9911796707
TMI Blog2017 (5) TMI 1651X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee's appeal is rejected. TPA - determination of Arm's Length Price (ALP) - Comparable selection - turnover and size are relevant factor for selecting the comparable companies for the purpose of determining the ALP however a proper parameter of turnover has to be applied - Held that:- Tribunal is taking a consistent view of applying the turnover filter of 10 times of assessee's turnover on both sides for selecting the comparable companies. Further the RPT is also a relevant factor for selecting comparable companies though the comparable price should be uncontrolled and unrelated however it is not possible to find a company without having RPT therefore, in due course of consideration and in analyzing this issue, this Tribunal has taken a view that a tolerance range of 5% to 25% can be considered depending upon the availability of the comparable companies. Accordingly, in normal course 15% of RPT can be a tolerance range for selection of comparable entity. Since the TPO has not applied and also not given the details of turnover as well as RPT of the comparable. Therefore we are of the considered opinion that the entire issue of TP Adjustment requires a fresh consideration at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of making fresh investment or selling the existing investment is taken at a very high level of management therefore it cannot be accepted that the assessee has not incurred any expenditure for earning the dividend income. Accordingly, when there is a change and reshuffling in the investment portfolio then the indirect expenditure is bound to be incurred which is allocable to the tax exempt income - we confirm the disallowance made by the Assessing Officer on account of administrative expenses and delete the disallowance made by the Assessing Officer on account of interest expenditure. Disallowance of provision towards creditor - AO noted that the assessee has not complied with the TDS provision as required under Section 40(a)(ia) - Held that:- As regards the telephone expenses payable to Tata Teleservices, we find that though the amount was not paid till date however if the amount was accrued during the year then the claim of expenditure cannot be disallowed on the ground of non-deduction of TDS as the TDS provisions are not applicable on such expenditure. Accordingly, this amount of 20,00,000 is an allowable claim. As regards Office Rent, since the assessee has not comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Appellant. G.R. Reddy, CIT (DR) for the Respondent. ORDER Vijay Pal Rao, These two appeals by the assessee are directed against the assessment order dt.25.9.2012 and 31.1.2014 passed under Section 143(3) r.w.s. 144C in pursuant to the directions of the Dispute Resolution Panel (in short DRP) for the Assessment Years 2008-09 & 2007-08 respectively. 2. First we take up the appeal for the Assessment Year 2008-09 wherein the assessee has raised the following grounds : 1 Assessment and reference to Transfer Pricing Officer are bad in law (a) The final order issued by the Deputy Commissioner of Income Tax - Circle 12(4) ['ITO' or 'AC], is bad on facts and in law and is in violation of the principles of natural justice. Without prejudice to the above, the order issued by the AO is bad in law insofar as the fact that the AO did not issue to Tavant Technologies India Private Limited ('the Appellant or the Company'), a show cause notice, as per proviso to section 92C(3) of the Income- tax Act, 1961 [the Act]. (b) The AO has erred in law in making a reference to the Transfer Pricing Officer ['TPO'], inter alia, since he has not recorded an opi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deviating from the uncontrolled party transaction definition as per the Income-tax Rules and arbitrarily applying a 25% related party criteria in accepting/rejecting comparables. (f) The AO/TPO grossly erred on facts in arbitrarily rejecting companies having software development revenue less than 75% of total operating revenue. (g) The AO/TPO erred on facts in arbitrarily rejecting companies having export sales less than 25% of total sales. (h) The AO/TPO erred on facts in arbitrarily rejecting companies having onsite revenue more than 75% of the export revenue. (i) The AO/TPO erred on facts in arbitrarily rejecting companies having employee cost less than 25% of the operating revenue. (j) The AO/TPO also erred on facts and in law in arbitrarily rejecting companies with different year ending (i.e. other than 31 March 2008). (k) The AO/TPO also erred on facts in arbitrarily rejecting companies based on their financial results without considering the functional comparability. (l) The TPO erred on facts and in law in considering a set of 'secret data', i.e. data which was not available in public domain, in arriving at a fresh set of companies using his power unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The Assessing Officer grossly erred in making the addition of ₹ 9,82,999/- under the head 'Exempt Income' without appreciating any of the plea of the appellant. 14. The Assessing Officer grossly erred in disallowing a sum of ₹ 44,19,798/- under the head 'Provision' without appreciating the plea of the appellant and without appreciating that the provision made for expenditure was actuals and incurred in the normal course of the appellant's business. 15. Directions issued by the Honorable Dispute Resolution Panel ['DRP'] (a) The DRP has erred in law and facts in not taking cognizance of the objections filed by the Appellant in relation to the draft assessment order issued by the AO in the proceedings before them. (b) The DRP further erred on facts and in law confirming the draft order of the AO. (c) Without prejudice, the additions/disallowances are excessive, arbitrary and unreasonable and ought to be reduced substantially. 16. The Assessing Officer further erred in charging the interest u/s. 234B and 234D of the Act. 17. Penalty under section 271(l)(c) (a) The learned AO has erred in initiating penalty proceedings under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show the level of capacity of utilization of the assessee as well as comparable companies. The learned Authorised Representative of the assessee has submitted that it was not feasible for the assessee to give all the details of the comparable companies regarding capacity utilization. We do not find any merit in the claim of the assessee when the assessee failed to produce the relevant details regarding the level of capacity utilization of each and every comparable company in comparison to the assessee's capacity utilization. Therefore in the absence of necessary details and evidences, this ground of the assessee's appeal is rejected. 8. Ground Nos. 5 to 8 are regarding determination of Arm's Length Price (ALP) and TP Adjustment made by the TPO/A.O. 9. The assessee is a software development services provider to its Associated Enterprise (AE). To determine the ALP, the TPO has selected 20 comparable companies as under : Sl. No. Name of the company OP/TC % 1 Avani Cincom Technologies 25.62 2 Bodhtree Consulting Ltd 18.72 3 Celestial Biolabs 87.94 4 e-zest Solutions Ltd 29.81 5 Flextronics (Aricent) 7.86 6 iGate Global solution ltd 13.99 7 Infosys ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of FAR Analysis of each and every comparable company with the assessee, it cannot be excluded merely on the basis of the finding of the Tribunal in some other case. He has relied upon the orders of the authorities below. 13. We have considered the rival submissions as well as the relevant material on record. It is pertinent to note that turnover and size are relevant factor for selecting the comparable companies for the purpose of determining the ALP however a proper parameter of turnover has to be applied. This Tribunal is taking a consistent view of applying the turnover filter of 10 times of assessee's turnover on both sides for selecting the comparable companies. Further the RPT is also a relevant factor for selecting comparable companies though the comparable price should be uncontrolled and unrelated however it is not possible to find a company without having RPT therefore, in due course of consideration and in analyzing this issue, this Tribunal has taken a view that a tolerance range of 5% to 25% can be considered depending upon the availability of the comparable companies. Accordingly, in normal course 15% of RPT can be a tolerance range for selection of comparabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but the amount has actually been paid in the subsequent year in June, 2009. We find that even if provision is made towards the accrued bonus on account of length of service of the employee then the actual payment may be made in the subsequent year or in future but the liability cannot be treated as uncertain. Therefore in view of the decision of the Hon'ble Supreme Court in the case of Bharat Earth Movers (supra) the provision made towards accrued long term retained bonus is an allowable claim. Accordingly, the Assessing Officer is directed to allow the claim of the assessee after verification of the quantum which has accrued as a bonus to the employees though the payment may be paid in future. 21. Ground No. 12 is regarding rent equilisation provision. 22. The assessee has debited an amount of ₹ 7,47,33,780 towards rent expenditure. On verification of the record, the Assessing Officer found that the amount of ₹ 11,86,981 is a provision and cannot be recognized as a certain liability. Accordingly, the Assessing Officer has made addition of ₹ 11,86,981. 23. Before us, the learned Authorised Representative of the assessee has relied upon the decision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be invoked. The assessee has claimed that it has not incurred any expenditure for earning the exempt income then without verifying the claim of the assessee the Assessing Officer cannot make a disallowance under Section 14A of the Act. 30. On the other hand, the learned Departmental Representative has relied upon the orders of the authorities below. 31. We have considered the rival submissions as well as the relevant material on record. As regards the disallowance made by the Assessing Officer on account of interest expenditure computed as per Rule 8D(2)(ii), we find that when the assessee has not shown any interest expenditure in the profit and loss account then no disallowance is called for on account of interest expenditure under Section 14A of the Act. As regards, the administrative expenditure that the assessee has claimed that it has not incurred any expenditure for earning the exempt income however, we find that in the investment portfolio of assessee there is a significant change and movement. The balance as on 31.3.2007 was ₹ 30,85,00,000 which has been reduced to ₹ 7,06,00,000 which shows a significant change in the investment portfolio and the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20,00,000 Mail received