Autodesk India Private Limited, Bangalore V. Asst.C.I.T., Bangalore

ITA 156/BANG/2016

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8660 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 10 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 10-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR BENGALURU
• Assessee Lawyers: T SURYANARAYANA
• Keywords: Business income; Transfer pricing; International transaction
• Section: 133(6); 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI JASON P. BOAZ , ACCOUNTANT MEMBER I T (TP) A NO. 156/BANG/2016 ASSESSMENT YEAR : 2011 - 12 AUTODESK INDIA PRIVATE LTD., UNIT A-4, A WING, 2 ND FLOOR, DIVYASHREE CHAMBERS, LANGFORD ROAD, BANGALORE 560 025. PAN: AABCA 6924B VS. THE ASISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(1)(1), BANGALORE. APP EL L ANT RESPONDENT IT(TP)A NO.220/BANG/2016 ASSESSMENT YEAR : 2011 - 12 THE ASISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(1)(1), BANGALORE. VS. AUTODESK INDIA PRIVATE LTD., BANGALORE 560 025. PAN: AABCA 6924B APPELLANT RESPONDENT ASSESSEE BY : SHRI T. SURYANARAYANA, ADVOCATE RE VENUE BY : SHRI PRADEEP KUMAR, CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 13.12. 201 8 DATE OF PRONOUNCEMENT : 21 .12. 2018 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT IT(TP)A NOS.156/B/16 AND 220/B/16 ARE CROSS APPEALS FILED BY THE ASSESSEE AND REVENUE RESPECTIVELY FOR THE ASSESSMEN T YEAR 2011-12 AND IT(TP)A.NO.156 & 220/BANG/2016 PAGE 2 OF 18 THE APPEALS ARE DIRECTED AGAINST THE FINAL ORDER OF ASSESSMENT DATED 21.12.2015 PASSED BY THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE- 1(1)(1) BANGALORE, U/S.143(3) READ WITH SEC.144C(13 ) OF THE INCOME TAX ACT, 1961 (ACT). 2. THE BRIEF FACTS RELATING TO THESE APPEALS ARE TH AT THE ASSESSEE WAS SET UP AS A SUBSIDIARY OF AUTODESK INC., USA ('AUTO DESK US' FOR SHORT), IN OCTOBER 1998 AND IS ENGAGED IN THE BUSINESS OF PROV IDING SOFTWARE DEVELOPMENT (TECHNICAL SUPPORT) SERVICES AND MARKET ING SUPPORT SERVICES TO ITS OVERSEAS ASSOCIATED ENTERPRISES ('AE' FOR SH ORT). IT IS NOT IN DISPUTE THAT THE TRANSACTION OF RENDERING OF SOFTWARE DEVEL OPMENT SERVICES AND PROVIDING MARKETING SUPPORT SERVICES BY THE ASSESSE E TO ITS AE WERE INTERNATIONAL TRANSACTIONS AND IN VIEW OF THE PROVI SIONS OF SEC. 92 OF THE INCOME TAX ACT, 1961 (ACT), INCOME ARISING FROM SUC H INTERNATIONAL TRANSACTIONS HAS TO BE DETERMINED HAVING REGARD TO ARMS LENGTH PRICE (ALP). THE ISSUES TO BE DECIDED IN THE CROSS APPEA LS ARE DETERMINATION OF ALP OF THE INTERNATIONAL TRANSACTION OF PROVIDING S OFTWARE DEVELOPMENT SERVICES AND MARKETING SUPPORT SERVICES BY THE ASSE SSEE TO ITS AE. 3. WE WILL FIRST DEAL WITH DISPUTE WITH REGARD TO D ETERMINATION OF ALP IN SOFTWARE DEVELOPMENT SERVICE SEGMENT. DURING THE P REVIOUS YEAR 2010- 11 RELEVANT TO THE AY 2011-12, THE ASSESSEE RENDERE D SOFTWARE DEVELOPMENT (TECHNICAL SUPPORT) TO ITS AES. AS RE GARDS THE INTERNATIONAL TRANSACTION OF PROVISION OF SOFTWARE DEVELOPMENT (S WD) SERVICES TO ITS AES, THE ASSESSEE RECEIVED CONSIDERATION OF RS.9,01 ,16,965/- FOR RENDERING SOFTWARE DEVELOPMENT SERVICES FROM ITS AE. IN SUPP ORT OF ITS CLAIM THAT THE PRICE CHARGED BY IT IN THE INTERNATIONAL TRANSACTIO N THE ASSESSEE FILED A TRANSFER PRICING STUDY (TP STUDY) IN WHICH THE ASSE SSEE ADOPTED TRANSACTION NET MARGIN METHOD (TNMM) AS THE MOST AP PROPRIATE METHOD (MAM) FOR DETERMINATION OF ALP. THE PROFIT LEVEL I NDICATOR (PLI) CHOSEN FOR THE PURPOSE OF COMPARISON OF PROFIT MARGIN OF COMPA RABLE COMPANIES WAS IT(TP)A.NO.156 & 220/BANG/2016 PAGE 3 OF 18 OPERATING PROFIT TO OPERATING COST (OP/OC). THE PRICE CHARGED IN THE INTERNATIONAL TRANSACTION BY THE ASSESSEE FROM ITS AE WAS RS.9,01,16,965. THE OPERATING COST OF THE ASSESSEE WAS RS.8,21,16,7 71/-. THE OPERATING PROFIT WAS THUS RS.80,00,194 (RS.9,01,16,965 RS.8 ,21,16,771). OP/OC WAS 9.74%. THE ASSESSEE IN ITS TP STUDY HAD CHOSEN 14 COMPANIES AS COMPARABLE COMPANIES. 