IVY Comptech Private Limited, Hyderabad V. ACIT, Hyderabad

ITA 1558/HYD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74532 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 09-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 10-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: ARIJIT CHAKRAVORTHY
• Keywords: Related party transaction; Transfer pricing; Opportunity of being heard; International transaction
• Section: 234B; 115JB; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1558/HYD/2010 ASSESSMENT YEAR 2005!06 M/S. IVY COMPTECH PVT. LTD., HYDERABAD PAN: AAACI8884K VS. THE ASST. CIT CIRCLE!2(1) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI ARIJIT CHAKRAVORTHY & SRI RAVI BHARADWAJ RESPONDENT BY: SRI P. SOMA SEKHAR REDDY DATE OF HEARING: 21.11.2013 DATE OF PRONOUNCEMENT: 17.01.2014 O R D E R PER SAKTIJIT DEY, JM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)!III, HYDERABAD DATED 29.9.2010 FOR A. Y. 2005!06. 2. THE ASSESSEE RAISED ALTOGETHER 15 MAIN GROUNDS OF A PPEAL AND TWO ADDITIONAL GROUNDS. 3. AT THE OUTSET THE LEARNED AR SUBMITTED THAT HE WOUL D NOT LIKE TO PRESS GROUND NOS. 2, 3, 4, 5, 6, 7, 9, 13 A ND 14. IN VIEW OF SUCH SUBMISSION OF THE LEARNED AR, THESE GROUNDS AR E DISMISSED AS NOT PRESSED. ITA. NO. 1558/HYD/2010 M/S. IVY COMPTECH PVT. LTD. ============-========== 2 4. IN GROUND NO. 8, THE ASSESSEE HAS CHALLENGED SELECT ION OF 5 COMPANIES AS COMPARABLES IN SOFTWARE SERVICES SEG MENT FOR DETERMINING THE ARMS' LENGTH PRICE (ALP) UNDER TNMM . IN THE ADDITIONAL GROUND NO. 1, THE ASSESSEE HAD INCLUDED TWO MORE COMPANIES AS UN!COMPARABLES IN THE SAME SEGMENT. 5. BRIEFLY, THE FACTS RELATING TO THE ISSUE IN DISPUTE ARE THAT THE ASSESSEE IS A COMPANY INCORPORATED UNDER THE CO MPANIES ACT, 1956. IT IS ENGAGED IN THE BUSINESS OF SOFTWA RE DEVELOPMENT SERVICES AND ITES SERVICES. THE ASSESS EE DURING THE YEAR UNDER DISPUTE PROVIDED SUCH SERVICES IN THE SE CTOR OF SOFTWARE DEVELOPMENT AND ITES ONLY TO ITS ASSOCIATE D ENTERPRISE (AE). FOR THE IMPUGNED ASSESSMENT YEAR, THE ASSESS EE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME AT 'NIL' UN DER THE NORMAL PROVISIONS OF INCOME!TAX ACT, 1961 AND BOOK PROFIT OF RS. 8,61,610 U/S. 115JB OF THE ACT. THE RETURN OF INCO ME WAS INITIALLY PROCESSED U/S. 143(1) OF THE ACT. SUBSEQUENTLY, IN COURSE OF SCRUTINY ASSESSMENT PROCEEDINGS, THE AO NOTICING TH AT THE ASSESSEE HAS EARNED REVENUE FROM INTERNATIONAL TRAN SACTIONS WITH ITS ASSOCIATED ENTERPRISES (AES), MADE A REFER ENCE TO THE TRANSFER PRICING OFFICER (TPO) FOR DETERMINING ALP. IN COURSE OF PROCEEDINGS BEFORE HIM, THE TPO WHILE EXAMINING THE TP STUDY REPORT SUBMITTED BY THE ASSESSEE ALONG WITH ITS RET URN OF INCOME NOTICED THAT THE ASSESSEE'S BUSINESS HAS BEEN DIVID ED INTO TWO SEGMENTS I.E., ITES/BPO AND SOFTWARE DEVELOPMENT SE RVICES. HE FURTHER NOTED THAT THE ASSESSEE HAS SELECTED TNMM A S THE MOST APPROPRIATE METHOD AND OP/TC AS THE PROFIT LEVEL IN DICATOR FOR ITA. NO. 1558/HYD/2010 M/S. IVY COMPTECH PVT. LTD. ============-========== 3 BOTH THE SEGMENTS. THE ASSESSEE ON SEARCH OF DATAB ASES HAD SELECTED 45 COMPANIES AS COMPARABLES IN SOFTWARE DEVELOPMENT SERVICES SEGMENT BY CONSIDERING THE FIN ANCIAL RESULTS FOR THE PERIOD ENDING BETWEEN 1.4.2002 AND 31.3.2004. AVERAGE MARGIN OF THE COMPARABLE COMPANIES SELECTED BY THE ASSESSEE BEING 9.97% AS AGAINST ASSESSEE'S MARGIN O F 15.08%, THE PRICE CHARGED BY THE ASSESSEE WAS FOUND TO BE WITHI N ARM'S LENGTH. SIMILARLY IN THE ITES SEGMENT, THE ASSESSE E HAD SELECTED 12 COMPANIES AS COMPARABLES WITH AN AVERAGE ARITHME TIC MEAN OF 12.92% AS AGAINST ASSESSEE'S MARGIN OF 13.1 0%. HENCE, PRICE CHARGED BY THE ASSESSEE WAS FOUND TO BE WITHI N THE ARM'S LENGTH. THE TPO, HOWEVER, REJECTED THE TP DOCUMENT OF THE ASSESSEE POINTING OUT VARIOUS DEFECTS AND DEFICIENC IES. AFTER REJECTING THE TP DOCUMENT, THE TPO APPLIED CERTAIN ADDITIONAL SEARCH CRITERIA AND APPLYING THOSE SEARCH CRITERIA, UNDERTOOK A SEARCH IN THE DATABASES. THE SEARCH PROCESS