GRASKO SOLUTIONS PRIVATE LIMITED,BANGALORE vs. DCIT, CIRCLE 3(1)(1), BANGALORE, BANGALORE

The order of the Learned Assessing Officer/Learned Transfer Pricing Officer/ Learned Dispute Resolution Panel (“Authorities below”), in so far as it is against the Appellant, is opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2. The Learned Assessing Officer erred in law in passing the final assessment order pursuant to the directions of the Learned Dispute Resolution Panel (“DRP”) beyond the time limit prescribed under section 144C(13) of the Income- tax Act, 1961, rendering the impugned assessment order barred by limitation and void ab initio. 3. The Authorities below erred in law and on facts in rejecting the Comparable Uncontrolled Price (“CUP”) Method adopted by the Appellant in its transfer pricing documentation and instead adopting the Transactional Net Margin Method (“TNMM”) as the Most Appropriate Method. 4. Without prejudice to Ground No. 3 that CUP should be considered as the most appropriate method to determine the arm’s length price for rendering of software development services to the Associated Enterprises (‘AEs’), the Appellant in following grounds contests the adoption of TNMM as the most appropriate method adopted by the learned transfer pricing officer (“TPO”) and as confirmed by the learned DRP. 4.1 The Authorities below erred in law and on facts in conducting a fresh search for comparable companies and following a non-transparent approach towards selection and rejection of comparable companies. 4.2 The Authorities below erred in law and on facts in rejecting companies having different financial year ending (i.e., year ending other than 31 March) or whose financial data could otherwise be reasonably aligned to a twelve-month period. 4.3 The Authorities below erred in law and on facts in not applying an upper limit to the turnover filter, resulting in inclusion of companies which are not comparable with the Appellant. 4.4 The Authorities below erred in law and on facts in applying a threshold of 75 percent in the export service income filter. 4.5 The Authorities below erred in law and on facts in not rejecting companies reporting abnormal profits. 4.6 The Authorities below erred in law and on facts in incorrect computation and application of the related party transaction (“RPT”) filter. 4.7 The Authorities below erred in law and on facts in rejecting companies having losses for two out of three years. 4.8 The Authorities below erred in law and on facts in considering bad debts written off, provision for doubtful debts and rates and taxes as non-operating in nature. 4.9 The Authorities below erred in law and on facts in not providing appropriate working capital adjustment. 4.10 The Authorities below erred in law and on facts in not providing appropriate market risk adjustment. 4.11 The Authorities below erred on facts and in law by introducing/retaining the following companies in the final set of comparables which are functionally dissimilar to the Appellant and/or fail quantitative filters: A. Nintec Systems Limited B. QSG Technologies Limited C. Happiest Minds Technologies Limited D. Systango Technologies Limited E. Tata Elxsi Limited F. Robosoft Technologies Private Limited G. Tata Consultancy Services Limited H. IDS Infotech Limited I. Cybage Software Private Limited

The Appellant craves leave of your Honour to add to, alter, amend, rectify or delete any of the grounds urged above. 6. For the above and other grounds that may be urged at the time of hearing, the Appellant humbly prays that the appeal may be allowed and justice rendered.

In terms of the above provision, the Assessing Officer shall complete the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received. In the instant case, the Assessing Officer received the direction from the DRP passed under Sub-Section (5) of Section 144C of the IT Act on 29.12.2015 and the Assessing Officer was required to pass assessment order within one month from the end of December 2015 i.e., the Assessing Officer ought to have passed assessment order on or before 31.01.2016. However, the Assessing Officer passed assessment order only on 18.02.2016, beyond the prescribed time under Sub-Section (13) of Section 144C of the IT Act. Under Sub-Section (13) of Section 144C of the IT Act, the Assessing Officer is mandated to pass order within the time prescribed thereunder and no discretion is vested with the Assessing Officer. Under Sub- Section (13) of Section 144C of the IT Act, the Assessing Officer on receipt of direction under Sub-Section (5) from DRP, mandated to complete the assessment within one month from the end of the month in which such direction is received. In other words, immediately on receipt of direction from the DRP under Sub-Section(5), the Assessing Officer shall complete the assessment within the timeline. The timeline prescribed under Sub-Section 144C are to be construed as mandatory. 10. Under similar facts, the Hon’ble High Court of Telengana in the case of Rapiscan Systems P Ltd v. ADIT (Int. Tax) [2025] 170 taxmann.com 753, held in Para 23 and Para 32 as follows:

The pivotal question is whether in view of the language employed in Section 144C(13) whether directions of DRP can be said to be received by the assessing officer on 30.06.2022. A conjoint reading of Section 144C (5) and (13) makes it clear that upon receipt of directions issued under Section 144C(5), it is imperative for assessing officer to complete the proceedings within one month from end of the month in which such a direction is received. Thus, key words used in Section 144C(13) are 'upon receipt of directions issued under Sub-Section (5)'

In view of forgoing discussion, there is no cavil of doubt that assessing officer received the DRP's directions on 30.06.2022 and therefore, the limitation must be counted from that date and not from 05.07.2022. The impugned assessment orders dated 30.08.2022 and 01.09.2022 that were issued counting the limitation from 05.07.2022 in both the Writ Petitions are liable to be set aside as the same are issued beyond permissible period of limitation.