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TMI Blog2020 (6) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... aside the order passed by the AO/TPO on this issue and restore the same to his file for examining the issue afresh. TP adjustment in respect of market support service - HELD THAT:- As A.R submitted that the TPO did not provide sufficient opportunity to the assessee to object to the comparable companies selected by him, we are of the view that this issue also needs to be set aside to the file of the AO/TPO. Accordingly, we set aside the order passed by AO on this issue and restore the same to the file of the AO/TPO. Computation of ALP on the entire operating costs - whether arm s length price ought to be computed only for the international transactions and not on the basis of costs incurred by the appellant? - HELD THAT:- PLI adop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statistical purposes. - IT(TP)TA No.842(Bang)/2016 And IT(TP)A No.2020(Bang)/2017 - - - Dated:- 17-6-2020 - Shri N.V. Vasudevan, Vice President And Shri B.R. Baskaran, Accountant Member For the Appellant : Shri Suresh Muthukrishnan, CA For the Revenue : Shri Muzaffar Hussain, CIT-DR ORDER PER B.R.BASKARAN, AM: Both these appeals filed by the assessee are directed against the assessment orders passed by the AO u/s 143(3) r.w.s 144C(13) of the Act, pursuant to the directions issued by the ld. Dispute Resolution Panel (DRP). Both these appeals were heard together and hence they are disposed of by this common order, for the sake of convenience. 2. The assessee is engaged in software research and development serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... khs in software development segment. 4. In the case of Marketing support services, The TPO selected three comparables and arrived at a mean margin of 18.25%. Accordingly the TPO proposed TP adjustment of ₹ 13.90 lakhs in marketing support services segment. 5. In respect of TP adjustment made in Software R D segment, the ld. DRP, following the decision rendered by the Bangalore Bench of the ITAT in the assessee s own case in IT(TP)A No.192(Bang)/2015 dated 26-06-2015 held that the turnover filter should be applied in respect of the comparable companies. Since the assessee company s turnover was ₹ 86.44 crores, the Ld DRP held that the assessee company would fall under the category of small sized firm . Accordingly it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 610.13 6 Tata Elxsi Ltd.(Seg) 358.20 7 Sasken Communications Technologies Ltd. 394.20 He submitted that, after excluding seven companies, there would remain only two comparable companies, viz., M/s ICRA Techno analytics Ltd. and M/s Persistent Systems Solutions Ltd. He submitted that M/s ICRA Techno analytics Ltd has been directed to be excluded by the Co-ordinate Bench of the Tribunal in assessee s own case for the assessment year 2010-11 in IT(TP)A No.592(Bang)/2015. The company M/s Persistent Systems Solutions Ltd was directed to be excluded by the co-ordinate Bench in the case of M/s Mann Hummel F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. DRP. All the companies selected by the TPO are liable to be excluded on the basis of turnover filter applied by the ld. DRP and the decision rendered by the Co-ordinate Benches referred above. Under these circumstances, since no comparable company would remain for determining the Arms Length Price of international transaction, we are of the view the entire issue should be restored to the file of the AO/TPO for undertaking the exercise afresh by selecting fresh set of comparable companies in respect of sotware R D segment. Accordingly we set aside the order passed by the AO/TPO on this issue and restore the same to his file for examining the issue afresh in the light of discussions made supra. 10. The net issue relates to TP adjustm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year, even though the assessee was incurring expenses throughout the year. The TPO, however, has computed the operating margins by considering the expenditure of the whole year. The ld. AR submitted that, for the purpose of computing the operating margins of international transactions, the TPO should have adopted related operating costs only. The ld. AR submitted that the assessee has furnished month wise P L account for the financial year 2012-13 and the operating margins arrived at by the assessee for first two months of the year was at arm s length, even considering the comparable companies selected by TPO. Accordingly, ld. AR submitted that, if the AO/TPO is directed to compute operating margin of first two months only, there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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