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(iv) the net profit margin realized by the enterprise and referred to in sub-clause (I) is established to be the same as the net profit margin referred to in sub-clause (iii);
(v) the net profit margin thus established is then taken into account to arrive at an arm's length price in relation to the international transaction (or the specified domestic transaction];"

5. In the context of agreed application of TNMM method, the Revenue adopted the results of various companies including above two companies, despite strong opposition from the assessee. The final working out by the Assessing Officer was done in tune with the report of the TPO. The Tribunal with respect to Bodhtree Consulting Ltd. referred to orders passed by other Tribunals in similar background and noted that the financial results of this company were highly fluctuating from year to year. On such basis, the Tribunal provided for exclusion of such company for transfer pricing on HC-NIC Page 3 of 9 Created On Sat Aug 06 01:30:06 IST 2016 O/TAXAP/258/2016 ORDER the basis of TNMM. With respect to E-Infochip Bangalore Ltd., the Tribunal noted that the company was engaged in software development and IT enabled services. The assessee was involved only in software development. The Tribunal accepted assessee's contention that since the financial information with respect to these two segments was not separately available, the profit margin of this company also must be kept out of consideration. 



HC-NIC                                 Page 4 of 9      Created On Sat Aug 06 01:30:06 IST 2016
                   O/TAXAP/258/2016                                                   ORDER

8. With respect to exclusion of E-Infochip Bangalore Ltd., however, the issue requires a closer scrutiny. As noted, the grievance of the assessee was that this company was engaged in software development as well as IT enabled services. Since the assessee was engaged only in software development, the financial results of the company in connection with such business alone could be compared. According to the assessee, the TPO committed an error in taking the overall results of the company which was engaged in two different businesses. It was in this background the Tribunal held that since the segmental information was not available, such company also must be kept out of consideration. However, we notice that before the TPO also, the assessee had raised similar contention. The TPO rejected the contention on the ground that the said company was engaged only in software development. TPO had observed as under :

"B.11.2 As far as the contention regarding entity being engaged in software development and IT enabled services is concerned, the observation of the assessee is itself negated by the details submitted by the company, which was incidentally reproduced by the assessee in the reply to show cause notice also. The same is being reproduced again for convenience:
e-infochips Bangalore Limited is engaged in the business of providing software development services, as mentioned below :
III. Application software development for various projects using the languages like C, C++, Java, Net and Android. The major customers in this segment are spread across all sorts of industries who need software for their support functions or integrations of their various systems.
From perusal of the above, there can be no doubt that the comparable is engaged in providing software development services only. The only difference can be in respect of the verticals in which such development services are being provided. Since neither the assessee nor the TPO has carried out research on the basis of different verticals, raising such a contention in respect of the comparable is inappropriate. The fact that this comparable is engaged only in providing software development activities is again fortified by the reply submitted u/s 133(6), which was not reproduced by the assessee, but is being reproduced for more clarify: