M/s TE Connectivity Global Shared Services India P Ltd, Bangalore V. Income tax Officer, Ward-11(1), Bangalore

ITA 1280/BANG/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7094 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 15-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 17-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B R RAMESH
• Assessee Lawyers: P K PRASAD; UMASHANKAR S
• Keywords: Transfer pricing; International transaction; Working capital adjustments
• Section: 143(3); 10B

Judgement Text

I T (T P ) A NO.1280/B/2014 NO .1280 / B A N G / 2 014 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE S HRI SUNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI JASON P BOAZ , ACCOUNTANT MEMBER I.T . (T.P) A. NO. 1280 /BANG/20 14 (ASSESSMENT YEAR : 20 09 - 10 ) M/S. TE CONNECTIVITY GLOBAL SHARED SERVIC ES INDIA PVT. LTD., NO.59/2, GURUDAS HERITAGE, BLOCK B, KADRENAHALLI, 100 FT. RING ROAD, BANASHANKARI, 2 ND STAGE, BANGALORE - 560 070 . . APPELLANT. VS. INCOME TAX OFFICER, WARD 11(1), BANGALORE. .. RESPONDENT. APPELLANT BY : S/ SHRI P.K. PRASAD & UMASHANKAR, ADVOCATES. R E SPONDENT BY : SHRI B.R. RAMESH, JCIT (D.R) DATE OF H EARING : 01.11.2017. DATE OF P RONOUNCEMENT : 13 .12 .201 7 . O R D E R PER SHRI JASON P BOAZ, A .M . : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TA X (APPEALS) - IV , BANGALORE DT.5.8.2014 FOR THE ASSESSMENT YEAR 20 09 - 10. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UNDER : - 2.1 THE ASSESSEE IS A COMPANY ENGAGED IN THE PROVISION OF SOFTWARE DEVELOPMENT SERVICES AND SHARED SE RVICES (ITES) TO ITS ASSOCIATED ENTERPRISE I T (T P ) A NO.1280/B/2014 NO .1280 / B A N G / 2 014 2 ( AE ) I.E. ADC TELECOMMUNICATIONS INC., USA, WHICH IS ITS HOLDING COMPANY. FOR ASSESSMENT YEAR 2009 - 10, THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.09.2009 DECLARING INCOME OF RS.1,04,430, AFTER CLAIMING DED UCTION OF RS.1,44,70,511 UNDER SECTION 10A OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). THE RETURN W AS PROCESSED UNDER SECTION 143(1 ) OF THE ACT AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY. IN VIEW OF THE INTERNATIONAL TRANSACTIONS ENTERED INTO BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION , AS REPORTED IN FORM 3CEB, THE ASSESSING OFFICER MADE A REFERENCE TO THE TRANSFER PRICING OFFICER ( TPO ) FOR DETERMINING THE ARM S LENGTH PRICE ( ALP ) OF THE INTERNATIONAL TRANSACTIONS ENTERED INTO WIT H ITS AES. THE TPO PASSED AN ORDER UNDER SECTION 92CA OF THE ACT DT.28.1.2013 PROPOSING THE FOLLOWING TP ADJUSTMENTS : - I) SWD SEGMENT : RS.1,50,87,408. II) ITES SEGMENT : RS.1,23,13,265. TOTAL TRANSFER PRICING ADJUSTMENT U/S.92CA : RS .2,74,00,673. THE ASSESSING OFFICER CONCLUDED THE ASSESSMENT UNDER SECTION 143(3) R.W.S. 92CA OF THE ACT VIDE ORDER DT.2.4.2013 WHEREIN THE ASSESSEE'S INCOME WAS DETERMINED AT RS.2,78,40,699, WHICH INTER ALIA, INCLUDED THE AFORESAID TRANSFER PRICING ADJUSTMENT OF RS.2,74,00,673. 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT DT.2.4.2013 FOR ASSESSMENT YEAR 2009 - 10, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (APPEALS). THE LEARNED CIT (APPEALS) DISPOSED OFF THE APPEAL VIDE ORDER DT.5.8.2014 ALLOWING T HE ASSESSEE PARTIAL RELIEF. I T (T P ) A NO.1280/B/2014 NO .1280 / B A N G / 2 014 3 3. THE ASSESSEE, BEING AGGRIEVED BY THE ORDER OF THE CIT (APPEALS) DT.5.8.2014 FOR ASSESSMENT YEAR 2009 - 10 , FILED AN APPEAL BEFORE THE TRIBUNAL RAISING CERTAIN GROUNDS OF APPEAL. SUBSEQUENTLY, THE ASSESSEE FILED REVISE D GROUNDS OF APPEAL WHICH ARE EXTRACTED HEREUNDER AND CONSIDERED FOR ADJUDICATION : - REVISED GROUNDS OF APPEAL. 1. THAT THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IV, BANGALORE ( CIT (A) ), TO THE EXTENT PREJUDICIAL TO THE APPELL ANT, IS BAD IN LAW AND LIABLE TO BE QUASHED. 2. THAT THE LEARNED CIT (A) ERRED IN UPHOLDING THE REJECTION OF TRANSFER PRICING ( TP ) DOCUMENTATION BY THE LEARNED TRANSFER PRICING OFFICER ( TPO )/ ASSESSING OFFICER ( AO ) AND IN MAKING AN ADJUSTMENT TO THE TR ANSFER PRICE OF THE APPELLANT IN RESPECT OF ITS SOFTWARE DEVELOPMENT SERVICES AND SHARED SERVICES. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) WHILE MAKING ADJUSTMENT TO THE VARIOUS SEGMENTS OF THE APPELLANT, ERRED IN; A. UPH OLDING THE REJECTION OF COMPARABILITY ANALYSIS OF THE APPELLANT IN THE TP DOCUMENTATION AND ACCEPTING THE COMPARABILITY ANALYSIS PERFORMED BY THE LEARNED TPO IN THE TP ORDER. B. DISREGARDING APPLICATION OF MULTIPLE YEAR/ PRIOR YEAR DATA AS USED BY THE APPELLA NT IN THE TP DOCUMENTATION AND HOLDING THAT CURRENT YEAR (I.E. FINANCIAL YEAR 2008 - 09) DATA FOR COMPANIES SHOULD BE USED FOR COMPARABILITY. C. UPHOLDING THE LEARNED TPO S APPROACH OF USING DATA AS AT THE TIME OF ASSESSMENT PROCEEDINGS, INSTEAD OF THAT AVAILAB LE AS ON THE DATE OF PREPARING THE TP DOCUMENTATION FOR COMPARABLE COMPANIES WHILE DETERMINING THE ARM S LENGTH PRICE. D. ARBITRARILY ARRIVING AT A SET OF COMPANIES AS COMPARABLE TO THE SOFTWARE DEVELOPMENT AND SHARED SERVICES OF THE APPELLANT, ON REJECTING C OMPANIES THAT ARE OTHERWISE FUNCTIONALLY COMPARABLE TO THE APPELLANT AND ON INCLUSION OF COMPANIES THAT OTHERWISE FAIL THE TEST OF COMPARABILITY. I T (T P ) A NO.1280/B/2014 NO .1280 / B A N G / 2 014 4 INFORMATION TECHNOLOGY EXCLUSION I. KALS INFORMATION SYSTEMS LIMITED II. BODHTREE CONSULTING LIMITED III. TATA ELX SI LIMITED IV. PERSISTENT SYSTEMS LIMITED V. LARSEN & TOUBRO INFOTECH LIMITED VI. INFOSYS TECHNOLOGIES LIMITED INCLUSION I. THINKSOFTGLOBALSERVICES LTD II. FCS SOFTWARE SOLUTIONS LTD INFORMATION TECHNOLOGY ENABLED SERVICES EXCLUSION I. INFOSYS BPO LIMITED II. ADITYA BIRLA MIN ACS WORLDWIDE LIMITED III. ACCENTIA TECHNOLOGIES LIMITED IV. COSMIC GLOBAL LIMITED V. ECLERXSERVICES LIMITED 4. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN IGNORING THE LIMITED RISK PROFILE OF APPELLANT AS DETAILED IN THE TP DOCUMENTATION AND IN UPHOLDING THE CON CLUSION OF THE LEARNED TPO AND IN NOT ALLOWING APPROPRIATE ADJUSTMENTS UNDER RULE 10B OF THE RULES TO ACCOUNT FOR DIFFERENCES BETWEEN THE APPELLANT AND COMPARABLE COMPANIES. THE APPELLANT SUBMITS THAT EACH OF THE ABOVE GROUNDS IS INDEPENDENT AND WITHOUT PR EJUDICE TO ONE ANOTHER. 4. REVISED GROUND NOS. 1 TO 3(A) TO 3(C) AND 4. 4.1 AT THE OUTSET, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED TH A T THE ASSESSEE IS NOT PRESSING THE REVISED GROUNDS RAISED AT S.NOS.1 TO 3( A ) TO 3(C) AND 4 IN THIS APPEAL, BUT WILL BE ONLY URGING REVISED GROUND 3(D) FOR EXCLUSION / INCLUSION OF COMPARABLES IN THE SOFTWARE DEVELOPMENT /INFORMATION TECHNOLOGY SERVICES SEGMENT AND EXCLUSION OF COMPARABLES IN THE ITES SEGMENT. IN VIEW OF THIS THE REVISED GRO UNDS RAISED I T (T P ) A NO.1280/B/2014 NO .1280 / B A N G / 2 014 5 BY THE ASSESSEE AT S.NOS.1, 3(A) TO 3(C) AND 4 ARE RENDERED INFRUCTUOUS AND ARE ACCORDINGLY DISMISSED AS NOT PRESSED. GROUND N O . 3(D) : TRANSFER PRICING ISSUES. 5.1 THE ASSESSEE IS A SUBSIDIARY OF ADC TELECOMMUNICATIONS INC., USA AND IS ENGAGED IN THE PROVISION OF SOFTWARE DEVELOPMENT SERVICES AND IT ENABLED SERVICES TO ITS AES. AS PER THE 92CE REPORT, THE ASSESSEE ENTERED INTO THE FOLLOWING INTERNATIONAL TRANSACTIONS IN THE YEAR UNDER CONSIDERATION : - 5.2 FOR THE SOFTWARE DEVELOP MENT SERVICES SEGMENT , THE ASSESSEE SELECTED 13 COMPANIES AS COMPARABLE TO THE ASSESSEE, LISTED AT PAGES 15 & 16 OF TPO S ORDER, WITH AN AVERAGE MEAN MARGIN OF 7.31 %. SINCE THE ASSESSEE'S PROFIT MARGIN OF OPERATING PROFIT / OPERATING COST WAS HIGHER AT 10.12%, THE ASSESSEE PRESUMED ITS INTERNATIONAL TRANSACTIONS IN THIS SEGMENT TO BE AT ARM S LENGTH. 5.3 FOR THE ITES SEGMENT , THE ASSESSEE SELECTED 5 COMPANIES LISTED AT PAGE 6 OF THE TPO S ORDER UNDER SECTION 92CA OF THE ACT, WITH AVERAGE MEAN MARG IN OF 13.01% TO BE COMPARABLE TO THE ASSESSEE. SINCE THE ASSESSEE'S I T (T P ) A NO.1280/B/2014 NO .1280 / B A N G / 2 014 6 PROFIT AT OPERATING PROFIT / OPERATING COST WAS 13.02%, THE ASSESSEE ASSUMED THAT ITS INTERNATIONAL TRANSACTIONS IN THE ITES SEGMENT TO BE AT ARM S LENGTH. 5.4 THE TPO REJECTED THE ASSESSEE'S TP STUDY FOR BOTH SOFTWARE DEVELOPMENT SERVICES AND ITES SEGMENTS FOR THE REASONS ENUMERATED IN HIS ORDER UNDER SECTION 92CA OF THE ACT. AFTER CARRYING OUT A FRESH COMPARABILITY ANALYSIS , APPLYING CERTAIN FILTERS AND CONSIDERING THE ASSESSEE'S OBJECTIONS , THE TPO SELECTED HIS OWN FINAL SET OF COMPARABLES FOR BOTH SEGMENTS AS UNDER : - 5.4.1 FINAL SET OF 11 COMPARABLES FOR SOFTWARE DEVT . SERVICES SEGMENT. I T (T P ) A NO.1280/B/2014 NO .1280 / B A N G / 2 014 7 5.4.2 AFTER ALLOWING WORKING CAPITAL ADJUSTMENT OF 0.14%, THE TPO WORKED OUT THE PROPOSED TRANSFER PRICING ADJUSTMENT OF RS.1,50,87,408 FOR THE SOFTWARE DEVELOPMENT SERVICES AS UNDER : 5.5.1 FINAL SET OF 8 COMPARABLES FOR ITES SEGMENT. 5.5.2 AFTER ALLOWING WORKING CAPITAL ADJUSTMENT OF 0.09%, THE TPO WORKED OUT THE PROP OSED TP ADJUSTMENT OF RS.1,23,13,265 FOR THE ITES SEGMENT AS UNDER : - I T (T P ) A NO.1280/B/2014 NO .1280 / B A N G / 2 014 8 6. ASSESSEE'S PLEA FOR EXCLUSION OF 6 COMPANIES FROM LIST OF COMPARABLES . 6.1 THE ASSESSEE HAS PRAYED FOR EXCLUSION OF THE FOLLOWING 6 COMPANIES FROM THE FINAL S ET OF COMPARABLES SELECTED BY THE TPO : - I) KALS INFORMATION SYSTEMS LTD. II) BODHTREE CONSULTING LTD. III) TATA ELXSI LIMITED IV) PERSISTENT SYSTEMS LTD. V) LARSEN & TOUBRO INFOTECH LTD. VI) INFOSYS TECHNOLOGIES LTD. 6.2 IN SUPPORT OF THE ASSESSEE 'S PLEA FOR EXCLUSION OF THE AFORESAID 6 COMPANIES FORM THE TPO S FINAL SET OF COMPARABLES, THE LEARNED AUTHORISED REPRESENTATIVE PLACED RELIANCE , INTER ALIA, ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL FOR THE SAM E ASSESSMENT YEAR 2009 - 10, AND THE FACTS OF WHICH; IT IS SUBMITTED WOULD GO TO SHOW ARE ENGAGED IN SIMILAR ACTIVITIES AS THE ASSESSEE IN THE CASE ON HAND : - (I) CISCO SYSTEMS INDIA PVT. LTD. IN IT(TP)A NO.271/BANG/2014 FOR A.Y. 2009 - 10, AND I T (T P ) A NO.1280/B/2014 NO .1280 / B A N G / 2 014 9 (I I) VM WARE SOFTWARE INDIA PVT. LTD. IN IT(TP)A NO.1311/BANG/2014 DT.6.1.2017. 7. KALS INFORMATION SYSTEMS LTD. (KALS) 7.1 THIS COMPANY KALS WAS SELECTED AS A COMPARABLE BY THE TPO IN SPITE OF THE OBJECTIONS OF THE ASSESSEE TO ITS INCLUSION ON GROUNDS OF BEING FUNCTIONALLY DISSIMILAR TO THE ASSESSEE AS IT WAS ENGAGED IN DEVELOPMENT AND SALE OF SOFTWARE PRODUCTS AND HAS SUBSTANTIAL INVENTORY IN THIS REGARD; WHEREAS THE ASSESSEE IN THE CASE ON HAND IS MERELY PROVIDING SOFTWARE D EVELOPMENT SERVICES TO ITS AES. THE TPO S ACTION WAS UPHELD BY THE LEARNED CIT (APPEALS). BEFORE US, IT IS SUBMITTED THAT FOR THE VERY SAME ASSESSMENT YEAR 2009 - 10, THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN ITS ORDER IN THE CASE OF CISCO SYSTEMS (INDIA) P. LTD. (SUPRA) HAS HELD THAT THIS COMPANY, KALS TO BE NOT COMPARABLE TO AN ASSESSEE PROVIDING SOFTWARE DEVELOPMENT SERVICES AND THE LEARNED AUTHORISED REPRESENTATIVE PRAYED THAT THEREFORE THIS COMPANY KALS BE EXCLUDED FROM THE LIST OF COMPARABLES. 7. 2 P E R CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW IN INCLUDING THIS COMPANY, KALS IN THE FINAL SET OF COMPARABLES. 7.3 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED AND CAREFULLY CON SIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMENTS CITED. WE FIND THAT THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF CISCO SYSTEMS (INDIA) P. LTD. (SUPRA) FOR ASSESSMENT YEAR 2009 - 10 HAS EXCLUDED THIS COMPANY, KALS FROM THE FI NAL SET OF COMPARABLES, HOLDING AS UNDER AT PARA 26.3 THEREOF : - I T (T P ) A NO.1280/B/2014 NO .1280 / B A N G / 2 014 10 2 6 . 3 KA L S I N F OR M A TI O N S Y S T E M S L T D . : - A S F A R A S T H IS C O M P A N Y IS C O N C E R N E D , IT IS N O T I N D IS P U T E BE F O R E U S T HA T T H IS C O MPA N Y HA S B EE N C O N S I D E R E D A S N O T C OM PAR A B L E TO A P U R E S O F T W A R E D E V E L O P ME N T S ER VI C E S C O M P AN Y B Y TH E B AN G A L O R E B EN C H O F T H E TR I B UNA L I N T H E C A S E O F M/ S . T RI L O G Y E - B U S I NESS S O FT W A R E I ND I A P V T . L T D. ( S UPR A ) . T H E F O LL O W I N G W E R E T H E RE L E V A N T OB S E R V A T I ON S O F T H E T R I B U N A L : - ( D ) K A L S I N FO R M A TI O N S Y S T E MS L T D . 46 . A S F AR AS T H I S C O M P A N Y I S C O N C ER N E D , T H E C O N T E N TI O N O F T H E A S S E S S EE I S T H AT T H E A F O RE S A I D C O M P A N Y H A S RE V E N U ES F RO M B O T H S O F TW ARE D E V E L OP ME N T A N D SO F TW ARE P R ODU C T S . B E SI D E S T H E A BOV E, I T W AS A L S O PO I N T ED O U T T H AT T H I S C O M P A N Y I S E N G A G ED I N P R O V I D I N G T RA I N I N G . IT W AS A L S O S U B M IT T ED T H A T AS P ER T H E A NNU AL RE P O T , T H E S A L ARY C O S T D E B IT E D UN D E R T H E SO F TW ARE D E V E L O P M E N T E X P E ND IT U RE WA S RS . 4 5 , 93,35 1 . T H E S A M E W AS L E S S T H AN 25 % O F T H E S O F T W ARE S ER V I CES RE V E NU E A N D T H ER E F O RE T H E S A L A RY C O S T F I LT ER T E S T F A IL S I N T H I S CA S E. R E F ER E N CE W AS M A D E T O T H E PU N E B E N CH T R I B U N A L S D EC I SI O N O F T H E IT A T I N T H E C A S E O F B I N D V I EW I N D I A P R I VA T E L I M IT ED V S . DCI , I TA N O. I TA N O 13 8 6 / P N / 1O W H ERE I N K A LS AS C O M P ARA B L E W AS RE J E C T ED F O R A Y 2006 - 0 7 O N ACC O U N T O F I T B E I N G F UN C T I O N A LL Y D I F F E R E N T F RO M S O F T W ARE C O M P A N I E S . T H E RE L E V A N T E X T RA C T A R E AS F O LL O W S : 1 6 . A NO T HE R I S SU E R E L A T I N G T O S E L E C T I O N O F C OM P AR A B L E S B Y T H E T P O IS RE G A R D I N G I N CL U S I O N O F K A LS I N F OR M A TI O N S Y ST E M L T D . T H E A S SE SS E E HA S O B J E C T E D T O I T S I N CL U SI O N O N T H E BA S IS T H A T F UN CT I O N A L LY T H E C O MP A N Y I S NO T C O M PA RA B L E . W I TH RE F E R EN C E TO PA G E S 18 5 - 1 8 6 O F T H E P A P E R B O O K, IT IS E X P L A I NE D T H A T T H E S A ID C O M P A N Y IS E N GA G E D I N D E V E L OPM EN T O F S O F T W A R E P R O D U CTS AN D S ER VI C E S A N D IS NO T C O M PAR A B LE TO S O FT W A R E D E V E L OP M EN T S ER VI C E S P R O V I DE D B Y T H E A SS E S SE E . T H E AP P E L L A N T H A S S UB M ITT E D A N E XT RA CT O N P AGE S 1 8 5 - 1 8 6 O F T H E P A P E R B OO K FR O M T H E W E B SITE O F T H E C O MPA N Y TO E S T AB LISH T HA T IT IS ENG AG E D I N P R O V I D I N G O F I T E N A B L E D S ER VI C E S A N D T HA T T H E S A I D C O M P A N Y I S I N TO D E V E L O P ME N T O F S O F T W A R E P R O D U C T S, E TC. A LL T H E S E A S P E CTS H A V E N O T B E E N F A C T UA LLY R E BU TT E D A ND , I N O U R V I E W , T H E S A ID C ON C E R N I S LI A B LE TO B E E XCL U DE D F RO M T H E F I N A L S E T O F C O MP AR A B L E S, A N D T HU S O N T H IS A S PE CT, A S S E S S E E S U CC E E D S . B A S ED O N A L L T H E A B O V E , I T WA S SUB M IT T ED O N B E H A L F O F T H E A SS E S S EE T H AT K A L S I N FO R M A TI O N SY S T E M S L I M IT E D S HO U L D B E RE J EC T E D AS A C O M P ARA B L E . I T (T P ) A NO.1280/B/2014 NO .1280 / B A N G / 2 014 11 47 . W E H A V E G I V EN A C AR E F U L C O NS I D ERA T I O N T O T H E S U B M I S SI O N M A D E O N B E H A L F O F T H E A S S E S S EE. W E F I N D T H AT T H E T P O H AS D RA W N C ON C L US I O N S O N T H E B A S I S O F I N F O R M A TI O N OB T A I N ED B Y I S SU E O F NO TI CE U / S.13 3 ( 6 ) O F T H E A C T . T H I S I N FO R M A TI O N W H I C H W AS NO T A V A I L A B L E I N PU B L I C D O M A I N C O U L D N O T H A V E B E EN U S ED B Y T H E T P O , W H EN T H E S A ME I S C ON T R ARY T O T H E A NNU AL RE P O RT O F T H I S C O M P A N Y A S H I GH LI GH T E D B Y T H E A SS E S S EE I N IT S L E T T ER D A T ED 21.6.201 0 T O T H E T P O . W E A LS O F I N D T H A T I N T H E D E C I S I O N R E FERR E D T O B Y T H E L EAR N ED C OUN S E L F O R T H E A S S E SS E E , T H E M U M B AI B E N C H O F I TA T H AS H E L D T H AT T H I S C O M P A N Y W AS D E V E L O P I N G S O F T W ARE P R ODU C T S A N D N O T PU RE L Y O R M A I N L Y SO F T W ARE D E V E L OP M E N T S E R V I C E P R O V I D E R . W E T H ER E F O RE A CCE P T T H E P L EA O F T H E A SS E S S EE T H A T T H I S C O M P A N Y I S NO T C O M P ARA B L E . FO L L O W I N G T H E A F O R E S A I D D E CISI O N O F T H E TR I B U N A L, WE HO LD TH A T KA L S I N F OR M A TI O N S Y ST E M S L T D . S H O U LD NO T B E R E GA R D E D A S A C O MP A R A B L E . 7.3.2 RESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF CISCO SYSTEMS (INDIA) PVT. LTD., ALSO FOR ASSESSMENT YEAR 2009 - 10 (SUPRA), WE HOLD THAT KALS WHICH IS INTO DEVELOPING OF SOFTWARE PRODUCTS, SHOULD NOT BE CONSIDERED AS COMPARABLE TO THE ASSESSEE IN THE CASE ON HAND , WHO IS MERELY PROVIDING SOFTWARE DEVELOPMENT SERVICES TO ITS AES AND ACCORDINGLY DIRECT THE TP O TO EXCLUDE IT FROM THE FINAL SET OF COMPARABLES. 8. BODHTREE CONSULTING LTD. ( BODHTREE ) 8.1 THIS COMPANY, BODHTREE WAS INCLUDED IN THE FINAL SET OF COMPARABLES BY THE TPO DESPITE THE OBJECTIONS OF THE ASSESSEE THAT IT HAS FLUCTUATING PROFIT MARGINS AND THIS WAS A YEAR IN WHICH IT EARNED SUPER NORMAL PROFITS. THE TPO S ACTION WAS UPHELD BY THE LEARNED CIT (APPEALS) . BEFORE US, APART F R O M THE AFORESAID OBJECTIONS, IT WAS ALSO CONTENDED THAT BODHTREE IS FUNCTIONALLY DISSIMILAR TO THE ASSESSEE, AS APART FROM SOFTWARE DEVELOP MENT IT ALSO PROVIDES END - TO - END WEB SOLUTIONS,IS ENGAGED IN I T (T P ) A NO.1280/B/2014 NO .1280 / B A N G / 2 014 12 SOFTWARE PRODUCTS, OFF - SHORING DATA MANAGEMENT AND DATA WAREHOUSING. IN SUPPORT OF THE ASSESSEE'S PLEA FOR EXCLUSION OF THIS COMPANY BODHTREE FROM THE TPO S FINAL SET OF COMPARABLES, THE LEARNED AUTHORISED REPRESENTATIVE PLACED RELIANCE ON THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF CISCO SYSTEMS (INDIA) PVT. LTD. FOR ASSESSMENT YEAR 2009 - 10 (SUPRA), WHEREIN IT WAS EXCLUDED AS IT WAS NOT CONSIDERED A GOOD COMPARABLE TO COMPANIES ENGAGED IN RENDERING SOFTWARE DEVELOPMENT SERVICES , LIKE THE ASSESSEE IN THE CASE ON HAND. 8.2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW IN INCLUDING THIS COMPANY AS A COMPARABLE. 8.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMENTS CITED. WE FIND THAT THE CO - ORDINATE BENCH O F THIS TRIBUNAL IN THE CASE OF CISCO SYSTEMS (INDIA) PVT. LTD. FOR ASSESSMENT YEAR 2009 - 10 (SUPRA) HAS EXCLUDED THIS COMPANY BODHTREE FROM THE FINAL SET OF COMPARABLES, HOLDING AS UNDER AT PARA 26.1 THEREOF : - 2 6 . 1 B O D H T R E E C ON S U L T I N G L T D . : - A S F A R A S T H I S COM PA N Y I S C ON C E RN E D , IT I S NO T I N D I S P U TE T HA T I N T H E L I ST O F C O M P A R A B L E S C HO S E N B Y T H E A S S E S S EE , T H IS C O M P AN Y W A S A L S O I N CL U DE D B Y T H E A SS E S S E E . T H E A SS E S SE E , HO W E V ER , S U B M ITS B E F OR E U S T HA T L A T E R O N IT C A M E TO T H E A S S E SS E E S N O T I CE T HA T T H IS C O M P AN Y IS N O T B E I N G C O N S I D E R E D A S A C O MP A R A B L E C O M PA N Y I N T H E C A S E O F C O M P A N I E S R E N D E R I N G S O FT W A R E D E V E L O P ME N T S E R VI C E S. IN T H I S R EGA R D , T H E L D . C O U N S E L F O R T H E A S S E S S E E HA S B R O UGH T T O OU R N O TICE T H E DE CIS I O N O F T H E M U M B A I B EN C H O F T H E TR I B U N A L IN T H E C A S E O F N E T HA W K N E T W O R K S P V T . L T D. V . I T O , I T A N O . 7633 / M U M/ 2012, O R D ER D A T ED 6 . 1 1 . 2 0 13 . I N T H I S C A S E , T H E T R I BU N A L F O LL O W E D T H E D E CI S I O N R E N D E R E D B Y T H E MU M B A I B E N C H O F T H E T R I B UN A L IN T H E C A S E O F W I L L S P R OCE S S I NG S E R V I C E S (I ) P . L T D . , I TA N O . 4 5 4 7 /M U M / 20 1 2 . I N T H E AF ORE S A I D DE C I S I O N S, T H E TR I BUN A L H A S T A K E N T H E VI E W T HA T B O D H T R E E C ON S U LT I N G L T D . IS IN T H E B U S I N E SS O F S O F T W A R E P RO D U C T S AN D W A S E NG A GE D IN P RO V I D I N G O PE N I T (T P ) A NO.1280/B/2014 NO .1280 / B A N G / 2 014 13 & EN D T O E N D W E B S O L U T I O N S S O FT W A R E C ON S U L T AN C Y A N D DE S I G N & D E V E L O P M E N T O F S O F T W A R E U SI N G L A T E ST T E C H NO L OG Y . T H E D E C I S I O N R E NDE R E D B Y T H E M U M BA I B EN C H O F T H E TR I B U NA L I N TH E CA SE O F N E T HA W K N E T W O R K S P V T . L T D . ( S U P R A ) I S I N R E L A TI O N T O A . Y . 2 00 8 - 0 9 . IT W A S A F F I R M E D B Y T H E L E A R N E D C OUN S E L F O R T H E A SS E SS E E T H A T T H E F A CTS A N D C I R C U M ST A N C E S IN T H E P R E S E N T Y EA R A L S O R E M A I N S I DEN TI C A L T O TH E F A CTS AN D CI R C U M ST A N C E S A S IT P R E V A I L E D IN A Y 0 8 - 0 9 A S F A R A S T H IS C O M PA R AB LE C O M P AN Y IS C O N C E R NED . F O L L O W I N G T H E A F O R E S A I D D E CI S I O N O F T H E M U M BA I B EN C H O F T H E T R I B U NA L, WE HO L D T H A T B O D H T R E E C ON S U L T I N G L T D . C AN N O T B E R EGA R D E D A S A C O M P AR A B L E . I N T H I S R E G A R D S, T H E F A CT T H A T T H E A S S E SS E E HA D ITS E LF P RO P O S E D T H I S C O MP A N Y A S C O MP A R A B L E , IN O U R O P I N I O N , S H OU L D N O T B E T H E BA SIS O N W H I C H TH E S A I D C O M PA N Y S H OU LD B E R E T A I N E D A S A C O M P A RA B L E , W HE N F A C T U A LL Y IT I S S H O WN T H A T T H E S A I D C O M P A N Y I S A S O FT W A R E P R O D U CT C O M PA N Y AN D NO T A S O FT W A R E D E V E L O P ME N T S ER VI C E S C O M P AN Y . 8.3.2 RESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF CISCO SYSTEMS (INDIA) PVT. LTD., ALSO FOR ASSESSMENT YEAR 2009 - 10 (SUPRA), WE HOLD THAT BODHTREE WHICH IS A SOFTWARE PRODUCT COMPANY, SHOULD NOT BE CONSIDERED AS COMPARABLE TO THE ASSESSEE IN THE CASE ON HAND ; WHO IS MERELY PROVIDING SO FTWARE DEVELOPMENT SERVICES TO ITS AES AND ACCORDINGLY DIRECT THE TPO TO EXCLUDE IT FROM THE FINAL SET OF COMPARABLES. 9. TATA ELXSI LIMITED ( TATA ) 9.1 THIS COMPANY, TATA WAS INCLUDED BY THE TPO IN THE FINAL SET OF COMPARABLES DESPITE THE A SSESSEE'S OBJECTIONS TO ITS INCLUSION ON GROUNDS OF BEING FUNCTIONALLY DIFFERENT AS IT IS A SOFTWARE PRODUCT COMPANY. THE LEARNED CIT (APPEALS) UPHELD THE ACTION OF THE TPO IN INCLUDING THIS COMPANY IN THE LIST OF COMPARABLES. BEFORE US, THE LEARNED AUTH ORISED REPRESENTATIVE CONTENDED THAT TATA OUGHT TO BE EXCLUDED FROM THE FINAL SET OF COMPARABLES FOR THE REASONS THAT APART FROM SOFTWARE DEVELOPMENT SERVICES, IT WAS ALSO ENGAGED IN PRODUCT AND DESIGN SERVICES, INNOVATION DESIGN AND ENGINEERING SERVICE S , VISUAL COMPUTING LABS AND DIVERSE SERVICES , WHICH RENDER IT NOT COMPARABLE TO THE ASSESSEE IN THE CASE ON HAND WH O IS MERELY PROVIDING SOFTWARE DEVELOPMENT SERVICES TO ITS AES. IN SUPPORT OF THE I T (T P ) A NO.1280/B/2014 NO .1280 / B A N G / 2 014 14 ASSESSEE'S CONTENTION, THE LEARNED AUTHORISED REPRESENTATI VE PLACED RELIANCE ON THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF CISCO SYSTEMS (INDIA) PVT. LTD. ALSO FOR ASSESSMENT YEAR 2009 - 10 (SUPRA). 9.2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR REVENUE SUPPORTED THE O RDERS OF THE AUTHORITIES BELOW IN INCLUDING THIS COMPANY , TATA IN THE FINAL SET OF COMPARABLE S . 9 .3.1 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMENT CITED. WE FIND THAT THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF CISCO SYSTEMS (INDIA) PVT. LTD. FOR ASSESSMENT YEAR 2009 - 10 (SUPRA) HAS EXCLUDED THIS COMPANY TATA FROM THE FINAL SET OF COMPARABLES, HOLDING AS UNDER AT PARA 26. 4 AND 26.5 THEREOF : - 2 6 . 4 TA T A E LXSI L T D . : - A S F A R A S T H IS C O M PA N Y IS C O N C E R NED , IT IS N O T IN D IS P U TE B E F OR E U S T H A T I N A S S E SS E E S O W N C A SE F O R T H E A . Y . 2 0 0 7 - 0 8 , T H I S C O M P AN Y W A S N O T R E G A R D E D A S A C O M P A R A B LE I N I T S S O F TW A R E D E V E L OP ME N T S E R V I C E S S EG ME N T I N I TA N O . 1 0 7 6 / B ANG / 2 0 1 1 , O R D ER DA T ED 29 . 3 . 2 013 . FO L L O W I N G W E R E T H E R E L E V A N T OB S E RV A T I O N S O F T H E T R I B U N A L : - II. U N R E A S O N A B L E C O M P A R A B ILITY C R ITE R IA : 19 . T H E L EAR N ED CH AR T ERED A CC OUN T A N T P L E A D E D T H AT OU T O F T H E S I X C O M P ARA B L E S SHO R T L I S T E D A BOV E AS C O M P A R A B L ES B A S ED O N T H E T U R NOV ER F I LT ER, T H E F O LL O W I N G T W O C O M P A N I E S , N A M E L Y ( I ) T A T A E L XS I L T D ; A N D ( II ) M /S . F L E X T R ON I CS SO F TWA RE SYS T E M S L T D . , D E S ER V E T O B E E L I M I N A T E D F O R T H E F O L L O W I N G R E A S ON S : (I) TA T A E L X S I L T D . , : T H E C O M P A N Y OP ERA T E S I N T H E S E G M E N T S O F S O F T WA RE D E V E L O P ME N T S E R V I CES W H I CH C O M P R I S ES O F EM B E DD ED P R O D U CT D E S I G N S ER V IC E S , I NDU S T R I AL D E S I G N A N D E N G I N EER I N G S ER V I C ES A N D V I S U AL C O M P U TI N G L A B S A N D SYS T E M I N T E G RA T I O N S ER V I C E S S E G M E N T . T H ERE I S N O SUB - S ER V I C E S B RE A K U P / I N F O R M AT I O N P R OV I D ED I N T H E A NNU AL R E P O RT O R T H E D A T A B A S ES B A S ED O N W H I CH T H E MAR G I N F R O M S O F T W ARE S ER V I C E S A C TI V I T Y O N L Y C OU L D B E C O M PU T E D . T H E C O M P A N Y I T (T P ) A NO.1280/B/2014 NO .1280 / B A N G / 2 014 15 H A S A L S O I N I T S RE S P O NS E T O T H E NO T I CE U / S.133 ( 6 ) S T A T ED T H AT I T CA NNO T B E C O N S I D E RED AS C O M P A R A B L E T O A N Y O T H ER S O F T WA RE S E R V I CES C O M P A N Y B E C A U S E O F I T S C O M P L E X N A T U RE. H E N CE, TA T A E L XS I L T D. , I S T O B E E X C L U D ED F R O M T H E L IS T O F C O M P ARA B L E S . ( II ) F L E X T R ON I C S S O F T W ARE SYS T E M S L T D . : T H E L EA R N ED T P O H AS C ON S I D ERED T H I S C O M P A N Y AS A C O M P AR A B L E B A S ED O N 133 ( 6 ) RE P L Y W H ER E I N T H I S C O M P A N Y R E F L E C T E D IT S SO F TW ARE D E V E L O P M E N T S ER V I C E S RE V E NU ES T O B E M O RE T H AN 75 % O F T H E ' S O F T W ARE P R O D U C T S A N D S ER V I CE S ' S E G ME N T R E V E N U E S . F L E X T R ON I CS H A S A HY B R I D RE V E NU E M O D EL A N D H E N C E S H O U L D B E R E J EC T ED AS F U N C TI ON A L L Y D I FF E R E N T . B A S ED O N T H E I N F O R MA TI O N P R OV I D E D U N D ER ' R E V E N U E R E C OGN I TI ON ' I N IT S A NN U A L R E P O R T , I T CAN B E I N F ERRED T H A T T H E SO F T WA RE S ER V I C E S RE V E NU ES ARE EAR N ED O N A HYB R I D RE V E NU E M O D E L , A N D T H E S A M E I S NO T S I M I L AR T O T H E R E GU L AR M O D E L S A DO P T ED B Y O T H ER S O F T W ARE S ER V I CE P R O V I D ER S . T H E L E A R N E D R E P RE S E N T A TI V E P L EA D E D T H A T A RE GU L AR S O F T WA R E S E R V I CES P R O V I D ER C OU L D NO T B E C O M P AR E D T O A C O M P A N Y H A V I N G SU CH A U N I QU E RE V E N U E M OD E L , W H ERE I N T H E RE V E NU ES O F T H E C O M P A N Y FR O M SO F TW ARE / P R ODU CT D E V E L OP M E N T S ER V I CES D E P E ND S O N T H E S U C CE S S O F T H E P R O D U CT S S O L D B Y IT S C LI E N T S I N T H E M A R K E T P L ACE. H E N C E , I T W OU L D B E I N A P P R OP R I A T E T O C O M P A RE T H E B U S I N E S S OP E RA TI O N S O F T H E A S S E S S E E W IT H T H AT O F A C O M P A N Y F O L L O W I N G HY B R I D B U S I N E S S M O D E L C O M P R I S I N G O F R OY A LT Y I N C O ME A S WE L L AS RE GU L AR S O F T W ARE S ER V I CES I N C O M E, F O R W H I CH RE V E NU E B REA K - U P I S NO T A V A I LA B L E. H E F I N A LL Y SU B M I T T E D T H AT T H I S W AS A GOO D REA S O N T O E X C L U D E T H I S C O M P A N Y AL S O F R O M T H E LI S T O F C O M P ARA B L E S . 20 . O N T H E O T H ER H A ND , T H E L E AR N E D D R S UPP O R T ED T H E O R D E R O F T H E L O W ER A U T H O R I TI ES RE G AR D I N G T H E I N C L US I O N O F TA T A E L XS I A N D F L E X T R ON I CS SO F T W ARE S Y S T E MS L T D. , I N T H E L IS T O F C O M P ARA B L E S . H E RE I T ERA T ED T H E C O N T E N T S O F P A R A 14.2.2 5 O F T H E T P O ' S O R D E R. H E A L S O READ O U T T H E FO L L O W I N G PO R T I O N FR O M T H E T P O ' S O R D ER : ' T H US A S S TATE D A BOV E B Y T H E C O M P A N Y , T H E F O L L O W IN G F A C T S E ME R GE : 1 . T H E COMP AN Y ' S S O FT W A R E D E VE L O P M E N T A N D S E R V I C E S S E G M E N T C O N S T I T U TE S T H R E E S U B - S E G M E N T S I ) P RO D U C T D E S I GN S ER V I C E S ; II ) E N G IN EE RIN G D E S I GN SE R VIC E S A N D I I I ) V I S U A L COMP U T I N G L A B S . 2 . T H E P RO D U C T D E S I GN SE R V I C E S S U B - S E G M EN T I S I N T O E M B E DD E D S OF T W A R E D E V E L OPM ENT . T H U S T HI S S E G M E N T I S IN T O S O F T W A R E D EV E L O PM EN T S E R V I C E S . 3. T H E CON TR I B U T IO N O F T H E E M B E D D E D S ER V I C E S S E G M E NT I S T O T H E T U N E O F R S . 2 30 CROR E S I N T H E T O TA L S E G M E N T RE VE N UE O F R S . 2 63 C R O R E S . E V E N I F W E CO N SI D E R T H E 16 IT(TP)A NO.1280/BANG/2017 O T H E R T W O S U B - S E G M E N T S P E RT A I N T O I T E N A B L E D S E R V IC E S , T H E 8 7. 4 5 % ( 7 5 %) O F T H E S E G M E N T' S R E V E N U E S I S FR O M SOF TWA R E D E VE L O P ME N T S E R V I C E S . 4. T HI S S E G M E N T Q U A L IFI E S A L L T H E F I L TE R S A P P L I E D BY T H E T P O . ' R E G AR D I N G F L E X T R O N I CS SO F T WA RE SYS T E M S , T H E F O L L O W I N G E X T R A CT F R O M P A G E 14 3 O F T P O ' S O R D ER W AS READ O U T B Y H I M AS H I S S U B M I S S I O N S : 'I T I S VE R Y P ERT I NE N T T O M ENT I O N H E R E T H A T T H E C O M P A N Y WA S C O N SI D E RE D B Y T H E TAX P AYE R A S A COMP ARA B LE F O R T H E PR E C E D IN G A SS E SSM E N T Y E A R I .E . , AY 2 0 0 6 - 0 7 . WH E N T H E S A M E WA S A C C E P T E D B Y T H E T P O A S A COMP A R A B L E , T H E S A M E WA S N O T OB JE C T E D T O I T B Y T H E T A X P A Y E R . AS T H E F A C T S M E N T ION E D B Y T H E T A XP AYE R A R E T H E S A M E A N D T H E S E W E R E T H E R E I N T H E EA R L IE R F Y 2 005 - 0 6, T H E R E I S N O REA S O N W H Y T H E T A X P AY E R I S OB JE C T I N G T O I T . H O W T H E COMP AN Y I S F U NC T ION A LLY SI M I L A R I N T H E E AR L I E R F Y 20 0 5 - 0 6 B UT T H E S A M E I S NO T F U N C TI O NA L LY SI M I L A R FO R T H E S U BS E Q U EN T F Y 20 0 6 - 0 7 E VE N W H E N N O F A C T S H A V E B EE N C H A N G E D FRO M T H E PR E C E D IN G YEA R . T H US T H E T A X P A Y E R I S A R GU I N G A G A IN S T T H I S C O MP A R A B L E A S T H E C OM P A N Y W A S N O T CO N S I D E RE D A S A C O MP A R A B L E B Y T H E T A X P AY E R FO R T H E PR E S E N T F Y 2 0 0 6 - 0 7 . ' 21 . W E H A V E H EARD T H E R I V AL S UB M I S S I O N S A N D C O N SI D ER E D T H E F AC T S A N D MA T ER I A L S O N REC O R D . A F T ER C ON SI D ER I N G T H E S U B M I S SI O NS , W E F I N D T H AT TA T A E L XS I A N D F L E X T R ON I C S ARE F U N C T I O N A LL Y D I F F E R E N T F R O M T H A T O F T H E A S S E SS EE A N D H E N CE T H EY D E S ER V E T O B E D E L E T ED F R O M T H E L I S T O F S I X C O M P ARA B L ES A N D H E N CE T H E RE R E M A I N S ON L Y F OU R C O M P A N I ES A S C O M P A RA B L E S , A S LI S T ED B E L O W : 2 6 . 5 . FO LL O W I N G T H E A F O R E S A I D D EC I S I O N O F T H E TR I BU N A L , W E HO L D T H AT M /S . TA T A E L X S I L T D . S H OU L D NO T B E RE G AR D ED A S A C O M P AR A B L E. 17 IT(TP)A NO.1280/BANG/2014 9 .3.2 RESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF CISCO SYSTEMS (INDIA) PVT. LTD. , ALSO FOR ASSESSMENT YEAR 2009 - 10 (SUPRA), WE HOLD THAT TATA ELXSI LTD. IS TO BE EXCLUDED FROM THE LIST OF COMPARABLES, IT BEING FUNCTIONALLY DIFFERENT FROM THE ASSESSEE IN THE CASE ON HAND, WHO IS MERELY PROVIDING SOFTWARE DEVELOPMENT SERVICES TO ITS AES . 10. INFOSYS TECHNOLOGIES LIMITED ( INFOSYS ) 10.1 THIS COMPANY, INFOSYS WAS INCLUDED IN THE FINAL SET OF COMPARABLES BY THE TPO REJECTING THE ASSESSEE'S OBJECTIONS TO ITS INCLUSION ON GROUNDS OF ITS SCALE OF OPERATIONS, OWNING OF SIGNIFI CANT INTANGIBLES, BRAND VALUE, SIGNIFICANT R & D ACTIVITIES AND BEING FUNCTIONALLY DIFFERENT. THE LEARNED CIT (APPEALS) UPHELD THE ACTION OF THE TPO. BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE REITERATED ITS OBJECTIONS PUT FORTH BEFORE THE AUTHORIT IES BELOW FOR EXCLUSION OF THIS COMPANY INFOSYS AS IT WAS FUNCTIONALLY DISSIMILAR TO THE ASSESSEE IN THE CAS E ON HAND ON ACCOUNT OF ITS OWNING SIGNIFICANT INTANGIBLES, ITS BRAND VALUE, R & D ACTIVITIES AND SCALE OF OPERATIONS. IN SUPPORT OF THE ASSESS EE'S PLEA FOR EXCLUSION OF THIS COMPANY, THE LEARNED AUTHORISED REPRESENTATIVE PLACED RELIANCE ON THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF CISCO SYSTEMS (INDIA) PVT. LTD. ALSO FOR ASSESSMENT YEAR 2009 - 10 (SUPRA). 18 IT(TP)A NO.1280/BANG/2014 10 .2 PE R CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW IN INCLUDING INFOSYS AS A COMPARABLE TO THE ASSESSEE. 1 0 .3.1 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED AND CAREFULLY CONSIDERED THE MAT ERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMENT CITED. WE FIND THAT THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF CISCO SYSTEMS (INDIA) PVT. LTD. , ALSO FOR ASSESSMENT YEAR 2009 - 10 (SUPRA) HAS DIRECTED EXCLUSION OF THIS COMPANY INFOSYS FR OM THE FINAL LIS T OF COMPARABLES TO A MERE PROVIDER OF SOFTWARE DEVELOPMENT SERVICES , FOR REASONS THAT IT OWNS SIGNIFICANT INTANGIBLES AND IS FUNCTIONALLY DIFFERENT AS IT GENERATES HUGE REVENUES FROM SOFTWARE PRODUCTS. IN THIS REGARD, AT PARA 26.2 OF ITS ORDER, THE CO - ORDINATE BENCH OF THIS TRIBUNAL HAS HELD AS UNDER : - 2 6 . 2 I N F O S Y S L T D . : - A S FA R A S T H I S C O MP A N Y IS C O N C E R N E D , IT IS NO T I N D IS P U TE BE F OR E U S T H A T T H IS C O M P AN Y H A S BE E N C ON SI D E R E D TO B E F U N CTI ONA LLY D IF F EREN T F RO M A C O M P AN Y P R O V I D I N G S I M P L E SOFT W AR E D E V E L O P M E N T S ER V I C E S, A S T H IS C O MP AN Y O W N S S I GN I F IC A N T I N T AN G I B L E S A N D H A S H UG E RE VE NUE S F R O M S O F T W A R E PR OD U CTS. IN T H IS R E GA R D , WE F I N D TH A T T H E B A NG A L O R E B E N C H O F T H E TR I BU N A L I N T H E C A S E O F M / S. T D P L M S O F T W A R E S O L U T I O N S L T D . V. DCI T , I T A N O . 1 3 0 3 / B A N G / 2 01 2 , B Y O R D E R D A T E D 28 .1 1 . 2 01 3 W ITH R EGA R D TO T H I S C O M P A RA B LE H A S H E LD A S F O L L O W S : - 11. 0 I N F O S Y S T E C HNOL O G I ES LTD. 11.1 TH I S W AS A C O M PARABLE S EL E C TED B Y T HE T P O . B E FORE T HE T P O , THE A SS E S S EE O B J E C T ED T O THE I N C L US ION O F T HE C O M PANY IN T HE S ET O F C O M PARABL E S , ON THE G R O UNDS O F TU R NO V ER AND B R AND AT T R I BUTABLE PRO F I T M ARGIN. THE T P O , HO W E V ER, R E J E C TED T HE S E OB J E C TIO N S RA I S ED B Y T HE A S S E SS EE ON T HE GROUN D S THAT TURNO V ER AND BR A ND A S PE C T S W ERE NO T MA T E RIAL L Y RELE V ANT IN T HE S O F T W ARE DE V ELO P M ENT S EG M EN T . 11.2 B E F ORE U S , T HE LEARNED A U T HO R I S ED R E P R E S ENTA T I V E C ON T ENDED THAT T H IS C O M PANY IS NOT F U N C T IONAL L Y C O M PA R ABLE T O 19 IT(TP)A NO.1280/BANG/2014 T H E A S S E SS EE IN THE C A S E ON HAND. THE LEARNED A UTHOR I S ED R EP R E S EN T ATI V E DREW OUR AT T EN T ION T O V ARIOUS P A RTS O F THE A NNUAL R EPORT O F T HIS C O M PANY T O S U B M IT T HAT THIS C O M PA N Y C O M M A N D S S U B S TAN T IAL BRAND V A L U E, O W NS IN T E L LE C TUAL PROPERTY RI G H T S A N D I S A M A R K ET L EA D ER I N S O F T W ARE DE V ELO P M ENT A C T I V I T IE S , W HE R EAS THE A SS E S S EE IS M ERELY A S O F T W ARE S E R V I C E PRO V IDER OPERATING I T S B U S INE S S I N I NDIA AND DO E S NOT P O S S E S S EI T HER A N Y BRAND V ALUE OR O W N A N Y INTAN G IBLE O R INTE L LE C T UAL PROPER T Y RIGHTS (I P R S ). IT W AS AL S O S U B M IT T ED B Y T HE LEARNED A U T HORI S E D R EPR E S E N T ATI V E T HA T : - (I) T HE C O - O RDINA T E BEN C H O F TH I S T R I BUNAL IN THE C A S E O F 24 / 7 C U S T O M E R . C O M P V T. LTD. I N I T A N O . 227/ B ANG/2 0 10 HAS HE L D T HAT A C O M PANY O W NING INTANGIBLES C ANNOT BE C O M PAR E D TO A L O W RI S K C AP T I V E S E R V I C E P R O V IDER W HO DOES NOT O W N A N Y IN T A N GIB L E AND HEN C E DO E S NO T HA V E AN ADDI T IONAL AD V ANTAGE I N THE M A R K E T . IT I S S U B M I T TED T HAT T HIS DE C I S ION IS APPLI C ABLE TO T HE A S S E SS EE ' S C A S E, A S T HE A SS E S S EE DO E S NOT O W N A N Y I N T A N G I B LES A N D HEN C E I N F O S Y S T E C H NOLOGIES LTD. C ANNO T BE C O M PARABLE TO THE A S S E S S EE ; (II) T HE OB S ER V ATION O F THE IT A T , D E L HI B E N C H IN THE C A S E O F A GNI T Y IND I A T E C HNOLOGI E S P V T. L T D. IN I T A N O.3856 ( D E L ) / 2010 AT PARA 5 . 2 THERE O F , THAT I N F O S Y S T E C HNOLOGI E S L T D. BEING A G I A NT C O M PANY AND M A R K ET LEADER A SS U M ING ALL RI S K S LEADING TO H I G HER P R O F I T S C ANNOT BE C O N S I D E R ED A S C O M PAR A B L E TO C APTI V E S ER V I C E P R O V IDE R S A S S U M ING L I M ITED RI S K ; (III) T HE C O M PANY HAS GENE R ATED S E V E RAL IN V ENTIONS AND F ILED F O R M ANY PA T E N TS IN I NDIA A N D US A ; (I V ) T HE C O M PANY HAS S U B S T AN T IAL RE V ENUES F R O M S O F T W ARE PRODU C T S AND T HE BREAK UP OF S U C H RE V ENUES I S NOT A V AILA BL E ; ( V ) T HE C O M PANY HAS I N C U RR ED HUGE E X P END I TURE F OR R E S E A R C H A N D DE V ELO P M EN T ; ( V I ) T HE C O M PANY HAS M ADE ARRANG E M EN T S TO W ARDS A C QU I S I TION O F I P R S IN A U T O L A Y , A C O MM E R C IAL A P P LI C A T ION PROD U C T U S ED IN DE S IGNING HIGH PER F O R M A N C E S T R U C T U R AL S Y S T E M S . I N V I E W OF THE ABO V E REA S ON S , THE LEARNED A U T HOR I S ED R EPR E S E N T ATI V E PLEADED T HAT, T H IS C O M PANY I .E. I N F O S Y S T E C HNO LOGI E S LTD . , BE E X C LUDED F O R M T H E L I S T OF C O M PARABLE C O MPANIE S . 11.3 P ER C ONTRA, OPP O S ING THE C ON T ENTIONS O F THE A S S E S S EE, T HE LEARNED D EP A R T M ENTAL R EPRE S E N T ATI V E S U B M IT T ED T H AT C O M P A R ABI L I T Y C ANNOT BE D E C IDED M E R E L Y ON THE BA S IS O F S C A LE O F OPERATIO N S AND T HE BRAND AT T RIBUTABLE PRO F IT M A R G I NS O F T HIS C O M P A N Y HA V E NOT BEEN E X TRAORDINAR Y . I N V I E W OF T HI S , THE 20 IT(TP)A NO.1280/BANG/2014 L E ARNED D EP A R T M EN T AL R EPR E S E N T ATI V E S UPPO R T ED THE DE C I S ION OF THE T P O T O IN C LUDE T HIS C O M PANY IN THE LI S T OF C O M P ARABLE C O M P ANI E S . 11.4 W E HA V E HE A RD THE RI V AL S U B M I S S IO N S AND PE R U S ED AND C A R E F ULLY C ON S IDERED T HE M AT E RIAL ON R E C ORD. W E F I ND THAT T HE A SS E S S EE HAS BROUGHT ON R E C ORD S U F F I C I ENT E V I D E N C E TO E S TAB L I S H THAT T H IS C O M PANY I S F U N C T IONAL L Y DI S - S I M I LAR AND D I FF E RE N T F R O M T HE A S S E SS EE AND HEN C E I S NOT C O M P A R AB L E AND T HE F INDING RENDERED IN THE C A S E O F T RILOGY E - B U S IN E S S S O F T W A R E IND I A P V T . LT D . ( S U PRA) F OR A S S E S S M EN T Y EAR 2007 - 08 IS A P P L I C A B L E T O T H IS Y EAR AL S O. W E A RE IN C LINED TO C ON C U R W ITH T H E ARG U M ENT PUT F O R TH B Y THE A S S E S S EE T HAT I N F O S Y S T E C HNOLOGI E S LTD IS NOT FU N C T IONAL L Y C O M P ARABLE S I N C E IT O W NS S IGN I F I C ANT IN T ANGIBLE AND HAS HU G E R E V ENU E S F R O M S O F T W ARE PROD U C T S . IT IS A L S O S EEN T HAT T HE BRE A K UP O F RE V ENUE F R O M S O F T W ARE S E R V I C E S A N D S O F T W ARE P R OD U C T S I S NOT A V A I LA B LE. IN T H IS V IEW OF T HE M AT T ER, W E HO L D T HAT T H IS C O M PANY OUGHT T O BE O M I T T ED F R O M T HE S ET O F C O M PA R A B L E C O M PANI E S . I T IS ORDER E D A C C ORDINGL Y . TH E D E C I S I O N R E N D E RE D A S A F O R E S A I D P E R T A I N S TO A . Y . 20 0 8 - 0 9 . IT W A S A FF I R M E D B Y T H E L EA R NE D C O UN S E L F O R T H E A S S E SS E E T HA T T H E F A C T S A N D C I R C U M S T A N C E S I N T H E P R E S E N T Y EA R A L S O R E M A I N S I DE N TIC A L TO T H E F A C T S A N D C I R C U M S T A N C E S A S IT P R E V A I L E D IN A Y 0 8 - 0 9 A S F A R A S T H IS COM PARAB L E C O M P AN Y IS C O N C E RN ED . R E S PE CT F U L L Y F O LL O W I N G T H E D E C I S I O N O F T H E TR I B U N A L R E F E RR E D T O A B O V E , WE H O L D T HA T I N F O S Y S L T D . B E E XC L UD E D F R O M T H E LIST O F C O M P A RA B LE C O MP AN I E S. 10 .3.2 RESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUN AL IN THE CASE OF CISCO SYSTEMS (INDIA) PVT. LTD., ALSO FOR ASSESSMENT YEAR 2009 - 10 (SUPRA), WE HOLD THAT INFOSYS TECHNOLOGIES LIMITED, IS TO BE EXCLUDED FROM THE LIST OF COMPARABLES, IT BEING FUNCTIONALLY DIFFERENT FROM THE ASSESSEE IN THE CASE ON HAND, W HO IS MERELY PROVIDING SOFTWARE DEVELOPMENT SERVICES TO ITS AES. 11. PERSISTENT SYSTEMS LIMITED ( PERSISTENT ) 11.1 THIS COMPANY, PERSISTENT WAS INCLUDED BY THE TPO IN THE FINAL LIST OF COMPARABLES, REJECTING THE ASSESSEE'S OBJECTIONS TO IT S INCLUSION ON GROUNDS OF BEING FUNCTIONALLY DIFFERENT AND FOR OWNING SIGNIFICANT 21 IT(TP)A NO.1280/BANG/2014 INTANGIBLES. THE LEARNED CIT (APPEALS) UPHELD THE ACTION OF THE TPO IN INCLUDING THIS COMPANY IN THE LIST OF COMPARABLES. BEFORE US, THE LEARNED AUTHORISED REPRESENTATIV E REITERATED THE ARGUMENTS PUT FORTH BEFORE THE AUTHORITIES BELOW FOR EXCLUSION OF THIS COMPANY FROM THE LIST OF COMPARABLES ON GROUNDS OF BEING FUNCTIONALLY DISSIMILAR TO THE ASSESSEE IN THE CASE ON HAND, AS PERSISTENT WAS ALSO ENGAGED IN DEVELOPMENT AND SALE OF SOFTWARE PRODUCTS, CHANGE IN BUSINESS ACTIVITIES PARTNERED WITH CUSTOMERS LEADING TO OWNERSHIP OF APPLICATIONS, ATTENDING TO OUTSOURCED BUSINESS NEEDS, ETC. IN SUPPORT OF THE ASSESSEE'S PLEA FOR EXCLUSION OF THIS COMPANY PERSISTENT FROM TH E LIST OF COMPARABLES, RELIANCE WAS PLACED ON THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF VMWARE SOFTWARE INDIA PVT. LTD. FOR ASSESSMENT YEAR 2009 - 10 (SUPRA). 1 1 .2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR REV ENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW IN INCLUDING PERSISTENT IN THE FINAL SET OF COMPARABLE S . 1 1 .3.1 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMEN T CITED. WE FIND THAT THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF VMWARE SOFTWARE INDIA PV T. LTD., ALSO FOR ASSESSMENT YEAR 2009 - 10 (SUPRA) AT PARAS 15 AND 16 THEREOF, OBSERVING THAT PERSISTENT IS ENGA G ED IN SOFTWARE PRODUCT DEVELOPMENT AND PRODUCT DESIGN SERVICES, HAS EXCLUDED THIS COMPANY AS ONE CANNOT BE CONSIDERED AS COMPARABLE TO A 22 IT(TP)A NO.1280/BANG/2014 COMPANY WHICH IS MERELY PROVIDING SOFTWARE DEVELOPMENT SERVICES TO ITS AE S ; AS IS THE ASSESSEE IN THE CASE ON HAND. AT PARAS 15 & 16 OF ITS ORDER (SUPRA) THE CO - ORDINATE BENCH OF THIS TRIBUNAL HAS HELD AS UNDER : - 15. SINCE LD. DR OF THE REVENUE COULD NOT POINT OUT ANY DIFFERENCE IN FACTS, RESPECTFULLY FOLLOWING THESE TRIBUNAL ORDERS, WE DIRECT THE AO/TPO TO EXCLUDE THIS COMPANY ALSO FROM THE LIST OF FINAL COMPARABLES. (4) PERSISTENT SYSTEMS LTD ., FOR EXCLUSION OF THIS COMPANY, RELIANCE HAS BEEN PLACED ON THE TRIBUNAL ORDER RENDERED IN THE CASE OF UNISYS INDIA ( P. ) LTD . IT(TP) APPEAL NO.67(BANG) OF 2015, COPY AVAILABLE ON PAGES 210 TO 246 OF C ASE LAW COMPENDIUM AND IN PARTICULAR, OUR ATTENTION WAS DRAWN TO PARA 36 TO 37 OF THE TRIBUNAL ORDER. THESE PARAS ARE REPRODUCED AS UNDER: '36. AS FAR AS PERSISTENT SYSTEMS LTD . A COMPARABLE BY THE ASSESSEE IN HIS TP STUDY BUT WAS OBJECTED BY THE ASSESSEE BEFORE THE TPO AS NOT COMPARABLE, THIS TRIBUNAL IN THE CASE OF IT(TP)A NO.108(BANG)/21014 ORDER DATED 12 - 12 - 2014 IN THE CASE OF YODLEE INFOTECH PVT . LTD . V. ITO HELD AS FOLLOWS: '5.12 THIS TRIBUNAL IN THE CASE OF 3DPLM SOFTWARE SOLUTIONS LTD . V. DY. CIT (IT(TP) A NO. 1303(BANG)/2012 DATED 28 - 11 - 2013) HAS ALSO HELD THAT PERSISTENT SYSTEMS PVT . LTD ., WAS IN PRODUCT DESIGNING SERVICES AND INTO SOFTWARE PRODUCT DEVELOPMENT. IN THE SAME DECISION IT WAS ALSO HELD THAT M / S INFOSYS TECHNOLOGIES LTD ., HAD CONS IDERABLE INTANGIBLES LIKE IPR, AND WAS ALSO INTO SOFTWARE PRODUCT DEVELOPMENT. IT WAS ALSO HELD THAT M / S TATA ELXSI LTD ., WAS DEVELOPING NICHE PRODUCTS AND INTO PRODUCT DESIGNING SERVICES. HENCE, THESE COMPANIES WOULD IN ANY CASE HAVE TO BE EXCLUDED FROM T HE COMPARABLES BEING FUNCTIONALLY DIFFERENT'. 37. FOLLOWING THE SAID DECISION, WE DIRECT THAT PERSISTENT SYSTEMS LTD ., BE EXCLUDED FROM THE FINAL LIST OF COMPARABLE COMPANIES CHOSEN BY THE TPO'. THE LD. DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORI TIES BELOW; 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT IN THIS CASE, THE TRIBUNAL HAS FOLLOWED ANOTHER TRIBUNAL ORDER RENDERED IN THE CASE OF YODLEE INFOTECH LTD . V. ITO [IT(TP) APPEAL NO. 108 (BANG) OF 2014]. THE RELEVANT PORTION OF THAT T RIBUNAL ORDER IS RE - PRODUCED ABOVE AND AS PER THE SAME, THIS COMPANY I.E. M/S. PERSISTENT SYSTEMS LTD ., WAS IN PRODUCT DESIGNING SERVICES AND INTO SOFTWARE PRODUCT DEVELOPMENT. SINCE THE PRESENT ASSESSEE COMPANY IS ONLY PROVIDING SOFTWARE DEVELOPMENT SERV ICES TO THE AE, THIS COMPANY CANNOT BE CONSIDERED AS A COMPARABLE IN THE PRESENT CASE. SINCE THE LD. DR OF THE REVENUE COULD NOT POINT OUT ANY DIFFERENCE IN FACTS, BY RESPECTFULLY FOLLOWING THIS TRIBUNAL ORDER, WE DIRECT THE AO/TPO FOR EXCLUSION OF THIS CO MPANY FROM THE FINAL LIST OF COMPARABLE. 23 IT(TP)A NO.1280/BANG/2014 1 1 .3.2 RESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF VMWARE SOFTWARE INDIA PVT. LTD., ALSO FOR ASSESSMENT YEAR 2009 - 10 (SUPRA) , WE HOLD THAT THIS COMPANY, PERSIS TENT SYSTEMS LTD., IS TO BE EXCLUDED FROM THE LIST OF COMPARABLES, IT BEING FUNCTIONALLY DI SSIMILAR TO THE ASSESSEE IN THE CASE ON HAND, WHO IS MERELY PROVIDING SOFTWARE DEVELOPMENT SERVICES TO ITS AES. 12. LARSEN & TOUBRO INFOTECH LTD. ( L & T ) 12.1 THIS COMPANY, L & T WAS INCLUDED BY THE TPO IN THE FINAL LIST OF COMPARABLES, REJECTING THE ASSESSEE'S OBJECTIONS TO ITS INCLUSION ON GROUNDS OF SCALE OF OPERATIONS, ETC. THE TPO HELD THAT THIS COMPANY L & T WAS FUNCTIONALLY COMPARABLE TO T HE ASSESSEE A S IT WAS ENGAGED IN PROVIDING SOFTWARE DEVELOPMENT SERVICES. THE LEARNED CIT (APPEALS) UPHELD THE ACTION OF THE TPO. BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE REITERATED THE ARGUMENTS PUT FORTH BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THIS COMPANY IS TO BE EXCLUDED AS IT HAS R PT IN EXCESS OF 15%. IN SUPPORT OF THE ASSESSEE'S CONTENTION ON RPT, RELIANCE WAS, INTER ALIA, PLACED ON THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF NOVELL SOFTWARE DEVE LOPMENT (INDIA) PVT. LTD. IN IT(TP)A NO.1287/BANG/2011 FOR ASSESSMENT YEAR 2007 - 08. 1 2 .2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW IN INCLUDING THIS COMPANY, L & T IN THE LIST OF COMPARABLES. THE LEARNED DEPARTMENTAL 24 IT(TP)A NO.1280/BANG/2014 REPRESENTATIVE SUBMITTED THAT IN A NUMBER OF DECISIONS THE CO - ORDINATE BENCH ES OF THIS TRIBUNAL HAD CONSISTENTLY TAKEN THE VIEW THAT APPLICATION OF RPT FILTER AT 25% OF TURNOVER IS REASONABLE. IT WAS ALSO POINTE D OUT THAT IN THE CASE OF NOVELL SOFTWARE DEVELOPMENT (INDIA) P. LTD. (SUPRA) RELIED UPON BY THE ASSESSEE, THE CO - ORDINATE BENCH OF THIS TRIBUNAL NOTED THAT THE RPT WAS GENERALLY APPLIED BY THE TRIBUNAL BETWEEN 15% AND 25%, BUT THE RPT FILTER AT 15% WAS AP PLIED IN THAT CASE ONLY BECAUSE THERE WAS A LARGE NUMBER OF COM PARABLES, I.E. 26 COMPARABLES; UNLIKE IN THE CASE ON HAND WHERE THERE ARE ONLY 11 COMPARABLES SELECTED BY THE TPO OUT OF WHICH THE INCLUSION OF 6 COMPARABLES IS BEING CHALLENGED BY THE ASSESSE E. 1 2 .3 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD . BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE COULD NOT CONTROVERT THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR REVENUE THAT VARIOUS CO - ORDINATE BENCH ES OF THIS TRIBUNAL HAVE BEEN CONSISTENTLY FOLLOWING APPLICATION OF RPT FILTER AT 25% OF TURNOVER. RESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH ES OF THIS TRIBUNAL IN THE CASE OF ITO VS. CAE SIM ULATION TECHNOLOGIES PVT. LTD. IN IT(TP)A NOS.100 & 141/BANG/2014 DT.1.9.2017 ALSO FOR ASSESSMENT YEAR 2009 - 10, WE REJECT THE ASSESSEE'S CLAIM FOR EXCLUSION OF L & T INFOTECH LTD., FROM THE LIST OF COMPARABLES AND CONSEQUENTLY UPHOLD INCLUSION OF THIS COMP ANY L & T BY THE AUTHORITIES BELOW IN THE FINAL SET OF COMPARABLES. 25 IT(TP)A NO.1280/BANG/2014 ASSESSEE'S PLEA FOR INCLUSION OF 2 COMPANIES IN THE LIST OF COMPARABLES SOFTWARE DEVELOPMENT SERVICES SEGMENT. 13.1 IN THE REVISED GROUNDS RAISED (SUPRA), THE ASSESSEE HAS SO UGHT INCLUSION OF THE FOLLOWING TWO COMPANIES IN THE FINAL SET OF COMPARABLES : - (I) THINKSOFT GLOBAL SERVICES LTD. AND (II) FCS SOFTWARE SOLUTIONS LTD. 13.2 ON A PERUSAL OF THE TPO S ORDER UNDER SECTION 92CA OF THE ACT AT PARA 13.1 (B), WE FIN D THAT THE TPO HIMSELF IN THE SHOW CAUSE NOTICES HAS PROPOSED THE AFORESAID TWO COMPANIES FOR INCLUSION IN THE FINAL SET OF COMPARABLES, BUT HAD THEREAFTER CAME TO THE VIEW THAT THE WORKING CAPITAL ADJUSTMENT FOR BOTH THESE COMPANIES EXCEEDED 4% OF PROFIT S AND THEREFORE THESE TWO COMPANIES COULD NOT BE TAKEN AS PROPER COMPARABLES. AT PARA 13.1 (B), THE TPO HAS RENDERED THE FOLLOWING REASONING FOR EXCLUDING TH ESE TWO COMPANIES AS UNDER : - 13.1 (B) TWO COMPANIES PROPOSED IN THE SHOW CAUSE NOTICE ARE F UNCTIONALLY SIMILAR TO THE TAXPAYER. HOWEVER, WHEN THE WORKING CAPITAL OF THESE COMPANIES IS CONSIDERED, THE PROFIT MARGIN GET DISTORTED. IT MAY NOT BE OUT OF CONTEXT TO MENTION THAT OUR SEARCH FOR COMPARABLE IS PRIMARILY FOCUS ON THOSE COMPANIES WHOSE P ROFIT MARGIN IS PREDOMINANTLY FORM OPERATING BUSINESS AND NOT FROM FINANCIAL ACTIVITIES. THIS PRE - REQUISITE IS NOT DIFFERENT IN CASE OF SOFTWARE DEVELOPMENT COMPANIES AS THEY DO NOT NEED ANY INTER E ST BEARING FUNDS TO MANAGE THEIR WORKING CAPITAL REQUIREMEN T. THEREFORE, WITH THE PURPOSE TO IDENTIFY ONLY THOSE UNCONTROLLED COMPARABLES WHO ARE HAVING PROFIT MARGIN FROM CORE OPERATING ACTIVITIES AND NOT FROM FINANCIAL ACTIVITIES, THE FOLLOWING TWO COMPANIES HAVING WORKING CAPITAL IMPACT OF MORE THAN 4% ON PRO FIT HAVE BEEN EXCLUDED. 26 IT(TP)A NO.1280/BANG/2014 1. THINKSOFT GLOBAL SERVICES LIMITED. 2. FCS SOFTWARE SOLUTIONS LIMITED. 13.3 BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT IN SIMILAR FACTUAL CIRCUMSTANCES, AS THOSE PREVAILING IN THE CASE ON HAND WITH RESPECT TO THE AFORESAID COMPANIES, FOR THE SAME ASSESSMENT YEAR 2009 - 10, A CO - ORDINATE BENCH OF THIS TRIBUNAL IN ITS ORDER IN THE CASE OF ARM EMBEDDED TECHNOLOGIES P. LTD. IN IT(TP)A NO.1659/BANG/2014 DT.31.8.2015; WHERE THE ASSESSEE WAS ENGAGED IN, INTER ALIA, P ROVISIONS OF SOFTWARE DEVELOPMENT AND MAINTENANCE SERVICES TO ITS AES; JUST AS IN THE CASE ON HAND, THE TRIBUNAL DIRECTED INCLUSION OF THE AFORESAID TWO COMPANIES IN THE FINAL SET OF COMPARABLES AND SET ASIDE TO THE FILE OF THE TPO THE COMPUTATION OF WORKI NG CAPITAL ADJUSTMENT ON ACTUAL BASIS FOR WORKING OUT THE CORRECT PLI OF THE FINAL COMPARABLES. 13.4 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW IN EXCLUDING THE ABOVE TWO COMPANIES FR OM THE LIST OF COMPARABLES. 13.5.1 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMENT CITED. WE FIND THE VERY SAME ISSUE , IN SIMILAR CIRCUMSTANCES OF INCLUSION OF THE AFORE SAID TWO COMPANIES I.E. (I) THINKSOFT GLOBAL SERVICES LTD. AND (II) FCS SOFTWARE SOLUTIONS LTD. IN THE FINAL LIST AS COMPARABLES TO AN ASSESSEE PROVIDING SOFTWARE DEVELOPMENT SERVICES TO ITS AES; JUST AS IN THE CASE ON HAND, WAS CONSIDERED BY A CO - ORDINAT E BENCH OF THIS TRIBUNAL 27 IT(TP)A NO.1280/BANG/2014 IN THE CASE OF ARM EMBEDDED TECHNOLOGY P. LTD. FOR ASSESSMENT YEAR 2009 - 10 (SUPRA). IN ITS ORDER, AT PARAS 20 TO 25 THEREOF, THE CO - ORDINATE BENCH (I) DIRECTED INCLUSION OF THE AFORESAID TWO COMPANIES IN THE FINAL SET OF COMPARAB LES AND (II) SET ASIDE TO THE FILE OF THE TPO/A.O., THE ISSUE OF WORKING OUT THE CORRECT PLI OF THE FINAL SET OF COMPARABLES BY COMPUTING AND ALLOWING WORKING CAPITAL ADJUSTMENT ON ACTUAL BASIS; HOLDING AS UNDER : 20. COMING TO THE GROUND FOR INCLUSION OF M/S. THINKSOFT GLOBAL SOLUTIONS LTD AND FCS SOFTWARE SOLUTIONS LTD, WE FIND THAT TPO HERSELF HAD SUGGESTED THESE IN THE SHOW CAUSE NOTICE, BUT HAD THEREAFTER COME TO A CONCLUSION THAT WORKING CAPITAL ADJUSTMENT REQUIRED FOR THESE TWO COMPANIES EXCEEDED 4% OF PROFITS AND COULD NOT BE THEREFORE TAKEN AS PROPER COMPARABLES. REASONS GIVEN BY THE TPO FOR EXCLUDING THESE TWO COMPANIES, APPEAR AT PARAS 3.6.5.1, OF HER ORDER WHICH READS AS UNDER : B) TWO COMPANIES PROPOSED IN THE SHOW - CAUSE NOTICE ARE FUNCTIO NALLY SIMILAR TO THE TAXPAYER. HOWEVER, WHEN THE WORKING CAPITAL OF THESE COMPANIES IS CONSIDERED, THE PROFIT MARGIN GETS DISTORTED. IT MAY NOT BE OUT OF CONTEXT TO MENTION THAT OUR SEARCH FOR COMPARABLE IS PRIMARILY FOCUS ON THOSE COMPANIES WHOSE PROFIT MARGIN IS PREDOMINANTLY FROM OPERATING BUSINESS AND NOT FROM FINANCIAL ACTIVITIES. THIS PREREQUISITE IS NOT DIFFERENT IN CASE OF SOFTWARE DEVELOPMENT COMPANIES AS THEY DO NOT NEED ANY INTEREST BEARING FUNDS TO MANAGE THEIR WORKING CAPITAL REQUIREMENT. T HEREFORE, WITH THE PURPOSE TO IDENTIFY ONLY THOSE UNCONTROLLED COMPARABLES WHO ARE HAVING PROFIT MARGIN FROM CORE OPERATING ACTIVITIES AND NOT FROM FINANCIAL ACTIVITIES, THE FOLLOWING TWO COMPANIES HAVING WORKING CAPITAL IMPACT OF MORE THAN 4% ON PROFIT HA VE BEEN EXCLUDED. 21. TPO HAS ACCEPTED THAT THESE COMPANIES WERE FUNCTIONALLY SIMILAR TO THAT OF THE ASSESSEE. HOWEVER, ACCORDING TO HER, THE MARGINS OF THESE COMPANIES HAD NOT COME FROM ITS CORE OPERATING ACTIVITIES BUT FROM FINANCIAL ACTIVITIES. PROFIT AND LOSS ACCOUNT OF M/S. THINKSOFT GLOBAL SOLUTIONS FOR THE RELEVANT PREVIOUS YEAR IS PLACED AT PAPER BOOK PAGE.247. SOFTWARE SERVICE REVENUES OF THE SAID COMPANY CAME TO RS.920921452/ - . OTHER INCOME OF THE SAID COMPANY CAME TO RS.35,738,801/ - . BREAK - U P OF THE OTHER INCOME AS GIVEN AT SCHEDULE 10 PLACED AT PAPER BOOK PAGE.256 SHOW THAT OUT OF SUCH AMOUNT RS.26,536,978/ - WAS EXCHANGE GAIN. INTEREST RECEIVED FROM DEPOSITS WITH BANKS AND OTHERS CAME TO RS.29,15,080/ - ONLY. FOR BETTER CLARITY THIS BREAK - U P IS GIVEN HEREUNDER : 28 IT(TP)A NO.1280/BANG/2014 OTHER INCOME INTEREST RECEIVED ON DEPOSITS WITH BANKS .. 2,371,740 INTEREST RECEIVED FROM OTHERS .. 543,310 PROFIT ON SALE OF FIXED ASSETS .. 6,276,773 EXCHANGE GAIN (NET) .. 26,536,978 MISCELLANEOUS INCOME .. 10,000 35,738,801 WE CANNOT SAY THAT THE OTHER INCOME AROSE OUT OF ANY FINANCIAL SERVICES DONE BY THE ASSESSEE AND WOULD TAKE AWAY THE SHEEN OF ITS SOFTWARE SERVICES INCOME. THE AMOUNT, IN OUR OPINION, WAS INSIGNIFICANTLY SMALL AND NOT ENO UGH TO WARRANT A CONCLUSION THAT ITS OPERATING MARGINS HAD COME NOT FROM ITS CORE OPERATIONAL ACTIVITIES. 22. COMING TO FCS SOFTWARE SOLUTIONS LTD, PROFIT AND LOSS ACCOUNT PLACED AT PAPER BOOK PAGE 321 SHOWS THAT ITS REVENUE FROM SOFTWARE DEVELOPMENT AND O THER SERVICES WAS RS.1902547907/ - . AS AGAINST THIS, MISCELLANEOUS INCOME WAS ONLY RS.7875588/ - . BREAK - UP OF SUCH MISCELLANEOUS INCOME AS GIVEN AT SCHEDULE M, PLACED AT PAPER BOOK PAGE. 328 READS AS UNDER : INTEREST .. 2,875,685 RENT INCOME .. 4,515,000 AMOUNT W/BACK .. 484,902 7,875,588 23. COMPARED TO THE SOFTWARE DEVELOPMENT SERVICES INCOME, INTEREST RECEIVED BY M/S. FCS SOFTWARE SOLUTIONS LTD, WAS IN OUR OPINION, INSIGNIFICANTLY SMALL. THUS THE REASONING GIVEN BY TPO FOR REJECTING THESE TWO COMPANIES AS PROPER COMPARABLES, WAS IN OUR OPINION, INCORRECT. WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES IN THIS REGARD AND DIRECT THESE TWO COMPANIES TO BE INCLUDED IN THE LIST OF COMPARABLES FOR WORKING OUT THE AVERAGE PLI. 24. NOW COMING TO THE ISSUE OF WORKING CAPITAL ADJUSTMENT, FINDINGS OF THE TPO IN THIS REGARD AS IT APPEARS AT PARA 3.7, READS AS UNDER : 29 IT(TP)A NO.1280/BANG/2014 TPO HAD RESTRICTED THE COST OF CAPITALTO 1.71%. RATIONALITY FOR SUCH AN UPPER LIMIT BEING PLACED ON WORKING CAPITAL ADJUSTMENT WAS AN IS SUE WHICH HAD COME UP BEFORE THIS TRIBUNAL IN THE CASE OF M/S. RAMBUS CHIP TECHNOLOGIES (INDIA) P. LTD V. DCIT [IT(TP)A.23/BAN/2015, DT.22.07.2015. COORDINATE BENCH HAD HELD AS UNDER AT PARA 13 AND 14 OF ITS ORDER : 13. AS REGARDS GROUND NO.3(F), LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE AO/TPO WHILE CONSIDERING THE WORKING CAPITAL ADJUSTMENT, HAS ARRIVED AT THE WORKING CAPITAL ADJUSTMENT IN THE CASE OF THE ASSESSEE AT 5.97%, BUT WHILE GIVING EFFECT TO THE WORKING CAPITAL ADJUSTMENT, HAS RESTRIC TED THE SAID ADJUSTMENT TO 1.71% IN CASE OF UNCONTROLLED COMPARABLES SELECTED BY THE TPO. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TPO HAS NOT GIVEN ANY BASIS FOR SUCH RESTRICTION OF THE WORKING CAPITAL ADJUSTMENT. HE SUBMITTED THAT THE CI T(A) ALSO HAS NOT APPLIED HIS MIND TO THIS ISSUE BUT HAS SUMMARILY CONFIRMED THE ORDER OF THE AO AND THEREFORE IT HAS TO BE SET ASIDE. 14. ON GOING THROUGH THE TPO S ORDER AS WELL AS ANNEXURE D REFERRED TO IN THE TRANSFER PRICING ORDER ON WORKING CA PITAL ADJUSTMENT, WE FIND THAT THE AO HAS NOT GIVEN ANY BASIS FOR RESTRICTING THE ADJUSTMENT TO 1.71%. IN ALL THE CASES RELATING TO TRANSFER PRICING ADJUSTMENT, THIS TRIBUNAL HAS BEEN DIRECTING TO GIVE WORKING CAPITAL ADJUSTMENT ON ACTUAL BASIS AND THE TP O HAVING ARRIVED AT 5.97% OUGHT TO HAVE ADOPTED THE SAME INSTEAD OF RESTRICTING IT TO 1.71%. IN VIEW OF THE SAME, WE DEEM IT PROPER TO REMAND THIS ISSUE TO THE FILE OF THE AO/TPO FOR WORKING OUT THE ALP AFTER GIVING ADJUSTMENT OF WORKING CAPITAL AS PER TH E CALCULATION OF THE AO IN ANNEXURE D ANNEXED TO THE 30 IT(TP)A NO.1280/BANG/2014 TRANSFER PRICING ORDER. THIS GROUND OF APPEAL IS ACCORDINGLY ALLOWED. 25. ACCORDINGLY WE DIRECT THE AO / TPO TO CORRECTLY WORK OUT THE PLI OF THE FINAL COMPARABLES AFTER GIVING DUE ADJUSTMENT FOR THE WO RKING CAPITAL ON ACTUAL BASIS. RELATED GROUND OF THE ASSESSEE IS THEREFORE ALLOWED. 13.5.2 RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ARM EMBEDDED TECHNOLOGIES P. LTD. FOR ASSESSMENT YE AR 2009 - 10, WE HOLD AND DIRECT THE TPO THAT THE FOLLOWING TWO COMPANIES I.E. (I) THINKSOFT GLOBAL SERVICES LTD. AND (II) FCS SOFTWARE SOLUTIONS LTD. BE INCLUDED IN THE FINAL SET OF COMPARABLES AND SET ASIDE TO THE FILE OF THE TPO THE ISSUE OF WORKING O UT THE CORRECT PLI OF THE FINAL SET OF COMPARABLES BY COMPUTING AND ALLOWING WORKING CAPITAL ADJUSTMENT ON ACTUAL BASIS. ASSESSEE'S PLEA FOR EXCLUSION OF 5 COMPARABLE FROM FINAL SET OF COMPANIES IN ITES SEGMENT. 14.1 IN THE REVISED GROU ND RAISED, THE ASSESSEE PLEADS FOR EXCLUSION OF THE FOLLOWING 5 COMPANIES FROM THE FINAL LIST / SET OF COMPARABLES : - (I) INFOSYS BPO LIMITED (II) ADITYA BIRLA MINACS WORLDWIDE L IMITED (III) ACCENTIA TECHNOLOGIES LIMITED (IV) COSMIC GLOBAL LIMITED (V) E CLERX SERVICES LIMITED. 14.2 IN SUPPORT OF THE ASSESSEE'S CONTENTIONS FOR EXCLUSION OF THE AFORESAID COMPANIES AT S.NOS.(I) AND (III) TO (V) (SUPRA) FROM THE FINAL SET 31 IT(TP)A NO.1280/BANG/2014 OF COMPARABLES FOR THE ASSESSEE'S ITES SEGMENT, RELIANCE, INTER ALIA, WS PLACED O N THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF NOVO NORDISK INDIA PVT. LTD. IN IT(TP)A NO.122/BANG/2014 FOR ASSESSMENT YEAR 2009 - 10. IN RESPECT OF THE COMPANY AT S.NO.(II), RELIANCE WAS PLACED ON NOVELL SOFTWARE DEVELOPMENT (INDIA ) P. LTD. IN IT(TP)A NO.1287/BANG/2011 FOR ASSESSMENT YEAR 2007 - 08 (SUPRA). 15 . (I) INFOSYS BPO LIMITED (III) ACCENTIA TECHNOLOGIES LIMITED (IV) COSMIC GLOBAL LIMITED (V) ECLERX SERVICES LIMITED. 15.1 THE ABOVE 4 COMPANIES (SUPRA) WERE INCLUDED IN THE FINAL SET OF COMPARABLES BY THE TPO, DESPITE THE OBJECTIONS OF THE ASSESSEE THAT, INTER ALIA, THEY WERE FUNCTIONALLY DISSIMILAR TO THE ASSESSEE IN THE CASE ON HAND. THE TPO S ACTION WAS UPHELD BY THE LEARNED CIT (APPEALS). BEFORE US, THE LEARNED A UTHORISED REPRESENTATIVE OF THE ASSESSEE REITERATED THE OBJECTIONS TO THEIR INCLUSION AS COMPARABLES RAISED BEFORE THE AUTHORITIES BELOW THAT THEY WERE, INTER ALIA, FUNCTIONALLY DISSIMILAR FROM THE ASSESSEE IN THE CASE ON HAND. IT IS CONTENDED THAT THE CO MPARABILITY OF THESE COMPANIES WITH AN ITES COMPANY WAS CONSIDERED BY A CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF NOVO NORDISK INDIA PVT. LTD. FOR ASSESSMENT YEAR 2009 - 10 (SUPRA) AFTER WHICH THEY WERE DIRECTED TO BE EXCLUDED FROM THE FINAL LIST OF COMPARABLES IN THE ITES SEGMENT. IT WAS THEREFORE PRAYED THAT THESE COMPANIES BE EXCLUDED FROM THE FINAL SET OF COMPARABLES. 32 IT(TP)A NO.1280/BANG/2014 15.2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW IN INCLUD ING THE AFORESAID 4 COMPANIES IN THE FINAL SET OF COMPARABLES. 15.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMENT CITED. WE FIND THAT COMPARABILITY OF THE ABOVE 4 COMPANIES (SUPRA) WITH AN ITES COMPANY WAS CONSIDERED BY A CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF NOVO NORDISK INDIA PVT. LTD. FOR THE VERY SAME ASSESSMENT YEAR 2009 - 10 (SUPRA) AND THE BENCH DIRECTED THAT THEY WERE TO BE EXCLUDED FROM THE FINA L SET OF COMPARABLES BY HOLDING AS UNDER AT PARAS 86 & 87 THEREOF : - 33 IT(TP)A NO.1280/BANG/2014 34 IT(TP)A NO.1280/BANG/2014 35 IT(TP)A NO.1280/BANG/2014 36 IT(TP)A NO.1280/BANG/2014 37 IT(TP)A NO.1280/BANG/2014 38 IT(TP)A NO.1280/BANG/2014 39 IT(TP)A NO.1280/BANG/2014 15.3.2 RESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF NOVO NORDISK INDIA PVT. LTD. FOR ASSESSMENT YEAR 2009 - 10 (SUPRA) WHICH ARE RENDERED ON SIMILAR / IDENTICAL FACTS AND CIRCUMSTANCES, WE HOLD THAT THE AFORESAID 4 COMPANIES LISTED AT PARA 15 (SUPRA) ARE NOT COMPARABLE TO AN ITES COMPANY AND CONSEQUENTLY DIRECT THE TPO/A.O. TO EXCLUDE THEM FROM THE LIST OF COMPARABLE COMPANIES. 16. ADITYA BIRLA MINACS WORLDWIDE LIMITED ( ADITYA BIRLA ) 16.1 THIS COMPANY, ADITYA BIRLA WAS INCLUDED BY THE TPO IN THE FINAL LIST OF COMPARABLES, REJECTING THE ASSESSEE'S OBJECTIONS TO ITS INCLUSION ON GROUNDS OF SC ALE OF OPERATIONS, ETC. THE TPO HELD THAT THIS COMPANY ADITYA BIRLA WAS FUNCTIONALLY COMPARABLE TO THE ASSESSEE AS IT WAS ENGAGED IN PROVIDING SOFTWARE DEVELOPMENT SERVICES. THE LEARNED CIT (APPEALS) UPHELD THE ACTION OF THE TPO. BEFORE US, THE LEARN ED AUTHORISED REPRESENTATIVE REITERATED THE ARGUMENTS PUT FORTH BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THIS COMPANY IS TO BE 40 IT(TP)A NO.1280/BANG/2014 EXCLUDED AS IT HAS R PT IN EXCESS OF 15%. IN SUPPORT OF THE ASSESSEE'S CONTENTION ON RPT, RELIANCE WAS, INTER ALI A, PLACED ON THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF NOVELL SOFTWARE DEVELOPMENT (INDIA) PVT. LTD. IN IT(TP)A NO.1287/BANG/2011 FOR ASSESSMENT YEAR 2007 - 08. 16.2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW IN INCLUDING THIS COMPANY, ADITYA BIRLA IN THE LIST OF COMPARABLES. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT IN A NUMBER OF DECISIONS THE CO - ORDINATE BENCHES OF THIS TRIBUNAL HAD C ONSISTENTLY TAKEN THE VIEW THAT APPLICATION OF RPT FILTER AT 25% OF TURNOVER IS REASONABLE. IT WAS ALSO POINTED OUT THAT IN THE CASE OF NOVELL SOFTWARE DEVELOPMENT (INDIA) P. LTD. (SUPRA) RELIED UPON BY THE ASSESSEE, THE CO - ORDINATE BENCH OF THIS TRIBUNAL NOTED THAT THE RPT WAS GENERALLY APPLIED BY THE TRIBUNAL BETWEEN 15% AND 25%, BUT THE RPT FILTER AT 15% WAS APPLIED IN THAT CASE ONLY BECAUSE THERE WAS A LARGE NUMBER OF COMPARABLES, I.E. 26 COMPARABLES. 16.3 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE COULD NOT CONTROVERT THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR REVENUE THAT VARIOUS CO - ORDINATE BENCHES OF THIS TRIBUNAL HAVE BEEN CONSISTENTLY FOLLOWING APPLICATION OF RPT FILTER AT 25% OF TURNOVER. RESPECTFULLY FOLLOWING THE 41 IT(TP)A NO.1280/BANG/2014 DECISION OF THE CO - ORDINATE BENCHES OF THIS TRIBUNAL IN THE CASE OF ITO VS. CAE SIMULATION TECHNOLOGIES PVT. LTD. IN IT(TP)A NOS.100 & 1 41/BANG/2014 DT.1.9.2017 ALSO FOR ASSESSMENT YEAR 2009 - 10, WE REJECT THE ASSESSEE'S CLAIM FOR EXCLUSION OF ADITYA BIRLA MINACS WORLDWIDE LIMITED , FROM THE LIST OF COMPARABLES AND CONSEQUENTLY UPHOLD INCLUSION OF THIS COMPANY ADITYA BIRLA BY THE AUTHORIT IES BELOW IN THE FINAL SET OF COMPARABLES. 17. IN THE RESULT, THE ASSESSEE'S APPEAL FOR ASSESSMENT YEAR 2009 - 10 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 13TH DAY OF DEC., 201 7 . SD/ - ( SUNIL KUMAR YADAV ) ACCOUNTANT MEMBER SD/ - ( JASON P BOAZ ) JUDICIAL MEMBER BANGALORE, DT. 13 .12.2017. *REDDY GP COPY TO : 1 APPELLANT 4 CIT(A) 2 RESPONDENT 5 DR. ITAT, BANGALORE 3 CIT 6 GUARD FILE SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL BANGALORE.