Swiss Re Shared Services (India) Private Limited, Bangalore V. DCIT, Bangalore

ITA 1139/BANG/2011

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5388 (ITAT-BANGALORE)
• Duration Of Justice: 5 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-12-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 22-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAMPATH RAGHUNATHAN
• Keywords: Depreciation; Transfer pricing; International transaction; Additional evidence; Wholly owned subsidiary; Bad and doubtful debts

Judgement Text

IT(TP)A.1139 & 1205/BANG/2011 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BENGALURU BENCH 'C', BENGALURU BEFORE SHRI. VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI. S. JAYARAMAN, ACCOUNTANT MEMBER I.T(TP).A NO.1139/BANG/2011 (ASSESSMENT YEAR : 2004-05) SWISS RE SHARED SERVICES (INDIA) P. LTD, 2 ND TO 6 TH FLOOR, VASWANI CENTROPOLIS, NO.21, LANGFORD ROAD, BENGALURU 560 027 .. APPE LLANT PAN : AFCPR5285B V. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 12(3), BENGALURU .. RESPONDENT I.T(TP).A NO.1205/BANG/2011 (ASSESSMENT YEAR : 2004-05) DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 12(3), BENGALURU .. APPELLANT V. SWISS RE SHARED SERVICES (INDIA) P. LTD, 2 ND TO 6 TH FLOOR, VASWANI CENTROPOLIS, NO.21, LANGFORD ROAD, BENGALURU 560 027 .. RESP ONDENT PAN : AFCPR5285B ASSESSEE BY : SHRI. SAMPATH RAGHUNATHAN, ADVOCATE REVENUE BY : SHRI. M. K. BIJU, JCIT HEARD ON : 07.02.2017 PRONOUNCED ON : 03.05.2017 O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER : THESE APPEAL AND CROSS APPEAL ARE FILED BY THE ASS ESSEE AND THE REVENUE AGAINST THE ORDER OF THE CIT (A) IV, BENGA LURU, DT.23.09.2011, FOR THE ASSESSMENT YEAR 2004-05. IT(TP)A.1139 & 1205/BANG/2011 PAGE - 2 02. SWISS RE SHARED SERVICES (INDIA) PRIVATE LIMITE D , THE ASSESSE, WAS INCORPORATED ON AUGUST 18, 2000, IS A WHOLLY OWNED SUBSIDIARY OF SWISS REINSURANCE COMPANY, ZURICH. IT IS PROVIDING IT ENA BLED BACK-OFFICE SERVICES IN THE FIELD OF INSURANCE FOR ITS GLOBAL A FFILIATES VIZ CONTRACT ADMINISTRATION, CLAIMS ADMINISTRATION, TECHNICAL IN SURANCE ACCOUNTING SUPPORT AND OTHER SERVICES. IT IS REGISTERED UNDER THE SOFTWARE TECHNOLOGY PARKS OF INDIA ('STPI') SCHEME WITH THE GOVERNMENT OF INDIA, BASED IN BANGALORE AND IS ELIGIBLE TO CLAIM TAX BENEFIT UNDE R SECTION 10A . FOR THE ASSESSMENT YEAR 2004-05, ON ITS INTERNATIONAL TRANS ACTIONS IN PROVIDING ITE SERVICES (NON-VOICE BASED) TO ITS GROUP COMPANIES, THE ASSESSEE HAD UNDERTAKEN ANALYSIS SELECTING THE TNMM AS THE MOS T APPROPRIATE METHOD. FOR THE 16 COMPANIES IDENTIFIED AS COMPARABLES , IT ARRIVED THE OPERATING PROFIT EARNED ON OPERATING COSTS ,AFTER PROVIDING 2 % WORKING CAPITAL ADJUSTMENT, AT 14% . SINCE THE ASSESSEES OPERATIN G PROFIT EARNED ON OPERATING COSTS WAS AT 9 % , IT CONSIDERED THAT THE PRICE CHARGED BY THE IT WAS WITHIN +5% AND HENCE ITS TRANSACTIONS ARE AT A RMS LENGTH. 04. THE TPO DID NOT CONCUR WITH THE TP ANALYSIS UN DERTAKEN BY THE ASSESSEE. BEFORE THE TPO , THE ASSESSE PROPOSED ANO THER 6 COMPARABLES. IN HIS TP ORDER DT.12.12.2006, THE TPO RETAINED 5 COMPARABLES , OUT OF 22 CHOSEN BY THE ASSESSEE , INTRODUCED 3 NEW COMPARA BLES AND COMPUTED THE AVERAGE NET MARGIN OF THE COMPARABLES AT 33.33 % ON OPERATING COST (AFTER PROVIDING A WORKING CAPITAL ADJUSTMENT OF 1. 82%) AS AGAINST 14% ORIGINALLY COMPUTED BY THE ASSESSEE. ACCORDINGLY, THE TPO MADE AN IT(TP)A.1139 & 1205/BANG/2011 PAGE - 3 ADDITION OF RS.1,58,56,899/- TO THE TOTAL INCOME I N CONNECTION WITH ITS INTERNATIONAL TRANSACTION. 