The Tax PublishersIT(TP)A No. 3131/Bang/2018
2020 TaxPub(DT) 1390 (Bang-Trib)

IN THE ITAT, BANGALORE BENCH

B.R. BASKARAN, A.M. & PAVAN KUMAR GADALE, J.M.

Microsoft Research Lab India (P) Ltd. v. Dy. CIT

IT(TP)A No. 3131/Bang/2018

5 February, 2020

Assessee by: Nageswar Rao, Advocate

Revenue by: Pradeep Kumar, Commissioner (Departmental Representative)

ORDER

Shri Pavan Kumar Gadale, J.M.

The assessee has filed an appeal against the order passed under section 143(3) read with section 144C of the Income Tax Act, 1961 ('the Act') in pursuance to the directions of Dispute Resolution Panel (DRP), dated 21-8-2018.

2. The assessee has raised the following grounds of appeal :--

3. At the time of hearing, the learned Authorised Representative has not pressed Ground of appeal Nos. 11 to 14 and made endorsement, hence they are treated as withdrawn and dismissed; The assessee raised additional Ground of appeal on the Turnover criteria and is admitted and read as under :--

4. The Brief facts of the case are that the assessee was incorporated in January, 2005 as a wholly owned subsidiary of Microsoft Corporation, US (M S Corp.). The Asssesse company is engaged primarily in rendering Software Development Research and Development Services to its Associated Enterprise (AE) M.S. Corp. The assessee company filed the Original Return of Income on 28-11-2014 with total income of Rs. 18,21,06,039 and filed the Revised Return of Income on 30-3-2016 with total income of Rs. 17,22,00,910. Subsequently, the case was selected for scrutiny under CASS and Notice under section 143(2) & 142(1) of the act were issued. In compliance the learned Authorised Representative appeared from time to time and submitted the details. The assessing officer find that the assessee has international transactions and the matter was referred with prior approval of Pr. CIT to the Transfer Pricing Officer (TPO). The assessee is engaged in Software Development Segment (SDS) and the financials are referred at Para 2.3 and 2.4 of T.P. Order which is as under :--

5. The assessee filed the TP Study Report in Software Development Services and adopted 22 comparables for analysis and PLI of Op/Oc is 12.64%. Whereas the Transfer Pricing Officer has rejected the TP Study and applied filters and dealt on the functionality of comparables and adoption of filters at Para 4.2 to 7.3 of Transfer Pricing Officer order. Further Transfer Pricing Officer issued Show Cause Notice and the assessee filed objections on Transfer Pricing Officer's remark. Finally the Transfer Pricing Officer considered the functionality and working criteria and has selected 8 comparables at page 33 para 14 of the order which are as under :--

SUBSCRIBE TaxPublishers.inSUBSCRIBE FOR FULL CONTENT