ACCENTURE SERVICES P.LTD, MUMBAI V. DCIT CIR 3(1), MUMBAI

ITA 1671/MUM/2014

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1955 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Next Hearing Date: 23-07-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 11-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Transfer pricing; International transaction; Unabsorbed depreciation
• Section: 143(3); 10AA; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI N.K. PRADHAN , ACCOUNTANT MEMBER ITA NO. 1671 / MUM . /2014 ( ASSESSMENT YEAR : 20 09 10 ) ACCENTURE SERVICES PVT. LTD. PLANT NO.3, GODREJ & BOYCE COMPLEX PHIROJSHAH NAGAR, VIKHROLI WEST OFF LBS MARG, MUMBAI 400 079 PAN AACCA8997K . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CIRCLE 3(1), MUMBAI . RESPONDENT ITA NO. 1110/ MUM. /2014 ( ASSESSMENT YEAR : 20 09 10 ) DY. COMMISSIONER OF INCOME TAX CIRCLE 3(1), MUMBAI . APPELLANT V/S ACCENTURE SERVICES PVT. LTD. 14 TH FLOOR, THE RUBY 29, SENAPATI BAPAT MARG DADAR (W), MUMBAI 400 028 PAN AACCA8997K . RESPONDENT 2 ACCENTURE SERVICES PVT. LTD. ITA NO. 501 /MUM. /2015 ( ASSESSMENT YEAR : 20 10 11 ) ACCENTURE SERVICES PVT. LTD. PLANT NO.3, GODREJ & BOYCE COMPLEX PHIROJSHAH NAGAR, VIKHROLI WEST OFF LBS MARG, MUMBAI 400 079 PAN AACCA8997K . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CIRCLE 3(1)(1), MUMBAI . RESPONDENT ITA NO. 549 /MUM. /2015 ( ASSESSMENT YEAR : 20 10 11 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 14(1)(1), MUMBAI . APPELLANT V/S ACCENTURE SERVICES PVT. LTD. C/O SRBC ASSOCIATES & LLP 14 TH FLOOR, THE RUBY 29, SENAPATI BAPAT MARG DADAR (W), MUMBAI 400 028 PAN AACCA8997K . RESPONDENT ASSESSEE BY : SHRI P.J. PARDIWALAA/W SHRI HITEN CHANDE, SHRI NISHANT THAKKAR, SHRI MUKESH BUTANI & SHRI SHREYASH SHAH REVENUE BY : SHRI ANAND MOHAN DATE OF HEARING 22.04.2019 DATE OF ORDER 28.06.2019 O R D E R PER SAKTIJIT DEY. J.M. THESE ARE TWO SETS OF CROSS APPEAL S ARISING OUT OF THE FINAL ASSESSMENT ORDERS PASSED UNDER SECTION 143(3) R/W SECTION 144C(13) 3 ACCENTURE SERVICES PVT. LTD. OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) PURSUANT TO THE DIRECTIONS OF THE DISPUTE RESOLUTION PANEL I (DRP), MUMBAI, PERTAINING TO THE ASSESSMENT YEAR S 2009 10 AND 2010 11. ITA NO. 1671/MUM./2014 ASSESSEES APPEAL A.Y. 2009 10 2 . SHRI P.J. PARDIWALA, LEARNED SR. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, SUBMITTED THAT GROUNDS NO.1, 2, 5 AND 11 ARE GENERAL IN NATURE, HENCE, DO NOT REQUIRE ADJUDICATION. CONSIDERING THE ABOVE, THESE GROUNDS ARE DISMISSED. 3 . FURTHER , ON T HE INSTRUCTIONS OF THE ASSESSEE HE SUBMITTED THAT GROUNDS NO.3, 4, 7, 8, 9, 12, 13, 14, 16, 17, 18, 20 AND 21 ARE NOT TO BE PR E SSED. CONSIDERING THE AFORESAID SUBMISSIONS OF THE LEARNED SR. COUNSEL FOR THE ASSESSEE, ALL THESE GROUNDS ARE DISMISSED AS NOT PRESSED. 4 . THUS, THE SURVIVING GROUNDS WHICH NEED TO BE ADJUDICATED ARE , GROUNDS NO.6, 10, 15, 19, 22 AND 23. THE MAJOR ISSUE PERTAINING TO THE TRANSFER PRICING ADJUSTMENT ARISES IN GROUNDS NO. 10 AND 15 RELATING TO SELECTION/ REJECTION OF CERTAIN COMPARABLE S FOR BENCH MARKING THE INTERNATIONAL TRANSACTION WITH ASSOCIATED ENTERPRISES (AES)RELATING TO PROVISION OF INFORMATION TECHNO LOGY ENABLED SERVICES (ITES). 4 ACCENTURE SERVICES PVT. LTD. 5 . BRIEF FACTS RELATING TO THIS ISSUE ARE, THE ASSESSEE , AN INDIAN COMPANY , IS A SUBSIDIARY OF M/S. BEAUMONT DEVELOPMENT CENTRE HOLDING LTD. AND PART OF ACCENTURE GROUP. THE ASSESSEE BASICALLY PROVIDES SERVIC ES TO ITS A ES ACROSS THE GLOBE UNDER THREE SEGMENTS VIZ. SOFTWARE DEVELOPMENT SERVICE (SDS), ITES, CONSULTANCY SERVICES UNDER IPSA . AS STATED, T HE DISPUTE IN THESE GROUNDS IS BASICALLY CONFINED TO THE ADJUSTMENT MADE TO THE ARM'S LENGTH PRICE OF THE SERVICES P ROVIDED TO THE A E UNDER ITES SEGMENT. IT IS RELEVANT TO OBSERVE , WHILE BENCH MARKING THE AFORESAID TRANSACTION WITH ITS A.ES, THE ASSESSEE HAD AGGREGATED THE TRANSACTIONS UNDER SDS AND ITES SEGMENTS AND BENCH MARK ED THEM BY APPLYING TRANSACTIONAL NET MARGIN METHOD (TNMM) AS THE MOST APPROPRIATE METHOD WITH OPERATING PROFIT / OPERATING COST (OP/OC) AS THE PROFIT LEVEL INDICATOR (PLI). AFTER AGGREGATING THESE TWO SEGMENTS, THE ASSESSEE HAS SHOWN THE OPERATING MARGIN OF 21.53%. IN THE COURSE OF TRANSFER PRICING PROCEEDINGS, THE TRANSFER PRICING OFFICER WAS OF THE VIEW THAT INTERNATIONAL TRANSACTION RELATING TO SDS AND ITES SEGMENTS HAVE TO BE BENCH MARK ED SEPARATELY. ACCORDINGLY, HE DIRECTED THE ASSESSEE TO DO SO. IN RESP ONSE TO THE QUERY RAISED BY THE TRANSFER PRICING OFFICER, THE ASSESSEE FURNISHED THE SEG MENTAL RESULTS FOR ITES SEGMENT COMPUTING THE MARGIN AT 24.61% AS AGAINST THE COMPARABLE S ARITHMETIC MEAN OF 15.09%. THUS, THE PRICE CHARGED FOR THE 5 ACCENTURE SERVICES PVT. LTD. TRANSACTION UNDER ITES SEGMENT WAS CLAIMED TO BE AT ARM'S LENGTH. INSOFAR AS THE PROVISION OF CONSULTANCY SERVICES IS CONCERNED, THE ASSESSEE BENCH MARKED IT SEPARATELY BY APPLYING COMPARABLE UNCONTROLLED PRICE (CUP) METHOD. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ALONG WITH DETAILS FILED, THE TRANSFER PRICING OFFICER WAS OF THE VIEW THAT SERVICES RENDERED BOTH UNDER ITES AND CONSULTANCY SERVICES SEGMENT ARE SIMILAR IN NATURE. HOWEVER, HE PROCEEDED TO BENCH MARK THEM SEPARATELY. INSOFAR AS ITES SEGMENT IS CONCERNED, THE TRANSFER PRICING OFFICER SELECTED SEVEN COMPANIES AS COMPARABLE S WITH ARITHMETIC MEAN OF 31.92%. APPLYING THE ARITHMETIC MEAN OF THE COMPARABLE S TO THE COST OF ITES SEGMENT, THE TRANSFER PRICING OFFICER DETERMINED THE ARM'S LENGTH PRICE OF THE TRANSACT ION AT ` 1702,72,09,033 A S AGAINST THE PRICE CHARGED BY THE ASSESSEE AT ` 1595,74,25,202. THE RESULTANT SHORT FALL OF ` 106,97,83,831, WAS TREATED AS UPWARD ADJUSTMENT TO THE ARM'S LENGTH PRICE SHOWN BY THE ASSESSEE. ON THE BASIS OF TRANSFER PRICING ADJUSTMENT SUGGESTED BY THE TRANSFER PRICING OFFICER , THE ASSESSING OFFICER MADE THE ADDITION WHILE FRAMING THE DRAFT ASSESSM ENT ORDER. THE ASSESSEE RAISED OBJECTION S AGAINST THE DRAFT ASSESSMENT ORDER BEFORE LEARNED DRP. 6 . A FTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, LEARNED DRP GRANTED PARTIAL RELIEF TO THE ASSESSEE BY ACCEPTING ASSESSEES CLAIM TO INCLUD E R. SYSTEMS INTE RNATIONAL LTD. AS A COMPARABLE. 6 ACCENTURE SERVICES PVT. LTD. 7 . BEFORE US, THOUGH , THE ASSESS EE HAS CHALLENGED SELECTION / REJECTION OF EIGHT COMPARABLES, HOWEVER, THE LEARNED SR. COUNSEL PUT MUCH STRESS FOR REJECTION OF TWO COMPARABLES VIZ. GENESIS INTERNATIONAL CORPORATION LTD. AND CRO SS DOMAIN SOLUTIONS LTD. AT THE OUTSET, WE WILL DEAL WITH THE ACCEPTABILITY OR OTHERWISE OF THESE TWO COMPARABLES. I) GENESY S INTERNATIONAL CORPORATION LTD. 8 . THIS COMPANY , THOUGH , WAS SELECTED BY THE ASSESSEE AS A COMPARABLE IN THE TRANSFER PRICING STUDY REPORT BY USING MULTIPLE YEAR DATA, HOWEVER, BEFORE THE TRANSFER PRICING OFFICER, THE ASSESSEE OBJECTED TO SELECTION OF THE COMPANY DUE TO FUNCTIONAL DIFFERENCE AND EXCEPTIONAL YEA R OF PERFORMANCE. HOWEVER, REJECTING THE OBJECTIONS OF THE ASSESSEE, THE TRANSFER PRICING OFFICER SELECTED THIS COMPANY AS A COMPARABLE. LEARNED DRP ALSO UPHELD THE DECISION OF THE TRANSFER PRICING OFFICER BY HOLDING THAT ONCE THE COMPANY WAS SELECTED AS C OMPARABLE BY THE ASSESSEE, IT CANNOT BE EXCLUDED. 9 . OBJECTING TO THE SELECTION OF THIS COMPANY, THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED, THE COMPANY IS ENGAGED IN PROVIDING ENGINEERING DESIGN SERVICES (CAD/CAM) AND GEOGRAPHICAL INFORMATION SERVI CE (GIS) WHICH ARE IN THE NATURE OF KNOWLEDGE PROCESS OUTSOURCING (KPO) SERVICES. DRAWING OUR ATTENTION TO THE ANNUAL REPORT OF THE COMPANY, HE SUBMITTED , GIS IS A SYSTEM DESIGNED 7 ACCENTURE SERVICES PVT. LTD. TO CAPT URE, STORE, MANIPULATE, ANALYSE , MANAGE AND PRESENT DIFFERENT TYPES O F GEOGRAPHICAL DATA. IT DIGITALLY CREATES AND MANIPULATES SPATIAL AREAS THAT MAY BE JURISDICTIONAL, PURPOSE OR APPLICATION ORIENTED. HE SUBMITTED , THE SERVICES PROVIDED BY THE COMPANY ARE COMPLETELY DIFFERENT F ROM NORMAL BUSINESS PROCESS OUT SOURCING (BPO) SERVICE PROVIDED BY THE ASSESSEE. DRAWING OUR ATTENTION TO THE DIRECTORS REPORT, THE LEARNED SR. COUNSEL SUBMITTED , THE COMPANY IS INVOLVED IN LAND BASE D MAPPING ALSO. HE SUBMITTED , AS PER THE SAFE HARBOR RULES NOTIFIED VIDE CBDT NOTIFICATION NO.S.O. 2810 (E) DATED 18 TH SEPTEMBER 2013, GIS HAS B EEN CLASSIFIED AS A KPO SERVICE WHICH REQUIRES APPLICATION OF KNOWLEDGE AND ADVANCED ANALYTICAL AND TECHNICAL SKILL. HENCE , THE SERVICES RENDERED BY THE COMPANY ARE NOT COMPARABLE TO THE ASSESSEE. HE SUBMITTED , BECAU SE OF FUNCTIONAL DISSIMILARITY, THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005 06 AND 2008 09, HAS REJECTED THIS COMPANY AS A COMPARABLE. HE SUBMITTED , SINCE THERE IS NO CHANGE IN THE FUNCTIONAL PROFILE OF THE COMPANY IN THE IMPUGNED ASSE SSMENT YEAR, FOLLOWING THE DECISION OF THE TRIBUNAL IN PRECEDING ASSESSMENT YEAR S , THE COMPANY HAS TO BE REJECTED. IN SUPPORT OF SUCH CONTENTION, HE RELIED UPON THE FOLLOWING DECISIONS: I ) CIT V/S M/S. MERCER CONSULTING INDIA PVT. LTD. , GURGAON, ITA NO.101/2015, DATED 24.08.2016; II ) AEGIS LTD. V/S ACIT, ITA NO.1213/MUM./2014, DATED 27.07.2015; AND 8 ACCENTURE SERVICES PVT. LTD. III ) MERCER CONSULTING INDIA PVT. LTD. V/S DCIT, ITA NO.966/ DEL./ 2014, DATED 06.06.2014. 