Asst. Commissioner of Income Tax, Circle 11(1), Bangalore. ..... Respondent. Appellant By : Shri T. Suryanarayana, Advocate. Respondent By : Shri G.R. Reddy, CIT (DR) (ITAT)1, Bengaluru. Date of Hearing : 05.07.2017. Date of Pronouncement : 24.08.2017. O R D E R Per Shri Vijay Pal Rao, J.M. : This appeal by the assessee is directed against the assessment order dt.17.10.2012 passed under Section 143(3) r.w.s. 144C of the Income Tax Act, 1961 (in short 'the Act') in pursuant to the directions of the Dispute 2 IT(TP)A No.1612/Bang/2012 Resolution Panel (in short 'DRP') dt.26.06.2012 for the Assessment Year 200809. 2. The assessee has filed the following grounds along with the Memo of Appeal in Form No.36B. 1 " Assessment and reference to Transfer Pricing Officer are bad in law a) The final order issued by the Deputy Commissioner of Income Tax Circle 11(1) ['ITO' or 'AO'], is bad on facts and in law and is in violation of the principles of natural justice. Without prejudice to the above, the order issued by the AO is bad in law insofar as the fact that the AO did not issue to ABB Global Industries & Services Limited ('the Appellant or 'the Company'), a show cause notice, as per proviso to section 92C(3) of the Incometax Act, 1961 ['the Act']. b) The AO has erred in law in making a reference to the Transfer Pricing Officer ['TPO'], inter alia, since he has not recorded an opinion that any of the conditions in section 92C(3) of the Act, were satisfied in the instant case. The AOalso erred in not following the provision contained in section 92CA(1) of the Act. 2 The fresh comparable search undertaken by the AO/TPO is bad in law a) The AO/TPO erred on facts and in law in conducting a fresh benchmarking analysis using non contemporaneous data and substituting the Appellant's analysis with fresh benchmarking analysis on his own conjectures and surmises. b) On the facts and in the circumstances of the case and in law, the learned AO/TPO erred in not demonstrating that the motive of the Appellant was to shift profits outside of India by manipulating the prices charged in its international transactions, which is a prerequisite condition to make any adjustment under the provision of Chapter X of the Act 3 Comparability analysis adopted by the AO/TPO for determination of arm's length price 3 IT(TP)A No.1612/Bang/2012 a) The AO/TPO grossly erred on facts in benchmarking the transactions of the captive software services of the Appellant with companies operating as full fledged entrepreneurs without considering the differences in the functions performed, assets employed and risk undertaken by the Appellantvisàvis comparable companies. b) The AO/TPO erred on facts in rejecting the comparable companies arrived at in the Transfer Pricing Study without considering the functional and risk analysis of the Appellant. c) The AO/TPO erred in law in applying arbitrary filters to arrive at a fresh set of companies as comparables to the Appellant, without establishing functional comparability. d) The AO/TPO also erred on facts in arbitrarily accepting companies without considering the turnover and size of the Appellant and comparables. e) The AO/TPO grossly erred in law in deviating from the uncontrolled party transaction definition as per the Incometax Rules and arbitrarily applying a 25% related party criteria in accepting/rejecting comparables. f) The AO/TPO grossly erred on facts in arbitrarily rejecting companies having software development revenue less than 75% of total operating revenue. g) The AO/TPO erred on facts in arbitrarily rejecting companies having export revenues less than 25% of total sales. h) The AO/TPO erred in rejecting companies having employee cost less than 25% of total sales. i) The AO/TPO erred on facts in