4. THE ARITHMETIC MEAN OF THE PROFIT MARGIN OF THE 14 COMPANIES SO SELECTED BY THE ASSESSEE COMPARED TO THE PROFIT MAR GIN OF THE ASSESSEE WAS AT ARMS LENGTH. SINCE THE ASSESSEES PROFIT M ARGIN WAS WITHIN THE RANGE OF PROFIT MARGIN OF THE COMPARABLE COMPANIES, THE ASSESSEE CLAIMED THAT THE PRICE CHARGED IN THE INTERNATIONAL TRANSACTION WAS AT ARMS LENGTH AND THEREFORE NO ADDITION BY WAY OF ADJUSTME NT TO ALP SHOULD BE MADE. 5. THE ASSESSING OFFICER (AO) REFERRED THE QUESTION OF DETERMINATION OF ALP TO THE TRANSFER PRICING OFFICER (TPO) AS IS REQ UIRED BY THE PROVISIONS OF SEC.92CA OF THE ACT. THE TPO AFTER ACCEPTING SOME OF THE COMPARABLE COMPANIES CHOSEN BY THE ASSESSEE, SELECTED 13 COMPA RABLE COMPANIES. THE FOLLOWING TABLE WILL SHOW THE FINAL LIST OF COM PARABLE COMPANIES AND THEIR PROFIT MARGIN AND COMPUTATION OF ARITHMETIC M EAN OF PROFIT MARGIN OF THESE 13 COMPARABLE COMPANIES:- SL. NO. NAME SALES COST PLI (%) 1. ACROPETAL TECHNOLOGIES LTD. (SEG) 814,016,893 616,754,876 31.98 2. E ZEST SOLUTIONS (FROM CAPITALINE) 112,866,098 93,255,341 21.03 3. E - INFOCHIPS LTD. 260,384,251 166,447,527 56.44 4. EVOKE (FROM CAPITALINE) 144,869,912 133,996,568 8.11 5. ICRA TECHNO ANALYTICS LTD. (IN 000) 158,401,000 126,894,000 24.83 6. INFOSYS LTD. 253,850,000,000 177,030,000,000 43.39 IT(TP)A.NO.156 & 220/BANG/2016 PAGE 4 OF 18 7. LARSEN & TOUBRO INFOTECH LTD. 23,318,122,096 19,764,861,289 19.83 8. MINDTREE LTD. (SEG) 8,783,000,000 7,937,143,242 10.66 9. PERSISTENT SYSTEMS & SOLUTIONS LTD. 189,490,457 155,172,089 22.12 10. PERSISTENT SYSTEMS LTD. 6,101,270,000 4,971,860,000 22.84 11. R S SOFTWARE (INDIA) LTD. 1,882,638,471 1,617,804,170 16.37 12. SASKEN COMMUNICATION TECHNOLOGIES LTD. 3,941,962,000 3,175,616,000 24.13 13. TATA ELXSI LTD. (SEG) 3,581,985,000 2,962,533,352 20.91 AVERAGE MARGIN 24.82 6. THE TPO COMPUTED THE ADDITION TO BE MADE TO THE TOTAL INCOME ON ACCOUNT OF DETERMINATION OF ALP AT RS. 1,10,42,685/ - AS FOLLOWS:- ARMS LENGTH MEAN MARGIN ON COST 24 .82% LESS: WORKING CAPITAL ADJUSTMENT (AS PER ANNEX.C) 1.63% ADJUSTED MARGIN 23.19% OPERATING COST 82,116,771 ARMS LENGTH PRICE (ALP) @ 123.19% OF OPERATING COST 101,159,650.20 PRICE RECEIVED 90,116,965 SHORTFALL BEING ADJUSTMENT U/S. 92CA 11,042,685 7. THE ADDITION SUGGESTED BY THE TPO WAS ADDED TO T HE TOTAL INCOME OF THE ASSESSEE BY THE AO IN THE DRAFT ORDER OF ASSESS MENT. AGGRIEVED BY THE ORDER OF THE AO MAKING THE AFORESAID ADDITION, THE ASSESSEE PREFERRED OBJECTIONS BEFORE DISPUTES RESOLUTION PANEL (DRP). THE DRP VIDE ITS DIRECTIONS DATED 19.11.2015 EXCLUDED 10 COMPARABLE COMPANIES FINALLY CHOSEN BY THE TPO AND RETAINED ONLY 3 COMPARABLE CO MPANIES. 8. THE ASSESSEE IS AGGRIEVED BY NOT INCLUDING TWO C OMPARABLE COMPANIES WHICH IT HAD CHOSEN IN ITS TRANSFER PRICI NG ANALYSIS (TP ANALYSIS) VIZ., C.G.VAK SOFTWARE & EXPORTS LTD., AN D LGS GLOBAL LTD., AND HAS RAISED GR.NO. 3(J) IN ITS GROUNDS OF APPEAL BEF ORE THE TRIBUNAL. THE ASSESSEE IS ALSO AGGRIEVED BY THE INCLUSION/RETENTI ON OF 3 COMPANIES BY IT(TP)A.NO.156 & 220/BANG/2016 PAGE 5 OF 18 THE DRP VIZ., PERSISTENT SYSTEMS & SOLUTIONS LTD., PERSISTENT SYSTEMS LTD., AND SASKEN COMMUNICATION TECHNOLOGIES LTD. THE REL EVANT GROUND OF APPEAL IN ASSESSEES GROUNDS OF APPEAL IS GROUND NO .3(K). THE ASSESSEE IS ALSO AGGRIEVED BY THE ACTION OF THE DRP IN EXCLU DING EVOKE TECHNOLOGIES INDIA PVT. LTD. AND R.S. SYSTEMS INDIA PVT. LTD. FROM THE LIST OF COMPARABLE COMPANIES CHOSEN BY THE TPO. THE REL EVANT GROUND OF APPEAL RAISED BY THE ASSESSEE IN THIS REGARD IS GR. NO.3(L). AT THE TIME OF HEARING, THE LEARNED COUNSEL SUBMITTED THAT THE ASS ESSEES GRIEVANCE WOULD BE ADDRESSED IF THE AFORESAID THREE GROUNDS A RE ADJUDICATED AND THEREFORE THE OTHER GROUNDS OF APPEAL RAISED BY THE ASSESSEE NEED NOT BE ADJUDICATED. 9. AS FAR AS THE REVENUE IS CONCERNED, IT IS AGGRIE VED BY EXCLUSION OF SOME OF THE COMPANIES CHOSEN BY THE TPO AND HAS RAI SED THE FOLLOWING GROUNDS OF APPEAL IN THIS REGARD:- SOFTWARE DEVELOPMENT SERVICES SEGMENT 3. THE DRP ERRED IN DIRECTING THE AO/TPO TO EXCLUDE M/S. ACROPETAL TECHNOLOGIES LTD., M/S. LARSEN & TOUBRO I NFOTECH LTD. AND M/S. SOFTWARE (INDIA) LTD., FROM THE LIST OF COMPARABLES, HOLDING THEM TO BE FUNCTIONALLY DISSIMILAR AS THEY ARE HAVING SIGNIFICANT ONSITE REVENUES, THEREBY SEEKING EXACT COMPARABILITY WHILE SEARCHING FOR COMPARABLE COMPANIES OF THE ASS ESSEE UNDER TNMM METHOD, WHEREAS REQUIREMENT OF LAW AND INTERNA TIONAL JURISPRUDENCE REQUIRE SEEKING SIMILAR COMPARABLE CO MPANIES. ALSO, THE NATURE OF ACTIVITY, IE., SOFTWARE DEVELOP MENT REMAINS THE SAME, IRRESPECTIVE OF THE COMPANY ENGAGED IN PROVID ING ONSITE OR OFFSHORE SERVICES. 4. THE DRP ERRED IN DIRECTING EXCLUSION OF M/S. R.S . SOFTWARE PVT. LTD., M/S. LARSEN & TOUBRO INFOTECH L TD., AND M/S. ACROPETAL TECHNOLOGIES LTD., ON THE GROUND THAT THE Y HAVE SIGNIFICANT ONSITE REVENUE, WITHOUT APPRECIATING TH E FACT THAT ONSITE DEVELOPMENT OF SOFTWARE ENTAILS MORE COST AN D THEREBY RESULTS IN LOWER PROFIT MARGINS. IT(TP)A.NO.156 & 220/BANG/2016 PAGE 6 OF 18 5. THE DRP ERRED IN DIRECTING THE AO TO EXCLUDE M/ S. ACROPETAL TECHNOLOGIES LTD., FROM THE LIST OF FINAL COMPARABLES ALSO FOR THE REASON THAT CLEAR SEGMENTAL INFORMATIO N OF THE EMPLOYEE COST WAS NOT AVAILABLE WITHOUT APPRECIATIN G THAT PROPER SEGMENTAL INFORMATION WAS AVAILABLE ON PROWESS DATA BASE AS WELL AS AUDITED FINANCIALS. 6. THE DRP ERRED IN DIRECTING TO EXCLUDE E-INFOCHI PS LTD., FROM THE LIST OF COMPARABLES HOLDING THAT NO SEGMEN TAL INFORMATION IS AVAILABLE AND THAT IT FAILS 75% SERV ICE REVENUE FILTER, BY NOT ACKNOWLEDGING THE FACT THAT ENTIRE R EVENUE OF THE COMPANY COMES FROM PROVISION OF SERVICES, AND SERVI CE INCOME BEING 100% OF ITS SALES, THE COMPANY QUALIFIES THE FILTER. 7. THE DRP ERRED IN DIRECTING EXCLUSION OF M/S. M/ S.ICRA TECHNO ANALYTICS LTD., FROM THE LIST OF COMPARABLES ON THE GROUND THAT IT IS INTO DIVERSIFIED ACTIVITY AND NO SEGMENTAL DATA IS AVAILABLE, WITHOUT APPRECIATING THAT THE BASIC FUNC TION OF THE COMPANY IS DEVELOPING SOFTWARE SOLUTIONS IN THOSE A ND OTHER VERTICALS. THE COMPANY'S BUSINESS OF ANALYSIS OF ST ATISTICAL DATA OF ITS CLIENTS BEFORE PROVIDING SOFTWARE SOLUTIONS DOE S NOT RENDER THE SERVICES TO BE FUNCTIONALLY UNCOMPARABLE. 8. THE DRP ERRED IN DIRECTING TO EXCLUDE M/S. E-ZE ST SOLUTIONS LTD., FROM THE LIST OF COMPARABLES HOLDIN G IT TO BE FUNCTIONALLY UNCOMPARABLE, THEREBY SEEKING EXACT CO MPARABILITY BY IMPOSING CONDITION BEYOND LAW WHEREAS REQUIREMEN T OF LAW IS TO ACKNOWLEDGE ONLY THOSE DIFFERENCES THAT ARE LIKE LY TO MATERIALLY AFFECT THE MARGIN. THE DRP OUGHT TO HAVE APPRECIATED THAT THE COMPARABLE QUALIFIED ALL THE QUALITATIVE A ND QUANTITATIVE FILTERS APPLIED BY THE TPO AND IN A COMPUTER SOFTWA RE SERVICES, IF CONSIDERED AS A SECTOR OF BUSINESS, THE 15 DIFFEREN T LINES PREVAILING IN THE BUSINESS CANNOT BE CONSIDERED FUN CTIONALLY DIFFERENT FROM EACH OTHER. 9. THE DRP ERRED IN DIRECTING EXCLUSION OF M/S.INF OSYS TECHNOLOGIES LTD., FROM THE LIST OF COMPARABLES HOL DING IT TO BE FUNCTIONALLY UNCOMPARABLE, WITHOUT APPRECIATING THA T THE PRIMARY SOURCE OF INCOME OF THE COMPARABLE IS FROM PROVISIO N OF SOFTWARE DEVELOPMENT SERVICES. ALSO, THE DRP ERRED IN IMPOSI NG A CONDITION BEYOND LAW IN SEEKING EXACT COMPARABILITY , WHEREAS IT(TP)A.NO.156 & 220/BANG/2016 PAGE 7 OF 18 REQUIREMENT OF LAW IS TO ACKNOWLEDGE ONLY THOSE DIF FERENCES THAT ARE LIKELY TO MATERIALLY AFFECT THE MARGIN. 10. THE DRP ERRED IN DISREGARDING THE POSITION OF LAW THAT THERE COULD BE DIFFERENCES BETWEEN THE ENTERPRISES COMPARED UNDER TNMM METHOD THAT ARE NOT LIKELY TO MATERIALLY AFFECT THE PRICE OR COST CHARGED OR THE PROFITS ACCRUING TO SU CH ENTERPRISES. 