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TMI Blog2024 (12) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... I, if no business activities had been done by the assessee during the period from 06/12/2009 till 15/03/2010. Accordingly the grounds no. 4 of the assessee is allowed for statistical purposes. - SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER AND SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER For the Assessee: Shri S. Rama Rao, AR For the Revenue: Smt. L. Sunitha Rao, CIT-DR ORDER PER MADHUSUDAN SAWDIA, A.M.: These cross-appeals are filed by Azingo Soft Systems India Private Limited ( the Assessee ) and Revenue for the A.Y. 2010-11 against the order of the learned Assessing Officer ( vLd. AO ) dated 30-01-2015, passed u/s.143(3) r.w.s. 144C of the Income Tax Act, 1961 ( the Act ), consequent to the directions of the Dispute Resolution Panel, Hyderabad [ Ld. DRP ]. For the sake of convenience, both these appeals are decided by this common order. 2. At the outset, it is seen that, there is a delay of 1 day in filing of this appeal for which the Revenue has filed a condonation petition along with affidavit explaining the reasons for such delay. After considering the contents of the condonation petition and after hearing the Ld. AR the delay of 1 day in filing of this appeal by the Revenue is con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO/DRP erred in not following the specific directions of the DRP to verify and exclude companies listed in Sl. no (f) to (i) above. Error in computation of margin of the comparable companies 8. That the AO / DRP erred in confirming the TPO's stand of not treating the annual listing fees as part of operating cost for the purpose of margin computation of CAT Technologies Ltd. 9. That the AO / DRP erred in confirming the TPO's stand of not treating discount and rebate received as part of non-operating income and bad debts written off as part of operating expense for the purpose of margin computation of E-Zest Solutions Ltd. 10. That the AO / DRP erred in confirming the TPO's stand of treating the provision for doubtful debts and bad debts as non-operating expenses for the purpose of margin computation of comparable companies as selected by TPO. Rejection of comparable companies 11. That on the facts and circumstances of the case and in law, the AO / DRP erred in confirming the rejection of the following comparable companies, as rejected by the TPO: a) Akshay Software Technologies Ltd; b) LGS Global Ltd; c) R Systems International Ltd; d) Quintegra Solutions Ltd; e) Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he extent of Rs. 86,50,000 as against Rs. 89,00,000 claimed in the return of income filed by the Appellant 21. That the consequential effect should be given to the liability of interest under Section 234B and Section 234D of the Act. 22. The Appellant craves, to consider each of the above grounds of appeal without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of appeal. 4. The Revenue has raised the following grounds before the Tribunal: (i) In the facts of the circumstances of the case, the Hon'ble DRP was not justified in directing the A.O to delete Larsen Tourbo Infotech Ltd on the ground of having high turnover which is contrary to Rule 1OB(2) which prescribes comparability of international transactions with uncontrolled transactions with reference to functions performed, assets employed and risks assumed? (ii) In the facts and the circumstances of the case, the Hon'ble DRP was not justified in directing the TPO to exclude companies in the event of any merger / acquisition without proving that it has really impacted the profit margin and now the company became functionally different. (iii) In the facts and the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determination of Arms Length Price ( ALP ) and the Ld. TPO by order dated 24-09-2013, recommended an adjustment of Rs. 17,73,39,787/- u/s. 92CA of the Act. After receipt of order from Ld. TPO, considering the recommendations of the Ld. TPO, the Ld. AO passed draft assessment order u/s 143(3) r.w.s.92CA 144C of the Act on 07/03/2014 assessing the total income at Rs. 17,05,06,361/- under the normal provision of the Act. 8. Feeling aggrieved, the assessee raised objections before the Ld. DRP against the draft assessment order dated 07/03/2014. The Ld. DRP vide its order dated 28/11/2014, directed the Ld. TPO to (i) exclude two comparable s i.e. Infosys Technologies and L T Infotech from the list of comparable and to rework the ALP, [ii] verify the effect of extraordinary events like acquisition, merger and restructuring of companies in four companies named in its order and (iii) charge interest at LIBOR+2% of the inter- company receivables, as against 12% adopted by the Ld. TPO. Accordingly, the Ld. TPO in order to give effect to the directions of Ld. DRP, suggested an adjustment of Rs. 15,82,39,054/-. Finally, considering the recommendations of the Ld. TPO, the Ld. AO passed the fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivities w.e.f. 06/12/2009, the expenditure incurred after that date can not be treated as part of operating cost. Hence we are in agreement with the submission of Ld. AR. Therefore we set aside the matter to the file of Ld.AO with a direction to exclude the amount of expenditure incurred by the assessee for the period from 06/12/2009 till 15/03/2010 from the calculation of operating cost for the purpose of calculation of PLI, if no business activities had been done by the assessee during the period from 06/12/2009 till 15/03/2010. Accordingly the grounds no. 4 of the assessee is allowed for statistical purposes. 14. With respect to the other grounds raised by the assessee, since we have allowed the core issue raised by the assessee vide Ground No. 4, the adjudication of the other grounds raised by the assessee becomes as a mere academic exercise. Accordingly, the other grounds are disposed of. 15. In the result, the grounds of the assessee are allowed for statistical purposes. Appeal of the Revenue 16. As we have allowed the appeal of the assessee for statistical purposes, the appeal of the Revenue is dismissed. 17. In the result, the grounds of the Revenue are dismissed. 18. To ..... X X X X Extracts X X X X X X X X Extracts X X X X
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