आदेश/ORDER 

Per Shri D.S.Sunder Singh, Accountant Member :

This appeal filed by the assessee is directed against the order of Deputy Commissioner of Income Tax, Hyderabad, dated 31.10.2018 passed u/s 143(3) r.w.s 144C of the Income Tax Act for the Assessment Year 2015- 16 and stay application is filed by the assessee. Since the main appeal is taken up for hearing, the stay application filed by the assessee is dismissed in limine.

The assessee filed appeal raising the following grounds of appeal:

1. On the facts and in the circumstances of the case and in law, the Ld. Transfer Pricing Officer i.e the Deputy Commissioner of Income-tax - Circle - 2(1), Hyderabad (hereinafter referred to as the Ld. TPO’) and the Ld. AO under the directions issued by Hon’ble DRP, erred in making an addition to the Appellant’s total income of INR 4,60,53,538 (based on the provisions of Chapter X of the Income-Tax Act, (’the Act’) and the said additions being wholly unjustified are liable to be deleted.

2. On the facts and in the circumstances of the case and in law, the Ld. TPO erred and the Hon’ble DRP further erred in upholding/ confirming the action of the Ld. TPO in incorrectly including / selecting the following companies as comparables, without appreciating that the said companies were functionally dissimilar to the Appellant, which ought to have been excluded for the following reasons which are independent of and without prejudice to one another i.e. the said companies were engaged in product development, do not have required segmental Information, have huge turnover, presence of brand and intangibles, have incurred huge R & D Expenditure, have significant Onsite Expenses, hold significant inventory, have abnormal profits, have insufficient information in public domain, have significant Related Party Transactions, peculiar economic circumstances, and earn fluctuating margins:

i) Infosys Limited

ii) Larsen & Toubro Infotech Limited

iii) Mindtree Limited

iv) Tata Elxsi Limited (Seg)

v) Persistent Systems Limited

vi) Thirdware Solution Limited

vii) Cybage Software Private Limited

viii) Aspire Systems (India) Private Limited

ix) Nihilent Technologies Limited

x) Inteq Software Private Limited

xi) Rheal Software Private Limited

xii) R.S.Software (India) Limited

xiii) Infobeans Technologies Limited

3. On the facts and in the circumstances of the case and in law, the Ld. TPO erred in and the Hon’ble DRP further erred in upholding / confirming the action of the Ld. TP0 in incorrectly rejecting the following companies which ought to have been included as they are engaged in software development services as comparables, without appreciating that the said companies fulfilled all the filters and were functionally comparable to the Appellant:

i) Evoke Technologies Private Limited

ii) Infomile Technologies Limited

iii) 12T2 India Limited

iv) Kireeti Soft Technologies Limited

v) SugarSoft India Limited

vi) Akshay oftware Technologies Limited

vii) Harbinger Systems Private Limited

4. Without prejudice to the above grounds on rejection of functionally dissimilar comparable companies, on the facts and in the circumstances of the case and in law, the Ld. TPO erred by incorrectly computing the margin of the following comparable companies i.e. (i) Nihilent Technologies Limited, (ii) Thirdware Solution Limited iii) Sasken Communication Technologies Ltd.

5. On the facts and in the circumstances of the case and in law, the Ld TPO erred in and the Hon’ble DRP further erred in upholding / confirming the action of the Ld TPO in rejecting the transfer pricing analysis / study prepared by the Appellant for the software development segment, without appreciating that none of the conditions mentioned in clauses (a) to (d) of Section 92C(3) of the Act were satisfied. The Ld. TPO further erred in and the Hon’ble DRP further erred in upholding / confirming the action of The Ld. TPO in applying inappropriate filters and conducting a fresh benchmarking which was erroneous and liable to be rejected.

6. On the