207, Gupta Arcade, Circle Circle10(1), 12(1), LSC Plot No. 5, Mayur New Delhi Vihar Phase1 Extension, New Delhi PAN :AABCI2526F (Appellant) (Respondent) Appellant by Shri Neeraj Jain, Adv.; Shri Abhishek Aggarwal, Adv.; & Ms. Ramit Katyal, CA Respondent by Sh. Surender Pal, CIT(DR) Date of hearing 06.02.2020 Date of pronouncement 01.05.2020 ORDER PER O.P. KANT,A.M.: This appeal by the assessee is directed against final assessment order dated 25/05/2018 passed by the Learned Deputy Commissioner of IncomeTax, Circle10(1), New Delhi [in short 'the Learned Assessing Officer'] pursuant to the direction of the learned Dispute Resolution Panel ('DRP') for assessment year 201415. The grounds raised in the appeal are reproduced as under: 1. That the impugned order of assessment framed by the Assessing Officer in pursuance of the directions of the Dispute Resolution Panle (hereinafter referred to as 'DRP') under Section 143(3) read with 2 ITA No.4740/Del./2018 Section 144C of the Incometax Act, 1961 ('Act'), is bad in law, violative of principles of natural justice and void abinitio. 1.1 That the Assessing Officer erred on facts and in law in passing order under section 143(3) read with Section 144C of the Act at an income of Rs.57,96,95,314 as against returned income of Rs.35,04,84,700. 2. That the assessing officer erred on facts and in law in making an adjustment of Rs.18,16,82,680/ to the arm's length price of the 'international transactions' of provision of software development services undertaken with the associated enterprise on the basis of order passed by the Transfer Pricing Officer ('TPO')/Dispute Resolution Panel ('DRP'). 2.1 That while giving effect to the direction of DRP, the AO/TPO erred on facts and in law in computing the operating profit to cost ratio of appellant at 9.61% as against 15.20% (13.17% in AE segment) computed by the appellant, by erroneously considering foreign exchange fluctuation income of Rs.10,51,15,282/ as nonoperating item of income. 2.2 That the AO/TPO erred on facts and in law in passing order under Section 143(3) read with section 144C of the Act in gross violation of section 144C(10) of the Act, by not considering the specific direction of the DRP to consider foreign exchange fluctuation income as operating item of income. 2.3 That DRP/TPO erred on facts and in law in considering following companies in the final set of comparable companies allegedly holding them to be functionally comparable to the assessee: (i) EZest Solutions (ii) Infobeans Technologies Limited (iii)Larsen &Tubro Infotech Limited (iv)Mindtree Limited (v) Persistent Systems Limited (vi)Tata Elxsi Limited (vii)Thirdware Solutions Limited 2.4 That the DRP/TPO erred on facts and in law in considering following companies in the final set of comparables companies merely for the reason that the said companies were considered by the assessee itself, at the time of preparation of transfer pricing document: (i) Larsen &Tubro Infotech Limited (ii) Mindtree Limited (iii)Persistent Systems Limited. 2.5 That while giving effect to the direction of DRP, the AO/TPO erred on facts and in law in considering Thirdware Solutions Limited in the final set of comparable companies, without considering the specific direction of the DRP to retain the company only if segmental profitability of company with respect to software development services (IT segment ) is available. 2.6 Without prejudice, that the TPO while giving effect to the direction of DRP, erred on facts in considering incorrect operating profit margin of following companies: (i) Persistent Systems Limited (ii) Tata ELXSI Limited 3 ITA No.4740/Del./2018 (iii)Thirdware Solution Limited 2.7 That the assessing officer/TPO erred on fa