ITO, BANGALORE vs. M/S AMAZON DEVELOPMENT CENTRE (INDIA) PVT. LTD.,, BANGALORE

This is an appeal filed by the revenue against the order of the CIT(A)-IV, Bangalore, dated 14/03/2012 for the assessment year 2007-08.

IT(TP)A No.676/Bang/2012 Page 2 of 6 2. The assessee raised the following grounds of appeal:

1) “The order of the Learned CIT (Appeals), in so for as it is prejudicial to the interest of revenue, is opposed to law and the facts and circumstances of the case. 2) The learned CIT (Appeals) was not justified in directing the AO to recompute the deduction allowable u/s. 10A of I.T.Act, 1961 after reducing the lease line charges of las. 1,49,56,464/- and other expenses incurred in foreign currency of Rs. 134,27,546/-, both from the export turnover and from the total turnover, without appreciating the facts and circumstances of the case. 3) The learned CIT (Appeals) has erred in not appreciating that there is no provision in section10A, which requires the above mentioned expenses to be reduced from the total turnover. 4) The learned CIT(A) erred in allowing the relief, relying on the decision of the Hon'ble Karnataka High Court in consolidated order in & others, which has not reached its finality and SLP has been recommended to be filed before the Hon'ble Supreme Court u/s 261 of the I T Act, 1961 against such order. 5) The Learned CIT(Appeals) was not justified in allowing relief to the assessee out of the additions made by the Assessing Officer u/s 92CA of the I.T. Act, 1961, without appreciating the facts and circumstances under which the adjustment was made by the Assessing Officer based on the TPO's order. 6) The Learned CIT(Appeals) has erred in holding that the TPO should not include uncontrolled comparables having any related party transactions even upto 25%. 7) The Learned CIT (Appeals) has erred in holding that the turnover of the company are deciding factors for treating a company as a comparable and accordingly, erred in excluding M/s Flextronics Software Systems Ltd., MR Infosys

IT(TP)A No.676/Bang/2012 Page 3 of 6 Technology Ltd., M/s iGate Global Solutions, MIs Mind Tree Ltd., M/s Perisistent Systems Ltd., M/s Sasken Communication Technologies Ltd., M/s Tata Elxsi and M/s Wipro Ltd in software development segment and M/s HCL Conmed System and Services Ltd., MIs Infosys BPO Ltd and M/s Wipro Ltd in ITES segment cannot be compared with the taxpayer as a comparable. 8) The Learned CIT (Appeals) has erred in rejecting M/s Eclerx Systems Ltd as a comparable as KPO services ignoring the TPQ findings of qualifying all filters applied by the TPO. 9) The learned CIT(Appeals) has erred in rejecting M/s Moldtek Technologies Ltd as a comparable as KPO services on function basis. 10) The learned CIT(Appeals) has erred in holding that the comparables sM/s Eclerx Services and M/s Moldtek Technology Ltd should be rejected as comparable since they were cases of super normal profits without defining as to what constitutes super normal profit and the conditions under which the same is to be rejected. 11) The learned CIT(Appeals) has erred in holding unilaterally that M/s IDatamatics Ltd and M/s Mediasoft Solutions Ltd in the software development segment and M/s batamatics Financial Services Ltd, M/s Apollo Health Street Ltd, M/s Geometric Ltd., MIs Quintegra Solutions Ltd, M/s R S Software India Ltd., M/s SIP Technologies and M/s iGate Global Solutions in the ITES Segment should be excluded due to the abnormal low margins, without appreciating the fact that the some had been accepted by the assessee before the TPO and without giving an opportunity to the TPO of being heard on the issue. 12) The learned CIT(Appeals) has erred in holding that the reasons for determination of profit of 33.41% should be identified before using it as a comparable ignoring the fact that the comparable company has satisfied the filters applied by the TPO in selection of the IT(TP)A No.676/Bang/2012 Page 4 of 6 comparable company. 13) The learned CIT(Appeals) has erred in holding that M/s Flextronics and M/s Celestial Labs cannot be taken as comparables, being functionally different ignoring the critical fact of satisfaction of all the filters applied by the TPO. 14) The learned CIT(Appeals) erred in holding that the conclusion of the TPO for taking a company as a comparable based on presumption has no validity, ignoring the detailed analysis of objective comparability done by the TPO in the TP study. 15) The learned CIT(Appeals) has erred in excluding M/s Tata Elxsi Ltd as a comparable ignoring the functional similarities between the two companies particularly in the light of the fact that R & b expenses does not havaae material impact on profitability. 16) The Learned CIT (Appeals) has erred in holding that the assessee is eligible for a standard deduction of 5% from the Arm's Length Price (ALP) under the proviso to Section 92C(2) of the I T Act, 1961. 17) For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the CIT (A) be reversed in so far as the above mentioned issues are concerned and that of the assessing officer be restored. 18) The appellant craves leave to add, to alter, to amend or to delete any of the grounds that may be urged at the time of hearing of the appeal.”

IT(TP)A No.676/Bang/2012 Page 5 of 6 turnover, following the decision of the Hon'ble jurisdictional High Court in the case of CIT vs Tata Elxsi (349 ITR 98). The only grievance of the revenue is that the decision of the Hon'ble jurisdictional High Court has not reached finality as SLP has been filed before the Hon’ble Supreme Court.

Order pronounced in the open court on this 26th day of February, 2016