10 . FURTHER, HE SUBMITTED , THE COMPANY HAD AN EXCEPTIONAL YEAR OF PERFORMAN CE WHICH IS REFLECTED IN THE GROWTH OF REVENUE AND NET PROFIT BY 77% AND 107% RESPECTIVELY. THUS, HE SUBMITTED , THE COMPANY CANNOT BE TREATED AS COMPARABLE TO THE ASSESSEE. 11 . SHRI ANAND MOHAN, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , THE FUNCTIONS OF THE COMPANY MATCHED WITH THAT OF THE ASSESSEE. THEREFORE, IT CANNOT BE SAID TO BE FUNCTIONAL LY DISSIMILAR TO THE ASSESSEE. FURTHER, HE SUBMITTED , THE AFORESAID FACTUAL POSITION IS VINDICATED FROM THE FACT THAT THE ASSESSEE ITSELF HAD SELE CTED IT AS A COMPARABLE IN TRANSFER PRICING STUDY REPORT. THUS, HE SUBMITTED , IT CANNOT BE REJECTED AS A COMPARABLE. 12 . IN REJOINDER, THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , MERELY BECAUSE THE COMPANY WAS WRONGLY SELECTED AS A COMPARABLE IN THE T RANSFER PRICING STUDY REPORT, IT CANNOT BE RETAINED AS A COMPARABLE EVEN IF IT IS FUNCTIONALLY DISSIMILAR TO THE ASSESSEE. HE SUBMITTED , THOUGH, THE ASSESSEE MIGHT HAVE SELECTED IT AS A COMPARABLE INIT IALLY, HOWEVER, IF SUBSEQUENTLY INFORMATION AVAILABLE IN THE PUBLIC DOMAIN INDICATE THAT THE COMPANY IS FUNCTIONALLY DIFFERENT, ASSESSEE CANNOT BE PREVENTED FROM OBJECTING TO THE SELECTION OF THE 9 ACCENTURE SERVICES PVT. LTD. COMPANY AS A COMPARABLE. FOR SUCH PROPOSITION, HE RELIED UPON THE FOLLOWING DECISIONS: I ) TA TA POWER SOLAR SYSTEMS LTD., ITA NO.1120/2014 (BOM.); II ) M/S. QUARK SYSTEMS INDIA PVT. LTD., ITA NO.594/2010 (P&H); III ) M/S. SYMANTEC SOFTWARE SOLUTIONS PVT. LTD., ITA NO.7623/MUM./2012; IV ) M/S. APTEAN SOFTWARE INDIA PVT. LTD., IT(TP)A NO.1285/BANG./2012 AND IT(T P)A NO.207/BANG./2014; V ) M/S. CITRIX R&D INDIA PVT. LTD., IT(TP)A NO.1289/BANG./ 2014; VI ) M/S. YODLEE INFOTECH PVT. LTD., IT(TP)A NO.108/BANG./2014; AND VII ) INTERNATIONAL SPECIALTY PRODUC TS INDIA PVT. LTD., ITA NO.218/ HYD./2014. 13 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. NO DOUBT, IN THE TRANSFER PRICING STUDY REPORT, THE ASSESSEE HAS SELECTED IT AS A COMPARABLE ON THE BASIS OF MULTIYEAR DATA. HOWEVER, IN THE COURSE OF PROCEEDINGS BEFORE THE TRANSFER PRICING OFFICER AND LE ARNED DRP, THE ASSESSEE HAS OBJECTED TO SELECTION OF THIS COMPANY AS A COMPARABLE. FROM THE FUNCTIONAL PROFILE OF THE COMPANY AS MENTIONED IN THE ANNUAL REPORT PLACED IN THE PAPER BOOK, IT IS NOTICED THAT THIS COMPANY IS ENGAGED IN ENGINEERING DESIGN SERVI CE (CAD / CAM) AND GEOGRAPHICAL INFORMATION SYSTEM (GIS) WHICH ARE IN THE NATURE OF KPO SERVICES. IN FACT, THE REVENUE HAS ALSO IDENTIFIED THE DIFFERENCE BETWEEN THE BPO/KPO SERVICES AS CLARIFIED IN CBDT 10 ACCENTURE SERVICES PVT. LTD. NOTIFICATION NO.S.O.2810(E) DATED 18 TH SEPTEMBER 2013.THOUGH, THE AFORESAID NOTIFICATION WAS ISSUED AFTER THE IMPUGNED ASSESSMENT YEAR, HOWEVER, IT PROVIDES AN INSIGHT INTO THE DIFFERENCE BETWEEN THE KPO / BOP SERVICES. IN VARIOUS JUDICIAL PRONOUNCEMENTS ALSO, IT HAS BEEN HELD THAT A COMPANY E NGAGED IN PROVIDING KPO SERVICES CANNOT BE COMPARED WITH BOP SERVICE PROVIDER. WHILE EXAMINING THE COMPARABILITY OF THE AFORESAID COMPANY IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2005 06, THE TRIBUNAL IN ITA NO.4100/MUM./2009, DATED 10 TH NOVEMBER 2017, HA VING FOUND THIS COMPANY TO BE FUNCTIONALLY DIFFERENT EXCLUDED IT FROM BEING CONSIDERED AS A COMPARABLE. THE SAME VIEW WAS REITERATED BY THE TRIBUNAL WHILE DECIDING ASSESSEES APPEAL ON IDENTICAL ISSUE IN THE ASSESSMENT YEAR 2008 09, VIDE IT(TP)A NO. 7686/M UM./2012, DATED 20 TH JULY 2018. ON A PERUSAL OF THE ANNUAL REPORT OF THE COMPANY FOR THE IMPUGNED ASSESSMENT YEAR AS PLACED IN THE PAPER BOOK , WE HAVE NOTICED THAT THERE IS NO DIFFERENCE IN FUNCTIONAL PROFILE FROM THE EARLIER ASSESSMENT YEARS. THAT BEING T HE CASE, THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE , AS REFERRED TO ABOVE , SQUARELY COVERS THE ISSUE. EVEN , IN VARIOUS OTHER DECISIONS CITED BEFORE US BY THE LEARNED SR. COUNSEL , WHICH ARE FOR THE VERY SAME ASSESSMENT YEAR, IT HAS BEEN HELD THAT T HE COMPANY BEING A KPO SERVICE PROVIDER IS NOT COMPARABLE TO A BPO SERVICE PROVIDER. THEREFORE, IN OUR CONSIDERED VIEW, DUE TO FUNCTIONAL 11 ACCENTURE SERVICES PVT. LTD. DIFFERENCE ALONE, THE COMPANY CANNOT BE A COMPARABLE TO THE ASSESSEE. AS REGARDS THE REASONING OF THE DEPARTMENT THAT THE COMPANY WAS SELECTED BY THE ASSESSEE AS A COMPARABLE IN THE TRANSFER PRICING STUDY REPORT, WE MUST OBSERVE , THE COMPARABLE S SELECTED BY THE ASSESSEE IN THE TRANSFER PRICING STUDY REPORT ARE NOT SACROSANCT. HAD IT BEEN THE CASE, ALL COMPAN IES SELECTED B Y THE ASSESSEE HAVE TO BE ACCEPTED BY THE TRANSFER PRICING OFFICER. AFTER ALL, THE PURPOSE OF COMPARATIVE ANALYSIS IS TO FIND OUT SUITABILITY OF A COMPANY AS A COMPARABLE. IN FACT , THE DUTY OF THE ASSESSEE AND THE TRANSFER PRICING OFFICER IS TO FIND OUT CO MPARABLES WHICH ARE FUNCTIONALLY SIMILAR. IF THE COMPANY , THOUGH , IS SELECTED BY THE ASSESSEE IS NOT FOUND TO BE FUNCTIONALLY SIMILAR IT HAS TO BE REJECTED. APPLYING THE AFORESAID PRINCIPLE , IN MANY CASES THE TRANSFER PRICING OFFICER DOES NOT ACCEPT THE CO MPARABLES SELECTED BY THE ASSESSEE, AS, IN HIS VIEW THEY ARE FUNCTIONALLY DIS SIMILAR TO THE ASSESSEE . THEREFORE, ONLY BECAUSE ASSESSEE HAS SELECTED A PARTICULAR COMPANY AS A COMPARABLE IN THE TP ANALYSIS, IT CANNOT BE TREATED AS COMPARABLE IF IT IS FUNCTIO NALLY DI FFERENT . MOREOVER, IN THE JUDICIAL PRONOUNCEMENTS , REFERRED TO ABOVE, IT HAS BEEN HELD THAT THE COMPANY CANNOT BE TREATED AS COMPARABLE TO A BPO SERVICE PROVIDER . IN VIEW OF THE AFORESAID, WE DIRECT THE ASSESSING OFFICER TO EXCLUDE THIS COMPANY FROM THE LIST OF COMPARABLE S . 12 ACCENTURE SERVICES PVT. LTD. I I) C ROSSDOMAIN SOLUTIONS LTD. 14 . THIS COMPANY WAS INTRODUCED AS A FRESH COMPARABLE BY THE TRANSFER PRICING OFFICER. HE WAS OF THE VIEW THAT SINCE THE COMPANY IS INTO PAYROL L SERVICE, IT IS IN THE NATURE OF ITES, HENCE, COMPARABLE TO THE ASSESSEE. LEARNED DRP ALSO ACCEPTED THE VIEW OF THE TRANSFER PRICING OFFICER. 15 . OBJECTING TO THE SELECTION OF THIS COMPANY AS A COMPARABLE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , THE COMPANY IS FUNCTIONALLY DIFFERENT FROM THE ASSESSEE AS IT PROVIDES VARIETIES OF SERVICES INCLUDING KPO SERVICES. TO DEMONSTRATE SUCH FACT, HE DREW OUR ATTENTION TO THE ANNUAL REPORT OF THE COMPANY. HE SUBMITTED , THOUGH , THE COMPANY PROVIDES VARIOUS SE RVICES INCLUDING KPO SERVICE, HOWEVER, THE SEGMENTAL DETAILS RELATING TO SUCH SERVICES ARE NOT AVAILABLE IN PUBLIC DOMAIN. FURTHER, HE SUBMITTED , EVEN THE PROFIT & LOSS ACCOUNT OF THE COMPANY FOR THE IMPUGNED ASSESSMENT YEAR IS NOT AVAILABLE IN PUBLIC DOMA IN. 16 . THE LEARNED SR. COUNSEL SUBMITTED , CONSIDERING THE AFORESAID FACTS AND LACK OF AVAILABILITY OF ADEQUATE INFORMATION RELATING TO THE COMPANY IN PUBLIC DOMAIN, THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008 09 HAS EXCLUDED IT AS A COMPARA BLE. THE LEARNED SR. COUNSEL SUBMITTED , THERE IS NO CHANGE IN FACT IN THE 13 ACCENTURE SERVICES PVT. LTD. IMPUGNED ASSESSMENT YEAR AS WELL. THEREFORE, HE SUBMITTED, THE COMPANY SHOULD BE REJECTED AS A COMPARABLE. IN SUPPORT OF SUCH CONTENTION, HE RELIED UPON THE FOLLOWING DECISIONS: I ) APTARA TECHNOLOGY PVT. LTD., ITA NO.1209/2015 (BOM.); II ) BNY MELLON INTERNATIONAL OPERATIONS, ITA NO.1226/2015 (BOM.); III ) AEGIS LTD., ITA NO.1213/MUM./2014; IV ) WILLIS PROCESSING SERVICES INDIA LTD., ITA NO.2152/MUM./ 2014; V ) VERTEX CUSTOMER SERVICES INDIA PVT. LT D., ITA NO572/ DEL./2014; VI ) VENTURA INDIA, ITA NO.1788/PUN./2014; VII ) BNY MELLON INTERNATIONAL OPERATIONS, ITA NO.23/PUN./2014; AND VIII ) DIALOGIC NETWORKS INDIA PVT. LTD., ITA NO.7280/MUM./2012. 17 . T HE LEARNED DEPARTMENTAL REPRESENTATIVE , THOUGH , AGREED THAT THE PROFIT & LOSS ACCOUNT OF THE COMPANY FOR THE ASSESSMENT YEAR 2008 09 IS NOT AVAILABLE IN PUBLIC DOMAIN, HOWEVER, HE SUBMITTED THAT THE FUNCTIONAL PROFILE OF THE COMPANY IS AVAILABLE IN THE ANNUAL REPORT CLEARLY REVEALS THAT IT IS FUNCTIONAL LY SIMILAR TO THE ASSESSEE. THEREFORE, IT WAS RIGHTLY INCLUDED AS A COMPARABLE. 18 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. AS COULD BE SEEN FROM THE MATERIAL PLACED BEFORE US, THE COMPANY IS ENGAGED IN RENDERING SERVICES RELATING TO SOFTWARE 14 ACCENTURE SERVICES PVT. LTD. DEVELOPMENT AND MAINTENANCE , SOFTWARE TESTING, INFRASTRUCTURE SET UP AND MANAGEMENT, C ONSULTING SERVICE, ARCHITECTURE , CONFIGURATION AND INSTALLATION, ETC. MANY OF SUCH SERVICES ARE IN THE NATURE OF KPO SERVICES. FURTHER, THOUGH , THE COMPANY HAS EARNED REVENUE FROM VARIOUS SERVICE S PROVIDED BY IT, HOWEVER, THE SEGMENTAL DETAILS ARE NOT AVAI LABLE. IN FACT, THE TRANSFER PRICING OFFICER HIMSELF HAS ADMITTED THAT THE PROFIT & LOSS ACCOUNT OF THE COMPANY FOR THE IMPUGNED ASSESSMENT YEAR IS NOT AVAILABLE IN PUBLIC DOMAIN. AS IT APPEARS, THE TRANSFER PRICING OFFICER HAS ALSO NOT CALLED FOR INFORMAT ION FROM THE COMP AN Y WITH REGARD TO ITS FINANCIAL RESULTS. THEREFORE, IN THE ABSENCE OF PROFIT & LOSS ACCOUNT OF THE COMPANY IN PUBLIC DOMAIN, THE FINANCIAL RESULTS OF THE COMPANY CANNOT BE RELIABLY ASCERTAINED. IN ANY CASE OF THE MATTER, VARIOUS FUNCTIONS PERFORMED BY THIS COMPANY CANNOT BE COMPARABLE TO THE ASSESSEE. CONSIDERING THE AFORESAID FACTUAL ASPECT, THE TRIBUNAL WHILE EXAMINING THE COMPARABILITY OF THIS COMPANY IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008 09 IN ITA NO.7686/MUM./2012, DATED 20 TH JULY 2018, HAS REJECTED IT AS A COMPARABLE. SINCE , THERE IS NO CHANGE IN THE FUNCTIONAL PROFILE OF THE COMPANY IN THE IMPUGNED ASSESSMENT YEAR, THE DECISION OF THE TRIBUNAL IN ASSESSMENT YEAR 2008 09 WOULD SQUARELY APPLY. MOREOVER, IN VARIOUS DECISIO NS CITED BEFORE US BY THE LEARNED SR. COUNSEL, MANY OF WHICH ARE RELATING TO THE IMPUGNED ASSESSMENT YEAR, THE COMPANY HAS BEEN HELD TO BE 15 ACCENTURE SERVICES PVT. LTD. INCOMPARABLE TO A BPO SERVICE PROVIDER. IN VIEW OF THE AFORESAID, WE DIRECT THE ASSESSING OFFICER TO EXCLUDE THIS COM PANY FROM THE LIST OF COMPARABLES. 19 . AT THIS STAGE, WE PROPOSE TO DEAL WITH THE COMPARABILITY OF R. SYSTEMS INTERNATIONAL LTD., WHICH WAS ACCEPTED AS COMPARABLE BY LEARNED DRP BUT IS DISPUTED BEFORE US BY THE DEPARTMENT IN GROUND NO.1 OF ITS APPEAL BEING I TA NO.1110/MUM./2014. SINCE , WE ARE ON THE ISSUE OF SELECTION / REJECTION OF COMPARABLES RELATING TO ITES SEGMENT, IT WILL BE APPROPRIATE TO DEAL WITH THE ISSUE AT THIS STAGE. 20 . R. SYSTEMS INTERNATIONAL LTD. IS A COMPARABLE SELECTED BY THE ASSESSEE. THOUGH , THE TRANSFER PRICING OFFICER REJECTED THE COMPANY SOLELY ON THE GROUND THAT THE FINANCIAL YEAR OF THE COMPANY ENDING ON 31 ST DECEMBER DOES NOT MATCH WITH FINANCIAL YEAR OF THE ASSESSEE ENDING ON 31 ST MARCH, HOWEVER, LEARNED DRP ACCEPTING ASSESSEES OBJECT ION SELECTED IT AS A COMPARABLE. 21 . THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , AS PER RULE 10B(4) THE DATA RELATING TO FINANCIAL YEAR IN WHICH THE ASSESSEE HAS UNDERTAKEN THE INTERNATIONAL TRANSACTION HAS TO BE CONSIDERED FOR COMPARABILITY ANALYSIS. THUS, HE SUBMITTED , SINCE THIS COMPANYS FINANCIAL YEAR ENDS ON 31 ST DECEMBER, THE FINANCIAL RESULTS OF THE COMPANY FOR THE FINANCIAL YEAR FOLLOWED BY THE ASSESSEE ARE NOT 16 ACCENTURE SERVICES PVT. LTD. ASCERTAINABLE. THEREFORE, THE COMPANY CANNOT BE TREATED AS COMPARABLE. IN SUPPORT O F SUCH CONTENTION, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S PTC SOFTWARE INDIA PVT. LTD., [2017] 395 ITR 176 (BOM.) . THUS, HE SUBMITTED , THE COMPANY CANNOT BE TREATED A S COMPARABLE TO THE ASSESSEE. 22 . THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , IN PURSUANCE TO THE QUERY RAISED BY THE TRANSFER PRICING OFFICER UNDER SECTION 133(6) OF THE ACT, THE COMPANY HAS FURNISHED ITS FINANCIAL RESULTS FOR THE FINANCIAL YEAR 2008 09 AND 2009 10. IN THIS CONTEXT, HE DREW OUR ATTENTION TO THE FINANCIAL RESULTS FOR MARCH ENDING 2008 AND 2009 AS FOUND PLACE IN THE ANNUAL REPORT OF THE COMPANY PLACED AT PAGE 638 OF THE PAPER BOOK. THE LEARNED SR. COUNSEL SUBMITTED , THE AFORESAID INFORMATION WAS OB TAINED BY THE TRANSFER PRICING OFFIC ER HIMSELF IN COURSE OF PROCEEDINGS . THEREFORE , IT CANNOT BE SAID THAT THE FINANCIAL RESULTS OF THE COMPANY FOR THE FINANCIAL YEAR FOLLOWED BY THE ASSESSEE ARE NOT AVAILABLE. THE LEARNED SR. COUNSEL SUBMITTED , EVEN OTHER WISE ALSO IF THE FINANCIAL DATA OF THE COMPARABLE RELATING TO THE FINANCIAL YEAR FOLLOWED BY THE ASSESSEE CAN RELIABLE TO BE ASCERTAINED, THERE IS NO DEFECT IN ACCEPTING THE COMPANY AS A COMPARABLE IF OTHERWISE IT IS FUNCTIONALLY SIMILAR TO THE ASSESSEE. I N SUPPORT OF SUCH CONTENTION, HE RELIED UPON THE FOLLOWING DECISIONS: 17 ACCENTURE SERVICES PVT. LTD. I ) M/S. MERCER CONSULTING (INDIA) PVT. LTD., ITA NO.101 OF 2015 (P&H); II ) AEGIS LTD., ITA NO.1213/2014 ITAT, MUMBAI; III ) PANGEA3 & LEGAL DATABASE SYSTEMS P. LTD. ITA NO.1958 & 2128/2014 (MUM.) (TRIB.). 23 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. WE HAVE ALSO APPLIED OUR MIND TO THE DECISIONS RELIED UPON. THERE IS NO DISPUTE THAT THIS COMPANY IS FUNCTIONALLY SIMILAR TO THE ASSESSEE. THE ONLY RE ASON FOR WHICH THE TRANSFER PRICING OFFICER REJECTED THIS COMPANY IS, IT HAS A DIFFER ENT FINANCIAL YEAR COMPARED TO TH E ASSESSEE. HOWEVER, FROM THE FACTS ON RECORD, IT IS EVIDENT THAT IN RESPONSE TO THE QUERY RAISED BY THE TRANSFER PRICING OFFICER IN THE COURS E OF PROCEEDINGS, THIS COMPANY HAD PROVIDED THE OPERATING MARGINS FOR THE FINANCI AL YEAR APRIL 2008 TO MARCH 2009 AND APRIL 2009 TO MARCH 2010 . IN FACT, THE TRANSFER PRICING OFFICER HIMSELF CONFRONTED THE AFORESAID INFORMATION RECEIVED BY HIM TO THE ASSESS EE. FURTHER, THE OPERATING MARGIN OF THE COMPANY FOR FINANCIAL YEAR 2008 09 AND 2009 10 AS PROVIDED BY THE TRANSFER PRICING OFFICER IS ALSO PLACED IN THE PAPER BOOK FILED BEFORE US. ON A PERUSAL OF THE SAID INFORMATION, IT IS VERY MUCH CLEAR THAT THE FINAN CIAL RESULT FOR THE FINANCIAL YEAR 2008 09 CORRESPONDING TO THE FINANCIAL YEAR FOLLOWED BY THE ASSESSEE WAS VERY MUCH AVAILABLE WITH THE TRANSFER PRICING OFFICER. THEREFORE, THERE IS NO VALID REASON FOR THE TRANSFER PRICING OFFICER TO REJECT THE COMPANY 18 ACCENTURE SERVICES PVT. LTD. ON THE ALIBI OF DIFFERENT FINANCIAL YEAR ENDING. WHAT RULE 10B(4) MANDATES IS, THE FINANCIAL DATA RELATING TO THE FINANCIAL YEAR IN WHICH THE SUBJECT INTERNATIONAL TRANSACTION HAS BEEN UNDERTAKEN IS TO BE CONSIDERED FOR COMPARABILITY ANALYSIS. IN THE FACTS O F THE PRESENT CASE, UNDISPUTEDLY, THE FINANCIAL DATA OF THE COMPARABLE FOR THE FINANCIAL YEAR IN WHICH THE INTERNATIONAL TRANSACTION, SUBJECTED TO DETERMINATION OF ARM'S LENGTH PRICE , HAS TAKEN PLACE IS AVAILABLE BEFORE THE TRANSFER PRICING OFFICER. THAT B EING THE CASE, THE CON DITION OF RULE 10B(4) ARE SATISFIE D. FURTHER, IN CASE OF MERCER CONSULTING( INDIA ) PVT. LTD . (SUPRA) THE HONBLE P UNJAB & H ARYANA HIGH COURT HAS HELD THAT IF THE FINANCIAL RESULTS OF THE COMPARABLE RELATING TO THE FINANCIAL YEAR FOLLOWED BY THE ASSESSEE ARE AVAILABLE AND THE COMPARABLE IS OTHERWISE FUNCTIONALLY SIMILAR, THERE IS NO REASON TO REJECT IT MERELY BECAUSE IT HAS A DIFFERENT FINANCIAL YEAR ENDING. THE SAME VIEW HAS BEEN EXPRESSED IN MANY OTHER JUDICIAL PRONOUNCEMENTS , SO ME OF WHICH HAVE BEEN CITED BEFORE US BY THE LEARNED SR. COUNSEL. AS REGARDS THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN PTC SOFTWARE INDIA PVT. LTD. (SUPRA) CITED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, A READING OF THE JUDGMENT WOULD REV EAL THAT THE FINA NCIAL RESULTS OF THE COMPARABLE CORRESPONDING TO THE FINANCIAL YEAR FOLLOWED BY THE ASSESSEE WAS NOT AVAILABLE, HENCE, IT WAS REJECTED. IT IS RELEVANT TO OBSERVE , IN ASSESSEES OWN CASE IN ASSESSMENT YEAR S 2007 08 AND 2008 09 THE 19 ACCENTURE SERVICES PVT. LTD. TRANSFER PRICING OFFICER HIMSELF HAS ACCEPTED THIS COMPANY AS A COMPARABLE IN SPITE OF THE FACT THAT ITS FINANCIAL YEAR WAS NOT MATCHING WITH THAT OF THE ASSESSEE. THE REASON FOR WHICH THE TRANSFER PRICING OFFICER ACCEPTED THE COMPANY AS COMPARABLE IN THOSE YEARS I S , THE FINANCIAL RESULTS OF THE COMPANY CORRESPONDING TO THE FINANCIAL YEAR FOLLOWED BY THE ASSESSEE WERE AVAILABLE WITH HIM. FACTUAL POSITION IS NO DIFFERENT IN THE IMPUGNED ASSESSMENT YEAR. IN VIEW OF THE AFORESAID, WE DO NOT FIN D ANY INFIRMITY IN THE DE CISION OF LEARNED DRP IN ACCEPTING THIS COMPANY AS A COMPARABLE. THEREFORE, REVENUES GROUND ON THE ISSUE IS DISMISSED. 24 . IN THE COURSE OF HEARING, LEARNED SR. COUNSEL FOR THE ASSESSEE HAD SUBMITTED , WITH EXCLUSION OF GENESY S INTERNATIONAL CORPORATION LTD. AND CROSSDOMAIN SOLUTIONS LTD. AND IN CLUSION OF R. SYSTEMS INTERNATIONAL LTD. AS COMPARABLE S , THE MARGIN OF THE ASSESSEE WOULD FALL WITHIN 5% CHANGE OF ARITHMETIC MEAN OF THE REST OF THE COMPARABLE. THEREFORE, ISSUES RELATING TO THE OTHER COMPARABLES DISP UTED BEFORE THE TRIBUNAL WOULD BE ACADEMIC . I N VIEW OF THE AFORESAID SUBMISSIONS OF THE LEARNED SR. COUNSEL FOR THE ASSESSEE , WE DO NOT INTEND TO DEAL WITH THE ACCEPTABILITY OR OTHERWISE OF THE FO LLOWING COMPANIES AS COMPARABLE: 20 ACCENTURE SERVICES PVT. LTD. I ) ACCENTIA TECHNOLOGIES LTD; II ) CORAL HUBS LTD. (FORMERLY KNOWN AS VISHAL INFORMATION TECHNOLOGIES LTD.); III ) COSMIC GLOBAL LTD; IV ) CG VAK SOFTWARE AND EXPORTS LTD; V ) INFORMATION TECHNOLOGIES LTD; AND VI ) MICRO GENETICS SYSTEMS LTD. 25 . HOWEVER, WE MAKE IT CLEAR THAT SINCE WE HAVE NOT GONE INTO THE MERITS OF THE COMPARABILITY OF THESE COMPARABLES, THE ISSUE RELATING TO ACCEPTABILITY OR OTHERWISE OF THEM ARE LEFT UPON FOR ADJUDICATION IF THEY ARISE IN ANY OTHER ASSESSMENT YEAR RELATING TO THE ASSESSEE. THE REFORE, GROUNDS NO.10 AND 15 RAISED BY THE ASSESSEE ARE PARTLY ALLOWED. 