from TTSL and average of 3 months On verification of the details it is seen that the assessee has not paid the amount till date and no TDS had been deducted. It is stated that the assessee has disputed the bill therefore, the the liability is not an ascertained liability. Moreover according to print out of the email communication furnished during the course of hearing the total outstanding amount is ₹ 12,18,178/-. Office rent CSRIE 13,74,005 Claimed to have been provided for as per working. On verification it is seen that the assessee has not paid the amount till date and no TDS has been deducted. It is stated that the differential rent has been provided as per working, pending settlement but no such working has been produced by the assessee and since the amount is under dispute, it cannot be aao to be an ascertained liability. Moreover the assessee has not deducted and paid the TDS. Repairs and maintenance payable to Brigade Enterprises 6,76,793 Estimate value As can be seen from the annexure the assessee had just stated that the provision had been made as per the estimated value but no basis of estimation has been provided. The payment ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not clear how the provisions of Section 40(a)(ia) are applicable on this amount. Accordingly, we direct the Assessing Officer to properly examine the relevant provisions of Chapter XVII qua these payments on account of repairs and maintenance and then decide the issue. 38. As regards the staff welfare expenses, the Assessing Officer has disallowed this amount on the ground that it is a provision on estimate basis but no estimation has been provided by the assessee. It is pertinent to note that if an amount has accrued in respect of staff welfare expenses then the payment of the same in future cannot be a ground for disallowance of expenditure. However, since the assessee has not provided the necessary details to show that this expenditure is already accrued on account of staff welfare, therefore we do not find any reason to interfere with the order of the Assessing Officer qua this issue. 39. In the result, the appeal of the assessee is partly allowed. Assessment 2007-08 40. The assessee has raised the following grounds : 1. Assessment and reference to Transfer Pricing Officer are bad in law (a) The final order issued by the Deputy Commissioner of Income Tax - Circle 12(4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (e) The AO/TPO grossly erred in law in deviating from the uncontrolled party transaction definition as per the Income-tax Rules and arbitrarily applying a 25% related party criteria in accepting / rejecting comparables. (f) The AO /TPO grossly erred on facts in arbitrarily rejecting companies having software development revenue less than 75% of total operating revenue. (g) The AO/ TPO erred on facts in arbitrarily rejecting companies having export sales less than 25% of total sales. (h) The AO/TPO erred on facts in arbitrarily rejecting companies having onsite revenue more than 75% of the export revenue. (i) The AO/TPO erred on facts in arbitrarily rejecting companies having employee cost less than 25% of the operating revenue. (j) The AO/TPO also erred on facts and in law in arbitrarily rejecting companies with different year ending (i.e. other than 31 March 2008). (k) The AO/TPO also erred on facts in arbitrarily rejecting companies based on their financial results without considering the functional comparability. (l) The TPO erred on facts and in law in considering a set of 'secret data', i.e. data which was not available in public domain, in arriving a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a. known liability and the same cannot, be disallowed. 11. The learned Assessing Officer further made addition to the tune of ₹ 25,01,680/- towards rent equalization provision without appreciating that the said was a provision towards rent which was not added back and the same is in accordance with AS 19 and hence the same should be held as allowable expenditure. 12. The learned Assessing Officer also further erred in adding an amount to the tune of ₹ 77,139/- towards purchase of software as capital expenditure as against revenue expenditure claimed by the Appellant without appreciating the plea of the Appellant. 13. The learned assessing officer also further erred in calculating the Education Cess at the rate of 3% instead of 2%. 14. The learned Assessing Officer erred in charging interest under Sections 234B and 234C of the Act. 15. Directions issued by the Honorable Dispute Resolution Panel ['DRP'] (a) The DRP has erred in law and facts in not taking cognizance of the objections filed by the Appellant in relation to the draft assessment order issued by the AO in the proceedings before them. (b) The DRP further erred on facts and in law confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies have been examined by the co-ordinate bench of this Tribunal vide order dt.28.2.2013 in the case of Logica (P.) Ltd. (supra), in the case of Tesco Hindustan Service Centre (P) Ltd. (supra), in the case of Societe Generale Global Solution Centre (P.) Ltd. (supra) and the decision dt.18.3.2016 in the case of McAfee Software (India) (P.) Ltd. (supra). Thus the learned Authorised Representative has submitted that these 15 companies are required to be excluded from the set of comparables. 46. On the other hand, the learned Departmental Representative has objected to the exclusion of these companies and submitted that without examination of FAR Analysis of each and every comparable company with the assessee, it cannot be excluded merely on the basis of the finding of the Tribunal in some other case. He has relied upon the orders of the authorities below. 47. Having considered the rival submissions as well as the relevant material on record, at the outset we note that the functional comparability of following 8 companies are examined by the co-ordinate bench of this Tribunal in the case of Logica (P.) Ltd. (supra) dt.21.2.2013 one by one in para Nos.12 to 15 as under : " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore us:- Particulars FY 05-06 FY 06-07 FY 07-08 FY 08-09 Operating Revenue 21761611 35477523 29342809 28039851 Operating Expenses 16417661 23249646 23359186 31108949 Operating Profit 5343950 12227877 5983623 (3069098) Operating Margin 32.55% 52.59% 25.62% - 9.87% 40. It was submitted that this company has made unusually high profit during the financial year 06-07. The operating revenues increased 63.03% which indicates that it was an extraordinary year for this company. Even the growth of software industry for the previous year as per NASSCOM was 32%. The growth rate of this company was double the industry average. In view of the above, it was argued that this company ought to have been rejected as a comparable. 41. We have given a careful consideration to the submissions made on behalf of the Assessee and are of the view that the same deserves to be accepted. The reasons given by the Assessee for excluding this company as comparable are found to be acceptable. The decision of ITAT (Mumbai) in the case of Telcordia Technologies Pvt. Ltd. v. ACIT (supra)also supports the plea of the assessee. We therefore accept the plea of the Assessee to reject this com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Institute, Department of Microbiology, Osmania University, Hyderabad. In the industrial biotechnology area, the company has signed the Technology transfer agreement with IMTECH CHANDIGARH (a very reputed CSIR organization) to manufacture and market initially two Enzymes, Alpha Amylase and Alkaline Protease in India and overseas. The company is planning to set up a biotechnology facility to manufacture industrial enzymes. This facility would also include the research laboratories for carrying out further R & D activities to develop new candidates' drug molecules and license them to Interested Pharma and Bio Companies across the GLOBE. The proposed Facility will be set up in Genome Valley at Hyderabad in Andhra Pradesh.' According to the learned D.R. celestial labs is also in the field of research in pharmaceutical products and should be considered as comparable. As rightly submitted by the learned counsel for the Assessee, the discovery is in relation to a software discovery of new drugs. Moreover the company also is owner of the IPR. There is however a reference to development of a molecule to treat cancer using bio-informatics tools for which patenting process was also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process. In response to the request of the TPO this company in its reply dated 29.3.2010 has given details of employees working in software development but it is not clear as to whether any segmental data was given or not. Besides the above there is no other detail in the TPO's order as to the nature of software development services performed by the Assessee. Celestial labs had come out with a public issue of shares and in that connection issued Draft Red Herring Prospectus (DRHP) in which the business of this company was explained as to clinical research. The TPO wanted to know as to whether the primary business of this company is software development services as indicated in the annual report for FY 06-07 or clinical research and manufacture of bio products and other products as stated in the DRHP. There is no reference to any reply by Celestial labs to the above clarification of the TPO. The TPO without any basis has however concluded that the business mentioned in the DRHP are the services or businesses that would be started by utilizing the funds garnered though the Initial Public Offer (IPO) and thus in no way connected with business operations of the company during FY 06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have given a careful consideration to the submission made on behalf of the Assessee. We find that the TPO has drawn conclusions on the basis of information obtained by issue of notice u/s. 133(6) of the Act. This information which was not available in public domain could not have been used by the TPO, when the same is contrary to the annual report of this company as highlighted by the Assessee in its letter dated 21.6.2010 to the TPO. We also find that in the decision referred to by the learned counsel for the Assessee, the Mumbai Bench of ITAT has held that this company was developing software products and not purely or mainly software development service provider. We therefore accept the plea of the Assessee that this company is not comparable. (e) Accel Transmatic Ltd. 48. With regard to this company, the complaint of the assessee is that this company is not a pure software development service company. It is further submitted that in a Mumbai Tribunal Decision of Capgemini India (F) Ltd v. Ad. CIT 12 Taxman.com 51, the DRP accepted the contention of the assessee that Accel Transmatic should be rejected as comparable. The relevant observations of DRP as extracted by the ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 and 26 have to be rejected