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TMI Blog2023 (6) TMI 817X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. Adjustment on account of interest on outstanding receivables from the AEs - while rejecting assessee s submission, the TPO computed interest at the rate of 4.329% in respect of receivables, which remained outstanding beyond the period of 60 days from the date of issue of invoice - HELD THAT:- While considering identical issue in assessee s own case in assessment years 2010-11, 2011-12, 2012-13, the Tribunal has deleted similar adjustments made by the TPO. Identical view was expressed by the Tribunal while deciding assessee s appeal for assessment year 2014-15 [ 2019 (5) TMI 621 - ITAT DELHI] after following the decision of Kusum Healthcare Pvt.ltd. [ 2017 (4) TMI 1254 - DELHI HIGH COURT] decided the issue in favour of the assessee. - ITA No.6727/Del/2019 - - - Dated:- 16-6-2023 - Shri Saktijit Dey, Judicial Member And Dr. B.R.R. Kumar, Accountant Member For the Appellant : Sh. Rohit Tiwari, Advocatem, Ms. Tanya, Advocate For the Respondent : Sh. Rajesh Kumar, CIT (DR) ORDER PER SAKTIJIT DEY, JM: The present appeal has been filed by the assessee challenging the final assessment order dated 20.06.2019 passed under section 143(3)/144C of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rables, the assessee claimed the transaction to be at arm s length. After examining the transfer pricing analysis of the assessee, the Transfer Pricing Officer (TPO), though, accepted that the most of the filters applied by the assessee are appropriate, however, he introduced certain additional filters. Due to introduction of such filters, certain comparables selected by the assessee were found to be inappropriate, hence, excluded by the TPO. Out of eight comparables selected by the assessee, four were retained. Proceeding further, the TPO after carrying out a search in the database selected nine more comparables. Thus, the total comparables selected by the TPO were thirteen in number with median of 25.3%. Based on the average margin of the comparables, the TPO worked out the ALP of transaction with AE at Rs. 25,69,92,052/- as against the price received by the assessee of Rs. 23,54,84,637/- The resultant short fall of Rs. 2,15,07,415/- was proposed as transfer pricing adjustment to the price shown by the assessee. The adjustment proposed by the TPO was incorporated in the draft assessment order. Against draft assessment order, assessee raised objections before learned DRP. After co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are providing software development services. Drawing our attention to the Annual Report of the company placed in the paper-book, he submitted, the company has reported only one segment, i.e., Information Technology Service segment from which it has earned revenue. Therefore, there is no functional difference between the assessee and the comparable. 9. As regards assessee s contention regarding transfer and acquisition, learned Departmental Representative submitted that the assessee itself has transferred one of its division during the year. Thus, he submitted, unless the assessee brings specific material to demonstrate that the transfer and acquisition has impacted the profitability, the company cannot be excluded. 10. We have considered rival submissions and perused the materials on record. Undisputedly, the assessee provides software development services to its AEs as a captive service provider. Whereas, Larsen Toubro Infotech Ltd., as per the information available in the website as well as Annual Report, is in diversified activities. The company has also developed various products and created marketing intangibles. Further, being a part of the Larsen Toubro group, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is nothing either in the annual report or on record to demonstrate that the company is doing anything else, other than, providing software development services. Thus, prima face, this company appears to be functionally similar to the assessee. 15. Though, the Pune Bench of the Tribunal in case of SAS Research Development India Pvt. Ltd. (supra), has rejected it as a comparable and the Bangalore Bench of the Tribunal has also expressed similar view in case of EIT Services India Pvt. Ltd. (supra), however, in many other decisions cited by learned counsel, this company has been found to be a comparable to a software development provider. In this context we may refer to the following decisions: i. M/s. Nethawk Networks India Pvt. Ltd. Vs. ACIT, ITA No.173/Pun/2017, dated 17.06.2021 ii. Velocity Tech-SOL India Pvt. Ltd. Vs. ACIT, ITA No.1694/Pun/2018, Dated 30.05.2022. 16. In view of the aforesaid, we hold that this company, being functionally similar to the assessee, is a comparable. 17. The last comparable objected by the assessee is Cybercom Datamatics Information Solutions Ltd. As regards this company, learned counsel for the assessee, drawing our attention t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the AEs. 22. We have heard the parties and perused the materials on record. In course of proceedings before him, the TPO found that the AE has not paid the invoice amount to the assessee within the credit period. Thus, he show-caused the assessee to explain, why proportionate interest should not be charged for delay in receiving the outstanding amount. Though, the assessee objected to the proposed action of the Assessing Officer, however, rejecting assessee s submission, the TPO computed interest at the rate of 4.329% in respect of receivables, which remained outstanding beyond the period of 60 days from the date of issue of invoice. Accordingly, he proposed the adjustment of Rs. 11,45,642/-. The adjustment so proposed by the TPO was also upheld by learned DRP. 23. Having considered rival submissions, we find, while considering identical issue in assessee s own case in assessment years 2010-11, 2011-12, 2012-13, the Tribunal has deleted similar adjustments made by the TPO. Identical view was expressed by the Tribunal while deciding assessee s appeal for assessment year 2014-15 in ITA No. 4191/Del/2018 after following the decision of the Hon ble Jurisdictional High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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