11. THE DRP ERRED IN DIRECTING THE AO TO EXCLUDE M /S. TATA ELXSI LTD., FROM THE LIST OF COMPARABLES, HOLDING I T TO BE FUNCTIONALLY UNCOMPARABLE, WITHOUT APPRECIATING THE FACT THAT THE COMPARABLE QUALIFIED ALL THE QUALITATIVE AND QUANTI TATIVE FILTERS APPLIED BY THE TPO AND IT IS A SIMILAR COMPARABLE C OMPANY AND MOREOVER, THE REQUIREMENT OF LAW AND INTERNATIONAL JURISPRUDENCE REQUIRE SEEKING SIMILAR COMPARABLE COMPANIES WHILE SEARCHING FOR COMPARABLE COMPANIES UNDER TNMM. THE DRP HAS AL SO NOT APPRECIATED THAT THERE HAVE BEEN NO PROJECTS IN VIS UAL COMPUTING LABS DURING THE RELEVANT PREVIOUS YEAR. 12. THE DRP ERRED IN DIRECTING THE AO/TPO TO EXCLU DE M/S. R.S. SOFTWARE (INDIA) LTD., FROM THE LIST OF COMPAR ABLES MERELY TO MAINTAIN CONSISTENCY, EVEN IN THE ABSENCE OF OBJECT ION WITH RESPECT TO INCLUSION OF THE SAID COMPARABLES IN THE LIST. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE SHAL L FIRST TAKE UP GROUNDS OF APPEAL OF REVENUE FOR CONSIDERATION. GR OUND NOS.3 & 4 RAISED BY THE REVENUE ARE WITH REGARD TO EXCLUSION BY THE DRP OF M/S. ACROPETAL TECHNOLOGIES LTD., M/S. LARSEN & TOUBRO INFOTECH LT D. AND M/S. R.S. SOFTWARE (INDIA) LTD. FROM THE LIST OF COMPARABLE C OMPANIES THAT WERE CHOSEN BY THE TPO. 11. GROUND NOS.3 & 4 RAISED BY THE REVENUE CAN BE C ONVENIENTLY DECIDED TOGETHER WITH GROUND NO.3(L) RAISED BY THE ASSESSEE IN ITS APPEAL. THESE GROUNDS REVOLVE AROUND THE APPLICATION OF ONS ITE REVENUE FILTER. IN THE BUSINESS OF RENDERING SOFTWARE DEVELOPMENT SERV ICES, DEVELOPMENT OF SOFTWARE IS DONE OFFSHORE I.E. IN INDIA FOR AN ASSO CIATED ENTERPRISE (AE) OUTSIDE INDIA. THESE ARE CALLED OFFSHORE DEVELOPME NT SERVICES. IN SOME IT(TP)A.NO.156 & 220/BANG/2016 PAGE 8 OF 18 CASES, SOFTWARE DEVELOPER, SAY AN INDIAN COMPANY RE NDERS SOFTWARE DEVELOPMENT SERVICES AT THE SITE OF AE OUTSIDE THE COUNTRY. SUCH SERVICES ARE CALLED ONSITE DEVELOPMENT SERVICES. THE ONSITE REVENUE FILTER APPLIED IN TP CASES IS A FILTER WHEREBY A COMPANY WHOSE REVENU ES FROM ONSITE SERVICES ARE BEYOND A PARTICULAR LIMIT OF THE TOTAL REVENUES FROM RENDERING SOFTWARE DEVELOPMENT SERVICES ARE TO BE REGARDED AS NOT COMPARABLE FOR THE REASON THAT THE GEOGRAPHIC AREA AND THE MARKET IN WHICH SOFTWARE DEVELOPMENT SERVICES ARE RENDERED ONSITE ARE DIFFER ENT. THE PLEA OF THE REVENUE IS THAT FUNCTIONALLY BOTH OFFSHORE COMPANIE S AND ONSITE COMPANIES PERFORM SOFTWARE DEVELOPMENT SERVICES AND THEREFORE SHOULD BE CONSIDERED AS COMPARABLE. ON THIS ASPECT, WE FIND T HAT IN THE TP CASES, THE ONSITE REVENUE FILTER IS GENERALLY APPLIED FOR THE PURPOSE OF CHOOSING COMPARABLE COMPANIES. IT IS, HOWEVER, TO BE NOTICE D THAT THE ONSITE REVENUE FILTER HAS TO BE APPLIED BY HAVING A THRESH OLD LIMIT OF, SAY, LESS THAN 25% OR SO OF THE TOTAL REVENUES OF THE COMPARABLE C OMPANIES. WITHOUT SUCH THRESHOLD LIMIT BEING FIXED, COMPANIES CANNOT BE EXCLUDED. TO THIS EXTENT, THERE IS MERIT IN GROUND NOS.3 & 4 OF THE R EVENUE. HOWEVER, THE ISSUE RAISED IN GROUND NOS.3 & 4 BY THE REVENUE WIL L BECOME ACADEMIC FOR THE REASON THAT ACROPETAL TECHNOLOGIES LTD. WAS EXC LUDED BY THE DRP ON THE GROUND THAT SEGMENTAL DETAILS OF ITS EMPLOYEE C OST WAS NOT AVAILABLE. THIS COMPANY WAS ALSO EXCLUDED FOR THE REASON THAT THERE WAS ABSENCE OF SEGMENTAL INFORMATION TO EXAMINE WHETHER IT PASSES EXPORT SALES FILTER AND FOR THE REASON THAT SOFTWARE REVENUE WAS NOT MORE T HAN 75% OF ITS TOTAL REVENUE. 12. IN THE CASE OF APPLIED MATERIALS (I) P. LTD. V. ACIT , IT(TP)A NO.17 & 39/BANG/2016 FOR THE AY 2011-12, ORDER DATED 21.09.2016, THIS TRIBUNAL EXCLUDED ACROPETAL TECHNOLOGIES LTD. FROM THE LIST OF COMPARABLE COMPANIES VIDE PARA 16.1 TO 16.4 OF THE SAID ORDER. WE ARE, THEREFORE, OF THE VIEW THAT THERE IS NO MERIT IN GROUND NO.5 RAIS ED BY THE REVENUE IN THIS IT(TP)A.NO.156 & 220/BANG/2016 PAGE 9 OF 18 REGARD. SIMILARLY, L & T INFOTECH LTD. WAS ALSO E XCLUDED BY THE DRP FOR THE REASON THAT 48.84% OF ITS TOTAL EXPENSES ARE IN CURRED IN FOREIGN CURRENCY WHICH INCLUDES SUBSTANTIAL EXPENSES ON SUB -CONTRACTING INDICATING THAT THE COMPANY HAS HIGH ONSITE REVENUE. BESIDES THE ABOVE, THE REVENUES FROM ALL THE 3 SEGMENTS IN WHICH THIS COMP ANY WAS ENGAGED, WAS CONSIDERED BY THE TPO. THIS PART OF THE DIRECTIONS OF THE DRP HAS NOT BEEN CHALLENGED BY THE REVENUE IN ITS APPEAL AND TH EREFORE NO USEFUL PURPOSE WILL BE SERVED BY TESTING THE COMPARABILITY OF THIS COMPANY BY APPLYING THE ONSITE REVENUE FILTER. 13. AS FAR AS R S SOFTWARE (I) P. LTD. IS CONCERNED , THE REVENUE HAS SOUGHT ITS INCLUSION IN GROUND NO.12 ALSO. THE ASS ESSEE HAS ALSO SOUGHT INCLUSION OF THIS COMPANY IN GROUND NO. 3 (L) OF ITS GROUNDS. THIS COMPANY WAS NOT SOUGHT TO BE EXCLUDED BY THE ASSESSEE IN IT S APPEAL BEFORE THE DRP AND ACCEPTED THE ACTION OF THE TPO IN ACCEPTING THIS COMPANY AS COMPARABLE COMPANY. THE DRP SUO MOTU APPLIED ONSIT E REVENUE FILTER TO EXCLUDE THIS COMPANY FROM THE LIST OF COMPARABLE CO MPANIES. WE ARE THEREFORE OF THE VIEW THAT R S SOFTWARE (I) P. LTD SHOULD BE INCLUDED IN THE LIST OF COMPARABLE COMPANIES. WE HOLD AND DIRECT A CCORDINGLY. THUS, GROUND NOS.3 TO 5 & 12 RAISED BY THE REVENUE STANDS DECIDED ACCORDINGLY. 14. AS FAR AS GROUND NO. 3 (L) RAISED BY THE ASSESSEE IS CONCERNED, THE ASSESSEE HAS SOUGHT INCLUSION OF A COMPANY BY NAME EVOKE TECHNOLOGIES P. LTD. AS FAR AS THIS COMPANY IS CONCERNED, THE A SSESSEE ACCEPTED THIS AS A COMPARABLE BEFORE THE TPO AND DID NOT CHALLENG E INCLUSION OF THIS COMPANY IN THE GROUNDS BEFORE THE DRP. BUT THE DRP , HOWEVER, EXCLUDED THIS COMPANY FOR THE REASON THAT WHILE THE PROFIT M ARGIN OF COMPARABLE COMPANIES WAS 20.91% TO 24.83%, PROFIT MARGIN OF TH IS COMPANY WAS ABNORMALLY LOW AT 8.11%. THE DRP FURTHER WENT ON T O EXAMINE THAT THE ABNORMAL LOW PROFIT OF THIS COMPANY WAS DUE TO SOME EXTRAORDINARY IT(TP)A.NO.156 & 220/BANG/2016 PAGE 10 OF 18 CIRCUMSTANCES THAT PREVAILED DURING THE PREVIOUS YE AR WHICH ADVERSELY AFFECTED THE PROFIT MARGIN OF THIS COMPANY. THE DR P, THEREFORE, WAS OF THE VIEW THAT THIS COMPANY WILL NOT BE A COMPARABLE COM PANY. ON THIS ASPECT, WE FIND THAT THERE IS NO DISPUTE THAT THIS COMPANY IS FUNCTIONALLY COMPARABLE WITH THAT OF THE ASSESSEE. MOREOVER, IN THE CASE OF APPLIED MATERIALS (I) P. LTD. (SUPRA) THIS TRIBUNAL CONSIDERED THE COMPARABILITY OF THIS COMPANY AND VIDE PARA 21 TO 21.2 RESTORED FOR FRESH CONSIDERATION THE COMPARABILITY OF THIS COMPANY. WE MAY ADD THAT FUN CTIONAL PROFILE OF THE ASSESSEE IN THE PRESENT CASE AND THE ASSESSEE IN TH E CASE OF APPLIED MATERIALS (I) P. LTD. (SUPRA) ARE IDENTICAL AND BOTH ARE SOFTWARE DEVELOPMENT SERVICES PROVIDER. WE, THEREFORE, FOLLO WING THE DECISION OF THE TRIBUNAL IN THE CASE OF APPLIED MATERIALS (I) P. LTD. (SUPRA) RESTORE THIS ISSUE FOR FRESH CONSIDERATION WITH SIM ILAR DIRECTIONS AS WAS GIVEN BY THE TRIBUNAL IN THE CASE OF APPLIED MA TERIALS (I) P.LTD.(SUPRA). THUS, GROUND NO. 3(L) RAISED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED. 15. IN GROUND NO.6, THE REVENUE HAS CHALLENGED T HE ACTION OF THE DRP IN EXCLUDING E-INFOCHIP LTD. FROM THE LIST OF COMP ARABLE COMPANIES. THIS COMPANY WAS EXCLUDED FOR THE REASON THAT NO SEGMENT AL INFORMATION REGARDING ITS DIVERSE FUNCTIONS WAS AVAILABLE AND I T FAILS THE SOFTWARE SERVICES INCOME FILTER. BESIDES THE ABOVE, THERE WERE MAJOR FLUCTUATION IN ITS PROFIT WHICH WERE INFLUENCED BY EXTRAORDINARY A ND PECULIAR CIRCUMSTANCES AND THEREFORE THIS COMPANY WAS REGARD ED AS NOT COMPARABLE. IN THE CASE OF COMMSCOPE NETWORKS (I) P. LTD. V. ITO , IT(TP)A NO.166 & 181/BANG/2016, ORDER DATED 22.02.2 017 , THE TRIBUNAL EXCLUDED THIS COMPANY FROM THE LIST OF COMPARABLE C OMPANIES FOR THE IDENTICAL REASONS AS ARE GIVEN BY THE DRP IN THE PR ESENT CASE. WE THEREFORE DO NOT FIND ANY MERIT IN GROUND NO.6 RAIS ED BY THE REVENUE. IT(TP)A.NO.156 & 220/BANG/2016 PAGE 11 OF 18 16. AS FAR AS GROUND NO.7 RAISED BY THE REVENUE IS CONCERNED, THE SAME RELATES TO EXCLUSION OF ICRA TECHNO ANALYTICS LTD. FROM THE LIST OF COMPARABLE COMPANIES. IT IS NOT IN DISPUTE BEFORE US THAT IN THE CASE OF APPLIED MATERIALS (I) P. LTD. (SUPRA) , THIS COMPANY WAS REGARDED AS NOT COMPARABLE FUNCTIONALLY VIDE PARA 17.1 TO 17.2 OF THE SAID ORDER. IN SHORT, IT WAS HELD BY THE TRIBUNAL THAT THIS COM PANY WAS ENGAGED IN DIVERSIFIED ACTIVITIES OF SOFTWARE DEVELOPMENT A ND CONSULTANCY, ENGINEERING SERVICES, WEB DEVELOPMENT AND HOSTING AND THEREFORE CANNOT BE REGARDED AS FUNCTIONALLY COMPARABLE WITH ASSESSEE RENDERING SOFTWARE DEVELOPMENT SERVICES. IT IS ALS O NOT DISPUTED THAT NO SEGMENTAL INFORMATION REGARDING VARIOUS LINES OF BUSINESS IS AVAILABLE IN THE PUBLIC DOMAIN. IN VIEW OF THE ABO VE, WE FIND NO MERIT IN GROUND NO.7 RAISED BY THE REVENUE. 