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TMI Blog2020 (12) TMI 1191X X X X Extracts X X X X X X X X Extracts X X X X ..... TIONS INDIA PRIVATE LTD. [ 2020 (2) TMI 1279 - ITAT BANGALORE] such as the Assessee, this company was held to be a valid comparable company and included in the list of comparable companies. We therefore direct inclusion of this company in the list of comparable companies. - IT(TP) A No. 150/Bang/2016 - - - Dated:- 16-12-2020 - N.V. Vasudevan, Vice President And Chandra Poojari, Member (A) For the Appellant : Aliasgar Rampurwala, C.A. For the Respondents : G. Gurusamy, CIT (D.R.) ORDER Chandra Poojari, Member (A) This appeal filed by the assessee is directed against the final assessment order passed by the Assessing Officer u/s. 143(3) r.w.s. 144C of the Income Tax Act, 1961 ('the Act'). 2. The assessee has raised the following grounds: 1. That the order passed by the learned Deputy Commissioner of Income-tax, Circle 3(1)(2), Bangalore (`Assessing Officer' or 'MY)/the Additional Commissioner of Income-tax (Transfer Pricing--1(3)), Bangalore ( Transfer Pricing Officer' or 'TPO') and the learned Dispute Resolution Panel (the 'Panel% to the extent prejudicial to the Appellant, is bad in law and liable to be quashed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO/TPO/Panel erred in law and on facts in not including L G S Global Limited as comparable company even though it passes the test of functional comparability vis-a-vis the functions performed by the Appellant. 3. The learned AO/TPO/Panel erred in law and on facts in not including Akshay Software Technologies Limited as comparable company even though it passes the test of functional comparability vis-a-vis the functions performed by the Appellant. 4. The learned AO and the learned TPO in pursuance of the DRP directions erred in law and on facts in not considering Evoke Technologies Private Limited as comparable company that passes all the test of functional comparability vis-a-vis the functions performed by the Appellant without giving the opportunity of being heard. 5. The learned AO and the learned TPO in pursuance of the DRP directions erred in law and on facts in not considering R.S. Software (India) Limited as comparable company that passes all the test of functional comparability vis-a-vis the functions performed by the Appellant without giving the opportunity of being heard. 6. The learned AO and the learned TPO in pursuance of the DRP directions erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T products. The company has 297 customers with whom the company has long term contract for software development. The company is engaged in Software Development only. Hence it was included in the list of comparables. 5.2 Now the contention of the AR is that Persistent Systems Limited which was engaged in diversified activities with no segmental break up. He relied on the order of the co-ordinate bench of this Tribunal in the case of LG Software India Pvt. Ltd. in IT(TP) A No. 52/Bang/2016 dt. 5.8.2020 wherein it was excluded from the list of comparables. The ld. DR submitted that the segmental details could be collected from the said company by issue of notice u/s. 133(6) of the Act and it may be remitted to the Assessing Officer for fresh consideration. 5.3 We have heard the rival contentions, perused and carefully considered the material on record. The company Persistent Systems Limited was considered in the case of LG Software India Pvt. Ltd. cited (supra) by the co-ordinate Bench and it was excluded. Following the judicial precedence, we are of the opinion that the segmental details were not available and it cannot be included in the list of comparables. Accordingly, we di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Software Technologies Ltd. is not a good comparable. For the second company is LGS Global Ltd., we find that in the case of M/s. Applied Materials India Pvt. Ltd. (supra), it was held by the Tribunal regarding LGS Global Ltd. that the cost of employees is not separately reported by this company and this is also not clear as to whether the goodwill is self generated or it acquired as an intangible asset and therefore, the issue regarding this company was set aside to the record of TPO/Assessing Officer to verify the relevant facts to ascertain the employee cost and then decide the functional comparability. It was also held that information u/s. 133(6) may be obtained from that company for the purpose of ascertaining the annual employee cost of this company. As per the above discussion, we hold that the issue regarding inclusion or exclusion of LGS Global Ltd. (supra) is restored back to the file of the A.O./TPO for fresh decision and the claim of the assessee for inclusion of Akshay Software is rejected. So the TPO/A.O. should first decide about inclusion/exclusion of LGS Global Ltd. and if it is found that this company is to be included, then the ALP should be worked out on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was submitted that the DRP has not spelt out as to how increase in consultancy charges resulted in peculiar circumstances prevailing in the case of this company. Our attention was drawn to a decision of the ITAT Bangalore in the case of M/S. Applied Materials India Pvt. Ltd. IT(TP) A. No. 17/Bang/2016 IT(TP) A. No. 39/Bang/2016 order dated 21.9.2016 for AY 2011-12 wherein this company was regarded as comparable and include as comparable. The learned DR relied on the order of the DRP. 8. We are of the view that the reasons for exclusion of this company are not sound. When both the Assessee and the revenue seek inclusion of this company, there was no valid basis for the DRP to suo motto exclude this company from the list of comparable companies. In the decision cited by the learned counsel for the Assessee in the case of a SWD service provider such as the Assessee, this company was held to be a valid comparable company and included in the list of comparable companies. We therefore direct inclusion of this company in the list of comparable companies. In view of the above decision of Tribunal, we allow the ground taken by the assessee. We direct the Assessing Officer/TPO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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