M/s. SunGard Solutions (India) Pvt. Ltd., Pune V. Dy. Director of Income-tax (Intl. Taxation-I),

ITA 1670/PUN/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88871 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 19-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 26-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Assessee Lawyers: MRS KARISHMA PHATARPHEKAR
• Keywords: Related party transaction; Business income; Transfer pricing; International transaction
• Section: 43B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1670/PN/2011 (ASSESSMENT YEAR : 2007-08) M/S SUNGARD SOLUTIONS (INDIA) PVT. LTD., [FORMERLY KNOWN AS AUTOMATED SECURITIES CLEARANCE (INDIA)], WESTEND CENTER ONE, SURVEY NO.169/1, SECTOR II, AUNDH, PUNE 411 007. PAN : AACCA7484M . APPELLANT VS. DY. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION)-I, PUNE. . RESPONDENT ASSESSEE BY : MRS. KARISHMA PHATARPHEKAR, DEPARTMENT BY : MR. A. K. MODI DATE OF HEARING : 19-01-2015 DATE OF PRONOUNCEMENT : 30-01-2015 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL HAS BEEN PREFERRED BY THE ASSE SSEE PERTAINING TO THE ASSESSMENT YEAR 2007-08, AND IS DIRECTED AGAINS T THE ORDER OF THE DY. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION)-I, PUNE (IN SHORT THE ASSESSING OFFICER) PASSED U/S 143(3) R.W.S. 144C(13) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 28.10.2011, WHICH IS IN CONFORMITY WITH THE DIRECTIONS GIVEN BY THE DISPUTE RESOLUTION PANEL, PUNE (IN SHO RT THE DRP) DATED 26.09.2011. 2. IN THIS APPEAL, A SUBSTANTIVE DISPUTE IS WITH RE GARD TO AN ADDITION OF RS.8,79,44,950/- MADE BY THE INCOME-TAX AUTHORITIES WHILE DETERMINING THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION OF SOFTWARE DEVELOPMENT SERVICES RENDERED TO THE ASSOCIATED ENTERPRISES. ITA NO.1670/PN/2011 3. THE APPELLANT-ASSESSEE BEFORE US IS A BRANCH-OFF ICE OF M/S SUNGARD TRADING SYSTEMS OF USA (STS), WHICH IS ONE OF THE S UBSIDIARIES OF SUNGARD DATA SYSTEMS INC (SDS). SDS IS A GLOBAL LEADER IN INTEGRATED IT AND E-PROCESSING SOLUTIONS FOR THE FINANCIAL SERVICES I NDUSTRY. ASSESSEE PROVIDES SOFTWARE DEVELOPMENT SERVICES TO STS, AND SUCH SERV ICES INCLUDE DEVELOPMENT OF SOFTWARE AND COMPONENTS OF SOFTWARE PRODUCTS DEVELOPED AS PER THE REQUIREMENTS OF SUNGARD GROUP ENTITIES. FO R THE ASSESSMENT YEAR UNDER CONSIDERATION, ASSESSEE FILED A RETURN OF INC OME DECLARING TOTAL INCOME OF RS.39,37,714/-. THE SAID RETURN OF INCOME WAS S UBJECT TO A SCRUTINY ASSESSMENT WHEREBY THE ASSESSING OFFICER PASSED AN ORDER U/S 143(3) R.W.S. 144C(13) OF THE ACT DATED 28.10.2011 DETERMINING TH E TOTAL INCOME AT RS.9,30,21,450/-. AS ASSESSEE WAS FOUND TO HAVE UN DERTAKEN INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTERPRISE ABROAD BY WAY OF RENDERING SOFTWARE DEVELOPMENT SERVICES, ASSESSING OFFICER MA DE A REFERENCE TO THE TRANSFER PRICING OFFICER (IN SHORT THE TPO) U/S 9 2CA(1) OF THE ACT FOR DETERMINATION OF THE ARM'S LENGTH PRICE OF SUCH INT ERNATIONAL TRANSACTIONS. THE TPO PASSED AN ORDER U/S 92CA(3) OF THE ACT DATED 29 .10.2010 WHEREBY THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION S OF SOFTWARE DEVELOPMENT SERVICES WAS DETERMINED BY HIM AT AN AMOUNT HIGHER THAN THE STATED VALUE OF SUCH TRANSACTIONS. NOTABLY, ASSESSEE HAD RENDERED SOFTWARE DEVELOPMENT SERVICES TO ITS ASSOCIATED ENTERPRISES AND RECEIVED RS.89,35,90,013/- ON THIS COUNT. HOWEVER, THE TPO ARRIVED AT AN ADJUSTMENT O F RS.8,79,44,950/- IN ORDER TO DETERMINE THE ARM'S LENGTH PRICE OF SUCH I NTERNATIONAL TRANSACTIONS. THE TPO ACCEPTED THE TRANSACTIONAL NET MARGIN (TNM) METHOD ADOPTED BY THE ASSESSEE IN ITS TRANSFER PRICING STUDY AS THE M OST APPROPRIATE METHOD IN ORDER TO BENCHMARK THE INTERNATIONAL TRANSACTIONS O F SOFTWARE SERVICES. HOWEVER, HE HAS DIFFERED WITH THE ASSESSEE ON VARIO US OTHER ASPECTS AND FINALLY THE FINAL SET OF COMPARABLES TAKEN BY HIM W ERE AS UNDER :- ITA NO.1670/PN/2011 SL. NO. NAME OF THE COMPANY NCP 2006-07 (%) 1 AKSHAY SOFTWARE TECHNOLOGIES LTD. 4.63 2 GOLDSTONE TECHNOLOGIES LTD. 21.90 3 KALS INFORMATION SYSTEMS LTD. 30.55 4 SYNETAIROS TECHNOLOGIES LTD. 19.75 5 TRANSWORLD INFOTECH LTD. 32.90 6 COMPUCOM SOFTWARE LTD. 35.63 ARITHMETIC MEAN 24.23 4. BY APPLYING THE PROFIT LEVEL INDICATOR (PLI) AS A RATIO OF OPERATING PROFITS TO OPERATING COSTS, THE TPO COMPUTED THE ME AN PLI OF THE COMPARABLES AT 24.23%. SINCE THE PLI OF THE ASSESS EE WAS 13.10%, HE TREATED THE STATED VALUE OF THE INTERNATIONAL TRANS ACTION OF SOFTWARE DEVELOPMENT SERVICES AS BELOW ITS ARM'S LENGTH PRIC E, AND ACCORDINGLY, HE COMPUTED ADJUSTMENT OF RS.8,79,44,950/- ON THIS POI NT. THE ASSESSING OFFICER HAS PASSED THE FINAL ASSESSMENT ORDER DATED 28.10.2 011 (SUPRA) AFTER AN ADDITION OF RS.8,79,44,950/- ON ACCOUNT OF THE TRAN SFER PRICING ADJUSTMENT. 5. AT THE TIME OF HEARING, IT WAS A COMMON POINT BE TWEEN THE PARTIES THAT THE DISPUTE RELATING TO THE DETERMINATION OF ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION OF SOFTWARE DEVELOPMENT S ERVICES IS IDENTICAL TO THE DISPUTE DEALT WITH BY THE PUNE BENCH OF THE TRIBUNA L IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 VIDE ITA NO.122/PN /2011 DATED 30.09.2014. 6. THE LD. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IN CASE THE FOLLOWING THREE CONCERNS, NAMELY, (I) KALS INFORMAT ION SYSTEMS LTD.; (II) TRANSWORLD INFOTECH LTD.; AND, (III) COMPUCOM SOFTW ARE LTD. ARE EXCLUDED FROM THE FINAL SET OF COMPARABLES, BASED ON THE DECISION OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 (SU PRA), THE RESULTANT ARM'S LENGTH PRICE WOULD FALL WITHIN THE +/- 5% OF THE STATED VALUE OF THE INTERNATIONAL TRANSACTIONS AND THEREFORE IN TERMS O F SECTION 92C(2) OF THE ACT NO ADJUSTMENT WOULD BE REQUIRED TO BE MADE. IT IS POINTED OUT THAT THE AFORESAID THREE CONCERNS WERE ALSO DIRECTED TO BE E XCLUDED BY THE TRIBUNAL ITA NO.1670/PN/2011 FROM THE FINAL SET OF COMPARABLES IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 (SUPRA). IT WAS ALSO ASSERTED, WITHOUT CON TROVERSION FROM THE SIDE OF THE REVENUE, THAT THE FACTS AND CIRCUMSTANCES PREVA ILING IN THIS ASSESSMENT YEAR QUA THE AFORESAID ASPECT ARE SIMILAR TO THOSE CONSIDERED BY THE TRIBUNAL IN ASSESSMENT YEAR 2006-07 (SUPRA). IT WAS THEREFO RE SUBMITTED THAT THE APPEAL BE HEARD ON THIS LIMITED ASPECT. THE LD. CI T-DR, APPEARING FOR THE REVENUE HAS NOT OPPOSED THE AFORESAID PLEA OF THE A PPELLANT AS THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEAR 2006-07 DATED 30.0 9.2014 (SUPRA) CONTINUES TO HOLD THE FIELD. 7. ALTHOUGH, ASSESSEE HAS RAISED MULTIPLE GROUNDS O F APPEAL IN ORDER TO ASSAIL THE ADDITION OF RS.8,79,44,950/- ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT, BUT THE SAID DISPUTE IS BEING DISPOSED- OFF AFTER ADVERTING TO THE LIMITED ISSUE ARGUED BY THE PARTIES BEFORE US. IN THE BACKGROUND OF THE AFORESAID CONVERGENCE OF STANDS OF THE RIVAL PARTIE S, WE HAVE HEARD THE APPEAL ON THE LIMITED ISSUE RELATING TO THE AFORESAID EXCL USIONS ALONE. 8. AT THE TIME OF HEARING, ORDER OF THE TRIBUNAL DA TED 30.09.2014 (SUPRA) WAS REFERRED IN ORDER TO JUSTIFY EXCLUSION OF THE T HREE CONCERNS STATED EARLIER. WE FIND THAT THE TRIBUNAL HAS DEALT WITH EACH OF TH E SAID CONCERNS AND IT WAS HELD THAT THE SAME WERE NOT COMPARABLE TO THE ACTIV ITIES OF THE ASSESSEE. IN ORDER TO IMPART COMPLETENESS TO THIS ORDER, THE REL EVANT PORTION OF THE ORDER OF THE TRIBUNAL DATED 30.09.2014 (SUPRA) IS REPRODUCED HEREINAFTER. IN SO FAR AS THE PLEA OF THE ASSESSEE FOR EXCLUSION OF KALS INFO RMATION SYSTEMS LTD. IS CONCERNED, THE DISCUSSION IN THE ORDER OF THE TRIBU NAL DATED 30.09.2014 (SUPRA) READS AS UNDER :- 14. ANOTHER PLEA OF THE ASSESSEE IS AGAINST THE AC TION OF THE TPO IN INCLUDING KALS INFORMATION SYSTEMS LTD. AS A COM PARABLE CONCERN. THE ASSESSEE HAS CONTENDED THAT THE SAID CONCERN IS FUN