AT & T Global Business Services India Priavate Limited, Bangalore V. Asst.C.I.T., Bangalore

ITA 190/BANG/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 2346 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 18-07-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 16-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C H SUNDAR RAO
• Assessee Lawyers: UMASHANKAR GAUTAM
• Keywords: Depreciation; Transfer pricing; International transaction; Bad and doubtful debts; Unabsorbed depreciation
• Section: 244A; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH C BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER I.T. (T. P.) A. NO.171/BANG/2016 (ASSESSMENT YEAR:2011 - 12) ACIT, CIRCLE 1 (1) (1), APPELLANT BENGALURU. VS. M/S.AT & T GLOBAL BUSINESS SERVICES INDIA PVT. LTD. , SALARPURIA SOFTZONE, BLOCK A, GROUND FLOOR, BELLANDUR JUNCTION, BENGALURU 560103. PAN AACCA9362N RESPONDENT & I.T. (T. P.) A. NO. 190/BANG/2016 (ASSESSMENT YEAR: 2011 - 12) M/S. AT & T GLOBAL BUSINESS SERVICES INDIA PVT. LTD ., SALARPURIA SOFTZONE, BLOCK A, GROUND FLOOR, BELLANDUR JUNCTION, BENGALURU - 560103. APPELLANT VS. ACIT, CIRCLE 1 (1) (1), BENGALURU. RESPONDENT ASSESSEE BY : SHRI UMA SHANKAR GAUTAM, ADVOCATE RE VENUE BY : S HRI C. H. SUNDAR RAO, C IT ( DR ) DATE OF HEARING : 26.06.2018 DATE OF PRONOUNCEMENT : 31.08.2018 O RD E R PER SHRI A. K. GARODIA, A.M. : THESE ARE CROSS APPEALS FILED BY THE REVENUE AND TH E ASSESSEE AND THESE ARE DIRECTED AGAINST THE ASSESSMENT ORDER PASSED BY THE A. O. ON 16.12.2015 FOR A. Y. 201112 U/S 143 (3) R.W.S. 144C AS PER THE DI RECTIONS OF DRP. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER:- 1. THE ORDERS OF THE DISPUTE RESOLUTION PANEL IS OP POSED TO LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 IT(TP)A NOS.171 & 190/BANG/2016 2. THE DRP ERRED IN DIRECTING THE AP/TPO TO EXCLUDE M/S. ACROPETAL TECHNOLOGIES LTD., M/S. MINDTREE LTD., M/S. R.S. SO FTWARE (INDIA) LTD., M/S. LARSEN AND TOUBRO INFOTECH LTD., FROM THE LIST OF COMPARABLES, HOLDING THEM TO BE FUNCTIONALLY DISSIMILAR AS THEY ARE HAVING SIGNIFICANT ONSITE REVENUES, THEREBY SEEKING EXACT COMPARABILITY WHILE SEARCHING FOR COMPARABLE COMPANIES OF THE ASSESSEE UNDER TNMM METHOD, WHEREAS REQUIREMENT OF LAW AND INTERNATIONA L JURISPRUDENCE REQUIRE SEEKING SIMILAR COMPARABLE COMPANIES. ALSO, THE NATURE OF ACTIVITY, I.E., SOFTWARE DEVELOPMENT REMAINS THE SA ME, IRRESPECTIVE OF THE COMPANY ENGAGED IN PROVIDING ONSITE OR OFFSHORE SERVICES. 3. THE DRP ERRED IN DIRECTING THE AO TO EXCLUDE M/S . ACROPETAL TECHNOLOGIES LTD., FROM THE LIST OF FINAL COMPARABL ES ALSO FOR THE REASON THAT CLEAR SEGMENTAL INFORMATION OF THE EMPL OYEE COST AND EXPORT EARNING FILTER WAS NOT AVAILABLE WITHOUT APP RECIATING THAT PROPER SEGMENTAL INFORMATION IS AVAILABLE ON PROWES S DATABASE AS WELL AS AUDITED FINANCIALS. 4. THE DRP ERRED IN DIRECTING THE AO TO EXCLUDE M/S . MINDTREE LTD., FROM THE LIST OF COMPARABLES HOLDING IT TO BE FUNCT IONALLY DISSIMILAR ALSO FOR THE REASON THAT THERE WERE EXTRAORDINARY E VENT OF MERGER WHEN IT HAS NOT BEEN PROVED THAT SUCH MERGER HAS AN Y MATERIAL EFFECT ON PROFIT MARGIN. 5. THE DRP ERRED IN DIRECTING TO EXCLUDE E-INFOCHIP S LTD., FROM THE LIST OF COMPARABLES HOLDING THAT NO SEGMENTAL INFOR MATION IS AVAILABLE AND THAT IT FAILS 75% SERVICE REVENUE FILTER, BY NO T ACKNOWLEDGING THE FACT THAT THE DETERMINATION OF ALP BY CARRYING OUT COMPARABILITY ANALYSIS OF THE COMPARABLE COMPANIES IS AN ART AND NOT EXACT SCIENCE AS NO TWO COMPANIES ARE EXACTLY SAME AND ALSO THE D RP ERRED IN APPLYING THE SERVICE REVENUE INCOME FILTER BY TAKIN G 'SOFTWARE SERVICE INCOME' TO TURNOVER RATIO RATHER THAN 'SERVICE INCO ME' TO TURNOVER RATIO. 6. THE DRP ERRED IN DIRECTING TO EXCLUDE M/S. E-ZES T SOLUTIONS LTD., M/S. INFOSYS LTD., M/S. ICRA TECHNO ANALYTICS LTD., FROM THE LIST OF COMPARABLES HOLDING THEM TO BE FUNCTIONALLY UNCOMPA RABLE, THEREBY SEEKING EXACT COMPARABILITY BY IMPOSING CONDITION B EYOND LAW WHEREAS REQUIREMENT OF LAW IS TO ACKNOWLEDGE ONLY T HOSE DIFFERENCES THAT ARE LIKELY TO MATERIALLY AFFECT THE MARGIN. TH E DRP OUGHT TO HAVE APPRECIATED THAT ALL THE COMPARABLES QUALIFIED ALL THE QUALITATIVE AND QUANTITATIVE FILTERS APPLIED BY THE TPO AND AS LONG AS THE VERTICAL IS THE SAME, INSISTING ON STRICT COMPARABILITY UNDER T NMM DEFEATS THE VERY PURPOSE OF THE LAW RELATING TO DETERMINATION O F ALP UNDER I.T. ACT. 7. THE DRP ERRED IN DIRECTING THE AO TO EXCLUDE M/S . TATA ELXSI LTD., FROM THE LIST OF COMPARABLES, HOLDING IT TO BE FUNC TIONALLY UNCOMPARABLE, WITHOUT APPRECIATING THE FACT THAT TH E COMPARABLE QUALIFIED ALL THE QUALITATIVE AND QUANTITATIVE FILT ERS APPLIED BY THE TPO 3 IT(TP)A NOS.171 & 190/BANG/2016 AND IT IS A SIMILAR COMPARABLE COMPANY AND MOREOVER , THE REQUIREMENT OF LAW AND INTERNATIONAL JURISPRUDENCE REQUIRE SEEKING SIMILAR COMPARABLE COMPANIES WHILE SEARCHING FOR CO MPARABLE COMPANIES UNDER TNMM. THE DRP HAS ALSO NOT APPRECIA TED THAT THERE HAVE BEEN NO PROJECTS IN VISUAL COMPUTING LAB S DURING THE RELEVANT PREVIOUS YEAR. 8. THE DRP ERRED IN DIRECTING THE AO/TPO TO EXCLUDE M/S. EVOKE TECHNOLOGIES LTD., FROM THE LIST OF COMPARABLES, HO LDING IT TO BE FUNCTIONALLY UNCOMPARABLE DUE TO THE PECULIAR ECONO MIC CIRCUMSTANCES WITHOUT APPRECIATING THAT THE EXPENDI TURE INCURRED IS A NORMAL PHENOMENA AND A COMPANY CANNOT BE EXCLUDED M ERELY ON ABNORMAL PROFIT MARGINS. 