26 . IN GROUND NO.6, THE ASSESSEE HAS CHALLENGED THE DECISION OF THE DEPARTMENTAL AUTHORITI ES IN HOLDING THAT SERVICE PROVIDED TO THE AE UNDER INTELLECTUAL PROPERTY SERVIC E AGREEMENT (IPSA) IS AKIN TO ITES. 27 . AS DISCUSSED EARLIER, IN TH E TRANSFER PRICING STUDY REPORT THE ASSESSEE CONSIDERED THE CONSULTANCY SERVICES PROVIDED UNDER IPSA AS AN IN DEPENDENT TRANSACTION AND BENCH MARK ED IT SEPARATELY. HOWEVER, THE TRANSFER PRIC ING OFFICER REJECTING THE BENCH MARKING OF THE ASSESSEE HELD THAT SERVICES RENDERED UNDER IPSA ARE AKIN TO BPO SERVICES. WHILE DOING SO, HE REFERRED TO CBDT NOTIFICATION NO.890(E) DATED 26 TH SEPTEMBER 2010 AND BENCH MARK ED IT ALONG WITH THE ITES SEGMENT. 21 ACCENTURE SERVICES PVT. LTD. LEARNED DRP ALSO ENDORSED THE AFORESAID ACTION OF THE TRANSFER PRICING OFFICER. 28 . THE LEARNED SR. COUNSEL FOR THE ASSESSEE FAIRLY SUBMITTED THAT IDENTICAL ISSUE AROSE IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008 09. HE SUBMITTED , WHILE DECIDING THE ISSUE, T HE TRIBUNAL HELD THAT SERVICES RENDERED UNDER IPSA ARE AKIN TO ITES, HOWEVER, THE TRIBUNAL DIRECTED THE ASSESSING OFFICER TO BENCH MARK THE ARM'S LENGTH PRICE OF SUCH SERVICES RENDERED UNDER IPSA AGREEMENT BY AGGREGATING WITH ITES SEGMENT AND APPLYING THE S AME SET UP COMPARABLES. THUS, HE SUBMITTED , SIMILAR DIRECTION MAY BE GIVEN IN THIS YEAR ALSO. THE LEARNED SR. COUNSEL FURTHER SUBMITTED , IF THE SERVICES PROVIDED UNDER IPSA ARE CONSIDERED AS PART OF BPO SERVICE SEGMENT, THE OPERATING MARGIN FOR COMBINED BP O SERVICE SEGMENT FOR THE IMPUGNED ASSESSMENT YEAR WOULD STAND REVISED TO 18.33%. 29 . THE LEARNED DEPARTMENTAL REPRESENTATIVE AGREED THAT THE ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSMENT YEAR 2008 09. 30 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AN D PERUSED THE MATERIAL ON RECORD. AS CAN BE SEEN, IDENTICAL DISPUTE AROSE IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008 09. WHILE DECIDING THE ISSUE IN IT(TP)A NO.7686/MUM./2012, DATED 20 TH JULY 2018, THE TRIBUNAL HAS DIRECTED AS UNDER: 22 ACCENTURE SERVICES PVT. LTD. 52. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. UNDISPUTEDLY, THE ASSESSEE HAS RENDERED SERVICES TO ITS OVERSEAS A.E. UNDER TWO DIFFERENT AGREEMENT VIZ. DCA AND IPSA. WHILE THE SERVICES RENDERED UNDER THE DCA HAVE BEEN TREATED TO BE IN THE NATURE OF SOFTWARE DEVELOPMENT AND ITES, SERVICES RENDERED UNDER THE IPSA HAS BEEN SEGREGATED BY THE ASSESSEE INTO TWO CATEGORIES. AS COULD BE SEEN FROM THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE TRANSFER PRICING OFFICER, THE ASSESSEE ITSELF ADMITTED THAT AN AMOUNT OF ` 90,41,87,522, RECEIVED UNDER THE IPSA IS IN THE NATURE OF ITES AND CAN BE TREATED AT PAR WITH ITES RENDERED UNDER THE DCA AND CAN ALSO BE BENCHMARKED CONSIDERING SAME COMPARABLES. HOWEVER, AN AMOUNT OF ` 8,47,34,817, RECEIVED TOWARDS SERVICES RENDERED UNDER THE IPSA WAS TREATED BY THE ASSESSEE NOT TO BE IN THE NATURE OF EITHER SOFTWARE SERVICES OR ITES. IT IS THE CONTENTION OF THE LEARNED SR. COUNSEL BEFORE US THAT IMAGE DEVELOPMENT - WEB DEVELOPMENT IS NOT IN THE NATURE OF ITE S AND IS ALTOGETHER A SEPARATE CLASS OF SERVICE, HENCE, CANNOT BE CLASSIFIED AS ITES. AFTER CAREFULLY CONSIDERING THE SUBMISSIONS MADE FROM BOTH SIDES IN THE LIGHT OF FACTS AND MATERIALS ON RECORD, WE ARE NOT CONVINCED WITH THE CLAIM OF THE ASSESSEE. AS CO ULD BE SEEN FROM CBDT NOTIFICATION NO.S0 890E, DATED 26 TH SEPTEMBER 2010, IT WAS SPECIFICALLY ISSUED FOR THE PURPOSE OF SECTION 10A OF THE ACT. ON A PERUSAL OF THE SAID NOTIFICATION, IT IS CLEAR THAT CONTENT DEVELOPMENT OR ANIMATION AND WEBSITE SERVICES AR E COMING WITHIN THE AMBIT OF I.T. ENABLED PRODUCTS OR SERVICES. THUS, KEEPING IN VIEW THE AFORESAID FACT, IT HAS TO BE CONCLUDED THAT THE SERVICES RENDERED UNDER IPSA ARE TO BE TREATED AS ITES. AS COULD BE SEEN FROM THE ORDER OF THE TRANSFER PRICING OFFICE R, THOUGH, HE HAS TREATED THE REVENUE EARNED OF ` 8.47 CRORE AS ITES, HOWEVER, HE HAS BENCHMARKED IT SEPARATELY WITHOUT AGGREGATING IT WITH ALL SERVICES RENDERED ITES SEGMENT. THE DRP HAS ALSO FAILED TO RECTIFY THE ERROR COMMITTED BY THE TRANSFER PRICING O FFICER BY BENCHMARKING IT SEPARATELY. SINCE, THE TRANSFER PRICING OFFICER HAS NOT BENCHMARKED THIS PARTICULAR TRANSACTION BY AGGREGATING IT WITH OTHER ITES, WE ARE INCLINED TO RESTORE THE ISSUE TO THE ASSESSING OFFICER FOR UNDERTAKING THE NECESSARY EXERCIS E OF BENCHMARKING THE TRANSACTION BY AGGREGATING WITH OTHER ITES AND DETERMINE THE ARM'S LENGTH PRICE BY APPLYING THE AVERAGE MARGIN OF THE COMPARABLES SELECTED UNDER THE ITES SEGMENT, SUBJECT TO OUR DIRECTION CONTAINED IN THIS ORDER WITH REGARD TO THE COM PARABLES UNDER ITES SEGMENT. 31 . FACTS BEING IDENTICAL, WE DIRECT THE ASSESSING OFFICER TO DECIDE THE ISSUE FOLLOWING THE DIRECTION OF THE TRIBUNAL IN ASSESSMENT YEA R 23 ACCENTURE SERVICES PVT. LTD. 2008 09, AS REPRODUCED HEREIN BEFORE. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 32 . IN GROUND NO.19, THE ASSESSEE HAS RAISED THE ISSUE OF WORKING CAPITAL ADJUSTMENT. 33 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT HAS BEEN BROUGHT TO OUR NOTICE BY THE LEARNED SR. COUNSEL FOR THE ASSESSEE THAT WHILE DECIDING S IMILAR ISSUE IN ASSESSEES OWN CASE FOR THE A.Y. 2008 09 IN ITA NO.7686/MUM./ 2012, DATED 20 TH JULY 2018, THE TRIBUNAL HAS ISSUED THE FOLLOWING DIRECTIONS: 41. COMPARABILITY ISSUES RELATING TO THESE COMPARABLES ARE LEFT OPEN FOR ADJUDICATION, IF WARRANTED, IN ANY OTHER ASSESSMENT YEAR. PERTINENTLY, IN COURSE OF HEARING LEARNED SENIOR COUNSEL FOR THE ASSESSEE SUBMITTED THAT ASSESSEES CLAIM OF WORKING CAPITAL ADJUSTMENT WAS NOT PROPERLY CONSIDERED EITHER BY THE TRANSFER PRICING OFFICER OR BY THE DR P. HE SUBMITTED, THE TRANSFER PRICING OFFICER HIMSELF HAS ALLOWED WORKING CAPITAL ADJUSTMENT IN ASSESSMENT YEAR 2012 13. IN THIS CONTEXT HE DREW OUR ATTENTION TO TRANSFER PRICING OFFICERS ORDER FOR THE SAID ASSESSMENT YEAR PLACED AT PAGE 1256 OF THE PAPE R BOOK. THUS, HE SUBMITTED, TRANSFER PRICING OFFICER MAY BE DIRECTED TO ALLOW WORKING CAPITAL ADJUSTMENT IN SIMILAR LINE. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED, ISSUE MAY BE RESTORED TO TRANSFER PRICING OFFICER FOR CONSIDERING ASSESSEES CLAIM. HAV ING CONSIDERED RIVAL SUBMISSIONS WE FIND THAT IN ASSESSMENT YEAR 2012 13 THE TRANSFER PRICING OFFICER HIMSELF HAS ALLOWED WORKING CAPITAL ADJUSTMENT TO THE ASSESSEE. THAT BEING THE CASE, WE DIRECT THE ASSESSING OFFICER/TRANSFER PRICING OFFICER TO CONSIDER ASSESSEES CLAIM OF WORKING CAPITAL ADJUSTMENT WHILE COMPUTING THE MARGINS OF THE COMPARABLES. 34 . IN VIEW OF THE AFORESAID, WE DIRECT THE ASSESSING OFFICER TO CONSIDER ASSESSEES CLAIM OF WORKING CAPITAL ADJUSTMENT KEEPING IN 24 ACCENTURE SERVICES PVT. LTD. VIEW THE DECISION OF THE TRIBUN AL REPRODUCED HEREIN BEFORE. GROUND RAISED IS ALLOWED FOR STATISTICAL PURPOSES. 35 . IN GROUND NO.22, THE ASSESSEE HAS CHALLENGED THE DECISION OF THE ASSESSING OFFICER IN ALLOWING ASSESSEES CLAIM OF DEDUCTION UNDER SECTIONS 10A AND 10AA , ON CONSOLIDATED BASIS AFTER SET OFF OF LOSSES. 36 . BRIEF FACTS ARE, IN THE RETURN OF INCOME FILED FOR THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE CLAIMED DEDUCTION UNDER SECTIONS 10A / 10AA OF THE ACT UNIT WISE AGAINST THE PROFIT EARNED BY THE RESPECTIVE STPI/SEZ UNI TS. IN RESPECT OF STPI/SEZ UNITS WHICH SUFFERED LOSSES, THE ASSESSEE DID NOT CLAIM ANY DEDUCTION UNDER SECTIONS 10A/10AA OF THE ACT. THE ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT THE AFORESAID CLAIM OF THE ASSESSEE. FOLLOWING HIS ORDER FOR THE ASSESSMENT YEAR 2007 08, T HE ASSESSING OFFICER HELD THAT DEDUCTION UNDER SECTIONS 10A/10AA OF THE ACT SHOULD BE ALLOWED FROM THE AGGREGATED TOTAL INCOME OF THE ASSESSEE AFTER SETTING OFF OF LOSSES OF OTHER ELIGIBLE UNITS AGAINST THE INCOME OF ALL ELIGIBLE UNITS. IN OTHER WORDS, THE ASSESSING OFFICER DISCARDED THE UNIT WISE COMPUTATION OF DEDUCTION UNDER SECTIONS 10A / 10AA OF THE ACT FOLLOWED BY THE ASSESSEE. LEARNED DRP ALSO APPROVED THE DECISION OF THE ASSESSING OFFICER. THE LEARNED SR. COUNSEL SUBMITTED , WHILE DECIDING IDENTICAL ISSUE IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008 09 CITED SUPRA, THE TRIBUNAL HAS 25 ACCENTURE SERVICES PVT. LTD. ACCEPTED A SSESSEES CLAIM OF DEDUCTION UNDER SECTION 10A / 10AA OF THE ACT. 37 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FAIRLY AGREED THAT IN ASSESSMENT YEAR 2008 09, THE T RIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 38 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AS COULD BE SEEN, WHILE DECIDING IDENTICAL ISSUE ARISING IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008 09, THE TRIBUNAL FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN YOKOGAWA INDIA LTD., 391 ITR 274 (SC) HAS ALLOWED ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 10A OF THE ACT UNIT WISE. THE OBSERVATIONS OF THE TRIBUNAL IN HIS REGARD ARE AS UNDER: 58. WE HAVE CONS IDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. THE DISPUTE BETWEEN THE ASSESSEE AND THE DEPARTMENT IS LIMITED TO THE ISSUE AS TO WHETHER DEDUCTION UNDER SECTION 10A OF THE ACT HAS TO BE ALLOWED FROM THE GROSS TOTAL INCOME BEFORE SETTING OFFOF L OSS OR DEDUCTION UNDER SECTION 10A OF THE ACT IS TO BE ALLOWED FROM THE TOTAL INCOME AFTER REDUCTION OF LOSS. THE ASSESSING OFFICER HAS ALLOWED DEDUCTION UNDER SECTION 10A OF THE ACT AFTER SETTING OFF OF LOSS ON THE REASONING THAT AS PER THE AMENDED PROVIS IONS OF SECTION 10A OF THE ACT DEDUCTION HAS TO BE COMPUTED ON THE TOTAL INCOME. HOWEVER, IN OUR CONSIDERED VIEW, THE ISSUE NOW STANDS SETTLED BY THE DECISION OF THE HON'BLE SUPREME COURT IN YOKOGAWA INDIA LTD. (SC) WHEREIN, THE HON'BLE SUPREME COURT HAS H ELD THAT EVEN AFTER AMENDMENT MADE TO SECTION 10A OF THE ACT BY MAKING IT A DEDUCTION PROVISION INSTEAD OF EXEMPTION PROVISION, THERE IS NO MATERIAL CHANGE IN THE NATURE OF DEDUCTION CLAIMED BY THE ASSESSEE WHICH HAS TO BE ALLOWED FROM THE GROSS TOTAL INCO ME BEFORE SET OFF OF LOSS. THEREFORE, IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT AS DISCUSSED ABOVE, ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 10A 26 ACCENTURE SERVICES PVT. LTD. OF THE ACT UNIT WISE IS ALLOWABLE. THE ASSESSING OFFICER IS DIRECTED TO COMPUTE THE DEDUCT ION ACCORDINGLY. 39 . THE RATIO LAID DOWN IN THE AFORESAID DECISION WILL ALSO APPLY TO THE DEDUCTION CLAIMED UNDER SECTION 10AA OF THE ACT. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE CO ORDINATE BENCH AS REFERRED TO ABOVE; WE DIRECT THE ASSESSING O FFICER TO COMPUTE THE DEDUCTION UNDER SECTIONS 10A / 10AA OF THE ACT ACCORDINGLY. THIS GROUND IS ALLOWED. 40 . IN GROUND NO.23, THE ASSESSEE HAS CHALLENGED DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 10A / 10AA OF THE ACT ON INCOME DERIVED UNDER THE IPSA. 41 . DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE PROVIDED SERVICE UNDER THE IPSA FROM ITS UNITS LOCATED IN SOFTWARE TECHNICAL PARK OF INDIA (STPI) AND SPECIAL ECONOMIC ZONE (SEZ). THE ASSESSEE CLAIMED THE AFORESAID DEDUCTION UNDER SECTION 10A / 10AA OF THE ACT ONLY IN RESPECT OF STPI / SEZ UNITS WHICH MADE PROFITS DURING THE YEAR. THE ASSESSEE DID NOT CLAIM ANY DEDUCTION UNDER SECTION 10A / 10AA OF THE ACT IN RESPECT OF IPSA REVENUE EARNED BY STPI/SEZ UNITS WHICH HAD INCURRED LOSSES. WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER, HOWEVER, DID NOT ALLOW ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 10A / 10AA IN RESPECT OF IPSA REVENUE BY HOLDING THAT THEY ARE 27 ACCENTURE SERVICES PVT. LTD. NOT IN THE NATURE OF ITES. WHILE DOING SO, HE FOLLOWED HIS DECISION IN ASSESSMENT YEAR 200 7 08 AND 2008 09. 42 . THE DPR ALSO UPHELD THE DECISION OF THE ASSESSING OFFICER. 43 . THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , WHILE DECIDING IDENTICAL ISSUE IN ASSESSMENT YEAR 2008 09, THE TRIBUNAL HAS HELD THAT THE SERVICES RENDERED UNDER IPSA BEING IN THE NATURE OF ITES, THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 10A OF THE ACT. FURTHER, HE SUBMITTED , INSOFAR AS SEZ UNITS ARE CONCERNED, THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 10 AA OF THE ACT IN RESPECT OF ALL REVENUE EARNED UNDER IPSA INCLUDING ITES. HE SUBMITTED , THIS IS BECAUSE , SECTION 10AA OF THE ACT DOES NOT RESTRICT ONLY TO INCOME EARNED FROM ITES. HE SUBMITTED , THE AFORESAID CLAIM OF THE ASSESSEE HAS BEEN ACCEPTED BY THE D RP IN ASSESSMENT YEAR 2013 14 AND 2014 15. 44 . THE LEARNED DEPARTMENTAL REPRESENTATIVE ALSO AGREED THAT THE ISSUE IS COVERED BY THE DECISION OF THE TRIBUNAL. 45 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WHILE DECIDING IDENTICAL IS SUE IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008 09, THE TRIBUNAL HAS HELD AS UNDER: 28 ACCENTURE SERVICES PVT. LTD. 62. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD, AS PER THE TERMS OF THE IPSA AGREEMENT THE ASSESSEE WAS REQUIRED TO PROVIDE CERTAIN SERVICES INCLUDING CONTENT DEVELOPMENT AND IMAGE DEVELOPMENT AND WEB DEVELOPMENT. THE TRANSFER PRICING OFFICER WHILE EXAMINING THE NATURE OF SERVICES RENDERED UNDER THE IPSA AGREEMENT HAS CLASSIFIED IT TO BE IN THE NATURE OF ITES. WHILE DOING SO, HE HAS ALSO REFERRED TO CBDT NOTIFICATION NO.SO 890(E), DATED 26 TH SEPTEMBER 2010. A CAREFUL READING OF THE OBSERVATIONS OF THE TRANSFER PRICING OFFICER IN PARA 15.2 OF HIS ORDER WOULD CLEARLY ESTABLISH THAT BY REFERRING TO THE CBDT NOTIFICATION UNDER CONSIDERATION HE HAS CONCLUDED THAT THE INCOME FROM IPSA AGREEMENT EITHER HAS TO BE CLASSIFIED UNDER SOFTWARE DEVELOPMENT OR ITES. ON FURTHER ANALYSIS, HE HAS FINALLY CONCLUDED THAT THE SERVICES RENDERED ARE MORE AKIN TO ITES. A CCORDINGLY, THE TRANSFER PRICING OFFICER HAS PROCEEDED TO BENCHMARK THE REVENUE RECEIVED FROM IPSA AGREEMENT AS ITES. THUS, THE CONTENTION OF THE DEPARTMENT THAT THE TRANSFER PRICING OFFICER HAS NOT RECORDED ANY CONCLUSIVE FINDING WITH REGARD TO THE NATURE OF INCOME FROM IPSA AGREEMENT IS CONTRARY TO FACTS ON RECORD. IN ANY CASE OF THE MATTER, WHEN THE TRANSFER PRICING OFFICER HAS CLASSIFIED THE INCOME RECEIVED UNDER IPSA AGREEMENT TO BE OF THE NATURE OF ITES AND HAS ALSO BENCHMARKED IT AS SUCH, THE ASSESSI NG OFFICER CANNOT TAKE A CONTRARY VIEW BY STATING THAT IT IS NOT IN THE NATURE OF ITES ONLY FOR DISALLOWING ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 10A OF THE ACT. THE DEPARTMENT CANNOT BE PERMITTED TO TAKE CONTRARY VIEW WITH REGARD TO THE NATURE OF A PARTICULAR ITEM OF INCOME FOR ITS OWN ADVANTAGE. ONCE, THE INCOME UNDER THE IPSA HAS BEEN CLASSIFIED TO BE IN THE NATURE OF ITES, ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 10A OF THE ACT HAVE TO BE ALLOWED. IN VIEW OF THE ABOVE, WE DIRECT THE ASSESSING O FFICER TO ALLOW ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 10A OF THE ACT N RESPECT OF INCOME EARNED FROM IPSA. HOWEVER, WE MAKE IT CLEAR SUCH DEDUCTION HAS TO BE COMPUTED ON THE AMOUNT OF ` 90,41,87,522 AS CLAIMED IN THE RETURN OF INCOME AND AS PER GROUN DS RAISED BEFORE US. 46 . IT IS ALSO NOTICED THAT LEARNED DRP IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2013 14 AND 2014 15, HAS DIRECTED THE ASSESSING OFFICER TO ALLOW ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 10AA OF THE ACT IN RESPECT OF REVENUE EARNED U NDER IPSA. IN VIEW OF THE AFORESAID, WE DIRECT THE ASSESSING OFFICER TO COMPUTE DEDUCTION UNDER 29 ACCENTURE SERVICES PVT. LTD. SECTION 10A / 10AA IN RESPECT OF IPSA INCOME FOLLOWING THE DIRECTION OF THE TRIBUNAL AND DRP AS REFERRED TO ABOVE. THIS GROUND IS ALLOWED. 47 . GROUNDS NO.24, 25, 26 AND 27 ARE NOT PRESSED, HENCE, DISMISSED. 48 . IN VIEW OF OUR DECISION IN GROUND NO.23, THE ADDITIONAL GROUNDS BEING GROUNDS NO.28 AND 29, HAVE BECOME INFRUCTUOUS, HENCE, DISMISSED. 49 . IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ITA NO.1110/MUM./2014 REVENUES APPEAL A.Y. 2009 10 50 . GROUND NO.1, HAS ALREADY BEEN DEALT WITH WHILE DECIDING GROUNDS NO.10 AND 15 OF ASSESSEES APPEAL IN ITA NO.1671/MUM./2014, IN THE EARLIER PART OF THE ORDER. THEREFORE, SEPARATE ADJUDICATION IS NOT REQUIRED. 51 . IN GROUND NO. 2,THE REVENUE HAS CHALLENGED THE DECISION OF LEARNED DRP IN DIRECTING THAT THE ADJUSTMENT TO BE MADE BY THE TRANSFER PRICING OFFICER IS TO BE RESTRICTED ONLY TO THE INTERNATIONAL TRANSACTION 52 . HAVING CONSIDERED RIVAL SUBMISSIONS, WE DO NOT FIN D ANY INFIRMITY IN THE DECISION OF LEARNED DRP ON THE ISSUE AS THE ARM'S LENGTH PRICE OF THE TRANSACTION WHICH REQUIRES ADJUSTMENT IS THE INTER NATIONAL 30 ACCENTURE SERVICES PVT. LTD. TRANSACTION WITH THE A E. THEREFORE, ANY ADJUSTMENT ON ACCOUNT OF ARM'S LENGTH PRICE HAS TO BE RESTRICTED TO TH E I NTERNATIONAL TRANSACTION WITH A E. THIS VIEW HAS ALSO BEEN APPROVED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S HINDUSTAN UNILE VER LTD., [2016] 72 TAXMANN.COM 325 (BOM.). IN VIEW OF THE ABOVE, GROUND RAISED IS DISMISSED. 53 . IN THE RESULT, REVENUES APPEAL IS DISMISSED. ITA NO. 501/MUM./2015 ASSESSEES APPEAL A.Y. 20 10 11 54 . GROUNDS NO.1, 2 AND 6, BEING GENERAL IN NATURE, DO NOT REQUIRE ADJUDICATION. 55 . IN GROUNDS NO.13 TO 19, THE ASSESSEE HAS CHALLENGED SELECTION / REJECTION OF CERTAIN COMPARABLES UNDER INFORMATION TECHNOLOGY (I T) SERVICE AND INFORMATION TECHNOLOGY ENABLED SERVICES (ITES) SEGMENT S . AT FIRST, WE WILL DEAL WITH THE COMPARABLES DISPUTED UNDER INFORMATION TECHNOLOGY SERVICE SEGMENT. 