Income Tax Appellate Tribunal Delhi Siemens Product Lifecycle Management ... vs Acit, New Delhi on 22 January, 2018 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH 'I1' : NEW DELHI) BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER and SHRI KULDIP SINGH, JUDICIAL MEMBER ITA No.5922/Del./2012 (ASSESSMENT YEAR : 200809) Siemens Product Lifecycle Management vs. ACIT, Circle 8 (1), Software (India) Pvt. Ltd., New Delhi. E 20, 1st & 2nd Floor, Hauz Khas, New Delhi. (PAN : AABCS7638E) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Ravi Sharma, Advocate Shri Anubhav Rastogi, Advocate REVENUE BY : Shri Sanjay I. Bara, CIT DR Date of Hearing : 22.11.2017 Date of Order : 22.01.2018 ORDER PER KULDIP SINGH : The Appellant, M/s. Siemens Product Lifecycle Management Software (India) Private Limited (hereinafter referred to as 'the taxpayer') by filing the present appeal sought to set aside the impugned order dated 28.09.2012, passed by the Assessing Officer in consonance with the orders passed by the ld. DRP/TPO under section 143 (3) read with section 144C of the Incometax 2 ITA No.5922/Del/2012 Act, 1961 (for short 'the Act') qua the assessment years 200809 on the grounds inter alia that : "1. On the facts and in law, the Learned Assistant Commissioner of Income Tax, Circle 8(1), New Delhi ("Ld. AO") erred in passing the impugned assessment order dated 28 September 2012 pursuant to the directions of the Hon'ble Dispute Resolution Panel ("Hon'ble DRP") and computing the total income of the Appellant for Assessment Year ('"AY") 200809 at INR 27,30,95,863 as against the returned income of INR 12,07,44,372. 2. The Ld. AO erred in proposing and the Hon'ble DRP further erred in confirming the addition of Rs.15,23,51,491 to the Appellant's returned income of Rs.12,07,44,372. Transfer Pricing Adjustment INR 10,91,38,523 3. On the facts and in law, the Learned Additional Director of Income Tax, Transfer Pricing Officer II(4) ("'Ld. TPO") and the Ld. AO erred in proposing and the Hon'ble DRP erred in confirming the addition of Rs.10,91,38,523 in relation to the international transactions of provision of software development, competency center and IT support services. 4. On the facts and in law, the Ld. TPO, the Ld. AO and the Hon'ble DRP erred in rejecting the Transfer Pricing ("TP") documentation maintained by the Appellant under section 92D of the Incometax Act, 1961 ("the Act") read with Rule 10D of the Incometax Rule, 1962 ("the Rules") and calling for a fresh search, applying arbitrary filters during the assessment proceedings, without discharging the statutory onus to establish that any of the conditions specified in clause (a) to (d) of Section 92C(3) of the Act has not been satisfied. 5. On the facts and in law, the Ld. TPO, the Ld. AO and the Hon'ble DRP erred in disregarding the use of current year and prior two years' data by the Appellant to benchmark the international transactions in the TP documentation for the relevant previous year in contravention of Rule 10B(4) of the Rules. 3 ITA No.5922/Del/2012 6. On the facts and in law, the Ld. TPO, the Ld. AO and the Hon'ble DRP violated the provisions of Rule 10B(2) of the Rules by arbitrarily rejecting the companies selected by the Appellant in the TP documentation and the fresh search, which are functionally comparable to the Appellant. 7. On the facts and in law, the Ld. TPO, the Ld. AO and the Hon'ble DRP violated the provisions of Rule 10B(2) of the Rules by arbitrarily introducing new companies as comparable to the Appellant, disregarding the differences in the functional profile of the Appellant and such additional companies. 8. On the facts and in law, the Ld. TPO, the Ld. AO and the Hon'ble DRP erred in disregarding the segmentation carried out by the Appellant in its TP documentation and subsequently, merging the three segments namely, software development, competency centre and IT support services without appreciating the cardinal principal of Transfer Pricing which requires that each transaction should be benchmarked separately based on the provisions of section 92(1) of the Act. 9. On the facts and in law, the Ld. TPO and the Ld. AO erred in computing and the Hon'ble DRP erred in disregarding the correct operating profit margin of the companies selected by the Ld. TPO. 10