M/s. Microsoft Corporation India Pvt. Ltd., New Delhi V. DCIT, New Delhi

CO 375/DEL/2014

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3849 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 22-06-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I1
• Next Hearing Date: 11-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 22-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY I BARA
• Keywords: Transfer pricing; International transaction; Wholly owned subsidiary

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: I-1, NEW DELHI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER ITA NO. 1206/DEL/2014 A.Y. 2009-10 DCIT, CIRCLE 6(1) NEW DELHI VS . MICROSOFT CORPORATION INDIA PVT.LTD. F-40, NDSE PART 1 NEW DELHI 110 049 PAN: AAACM5586C C.O.NO.375/DEL/2014 (IN ITA NO. 1206/DEL/2014) A.Y. 2009-10 MICROSOFT CORPORATION INDIA PVT.LTD. NEW DELHI 110 049 VS . DCIT, CIRCLE 6(1) NEW DELHI ITA NO. 2529/DEL/2014 A.Y. 2009-10 MICROSOFT CORPORATION INDIA PVT.LTD. NEW DELHI 110 049 VS . DCIT, CIRCLE 6(1) NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY SH. NAGESWAR RAO, ADV. DEPARTMENT BY SH. SANJAY I BARA, CIT, D.R. DATE OF HEARING 20/06/2018 DATE OF PRONOUNCEMENT 22/06/2018 ITA NO.1206/DEL/14 A.Y.: 2009-10 - DCIT VS. MICROS OFT CORPN INDIA P LTD. C.O.375/DEL/14 (IN ITA 1206/DEL/14) - MICROSOFT CO RPN INDIA P LTD. VS. DCIT ITA 2529/DEL/14 : A.Y.:2009-10 - MICROSOFT CORPN I NDIA P LTD. VS. DCIT PAGE 2 OF 11 ORDER PER K.NARASIMHA CHARY, JUDICIAL MEMBER THESE TWO APPEALS AND THEY CROSS OBJECTION IS OUT O F THE ORDER DATED 28/02/2014 PASSED BY THE LEARNED ASSESSING OFFICER, PURSUANT TO THE DIRECTIONS DATED 31/12/2013 ISSUED BY THE LEARNED DISPUTE RESO LUTION PANEL III, NEW DELHI. 2. MICROSOFT CORPORATION INDIA PRIVATE LIMITED (MC IL OR MCIPL), IS THE ASSESSEE. IT WAS INCORPORATED AS A PRIVATE COMPANY IN INDIA IN JULY 1988 AND WAS CONVERTED TO A WHOLLY OWNED SUBSIDIARY OF MS CO RP IN JANUARY 1996. ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING SE RVICES IN SUPPORTING THE DEVELOPMENT OF CLIENT/SERVER APPLICATIONS, TO ASSIS T CUSTOMERS IN THE SUCCESSFUL ALLOTMENT OF MICROSOFT TECHNOLOGY, BOTH DIRECTLY AN D THROUGH SERVICE PROVIDERS AND TO PROVIDE TRAINING TO AUTHORISED TRAINING CENT RES TO ASSIST CUSTOMERS INDIA OPERATIONS OF MICROSOFT LICENSED SOFTWARE. 3. DURING THE FINANCIAL YEAR 2008-09 THE ASSESSEE W AS ENGAGED IN PROVIDING MARKETING SUPPORT TO MS CORP AND AFFILIATED ENTITIE S IN RETURN FOR A SERVICE FEE AND ALSO PROVID SOFTWARE CONSULTING SERVICES AND OT HER SERVICES. THE INTERNATIONAL TRANSACTIONS OF THE ASSESSEE DURING T HE YEAR WITH ITS ASSOCIATED ENTERPRISES (AEA) IN RESPECT OF PROVISION OF MARKET ING SUPPORT SERVICES (MSS) WAS OF A VALUE OF RS. 7,11,86,08,559/-. ASSESSEE SE LECTED THE TRANSACTIONAL NET MARGIN METHOD (TNMM) AS THE MOST APPROPRIATE METH OD (MOM) FOR BENCHMARKING OF THE INTERNATIONAL TRANSACTION FOR P ROVISION OF MSS WITH A RETURN ON TOTAL OPERATING COST (OP/TC) AS THE PRO FIT LEVEL INDICATOR (PLI) AND COMPUTED THE PLI AT 16.75%. PLI OF FOURTEEN COMPAR ABLES ON THE BASIS OF MULTIPLE DATA WAS COMPUTED AT 8.91%, AND CONCLUDED THAT INTERNATIONAL TRANSACTION IS AT ARMS LENGTH PRICE. HOWEVER, LD. TPO, WITH REFERENCE TO THE ITA NO.1206/DEL/14 A.Y.: 2009-10 - DCIT VS. MICROS OFT CORPN INDIA P LTD. C.O.375/DEL/14 (IN ITA 1206/DEL/14) - MICROSOFT CO RPN INDIA P LTD. VS. DCIT ITA 2529/DEL/14 : A.Y.:2009-10 - MICROSOFT CORPN I NDIA P LTD. VS. DCIT PAGE 3 OF 11 SHOW CAUSE NOTICE AND THE SUBMISSIONS OF THE ASSESS EE, REJECTED FIVE COMPARABLES STATING THAT THE ASSESSEE IS PROVIDING HIGH-END MARKET SUPPORT SERVICES TO ITS PARENT AE. FINALLY LD. TPO SELECTED A SET OF NINE COMPARABLES, AND WHILE REJECTING THE REQUEST OF THE ASSESSEE FOR WORKING CAPITAL ADJUSTMENT, MADE AN ADJUSTMENT OF RS. 51.75 CRORES. 4. LD. DRP, BY ORDER DATED 31/12/2013, REFERRED TO THEIR OWN ORDER FOR THE ASSESSMENT YEAR 2008-09, DIRECTED THE EXCLUSION OF M/S. BASIZ FUND SERVICES PRIVATE LIMITED FROM THE FINAL SET OF COMPARABLE CO MPANIES AND GAVE RELIEF ON CERTAIN CORPORATE TAX GROUNDS. 5. CHALLENGING THE DIRECTION OF DRP TO EXCLUDE M/S. BASIZ FUND SERVICES PRIVATE LIMITED FROM FINAL SET OF COMPARABLE COMPAN IES, REVENUE FILED ITA 1206/DEL/2014. BY FILING CO NO 375/DEL/2014, MCIPL IS SEEKING CONSIDERATION OF TRANSFER PRICING STUDY AS FINAL AND VALID FOR AL L PURPOSES AND EXCLUSION OF FOUR COMPANIES - APITCO, GLOBAL PROCUREMENT CONSULTANTS, KILLICK AGENCIES AND ORIENT ENGINEERING FROM FINAL SET OF COMPARABLE COM PANIES AND INCLUSION OF SOME COMPARABLE COMPANIES LIKE INMACS, ACCESS INDIA , EDCIL, INHOUSE PRODUCTION, ITDC (SEG) ETC., MCIPL ALSO FOR GRANT O F WORKING CAPITAL ADJUSTMENT, WHEREAS BY WAY OF ITA 2529/DEL/2014, MCIPL IS REQUE STING FOR DELETION OF AD HOC DISALLOWANCE MADE IN RELATION TO MOTORCAR RUNNI NG EXPENDITURE AND FURTHER RELIEF BY WAY OF DELETING EXCESS INCOME WRO NGLY OFFERED TO TAX DUE TO ERRONEOUS AND INADVERTENT AUTOMATIC REVERSAL OF YEA R END PROVISION IN BOOKS OF ACCOUNTS. ITA NO. 2529/DEL/2014. 6. GROUND NO. 1 IS GENERAL IN NATURE AND GROUND NO. 5 IS A PRE-MATURED ONE. GROUND TO RELATE TO THE DISALLOWANCE OF 50% OF CAR RUNNING AND MAINTENANCE EXPENSES WHEREAS GROUNDS 3 AND 4 RELAT E TO THE EXCESS INCOME ITA NO.1206/DEL/14 A.Y.: 2009-10 - DCIT VS. MICROS OFT CORPN INDIA P LTD. C.O.375/DEL/14 (IN ITA 1206/DEL/14) - MICROSOFT CO RPN INDIA P LTD. VS. DCIT ITA 2529/DEL/14 : A.Y.:2009-10 - MICROSOFT CORPN I NDIA P LTD. VS. DCIT PAGE 4 OF 11 OF RS. 2,04,88,369/-OFFERED FOR TAXATION IN THE SUB JECT YEAR ERRONEOUSLY ON ACCOUNT OF AUTOMATICALLY WORSEN OF YEAR-END PROVISI ONS IN THE ACCOUNTING SYSTEM OF MCIPL. 7. IN RESPECT OF GROUND NO. 3 IT IS THE FINDING OF THE LD. AO THAT THE FREEDOM TO USE CAR WAS WITH THE EMPLOYEE AND THE COMPANY ON LY MONITORS IT BY PUTTING AN OVERALL CEILING ON THE AMOUNT THAT CAN BE CLAIME D BY THE EMPLOYEE, FOR ALL PRACTICAL PURPOSES THE VEHICLE IS UNDER THE FULL CO NTROL AND COMMAND OF THE EMPLOYEE AS SUCH THE POSSIBILITY OF EMPLOYEE MAKING USE OF THE VEHICLE FOR NON-BUSINESS PURPOSES CANNOT BE RULED OUT. BY OBSER VING THAT THE CAR POLICY OF THE COMPANY DOES NOT KEEP AN EYE ON THE PURPOSE OF USE OF CAR USE BUT ONLY ON QUANTUM OF CAR USE, LD. AO FOUND THAT IN THE ABS ENCE OF ANY RECORD, 50% OF RUNNING AND MAINTENANCE EXPENSES THAT IS RS. 1,74,9 4,518/-HAD TO BE DISALLOWED BEING EXPENDITURE INCURRED FOR NON-BUSIN ESS PURPOSES. 8. LD. DRP RECORDED THAT THE FACTS OF THIS CASE ARE SIMILAR TO THE FACTS AS IN AY 2008-09 AND FOR AY 2008-09 THE LD. DRP HELD THAT INASMUCH AS THE ISSUE WAS PENDING BEFORE THE ITAT AND HAS NOT REACHED FIN ALITY, FOLLOWING THE EARLIER YEAR ORDER DECLINED TO INTERFERE WITH THE ORDER OF THE LD. AO. BY FOLLOWING THE SAME, LD. DRP DECLINED TO INTERFERE WITH THE ORDER OF THE LD. AO FOR THIS AY ALSO. 9. IT IS BROUGHT TO OUR NOTICE THAT THIS ISSUE IS D ECIDED IN FAVOUR OF THE ASSESSEE BY THE ITAT IN RESPECT OF THE ASSESSMENT Y EARS 2006-07 VIDE ORDER DATED 18/12/2014 IN ITA NO. 5855/DEL/2010, AND FOR ASSESSMENT YEAR 2007-08 BY ORDER DATED 30/06/2015 IN ITA NO. 5766/DEL/2011. WE HAVE GONE THROUGH THE ORDER DATED 09/02/2016 IN ITA NO. 6417/DEL/2012 FOR THE ASSESSMENT YEAR 2008-09 WHEREIN AFTER REFERRING TO THE ORDERS RELAT ING TO THE EARLIER ASSESSMENT YEARS, THE TRIBUNAL REACHED THE VERY SAME CONCLUSIO N IN FAVOUR OF THE ASSESSEE. ITA NO.1206/DEL/14 A.Y.: 2009-10 - DCIT VS. MICROS OFT CORPN INDIA P LTD. C.O.375/DEL/14 (IN ITA 1206/DEL/14) - MICROSOFT CO RPN INDIA P LTD. VS. DCIT ITA 2529/DEL/14 : A.Y.:2009-10 - MICROSOFT CORPN I NDIA P LTD. VS. DCIT PAGE 5 OF 11 INSOFAR AS THE CONTINUITY OF THESE FACTS OVER THE Y EARS IS CONCERNED, REVENUE DOES NOT DISPUTE THE SAME. WHEN THE FACTS CONTINUE TO BE SIMILAR, WE DO NOT FIND ANY REASON TO TAKE A DIFFERENT VIEW. WE, THERE FORE, RESPECTFULLY FOLLOWING THE CONSISTENT VIEW TAKEN BY THE TRIBUNAL FOR THE A SSESSMENT YEARS 2006-07 TO 2008-09 ANSWER THE ISSUE IN FAVOUR OF THE ASSESSEE AND A DIRECT THE LD. AO TO DELETE THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF CAR RUNNING AND MAINTENANCE EXPENSES. 