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TMI Blog2022 (6) TMI 1368X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of product sales. As per the information in annual report, in the software development services segment, this company helps its customer to create new path and experience to drive their growth and also the TPO/DRP rightly commented on the various objections made by the assessee before them. The Ld. A.R. was not able to controvert the above findings before us. In view of this, we do not find any infirmity in including this comparable in the list of comparables. This ground of appeal of the assessee is rejected. Exclusion of Mind Tree Ltd. from the list of comparables - Admittedly, this comparable is considered as not comparable in the case of Yahoo Software Development India Pvt. Ltd. [ 2020 (2) TMI 1365 - ITAT BANGALORE] .Thus we are inclined to direct the TPO/AO to exclude this company from the list of comparables. Exclusion of Larsen Toubro Infotech Ltd. - We have heard the rival submissions and perused the materials available on record. This company as not considered as comparable in the case of Global Logic India Ltd [ 2020 (6) TMI 712 - ITAT DELHI] because of trading in software and owned significant intangible assets, thus we direct the AO/TPO to exclude this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the list of comparables. Direction to AO/TPO to include comparables in the list of comparables while passing giving effect order to the DRP s direction arbitrarily when the above comparable did not form part of the final list of comparables as per TPO order for SWD segment - Bhilwara Infotechnology Ltd., Nucleus Software Expots Ltd., Cybercom Datamatics Information Solotions Ltd. AND Consilient Technologies Pvt. Ltd. - After hearing both the parties, we direct the AO/TPO to pass the consequent orders in conformity with the direction to the Ld. DRP order. Ordered accordingly. Excluding Infomile Technologies Ltd.- Admittedly, the assessee raised additional ground on this issue. As such in our opinion, lower authority have no occasion to examine it. Being so, in the interest of justice, we remit this issue to AO/TPO for fresh consideration. - IT(TP)A No.2428/Bang/2019 - - - Dated:- 15-6-2022 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K., JUDICIAL MEMBER For the Appellant : Shri Sumeet Khurana, A.R. For the Respondent : Ms. Neera Malhotra, D.R. ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER: This appeal by the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd (Seg) as a comparable to the Appellant on the ground of functional similarity whereas this comparable should have been excluded for the reason being functionally dissimilar, huge amount of R D expenditure, huge onsite expenses, etc. 8. The Learned AO in pursuance of the directions of the learned Panel erred in law and on facts in including Rheal Software Private Ltd. as a comparable to the Appellant on the grou.r.ld of functional similarity whereas this comparable should have been excluded for the reason being functionally dissimilar, no segmental bifurcation etc. 9. The Learned AO in pursuance of the directions of the learned Panel erred in law and on facts in including Mindtree Ltd. as a comparable to the Appellant on the ground of functional similarity whereas this comparable should have been excluded for the reason being functionally dissimilar, lack of segmental data, significant onsite activities, owns huge amount of intangibles and having significant R D expenditure. 10. The Learned AO in pursuance of the directions of the learned Panel erred in law and on facts in including Larsen Tourbo Infotech Ltd. as a comparable to the Appellant on the ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eason being functionally dissimilar etc. 17. The Learned AO in pursuance of the directions of the learned Panel erred in law and on facts in including Infosys Ltd. as a comparable to the Appellant on the ground of functional similarity whereas this comparable should have been excluded for the reason being functionally dissimilar, involved in development of software products, huge brand building and R D 18. The Learned AO in pursuance of the directions of the learned Panel erred in law and on facts in including Cybage Software Pvt. Ltd. as a comparable to the Appellant on the ground of functional similarity whereas this comparable should have been excluded for the reason being functionally dissimilar, involved in diversified activities and lack of segmental data etc. 19. The Learned TPO along with the learned AO in pursuance of the directions of the learned Panel erred in law and on facts in excluding Akshay Software Technologies Ltd. as a comparable to the Appellant on the ground of functional dissimilarity whereas this comparable should have been included for the reason being functionally similar and passing all the filters applied by the Learned TPO. 20. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27. The Learned AO/ TPO while passing the final AO order/ Order giving effect to DRP directions erred in excluding Sasken Communication Technologies IT(TP)A No.2428/Bang/2019 M/s. Citrix R D India Private Limited, Bangalore Ltd in SWD comparable set whereas the same should have been included as per the DRP directions. 