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Income Tax Appellate Tribunal, “J” Bench, Mumbai
O R D E R Per Shamim Yahya (AM) :- This appeal by the assessee is directed against the order of learned CIT(A) dated 30.10.2014 pertaining to assessment year 2010-11.
The grounds of appeal read as under :
“Each of the grounds of appeal and the sub grounds there under are without prejudice to and independent of one another.
1. On the facts and circumstances of the case and in law, the learned Deputy Commissioner of Income- tax - 8(3) (hereinafter referred to as the AO) erred in assessing the total income of the appellant for the relevant assessment year at Rs.2,54,05,180 pursuant to the directions of Hon'ble Dispute Resolution Panel ("DRP/the Panel") as against the total income of Rs. 1,50,19,717 declared as per return of income.
2. On the facts and circumstances of the case and in law, the AO erred in making transfer pricing adjustment of Rs. 1,03,85,458 in respect of software development services provided by the appellant. Transfer pricing grounds: Not giving effect to the directions of the DRP
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3. On the facts and circumstances of the case and in law, the AO erred in not reworking the margins of the appellant and that of the comparable companies by treating the foreign exchange income/loss as non- operating in nature and the amount of bad debts recovered, excess provision written back and miscellaneous income as operating in nature as per directions of Hon'ble Panel at paras 8 and 10 of the directions.
4. On the facts and circumstances of the case and in law, the AO erred in not allowing the appellant, the benefit contemplated in second proviso to section 92C(2)of the Act.
On the facts and circumstances of the case and in law, the AO erred in not appreciating that on reworking the margins of the appellant and of the comparable companies by giving effect to the directions of the Hon'ble Panel at paras 8 and 10 of the directions, the arm's length price of the 'income from providing software development services' as determined, would not exceed 5% of the actual price of the international transaction of provision of software development services and therefore no transfer pricing adjustment would have been required to be made.
Rejection of comparables selected by the appellant
On the facts and circumstances of the case and in law, the AO/ Hon'ble Panel erred in rejecting some of the comparable companies selected by the appellant in the Transfer Pricing Documentation ('TP Study Report').
Selection of comparables which were rejected by the appellant in Transfer Pricing Study Report
On the facts and circumstances of the case and in law, the AO / Hon'ble Panel erred in upholding the action of the learned Transfer Pricing Officer (TPO') in selecting following companies as a comparable company, which was rejected by the appellant in its TP Study Report:
• Thirdware Solutions Limited • Kals Information Systems Limited • Bodhtree Consulting Limited The AO/Hon'ble Panel ought to have held that a) Thirdware Solutions Limited b) Kals Information Systems Limited and c) Bodhtree Consulting Limited is not functionally comparable with the appellant and ought to have been rejected.
Observations by Hon'ble Panel in respect of Akshay Software Technology Limited
On the facts and circumstances of the case and in law, the AO/Hon'ble Panel erred in holding that 'Akshay Software Technology Limited' is a software product company bearing high significant risks and therefore
3 Smart Stream Technologies India Private Limited similar to the comparable companies 'Thirdware Solutions Limited' and 'Kals Information Systems Limited' selected by the TPO.
The AO/Hon'ble Panel further erred in holding that in the event 'Thirdware Solutions Limited' and 'Kals Information Systems Limited' are excluded from comparable companies at a later stage for the reason that they are not comparable, then 'Akshay Software Technology Limited' also requires to be excluded.
The AO/Hon'ble Panel erred in not giving appellant sufficient opportunity of being heard while considering and commenting upon the aforesaid comparable company.
Denial of Working Capital Adjustment and Market Risk Adjustment
On the facts and circumstances of the case and in law, the AO/Hon'ble Panel erred in not allowing any adjustments (i.e. working capital adjustment and market risk adjustment) as warranted under rule 10B(l)(e)(iii) of the Income- tax Rules, 1962 ("the Rules") to account for differences between international transactions and the alleged comparable uncontrolled transaction selected by the Assessing Officer/Panel.
Use of multiple year data
On the facts and circumstances of the case and in law, the AO/Hon'ble Panel erred in rejecting the use of multiple year data as permitted under the provisions of Rule 10D(4) of the Rules for computing the operating margins earned by the alleged comparable companies.
Others:
The AO erred in charging interest under section 234B of Rs. 16,35,312.
The AO erred in charging interest under section 234D of Rs. 1,42,203. The appellant prays for leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing, of the appeal.”
At the outset in this case learned Counsel of the assessee submitted that he shall be withdrawing the appeal. Learned Departmental Representative did not have any objection to this proposition.
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Upon careful consideration we have granted permission to withdraw the appeal. Accordingly this appeal is dismissed as withdrawn.
Pronounced in the open court on 20.10.2021.