Ubisoft Entertainment India Pvt. Ltd., Pune V. Deputy Commisisoner of Income-tax,

CO 30/PUN/2015

• Counselvise Citation: [2017] 111 COUNSELVISE.COM (IT) 0148 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-06-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 24-09-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: REENA JHA TRIPATHI
• Assessee Lawyers: Not Found
• Keywords: Transfer pricing; International transaction
• Section: 271(1)(c); 143(3); 234B; 201; 13; 22; 2; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 351 /PUN/2015 / ASSESSMENT YEAR : 20 10 - 11 UBISOFT ENTERTAINMENT INDIA PRIVATE LIMITED, LEVEL 6, BUILDING NO. B - 3, KUMAR CEREBRUM, KALYANI NAGAR, PUNE 411006 PAN : AAACU9861E ....... / APPELLANT / V S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 12, PUNE / RESPONDENT . / ITA NO . 552 /PUN/2015 / ASSESSMENT YEAR : 2010 - 11 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 12, PUNE ....... / APPELLANT /VS. UBISOFT ENTERTAINMENT INDIA PRIVATE LIMITED, LEVEL 6, BUILDING NO. B - 3, KUMAR CEREBRUM, KALYANI NAGAR, PUNE 411006 PAN : AAACU9861E / RESPONDENT 2 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 . / CO NO. 30/PUN/2015 / ASSESSMENT YEAR : 2010 - 11 UBISOFT ENTERTAINMENT INDIA PRIVATE LIMITED, LEVEL 6, BUILDING NO. B - 3, KUMAR CEREBRUM, KALYANI NAGAR, PUNE 411006 PAN : AAACU9861E ....... / APPELLANT /VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 12, PUNE / RESPONDENT ASSESSEE BY : SHRI M.P LOHIA REVENUE BY : S MT. REENA JHA TRIPATHI / DATE OF HEARING : 0 7 - 06 - 2017 / DATE OF PRONOUNCEMENT : 28 - 0 6 - 2017 / ORDER PER VIKAS AWASTHY, JM : TH ESE CROSS APPEALS BY THE ASSESSEE AND THE REVENUE ARE DIRECTED AGAINST THE ASSESSMENT ORDER DATED 26 - 02 - 2015 PASSED U/S. 143(3) R.W.S. 144C(5) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR THE ASSESSMENT YEAR 2010 - 11. 2. SHRI M.P LOHIA APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS RAISED 19 GROUNDS IN THE APPEAL ASSAILING THE ASSESSMENT 3 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 ORDER BASED ON THE DIRECTIONS OF DISPUTE RESOLUTION PANEL (DRP). THE LD. AR SUBMITTED THAT THE ASSESSEE IS NOT PRESSING GROUND NOS. 3, 4, 6, 9, 10 AND 11. THE GROUND NOS. 1 AND 2 ARE GENERAL IN NATURE. THUS, THE GROUNDS FOR EFFECTIVE ADJUDICATION BEFORE THE TRIBUNAL A RE AS UNDER : REJECTION OF LOSS MAKING COMPARABLES 5. ERRED IN REJECTING ANCENT SOFTWARE INTERNATIONAL LIMITED, QUINTEGRA SOLUTIONS LIMITED, SIP TECHNOLOGIES AND EXPORTS LIMITED AND TVS INFOTECH LIMITED ON THE GROUND THAT THEY ARE LOSS MAKING IN THE YEAR UNDER CONSIDERATION; INTRODUCTION OF FUNCTIONALLY DIFFERENT COMPARABLES BY THE TPO 7. ERRED IN CONSIDERING ACROPETAL TECHNOLOGIES LIMITED TO BE COMPARABLE TO THE APPELLANT, DISREGARDING THE FACT THAT THE COMPANY IS ALSO ENGAGED IN PRODUCT DEVELOPMEN T ACTIVITIES IN ADDITION TO SOFTWARE SERVICES AND HENCE IS FUNCTIONALLY DIFFERENT FROM THE APPELLANT; 8. ERRED IN CONSIDERING THIRDWARE SOLUTIONS LIMITED AS A COMPARABLE, DISREGARDING THE FACT THAT THE COMPANY IS ENGAGED IN PRODUCT DEVELOPMENT SERVICES IN ADDITION TO SOFTWARE SERVICES AND DOES NOT REPORT SEPARATE SEGMENTAL ACCOUNTS FOR THE SAME AND HENCE IS FUNCTIONALLY DIFFERENT FROM THE APPELLANT; WORKING CAPITAL ADJUSTMENT 12. ERRED IN NOT GRANTING THE BENEFIT OF WORKING CAPITAL ADJUSTMENT TO THE APPELLANT WHILE DETERMINING THE MARGINS OF COMPARABLE COMPANIES; RISK ADJUSTMENT 13. ERRED IN NOT GRANTING RISK ADJUSTMENTS WHILE COMPARING THE MARGINS OF COMPARABLE COMPANIES WITH THAT OF THE APPELLANT; BENEFIT OF +/ - 5% 14. SHOULD HAVE APPRECIATED THA T BENEFIT OF +/ - 5% UNDER PROVISO TO SECTION 92C(2) OF THE ACT BE GRANTED TO THE APPELLANT IF THE ADJUSTMENT UNDER TRANSFER PRICING FALLS WITHIN THE RANGE SPECIFIED THEREIN; 4 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 NON TRANSFER PRICING GROUNDS COMPUTATIONAL ERROR 15. ERRED IN INADVERTENTLY CO NSIDERING THE TOTAL INCOME OF THE APPELLANT AT RS.4,44,13,971 IN THE FINAL ASSESSMENT ORDER INSTEAD OF RS.1,21,75,260 AS COMPUTED BY THE APPELLANT IN THE RETURN OF INCOME; LEVY OF INTEREST UNDER SECTION 234B OF THE ACT 16. ERRED IN LEVYING INTEREST UNDER SECTION 234B OF THE ACT; 17. WITHOUT PREJUDICE TO THE ABOVE , THE LEARNED AO HAS ERRED IN COMPUTATION OF INTEREST UNDER SECTION 234B OF THE ACT INCORRECTLY; LEVY OF INTEREST UNDER SECTION 234D OF THE ACT 18. ERRED IN LEVYING INTEREST UNDER SECTION 234D OF THE ACT; PENALTY PROCEEDINGS 19. ERRED IN INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. 2.1 THE LD. AR SUBMITTED THAT THE ASSESSEE COMPANY IS A SUBSIDIARY OF UBISOFT ENTERTAINMENT SA, FRANCE. THE ASSESSEE COMPANY ASSISTS UBI SOFT, FRANCE IN GAME DEVELOPMENT AND QUALITY ASSURANCE SERVICES. THE ASSESSEE IS A CAPTIVE SERVICE PROVIDER. THE ASSESSEE IS REMUNERATED WITH MARK UP OF 8.87% ON COSTS FOR RENDERING SERVICES TO ITS PARENT COMPANY. DURING THE PERIOD RELEVANT TO ASSESSMEN T YEAR UNDER APPEAL, THE ASSESSEE HAS GROSS TURNOVER OF RS.1 3,57,63,000/ - FROM GAME DEVELOPMENT AND QUALITY ASSURANCE SERVICES PROVIDED TO ITS ASSOCIATED ENTERPRISES (AE). THE ASSESSEE APPLIED TRANSACTIONAL NET MARGIN METHOD (TNMM) AS THE MOST APPROPRIATE METHOD FOR BENCHMARKING ITS INTERNATIONAL TRANSACTIONS AND SELECTED OPERATING PROFIT/OPERATIVE COST (OP/OC) AS PROFIT LEVEL INDICATOR (PLI). THE ASSESSEE IDENTIFIED 21 COMPANIES AS COMPARABLES AND 5 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 DETERMINED WEIGHTED AVERAGE MARGIN OF 11.26% AS AGAINST ASSESSEES MARGIN OF 8.94%. THE TPO ACCEPTED TNMM SELECTED BY THE ASSESSEE TO BENCHMARK ITS INTERNATIONAL TRANSACTIONS. HOWEVER, THE TPO REJECTED 9 COMPANIES SELECTED BY THE ASSESSEE FROM THE LIST OF COMPARABLES AND ADDED 2 NEW COMPANIES , THUS, MAKING TH E FINAL LIST OF 14 COMPANIES AS COMPARABLES. THE TPO COMPUTED AVERAGE MARGIN OF COMPARABLES AT 24.99%. WHILE REJECTING/SELECTING COMPARABLE COMPANIES , THE TPO APPLIED O N - SITE REVENUE FILTER . THE ASSESSEE REQUESTED FOR APPLYING TURNOVER FILTER , BUT THE REQUEST OF THE ASSESSEE WAS DECLINED. THE ASSESSEE FURTHER PRAYED FOR GIVING RISK ADJUSTMENT. THE SAID REQUEST OF THE ASSESSEE WAS ALSO REJECTED BY THE TPO. THE TPO MADE TP ADJUSTMENT OF RS.2,01,14,892/ - . BASED ON THE ORDER DATED 28 - 01 - 2014 U/S. 92CA( 3) OF THE ACT BY THE TPO , THE ASSESSING OFFICER PASSED DRAFT ASSESSMENT ORDER ON 05 - 03 - 2014. AGAINST THE SAID DRAFT ASSESSMENT ORDER , THE ASSESSEE FILED OBJECTIONS BEFORE THE DRP. THE DRP APPLIED TURNOVER FILTER AND REJECTED SIX COMPANIES FROM THE LIST O F COMPARABLES MADE BY THE TPO. FURTHER, THE DRP REJECTED O N - SITE FILTER APPLIED BY THE TPO . THE DRP ADDED TWO COMPANIES IN THE LIST OF COMPARABLES AND THUS, MADE LIST OF 10 COMPANIES AS THE FINAL LIST OF COMPARABLES. THE SAME IS REPRODUCED HERE - IN - UNDER : SR. NO. NAME OF COMPARABLES PLI F.Y. 2009 - 10 1 AKSHAY SOFTWARE TECHNOLOGIES LIMITED - 1.07% 2 CG - VAK SOFTWARE & EXPORTS LIMITED (SEGMENTAL) - 10.59% 3 GOLDSTONE TECHNOLOGIES LIMITED 20.35% 4 INDIUM SOFTWARE (INDIA) LIMITED 7.16% 5 PERSISTENT SYSTEMS PRIVATE LIMITED 30.50% 6 R S SOFTWARE (INDIA) LIMITED 9.53% 7 THINKSOFT GLOBAL SERVICES LIMITED 17.05% 8 ZYLOG SYSTEMS LIMITED 25.07% 6 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 9 ACROPETAL TECHNOLOGIES LTD. (SEG.) 51.97% 10 THIRDWARE SOLUTIONS LIMITED 33.59 ARITHMETIC MEAN 18.36% 2.2 AFTER THE DIRECTIONS OF THE DRP, THE TP ADJUSTMENT WAS REDUCED TO RS.1,19,53,508/ - . THE LD. AR SUBMITTED THAT IN GROUND NO. 5 OF THE APPEAL THE ASSESSEE HAS ASSAILED EXCLUSION OF 4 COMPANIES FROM LIST OF COMPARABLES STATED TO BE LOSS MAKING COMPANIES. THE COMPANIES EXCLUDED BY THE TPO ARE ANCENT SOFTWARE INTERNATIONAL LIMITED, QUINTEGRA SOLUTIONS LIMITED, SIP TECHNOLOGIES AND EXPORTS LIMITED AND TVS INFOTECH LIMITED. THE ASSESSEE IS NOT PRESSING EXCLUSION OF SIP TECHNOLOGIES AND EXPORTS LIM ITED AND TVS INFOTECH LIMITED. THE DRP HAS ERRED IN UPHOLDING THE FINDINGS OF TPO IN REJECTING THE AFORESAID COMPANIES ON THE GROUND OF BEING LOSS MAKING COMPANIES. THE LD. AR REFERRED TO THE ANNUAL REPORT S OF ANCENT SOFTWARE INTERNATIONAL LIMITED FOR TH E FINANCIAL YEAR S 2007 - 08 TO 2009 - 10 AT PAGE S 221 TO 252 OF THE PAPER BOOK. THE LD. AR POINTED THAT ANCENT SOFTWARE INTERNATIONAL LIMITED IS NOT A LOSS MAKING COMPANIES. FURTHER REFERRING TO THE M ARGIN ANALYSIS OF THE SAID COMPANY FOR THE FINANCIAL YEARS 2007 - 08, 2008 - 09 AND 2009 - 10 AT PAGE 254 OF THE PAPER BOOK , T HE LD. AR ASSERTED THAT THE SAID COMPANY IS A PROFIT EARNING COMPANY WITH OP/OC OF 7.97%, 7.14% AND 1.69% IN FINANCIAL YEARS 2007 - 08, 2008 - 09 AND 2009 - 10, RESPECTIVELY. SIMILARLY, IN THE CASE O F QUINTEGRA SOLUTIONS LIMITED THE LD. AR REFERRED TO THE FINANCIAL RESULTS OF THE COMPANY FOR THE FINANCIAL YEARS 2007 - 08, 2008 - 09 AND 2009 - 10 AT PAGES 255 TO 29 1 OF THE PAPER BOOK. THE LD. AR FURTHER REFERRED TO THE M ARGIN ANALYSIS OF THE QUINTEGRA SOLUT IONS LIMITED AT PAGE 292 OF THE PAPER BOOK AND SUBMITTED THAT THE SAID COMPANY IS ALSO NOT A LOSS MAKING 7 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 COMPANY . THE OP/OC OF THE SAID COMPANY FOR THE FINANCIAL YEARS 2007 - 08, 2008 - 09 AND 2009 - 10 IS 21.37%, 0.03% AND 1.47%, RESPECTIVELY. THE LD. AR CONT ENDED THAT A COMPANY SHOULD BE REJECTED AS LOSS MAKING COMPANY ONLY IF IT IS A CONSISTENT LOSS MAKING COMPANY I.E. IT HAS SUFFERED LOSSES IN THREE CONSECUTIVE FINANCIAL YEARS. IN SUPPORT OF HIS SUBMISSIONS, THE LD. AR PLACED RELIANCE ON THE DECISION OF PU NE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. CARRARO TECHNOLOGIES INDIA PVT. LTD. VS. INCOME TAX OFFICER IN ITA NO. 2189/PN/2013 FOR ASSESSMENT YEAR 2010 - 11 DECIDED ON 30 - 11 - 2016. 2.3 IN RESPECT OF GROUND NOS. 7 AND 8 WHEREIN THE ASSESSEE HAS PRAYED FOR EXCLUSION OF ACROPETAL TECHNOLOGIES LIMITED AND THIRDWARE SOLUTIONS LIMITED. THE LD. AR SUBMITTED THAT BOTH THE COMPANIES SHOULD BE EXCLUDED FROM THE LIST OF COMPARABLES AS THEY ARE FUNCTIONALLY DIFFERENT AND HAVE DIFFERENT BUSINESS MODEL. THE LD. AR CO NTENDED THAT ACROPETAL TECHNOLOGIES LIMITED IS A PRODUCT COMPANY AND IS PERFORMING ACTIVITIES ON - SITE. THE TPO APPLIED ON - SITE FILTER , H OWEVER, THE DRP REJECTED THE SAID FILTER. THE LD. AR CONTENDED THAT A PERUSAL OF THE ANNUAL REPORT OF ACROPETAL TECHNO LOGIES LIMITED WOULD SHOW THAT FOR THE FINANCIAL YEAR 2009 - 10 SEGMENTAL BIFURCATION OF REVENUE IS GIVEN , BUT, THERE IS NO SEGMENTAL BIFURCATION OF REVENUE FROM IT SERVICE AND IT PRODUCT. THE BIFURCATION IS BETWEEN ENGINEERING DESIGN SERVICES, INFORMATION TECHNOLOGY SERVICE AND HEALTHCARE. THE LD. AR PLACED RELIANCE ON THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF QAD INDIA PVT. LTD. VS. DY. COMMISSIONER OF INCOME TAX IN ITA NO. 1685/MUM/2013 FOR ASSESSMENT YEAR 2009 - 10 DECIDED ON 30 - 09 - 2016 TO CONTEND THAT ACROPETAL TECHNOLOGIES LIMITED IS A PRODUCT COMPANY AND IS NOT FUNCTIONALLY 8 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 COMPARABLE WITH COMPANY ENGAGED IN SOFTWARE DEVELOPMENT SERVICES. TO FURTHER BUTTRESS HIS SUBMISSIONS, THE LD. AR PLACED RELIANCE ON THE DECISION OF HYDERABAD BENC H OF THE TRIBUNAL IN THE CASE OF INTOTO SOFTWARE INDIA PRIVATE LTD. VS. ACIT IN ITA NO. 1196/HYD/2010 FOR ASSESSMENT YEAR 2005 - 06 DECIDED ON 24 - 05 - 2013 WHICH HAS BEEN UPHELD BY THE HONBLE ANDHRA PRADESH HIGH COURT IN ITA NO. 233 OF 2014 DECIDED ON 27 - 03 - 2014. THE LD. AR SUBMITTED THAT THE COMPANY ENGAGED IN PROVIDING ON - SITE SERVICES HAS TO BE REJECTED FROM THE LIST OF COMPARABLES AS THE BUSINESS MODEL OF SUCH COMPANY IS DIFFERENT FROM THE COMPAN Y WORKING OFF - SITE. TO SUPPORT HIS CONTENTION THE LD. AR D RAWS STRENGTHEN FROM THE FOLLOWING DECISIONS OF THE TRIBUNAL : I . MSC SOFTWARE CORPORATION INDIA PVT. LTD. IN ITA NO. 46/PUN/2013 FOR ASSESSMENT YEAR 2008 - 09 DECIDED ON 22 - 03 - 2017; II . BMC SOFTWARE INDIA PVT. LTD. IN ITA NO. 1425/PN/2010 FOR ASSESSMENT YEAR 2006 - 07 DECIDED ON 16 - 03 - 2016; III . TIBCO SOFTWARE INDIA PVT. LTD. IN ITA NO. 2536/PN/2012 FOR ASSESSMENT YEAR 2008 - 09 DECIDED ON 11 - 02 - 2015. IN RESPECT OF THIRDWARE SOLUTIONS LIMITED THE LD. AR SUBMITTED THAT THE SAID COMPANY IS A PRODUCT COMPANY AND IS ALSO ENGA GED IN ITES SERVICES PROVIDING BUNDLE OF SERVICES WHICH INCLUDE IMPLEMENTATION AND CONSULTING SERVICES OF SOFTWARE BASED ON ERP AND BUSINESS INTELLIGENCE ETC. THE SAID COMPANY IS ALSO ENGAGED IN DEVELOPMENT OF SOFTWARE PRODUCT PAPA. THERE IS NO SEGMENT AL BIFURCATION AVAILABLE IN RESPECT OF SOFTWARE DEVELOPMENT AND SOFTWARE PRODUCT SERVICES OF THE SAID COMPANY. THE LD. AR IN SUPPORT OF HIS CONTENTION THAT THIRDWARE SOLUTIONS LIMITED IS 9 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 FUNCTIONAL LY DIFFERENT AND HAS TO BE EXCLUDED FROM THE LIST OF COMPA RABLES PLACED RELIANCE ON THE FOLLOWING DECISIONS : I . FISERV INDIA PVT. LTD. IN ITA 17/2016 FOR ASSESSMENT YEAR 2009 - 10 DECIDED ON 06 - 01 - 2016 (DELHI HIGH COURT); II . FISERV INDIA PVT. LTD. IN ITA NO. 1822/DEL/2014 FOR ASSESSMENT YEAR 2009 - 10 DECIDED ON 26 - 06 - 201 5; III . TIBCO SOFTWARE INDIA PVT. LTD. IN ITA NO. 276/PUN/2015 AND ITA NO. 334/PUN/2015 FOR ASSESSMENT YEAR 2010 - 11 DECIDED ON 31 - 01 - 2017; IV . OPEN SOLUTIONS SOFTWARE SERVICES PVT. LTD. IN ITA NO. 7078/DEL/2014 FOR ASSESSMENT YEAR 2010 - 11 DECIDED ON 17 - 04 - 2017. 2. 4 THE LD. AR SUBMITTED THAT IN GROUND NO. 12 THE ASSESSEE HAS ASSAILED THE FINDINGS OF DRP IN NOT GRANTING THE BENEFIT OF WORKING CAPITAL ADJUSTMENT WHILE DETERMINING MARGIN OF COMPARABLE COMPANIES. THE LD. AR SUBMITTED THAT WORKING CAPITAL ADJUSTMENT SHO ULD HAVE BEEN GIVEN BY THE AUTHORITIES BELOW WHILE DETERMINING THE MARGIN OF COMPARABLE COMPANIES. IN SUPPORT OF HIS SUBMISSIONS THE LD. AR PLACED RELIANCE ON THE FOLLOWING DECISIONS : I . DEMANG CRANES & COMPONENTS (INDIA) PRIVATE LIMITED IN ITA NO. 32/PN/20 14 FOR ASSESSMENT YEAR 2009 - 10 DECIDED ON 19 - 10 - 2016; II . STARNET NETWORKS INDIA PVT. LTD. IN ITA NO. 812/PN/2013 FOR ASSESSMENT YEAR 2005 - 06 DECIDED ON 27 - 04 - 2016; III . DEMANG CRANES & COMPONENTS (INDIA) PRIVATE LIMITED IN ITA NO. 120/PN/2011 FOR ASSESSMENT YEAR 2006 - 07 DECIDED ON 04 - 01 - 2012. 10 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 3. ON THE OTHER HAND SMT. REENA JHA TRIPATHI REPRESENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF DRP/ASSESSING OFFICER AGAINST WHICH THE ASSESSEE IS IN APPEAL. 4. W E HAVE HEARD THE EXTENSIVE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW . WE HAVE ALSO CONSIDERED VARIOUS DECISIONS AND THE DOCUMENTS ON WHICH BOTH THE SIDES HAVE PLACED RELIANCE DURING THE COURSE OF MAKING SUBMISSIONS. THE ASSESSEE IN ITS APPEAL HAS PRIMARILY ASSAILED THE FINDINGS OF AUTHORITIES BELOW IN SELECTING/REJECTING SOME OF THE COMPARABLES. 5 . THE ASSESSEE HAS RAISED 19 GROUNDS IN ITS APPEAL. THE GROUND NOS. 1 AND 2 ARE GENERAL IN NATURE, HENCE, REQUIRE NO A DJUDICATION. 6 . THE LD. AR OF THE ASSESSEE STATED AT THE BAR THAT HE IS NOT PRESSING GROUND NOS. 3, 4, 6, 9, 10 AND 11. ACCORDINGLY, THE AFORESAID GROUNDS ARE DISMISSED AS NOT PRESSED. 7 . IN GROUND NO. 5 THE ASSESSEE HAS ASSAILED THE REJECTION OF AN CENT SOFTWARE INTERNATIONAL LIMITED AND QUINTEGRA SOLUTIONS LIMITED ON THE GROUND THAT THEY ARE LOSS MAKING ENTITIES IN THE YEAR UNDER CONSIDERATION. THE LD. AR HAS DRAWN OUR ATTENTION TO THE MARGIN ANALYSIS OF ANCENT SOFTWARE INTERNATIONAL LIMITED FOR TH E FINANCIAL YEARS 2007 - 08, 2008 - 09 AND 2010 - 11 AT PAGE 254 OF THE PAPER BOOK. A PERUSAL OF THE COMPARATIVE ANALYSIS IN THE THREE FINANCIAL YEARS SHOW THAT THE SAID COMPANY HAS POSITIVE INCOME IN THE FINANCIAL YEAR 2009 - 10 RELEVANT TO THE ASSESSMENT 11 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 YEAR 2 010 - 11 AND THE IMMEDIATELY TWO PRECEDING FINANCIAL YEARS I.E. FINANCIAL YEARS 2007 - 08 AND 2008 - 09. QUINTEGRA SOLUTIONS LIMITED HAS ALSO BEEN REJECTED BY THE AUTHORITIES BELOW FOR THE SIMILAR REASONS. A PERUSAL OF THE MARGIN ANALYSIS OF THE SAID COMPANY F OR FINANCIAL YEAS 2007 - 08, 2008 - 09 AND 2009 - 10 AT PAGE 291 OF THE PAPER BOOK REVEAL THAT THE COMPANY IS HAVING PROFITS IN T HE FINANCIAL YEAR 2009 - 10 I.E. THE RELEVANT TO THE ASSESSMENT YEAR 2010 - 11 AND THE IMMEDIATELY TWO PRECEDING FINANCIAL YEARS 2007 - 08 AND 2008 - 09. A COMPANY IS SAID TO BE NOT GOOD COMPARABLE AND SHOULD BE EXCLUDED FROM THE LIST OF COMPARABLES ONLY IF IT IS A CONSISTENT LOSS MAKING COMPANY. THE COMPANY IS SAID TO HAVE CONSISTENT LOSSES , IF THE COMPANY HAS SUFFERED LOSS IN THE LAST THREE CONSECUTIVE ASSESSMENT YEARS INCLUDING THE ASSESSMENT YEAR SELECTED FOR COMPARISON. OUR THIS VIEW IS FORTIFIED BY THE DECISION OF CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. CARRARO TECHNOLOGIES INDIA PVT. LTD. VS. INCOME TAX OFFICER (SUPR A). THE RELEVANT EXTRACT OF THE FINDINGS OF TRIBUNAL IN THE SAID CASE ARE AS UNDER : 8. THERE IS NO DISPUTE IN RESPECT OF SETTLED POSITION THAT THE CONSISTENT LOSS MAKING COMPANY HAS TO BE EXCLUDED FROM THE LIST OF COMPARABLES. A COMPANY IS SAID TO BE C ONSISTENT LOSS MAKING WHEN THE COMPANY HAS INCURRED LOSSES IN THE THREE CONSECUTIVE FINANCIAL YEARS INCLUDING THE FINANCIAL YEAR IN WHICH THE INTERNATIONAL TRANSACTIONS HAVE BEEN MADE. IN THE INSTANT CASE FINANCIAL YEAR 2009 - 10 IS RELEVANT TO THE ASSESSME NT YEAR UNDER APPEAL. THUS, THE FINANCIAL YEARS TO BE CONSIDERED FOR DETERMINING WHETHER THE COMPANY IS CONSISTENT LOSS MAKING ARE FINANCIAL YEARS 2007 - 08, 2008 - 09 AND 2009 - 10. A PERUSAL OF THE PROFIT AND LOSS ACCOUNT OF ONWARD TECHNOLOGIES LTD. PLACED O N RECORD SHOWS THAT THE SAID COMPANY HAS SUFFERED LOSSES IN FINANCIAL YEARS 2007 - 08, 2008 - 09 AND 2009 - 10. THE PROFITS/(LOSSES) BEFORE TAX OF THE COMPANY IN THE RELEVANT THREE FINANCIAL YEARS ARE AS UNDER : 12 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 FINANCIAL YEAR PROFIT/(LOSS) BEFORE TAX (IN ` ) 2007 - 08 (1,65,87,281) 2008 - 09 (8,89,22,096) 2009 - 10 (5,18,75,427) THUS, IT IS EVIDENT FROM THE PERUSAL OF THE FINANCIAL RESULTS OF ONWARD TECHNOLOGIES LTD. THAT ONWARD TECHNOLOGIES LTD. IS CONSISTENT LOSS MAKING COMPANY, THEREFORE, THE SAID COMPANY CA NNOT BE CONSIDERED AS A GOOD COMPARABLE. A PERUSAL OF ORDER OF THE AUTHORITIES BELOW SHOW THAT THEY HAVE NOT EXAMINED THE FACTS OF THE CASE IN THE LIGHT OF EARLIER DECISION OF THE TRIBUNAL AND HAS EXCLUDED ANCENT SOFTWARE INTERNATIONAL LIMITED AND QUINTEGRA SOLUTIONS LIMITED MERELY ON THE BASIS OF PERFORMANCE IN SINGLE YEAR. THE FINDINGS OF AUTHORITIES BELOW APPEAR TO BE AGAINST THE FACT S . ACCORDINGLY, WE DEEM IT APPROPRIATE TO REMIT THIS ISSUE BACK TO THE FILE OF TPO TO VERIFY THE FINANCIAL RESUL TS OF BOTH THE SAID COMPANIES. THE AFORE SAID COMPANIES SHOULD BE EXCLUDED FROM THE LIST OF COMPARABLE S ONLY IF THEY ARE CONSISTENT LOSS MAKING COMPANIES AS HAS BEEN ELUCIDATE IN THE ORDER OF TRIBUNAL IN THE CASE OF M/S. CARRARO TECHNOLOGIES INDIA PVT. LTD . (SUPRA). THE ASSESSEE IN GROUND NO. 5 HAS ALSO ASSAILED THE REJECTION OF SIP TECHNOLOGIES AND EXPORTS LIMITED AND TVS INFOTECH LIMITED FOR THE SIMILAR REASONS. THE LD. AR HAS STATED AT THE BAR TH AT HE IS NOT PRESSING EXCLUSION OF SIP TECHNOLOGIES AND E XPORTS LIMITED AND TVS INFOTECH LIMITED. ACCORDINGLY, GROUND NO. 5 RAISED IN THE APPEAL BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8 . IN GROUND NO. 7 OF THE APPEAL THE ASSESSEE HAS ASSAILED EXCLUSION OF ACROPETAL TECHNOLOGIES LIMITED ON THE GROUND THAT THE SAID COMPANY IS 13 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 ENGAGED IN PRODUCT DEVELOPMENT ACTIVITIES AND HENCE , IS FUNCTIONALLY DIFFERENT. A PERUSAL OF ANNUAL REPORT OF THE SAID COMPANY FOR FINANCIAL YEAR 2009 - 10 SHOWS THAT THE SAID COMPANY IS ENGAGED IN VARIOUS ACTIVITIES INCLUDING ENGINEERING DESIGN SERVICES, INFORMATION TECHNOLOGY SERVICE AND HEALTHCARE. THE SAID COMPANY IS PROVIDING SERVICES ON - SITE. THE TPO HAD APPLIED ON - SITE FILTER W HICH WAS SUBSEQUENTLY REJECTED BY THE DRP. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE IS ENGAGED IN PROVIDING OFF - SITE SERVICES , WHEREAS , ACROPETAL TECHNOLOGIES LIMITED IS ENGAGED IN PROVIDING ON - SITE DEVELOPMENT OF SOFTWARE. BOTH THE COMPANIES I.E. THE ASSESSEE AND ACROPETAL TECHNOLOGIES LIMITED HAVE DIFFERENT BUSINESS MODEL. THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF TIBCO SOFTWARE INDIA PVT. LTD. VS. DY. COMMISSIONER OF INCOME TAX (SUPRA) HAS HELD THAT WHERE THE ASSESSEE IS PROVIDING OFF - SIT E SERVICES IT CANNOT BE COMPARED WITH A COMPANY PROVIDING SERVICES ON - SITE. THE RELEVANT EXTRACT OF THE FINDINGS OF THE TRIBUNAL IN THE SAID CASE ARE AS UNDER : 40. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. FACTUALLY SPEAKING, AKSHY SOFTWARE T ECHNOLOGIES LIMITED WAS FOUND BY THE TPO TO BE PREDOMINANTLY ENGAGED IN RENDERING SERVICES TO ITS CLIENTS ON ON - SITE BASIS. AS PER THE TPO, AKSHY SOFTWARE TECHNOLOGIES LIMITED RENDERED SERVICES AT CLIENTS SITE UNLIKE THE SERVICES BEING PROVIDED BY THE A SSESSEE THROUGH OFF - SHORE SITES. THE DIFFERENCE IN OPERATING MECHANISM OF TWO BUSINESS MODELS IS STARKLY EVIDENT. WHILE UNDER THE ON - SITE BUSINESS MODEL, THE SERVICE PROVIDER POSITIONS ITS PERSONNEL ON THE CLIENTS SITE AND ON THE OTHER HAND, IN THE OFF - SHORE BUSINESS MODEL, THE SERVICE PROVIDER POSITIONS ITS PERSONNEL ON ITS OWN SITE I.E. AWAY FROM THE SITE OF THE CLIENTS . THE TPO IN TERMS OF HIS DISCUSSION IN THE ORDER HAS ATTEMPTED TO DEDUCE THAT THE MARGINS FROM ON - SITE CONSULTANCY ARE LOWER WHEN COM PARED WITH MARGINS FROM OFF - SHORE DEVELOPMENT WORK. HE HAS ALSO REFERRED TO AN EXTRACT FROM MCKINSEYS RESEARCH ON INDIAN SOFTWARE INDUSTRY COMPETITIVENESS TO SAY THAT BECAUSE OF THE DIFFERENCES IN COSTS BETWEEN A DEVELOPED COUNTRY AND INDIA, IT ACTS AS M OTIVATOR FOR THE COMPANIES LOCATED IN DEVELOPED COUNTRIES TO INCREASE ITS OFF - SHORE SOURCING OF SERVICES. IN OUR CONSIDERED OPINION, WHETHER ON - SITE 14 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 BUSINESS MODEL PROVIDES HIGHER OR LOWER MARGINS IN COMPARISON WITH OFF - SHORE DEVELOPMENT WORK, IS NOT THE ISSUE OF CONSIDERATION. THE IMPORTANT POINT IS THAT THE BUSINESS MODELS ARE QUITE DIFFERENT. OSTENSIBLY, THE LOGISTICS AND OTHER ASPECTS OF THE TWO BUSINESS MODELS CANNOT BE TREATED ON PAR AND CERTAINLY IT WOULD IMPACT THE RELATIVE MARGINS OF THE TWO BUS INESS MODELS. THEREFORE, IN OUR CONSIDERED OPINION, THE BUSINESS MODEL OF THE ASSESSEE I.E. PROVISION OF OFF - SHORE SERVICES TO ITS ASSOCIATED ENTERPRISE STANDS ON A DIFFERENT FOOTING THAN THE ON - SITE SERVICES BEING RENDERED BY AKSHY SOFTWARE TECHNOLOGIES LIMITED . THE ASSERTIONS OF THE ASSESSEE THAT ITS ARRANGEMENT WITH ASSOCIATED ENTERPRISE DOES NOT RULE OUT PROVISION OF ON - SITE SERVICES DOES NOT DISTRACT FROM THE FACT THAT THE TESTED TRANSACTIONS UNDERTAKEN BY THE ASSESSEE INVOLVE OFF - SHORE RENDERING OF SERVICES, WHICH IS INCOMPARABLE TO THE ON - SITE SERVICES BEING RENDERED BY AKSHY SOFTWARE TECHNOLOGIES LIMITED TO ITS CLIENTS ABROAD. [EMPHASIZED BY US] THE DRP HAS ERRED IN REMOVING ON - SITE FILTER WHILE SELECTING COMPANIES AS COMPARABLES . W HETHER T HE COMPANY IS PROVIDING SERVICES ON - SITE OR OFF - SITE, IT HAS MATERIAL BEARING ON ITS PROFITABILITY. THE COMPANY OFFERING ON - SITE SERVICES CANNOT BE CONSIDERED AT PAR WITH COMPANY PROVIDING OFF - SITE SERVICES. BUSINESS MODELS OF BOTH THESE COMPANIES ARE AT VARIANCE. THUS, IN THE LIGHT OF DECISION IN THE CASE OF TIBCO SOFTWARE INDIA PVT. LTD. VS. DY. COMMISSIONER OF INCOME TAX (SUPRA) AND THE FACTS OF THE PRESENT CASE, WE ARE OF THE CONSIDERED OPINION THAT ON - SITE FILTER WAS RIGHTLY APPLIED BY THE TPO AN D THE DRP HAS ERRED IN REMOVING THE SAME. IT HAS BEEN FURTHER POINTED BEFORE US THAT ACROPETAL TECHNOLOGIES LIMITED IS FUNCTIONALLY DIFFERENT AS IT IS ENGAGED IN PRODUCT DEVELOPMENT AND OTHER SERVICES. APART FROM THE FACT TH AT ACROPETAL TECHNOLOGIES LI MITED IS FUNCTIONALLY DIFFERENT , THE SAID COMPANY IS LIABLE TO BE REJECTED AS 15 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 COMPARABLE ON GROUND OF HAVING DIFFERENT BUSINESS MODEL. ACCORDINGLY, GROUND NO. 7 RAISED IN THE APPEAL BY THE ASSESSEE IS ALLOWED. 9 . IN GROUND NO. 8 THE ASSESSEE HAS PRAYED FOR EXCLUDING THIRDWARE SOLUTIONS LIMITED FROM THE LIST OF COMPARABLE ON ACCOUNT OF FUNCTIONAL DIFFEREN CE . A PERUSAL OF A NNUAL R EPORT OF THE SAID COMPANY FOR F INANCIAL Y EAR 2009 - 10 PLACED ON RECORD SHOW THAT THE SAID COMPANY HAS DEVELOPED SOFTWARE PAPA. THE FINANCIAL RESULTS OF THE SAID COMPANY FURTHER SHOW THAT THE COMPANY IS HAVING INCOME FROM SALE OF LICENSES, REVENUE FROM SUBSCRIPTION, ETC. IT HAS ALSO BEEN POINTED THAT THIRDWARE HAS OUTSOURCED SUBSTANTIAL PORTION OF WORK TO THIRD PARTIES AND HAS P AID RS.11.42 CRORES TOWARDS OUTSOURCING CHARGES DURING THE FINANCIAL YEAR 2009 - 10. THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF APPROVA SYSTEMS PVT. LTD. VS. DCIT IN ITA NO. 1921/PUN/2014 FOR ASSESSMENT YEAR 2010 - 11 DECIDED ON 25 - 01 - 2017 EXCLUDED THIRDWARE FROM THE FINAL LIST OF COMPARABLES IN ASSESSMENT YEAR 2010 - 11 ON THE GROUND THAT THE SAID COMPANY IS SUPER PROFIT EARNING COMPANY AND IS ENGAGED IN THE BUSINESS OF SOFTWARE LICENSES AND TRADING OF IMPLEMENTATION ACTIVITIES. THE RELEVANT EXTRACT OF THE FINDINGS OF TRIBUNAL ARE AS UNDER : 11. WE FIND THAT THE TRIBUNAL NOTED THAT THE TPO HAD SELECTED KALS INFORMATION SYSTEM LTD. AND THIRDWARE SOLUTION LTD. AS BEING COMPARABLE, WHEREAS THE CASE OF ASSESSEE WAS THAT BOTH THE SAID CONCERNS WERE FUNCTI ONALLY DIFFERENT. WITH REGARD TO KALS INFORMATION SYSTEM LTD., IT WAS POINTED OUT THAT THE SAID COMPANY WAS EARNING INCOME FROM SALE OF APPLICATION SOFTWARE AND SEGMENTAL INFORMATION WITH RESPECT TO SOFTWARE SERVICES WERE AVAILABLE. IN RESPECT OF THIRDWA RE SOLUTION LTD., IT WAS POINTED OUT THAT THE SAID CONCERN WAS ENGAGED IN SOFTWARE DEVELOPMENT, TRADING OF SOFTWARE LICENCES AND TRAINING IMPLEMENTATION ACTIVITIES APART FROM SOFTWARE DEVELOPMENT. ANOTHER CONTENTION WAS RAISED THAT THIRDWARE SOLUTION LTD. WAS SUPER PROFIT EARNING COMPANY AND WAS ALSO ENGAGED IN THE BUSINESS OF SOFTWARE LICENCES AND TRADING OF IMPLEMENTATION ACTIVITIES. THE TRIBUNAL TAKING NOTE OF THE SPECIAL BENCH DECISION IN THE CASE OF MAERSK GLOBAL 16 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 CENTRES (INDIA) PVT. LTD. VS. ACIT VI DE ITA NO.7466/M/2012 IN RESPECT OF SUPER PROFITS AND INCLUSION OF CONCERN THIRDWARE SOLUTION LTD., HELD THAT THE SAID CONCERN WAS NOT COMPARABLE AND OBSERVED AS UNDER: - 29. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES. WE FIND THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MAERSK GLOBAL CENTRES (INDIA) PVT. LTD. VS. ACIT VIDE ITA NO.7466/MUM/2012 HAS OBSERVED AS UNDER : 99. THE QUESTION NO. 2 REFERRE D TO THIS SPECIAL BENCH IS AS TO WHETHER, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, COMPANIES EARNING ABNORMALLY HIGH PROFIT MARGIN SHOULD BE INCLUDED IN THE LIST OF COMPARABLE CASES FOR THE PURPOSE OF DETERMINING ARMS LENGTH PRICE OF AN INTERNATIONAL T RANSACTION. AS ALREADY OBSERVED, THE ISSUE INVOLVED IN THIS QUESTION HAS BECOME INFRUCTUOUS IN SO FAR AS THE CASE OF THE ASSESSEE BEFORE THE SPECIAL BENCH IS CONCERNED AND THE SAME THEREFORE NO MORE SURVIVES FOR CONSIDERATION IN THE PRESENT CASE. IN GENERA LITY, WE ARE OF THE VIEW THAT THE ANSWER TO THIS QUESTION WILL DEPEND ON THE FACTS AND CIRCUMSTANCES OF EACH CASE INASMUCH AS POTENTIAL COMPARABLE EARNING ABNORMALLY HIGH PROFIT MARGIN SHOULD TRIGGER FURTHER INVESTIGATION IN ORDER TO ESTABLISH WHETHER IT C AN BE TAKEN AS COMPARABLE OR NOT. SUCH INVESTIGATION SHOULD BE TO ASCERTAIN AS TO WHETHER EARNING OF HIGH PROFIT REFLECTS A NORMAL BUSINESS CONDITION OR WHETHER IT IS THE RESULT OF SOME ABNORMAL CONDITIONS PREVAILING IN THE RELEVANT YEAR. THE PROFIT MARGIN EARNED BY SUCH ENTITY IN THE IMMEDIATELY PRECEDING YEAR/S MAY ALSO BE TAKEN INTO CONSIDERATION TO FIND OUT WHETHER THE HIGH PROFIT MARGIN REPRESENTS THE NORMAL BUSINESS TREND. THE FAR ANALYSIS IN SUCH CASE MAY BE REVIEWED TO ENSURE THAT THE POTENTIAL COMP ARABLE EARNING HIGH PROFIT SATISFIES THE COMPARABILITY CONDITIONS. IF IT IS FOUND ON SUCH INVESTIGATION THAT THE HIGH MARGIN PROFIT MAKING COMPANY DOES NOT SATISFY THE COMPARABILITY ANALYSIS AND OR THE HIGH PROFIT MARGIN EARNED BY IT DOES NOT REFLECT THE N ORMAL BUSINESS CONDITION, WE ARE OF THE VIEW THAT THE HIGH PROFIT MARGIN MAKING ENTITY SHOULD NOT BE INCLUDED IN THE LIST OF COMPARABLE FOR THE PURPOSE OF DETERMINING THE ARMS LENGTH PRICE OF AN INTERNATIONAL TRANSACTION. OTHERWISE, THE ENTITY SATISFYING THE COMPARABILITY 17 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 ANALYSIS WITH ITS HIGH PROFIT MARGIN REFLECTING NORMAL BUSINESS CONDITION SHOULD NOT BE REJECTED SOLELY ON THE BASIS OF SUCH ABNORMAL HIGH PROFIT MARGIN. QUESTION NO. 2 REFERRED TO THIS SPECIAL BENCH IS ANSWERED ACCORDINGLY. 29.1 WE FIN D FROM THE DETAILS FURNISHED BY THE ASSESSEE THAT THE ASSESSEE IS A SOFTWARE DEVELOPER WHEREAS THIRDWARE SOLUTIONS LTD. IS ENGAGED IN THE BUSINESS OF SALE - CUM - LICENCE OF SOFTWARE WHICH IS AVAILABLE FROM THE AUDITED ACCOUNTS, THE DETAILS OF WHICH ARE AS UND ER : SCHEDULE : SALES AS ON AS ON 31 - 03 - 2009 31 - 03 - 2008 SALE OF LICENCE 22,237,588 3,916,427 SOFTWARE SERVICES 89,177,023 76,724,371 EXPORT FROM SEZ UNIT 478,572,420 263,971,033 EXPORT FROM STPI UNIT 162,900,630 168,863,049 REVENUE FROM SUBSCRIPTION 16,433,714 9,293,874 770,321,376 522,768,754 APART FROM THE ABOVE THE COMPANY IS ALSO HAVING DIVIDEND INCOME, INTEREST INCOME AND PROFIT ON SALE OF INVESTMENT AS WELL AS PREMIUM OF SOFTWARE CONTRACT TOTALLING TO RS.2,30,48,603/ - WHICH IS AS PER SCHEDULE - 13 OTHER SOURCES. FROM THE VARIOUS DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE WE FIND THIRDWARE SOLUTIONS LTD. HAS BE EN REJECTED ON THE GROUND THAT IT IS FUNCTIONALLY DISSIMILAR. THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF INTOTO SOFTWARE INDIA PVT. LTD. VS. ACIT AND VICEVERSA IN CONSOLIDATED ORDER DATED 24 - 05 - 2013 FOR A.Y. 2005 - 06 AND 2007 - 08 AT PARA 26 OF THE OR DER HAS OBSERVED AS UNDER : 26. AS FAR AS THIRDWARE SOFTWARE SOLUTION LIMITED IS CONCERNED, WE FIND FROM THE INFORMATION FURNISHED BY THE SAID COMPANY THAT THOUGH THE SAID COMPANY IS ALSO INTO PRODUCT DEVELOPMENT, THERE ARE NO SOFTRWARE PRODUCTS THAT THE COMPANY INVOICED DURING THE RELEVANT FINANCIAL 52 YEAR AND THE FINANCIAL RESULTS ARE IN RESPECT OF SERVICES ONLY. THUS, IT IS CLEAR THAT THERE IS NO SALE OF SOFTWARE PRODUCTS DURING THE YEAR BUT THE 18 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 SAID COMPANY MIGHT HAVE INCURRED EXPENDITURE TOWARDS THE DEVELOPMENT OF THE SOFTWARE PRODUCTS. 29.2 IN VARIOUS OTHER DECISIONS ALSO THIRDWARE SOLUTIONS LTD. HAS BEEN REJECTED AS A COMPARABLE ON THE GROUND THAT IT IS FUNCTIONALLY DISSIMILAR. WE THEREFORE FIND FORCE IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THIRDWARE SOLUT IONS LTD. SHOULD NOT BE INCLUDED AS A COMPARABLE. WE ACCORDINGLY SET - ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO EXCLUDE THE SAME FROM THE LIST OF COMPARABLES. 12. BOTH THE LEARNED AUTHORIZED REPRESENTATIVES HAVE ADMITTED THAT THIRDW ARE SOLUTIONS LTD. WAS INVOLVED IN SIMILAR FUNCTIONS AS IN EARLIER YEAR AND IN VIEW THEREOF, WE HOLD THAT THE SAID CONCERN IS FUNCTIONALLY DIFFERENT AND IS TO BE EXCLUDED FROM FINAL LIST OF COMPARABLES. THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF ION TRADING INDIA PVT. LTD. VS. ITO REPORTED AS 70 TAXMANN.COM 349 HAS EXCLUDED THIRDWARE FROM THE LIST OF COMPARABLES IN ASSESSMENT YEAR 2010 - 11 ON ACCOUNT OF OUTSOURCING OF ITS WORK TO THIRD PARTIES AND INCOME FROM DIVERSIFIED ACTIVITIES. THE RELEVANT EXTRA CT OF THE FINDINGS OF TRIBUNAL IN THE SAID CASE ARE AS UNDER: 56. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. IT IS SEEN FROM THE DETAILS ON RECORD THAT THE FUNCTIONS OF THIRDWARE ARE IN CONTRAST WITH THE ASSESSEE WHICH ONLY PROVIDES SOFTWARE DEVELOPMENT IN THE FINANCE DOMAIN AS PER THE INSTRUCTION OF ITS AE. ALSO, THIRDWARE HAS INCURRED EXPENSES TOWARDS IMPORT OF SOFTWARE SERVICES, EVIDENCING OUTSOURCING OF SOFTWARE SERVICES UNLIKE THE ASSESSEE. SINC E, IT IS ALSO ENGAGED IN OUTSOURCING ITS ACTIVITIES AS IT HAS INCURRED EXPENSES TOWARDS IMPORTS OF SOFTWARE SERVICES, EVIDENCING OUTSOURCING OF SOFTWARE SERVICES UNLIKE THE APPELLANT COMPANY. HENCE, IT IS FUNCTIONALLY NOT COMPARABLE AND CANNOT BE TREATED AS A COMPARABLE TO ASSESSEE. WE ORDER ACCORDINGLY. 19 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 THUS, IN VIEW OF THE AFORESAID FACTS AND THE DECISIONS DISCUSSED ABOVE, WE ARE OF CONSIDERED VIEW THAT THIRDWARE IS NOT A GOOD COMPARABLE BEING FUNCTIONALLY DIFFERENT. THUS, THIRDWARE HAS TO BE EXCLUDED FROM THE FINAL LIST OF COMPARABLES. ACCORDINGLY, GROUND NO. 8 RAISED IN THE APPEAL BY THE ASSESSEE IS ALLOWED. 10 . IN GROUND NO. 12 THE ASSESSEE HAS PRAYED FOR GRANTING WORKING CAPITAL ADJUSTMENT WHILE DETERMINING THE MARGINS OF COMPARABLE COMP ANIES. THE LD. AR SUBMITTED THAT THE WORKING CAPITAL ADJUSTMENT HAS TO BE ALLOWED IN VIEW OF VARIOUS DECISIONS OF THE TRIBUNAL. RELIANCE HAS BEEN PLACED ON THE DECISION OF TRIBUNAL IN THE CASE OF DEMAG CRANES & COMPONENTS (INDIA) PRIVATE LIMITED VS. DEPU TY COMMISSIONER OF INCOME TAX (SUPRA) AND ACIT VS. STARNET NETWORKS INDIA PVT. LTD. (SUPRA). IN BOTH THE ABOVE CASES THE TRIBUNAL GRANTED WORKING CAPITAL ADJUSTMENT TO THE ASSESSEE BY FOLLOWING EARLIER ORDER OF THE TRIBUNAL IN THEIR RESPECTIVE CASES. TH E CONCEPT OF GRANTING WORKING CAPITAL ADJUSTMENT IS NOT AN ALIEN CONCEPT , H OWEVER, THE ASSESSEE HAS TO SHOW LEGITIMACY FOR GRANT OF WORKING CAPITAL ADJUSTMENT IN ITS CASE. THE ASSESSEE HAS ALSO PLACED RELIANCE ON THE DECISION OF DEMAG CRANES & COMPONENTS (INDIA) PVT. LIMITED VS. DCIT IN ITA NO. 120/PN/2011 FOR ASSESSMENT YEAR 2006 - 07 DECIDED ON 04 - 01 - 2012 WHEREIN THE DETAILED DISCUSSION HAS BEEN MADE FOR GRANTING WORKING CAPITAL ADJUSTMENT TO THE ASSESSEE. WE DEEM IT APPROPRIATE TO REMIT THIS ISSUE BACK TO THE FILE OF TPO TO CONSIDER THE CLAIM OF ASSESSEE FOR GRANT OF WORKING CAPITAL ADJUSTMENT AFRESH. THE TPO SHALL DECIDE THIS ISSUE IN THE LIGHT OF DECISION RENDERED IN THE CASE OF DEMAG CRANES & COMPONENTS (INDIA) PVT. LIMITED VS. DCIT FOR ASSESSMENT YE AR 2006 - 07 (SUPRA) , AFTER AFFORDING SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE. ACCORDINGLY, 20 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 GROUND NO. 12 RAISED IN THE APPEAL BY ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 1 1 . IN GROUND NO. 13 THE ASSESSEE HAS PRAYED FOR ALLOWING RISK ADJUSTMENTS. A PERUSAL OF DOCUMENTS FURNISHED BY THE ASSESSEE GIVING THE BACKGROUND OF THE CASE REVEAL THAT THE ASSESSEE HAS ADMITTED THAT IT IS A CAPTIVE SERVICE PROVIDER WITH LIMITED FUNCTIONS AND NEGLIGIBLE RISK. SUBSEQUENTLY, THE ASSESSEE IN PROCEEDI NGS BEFORE THE TPO ASKED FOR RISK ADJUSTMENT. THE TPO REJECTED THE SAME. THE ASSESSEE HAS ALSO RAISED OBJECTION BEFORE THE DRP AGAINST REJECTION OF RISK ADJUSTMENT , WHEREIN THE ASSESSEE WAS UNS UCCESSFUL IN SEEKING THE DESIRED RELIEF. BEFORE TRIBUNAL THE LD. AR OF THE ASSESSEE HAS REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. THE LD. AR OF THE ASSESSEE HAS NOT BEEN ABLE TO SHOW AS TO HOW THE FINDINGS OF AUTHORITIES BELOW ON THIS ISSUE ARE BAD. WE FIND NO MERIT IN THE GROUND RAISED BY THE ASSESSEE , A CCORDINGLY, THE SAME IS DISMISSED. 1 2 . IN GROUND NO. 14, THE ASSESSEE HAS PRAYED FOR GRANTING THE BENEFIT OF 5% AS PER THE PROVISIONS OF SECTION 92C(2) OF THE ACT. THE LD. AR HAS SUBMITTED THAT IF ANCENT SOFTWARE INTERNATIONAL LIMITED AND QUINTEGRA SOLUTIONS LIMITED ARE INCLUDED IN THE LIST OF COMPARABLES ; AND ACROPETAL TECHNOLOGIES LTD. AND THIRDWARE SOLUTIONS LIMITED ARE EXCLUDED FROM THE LIST OF COMPARABLES , THE AVERAGE MARGINS OF THE ASSESSEE WILL FIT WITHIN 5% RANGE . HOWEVER, BEFOR E US NO WORKING HAS BEEN FURNISHED BY THE LD. AR TO SUBSTANTIATE HIS POINT. ACCORDINGLY, WE REMIT THIS ISSUE BACK TO THE FILE OF TPO TO CONSIDER THE CONTENTION S OF THE ASSESSEE AND DECIDE THIS ISSUE, IN 21 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 ACCORDANCE WITH LAW. THUS, GROUND NO. 14 RAISED IN THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 1 3 . IN GROUND NO. 15, THE ASSESSEE HAS PRAYED FOR DIRECTIONS TO RECTIFY THE COMPUTATIONAL ERROR. THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER HAS DETERMINED TOTAL INCOME OF THE ASSESSEE AT RS.4,44,13,97 1/ - IN THE FINAL ASSESSMENT ORDER INSTEAD OF RS.1,21,75,260/ - . THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE CLAIM OF ASSESSEE AND RECTIFY THE SAME , IF THERE IS ANY ERROR. ACCORDINGLY, GROUND NO. 15 RAISED IN THE APPEAL BY THE ASSESSEE IS ALLOWED FOR S TATISTICAL PURPOSE. 1 4 . IN GROUND NOS. 16 TO 18, THE ASSESSEE HAS PRAYED FOR DELETING THE LEVY OF IN TEREST U/S. 234B AND 234D OF THE ACT. SINCE, CHARGING OF INTEREST U/S. 234B AND 234D IS MANDATORY AND CONSEQUENTIAL, THEREFORE, GROUND NOS. 16 TO 18 RAISED IN THE APPEAL IS DISMISSED. 1 5 . IN GROUND NO. 19, THE ASSESSEE HAS ASSAILED INITIATION OF PENALTY U/S. 271(1)(C) OF THE ACT. ASSAILING RECORDING OF SATISFACTION FOR LEVY OF PENALTY IN ASSESSMENT PROCEEDINGS AT THIS STAGE IS PRE - MATURE. ACCORDINGLY, GROUND NO. 1 9 IS DISMISSED. 1 6 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN THE AFORESAID TERMS. ITA NO. 552/PUN/2015 (REVENUES APPEAL) 1 7 . THE DEPARTMENT IN ITS APPEAL HAS RAISED THREE GROUNDS . THE SAME ARE REPRODUCED AS UNDER : 22 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, WHETHER THE LEARNED DRP WAS RIGHT IN LAW AND ON FACTS IN DIRECTING THE EXCLUSION OF COMPANIES HA VING TURNOVER ABOVE 200 CORES WITHOUT APPRECIATING THAT THE ASSESSEE ITSELF HAD NOT APPLIED TURNOVER AS ONE OF THE CRITERIAS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, WHETHER THE LEARNED DRP WAS RIGHT IN LAW AND ON FACTS IN DIRECTING THE EXCLUSION OF COMPANIES HAVING TURNOVER ABOVE 200 CORES ON THE ONE HAND AND DIRECTING THE INCLUSION OF CERTAIN OTHER COMPANIES AS COMPA RABLES DESPITE THEIR TURNOVER BEING MORE THAN RS.200 CRORES. 3. WHETHER THE LEARNED DRP WAS RIGHT IN LAW AND ON FACTS IN DIRECTING TO REJECT THE ONSITE REVENUE FILTER APPLIED BY THE TPO. 1 8 . THE LD. DR SUBMITTED THAT THE REVENUE HAS ASSAILED THE FI NDINGS OF DRP /ASSESSING OFFICER ON THREE GROUNDS : (I) TURNOVER FILTER : THE LD. DR SUBMITTED THAT THE ASSESSEE IN ITS ORIGINAL TP STUDY HAD NOT APPLIED TURNOVER FILTER . I T WAS DURING THE PROCEEDINGS BEFORE THE TPO THAT THE ASSESSEE REQUESTED FOR APPLYING TURNOVER FILTER TO EXCLUDE THE COMPANIES HAVING TURNOVER OF MORE RS.200 CRORES. THE DRP WHILE DECIDING THE OBJECTIONS OF ASSESSEE EXCLUDED SIX COMPANIES BY APPLYING TURNOVER FILTER. THE ASSESSEE HAS NOT GIVEN ANY JUSTIFICATION AS TO HOW TURNOVER OF COMP ANY PLAY CRUCIAL ROLE IN COMPARABILITY ANALYSIS. NO REASON WHATSOEVER HAS BEEN GIVEN BY THE ASSESSEE TO EXPLAIN AS TO WHY TURNOVER WAS NOT INITIALLY APPLIED AT THE TIME OF TP STUDY. (II) SELECTIVE USE OF TURNOVER FILTER : AFTER HAVING APPLIED TURNOVER FILTER , THE DRP HAS DIRECTED TO INCLUDE Z YLOG SYSTEMS LIMITED AND PERSISTENT SYSTEMS PRIVATE LIMITED IN THE LIST OF FINAL COMPARABLES. BOTH THESE COMPANIES SHOULD HAVE BEEN REMOVED FROM THE LIST OF COMPARABLES AS BOTH 23 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 THE COMPANIES HAVE TURNOVER OF MORE T HAN RS.200 CRORES IN THE PERIOD RELEVANT FOR COMPARISON. THE LD. DR SUBMITTED THAT A PERUSAL OF P ROFIT AND L OSS ACCOUNT OF ZYLOG SYSTEMS LIMITED FOR THE PERIOD ENDING 31 - 03 - 201 0 WOULD SHOW THAT THE TURNOVER OF THE SAID COMPANY FROM SOFTWARE DEVELOPMENT SE RVICES AND PRODUCTS IS RS.7,78,12,93,691/ - . SIMILARLY, IN THE CASE OF PERSISTENT SYSTEMS PRIVATE LIMITED THE OVERSEAS TURNOVER OF THE COMPANY FROM THE SALE OF SOFTWARE SERVICES AND PRODUCTS FOR THE FINANCIAL YEAR ENDING ON 31 - 03 - 2010 IS RS. 4,73, 98,20,000/ - . THUS, BOTH THESE COMPANIES FALL OUTSIDE THE PURVIEW OF COMPARISON , IF TURNOVER FILTER IS APPLIED. (III) ON - SITE REVENUE FILTER : THE DRP HAS ERRED IN DIRECTING TO REJECT ON - SITE REVENUE FILTER APPLIED BY THE TPO. THE COMPANIES ENGAGED IN PROVIDING ON - SITE SERVICES AND OFF - SITE SERVICES HAVE DIFFERENT BUSINESS MODEL. THEREFORE, THE COMPANIES CARRYING ON ACTIVITIES ON - SITE CANNOT BE COMPARED WITH COMPANIES PERFORMING ACTIVITIES OFF - SITE. 1 9 . CONTROVERTING THE SUBMISSIONS MADE ON BEHALF OF THE DEPA RTMENT THE LD. AR SUBMITTED THAT THE TURNOVER FILTER IS APPLIED TO DRAW A REALISTIC RESULT FROM THE SELECTED COMPARABLE COMPANIES. IT IS IMPORTANT TO HAVE COMPARISON BETWEEN THE TWO COMPANIES WORKING ON THE SAME SCALE. THE COMPANIES HAVING VERY HIGH TURN OVER ENJOY ECONOMICS OF LARGE SCALE OPERATIONS, T HEREFORE, TURNOVER FILTER SHOULD BE APPLIED TO REMOVE COMPANIES HAVING VERY HIGH OR LOW TURNOVER . THE APPLICATION OF TURNOVER FILTER HAS LEGAL BACKING . T HE TRIBUNAL IN CATENA OF JUDGMENTS HAVE APPROVED APP LICATION OF TURNOVER FILTER. 24 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 20 . THE FIRST GROUND RAISED IN THE APPEAL BY THE DEPARTMENT IS AGAINST APPLICATION OF TURNOVER FILTER FOR REJECTING THE COMPARABLES. THE TRIBUNAL IN CATENA OF JUDGMENTS HAS HELD THE TURNOVER FILTER HAS TO BE APPLIED TO REMO VE ABERRATIONS IN COMPARA TIVE ANALYSIS AND TO RATIONALIZE THE COMPARABLES WITH THE ASSESSEE COMPANY. THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF DY. COMMISSIONER OF INCOME TAX VS. QURARK SYSTEMS (P) LTD. REPORTED AS 38 SOT 307 (CHD. - SB) HA S APPROVED THE PRINCIPLE OF REJECTING/SELECTING COMPARABLES ON THE BASIS OF TURNOVER. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. PENTAIR WATER INDIA P. LTD. REPORTED AS 381 ITR 216 UPHELD EXCLUSION OF COMPANY FROM LIST OF COMPARABLES BY APPLY ING TURNOVER FILTER. THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF GENESIS INTEGRATING SYSTEMS (INDIA) P. LTD. VS. DCIT REPORTED AS 53 SOT 159 HELD THAT TURNOVER CRITERIA OF RS.1 TO RS.200 CRORES FOR AN ASSESSEE HAVING TURNOVER OF RS.47 CRORES IS REASONABLE. ACCORDINGLY, COMPANIES HAVING TURNOVER OF MORE THAN RS.200 CRORES WERE REJECTED. THUS, IN VIEW OF THE FACTS OF THE CASE AND VARIOUS CASE LAWS DISCUSSED ABOVE, THE DRP WAS RIGHT IN APPLYING TURNOVER FILTER WHILE SELECTING CO MPARABLE COMPANIES. 21 . IN GROUND NO. 2 THE DEPARTMENT HAS ASSAILED THE FINDINGS OF DRP IN SELECTING TWO COMPANIES I.E. ZYLOG SYSTEMS LIMITED AND PERSISTENT SYSTEMS PRIVATE LIMITED , D ESPITE THE FACT THAT BOTH THE COMPANIES HAVE TURNOVER OF MORE THAN RS. 2 00 CRORES DURING THE PERIOD OF ANALYSIS . A FTER HAVING APPLIED TURNOVER FILTER , B OTH THESE COMPANIES HAVE BEEN INCLUDED IN THE LIST OF COMPARABLES. WE FIND MERIT IN THE GROUND RAISED BY THE DEPARTMENT. ONCE, HAVING APPLIED TURNOVER FILTER THE RE CANNOT B E ARBITRARY SELECTION OF 25 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 THE COMPANIES IGNORING THE TURNOVER. THE DRP HAS DRAWN OUR ATTENTION TO THE FINANCIAL RESULTS OF BOTH THE AFORESAID COMPANIES. A PERUSAL OF PROFIT AND LOSS ACCOUNTS OF THE SAID COMPANIES FOR THE FINANCIAL YEAR ENDING 31 - 03 - 2010 R EVEAL THAT BOTH THESE COMPANIES HAVE TURNOVER MUCH MORE THAN RS.200 CRORES. ACCORDINGLY, BOTH THESE COMPANIES HAVE TO BE EXCLUDED FROM THE LIST OF COMPARABLES. ACCORDINGLY, GROUND NO. 2 RAISED BY THE DEPARTMENT IN APPEAL IS ALLOWED. 2 2 . IN GROUND NO. 3, THE DEPARTMENT HAS ASSAILED THE FINDINGS OF DRP IN REJECTING O N - SITE REVENUE FILTER APPLIED BY THE TPO. THIS ISSUE WE HAVE ALREADY DEALT IN DETAIL DECIDING THE APPEAL OF THE ASSESSEE. WE HAVE REVERSED THE FINDINGS OF DRP IN REJECTING O N - SITE REVENUE FILTER . FOR THE DETAILED REASONS GIVEN IN PARA 8 ABOVE, WE ALLOW GROUND NO. 3 RAISED BY THE DEPARTMENT. 2 3 . IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS PARTLY ALLOWED. CO NO. 30/PUN/2015 2 4 . IN CROSS OBJECTIONS THE ASSESSEE HAS RAISED FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, WHETHER THE LEARNED DRP WAS RIGHT IN LAW AND ON FACTS IN DIRECTING THE EXCLUSION OF COMPANIES HAVING TURNOVER ABOVE 200 CORES WITHOUT APPRECIATING THAT THE ASSESSEE ITSELF HAD NOT APPLIED TURNOVER AS ONE OF THE CRITERIAS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, WHETHER THE LEARNED DRP WAS RIGHT IN LAW AND ON FACTS IN DIRECTING THE EXCLUSION OF COMPANIES HAVING TURNOVER ABOVE 200 CORES ON THE ONE HAND AND DIRECTING THE INCLUSION OF CERTAIN OTHER COMPANIES AS COMPARABLES DESPITE THEIR TURNOVER BEING MORE THAN RS.200 CRORES. 26 ITA NO S. 351 & 552/PUN/2015 AND CO NO. 30/PUN/2015, A.Y. 2010 - 11 3. WHETHER THE LEARNED DRP WAS RIGHT IN LAW AND ON FACTS IN DIRECTING TO REJECT THE ONSITE REV ENUE FILTER APPLIED BY THE TPO. 2 5 . SINCE, WE HAVE ALREADY ALLOWED GROUND NOS. 2 AND 3 RAISED BY THE DEPARTMENT IN ITS APPEAL, THE CROSS OBJECTIONS RAISED BY THE ASSESSEE HAVE BECOME INFRUCTUOUS. ACCORDINGLY, THE SAME ARE DISMISSED AS SUCH. 2 6 . IN THE RESULT, THE APPEALS OF THE ASSESSEE AND THE RE VENUE ARE PARTLY ALLOWED AND THE CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 28 TH DAY OF JUNE, 201 7 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 28 TH JUNE, 2017 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE DISPUTE RESOLUTION PANEL, PUNE 4. THE DIT (INTL. TAXATION), PUNE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / ASSISTANT REGISTRAR , , / ITAT, PUNE