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TMI Blog2020 (3) TMI 1437X X X X Extracts X X X X X X X X Extracts X X X X ..... Representative has filed the revised grounds of appeal, chart and prayed for exclusion of comparables only. 3. The Brief facts of the case are that the assessee is engaged in software development services and IT Consultancy.The assessee has filed the Return of Income for the Asst. Year 2011-12 with total income of Rs.8,45,553/- after claiming deduction under Section 10A of the Act. Subsequently the case was selected for scrutiny and Notice under Section 143(2) and 142(1) of the Act were issued. The Assessing Officer found that there are international transactions exceeding the limit and the matter was referred to the Transfer Pricing Officer for determination of ALP with prior approval of the Commissioner of Income Tax, Bangalore-3. The TPO has considered the financial results as per the profit and loss account and PLI worked out on OP/OC at 14.80% and the assessee has applied the TNMM as Most Appropriate Method. The TPO has issued Notice to submit the documents as per Section 92D along with the financial statements, Annual Report and copies of agreements. As per the TP study, the assessee has chosen five comparables in respect of software development activity and applied filter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mon scope Networks India Pvt. Ltd. Vs. ITO (supra) and the employee earnings is only 73% and fails export turnover filter. iii) E-Infochips Limited - This comparable has turnover of Rs.26.04 Crores and has abnormal high margin of 56.44% and revenue from software development services segment is 73.77% and fails the revenue filter of 75% and functionally different. The learned Authorized Representative relied on chart and the comparable was excluded in the case of Commonscope Networks India Pvt. Ltd. Vs. ITO (supra). iv) ICRA Techno Analytics Limited where the turnover is Rs.15.84 Crores and RPT of 23.28%,the company is functionally different as it is engaged in the business of IT Products, Engineering and KPO Services, Segmental results of software development are not available. It fails the RPT filter and functionally not comparable. The ld.AR relied on the decision of Applied Materials India Pvt. Ltd. Vs. ACIT [IT(TP)A No.17/Bang/2016 Dt.21.09.2016 for A.Y. 2011-12] at pages 32 to 34 para 17.1 17.2 as under : (ii) Icra Techno Analytic Ltd. 17.1 We have heard the learned D.R. as well as learned A.R. and considered the relevant material on record. The D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment service provider. Nothing has been brought before us to show that the facts recorded by the DRP as well as by the co-ordinate bench of this Tribunal are not correct. Accordingly, in view of the decision of the co-ordinate bench of this Tribunal in the case of DCIT Vs. Electronics for Imaging India Pvt. Ltd. (supra), we do not find any error or illegality in the order of the DRP on this issue. 8. We found the comparables(i) Acropetal Technologies Ltd(ii)E-Zest Solutions Ltd (iii)E-Infochips Ltd. have been considered in the case of Common scope Networks India Pvt. Ltd. Vs. ITO (supra) at paras 8 9 as under : 9. The learned Departmental Representative has filed written submissions and relied on the decision in the case of M/s.Telsima Communications Pvt. Ltd. Vs. DCIT [IT(TP)A No.304/Bang/2016 Dt.22.02.2019 Asst Year 2011-12 at page 15 para 7.3.2 as under in respect of Acropetal technologies ltd. 7.3.2 From the above, it is seen that the assessee had objected to the inclusion of Acropetal on different issues before different authorities. The TPO and DRP have not addressed the issues raised before them. Before us, the assessee has objected to the incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd from an appraisal of the record before us, that the assessee has raised the objection before the TPO that this company E-infochips , is functionally dissimilar to the assessee and that the revenue from software development services is less than 75%. The TPO, however, rejected the assessee s contention on the ground that the revenue from software development services is 88% and hence it satisfies the filter. However, the TPO has not rendered any finding on the issue of functional dissimilarity of E-infochips vis- -vis the assessee in the case on hand. It is also seen that before the DRP, the assessee has raised objections on the inclusion of this company as a comparable on various issues, but the DRP has not rendered any findings on the same. 9.3.2 We find tha thte Co-ordinate Bench of this Tribunal in the decision of Finastra Software Solutions (I) Ltd., (supra) cited by the assessee (supra) has excluded this company E-infochips from the set of comparables by relying on the decision in the case of Applied Materials (P) Ltd., (IT(TP)A No.17 and 39/Bang/2016 dated 21.09.2016). However, the issue on which this company has been excluded from the set of comparables is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Tribunal in the case of Finastra Software Solutions (India) Pvt. Ltd., (supra), cited by the assessee, in its order, has excluded ICRA from the set of comparables by relying on the decision of another Co-ordinate Bench in the case of Applied Materials (P) Ltd., (IT(TP)A No.17 and 39/Bang/2016 dated 29.09.2016). However, the issue on which this company ICRA has been excluded from the set of comparables is not clear from the judicial pronouncement cited by the assessee. Since the assessee has raised certain issues for seeking exclusion of this company for the first time before us, we deem it appropriate to remand the issue of comparability of ICRA back to the file of the TPO for examination and verification of facts of the matter and adjudication on the issues raised by the assessee. Needless to add, the TPO shall afford the assessee adequate opportunity of being heard and to file details / submissions in this regard, which shall be considered before deciding this matter. We found that the decision relied by the learned Departmental Representative is a recent decision of year 2019 pertaining to assessment year 2011-12 and facts are dealt, and the comparables were rest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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