as functionally not comparable with that of the assessee in view of the decision of the Mumbai Bench of the Tribunal in the case of Telcordia Technologies India (P.) Ltd. v. Asstt. CIT [2012] 137 ITD 1/22 taxmann.com 96 (Mum.) wherein it was held as under:- "7.2 Lucid Software Limited It has been submitted before us that this company, besides doing software development services, is also involved in development of software product. The learned AR has tried to distinguish by pointing out that product development expenditure in this case is around 39% of the capital employed by the said company, and, therefore, such a company cannot be considered as tested party. Even as per the information received in response to notice under Section 133(6), the company has described its business as software development company or pure software development service provider. This information itself is very vague as the segmental details of operating revenue has not been made available to examine how much is the ratio of sale from software product and sale of software service and development. Looking to the fact that it has developed a software product named as &q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y shows that the profit level indicators in relation to return of cost, return of sales and return of assets are huge between Infosys and the assessee company and therefore, the Infosys cannot be treated as comparable entity for making comparability analysis with the assessee company. The comparability of lnfosys Technology of the company as that of an assessee has been dealt with ITAT Delhi Bench in the case of 'Agnity India Technologies Private Limited' (ITA No.3856/Delhi/2010), wherein it was held that lnfosys is a giant in the area of development of software and it assumes all risks, leading to higher profit and cannot be compared with the company which is a captive unit of its parent company assuming only limited currency risk. In view of the above finding, we hold that the Infosys cannot be taken as a comparable for determining the arms length price in the case of the assessee. 7.5 Wipro Ltd.-IT Services Seqment ('Wipro'): This company is also a global IT Company having varieties of service and products and looking to the magnitude of its operations, sales and expenses, the same cannot be taken into consideration for comparability analysis. Moreover, 67% o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re different from the assessee as have been narrated in para 6.6 above. Even the segmental details for revenue sales have not been provided by the TPO so as to consider it as a comparable party for comparing the profit ratio from product and services. Thus, on these facts, we are unable to treat this company fit for comparability analysis for determining the arms length price for the assessee, hence, should be excluded from the list of comparable parties." 15. In view of the above, the ld. counsel for the assessee fairly admitted that comparable company at Sl.No.6 viz., Flextronics Software Systems Pvt. Ltd. should be taken as a comparable, while comparable at Sl.No.24 viz., Tata Elxsi Ltd. should be rejected as a comparable." Following the earlier order of this Tribunal, we direct the TPO/A.O. to exclude the above mentioned 8 companies from the set of comparables. E-Zest Solutions Ltd. 48. The learned Authorised Representative of the assessee has submitted that the functional comparability of this company has been examined by the co-ordinate bench of this Tribunal in the case of Tesco Hindustan Service Centre (P.) Ltd. (supra) and accordingly this company is require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pment services and therefore companies rendering KPO services ought not to be considered as comparable to software development companies and relied on the decision of the co-ordinate bench in the case of Capital IQ Information Systems (India) (P) Ltd. in ITA No.1961(Hyd) of 2011, dated 23-11-2012 and prayed that in view of the above reasons, this company i.e. e-Zest Solutions Ltd., ought to be omitted from the list of comparables. 14.3 Per contra, the learned Departmental Representative supported the inclusion of this company in the list of comparables by the TPO. 14.4 We have heard the rival submissions and perused and carefully considered the material on record. It is seen from the record that the TPO has included this company in the list of comparbales only on the basis of the statement made by the company in its reply to the notice under section 133(6) of the Act. It appears that the TPO has not examined the services rendered by the company to give a finding whether the services performed by this company are similar to the software development services performed by the assessee. From the details on record, we find that while the assessee is into software development service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in software and giving licenses for use of software. In this regard, the learned Authorised Representative submitted that :- (i) This company is engaged in product development and earns revenue from sale of licences and subscription. It has been pointed out from the Annual Report that the company has not provided any separate segmental profit and loss account for software development services and product development services. (ii) In the case of E-Gain communications Pvt. Ltd. (2008-TII-04- ITAT-PUNE-TP), the Tribunal has directed that this company be omitted as a comparable for software service providers, as its income includes income from sale of licences which has increased the margins of the company. The learned A.R. prayed that in the light of the above facts and in view of the afore cited decision of the Tribunal (supra), this company ought to be omitted from the list of comparables. 