Radisys India Pvt. Ltd., Bangalore V. ITO,

ITA 1548/BANG/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0268 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 13-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Related party transaction; Business income; Transfer pricing; Opportunity of being heard
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A, BANGALORE BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SMT ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER IT (TP) A NOS.1548,1549(BANG) 2013 (ASSESSMENT YEARS : 2005-06 & 2006-07) M/S RADISYS INDIA PRIVATE LIMITED., FORMERLY KNOWN AS CONTINUOUS COMPUTING INDIA PVT. L TD., ELECTRA, EXORA BUSINESS PARK, (PRESTIGE TECH PARK-2 ) MARATHALLI SARJAPUR RING ROAD, BANGALORE-560 103 NO.AACCC 3169M APPELLANT VS THE INCOME TAX OFFICER, WARD-11(1), BANGALORE RESPONDENT AND (IN IT(TP)A NOS.1663 & 1664(BANG)/2013 (ASSESSMENT YEARS : 2005-06 & 2006-07) (BY REVENUE) ASSESSEE BY: SHRI MAHAVEER C JAIN, CA REVENUE BY: DR. P.K.SRIHARI, ADDL.CIT DATE OF HEARING : 11-07-2016 DATE OF PRONOUNCEMENT: : 15-07-2016 O R D E R PER SHRI A.K.GARODIA, AM THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND T HE REVENUE FOR THE ASSESSMENT YEARS: 2005-06 & 2006-07 RESPECTIVELY. ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY A COMMO N ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP THE APPEAL OF THE REVENUE FOR T HE ASSESSMENT YEAR : 2005-06. GROUND NO.5 OF THE APPEAL RAISED BY THE R EVENUE READS AS UNDER; IT(TP)A NOS.1548-49 & 1663-64(B)2013 2 5. THE LEARNED AO HAS ERRED IN INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C ) OF THE IT ACT MECHANICALLY AND WITHOUT RECORDING ANY ADEQUATE SATISFACTION FOR SUCH INITIATION. 3. IT WAS SUBMITTED BY THE LD. DR OF THE REVENUE TH AT THE MAIN ISSUE HAS BEEN SET ASIDE BY THE LD. CIT(A) TO THE FILE OF THE TPO WITH A DIRECTION TO EXCLUDE THOSE COMPANIES WHICH ARE FUNCTIONALLY DISS IMILAR BASED ON THE GUIDELINES PASSED BY ANOTHER ORDER OF THE LD. CIT(A ). HE SUBMITTED THAT NOW, THE LD. CIT(A) CANNOT RESTORE THE MATTER TO THE FIL E OF THE AO AND HE HAS TO DECIDE THE ISSUE HIMSELF AND THEREFORE, IN THE PRES ENT CASE, THE ENTIRE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE LD. CT(A ) FOR FRESH DECISION. 4. THE LD. AR OF THE ASSESSEE ALSO AGREED TO THIS P REPOSITION AND SINCE THE MAIN ISSUE WAS SET ASIDE BY THE LD. CIT(A), WE FEEL IT PROPER THAT THE ENTIRE MATTER SHOULD BE RESTORED BACK TO THE FILE O F THE LD. CIT(A) FOR FRESH DECISION. ACCORDINGLY, WE SET ASIDE THE ORDER OF T HE LD.CIT(A)AND RESTORE THE ENTIRE MATER BACK TO THE FILE OF THE LD.CIT(A) FOR A FRESH DECISION WITHOUT RESTORING BACK ANY PART OF THE MATTER TO THE LOWER AUTHORITY AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. 5. IN VIEW OF OUR ABOVE DECISION IN THE ABOVE PARA REGARDING GROUND NO.5 OF THE APPEAL OF THE REVENUE, FOR OTHER GROUND S RAISED BY THE REVENUE AND FOR ALL THE GROUNDS RAISED BY THE ASSESSEE, NO ADJUDICATION IS CALLED FOR AT THIS STAGE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE AS WEL L AS APPEAL OF THE ASSESSEE FOR AY: 2005-06 ARE ALLOWED FOR STATISTICA L PURPOSES. IT(TP)A NOS.1548-49 & 1663-64(B)2013 3 7. NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR AY : 2006-07. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER; 1. THE ORDER OF THE LD. CIT(A) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) ERRED IN LAW IN DIRECTING THE AO TO EXCL UDE THE REIMBURSEMENT OF COMMUNICATION EXPENSES BOTH FROM T HE EXPORT TURNOVER AS WELL AS FROM TOTAL TURNOVER FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S 10A, WITHOU T APPRECIATING THE FACT THAT THE STATUTE ALLOWS EXCLU SION OF SUCH EXPENDITURE ONLY FROM EXPORT TURNOVER BY WAY O F SPECIFIC DEFINITION OF EXPORT TURNOVER AS ENVISAGED BY SUB- CLAUSE (4) OF EXPLANATION 2 BELOW SUB-SECTION(8) OF SECTION 10A AND THE TOTAL TURNOVER HAS NOT BEEN DEFINED IN THIS SECTION. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN DIRECTING THE AO TO COMPUTE DEDUCTI ON U/S 10A IN THE ABOVE MANNER BY PLACING RELIANCE ON THE DECISION OF THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF M/S TATA ELXSI LTD., WHICH HAS NOT BECOME FINAL SINCE THE SAME HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND SLPS AR E PENDING BEFORE THE HONBLE SUPREME COURT. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT(A) IN SO FAR AS IT RELATES TO THE ABOVE GROUNDS MAY BE REVER SED AND THAT OF THE AO MAY BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR DELETE ANY OF THE GROUNDS MENTIONED ABOVE. 8. THE LD. DR OF THE REVENUE SUPPORTED THE ASSESSM ENT ORDER WHEREAS THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF T HE LD. CIT(A). HE ALSO SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF T HE ASSESSEE BY THE IT(TP)A NOS.1548-49 & 1663-64(B)2013 4 JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT RENDER ED IN THE CASE OF M/S TATA ELXSI LTD., REPORTED IN 349 ITR 98. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND FORCE IN THE SUBMISSIONS OF THE LD. AR OF THE ASSESSEE BECAUSE A S PER THE JUDGMENT OF THE HONBLE KARNATAKA HIGH COURT RENDERED IN THE CA SE OF M/S TATA ELXSI LTD. (SUPRA), THE TOTAL TURNOVER IS A SUM TOTAL OF EXPORT TURNOVER AND DOMESTIC TURNOVER AND THEREFORE, IF AN AMOUNT IS RE DUCED FROM THE EXPORT TURNOVER THEN THE TOTAL TURNOVER IS ALSO REQUIRED T O BE REDUCED BY THE SAME AMOUNT. ACCORDINGLY, WE DECLINE TO INTERFERE WITH THE ORDER OF THE LD. CIT(A) ON THIS ISSUE. 10. IN THE RESULT, THE APPEAL OF THE REVENUE FOR A Y: 2006-07 IS DISMISSED. 11. NOW WE TAKE UP THE APPEAL OF THE ASSESSEE FOR A Y: 2006-07. 11.1 THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDE R; BOTH THE LD. DCIT(TP)-IV (HEREINAFTER REFERRED TO AS TPO ) AND THE LD.CIT(A)-IV BANGALORE (HEREINAFTER REFER RED TO AS CIT(A)) HAVE BY NOT FOLLOWING THE DIRECTIONS GIV EN BY THE HONBLE ITAT, BANGALORE (HEREINAFTER REFERRED T O AS ITAT) IN RE-COMPUTATION OF THE ARMS LENGTH PRICE WHICH HAS RESULTED IN A TRANSFER PRICING ADJUSTMENTS AND IN SO DOING, BASED ON THE FACTS AND LAW, THE LD. TPO AND THE LD. CIT(A) HAVE GROSSLY ERRED; 1. BY DISREGARDING THE FUNCTIONAL AND RISK PROFILE OF THE APPELLANT AND COMPARING IT WITH COMPANIES WHICH HAV E AN ENTIRELY DIFFERENT FUNCTIONAL AND RISK PROFILE. IT(TP)A NOS.1548-49 & 1663-64(B)2013 5 2. BY DISMISSING THE APPELLANTS GROUND OF REJECTIN G THE COMPANIES HAVING RELATED PARTY TRANSACTION OF 15% O F MORE. 3. BY ADOPTING THE EXPORT SALES TOTAL FILTER OF 25% OF LESS FOR REJECTION INSTEAD OF THE EXPORT SALES TO TOTAL SALES FILTER OF 75% OR LESS APPLIED BY THE LD. TPO HIMSEL F FOR REJECTION IN THE SUBSEQUENT YEARS AS THE APPELLANT IS 100% EXPORT ORIENTED UNIT. 4. BY COMPARING THE APPELLANT WHICH IS IN ITS SECON D YEAR OF OPERATION WITH ESTABLISHED COMPANIES ON THE ONE HAND AND HAVE NOT EXCLUDED THE STARTUP RELATED COST OF RS.91.31 LAKHS INCURRED BY THE APPELLANT FROM THE OPERATING COST WHILE COMPUTING THE NCP OF THE APPEL LANT EVEN THOUGH THE SAME WAS EXCLUDED BY THE LEARNED TP O FROM THE OPERATING COST WHILE COMPUTING THE NCP OF THE APPELLANT IN THE ASSESSMENT YEAR 2007-08. 5. BY DISMISSING THE APPELLANTS GROUND OF REJECTIN G THE COMPANIES HAVING EMPLOYEE COST TO SALES OF 40% OR L ESS. 6. BY IMPLICITLY ACCEPTING THE COMPARABLES HAVING ABNORMAL/SUPER PROFITS ON ONE HAND AND ON THE OTHER HAND REMOVING PERSISTENT LOSS MAKING COMPANIES. THAT THE ABOVE GROUNDS OF OBJECTION ARE WITHOUT PREJUDICE TO EACH OTHER. THE APPELLANT CRAVES LEAVE TO ADD, OMIT OR ALTER GR OUNDS OF APPEAL BEFORE OR DURING THE HEARING OF THE APPEA L. 12. THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUNDS WHICH ARE AS UNDER; 1. IN THE PRESENT CASE, THE APPELLANT PLEADS FOR: THE REMOVAL OF KALS INFORMATION SYSTEMS LIMITED SELECTED AS COMPARABLES BY THE LEARNED TPO (HEREAFT ER REFERRED TO AS TPO) AND BY THE APPELLANT. IT(TP)A NOS.1548-49 & 1663-64(B)2013 6 THE REMOVAL OF BODHTREE CONSULTING LIMITED SELECTED AS COMPARABLE Y THE LEARNED TPO (HEREAFTER REFERRED TO AS TPO) THE REMOVAL OF ACCEL TRANSMATIC SELECTED AS COMPARA BLE BY THE LD. TPO (HEREAFTER REFERRED TO AS TPO) 2. THE APPELLANT HAD CONSIDERED KALS INFORMATION SYSTEMS LIMITED AS A COMPARABLE IN ITS TP STUDY AND HAD ARGUED FOR REMOVAL OF THE SAID COMPANY ON FUNCTIONAL GROUND EARLIER BEFORE THELD.CIT(A) ON FUNCTIONALITY GROUND. HENCE, HE APPELLANT SEEKS THE PERMISSION OF THE HONBLE BENCH FOR ADMISSION OF ADDITIONAL GROUNDS. 3. ACCEL TRANSMATIC LIMITED WAS SELECTED AS A COMPARABLE BY THE LEARNED TPO AND THE APPELLANT HAD ARGUED FOR REMOVAL OF THIS COMPANY ON FUNCTIONAL GROUND EARLIER BEFORE THE LD. CIT(A) ON FUNCTIONALI TY GROUND. HENCE, HE APPELLANT SEEKS THE PERMISSION OF THE HONBLE BENCH FOR ADMISSION OF ADDITIONAL GROUN DS. 4. TATA ELXSI LTD., WAS SELECTED AS A COMPARABLE BY THE LD. TPO AND THE APPELLANT HAD ARGUED FOR REMOVAL OF THIS COMPANY ON FUNCTIONAL GROUND BEFORE THE LEARNE D CIT(A) ON FUNCTIONALITY GROUND. HENCE, THE APPELL ANT SEEKS THE PERMISSION OF THE HONBLE BENCH FOR ADMISSION OF ADDITIONAL GROUNDS. 