9. THE DRP ERRED IN DIRECTING THE AO/TPO TO EXCLUDE M/S. R.S. SOFTWARE (INDIA) LTD., AND M/S. EVOKE TECHNOLOGIES LTD., FROM THE LIST OF COMPARABLES MERELY TO MAINTAIN CONSISTENCY, EVEN IN THE ABSENCE OF OBJECTION WITH RESPECT TO INCLUSION OF THE SAID COM PARABLES IN THE LIST. CORPORATE ISSUE: 10. THE DRP ERRED IN DIRECTING THE AO TO FOLLOW THE RATIO LAID DOWN BY THE HON'BLE COURT IN THE CASE OF TATA ELXSI LIMI TED 349 ITR 98 AND EXCLUDE COMMUNICATION EXPENSES (DATALINE CHARGES) F ROM THE TOTAL TURNOVER ALSO, WHILE COMPUTING THE DEDUCTION U/S 10 A OF THE I.T. ACT, WITHOUT APPRECIATING THE FACT THAT THERE IS NO PROV ISION IN SECTION 10A THAT SUCH EXPENSES SHOULD BE REDUCED FROM THE TOTAL TURNOVER ALSO, AS CLAUSE (IV) OF THE EXPLANATION TO SECTION 10A PROVI DES THAT SUCH EXPENSES ARE TO BE REDUCED ONLY FROM THE EXPORT TUR NOVER. 11. THE DRP ERRED IN NOT APPRECIATING THE FACT THAT THE JURISDICTIONAL HIGH COURT'S DECISION IN THE CASE OF TATA ELXSI LIM ITED 349 ITR 98 HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND AN APPE AL HAS BEEN FILED BEFORE THE HON'BLE SUPREME COURT. 12. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE DRP BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 13. THE APPELLATE CRAVES LEAVE TO ADD, TO ALTER, TO AMEND OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEA RING OF THE APPEAL. 3. THE REVISED GROUNDS RAISED BY THE ASSESSEE ARE A S UNDER:- IN CONFORMITY WITH RULE 8 OF INCOME-TAX APPELLATE T RIBUNAL RULES, 1963 THE GROUNDS OF APPEAL RAISED BY THE APPELLANT ARE W ITHOUT PREJUDICE TO ONE ANOTHER. 4 IT(TP)A NOS.171 & 190/BANG/2016 1. THAT THE ORDER PASSED BY THE LEARNED (`LD.') ASS ISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 1(1)(1), (LD. A SSESSING OFFICER' OR `LD. AO') AND HON'BLE DISPUTE RESOLUTION PANEL, [DRP' OR `LD. PANEL], TO THE EXTENT PREJUDICIAL TO THE APPELLANT, IS BAD IN LAW AND LIABLE TO BE QUASHED. [CORRESPONDING TO GROUND NO. 1] 2. THE LD. AO IN PURSUANCE OF THE ORDER OF THE LD. TPO AND THE DIRECTIONS OF THE LD. DRP ERRED ON FACTS AND LAW IN MAKING A TRANSFER PRICING ADJUSTMENT OF RS.6,13,68,769 TO THE APPELLA NT'S INTERNATIONAL TRANSACTIONS. [CORRESPONDING TO GROUND NO. 2] 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. PANEL ERRED IN UPHOLDING THE DECISION OF THE LD. AO/LD. TPO OF RE- CHARACTERISING THE APPELLANT AS A SOFTWARE DEVELOPMENT SERVICE PROVIDE R AS AGAINST THE SOFTWARE SUPPORT SERVICES BEING CARRIED BY THE APPE LLANT. [CORRESPONDING TO GROUND NO. 3] 4. THE LD. AO IN PURSUANCE OF THE ORDER OF THE LD. TPO AND THE DIRECTIONS OF THE LD. DRP ERRED ON FACTS AND LAW BY REJECTING THE TRANSFER PRICING STUDY WHICH WAS MAINTAINED IN GOOD FAITH AND DUE DILIGENCE [CORRESPONDING TO GROUND NO. 4 (I)] 5. THE LD. AO IN PURSUANCE OF THE ORDER OF THE LD. TPO AND THE DIRECTIONS OF THE LD. DRP ERRED ON FACTS AND LAW BY INCORRECTLY APPLYING THE FILTERS. [CORRESPONDING TO GROUND NO. 4 (II)] 6. THE LD. AO IN PURSUANCE OF THE ORDER OF THE LD. TPO AND THE DIRECTIONS OF THE LD. DRP ERRED ON FACTS AND LAW BY NOT APPLYING THE FILTER ON UPPER TURNOVER ADOPTED BY APPELLANT. [COR RESPONDING TO GROUND NO. 4 (III)] 7. THE LD. AO IN PURSUANCE OF THE ORDER OF THE LD. TPO AND THE DIRECTIONS OF THE LD. DRP ERRED ON FACTS AND LAW BY REJECTING THE SEARCH PROCESS FOLLOWED BY THE APPELLANT. [CORRESPO NDING TO GROUND NO. 4 (IV)] 8. THE LD. AO IN PURSUANCE OF THE ORDER OF THE LD. TPO AND THE DIRECTIONS OF THE LD. DRP ERRED ON FACTS AND LAW BY REJECTING THE USE OF MULTIPLE YEAR DATA. [CORRESPONDING TO GROUND NO. 4 (V)] 9. THE LD. AO IN PURSUANCE OF THE ORDER OF THE LD. TPO AND THE DIRECTIONS OF THE LD. DRP ERRED ON FACTS AND LAW WH ILE INCLUDING PERSISTENT SYSTEMS AND SOLUTIONS LIMITED AS A COMPA RABLE WHEREAS THE SAME SHOULD HAVE BEEN EXCLUDED FOR THE REASONS OF FUNCTIONAL DISSIMILARITY. [CORRESPONDING TO GROUND NO. 4 (VI)] 10. THE LD. AO IN PURSUANCE OF THE ORDER OF THE LD. TPO AND THE DIRECTIONS OF THE LD. DRP ERRED ON FACTS AND LAW WH ILE INCLUDING PERSISTENT SYSTEMS LIMITED AS A COMPARABLE WHEREAS THE SAME SHOULD 5 IT(TP)A NOS.171 & 190/BANG/2016 HAVE BEEN EXCLUDED FOR THE REASONS OF FUNCTIONAL DI SSIMILARITY. [CORRESPONDING TO GROUND NO. 4 (VI)] 11. THE LD. AO IN PURSUANCE OF THE ORDER OF THE LD. TPO AND THE DIRECTIONS OF THE LD. DRP ERRED ON FACTS AND LAW WH ILE INCLUDING SASKEN COMMUNICATION TECHNOLOGIES LIMITED AS A COMP ARABLE WHEREAS THE SAME SHOULD HAVE BEEN EXCLUDED FOR THE REASONS OF FUNCTIONAL DISSIMILARITY. [CORRESPONDING TO GROUND NO. 4 (VI)] 12. THE LD. AO IN PURSUANCE OF THE ORDER OF THE LD. TPO AND THE DIRECTIONS OF THE LD. DRP ERRED ON FACTS AND LAW WH ILE EXCLUDING INTERTEC COMMUNICATIONS LTD AS A COMPARABLE BY APPL YING EMPLOYEE COST GREATER THAN 25% OF TOTAL REVENUE AS A COMPARA BILITY CRITERION. [CORRESPONDING TO GROUND NO. 4 (VII)] 13. THE LD. AO IN PURSUANCE OF THE ORDER OF THE LD. TPO AND THE DIRECTIONS OF THE LD. DRP ERRED ON FACTS AND LAW WH ILE EXCLUDING MYM TECHNOLOGIES LTD AS A COMPARABLE FOR HAVING DIF FERENT FINANCIAL YEAR END (I.E. COMPANIES HAVING FINANCIAL YEAR OTHE R THAN MARCH 31). [CORRESPONDING TO GROUND NO. 4 (VII)] 14. THE LD. AO IN PURSUANCE OF THE ORDER OF THE LD. TPO AND THE DIRECTIONS OF THE LD. DRP ERRED ON FACTS AND LAW WH ILE EXCLUDING FCS SOFTWARE SOLUTIONS LIMITED AS A COMPARABLE DUE TO P ROFIT MARGIN DISTORTION AFTER CONSIDERING THE WORKING CAPITAL AD JUSTMENT, WHEREAS THE SAME SHOULD HAVE BEEN INCLUDED FOR THE REASONS OF FUNCTIONAL COMPARABILITY. [CORRESPONDING TO GROUND NO. 4 (VII) & 4(IX)] 15. THE LD. AO IN PURSUANCE OF THE ORDER OF THE LD. TPO AND THE DIRECTIONS OF THE LD. DRP ERRED ON FACTS AND LAW IN THE EXCLUSION OF 'PROVISION FOR DOUBTFUL DEBTS' AND 'PROVISION NO LO NGER REQUIRED WRITTEN