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TMI Blog2021 (4) TMI 1023X X X X Extracts X X X X X X X X Extracts X X X X ..... s length, in the Transfer Pricing Documentation. There is no dispute on part of the revenue that in the BPO industry the prevalent rate for services was in the range of USD 8 to USD 15 per hour and was comparable/lower to the rate of USD 19 charged by the assessee from the AE and was at arm s length applying CUP method. Thus, the adjustment made by the TPO is not sustainable even applying the CUP method. Hence, there is no need to interfere with the findings of the CIT(A). Hence, the appeal of the Revenue is dismissed. - I.T.A. No. 2881 /DEL/2011 - - - Dated:- 23-4-2021 - SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER Appellant by : Sh. Bhagwati Charan, SR. DR Respondent by : Sh. Ajay Vohra, Sr. Adv, Mr. Romit Katyal, Adv ORDER PER SUCHITRA KAMBLE, JM This appeal is filed by the Revenue against the order dated 29/03/2011 passed by CIT(A)-XX, New Delhi for Assessment Year 2004-05. 2. The grounds of appeal are as under:- 1. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of ₹ 7,32,39,369/- on account of adjustment in Arm Length . 2. The Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his is violation of R 46A. 3. The assessee is a company engaged in the business of developing package software and providing software consulting services primarily for the use in delivery communication Industry. The assessee during the relevant previous year has entered into the following international transactions: S. No. Description of transaction Method Used Value (In Rs.) 1 Sale of Software development product CUP 29,05,100 2 Provision of software development service TNMM 72,53,13,306 3 Payment for administration and support services TNMM 1,88,70,124 4 Provision of business process outsourcing services TNMM 16,62,13,210 5 Payment of marketing services TNMM 50,11,564 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has rightly calculated the operating margin of the assessee at 12% after allowing comparability adjustment on account of abnormal cost. The Ld. AR relied upon the following decisions: a) Transwitch India Pvt. Ltd. vs. ACIT (ITA No. 6083/Del/2010 approved by the Hon ble Delhi High Court vide order dated 17.07.2013) b) DCIT vs. Terex India Pvt. Ltd. (ITA No. 6775/Del/2015) c) Ariston Thermo India Ltd. vs. DCIT (ITA No. 1455.PN/2010) d) Pangea3 Legal Database Systems Pvt. Ltd. vs. ITO (ITA No. 2128/Del/2014) e) Smart Cube India Pvt. Ltd. vs. ACIT (ITA No. 6274/Del/2012) f) ACIT vs. Fiat India Pvt. Ltd. (ITA No. 1848/Mum/2009) g) Brintons Carpets Asia Pvt. Ltd. vs. ACIT (ITA No. 1296/PN/10) h) DCIT vs. Panasonic AVC Networks India Co. Ltd. (ITA No. 4620/Del/2011) The Ld. AR further submitted that the comparability adjustment on account of abnormal cost was claimed by the assessee before the TPO. The adjusted margin after making the adjustments was worked out at 4.08%. The claim of the assessee was rejected by the TPO. Against the order of the TPO, the assessee claimed the adjustment before the CIT(A) and filed revised calculat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 51%. After making adjustment on account of idle employee cost the adjusted operating margins of the assessee is work out at 45.87% which is more than the arithmetic mean margin of the comparables companies at 15.49% (corrected margin 9.66%). Thus, this does not warrant any transfer pricing adjustment in respect of international transactions undertaken by the assessee. The Ld. AR further submitted that in terms of Rule 27, the assessee is entitled to defend the order of the CIT(A) before the Tribunal on all grounds including the grounds which have either not been decided by the CIT(A) or have been decided against the assessee. For which, the Ld. AR relied upon the decisions of Sanjay Sawhney vs. Pr. CIT 273 Taxmann 332 (Del.) and B. R. Bamasi vs. CIT 83 ITR 233 (Bom). Thus, the Ld. AR submitted that the adjustment made by the TPO is not sustainable even applying the CUP method. 7. We have heard both the parties and perused the material available on record. It is pertinent to note that the comparability adjustment on account of abnormal cost was claimed by the assessee before the TPO and the adjusted margin after making the adjustments was worked out at 4.08%. The said claim o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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