3. The assessee filed petition for admission of additional grounds stating that on account of inadvertent oversight on the part of assessee, these additional grounds were not raised on earlier occasion before Ld. Dispute Resolution Panel ( DRP ) and prayed that these additional grounds may be admitted. In view of the judgement of the Hon ble Supreme Court in the case of NTPC Ltd. reported in 229 ITR 383, wherein it was held that when there is no necessity of investigation of fresh facts, otherwise on record, Tribunal is at liberty to admit the additional grounds. Accordingly, Ld. AR prayed that all the facts are already recorded and there is no necessity of investigation of any facts otherwise on record and prayed that additional grounds may be admitted in the interest of justice. 3.1 Ld. D.R. not put any serious objection for admission of additional ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or sales effected or assets employed or to be employed by 'the enterprise or having regard to any other relevant base; (ii) the net profit margin realised by the enterprise or by an unrelated enterprise from a comparable uncontrolled transaction or a number of such transactions is computed having regard to the same base; (iii) the net profit margin referred to in sub-clause (ii) arising in comparable. uncontrolled transactions is adjusted to take into account the differences, if any, between the international transaction [or the specified domestic transaction] and the comparable uncontrolled transactions, or between the enterprises entering into such transactions, which could materially affect the amount of net profit margin in the open market; (iv) the net profit margin realised by the enterprise and referred to in sub-clause (i) is established to be the same as the net profit margin referred to in sub-clause (iii); (v) the net profit margin thus established is then taken into account to arrive at an arm's length price in relation to the, international transaction [or the specified domestic transaction]; (f) ..... (2) For the purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was approved by the Council of the OECD on 22 July 2010. In paragraph 2 of these guidelines it has been explained as to what is comparability adjustment. The guideline explains that wheri applying the arm's length principle, the conditions of a controlled transaction (i.e. a transaction between a taxpayer and an associated enterprise) are generally compared to the conditions of comparable uncontrolled transactions. In this context, to be comparable means that: None of the differences (if any) between the situations being compared could materially affect the condition being examined in the methodology (e.g. price or margin), or Reasonably accurate adjustments can be made to eliminate the effect of any such differences. These are called comparability adjustments. 13. In Paragraph 13 to 16 of the aforesaid OECD guidelines, need for working capital adjustment has been explained as follows: 13. In a competitive environment, money has a time value. If a company provided, say, 60 days trade terms for payment of accounts, the price of the goods should equate to the price for immediate payment plus 60 days of interest on the immediate payment price. By carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ures of receivables, inventory and payable at the year end or beginning of the year or average of these figures. (ii) the selection of the appropriate interest rate (or rates) to use. The rate (or rates) should generally be determined by reference to the rate(s) of interest applicable to a commercial enterprise operating in the same market as the tested party. The guidelines conclude by observing that the purpose of working capital adjustments is to improve the reliability of the comparables. 15. In the present case the TPO allowed working capital adjustment accepting the calculation given s by the Assessee. The CIT(A) in exercise of his powers of enhancement held that no adjustment should be made to the profit margins on account of working capital differences between the tested party and the comparable companies for the following reasons: (i) The daily working capital levels of the tested party and the comparables was the only reliable basis of determining adjustment to be made on account of working capital because that would be on the basis of working capital deployed throughout the year. (ii) Segmental working capital is not disclosed in the annual reports of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjustment has to be based on the opening and closing working capital deployed. The Bench has also observed that that in Transfer Pricing Anal is there is always an element of estimation because it is not an exact science. One has to see that reasonable adjustment is being made so as to bring both comparable and test party on same footing. Therefore there is little merit in CIT(A)'s objection on working adjustment based on unavailable daily working capital requirements data. There is Also no merit in the objection of the CIT(A) regarding absence of segmental details available of working capital requirements of comparable companies chosen and absence of details of trade and non-trade debtors of comparable companies as these details are beyond the power of the Assessee to obtain, unless these details are available in public domain. Regarding absence of cost of working capital funds, the OECD guidelines clearly advocates adopting rate(s) of interest applicable to a commercial enterprise operating in the same market as the tested party. Therefore this objection of the CIT(A) is also not sustainable. 