56 . IN ITS TRANSFER PRICI NG ANALYSIS, THE ASSESSEE BENCH M ARKED THE INTERNATIONAL TRANSACTION WITH THE AE BY APPLYING TNMM AS THE MOST APPROPRIATE METHOD. THE ASSESSEE SELECTED ELEVEN COMPARABLES WITH ARITHMETIC MEAN OF 12.83% AS AGAINST THE MARGIN SHOWN BY IT AT 13.33%. THE TRANSFER PRICING OFFICER REJECTED SOME OF THE COMPARABLES SELECTED BY THE ASSESSEE AND INTRODUCED SOME FRESH 31 ACCENTURE SERVICES PVT. LTD. COMPARABLES. FINALLY, HE SELECTED THIRTEEN COMPARABLES WITH ARITHMETIC MEAN OF 22.92% AND PROPOSED AN UPWARD ADJUSTMENT TO TH E ARM'S LENGTH PRICE OF THE IT SERVICES SEGMENT. IN TERMS OF THE ADJUSTMENT PROPOSED BY THE TRANSFER PRICING OFFICER , THE ASSESSING OFFICER MADE ADDITION IN THE DRAFT ASSESSMENT ORDER. 57 . BEFORE LEARNED DRP, THE ASSESSEE CHALLENGED SELECTION / REJECTION OF CERTAIN COMPARABLES. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, LEARNED DRP ACCEPTED R.S. SOFTWARE LTD., SELECTED BY THE ASSESSEE AS A COMPARABLE AND REJECTED FCS SOFTWARE SOLUTIONS LTD., SELECTED BY THE TRANSFER PRICING OFFICER. 58 . BEFORE US, THE LEARNED SR. COUNSEL SUBMITTED , THOUGH IN THE GROUNDS RAISED THE ASSESSEE HAS RAISED DISPUTE AGAINST A NUMBER OF COMPARABLES, HOWEVER, IF THREE OF THE COMPARABLES SELECTED BY THE TRANSFER PRICING OFFICER VIZ. THIRDWARE SOLUTIONS LTD., PE R SISTENT SYSTEMS LTD. AND CAT TECHNOLOGIES LTD., A RE ACCEPTED AND FURTHER IF DRPS ORDER REJECTING FCS SOFTWARE SOLUTIONS LTD. IS UPHELD, THE ISSUE RELATING TO OTHER COMPARABLES WOULD BECOME ACADEMIC AS THE ASSESSEES MARGIN WOULD FALL WITHIN 5% OF THE REMAINING COMPARABLES. CONSIDERING THE AFORESAID SUB MISSIONS OF THE LEARNED SR. COUNSEL, AT THE OUTSET, WE PROCEED TO EXAMINE THE COMPARABILITY OF THE AFORESAID FOUR COMPARABLES. 32 ACCENTURE SERVICES PVT. LTD. I) THIRDWARE SOLUTIONS LTD. 59 . THIS COMPANY WAS INTRODUCED BY THE TRANSFER PRICING OFFICER AS A FRESH COMPARABLE AND UPHELD BY LEARNED DRP. OBJECTING TO THE SELECTION OF THIS COMPANY, LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , THE COMPANY IS FUNCTIONALLY DIFFERENT FROM THE ASSESSEE AS IT IS ENGAGED IN TRADING OF SOFTWARE PRODUCT APART FROM RENDERING SOFTWARE SERVICES. HE SUBM ITTED , CONSIDERING THE FACT THAT THE COMPANY IS ENGAGED IN MULTIPLE ACTIVITIES, THE TRIBUNAL IN ASSESSEES OWN CASE HAS REJECTED THIS COMPANY AS COMPARABLE IN ASSESSMENT YEAR S 2005 06 AND 2008 09. THUS, HE SUBMITTED , THE COMPANY SHOULD BE REJECTED AS A COM PARABLE. IN THIS REGARD, HE RELIED UPON THE FOLLOWING DECISIONS: I ) PCIT V/S ST. ERICSSION INDIA PVT. LTD., ITA NO.821/2017 (DEL.) II ) PCIT V/S FISERV INDIA PVT. LTD. (ITA NO.17/2016 (DEL.); III ) M/S. BRISTLECONE INDIA LTD. V/S ACIT, ITA NO.1670/MUM./ 2015; IV ) OPEN SOLUTIONS SOFTWARE SERVICES V/S DCIT , ITA NO.7078/ DEL./2014; V ) M/S. LIME LABS INDIA PVT. LTD. V/S ITO, ITA NO.1703/DEL./ 2015; VI ) APPROVA SYSTEMS PVT. LTD. V/S DCIT, ITA NO.1921/PUN./ 2014; VII ) TIBCO SOFTWARE INDIA PVT. LTD. V/S DCIT, ITA NO.276 & 334/ PUN./201 5; AND VIII ) APPROVA SYSTEMS LTD. V/S CIT, ITA NO.1788/PUN./2013. 33 ACCENTURE SERVICES PVT. LTD. 60 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE TRANSFER PRICING OFFICER AND LEARNED DRP. 61 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. FROM T HE ANNUAL REPORT OF THE COMPANY IT IS NOTICED THAT THE COMPANY IS ALSO ENGAGED IN DEVELOPMENT OF PRODUCTS AND COMPLETE INFORMATION RELATING TO SEGMENTAL DETAILS ARE NOT AVAILABLE. FOR THIS REASON, LEARNED COMMISSIONER (APPEALS) REJECTED THIS COMPANY AS A COMPARABLE IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2005 06. FURTHER, THE TRIBUNAL ALSO WHILE DECIDING ASSESSEES APPEAL IN ASSESSMENT YEAR 2008 09 SUPRA, HAS REJECTED THIS COMPANY AS COMPARABLE FOR THE VERY SAME REASON. IN VARIOUS OTHER DECISIONS CI TED BEFORE US BY THE LEARNED SR. COUNSEL PERTAIN ING TO THE IMPUGNED ASSESSMENT YEAR, THE COMPANY HAS BEEN R EJECTED AS A COMPARABLE TO AN IT SERVICE PROVIDER. IN FACT, THE HON'BLE DELHI HIGH COURT IN PCIT V/S S.T. ERICSON INDIA PVT. LTD, VIDE ORDER DATED 31 ST JANUARY 2018, HAS UPHELD THE DECISION OF THE TRIBUNAL IN REJECTING THIS COMPANY AS A COMPARABLE TO AN IT SERVICE PROVIDER. IN VIEW OF THE AFORESAID, WE DIRECT THE ASSESSING OFFICER TO EXCLUDE THIS COMPANY AS A COMPARABLE. I I) PERSISTENT SYSTEMS LTD. 62 . THOUGH , THE ASSESSEE HAD SELECTED THIS COMPANY AS A COMPARABLE ON THE BASIS OF MULTIPLE YEAR DATA, HOWEVER, IN COURSE OF 34 ACCENTURE SERVICES PVT. LTD. PROCEEDINGS BEFORE THE TRANSFER PRICING OFFICER THE ASSESSEE SOUGHT EXCLUSION OF THIS COMPANY AS A COMPARABLE ON ACCOUNT OF FUNCTIONAL DIFFERENCES AND EXCEPTION AL YEAR OF PERFORMANCE. THE T RANSFER PRICING OFFICER REJECTING THE OBJECTIONS OF THE ASSESSEE SELECTED THE COMPANY AS A COMPARABLE WHICH WAS UPHELD BY LEARNED DRP. 63 . THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , BEFORE THE D RP , THE ASSESSEE HAD SPECIFICALLY CO NTENDED THAT APART FROM SALE OF SOFTWARE SERVICES THE COMPANY IS ALSO ENGAGED IN SALE OF SOFTWARE PRODUCTS AND NO SEGMENTAL DETAILS ARE AVAILABLE. IN THIS CONTEXT, HE DREW OUR ATTENTION TO THE OBJECTIONS RAISED BEFORE LEAR NED DRP AS WELL AS THE ANNUAL REPORT OF THE COMPANY. FURTHER, HE SUBMITTED , LEARNED DRP HAS NOT AT ALL DEALT WITH ASSESSEES SUBMISSIONS. THUS, HE SUBMITTED , THE COMPANY BEING FUNCTIONALLY DISSIMILAR TO THE ASSESSEE CANNOT BE TREATED AS COMPARABLE. IN SUPP ORT, HE RELIED UPON THE FOLLOWING DECISIONS: I ) CASH EDGE INDIA PVT. LTD., ITA NO.279/2016 (DEL. HC); II ) PCIT V/S FINSERV INDIA PVT. LTD., ITA NO.602/2016 & CM NO.30032/2016 (DEL. HC); III ) OPEN SOLUTIONS SOFTWARE SERVICES V/S DCIT, IT ANO.7078/ DEL./2014; IV ) M/S LIME LABS (I) PVT. LTD. V/S ITO, ITA NO.1703/DEL./2015; V ) M/S. LIONBRIDGE TECHNOLOGIES PVT. LTD. V/S ITO, ITA NO.668 & 1375/MUM./2014, ITA NO.7415 & 290/MUM./2014; 35 ACCENTURE SERVICES PVT. LTD. VI ) DCIT V/S ELECTRONICS FOR IMAGING INDIA PVT. LTD., IT(TP)A NO. 212/BANG./2015; VII ) M/S. SOFTTEK INDIA PVT. LTD. V/S DCIT, IT(TP)A NO.396 & 435/ BANG./2015; ETC. 64 . THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , SINCE THE ASSESSEE ITSELF HAD SELECTED IT AS A COMPARABLE IN TRANSFER PRICING STUDY REPORT , SUBSEQUENTLY , IT CANNOT CLAIM THAT THE COMPANY IS FUNCTIONALLY DISSIMILAR. HE SUBMITTED , BEFO RE THE DEPARTMENTAL AUTHORITIES ASSESSEE HAS FAILED TO DEMONSTRATE HOW THE COMPANY IS FUNCTIONALLY DIFFERENT. THEREFORE , THERE IS NO REASON TO EXCLUDE THE COMPANY AS A COMPARABLE. 65 . WE HAVE CONSIDERED RIVAL SUB MISSIONS AND PERUSED THE MATERIAL ON RECORD. THE MAIN PLANK ON WHICH THE ASSESSEE HAS SOUGHT EXCLUSION OF THIS COMPANY IS, IT IS ALSO ENGAGED IN SALE OF SOFTWARE PRODUCTS AND THE SEGMENTAL DETAILS ARE NOT AVAILABLE. THOUGH , THE AFORESAID OBJECTION WAS TAKE N BY THE ASSESSEE BEFORE LEARNED DRP, HOWEVER, LEARNED DRP, AS IT APPEARS, HA S REJECTED ASSESSEES CONTENTION PRIMARILY FOR THE REASON THAT THE COMPANY WAS SELECTED AS A COMPARABLE IN TRANSFER PRICING STUDY REPORT. LEARNED DRP HAS NOT AT ALL DEALT WITH ASS ESSEES CONTENTION THAT THE COMPANY IS ALSO ENGAGED IN SALE OF PRODUCTS AND SEGMENTAL DETAILS ARE NOT AVAILABLE. IN THE CASE OF CASH EDGE INDIA PVT. LTD. V/S ITO, ITA NO.64/DEL./2015, DATED 23TH SEPTEMBER 2015, THE TRIBUNAL, DELHI BENCH, HAS EXCLUDED THIS 36 ACCENTURE SERVICES PVT. LTD. COMPANY FINDING THAT THE COMPANY IS ENGAGED IN DEVELOPMENT OF PRODUCTS AND SEGMENTAL DETAILS ARE NOT AVAILABLE EXCLUDED IT AS A COMPARABLE. THE AFORESAID DECISION OF THE TRIBUNAL WAS UPHELD BY THE HON'BLE DELHI HIGH COURT WHILE DECIDING THE APPEAL OF THE R EVENUE, VIDE ITA NO.279/2016, DATED 4 TH MAY 2016. THE SAME VIEW HAS BEEN EXPRESSED BY THE TRIBUNAL IN F I NSERVE INDIA PVT. LTD. V/S DCIT, ITA NO.6737/DEL./2014, DATED 26 TH JUNE 2015, W H ICH WAS ALSO UPHELD BY THE HON'BLE DELHI HIGH COURT WHILE DECIDING REVENUES APPEAL IN ITA NO.602/2016, DATED 7 TH OCTOBER 2016. SINCE , THE AFORESAID DECISIONS ARE FOR THE VERY SAME ASSESSMENT YEAR, RESPECTFULLY FOLLOWING THEM, WE DIRECT THE ASSESSING OFFICER TO EXCLUDE THIS COMPANY AS A COMPARABLE. II I) CAT TECHNOLOGIES LTD. 66 . THOUGH , THIS COMPANY WAS NOT SELECTED BY THE ASSESSEE IN THE TRANSFER PRICING STUDY REPORT DUE TO FUNCTIONAL DIFFERENCE AND UNAVAILABILITY OF DATA FOR THE FINANCIAL YEAR 2010 11, HOWEV ER, IN COURSE OF PROCEEDINGS BEFORE THE TRANSFER PRICING OFFICER , THE ASSESSEE OFFERED IT AS A COMPARABLE ON TH E BASIS OF CURRENT YEAR DATA . HOWEVER, THE TRANSFER PRICING OFFICER REJECTED THE COMPANY AS A COMPARABLE SINCE IT WAS NOT SELECTED BY THE ASSESSE E IN THE TRANSFER PRICING STUDY REPORT. 37 ACCENTURE SERVICES PVT. LTD. 67 . LEARNED DRP ALSO AGREED WITH THE AFORESAID DECISION OF THE TRANSFER PRICING OFFICER. 68 . THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , ASSESSEE HAD INITIAL REJECTED THIS COMPANY AS A COMPARABLE AS DATA RELATING TO THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER DISPUTE WAS NOT AVAILABLE. HE SUBMITTED , SUBSEQUENTLY, SINCE THE DATA RELATING TO THE CURRENT YEAR WAS AVAILABLE, THE ASSESSEE HAD PROPOSED IT AS A COMPARABLE IN THE COURSE OF PROCEEDING BEFORE TH E TPO. 69 . D RAWING OUR ATTENTION TO THE ANNUAL REPORT OF THE COMPANY THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , THAT THE COMPANY IS ENGAGED IN SOFTWARE DEVELOPMENT SERVICES HA S NOT BEEN DISPUTED EITHER BY THE TRANSFER PRICING OFFICER OR BY THE DRP. F URTHER, DRAWING OUR ATTENTION TO THE PROFIT & LOSS ACCOUNT OF THE COMPANY FOR THE IMPUGNED ASSESSMENT YEAR HE SUBMITTED , MAJOR PART OF THE REVENUE EARNED BY THE COMPANY , WORKING OUT TO ALMOST 91% , IS EARNED FROM SOFTWARE DEVELOPMENT AND CONSULTING SERVICES . THEREFORE, THE COMPANY BEING FUNCTIONALLY SIMILAR TO THE ASSESSEE IS A COMPARABLE. THE LEARNED SR. COUNSEL SUBMITTED , THE COMPANY ALSO DOES NOT FAIL T HE DIMINISHING REVENUE FILTER APPLIED BY THE TRANSFER PRICING OFFICER AS THE COMPANY H AS DIMINISHING REV ENUE ONLY IN THE CURRENT YEAR. HE SUBMITTED , UNLESS A COMPANY HAS DIMINISHING REVENUE OVER THE PAST 38 ACCENTURE SERVICES PVT. LTD. THREE - YEAR PERIOD, THE DIMINISHING REVENUE FILTER CANNOT BE APPLIED. HE SUBMITTED , IF THE LOGIC APPLIED BY THE TRANSFER PRICING OFFICER TO EXCLUDE THE COMPA NY IS TO BE APPLIED CONSISTENTLY, THEN , THIRDWARE SOLUTIONS LTD. AND PERSISTENT SYSTEMS LTD. CANNOT BE TREATED AS A COMPARABLE SINCE THEY HAVE DIMINISHING REVENUE IN THE CURRENT YEAR. IN SUPPORT OF HIS CONTENTION, THE LEARNED SR. COUNSEL RELIED UPON THE FO LLOWING DECISIONS: I ) ACIT V/S SYNECHRON TECHNOLOGIES PVT. LTD., ITA NO.536/PUN./ 2015; II ) MERCEDES BENZ RESEARCH & DEVELOPMENT I NDIA PVT. LTD. V/S DCIT, IT(TP) A NO.1645/BANG./2016; III ) TRANSCEND INDIA PVT. LTD., ITA NO.2754/DEL./2015 AND C.O. NO.446/DEL./2015; IV ) TATA POWER SOLAR SYSTEM LTD. V/S DCIT, ITA NO.6657/MUM./ 2012; VIII ) M/S. CITRIX R&D INDIA PVT. LTD., IT(TP)A NO.1289/BANG./ 2014; IX ) M/S. QUARK SYSTEMS INDIA PVT. LTD., ITA NO.594/2010 (P&H); X ) M/S. APTEAN SOFTWARE INDIA PVT. LTD., IT(TP)A NO.1285/ BANG./2012 AN D IT(TP)A NO.207/BANG./2014; XI ) XANDER ADVISORS INDIA PVT. LTD., ITA NO.5840/DEL./2012; XII ) YODLEE INFOTECH PVT. LTD., IT(TP)A NO.108/BANG./2014; ETC. 70 . THE D EPARTMENTAL REPRESENTATIVE EXTENSIVELY REFERRING TO THE OBSERVATIONS OF LEARNED DRP SUBMITTED , SINCE THE REJECTION OF THE COMPARABLE IS ON THE BASIS OF WELL - FOUNDED REASONING, ASSESSEES CONTENTION SHOULD NOT BE ACCEPTED. 39 ACCENTURE SERVICES PVT. LTD. 71 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. UNDISPUTEDLY, ASSESSEE INITIALLY HAD NOT SELECTED THIS COMPANY , AS EXPLAINED BY THE LEARNED SR. COUNSEL , WAS DUE TO UNAVAILABILITY OF DATA OF THE IMPUGNED ASSESSMENT YEAR . HOWEVER, BEFORE THE TRANSFER PRICING OFFICER, THE ASSESSEE PROPOSED IT AS A COMPARABLE ON THE BASIS OF SINGLE YEAR DATA AVAILABLE IN PUBLIC DOMAIN. BOTH, THE TRANSFER PRICING OFFICER AND LEARNED DRP REJECTED THE COMPANY AS A COMPARABLE PRIMARILY ON THE REASONING THAT IT WAS NOT SELECTED BY THE ASSESSEE AS COMPARABLE IN THE TRANSFER PRICING STUDY REPORT. FURTHER, LEARNED DRP HAS ALSO OBS ERVED THAT THE COMPANY FALLS THE DIMINISHING REVENUE FILTER. ON A PERUSAL OF THE PROFIT & LOSS ACCOUNT OF THE COMPANY FORMING PART OF THE ANNUAL REPORT, IT IS NOTICED THAT A SUBSTANTIAL PART OF THE REVENUE EARNED BY THE COMPANY DURING THE YEAR IS FROM SOFT WARE DEVELOPMENT AND CONSULTING SERVICES. THUS, PRIMA FACIE IT APPEARS THAT THE COMPANY IS FUNCTIONALLY SIMILAR TO THE ASSESSEE. IN CASE OF ACIT V/S M/S. SYN E C HRON TECHNOLOGIES PVT. LTD., ITA NO.536/PUN./2015, DATED 16 TH JUNE 2017, THE TRIBUNAL WHILE CONSI DERING THE COMPARABILITY OF THIS COMPANY TO AN ASSESSEE ENGAGED IN SOFTWARE DEVELOPMENT (IT) SERVICE FOUND THAT , THOUGH , IN THE TRANSFER PRICING STUDY REPORT THE ASSESSEE HAD REJECTED THIS COMPANY AS A COMPARABLE, HOWEVER, SUBSEQUENTLY, ON THE BASIS OF SIN GLE YEAR DATA, THE ASSESSEE PROPOSED IT AS A COMPARABLE BEFORE THE TRANSFER 40 ACCENTURE SERVICES PVT. LTD. PRICING OFFICER WHICH WAS REJECTED BY THE TRANSFER PRICING OFFICER. T HE DRP HAVING FOUND THAT MAJOR PART OF THE REVENUE EARNED IS FROM SOFTWARE DEVELOPMENT AND CONSULTING SERVICE C ONSTITUTING ALMOST 90% OF THE TOTAL RECEIPT DIRECTED THE ASSESSING OFFICER TO ADOPT THE NET MARGIN OF THE COMPANY AS A COMPARABLE. WHILE DECIDING REVENUES APPEAL AGAINST THE AFORESAID DIRECTION OF DRP, THE TRIBUNAL UPHELD THE DECISION OF THE DRP IN ACCEPT ING THE COMPANY AS A COMPARABLE. SINCE THE AFORESAID DECISION OF THE CO ORDINATE BENCH PERTAINS TO THE VERY SAME ASSESSMENT YEAR AND THE FACTUAL POSITION ON THE BASIS OF WHICH THE COMPANY WAS ACCEPTED AS A COMPARABLE IS ALMOST IDENTICAL, RESPECTFULLY FOLLO WING THE DECISION, WE DIRECT THE ASSESSING OFFICER TO INCLUDE THIS COMPANY AS A COMPARABLE. 72 . SINCE WE ARE ON THE ISSUE OF ACCEPTABILITY OR OTHERWISE OF SOME COMPARABLES RELATING TO SOFTWARE DEVELOPMENT (IT) SEGMENT , AT THIS STAGE , WE PROPOSE TO DEAL WITH T HE ISSUE RELATING TO REJECTION OF FCS S OFTWARE SOLUTIONS LTD. AS A COMPARABLE BY LEARNED DRP WHICH HAS BEEN CHALLENGED BY THE REVENUE IN ITS APPEAL IN ITA NO.459/MUM./ 2015. IV) FCS SOFTWARE SOLUTIONS LTD. 73 . THIS COMPANY THOUGH WAS REJECTED BY THE ASSESSEE IN ITS TRANSFER PRICING STUDY REPORT, HOWEVER, THE TRANSFER PRICING OFFICER ACCEPTED IT 41 ACCENTURE SERVICES PVT. LTD. AS A COMPARABLE STATING THAT IT IS FUNCTIONALLY SIMILAR TO THE ASSESSEE. HOWEVER, WHILE CONSIDERING ASSESSEES OBJECTIO N, LEARNED DRP REJECTED THE COMPANY AS A COMPARABLE SINCE IT DID NOT QUALIFY IT SERVICE INCOME FILTER OF 75% APPLIED BY THE TRANSFER PRICING OFFICER. WHILE DOING SO, LEARNED DPR OBSERVED THAT 37% OF THE REVENUE EARNED BY THE COMPANY IS FROM EDUCATION SEGME NT. 74 . LEARNED D EPARTMENTAL REPRESENTATIVE SUBMITTED , SINCE THE EDUCATION SERVICE IS PROVIDED WITH THE AID OF INFORMATION TECHNOLOGY IT IS PART OF THE IT SERVICE . IN THIS CONTEXT, HE STRONGLY RELIED UPON THE OBSERVATIONS OF THE TRANSFER PRICING OFFICER. 75 . THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , AS PER THE INFORMATION CONTAINED IN THE ANNUAL REPORT, IT IS VERY MUCH CLEAR THAT THE COMPANY HAS THREE SEGMENTS VIZ. IT, CONSULTING, EDUCATION AND INFRASTRUCTURE MANAGEMENT. FURTHER, REFERRING TO THE ANNUAL REPORT OF THE COMPANY, IT WAS SUBMITTED , 37% OF THE TOTAL REVENUE FOR THE YEAR IS EARNED FROM EDUCATION SERVICE SEGMENT. THUS, HE SUBMITTED , THE COMPANY FAILS 75% OF IT INCOME FILTER APPLIED BY THE TRANSFER PRICING OFFICER. FURTHER, DRAWING OUR ATTENTION TO THE WEBSITE EXTRACT OF THE COMPANY, HE SUBMITTED , IT PROVIDES DIGITAL CONTENT SERVICE WHICH IS IN THE NATURE OF ITES AS PER CBDT NOTIFICATION NO.S.O. 890(E) DATED 26 TH SEPTEMBER 2000. THUS, HE SUBMITTED , THE COMPANY BEING FUNCTIONALLY 42 ACCENTURE SERVICES PVT. LTD. DIFFERENT CANNOT B E TREATED AS COMPARABLE. IN SUPPORT OF SUCH CONTENTION, HE RELIED UPON THE FOLLOWING DECISIONS: I ) EXFO ELECTRO OPTICAL ENGINEERING INDIA PVT. LTD. V/S DCIT, ITA NO.1347/PUN./2015; II ) M/S. BRISTLECONE INDIA LTD/ V/S ACIT, ITA NO.1670/MUM./ 2015; III ) BARCLAYS TECHNOLOGY CENTRE INDIA PVT. LTD. V/S DCIT, ITA NO.1251/PUN./2015, ETC.; IV ) ACIT V/S M/S. AT&T GLOBAL BUSINESS SERVICE INDIA PVT. LTD., IT(TP)A NO.171 & 190/BANG./2016; V ) ITO V/S MAGIC SOFTWARE ENTERPRISES INDIA PVT. LTD., ITA NO.756 & 757/PUN./2014 AND ITA N O.761 & 762/PUN./ 2014; VI ) DCIT V/S AMBER POINT TECHNOLOGY INDIA PVT. LTD., ITA NO.756 & 757/PUN./2014 AND ITA NO.761 & 762/PUN./ 20 1 4; ETC. 76 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. AS COULD BE SEEN FROM THE INFORMATION CONTAINED IN THE ANNUAL REPORT OF THE COMPANY PLACED IN THE PAPER BOOK, IT HAS THREE SEGMENTS AND THE REVENUE FROM THE IT SERVICE SEGMENT IS LESS THAN 75% OF THE TOTAL REVENUE EARNED BY THE COMPANY. THUS, PRIMA FACIE, IT FAILS THE 75% IT REVENUE FILTER APPLIED BY T HE TRANSFER PRICING OFFICER. T HE CONTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT EDUCATION SERVICE IS NOT ACCEPTABLE AS EDUCATION SERVICE CANNOT BE COMPARED TO IT SERVICE. MOREOVER, AS RIGHTLY BROUGHT TO OUR NOTICE BY THE LEARNED SR. COUNSEL FOR THE ASSESSEE , THE COMPANY IS ALSO ENGAGED IN E 43 ACCENTURE SERVICES PVT. LTD. LEARNING AND DIGITAL CONTENT SERVICE WHICH IS IN THE NATURE OF ITES. IN VIEW OF THE AFORESAID, THE COMPANY BEING FUNCTIONALLY DIFFERENT FROM THE ASSESSEE HAS BEEN RIGHTLY REJECTED AS A COMPARABLE. THE DECISIO NS CITED BY THE LEARNED SR. COUNSEL COMPLETELY SUPPORT OUR VIEW. ACCORDINGLY, WE UPHOLD THE DECISION OF LEARNED DRPON THE ISSUE. 77 . IN COURSE OF HEARING LEARNED SR. COUNSEL HAS SUBMITTED , ON EXCLUSION OF THIRDWARE SOLUTIONS LTD., PERSISTENT SYSTEMS LTD. AND FSC SOLUTIONS LTD. AND INCLUSION OF CAT TECHNOLOGIES LTD., ASSESSEES MARGIN WOULD FALL WITHIN 5% RANGE OF THE ARITHMETIC MEAN OF THE REST OF THE COMPARABLES IN SOFTWARE DEVELOPMENT (I T) SERVICE SEGMENT . IN VIEW OF THE AFORESAID, WE DO NOT INTEND TO DWELL UPON THE ISSUES RELATING TO THE OTHER COMPARABLES IN IT SERVICE SEGMENT AND LEAVE THE ISSUE OPEN RELATING TO THESE COMPARABLES FOR ADJUDICATION IF THEY ARISE IN ANY OTHER ASSESSMENT YE AR IN FUTURE. 78 . INSOFAR AS ITES SEGMENT IS CONCERNED, A T THE OUTSET, THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , IF ONE OF THE COMPARABLES , VIZ ; ACCENTIA TECHNOLOGIES LTD., SELECTED BY THE TRANSFER PRICING OFFICER AND RETAINED BY THE DRP IS EXCLUDED , THE MARGIN OF THE ASSESSEE WOULD FALL WITHIN 5% OF THE ARITHMETIC MEAN OF THE REST OF THE COMPARABLES. CONSIDERING THE A BOVE , WE PROPOSE TO DEAL WITH THIS COMPARABLE AT THE VERY OUTSET. 44 ACCENTURE SERVICES PVT. LTD. I) ACCENTIA TECHNOLOGIES LTD. 79 . THOUGH , IN THE TRANSFER PRICING ST UDY REPORT ASSESSEE HAD ACCEPTED IT AS A COMPARABLE USING MULTIPLE YEAR DATA, HOWEVER, IN COURSE OF PROCEEDINGS BEFORE THE TRANSFER PRICING OFFICER ASSESSEE SOUGHT EXCLUSION OF THE COMPANY ON ACCOUNT OF FUNCTIONAL DIFFERENCE AND EXTRA ORDINAR Y EVEN T TAKING PLACE DURING THE YEAR. REJECTING THE CLAIM OF THE ASSESSEE, THE TRANSFER PRICING OFFICER ACCEPTED THE COMPANY AS A COMPARABLE. LEARNED DRP ALSO UPHELD THE DECISION OF THE TRANSFER PRICING OFFICER ON THE REASONING THAT THE ASSESSEE HAVING SELECTED IT A COMPARABLE , CANNOT SEEK EXCLUSION OF THE SAME. 80 . DRAWING OUR ATTENTION TO THE ANNUAL REPORT OF THE COMPANY PLACED IN THE PAPER BOOK, THE L EARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , THE COMPANY IS ENGAGED IN PROVIDING HEALTHCAR E REVENUE CYCLE MANAGEMENT SERVICES , LEGAL PROCESS OUTSOURCING SERVICE S AND PROVISIONS OF SOFTWARE AS A SERVICE (SAAS), HE SUBMITTED , SEPARATE SEGMENTAL INFORMATION RELATING TO THE AFORESAID SERVICE S ARE ALSO UNAVAILABLE. HE SUBMITTED , THE COMPANY ALSO HAS SOFTWARE PRODUCT WHICH RENDERS IT INCOMPARABLE TO THE ASSESSEE. HE SUBMITTED , DUE TO THE AFORESAID FUNCTIONAL DISSIMILARITY, THE COMPANY WAS REJECTED AS A COMPARAB LE IN ASSESSEES OWN CASE BY THE TRIBUNAL IN THE ASSESSMENT YEAR 2008 09. WITHOUT PREJUDICE TO THE AFORESAID SUBMISSIONS, THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , DURING THE YEAR UNDER 45 ACCENTURE SERVICES PVT. LTD. CONSIDERATION ANOTHER COMPANY VIZ. ASCENT INFOSERVE PVT. LTD . H AS AMALGAMATED WITH THE COMPANY . T HEREFORE, SUCH AMALGAMATION MUST HAVE IMPACT ED THE PRO FITABILITY OF THE COMPANY. FURTHER, TO SUPPORT HIS CONTENTION, THE LEARNED SR. COUNSEL RELIED UPON THE FOLLOWING DECISIONS: I ) PTC SOFTWARE INDIA PVT. LTD., ITA NO.59 8/2016 (BOM.); II ) BNY MELLON INTERNATIONAL OPERATIONS, ITA NO.1226/2015 (BOM.); III ) M/S. CADENCE DESIGN SYSTEMS INDIA PVT. LTD., ITA NO.380/2015 (DEL. TRIB.); IV ) AGILENT TECHNOLOGIES INTERNATIONAL PVT. LTD. ITA NO.1620/2015, ITA NO.477 & 642/2016 (DEL. HC); V ) BECHTEL INDIA PVT. LTD., ITA NO.1478/2015 (DEL. TRIB.); VI ) TORUS BUSINESS SOLUTIONS PVT. LTD., ITA NO.1974/DEL./2015 & ITA NO.6201/DEL.2015, ETC. (DEL. TRIB.); VII ) PTC SOFTWARE INDIA PVT. LTD., ITA NO.572 & 352/PUN./2015; AND VIII ) IVY COMPTECH PVT. LTD., ITA NO.222 /HYD./2015 (HYD.); ETC. 81 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE TRANSFER PRICING OFFICER AND LEARNED DRP. 82 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. ON A PERUSAL OF THE ANNUAL REPORT PLACED IN THE PAPER BOOK IT IS NOTICED THAT THE COMPANY HAS DIFFERENT SEGMENTS , WHEREAS , THE SEGMENTAL INFORMATION RELATING TO ALL THE SEGMENTS ARE NOT AVAILABLE. MOREOVER , DURING THE YEAR UNDER CONSIDERATION THERE IS AN EXTRA ORDINARY EVENT BY WAY OF AMALGAMATION OF ANOTHER COMPANY. THUS, BY 46 ACCENTURE SERVICES PVT. LTD. VIRTUE OF SUCH AMALGAMATION, THERE COULD HAVE BEEN IMPACT ON THE PROFITABILITY OF THE COMPANY. CONSIDERING THE AFORESAID ASPECT, THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008 09 HAS REJECTED THIS COMPANY AS A COMPARABLE. IN VARIOUS OTHER DECISIONS CITED BEFORE US BY THE LEARNED SR. COUNSEL FOR THE ASSESSEE , SOME OF WHICH PERTAIN TO THE IMPUGNED ASSESSMENT YEAR, THE COMPANY HAS BEEN REJECTED AS A COMPARABLE TO AN ITES PROVIDER. THERE BEING NO MATERIAL DIFFERENC E IN FACTS, RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE AS WELL AS OTHER DECISIONS CITED BEFORE US, AS REFERRED TO ABOVE, WE DIRECT THE ASSESSING OFFICER TO EXCLUDE THIS COMPANY AS A COMPARABLE. 83 . CONSIDERING THE SUBMISSIONS OF THE LEARNED SR. COUNSEL FOR THE ASSESSEE THAT WITH EXCLUSION OF THIS COMPANY, OPERATING MARGIN OF THE ASSESSEE WOULD FALL WITHIN 5% OF THE ARITHMETIC MEAN OF THE REST OF THE COMPARABLES SELECTED BY THE TRANSFER PRICING OFFIC ER, WE DO NOT INTEND TO DEAL WITH THE ACCEPTABILITY OR OTHERWISE OF THE REST OF THE COMPARABLES DISPUTED BEFORE US UNDER ITES SEGMENT AND LEAVE THE ISSUE RELATING TO COMPARABILITY OF THESE COMPARABLES OPEN FOR ADJUDICATION IF THEY ARISE IN ANY OTHER ASSESS MENT YEAR IN FUTURE. 84 . GROUND NO.7, OF THIS APPEAL IS IDENTICAL TO GROUND NO.6 OF ITA NO. 1671/MUM./2014. OUR DECISION THEREIN WILL APPLY MUTATIS MUTANDIS TO THIS APPEAL AS WELL. 47 ACCENTURE SERVICES PVT. LTD. 85 . IN GROUND NO.20, THE ASSESSEE HAS RAISED THE ISSUE OF WORKING CAPITAL ADJUSTMENT. THIS GROUND IS IDENTICAL TO THE GROUND NO.19 OF ITA NO.1671/MUM./2014. OUR DECISION THEREIN WILL APPLY MUTATIS MUTANDIS TO THIS APPEAL ALSO. 86 . IN GROUND NO.23, THE ASSESSEE HAS CHALLENGED DISALLOWANCE OF DEDUCTION CLAIMED UNDER SECTION 10A / 10A A OF THE ACT IN RESPECT OF STPI / SEZ UNITS. 87 . THIS GROUND IS IDENTICAL TO GROUND NO.23 OF ITA NO.1671/MUM./ 2014. OUR DECISION IN RESPECT OF THE SAID GROUND WILL APPLY MUTATIS MUTANDIS TO THIS APPEAL ALSO. 88 . IN GROUND NO.24, THE ASSESSEE HAS RAISED THE ISSU E OF DISALLOWANCE OF BROUGHT FORWARD UNABSORBED DEPRECIATION AMOUNTING TO ` 41,32,11,832. 89 . BRIEF FACTS ARE, IN THE RETURN OF INCOME FILED FOR THE IMPUGNED ASSESSMENT YEAR, THE ASSESSEE HAD CLAIMED SET OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION RELATING TO THE ASSESSMENT YEAR 2007 08 AND 2008 09. THE ASSESSEES CLAIM WAS DISALLOWED BY THE ASSESSING OFFICER AND LEARNED DRP ON THE GROUND THAT AFTER COMPLETION OF ASSESSMENT FOR A.Y. 2008 09, THERE IS NO UNABSORBED DEPRECATION LEFT TO BE CARRIED FORWARD. 48 ACCENTURE SERVICES PVT. LTD. 90 . THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , DUE TO VARIOUS DISALLOWANCE S / ADJUSTMENTS MADE IN ASSESSMENT YEAR 2007 08 THE UNABSORBED DEPRECIATION CLAIMED FOR CARRY FORWARD WAS NULLIFIED. HOWEVER, THE APPEAL IS PENDING FOR DISPOSAL BEFORE THE TRIBUNAL . HE SUBMITTED , IN VIEW OF THE ORDER PASSED BY THE TRIBUNAL IN ASSESSMENT YEAR 2008 09, UNABSORBED DEPRECIATION AMOUNTING TO ` 37,94,78,811, IS ELIGIBLE FOR CARRY FORWARD AND WHICH WILL BE AVAILABLE FOR SET OFF IN THE IMPUGNED ASSESSMENT YEAR. THUS, HE SUB MITTED , THE ASSESSING OFFICER MAY BE DIRECTED TO ALLOW SET OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION RELATING TO THE ASSESSMENT YEAR 2007 08 AND 2008 09 AFTER GIVING EFFECT TO THE DIRECTIONS OF THE TRIBUNAL IN TH ESE ASSESSMENT YEAR S . 91 . THE LEARNED DEPA RTMENTAL REPRESENTATIVE SUBMITTED THAT NECESSARY DIRECTIONS MAY BE ISSUED TO THE ASSESSING OFFICER. 92 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD, ASSESSEES CLAIM OF SET OFF OF BROUGHT FORW ARD UNABSORBED DEPRECIATION IS DEPENDENT UPON THE DECISION OF THE TRIBUNAL IN ASSESSEES APPEAL RELATING TO ASSESSMENT YEAR 2007 08 AND 2008 09. THEREFORE, AFTER GIVING EFFECT TO THE ORDERS OF THE TRIBUNAL IN ASSESSMENT YEAR S 2007 08 AND 2008 09, THE ASSESSING OFFICER SHOULD CONSIDER ASSESSEES CLAIM OF SET OFF OF 49 ACCENTURE SERVICES PVT. LTD. BROUGHT FORWARD UNABSORBED DEPRECIATION IN THE IMPUGNED ASSESSMENT YEAR IN ACCORDANCE WITH LAW. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 93 . REST OF THE GROUNDS ARE NOT PRESSED, HENCE, DISMISSED. 94 . IN TH E RESULT , APPEAL IS PARTLY ALLOWED. ITA NO.459/MUM./2015 REVENUES APPEAL A.Y. 2010 11 95 . GROUND NO.1, IS IDENTICAL TO GROUND NO.1 OF ITA NO.1110/MUM./ 2014. FOLLOWING OUR DECISION THEREIN, WE UPHOLD THE DECISION OF THE DRP IN INCLUDING R. SYSTEMS LTD. AS A COMPARABLE. 96 . GROUND NO.2, IS AGAINST REJECTION OF FCS SOFTWARE SOLUTIONS LTD. AS A COMPARABLE. 97 . WE HAVE DEALT WITH THIS ISSUE WHILE DECIDING GROUND NO.13 OF ASSESSEES APPEAL BEING ITA NO.501/MUM./2015. ACCORDI NGLY, GROUND IS DISMISSED. 98 . GROUND NO.3 OF THIS APPEAL IS IDENTICAL TO GROUND NO.2 OF ITA NO.1110/MUM./2014. FOLLOWING OUR DECISION THEREIN, WE UPHOLD THE DECISION OF LEARNED DRP. ACCORDINGLY, GROUND IS DISMISSED. 50 ACCENTURE SERVICES PVT. LTD. 99 . GROUNDS NO.4 AND 5, BEING GENERAL IN NATURE, DO NOT REQUIRE ADJUDICATION. 100 . IN THE RESULT, REVENUES APPEAL IS DISMISSED. 101 . TO SUM UP, ASSESSEES APPEALS ARE PARTLY ALLOWED AND REVENUES APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 28.06.2019 SD/ - N.K. PRADHAN ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 28.06.2019 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TR UE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI