Harland Clarke Holding Software India Private Limited, CHENNAI V. DCIT Company Circle 2(2), CHENN

ITA 113/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1955 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 08-01-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SRINIVASA RAO VARACITD R
• Assessee Lawyers: V VIKRAM VIJAYARAGHAVAN
• Keywords: Depreciation; Transfer pricing; Principle of natural justice; International transaction; Working capital adjustments; Bad and doubtful debts
• Section: 92C; 234B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI , , BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER & SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A.NO.113/CHNY/2018 / ASSESSMENT YEAR : 2013-14 M/S. HARLAND CLARKE HOLDING SOFTWARE INDIA PVT LTD., SUITE 305,DELTA WING, 3 RD FLOOR, RAHEJA TOWERS, NO.177,ANNA SALAI, CHENNAI. 600 002. VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-2(2), WANAPARTHY BLOCK, CHENNAI.34 [PAN AAHCS 4742 D ] ( / APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR.V.VIKRAM VIJAYARAGHAVAN ADVOCATE !' /RESPONDENT BY : MR.SRINIVASA RAO VARA,CIT,D.R # $ %& / DATE OF HEARING : 30 - 1 0 - 201 8 '( %& / DATE OF PRONOUNCEMENT : 30 - 1 0 - 201 8 !' / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME-TAX, CO RPORATE CIRCLE 4(2) (AO) IN NO.H-502/TPO-2(1)/A.Y 2013-14 VIDE ORDER D ATED 28.10.2016 IN PURSUANT TO THE DIRECTIONS ISSUED BY THE DISPUTE RE SOLUTION PANEL-2, (DRP), BENGALURU IN F.NO.266/DRP-2/BANG/2016-17 DATED 06.0 9.2017 FOR ASSESSMENT YEAR 2013-14. ITA NO.113/CHNY/2017 :- 2 -: 2. MR. V.VIKRAM VIJAYARAGHAVAN REPRESENTED ON BEHALF OF THE ASSESSEE, AND MR.SRINIVASA RAO VARA REPRESENTED ON BEHALF OF THE REVENUE. 3. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOL LOWING GROUNDS:- GROUNDS OF APPEAL THE GROUNDS OF APPEAL LISTED BELOW ARE WITHOUT PREJ UDICE TO EACH OTHER. GROUND OF OBJECTION I GENERAL GROUND THE ORDER OF THE LEARNED DEPUTY COMMISSIONER OF INC OME TAX, COMPANY CIRCLE 2(2), CHENNAL (ASSESSING OFFICER OR AO) PASSED PURSUANT TO THE ORDER OF THE LEARNED TRANSFER PRICING OFFICER-V, CHENNAL (TRANSFER PRICING OFFICER OR TPO) AND THE DIRECTIONS ISSUED BY THE HONBLE DISPUTE RESOLUTION PANEL II (THE DRP), TO THE EXTENT PREJUDICIAL TO THE APPELLANT, IS ERRONEOUS, BAD IN LAW, AND CONTRARY TO THE FACTS AND CIRCUMSTANCE S OF THE CASE. ISSUE I GROUNDS RELATING TO TRANSFER PRICING MATT ERS GROUND OF OBJECTION 2 REJECTION OF ECONOMIC ANALY SIS OF THE APPELLANT WITHOUT ANY COGENT REASONS THE LD. AO/ TPO AND THE HONBLE DRP HAVE ERRED, IN LAW AND IN FACTS BY DISREGARDING THE ECONOMIC ANALYSIS UNDERTAKEN BY TH E APPELLANT IN ACCORDANCE WITH THE PROVISIONS OF THE INCOME TAX AC T, 1961 READ WITH INCOME TAX RULES, 1962 (THE RULES) FOR DETERMINATIO N OF ARMS LENGTH PRICE OF THE 1 INTERNATIONAL TRANSACTION OF THE APPELLAN T. THE TPO ALSO CONDUCTED A FRESH ECONOMIC ANALYSIS FOR SELECTION OF COMPARAB LE COMPANIES WITHOUT PROVIDING ANY COGENT REASONS FOR UNDERTAKING THE SA ME. GROUND OF OBJECTION 3 OBJECTION ON COMPARABLE COMP ANIES THE LEARNED AOITPO AND HONBLE DRP HAVE ERRED IN LA W AND FACTS, BY CONSIDERING COMPANIES THAT DO NOT SATISFY THE COMPA RABILITY PARAMETERS (EVIDENCED FROM THE WEBSITE, ANNUAL REPORTS AND INF ORMATION AVAILABLE IN THE PUBLIC DOMAIN) AS COMPARABLE TO THE BUSINESS OF THE APPELLANT. THE HONBLE DRP HAS ACCEPTED FUNCTIONAL COMPARABILI TY OF ADDITIONAL COMPANIES IDENTIFIED BY THE ASSESSEE, HOWEVER, INAD VERTENTLY REJECTED THE GROUND OF OBJECTION RAISED BY THE ASSESSEE. ITA NO.113/CHNY/2017 :- 3 -: GROUND OF OBJECTION 4APPLICATION OF INVALID FILLER S THE LEARNED AO/TPO AND THE HONBLE DRP HAVE ERRED, IN LAW AND IN FACTS, BY MODIFYING CERTAIN QUANTITATIVE AND QUALITATIVE FILT ERS APPLIED BY THE APPELLANT (WITHOUT PROVIDING ANY COGENT REASONS) AND APPLYING