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TMI Blog2018 (1) TMI 1152X X X X Extracts X X X X X X X X Extracts X X X X ..... [DRP]. 2. Brief facts of the case are that assessee is engaged in the business of developing software design, development and modification services related to semi-conductors and also provides marketing and technical support services which are generally categorized as 'software development services'. During the year, assessee has provided services to Associated Enterprise [AE] in the form of software design and development services and reimbursement of expenses etc. The appellant has disclosed OP/OC at 12.78 and has provided a TP report, wherein 12 comparable companies were short listed, whose PLI (operating profit/operating cost) was at 12%. While arriving the PLI at 12.78%, assessee has suo motto made an adjustment of Rs. 46,87,630/- an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 16 Tata Elxsi Ltd 17 Zylog Systems Ltd 4. After exclusion by the DRP, the following three comparables only survived: i. Persistent Systems Ltd., ii. Persistent Systems and Solutions Ltd., iii. Sasken Communication Technologies Ltd., 5. The AO consequent to the direction of the DRP, passed the impugned assessment order thereby making the adjustment. There was one more adjustment of Rs. 93,303/- as interest paid on the external commercial borrowings, on which issue in earlier years the issue was restored to the file of AO for verification, but due to smallness of the amount involved, assessee did not press for the ground (Gr. No.3). 6. Ld. Counsel appearing for assessee submitted that even though various sub-grounds are r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vi. ACIT Vs. Broadcom India Research (P) Ltd., - AY. 2010- 11 - ITA No. 348/Bang/2015 (Pg.10; para 13.4); ii. Sasken Communication Technologies Ltd: 6.2. The above company earns revenue from software services as well as software products. Though the breakup of revenue between the services and products is available, the breakup of operating costs and the net profitability between the two segments is not available. Ld. Counsel placed reliance on the following decisions: i. Saxo India (P) Ltd. Vs. ACIT - ITA No. 6148/Del/2015 (Pg. 15-16; para 14.1 - 14.2) affirmed by Hon'ble Delhi High Court in ITA No. 682/2016 (pg.4; para 10); ii. Electronic Imaging India (P) Ltd., Vs. DCIT - AY. 2011-12 - ITA No. 1506/Bang/2015 (Pg. 13; para 9); ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s mentioned above were excluded and with reference to Evoke Technologies Pvt. Ltd., the same was not accepted by the Bench only on the reason that assessee has accepted the exclusion in a later year. Ld. Counsel, however, referred to the detailed annual report of Evoke Technologies Pvt. Ltd., Pg. No. 436 to 464 of paper book, to submit that this company satisfies all the parameters as that of assessee. 7. The DRP has excluded the said company by stating as under: "Evoke Technologies Pvt. Ltd - ("Evoke") Assessee is in agreement with Ld. TPO but Correct margin to be considered it is a well established principle that for transfer pricing analysis, a company which has significant high or low margins should not be retained as comparables ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... separate direction on this issue". 7.1. It was submitted that the consultancy charges increased was part of administrative expenditure and is comparable with the increase in turnover of assessee-company that does not indicate peculiar economic circumstances. It was submitted that the company which can be compared not only on functional basis but also on economic basis. Therefore, the same is to be included. It was the submission that by excluding the above two companies and including the company as requested, assessee PLI is still less and require some adjustment. Since assessee-company has closed its operations in India and wanted to settle the matters, Ld. Counsel submitted for adjudication as requested. 8. Ld.DR, however, relied on th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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