Income Tax, (India) Pvt. Ltd., Circle 12(3), Unit5, Level3, Innovator Block, Bangalore. International Tech Park, White Field Road, Bangalore 560 066. PAN: AAECS 0269E APPELLANT RESPONDENT CO No.13/Bang/2012 [in IT(TP)A No.1109/Bang/2011 ] Assessment year : 200506 M/s. Sharp Software Development Vs. The Deputy Commissioner of (India) Pvt. Ltd., Income Tax, Bangalore 560 066. Circle 12(3), PAN: AAECS 0269E Bangalore. CROSS OBJECTOR RESPONDENT Revenue by : Sheri M.K. Biju, Addl. CIT (ITAT)3, DR Assessee by : Shri Chavali Narayan, CA Date of hearing : 23.11.2016 Date of Pronouncement : 25.01.2017 IT(TP)A No.1109/Bang/2011 & CO 13/Bang/2012 Page 2 of 33 ORDER Per Sunil Kumar Yadav, Judicial Member This appeal is preferred by the revenue against the order of CIT(Appeals) inter alia on the following grounds: "1. The order of the Learned CIT(A) in so far as it relates to the following grounds is opposed to law and facts of the case. 2. The CIT(A) erred in holding that expenditure traveling and communication expenses of Rs.87,69,553/ are to be excluded from total turnover as well for the purpose of computation of deduction u/s 10A while such exclusion is permitted to arrive at the export turnover only as per the definitions given in Sec.10A of the I.T. Act, 1961 and total turnover has not been defined in the section. 3. The learned CIT(A) erred in holding that profit on cost of more than 50% of the comparable company(ies) is abnormal without giving reasons how functions discharged, assets deployed and risks assumed of such companies were different from the appellant company. 4. In the facts and circumstances of the case, the learned CIT(A) erred in holding that the TPO erred in not excluding comparables having any related party transactions, even if the related party transactions are less than 25% of the revenues. 5. The learned CIT(A) erred in holding that the assessee is eligible for a standard deduction of 5% from the Arm's Length Price (ALP) under the proviso to Section 92C(2) of the Income Tax Act. 6. The learned CIT(A) erred in holding that the size, turnover and brand of the company are deciding factors for treating a company as a comparable, and accordingly erred in excluding M/s Infosys Technologies Ltd. as a comparable. 7. For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT(A) in so far as it relates to the above grounds may be reversed and that of the Assessing Officer may be restored. IT(TP)A No.1109/Bang/2011 & CO 13/Bang/2012 Page 3 of 33 8. The appellant craves leave to add, alter, amend and/or delete any of the grounds mentioned above." 2. The assessee has filed cross objection assailing the order of CIT(Appeals) inter alia on the following grounds: "On the facts and circumstances of the case and in law: 1. The learned CIT(A) has erred, in law and in facts, by not accepting the Respondent's plea in entirety and confirming with the Learned Assessing Officer ("AO)/ Transfer Pricing Officer ("TPO") on not accepting the economic analysis undertaken by the Respondent in accordance with the provisions of the Act read with the Income Tax Rules, 1962 and conducting a fresh economic analysis for the determination of the arm's length price in connection with the impugned international transaction and holding that the Respondent's international transaction is not at arm's length. 2. The learned CIT(A) has erred, in law and in facts, in not accepting the Respondent's plea and confirming with the Learned AO/T