5. BODHTREE CONSULTING LTD., WAS SELECTED AS A COMPARABLE BY THE LEARNED TPO AND THE APPELLANT HAD NOT SOUGHT FOR REMOVAL OF THIS COMPANY ON FUNCTIONA L GROUND EARLIER. HENCE, THE APPELLANT SEEKS THE PERMISSION OF THE HONBLE BENCH FOR ADMISSION OF ADDITIONAL GROUNDS. 6. FURTHER, THE APPELLANT HAD NOT SOUGHT FOR COMPUT ATION OF MARGIN OF MEGASOFT ON SEGMENTAL BASIS. NOW, SIN CE THE SEGMENTAL DATA IS AVAILABLE AS A RESULT OF REPL Y TO IT(TP)A NOS.1548-49 & 1663-64(B)2013 7 NOTICE UNDER SECTION 133(6) APPEARING IN PUBLIC DOM AIN AFTER THE PROCEEDINGS BEFORE THE LEARNED TPO. HENC E, HE APPELLANT SEEKS THE PERMISSION OF THE HONBLE BENCH FOR ADMISSION OF ADDITIONAL GROUNDS. 7. IN THIS REGARD, WE WISH TO STATE THAT THE APPEAL PERTAINS TO ASSESSMENT YEAR 2006-07 BEING THE SECON D YEAR OF OPERATION. AS THESE WERE THE INITIAL YEARS FOR IMPLEMENTATION OF TRANSFER PRICING PROCEEDINGS FOR THE APPELLANT AND HENCE THE APPELLANT WAS NOT FULLY CONVERSANT WITH THIS NEW BRANCH OF LAW WHEN PROCEEDINGS WERE INITIATED. 8. SUBSEQUENTLY, DUE TO JUDICIAL PRONOUNCEMENTS AND AVAILABILITY OF THE ANNUAL REPORTS IN THE PUBLIC DO MAIN, THE APPELLANT BECAUSE AWARE OF THE FUNCTIONAL DIFFERENCES OF THE COMPANIES SELECTED AS COMPARABLE S BY THE LEARNED TPO. DURING THE TRANSFER PRICING PROCEEDINGS, THE LD.TPO AND THE APPELLANT HAD RELIE D ON THE PROWESS SOFTWARE IN WHICH THE ANNUAL REPORTS WE RE NOT AVAILABLE. HENCE, THE APPELLANT IS FILING AD DITIONAL GROUNDS FOR REMOVAL OF THE KALS INFORMATION SYSTEMS LTD., ACCEL TRANSMATIC LTD, TATA ELXSI LTD., AND BODHTREE CONSULTING LIMITED SELECTED AS COMPARABLE BY THE LD. TPO. 9.WITH REGARD TO THE CONSIDERATION OF SEGMENTAL DAT A IN CASE OF MEGASOFT, THE SEGMENTAL DATA WAS AVAILABLE AS A RESULT OF REPLY TO NOTICE UNDER SECTION 133(6) AP PEARING IN PUBLIC DOMAIN AFTER THE PROCEEDINGS BEFORE THE L D. TPO. HENCE, APPELLANT IS FILING ADDITIONAL GROUND FOR CONSIDERING THE SEGMENTAL DATA OF MEGASOFT FOR THE COMPUTATION OF MARGINS. 10. IN REGARD TO THE ABOVE SAID, THE APPELLANT PLA CES RELIANCE ON THE FOLLOWING RULINGS FOR THE PROPOSITI ON THAT IT(TP)A NOS.1548-49 & 1663-64(B)2013 8 A COMPANY NOT ARGUED BEFORE THE LOWER AUTHORITIES C AN BE ARGUED BEFORE THE HON'BLE ITAT. IN THE CASE OF QUARK SYSTEMS PVT. LTD., 38 (SB) (CH DG.) WHEREIN IT WAS HELD BY THE SPECIAL BENCH CHANDIGARH THAT A TAXPAYER IS NO STOPPED FROM POINTING OUT A MISTAKE IN THE ASSESSMENT THOUGH SUCH MISTAKE IS TH E RESULT OF EVIDENCE ADDUCED BY THE TAXPAYER. JURISDICTIONAL HONBLE BANGALORE ITAT RULING IN THE CASE OF BROADCOM INDIA PVT LTD., -IT(TP)A NO.1164(BANG)/2011. 11. THE APPELLANT HUMBLY PRAYS THAT THE ADDITIONAL GROUNDS BE ADMITTED AND ADJUDICATED ALONG WITH THE OTHER GROUND OF APPEAL IN THE COURSE OF HEARING OF THE APPEAL. THE APPELLANT PLEADS ACCORDINGLY. GROUND NO.7. THE LD. TPO/AO HAS GROSSLY ERRED BY DISREGARDING TH E FUNCTIONAL AND RISK PROFILE OF THE APPELLANT AND COMPARING IT WITH THE FOLLOWING COMPARABLES WHICH H AS AN ENTIRELY DIFFERENT FUNCTIONAL AND RISK PROFILE A ND THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE SAME. - KALS INFORMATION SYSTEMS LTD., - ACCEL TRANSMATIC LTD., - TATA ELXSI LTD., - BODHTREE CONSULTING LTD. THE LD. TPO/AO HAS GROSSLY ERRED IN COMPUTING THE MARGIN OF MEGASOFT LTD., ON ENTITY BASIS INSTEAD OF SEGMENTAL INFORMATION. THE APPELLANT PLEADS ACCORDINGLY. IT(TP)A NOS.1548-49 & 1663-64(B)2013 9 12. IT IS SUBMITTED BY THE LD. AR OF THE ASSESSEE THAT THE TRIBUNAL ORDER IN THE FIRST ROUND IS AVAILABLE ON PAGES 403 TO 433OF THE PAPER BOOK IN ITA NO.1343(BANG)/2010 DATED 30-03-2012. IN PARTIC ULAR, OUR ATTENTION WAS DRAWN TO PARA-27 & 28 OF THIS TRIBUNAL ORDER AN D IT WAS POINTED OUT THAT THE MATTER WAS RESTORED BACK BY THE TRIBUNAL I N THE CASE OF THE ASSESSEE BY FOLLOWING THE TRIBUNAL ORDER RENDERED I N THE CASE OF M/S INSILICA SEMICONDUCTORS INDIA PVT. LTD., V ITO IN ITA NO.139 9(BANG)/2010 FOR THE AY: 2006-07 DATED 29-02-2012 AND THE RELEVANT PORTI ON OF THAT TRIBUNAL ORDER HAS BEEN REPRODUCED IN THE ORDER IN CASE OF T HE ASSESSEE. IT WAS FURTHER POINTED OUT THAT IN THAT CASE, IT IS NOTED BY THE TRIBUNAL THAT NEW COMPANIES WERE ADOPTED BY THE TPO AS COMPARABLES WI THOUT AFFORDING OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS OBJECTIO NS TO THEIR ADOPTION. HE SUBMITTED THAT SINCE THE TRIBUNAL O RDER HAS BEEN FOLLOWED BY THE TRIBUNAL IN THE CASE OF THE ASSESSEE, THE OBJECTIONS OF THE ASS ESSEE REGARDING ADOPTION OF VARIOUS COMPARABLES SHOULD BE DECIDED BY THE TPO AN D BY THE LD. CT(A). THEREAFTER, HE SUBMITTED THAT THE DECISION OF THE L D. CIT(A) IN THE IMPUGNED ORDER IS ON THIS BASIS THAT THE OBJECTIONS OF THE A SSESSEE REGARDING FUNCTIONAL DISSIMILARITY AND OTHER ASPECTS IN RESPE CT OF VARIOUS COMPARABLES IS BEYOND THE SCOPE OF THE DIRECTIONS CONTAINED IN THE TRIBUNAL ORDER. HE SUBMITTED THAT AS PER THE TRIBUNAL ORDER, ALL THE O BJECTIONS OF THE ASSESSEE ARE TO BE DECIDED AND THEREFORE, THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE LD. CIT(A) FOR FRESH DECISION. 13. THE LD. DR OF THE REVENUE SUPPORTED THE ORDER OF THE LD. CIT(A). IT(TP)A NOS.1548-49 & 1663-64(B)2013 10 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FOR THE SAKE OF READY REFERENCE, WE REPRODUCE THE RELEVANT PORTION OF THE TRIBUNAL ORDER IN THE ASSESSEES OWN CASE IN THE FIRST ROUND BEING PARA- 27 & 28 OF THIS TRIBUNAL ORDER AVAILABLE ON PAGES 421 & 423 OF THE PAPER BOO K. 27. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVA ILABLE ON RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT A SIMILAR ISSUE HAVING SIMILAR FACTS HAS BEEN ADJUDICATED BY THIS B ENCH OF THE TRIBUNAL IN THE CASE OF M/S. INSILICA SEMICONDUCTORS INDIA PVT. LTD. V. ITO IN ITA NO.1399/BANG/2010 FOR THE A.Y. 2 006-07, ORDER DATED 29.02.2012 AND THE ISSUE HAS BEEN REMANDED BACK TO THE AO / TPO. THE RELEVANT FINDINGS ARE GIVEN IN PARAS 18 & 19 OF THE SAID ORDER WHICH READ AS UNDER: 18. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE ASSESSEE SELEC TED 10 COMPARABLES OUT OF WHICH 2 VIZ., VISUAL SOFT TECHNO LOGIES LTD. AND VJIL CONSULTANCY LTD. WERE REJECTED BY THE TPO. HOWEVER, THE TPO INCLUDED ANOTHER COMPANY M/S. INFOSYS TECHN OLOGIES LTD. WHICH WAS CLAIMED TO BE 906 TIMES BIGGER THAN THE ASSESSEE. IN OUR OPINION THE SAID COMPANY BEING SIGNIFICANTLY DISSIMILAR IN SIZE SHOULD NOT HAVE BEEN CONSIDERED AS COMPARABLE. IN THE PRESENT CASE, THE TPO INCLUDED CERTAIN COMPANIES AS COMPARABLE ON THE BASIS OF INFORMATION OBTAINED BY WAY OF NOTI CE U/S. 133(6) OF THE ACT, BUT WITHOUT PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, THE TPO ISSUED A SHOW CAUSE NOTICE DA TED 30.04.09 COPY OF WHICH IS PLACED ON PAGES 95 TO 125 OF THE A SSESSEES PB AND PROPOSED TO REDETERMINE THE ALP ON THE BASIS OF 20 COMPARABLES AND SUBSEQUENTLY ISSUED ANOTHER NOTICE ON 20.07.09 AND PROPOSED TO ADOPT 14 COMPANIES AS COMPARABLES, BUT IN THE FINAL ORDER THE TPO SELECTED 22 COMPANIES AS COMPAR ABLES. IN OTHER WORDS, 8 ADDITIONAL COMPANIES WERE CONSIDERED AS COMPARABLES APART FROM THOSE WHICH WERE PROPOSED IN THE NOTICE DATED 20.07.09, COPY OF WHICH IS PLACED AT PAGES 30 5 TO 355 OF THE IT(TP)A NOS.1548-49 & 1663-64(B)2013 11 ASSESSEES COMPILATION. IT THEREFORE APPEARS THAT NEW COMPANIES WERE ADOPTED BY THE TPO AS COMPARABLES WITHOUT AFFO RDING OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS OBJECTIO NS TO THEIR ADOPTION. IT IS WELL SETTLED THAT NOBODY SHOULD BE CONDEMNED UNHEARD AS PER THE MAXIM AUDI ALTERAM PARTEM , BUT IN THE PRESENT CASE NOTHING IS BROUGHT ON RECORD TO SUBSTANTIATE T HAT THE TPO/AO WHILE ADOPTING ADDITIONAL COMPARABLES HAD PROVIDED OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THEREFORE THIS ISS UE DESERVES TO BE SET ASIDE TO BE DECIDED AFRESH AT THE LEVEL OF THE ASSESSING OFFICER. FOR THE AFORESAID VIEW, WE ARE FORTIFIED BY THE ORD ER DATED 31.01.2012 OF THE ITAT A BENCH BANGALORE IN THE C ASE OF GENESIS MICROCHIP (I) PVT. LTD., BANGALORE V. DCIT, CIRCLE 11(3), BANGALORE IN ITA NO.1254/BANG/2010 FOR THE A.Y. 200 6-07 . 19. IN THE PRESENT CASE, THE AO ADOPTED M/S. INFOS YS TECHNOLOGIES LTD., KALS INFORMATION SYSTEM LTD., AC CEL TRANSMATIC LTD. AND TATA ELXSI LTD. AS COMPARABLES ON THE BASIS OF DATA WHICH WAS OBTAINED BY HIM IN RESPONSE OF TH E NOTICES ISSUED U/S. 133(6) OF THE ACT, HOWEVER NO OPPORTUNI TY OF BEING HEARD WAS PROVIDED TO THE ASSESSEE FOR REBUTTAL, TH EREFORE THE ASSESSING OFFICER WAS NOT JUSTIFIED IN CONSIDERING THOSE COMPARABLES WHILE WORKING OUT THE ALP IN ASSESSEES CASE. IN THAT VIEW OF THE MATTER, WE DEEM IT APPROPRIATE TO SET ASIDE THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER, TO BE ADJUDICATED AFRESH IN ACCORDANCE WITH LAW, AFTER PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE A O/TPO IS ALSO DIRECTED TO ALLOW THE OPPORTUNITY TO CROSS-EXAMINE THE COMPARABLES WHOSE REPLIES WERE OBTAINED U/S. 133(6) OF THE ACT AND WERE SOUGHT TO BE USED AGAINST THE ASSESSEE, IF THE ASSESSEE SO DESIRES. 28. SINCE THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE FACTS INVOLVED IN THE AFORESAID REFERRED TO CASE OF M/S. INSILICA SEMICONDUCTORS PVT. LTD. IN ITA NO.1399/BANG/2010 F OR THE A.Y. 2006-07 , SO RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER, WE REMAND THIS ISSUE BACK TO THE FILE OF THE ASSESS ING OFFICER FOR FRESH ADJUDICATION IN ACCORDANCE WITH THE LAW, AFTE R PROVIDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE AS SESSEE. IT(TP)A NOS.1548-49 & 1663-64(B)2013 12 15. FROM THE ABOVE PARAS REPRODUCED FROM THE TRIBU NAL ORDER IN ASSESSEES OWN CASE IN THE FIRST ROUND, IT IS SEEN THAT THE TRIBUNAL HAD FOLLOWED ANOTHER TRIBUNAL ORDER RENDERED IN THE CAS E OF M/S INSILICA SEMICONDUCTORS INDIA PVT. LTD.,(SUPRA) AND IN THAT CASE, THE ISSUE REGARDING ADOPTION OF ADDITIONAL COMPARABLES WAS RE STORED BACK TO THE FILE OF THE AO/TPO FOR FRESH DECISION. IN THE PRESENT CASE , IT IS OBSERVED BY THE TRIBUNAL THAT THE FACTS OF THE PRESENT CASE ARE SIM ILAR TO THE FACTS INVOLVED IN THE CASE OF M/S INSILICA SEMICONDUCTORS INDIA PVT. LTD.(SUPRA) AND BY FOLLOWING THAT TRIBUNAL ORDER, THE MATTER WAS RESTO RED BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW AF TER PROVIDING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN OU R CONSIDERED OPINION, AS PER THE DIRECTION OF THE TRIBUNAL, THE ASSESSEE IS AUTHORIZED TO RAISE OBJECTIONS AGAINST THE ADOPTION OF A COMPARABLE BY THE TPO AND SUCH OBJECTION HAS TO BE DECIDED BY THE AO/TPO AND BY TH E LD. CIT(A) BUT SINCE IN THE IMPUGNED ORDER, THE LD. CIT(A) HAS NOT DECI DED THESE OBJECTIONS, WE FEEL IT PROPER TO RESTORE THIS MATTER BACK TO THE F ILE OF THE LD. CIT(A) FOR A FRESH DECISION AND ACCORDINGLY, WE SET ASIDE THE OR DER OF THE LD. CIT(A) AND RESTORE THE ENTIRE MATTER IN RESPECT OF TP ISSUE BA CK TO HIS FILE FOR A FRESH DECISION IN ACCORDANCE WITH LAW AFTER PROVIDING ADE QUATE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR THE AY: 2005-06 IS ALLOWED FOR STATISTICAL PURPOSES. IT(TP)A NOS.1548-49 & 1663-64(B)2013 13 17. IN THE COMBINED RESULT, THE APPEAL OF THE REVE NUE FOR AY: 2006-07 IS DISMISSED AND THE REMAINING ONE APPEAL OF THE RE VENUE AND TWO APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE S. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ASHA VIJAYARAGHAVAN) SD/- (A.K. GARODIA) JUDICAL MEMBER ACCOUNTANT MEMBER BANGALORE: D A T E D : 15/ 07/2016 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-II BANGALORE 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER AR, ITAT, BANGALORE IT(TP)A NOS.1548-49 & 1663-64(B)2013 14 1. DATE OF DICTATION .. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P. S. .. 4 DATE ON WHICH THE ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE ORDER COMES BACK TO THE SR. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE .. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO . 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER DOES FOR XEROX & ENDORSEMENT . 10. DATE ON WHICH T HE FILE GOES TO THE HEAD CLERK. 11 THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER. 12 THE DATE ON WHICH THE FILE GOES TO THE DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER 13 DATE OF DISPATCH OF ORDER