आयकर अपील(cid:547)य अ(cid:876)धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ B ‘ Bench, Hyderabad Before Shri Laliet Kumar, Judicial Member And Shri Manjunatha, G. Accountant Member आ.अपी.सं /ITA No.342/Hyd/2016 (िनधा१रण वष१/Assessment Year: 2011-12)

Pegasystems Worldwide India (P) Ltd Hyderabad PAN:AAECP3453F	Vs.	Income Tax Officer Ward 16(3) Hyderabad
(Appellant)		(Respondent)
िनधा१ौरती (cid:554)ारा/Assessee by: CAs Kranthi & Mrudulatha
राज(cid:830) व (cid:554)ारा/Revenue by:: Shri M Vijay Kumar, CIT(DR)
स ुनवाई की तारीख/Date of hearing: 19/06/2024
घोषणा की तारीख/Pronouncement: 07/08/2024

आदेश/ORDER Per Manjunatha, G. A.M This appeal filed by the assessee is directed against the final assessment order passed by the Assessing Officer u/s 143(3) r.w.s. 144C(13) of the I.T. Act, 1961, in pursuant to the directions u/s 144C(5) of the I.T. Act, 1961 issued by the learned Dispute Resolution Panel-1, Bengaluru, dated 3.12.2015 and pertains to A.Y 2011-12.

2. The assessee has raised multiple grounds on various issues, including rejection of T.P documentation, rejection of use of multiple year data, negative working capital adjustment, inclusion of certain comparables and exclusion of certain comparables, but restricted its arguments only on the grounds relating to inclusion/exclusion of certain comparables. Therefore, we deem it not necessary to reproduce the grounds of appeal filed by the assessee.

3. The brief facts of the case are that the assessee company, M/s. Pegasystems Worldwide India (P) Ltd is a wholly owned subsidiary of Pegasystems Inc. USA . The company is engaged in providing software development services to Pega US and is remunerated on a cost plus mark-up basis. The assessee has filed its return of income for the A.Y 2011-12 on 7.10.2011 disclosing ‘nil’ income after claiming deduction of Rs.7,79,30,465/- u/s 10AA of the I.T. Act, 1961 in respect of its exports from SEZ Unit. The case was selected for scrutiny and during the course of assessement proceedings, the Assessing Officer noticed that the assessee has entered into international transactions with its AEs for providing software development services and receivables from AE. During the course of assessement proceedings, the issue of international transaction entered into by the assessee was referred to the TPO to determine the Arms’ Length Price (ALP) of international transaction of the assessee with its AE. The TPO vide order u/s 92CA(3) dated 31.10.2014 determined the ALP for the provision of software development services and arrived at higher value of Rs.2,229,53,557/- being transfer pricing adjustment u/s 92C of the Act. The TPO had also made transfer pricing adjustment of Rs.2,30,25,260/- towards notional interest receivable on outstanding receivable from AE. Against the draft assessment order, the assessee has filed objections before the DRP and contested TP adjustment suggested by the TPO in respect of provision of software development services and notional interest receivable on outstanding receivables from AE. The DRP-1 Bengaluru vide directions issued u/s 144C(5) of the I.T. Act, 1961 dated 3.12.2015 directed the Assessing Officer to recompute the deduction claimed u/s 10A of the Act by excluding communication charges from the total turnover. The DRP had also directed the Assessing Officer to delete TP adjustment made towards receivables and further issued direction to the Assessing Officer/TPO to exclude certain comparables for the reasons stated in their order dated 3.12.2015. In pursuant to the directions issued by the DRP u/s 144C(5) of the Act dated 3.12.2015, the Assessing Officer has passed the final assessment order u/s 143(3) r.w.s. 144C(13) of the I.T. Act, 1961 dated 27.01.2016 and made addition of Rs.3,29,70,250/- towards TP adjustment in respect of provision of software development services.

4. Being aggrieved by the final assessment order, the assessee is in appeal before us.

5.

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