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TMI Blog2020 (12) TMI 1149X X X X Extracts X X X X X X X X Extracts X X X X ..... ified. L T Infotech Limited - This company is not functionally comparable to the assessee's case as the company L T Infotech Limited is predominantly engaged in onsite software development - Accordingly, the exclusion of this company from the comparison list by DRP is justified. R S Software Limited - when the assessee as well as the TPO excluded it as comparable without any objection by the assessee, it cannot be excluded by the DRP. Accordingly, this company is to be included as a comparable. The exclusion of this company as comparable suo moto by the DRP cannot be approved. We direct the TPO to include this company in the list of comparables. Acropetal Technologies Limited - We direct the TPO to exclude this company from the list of comparables. Jeevan Scientific Technologies Ltd. and I-Gate Global Solutions Limited - No serious argument was put forth by the ld. DR. Accordingly the exclusion of these two comparables by the DRP is justified. We direct the TPO to exclude these two companies as comparables from the list of comparables. Net profit margin realized by the tax payer in the international transactions - foreign exchange transactions to be considered as operating in n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the TPO to include this company as comparable in the list of comparables for determining the ALP. 3.2. (ii) E-Infochips Limited: According to the ld. DR this company service income 100% from sales. Being so, the DRP excluded it from the comparables on the reason that it fails the filter of service income which is 70% of the sales, which is incorrect. On the other hand, the ld. AR submitted that this company has revenue from Software Development Service is less than 75%; functionally and non-functionally not comparable as it has high fluctuation in profit and there is no segmental information available. 3.2.1. We have heard the rival contentions and perused the material on record. This company i.e. E-Infochips Limited has been considered in the Assessment Year 2011-12 in the case of Saxo India Pvt. Ltd. Vs. ACIT in IT(TP)A No. 6148/Del/2015 (67 taxmann.com 155) by the co-ordinate Bench of the Tribunal vide order dt. 5.2.2016 in para 10.2 held as under: 10.2. After considering the rival submissions and perusing the relevant material on record, we find that the Annual report of this company is available in the paper book with its Profit and loss account at page 1025. Schedule of Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ACIT In IT(TP)A No. 17/Bang/2016 for the Asst. Year 2011-12 vide order dt. 21.09.2016, this comparable was excluded in the list of comparables. Accordingly, the exclusion of the DRP is justified. 3.4. L T Infotech Limited-The ld. DR submitted that this comparable cannot be excluded on the reason of high turnover from the list of comparables and more so the assessee itself has considered in its own TP Study. On the other hand, the ld.AR submitted that this company was rejected by the TPO on the reason that this comparable has high turnover of ₹ 2,336 Crores and net assets employed by the company is ₹ 165.02 Crores which is significantly higher than the assessee and it cannot be compared with the captive service provider like the assessee. More so, this company has engaged in product development. The ld.AR has supported the order of lower authorities. 3.4.1. We have heard the rival contentions and perused the material on record. This company is not functionally comparable to the assessee's case as the company L T Infotech Limited is predominantly engaged in onsite software development and it was considered in the case of Applied Materials India Pvt. Ltd. Vs. ACIT in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue is concerned. Therefore, we direct the AO/TPO to apply 15% RPT filter in respect of all the comparables. In view of the facts recorded by the DRP as well as the decision of the co-ordinate bench, we do not find any reason to interfere with the directions of the DRP. 3.4. Similar view was taken in the case of Finstra Software Solutions India Pvt. Ltd. Vs. ACIT in IT(TP)A No. 491 529/Bang/2016 Dt. 2.5.2018 and in the case of Comscope Network (India) Pvt. Ltd. Vs. ITO in IT(TP)A Nos. 166 181/Bang/2016 Dt. 22.2.2017. Accordingly, the exclusion of this company from the comparison list by DRP is justified. 3.5. (v) R S Software Limited-This company considered as acceptable by the assessee and the TPO in the TP Study however the DRP excluded it from list of comparables. In our opinion, when the assessee as well as the TPO excluded it as comparable without any objection by the assessee, it cannot be excluded by the DRP. Accordingly, this company is to be included as a comparable. The exclusion of this company as comparable suo moto by the DRP cannot be approved. We direct the TPO to include this company in the list of comparables. 3.6. In the ITES Segment, the Revenue has raised ground ..... X X X X Extracts X X X X X X X X Extracts X X X X
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