10. NOW COMING TO GROUNDS NO. 4 AND 5, IT IS SUBMIT TED BY THE LD. AR THAT IN THE FINANCIAL YEAR 2007-08, THE ASSESSEE COMPANY HA S BEEN BOOKING YEAR-END PROVISIONS IN ITS PROFIT AND LOSS ACCOUNT AND OUT O F SUCH PROVISIONS THE STATUTORY AUDITORS OF THE COMPANY HAD REVERSED HALF THE AMOUN T BEING EXCESS IN NATURE AT THE TIME OF FINALISATION OF THE BOOKS OF ACCOUNT S AND CLAIMED ONLY THE REMAINING HALF AS DEDUCTION IN THE RETURN OF INCOME . HOWEVER, SUBSEQUENTLY IN THE FINANCIAL YEAR 2008-09 THE ENTIRE AMOUNT OF PRO VISION WAS AUTOMATICALLY REVERSED IN THE ACCOUNTING SYSTEM OF THE COMPANY AS A NORMAL INDUSTRY PRACTICE INSTEAD OF REVERSING THE AMOUNT THAT WAS D EBITED TO THE PROFIT AND LOSS ACCOUNT IN FINANCIAL YEAR 2007-08, RESULTING I N AN ADDITIONAL AMOUNT BEING OFFERED TO TAX IN THE WRITTEN OF INCOME ERRONEOUSLY . 11. HE FURTHER SUBMITTED THAT IN THE FINANCIAL YEA R 2012-13 THE ASSESSEE HAD REVERSED THE ABOVE ADDITIONAL INCOME TO SQUARE UP T HE ACCOUNT AND AN EXPENSE HAS BEEN DEBITED TO THE PROFIT AND LOSS ACC OUNT. IN THE RETURN OF INCOME FOR THE FINANCIAL YEAR 2012-13 FILED BY THE ASSESSEE SUCH AN AMOUNT WAS NOT CLAIMED, AND HAS BEEN ADDED BACK WHILE COMP UTING THE TAXABLE INCOME ON AND AS EMPTION THAT THE SAME SHALL BE ALL OWED IN THE SUBJECT PROCEEDINGS OF FINANCIAL YEAR 2008-09. ASSESSEE WAS OF THE VIEW THAT IT IS MORE APPROPRIATE TO CLAIM THIS EXPENSE OR REVERSAL OF IN COME IN THE SAME FINANCIAL ITA NO.1206/DEL/14 A.Y.: 2009-10 - DCIT VS. MICROS OFT CORPN INDIA P LTD. C.O.375/DEL/14 (IN ITA 1206/DEL/14) - MICROSOFT CO RPN INDIA P LTD. VS. DCIT ITA 2529/DEL/14 : A.Y.:2009-10 - MICROSOFT CORPN I NDIA P LTD. VS. DCIT PAGE 6 OF 11 YEAR IN WHICH THE ADDITIONAL INCOME WAS OFFERED, BY BOOKING THE SAME AS ADVANCES AND DEPOSITS WRITTEN OFF IN NOTE 17 TO T HE FINANCIAL STATEMENTS OF FINANCIAL YEAR 2012-13. 12. LD. AR SUBMITTED THAT AN ADDITIONAL GROUND ON T HIS ASPECT WAS RAISED AGAINST THE DRAFT ASSESSMENT ORDER BEFORE THE LD. D RP, BUT THE LD. DRP HAS NOT CONSIDERED THE SAME IN THE DIRECTIONS PASSED ON 31/ 12/2013. 