17. In the light of the above discussion we are of the view that the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e issue to the file of AO/TPO to compute the working capital adjustment after necessary examination in the light of the above observation and after allowing an opportunity of hearing to the assessee. This ground is partly allowed for statistical purpose. 7. Ground No.5 above is not pressed and dismissed as not pressed. 8. With regard to Ground No.6, the contention of the Ld. A.R. is that the AO/TPO has computed incorrect margin across various comparables in both segments of SWD ITes. The comparable needs re-computation/verification and prayed that the issue may be remitted for re-computation purpose in respect of following comparables:- SWD Segment 1. CG VAK Software Exports Ltd. 2. Tata Elxsi Limited (Segment) 3. Cybage Software (P) Ltd. ITes Segment 1. Cosmic Global Limited 2. Digicall Global (P) Limited 8.1. We accede to the request of Ld. A.R. Accordingly, we remit the issue to the file of AO/TPO for re-computation of correct margin after giving an opportunity of hearing to the assessee. Accordingly, this ground of appeal is allowed for statistical purposes. Ground Nos.7 to 18:- 9. The Ld. A.R. wanted the exclusion of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the generally acceptable tolerable limit of 3%. There is no indication in the annual report to show that the R D had resulted in any distinct product development giving rise to source of separate revenue stream. On the other hand, the information in the annual report indicate that the R D activities are undertaken towards continuous training, human resource development and to facilitate the engineering teams in upcoming projects in terms of delivery capability and capacity. Therefore, the R D activities are to be considered as routine and towards enhancing the development capability of the employees for efficient delivery. In view of the above these pleas were rejected by the Ld. DRP. 10.4 With regard to the plea that the company has significant intangibles, it was noted by Ld. DRP that the value of intangibles generated internally was only Rs.3.97 crore (refer page No. 52, fixed assets schedule 9) and is not very significant considering the turnover of Rs.817 crore and assets put to use of Rs.101 crore of the company. Hence this plea was rejected. Ld DRP also noted that the assessee has failed to establish that such differences towards R D, intangibles have material effect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per the information in annual report, in the software development services segment, this company helps its customer to create new path and experience to drive their growth and also the TPO/DRP rightly commented on the various objections made by the assessee before them. The Ld. A.R. was not able to controvert the above findings before us. In view of this, we do not find any infirmity in including this comparable in the list of comparables. This ground of appeal of the assessee is rejected. 11. Ground No.8 is with regard to exclusion of Rheal Software P. Ltd. This ground was not pressed. Accordingly, dismissed as not pressed. 12. Ground No.9 is with regard to exclusion of Mind Tree Ltd. from the list of comparables. Ld. A.R. submitted the following:- Significant onsite activity (viz. 46% of revenue earned under Onsite model) Diversified business operations UN Practice Manual, Chapter 5 extract - comparables having unique intangibles have to be rejected Significant Research and development activity Presence of significant non-routine intangibles. 12.1 Ld. D.R. submitted that on perusal of the annual report of this company Ld. DRP noted that this com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.0 3 Providing software support and maintenance to the clients 62013 21.1 Computer consultancy and computer facilities management activities 62020 4.0 5 Software installation 62091 5.6 6 Other information technology and computer service activities n.e.c 53.7 Total 100 12.3 The above information clearly show that this company is engaged only in software development and related services. Therefore, the pleas that the company performs different and diverse activities and hence functionally different is rejected. Hence, Ld DRP also rejected the plea that this company is product-based company. 12.4 It was also contended that this company owns significant non-routine intangibles and hence not comparable. However, on perusal of the annual report for the F.Y. 2014-15, Ld. DRP noted that there is no information to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering into business transactions or likely to materially affect the profit arising from such transactions in the open market. Hence, these pleas were rejected by Ld. DRP. 12.6 As to onsite expenses, it was noted that the assessee has assumed that the entire expenditure incurred in foreign currency would be onsite expenses, which is incorrect, as there may be requirement to incur expenditure in foreign currency for offshore transactions also like payment of professional charges, sales commission etc. Besides, the onsite activity, as such would not affect adversely comparability when the company is otherwise functionally comparable. Therefore, Ld. DRP considered it appropriate to reject these pleas. Accordingly, he upheld the selection of this comparable. 