Private Limited, Ward 1(1)(2), Embassy Star, 2nd Floor, No.8, Bangalore. Palace Road, Vasanthnagar, Bangalore 560 052. PAN: AACCC 3490K APPELLANT RESPONDENT IT(TP)A No.175/Bang/2016 Assessment year: 201112 The Income Tax Officer, Vs. Aspect Technology Center (India) Ward 1(1)(2), Private Limited, Bangalore. Bangalore 560 052. PAN: AACCC 3490K APPELLANT RESPONDENT Appellant by : Ms. Tanmayee Rajkumar, Advocate Respondent by : Shri Pradeep Kumar, CIT(DR)(ITAT), Bengaluru. Date of hearing : 27.07.2020 Date of Pronouncement : 30.07.2020 ORDER Per N.V. Vasudevan, Vice President IT(TP)A No.187/Bang/2016 is an appeal by the revenue, while IT(TP)A No.175/Bang/2016 is an appeal by the assessee. Both these IT(TP)A Nos.187 & 175/Bang/2016 Page 2 of 38 appeals are directed against the order dated 16.12.2016 of the ITO, Ward 1(1)(2), Bangalore passed u/s. 143(3) r.w.s. 144C(13) of the Incometax Act, 1961 [the Act] in relation to AY 201112. 2. The grounds of appeal raised by the revenue in its appeal reads as follows: "1. The orders of the Dispute Resolution Panel is opposed to law and the facts and circumstances of the case. Software development services segment: 2. The DRP erred in directing the AO/TPO to exclude M/s. Acropetal Technologies Ltd., M/s. Mindtree Ltd., and M/s. R.S. Software (India) Ltd., from the list of comparables, holding them to be functionally dissimilar as they are having significant onsite revenues, thereby seeking exact comparability while searching for comparable companies of the assessee under TNMM method, whereas requirement of law and international jurisprudence require seeking similar comparable companies. Also, the nature of activity, ie., software development remains the same, irrespective of the company engaged in providing onsite or offshore services. 3. The DRP erred in directing exclusion of M/s. R.S. Software Pvt. Ltd., M/s. Mindtree Ltd., and M/s. Acropetal Technologies Ltd., on the ground that they have significant onsite revenue, without appreciating the fact that onsite development of software entails more cost and thereby results in lower profit margins. 4. The DRP erred in directing the AO to exclude M/s. Acropetal Technologies Ltd., from the list of final comparables also for the reason that clear segmental information of the employee cost and export earning filter was not available, without appreciating that proper segmental information was available on Prowess database as well as audited financials. 5. The DRP erred in directing the AO to exclude M/s. Mindtree Ltd., from the list of comparables holding it to be IT(TP)A Nos.187 & 175/Bang/2016 Page 3 of 38 functionally dissimilar also for the reason that there were extraordinary event of merger when it has not been proved that such merger has any material effect on profit margin. 6. The DRP erred in directing to exclude Einfochips Ltd., from the list of comparables holding that it is functionally not comparable as no segmental information is available and for the reason that it fails 75% service revenue filter, by not acknowledging the fact that entire revenue of the company comes from provision of services, and service income being 100% of its sales, the company qualifies the filter. 7. The DRP erred in directing exclusion of M/s. M/s.ICRA Techno Analytics Ltd., from the list of comparables on the ground that it is into diversified activity and no segmental data is available, without appreciating that the basic function of the company is developing software solutions in those and other verticals. The DRP also failed to appreciate that the company's business of analysis of statistical data of its clients before providing software solutions does not render the services to be functionally uncompara