CTIONALLY ENGAGED IN A DIFFERENT ACTIVITY INASMUCH AS IT IS ENGAGED IN DEV ELOPMENT OF SOFTWARE PRODUCTS WHICH IS QUITE DISTINCT FROM THE SOFTWARE DEVELOPMENT SERVICES BEING ITA NO.1670/PN/2011 PROVIDED BY THE ASSESSEE. AT THE TIME OF HEARING, IT HAS BEEN SUBMITTED THAT SIMILAR DISTINCTION HAS BEEN NOTICED BY THE TRIBUNA L IN THE CASE OF BINDVIEW INDIA (P.) LTD. (SUPRA) WITH RESPECT TO KALS INFORM ATION SYSTEMS LTD. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION BEFORE US. IT HAS BEEN POINTED OUT THAT BINDVIEW INDIA (P.) LTD. (SUPRA) IS A COMPANY WHICH IS ENGAGED IN SOFTWARE DEVELOPMENT ACTIVITIES, WHICH IS AKIN TO THE ACTIVI TIES BEING CARRIED OUT BY THE ASSESSEE FOR ITS ASSOCIATED ENTERPRISES. THEREFORE , THE SAID CONCERN I.E. KALS INFORMATION SYSTEMS LTD. IS LIABLE TO BE EXCLU DED FROM THE FINAL SET OF COMPARABLES. THE LEARNED CIT-DR HAS NOT DISPUTED T HAT THE DECISION OF THE TRIBUNAL IN THE CASE OF BINDVIEW INDIA (P.) LTD. (S UPRA) COVERS THE ARGUMENT BEING SETUP BY THE ASSESSEE BEFORE US. 15. IN THIS CONTEXT, WE HAVE PERUSED THE DECISION O F THE BINDVIEW INDIA (P.) LTD. (SUPRA) WHICH ALSO IS A CONCERN ENG AGED IN RENDERING OF SOFTWARE DEVELOPMENT SERVICES TO ITS PARENT COMPANY ABROAD. IN THE CONTEXT OF BENCHMARKING THE SERVICES RENDERED BY BINDVIEW I NDIA (P.) LTD. (SUPRA), WHICH IS SIMILAR TO THE SERVICES BEING RENDERED IN THE INSTANT CASE, THE TRIBUNAL OBSERVED THAT KALS INFORMATION SYSTEMS LTD. WAS NOT A FUNCTIONALLY COMPARABLE CONCERN. THE FOLLOWING DISCUSSION IN TH E ORDER OF THE BINDVIEW INDIA (P.) LTD. (SUPRA) IS RELEVANT :- 16. ANOTHER ISSUE RELATING TO SELECTION OF COMPARA BLE BY THE TPO IS REGARDING INCLUSION OF KALS INFORMATION SYSTEM LTD. THE ASSESSEE HAS OBJECTED TO ITS INCLUSION ON THE BASIS THAT FUNCTIO NALLY THE COMPANY IS NOT COMPARABLE. WITH REFERENCE TO PAGES 185-186 OF THE PAPER BOOK, IT IS EXPLAINED THAT THE SAID COMPANY IS ENGAGED IN DEVELOPMENT OF SOFTWARE PRODUCTS AND SERVICES AND IS NOT COMPARABL E TO SOFTWARE DEVELOPMENT SERVICES PROVIDED BY THE ASSESSEE. THE APPELLANT HAS SUBMITTED AN EXTRACT ON PAGES 185-186 OF THE PAPER BOOK FROM THE WEBSITE OF THE COMPANY TO ESTABLISH THAT IT IS ENGA GED IN PROVIDING OF IT ENABLED SERVICES AND THAT THE SAID COMPANY IS INTO DEVELOPMENT OF SOFTWARE PRODUCTS, ETC. ALL THESE ASPECTS HAVE NOT BEEN FACTUALLY REBUTTED AND, IN OUR VIEW, THE SAID CONCERN IS LIAB LE TO BE EXCLUDED FROM THE FINAL SET OF COMPARABLES, AND THUS ON THIS ASPECT, ASSESSEE SUCCEEDS. 16. FOLLOWING THE AFORESAID DECISION, WE DIRECT THE ASSESSING OFFICER TO EXCLUDE KALS INFORMATION SYSTEMS LTD. FR OM THE FINAL SET OF COMPARABLES. THUS, ON THIS ASPECT ALSO ASSESSEE SU CCEEDS. 