M/s. Open Solutions Software Services Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 1062/DEL/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77732 (ITAT-DELHI)
• Duration Of Justice: 44 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2014
• Appeal Filed By: Assessee
• Assessment Year: misc
• Appeal Filed On: 01-01-1970
• Court: TRIBUNAL
• Department Lawyers: PEEYUSH JAIN ORDE ORDE ORDE
• Assessee Lawyers: GARGI BHATT
• Keywords: Related party transaction; Business income; Transfer pricing; International transaction; Wholly owned subsidiary
• Section: 143(3); 133(6)

Judgement Text

ITA NO. 1062/DEL/2014 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 1062/DEL/2014 A.Y. : 2009-10 M/S OPEN SOLUTIONS SOFTWARE SERVICES PVT. LTD., 46, ARADHANA, CHANKYAPURI, SOUTH DELHI, NEW DELHI 110 066 (PAN: AAACO7542G) VS. INCOME TAX OFFICER, WARD -13(4), ROOM NO. 225-B, CR BUILDING, NEW DELHI 110 002 (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : S H. SACHIT JOLLY, ADV., MS. ROOHINA DUA, ADVOCATE AND SH. GARGI BHATT, ADV. DEPARTMENT BY : SH. PEEYUSH JAIN, CIT(DR) ORDE ORDE ORDE ORDER R R R PER PER PER PER SHRI SHAMIM YAHYA : AM SHRI SHAMIM YAHYA : AM SHRI SHAMIM YAHYA : AM SHRI SHAMIM YAHYA : AM THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE ASSESSING OFFICER PASSED U/S. 143(3) OF THE I.T. ACT READ WIT H SECTION 144C FOR THE ASSTT. YEAR 2009-10. 2. VARIOUS GROUNDS HAVE BEEN RAISED BY THE ASSESSE E. HOWEVER, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ONLY FOLLOWING GROUNDS ARE RELEVANT WHICH SHALL BE PRESSED. 1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSING OFFICER ERRED IN ASSESSING ITA NO. 1062/DEL/2014 2 THE TOTAL INCOME OF THE APPELLANT AT RS. 3,33,95,166/- AS AGAINST INCOME OF RS. 2,33,321/- RETURNED BY THE APPELLANT BY CONFIRMING THE ADDITION OF RS. 3,31,61,845/- PROPOSED BY THE TRANSFER PRICING OFFICER UNDER SECTION 92CA OF THE INCOME TAX ACT, 1961 IN RESPECT OF INTERNATIONAL TRANSACTION OF SOFTWARE DEVELOPMENT RESEARCH AND OTHER SERVICES RENDERED BY THE APPELLANT TO ITS PARENT COMPANY, VIZ., OPEN SOLUTIONS INC. 2. THAT THE AO AND DRP ERRED IN CONFIRMING THE ACTION OF THE TPO IN SELECTING THE FOLLOWING COMPANIES WHICH WERE NOT FUNCTIONALLY COMPARABLE TO THE ASSESSEE FOR THE PURPOSES OF BENCHMARKING THE INTERNATIONAL TRANSACTION ENTERED INTO BY THE APPELLANT:- A) CAT TECHNOLOGIES LTD. B) GOLDSTONE TECHNOLOGIES LTD. C) INFOSYS LTD. D) TATA ELXSI LTD. E) TATA CONSULTANCY SERVICES LTD. F) L&T INFOTECH G) PERSISTENT SYSTEMS LTD. ITA NO. 1062/DEL/2014 3 3. THAT THE AO AND DRP ERRED IN CONFIRMING THE ACTION OF THE TPO IN NOT COMPUTING THE PLI OF MINDTREE LTD. AND GOLDSTONE TECHNOLOGIES LIMITED ON SEGMENTAL BASIS WITHOUT APPRECIATING THAT BOTH THESE COMPANIES WERE ENGAGED IN VARIOUS OTHER BUSINESSES APART FROM RENDITION OF SOFTWARE DEVELOPMENT SERVICES. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER:- OPEN SOLUTIONS SOFTWARE SERVICE PRIVATE LIMITED IS A WHOLLY OWNED SUBSIDIARY OF OPEN SOLUTIONS INC. USA. IT I S ENGAGED IN PROVIDING SOFTWARE DEVELOPMENT AND RELATED SERVICES TO ITS ASSOCIATED ENTERPRISES (AE). THE SERVICES PROVIDED BY THE ASSESSEE ARE FOR DEVELOPING SOFTWARE COMPONENTS THA T CAN BE INTEGRATED INTO PRODUCTS DEVELOPED AND OWNED BY THE AE. THE ASSESSEE IS COMPENSATED BASED ON THE TERMS OF TH E SERVICE AGREEMENT ENTERED BETWEEN OPEN SOLUTIONS AND THE AE ON COST PLUS BASIS (15% FOR THE YEAR UNDER CONSIDERATION). 4. IN THE TP REPORT, IT WAS SUBMITTED THAT OPERATI NG PROFIT /OPERATING COST (OP/OC) RATIO WAS TAKEN AS THE PROFI T LEVEL INDICATOR (PLI) IN THE TNMM ANALYSES. THE PLI OF THE ASSESSEE W AS ARRIVED AT 15.01% ON COST WHEREAS THE OVERALL PLI OF COMPARABLES WAS ARRIVED AT 14.36% AS PER ANALYSES IN THE TP DOCUMENT. FOLLOWI NG COMPARABLES WERE SELECTED BY THE ASSESSEE IN THE SOFTWARE DEV ELOPMENT SERVICES SCHEME IN ITS TP STUDY. ITA NO. 1062/DEL/2014 4 NO. NO. NO. NO. NAME OF THE COMPANY NAME OF THE COMPANY NAME OF THE COMPANY NAME OF THE COMPANY WEIGHTED AVERAGE WEIGHTED AVERAGE WEIGHTED AVERAGE WEIGHTED AVERAGE OP/OC (%) OP/OC (%) OP/OC (%) OP/OC (%) 1. ABM KNOWLEDGEWARE LTD. 28.91 2. ACCEL TRANSMATICS LTD. (SEG.) 10.58 3. COMPUCON SOFTWARE LTD. (SEG) 22.28 4. COMPULINK SYSTEMS LTD. (SEG) 5.17 5. SAGARSOFT (I) LTD. 11.97 6. SYNETAIROS TECHNOLOGIES LTD. 24.93 7. KERALA AYURVEDA LTD. (SEG.) 9.53 8. SAARC NET LTD. (SEG.) 1.57 9. VAMA INDUSTRIES LTD. (SEG.) 9.76 HOWEVER, THE TPO DID NOT AGREE WITH THE ABOVE. HE REJECTED THE SOME OF THE COMPARABLE OF THE ASSESSEE AND ADDED SOME AND CAME TO ARMS LENGTH MARGIN OF 29.50% OF OC. ACCORDINGLY, ENHANCEMENT OF INCOME OF THE ASSESSEE OF RS. 4,08,55,412/- WAS PRO POSED BY THE TPO. 4.1 BEFORE DRP ASSESSEE MADE ELABORATE SUBMISSIONS. TH E DRP DIRECTED THE TPO WITH REGARD TO ADJUSTMENT ON ACCOUN T OF WORKING CAPITAL. CONSEQUENTLY, THE ARMS LENGTH PRICE OF SOF TWARE DEVELOPMENT SERVICES WAS DETERMINED AS UNDER:- OPERATING COST 2,77,746,097/- ARMS LENGTH MARGIN 26.73 ARMS LENGTH PRICE (ALP) 35,19,87,629/- PRICE SHOWN IN THE INTERNATIONAL TRANSACTIONS 31,88,25,784/- SHORTFALL BEING ADJUSTMENT U/S. 92CA 3,31,61,845 4.2 ACCORDINGLY, THE INCOME OF THE ASSESSEE WAS ENH ANCED RS. 3,31,61,845/- ON ACCOUNT OF TRANSFER PRICING ADJUST MENT. ITA NO. 1062/DEL/2014 5 5. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEA L BEFORE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. WE FIND THAT THE BASIC GRIEVANCE OF THE ASSESSEE IS TH AT TPO HAS INCLUDED CERTAIN COMPARABLES WHICH WERE NOT FUNCTIONING COMPAR ABLE TO THE ASSESSEE FOR THE PURPOSE OF BENCH-MARKING THE INTERN ATIONAL TRANSACTIONS ENTERED INTO BY THE ASSESSEE. LD. CO UNSEL OF THE ASSESSEE SUBMITTED THAT ASSESSEE HAS MADE ELABORATE S UBMISSIONS WITH RESPECT TO THE COMPARABLES MENTIONED IN GROUND N OS. 2 AND 3 ABOVE BEFORE THE TPO. ASSESSEE HAS SUBMITTED THAT TH ESE WERE NOT FUNCTIONAL COMPARABLES AND IT WAS INTER-ALIA SUBMITTE D THAT SEGMENTAL DATA WERE NOT AVAILABLE. IT WAS CONTENDED THAT SO ME OF THE COMPANIES WERE ENGAGED IN VARIOUS OTHER BUSINESS, A PART FROM SOFTWARE DEVELOPMENT SERVICES. LD. AO & DRP HAVE NOT PROPERLY DEALT WITH THE ASSESSEES SUBMISSIONS AND BY WAY OF A VERY CRYPTIC ORDER, THEY HAVE REJECTED THE SUBMISSIONS OF THE ASSESSEE. ACCORDINGLY, LD. COUNSEL OF THE ASSESSEE CONTENDED THAT THESE COMPARA BLES SELECTED BY THE TPO SHOULD BE REJECTED. 6.1 LD. DR ON THE OTHER RELIED UPON THE ORDERS OF T HE AUTHORITIES BELOW. HOWEVER, HE AGREED THAT THE COMPARABLES AS A GITATED BY THE ASSESSEE AS ABOVE MAY BE SENT BACK TO THE TPO FOR R ECONSIDERATION, IN LIGHT OF THE ASSESSEES SUBMISSIONS. 6.2 WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. WE FIND THAT THE ASSESSEE HAS AGITATED THAT TPO HAS SELECTED COMPARABL ES WHICH WERE NOT FUNCTIONAL COMPARABLES. SOME OF THESE COMPANIE S WERE ENGAGED IN VARIOUS OTHER BUSINESS APART FROM RENDERI NG OF SOFTWARE DEVELOPMENT SERVICES. THE SEGMENTAL DATA THEREFORE, WAS ALSO NOT AVAILABLE. DESPITE THAT BY A CRYPTIC AND LACONIC OR DER TPO HAS REJECTED ITA NO. 1062/DEL/2014 6 THE ASSESSEES SUBMISSIONS AND DRP IN A FURTHER CRYPT IC ORDER HAS AFFIRMED THE SAME. IN THIS REGARD, WE CAN GAINFULL Y REFER TO THE EXAMPLE OF FIRST COMPARABLE NAMELY CAT TECHNOLOGIES L TD. IN THIS REGARD, WE MAY REFER TO THE OBJECTIONS FILED BY THE ASSESSEE AGAINST THE DRAFT ORDER WITH REGARD TO CAT TECHNOLOGIES AS UNDER:- IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY THE LD. TPO, THE ASSESSEE SUBMITTED THAT CAT TECHNOLOGIES LT D. SHOULD BE REJECTED SINCE THE COMPANY IS EARNING SUPERNORMAL PROFITS DURING THE FY 2008-09. THE LD. TPO HAS REJECTED THE SUBMISSION MADE BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEE WAS NOT ABLE TO POINT OUT SHOW THIS GROWTH IN SALES IS AN ABERRATIO N AND ON ACCOUNT OF FACTORS WHICH ARE NOT ON ACCOUNT OF PROV IDING SOFTWARE DEVELOPMENT SERVICES AND HAS INCLUDED CAT TECHNOLOGIES LIMITED IN FINAL SET OF COMPARABLE COMPAN IES. THE ASSESSEE DOES NOT AGREE TO THE SELECTION OF CAT TECHNOLOGIES AS A COMPARABLE. THE CONTENTION OF TH E ASSESSEE IN THIS REGARD IS PROVIDED BELOW: THE ASSESSEE HUMBLY SUBMITS DURING THE FINANCIAL YEAR 2008-09 THE COMPANY RECORDED