05. ON THE ASSESSEES OBJECTIONS, THE CIT(A) E XCLUDED 3 COMPARABLES (2 ON THE GROUND OF RPT AND ONE THE GROUND OF ABNOR MAL LOSSES IE NORMALISATION OF EXPENSES MADE BY THE TPO IS REJECT ED), MADE CERTAIN CORRECTIONS ON THE MARGIN COMPUTATIONS AND COMPUT ED THE AVERAGE NET MARGIN OF THE REMAINING 5 COMPARABLES AT 33.19 % ON OPERATING COST (AFTER PROVIDING A WORKING CAPITAL ADJUSTMENT OF 1.15%) AN D THUS CONFIRMED THE ADDITION AT RS.1,02,78,529/-ONLY. AGGRIEVED, THE A SSESSE FILED THIS APPEAL WITH THE FOLLOWING GROUNDS . IT(TP)A.1139 & 1205/BANG/2011 PAGE - 4 IT(TP)A.1139 & 1205/BANG/2011 PAGE - 5 06. SUBSEQUENTLY, THE ASSESSEE FILED ADDITIONAL GRO UNDS OF APPEAL WITH THE FOLLOWING SUBMISSIONS: IT(TP)A.1139 & 1205/BANG/2011 PAGE - 6 6.1 ASSESSEES PRAYER FOR ADMISSION OF ADDITIONAL G ROUNDS ARE AS UNDER : IT(TP)A.1139 & 1205/BANG/2011 PAGE - 7 6.2 ADDITIONAL GROUNDS OF APPEAL : 07. AGGRIEVED ON THE DECISION OF THE CIT (A), THE R EVENUE ALSO FILED ITS CROSS APPEAL AND REVISED ITS GROUNDS AS UNDER: IT(TP)A.1139 & 1205/BANG/2011 PAGE - 8 08. ON THE ADMISSION OF ADDITIONAL GROUNDS WE HEARD THE RIVAL SUBMISSIONS AND ADMIT THEM ON THE MERITS OF THE ASSESSEES SUBMISSIONS EXTRACTED, SUPRA, AND ALSO FOR THE REA SON THAT THEY ARE BASED ON PRECEDENTS SET BY THE TRIBUNAL AND DOES NOT REQU IRE ANY ADDITIONAL EVIDENCE/ EXAMINATION BY THE LOWER AUTHORITIES. 09. BEFORE US, THE AR PRESSED FOR GROUND NO 4 A & B AND THROUGH THE ABOVE ADDITIONAL GROUNDS REJECTION OF TRICOM INDIA PRIVATE LTD, ULTRAMARINE & PIGMENTS LTD, WIPRO BPO SOLUTIONS LTD, FORTUNE IN FOTECH LTD, VISHAL INFORMATION TECHNOLOGY LTD, AIR LINE FINANCIAL SUPP ORT SERVICES INDIA LTD AND RECTIFICATION OF NCP MARGIN OF NUCLEUS NETSOFT & GIS INDIA LTD . ON REJECTION OF TRICOM INDIA PRIVATE LTD , WIPRO BPO S OLUTIONS LTD, FORTUNE IT(TP)A.1139 & 1205/BANG/2011 PAGE - 9 INFOTECH LTD AND VISHAL INFORMATION TECHNOLOGY LT D, HE RELIED ON THIS TRIBUNAL DECISION IN THE CASE OF 24/7 CUSTOMER.COM P LTD V DCIT , CIRCLE 11(2), BANGALORE [2013] 140 ITD 344 (ITAT[BANG]) OF ASSESSMENT YEAR 2004-05 IN IT A NO. 227 (BANG) OF 2010 , WHICH WAS ENGAGED IN THE BUSINESS OF CALL CENTRE SERVICES EXCLUSIVELY TO ITS AES. ON REJECTION OF ULTRAMARINE & PIGMENTS LTD, THE AR RELIED ON THE HY DERABAD TRIBUNAL DECISION IN THE CASE OF BRIGADE GLOBAL SERVICES P L TD V ITO [2013] 33 TAXMANN.COM 618 (HYD) WHICH WAS ENGAGED IN PROVIDIN G BACK OFFICE PROCESSING SERVICES. 9.1 LET US EXAMINE THE RELEVANT PORTION OF THE ORDE R FROM 24/7 CUSTOMER.COM P LTD V DCIT , CIRCLE 11(2), BANGALORE [2013] 140 ITD 344 (ITAT[BANG]) AS UNDER : 15. COMPARABLES COMPANIES OWNING INTANGIABLES 15.1 IN GROUND NO. 1, THE ASSESSEE HAS CONTENDED TH AT THE LEARNED CIT (APPEALS) ERRED IN ACCEPTING COMPARABLE COMPANIES OWNING INTA NGIBLES AS PROPOSED BY THE TPO. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A CAPTIVE SERVICE PROVIDER ENGAGED IN THE BUSINESS OF PROVIDI NG CALL CENTRE SERVICES AND WOULD FALL UNDER THE IT ENABLED SERVICE SECTOR. IT IS ARG UED THAT WHILE THE ASSESSEE DOES NOT OWN BRAND INTANGIBLES SOME OF THE COMPARABLES C HOSEN BY THE TPO HAVE THEIR OWN, SOFTWARE PRODUCTS AND HENCE OWN INTANGIBLES. I T IS SUBMITTED THAT SUCH COMPANIES, HAVING THE ABILITY TO DELIVER SERVICES, PENETRATE THE MARKET AND PROVIDE FASTER DELIVERY, OUGHT NOT TO HAVE BEEN TAKEN AS CO MPARABLE COMPANIES AS HAS BEEN DONE IN THE CASE OF WIPRO BPO LTD., TRICOM IND IA LTD. AND FORTUNE INFOTECH LTD. IT IS URGED THAT THESE COMPANIES OUGHT TO BE E XCLUDED FROM THE LIST OF COMPARABLES. THE LEARNED COUNSEL FOR THE ASSESSEE A RGUED THAT INTANGIBLE ASSETS, IN THE NORMAL COMMERCIAL SENSE, ARE THOSE WHICH HAVE I NTRINSIC PRODUCTIVE VALUE, EVEN THOUGH THEY MAY NOT HAVE ANY INTANGIBLE FORM AND SU BSTANCE SUCH AS RESEARCH & DEVELOPMENT, PATENTS AND SOFTWARE. HE QUOTED FROM T HE SYNTHESIS REPORT OF THE OECD, WHICH FORMS PART OF THE PAPER BOOKS, TO STRES S THAT INTANGIBLE ASSETS PLAY AN IMPORTANT ROLE IN VALUE CREATION AND ENABLING PRODU CTIVITY AND EFFICIENCY TO REAP ECONOMIC GAINS. IT WAS CONTENDED THAT IN THE SERVIC E INDUSTRY, SERVICE PROVIDERS WHO HAVE BETTER BRAND OR OTHER INTANGIBLE ASSETS GE T BETTER PREMIUM FOR THEIR SERVICES, AS IN THE CASE OF SOME OF THE COMPARABLE COMPANIES SELECTED BY THE TPO. WHEREAS, IT IS SUBMITTED THAT, THE ASSESSEE IS ONLY RENDERING CALL CENTRE SERVICES IT(TP)A.1139 & 1205/BANG/2011 PAGE - 10 AND DOES NOT POSSESS ANY INTANGIBLES NOR DOES IT DE RIVE ANY BENEFIT FROM INTANGIBLES IN PROVIDING THESE SERVICES. 15.2 THE LEARNED DEPARTMENTAL REPRESENTATIVE ON HIS PART SUPPORTED THE ORDERS OF THE LEARNED CIT (APPEALS) WHICH HE CONTENDED WAS WE LL EXPLAINED. IT WAS SUBMITTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE ASSESSEE HAD NOT POINTED OUT ANY PROVISIONS IN THE ACT OR RULES OR OECD GUIDELIN ES WHICH IMPOSES ANY PROHIBITION IN TAKING COMPARABLES WITH INTANGIBLES SO LONG AS T HERE IS FUNCTIONAL SIMILARITY OF COMPARABLES VIS--VIS THE TESTED PARTY. THE LEARNED DEPARTMENTAL REPRESENTATIVE ARGUED THAT BRANDS CAN GIVE BUSINESS BUT NOT PROFIT S. THE LEARNED DEPARTMENTAL REPRESENTATIVE POINTED OUT THE ASSESSEE ITSELF DOES NOT HAVE ANY CONSISTENT STAND IN THE MATTER AS IN ITS OWN T.P. STUDY THE ASSESSEE HAS TAKEN COMPANIES LIKE TATA SHARE REGISTRY AND MAX HEALTH WHICH HAD THEIR OWN I NTANGIBLES. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ARGU MENTS PUT FORTH BY THE ASSESSEE SHIFTED TO SUITE ITS OWN PURPOSE. IN THESE CIRCUMSTANCES, THE LEARNED DEPARTMENTAL REPRESENTATIVE CONTENDED THAT THE FIND INGS OF THE LEARNED CIT (APPEALS) BE UPHELD. 15.3.1 WE HAVE HEARD BOTH PARTIES AND HAVE CAREFULL Y PERUSED AND CONSIDERED THE SUBMISSIONS MADE, DETAILS FILED AND MATERIAL ON REC ORD. IT IS A WELL ACCEPTED PRINCIPLE THAT ONLY THOSE COMPANIES WHICH ARE ON SI MILAR STANDARDS NEED TO BE CONSIDERED FOR COMPARABILITY. IN THIS CONTEXT, A CO -ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF GENISYS INTEGRATING SYSTEMS (INDIA) (P. ) LTD. (SUPRA ) HAS REITERATED THAT ALL THE COMPARABLES HAVE TO BE COMPARED ON SIM ILAR STANDARDS. THEREFORE, COMPANIES WHICH POSSESS THEIR OWN UNIQUE SOFTWARE I NTANGIBLES CANNOT BE COMPARED WITH THE ASSESSEE, AS THE FORMER WOULD DER IVE SIGNIFICANT ADVANTAGE FROM UNIQUE SOFTWARE COMPARED WITH THE ASSESSEE, WHICH I S PERFORMING CALL CENTRE SERVICES FOR IT'S A.E. IN THE USA. 15.3.2 IN THE CASE OF M/S. WIPRO BPO LTD., THIS COM PARABLE IS UNDER CONSIDERATION FOR EXCLUSION AS A COMPARABLE, IN THIS CASE FOR THI S ASSESSMENT YEAR 2004-05, ON ACCOUNT OF THE APPLICATION OF THE TURNOVER FILTER O F RS. 1 CRORE TO RS. 200 CRORES. (REFER PARA 14.3 SUPRA) 15.3.3 IN RESPECT OF M/S. TRICOM INDIA LTD., THE LE ARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT IT HAS REGISTERED AN ABNORMAL GROWTH OF 33% INCREASE IN PAT IN THE RELEVANT PERIOD DUE TO THE FACT THAT IT HAS DEVELOP ED ITS UNIQUE SOFTWARE TO PROVIDE BPO SERVICES TO ITS CUSTOMERS. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRED TO THE ANNUAL REPORT OF THIS COMPARABLE, WHEREIN IT IS MEN TIONED THAT IT DOES SPECIALIZED SERVICES SUCH AS TITLE PLANT MAINTENANCE AND ELECTR ONIC DATA DISCOVERY WHICH GIVES IT AN EDGE OVER OTHER INDIAN COMPANY COMPETITION TH EREBY ENABLING IT TO GENERATE HIGHER REVENUES AND MARGINS. IT WAS ALSO SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT IT HAS A PROCESS OF CONTINUOUS IN HOU SE R & D PROCESS FOR UPGRADATION OF SOFTWARE AND TRAINING ITS PROFESSION ALS TO DEVELOP ITS OWN SOFTWARE TO CATER TO THE NEEDS OF ITS CLIENTS. ON APPRAISAL OF THE SUBMISSIONS AND THE MATERIAL ON RECORD, IT WOULD CERTAINLY STAND TO REASON THAT A COMPANY HAVING UNIQUE SOFTWARE DEV ELOPED IN HOUSE WHICH ALSO RENDERS SPECIALIZED SERVICES IN ITS AREA OF SPECIAL IZATION GETS THAT SORT OF COMPETITIVE EDGE THAT GIVES IT AN ADVANTAGE. APPLYING THE PRINC IPLE THAT COMPANIES WHICH ARE ON SIMILAR STANDARDS ONLY SHOULD BE TAKEN AS COMPARABL ES, WE HOLD THAT THIS COMPANY IT(TP)A.1139 & 1205/BANG/2011 PAGE - 11 WHICH HAS UNIQUE INTANGIBLES CANNOT BE TAKEN AS A C OMPARABLE FOR THE ASSESSEE AND ACCORDINGLY DIRECT THE ASSESSING OFFICER / TPO TO E XCLUDE IT FROM THE LIST OF COMPARABLES IN THIS CASE. M/S. FORTUNE INFOTECH LTD. 15.3.4 THE LEARNED COUNSEL FOR THE ASSESSEE CONTEND ED THAT THIS COMPANY WAS USING WEB BASED SOFTWARE, UNIQUE TECHNOLOGY AND TEC HNICAL KNOW HOW IMPORTED FROM ITS BUSINESS PARTNER FOR PROVIDING BPO SERVICE S AND SUBMITTED LETTER DT.11.9.2012, ENCLOSING WEB SITE EXTRACTS DETAILING THE INTANGIBLES DEVELOPED BY THIS COMPANY. ON PERUSAL OF THE DETAILS FURNISHED AND SUBMISSIONS MADE, IT IS SEEN THAT THIS COMPANY HAS DEVELOPED ITS OWN SOFTWARE CALLED 'FINE TRAN' AND 'IMAGE INDEX' FOR PERFORMING SPECIALIZED SERVICES IN MEDICAL TRANSCRI PTION AND PATIENT RECORD MANAGEMENT. ON APPRAISAL OF THE SAME, WE ARE OF THE OPINION THAT THIS COMPARABLE COMPANY HAS DEVELOPED UNIQUE SOFTWARE FROM WHICH IT WOULD DERIVE SUBSTANTIAL BENEFITS/ADVANTAGES WHEN COMPARED WITH THE ASSESSEE WHICH IS UNDERTAKING PURE CALL CENTRE SERVICES. APPLYING THE PRINCIPLE THAT C OMPANIES WHICH ARE ON SIMILAR STANDARDS ONLY SHOULD BE TAKEN AS COMPARABLES, WE H OLD THAT THIS COMPANY WHICH HAS UNIQUE INTANGIBLES CANNOT BE TAKEN AS A COMPARA BLE FOR THE ASSESSEE AND ACCORDINGLY DIRECT THE ASSESSING OFFICER/TPO TO EXC LUDE IT FROM THE LIST OF COMPARABLES IN THIS CASE. 16. PARENT COMPANY LOSSES ................................................... ................................................... .............. ................................................... ................................................... .............. ................................................... ................................................... .............. ..................................... 17. INDIVIDUAL COMPANIES FOR COMPARABILITY 17.1 HAVING HELD THAT THERE WAS NO INFIRMITY IN THE ACTION OF THE TPO IN REJECTING THE TP STUDY OF THE ASSESSEE AND HAVING DECIDED THE PRINCIPLES AS DISCUSSED IN THE PRECEDING PARAGRAPHS, WE NOW PROCEED TO EXAMINE THE INDIVIDUAL COMPANIES CHOSEN AS COMPARABLES. AS MENTIONED EARLIER, THE ASSESSEE HAD SELECTED A LIST OF 7 COMPANIES IN THE TP STUDY. DURING THE TRANSFER PRIC ING AUDIT PROCEEDINGS, THE ASSESSEE UPDATED THE COMPARABILITY ANALYSIS BASED O N CURRENT YEAR'S DATA AND SUBMITTED A LIST OF SEVEN COMPARABLE COMPANIES. THE TPO CONSIDERED THE UPDATED SET OF COMPARABLES SUBMITTED BY THE ASSESSEE AND CO ME UP WITH A FINAL SET OF EIGHT COMPARABLE COMPANIES, WHICH ARE AS UNDER : IT(TP)A.1139 & 1205/BANG/2011 PAGE - 12 S.NO. NAME OF THE COMPARABLE OPERATING REVENUE OPERATING COST (OC) OPERATING PROFIT (OP) OP/OC 1. NUCLEUS NETSOFT & G.S. INDIA LTD. 1.66 1.94 0.28 16.87 % 2. VISHAL INFORMATION TECHNOLOGIES LTD. 9.37 13.88 4.51 48.13 % 3. WIPRO BPO LTD. 322.3 430.31 108.01 33.51 % 4. TRICOM INDIA LTD 6.34 9.24 2.90 45.74 % 5. FORTUNE INFOTECH LTD 8.08 11.28 3.30 40.84 % 6. SPARES TELESYSTEMS & SOLUTIONS LTD. 10.32 15.44 4.57 40.10 % 7. ULTRAMARINE PIGMENTS LTD. 6.18 10.99 3.91 63.27 % 8. ALLSEC TECHNOLOGIES LTD. 24.10 24.94 0.83 3.44 % ARITHMETICAL MEAN 36.49% FROM THE RECORD, IT IS SEEN THAT THE TPO REJECTED T HE TRANSFER PRICING DOCUMENTATION MENTIONED BY THE ASSESSEE MAINLY ON THREE PARAMETER S/DEFECTS NAMELY : (I) THE ASSESSEE DID NOT USE DATA OF THE RELEVANT F INANCIAL YEAR I.E. 2003-04 (II) THE ASSESSEE REJECTED CERTAIN COMPANIES AS COM PARABLES EVEN THOUGH THEY ARE FUNCTIONALLY COMPARABLE. (III) THE ASSESSEE CONSIDERED CERTAIN COMPANIES CAT ERING TO THE DOMESTIC SECTOR, WHEREAS THE ASSESSEE IS CATERING TO THE EXPORT SECT OR. 17.2 NUCLEUS NETSOFT GIS INDIA : IN RESPECT OF THIS COMPARABLE, BOTH THE ASSESSEE AND THE TPO AGREE THAT THERE IS NO DISPUTE AS THIS IS A COMPARABLE COMPANY. 17.3 VISHAL INFORMATION TECHNOLOGIES LTD. (VIT) IN THE CASE OF THIS COMPARABLE, WE FIND THAT THE MUMBAI TRIBUNAL IN THE CASE OF ASSTT. CIT V. MAERSK GLOBAL SERVICE CENTER (INDIA) (P.) LTD. [2011] 133 ITD 543 / 16 TAXMANN.COM 47 HAS HELD THAT SINCE VISHAL INFORMATION TECHNOLOGIES LTD IS OUTSOU RCING MOST OF ITS WORK IT HAS TO BE EXCLUDED FROM THE LIST WHEREAS THE ASSESSEE IN T HE CITED CASE WAS CARRYING OUT THE WORK BY ITSELF. IN THE INSTANT CASE OF THE ASSE SSEE ALSO THE ASSESSEE WAS CARRYING OUT ITS WORK BY ITSELF WHEREAS IN THE CASE OF VITL, IT IS OUTSOURCING MOST OF ITS WORK. WE ARE THEREFORE OF THE CONSIDERED OPINIO N THAT THE DECISION OF THE ITAT, MUMBAI IN THE CITED CASE ON THE ISSUE OF EXCLUDING VITL AS A COMPARABLE SQUARELY APPLIES. THIS DECISION WAS FOLLOWED BY THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF NETLINX INDIA (P.) LTD IN I TA NO.454/BANG/2011 DT.19.10.2012] WHEREIN IT WAS HELD THAT VISHAL INFO RMATION TECHNOLOGIES LTD CANNOT IT(TP)A.1139 & 1205/BANG/2011 PAGE - 13 BE CONSIDERED AS A COMPARABLE. WE, THEREFORE, RESPE CTFULLY FOLLOWING THE DECISION OF THE MUMBAI TRIBUNAL IN THE CASE OF MAERSK GLOBAL SE RVICE CENTRE (INDIA) (P.) LTD. CASE (SUPRA) DIRECT THE ASSESSING OFFICER/TPO TO EX CLUDE VISHAL INFORMATION TECHNOLOGIES LTD. FROM THE LIST OF COMPARABLES. WIPRO BPO LTD. 17.4 AS PER THE DETAILS ON RECORD, THE TURNOVER/REV ENUE OF WIPRO BPO LTD. IN THE PERIOD RELEVANT TO ASSESSMENT YEAR 2004-05 IS RS. 3 22 CRORES. FURTHER, THIS COMPANY HAVING THE INFLUENCE OF 'WIPRO' BRAND MAY B E SEEN AS HAVING ITS UNIQUE INTANGIBLES. FOLLOWING THE DECISION OF THE CO-ORDIN ATE BENCH OF THIS TRIBUNAL IN THE CASE OF GENISYS INTEGRATING SYSTEMS (INDIA) (P.) LT D. (SUPRA), WE HAVE ALREADY HELD THAT COMPANIES WHOSE TURNOVER IS OUTSIDE THE RANGE OF RS. 1 CRORE TO RS. 200 CRORES ARE TO BE EXCLUDED FROM THE SET OF COMPARABL ES AND ACCORDINGLY DIRECT THE ASSESSING OFFICER/TPO TO EXCLUDE WIPRO BPO LTD FROM THE LIST/SET OF COMPARABLE COMPANIES FOR THE ASSESSEE'S CASE IN ASSESSMENT YEA R 2004-05. TRICOM INDIA LTD. 17.5 THIS COMPARABLE HAS ALREADY BEEN CONSIDERED AN D DEALT WITH BY US IN PARA 15.3.3 OF THIS ORDER (SUPRA) WHEREIN WE HAVE DIRECT ED THE ASSESSING OFFICER/TPO TO EXCLUDE IT FROM THE LIST OF COMPARABLES FOR THE ASS ESSEE'S CASE IN ASSESSMENT YEAR 2004-05. FORTUNE INFOTECH LTD. 17.6 THIS COMPARABLE HAS ALSO BEEN CONSIDERED AND D EALT WITH BY US IN PARA 15.3.4 OF THIS ORDER (SUPRA) WHEREIN WE HAVE DIRECTED THE ASSESSING OFFICER/TPO TO EXCLUDE IT FROM THE LIST OF COMPARABLES FOR THE ASSESSEE'S CASE FOR ASSESSMENT YEAR 2004- 05. THUS, THE TRIBUNAL HAS EXAMINED AND EXCLUDED TRICO M INDIA PRIVATE LTD , WIPRO BPO SOLUTIONS LTD, FORTUNE INFOTECH LTD AND VISHAL INFORMATION TECHNOLOGY LTD FROM THE LIST OF COMPARABLES ON THRE E COUNTS VIZ THOSE COMPARABLES WHICH HAVE RPT IN EXCESS OF 15% OF THE TOTAL TURNOVER AFTER DUE VERIFICATION, ON THE TURNOVER FILTER OF RS ONE CRORE TO RS.200 CRORE (WIPRO BPO SOLUTIONS LTD WAS EXCLUDED) AND ON FUN CTIONAL DISSIMILARITY (TRICOM INDIA PRIVATE LTD , WIPRO BPO SOLUTIONS LTD , FORTUNE INFOTECH LTD AND VISHAL INFORMATION TECHNOLOGY LTD WERE EXCLUDE D). APPLYING IT, WE DIRECT THE ASSESSING OFFICER/TPO TO EXCLUDE, TRICO M INDIA PRIVATE LTD , IT(TP)A.1139 & 1205/BANG/2011 PAGE - 14 WIPRO BPO SOLUTIONS LTD, FORTUNE INFOTECH LTD AND VISHAL INFORMATION TECHNOLOGY LTD FROM THE LIST OF COMPARABLES ON FUN CTIONAL DISSIMILARITY. THE TRIBUNAL IN THE ABOVE DECISION UPHELD EXCLUSION O F WIPRO BPO SOLUTIONS LTD ON THE BASIS OF TURNOVER FILTER OF RS ONE CRORE TO RS.200 CRORE ALSO. EARLIER, THE ITAT HAD ACCEPTED THE TURNOVER RANGE OF RS. 1 T O 200 CRORES AND OBSERVED THAT THIS RANGE CANNOT BE FIXED, AS FACTS MAY VARY FROM CASE TO CASE. BUT THIS METHOD OF ADOPTING 200 CRORES WITHO UT ANY PROPER BASIS OR LOGIC RESULTED IN UNREASONABLE JUDGEMENTS. HENCE , THE ITAT IN MCAFEE RULING HELD THAT A RANGE OF UPPER LIMIT AT T EN TIMES AND LOWER LIMIT OF TEN TIMES I.E., ONE TENTH CAN BE ADOPTED. THE IT AT IN THAT CASE ALSO HELD THAT THERE COULD MARGIN OF VARIATIONS BUT THES E BROAD PARAMETERS COULD BE ADOPTED ON UNIFORM BASIS. IN THE ASSESSEES CASE , ITS TURNOVER, AS PER ASSESSMENT ORDER IS RS.9.35 CRORES. THEREFORE, FOLL OWING MCAFEE RULING, THE RANGE WOULD BE 0.95 CRORE TO 93.5 CRORES. AS PE R THE TRIBUNAL DECISION, SUPRA, THE TURNOVER/REVENUE OF WIPRO BPO LTD. IN TH E PERIOD RELEVANT TO ASSESSMENT YEAR 2004-05 IS RS. 322 CRORES. THEREFOR E, WIPRO BPO SOLUTIONS LTD DOES NOT FALL WITHIN THE SAID RANGE A ND HENCE IT SHOULD BE EXCLUDED ON TURNOVER FILTER ALSO. TO THIS EXTENT, T HE ASSESSEES APPEAL IS ALLOWED. HOWEVER, THE REVENUE IS ON APPEAL AGAINST THE DECISION OF THE CIT (A) ON THE APPLICATION OF THE 0% RPT FILTER. APPLY ING THE ABOVE DECISION, WE DIRECT THE ASSESSING OFFICER/TPO TO EXCLUDE THOSE COMPARABLES WHICH HAVE RPT IN EXCESS OF 15% OF THE TOTAL TURNOVER AFTER DU E VERIFICATION. TO THIS EXTENT, THE REVENUES APPEAL IS ALSO ALLOWED. IT(TP)A.1139 & 1205/BANG/2011 PAGE - 15 10. THE AR PLEADED THAT THE COMPARABLE ULTRAMARINE PIGMENTS LTD IS TO BE EXCLUDED ON VARIOUS GROUNDS INCLUDING ON ABNORMA L MARGIN AND THE GIST HIS SUBMISSIONS ARE EXTRACTED AS UNDER : IT(TP)A.1139 & 1205/BANG/2011 PAGE - 16 AND THE AR RELIED ON THE HYDERABAD TRIBUNAL DECISIO N IN THE CASE OF BRIGADE GLOBAL SERVICES P LTD V ITO [2013] 33 TAXMANN.CO M 618 (HYD) WHICH WAS ENGAGED IN PROVIDING BACK OFFICE PROCESSING SERVICE S. HE HAS SUBMITTED THAT IF THIS COMPARABLE IS INCLUDED INSPITE OF THIS SUBM ISSION, THEN THE COMPARABLE ALLSEC TECHNOLOGIES LTD SHOULD ALSO BE I NCLUDED DESPITE ABNORMAL LOSSES VIDE HIS APPEAL GROUNDS 4A, 4B & TH E ADDITIONAL GROUNDS. LET US EXAMINE THE RELEVANT PORTION OF THE ORDER FR OM BRIGADE GLOBAL SERVICES P. LTD V. ITO [(2013) 33 TAXMANN.COM 618 ( HYD) AS UNDER : IT(TP)A.1139 & 1205/BANG/2011 PAGE - 17 39. THE AUTHORISED REPRESENTATIVE SUBMITTED IN RES PECT OF ULTRAMARINE & PIGMENT LTD. (ITEM NO. 17 IN THE CHART) INTRODUCED BY THE A SSESSEE AND ACCEPTED BY THE LOWER AUTHORITIES BUT LATER ON REJECTED BY THE ASSE SSEE ON THE GROUND THAT DURING THE CURRENT FINANCIAL YEAR, THE COMPANY HAD MADE AB NORMAL PROFITS. THE AUTHORISED REPRESENTATIVE SUBMITTED THAT THE COMPANY SHOWING A BNORMAL PROFITS, WHICH IS BEYOND THE NORMS OR THE STANDARDS OF INDUSTRY CANNO T BE TAKEN AS COMPARABLES. RELIANCE FOR THIS PROPOSITION IS PLACED ON THE DECI SION OF THE MUMBAI BENCH IN THE CASES OF ADOBE SYSTEMS INDIA P. LTD. V. ADDL.CIT [2 012] 14 ITR (TRIB) 84 (DELHI), ITO V. SAUNAY JEWELS P. LTD. [2010] 42 SOT 4 (MUM), MENTOR GRAPHICS (NOIDA) P. LTD. V. DEPUTY CIT [2007] 109 ITD 101 (DELHI) AND THE CASE OF THE INCOME-TAX APPELLATE TRIBUNAL, PUNE BENCH IN THE CASE OF E-GAI N COMMUNICATION P. LTD. V. ITO [2008] 118 TTJ (PUNE) 354 AND SAPIENT CORPORATION P. LTD. V. DEPUTY CIT [201 2] 15 ITR (TRIB) 285 (DELHI). 40. THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT M/S. ULTRAMARINE PIGMENTS LTD. CANNOT BE EXCLUDED FROM COMPARABLES. ACCORDING TO T HE ASSESSEE'S COUNSEL, THE ASSESSING OFFICER WAS NOT CORRECT IN ACCEPTING THIS COMPANY WHICH HAS 123 PER CENT. INCREASE IN REVENUE IN ONE YEAR, AS A COMPARA BLE IN THIS CASE. HOWEVER, THE ASSESSEE ITSELF HAS PROPOSED THIS COMPANY AS A COMP ARABLE IN THEIR TRANSFER PRICING DOCUMENTATION. FURTHER, IT IS SEEN THAT THE TRANSFE R PRICING OFFICER HAS CONSIDERED ONLY THE SEGMENTAL RESULTS, PERTAINING TO THE FINAN CIAL YEAR 2003-04 IN THE CASE OF THE ABOVE COMPANY FOR COMPARABILITY ANALYSIS IN THI S CASE. AS PER THE FINANCIAL DATA PERTAINING TO SUCH SEGMENTAL RESULTS, THE AMOUNT OF INCOME IS SHOWN AT RS. 10.9 CRORES, WHICH IS COMPARABLE, KEEPING IN VIEW THE TU RNOVER OF RS. 13.05 CRORES SHOWN BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2004- 05. IT IS ALSO RELEVANT TO MENTION HERE THAT, THE TRANSFER PRICING OFFICER HAS NOTED THAT THE EXTRAORDINARY PROFITS EARNED IN SUBSEQUENT FINANCIAL YEAR 2004-05 , IS NOT RELEVANT AS THE MATTER HERE PERTAINS TO FINANCIAL YEAR 2003-04. HAVING REG ARD TO SUCH FACTS, THE TRANSFER PRICING OFFICER WAS JUSTIFIED IN CONSIDERING THE SE GMENTAL RESULTS IN RESPECT OF THE ABOVE COMPANY, FOR COMPARABILITY ANALYSIS IN THIS C ASE. ACCORDINGLY, THE ASSESSING OFFICER WAS ALSO JUSTIFIED IN ACCEPTING SUCH SEGMEN TAL RESULTS IN RESPECT OF THE ABOVE COMPANY FOR COMPARABILITY ANALYSIS IN THIS CA SE. 41. WE HAVE HEARD BOTH PARTIES ON THIS ISSUE. IT IS AN ADMITTED FACT THAT THE CASES WHICH WERE SHOWING ABNORMAL TRADING RESULTS, AS DIS CUSSED IN THE EARLIER PARAS, BY RELYING ON THE ORDER OF THE BANGALORE BENCH IN THE CASE OF GENISYS INTEGRATING SYSTEMS (INDIA) P. LTD. [2012] 15 ITR (TRIB) 475 (BANG), COMPANIES SHOWING ABNORMAL RESULTS CANNOT BE CONSIDERED AS COMPARABLE S. IT IS AN ADMITTED VIEW THAT THE COMPANIES MAKING ABNORMAL PROFITS AS COMPARED T O THE ASSESSEE CANNOT BE CONSIDERED AS COMPARABLES WHILE DETERMINING THE ARM 'S LENGTH PRICE. FOR THIS PURPOSE WE PLACE RELIANCE ON THE DECISION OF THE SP ECIAL BENCH IN THE CASE OF DEPUTY CIT V. QUARK SYSTEMS P. LTD. [2010] 4 ITR (TRIB) 606 (CHANDIGARH) [SB]. ACCORDINGLY, IN OUR OPINION, SUPER PROFIT COMPANIES PER SE ARE LIABLE TO BE EXCLUDED FROM THE COMPARABLES. FROM THE ABOVE, IT IS CLEAR THAT THE ASSESSEE HAS MADE OUT A CLEAR CASE IN ITS FAVOUR. SINCE, THE TRIBUNAL AFTER DUE A NALYSIS HAS EXCLUDED IT(TP)A.1139 & 1205/BANG/2011 PAGE - 18 ULTRAMARINE PIGMENTS LTD, APPLYING IT THE AO/TPO IS DIRECTED TO EXCLUDE THIS COMPARABLE ON THE GROUND OF SUPER PROFITS .ASSESSE ES GROUNDS OF APPEAL ALLOWED TO THIS EXTENT. 11. THE NEXT ISSUE IS SEEKING EXCLUSION OF THE COMP ARABLE AIR LINE FINANCIAL SUPPORT SERVICES INDIA LTD. THE AR PLEADE D THAT DESPITE THIS COMPARABLE BEING A JV BETWEEN TATA SONS & SWISSAIR AND A PREDOMINANTLY A CAPTIVE SERVICE PROVIDER , IT IS INCLUDED AS A COMP ARABLE THE GIST HIS SUBMISSIONS ARE EXTRACTED AS UNDER: IT(TP)A.1139 & 1205/BANG/2011 PAGE - 19 WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUG H RELEVANT MATERIAL. SINCE THE LOWER AUTHORITIES HAD NO OCCASI ON TO EXAMINE THESE ASPECTS , WE DEEM IT FIT TO REMIT THIS ISSUE BACK T O THE TPO FOR RE- EXAMINATION AND RE-ADJUDICATION IN ACCORDANCE WITH LAW AFTER AFFORDING DUE OPPORTUNITY TO THE ASSSESSEE. 12. THE NEXT ISSUE IS THAT THE REVENUES APPEAL GRO UND THAT THE LD CIT(A) ERRED IN HOLDING THAT FOREIGN EXCHANGE LOSS OR GAIN, AMORTISATION EXPENSES OF PRE-OPERATIVE AND PRELIMINARY EXPENSES, FOREX LOSSES, BAD DEBTS WRITTEN OFF AND FIXED ASSETS WRITTEN OFF ETC FROM THE COST BASE ARE PARTS OF OPERATING COST OR OPERATING INCOME, AS THE CASE MAY BE, WHEN THE TPO HAS EXCLUDED THIS DATA FROM THE COMPARABLES. IN THIS REGARD, THE CIT (A) HELD THAT IT IS ALSO SUBMITTED THAT WHILE COMPUTING THE MARGINS OF THE COMPARABLE COMPANIES, THE LEARNED TPO HAS EXCLUDED CERTAIN COSTS SUCH AS AMORTISATION EXPENSE S OF PRE-OPERATIVE AND PRELIMINARY EXPENSES, FOREX LOSSES, BAD DEBTS WRITT EN OFF AND FIXED ASSETS WRITTEN OFF ETC FROM THE COST BASE. FURTHER IN RESPECT OF M /S. FORTUNE LNFOTECH LTD AND M/S. NUCLEUS NET SOFT & GIS INDIA LTD, THE TPO HAS ERRON EOUSLY COMPUTED THE MARK UP. IN THIS RESPECT, IT IS SUBMITTED THAT SUCH EXPENSES ARE INCURRED BY THE ENTERPRISE IN ITS NORMAL COURSE OF BUSINESS ASSOCIA TED WITH SUCH COSTS ARE FACTORED INTO THE SALE PRICE AT THE TIME OF DETERMI NATION OF THE SALE PRICE OF THE SERVICES. THEREFORE, EXCLUSION OF SUCH COSTS FO R THE PURPOSE OF THE CALCULATION OF OPERATING PROFITS WOULD NOT BE IN LI NE WITH THE AUDITED ACCOUNTS. OUT OF THE FINAL COMPARABLES SELECTED, IT IS NOTICE D THAT IN THE CASE OF MIS. NUCLEUS NET SOFT & GIS INDIA LTD AND AIRLINE FINANCIAL SERV ICES LTD, THE TPO HAS EXCLUDED BAD DEBTS FROM THE OPERATING COST, THE BAD DEBTS IS AN EXTRAORDINARY EXPENDITURE AND IT CANNOT BE SAID THAT THE BAD DEBTS ARE CONNECTED WIT H THE OPERATING PROFITS OF THE COMPANY OF THE RELEVANT YEAR, UNLESS IT IS PROVED T HAT THE BAD DEBTS ARE CONNECTED TO THE BUSINESS OF THE RELEVANT YEAR. THEREFORE, TH E TPO WAS JUSTIFIED IN IT(TP)A.1139 & 1205/BANG/2011 PAGE - 20 EXCLUDING THE BAD DEBTS FROM THE OPERATING COST .IN THE CASE OF FORTUNE INFOTECH ON PERUSAL OF THE PROFIT & LOSS A/C, IT IS NOTICED THA T THE NET OPERATING INCOME IS RS.11.37 CRORES, AGAINST WHICH THE OPERATING COST I NCLUDING THE DEPRECIATION WORKS OUT TO Z 8.64 CRORES. THUS THE OPERATING PROFIT WOR KS OUT TO RS. 2.73 CRORES WHICH WORKS OUT TO 31.59%, WHEREAS THE TPO HAS TAKEN THE OPERATING IR1ME AT RS. 11.26 CRORES, THE TOTAL EXPENSES AT RS 8.53 CRORES, OUT OF WHICH HE REDUCED THE AMORTISATION EXPENSES OF 14 LAKHS AND OTHER COST OF RS. 40 LAKHS AND CAME TO ADJUSTED PROFIT OF 40.84%, BUT NO REASONS FOR SUCH ADJUSTMENTS HAVE BEEN GIVEN, THE WORKING CAPITAL ADJUSTMENT HAVE BEEN ALL OWED AT 4.05%. THE UNDERSIGNED PERUSED THE CAPITALINE DATA BASE AND PROWESS DATA BASE FROM WHICH IT IS NOT POSSIBLE TO IDENTIFY THE COST OF RS. 40 IAKHS NOT C ONSIDERED BY THE TPO AS OPERATING COST. IN SUCH CIRCUMSTANCES THERE IS NO A LTERNATE BUT TO ACCEPT THE WORKING OF THE MARGIN AFTER THE WORKING CAPITAL ADJ USTMENT AT 28.43% AS COMPUTED BY THE APPELLANT. HOWEVER, THE APPELLANT W AS FAIR IN POINTING OUT THAT ACCORDING TO HIM THE POST WORKING MARGIN ON CO ST IN THE CASE OF TRICOM INDIA LTD WORKS OUT TO 44.11% INSTEAD OF 40.65% TAK EN BY THE TRANSFER PRICING OFFICER. THE MARGINS ARE ACCORDINGLY MODIFIED WHILE WORKING OUT THE ARITHMETIC MEAN OF THE MARGIN OF THE COMPARABLES. WE HAVE HEARD THE RIVAL SUBMISSIONS. FROM THE ABOVE , IT IS CLEAR THE CIT(A) HAS CONSIDERED THAT SUCH EXPENSES WHICH ARE INCURRED BY THE ENTERPRISE IN ITS NORMAL COURSE OF BUSINESS ASSOCIA TED WITH SUCH COSTS ARE FACTORED INTO THE SALE PRICE AT THE TIME OF DETERMINATION OF THE SALE PRICE OF THE SERVICES. THEREFORE, HE HELD THAT EXCLUSION OF SUCH COSTS FOR THE PURPOSE OF THE CALCULATION OF OPERATI NG PROFITS WOULD NOT BE IN LINE WITH THE AUDITED ACCOUNTS. FURTHER, OUT OF THE FINAL COMPARABLES SELECTED, THE CIT (A) HAS NOTICED THAT IN THE CASE OF M/S. NUCLEUS NET SOFT & GIS INDIA LTD AND AIRLINE FINANCIAL SERVICES LTD, T HE TPO HAS EXCLUDED BAD DEBTS FROM THE OPERATING COST AND HELD THAT THE BAD DEBTS IS AN IT(TP)A.1139 & 1205/BANG/2011 PAGE - 21 EXTRAORDINARY EXPENDITURE AND IT CANNOT BE SAID THA T THE BAD DEBTS ARE CONNECTED WITH THE OPERATING PROFITS OF THE COMPANY OF THE RELEVANT YEAR, UNLESS IT IS PROVED THAT THE BAD DEBTS ARE CONNECTE D TO THE BUSINESS OF THE RELEVANT YEAR. THEREFORE, THE CIT (A) HELD THAT THE TPO WAS JUSTIFIED IN EXCLUDING THE BAD DEBTS FROM THE OPERATING COST UNL ESS IT IS PROVED THAT THE BAD DEBTS ARE CONNECTED TO THE BUSINESS OF THE RELE VANT YEAR.. WHILE WE ARE UPHOLDING THESE PRINCIPLES, HOWEVER, WE REMIT THE M ATTER TO THE AO/TPO TO RE-EXAMINE AS TO WHETHER THERE IS ANY CALCULATION ERROR ADOPTED BY THE CIT(A)/ TPO IN APPLYING THESE PRINCIPLES AND IF SO, TO MAKE SUITABLE CORRECTION TO THAT EXTENT, AFTER AFFORDING DUE OPP ORTUNITY TO THE ASSESSEE. TO THIS EXTENT, THE REVENUES APPEAL IS TREATED AS ALLOWED. 13. IN THE NEXT GROUND THE ASSESSEE IS SEEKING CORR ECTION IN COMPUTING THE MARGIN OF NUCLEUS NETSOFT & GIS INDIA LTD. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE RELEVANT PORTION OF THE ORDER OF THE CIT (A) IS EXTRACTED IN PARA.12 (SUPRA ). HOWEVER, THIS ISSUE IS REMITTED BACK TO THE AO / TPO FOR RE-EXAMINATION AN D RECOMPUTATION OF THE MARGIN OF NUCLEUS NETSOFT & GIS INDIA LTD, AFTER AF FORDING DUE OPPORTUNITY TO THE ASSESSEE. THIS GROUND OF THE ASSESSEE IS ALLOW ED. 14. THE LAST ISSUE IS THAT THE REVENUES APPEAL GRO UND THAT THE LD CIT(A) ERRED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR A STANDARD DEDUCTION OF 5% FROM THE ARMS LENGTH PRICE DETERMINED BY THE TPO/A O. IT(TP)A.1139 & 1205/BANG/2011 PAGE - 22 WE HAVE HEARD THE RIVAL SUBMISSIONS. THE CIT (A) AL LOWED THIS CLAIM BASED ON THIS TRIBUNAL DECISION. NOW, THIS ISSUE IS A SETTLED ONE AND HENCE THE REVENUES GROUNDS FAIL. 15 IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED AND THE REVENUES CROSS APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD DAY OF MAY , 2017. SD/- SD/- (VIJAY PAL RAO) (S. JAYARAMAN) JUDICIAL MEMBER A CCOUNTANT MEMBER MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME TAX 4. THE COMMISSIONER OF INCOME TAX (A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR IT(TP)A.1139 & 1205/BANG/2011 PAGE - 23