CERTAIN ADDITIONAL FILTERS, WHICH ARE ARBITRARY IN NATURE, FOR THE PUR POSES OF DETERMINATION OF ARMS LENGTH PRICE. GROUND OF OBJECTION 5 NON-GRANT OF WORKING CAPITA L ADJUSTMENT THE LCD. AO/TPO ARID HONBLE DRP HAVE ERRED IN LAW AND FACTS, BY NOT MAKING SUITABLE ADJUSTMENTS TO ACCOUNT FOR WORKING CAPITAL DIFFERENCES BETWEEN THE APPELLANT VIS-A-VIS THE COMPARABLES AND IN THE PROCESS ALSO NEGLECTED THE INDIAN TRANSFER PRICING REGULATIONS, OECD GUIDELINES ON TRANSFER PRICING AND VARIOUS JUDICIAL PRECEDENCE. GROUND OF OBJECTION 6 NON-GRANT OF RISK ADJUSTMENT THE TPO/AO AND THE HONBLE DRP HAVE ERRED, IN LAW A ND FACTS, BY NOT MAKING SUITABLE ADJUSTMENTS TO ACCOUNT FOR DIFFEREN CES IN THE LEVEL OF RISK OF THE ASSESSEE VIS--VIS THE COMPARABLE COMPANIES UND ER SUB-RULE(3) OF RULE- 10B. GROUND OF OBJECTION 7 ERRONEOUS RE-CHARACTERIZATIO N OF THE SEGMENTS THE LEARNED AO/TPO/ DRP HAVE ERRED IN FACTS AND IN CIRCUMSTANCES OF THE CASE BY ERRONEOUSLY UNDERSTANDING THE BUSINESS OF T HE COMPANY AND ADOPTING ERRONEOUS SEGMENTATION FOR THE PURPOSE OF COMPARABILITY ANALYSIS. GROUND OF OBJECTION 8 CHERRY PICKING OF COMPARABLE COMPANIES WITHOUT PREJUDICE TO THE ABOVE, THE LD. AO /TPO AND THE HONBLE DRP HAVE ERRED IN LAW AND FACTS, AND VIOLATED PRINCIPLES OF NATURAL JUSTICE BY NOT PROVIDING THE DETAILED PROCESS (I.E. ACCEPT /REJECT MATRIX AND THE REASON OF REJECTIONS OF THE COMPANIES REJECTED QUALITATIVELY) OF THE FRESH ECONOMIC ANALYSIS CONDUCTED FOR IDENTIFICATION OF COMPARABLE COMPANIES, AND THUS HAVE RESORTED TO CHERRY PICKING OF THE COMPANIES UN DERTAKING NON- COMPARABLE ACTIVITIES. GROUND OF OBJECTION 9 ERRONEOUS TREATMENT OF EXPEN SES THE LEARNED AOITPO HAS ERRED IN LAW AND FACTS, BY C ONSIDERING PROVISION FOR BAD AND DOUBTFUL DEBTS TO BE NON-OPERATING ITEM. GROUND OF OBJECTION 10 USE OF SINGLE YEAR DATA (WHICH WAS NOT AVAILABLE AT THE TIME OF MAINTAINING TP DOCUMENTATION) ITA NO.113/CHNY/2017 :- 4 -: THE LD. TPO/ AO AND THE HONBLE DRP HAVE ERRED IN L AW AND IN FACTS, BY DETERMINING THE ARMS LENGTH MARGIN! PRICE USING ON LY FINANCIAL YEAR 2012-13 DATA, AS AGAINST MULTIPLE YEAR DATA ADOPTED BY THE APPELLANT WITHOUT APPRECIATING THAT MULTIPLE YEAR DATA HAS AN INFLUEN CE ON THE DETERMINATION OF TRANSFER PRICES IN RELATION TO THE INTERNATIONAL TR ANSACTIONS AND ALSO NOT GIVING DUE COGNIZANCE TO THE RULES NOTIFIED BY THE CBDT VI DE NOTIFICATION NO. 83/2015 [F.NO. 142/25/2015-TPOJ. GROUND OF OBJECTION 11- +/-3% TOLERABLE RANGE AS P ROVIDED IN PROVISO TO SECTION 92C(2) OF THE ACT. THE LD. TPO/ AO AND THE HONBLE DRP HAVE ERRED IN L AW AND IN FACTS, IN COMPUTING THE ARMS LENGTH PRICE WITHOUT GIVING BEN EFIT OF +/- 3 PERCENT UNDER THE PROVISO TO SECTION 92C OF THE ACT. ISSUE 2GROUNDS RELATING TO CORPORATE TAX MATTERS GROUND OF OBJECTION 12 DEPRECIATION ON COMPUTER S OFTWARE THE LEARNED AO HAS ERRED IN TREATING COMPUTER SOFTW ARE AS INTANGIBLE ASSETS ELIGIBLE FOR DEPRECIATION AT THE RATE OF 25 PERCENT AS AGAINST TREATING IT AS COMPUTERS INCLUDING COMPUTER SOFTWARE ELIGIBLE FOR DEPRECIATION AT THE RATE OF 60 PERCENT AS CLAIMED BY THE APPELLANT. GROUND OF OBJECTION 13 SET-OFF OF BROUGHT FORWARD MINIMUM ALTERNATE TAX (MAT) CREDIT THE LEARNED AO HAS ERRED IN LAW BY NOT CONSIDERING THE ELIGIBLE BROUGHT FORWARD MAT CREDIT TO BE SET-OFF AGAINST THE TAX ON ASSESSED INCOME. ISSUE 3 ERRONEOUS LEVY OF INTEREST UNDER SECTION 2 34B AND 234C GROUND OF OBJECTION 14 ERRONEOUS LEVY OF INTEREST UNDER SECTION 234B AND SECTION 234C THE LEARNED AO AND THE HONBLE DRP HAVE ERRED IN LE VYING INTEREST UNDER SECTION 234B AND 234C OF THE ACT DESPITE THE FACT T HAT THE ADDITIONS TO THE INCOME WERE UN-ANTICIPATED AND THERE WOULD BE CONSE QUENTIAL REDUCTION IN THE INTEREST ONCE THE APPLICATION IS ALLOWED ON THE ISSUE UNDER APPEAL. ISSUE 4 INITIATION OF PENALTY PROCEEDINQS GROUND OF OBJECTION 15 INITIATION OF PENALTY PROCE EDINGS THE ID. AO HAS ERRED IN INITIATING PENALTY PROCEEDI NGS UNDER SECTION 271(1)(C) OF THE ACT, WITHOUT APPRECIATING THE FACT THAT THE TRANSFER PRICING ADJUSTMENTS ARISING ON ACCOUNT OF DIFFERENCE IN THE APPROACHES ADOPTED BY ITA NO.113/CHNY/2017 :- 5 -: THE APPELLANT VIS--VIS THE LD. TPO/ AO DOES NOT AM OUNT TO ANY CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURAT E PARTICULARS BY THE APPELLANT. 