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TMI Blog2021 (3) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act, 1961 (Act) in relation to AY 2013-14. 2. There is a delay of 2 days in filing this appeal which has been explained by the assessee as due to the Managing Director of the assessee not being available in Bangalore due to official work. The delay being a nominal delay, the same is condoned accepting the reasons given for condonation of delay. 3. The assessee in engaged in the business of provision of Software Development Services (SWD services), to its wholly owned holding company. In terms of the provisions of Sec.92-A of the Act, the assessee and its wholly owned holding company were Associated Enterprises ("AEs"). In terms of Sec.92B(1) of the Act, the transaction of providing SWD Services and MSS were "international transaction" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit Level Indicator (PLI) for the purpose of comparison. The OP/OC of the assessee was arrived at 16.59% by the assessee in its TP study. The operating income was Rs. 119,38,25,958/- and the Operating Cost was Rs. 102,40,13,273/-. The Operating profit (Operating income - Operating cost was Rs. 16,98,12,685/-. Thus the OP/TC was arrived at 16.58%. The assessee chose companies who are engaged in providing similar services such as the assessee. The assessee identified comparable companies whose average arithmetic mean of profit margin was comparable with the Operating margin of the Assessee. The Assessee therefore claimed that the price it charged in the international transaction should be considered as at Arm's Length. 5. The Transfer Pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 371,50,173 13.4.3 The above shortfall of Rs. 371,50,173/- is treated as transfer pricing adjustment u/s 92CA in respect of software development segment of the taxpayer's international transactions." Thus a sum of Rs. 3,71,50,173/- was added to the total income of the Assessee on account of determination of ALP for provision of SWD services by the Assessee to its AE. 7. The Assessee filed objections before the Disputes Resolution Panel (DRP) against the draft assessment order passed by the AO wherein the addition suggested by the TPO as adjustment to ALP was added to the total income of the Assessee by the AO. The DRP gave certain directions. Based on the directions of the DRP, the AO passed the final order of assessment. To the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd., 293.05 11. As far as excluding the companies on the basis of turnover is concerned, the issue has been settled in several decisions of the Tribunal and has been elaborately discussed by this Tribunal in the case of Autodesk India Pvt. Ltd. v. DCIT in IT(TP)A No.540 & 541/Bang/2013, order dated 06.07.2018. The Tribunal in this decision after review of entire case laws on the subject, considered the question, whether companies having turnover more than 200 crores upto 500 crores has to be regarded as one category and those companies cannot be regarded as comparables with companies having turnover of less than 200 crores, the Tribunal held as follows:- "17.7. We have considered the rival submissions. The substantial question of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the 5 companies turnover was much higher compared to that the Assessee. 17.8. In view of the above conclusion, there may not be any necessity to examine as to whether the decision rendered in the case of Genisys Integrating (supra) by the ITAT Bangalore Bench should continue to be followed. Since arguments were advanced on the correctness of the decisions rendered by the ITAT Mumbai and Bangalore Benches taking a view contrary to that taken in the case of Genisys Integrating (supra), we proceed to examine the said issue also. On this issue, the first aspect which we notice is that the decision rendered in the case of Genisys Integrating (supra) was the earliest decision rendered on the issue of comparability of companies on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the CIT(A) on the issue of application of turnover filter and his action in excluding companies by following the ratio laid down in the case of Genisys Integrating (supra)." 12. Respectfully following the aforesaid decision, we hold that the aforesaid five mentioned in ground No.5 should be excluded from the list of comparable companies. We hold and direct accordingly. No other grounds raised in the grounds of appeal as well as the additional grounds were pressed for adjudication as in the opinion of the counsel for the learned counsel for the Assessee, those grounds would become academic. 13. We direct the AO/TPO to compute the ALP in the light of the directions given in this order after affording opportunity of hearing to the Assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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