Income Tax Appellate Tribunal Bangalore M/S. Schneider Electric It Business ... vs Joint Commissioner Of Income Tax, Ltu, ... on 30 April, 2019 IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER IT(TP)A No. A.Y. Appellant Respondent Schneider Electric IT Business India Private Limited, (Formerly known as American Power Conversion Joint Commissioner of 299/Bang/14 200910 (India) Private Limited), Income Tax, LTU, th 4 Floor, Electra, Wing A, BANGALORE Exora Business Parks, Marathahalli Sarjapur Outer Ring Road, BANGALORE [PAN: AACCA6398Q] M/s. Schneider Electric IT Business India Private Limited, Joint Commissioner of (Formerly known as 218/Bang/14 200910 Income Tax, LTU, American Power Conversion BANGALORE (India) Private Limited), No. 187/3 & 188/3, Jigani, BANGALORE [PAN: AACCA6398Q] Assessee by : Shri T. Suryanarayana, Advocate Revenue by : Shri C. Sundar Rao, CIT Date of hearing : 19032019 Date of Pronouncement : 30042019 ORDER Per N V Vasudevan, Vice President : IT(TP)A No.218/Bang/2014 is an appeal by the Revenue while IT(TP)A No.299/Bang/2014 is an appeal by the assessee. Both the :2: IT(TP)A Nos. 299 & 218/Bang/2014 appeals are directed against the order dated 31012014 of the JCIT, LTU, Bangalore passed u/s.143(3) read with Sec.144C of the Income Tax Act, 1961 (Act) in relation to AY 200910. 2. Gr.No.1 to 9 in Assessee's appeal and the grounds of appeal raised by the revenue in its appeal are with regard to determination of Arm's Length Price (ALP) in respect of international transactions of (a) rendering Software Development Services (SWD services) (b) rendering of Research and Development Services by the Assessee to its Associate Enterprise (AE). These Grounds read as follows: Grounds of Appeal raised by assessee: 1. The learned Assessing Officer ("learned AO") and the learned Dispute Resolution Panel (learned DRP) erred in law and in facts in upholding the adjustment to the transfer price of the Appellant in the contract software development services by Rs.9,819,200 and in the contract Research and Development (R&D) services by Rs.28,882,400. 2. The learned AO, the learned DRP and the learned TPO erred in rejecting the Transfer Pricing ('TP') documentation maintained by the Appellant on invoking provisions of subsection (3) of 92C of the Income Tax Act, 1961 contending that the information or data used in the computation of the arm's length price is not reliable or correct. 3. The learned AO, learned DRP and the learned TPO erred in rejection of comparability analysis carried in the Transfer Pricing documentation and in conducting a fresh comparability analysis on application of additional filters for determination of the arm's length price for contract software development and contract R&D services segments. 4. The learned AO, learned DRP and the learned TPO have not :3: IT(TP)A Nos. 299 & 218/Bang/2014 appreciated the functions undertaken by the Appellant in the R&D segment which are predominantly in the nature of software development services and thereby erroneously compared the markup on cost earned by the Appellant in this segment with that earned by the entrepreneurial R&D services providers. The learned AO has erred in rejecting companies selected as comparable by the appellant in the TP documentation and has erred in selecting companies which are not comparable to the Appellant. Specifically • Auringene Discovery Technologies Ltd • Celestial Biolabs • Jubilant Chemys • Oil Field Instruments (Indi