BACK' FROM COMPUTATION OF OPERATING COST AN D OPERATING REVENUE RESPECTIVELY AND THE INCLUSION OF 'OTHER INCOME'/'MISCELLANEOUS INCOME FOR THE COMPUTATION OF OPERATING INCOME. [CORRESPONDING TO GROUND NO. 4 (VIII)] 16. THE LD. AO IN PURSUANCE OF THE ORDER OF THE LD. TPO AND THE DIRECTIONS OF THE LD. DRP ERRED ON FACTS AND LAW PR OVIDING ANY ADJUSTMENT TOWARDS THE DIFFERENCE IN RISK PROFILE B ETWEEN THE APPELLANT AND THE ENTREPRENEUR COMPANIES SELECTED A S COMPARABLE WHILE DETERMINING THE ARM'S LENGTH PRICE. [CORRESPO NDING TO GROUND NO. 4 (X)] 17. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A ND LAW, THE LD. AO ERRED IN NOT ALLOWING THE SET OFF OF THE BROUGHT FO RWARD UNABSORBED DEPRECIATION OF RS. 9,84,026 WHILE COMPUTING THE IN COME OF THE COMPANY. [CORRESPONDING TO GROUND NO. 5] 6 IT(TP)A NOS.171 & 190/BANG/2016 18. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE LD. AO ERRED IN COMPUTATION OF INTEREST UNDER SECTION 244A OF THE I NCOME-TAX ACT, 1961. [CORRESPONDING TO GROUND NO. 6] 19. THE LD. AO ERRED IN FACTS AND LAW IN INITIATING PROCEEDINGS UNDER SECTION 271(1)(C) OF THE INCOME-TAX ACT, 1961. [COR RESPONDING TO GROUND NO. 7] THAT THE APPELLANT CRAVES LEAVE TO ADD TO AND/OR TO ALTER, AMEND, RESCIND, MODIFY THE GROUNDS HEREIN ABOVE OR PRODUCE FURTHER DOCUMENTS BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 4. LEARNED DR OF THE REVENUE SUPPORTED THE DRAFT AS SESSMENT ORDER PASSED BY THE A.O. LEARNED AR OF THE ASSESSEE SUPPORTED THE O RDER OF DRP IN RESPECT OF THE APPEAL FILED BY THE REVENUE. REGARDING THE APPE AL FILED BY THE ASSESSEE, HE SUBMITTED THAT ONLY GROUND NOS. 9, 10, 11 & 14 ARE TO BE DECIDED AND THE REMAINING GROUNDS ARE NOT PRESSED. HE ALSO SUBMITTE D A CHART REGARDING ALL 13 COMPARABLES SELECTED BY THE TPO AND SUBMITTED THAT OUT OF THE SAME, DRP HAS EXCLUDED 10 COMPARABLES AND THE REVENUE IN ITS APPEAL IS CHALLENGING ALL THESE 10 EXCLUSIONS. HE SUBMITTED THAT THE ASSESSEE AGREES FOR INCLUSION OF 3 COMPARABLES OUT OF 10 EXCLUSIONS ORDERED BY DRP AND THESE THREE COMPARABLES ARE 1) EVOKE TECHNOLOGIES PVT. LTD., 2) MINDTREE LIMITED (SEG.) AND 3) R S SOFTWARE (INDIA) LTD. HE SUBMITTED THAT THE ISSUE REGARDING EXCLUSION OF REMAINING SEVEN COMPARABLES EXCLUDED B Y DRP AD 3 COMPARABLES NOT EXCLUDED BY DRP BUT EXCLUSION BEING REQUESTED B Y THE ASSESSEE I.E. TOTAL 10 EXCLUSIONS IS COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL ORDER RENDERED IN THE CASE OF COMMSCOPE NETWORKS INDIA PV T. LTD. IN IT (TP) A NO. 166/BANG/2016 DATED 22.02.2017 AVAILABLE ON PAGES 2 349 TO 2367 OF THE CASE LAW PAPER BOOK. HE DRAWN OUR ATTENTION TO PARA 9 OF THIS TRIBUNAL ORDER AND POINTED OUT THAT AS PER THIS PARA, EXCLUSION OF 1) ACCROPETAL TECHNOLOGIES LTD. (SEG.), 2) E ZEST SOLUTIONS LTD., 3) E