4. AT THE TIME OF HEARING, LD.COUNSEL FOR THE ASSE SSEE SUBMITTED THAT HE DID NOT SISH TO PRESS GROUNDS NOS.1,2,4,6,7,9 & 11. LD.A.R HAS ACCORDINGLY WITHDRAWN THE SAID GROUNDS. CONSEQUENTLY, THE SAME ARE DISMISSED AS NOT PRESSED. 4.1 IT WAS SUBMITTED BY LD.A.R THAT GROUNDS NOS.3, 5, 8 AND 10 WERE ISSUES AGAINST THE ORDER OF THE TPO AND THE DIRECTI ON OF THE DRP IN RESPECT OF TRANSFER PRICING MATTERS. 4.2 IT WAS A FURTHER SUBMISSION THAT GROUND NO.12 WAS CORPORATE TAX MATTER IN RESPECT OF TREATING THE SOFTWARE AS INTA NGIBLE ASSETS ELIGIBLE FOR DEPRECIATION AT THE RATE OF 25% OR 60%. 4.3 IT WAS A SUBMISSION THAT GROUNDS NOS.13 RELATIN G TO MAT CREDIT WAS NOT ARGUED BY LD.A.R. CONSEQUENTLY, THE SAME IS DIS MISSED AS NOT PRESSED. 4.4 IT WAS A SUBMISSION THAT GROUND NOS.14 WAS CON SEQUENTIAL IN NTURE IN LEVYING OF INTEREST UNDER SECTIONS 234B & 234C OF T HE ACT AND GROUND NO.15 WAS AGAINST THE INITIATION OF PENALTY U/S.271(1)(C) OF THE ACT. THE GROUNDS NOS.14 & 15 WERE NOT ARGUED BY LD.A.R. CONSEQUENTLY , THE SAME IS DISMISSED AS NOT PRESSED. 5. IN REGARD TO THE TRANSFER PRICING ISSUES, IT WA S SUBMITTED BY LD.A.R THAT THE ASSESSEE HAS THREE LINES OF BUSINESS; I) S OFTWARE DEVELOPMENT SERVICES, II) CONTENT DEVELOPMENT SERVICES AND III) ON-LINE TUTORING SERVICES. ITA NO.113/CHNY/2017 :- 6 -: IT WAS A SUBMISSION THAT WHEN THE ASSESSEE HAD DONE TRANSFER PRICING STUDY, IT HAD TREATED THE SOFTWARE DEVELOPMENT SERVICES AN D THE CONTENT DEVELOPMENT SERVICES AS INFORMATION TECHNOLOGY SERV ICES (I.T.SERVICES) AND IN RESPECT OF ON-LINE TUTORING SERVICES, THE SAME W AS TREATED AS INFORMATION TECHNOLOGY ENABLED SERVICES (I.T.E.S). IT WAS A SUB MISSION THAT THE LD. ASSESSING OFFICER HOWEVER TREATED THE SOFTWARE DEVE LOPMENT SERVICES AS INFORMATION TECHNOLOGY SERVICES, BUT TREATED THE CO NTENT DEVELOPMENT SERVICES AND THE ON-LINE TUTORING SERVICES AS INFOR MATION TECHNOLOGY ENABLED SERVICES. IT WAS A SUBMISSION THAT THE SOFTWARE DEV ELOPMENT SERVICES INVOLVED SOFTWARE DEVELOPMENT PROCESS. IT WAS A SUB MISSION THAT NO ADJUSTMENT WAS FOUND NECESSARY BY THE LD. ASSESSING OFFICER IN RESPECT OF SOFTWARE DEVELOPMENT SERVICES, INCOME EARNED FROM S OFTWARE DEVELOPMENT SERVICES WAS DISCLOSED BY THE ASSESSEE. IN RESPECT OF CONTENT DEVELOPMENT SERVICES, WHICH WAS IN NATURE OF TRANSFORMING THE B USINESS REQUIREMENT OF THE ASSESSEES GROUP COMPANIES INTO INSTRUCTIONAL D ESIGN, STORY BOARD CREATION, ANIMATION, GRAPHICS AND LEARNING. IN RESP ECT OF ONLINE TUTORING SERVICES, WHICH INVOLVED PROVIDING ON-LINE TUTORING SERVICES TO ITS CUSTOMERS AS PER THE DIRECTION OF ITS GROUP INDUSTRIES. THE LD. ASSESSING OFFICER FOUND THAT THE PLI ADOPTED BY THE ASSESSEE, WHEN COMPARED TO NET MARGIN OF SELECTED COMPARABLES WERE LOWER, IN CONSEQUENTIAL M ADE AN ADJUSTMENT ABOUT 10.53%. IT WAS A SUBMISSION THAT THE ASSESSEE S PROFIT MARGIN WAS 10.37% AND THE PROFIT MARGINS OF THE COMPARABLES WA S ARRIVED AT 20.90%. THUS, THE DIFFERENCE OF 10.53% DIFFERENTIAL WAS ADJ USTED UPWARDS. IT WAS A SUBMISSION THAT THE ASSESSEE WAS NOT CHALLENGING TH E SHIFTING OF THE CONTENT ITA NO.113/CHNY/2017 :- 7 -: DEVELOPMENT SERVICES FROM INFORMATION TECHNOLOGY SE RVICES TO INFORMATION TECHNOLOGY ENABLED SERVICES. THE ASSESSEE WAS BASIC ALLY CHALLENGING THE COMPARABLES. IT WAS A SUBMISSION THAT THE CLAIM OF ASSESSEE REVOLVED AROUND THE EXCLUSION OF 4 OF THE COMPARABLES AS TAKEN BY T HE LD. ASSESSING OFFICER AND INCLUSION OF ONE COMPARABLE, WHICH HAD BEEN DIS CARDED BY THE LD. ASSESSING OFFICER. THE LD.A.R DREW OUR ATTENTION TO LIST OF COMPARABLES TAKEN BY THE TPO AT PAGE 25 OF THE PAPER BOOK WHICH IS AS FOLLOWS: COMPARABLES MARGIN (OP/OC) E4E HEALTH CARE LTD 19.24 JINDAL INTELICOM LTD 7.71 MPS LTD.