12.7 We have heard the rival submissions and perused the materials available on record. Admittedly, this comparable is considered as not comparable in the case of Yahoo Software Development India Pvt. Ltd. in ITA No.2651/Bang/2018 and 2635/Bang/2019 for the assessment years 2014-15 2015-16 vide order dated 28.2.2020 42. The DRP while dealing with the aforesaid objections has merely taken the view that the presence of IP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parable. Further, Ld. DRP noted that this company has two business segments services cluster and industrials cluster operating in software development services. The information in the annual report clearly show that the entire revenue is from provision of software services. As per Note 2, regarding accounting principle on Revenue Recognition, it is stated that revenue is recognized when services are rendered and related costs incurred; and there is no reference to sale of products. The financial statements do not mention about any product sale or inventory. As there is no revenue stream on account of product sales, Ld. DRP did not find any merit in the argument that the company is engaged in product sales. Accordingly, he upheld it as functionally comparable being a software service provider. 13.2 It was also contended that the company is engaged in diversified activities with reference to certain information said to be available in the company's website. At the outset, Ld. DPR noted that the information put in website cannot be given much credence, as they are mere forward looking statements with the motive of advertisement and other promotion. Further, the information in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no information to indicate that the brand has impacted the revenue or profit of the company. The intangibles referred in the Asset Schedule represent the computer software, and business rights and as such does not refer to any IPR or license owned by the said company as argued. Certain developments are under way which has not crystallized into an intangible to be a source of revenue. Thus, the assessee has failed to establish that such differences have material effect on the margin of the above company, in terms of clause (i) of sub-rule (3) of Rule 10B, which provides that an uncontrolled transaction shall be comparable to an international transaction if none of the differences, if any, between enterprises entering into business transactions or likely to materially affect the profit arising from such transactions in the open market. Hence, these pleas were rejected by the Ld. DRP. 13.5 On the plea of onsite expense, Ld. DRP noted that the expenditure incurred in foreign currency have been assumed to represent onsite expenses which is totally incorrect. It was seen that, the assessee has not given any reasons or justification as to how these affect comparability. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een product and services segment, presence of onsite activity and the impact of extraordinary event of acquisition during the relevant previous year. Therefore; this company is, directed to be excluded from the list of comparable company. 38. As far as L T Infotech Ltd. is concerned, the Id. counsel for the assessee brought to our notice the decision of ITA Delhi Bench in the case of Saxo India Pvt. Ltd. v. ACIT, ITA No. 6148/De1/2015 for A' 2011- 12, order dated 5-2-2010, wherein the Tribunal took note of the fact that this company was also trading in software and owned insignificant intangible assets. The company was excluded from the list of comparable companies with reference to SWD services provider such as the assessee. The Id. Counsel pointed out that though this decision was rendered with reference to AY 2011-12, the same reasoning would apply to AY 2015-16 also and in this regard, he drew our attention to page 696 of assessee's PB, which gives the details of the revenue generated by this company without any segmental breakup. Our attention was also drawn to page 682 of PB which shows that there is substantial onsite revenue activity as well as cost incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted was considered for exclusion because of trading in software and owned significant intangible assets, and further the Infosys Limited was excluded considering the brand presence and turnover criteria. We follow the judicial precedence and direct the TPO to exclude L T InfoTech Limited, Persistent Systems Limited and Infosys Limited from the final list of comparables for determination of ALP. 13.8 In view of the above, we direct the AO/TPO to exclude this company from the list of comparables. 14. Ground No.11 is with regard to exclusion of R.S. Software (India) Ltd. from the list of comparable companies. In this regard, the Ld. A.R. submitted as follows:- Significant Onsite activity - The overseas staff and office expenses constitutes a significant portion of the operating cost of the company - 68.82% Functionally dissimilar Significant outsourcing charges - Charges are in the nature of sub-contractor expenses. 