13. ON A CAREFUL CONSIDERATION OF THE MATTER WE FIN D FORCE IN THE SUBMISSION OF THE LD. AR. INASMUCH AS FACTUAL VERIFICATION IS NECESSARY ON THIS ASPECT, WE DIRECT THE LD. AO TO VERIFY WHETHER THE ASSESSEE HA D REVERSED THE PROVISION TO THE EXTENT OF RS. 2,04,88,269/-IN THE FINANCIAL YEA R 2007-08 ITSELF, BUT BY MISTAKE OF THE AUTOMATICALLY PROCEDURES REVERSAED T HE ENTIRE AMOUNT OF RS. 4,09,81,176/-THEREBY AN ADDITIONAL AMOUNT OF RUPEES RS. 2,04,88,269/-WAS OFFERED TO TAX ERRONEOUSLY, AND TO PASS ORDER IN AC CORDANCE WITH LAW. THESE GROUNDS ARE, ACCORDINGLY ARE RESTORED TO THE FILE O F THE LD. AO FOR THE PURPOSE OF VERIFICATION AND PASSING ORDERS A FRESH. ITA NO. 1206/DEL/2014 14. AS STATED ABOVE, IT IS CLEAR THAT THE DISPUTE I N THIS APPEAL IS CONFINED TO THE BENCHMARKING OF 'PROVISION OF MARKET SUPPORT SE RVICES' (MSS) ALONE. REVENUE IS QUESTIONING THE DIRECTION OF THE LD. DRP TO EXCLUDE M/S. BASIZ FUND SERVICES FROM THE FINAL SET OF COMPARABLES, STATING THAT IT IS THE RESULT OF NON- EXAMINATION OF THE ORDER OF LD. TPO AND IGNORING TH E DETAILED REASONS GIVEN IN SUCH ORDER. 15. IT IS THE ARGUMENT OF THE LD. DR THAT THE REJEC TION OF M/S. BASIZ FUND SERVICES BY LD. DRP ON THE GROUND OF FUNCTIONAL DIS SIMILARITY IS INCORRECT AND THE LD. DRP HAS CHANGED THE FILTER FROM BROAD FUNCT IONAL COMPARABILITY TO STICK ITA NO.1206/DEL/14 A.Y.: 2009-10 - DCIT VS. MICROS OFT CORPN INDIA P LTD. C.O.375/DEL/14 (IN ITA 1206/DEL/14) - MICROSOFT CO RPN INDIA P LTD. VS. DCIT ITA 2529/DEL/14 : A.Y.:2009-10 - MICROSOFT CORPN I NDIA P LTD. VS. DCIT PAGE 7 OF 11 TO FUNCTIONAL COMPARABILITY AND APPLIED IT ONLY TO ONE COMPARABLE. ACCORDING TO THE LD. DR THE INDEPENDENT TP AUDITOR AS WELL AS THE LD. TPO SELECTED THE COMPARABLES FROM THE ENTIRE LIST OF COMPANIES PROVI DING MARKETING SERVICES KEEPING IN VIEW THE BROAD FUNCTIONAL COMPARABILITY UNDER TNMM, THE ABOVE APPROACH OF THE TP AUDITOR WAS NEVER OBJECTED BY TH E ASSESSEE AND AN IDENTICAL APPROACH WAS ADOPTED BY THE LD. TPO AS SU CH NOW THE ASSESSEE CANNOT INSIST ON STRICT FUNCTIONAL COMPARABILITY TO OBJECT ONLY THOSE COMPARABLES WHERE MARGIN IS HIGH. 16. FURTHER ACCORDING TO THE LD. DR IT IS A WELL SE TTLED PROPOSITION OF LAW THAT ASSESSEE CANNOT APPROBATE AND REPROBATE. IF STRICT FUNCTIONAL COMPARABILITY IS ADOPTED FOR SELECTION OF COMPARABLES THEN THE MATTE R NEEDS TO BE RESTORED TO THE LD. TPO SO AS TO STICK TO FUNCTIONAL COMPARABIL ITY OF ALL COMPARABLES, INCLUDING THE COMPARABLES NOT OBJECTED BY THE ASSES SEE LIKE CYBER MEDIA RESEARCH, WHICH IS ENGAGED IN EVENT MANAGEMENT ACTI VITIES AND ICRA MANAGEMENT CONSULTING, ENGAGED IN PROVIDING CONSULT ANCY SERVICES IN STRATEGY, RISK MANAGEMENT, OPERATIONS MANAGEMENT, R EGULATORY ECONOMICS AND TRANSACTION ADVISORY CAN BE TESTED. 