( REJECTED BY DRP ) 28.22 MICROGENTIC S YSTEMS LTD. 16.25 ICRA ONLINE LTD. 25.48 INFOSYS BPO LTD 29.28 ACROPETAL TECHNOLOGIES LTD 14.43 HARTRON COMMUNICATION LTD. 33.60 ACCENTIA TECHNOLOGIES LTD. 13.90 AVERAGE 20.90% 5.1 FURTHER, LD.A.R FILED A NOTE AS FOLLOWS :- HARLAND CLARKE HOLDING SOFTWARE INDIA PRIVATE LIMIT ED (HARLAND INDIA) BEFORE THE INCOME TAX APPELLATE TRIBUNAL CHENNAI D BENCH SUMMARY OF KEY CONTENTIONS ASSESSMENT YEAR 2013-1 4 1. BACKGROUND - HARLAND INDIA WAS ENGAGED IN PROVID ING CONTENT DEVELOPMENT SERVICES AND ITES. 2. INTERNATIONAL TRANSACTION - THE INTERNATIONAL TR ANSACTION UNDER DISPUTE RELATES TO PROVISION OF ITES AMOUNTING TO INR 6.62 CR. 3. ISSUES UNDER DISPUTE - THE ISSUES UNDER DISPUTE ARE ON SELECTION OF COMPARABLE COMPANIES AND NON-GRANT OF ECONOMIC ADJU STMENTS VIZ, WORKING CAPITAL AND RISK ADJUSTMENT. 4. TRANSFER PRICING (TP) ADJUSTMENT INR 58.81 L ACS KEY OBJECTIONS ON COMPARABLE COMPANIES NAME OF COMPANY COMPANIES TO BE EXCLUDED GROUND NO.3 SUPPORT FROM JUDICIAL PRONOUNCEMENTS-COVERED ITA NO.113/CHNY/2017 :- 8 -: JUDGEMENTS HARTRON COMMUNI CATIONS LTD (HARTON) SIGNIFICANT FLUCTUATIONS IN THE TURNOVER - WHERE REVENUE HAS INCREASED 350% COMPARED TO PREVIOUS YEARS (PAGE 6 OF PAPER BOOK 3) HIGH FLUCTUATION IN MARGINS -THE MARGINS OF HARTRON HAS HIGHLY FLUCTUATED WHICH IS AS FOLLOWS: YEAR 2010- 11 2011- 12 2012- 13 2013- 14 2014- 15 TURNOVER INR CRORES 2.08 3.81 18.43 10.33 14.37 % OF CHANGE - +82.86 383.1 - 43.95 39.19 YEAR 2010- 11 2011- 12 2012- 13 2013- 14 2014- 15 PROFIT/LOSS INR CRORES - 2.03 - 1.41 4.61 - 0.26 - 3.74 % OF CHANGE -97.56 - 37.15 25.05 - 2.52 -26.02 - UNRELIABLE FINANCIAL INFORMATION QUALIFICATION IN THEAUDITOR REPORT. (PAGE 14 OF PAPER BOOK 3) PG.439-440 OF PAPERBOOK FOR OBJECTIONS BEFORE DRP PG.332-334 OF PAPERBOOK FOR OBJECTIONS BEFORE TPO GE CONVERTEAM EDC PRIVATE LIMITED (ITAT CHENNAI )A.Y 2009- 10 ( PAGE 8 IN PARA 9 ) BANGALORE TRIBUNAL IN CASE OF SAP LABS INDIA PVT. LTD. ( PAGE 6 IN PARA 7.2.2 ) Q LOGIC (INDIA) (P.) LTD. (ITAT PUNE) (PAGE 9 IN PARA 15 ) INFOSYS BPO LTD (INFOSYS) SIGNIFICANT DIFFERENCE IN TURNOVER -(INFOSYS TURNOV ER IS INR 1831 CRORES [39 TIMES THE TURNOVER OF THE ASSESSEE] - SIGNIFICANT BRAND VALUE IN MARKET . - DIFFERENCE IN NATURE OF SERVICES VARIED HIGH END SERVICES. SIGNIFICANT ASSET BASE - LNFOSYS BPOS ASSET IS OF 2446 CRORES WHEREAS OF THE ASSESSEE 1.63 CRORES. PG. 444-445 OF PAPER BOOK FOR OBJECTIONS BEFORE DRP PG. 332-334 OF PAPER BOOK FOR OBJECTIONS BEFORE TP O - BOMBAY HIGH COURT IN CASE OF PENTAIR WATER INDIA PVT LTD ( PAGE 18 ) - BNP PARIBAS GLOBAL SECURITIES (I.T.A.NO.2141/ CHNY/2017) AY 2013-14 ( PAGE-3 IN PARA 5 ) ICRA ONLINE LIMITED LCRA - FUNCTIONALLY DIFFERENT KPO SERVICES & HIGH-END. ( PAGE 112 OF PB 3 ) PG. 435-437 OF PAPER BOOK FOR OBJECTIONS BEFORE DRP PG. 322-323 OF PAPER BOOK FOR OBJECTIONS BEFORE TPO - DELHI HIGH COURT IN EVALUESERVE SEZ (GURGAON) PVT. LTD. ( PAGE 3 IN PARA 6) - DELHI HIGH COURT IN RAMPGREEN SOLUTIONS PRIVATE LIMITED E4E HEALTH BUSINESS FUNCTIONALLY DIFFERENT KPO SERVICES & HIGH END (PAGE 136 OF PB 3) - ABSENCE OF SEGMENTAL INFORMATION VARIED DELHI HIGH COURT IN EVALUESERVE SEZ (GURGAON) PVT. LTD. ITA NO.113/CHNY/2017 :- 9 -: (E4E) SERVICES & NO SEGMENT. PG. 448 OF PAPER BOOK FOR OBJECTIONS BEFORE DRP ( PAGE 3 IN PARA 6) - BANGALORE ITAT IN NVIDIA GRAPHICS PRIVATE LIMITED R SYSTEMS (ADDITION ALLY IDENTIFIE D BY ASSESSEE BEFORE TPO) DIFFERENT FINANCIAL YEAR DATA EXTRAPOLTION CAN BE OBTAINED. PG. 349-351OF PAPER BOOK FOR OBJECTIONS BEFORE DRP PG. 451-452 OF PAPER BOOK FOR OBJECTIONS BEFORE TPO DELHI HIGH COURT IN MCKINSEY KNOWLEDGE CENTRE INDIA PVT LTD. ( PAGE 11 ) DELHI ITAT IN CASE OF UNITED HEALTH GROUP INFORMATION SERVICES PRIVATE LTD ( PAGE 29 IN PARA 54) 5. WORKING CAPITAL (WC) ADJUSTMENT GROUP NO.5 OPERATING MARGINS OF COMPARABLES ARE CONSIDERED WIT HOUT ADJUSTING FOR DIFFERENCES ARISING OUT OF WORKING CAPITAL POSITION S. PARTICULARS E4E JINDAL MICROGEN IRCA INFOSYS ACROETAL HARTRON AVERAGE WC DAYS 70 35 30 39 278 4 67 67 PARTICULARS WC DAYS COMPARABLE COMPANIES (AVERAGE) 67 HARLAND INDIA 15 JUDICIAL PRECEDENTS - DELHI ITAT IN AGILENT TECHNOLOGIES (INTERNATIONAL) PVT LTD., - M/S.MOBIS INDIA LTD VS. DCIT (ITA NO.2112/MDS./2011 IN HONBLE CHENNAI ITAT. 6. COMPARABLE COMPANIES AND MARGINS HARLAND INDIAS MARGINS 10.39% (PAGE 17OF APPEAL SET) TPO COMPARABLES E4E HEALTH C ARE LTD JINDAL INTELICOM LTD MPS LTD.( REJECTED BY DRP ) MICROGENTIC SYSTEMS LTD. ICRA ONLINE LTD. INFOSYS BPO LTD ACROPETAL TECHNOLOGIES LTD HARTRON COMMUNICATION LTD. ACCENTIA TECHNOLOGIES LTD.( REJECTED BY DRP ) ITA NO.113/CHNY/2017 :- 10 - : TP STUDY COMPRAB LES APTECH LTD. COMPUCOM SOFTWARE LTD. FIRST OBJECT TECHNOLOGY LTD. USHA MARTIN EDUCATION LTD. NIIT LTD. EDUCATION INITIATIVE PVT LTD. 7. DISALLOWANCE ON 60% DEPRECIATION ON COMPUTER SOFTWA RE- INR 30.37 LACS GROUND NO 12 THE COMPANY HAS CLAIMED DEPRECIATION ON SOFTWARE LICENSES AT THE RATE OF 60 PERCENT. THE DESCRIPTION OF ADDITIONS MADE TO COMPUTER SOF TWARE DURING THE SUBJECT AY ARE AS FOLLOWS: DESCRIPTION OF ASSET DATE PUT TO USE AMOUNT (ININR) MICROSOFT VISUAL PROFESSIONAL 2-MAY-12 9,01,602 MICROSOFT VISUAL STUDIO PROFESSIONAL 2-MAY-12 4,55,107 MINITAB 16 FOR WINDOWS LICENSE 9-MAY-12 79,111 SPSS STATISTIC LICENSE 18-MAY-12 1,28,605 8 TO 16 PARTITION LICENSE 14-JUN-12 61,619 VMWARE LICENSE 1-JUL-12 6,71,153 ACCESS 2010 LIFETIME LICENSE 10-JUL-12 8,231 NET SOFTWARE 25-OCT-12 97,801 VMWARE LICENSE 4-DEC-12 1,48,926 RESHARPER 7.0 C# EDITION COMMERCIAL LICENSE 13-DEC-12 14,106 RESHARPER 7.0 EDITION COMMERCIAL LICENSE 18-FEB-13 15,380 TOTAL 25,81,641 REMARKS MADE BY THE LEARNED AO THE LEARNED AO HAS RELIED ON THE RULING OF SONY IND IA PRIVATE LIMITED VS. ADDITIONAL CIT [ ITA NOS. 4008 & 4994/DEL/20101 (DELHI TRIBUNA L) CONTENTION OF THE APPELLANT THE DECISION RELIED BY THE AO IS PRIOR TO AMENDMENT TO INCOME TAX RULES, 1962 (THE RULES). THE FOLLOWING CASE LAWS HAVE HELD THAT COMPUTER S OFTWARE IS ELIGIBLE FOR DEPRECIATION AT 60 PERCENT: I-FLEX SOLUTIONS LTD [225 TAXMANN 37] (BOMBAY HC) M/S TNQ BOOKS AND JOURNALS PVT LTD [IN ITA 752/MD S/2015] (CHENNAI TRIBUNAL) AMWAY INDIA ENTERPRISES VS. DCIT AND M/S SQL STA R INTERNATIONAL LIMITED [301 ITR 1] (DELHI TRIBUNAL) (SPECIAL BENCH) ITA NO.113/CHNY/2017 :- 11 - : 6. IT WAS A SUBMISSION THAT THE COMPARABLE M/S.HAR TRON COMMUNICATION LTD ., WAS AN INCOMPARABLE WITH THE ASSESSEE BECAUSE THERE WAS SIGNIFICANT FLUCTUATIONS IN THE MARGINS. IT WAS SUBMITTED BY LD.A.R THAT THE TURNOVER OF M/S.HARTRON COMMUNICATION LTD ., IS ALSO SUBSTANTIALLY HIGHER THAN THAT OF THE ASSESSEE. M/S .HARTRON COMMUNICATION LTD., WAS ALSO IN THE BUSINESS OF HEALTH CARE SERVI CES AND CONSEQUENTLY COULD NOT BE COMPARED TO THAT OF T HE ASSESSEE. IN RESPECT OF VARIATION IN RESPECT OF THE MARGINS, LD. A.R PLACED RELIANCE ON THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIB UNAL IN THE CASE OF M/S.GE CONVERTEAM EDC PVT. LTD., IN ITA NO.973/MDS/ 2014 VIDE ORDER DATED 25.01.2017 WHEREIN RELYING UPON THE DECISION OF DELHI BENCH IN THE CASE OF M/S.CIENA INDIA PVT LTD., IN ITA NO.145 3/DEL./14 DATED 24.04.2015 WHEREIN IT HAS BEEN HELD THAT ONCE IT IS HELD THAT THE PROFITS DO NOT REPRESENT FAIR PROFITABILITY ON YEAR TO YEAR BASIS, THIS COMPANY LOSES ITS TAG OF AN EFFECTIVE COMPARABLE. 6.1 IN RESPECT OF SECOND COMPARABLE BEING M/S.INFO SYS BPO LTD., IT WAS SUBMITTED BY LD.A.R THAT THE SAME WAS NOT LI ABLE TO BE CONSIDERED AS A COMPARABLE IN SO FAR AS M/S.INFOSYS BPO LTD., IS MUCH LARGER COMPANY COMPARABLE TO THAT OF THE ASSESSEE C OMPANY AND THE TURNOVER OF M/S.INFOSYS BPO LTD., WAS 39 TIMES THE TURNOVER OF THE ASSESSEE AND M/S.INFOSYS BPO LTD., HAD SIGNIFICANT BRAND VALUE IN MARKET. FOR THIS LD.A.R PLACED RELIANCE ON THE DECI SION OF CO-ORDINATE ITA NO.113/CHNY/2017 :- 12 - : BENCH OF THIS TRIBUNAL IN THE CASE OF M/S.BNP PARIB AS GLOBAL SECURITIES IN ITA NO.2141/CHNY/2017 DATED 06.03.2018. 6.2 IN RESPECT OF THIRD COMPARABLES BEING M/S.ICRA ONLINE LTD., IT WAS SUBMITTED BY LD.A.R THAT THE SAID COMPARABL E WAS NOT IN THE PROCESSING SERVICES, MORE SPECIFICALLY KNOWN AS KPO SERVICES, WHICH IS HIRED SERVICES. IT WAS A SUBMISSION THAT AS KPO SER VICES WERE SPECIFIC SERVICES AND HIRED SERVICES, THE SAME CANNOT BE COM PARED TO THE SERVICES RENDERED BY THE ASSESSEE. 6.3 IN RESPECT OF FOURTH COMPARABLES BEING M/S.E4E HEALTH BUSINESS, IT WAS A SUBMISSION THAT THE SAID COMPARA BLE WAS AGAIN IN THE KPO SERVICES AND THERE WAS NO SEGMENTED INFORMA TION AVAILABLE IN RESPECT OF THE SAME. IT WAS A PRAYER THAT THIS COMP ANY WAS TO BE EXCLUDED AS INCOMPARABLE. 6.4 IN RESPECT OF FIFTH COMPARABLES BEING M/S.R.SY STEMS, IT WAS SUBMITTED BY LD.A.R THAT THIS COMPANY WAS LIABLE TO BE TREATED AS ONE OF THE COMPARABLES, BUT THE SAME HAD BEEN REJECTED BY THE TPO AND THE DRP ON THE GROUND THAT THE FINANCIAL YEAR WAS D IFFERENT. IT WAS A SUBMISSION THAT M/S.R.SYSTEMS WAS FOLLOWING FINANCI AL YEAR FROM JANUARY TO DECEMBER, WHEREAS THE ASSESSEE WAS FOLLO WING FINANCIAL YEAR FROM APRIL TO MARCH. IT WAS A SUBMISSION THAT THE ASSESSEE HAD RE-WORKED THE ACCOUNT SOF THE SAID COMPARABLE AND H AD TAKEN AVERAGE ITA NO.113/CHNY/2017 :- 13 - : OF THE QUARTERLY RESULTS AND PLACED THE SAME BEFORE THE TPO AND THE DRP. IT WAS A SUBMISSION THAT THIS COMPARABLE WAS L IABLE TO BE CONSIDERED. IN RESPECT OF M/S.R.SYSTEMS, LD.A.R PLA CED RELIANCE IN THE DECISION OF DELHI HIGH COURT IN THE CASE OF MCKINSE Y KNOWLEDGE CENTRE INDIA PVT. LTD., IN ITA 217/2014 DATED 27.03 .2015 WHEREIN IT HAS BEEN HELD THAT IF FROM THE AVAILABLE DATA ON RE CORD, THE RESULTS FOR FINANCIAL YEAR CAN REASONABLY BE EXTRAPOLATED, THEN THE COMPARABLE CANNOT BE EXCLUDED SOLELY ON THE GROUND THAT THE CO MPARABLES HAVE DIFFERENT FINANCIAL YEAR ENDINGS. IT WAS A SUBMISSI ON THAT WORKING CAPITAL ADJUSTMENT WAS LIABLE TO BE GRANTED TO THE ASSESSEE. 7. IN RESPECT OF THE CORPORATE TAX, THE ASSESSEE H AD CLAIMED DEPRECIATION ON THE SOFTWARE LICENSE @ 60%. THE BRE AK-UP OF THE COST OF THE SOFTWARE LICENSE WAS SPECIFICALLY SHOWN AT P ARA-7 OF THE NOTE SUBMITTED BY THE LD.A.R. LD.A.R PLACED RELIANCE ON THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF M/S.I-FLEX SOLUTIO NS LTD. REPORTED IN225 TAXMANN 37 (BOM.) WHEREIN THE HONBLE BOMBAY HIGH COURT HAD HELD THAT IN THE CASE OF THAT ASSESSEE, THE SOF TWARE CANNOT BE WORKED IN ISOLATION AND IT HAS TO BE LOADED ON THE COMPUTER AND CONSEQUENTLY, IT WAS AN INTEGRAL PART OF THE COMPUT ER IN CONSEQUENCE THE SOFTWARE WAS CLUBBED WITH THE COMPUTERS AS DEPR ECIABLE ASSET ELIGIBLE FOR DEPRECIATION @ 60% AS AGAINST 25% AS I NTANGIBLE ASSET GRANTED BY THE LD. ASSESSING OFFICER. ITA NO.113/CHNY/2017 :- 14 - : 8. IN REPLY, LD.D.R VEHEMENTLY SUPPORTED THE ORDER OF TPO AND THE DIRECTIONS OF THE DRP. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. TA KING EACH OF THE ISSUE RAISED BY THE ASSESSEE, IN RESPECT OF M/S .HARTRON COMMUNICATION LTD., WHICH HAS BEEN CLAIMED FOR EXCLUSION BY THE ASSESSEE, ON ACCOUNT OF THE HIGH TURNOVER, AND FLUC TUATIONS ARE IN MARGINS. IT IS NOTICED THAT HONBLE DELHI HIGH COUR T IN THE CASE OF M/S.MCKINSEY KNOWLEDGE CENTRE INDIA PVT LTD., REFER RED TO SUPRA, WHICH HAS BEEN REFERRED TO BY THE ASSESSEE ITSELF S HOWS THAT IF FROM THE AVAILABLE DATE ON RECORD, THE RESULTS FOR THE F INANCIAL YEAR CAN BE REASONABLY EXTRAPOLATED, THEN THE COMPARABLE CANNOT BE EXCLUDED SOLELY ON THE GROUND THAT THE COMPARABLES HAVE DIFF ERENT FINANCIAL YEAR ENDINGS. APPLYING THE SAID PRINCIPLES CLEARLY SHOW S THAT THERE IS A VARIATION IN THE MARGINS FOR VARIOUS ASSESSMENT YEA RS, DOES NOT MEAN THAT THE MARGINS FOR PARTICULAR YEAR CANNOT BE CONS IDERED. IT WOULD BE VERY MUCH AVAILABLE TO THE ASSESSEE TO POINT OUT TH E REASONS FOR THE HIGHER RATE OF MARGINS IN THE CASE OF PARTICULAR CO MPARABLE. BUT THAT IS NOT OPEN, WHAT IS SPECIFICALLY KEPT IN MIND THAT IS THAT METHOD HAD BEEN APPLIED HEREIN, IS TNMM I.E. TRANSACTIONAL NET MARGIN METHOD, WHETHER THE TURNOVER IS HIGH OR NOT, WOULD NOT MAKE A DIFFERENT NOR WOULD BE THE QUESTION WORKING CAPITAL ADJUSTMENTS B E REQUIRED, WHAT IS BEING COMPARED AS A PERCENTAGE OF PROFITABILITY. IT IS VERY MUCH ITA NO.113/CHNY/2017 :- 15 - : OPEN TO THE ASSESSEE TO POINT OUT HOW THE PERCENTAG ES AS DISCLOSED BY THE COMPARABLES ARE HIGHER ON ACCOUNT OF FROM SPECI FIC REASONS AS LONG AS THE PRODUCTS DEAL WITH THE COMPARABLES AND THE ASSESSEES ARE COMPARABLE, THEN IT IS ONLY A NET MARGIN, WHICH IS BEING COMPARED. IT WOULD NOT LEAD TO THE REQUIREMENTS OF THE EXCLUSION OF ANY PARTICULAR COMPARABLE. IN THE CASE OF M/S.HARTRON COMMUNICATION LTD., NO SUCH SPECIFIC REASON FOR EXCLUSION HAS BEEN POINTED OUT. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE COMPARAB LES TAKEN BY THE LD. ASSESSING OFFICER /TPO REPRESENTING M/S.HARTRON COMMUNICATION LTD., DOES NOT CALL FOR EXCLUSION. THE SAME ALSO GO ES FOR THE CASE OF M/S.INFOSYS BPO LTD. IT IS THE TNMM METHOD, WHICH I S BEING APPLIED AND THE MARGINS ARE IN THE PERCENTAGE AND NO WAY S UCH MARGINS ARE EFFECTED SUBSTANTIALLY ON ACCOUNT OF THE TURNOVER. IN FACT, FROM THE NOTE OF THE ASSESSEE, THE ASSESSEE ITSELF SAID THAT THE TURNOVER OF M/S.INFOSYS BPO LTD., IS 39 TIMES THE TURNOVER OF T HE ASSESSEE. HOWEVER, THE ASSET BASIS OF THE M/S.INFOSYS BPO LTD ., IS ` 2446 CRORES WHEREAS THAT OF THE ASSESSEE IS ` 1.63 CRORES. THIS CLEARLY SHOES THAT M/S.INFOSYS BPO LTD., IS HOLDING MUCH HIGHER ASSET POSSESSION, WHICH WOULD FAIRLY LEAD TO HIGHER DEPRECIATION, AND HIGH CAPITAL COSTS. IT WOULD ONLY GO TO REPRESENT ITS PROFITABILITY. IN RE SPECT OF M/S.ICRA ONLINE LTD., THE ASSESSEE CLAIMS THE SAME TO BE KPO SERVICES MORE SPECIFICALLY KNOWLEDGE PROCESSING SERVICES. IN RESP ECT OF E4E HEALTH ITA NO.113/CHNY/2017 :- 16 - : BUSINESS ALSO, THE ASSESSEE CLAIMS THE SAME TO BE K PO SERVICES. M/S.R.SYSTEMS, WHICH HAS BEEN CLAIMED BY THE ASSESS EE TO BE INCLUDED, IS ALSO KPO SERVICES. KNOWLEDGE PROCESSIN G OUT SOURCING, THE SAID SERVICES INCLUDE RESEARCH, INFORMATION GATHERI NG AND INFORMATION DRIVEN FORCE. KPO IS THE SERVICE OFFERED LEARNING S OLUTION, CONTENT DEVELOPMENT ETC. THIS IS OBTAINED FROM TYPING KPO O R KNOWLEDGE PROCESSING SERVICES ON THE INTERNET IN GOOGLE. CLEA RLY THE ASSESSEE HAS ADMITTED ITSELF IN THE BUSINESS OF CONTENT DEVELOPM ENTS AND ON LINE TUTORING, THUS THE ASSESSEE ITSELF IS IN THE KPO SE RVICES, THEREFORE IT WOULD BE HELD THAT ICRA ONLINE LTD., OR E4E HEALTH BUSINESS, OR IN ANY DIFFERENT FUNCTIONING, CONSEQUENTLY THE SAME HAS CO RRECTLY TAKEN AS COMPARABLE. M/S.R.SYSTEMS HAS BEEN ADDITIONALLY IDE NTIFIED BY THE ASSESSEE AS COMPARABLE, BUT HAS BEEN EXCLUDED BY T HE TPO AND DRP ON ACCOUNT OF DIFFERENT FINANCIAL YEARS, CANNOT BE EXCLUDED IN SO FAR AS THE SAID M/S.R.SYSTEMS IS ALSO DOING THE SYSTEM OF KPO AND THE FINANCE OF THE SAID M/S.R.SYSTEMS HAS BEEN RE-WORKE D ON QUARTERLY BASIS AND THE AVERAGE OF THE SAME HAS ALSO BEEN DET ERMINED BY THE ASSESSEE. THE AVERAGE OF WHICH HAS BEEN PRODUCED BE FORE THE TPO AND THE DRP. THE SAME BEING COMPARABLE TO THE ASSES SEES BUSINESS, THE LD. TPO IS DIRECTED TO RE-WORK THE PLI AFTER TA KING INTO CONSIDERATION M/S.R.SYSTEMS AS THE COMPARABLE. THE ASSESSEE IS TO PROVIDE THE FINANCIAL RE-WORKING TO THE TPO FOR TH E NECESSARY ITA NO.113/CHNY/2017 :- 17 - : ADJUSTMENTS. IN THE CIRCUMSTANCES, THE PRAYER OF EX CLUSION OF M/S.HARTON COMMUNICTIONS, M/S.INFOSYS BPO LTD., M/S .ICRA ONLINE LTD., AND E4E HEALTH BUSINESS FROM THE LIST OF COM PARABLES STANDS REJECTED AND THE ASSESSEES REQUEST FOR INCLUDING O F M/S.R.SYSTEMS AS COMPARABLE STANDS ACCEPTED. 10. COMING TO THE ISSUE OF WORKING CAPITAL ADJUSTM ENTS, AS MENTIONED EARLIER THE METHODOLOGY APPLIED HEREIN IS TNMM, NO SPECIFIC ADJUSTMENTS TOWARDS WORKING CAPITAL IS PERMITTED, I N SO FAR AS MAKING ONLY AN ADJUSTMENT OF ONE ITEM BEING WORKING CAPITA L WILL MAKE THE FINANCIALS OF THE COMPARABLE UNWORKABLE. WHAT IS CO MPARABLE IS THE PERCENTAGE OF THE MARGINS, AND OBVIOUSLY WHEN ARRIV ING AT THE MARGINS FOR EACH OF THE COMPARABLES, SUCH COMPARABLES WOULD HAVE TAKEN INTO CONSIDERATION THEIR COST OF WORKING CAPITAL. THEREF ORE, ANY TINKERING TO THAT WOULD HAVE A NEGATIVE IMPACT, WHICH COULD BE M ANY OF THE FINANCIALS OF COMPARABLES UNWORKABLE. IT MUST BE RE MEMBERED THAT WHEN ARRIVING AT MARGINS, VARIOUS COMPONENTS WOULD GO INTO ITS CALCULATIONS, SUCH AS THE COST OF CAPITAL, THE NUMB ER OF EMPLOYEES, NUMBER OF WORKING DAYS, TYPE OF ASSETS, COST OF ASS ETS ETC. IF EACH OF THESE IS TO BE ADJUSTED, THEN THERE WOULD BE NO COM PARISON. BASICALLY, TNMM WHAT IS BEING LOOKED AT, IS THE MARGIN THAT NO RMALLY COMPARABLE BUSINESS WOULD GENERATE. THIS BEING SO, THE WORKING CAPITAL ADJUSTMENTS APPLIED FOR STAND REJECTED. ITA NO.113/CHNY/2017 :- 18 - : 11. COMING TO THE ISSUE OF CORPORATE TAX BEING DEP RECIATION ON THE SOFTWARE, THE LIST OF THE SOFTWARE ON WHICH THE ASSESSEE IS CLAIMING DEPRECIATION CLEARLY SHOWS THAT THESE ARE NOT SOFTW ARES THAT RUNNING THE COMPUTES. ADMITTEDLY, THESE SOFTWARES CAN BE US ED IN A COMPUTER ONLY, BUT THE COMPUTER IS NOT DEPENDENT ON THESE SO FTWARES. THESE ARE SOFTWARES, WHICH ARE USED BY THE ASSESSEE FOR ITS S PECIFIC BUSINESS PURPOSES. A PERUSAL OF THE DECISION OF THE BOMBAY H IGH COURT IN THE CASE OF CIT VS.I-FLEX SOLUTIONS LTD., IN [2014] 46 TAXMANN.COM 88(BOM.) SAYS THAT THE APPELLATE AUTHORITY THEREIN HAD HELD THAT THE SOFTWARE THEREIN WAS AN INTEGRAL PART OF THE COMPUT ER. THE SOFTWARE IN THE CASE OF THE ASSESSEE IS NOT AN INTEGRAL PART OF THE COMPUTER, BUT ARE SOFTWARES WHICH ARE USED IN THE COMPUTERS FOR T HE SPECIFIC BUSINESS PURPOSE OF THE ASSESSEE. FOR COMPUTER TO RUN THERE ARE BASIC SPECIFIC SOFTWARE, THESE SOFTWARES ARE AN INTEGRAL PART OF THE COMPUTER. AS WITHOUT SUCH SOFTWARE, THE COMPUTER WOULD BE JUS T A BOX INCAPABLE OF DOING ANYTHING OR FUNCTION AS A COMPUTER. NOW TO SUCH A COMPUTER, FURTHER SOFTWARES ARE ADDED, DEPENDING UPON THE BUS INESS REQUIREMENTS OF THE ASSESSEE, THOSE SOFTWARES ARE N OT AN INTEGRAL PART OF THE COMPUTERS. IN THE PRESENT CASE, THE SOFTWARE S ON WHICH THE ASSESSEE IS CLAIMING DEPRECIATION @ 60% ARE NOT SUC H SOFTWARES, WHICH ARE THE INTEGRAL PART OF THE COMPUTERS, BUT T HAT THE LIST OF SOFTWARE MENTIONED BY THE ASSESSEE, WHICH ARE USED FOR THE SPECIFIC ITA NO.113/CHNY/2017 :- 19 - : BUSINESS PURPOSE OF THE ASSESSEE, IN CONSEQUENCE TH E SAME CANNOT BE HELD AS INTEGRAL PART OF THE COMPUTER, AND CANNOT B E ELIGIBLE FOR DEPRECIATION @ 60%. GROUND NO.12 OF THE ASSESSEES APPEAL STANDS DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 30 TH OCTOBER, 2018, AT CHENNAI. SD/ - SD/ - ( ) (S. JAYARAMAN) # !$ /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) % !$ / JUDICIAL MEMBER ) $ / CHENNAI * / DATED: 30 TH OCTOBER, 2018. K S SUNDARAM + !%,- . -% / COPY TO: 1 . / APPELLANT 3. # /% () / CIT(A) 5. -23 !%4 / DR 2. !' / RESPONDENT 4. # /% / CIT 6. 35 6$ / GF