ADOPTE D BY THE TPO ENDED IN SELECTION OF 17 COMPANIES IN THE SOFTW ARE DEVELOPMENT SERVICES SEGMENT WHICH CONTAINED 7 COMP ANIES SELECTED BY THE ASSESSEE AND 9 COMPANIES IN THE ITE S SEGMENT INCLUDING 5 SELECTED BY THE ASSESSEE. ON THE BASIS OF COMPARABLES SELECTED BY THE TPO, HE COMPUTED THE AL P OF BOTH THE SEGMENTS WHICH RESULTED IN A SHORT FALL OF RS. 5,00,16,805 I.E., RS. 1,12,00,580 IN RESPECT OF SOFTWARE DEVELO PMENT SERVICES AND RS. 3,88,16,225 IN RESPECT OF ITES SEGMENT. OF COURSE, THESE FIGURES WERE SUBSEQUENTLY AMENDED BY THE TPO U/S. 1 54 TO RS. 1,10,82,051 AND RS. 2,81,98,127, RESPECTIVELY. ON THE BASIS OF TRANSFER PRICING ADJUSTMENT COMPUTED BY THE TPO, TH E AO ITA. NO. 1558/HYD/2010 M/S. IVY COMPTECH PVT. LTD. ============-========== 4 PASSED THE ASSESSMENT ORDER MAKING AN ADDITION OF R S. 5,00,16,805. BEING AGGRIEVED BY THE ASSESSMENT ORD ER, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT (A), HOWEVER, DISMISSED THE APPEAL OF THE ASSESSEE REJECTING ALL ITS CONTENTION. BEING AGGRIEVED BY SUCH ORDER, THE ASSESSEE IS IN A PPEAL BEFORE US. 6. THE GRIEVANCE OF THE ASSESSEE IN GROUND NO. 8 IS IN RESPECT OF SELECTION OF CERTAIN COMPANIES AS COMPAR ABLES IN THE SOFTWARE SERVICE SEGMENT. NOW WE WILL DEAL WITH EACH COMPANY THAT WAS OBJECTED BY THE ASSESSEE: (A) EXENSYS SOFTWARE SOLUTIONS LTD. : OBJECTING TO THE AFORESAID COMPANY'S SELECTION AS A COMPARABLE, THE AR SUBMITTED THAT IT IS A PRODUCT COMPANY AS IT IS INV OLVED IN DEVELOPMENT OF SOFTWARE PRODUCTS WHICH IS EVIDENT F ROM SIGNIFICANT INTANGIBLES OWNED BY THAT COMPANY. THA T APART IT IS ALSO AN EXCEPTIONAL YEAR OF OPERATION I N CASE OF THE SAID COMPANY. THERE IS MERGER OF HOLOOL INDIA WITH EFFECT FROM 14.2004 WHICH HAD A MATERIAL IMPACT IN THE FINANCIAL RESULTS FOR THE YEAR. IN SUPPORT OF SUCH CONTENTION, THE LEARNED AR REFERRED TO THE DECISION S OF THE CO!ORDINATE BENCH OF THE TRIBUNAL IN CASE OF IN TOTO SOFTWARE INDIA PVT. LTD. ( ITA NOS. 1196, 1197/HYD/ 2010), ITO VS. COLT TECHNOLOGY SERVICES INDIA PVT. LTD. (I TA NO. 609/DEL/2011), INTEGRATED DECISIONS & SYSTEMS INDIA (P) LTD. VS. DCIT (TA NO. 27/JP/2011) AND ACIT VS. SONA TA SOFTWARE (ITA NO. 3514/MUM/2010) WHEREIN THE CO! ITA. NO. 1558/HYD/2010 M/S. IVY COMPTECH PVT. LTD. ============-========== 5 ORDINATE BENCHES OF THE TRIBUNAL HAVE EXCLUDED THE AFORESAID COMPANY FROM BEING TREATED AS COMPARABLE DUE TO THE AFORESAID REASONS. THE LEARNED DR, HOWEVER, SUBMITTED THAT THE TPO HAVING SELECTED THE COMPARABLES AFTER CONSIDERING A LL THE ISSUES, THERE IS NO REASON FOR EXCLUDING THIS COMPA NY AS COMPARABLE. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIALS ON RECORD. IT IS THE CON TENTION OF THE LEARNED AR THAT NOT ONLY THE AFORESAID COMPA NY IS INVOLVED IN DEVELOPMENT OF PRODUCTS BUT THERE IS AL SO AN EXTRAORDINARY EVENT OF MERGER OF HOLOOL INDIA LTD., DURING THE RELEVANT FINANCIAL YEAR. FROM THE MATERIAL ON RECORD, IT IS TO BE NOTED THAT IN COURSE OF PROCEEDINGS BEF ORE THE TPO, IN RESPONSE TO THE NOTICE ISSUED U/S. 133(6) O F THE ACT BY THE TPO, THE SAID COMPANY HAS ALSO ADMITTED THIS FACT. THE ITAT, HYDERABAD BENCH IN THE CASE OF INTOTO SOF TWARE INDIA PVT. LTD. (SUPRA) IN ITA NO. 1196 & ORS./HYD/ 2010 DATED 24.5.2013 HAS HELD AS UNDER: '17. HAVING HEARD BOTH PARTIES AND HAVING CONSIDERE D THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THERE IS NO DISPU TE THAT THE ASSESSEE HAS ACCEPTED THE EXENSYS SOFTWARE SOLUTIONS LIMITED AS ONE OF THE COMPARABLE COMPANIES WHEN PROPOSED BY THE TPO. HOWE VER, THE FACT THAT THERE IS AN AMALGAMATION OF TWO COMPANIES I.E. , EXENSYS SOFTWARE LIMITED AND HOLOOL INDIA LIMITED, THE RESULTS OF WH ICH, HAS RESULTED IN HIGH OPERATING MARGIN CANNOT BE LOST SIGHT FOR. IT HAS BEEN HELD IN MANY CASES BY THIS TRIBUNAL AS WELL AS THE HIGHER F ORUMS THAT TO COMPARE A COMPANY WITH ANOTHER COMPANY, BOTH THE CO MPANIES HAVE TO BE BROUGHT ON PAR WITH EACH OTHER AFTER MAKING T HE NECESSARY ADJUSTMENTS WHEREVER NECESSARY AND POSSIBLE. HOWEVE R, WHERE THERE