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05-09-2019, Medpluxes India, Section 115JB, 144C, 92CA, Tribunal Hydrabad

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5 days 5 hours ago #10757 by amit
Section - 115JB, 144C, 92CA, 234B, 234C
Order Date - 05-09-2019
Favouring - Assessee
Court - Tribunal Hydrabad
Appellant - Medpluxes India Pvt. Ltd.
Respondent - ACIT
Justice - P. MADHAVI DEVI JM & S. RIFAUR RAHMAN AM
Citation - 919Taxpundit78
Appeal No. - ITA No. 411/Hyd/2016
Asstt. Year - 2011-12

Order

PER : S. RIFAUR RAHMAN, A.M.

This appeal of the assessee is directed against the order passed u/s 143(3) ws 92CA(3) rws 144C(53) of the Income-tax Act, 1961 (in short ‘the Act’), dated 28/01/2016, for the AY 2011-12.

2. Brief facts of the case are, assessee company, engaged in the business of software development, filed its return of income for the AY 2011-12 on 28/09/2011 admitting total income of Rs. Nil and book profits of Rs. 66,08,535/- under the provisions of section 115JB of the Income-tax Act, 1961 (in short ‘the Act’), which was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny and accordingly, notices issued u/s 143(2) and 142(1). . In response to the said notices, the AR of the assessee furnished the information called for.

2.1 After verification of the information, the AO referred the matter to TPO u/s 92CA of the Act, for determination of arm’s length price in respect of international transaction reported by the assessee for the AY 2011-12.

3. International transactions:

3.1 Examination of TP study conducted by assessee: The assessee has carried out the economic analysis and has summarized it as under:

3.2 Financial analysis of the assessee: As per the audited statement of accounts, the financials of the assessee for the AY 2011-12 are as under:

3.3 On going through the TP document, the TPO observed that some of the filters applied by the assessee are not the filter which the TPO has been usually applying in software cases and ITES cases , consequently, resulted in selection of inappropriate comparables. TPO, therefore, rejected the TP document and an independent analysis was made by aggregating all the transactions under TNMM.

3.4 As regards the software development services, the TPO rejected the comparables selected by the assessee and he selected the following comparables, which included 3 common companies identified by the assessee:

3.5 Computation of arm’s length price by TPO and the adjustment made as under:

Accordingly, for SDS segments, the arm’s length margin was arrived at 16.93% and the arm’s length price of international transactions was determined at Rs. 5,23,41,357/- and the shortfall is computed at Rs. 33,34,083.

3.6 IT Enables Services: The TPO rejected the comparables selected by the assessee and he selected the following comparables, which included 5 common companies identified by the assessee in the TP study:

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