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9. The assessee points out that Goldstone Technologies was applied by the assessee and accepted by the TPO, hence, there is no dispute about the said concern. However, the assessee is aggrieved by inclusion of all the other concerns as comparable. Further, the assessee is also aggrieved by the order of TPO in not including the following concerns as comparable:- 

            Sr No.    Name of the company
               1      Akshay Software Technologies Ltd.
               2      Indium Software (India) Ltd.
               3      Maars Software international Ltd.
               4      Quintegra Solutions Ltd.
               5      S I P Technologies and Exports Ltd.
               6      R S Software (India) Ltd.

15. We have heard the rival contentions. The assessee while carrying out its transfer pricing analysis had applied certain filters to select the concerns by applying the filter of accept / reject matrix, the concerns which they do not have significant (less than 25%) foreign exchange earning were held to be reason for rejection of companies as comparable. The perusal of financial reporting of the concern E-Infochips Ltd. at page 625 of the Paper Book reflects that the income from software services at Rs.21.03 crores with consulting services at Rs.2.16 crores and hardware sales were at Rs.82.61 lakhs. The consultancy services were linked to the software services provided by the assessee and the hardware sales undertaken by the said concern were less than 4% of the total turnover. Where the assessee had itself applied the turnover filter of 75% of the sales for software development services, then the said concern qualifies the filter as it was predominantly providing software development services. The next objection of the assessee that E-Infochips Ltd. was engaged in sale of software products and ITES thus has no reasoning once turnover of products is less than 4% of total turnover. Further, the Hon'ble High Court of Gujarat has set aside the issue of exclusion of E-Infochips Bangalore Ltd. on the ground that it was not clear as to whether the said concern was engaged in any services other than software development services. However in the present case, financial details are available and applying the filters adopted by assessee, we hold that E-Infochips Bangalore Ltd. is to be included in final set of comparables.

21. We find that the concern KALS Information Systems Ltd. is functionally not comparable to the assessee as it is engaged in software services as well as software products and has reported inventory and work in progress in annual report. Reference is made to pages 719 and 720 of the Paper Book. Even the website of KALS Information Systems Ltd. states that the company has developed two products i.e. Virtual Insure and La-Vision. Since the revenue breakup is not available, then the margins of said concern cannot be applied to benchmark the international transactions undertaken by the assessee of provision of software development services to its associate enterprises. Similar proposition has been laid down by the Pune Bench of Tribunal in John Deere India Pvt. Ltd. Vs. ACIT (supra). Further the Hon'ble Bombay High Court in the case of CIT Vs. PTC Software (I) Pvt. Ltd. in Income Tax Appeal No.732 of 2014 judgement dated 26-09-2016 has held that Kals Information Systems Ltd. was engaged in Software products not comparable to concern providing software services. Applying the same, we hold that the said concern is to be excluded from the final list of comparables.

23. Now, coming to the second argument of the assessee i.e. exclusion of concerns which were selected by the assessee in its TP analysis. The first concern is Akshay Software Technologies Ltd., which as per the assessee is functionally comparable to the assessee. However, the said concern is engaged in on-site development and hence, the margins of said concern are not comparable to the assessee which is off-site developer. The Pune Bench of Tribunal in TIBCO Software (India) Pvt. Ltd. Vs. DCIT in ITA No.2536/PN/2012 relating to assessment year 2008-09, order dated 11.02.2015 had held that both Akshay Software Technologies Ltd. and Maars Software International Ltd. were to be rejected being on-site developers while comparing the margins with off-site developers. The said proposition was again applied by the Pune Bench of Tribunal in BMC Software India Pvt. Ltd. Vs. DCIT in ITA No.1425/PN/2010, relating to assessment year 2006-07, order dated 16.03.2016. Applying the said principle, we hold that Akshay Software Technologies Ltd. is to be excluded from the final list of comparables as done by the TPO. Applying the said principle, we further hold that the concern at serial No.3 i.e. Maars Software International Ltd. being on-site developer is also to be excluded from the final set of comparables. Similarly, the concern at serial No.6 i.e. R S Software (India) Ltd. is on-site developer and the same is to be excluded from the final list of comparables.