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TMI Blog2018 (3) TMI 1759X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the coordinate bench for exclusion of this company compared with a company which is engaged in the business of development of software. In the present case the assessee is not even the developer of the software but merely providing software support services. Direct the TPO to exclude Infosys Technologies Ltd from the comparability analysis of software support systems segment of the assessee while determining Arm s length price of international transactions. - Decided in favour of assessee. - ITA No. 5971/Del/2014 - - - Dated:- 19-3-2018 - SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For the Appellant : Shri Manoneet Dalal, AR, Shri Vishu Goel, AR For the Respondent : Shri Sanjay Kumar Yadav, Sr. DR ORDER PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the assessee against the order of the ld CIT(A)-2, Faridabad dated 19.08.2014 for the Assessment Year 2007- 08. 2. The assessee has raised the following grounds of appeal:- 1. That on the facts and in the circumstances of the case and in law, the order passed by the Ld. Assessing Officer ( AO ) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. AO/ Ld. TPO/ Ld. CIT-(A) erred in rejecting L G S Global Ltd. and V M F Soft Tech Ltd. due to non-availability of data, even though their financial data is available in the public domain 5.1.3 The Ld. AO/ Ld. TPO/ Ld. CIT-(A) erred in rejecting Maars Software International Ltd., Melstar Information Technologies Ltd. and V J I L Consulting Ltd. even though these were not persistent loss making for consecutive three years (FY 2004-05 to FY 2006-07) 6 That the Ld. AO/ Ld. TPO/ Ld. CIT-(A) has erred in erroneously including in the final comparable set one company i.e. Infosys Technologies Limited ( Infosys ) with different functional and economic profile as compared to captive software support services provided by the Appellant 7 That the Ld. AO/ Ld. TPO/ Ld. CIT-(A) herein also erred in not taking cognizance of the fresh search undertaken by the Appellant without prejudice to its contemporaneous documentation, to search for functionally comparable companies whose data is now available but was not available at the time of determination of the arm's length price/creation of Transfer Pricing documentation 8 That the Ld. AO/Ld. TPO/ Ld. CIT-( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that international transaction entered into by the assessee are at arm s length. There is no dispute with respect to other segments other than software segments. In the software support segment the assessee has selected 28 comparables and the weighted average margin for three years was taken as 14.33%. The ld Transfer Pricing Officer rejected the comparability study of the assessee and carried out fresh search. He selected the 4 comparables in final set and their margin was computed at 24.10% and consequently, found that there is a difference of 12.82% in the margin of the assessee. Consequently, an adjustment of ₹ 29861631/- was proposed by the ld Transfer Pricing Officer. 5. The assessment order u/s 143(3) was passed on 09.02.2011, wherein the returned income of the assessee at ₹ 18291080/- was assessed at ₹ 49582150/-. The assessee aggrieved with the order of the ld AO preferred appeal before the ld CIT(A) who vide order dated 19.08.2014 partly allowed the appeal of the assessee. The assessee further aggrieved by the order of the ld CIT(A) has preferred appeal before us. 6. Though assessee has raised 12 grounds of appeal but in nutshell it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfer Pricing Officer dated 31.08.2010 addressed to the assessee. Furthermore, before the Transfer Pricing Officer vide letter dated 13.10.2010 has accepted the comparable without any comment. Therefore, it is apparent that assessee has not challenged this comparable before the ld TPO. However, for the first time it was challenged before the ld CIT(A) on the above ground. The functional profile of the assessee of the software support segment is that assessee is providing services of commissioning of software embedded in the equipment supplied by ZTE Corporation to its customers in India. The services performed by the appellant also include localization and customization of appellant is engaged in providing low end software services like diagnosis of software, updation of software, inspection of software, routine maintenance of software etc. Thus, requirements of and specifications provided by the AE(s) that ZTE India provides software support services. Thus, neither is it engaged in end to end development of a product nor does it own any products. The assessee diagnosis and correct the software and further updated for the bugs in those software. It also performs routine maintenance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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