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(a). Rendering of Services.

(b). Purchase of fixed assets.

(c). Recharge paid to AEs.

(d). Sale of fixed assets.

(e). Recharge paid by AEs.

6. From the above, (a) to (e) are interlinked and have been aggregated for the purpose of analysis as a software development services and the assessee has applied TNMM and PLI (OP/TC) calculated at 17.44% whereas OP/TC has been calculated of comparables at 13.18% from software development services. In case of (d) & (e), the assessee has applied CUP method and have been separately evaluated from the transfer pricing prospective. The functional analysis were undertaken, in which functions performed by the group companies and by SEMCI, assets employed and risk assumed, were also analysed in detail in the TP study report. The economic 6006 & 6751/Del./2014 8 analysis regarding software development services and other international transactions are at page 22 to 28 of TP Study Report which is as under :

13. Thinksoft Global Services Ltd. P 17.72%

14. Zensar Obt. Technologies Ltd. P 18.97%

15. Crazy Infotech Ltd. P-Seg. 1.35%

16. Teledata Marin Solutions Ltd. C-Seg 2.86% Mean 13.18% 6006 & 6751/Del./2014 16 Median 12.97% Upper Quartile 21.38% Lower Quartile 4.24% The details of search for uncontrolled comparables and determination of arm's length price has been given in Appendix G. Our analysis shows that the arithmetic mean OP/TC of comparable companies is 13.18%. Hence, prices of international transactions of SEMCI that achieve an OP/TC of 13.18% or more would meet the arm's length standard required under the Indian Regulations. The financial results of SEMCI provided to us (summarised in Appendix I) indicate that the Branch has an OP/TC of 17.44% during the year ended March 31, 2010. This provides evidence that both the pricing basis itself of international transactions of SEMCI and the outcome of the pricing i.e. the profitability, support our view that the international transactions of SEMCI were in accordance with the 'Arm's Length' standard required under the Indian Regulations. 5.3. Other international Transactions Cost Recharges paid by AEs As mentioned above, the operations of the branch have been to closed and thus, the fixed assets have been sold to the group companies (amounting to Rs. 148,258,176) and remaining fixed assets have been discarded/scrapped. On account of such disposal of fixed assets the branch has incurred a toss of Rs. 285,676,223 which the AEs have reimbursed. Further, other costs incurred by the Branch amounting to Rs. 145,873,325 have also been reimbursed by the parent company. As the above amounts represent actual cost/ losses incurred by the Branch, which have been reimbursed by the AEs on a cost-to-cost basis, therefore the transactions satisfies the arm's length principle."

8. In the TP study report, the assessee identified the comparable companies by using widely recognized commercial information database, viz., prowess and Capital Line Plus. After the detailed study of the functions performed, risk assumed, assets employed and nature of activity of each company were identified and finally the assessee selected 16 company were identified and finally, the assessee selected 16 companies as comparables which were narrated in the T.P. Study report and calculated average mean margin of OP/TC @ 13.18% by using multiple year data. Based on the analysis, the assessee determined ALP of the impugned international transactions for software development services. The operating profit margin was calculated in TP study report as under :