17. HE PLACED RELIANCE ON THE DECISION REPORTED IN COPAL RESEARCH INDIA (P.) LTD VS. DCIT (2016) 73 TAXMAN.COM 157 (DELHI-TRIB) FOR THE PRINCIPLE THAT MERE POSSESSION OF INTANGIBLE WILL NOT MAKE THE COMPARAB LE UNFIT FOR BENCHMARKING AND IT CAN BE EXCLUDED ONLY WHEN THE POSSESSION OF INTANGIBLE IMPACTS PROFITABILITY. BASING ON THIS LD. DR ARGUED THAT TH E ONUS WAS ON THE ASSESSEE TO ESTABLISH THE PROFITABILITY IMPACT DUE TO THE POSIT ION OF INTANGIBLES, WHICH THE ASSESSEE FAILED TO DISCHARGE. 18. PER CONTRA, LD. AR SUBMITTED THAT THE LD. DRP H AS RIGHTLY DIRECTED EXCLUSION OF M/S. BASIZ FUND SERVICES PRIVATE LIMIT ED FROM FINAL SET OF ITA NO.1206/DEL/14 A.Y.: 2009-10 - DCIT VS. MICROS OFT CORPN INDIA P LTD. C.O.375/DEL/14 (IN ITA 1206/DEL/14) - MICROSOFT CO RPN INDIA P LTD. VS. DCIT ITA 2529/DEL/14 : A.Y.:2009-10 - MICROSOFT CORPN I NDIA P LTD. VS. DCIT PAGE 8 OF 11 COMPARABLE COMPANIES AS IT IS FUNCTIONALLY NOT AT A LL COMPARABLE TO MSS SERVICE PROVIDED BY MCIPL. ANNUAL REPORT OF M/S. BA SIZ FUND SERVICES PRIVATE LIMITED CAN BE FOUND AT PAGE 961 OF THE FOURTH PAPE R BOOK. AS CAN BE SEEN FROM PAGE 985 WHERE SCHEDULE 13 TO FINANCIALS IS SE T OUT, INCOME WAS EARNED FROM PREPARATION OF FINANCIAL STATEMENTS, LIQUIDITY MONITORING SERVICES, NAV ACCOUNTING OF INTERNATIONAL FUNDS AND CONSULTING CH ARGES ON US TAXATION ETC. THIS COMPANY ALSO OWNS INTELLECTUAL-PROPERTY AND TE CHNICAL KNOW-HOW AS CAN BE REFERRED FROM PAGE 981. 19. HE FURTHER BROUGHT TO OUR NOTICE THAT THE AVOWE D OBJECTIVE OF THE COMPANY AS SET OUT AT PAGE 989 OF THE PAPERBOOK WAS TO PROVIDE FUND ACCOUNTING SERVICES FUND ADMINISTRATORS, INSURANCE COMPANIES, PRIME BROKERS, PRIVATE EQUITY FUNDS IN SELECTED GEOGRAPHIES, MANAG ED FUNDS/PORTFOLIO ACCOUNTS, FAMILY OFFICES AND INTERNAL FUND ACCOUNTI NG FOR WHICH FUNDS. THUS, IT CAN BE SEEN THAT THE ACTIVITIES OF M/S. BASIZ FUND SERVICES PRIVATE LIMITED AND THEREFORE, FAR ARE TOTALLY DISTINCT AND DIFFERENT F ROM THE FAR UNDERTAKEN BY MSS SERVICES PROVIDED BY MCIPL. LD. AR, THEREFORE, PRAYED TO REJECT THE RELIEF REQUESTED IN DEPARTMENT APPEAL NUMBER 1206/DEL/2014 . 20. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS ON EITHER SIDE. DURING THE FINANCIAL YEAR 2008-09 MCIP L CONTINUED TO PROVIDE MARKET SUPPORT SERVICES. TRANSFER PRICING STUDY AND THE SEGMENTAL FINANCIALS EXTRACTED BY TPO SHOW THAT MSS WAS THE MAJOR TRANSA CTION. THE ASSESSEE SELECTED THE TRANSACTIONAL LET MARGIN METHOD (TNMM ) AS THE MOST APPROPRIATE METHOD FOR BENCHMARKING OF THE INTERNAT IONAL TRANSACTION FOR PROVISION OF MARKETING