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TMI Blog2024 (8) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... ant, on unjustifiable grounds even though they are functionally comparable to the assessee : (i) Sagarsoft (India) Limited (ii) Athena Global Technologies Limited (iii) Akshay Software Technologies Limited (iv) Batchmaster Software Private Limited (v) Celstream Technologies Private Limited (vi) Isummation Technologies Private Limited (vii) Evoke Technologies Private Limited (viii) DCIS DOT COM Solutions India Private Limited (ix) Maveric Systems Limited (x) Orangescape Technologies Limited (xi) Sasken Communication Technologies Limited (xii) Infomile Technologies Limited (xiii) E-Zest Solutions Limited Ground No. 3: The Ld. TPO and Hon'ble DRP erred on facts and law by comparing the Appellant with the following companies having high turnover, despite the same failing the legally accepted criteria of turnover being greater than Rs. 200 crores in various judicial precedents: (i) Larsen & Toubro Infotech Limited (Seg) (ii) Tata Elxsi Limited (Seg) (iii) Nihilent Technologies Limited (iv) Persistent Systems Limited (v) Aspire Systems (India) Private Limited (vi) Infosys Limited (vii) Thirdware Solution Limited (viii) Cybage Software Private ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eved such draft assessment order, assessee preferred objections before the Dispute Resolution Panel (DRP) and pursuant to the directions of the DRP dt. 16.02.2021, Assessing Officer finalized the assessment, by making addition of TP adjustment and thereby assessed the total income at Rs. 2,78,45,897/-. Hence, this appeal 4. With respect to ground Nos.1 and 2, ld. AR has submitted that the TPO has rejected the following comparables : (i) Sagarsoft (India) Limited (ii) Athena Global Technologies Limited (iii) Akshay Software Technologies Limited (iv) Batchmaster Software Private Limited (v) Celstream Technologies Private Limited (vi) Isummation Technologies Private Limited (vii) Evoke Technologies Private Limited (viii) DCIS DOT COM Solutions India Private Limited (ix) Maveric Systems Limited (x) Orangescape Technologies Limited (xi) Sasken Communication Technologies Limited (xii) Infomile Technologies Limited (xiii) E-Zest Solutions Limited 4.1. The TPO while rejecting the TP objection of the assessee held that these comparables were not appearing in the search matrix of the appellant TP Study Report. It was submitted by the assessee by referring to the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and OECD Guidelines wherein the emphasis is laid on the eliminating material differences for the purpose of comparability: Determination of arm's length price under section 92C 10B. (1). . . . (e) transactional net margin method, by which,- (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; (2). . . . 3) An uncontrolled transaction shall be comparable to an international transaction [or a specified domestic transaction] if- (i) none of the differences, if any, between the transactions being compared, or between the enterprises entering into such transactions are likely to materially affect the price or cost charged or paid in, or the profit arising from, such transactions in the open market; or (ii) reasonably accurate adjustments can be made to eliminate the material effects of such diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we hold that the 8 companies listed in Sl.No.(a) to (i) in paragraph -13 of this order, which the assessee seeks exclusion and whose turnover in the current year is more than Rs. 200 Crores should be excluded from the list of comparable companies" (i) M/s. Auriga Software Technologies Private Limited vs ITO, Bangalore ITAT, IT(TP)A No. 178/Bang/2021, AY 2016-17, 03/02/2022 - Appendix AT (ii) M/s. Prism Networks Private Limited vs ACIT, Bangalore ITAT, IT(TP)A No. 349/Bang/2021, AY 2016-17 - Appendix AU (iii) M/s. Capco Technologies Private Limited vs DCIT, Bangalore ITAT, IT(TP)A No.204/Bang/2021, AY 2016-17, 18/11/2021 - Appendix AW (iv) M/s. Atmecs Technologies Private Limited vs ITO, Bangalore ITAT, IT(TP)A No.187/Bang/2021, AY 2016-17, 20/12/2021 - Appendix AX (v) M/s OLF (India) Software Pvt. Ltd. vs ACIT, Bangalore ITAT, IT(TP)A No.182/Bang/2021, AY, 28/09/2021 2016-17 - Appendix AS L&T Infotech Ltd Tata Elxsi Ltd Nihilent Techno- logies Ltd Cybage Software Pvt Ltd Persistent Systems Ltd Aspire Systems Pvt Ltd Infosys Techno- logies Ltd Thirdware Solution Ltd Turnover (Rs. in Crore) 2,919.07 1,041.46 251.22 722.25 1,447.13 230.80 53,983.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td., IT APPEAL NO. 384 OF 2017 * In the above-mentioned case of Infor India, the coordinate bench has in its order dated October 26, 2023 clearly stated that: "13. In these circumstances, following the foot prints of the Hon'ble Karnataka High Court in the case of Obopay Mobile Technology India Private Ltd., (supra), we hold that the turnover is a relevant criteria for choosing companies as comparables in determining the ALP in Transfer Pricing cases. 14. Now turning to the next question as to the appropriate turnover filter, in all the decisions relied upon by the learned AR, a consistent view is taken that the application of tolerance range of turnover of ten times on both sides of assessee's turnover was proper. Following the same, we direct the learned Assessing Officer to adopt the same for a fresh search. With this view of the matter, we set aside the findings of the authorities below and direct the learned Assessing Officer/learned TPO to take the range of turnover filter at ten times on both the ends and conduct search afresh to take a plausible view." (Kindly refer Page 7 of case law of Infor India) * Similarly, in the recent case of iMedx Information Services, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hnologies Limited at Sl.No.vi on the ground that the lower authorities have rejected the plea of the assessee for exclusion of Infobeans Technologies Ltd on the wrong presumption that this company is functionally comparable with that of the assessee. The ld.AR has drawn our attention to pages 369 - 370 of the paper book and also the Pages 523 - 524 of the paper book I. On the basis of the above, it was submitted that the financials of this company were available in public domain and therefore, and perusal of the financials, make it clear that this company is into Automation Engine and customized software and content management system, which is functionally different from that of assessee and hence, is required to be excluded in the list of comparable. 11. Per contra, the ld.DR relied upon the orders of lower authorities. 12. We have heard the rival submissions and perused the material on record. The ld.DRP while dismissing the objections of the assessee has recorded that the functions of the assessee are required to be examined based on the profile of the assessee as available in public domain and not on the basis of the dynamic website of the assessee. It was also noted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with its AE matches with the profile of the comparable company. Therefore, we do not find any error in the order passed by the lower authorities. Accordingly, the ground raised by the assessee is rejected. With respect to the other companies, the assessee has not raised any objection and it was submitted that these companies would be taken care being the subject matter of turnover filter. Hence, the ground no.4 of the assessee is dismissed subject to our finding with respect to turnover filter. 13. Ground No.5 is with respect of adjustments made in the case of delay in receipts of sale proceeds from AE. 14. Before us, ld. AR has submitted that the assessee is accepting the order passed by the lower authorities whereby they have restricted to interest on trade receivable at as SBI short-term interest rate for the subject year as the ALP interested. It was submitted that the SBI 6% rate as upheld by this tribunal, in several cases, may kindly be applied in the case of the assessee for the assessment year under consideration. 15. The ld.DR has relied upon the order passed by the lower authorities. 16. We have heard the rival arguments and perused the material available on record ..... X X X X Extracts X X X X X X X X Extracts X X X X
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