ARE EXTRAORDINARY EVENTS SUCH AS THIS, THEN THOSE E VENTS HAVE TO BE ITA. NO. 1558/HYD/2010 M/S. IVY COMPTECH PVT. LTD. ============-========== 6 TAKEN NOTE OF AND WHERE NO ADJUSTMENT CAN BE MADE O N ACCOUNT OF THIS EXTRAORDINARY EVENT, THEN SUCH COMPANY CANNOT BE CO NSIDERED AS A COMPARABLE. THE OBJECTIONS TO THIS COMPANY BY THE A SSESSEE ARE MADE FOR THE FIRST TIME BEFORE THE TRIBUNAL. THE TRIBUNA L BEING THE FINAL FACT FINDING AUTHORITY IS BOUND TO TAKE NOTE OF THE OBJE CTIONS OF THE ASSESSEE. AS THE MATERIAL RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE CLEARLY DENOTES THAT THERE IS AN EXTRAORDINARY EVEN T WHICH HAS RESULTED IN THE HIGH OPERATING MARGIN OF THE COMPANY, WE DEE M IT FIT AND PROPER TO REMAND THIS ISSUE TO THE FILE OF THE ASSESSING O FFICER /TPO FOR RECONSIDERATION. IF IT IS FOUND THAT THERE IS AN AM ALGAMATION OF EXENSYS SOFTWARE LIMITED AND HOLOOL INDIA LIMITED AND FORME D AS ONE ENTITY VIZ., EXENSYS SOFTWARE SOLUTIONS LIMITED. DURING TH E RELEVANT PREVIOUS YEAR AND THE FINANCIAL RESULT IS THE COMBINED RESUL T OF THESE TWO COMPANIES, THEN, WE DIRECT THE ASSESSING OFFICER /T PO TO EXCLUDE THIS COMPANY FROM THE LIST OF COMPARABLES.' THE OTHER DECISIONS RELIED UPON BY THE LEARNED AR ALSO EXPRESSES THE SAME VIEW. THEREFORE, CONSIDERI NG THE TOTALITY OF FACTS AND CIRCUMSTANCES AND RESPECTFULL Y FOLLOWING THE VIEW EXPRESSED BY THE CO!ORDINATE BEN CH IN CASE OF INTOTO SOFTWARE INDIA PVT. LTD. (SUPRA), WE DIRECT THE AO/TPO TO EXAMINE THE ISSUE AFRESH IN CONFORMIT Y WITH THE DIRECTION GIVEN IN THE CASE OF INTOTO SOFTWARE INDIA PVT. LTD. (SUPRA). ACCORDINGLY, THIS ISSUE IS REMI TTED BACK TO THE FILE OF THE AO. (B) SANKHYA INFOTECH LTD. AND FOUR SOFT LTD. : THE LEARNED AR OBJECTING TO THE AFORESAID COMPANY BEING TREATED AS A COMPARABLE, SUBMITTED THAT THE ANNUAL REPORT AS WEL L AS OTHER MATERIAL ON RECORD WOULD CLEARLY SHOW THAT TH E AFORESAID COMPANY IS ENGAGED IN DEVELOPMENT OF PRODUCT. THEREFORE, THE COMPANY BEING FUNCTIONALLY DIFFERENT WITH THE ASSESSEE!COMPANY, IT CANNOT BE TREATED AS A COMPARABLE. IN SUPPORT OF SUCH CONTEN TION, THE ASSESSEE RELIED ON THE DECISIONS OF THE TRIBUNA L IN ITA. NO. 1558/HYD/2010 M/S. IVY COMPTECH PVT. LTD. ============-========== 7 CASES OF COLT TECHNOLOGY SERVICES INDIA PVT. LTD. ( SUPRA), DCIT VS. M/S. HELLOSOFT INDIA PVT. LTD. (ITA NO. 64 5/HYD/09), INTEGRATED DECISIONS & SYSTEMS INDIA (P) LTD. (SUPR A) AND SONATA SOFTWARE (SUPRA). THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDER OF THE TPO. WE HAVE HEARD SUBMISSIONS OF THE PARTIES AND PERUSED MATERIALS ON RECORD. ON A PERUSAL OF THE O RDER PASSED IN THE CASE OF HELLOSOFT INDIA PVT. LTD. (SU PRA), WHERE BOTH THE MEMBERS ARE PARTIES, IT IS TO BE SEE N THAT THE TRIBUNAL UPHELD THE CIT(A)'S ORDER IN REJECTING SANKHYA INFOTECH LTD. AND FOUR SOFT LTD. ON THE GROUND THAT THEY WERE HAVING ONSITE INCOME/EXPENSES OF MORE THAN 75% . IN VIEW OF THE AFORESAID DECISION OF THE CO!ORDINAT E BENCH, THE AO/TPO IS DIRECTED TO EXAMINE WHETHER ON SITE INCOME/EXPENDITURE OF AFORESAID COMPANY IS MORE THA N 75%. IF IT IS FOUND TO BE SO, THE AFORESAID COMPAN Y CANNOT BE SELECTED AS A COMPARABLE TO THE ASSESSEE. (C) THIRDWARE SOLUTIONS LTD.: OBJECTING TO THE AFORESAID COMPANY'S SELECTION AS A COMPARABLE, THE LEARNED AR SUBMITTED THAT THIS COMPANY IS ALSO INTO DEVELOPMEN T OF PRODUCT AND INVOLVED IN DISTRIBUTION ACTIVITIES. T HEREFORE, IT CANNOT BE TREATED AS A COMPARABLE. IN SUPPORT OF S UCH CONTENTION, THE LEARNED AR RELIED UPON THE DECISION S OF ITA. NO. 1558/HYD/2010 M/S. IVY COMPTECH PVT. LTD. ============-========== 8 THE TRIBUNAL IN CASES OF COLT TECHNOLOGY SERVICES I NDIA PVT. LTD., INTOTO SOFTWARE INDIA PVT. LTD. AND SONATA SO FTWARE. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED SELECTION OF THE AFORESAID COMPANY AS COMPARABLE BY THE TPO. ON A PERUSAL OF THE ORDER PASSED BY THE CO! ORDINATE BENCH IN CASE OF INTOTO SOFTWARE INDIA PVT . LTD. (SUPRA), IT IS TO BE NOTED THAT THOUGH THE CO!ORDIN ATE BENCH OBSERVED THAT THERE ARE SOFTWARE PRODUCTS THA T THE COMPANY INVOICED DURING THE FY AND THE FINANCIAL RE SULTS ARE IN RESPECT OF SERVICES ONLY BUT STILL IT HELD T HAT THOUGH THERE IS NO SALE OF SOFTWARE PRODUCTS DURING THE YE AR BUT THE SAID COMPANY MIGHT HAVE INCURRED EXPENDITURE TOWARDS DEVELOPMENT OF SOFTWARE PRODUCTS. THE CO! ORDINATE BENCH ON THAT BASIS DIRECTED THE AO/TPO TO EXCLUDE THIRDWARE SOLUTIONS LTD. FROM LIST OF COMPA RABLES. THE SAME VIEW HAS ALSO BEEN EXPRESSED BY THE DELHI BENCH OF THE ITAT IN THE CASE OF COLT TECHNOLOGY SE RVICES INDIA PVT. LTD. (SUPRA) AND IN CASE OF SONATA SOFTW ARE (SUPRA). RESPECTFULLY FOLLOWING THE DECISIONS OF T HE CO! ORDINATE BENCHES, AS NOTED ABOVE, WE DIRECT THE AO/ TPO TO EXCLUDE THE AFORESAID COMPANY FROM THE LIST OF COMPARABLES. (D) INFOSYS TECHNOLOGIES LTD.. : THE LEARNED AR OBJECTED TO THE AFORESAID COMPANY BEING TREATED AS A COMPARABLE IN ITA. NO. 1558/HYD/2010 M/S. IVY COMPTECH PVT. LTD. ============-========== 9 VIEW OF ITS EXTRAORDINARY HIGH TURNOVER OF ABOUT RS . 6,859 CRORES COMPARED TO THE TOTAL TURNOVER OF ABOUT RS. 66 CRORES OF THE ASSESSEE FROM BOTH THE SEGMENTS AND I T WAS CONTENDED BY THE LEARNED AR THAT UNDER NO CIRCUMSTANCES INFOSYS TECHNOLOGIES LTD. AND WIPRO CAN BE TREATED AS COMPARABLE TO THE ASSESSEE AS IT IS A GIANT IN THE SECTOR OF SOFTWARE DEVELOPMENT AND ITES HAVI NG CONSIDERABLE BRAND VALUE. THE LEARNED DR, ON THE OTHER HAND, WHILE STRONGLY OPPOSING CONTENTION OF THE ASSESSEE, SUBMITTED THAT THE ASSESSEE ITSELF IN ITS OWN TP STUDY HAD SELECTED IN FOSYS TECHNOLOGIES AS A COMPARABLE HAVING FOUND IT TO BE FUNCTIONALLY SIMILAR. HENCE, THE ASSESSEE'S CONTE NTION TO EXCLUDE COMPANIES AS COMPARABLES WOULD BE TOTALLY IRRELEVANT. THE LEARNED AR IN HIS REJOINDER SUBMITTED THAT THOUGH THE ASSESSEE HAD SELECTED INFOSYS TECHNOLOGI ES LTD. AS A COMPARABLE BUT IT IS NOT ESTOPPED FROM OBJECTING TO THE COMPANY BEING SELECTED AS A COMPARABLE IF IT HAS BEEN MISTAKENLY CONSIDERED AS A COMPARABLE BY THE ASSESSEE. IN SUPPORT OF SUCH CONTENTION, THE LEARNED AR RELIED UPON THE DECISION OF THE ITAT SPECIAL BENCH IN THE CASE OF QUARK SYSTEMS (38 SOT 207). ITA. NO. 1558/HYD/2010 M/S. IVY COMPTECH PVT. LTD. ============-========== 10 WE HAVE HEARD SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIALS ON RECORD. SO FAR AS INFOSYS TECHNOLOGIES LTD. IS CONCERNED THE ISSUE OF COMPARA BILITY OF THE AFORESAID COMPANY HAS BEEN CONSIDERED BY DIFFERENT BENCHES OF THE TRIBUNAL INCLUDING THE HYD ERABAD BENCHES. IT IS TO BE NOTED THAT THE CONSISTENT VIE W OF DIFFERENT BENCHES OF THE TRIBUNAL IS TO THE EFFECT THAT INFOSYS TECHNOLOGIES LTD. BEING A BIG COMPANY IN AL L RESPECTS INCLUDING THE RANGE OF TURNOVER IS NOT A COMPARABLE TO SMALL COMPANIES WHICH ARE CAPTIVE SERVICE PROVIDERS HAVING CONSIDERABLY LOW TURNOVER. IN FACT, THE HONBLE DELHI COURT IN A JUDGEMENT DATED 19.7.2013 IN THE CASE OF AGNITY INDIA LTD. UPHELD T HE DECISION OF ITAT DELHI BENCH IN EXCLUDING INFOSYS TECHNOLOGIES LTD. AS A COMPARABLE IN VIEW OF ITS S IZE. IT IS A FACT THAT THE ASSESSEE IN THE TP STUDY HAD SELECT ED INFOSYS TECHNOLOGIES LTD. AS A COMPARABLE. HOWEVER , AS HELD BY ITAT SPECIAL BENCH IN THE CASE OF QUARK SYS TEMS LTD. (SUPRA) MERELY BECAUSE THE ASSESSEE HAD SELECT ED IT AS A COMPARABLE IT CANNOT OPERATE AS AN ESTOPPEL IN RAISING OBJECTIONS WITH REGARD TO COMPARABILITY OF THE AFORESAID COMPANY. THEREFORE, KEEPING IN TUNE WITH THE CONSISTENT VIEW OF DIFFERENT BENCHES OF THE TRIBUNA L IN RESPECT OF THE AFORESAID COMPANY, WE DIRECT THE AO/ TPO TO EXCLUDE THE AFORESAID COMPANY FROM THE LIST OF COMPARABLES. ITA. NO. 1558/HYD/2010 M/S. IVY COMPTECH PVT. LTD. ============-========== 11 (E) TATA ELXSI LTD. : THE LEARNED AR OBJECTING TO THE AFORESAID COMPANY, SUBMITTED THAT IT CANNOT BE TREATED AS A COMPARABLE AS PER THE INFORMATION SUBMITTED BY THE SAID COMPANY IN COURSE OF PROCEEDINGS BEFORE THE TPO IN CASE OF ANOTHER ASSESSEE, THE COMPANY ITSELF HAD ADMITTED THAT IT CANNOT BE TREATED AS A