SUPPORT SERVICES WITH A RETU RN ON TOTAL OPERATING CASTE (OP/TC) AS THE PROFIT LEVEL INDICATOR AND COMPUTE D THE PLI AT 16.75% AND COMPUTED THE PLI OF 14 COMPARABLES ON THE BASIS OF MULTIPLE DATA AT 8.91%. LD. ITA NO.1206/DEL/14 A.Y.: 2009-10 - DCIT VS. MICROS OFT CORPN INDIA P LTD. C.O.375/DEL/14 (IN ITA 1206/DEL/14) - MICROSOFT CO RPN INDIA P LTD. VS. DCIT ITA 2529/DEL/14 : A.Y.:2009-10 - MICROSOFT CORPN I NDIA P LTD. VS. DCIT PAGE 9 OF 11 TPO HAS NOT REJECTED THE TRANSFER PRICING STUDY, BU T PROCEEDED TO MODIFY THE ECONOMIC ANALYSIS IN CONNECTION WITH INTERNATIONAL TRANSACTION OF MSS, BY ADOPTING THE TNNM AS THE MOST APPROPRIATE METHOD. 21. A READING OF THE BRIEF PROFILE OF OVERSEAS PARE NT AND MCIPL, AS COULD BE FOUND AT PAGES 775 AND 776 OF THE PAPER BOOK, THE D ETAILED ANALYSIS CARRIED OUT IN CONNECTION WITH THIS INTERNATIONAL TRANSACTI ON OF MSS AS HAS BEEN INCORPORATED AT PAGE 790 ONWARDS, SUMMARY OF FINANC IAL STATEMENTS CAN BE FOUND AT PAGE 890 AND FAR FROM PAGE 792 ONWARDS OF THE PAPER BOOK, AND THE AUDITED FINANCIAL STATEMENTS OF MCIPL AS CAN BE REF ERRED TO AT PAGE 625 OF PAPER BOOK - JUSTIFIES THE FINDING OF THE LD. DRP THAT THE COMPANY M/S. BASIZ FUND SERVICES PRIVATE LIMITED IS FUNCTIONALLY DISSI MILAR TO THE ASSESSEE INASMUCH AS SUCH A COMPANY IS INVOLVED IN THE FUND ACCOUNTING SERVICES, POSSESSING SIGNIFICANT INTANGIBLE ASSETS, THE DIFFE RENT EMPLOYEES PROFILE, VERY SIGNIFICANT GROWTH IN THE REVENUE AT 57.61% AND EAR NING OF PROFITS AT 46.75% AT SUPERNORMAL LEVEL. BASING ON THESE FACTORS, LD. DRP RECORDED A FINDING THAT THE POSSESSION OF SIGNIFICANT INTANGIBLES AND THE FUNCT IONS PERFORMED BY THE M/S. BASIZ FUND SERVICES PRIVATE LIMITED STANDS APART FR OM THE COMPANIES PROVIDING SIMPLE MARKETING SUPPORT SERVICES LIKE THE ASSESSEE . 22. FURTHER, IT IS CLEAR FROM THE ORDER DATED 30.01 .2013, LD. TPO NOTES THAT THE FACTS REMAIN SAME AS IN AY 2005-06 TO AY 2008-0 9. VIDE PARAGRAPH NO. 3 OF THEIR ORDER, LD. DRP FOUND THAT THIS ISSUE HAS ARIS EN FOR A CONSIDERATION FOR THE ASSESSMENT YEAR 2008-09 ALSO. THEY ARE EXTRACTED TH E RELEVANT PORTION OF THE ORDER FOR THE ASSESSMENT YEAR 2008-09 WHEREIN THE C ONTENTIONS ON EITHER SIDE WERE EXAMINED, AND ULTIMATELY IT WAS HELD THAT THE SERVICES RENDERED BY THE ASSESSEE ARE NOT HIGH-END AND THE CONTENTIONS OF TH E ASSESSEE WERE ACCEPTABLE. WHILE RESPECTFULLY FOLLOWING THE DECISI ON OF THE LD. DRP FOR ITA NO.1206/DEL/14 A.Y.: 2009-10 - DCIT VS. MICROS OFT CORPN INDIA P LTD. C.O.375/DEL/14 (IN ITA 1206/DEL/14) - MICROSOFT CO RPN INDIA P LTD. VS. DCIT ITA 2529/DEL/14 : A.Y.:2009-10 - MICROSOFT CORPN I NDIA P LTD. VS. DCIT PAGE 10 OF 11 ASSESSMENT YEAR 2009-10, THE LD. DRP HELD FILED THE YEAR UNDER CONSIDERATION ALSO THAT THE SERVICES OF THE ASSESSEE ARE NOT HIGH -END ONES AND THE CONTENTIONS OF THE ASSESSEE WERE ACCEPTED. 