15.2 Per contra, the learned Departmental Representative supported the action of the TPO in including this company in the list of comparables. 15.3 We have heard the rival submissions and perused and carefully considered the material on record. It is seen from the material on record tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the list of comparables, it is necessary that credible information is available about the company. Unless this basic requirement is fulfilled, the company cannot be taken as a comparable. It is true that ld. TPO is entitled to obtain information us/133(6), the object of which is primarily only to supplement the information already available on record, but not, as rightly submitted by ld. Counsel for the assessee, to replace the information. If there is a complete contradiction between the information obtained u/s 133(6) and annual report then the said information cannot be substituted for the information contained in annual report. We, therefore, are in agreement with ld. counsel for the assessee that this company cannot be included as a comparable in the set of comparables selected by ld. TPO on account of clear contradiction between contents of annual report and information obtained u/s 133(6). 27. Rule 10D(3) specifies the information and documents that are to be maintained by a person who is entering into international transactions. These are official publications, published accounts or those which are in public domain except for agreements and contracts to which assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e's appeal are interrelated. Revenue is mainly aggrieved on the RPT filter adopted by Ld.CIT(A) at 0% where as the Co-ordinate Benches have been accepting upto 15% and in some orders up to 25%. Depending on the facts of each case in each year, the RPT filter is being used / approved. Learned Counsel fairly admitted that Co-ordinate Bench in the case of ITO v. Sunquest Information Systems (India) (P.) Ltd. [2015] 61 taxmann.com 81 (Bang. - Trib.) a (Sunquest) has followed the other decisions on the issue and held that in various other cases companies having related party transaction upto 15% of total revenues can be considered. Considering the above, it was contended that the Revenue's Ground No. 2 may have to be allowed and the companies rejected by Ld.CIT(A) has to be reconsidered. At the same time, Learned Counsel also submitted that the companies which are functionally not similar, having RPT of more than 15% and high turnover cases require reconsideration and made various submissions on the issue. Ld. DR also made submissions on the filters of RPT, turnover etc., and comparability of each of the companies." Accordingly, a consistent view has been taken by the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l dissimilarities. The Hon'ble Tribunal further observed that it is engaged in the business of product development, software product document and product design services and no segmental details were available. Therefore, it was held that this company was not comparable with that of the assessee-company. Similar observations have been made in the following decisions: Bearing Point Business Consulting (P.) Ltd.'s case (supra) CSR India (P.) Ltd.'s case (supra) LG Soft India (P.) Ltd.'s case (supra) Mercedes Benz R & D India (P.) Ltd.'s case (supra); NDS Services Pay-TV Technology (P.) Ltd.'s case (supra) Following the decisions cited supra, we hold that this company cannot be considered as comparable company which is engaged in providing software development services. Therefore, we direct the TPO/AO to exclude this company from the list of comparable. (xii) Thirdware Solution Ltd., This company was excluded from the list of comparables by this Tribunal in the case of LSI Research (India) (P.) Ltd. (supra) following the decision of Pune Bench of Tribunal in the case of E-Gain Communication (P.) Ltd. v. ITO [2009] 118 ITD 243 (Pune - Trib.) on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Representative as well as learned Departmental Representative and considered the relevant material on record. We find that the details and nature of the expenditure is mentioned in the invoice / bills. However, the Assessing Officer has not conducted a proper enquiry and verification regarding the nature of expenditure incurred by the assessee from the invoices / bills. Accordingly in view of the facts and circumstances of the case, we set aside this issue to the record of the Assessing Officer for re-adjudication of this issue after verification of the invoices / bills as well as in the light of the decision of the Special Bench of the Tribunal in the case of Amway India Enterprises v. Dy. CIT [2008] 111 ITD 112 (Delhi). 71. Ground No.13 - The learned Authorised Representative of the assessee has stated at Bar that the assessee does not press Ground No.13 and the same may be dismissed as not pressed. The learned Departmental Representative has raised no objection if the Ground No.8 is dismissed. Accordingly, Ground No.13 of assessee's appeal is dismissed being not pressed. 72. Ground No.14 is regarding levy of interest under Section 234A & 234B which are mandatory and cons ..... 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