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TMI Blog2016 (5) TMI 1433X X X X Extracts X X X X X X X X Extracts X X X X ..... ee s appeal for the A.Y 2010-11. In this appeal, the assessee has challenged the transfer pricing adjustments made by the AO, in accordance with the directions of the DRP confirming the Arms Length Price confirmed by the TPO. 2. Brief facts of the case are that the assessee company is engaged in the business of software development services for securities systems. The assessee filed its return of income declaring a total income of ₹ 18,71,49,874 under the normal provisions of the Act and ₹ 18,20,22,870 u/s 115JB of the Act. Initially, the return was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny under CASS and notices u/s 143(2) and 142(1) were issued and duly served on the assessee company. The assessee s representative appeared from time to time and furnished necessary information called for. The AO observed that the assessee had entered into an international transaction with its Associated Enterprises (AE) which exceeds the limits fixed by the CBDT. Therefore, a reference was made to the TPO for determination of the Arms Length Price (ALP) u/s 92CA of the I.T. Act. The TPO passed an order u/s 92CA(3) of the Act on 25.11.2013. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of Pegasystems Worldwide India P Ltd is also for A.Y 2010- 11 is applicable to the facts before us as well. It is also seen that in the case of the assessee before us, the TPO had taken the following 18 companies as the final comparables and the very same companies were also taken as comparables by the TPO in the case of Pegasystems Worldwide India P Ltd which are reproduced on page 4 of the Tribunal s order. OP/OC % 1. Avani Cimcon Technologies Ltd., - 3.39 2. CAT Technologies Ltd., - 13.04 3. Evoke Technologies Pvt Ltd., - 18.61 4. E Zest Solutions Ltd., - 22.10 5. Kulilza Technologies Pvt Ltd., - 25.92 6. Mindtree Ltd (Seg) - 20.47 7. Persistent Systems and Solutions Ltd., - 11.37 8. RS Software India Ltd., - 9.88 9. Thinksoft Global Services Ltd., - 11.22 10. Zylog Systems Ltd., - 18.62 11. E infochips Bangalore Ltd., - 72.32 12. Comp-U-Learn Tech India Ltd., - 19.96 13. Kals Information Systems Ltd (Seg) - 22.05 14. Persistent Systems Ltd., - 31.57 15. Tata Elxsi Ltd (Seg) - 17.24 16. Sasken Communication Technologies Ltd., - 25.23 17. L T Infotech Ltd., - 19.97 Therefore, the decision taken by the Tribunal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difficult to obtain further information/segmental information about the company now. In view of its fluctuating profits over the years, this company was not selected as a comparable earlier or in later years by Revenue. Since the disclosure in annual report is common, Assessee relied on the decision of Ahmadabad Bench of ITAT in the case of All Scrips (India) Private Ltd., in ITA No. 771/AHD/2014 for AY. 2009-10, wherein this comparable was rejected on the basis of lack of segmental information. Assessee relied on para 10 of the Co-ordinate Bench order, which is as under: Para 10 With respect to E-Infochip Bangalore Ltd., we find that in the annual accounts of the company, with respect to the segment information it is stated that the company is primarily engaged in software development and I.T enabled services which is considered the only reportable business segment as per Accounting Standard AS-17 segment reporting prescribed in Companies (Accounting Standard) Rules, 2006. We thus find that no segmental information is available ..Considering the aforesaid facts, we are of the view that the aforesaid two companies needs to be excluded while working out the compara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ftware and training. Accordingly, he rejected Assessee s objections and included as the comparable company. DRP confirmed the same. 10.1. Assessee s main objection before us is on functionality of the comparable company. As seen from the annual report of 2008-09 and 2009-10 and comparative statement placed by Assessee, the company classified itself as the company engaged in development of software and software products since its inception . The company consisting of STPI unit engaged in development of software and software products and a training centre engaged in training of software professionals on on-line projects. This indicates that company is engaged in development of software and products and its inventory also indicates that Assessee has been using its readymade libraries for sales. This company was rejected in earlier year on functional analysis by ITAT in the case of Planet Online Pvt. Ltd., company is engaged in development of software products. Since its annual report states the same facts in this assessment year also, we are of the opinion that the company cannot be selected as a comparable as it was engaged in development of software and software products. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... development services as a segment by TPO cannot be considered as segmental data, unless the services rendered by that company are similar to the services rendered by Assessee. In view of this, we are of the opinion that this company cannot be selected as comparable. AO is directed to exclude the same. Sasken Communication Technologies Ltd: 13. This comparable was not objected to either before TPO or before DRP. Objections were raised before us on the comparability of this company on the reason that this company is having product sales and also a provider of telecommunication software services. Since there is no break-up of cost available, Assessee submits that they have difficulty in comparing the said company on FAR analysis. Assessee also relies on the decision of ITAT in the case of Planet Online Pvt. Ltd., in ITA No. 464/Hyd/2014 (supra), wherein the ITAT remitted the issue to comparability of this company for fresh adjudication by AO/TPO in an earlier year. Considering the view taken earlier, since AO/TPO did not have the opportunity to analyse the objections of Assessee as they have not objected earlier, we are of the opinion that inclusion of this company as comparable comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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