17. AS FAR AS GROUND NO.8 IS CONCERNED, IT IS WITH REFERENCE TO EXCLUSION OF E-ZEST SOLUTIONS LTD. FROM THE LIST OF COMPARABL E COMPANIES. AS FAR AS THIS COMPANY IS CONCERNED, THE DRP EXCLUDED THIS CO MPANY FROM THE LIST OF COMPARABLE COMPANIES FOR THE REASON THAT IT IS FUNC TIONALLY NOT COMPARABLE WITH A PURE SOFTWARE DEVELOPMENT SERVICES PROVIDER SUCH AS THE ASSESSEE AS IT WAS ENGAGED IN DIVERSE ACTIVITIES. IN THE CA SE OF COMMSCOPE NETWORKS (I) P. LTD. (SUPRA) , THIS TRIBUNAL CONSIDERED THE COMPARABILITY OF THIS COMPANY AND VIDE PARA 9 OF IT S ORDER, UPHELD THE EXCLUSION OF THIS COMPANY, FOR IDENTICAL REASONS AS IS GIVEN BY THE DRP AS IN THE PRESENT CASE. WE THEREFORE FIND NO M ERIT IN GROUND NO.8 RAISED BY THE REVENUE AND THE SAME IS DISMISSE D. 18. GROUND NO.9 BY THE REVENUE IS CHALLENGING EXCLU SION OF INFOSYS TECHNOLOGIES LTD. FROM THE LIST OF COMPARABLE COMPA NIES. THE DRP EXCLUDED THIS COMPANY FROM THE LIST OF COMPARABLE C OMPANIES ON THE IT(TP)A.NO.156 & 220/BANG/2016 PAGE 12 OF 18 GROUND THAT IT IS FUNCTIONALLY NOT COMPARABLE DUE T O SEVERAL REASONS. IN THE CASE OF APPLIED MATERIALS (I) P. LTD. (SUPRA) , THIS TRIBUNAL CONSIDERED THE COMPARABILITY OF THIS COMPANY WITH SOFTWARE DEV ELOPMENT SERVICE PROVIDER SUCH AS THE ASSESSEE. IN PARA 18 OF ITS O RDER, THE TRIBUNAL OBSERVED THAT INFOSYS TECHNOLOGIES LTD. WAS A GIANT IN THE FILED OF INFORMATION TECHNOLOGY AND HAD A BRAND VALUE AND HU GE TURNOVER AND THEREFORE CANNOT BE COMPARED WITH THE COMPANY SUCH AS THE ASSESSEE, WHO HAS A TURNOVER OF JUST RS.9.01 CRORES. IN VIEW OF THE AFORESAID DECISION OF THE TRIBUNAL, WE FIND NO MERIT IN GROUND NO.9 OF THE REVENUE. 19. AS FAR AS GROUND NO.10 IS CONCERNED, NO SPECIFI C INSTANCE OF MATERIAL DIFFERENCES IN THE COMPANIES EXCLUDED BY T HE DRP FROM THAT CHOSEN BY THE TPO HAS BEEN POINTED OUT AND THEREFOR E GROUND NO.10 OF THE REVENUE HAS TO BE REGARDED AS GENERAL IN NATURE CALLING FOR NO ADJUDICATION. 20. AS FAR AS GROUND NO.11 IS CONCERNED, THE REVEN UE IS AGGRIEVED BY THE EXCLUSION OF TATA ELXSI LTD. FROM THE LIST OF C OMPARABLE COMPANIES BY THE DRP. THE DRP EXCLUDED TIS COMPANY FROM THE LIS T OF COMPARABLES FOR THE REASON THAT IT IS NOT FUNCTIONALLY COMPARABLE. IN THE CASE OF APPLIED MATERIALS (I) P. LTD. (SUPRA) , COMPARABILITY OF THIS COMPANY WAS CONSIDERED BY THIS TRIBUNAL AND VIDE PARA 20 OF ITS ORDER, THE TRIBUNAL CAME TO THE CONCLUSION THAT THIS COMPANY WAS ENGAGED IN DIVERSIFIED ACTIVITIES OF PRODUCT DESIGN SERVICES, INNOVATION DESIGN, ENGINEE RING SERVICES, VIRTUAL COMPUTING LABS, ETC. IN VIEW OF THE AFORESAID DECI SION OF THE TRIBUNAL EXCLUDING THIS COMPANY FROM THE LIST OF COMPARABLE COMPANIES, WE FIND NO MERIT IN GROUND NO.11 RAISED BY THE REVENUE. 21. THE GROUNDS THAT ARE LEFT FOR CONSIDERATION IN THE ASSESSEES APPEAL IN THE SOFTWARE DEVELOPMENT SERVICES SEGMENT IS GRO UND NO.3(J) IN WHICH IT(TP)A.NO.156 & 220/BANG/2016 PAGE 13 OF 18 THE ASSESSEE HAS AGGRIEVED BY NON-INCLUSION OF SOME COMPANIES IN THE LIST OF COMPARABLE COMPANIES. 22. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE PRESSED FOR ADJUDICATION THE INCLUSION OF ONLY TWO COMPANIES VI Z., CG VAK SOFTWARE & EXPORT LTD. & LGS GLOBAL LTD. THESE COMPANIES WERE EXCLUDED BY THE TPO FOR THE REASON THAT THE DETAILS REGARDING EXPENSES UNDER THE HEAD PURCHASES & PERSONNEL COST WAS NOT AVAILABLE. IN THE ABSENCE OF SUCH DETAILS, THE TPO AS WELL AS DRP CAME TO THE CONCLUS ION THAT THE EMPLOYEE COST FILTER AND ITS APPLICATION CANNOT BE DECIDED. BESIDES THE ABOVE, THE DRP HAS ALSO COME TO THE CONCLUSION THAT THERE ARE PECULIAR ECONOMIC CIRCUMSTANCES OF FOREIGN CURRENCY INFLOW BEING LESS THAN THE EXPORT SALES. IT IS THE PLEA OF THE ASSESSEE BEFORE US THAT LGS G LOBAL LTD. OUGHT TO BE INCLUDED IN THE LIST OF COMPARABLE COMPANIES FOR TH E FOLLOWING REASONS:- ALL EXPENSES NEED TO BE DISCLOSED UNDER THE HEAD P ERSONNEL EXPENDITURE. IN ANY CASE, MAJOR EXPENDITURE FOR A SERVICE PROVID ER IS EMPLOYEE COST. THE EXPENSES RECORDED UNDER THE HEAD PURCHASES AND PERSONNEL COST ARE EMPLOYEE RELATED EXPENDITURE. MERE DIFFERENCE BETWEEN THE FOREIGN CURRENCY INFLOW AND EXPORT SALES CANNOT FORM BASIS FOR EXISTENCE OF PECULIAR E CONOMIC CIRCUMSTANCE. THE TPO FOR THE AY 2007-08 IN ASSESSEES OWN CASE H AS INCLUDED THE COMPANY IN THE FINAL LIST OF COMPARABLES. 23. THE LD. COUNSEL FOR THE ASSESSEE ALSO BROUGHT T O OUR NOTICE THE DECISION OF THE TRIBUNAL IN THE CASE OF APPLIED MATERIALS (I) P. LTD. (SUPRA) WHEREIN THIS TRIBUNAL UNDER IDENTICAL CIRCUMSTANCE S VIDE PARA 13.1 TO 13.4 SET ASIDE THE ISSUE TO THE AO FOR FRES H CONSIDERATION WITH IT(TP)A.NO.156 & 220/BANG/2016 PAGE 14 OF 18 A DIRECTION TO THE TPO TO SEEK NECESSARY INFORMATIO N REGARDING EMPLOYEE COST U/S. 133(6) OF THE ACT. FOLLOWING TH E AFORESAID DECISION, WE REMAND TO THE TPO THE QUESTION OF INCL USION OF THIS COMPANY AS A COMPARABLE COMPANY ON THE SAME LINES A S DIRECTED BY THE TRIBUNAL IN THE CASE OF APPLIED MATERIALS (I) P. LTD. (SUPRA) . 24. AS FAR AS CG VAK SOFTWARE & EXPORT LTD. IS CONC ERNED, THIS COMPANY WAS EXCLUDED FOR THE REASON THAT DETAILS REGARDING EMPLOYEE COST WAS NOT AVAILABLE AND THEREFORE IT WAS NOT POSSIBLE TO APPL Y THE EMPLOYEE COST FILTER. THE CONTENTION OF THE ASSESSEE BEFORE US IS THAT:- (A) MAJOR EXPENDITURE FOR A SERVICE PROVIDER IS EMPLOYE E COST. (B) EXPENSES RECORDED UNDER HEAD COST TO SERVICE ARE IN EXCESS OF 25% OF THE TOTAL SALES AND HENCE THE COMPANY PASSES THE FILTER. (C) THE TPO FOR THE ASSESSMENT YEAR 2009-10 IN ASSESSEE S OWN CASE HAS INCLUDED THE COMPANY IN THE FINAL LIST OF COMPARABLES. 25. THE ASSESSEE HAS ALSO PLACED RELIANCE ON THE OR DER DATED 29.09.2016 PASSED BY THE TPO IN ASSESSEES OWN CAS E FOR THE AY 2009- 10. IN THE AFORESAID CASE FOR AY 2009-10, THE ITAT REMANDED THE ISSUE TO THE TPO FOR FRESH CONSIDERATION REGARDING INCLUSION OF THIS COMPANY AFTER VERIFICATION OF EMPLOYEE COST. IN THE ORDER GIVING EFFECT TO THE ORDER OF TRIBUNAL, THE TPO HAS FOUND THAT THE EMPLOYEE COST WAS MORE THAN 25% OF THE REVENUE OF THIS COMPANY AND THEREFORE THIS COMP ANY WAS TO BE REGARDED AS A COMPARABLE COMPANY. IN OUR VIEW, IT WOULD BE JUST AND APPROPRIATE TO SET ASIDE THE ORDER OF DRP AND REMAN D FOR CONSIDERATION AFRESH BY THE TPO, THE EMPLOYEE COST IN THIS YEAR A ND THEREAFTER DECIDE THE COMPARABILITY OF THIS COMPANY IN ACCORDANCE WITH TH E LAW. 26. IN GROUND NO. 3(K), THE ASSESSEE HAS PRAYED FOR EXCLUSION OF ALL 3 COMPANIES WHICH WERE RETAINED BY THE DRP IN THE IMP UGNED ORDER. IN THIS IT(TP)A.NO.156 & 220/BANG/2016 PAGE 15 OF 18 REGARD, THE LD. COUNSEL FOR THE ASSESSEE HAS BROUGH T TO OUR NOTICE THAT PERSISTENT SYSTEMS & SOLUTIONS LTD. WAS REGARDED NO T COMPARABLE FOR THE REASON THAT IT HAD DIVERSE FUNCTIONS AND SEGMENTAL DETAILS WERE NOT AVAILABLE AND THAT IT WAS PRODUCT COMPANY AND THAT THERE WAS ABNORMAL INCREASE IN TURNOVER DUE TO FUNDING FROM HOLDING CO MPANY. THESE ASPECTS WERE CONSIDERED BY THE TRIBUNAL IN THE CASE OF APPLIED MATERIALS (I) P. LTD. (SUPRA) AND VIDE PARA 9.2.1 TO 9.2.4, THE TRIBUNAL REGARDED THIS COMPANY AS NOT COMPARABLE. PERSISTENT SYSTEMS LTD . WAS ALSO CONSIDERED AS NOT COMPARABLE IN THE AFORESAID ORDER VIDE SAME PARAS REFERRED TO ABOVE FOR THE REASON THAT IT WAS ENGAGE D IN DIVERSE ACTIVITIES AND IN THE ABSENCE OF SEGMENTAL DETAILS, BESIDES HO LDING IPRS. 27. THE OTHER COMPANY IS SASKEN COMMUNICATION TECH NOLOGIES LTD. WHICH WAS RETAINED BY THE DRP. AS FAR AS THIS COMP ANY IS CONCERNED, THE PLEA OF THE ASSESSEE IS THAT THIS COMPANY IS A SOFT WARE