INFOCHIP S LTD., 4) ICRA TECHNO ANALYTICS LTD., 5) INFOSYS LTD., 6) LARSEN & TOUBRO INFOTECH LTD., 7) PERSISTENT SYSTEM & SOLUTIONS LTD., 8) PERSISTENT SYSTEMS LTD. , 9) SASKEN COMMUNICATION TECHNOLOGIES LTD. AND 10) TATA ELXSI LTD. HAD BEEN APPROVED BY THE TRIBUNAL. HE ALSO POINTED OUT THAT THIS TRIBUNAL ORDER IS FOR THE SAME ASSESSMENT YEAR I.E. A. Y. 2011 12. THEREAFTER HE SUBMITTED THAT THE A SSESSEE IS REQUESTING FOR INCLUSION OF THREE COMPARABLES I.E. 1) INTERTEC COM MUNICATIONS TECHNOLOGIES LTD., 2) MYM TECHNOLOGIES LTD. AND 3) FCS SOFTWARE SOLUTIONS LTD. REGARDING 7 IT(TP)A NOS.171 & 190/BANG/2016 THE REQUEST OF FIRST AND 2 ND INCLUSION, IT WAS SUBMITTED THAT PAGES 2212 AND 2244 OF THE ANNUAL REPORT COMPENDIUM (ARC) RESPECTI VELY ARE RELEVANT. REGARDING THE REQUEST FOR 3 RD INCLUSION, HE PLACED RELIANCE ON THE TRIBUNAL ORDE R RENDERED IN THE CASE OF MARVELL INDIA PVT. LTD. IN IT (TP) A NOS. 384 & 471/BANG/2016 DATED 28.06.2017 COPY AVAILABLE ON PA GES 2443 TO 2470 OF CASE LAW COMPENDIUM AND IN PARTICULAR, OUR ATTENTIO N WAS DRAWN TO PAGE 2466. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, GONE T HROUGH THE ORDERS OF THE LOWER AUTHORITIES AND THE JUDGMENTS CITED BY THE LE ARNED AR OF THE ASSESSEE. VARIOUS GROUNDS NOT PRESSED BY THE LEARNED AR OF TH E ASSESSEE ARE REJECTED AS NOT PRESSED. AS PER THE APPEAL OF THE REVENUE, THE REVENUE HAS CHALLENGED THE EXCLUSION OF 10 COMPARABLES AS PER THE DIRECTIONS O F DRP. OUT OF THIS, THE ASSESSEE HAS CONCEDED THAT 3 COMPARABLES MAY BE INC LUDED I.E. 1) EVOKE TECHNOLOGIES PVT. LTD., 2) MINDTREE LIMITED (SEG.) AND 3) R S SOFTWARE (INDIA) LTD. TO THIS EXTENT, THE ORDER OF DRP IS REVERSED A ND THE AO/TPO ARE DIRECTED TO INCLUDE THESE THREE COMPARABLES IN THE FINAL LIS T OF COMPARABLES. REGARDING THE REQUEST OF THE REVENUE TO INCLUDE REMAINING SEV EN COMPARABLES EXCLUDED BY DRP AND 3 MORE COMPARABLES WHICH ARE NOT EXCLUDE D BY DRP BUT BEING REQUESTED BY THE ASSESSEE FOR EXCLUSION I.E. FOR TO TAL 10 EXCLUSIONS, PARA 9 OF THE TRIBUNAL ORDER RENDERED IN THE CASE OF COMMSCOP E NETWORKS INDIA PVT. LTD. (SUPRA) IS RELEVANT AND THEREFORE, THE SAME IS REPR ODUCED HERE IN BELOW FROM PAGES 2364 & 2365 OF THE CASE LAW COMPENDIUM FOR RE ADY REFERENCE. THIS PARA READS AS UNDER:- 9. NOW WE DECIDE ABOUT THE REMAINING 6 COMPARABLES EXCLUDED BY DRP AND 4 COMPARABLES RETAINED BY DRP BUT FOR WHICH THE ASSESSEE IS SEEKING EXCLUSION. OUT OF THESE 6 COMPARABLES EX CLUDED BY DRP, ONE COMPARABLE ICRA TECHNO ANALYTICS LTD. IS HAVING RPT IN EXCESS OF 15% AND THEREFORE, FOR THIS REASON ALONE, THIS C OMPARABLE HAS TO BE EXCLUDED ALTHOUGH DRP HAS EXCLUDED IT FOR A DIFFERE NT REASON THAT IT IS HAVING VARIOUS ACTIVITIES AND SEGMENTAL DATA ARE NO T AVAILABLE. WE UPHOLD ITS EXCLUSION ON ACCOUNT OF RPT FILTER. EXCL USION OF ACROPETAL TECHNOLOGIES LTD. (SEG) IS COVERED IN FAVOUR OF THE ASSESSEE BY THE SAME TRIBUNAL ORDER RENDERED IN THE CASE OF APPLIED MATERIALS INDIA PVT. LTD. VS. ACIT (SUPRA). RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD ITS EXCLUSION. EXCLUSION OF 1) E ZEST SOLUTIONS L TD., 2) INFOSYS LTD., 3) LARSEN & TOUBRO INFOTECH LTD., 4) PERSISTENT SYSTEM S & SOLUTIONS LTD., 5) PERSISTENT SYSTEMS LTD., 6) SASKEN COMMUNI CATION 8 IT(TP)A NOS.171 & 190/BANG/2016 TECHNOLOGIES LTD. AND 7) TATA ELXSI LTD. ARE ALSO C OVERED IN FAVOUR OF THE ASSESSEE BY THE SAME TRIBUNAL ORDER RENDERED IN THE CASE OF APPLIED MATERIALS INDIA PVT. LTD. VS. ACIT (SUPRA). RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE EXCLUSION OF THES E SEVEN COMPARABLES ALSO. EXCLUSION OF E INFOCHIPS LTD. I S COVERED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL ORDER RENDERED IN T HE CASE OF SAXO INDIA PVT. LTD. VS. ACIT IN ITA NO. 6148/DEL/2015 D ATED 05.02.2016 PARA 10.1 & 10.2 AVAILABLE AT PAGES 221 TO 223. RES PECTFULLY FOLLOWING THE SAME, WE UPHOLD ITS EXCLUSION. IN THI S MANNER, WE UPHOLD THE EXCLUSION OF SIX COMPARABLES EXCLUDED BY DRP OUT OF 9 COMPARABLES EXCLUDED BY DRP AND EXCLUDE 4 COMPARABL ES RETAINED BY DRP AND WE HAVE ALREADY HELD THAT OUT OF 9 COMPA RABLES EXCLUDED BY DRP, 3 HAVE TO COME BACK BEING 1) EVOKE TECHNOLO GIES PVT. LTD., 2) MINDTREE LTD. (SEG) AND 3) R S SOFTWARE (INDIA) LTD. NOW, WE DECIDE ABOUT LGS GLOBAL LTD. AS PER THE TRIBUNAL OR DER RENDERED IN THE CASE OF APPLIED MATERIALS INDIA PVT. LTD. VS. A CIT (SUPRA), THIS IS A GOOD COMPARABLE AND THEREFORE, WE DIRECT THE A.O. AND TPO TO INCLUDE THIS COMPARABLE. SO, THERE SHOULD BE 4 COMP ARABLES IN THE FINAL LIST OF COMPARABLE AND ON THE BASIS OF THAT, THE AO/TPO SHOULD WORK OUT THE ALP. 6. RESPECTFULLY FOLLOWING THIS TRIBUNAL ORDER, WE E XCLUDE THESE 10 COMPARABLES I.E. 1) ACCROPETAL TECHNOLOGIES LTD. (SEG.), 2) E ZEST SOLUTIONS LTD., 3) E INFOCHIPS LTD., 4) ICRA TECHNO ANALYTICS LTD., 5) I NFOSYS LTD., 6) LARSEN & TOUBRO INFOTECH LTD., 7) PERSISTENT SYSTEM & SOLUTI ONS LTD., 8) PERSISTENT SYSTEMS LTD., 9) SASKEN COMMUNICATION TECHNOLOGIES LTD. AND 10) TATA ELXSI LTD. 7. NOW, WE EXAMINE AND DECIDE ABOUT THREE INCLUSION S BEING REQUESTED BY THE ASSESSEE. REGARDING INTERTEC COMMUNICATIONS TECHNO LOGIES LTD., DRP HAS FOLLOWED A TRIBUNAL ORDER RENDERED IN THE CASE OF N AVISITE INDIA PVT. LTD. IN ITA NO. 5329/D/2012 AND A JUDGMENT OF HONBLE DELHI HIG H COURT RENDERED IN THE CASE OF RAMPGREEN SOLUTIONS PVT. LTD. IN ITA 102/20 15. LEARNED AR OF THE ASSESSEE COULD NOT POINT OUT ANY DIFFERENCE IN FACT S AND THEREFORE, EXCLUSION OF THIS COMPANY BY TPO AND DRP IS APPROVED. 8. REGARDING MYM TECHNOLOGIES LTD., WE FIND THAT TH IS COMPARABLE WAS EXCLUDED ON THIS BASIS THAT DATA FOR CURRENT FINANCIAL YEAR ARE NOT AVAILABLE. BEFORE US, IT WAS SUBMITTED THAT PAGE 2244 OF (ARC) IS RELEVANT. WE FIND THAT ON THIS PAGE, DIRECTORS REPORT IS AVAILABLE CONTAINING BRIEF FINA NCIAL RESULT FOR 12 MONTHS 9 IT(TP)A NOS.171 & 190/BANG/2016 ENDING ON 30.06.2010 AND 9 MONTHS ENDING ON 31.03.2 011 BUT IN THIS ARC, THE CORRESPONDING AUDITED BALANCE SHEET AND P & L ACCOU NT ARE NOT AVAILABLE. HENCE, WE FIND NO MERIT IN THE ASSESSEES REQUEST F OR INCLUSION OF THIS COMPARABLE. 9. REGARDING FCS SOFTWARE SOLUTIONS LTD., IT IS SEE N THAT IT IS NOTED BY DRP ON PAGE 8 OF ITS DIRECTIONS THAT REVENUE OF RS. 115.99 CRORES HAS BEEN SHOWN FROM SOFTWARE DEVELOPMENT AND OTHER SERVICES AND THERE I S NO SEGMENTAL INFORMATION AVAILABLE IN RESPECT OF SOFTWARE DEVELO PMENT. IT IS ALSO NOTED BY DRP THAT IT IS NOT POSSIBLE TO ASCERTAIN AS TO WHET HER THIS COMPANY PASSES EMPLOYEES COST FILTER OR NOT. IT IS ALSO NOTED THAT THIS COMPANY IS PREDOMINANTLY ENGAGED IN ONSITE DEVELOPMENT OF SOFTWARE. LEARNED AR OF THE ASSESSEE HAS PLACED RELIANCE ON THE TRIBUNAL ORDER RENDERED IN T HE CASE OF MARVELL INDIA PVT. LTD. (SUPRA) AND OUR ATTENTION WAS DRAWN TO PAGE 24 66 OF CASE LAW COMPENDIUM. IN THIS TRIBUNAL ORDER, ONLY THIS ASPEC T WAS CONSIDERED AND DECIDED THAT ONLY FOR THIS REASON THAT WORKING CAPI TAL ADJUSTMENT IS HIGH, A COMPARABLE CANNOT BE EXCLUDED BUT THERE IS NO DISCU SSION OR DECISION ON THIS ASPECT THAT THERE IS NO SEGMENTAL INFORMATION AVAIL ABLE AND REGARDING EMPLOYEES COST FILTER AND ONSITE REVENUE FILTER ETC . IN THE PRESENT CASE, TPO AND DRPS OBJECTIONS INCLUDE THESE ASPECTS ALSO IN ADDITION TO HIGH WORKING CAPITAL ADJUSTMENT. ON THESE OTHER ASPECTS, THIS TR IBUNAL ORDER DOES NOT RENDER ANY HELP TO THE ASSESSEE. THERE IS NO OTHER ARGUMEN T RAISED IN RESPECT OF THESE OTHER ASPECTS. HENCE, WE DECLINE TO INTERFERE IN TH E DIRECTION OF DRP IN RESPECT OF THIS COMPARABLE. THE REQUEST OF THE ASSESSEE FOR INCLUSION OF ALL THREE COMPARABLES IS REJECTED. 10. IN THE APPEAL OF THE REVENUE, THERE IS ONE ISSU E IN RESPECT OF CORPORATE TAX REGARDING REDUCTION OF SOME EXPENSES FROM TOTAL TUR NOVER ALSO WHILE COMPUTING DEDUCTION U/S 10A BY FOLLOWING THE JUDGMENT OF HON BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF TATA ELXSI LTD., 349 ITR 98 . THIS JUDGMENT IS NOW APPROVED BY HONBLE APEX COURT ALSO. HENCE, WE FIND NO INFIRMITY IN THE DIRECTIONS OF DRP ON THIS ISSUE. 10 IT(TP)A NOS.171 & 190/BANG/2016 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE AND REVENUE ARE PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ONTHE DAT E MENTIONED ON THE CAPTION PAGE. SD/- SD/- (SUNIL KUMAR YADAV) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 31 ST AUGUST, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE .