Limited Income Tax, ('Erstwhile i2 Technologies India Range 11, Pvt. Ltd.,) Bengaluru. Tower A, Mantri Commercio, Near Sakra World Hospital, Outer Ring Road, Bellandur, Bengaluru560103. PAN : AAACI7334Q APPELLANT RESPONDENT Assessee by : Shri. Arvind V. Sonde, Advocate Revenue by : Shri. C. H. Sundar Rao, CITDRI Date of hearing : 22.02.2018 Date of Pronouncement : 23.02.2018 ORDER Per Sunil Kumar Yadav, Judicial Member This appeal is preferred by the assessee against the order of the CIT(A), inter alia, on following grounds: I. Transfer Pricing A. Conceptual Grounds 1 The learned Commissioner of IncomeTax (Appeals) ["CIT(A)"] erred in determining an adjustment to the arm's length price of the Appellant's international transactions with associated enterprises, with respect to the following international transactions of the Appellant With its Associated Enterprises ("AEs") u/s 92CA of the Income Tax Act 1961 (`the Act'): • Software development services INR 15,29,27,582; and • Information Technology enabled Services (`ITeS') INR 1,78,98,463. 2. The learned CIT(A) erred in rejecting the Transfer Pricing (`TP') documentation maintained by the Appellant by invoking provisions of subsection (3) of 92C of the Act contending that the IT(TP)A No.1208/Bang/2014 Page 2 of 27 information or data used in the computation of the arm's length price is not reliable or correct. In doing so: 2(a) the learned CIT(A) and the learned TPO have failed to appreciate that at the time of preparation of the transfer pricing documentation for March 2005, contemporaneous data for financial year 200405 was not available in the data base (Prowess & Capitaline) for some of the companies. 2 (b) the learned CIT(A) erred in rejecting the set of filters applied by the Appellant in the TP documentation and in introducing additional filters for selection/ rejection of companies as comparable to the appellant. 2(c) the learned CIT(A) erred in rejection of comparability analysis carried in the TP documentation and in conducting a fresh comparability analysis based on application of additional filters in determining the arm's length price. 2(d) the learned CIT(A) erred in upholding the action of learned TPO of considering 25 percent as the threshold limit for the related party transactions filter as this number is an arbitrary number and has been adopted without any reasonable basis. 2(e) the learned CIT(A) erred in rejecting companies that are comparable to the appellant while performing the comparability analysis and erred in including companies which do not satisfy the test of comparability. 3. The learned CIT(A) erred in not applying multiple year / prior year data for comparable companies while determining arm's length price. 4. The learned CIT(A) erred in using data as at the time of assessment proceedings, instead of that available as on the date of preparing the TP documentation for comparable companies while determining arm's length price. 5. The learned CIT(A) ought to have appreciated the fact that transfer pricing is an anti avoidance mechanism. In the instant case the Appellant is registered as an entity under the Software Technology Parks of India ("STPI") scheme and has claimed tax benefits under section 10 A of the Act and has no reason to suppress its profit from its operations to manipulate the transfer prices. 6. Having accepted that the Appellant is a limited risk contract service provider rendering software development and ITeS, the learned CIT(A) erred in not providing appropriate adjustment towards the risk differential. when the comparables selected are full fledged entrepreneurial companies. 7. the learned CIT(A) erred in not granting working capital adjustment for the comparable companies selected by th