9. IN SO FAR AS THE DISCUSSION RELATING TO EXCLUSIO N OF TRANSWORLD INFOTECH LTD. FROM THE FINAL SET OF COMPARABLES, THE SAME IS FOUND IN PARA 17 OF THE ORDER OF THE TRIBUNAL DATED 30.09.2014 (SUPRA), WHI CH READS AS UNDER :- 17. ANOTHER PLEA BY THE ASSESSEE IS WITH RESPECT T O THE EXCLUSION OF TRANSWORLD INFOTECH LTD. FROM THE FINAL LIST OF COM PARABLES. THE EXCLUSION OF THE SAID CONCERN HAS BEEN JUSTIFIED ON THE BASIS TH AT THE SAID CONCERN HAS A FINANCIAL YEAR ENDING DIFFERENT FROM THAT OF THE AS SESSEE. AT PAGE 17 OF THE PAPER BOOK, ASSESSEE HAS PLACED AN EXTRACT FROM A C OPY OF THE ANNUAL REPORT OF TRANSWORLD INFOTECH LTD. WHICH SHOWS THAT THE FINANCIAL PERIOD IS ENDING ON 30 TH JUNE, 2006 WHICH CLEARLY DOES NOT CORRESPOND TO TH E FINANCIAL YEAR OF THE ASSESSEE WHICH IS ENDING ON 31.03.2006. FOR THE REASONS EXPLAINED BY US IN THE CONTEXT OF THE EXCLUSION OF SIP TECHNOLOGIES AND ITA NO.1670/PN/2011 EXPORT LTD. IN THE EARLIER PARAGRAPHS, HEREIN ALSO THE SAID CONCERN IS DIRECTED TO BE EXCLUDED FROM THE FINAL SET OF COMPARABLES BE CAUSE THE FINANCIAL YEAR OF THE SAID CONCERN IS DIFFERENT FROM THAT OF THE ASSE SSEE. THUS, ON THIS PLEA ALSO ASSESSEE SUCCEEDS. 10. SIMILARLY, WITH REGARD TO THE ASSESSEES PLEA F OR EXCLUSION OF COMPUCOM SOFTWARE LTD. FROM THE FINAL SET OF COMPAR ABLES, THE RELEVANT DISCUSSION IS CONTAINED IN PARA 8 OF THE ORDER OF T HE TRIBUNAL DATED 30.09.2014 (SUPRA), WHICH READS AS UNDER :- 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS ON THIS ASPECT AND WE ARE UNABLE TO UPHOLD THE STAND OF THE REVENUE. THE DISCUSSION MADE BY THE TPO IN PARA 6.5.2 OF HIS ORD ER ON THE IMPUGNED ISSUE SHOWS THAT HE HAS CONSIDERED A FILTER 25% OF THE RP TS FOR THE PURPOSE OF EXCLUDING A CONCERN FROM THE LIST OF COMPARABLES. WHILE APPLYING THE SAID FILTER IN THE CASE OF COMPUCON SOFTWARE LTD. HE HAS AGGREGATED THE RECEIPTS FOR SERVICES RENDERED AND THE PAYMENTS MADE FOR SER VICES RECEIVED AND THEREAFTER HE HAS DIVIDED THE TOTAL FIGURE BY THE T OTAL TURNOVER OF THE ASSESSEE. QUITE CLEARLY, THE NUMERATOR CONSIDERED BY THE TPO COMPRISES OF RECEIPTS FOR SERVICES RENDERED AS ALSO THE PAYMENTS MADE FOR SER VICES RECEIVED MEANING THEREBY THAT SALES AS WELL AS EXPENSES HAVING A COM PONENT OF RPTS ARE INCLUDED, WHEREAS THE DENOMINATOR COMPRISED OF ONLY THE SALES COMPONENT. OSTENSIBLY, THE AFORESAID FORMULA WOULD GIVE A DIST ORTED PICTURE OF THE RATIO OF RPTS TO THE TOTAL TRANSACTIONS. IF TOTAL EXPENSES INCURRED BY THE ASSESSEE BY WAY OF PAYMENTS TO ASSOCIATED ENTERPRISES IS DIVIDE D