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TMI Blog2017 (9) TMI 1831X X X X Extracts X X X X X X X X Extracts X X X X ..... om the annual report of the company that the said concern had earned revenue from IT consulting (42%), education (30%) and infrastructure management (21%). However, no breakup of business segment profitability is available and in the absence of the same, the margins of said concern cannot be compared. Another aspect is the activity of education being imparted by the said concern in the field of IT education to corporate companies and institutions, Central and State Government Departments, etc., the said concern thus, is functionally different from the activities undertaken by the assessee and cannot be included in the final list of comparables. Accordingly, we uphold the order of CIT(A) in this regard. The modified ground of appeal No.1 raised by the Revenue is thus, dismissed. The modified ground of appeal No.2 raised by the Revenue becomes academic in nature, in view of the pleading of learned Authorized Representative for the assessee after the dismissal of modified ground of appeal No.1 raised by the Revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... n law, by objecting the appropriate order given by CIT(A) to consider certain companies (i.e Quintegra Solutions Limited, R.S Software ( India) Limited, Zylog Systems Limited and Thinksoft Global Services Limited) as comparable to the Respondent and rejection of application of onsite filter used by the TPO for screening of companies. Further, based on the facts and circumstances of the case, the Hon'ble CIT(A) and consequently the learned AO and learned TPO has : Non-consideration of contemporaneous data 3. erred on the facts and circumstances of the case, and in law, in conducting an analysis based on information currently available for determining arm's length price but which was not available at the time of complying with transfer pricing regulations. Non-consideration of multiple year data 4. erred on the facts and in circumstances of the case and in law in not considering multiple year data ( i.e Financial Year 2009-10 and prior two years) for determining the arm's length price. Use of inappropriate filters for screening of companies 5. erred in law and in facts, by applying certain appropriate filters for screening of companies. Rejection of certain comparabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent and without prejudice to each other and craves, leave to add, alter, delete or modify all or any of the above grounds of cross objections. 4. The learned Authorized Representative for the assessee at the outset pointed out that if the issue raised by the Revenue in modified ground of appeal No.1 is dismissed i.e. FCS Software India Ltd. is not included as part of comparables being a product company and because of abnormal results and also being functionally different as against to the activities of assessee in providing captive services to its associated enterprises in the field of software development, then all the grounds of appeal raised by the Revenue would become academic. He further pointed out that grounds raised in Cross Objections also would become academic in nature. 5. The appeal filed by the Revenue and the Cross Objections filed by the assessee were heard together and are being disposed of by this consolidated order for the sake of convenience. 6. Briefly, in the facts of the case, the assessee was engaged in providing software development services to its associated enterprises and is captive service provider. During the year under consideration, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,39,77,971/- was proposed to the arm's length price of international transactions which was adopted by the Assessing Officer while passing assessment order under section 143(3) r.w.s. 144C(13) of the Act. 7. The CIT(A) analyzed the issue raised by the assessee and directed the Assessing Officer to include Quintegra Solutions Ltd., R.S. Software (I) Ltd., Zylog Systems Ltd. and Thinksoft Global Services Ltd. in the final list of comparable companies, in case it satisfies all the filters used by the TPO in his order. The CIT(A) accepted the plea of assessee for rejection of comparable FCS Software India Ltd. He noted that the Profit and Loss Account of said concern only gives narration as income from software development and other services but the segmental accounts were not available. He referred to the annual report of the said concern, wherein at pages 30 and 31, the company had earned 42% of revenue from IT consulting i.e. software services, 37% of revenue from education and 21% of revenue from infrastructure management. He directed the Assessing Officer to exclude the said company from the list of comparables. He also directed exclusion of Infosys Technologies Ltd. on the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue is aggrieved by exclusion of FCS Software India Ltd. from the list of comparables. The learned Authorized Representative for the assessee pointed out that the CIT(A) had directed exclusion of FCS Software Solutions Ltd. and Infosys Technologies Ltd. from the final list of comparables and in case FCS Software Solutions Ltd. is directed to be not comparable to the assessee, then the arm's length margin would fall to 23.07%, which was within +/-5% range allowed by the Income Tax Act i.e. where the margins of assessee is 18.51%. The Revenue is not in appeal against the order of CIT(A) in directing exclusion of Infosys Technologies Ltd. from the list of comparables. The modified ground of appeal No.1 is against exclusion of FCS Software Solutions Ltd. The said concern was held to be a product company and not functionally comparable to the concern engaged in providing software services to its associated enterprises. This view has been laid down by the Tribunal in TIBCO Software India Pvt. Ltd. Vs. DCIT (supra) and ACIT Vs. M/s. Synechron Technologies Pvt. Ltd. (supra). Following the same parity of reasoning and because of the said concern being a product company, we find no mer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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