TURNOVER OF RS. 99.01 MILLIONS AND INCURRED A NET PROFIT AFTER TAX OF RS. 22.99 MILLION COMPARED TO TURNOVER OF RS. 65.42 MILLION AND NET PROFIT AFTER TAX OF RS. 9.23 MILLION DURING THE PREV IOUS FINANCIAL YEAR, THUS A REGISTERING A GROWTH OF 51% AND 149% RESPECTIVELY. IT WOULD BE APPRECIATE THAT A GROWTH OF 149% IS ABNORMAL BY ANY STRETCH OF IMAGINATION. FURTHER, SIN CE ITA NO. 1062/DEL/2014 7 THE TPO HAS RIGHTLY SUGGESTED THAT COMPANIES THAT ARE AFFECTED BY FACTORS LIKE ... PERSISTENT LOSSES, EXTRAORDINARY INCOME... SHOULD NOT BE USED AS COMPARABLES AS THEY WILL NOT PROVE TO BE GOOD BENCHMARKS. ON SIMILAR LINES, COMPANIES WITH ABNORMAL GROWTH SHOULD ALSO NOT BE CONSIDERED AS COMPARABLE. FURTHER THE ASSESSEE WISHES TO SUBMIT THAT CAT TECHNOLOGIES IS ENGAGED IN PROVIDING INTEGRATED IT SOLUTIONS IN THE DOMAIN AREA OF HR BPO. DURING THE YEAR THE COMPANY LAUNCHED A JOB PORTAL VIZ. LOGTALENT.COM FOR JOB ASPIRANTS. EXTRACTS FROM PAGE 12 OF THE DIRECTORS REPORT FOR F Y 2009 HAVE BEEN REPRODUCED BELOW FOR REFERENCE: DURING THE YEAR THE COMPANY LAUNCHED JOB PORTAL VIZ. LOGATENT.COM WHICH WAS INSTANT SUCCESS WITH JOB ASPIRANTS. ENCOURAGE WITH SUCCESS OF THIS PORTAL COMPANY PROPOSED TO LAUNCH 3 TO 4 PORTAL DURING THE CURRENT FINANCIAL YEAR IN THE DIFFERENT FIELDS. OUTSOURCING THE DEVELOPMENT, MANAGEMENT AND ONGOING MAINTENANCE OF TECHNOLOGY PLATFORMS AND SOLUTIONS HAS BECOME INCREASINGLY IMPORTANT. YOUR COMPANYS STRENGTH LIES IN ITS INNATE ABILITY TO UNDERSTAND THE REQUIREMENTS OF ITS CLIENTS AND TO CONTINUOUSLY BUILD THE COMPETENCIES AND CAPABILITIES TO PROVIDE ITA NO. 1062/DEL/2014 8 INTEGRATED IT AND BPO SOLUTIONS UNIQUE TO CLIENT SPECIFIC NEEDS AND INDUSTRY DEMANDS. YOUR COMPANY HAS ACHIEVED GOOD MARKET REPUTATION IN THE DOMAIN AREA OF HR, BPO, WHICH IS A HIGH GROWTH BUSINESS AREA IN THE OUTSOURCING SPACE. BPO SEEKS TO LEVERAGE THE BENEFITS OF SERVICE DELIVERY GLOBALIZATION, PROCESS DESIGN AND TECHNOLOGY TO DRIVE EFFICIENCY AND COST EFFECTIVENESS IN CUSTOMER BUSINESS PROCESS. YOUR COMPANY LEVERAGES STRATEGIC PARTNERSHIPS WITH GLOBAL LEADERS IN TECHNOLOGY AND BUSINESS SOLUTIONS, WITH THE GOAL OF PROVIDING CLIENTS WITH END TO END BUSINESS SOLUTIONS. THUS, IT IS EVIDENT FROM THE ABOVE THAT THE FUNCTION S PERFORMED BY CAT TECHNOLOGIES ARE IN THE NATURE OF TIES/BPO I.E., WHICH ARE COMPLETELY DIFFERENT FROM THE SOFTWARE DEVELOPMENT SERVICES PROVIDED BY THE ASSESS EE. 6.3 THE DRP IN A LACONIC ORDER DISMISSED THE OBJECTIO NS OF THE ASSESSEE BY HOLDING AS UNDER:- THE OBJECTIONS OF THE ASSESSEE IS THAT THIS COMPANY IS FUNCTIONALLY DIFFERENT. HOWEVER, ON VERIFICATI ON OF THE SUBMISSION AND THE ORDER OF THE TPO, THE DRP IS OF THE VIEW THAT THIS A COMPARABLE COMPANY AND THEREFORE THE SAME SHOULD BE RETAINED. 6.4 THUS, FROM THE ABOVE WE FIND THAT IT IS TRUE T HAT ASSESSEES ELABORATE SUBMISSIONS WERE NOT AT ALL DEALT WITH BY THE TPO AND THE DRP. AS REGARDS THE COMPARABLE CAT TECHNOLOGY ASSESSE E HAS DULY ITA NO. 1062/DEL/2014 9 SUBMITTED THAT THE COMPANY IS NOT ONLY ENGAGED IN SO FTWARE DEVELOPMENT SERVICES, BUT ALSO RUNS JOB PORTAL WHIC H WAS LAUNCHED DURING THE RELEVANT PREVIOUS YEAR AND ACCORDINGLY, THE REVENUE GREW BY 51% AND PROFIT BY 149%. IN THIS REGARD, LD. COU NSEL OF THE ASSESSEE SUBMITTED THAT SEGMENTAL DATA WERE NOT AVAILABLE. TH E TPO DID NOT OBTAIN THE SEGMENTAL DATA FROM THE ABOVE COMPARABLE BY USING HIS POWERS U/S. 133(6). IN LIGHT OF THE ABOVE WE FIND T HAT ASSESSEES OBJECTIONS REGARDING THE ABOVE COMPARABLES HAVE NOT B EEN PROPERLY DEALT WITH. WE PROPOSED THAT THE MATTER PERTAINING T O THE ABOVE MAY BE SENT BACK TO THE FILE OF THE TPO TO CONSIDER THE ISSUE FRESH. LD. COUNSEL OF THE ASSESSEE AGREED TO THIS PROPOSITI ON. HOWEVER, HE SUBMITTED THAT DIRECTION SHOULD BE GIVEN TO THE TPO THAT WHERE NECESSARY SEGMENTAL DATA ARE NOT AVAILABLE THE SAME MAY BE OBTAINED BY ISSUING DIRECTION UNDER SECTION 133(6) AND IF TH E COMPARABLES ARE FOUND FUNCTIONALLY NOT COMPARABLE, THE SAME MAY BE RE JECTED. HOWEVER, THE LD. COUNSEL POINTED OUT THAT AS REGARD S ONE OF THE COMPARABLES NAMELY TCS, THE LACK OF COMPARABILITY IS SO OBVIOUS THAT THE SAME NEEDS TO BE REJECTED AT THE THRESHOLD. 6.5 LD. DR ON THE OTHER HAND SUBMITTED THAT THESE COMP ARABLES MAY BE REMITTED BACK TO THE FILE OF THE TPO FOR FRESH CO NSIDERATION. 6.6 UPON CAREFUL CONSIDERATION, WE DEEM IT APPROPRIA TE TO REMIT THE ISSUE PERTAINING TO ABOVE COMPARABLES EXCEPT TCS WHI CH WE ARE CONSIDERING HEREINBELOW TO THE FILE OF THE TPO. THE TPO SHALL EXAMINE THE ISSUE FRESH BY PROPERLY ADDRESSING THE ASSESSEE S OBJECTIONS WITH REGARD TO THE ABOVE COMPARABLES. NEEDLESS TO ADD TH AT THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEA RD. ITA NO. 1062/DEL/2014 10 7. AS REGARDS TCS ASSESSEE HAS MADE ELABORATE SUBMISS IONS IN HIS OBJECTIONS. THE SUBMISSIONS ARE SUMMARIZED AS UNDER:- ENGAGED NOT ONLY IN SOFTWARE DEVELOPMENT SERVICES BUT ALSO SALE OF PRODUCTS, ASSURANCE SERVICES, CLOUD CONSULTING, INDUSTRIAL SERVICES ETC . REVENUE FROM MANUFACTURING (RS. 2,245 CRORES) AND RETAIL AND DISTRIBUTION (RS. 2,121 CRORES) OUT OF TOTAL REVENUE OF RS. 22,404 CRORES. ALSO MADE VARIOUS ACQUISITIONS / DIVESTMENTS DURING THE RELEVANT PREVIOUS YEAR. TURNOVER OF RS. 22,404 CRORE V. RS. 31.86 CRORES OF THE ASSESSEE. RPT OF 59% AS AGAINST 25% APPLIED BY THE TPO HIMSELF. REVENUE OF RS. 10,801 CRORES FROM JUST ONE ASSOCIATED ENTERPRISE, I.E., TATA AMERICA INTERNATIONAL CORPORATION. CONSOLIDATED RESULTS OF 55 SUBSIDIARIES TAKEN BY THE TPO. 7.1 TPO HAS REJECTED THE ASSESSEES OBJECTIONS PERTAI NING TO ABOVE COMPARABLE BY HOLDING AS UNDER:- TAXPAYER HAS ARGUED FOR REJECTION OF THIS COMPARABLE ON THE GROUNDS OF NON-COMPARABLE SERVICES IT INFRASTRUCTURE SERVICES, BUSINESS PROCESS OUTSOURCING, IT ENABLED SERVICES, ENGINEERING AND INDUSTRIAL SERVICES. ITA NO. 1062/DEL/2014 11 IT IS SEEN FROM PAGE 55-56 OF ANNUAL REPORT THAT OUT OF TOTAL SALES OF RS. 27,385 CRORES, ONLY RS. 1919 CRORES IS FROM BPO, 2225 CRORES FORM IT INFRASTRUCTURE SERVICES. SO OUT OF TOTAL TURNOVER , THESE SEGMENTS CONSTITUTE ONLY 15% OF THE TOTAL REVENUE. BESIDES, PROFIT MARGINS IN THESE SEGMENTS ARE LOWER AND HENCE BY INCLUDING THE PERFORMANCE OF THESE SEGMENTS, NO PREJUDICE IS BEING CAUSED TO TAXPAYER. FURTHER, SALE OF EQUIPMENT AND SOFTWARE LICENSE CONSTITUTES ONLY 3.76% OF TOTAL SALES. HENCE, IT IS STILL A PREDOMINANTLY A SOFTWARE DEVELOPMENT SERVICE PROVIDER. IN VIEW OF THE ABOVE DISCUSSION, THIS COMPANY SHALL BE SELECTED AS A COMPARABLE. 7.2 LD. DRP IN AN ABSOLUTE LACONIC ORDER DISMISSED TH E ELABORATE OBJECTIONS OF THE ASSESSEE BY HOLDING THAT TPO HAS CONSIDERED ALL THESE OBJECTIONS IN THE ORDER. 7.3 WE FIND THAT THE ABOVE IS NOT AT ALL A TENABLE APPROACH. ASSESSEE HAS ELABORATELY SUBMITTED THAT TCS IS ENGAG ED NOT ONLY IN SOFTWARE DEVELOPMENT SERVICES BUT ALSO SALE OF PROD UCTS, ASSURANCE SERVICES, CLOUD CONSULTING, INDUSTRIAL SERVICES ETC . THE TURNOVER OF TCS WAS RS. 2,245 CRORES AS AGAINST RS. 31.86 CRORE S OF THE ASSESSEE. THERE WERE RELATED PARTY TRANSACTION OF 59% AS AGAI NST ASSESSEE 25% WHICH WERE ENGAGED IN DIVERSE FUNCTIONS. ALL THE A BOVE OBJECTIONS BY THE ASSESSEE ARE GLARING AND THE SAME NEEDED TO BE ADDRESSED COGENTLY BY THE TPO AND THE DRP. HOWEVER, WE FIND THAT THE SAME WERE REJECTED AND BRUSHED ASIDE IN A LACONIC MANNER DEVOID OF ITA NO. 1062/DEL/2014 12 COGENCY. WE FIND THAT IT IS SETTLED LAW THAT EVEN ADMINISTRATIVE ORDERS HAVE TO BE CONSISTENT WITH THE LAW OF NATURAL JUST ICE. IN THESE CIRCUMSTANCES, WE ARE IN AGREEMENT WITH THE SUBMISSIO NS OF THE LD. COUNSEL OF THE ASSESSEE THAT THE COMPARABLE TCS SHOU LD BE REJECTED FROM THE LIST OF COMPARABLES ON BOTH THE GROUND THAT THE SAME WAS NOT FUNCTIONALLY COMPARABLE AS WELL AS THE FACT THAT ASS ESSEES OBJECTIONS WERE NOT AT ALL ADDRESSED BY THE AUTHORITIES BELOW. ACCORDINGLY, WE DIRECT THAT THE COMPARABLE TCS SHOULD BE TAKEN OUT F ROM THE LIST OF COMPARABLE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27/5/2014. SD/- SD/- [ [[ [R.P. TOLANI R.P. TOLANI R.P. TOLANI R.P. TOLANI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE:- 27/5/2014 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO. 1062/DEL/2014 13