COMPARABLE TO ANY OTHER COMPANY. IN SUPPORT OF SUCH CONTENTION T HE LEARNED AR RELIED UPON THE DECISION OF TELCORDIA TECHNOLOGIES INDIA P. LTD. (ITA NO. 7821/MUM/2011), TRIOLOGY E SERVICES, LG SOFT, ETC. THE LEARNED DR, ON THE OTHER HAND, RELIED ON THE ORDER OF THE TPO. WE HAVE HEARD CONTENTIONS OF THE PARTIES AND PERUSED MATERIALS ON RECORD. WE RECORD OUR FINDING S AS UNDER: THE ASSESSEE HAS SOUGHT THE EXCLUSION OF THE AFORESAID COMPANY BY PLACING RELIANCE UPON A LETTER OF THE SAID COMPANY TO THE ADDITIONAL. CIT (TRANSFER P RICING), HYDERABAD RELATING TO A PROCEEDING IN CASE OF ANOTH ER ASSESSEE WHEREIN THE SAID COMPANY HAS ADMITTED THAT IT CANNOT BE TREATED AS COMPARABLE WITH ANY OTHER COMPANY SINCE IT IS A SPECIALIZED EMBEDDED SOFTWA RE DEVELOPMENT PROVIDER. IN THIS CONTEXT, IT WOULD BE RELEVANT TO NOTE THE FINDING OF THE CO!ORDINATE BEN CH OF ITA. NO. 1558/HYD/2010 M/S. IVY COMPTECH PVT. LTD. ============-========== 12 THIS TRIBUNAL IN CASE OF M/S. INTOTO SOFTWARE (SUPR A) WHICH IS AS UNDER:! 22. TATA ELXSI LIMITED : AS REGARDS THIS COMPANY, THE LEARNED COUNSEL APPEARING ON BEHALF OF THE ASSESSEE, FILED BEFORE US THE REPLY OF TATA ELXSI LIMITED TO THE ADDL. CIT (TRANSFER PR ICING), HYDERABAD, WHEREIN THE CONCERNED OFFICER HAS BEEN INFORMED THA T TATA ELXSI LIMITED IS SPECIALIZED EMBEDDED SOFTWARE DEVELOPMEN T SERVICE PROVIDER AND THAT IT CANNOT BE COMPARED WITH ANY OT HER SOFTWARE DEVELOPMENT COMPANY. IT WAS SUBMITTED THAT BECAUSE OF THE SPECIALIZATION AND ALSO BECAUSE OF DIVERSE NATURE O F ITS BUSINESS, IT IS VERY DIFFICULT TO SCALE-UP THE OPERATIONS OF TATA E LXSI LIMITED. IN VIEW OF THIS, TATA ELXSI LIMITED HAS INFORMED THAT IT IS NOT FAIR TO USE ITS FINANCIAL NUMBERS TO COMPARE IT WITH ANY OTHER COMP ANY. THE COMMUNICATION DATED 25TH AUGUST, 2009 TO THE TPO IS PLACED BEFORE US. AS THIS COMMUNICATION WAS NOT BEFORE THE TPO AT THE TIME OF TRANSFER PRICING ADJUSTMENT WE DEEM IT FIT AND PROP ER TO REMAND THIS ISSUE ALSO TO THE FILE OF THE TPO TO RECONSIDER ADO PTING THIS COMPANY AS THE COMPARABLE IN THE LIGHT OF OBSERVATIONS OF T HIS COMPANY TO THE TPO IN THE CASE OF ANOTHER ASSESSEE. IN THE RESULT, THE ASSESSING OFFICER/TPO IS DIRECTED TO RECONSIDER THE ISSUE IN ACCORDANCE WITH LAW, AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING H EARD TO THE ASSESSEE. RESPECTFULLY FOLLOWING THE DECISION OF THE CO!ORDIN ATE BENCH AS AFORESAID, WE ALSO REMIT THIS ISSUE TO THE ASSESSING OFFICER/TPO FOR CONSIDERING IT AFRESH AFT ER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD T O THE ASSESSEE. (F) BODHTREE CONSULTING LTD. : THE LEARNED AR OBJECTING TO THE AFORESAID COMPANY BEING TREATED AS A COMPARABLE SUBMITTED THAT THE RELATED PARTY TRANSACTION OF THE AFORESAID COMPANY BEING MORE THAN 25% OF ITS REVENU E I.E., PRECISELY 34%, IT FAILS THE RPT FILTER OF MOR E THAN 25% ADOPTED BY THE TPO HIMSELF. FOR THIS CONTENTION TH E ITA. NO. 1558/HYD/2010 M/S. IVY COMPTECH PVT. LTD. ============-========== 13 LEARNED AR REFERRED TO THE OBSERVATION MADE BY THE TPO AT PAGE 289 OF THE PAPER BOOK. THE LEARNED AR SUBMITTED THAT SINCE THE AFORESAID COMPANY FAILS THE RPT FILTER IT CANNOT BE TREATED A S A COMPARABLE. THE LEARNED DR SUPPORTED THE ORDER OF THE TPO. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIALS ON RECORD. THE GROUND ON WHICH THE LEARNED AR SEEKS FOR EXCLUSION OF THE AFO RESAID COMPANY IS, ITS RELATED PARTY TRANSACTION AS A PERC ENTAGE TO THE TOTAL REVENUE IS 34% WHICH IS MORE THAN THE ACCEPT/REJECT MATRIX OF MORE THAN 25% FIXED BY THE TPO. IT IS TO BE NOTED THAT IN FINAL FILTERS ADOPTED BY THE TPO IN PARA 8.7 OF HIS ORDER HE HIMSELF HAS EXCLUDED COMPA NIES HAVING RPT OF MORE THAN 25%. WE, THEREFORE, DIRECT THE AO TO EXAMINE THIS ASPECT AND EXCLUDE IT FROM THE L IST OF COMPARABLES IF THE ASSESSEE'S CONTENTION IS FOUND T O BE CORRECT. IN COURSE OF HEARING THE LEARNED DR HAS CONTENDED THAT THE DECISIONS RELIED UPON BY THE ASSESSEE WILL NOT APPLY TO THE FACTS OF THE PRESENT CASE AS THEY RELA TE TO DIFFERENT