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TMI Blog2019 (1) TMI 739X X X X Extracts X X X X X X X X Extracts X X X X ..... , filed its return of income for the AY 2005-06 showing income at Nil, after claiming deduction u/s 10A for Rs. 114,281,750/-. 2.1 Since the international transactions entered into by the assessee with its AE exceeded Rs. 5 crores, the AO had made a reference to the TPO u/s 92CA(1) of the Act. The TPO vide his order date 31/03/2008, passed order u/s 92CA(3) determining the ALP of such international transactions entered into with its AE, at Rs. (Rs. 104,34,80,489 - Rs. 95,39,59,994) towards adjustment u/s 92CA at Rs. 8,95,20,945/-. For analysing the arm's length margin the TPO adopted TNMM method and had identified the following 17 companies as comparables: Sl. No. Name of the Company WC adjusted 1 iGate Global Solutions Ld. 1.59 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comparales chosen by him; Exensys Software Solutions Ltd, Infosys Technologies Ltd and Sat yam Computer Services Limited are to be excluded." 5. Aggrieved by the order of CIT(A), the revenue is in appeal before us raising the following grounds of appeal: 1. The learned CIT(A) has erred both in law and on facts of the case. 2. The learned CIT(A) has erred in excluding companies having higher turnover (Infoysys Technologies Limited) which is contrary to rule 10B(2) which prescribes comparability of international transactions with uncontrolled transactions with reference to functions performed, asset employed and risk assumed. 3. The learned CIT (A) failed to appreciate that- i) In service industry there is no linkage whatsoever b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ationale or statistical analysis for such exclusion. Also in the business model employed by software sector in India, the operational size has no impact on the profit margins when TNMM is adopted as the Most Appropriate Method (MAM). 2. It is also submitted that the issue of abnormal profits, large turnover, branding and intangibles, the issue has been subject matter of decision in various cases including those before High Courts. There are several decisions holding that companies cannot be rejected on account of extraordinary margins, high turnover, branding or intangibles once their functions are broadly similar to the assessee. In this regard, reliance is also placed on the decision of Hon'ble Delhi High Court in the case of Chrys ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sanction of any provision of the Act. 5. In light of the above, the appeal may kindly be allowed.A humble request is also made in this regard that as there are decisions of other coordinate benches of ITAT and higher Courts on this matter stating that turnover, abnormal profits, branding etc cannot lead to exclusion of com parables per se and further analysis is required to exclude com parables, in case, Hon'ble ITAT Bench wants to differ with the decisions, the matter may kindly be referred to a Special Bench." 7. Ld. AR of the assessee, on the other hand, relied on various cases including the decision of coordinate bench of this Tribunal in assessee's own case for AY 2007-08 in ITA No. 1962/Hyd/2011. 8. Considered the rival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No. 1846/H/12. 5. Adaptec (India) Pvt. Ltd. DCIT, ITA No. 1801/H/2009 6. Cordys Software India Pvt. Ltd. Vs. ACIT, ITA No. 1972/H/11. 7. Trinity Advanced Software Labs Pvt. Ltd. Vs. ACIT, ITA No. 1129/H/2005. 8. DCIT Vs. Deloitte Consulting India (P) Ltd., 46 SOT 379 (Mum.) 9. Agnity India Technologies Vs. ITO, ITA No. 3856/Del/10 10. Genesis Integrating Systems India P. Ltd., ITA No. 1231/Bang/2010. 10. Brigade Global Services Pvt. Ltd., ITA No. 1449/H/10. 11. Frost & Sullivan India Pvt. Ltd., 50 SOT 517 (Mum.) 2.2 The learned DR, on the other hand, supported the orders of the DRP and TPO in so far as selection of the aforesaid company as comparable. 2.3 We have heard the submissions of the parties and pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ables for determining ALP." 8.1 The coordinate bench also opined the same views in the following decisions: i) In the case of United Online Software Development (India) Pvt. Ltd., in ITA No. 1480/Hyd/2010 for AY 2005-06, vide its order dated 24/01/2014, the coordinate bench has held as under: "14. We have heard submissions of the parties and perused the materials on record. So far as Infosys Technologies Ltd. is concerned the issue of comparability of the aforesaid company has been considered by different Benches of the Tribunal including the Hyderabad Benches. It is to be noted that the consistent view of different Benches of the Tribunal is to the effect that Infosys Technologies Ltd. being a big company in all respects including th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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