14.1. The Ld. D.R. submitted that the assessee had selected this company as functionally comparable in its TP study giving the reasons, R S software is engaged in providing technology solutions to the electronic payments industry. The company i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pment activity. The data analytic services also use only certain software and tools, write codes to perform certain tasks. Like any other software application, these tools also facilitate and enables business enterprises for informed management and decision. Therefore, he did not find merit in the plea. Further, there cannot be any distinction between high end software activity and low-end activity, so long as it falls within the purview of software development services. Besides, under the TN MM, such differences are tolerable and there is no requirement that the services / activities performed are identical. It is enough that the services are similar and fall within the same domain of software development. Accordingly, the pleas raised were rejected by the Ld. DRP. 14.4 On the plea of onsite expense, Ld. DRP has already noted that they do not adversely affect comparability. Hence, this plea was rejected by him. 14.5 The company has reported outsourcing activity constituting about 21.17% of total operating cost of the company during the year. The annual report mentions that these activities are used for operational activities. This is a common practice in almost all the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,353.53/- million and software licenses of Rs.71.45/- million aggregating to Rs.12,424.98/- million. Thus, the income from software licenses constitute a meagre 0.58% of its operating revenue. It is also noted that this company in response to the notice Software product Category Revenue as per books of accounts (INR) eMee Internally developed 20,525,798 Radia Acquired for Distribution activity 3,421,402 GEMS Reselling activity 14,374,00 SAP Reselling activity 28,877,317 WCM connector(ECSC) Internally developed 1,046,640 E Docs DM connector (ECSC) Internally developed 876,282 AWS Reselling activity 790,500 Cloudsquad Acquired for distribution activity 1,533,750 Grand total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 88 of the annual report for FY 2012-13 it was stated in the notes to the consolidated results that the increase of intangible block of assets during the year (2012-13), of Rs.262.84 million, was mainly on account of acquisition of various IPs during the year and the same is shown in the intangible Asset Schedule of the consolidated financial statement at page 115 as under:- 16.6 All these clearly show that the IP related and product revenue pertain to other group entities and does not pertain to M/s Persistent Systems Ltd, which is being compared. It is also relevant to note that this company has clarified in its reply given u/s 133(6), that M/s Persistent Systems Ltd is predominantly engaged in the business of rendering software development services; the revenue reported is primarily on account of rendering of software development services only. The relevant extract is as under In respect of the information you have requested under 3(a) and 3(c) in respect of software products and innovations, overseas subsidiary companies of Persistent Group have acquire certain Intellectual Property (IP) products and generating some revenue from licensing and support of these produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merica Software Development Centre Private Limited (in ITA (TP) No. 2531/Bang/2017 dated 23.05.2.918 relating to A.Y. 2013-14). In view of the above, Ld. DRP upheld the selection of this comparable. 16.9 On the plea of the RPT, Ld. DRP noted that the approach of the TPO in treatment of related party transaction into two sets, are for revenue transactions and other for expense transaction is logical and correct. He also noted that the RPT filter was adopted by the TPO was with the above conditions and has adopted consistently. Hence, Ld. DRP did not find any infirmity in the approach. Hence, he rejected the assessee's plea. 16.10 The company has reported outsourcing activity constituting about 14.51% of total operating cost of the company during the year. The annual report mentions that these activities are used for operational activities. This is a common practice in almost all the companies to give a small portion of the work to some other vendors for a variety of reasons. This may allow the company to focus on its core activities. Sometimes it may be to meet the mismatch in certain skill-sets that are required in various projects. These expenses are incurred in the rout ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e than 25% related party transactions should therefore be rejected as comparables. The Hon'ble ITAT has upheld the application of this filter by the TPO in its order in the case of M/s. Supporisoft India Pvt. Ltd for AY 2005-G6 in IT (TP)A 1372/B/11 20/2012 dated 28-3-2013 following its own decision in the case of M/s. Actis Advertisers Pvt. Ltd. vide ITA No.5277/Del/2011 dated 12.10.2012. On perusal of the Annual Report of Persistent observe that the company has RPT in excess of 25% of the sales. The calculation of the same has been provided below for your ease of reference: RPT to Sales ratio for FY 2014-15 particulars Amount (INR Million) Sale of services 2,410.02 Commission received 10.26 Purchase of software 1.49 Cost of technical professional 1,339.1 Commission paid on sales 111.79 Traveling and conveyance 19.27 Total related party transactions (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;s activities involve predominantly providing software related services, which is considered to be a single business segment, since these are subject to similar risks and returns'. Thus, it is functionally comparable to the assessee which renders software development -services and other allied services. Further, in response to the information gathered u/s 133(6), this company has clarified that it is engaged in software development and IT consulting services and it is not engaged in product development. Thus, the contentions of the assessee that it is engaged in diverse activities and not functionally comparable is without merits. Besides, there is no information in the annual report to indicate that this company is engaged in product development or to indicate that it has revenue stream from product sales. The assessee also could not point to any such information in the annual report. We also note at page 6 of the annual report, the independent auditor has certified, 'the company does not have any purchase of inventories or sales of goods since it is a service company'. In view of these, Ld. DRP upheld that this company is functionally comparable to the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see and cannot be considered as a comparable. However, these facts were not verified or the assessee not raised these arguments before lower authorities. Hence, this issue is remitted back to the file of AO/TPO for fresh consideration to examine this issue afresh. 18. Ground No.15 is with regard Aspire Systems (India) (P) Ltd. for exclusion of this company from the list of comparable companies. The Ld. A.R. submitted as follows:- Onsite revenue - It is observed that the company earns about 90.26% of its revenue from its office in South Africa. Functionally dissimilar - The company is engaged in high end services in the nature of technology analytics Segmental information is not provided. 18.1. Ld. D.R. submitted that on perusal of the annual report, Ld. DRP noted that this company is engaged in provision of software development services and satisfies all the filters adopted by the TPO. This company is engaged in providing outsourced technology services. The pleas raised as to platforms are nothing but software bases on which coding is carried out. Every software company has to use such software platforms to develop the software. The activities of the company fal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 19. Ground No.16 is with regard to exclusion of Inteq Software Pvt. Ltd. This ground is not pressed and hence, dismissed as not pressed. 20. Ground No.17 is with regard to exclusion of Infosys Ltd. as comparable in the list of comparables. 20.1 Ld. A.R. submitted as follows:- Infosys is involved in development of software products. No segment data is available in respect of the same. Presence of significant brand values, Intangibles scale respectively Company engaged in R D activity cannot be considered comparable to captive service providers Significant onsite activity (viz. 50.4% of revenue is generated from onsite model) 20.2 Ld. D.R. relied on the order of Ld DRP. 20.3 We have heard the rival submissions and perused the materials available on record. This company is considered as not comparable in the case of Yahoo Software Development India Pvt Ltd. Cited (supra). wherein it was held as under: 39. The next company which the assessee seeks to exclude is Infosys Ltd. As far as this company is concerned, it is seen that the following are the functional dissimilarities brought to our notice:- Functionally dissimilar - owns intelle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the predominant revenue generated during the year FY 14-15 is from export of software services. The Company satisfies all the filters applied by the learned TPO. The contention of the TPO that the company fails the export services revenue filter is misplaced, as the same is observed to be 97.55% 24.2 Ld. D.R. relied on the order of Ld. DRP 24.3 We have heard the rival submissions and perused the materials available on record. It was considered in the case of Goldman Sachs Pvt. Ltd. in IT(TP)A No.2355/Bang/2019 dated 15.6.2020 in which it was held as under: 10.(i) I2T2 India Limited - The Ld AR submitted that the comparable company margin is 3.67%. The comparable has to be included as the RPT details are available in the Annual Report and referred to page No.2385 of the Paper book. We are of the opinion that the Assessing Officer could have called for the information under section 133(6) of the Act to confirm the details in the proceedings. Accordingly, we restore this comparable to the file of the TPO/AO for examination and verification of facts. 24.4 In view of the above, we direct the AO/TPO to include this company as comparable in the list of com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pass the export earnings to sales filter across three financial years (including the year under consideration). 29.2 The Ld. D.R. submitted that the assessee has not contested before Ld. DRP. Hence, the plea of the assessee be rejected. 29.3 We have heard the rival submissions and perused the materials available on record. Admittedly, the assessee raised additional ground on this issue. As such in our opinion, lower authority have no occasion to examine it. Being so, in the interest of justice, we remit this issue to AO/TPO for fresh consideration. 30. Ground No.27 is with regard to fact that these comparables form part of the TPO s final list in the TP order who got omitted the DRP s directions and subsequently in the OGE from the TPO the said comparables are neither objected to by either of the parties. In our discussion, in DRP s direction the inadvertent lapse to be rectified and following companies to be included as comparables. 1) Kals Information Systems Ltd. 2) E-Zest Solutions Ltd. 3) CG VAK Software Exports Ltd. 31. Ground No.27 is the additional ground that the AO/TPO while passing the final assessment order/order giving effect to the DRP ..... X X X X Extracts X X X X X X X X Extracts X X X X
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