BY THE TOTAL EXPENSES INCURRED, THE RATIO OF RPTS TO THE TOTAL TRANSACTIO NS EXCEED 25%, AS PER THE WORKING MADE BY THE ASSESSEE. IN VIEW OF THE AFORE SAID INCORRECT APPROACH OF THE TPO IN ORDER TO CALCULATE THE LEVEL OF RPTS, CO MPUCON SOFTWARE LTD. HAS BEEN WRONGLY INCLUDED AS A COMPARABLE. MOREOVER, T HE ASSESSEE HAS ALSO REFERRED TO A DECISION OF THE PUNE BENCH OF THE TRI BUNAL IN THE CASE OF BINDVIEW INDIA (P.) LTD. VS. DCIT, (2013) 34 TAXMAN N.COM 164 (PUNE-TRIB.) RELATING TO THE ASSESSMENT YEAR 2006-07 WHEREIN THE RPTS IN THE CASE OF COMPUCON SOFTWARE LTD. HAVE BEEN ACCEPTED AS BEING IN EXCESS OF 25% OF THE TOTAL TRANSACTIONS. ON THIS BASIS ALSO, WE FIN D THAT THE PLEA OF THE ASSESSEE TO EXCLUDE COMPUCON SOFTWARE LTD. FROM THE LIST OF COMPARABLES HAS BEEN WRONGLY NEGATED BY THE LOWER AUTHORITIES. WE ORDER ACCORDINGLY AND ASSESSEE SUCCEEDS ON THIS ASPECT. 11. AT THE TIME OF HEARING, THE LD. REPRESENTATIVE FOR THE ASSESSEE ALSO POINTED OUT THAT FOR THE INSTANT ASSESSMENT YEAR I. E. 2007-08, THE LEVEL OF RELATED PARTY TRANSACTIONS (RPTS) IN THE CASE OF CO MPUCOM SOFTWARE LTD. HAVE BEEN FOUND TO BE IN EXCESS OF 25% BY THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF PTC SOFTWARE (INDIA) PVT. LTD. VS. ACIT VIDE ITA NO.1605/PN/2011 DATED 30.04.2013, THE RELEVANT DISCUSSION IN THE SA ID ORDER READS AS UNDER :- ITA NO.1670/PN/2011 14. SIMILARLY, IN THE CASE OF COMPUCOM SOFTWARE LT D., THE TPO HAS OBSERVED IN PARA 6.3.19 OF HIS ORDER THAT THE SAID CONCERN HAS NIL SALES REVENUE FROM RELATED PARTIES AGAINST TOTAL SALES OF 23.82 CRORES, BUT HAS INCURRED RPT EXPENSES OF RS.6.65 CRORES AGAINST TOT AL EXPENSES OF 17.78 CRORES. THE RATIO OF RPT TO TOTAL TRANSACTIONS HAS BEEN COMPUTED AT 15.19% BY THE TPO. AGAIN THE TPO HAS ADOPTED THE DENOMINA TOR OF RS.41.60 CRORES INCLUSIVE OF TOTAL SALES WHEREAS THE NUMERATOR IS R S.6.65 CRORES, COMPRISING OF ONLY RPT EXPENSES AND NO RPT SALES. THEREFORE, THE DENOMINATOR IS TO BE CORRECTED AT RS.17.78 CRORES AND THE CORRECT PERCEN TAGE OF RPTS WOULD BE 37.40%, I.E., RPT EXPENSES/TOTAL EXPENSES. THE RPT S BEING IN EXCESS OF THE 25% FILTER ADOPTED BY THE TPO, THE SAID CONCERN IN OUR VIEW IS ALSO LIABLE TO BE EXCLUDED FROM THE LIST OF COMPARABLES FOR THE PURPO SE OF COMPARABILITY ANALYSIS. 15. BEFORE PARTING, WE MAY ALSO OBSERVE THAT THE MA NNER IN WHICH THE RPT FILTER HAS BEEN APPLIED BY THE TPO IN THE Y EAR IS INCONSISTENT WITH HIS OWN APPROACH IN THE A.Y. 2006-07. FOR THIS PURPOS E, THE APPELLANT HAS REFERRED TO PAGES 668 TO 751 OF THE PAPER BOOK FOR THE COPY OF THE ORDER OF THE TPO DATED 29.10.2009 FOR A.Y. 2006-07, SPECIFICALLY AT PAGES 689 TO 690, WHERE THE TPO HAS TAKEN EITHER THE SALES OR EXPENSE S AS THE APPROPRIATE BASE, AS THE CASE MAY BE, AND NOT AGGREGATE OF SALE S AND TOTAL EXPENSES EVEN WHERE RELATED PARTY TRANSACTIONS IN ONE OF THE TWO WAS ABSENT. 12. ON THIS BASIS, IT WAS SOUGHT TO BE CANVASSED TH AT THE AFORESAID THREE CONCERNS ARE LIABLE TO BE EXCLUDED FROM THE FINAL S ET OF COMPARABLES IN ORDER TO DETERMINE THE ARM'S LENGTH PRICE OF THE INTERNATION AL TRANSACTIONS OF PROVIDING OF SOFTWARE DEVELOPMENT SERVICES. THE AFORESAID PR ECEDENTS CONTINUE TO HOLD THE FIELD AS THE SAME HAVE NOT BEEN ALTERED BY ANY HIGHER AUTHORITY. NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE H AS BEEN ESTABLISHED BEFORE US AND THEREFORE FOLLOWING THE ABOVE PRECEDE NTS, WE HOLD THAT THE CONCERNS, NAMELY, (I) KALS INFORMATION SYSTEMS LTD. ; (II) TRANSWORLD INFOTECH LTD.; AND, (III) COMPUCOM SOFTWARE LTD. BE EXCLUDED FROM THE FINAL SET OF COMPARABLES IN ORDER TO COMPUTE THE ARM'S LENGTH PR ICE OF THE INTERNATIONAL TRANSACTIONS. 13. AT THE TIME OF HEARING, IT WAS STATED BY THE LD . REPRESENTATIVE FOR THE ASSESSEE THAT IF ASSESSEE WERE TO SUCCEED ON ITS PLEA FOR THE EXCLUSION OF (I) KALS INFORMATION SYSTEMS LTD.; (II) TRANSWORLD INFO TECH LTD.; AND, (III) COMPUCOM SOFTWARE LTD. FROM THE FINAL SET OF COMPAR ABLES, THEN THE VARIATION BETWEEN THE ARM'S LENGTH PRICE DETERMINED AND THE S TATED VALUE OF THE ITA NO.1670/PN/2011 INTERNATIONAL TRANSACTION WOULD FALL WITHIN THE +/- 5% AND THEREFORE IN TERMS OF SECTION 92C(2) OF THE ACT NO ADJUSTMENT WOULD BE RE QUIRED TO BE MADE. SINCE WE HAVE UPHELD THE PLEA OF THE ASSESSEE FOR EXCLUSI ON OF (I) KALS INFORMATION SYSTEMS LTD.; (II) TRANSWORLD INFOTECH LTD.; AND, ( III) COMPUCOM SOFTWARE LTD. FROM THE FINAL SET OF COMPARABLES, THE OTHER GROUND S OF APPEAL RAISED BY THE ASSESSEE IN ORDER TO ASSAIL THE ADDITION OF RS.8,79 ,44,950/- ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT ARE RENDERED ACADEMIC A ND ARE NOT BEING ADJUDICATED FOR THE PRESENT. THUS, ON THIS ASPECT ASSESSEE PARTLY SUCCEEDS. 14. THE ONLY OTHER ISSUE IN THE APPEAL RELATES TO A DISALLOWANCE OF RS.11,37,645/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF APPLICATION OF SECTION 43B OF THE ACT. THE RELEVANT FACTS ARE THA T ASSESSEE WAS FOUND TO HAVE DEPOSITED THE EMPLOYEES CONTRIBUTION TO THE P ROVIDENT FUND OF RS.11,37,645/- BELATEDLY. THE ASSESSING OFFICER DI SALLOWED THE SAID CLAIM ON THE GROUND THAT THE EMPLOYEES CONTRIBUTION TO PROV IDENT FUND WAS LIABLE TO BE DEPOSITED WITHIN THE PERIOD PRESCRIBED IN THE RESPE CTIVE STATUTE. ACCORDING TO HIM, SUCH BELATED REMITTANCES ARE HIT BY THE PROVIS IONS OF SECTION 36(1)(VA) OF THE ACT. THE ASSESSEE HAD CONTENDED BEFORE THE LOW ER AUTHORITIES THAT IT HAS DEPOSITED THE SAID CONTRIBUTION BEFORE THE DUE DATE OF FILING OF RETURN AND THEREFORE SECTION 43B OF THE ACT COULD NOT BE INVOK ED TO DISALLOW SUCH AN EXPENDITURE. THE LOWER AUTHORITIES DISAGREED WITH THE ASSESSEE ON THE GROUND THAT THE ALLOWABILITY OF EMPLOYEES CONTRIBUTION WA S STILL GOVERNED BY SECTION 36(1)(VA) OF THE ACT EVEN AFTER THE AMENDMENT TO SE CTION 43B OF THE ACT, WHICH WAS RELIED UPON BY THE ASSESSEE. AS PER THE REVENU E, THE AMENDMENT TO SECTION 43B OF THE ACT WAS RELATING TO THE EMPLOYER S CONTRIBUTION ONLY. ACCORDINGLY, THE AMOUNT OF RS.11,37,645/- WAS DISAL LOWED. 15. AT THE TIME OF HEARING, IT WAS A COMMON POINT B ETWEEN THE PARTIES THAT THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS . M/S HINDUSTAN ORGANICS ITA NO.1670/PN/2011 CHEMICALS LTD. VIDE INCOME TAX APPEAL NO.399 OF 201 2 DATED 11.07.2014 HAS HELD THAT SUCH PAYMENT OF EMPLOYEES CONTRIBUTION T O PROVIDENT FUND COULD NOT BE DISALLOWED U/S 43B OF THE ACT. THE RELEVANT DIS CUSSION IN THE ORDER OF THE HONBLE HIGH COURT READS AS UNDER :- 9. EVEN OTHERWISE, WE FAIL TO UNDERSTAND THIS DEDU CTION COULD HAVE BEEN DISALLOWED TO THE ASSESSEE. ADMITTEDLY, THE ASSESSMENT YEAR IN QUESTION IS 2006-07. THE SECOND PROVISO TO SECTION 43B QUOTED ABOVE WAS DELETED WITH EFFECT FROM 1 ST APRIL, 2004 AND SIMULTANEOUSLY THE FIRST PROVISO W AS ALSO AMENDED BRINGING ABOUT A UNIFORMITY IN DEDUCTI ONS CLAIMED TOWARDS TAX, DUTY, CESS AND FEE ON THE ONE HAND AND CONTRIBUTION TO THE EMPLOYEES PROVIDENT FUND, SUPERANNUATION FUND AND OTHER WELFA RE FUNDS ON THE OTHER. THESE DEDUCTIONS BEING CLAIMED IN THE RETURN OF INC OME FILED FOR THE ASSESSMENT YEAR 2006-07, THE AMENDMENTS TO SECTION 43B WHICH CAME INTO FORCE WITH EFFECT FROM 1 ST APRIL, 2004 WOULD HAVE CLEARLY APPLIED TO THE ASSESSEES CASE. IN THIS VIEW OF THE MATTER ALSO, WE FIND THAT THE ITAT WAS FULLY JUSTIFIED IN DEALING THE ADDITION OF RS.1,82, 77,138/- ON ACCOUNT OF DELAYED PAYMENT OF PROVIDENT FUND OF EMPLOYEES CONTRIBUTIO N. 16. FOLLOWING THE AFORESAID JUDGEMENT, WE DIRECT TH E ASSESSING OFFICER TO DELETE THE ADDITION OF RS.11,37,645/-. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED ON 30 TH JANUARY, 2015. SD/- SD/- (SUSHMA CHOWLA) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 30 TH JANUARY, 2015. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE DRP, PUNE; 4) THE DIT (INTERNATIONAL TAXATION), PUNE; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE