The Dy. Commissioner of Income Tax, Circle 1(2), Pune .... प्रत्यथी / Respondent Assessee by : S/Shri Kamal Sawlney & Nilesh Joshi Revenue by : Shri Rajeev Kumar, CIT सन ु वाई की तारीख / घोषणा की तारीख / Date of Hearing : 03.10.2018 Date of Pronouncement: 16.11.2018 आदे श / ORDER PER SUSHMA CHOWLA, JM: The appeal filed by assessee is against order of DCIT, Circle1(2), Pune, dated 27.11.2012 relating to assessment year 200809 passed under section 143(3) r.w.s. 144C(13) of the Incometax Act, 1961 (in short 'the Act'). 2. The assessee has raised the following grounds of appeal: On the facts and in the circumstances of the case and in law, the Ld. AO and the Dy. Director of Income Tax (TP IV), Pune [hereinafter referred to as Ld. Transfer Pricing Officer ('Ld, TPO')] have erred in proposing and the Hon'ble ITA No.271/PUN/2013 2 Renishaw Metrology Systems Pvt. Ltd. Dispute Resolution Panel ('DRP') has further erred in determining the total income (before setoff of losses) of INR 5,512,066. I. In respect of transfer pricing adjustment of Rs.2,780,728 On the facts and in the circumstances of the case and in law, the Ld. AO and the Ld. TPO have erred in proposing and DRP has further erred in: 1. making a Transfer Pricing ('TP') adjustment of Rs.2,780,728 in relation to provision of software development services to its Associated Enterprises ('AE'); 2. disregarding the benchmarking analysis and comparable companies selected by the Appellant based on the contemporaneous data in the transfer pricing study report maintained as per Section 92D of the Act read with Rule 10D of the Incometax Rules, 1962 ('the Rules') and the various submissions made by the Appellant; 3. introducing additional new companies without providing any cogent reason, to benchmark the international transactions of the Appellant; 4. not sharing the search strategy adopted for selection of alleged comparable companies during the course of assessment proceedings in violation of the principles of natural justice; 5. rejecting comparable companies by erroneously applying a comparability criteria based on strict comparison of products / services and in doing so ignoring the basic tenets of applicability of Transactional Net Margin Method as the most appropriate method which is not based on the concept of strict comparability of products and services and relies on only broad comparability of functions assets and risks; 6. applying arbitrary filters inconsistently to arrive at a fresh set of companies as comparables to the Appellant: 7. accepting companies as comparables to the Appellant without considering the turnover and size of the Appellant and comparables and also disregarding the turnover filter applied by the Appellant 8. applying the filter of rejecting companies with export turnover less than 75% of sales in the search process without providing cogent reasons for using the same and even though the data in respect of export turnover was not available of all comparable companies; 9. including the reimbursement of expenses to calculate the threshold of 25% of related party transactions ('RPT') and thereby rejecting the Companies having RPT of less than 25%; 10. applying the benchmarking criteria inconsistently, as the companies selected by the Ld. TPO are liable to be rejected using the very same criteria used by the Ld. TPO for rejecting other comparables selected in the Transfer Pricing study furnished by the Appellant; 11. rejecting comparable companies selected in the Transfer Pricing study furnished by the Appellan