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TMI Blog2018 (11) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... e qualitative and quantitative filters adopted by the TPO. iii) Whether the Hon'ble DRP is right in applying "onsite revenue filter" without appreciating the fact that the function carried out is "Software Development" irrespective of whether onsite or offshore. iv) Whether the Hon'ble DRP in correct in excluding M/s RS Software Pvt. Ltd. and M/s Acropetal Technologies and M/s L&T Infotech ltd on the ground that they have significant onsite revenue without appreciating the fact that onsite development of software entails more cost and thereby results in lower profit margins. v) Whether the Hon'ble DRP was right in seeking exact comparability while searching for comparable companies of the assessee under TNMM method whereas requirement of law and international jurisprudence require seeking similar comparable companies. vi) Whether the Hon'ble DRP has erred on fact in deleting M/s Einfochips as a comparable on the ground that it fails the filter of service income less than 75% of the sales, when the said company has service income being 100% of the sales. vii) Whether Hon'ble DRP erred in fact in rejecting the company M/s Infosys Technologies Ltd., as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. The Ld. DRP while rejecting L&T Infotech Ltd. on onsite filter has grossly erred in not adjudicating on the following grounds: * Functional dissimilarity * No segmental details available * Sales turnover filter 6. The Ld. DRP while rejecting Mindtree Ltd. on the ground of onsite filter and presence of extraordinary events has grossly erred in not adjudicating on the following grounds: * Engaged in Intellectual property licensing * Sales turnover filter 7. The Ld. DRP erred in rejecting Evoke Technologies Ltd. only on the ground of having low margin when the said company passes all other filters adopted by the Ld. TPO. 8. The Ld. DRP erred in not rejecting Persistent Systems & Solutions Ltd., when the said company ought to be rejected on the following grounds: * Functional dissimilarity 9. The Ld. DRP erred in not rejecting Persistent Systems Ltd., when the said company ought to be rejected on the following grounds: * Functional dissimilarity * No segmental details available * Sales turnover filter 10. The Ld. DRP erred in not rejecting Sasken Communication Technologies Ltd., when the said company ought to be rejected on the following grounds: * Fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 of the appeal of the revenue, it is the grievance of the revenue that the DRP was not correct in applying onsite filter in software development segment in the case IT(TP)A Nos. 347 & 501/Bang/2015 of M/s. RS Software India Ltd. As per ground no. 9, this is the grievance of the revenue as to whether the application of new filter (Onsite filter) is within the purview of the DRP. The bench observed that this Tribunal is taking a consistent view that if a new filter is applied, it should be applied to all comparables and not to particular comparables on pick and choose basis and therefore, in that situation where new filter is applied, the matter has to go back to examine all comparables in the light of the new filter. In reply, it was submitted by ld. AR of assessee that regarding only one comparable i.e. M/s. RS Software India Ltd., the DRP has applied this new filter and excluded this comparable and the assessee as well as revenue both are in appeal against the exclusion of this comparable and therefore, this should be held that this filter is not applicable in the present case. The ld. DR of revenue supported the order of TPO and Draft assessment order. 5. We have considered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to three comparables i.e. 1) R S Software (India) Ltd., 2) Acropetal Technologies Ltd. and 3) Larsen and Toubro Infotech Limited. But it makes no difference because this is true that this filter was not applied by TPO and the same was applied by DRP for the first time to only 3 comparables out of 13 comparables selected by the TPO. There are some comparables which are not disputed by the assessee as they are having low profit margin such as Evoke tech 8.11%, Mindtree limited (Seg.) 10.66%. It may so happen that if these comparables are examined in the light of this filter, it may or may not pass through this filter. Hence, when a filter is applied for selection of comparables, it should be applied at the level of selecting the comparables itself and not after the comparables were selected because application of a filter determines the number of comparables available for TP analysis. Hence we are of the considered opinion that in the facts of present case also, this Tribunal order rendered in the case of ACIT Vs. Broadcom Communication Technologies (P.) Ltd. (supra) is squarely applicable. Respectfully following the same, we restore back the entire TP matter to the DRP for fresh dec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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