PRODUCT COMPANY AND SEGMENTAL DETAILS BETWEEN THE SOFTWARE DEVELOPM ENT SERVICES AND SOFTWARE PRODUCTS IS NOT AVAILABLE. OUR ATTENTION WAS DRAWN TO THE DECISION OF THE BANGALORE BENCH OF THE TRI IN THE CASE OF APPLIED MATERIALS (I) P. LTD. (SUPRA) WHEREIN IN PARA 9.3.1 TO 9.3.3 THIS TRIBUNAL CAME TO THE CONCLUSION THAT COMPARABILITY OF THIS COMPANY HAS T O BE DECIDED AFRESH BY THE TPO AFTER CONSIDERING THE FACTS AS RECORDED IN THE DECISIONS RENDERED BY THE TRIBUNAL IN THE CASE OF ELECTRONICS FOR IMAGING INDIA P. LTD. (2017) 85 TAXMANN.COM 124 (BANG.TRIB.). W E ARE OF THE VIEW THAT SIMILAR DIRECTIONS WOULD BE APPROPRIATE IN THE PRESENT ASSESSMENT YEAR ALSO. THUS, GROUND NO.3(K) IS DECIDED ACCORDINGLY. 28. WE SHALL NOW TAKE UP FOR CONSIDERATION THE DISP UTE WITH REGARD TO DETERMINATION OF ALP IN THE MARKETING SUPPORT SEGME NT. GROUND NO.2 RAISED BY THE REVENUE IN ITS APPEAL IS WITH REGARD TO DETERMINATION OF ALP IN THE SALES AND MARKETING SUPPORT SEGMENT. AS FAR AS THIS GROUND IS IT(TP)A.NO.156 & 220/BANG/2016 PAGE 16 OF 18 CONCERNED, THE TPO HAD CHOSEN 3 COMPARABLE COMPANIE S AND DETERMINED THE ADDITION TO BE MADE TOWARDS SHORTFALL OF ALP AS FOLLOWS:- COMPARABLES SELECTED BY THE TPO AND THEIR ARITHMETI C MEAN SL. NO. NAME OF THE COMPANY MARK-UP ON TOTAL COSTS (IN %) 1. ASIAN BUSINESS EXHIBITION & CONFERENCES LTD. 19.51 2. CYBER MEDIA RESEARCH LTD. 10.59 3. ICC INTERNATIONAL AGENCIES LTD. 24.66 AVERAGE MEAN 18.25 COMPUTATION OF ARMS LENGTH PRICE BY THE TPO AND TH E ADJUSTMENT MADE (IN RS.) ARMS LEN GTH MEAN MARGIN 18.25% OPERATING COST 40,90,56,356 ARMS LENGTH PRICE 118.25% OF OPERATING COST 48,37,09,141 PRICE RECEIVED 44,89,08,504 SHORTFALL BEING ADJUSTMENT U/S. 92CA 3,48,00,637 29. ON APPEAL BY THE ASSESSEE, THE DRP EXCLUDED ICC INTERNATIONAL AGENCIES LTD. FROM THE LIST OF COMPARABLE COMPANIES ON THE GROUND THAT INFORMATION REGARDING NATURE OF SERVICES AVAILABLE IN PUBLIC DOMAIN WAS NOT SUFFICIENT TO COME TO CONCLUSION WHETHER SERVICING INCOME IS ALSO EARNED BY THE ASSESSEE FROM SALES & MARKETING ACTIVITY. THE ASSESSEE WAS ALSO EARNING SERVICING INCOME AND IN THE ABSENCE OF THAT DETAIL, IT WAS NOT POSSIBLE TO COMPARE THIS COMPANY WITH THE ASSESSEE. THE REVENUE IS AGGRIEVED BY THIS DIRECTION OF DRP AND HAS RAISED G ROUND NO.2 BEFORE THE TRIBUNAL. IT(TP)A.NO.156 & 220/BANG/2016 PAGE 17 OF 18 30. AFTER HEARING THE RIVAL SUBMISSIONS, WE FIND TH AT THE SAID COMPANY IS NOT COMPARABLE AS IT IS RENDERING SERVICES IN THE N ATURE OF INDENTING ACTIVITY (PAGES 675-676 AND 1258-1260 OF THE PAPERBOOK). ON A PERUSAL OF THE SAME, IT IS CLEAR THAT THE SERVICE RENDERED BY THE COMPANY IS NOT SIMILAR TO THAT OF MARKETING SUPPORT SERVICES PROVIDED BY THE ASSESSEE. THE COMPANY IS ENGAGED IN TRADING ACTIVITY WHICH IS DISSIMILAR TO THAT OF THE FUNCTIONS CARRIED OUT BY THE ASSESSEE. RELIANCE WAS PLACED O N THE DECISION OF TRIBUNAL IN THE CASE OF ELECTRONICS FOR IMAGING (P.) LTD. V. DCIT [(2017) 8 5 TAXMANN.COM 124 (BANGALORE-TRIB)] AT PARA 16 PAGE 15, WHEREIN IN THE CASE OF A SIMILAR ASSESSEE, THIS COMPANY WAS DIRECT ED TO BE EXCLUDED. RELIANCE WAS ALSO PLACED ON THE DECISION OF THIS TR IBUNAL IN ASSESSEE'S OWN CASE FOR A.Y 2007-08, WHEREIN THE SAID COMPANY WAS REJECTED AS BEING FUNCTIONALLY NOT COMPARABLE. SINCE THE RELEVA NT CIRCUMSTANCES LEADING TO ITS REJECTION IN A.Y 2007-08 CONTINUE TO PREVAIL IN THE ASSESSMENT YEAR UNDER CONSIDERATION, THE COMPANY WAS RIGHTLY R EJECTED BY THE DRP AND THUS DOES NOT REQUIRE ANY INTERFERENCE. WE THE REFORE DO NOT FIND ANY MERIT IN GROUND NO.2 RAISED BY THE REVENUE. 31. IN THE RESULT, THE APPEAL BY THE ASSESSEE AND R EVENUE ARE PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF DECEMBER, 2018. SD/- SD/- ( JASON P. BOAZ ) ( N.V. VASUDEVAN ) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, THE 21 ST DECEMBER, 2018. / D ESAI S MURTHY / IT(TP)A.NO.156 & 220/BANG/2016 PAGE 18 OF 18 COPY TO: 1. THE APP ELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.