- (1.) This appeal has been preferred by the Revenue under Section 260A of the IT Act, 1961 (in short ''the Act'') against the order dt. 22nd Oct., 2009 passed by the Income-tax Appellate Tribunal, Chandigarh Special Bench, Chandigarh (hereinafter referred to as ''the Tribunal'') in ITA No. 115/Chd/2009 [reported as Dy. CAT vs. Quark Systems (P) Ltd.,2010 42 DTR 414--Ed., for the asst yr. 2004-05, claiming the following substantial question of law : Whether on facts and circumstances of the case and in law the Tribunal's decision was justified in accepting additional ground raised by the assessee to exclude the case of M/s Datamatics Technologies Ltd. which was chosen by the assessee itself and whether the Tribunal was justified in remanding the issue of exclusion of M/s Datamatics Technologies Ltd. along with its observation on the facts of the issue, which is likely to have a bearing on the decision of the TPO ?
(2.) Briefly stated, the facts necessary for disposal as narrated in the appeal are that the assessee is an Indian company, fully owned subsidiary of a Switzerland based company known by the name of Quark Systems SAM., Switzerland (QSSS). During the course of assessment proceedings, a reference was made to the Transfer Pricing Officer (TPO) for determination of ALP qua the international transactions which the assessee entered into with its parent company. The TPO noticed that the assessee had employed TNMM for the purpose of computing ALP and did not dispute the same. He further noticed that one of the comparables, out of independent comparables selected by the assessee for the computation of AIT was M/s Imercius Technologies India (P) Ltd. which showed a net loss @ 73.48 per cent. The TPO rejected M/s Imercius Technologies India (P) Ltd. as comparable holding that the said company was incorporated in 2002 only and its net worth was negative whereas turnover was also less than the turnover of the tested party. Accordingly, the TPO passed an order under Section 92CA(3) of the Act on 23rd Nov., 2006 determining the ALP of remuneration received by the assessee for software development services at Rs. 15,56,82,397 as against Rs. 13,06,27,301. Thus, an adjustment to the ALP was made at Rs. 2,50,55,096. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who vide order dt. 28th Nov., 2008 partly allowed the appeal granting the benefit of 5 per cent to the assessee under Section 92C(2) of the Act and dismissed the same with regard to use of multiple years data and the selection of M/s Imercius Technologies India (P) Ltd. as comparable. Against the order of the CIT(A), the Department as well as the assessee filed appeals before the Tribunal. The Tribunal vide order dt. 22nd Oct., 2009 upheld the exclusion of M/s Imercius Technologies India (P) Ltd. as comparable and remanded the issue of 5 per cent relaxation to the AO to reconsider the same in view of the amendment in Section 92C(2) of the Act. The Tribunal further accepted the additional ground taken by the assessee for exclusion of M/s Datamatics Technologies from the list of eomparables for the purpose of determination of ALP. Hence, the present appeal by the Revenue.
(3.) We have heard learned counsel for the Revenue.;