Income Tax Appellate Tribunal Panji Ptc Software (India) Pvt.Ltd, Pune vs Acit, Cir 4, Pune on 11 September, 2017 आयकर अऩीऱीय अधधकरण "ए" न्यायऩीठ ऩण ु े में । IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, PUNE श्री डी. करुणाकरा राव, ऱेखा सदस्य, एवं श्री ववकास अवस्थी, न्याययक सदस्य के समक्ष । BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM आयकर अऩीऱ सं. / ITA No. 2546/PUN/2012 यनधाारण वषा / Assessment Year : 200809 PTC Software (India) Private Limited, Survey No. 15, MarisoftII, Vadgaonsheri, Kalyaninagar, Pune 411014 PAN : AABCC1268J .......अऩीऱाथी / Appellant बनाम / V/s. Assistant Commissioner of Income Tax, Circle 4, Pune ......प्रत्यथी / Respondent Assessee by : S/Shri Ashwani Taneja, Somil Agarwal & Roshan Lunawat Revenue by : Shri Rajeev Kumar सन ु वाई की तारीख / Date of Hearing : 12072017 घोषणा की तारीख / Date of Pronouncement : 11092017 आदे श / ORDER PER VIKAS AWASTHY, JM : This appeal has been filed by the assessee assailing the assessment order dated 27112012 passed u/s. 143(3) r.w.s. 144C of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). 2 ITA No. 2546/PUN/2012, A.Y. 200809 2. The brief facts of the case as emanating from records are: The assessee company is engaged in the business of designing and developing softwares. The assessee is also providing support services through Call Centre. The assessee is providing Information Technology Services (ITS) and Information Technology Enabled Services (ITES) to its holding company M/s. Parametric Technology Corporation (PTC USA). Thus, the assessee is a captive service provider. During the period relevant to the assessment year under appeal, the assessee had entered into following international transactions with its Associated Enterprises (AEs) : i. Provision of IT Services Rs.1,15,17,54,575/. ii. Provision of IT Enabled Services Rs.8,14,01,681/. 2.1 The assessee adopted Transactional Net Margin Method (TNMM) as the most appropriate method to benchmark its Arm's Length Price (ALP) with AE. In respect of ITS the assessee selected 16 companies as comparables and computed average arithmetic mean (OP/TC) of the comparable companies at 11.66% as against assessee's PLI of 16.42%. The Transfer Pricing Officer (TPO) accepted TNMM applied by assessee as the most appropriate method, however, the TPO did not agree with the selection of comparables. The TPO excluded certain companies from the list of comparables selected by assessee and included some more companies in the final list. The final set of comparables as selected by TPO are as under : Sr. No. Name of the comparable OP/OC (%) 1 Bodhtree consulting Ltd. 19.14 2 Einfochip Ltd. 30.32 3 eZest Solutions Ltd. 28.58 4 F C S Software Solution Ltd. 57.02 3 ITA No. 2546/PUN/2012, A.Y. 200809 5 Goldstone Technologies Ltd. 27.06 6 Helios & Matheson Information Technology Ltd. 36.05 7 KALS Information Systems Ltd. (application 30.92 software seg) 8 L G S Global Ltd. 26.33 9 Softsol India Ltd. 15.18 10 Akshay Software Technologies Ltd. 7.45 Arithmetic Mean 27.81 Thus, the TPO made adjustment of Rs.14,78,25,360/ in respect of international transaction relating to software development services under ITS segment. 2.2 Similarly, in respect of ITES segment the TPO accepted TNMM as most appropriate method for benchmarking ALP but did not concur with the comparables selected by assessee. The TPO included two companies i.e. Accentia Technologies Ltd. and Coral Hubs Ltd. in the final list of comparables and excluded Aditya Birla Minacs Worldwide L