent Systems and Solutions Limited, Persistent Systems Limited and Sasken Communication Technologies Limited [at item Nos. 12, 13 and 16] worked out to be more than the margin computed by the TPO at 22.46%. Thereafter, the DRP concluded that more number of comparables take care of the differences due to the mean margin computation and accordingly, upheld the Arm's Length Price [ALP] determined by the TPO. Consequent to the order of the DRP, AO retained same addition and finalized the assessment order. Hence, assessee aggriev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se is normal in nature. 4.1.2. Ld. Counsel stated that assessee initially relied on website while objecting before DRP. However, annual report clearly states only software development services. The TPO/DRP have relied only on annual reports for other comparables and not website. Ld. Counsel argued that in light of this inconsistency, company should be retained as comparable. ii. Persistent Systems & Solutions Ltd. (Merged) : 4.2. Ld. Counsel for assessee submitted that this company is engaged in diversified services such as software consultancy, software product development and system integration services, all activities in which the assessee herein is not engaged in. The same is evident from: (i) PB pg. 993, 994 - Focusses on softwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the above, Ld. Counsel prayed that this company be rejected as a comparable. 4.3.1. Ld. Counsel relied on the following case law: i. CIT Vs. Intoto Software India Pvt. Ltd., (ITTA No. 233 of 2014, High Court of Telangana and Andhra Pradesh) Page 2; ii. Aleatel Lucent India Ltd., Vs. DCIT (ITA No. 6856/Del-2015) para (vi) page 43; iii. Symantee Software and Services India Private Limited Vs. DCIT (ITA No. 614/Mds-2016) Para (10) Page 12; iv. Sasken Communication Technologies Ltd. : 4.4. Ld. Counsel for assessee submitted that this company is an abnormally high turnover company as compared to that of assessee-company herein and ought to be rejected on the basis of Hon'ble DRP order for AY. 2010-11 as upheld by this ITAT. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T-DR while admitting that the DRP direction is not very clear, stated that it ultimately upheld the arithmetic mean of 17.03%, whereas the retained companies' arithmetic mean would come to 22.46%. It was the submission that assessee has not given clear grounds and most of the grounds are academic. If only one comparable is retained as requested by Ld. Counsel, the TP study is incomplete. Therefore, more number of comparables as opined by the DRP would iron out the differences while adopting the TNMM method. There is no dispute with reference to the functionality of assessee-company being software development solutions and particularly gaming applications and most of the companies selected by the TPO are in the same line of functionality. Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the DRP for AY. 2012-13 in which the DRP excluded Sasken Communication Technologies Limited, wherein it was clearly stated that the said company derives revenue from product and technology licensing and installation and commissioning services along with software services. It is also noted that receipts from software product services is higher than the receipts from software services. Following the Co-ordinate Bench decision in the case of Planet Online Pvt. Ltd., the DRP excluded Sasken Communication Technologies Limited in later year. The facts being same for this year also, the DRP should have excluded this company. We are unable to understand how this company is retained for this assessment year. As far as the objections with referen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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