POLYCOM TECHNOLOGY ( R & D) CENTER P.LTD,HYDERABAD vs. ASST CIT CIR 1(2)(2), MUMBAI

ननधाारयती की ओर से /Assessee by : Shri Nikhil Tiwari याजस्व की ओर से /Revenue by : Shri N.K.Chand सुनवाई की तायीख / Date of Hearing : 17/05/2016 घोषणा की तायीख/Date of Pronouncement 17/05/2016 आदेश / O R D E R Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the assessee against the assessment order framed by the AO u/s.143(3) r.w.s.144C(1) of the Income Tax Act pursuant to the directions dated 14-12-2015 of the Disputes Resolution Panel (DRP). 2. The assessee has taken as many as 13 grounds of appeal

3. At the outset, ld. AR has submitted that grounds taken in the present appeal are identical and squarely covered by the decision of the Tribunal in assessee’s own case for A.Y.2009-2010, passed in vide order dated 10-11-2015. Ld. AR has further relied upon a chart explaining in brief relating to the each ground taken by the assessee.

4. The ld. AR has stated that ground Nos.1 to 3 are general in nature and do not require any adjudication.

5. Ground No.4 is not pressed by ld. AR, the same is, therefore, dismissed as not pressed.

6. Ground Nos.5 to 7 are related to transfer pricing adjustment made by the TPO. The claim of the assessee is that it is engaged in providing contract software development and marketing support services to its associate enterprises. The assessee selected comparables having the same nature of business as that of the assessee in its TP study report. The assessee had shown its margin @15.11%, whereas as per TP study report, the weighted average comparable margin came to Rs.12.64%. Since the operating margin of the assessee was higher than the arithmetic mean of the comparables, the assessee claimed that no transfer pricing adjustment was required. However, during the proceedings before the TPO, the TPO after going into the annual financial of the assessee and reading the nomenclature of the works done by the assessee and the wording of the agreement was of the view that the assessee was engaged into the contract research and development services, instead of contract software development services as claimed by the assessee. He, therefore, rejected the comparables taken by the assessee in its TP study report and adopted the comparable companies engaged into rendering of contract research and development of services. 7. Being aggrieved by the above action of AO, the assessee carried the matter before the DRP and contended that the TPO had not correctly appreciated the business activity of the assessee and that he had wrongly rejected the comparables taken by the assessee and adopted his own comparables which were not applicable to the facts of the case. The DRP after considering the relevant submissions, rejected the contention of assessee, however, rejected one of the comparable out of 4 comparables taken by the TPO for calculation of the aforesaid comparable margin and enhanced the adjustment value to Rs.3.62 crores as against Rs.2.10 crores made by the TPO. The AO has given effect to the said directions, aggrieved by which the assessee has come in appeal before us.