ASSESSMENT YEARS. HOWEVER, ON PERUSAL OF THE ORDERS CITED BEFORE US, WE FIND MANY OF THEM TO BE RELATING TO THE IMPUGNED ASSESSMENT YEAR. HENCE, CONTENTION OF THE LEARNED DR IS NOT ACCEPTABLE. ITA. NO. 1558/HYD/2010 M/S. IVY COMPTECH PVT. LTD. ============-========== 14 7. IN GROUND NO. 10 AND ADDITIONAL GROUND NO. 2, THE ASSESSEE HAS SOUGHT EXCLUSION OF 4 COMPARABLE COMPA NIES SELECTED BY THE TPO IN THE ITES SEGMENT. HAVING HE ARD THE PARTIES, HEREINAFTER WE WILL DEAL WITH EACH OF THE COMPANIES OBJECTED BY THE ASSESSEE: (A) VISHAL INFORMATION TECHNOLOGIES LTD. : OBJECTING TO THE AFORESAID COMPANY HAVING BEEN SELECTED AS COMPARABLE BY THE TPO, THE LEARNED AR SUBMITTED THA T APART FROM THE FACT THAT THE SAID COMPANY IS FUNCTI ONALLY DIFFERENT AS IT IS IN THE BUSINESS OF PROVIDING DES IGNING AND PRINTING SOLUTIONS, THE PRIMARY REASON WHY THIS COM PANY SHOULD NOT BE SELECTED AS COMPARABLE IS IT HAS OUTSOURCED A CONSIDERABLE PART OF ITS BUSINESS TO T HIRD PARTY VENDORS. THIS IS PROVED FROM THE FACT THAT O NLY 2% OF THE REVENUE IS SPENT TOWARDS EMPLOYEE COST AND THER E IS HUGE VENDOR PAYMENT. IN SUPPORT OF SUCH CONTENTION , THE LEANED AR RELIED ON THE DECISIONS OF HYDERABAD ITAT IN THE FOLLOWING CASES: CAPITAL IQ INFORMATION SYSTEMS INDIA PVT. LTD. (ITA NO. 1961/HYD/2011) COGNIZANT TECHNOLOGY SERVICES PVT. LTD. (ITA NO. 16 23/HYD/2010). THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUBMITTED THAT THE TPO HAVING CONSIDERE D ALL ASPECTS OF THE MATTER AND SELECTED THE AFORESAID COMPANY AS A COMPARABLE, IT SHOULD NOT BE EXCLUDED FROM THE COMPARABILITY ANALYSIS. ITA. NO. 1558/HYD/2010 M/S. IVY COMPTECH PVT. LTD. ============-========== 15 WE HAVE HEARD THE CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIALS ON RECORD. ON A PERUSAL OF THE ORDER PASSED BY THE CO!ORDINATE BENCH IN THE CASE O F CAPITAL IQ INFORMATION SYSTEMS PVT. LTD. (SUPRA), I T IS TO BE NOTED THAT THE AFORESAID COMPANY HAS BEEN EXCLUDED AS A COMPARABLE BY HOLDING AS UNDER: 17. AFTER CONSIDERING THE SUBMISSIONS OF THE LEARN ED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE, WE FIND THAT THE D RP, IN THE PROCEEDINGS FOR THE ASSESSMENT YEAR 2008-09 IN ASSE SSEES OWN CASE, AFTER TAKING NOTE OF THE COMPOSITION OF THE VENDOR PAYMENTS OF CORAL HUB FOR THE LAST THREE YEARS, AND THE FACT THAT IT HAS ALSO COMMENCED A NEW LINE OF BUSINESS OF PRINTING ON DEMAND(POD), WH EREIN IT PRINTS UPON CLIENTS REQUEST, CONCLUDED AS FOLLOWS- 18.4. IN VIEW OF THIS MAJOR DIFFERENCE IN FUNCTI ONALITY AND THE BUSINESS MODEL, THIS PANEL IS OF THE VIEW THAT COR AL HUB IS NOT A SUITABLE COMPARABLE TO THE TAXPAYER AND HENCE NEEDS TO BE DROPPED FORM THE FINAL LIST OF COMPARABLES. IN CASE OF ACIT V/S. M/S. MAERSK GLOBAL SERVICE CEN TRE (SUPRA), THE ITAT MUMBAI BENCH HAS ALSO DIRECTED FOR EXCLUSION O F THE AFORESAID COMPANY, BY OBSERVING IN THE FOLLOWING MANNER- INSOFAR AS THE CASES OF TULSYAN TECHNOLOGIES LIMIT ED AND VISHAL INFORMATION TECHNOLOGIES LIMITED ARE CONCERNED, IT IS NOTICED FROM THEIR ANNUAL ACCOUNTS THAT THESE COMPANIES OUTSOURC ED A CONSIDERABLE PORTION OF THEIR BUSINESS. AS THE ASSESSEE CARRIED OUT ENTIRE OPERATIONS BY ITSELF, IN OUR CONSIDERED OPINION, THESE TWO CAS ES WERE RIGHTLY EXCLUDED. IN VIEW OF THE OBSERVATIONS MADE BY THE DRP AS WELL AS THE DECISION OF THE ITAT MUMBAI IN THE CASE OF MAERSK GLOBAL SERVIC E CENTRE, (SUPRA), WE ACCEPT THAT THIS COMPANY CANNOT BE TAKE N AS A COMPARABLE. 17. AS COULD BE SEEN FROM THE FINDINGS OF THE CO-O RDINATE BENCH, THE AFORESAID COMPANY UNLIKE THE ASSESSEE HAS OUTSOURCE D CONSIDERABLE PORTION OF ITS BUSINESS TO THIRD PARTY VENDOR. HEN CE, IT CANNOT BE CONSIDERED AS A COMPARABLE. THAT BESIDES THE DRP IN ASSESSEES OWN CASE FOR ASST. YEAR 2008-09 HAS HELD THAT THIS COMP ANY CANNOT BE TREATED AS A COMPARABLE. THEREFORE, CONSIDERING T HE AFORESAID FACT, WE ARE OF THE VIEW THAT M/S VISHAL INFORMATION TE CHNOLOGY LTD., CANNOT BE TAKEN AS A COMPARABLE AND DIRECT FOR EXCL UDING THE SAME FROM THE LIST OF COMPARABLES.' ITA. NO. 1558/HYD/2010 M/S. IVY COMPTECH PVT. LTD. ============-========== 16 IN AFORESAID VIEW OF THE MATTER, WE DIRECT THE TPO TO VERIFY WHETHER SIMILAR SITUATION EXISTS IN THE IMPU GNED ASSESSMENT YEAR ALSO. IF THE EMPLOYEE COST OF THE AFORESAID COMPARABLE IS ALSO IN SIMILAR LOW RANGE, THEN IT HAS TO BE ASSUMED THAT THE SAID COMPANY HAS OUTSOURCED ITS BUSINESS ACTIVITIES TO THIRD PARTY V ENDOR, HENCE CANNOT BE TREATED AS COMPARABLE TO THE ASSESS EE. (B) MAPLE E SOLUTIONS LTD. : THE LEARNED AR OBJECTED TO THE AFORESAID COMPANY BEING TREATED AS COMPARABLE AS IT PROVIDES DESIGN SERVICE ON LINE AND OUTLINE MEDIA R ANGING FROM INTERFACE TO LOGO DESIGN. THE SERVICE INCLUDE WEBSITE EVALUATION, INTRANET/EXTRANET, EMAIL LIST MANAGEMEN T CONTENT MANAGEMENT, SECURITY ETC. HENCE, THE COMPANIES IS FUNCTIONALLY DISSIMILAR TO THE ASSESSE E. HE FURTHER SUBMITTED THAT THE SAID COMPANY CANNOT ALSO BE TREATED AS COMPARABLE AS THE DIRECTORS OF THE SAID COMPANY WERE FOUND TO BE INVOLVED IN FRAUD, HENCE FINANCIAL RESULTS OF THE COMPANY CANNOT BE TRUSTED AS RELIABLE. IN SUPPORT OF SUCH CONTENTION, THE LEARN ED AR RELIED UPON THE DECISION OF ITAT, DELHI BENCH IN CA SE OF ITO VS. CRN SERVICES INDIA (P) LTD. (14 TAXMAN. CO M.96 (DEL). HAVING HEARD THE SUBMISSIONS OF THE PARTIES AND CONSIDERING THE MATERIAL ON RECORD, WE FIND THAT TH E ITAT, DELHI BENCH IN CASE OF ITO V/S. CRM SERVICES PVT. LIMITED ITA. NO. 1558/HYD/2010 M/S. IVY COMPTECH PVT. LTD. ============-========== 17 (SUPRA) HELD THAT THE AFORESAID COMPANY CANNOT BE TREATED AS COMPARABLES WITH THE FOLLOWING OBSERVATI ON:! 17.5 WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. THE ADMITTED FACTS IN RESPECT OF GALAXY COMMERCIAL ARE THAT IT IS CARRYING ON THREE LINES OF BUSINESS AND SEGMENT PROFITABILITY IS NOT AVAILABLE. OBVIOUSLY, OVERALL PROFITABILITY OF THE COMPANY CANNOT BE APPLIED IN THE CASE OF THE ASSESSEE AS IT WILL A MOUNT TO COMPARING INCOMPARABLE CASES. FURTHER, THE BUSINESS REPUTATIO N OF RASTOGI GROUP, OWNING MAPLE E. SOLUTIONS AND TRITON CORPORATION, I S UNDER SERIOUS INDICTMENT. THEY ARE ALSO CARRYING ON THE BUSINESS OF DATA PROCESSING SERVICES AND ITES SERVICES APART FROM BPO SERVICES. IN VIEW OF A QUESTION MARK ON THE REPUTATION OF THE OWNER, ALBEI T FOR EARLIER YEARS, IT WOULD BE UNSAFE TO TAKE THEIR RESULTS FOR COMPAR ISON OF THE PROFITABILITY OF THE ASSESSEE. .. ACCORDINGLY, IT IS HELD THAT NONE OF THESE CASES CAN BE TAKEN TO BE COMPARABLE CASE. THE ITAT HYDERABAD BENCH IN CASE OF CAPITAL IQ (IND IA) PVT. LTD. ITA NO. 1961/HYD/2011 FOLLOWING THE AFORE SAID DECISION OF DELHI BENCH HAS ALSO HELD THAT THE AFOR ESAID COMPANY CANNOT BE TREATED AS COMPARABLE. RESPECTFULLY FOLLOWING THE VIEW EXPRESSED BY CO!ORD INATE BENCHES AS AFORESAID, WE DIRECT THE ASSESSING OFFIC ER/TPO TO EXCLUDE THE AFORESAID COMPANY FROM THE LIST OF COMPARABLES. (C) NUCLEUS NETSOFT AND GIS INDIA LTD. : THE LEARNED DR OBJECTED TO THE AFORESAID COMPANY BEING TREATED AS COMPARABLE ON THE GROUND THAT IT FAILS EMPLOYEE COS T FILTER. THE LEARNED AR SUBMITTED THAT AS PER THE A NNUAL REPORT OF THAT COMPANY FOR THE IMPUGNED YEAR, ON AN OPERATING REVENUE OF RS. 1,22,55,116 IT HAS AN EMPL OYEE COST OF RS. 24,02,259 WHICH WORKS OUT TO ONLY 19.60 %. HE, THEREFORE, CONTENDED THAT SUCH LOW EMPLOYEE COST ITA. NO. 1558/HYD/2010 M/S. IVY COMPTECH PVT. LTD. ============-========== 18 PROVES THAT THE COMPANY OUTSOURCES ITS WORK AND DOE S NOT PROVIDE SERVICES BY ITSELF. IN THIS CONTEXT, T HE LEARNED AR RELIED UPON A DECISION OF THE ITAT, HYDERABAD BE NCHES IN CASE OF HSBC ELECTRONIC DATA PROCESSING INDIA PV T. LTD., IN ITA NO. 1624/HYD/2010 DATED 28.6.2013. WE HAVE HEARD THE PARTIES. THE SOLE CONTENTION OF THE ASSESSEE FOR EXCLUDING THE AFORESAID COMPANY IS THE EMPLOYEE COST AS A PERCENTAGE OF THE OPERATING REVENUE IS MUCH LOWER COMPARED TO THE ASSESSEE. ON A PERUSAL OF THE ORDER PASSED BY THE CO!ORDINATE BENC H IN THE CASE OF HSBC ELECTRONIC DATA PROCESSING INDIA P VT. LTD. (SUPRA), IT IS TO BE NOTED THAT THE CO!ORDINAT E BENCH WHILE CONSIDERING THE OBJECTION OF THE ASSESSEE WIT H REGARD TO THE AFORESAID COMPANY IN PARA 13 ACCEPTED ASSESSEE'S CONTENTION THAT THE COMPANY OUTSOURCED I TS WORK AND HAS HELD THAT THE COMPANY CANNOT BE SELECT ED AS A COMPARABLE ON ACCOUNT OF ITS LOW EMPLOYEE COST . IN VIEW OF SUCH ORDER OF THE CO!ORDINATE BENCH, WE DIR ECT THE AO/TPO TO EXAMINE THIS ASPECT AND IF THERE IS SUBSTANTIAL DIFFERENCE BETWEEN THE ASSESSEE AND THE AFORESAID COMPANY, THEN THIS COMPANY CANNOT BE TREATED AS A COMPARABLE. (D) WIPRO BPO SOLUTIONS LTD. : WE HAVE HEARD THE CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIAL S ON RECORD IN THE CONTEXT OF ASSESSEE'S OBJECTION WITH REGARD TO AFORESAID COMPANY. THE GROUND ON WHICH THE ITA. NO. 1558/HYD/2010 M/S. IVY COMPTECH PVT. LTD. ============-========== 19 ASSESSEE HAS SOUGHT EXCLUSION OF THE AFORESAID COMP ANY IS THAT WIPRO COMMANDS A PREMIUM IN THE PRICING OF ITS PRODUCTS AND SERVICES DUE TO GOODWILL, REPUTATION A ND BRAND VALUE. THEREFORE, IT CANNOT BE COMPARED TO A RISK MITIGATED CAPTIVE SERVICE PROVIDER LIKE THE ASSESSE E. IN SUPPORT OF SUCH CONTENTION THE LEARNED AR RELIED UP ON THE FOLLOWING DECISIONS: A) CAPITAL IQ INFORMATION SYSTEMS INDIA PVT. LTD. (ITA NO. 1961/HYD/2011). B) MARKET TOOLS RESEARCH PVT. LTD. VS. ACIT (ITA NO. 2066/HYD/2011). C) ADAPTEC (INDIA) PVT. LTD. VS. DCIT (ITA NO. 1801/HY D/09). D) PATNI TELECOM SOLUTIONS PVT. LTD. VS. ACIT (ITA NO. 1846/HYD/2012). E) AGNITY INDIA TECHNOLOGIES VS. ITO (ITA NO. 3856/DEL/2010). F) TRINITY ADVANCED SOFTWARE LABS PVT. LTD. VS. ACIT ( ITA NO. 1129/HYD/2005). G) TRIOLOGY E BUSINESS SERVICES SOFTWARE LTD. VS. DCIT (ITA NO. 1054/BANG/2011). H) TELCORDIA TECHNOLOGIES INDIA P. LTD. (ITA NO. 7821/MUM/2011). I) 24/7 CUSTOMER.COM PVT. LTD. (ITA NO. 227/BANG/2010) . IT IS A FACT THAT WIPRO IS A BIG COMPANY OWNING INTANGIBLE AND HAVING SUBSTANTIAL BRAND VALUE. IT HAD GENERATED CONSIDERABLE GOODWILL, REPUTATION AND BRA ND VALUE IN THE MARKET. IT IS ALSO A FACT THAT IT EAR NS SUBSTANTIAL REVENUE FROM PRODUCTS WHICH ARE SOLD AT A PREMIUM UNLIKE THE ASSESSEE WHICH IS ONLY A CONTRAC T SERVICE PROVIDER TO ITS AE. WHAT IMPACT THIS WILL HAVE ON THE PROFITABILITY OF THIS COMPANY DEFINITELY REQUIR ES TO BE EXAMINED IN DETAIL AFTER CONSIDERING THE FINANCIAL RESULTS OF ASSESSEE VIS!A!VIS WIPRO AS WELL AS OTHER RELEVA NT ITA. NO. 1558/HYD/2010 M/S. IVY COMPTECH PVT. LTD. ============-========== 20 FACTORS LIKE, OWNING OF INTANGIBLES, BRAND VALUE, G OODWILL, REPUTATION, ETC. ONLY AFTER EXAMINING ALL THESE FA CTORS THE AO/TPO MAY TAKE A DECISION WHETHER THE AFORESAID COMPANY CAN AT ALL BE TREATED AS A COMPARABLE TO TH E ASSESSEE. THIS ISSUE IS, THEREFORE, REMITTED BACK TO THE FILE OF THE AO FOR CONSIDERING AFRESH AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN AF ORESAID VIEW OF THE MATTER, WE DIRECT THE AO/TPO TO COMPUTE THE ALP OF THE ASSESSEE IN TERMS WITH OUR DIRECTIONS HEREINABOVE AND IF ON SUCH COMPUTATION, IT IS FOUND THAT NO ADJUSTMENT IS REQUIRED TO BE MADE TO THE PRICE DECLARED BY THE ASSESSEE FOR THE INTERNATIONAL TRANSACTIONS WITH ITS AE THEN THE RETURN OF INCOME FILED BY THE ASSESSEE SHOULD BE ACCEPTED. 8. GROUND NO. 15 IS WITH REGARD TO CHARGING OF INTERES T U/S. 234B OF THE ACT. THIS BEING CONSEQUENTIAL IN NATUR E, IS NOT REQUIRED TO BE ADJUDICATED AT THIS STAGE. ACCORDIN GLY, GROUND NO. 15 IS DISMISSED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JANUARY, 2014. SD/! (CHANDRA POOJARI) ACCOUNTANT MEMBER SD/! (SAKTIJIT DEY) JUDICIAL MEMBER HYDERABAD, DATED 17 TH JANUARY, 2014 ITA. NO. 1558/HYD/2010 M/S. IVY COMPTECH PVT. LTD. ============-========== 21 TPRAO COPY FORWARDED TO: 1. M/S. IVY COMPTECH PVT. LTD., 5 TH FLOOR, DIVYASREE OMEGA, BLOCK!B, PLOT NO. 13/E, SURVEY NO. 13 (PART), KONDA PUR, HYDERABAD!500 081. 2. THE DY. CIT, CIRCLE!2(1), INCOME TAX TOWER, AC G UARDS, MASAB TANK, HYDERABAD!500 004. 3. THE CIT(A)!III, HYDERABAD. 4. THE CIT!2, HYDERABAD 5. THE DR 'A' BENCH, ITAT, HYDERABAD