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TMI Blog2019 (5) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.2017, passed u/s.143(3) r.w.s.144C of the Act, in pursuance to the directions of the DRP, for the assessment year 2011-12. 2. Assessee is hundred percent subsidy of Sandvine Incorporated ULC. The assessee is involved in rendering the software development services to its assessee. 3. As per TP order during the Financial Year ( FY ) 2012-13 , Assessee has entered into the following international transactions with its Associated Enterprises ( AEs ): International Transactions Value (INR) Rendering of software development services 177355334 Reimbursement 3134 0017 Provision of software development service 146015317 Advanced or service to be rendered 3235 4934 Reimbursement of expenses 2333 5163 4. The assessee has selected the 5 comparables in its TP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grieved by the TP order, the Appellant filed an appeal before the DRP raising objections regarding the adjustments proposed in the TP Order. 9. The DRP in its final direction had partly granted the relief to the assessee. Pursuant to the directions of the DRP, the AO passed the final assessment order wherein the TP adjustment stood reworked at same figure as originally suggested by the TPO. The AO passed a fair order of assessment making the addition on account of determination of ALP by the TPO as modified by the DRP. The TP adjustment post the DRP Directions was re-worked and a Final Assessment Order was passed wherein the total adjustment stood at ₹ 97,14,556. 10. Aggrieved by the addition made in the fair order of assessment, the Assessee has raised several grounds of appeal challenging the addition on several counts. However, at the time of hearing the learned counsel restricted his arguments to exclusion of 4 comparables out of the 10 comparable companies that remain in the final list of comparable companies after the directions of the DRP viz., (a) Genesys International Corpn. Ltd., (b) Infosys Ltd., (c) Larsen and Toubro Infotech Ltd., an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e companies which were also chosen by the TPO in the case of the Assessee for the purpose of comparability. In the aforesaid decision the Tribunal held on the comparability of the 3 companies which the Assessee seeks to exclude as follows: (a) Infosys Ltd., was excluded from the list of comparable companies by following the decision of the Hon'ble Delhi High Court in the case of CIT v. Agnity India Technologies (P.) Ltd. [2013] 36 taxmann.com 289/219 Taxman 26 (Delhi). The discussion is contained in paragraphs 4.5 to 4.7 of the Tribunal's order. The Tribunal accepted that Infosys Ltd. is a giant risk taking company and engaged in development and sale of software products and also owns intangible assets and therefore not comparable with a software development service provider such as the Assessee in that case. (b) Larsen Toubro Infotech Ltd., was excluded from the list of comparable companies by relying on the decision of the Delhi Bench of ITAT in the case of Saxo India (P.) Ltd. v. Asstt. CIT [2016] 67 taxmann.com 155 (Delhi - Trib.). The discussion is contained in paragraphs 4.8 to 4.10 of the Tribunal's order. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mote Sensing, Cartography, Data Conversion, state of the art terrestrial and 3D geocontent including location based and other computer based related services. Pagc-38 of the Annual report 2012 containing the above description was brought to the notice of the TPO, Attention of the TPO was invited to the directors report to the shareholders at page ii of the annual report 2012, wherein the Directors have informed the shareholders that the company continued in its journey, to be innovators and leaders in the fields of location based services related geoplatforms and advanced survey techniques. There is no segmental reporting because it is stated in the annual report that this company is only in one segment viz., GIS based services and therefore there is no requirement of segmental reporting. It was also submitted that this company owns substantial intangibles equivalent to 10.42% of its total turnover. 32. The TPO however has regarded this company as a comparable company by observing that this company develops software for mapping and geospatial services and operates a few development centres in India. The company is predominantly into software development services. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nificant. Rule 10B(2) of the Income Tax Rules, 1962 (Rules) specifically provides that for the purposes of sub-rule (1) of Rule 10B, the comparability of an international transaction with an uncontrolled transaction shall be judged with reference to the following, namely:- (a) the specific characteristics of the property transferred or services provided in either transaction; (b) the functions performed, taking into account assets employed or to be employed and the risks assumed, by the respective parties to the transactions; In the given facts and circumstances, we are of the view that Genesys International Corporation Ltd., cannot be considered as a comparable company and the said company should be excluded from the final list of comparable companies. We hold accordingly. 15. The functional profile of the appellant before us is similar to that of the CGI Information Systems and Management consultants Private Limited (supra) hence we are bound by the decision of the coordinate bench. No contrary decision is of the coordinate bench or of the High Court was brought to our notice by either the parties. 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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