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TMI Blog2021 (1) TMI 358X X X X Extracts X X X X X X X X Extracts X X X X ..... e from Products on the overall kitty of profit, which may be significant. Since no segmental data of this company is available indicating operating profit from software development services, we order to exclude this company from the list of comparables. Persistent Systems and Solutions Ltd - As per Schedule 11, the entire revenue has been shown under one segment i.e., sale of software services and products. Therefore, no separate segment has been given in respect of software services. Accordingly, the composite data of revenue as well as margins of this company pertaining to the sale of software services and products cannot be considered as comparable with the software development services segment of the assessee. In view of the above facts and circumstances, we do not find any error or illegality in the directions of the DRP in excluding this company from the list of comparables. Include M/s. CG VAK Software and Export Ltd. as a comparable company ALP of the transactions relating to Software segment requires to be re-determined. Accordingly, we restore this issue to the file of AO/TPO with the direction to re-compute the ALP of Software development Services segment. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Transfer pricing study conducted by the assessee, its international transactions in respect of Software development segment were at arms length. 5. The TPO rejected transfer pricing study conducted by the assessee and selected following 13 companies: Sl. No. Name Sales Cost PLI 1 Acropetal Technologies Ltd. (seg) 81,40,16,893 61,67,54,876 31.98% 2 e-zest solutions (from Capitaline) 11,28,66,098 9,32,55,341 21.03% 3 E-Infochips Ltd. 26,03,84,251 167,64,47,527 56.44% 4 Evoke (from Capitaline) 14,48,69,912 13,39,96,568 8.11% 5 ICRA Techno Analytics Ltd. (in 000) 15,84,01,000 12,68,94,000 24.83% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he plea of exclusion of comparable companies, which were retained by Ld DRP. The Ld. A.R. submitted that the assessee seeks exclusion of following 3 comparable companies also from the list of comparable companies confirmed by Ld DRP:- 1. Acropetal Technologies Ltd. (seg) 2. E-Info Chips Ltd. 3. Persistent Systems Solutions Ltd. The Ld. A.R. submitted that all the above said three companies have been held to be not good comparable companies for Software Development segment by various decisions of the Tribunal. The Ld A.R furnished copies of various case laws relied upon by him. 8. On the contrary, the Ld. D.R. submitted that all the above said companies should be examined independently by the Tribunal without having recourse to the past decisions rendered by the Tribunal. He supported the order passed by Ld DRP. 9. We heard the parties on this issue. The Ld A.R submitted that M/s. Acropetal Technologies Ltd, E-zest Solutions, E-infochips Ltd. and ICRA Techno Analytics Ltd. have been excluded by the coordinate bench in the case of in the case of M/s. Applied Materials India P. Ltd. (IT(TP)A No. 17 39/Bang/2016 dated 21.9.2016. (A) Acropetal Technologi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny with the following observations:- (i) E-Infochips Limited: 10.1. The Transfer Pricing Officer included this company in the list of comparables. On being called upon to explain as to why it should not be considered as a comparable, the assessee contended that there was functional dissimilarity inasmuch as this company was engaged in software development and IT enabled services and also Products. The Transfer Pricing Officer observed that the revenues of this company from Products was only 15% of total revenue and hence the same qualified to be eligible for comparison. The DRP did not allow any relief. 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 Income indicates its operating revenue from software development, hardware maintenance, information technology, consultancy etc. Revenue from hardware maintenance stands at ₹ 3.92 crore, which has been considered by the Transfer Pricing Officer himself as sale of products. Such sale of products constitutes 15% of total revenue. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tware services and products. Therefore, no separate segment has been given in respect of software services. Accordingly, the composite data of revenue as well as margins of this company pertaining to the sale of software services and products cannot be considered as comparable with the software development services segment of the assessee. In view of the above facts and circumstances, we do not find any error or illegality in the directions of the DRP in excluding this company from the list of comparables. This ground of CO is dismissed. We notice that the co-ordinate bench has excluded this company in the case of Applied Materials India Private Limited (supra) by following the decision rendered in the case of Electronics for Imaging India P. Ltd. (supra). Consistent with the view taken in the above said cases, we direct exclusion of this comparable company. 10. The assessee also seeks inclusion of one company, named M/s. CG Vak Software Exports Ltd. The Ld A.R. submitted that this company has been held to be a good comparable in the case of Aspect Technology Centre India P. Ltd. (IT(TP)A 187/Bang/2016 dated 30-07-2020). 10.1. We heard Ld D.R and perused the record. We ..... X X X X Extracts X X X X X X X X Extracts X X X X
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