23. IT IS NOT THE CASE OF THE REVENUE THAT THERE IS ANY CHANGE IN THE FACTS AND CIRCUMSTANCES INVOLVED IN THIS MATTER FROM THOSE FI LE AY 2008-09 SO AS TO PROMPT US TO TAKE A DIFFERENT VIEW. AS A MATTER OF FACT EVEN FOR THE ASSESSMENT YEAR 2008-09 LD. DRP RECORDED THAT FOR PRECEDING YE ARS ALSO IT WAS HELD THAT THE SERVICES RENDERED BY THE ASSESSEE WERE NOT HIGH -END ONES, AS SUCH LD. DRP ACCEPTED THE VIEW TAKEN FOR THE EARLIER YEARS AND H ELD FOR THE ASSESSMENT YEAR 2008-09 THAT THE SERVICES RENDERED BY THE ASSESSEE WAS NOT OF HIGH-END. IT IS NOT THE CASE OF THE REVENUE THAT SUCH A FINDING OF FACT WAS DISTURBED BY ANY APPELLATE AUTHORITY. IT IS, THEREFORE, CLEAR THAT S UCH A FINDING OF FACT HAS ATTAINED FINALITY. FACTS BEING CONTINUED SIMILAR FO R ALL THESE YEARS, WE DEEM IT NECESSARY THAT THE REVENUE HAS TO FOLLOW THE CONSIS TENT VIEW TAKEN IN THE EARLIER YEARS. WE, THEREFORE, FIND THAT THE APPEAL NO. 1206/DEL/2014 IS DEVOID OF MERITS AND IS LIABLE TO BE DISMISSED. WE ACCORD INGLY DISMISS THE SAME. CROSS OBJECTIONS. 24. IT IS SUBMITTED BEFORE US AND WE ALSO FIND FROM ORDER DATED 28/03/2014 PASSED BY THE TPO, PURSUANT TO THE DIRECTIONS GIVEN BY THE DRP, THAT THE ENTIRE ADDITION BY WAY ADJUSTMENT ORIGINALLY PROPOSED BY T PO GOT DELETED. INASMUCH AS WE UPHOLD THE DIRECTIONS OF THE DRP TO DELETE M/ S. BASIZ FUND SERVICES PRIVATE LIMITED, THE ORDER DATED 28/03/2014 HOLDS W ELL. IN THESE CIRCUMSTANCES THE GROUNDS RAISED IN THE CROSS OBJECTIONS HAVE BEC OME ONLY ACADEMIC. WE, THEREFORE, FIND IT NOT NECESSARY TO DELVE DEEPER IN TO THE GROUNDS OF CROSS OBJECTION, AND, ACCORDINGLY, DISMISSED THE CROSS OB JECTIONS. ITA NO.1206/DEL/14 A.Y.: 2009-10 - DCIT VS. MICROS OFT CORPN INDIA P LTD. C.O.375/DEL/14 (IN ITA 1206/DEL/14) - MICROSOFT CO RPN INDIA P LTD. VS. DCIT ITA 2529/DEL/14 : A.Y.:2009-10 - MICROSOFT CORPN I NDIA P LTD. VS. DCIT PAGE 11 OF 11 25. IN THE RESULT ITA NO. 26/DEL/14 PREFERRED BY TH E REVENUE AND SCO NO. 375/DEL/2014 PREFERRED BY THE ASSESSEE ARE DISMISSE D. ITA NO. 2529/DEL/14 PREFERRED BY THE ASSESSEE IS ALLOWED IN PART FOR ST ATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND DAY OF JUNE, 2018 SD/- SD/- (PRASHANT MAHARISHI) ( K. NARASHIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 22 ND JUNE, 2018 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES