M/s. Google India Pvt. Ltd., Bangalore V. DCIT, Bangalore

ITA 1368/BANG/2010

• Counselvise Citation: 136821114 RSA 2010
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-07-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 03-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FARAHAT HUSSAIN QURESHI
• Assessee Lawyers: ARVIND SONDE
• Keywords: Transfer pricing; Share purchase agreement; International transaction

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SHRI N BARATHVAJA SANKAR, VICE RESIDENT AND SMT. P MADHAVI DEVI, JUDICIAL MEMBER ITA NO.1368/BA NG/2010 (ASST. YEAR - 2006-07) M/S GOOGLE INDIA PVT. LTD., . APPELLANT VS. THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-11(3), BANGALORE. . RESPONDENT APPELLANT BY : SHRI ARVIND SONDE, CA RESPONDENT BY : SHRI FARAHAT HUSSAIN QURESHI DATE OF HEARING : 18-09-2012 DATE OF PRONOUNCEMENT : 19-10-2012 O R D E R SMT. P MADHAVI DEVI, JUDICIAL MEMBER THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2006-07. THE APPEAL IS DIRECTED AGAINST TH E ASSESSMENT ORDER PASSED IN CONSONANCE WITH THE ORDER OF THE DISPUTE RESOLUTION PANEL AT BANGALORE DATED 20.09.2010. THE APPEAL ARISES O UT OF THE ITA NO.397 TO 4 04/B/11 2 ASSESSMENT COMPLETED U/S 144C(5) R.W.S 144C(8) OF T HE INCOME-TAX ACT, 1961. 2. THE ASSESSEE IS AGGRIEVED BY THE ASSESSMENT ORDE R PASSED IN CONSONANCE WITH THE ORDER OF THE DRP MAKING TRANSFE R PRICING ADJUSTMENT U/S 92CA OF THE INCOME-TAX ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT SER VICES AND INFORMATION TECHNOLOGY ENABLED SERVICES (ITES). AS THE ASSESSEE HAD ENTERED INTO AN INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTERPRISE, A REFERENCE U/S 92CA OF THE ACT WAS MAD E TO THE TPO FOR DETERMINING THE ARMS LENGTH PRICE OF THE SAID INTE RNATIONAL TRANSACTION. THE TPO VIDE ORDER DATED 28.10.2009 U/ S 92CA OF THE ACT, PROPOSED ADJUSTMENTS TOWARDS SOFTWARE DEVELOPM ENT SERVICES AND IT ENABLED SERVICES. THE AO TAKING DUE NOTE OF THE ADJUSTMENTS PROPOSED BY THE TPO, FORWARDED A DRAFT ASSESSMENT O RDER TO THE ASSESSEE. THE ASSESSEE RAISED OBJECTIONS TO THE DR AFT ASSESSMENT ORDER BEFORE THE DRP AND AFTER CONSIDERING THE SAME, THE DRP CONFIRMED THE PROPOSAL OF THE ASSESSING AUTHORITY AND ASSESSM ENT ORDER WAS ACCORDINGLY PASSED. ITA NO.397 TO 4 04/B/11 3 3. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. THE DRP CONFIRMED THE ORDER OF THE ASSESSING AUTHORITY AS F AR AS THE ADJUSTMENT TO THE ALP TOWARDS IT ENABLED SERVICES IS CONCERNED BUT RECOMMENDED THAT NO ADJUSTMENTS ARE REQUIRED TO BE DONE IN RESPECT OF THE INTERNATIONAL TRANSACTIONS RELATING TO SOFTW ARE DEVELOPMENT SERVICES SEGMENT. 4. AGGRIEVED BY THE ADJUSTMENT MADE UNDER THE ITES SEGMENT, THE ASSESSEE IS IN APPEAL BEFORE US. THOUGH THE ASSESS EE HAS RAISED AS MANY AS 19 GROUNDS OF APPEAL, THE MAIN GRIEVANCE IS AGAINST THE TRANSFER PRICING ADJUSTMENT AND THE COMPARABLES ADO PTED BY THE TPO. 5. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSES SE HAS DRAWN OUR ATTENTION TO THE ORDER OF THE DRP DATED 20.9.2010 R ELATING TO ADJUSTMENT TO BE GIVEN FOR THE UNDER UTILIZATION OF THE CAPACITY. HE SUBMITTED THAT THE DRP HAS CLEARLY NOTED THAT THE C OMPARABLES HAVE A AVERAGE OF 80% UTILIZATION LEVELS AS COMPARED TO TH E ASSESSEE WHICH IS AT 58%. HOWEVER, WHILE COMPUTING THE ADJUSTMEN T, AT PAGE 7 PARA 7, THE DRP HAS TAKEN THE CAPACITY UNDER UTILIZATION OF THE COMPARABLE COMPANIES AT 65%, WHICH HAS RESULTED IN THE HIGHER ADJUSTMENT. ITA NO.397 TO 4 04/B/11 4 6. THE LEARNED DR ALSO AGREED THAT AN ERROR HAS BEE N COMMITED WHILE MAKING THE ADJUSTMENT UNDER UTILIZATION OF CA PACITY OF THE COMPARABLES AS THIS IS ONLY A MISTAKE APPARENT FRO M RECORD, WE DEEM IT FIT AND PROPER TO DIRECT THE ASSESSING AUTHORITY TO RECTIFY THE MISTAKE BY COMPUTING THE CORRECT ADJUSTMENT IN UNDER UTILI ZING CAPACITY BY TAKING THE CAPACITY UTILIZATION OF THE COMPARABLE C OMPANIES AT 80% INSTEAD OF 65% MENTIONED IN THE ORDER OF THE DRP. 7. AS REGARDS THE OTHER GROUNDS OF APPEAL, THE ASSE SSEE HAS STATED THAT THE ASSESSEE HAS CHARGED ITS ASSOCIATED ENTERP RISES AT COST + METHOD, BUT FOR COMPUTING THE ARMS LENGTH PRICE, THE TNMM HAS BEEN ADOPTED. HE SUBMITTED THAT THE TRANSFER PRICIN G OFFICER HAS REJECTED SOME OF THE COMPARABLES ADOPTED BY THE ASS ESSEE AND AFTER CONDUCTING HIS OWN SEARCH ANALYSIS HAS ADOPTED CERT AIN OTHER COMPANIES AS COMPARABLES. HE SUBMITTED THAT THE AS SESSEE HAS RAISED OBJECTIONS TO THE ADOPTION OF THE SAID COMPARABLES BUT HOWEVER, THE TPO, AFTER BRUSHING ASIDE THE ASSESSEES OBJECTION, HAS PROCEEDED TO MAKE THE ADJUSTMENT TO THE ALP. HE SUBMITTED THAT SOME OF COMPANIES WHICH CANNOT BE ADOPTED AS COMPARABLES FO R THE TP STUDY ARE AS UNDER: ITA NO.397 TO 4 04/B/11 5 (1) ASIT C MEHTA FINANCIAL SERVICES LTD. (2) GOLDSTONE INFRATECH LTD. 8. THESE TWO COMPANIES HAVE ABNORMALLY HIGH PRO FIT MARGIN. HE SUBMITTED THAT ASIT C MEHTA HAS SHOWN PHENOMENAL IN CREASE IN PROFITS BY 1,195% AND THE REVNUES FOR THE FINANCIAL YEAR 2005 HAS INCREASED BY 363% AS COMPARED TO FINANCIAL YEAR 200 5. HE SUBMITTED THAT IN THE CASE OF GOLDSTONE INFRATECH LTD., THERE ARE ABNORMAL FLUCTUATIONS AS COMPARED TO FINANCIAL YEAR 2005-06. IN THE YEAR 2005, THE REVENUE WAS 31%, WHILE IN THE YEAR 2006 DECLIN E IN THE REVENUE WAS 16%, WHILE THE PROFIT EARNED DURING 2005 WAS -6 9% AS COMPARED TO THE PROFIT GROWTH OF 38% IN 2006. THUS, ACCORDI NG TO HIM, THESE COMPANIES HAVE TO BE EXCLUDED FROM THE LIST OF COMP ARABLES AS THEY ARE ABNORMALLY HIGHER MARGIN COMPANIES. IN SUPPORT OF ITS CONTENTION THAT THE ABNORMALLY HIGHER MARGIN COMPANIES ARE TO BE EXCLUDED FROM THE LIST OF COMPARABLES FOR THE PURPOSE OF TP STUDY , THE LEARNED COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE UPON T HE FOLLOWING DECISIONS : 1) ABODE SYSTEMS PVT. LTD., IN ITA NO.5043/DEL/2010 ITA NO.397 TO 4 04/B/11 6 2) SAP LABS INDIA PVT. LTD., IN ITA NO.398, 418/BANG/2008 3) TEVA INDIA PVT. LTD., IN ITA NO.5707/MUM/2010 4) SAUNARY JEWELS PVT. LTD., IN ITA NO.5758/MUM/2007 5) SAPIENT CORPORATION PVT. LTD., IN ITA NO.5263/DEL/2010 6) M/S GENISYS INTEGRATING SYSTEMS (I) PVT. LTD., IN ITA NO.5263/DEL/2010 9. THE NEXT COMPARABLE, THE ASSESSEE HAS OBJECTED T O IS (3) VISHAL INFORMATION TECHNOLOGY LTD. THE OBJECTION OF THE A SSESSEE IS THAT THE EMPLOYEE COST OF THIS COMPANY IS LESS THAN 25%. TH E LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE IT ENABLED SERV ICES ARE BASICALLY DEPENDENT UPON THE HUMAN RESOURCES AND, THEREFORE, ANY COMPANY WITH EMPLOYEE COST LESS THAN 25% CAN NOT BE COMPARE D WITH AN IT ENABLED SERVICES COMPANY. HE SUBMITTED THAT IN THE CASE OF MAERSK GLOBAL SERVICES CENTRE (I) PVT. LTD., CASE OF VISHA L INFORMATION TECHNOLOGY HAS BEEN CONSIDERED AND WAS DIRECTED TO BE EXCLUDED. HE SUBMITTED THAT THE TPO HAS HIMSELF HELD THAT EMPLOY EE COST FILTER IS VERY MUCH APPLICABLE AND THROUGH VISHAL INFORMATION TECHNOLOGIES LTD. HAVING OUTSOURCED SOME OF ITS SERVICES AND HAV ING EMPLOYEE COST OF 25% CANNOT BE CONSIDERED AS A COMPARABLE. HE HA S ALSO DRAWN OUR ITA NO.397 TO 4 04/B/11 7 ATTENTION TO THE TPOS ORDER, WHEREIN THE EMPLOYEE COST FILTER WAS CONSIDERED FOR THE PURPOSE OF SOFTWARE DEVELOPMENT SERVICES BUT HAS NOT BEEN CONSIDERED FOR THE IT ENABLED SERVICES. H E SUBMITTED THAT THE TPO HAS TO ADOPT THE SAME YARDSTICK FOR THE PUR POSE OF TP ADJUSTMENT FOR BOTH THE ITS AND TTES COMPANY. IN SUPPORT OF ITS CONTENTION THAT THE EMPLOYEE COST IS IMPORTANT FACT OR/ FILTER AND HAS TO BE CONSIDERED FOR THE PURPOSES OF MAKING TRANSFER PRICING ADJUSTMENT, HE PLACED RELIANCE UPON THE FOLLOWING DECISIONS : 1) AVAYA INDIA PVT. LTD., IN ITA NO.5150/DEL/2010 2) COLT TECHNOLOGIES SERVICES IND. PVT. LTD., IN ITA NO.4370/DEL/2010 3) SAPIENT CORPORATION SERVICES INDIA PVT. LTD., IN IT A NO.5263/DEL/2010 10. THE NEXT COMPARABLE COMPANY, THE ASSESSEE OBJ ECTING TO IS (4) APEX KNOWLEDGE SOLUTION PVT. LTD. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE ASSESSEE COMPANY IS I N THE PURE BUSINESS OF ITES, WHILE APEX KNOWLEDGE SOLUTION PVT. LTD., IS FUNCTIONALLY DIFFERENT, AS IT IS ENGAGED IN PROVIDING VALUE ADDE D E-PUBLISHING, , GIS AND KNOWLEDGE BASED SERVICES. HE SUBMITTED THA T THIS COMPANY OPERATES IN FOUR BUSINESS SEGMENTS I.E E-PUBLISHING SOLUTIONS, ITA NO.397 TO 4 04/B/11 8 BUSINESS SOLUTIONS, ENGINEERING SOLUTIONS AND CUSTO MER CARE SOLUTIONS AND SEGMENTAL DATA OF THESE SEGMENTS IS NOT AVAILAB LE. THEREFORE, ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THIS COMPANY HAS TO BE EXCLUDED FROM THE LIST OF COMPARABLES. IN RESPE CT OF THIS CONTENTION, HE PLACED RELIANCE UPON THE FOLLOWING D ECISIONS : 1) QUARK SYSTEMS PVT. LTD., IN [2010-TIOL -31-ITAT-CHD-SB] 2) CRM SERVICES INDIA (P). LTD., IN ITA NO.4068 OF 2009 AND 4796 OF 2010) 3) AZTEC SOFTWARE, (SB 107 ITD 141) 4) MOSER BAER INDIA LTD., 316 ITR 1 5) MENTOR GRAPHICS PVT. LTD., IN ITA NO.1969/D/200 6 6) EGAIN COMMUNICATION PVT. LTD., IN ITA NO.1685/P N/2007 12. THE FIFTH COMPARABLE COMPANY WHICH THE ASSESSE OBJECTS TO IS (5) DATAMATICS FINANCIAL SERVICES LTD. THE OBJECTIO N OF THE ASSESSE IS THAT THE COMPANY DOES NOT QUALIFY THE REVENUE FILTE R CONSIDERED BY THE LEARNED TPO HIMSELF, ACCORDING TO WHICH THE COMPANY NOT DERIVING 75% OR MORE OF ITS REVENUE FROM ITES ACTIVITY IS TO BE REJECTED FROM COMPARABLES. AS REGARDS LAST COMPARABLE WHICH THE ASSESSEE SEEKS TO BE EXCLUDED IS (6) ALLSEC TECHNOLOGIES LTD. ACCORDI NG TO THE LEARNED ITA NO.397 TO 4 04/B/11 9 COUNSEL FOR THE ASSESSEE, ALLEC TECHNOLOGIES LTD., HAS BEEN EXPERIENCING EXTRA ORDINARY EVENTS. DURING THE FIN ANCIAL YEAR 2005- 06, ALLSEC HAD GONE FOR A IPO DURING THE RELEVANT PREVIOUS YEAR AND ALSO THE COMPANY HAD ENTERED INTO A SHARE PURCHASE AGREEMENT WITH SHAREHOLDER OF B2K CORPORATION PVT. LTD., WHICH IS ENGAGED IN THE BUSINESS OF INBOUND AND OUTBOUND VOICE, EMAIL CHA T SERVICES AND INFORMATION TECHNOLOGY SERVICES. THEREFORE, DUE TO THESE EXTRA ORDINARY EVENTS, THE PROFITS OF THE SAID COMPANY AR E NOT ASCERTAINABLE AND, THEREFORE, THE COMPANY HAS TO BE EXCLUDED. 13. THE LEANED DR ON THE OTHER HAND SUPPORTED THE O RDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE H AD BEEN GIVEN AMPLE OPPORTUNITY OF RAISING THE OBJECTIONS BEFORE THE TPO AND THE DRP AND THE AUTHORITIES HAVE CONSIDERED THE OBJECTI ONS OF THE ASSESSEE BEFORE PASSING THE ORDER. THUS, ACCORDING TO HIM, THE ASSESSMENT ORDER IS TO BE CONFIRMED. 14. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THE RIVAL CONTENTIONS, WE FIND THAT THE ONLY DISPUTE BEFORE U S IS WITH REGARD TO THE COMPARABLES ADOPTED BY THE TPO. THE ASSESSEE V IDE ITS TP STUDY HAD ARRIVED AT FOUR COMPARABLE COMPANIES, OUT OF WH ICH THREE HAVE ITA NO.397 TO 4 04/B/11 10 BEEN REJECTED BY THE TPO AS NOT COMPARABLE. THEREA FTER, THE TPO AFTER CONDUCTING HIS OWN SEARCH FROM THE AVAILABLE DATA BASE PROVIDED ARRIVED AT CERTAIN OTHER COMPARABLES AND AFTER CALL ING FOR ASSESSEES OBJECTIONS HAS ADOPTED THE FINAL LIST OF COMPARABLE S. THE ASSESSEE HAS ACCEPTED SOME OF THE COMPARABLES ADOPTED BY THE TPO WHILE IT RAISED OBJECTIONS TO THE OTHERS. THE ASSESSEES OBJECTION REGARDING TWO COMPANIES (1) ASIT C MEHTA FINANCIAL SERVICES LTD., AND (2) GOLDSTONE INFRATECH LTD., IS ON THE ISSUE OF ABNORM ALLY HIGHER MARGIN. IN OUR VIEW, THIS OBJECTION IS JUSTIFIED ON THE BAS IS OF VARIOUS DECISIONS OF THE TRIBUNAL WHEREIN IT HAS BEEN HELD THAT SUPER PROFIT MAKING COMPANIES HAVE TO BE EXCLUDED FROM THE LIST OF COMP ARABLE BEFORE MAKING TRANSFER PRICING ADJUSTMENT. IN THE CASE B EFORE US, ONLY THESE TWO COMPANIES SHOWING PROFIT OF MORE THAN 100% AS C OMPARED TO THE OTHER COMPARABLES TAKEN BY THE TPO. IN VIEW OF THE DECISIONS OF THE CO-ORDINATE BENCHES OF THE TRIBUNAL, WE DIRECT THE AO TO EXCLUDE THESE TWO COMPANIES FROM THE LIST OF COMPARABLES FO R THE PURPOSE OF MAKING THE TRANSFER PRICING ADJUSTMENT. 15. AS REGARDS THE ISSUE OF (8) VISHAL INFORMATIO N TECHNOLOGIES LTD., WE FIND THAT, IT IS ADOPTED BY THE TPO. THE DRP HELD THAT VISHAL INFORMATION TECHNOLOGIES HAS OUTSOURCED ITS CALL CENTRE WORK ITA NO.397 TO 4 04/B/11 11 AND, THEREFORE, THE EMPLOYEE COST IS LESS THAN 25% AS IS THE COMMON PRACTICE AMONG OTHER ITES SERVICES. THE TPO AS WEL L AS THE DRP HAVE RECORDED THAT IN THE ITES SECTOR, EMPLOYEES FI LTER OF LESS THAN 25% ALONE IS NOT APPLICABLE FOR THE REASON THAT IN ADDITION TO THE AMPLE COSTS, THE COMMISSION COSTS ARE ALSO IMPORTAN T. WHEN COMPANY HAS OUTSOURCED ITS ITES SERVICES, IT CANNOT BE SAID THAT ITS BUSINESS RESULTS WOULD BE COMPARABLE TO ANY OTHER I TES SERVICE PROVIDER RENDERING THE SERVICES ENTIRELY ON ITS OWN . IN SUCH CIRCUMSTANCES, THE NET MARGINS OF THE TWO COMPARABL ES CANNOT BE ON THE SAME BASIS. THE DECISIONS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE ALSO HELD THAT THE EMPLOYEE COST FILTE R IS IMPORTANT FILTER TO BE ADOPTED FOR THE PURPOSE OF COMPUTING ALP. IN THE CASE OF MAERSK GLOBAL SERVICES CENTRE (INDIA) PVT. LTD., IN ITA NO.3774/M/2011, THE TRIBUNAL AT MUMBAI HAS HELD THA T VISHAL INFORMATION TECHNOLOGIES LTD. HAS TO BE EXCLUDED FR OM THE LIST OF COMPARABLES OF ITES COMPANY AS IT HAS OUTSOURCED IT S SERVICES. IN VIEW OF THE SAME, WE DIRECT THE AO TO EXCLUDE THIS COMPANY ALSO FROM THE LIST OF COMPARABLES. 16. AS FAR AS (4) APEX KNOWLEDGE SOLUTIONS PVT. LTD ., IS CONCERNED, WE FIND THAT THE ASSESSEE HAD TAKEN OBJE CTIONS BEFORE THE ITA NO.397 TO 4 04/B/11 12 TPO THAT IT IS FUNCTIONALLY DIFFERENT, AS IT IS PRO VIDES SERVICES SUCH AS E-PUBLISHING KNOWLEDGE BASED SERVICES ETC. BUT TPO HAS REJECTED THE OBJECTION ON THE GROUND THE ASSESSEE HAS NOT CONSID ERED THE VERTICALS OR FUNCTIONAL LINES DURING THE SEARCH PROCESS CONDU CTED BY IT AND, THEREFORE, IT IS NOT PROPER TO MAKE ANY OBJECTION O N THIS BASIS NOW. WE ARE NOT ABLE TO AGREE WITH THE FINDING OF THE TP O AS CONFIRMED BY THE DRP ON THIS ISSUE. MERELY BECAUSE, THE ASSESSE E ITSELF HAS NOT CONSIDERED THE SAID FILTER WHILE MAKING ITS TP STUD Y; IT CANNOT BE SAID THAT IT CANNOT RAISE SUCH AN OBJECTION BEFORE THE T PO. IT IS THE TPO WHO HAS ADOPTED THIS COMPANY AS COMPARABLE. ON SUCH ADOPTION, THE ASSESSEE HAS EVERY RIGHT TO RAISE THE OBJECTIONS AS REGARDS THE FUNCTIONAL DIFFERENCES BETWEEN THE ASSESSEE AND COM PARABLE. IT IS THE BOUNDEN DUTY OF THE TPO TO CONSIDER THE SAID OBJECT IONS IN ACCORDANCE WITH LAW. AS BROUGHT OUT BY THE ASSESSE E, THE ASSESSEE IS IN THE TT ENABLED SERVICES, WHEREAS THE SAID COMPAN Y APEX KNOWLEDGE SALUTATION PVT. LTD., IS IN THE BUSINESS OF E-PUBLISHING WHICH CANNOT BE SAID TO BE IN THE SAME LINE OF BUSI NESS. THE FUNCTIONAL DIFFERENCES ARE LIKELY TO AFFECT THE PRO FIT MARKING CAPACITY OF BOTH THE COMPANIES. IN VIEW OF THE SAME, WE ARE OF THE OPINION THAT THIS COMPANY IS ALSO TO BE EXCLUDED FROM THE L IST OF COMPARABLES. AS REGARDS THE OTHER TWO COMPARABLES I.E (5) DATAMA TICS FINANCIAL ITA NO.397 TO 4 04/B/11 13 SERVICES LTD. AND (6) ALLSEC TECHNOLOGIES LTD., WE FIND THAT MERELY BECAUSE THERE WERE EXTRAORDINARY EVENTS DURING THE FINANCIAL YEAR, WITHOUT DEMONSTRATING AS TO HOW THESE EXTRAORDINARY EVENTS HAVE INFLUENCED THE PROFIT MARGIN OF THE COMPANY, THEY C ANNOT BE EXCLUDED FROM THE LIST OF COMPARABLES, BUT THE ADJUSTMENTS F OR SUCH EXTRAORDINARY EVENTS HAVE TO BE MADE TO THE PROFITS OF THE COMPANIES TO BRING THEM ON PAR WITH THE ASSESSEE BEFORE COMPA RING THEM WITH THE ASSESSEEE. THEREFORE, WE REMAND THIS ISSUE TO THE FILE OF THE AO TO CONSIDER THE ADJUSTMENTS TO BE MADE TO THESE TWO CO MPARABLES BEFORE ARRIVING AT THE ALP. NEEDLESS TO MENTION THAT THE ASSESSEE SHALL BE GIVEN A FAIR OPPORTUNITY OF HEARING. 17. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19TH OCT, 2012. (N BARAT HVAJA SANKAR) (P MADHAVI DEVI) VICE PRESIDENT JUDICIAL MEMBER VMS. BANGALORE DATED : 19/10/2012 ITA NO.397 TO 4 04/B/11 14 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER SR. PRIVATE SECRETA RY, ITAT, BANGALORE.