M/s Dassault Systems India Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 1911/DEL/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7553 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 08-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Transfer pricing; International transaction; Initiation of penalty proceedings; Wholly owned subsidiary
• Section: 143(3); 92F; 234B; 144C; 143(2); 13; 22; 90

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-2: NEW DELHI BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI O.P.KANT, ACCOUNTANT MEMBER ITA NO.1911/DEL/2016 (ASSESSMENT YEAR-2011-12) DASSAULT SYSTEMS INDIA PRIVATE LTD. M-13 LGF, SOUTH EXTENSION-II, NEW DELHI-110049 PAN AACCD 7672A VS. DY. CIT , CIRCLE-7(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY SH. VISHAL KALRA ADV. SH. S.S. TOMER, ADV. SH. ANKIT SAHNI, ADV. RESPONDENT BY SH. SURENDRA PAL, CIT-DR ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER: THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE FINAL ASSESSMENT ORDER DATED 29.01.2016 PASSED U/S 143(3) READ WITH SECTION 144C OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLE D AS THE ACT) PASSED SUBSEQUENT TO THE DIRECTIONS OF THE DISPUTE RESOLUT ION PENAL-1, NEW DELHI (DRP) VIDE DIRECTIONS DATED 23.12.2015. THE ASSESSM ENT YEAR UNDER CONSIDERATION IS 2011-12. 2 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASS ESSEE IS A COMPANY INCORPORATED ON SEPTEMBER 12, 2007, IS A WHOLLY OWNED SUBSIDIARY OF DASSAULT SYSTEMES SA (DSSA). THE APPELLANT IS ENG AGED IN DISTRIBUTION OF THE SOFTWARE PRODUCTS DEVELOPED BY ITS ASSOCIATED ENTERPRISES (AES), VIZ. DSSA AND DASSAULT SYSTEMES DELMIA CORP (DASSA ULT DELMIA), AS PER THE TERMS OF THE INTERCOMPANY DISTRIBUTION AND LICE NSE AGREEMENT (IDLA). DURING AY 2011-12, THE APPELLANT WAS ENGAG ED IN DISTRIBUTION OF SOFTWARE PRODUCTS, PROVISION OF MARKETING SERVICES, AND PROVISION OF SOFTWARE RELATED PROFESSIONAL SERVICES TO ITS AES. 2.1 FOR THE FINANCIAL YEAR (FY) 2010-11, RELE VANT TO AY 2011-12, THE APPELLANT FILED ITS RETURN OF INCOME ON NOVEMBER 29 , 2011 DECLARING TAXABLE INCOME OF INR 16,43,22,980 ASSESSMENT PROCE EDINGS WERE INITIATED UNDER SECTION 143(2) OF INCOME TAX ACT, 1961 (ACT ). REFERENCE WAS MADE TO THE TRANSFER PRICING OFFICER (TPO) UNDER SECTI ON 92CA(1) OF THE ACT, FOR THE DETERMINATION OF THE ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS OF THE APPELLANT UNDER SECTION 92CA(3) OF THE ACT. BASED ON THE INFORMATION AND EXPLANATIONS FILED DURING THE A SSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER (AO) AND THE TPO, TH E AO ISSUED A DRAFT ASSESSMENT ORDER DATED MARCH 27, 2015 AS PER THE PR OVISIONS OF SECTION 3 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT 144C READ WITH SECTION 143(3) OF THE ACT, WHEREIN THE TOTAL INCOME OF THE APPELLANT WAS PROPOSED TO BE ASSESSED AT INR 22,09,4 7,700 UNDER THE NORMAL PROVISIONS OF THE ACT, AFTER MAKING FOLLOWING ADDITIONS TO THE RETURNED INCOME: PARTICULARS AMOUNT RETURNED INCOME UNDER THE NORMAL PROVISIONS OF THE ACT 16,43,22,980 ADD: ADJUSTMENT FOLLOWING THE ORDER UNDER SECTION 92CA(3 ) OF THE ACT PASSED BY THE TPO* 5,66,24,722 TOTAL ASSESSED INCOME (ROUNDED OFF) 22,09,47,700 THE SAID ADJUSTMENT WAS MADE IN RELATION TO THE INTE RNATIONAL TRANSACTION PERTAINING TO - PAYMENT OF ROYALTY AS UNDER: NATURE OF TRANSACTION AS PER AUDITED FINANCIAL STATEMENTS (IN INR) AS COMPUTED BY TPO ADDITION PAYMENT OF ROYALTY 42,55,81,564 1 37,72,31,327 5,66,24,721 IN FORM 3CEB & TP STUDY, AMOUNT OF INR 43,38,56,048 WAS DISCLOSED AS PAYMENT OF ROYALTY. THIS WAS ON ACCOUNT OF CERTAIN REVERSALS DURING THE YEAR . FURTHER THE APPELLANT HAD ALSO RECEIVED CREDIT OF INR 82,74,484 FROM ITS AE WHICH WAS ALSO DISCLOSED IN FORM 3CEB. 2.2 THE ASSESSEE FILED OBJECTIONS BEFORE THE HONBL E DISPUTE RESOLUTION PANEL (DRP) AGAINST THE SAID DRAFT ASSESSMENT ORD ER OF THE ASSESSING OFFICER. THE DRP UPHELD THE ORDER OF THE ASSESSING OFFICER/TPO WITH CERTAIN DIRECTIONS TO REVISE THE COMPUTATION OF MAR GINS IN LINE WITH THE SAFE HARBOR RULES. 4 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT 2.3 NOW THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBU NAL AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO/DRP/TPO HAVE ERRED IN ASSESSING THE TOTAL IN COME OF THE APPELLANT FOR THE RELEVANT AY AT INR 22,09,47,700 A S AGAINST THE RETURNED INCOME OF INR 16,43,22,980. TRANSFER PRICING GROUNDS 2. THAT ON THE FACTS AND CIRCUMSTANCES OF TH E CASE AND IN LAW, THE AO/DRP/TPO ERRED IN MAKING AN ADJUS TMENT OF INR 5,66,24,721 TO THE ARMS LENGTH PRICE (ALP) O F THE INTERNATIONAL TRANSACTION PERTAINING TO PAYMENT OF ROYALTY MADE BY THE APPELLANT TO ITS ASSOCIATED ENTERPRISE (AE). 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ASSESSING OFFICER/DRP/TPO ERRED IN DISREG ARDING THE FUNCTIONAL, ASSET AND RISK (FAR) PROFILE OF THE A PPELLANT AND REJECTING THE TP DOCUMENTATION MAINTAINED BY THE AP PELLANT IN AN ARBITRARY MANNER, DISREGARDING THAT THE APPELLANT I S A SOFTWARE DISTRIBUTOR AND ASSUMING NO OR NEGLIGIBLE RISKS. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO/DRP/ TPO ERRED IN REJECTING CERTAIN COM PANIES AND ADDING CERTAIN OTHER COMPANIES TO THE FINAL SET OF COMPARABLES BASED ON INCORRECT APPRECIATION OF FAR PROFILE, AND USING ARBITRARY / SUBJECTIVE SEARCH FILTERS ON AN AD-HOC BASIS, RES ORTING TO CHERRY PICKING OF COMPARABLE FOR BENCHMARKING. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO/ DRP/ TPO ERRED IN ARBITRARILY REJECTING ON E OF THE COMPARABLE COMPANY, I.E., FINTEC COMMUNICATIONS LIM ITED, ALLEGING THE SAME TO BE FUNCTIONALLY NOT COMPARABLE. 6. NOTWITHSTANDING AND WITHOUT PREJUDICE, THE AO/ DRP/ TPO ERRED IN LAW AND ON FACTS OF THE CASE, BY PICKING U P AND 5 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT QUESTIONING THE COMPARABLE COMPANIES AND / OR ECONO MIC ANALYSIS CONDUCTED BY APPELLANT FOR SOFTWARE SERVICE SEGMENT , WHICH IS AN INDEPENDENT AND SEPARATE BUSINESS SEGMENT AND WAS N EVER DISPUTED BY THE TPO. 7. WITHOUT PREJUDICE TO THE ABOVE, THE AO/TPO ERRED IN NOT COMPLYING WITH THE DIRECTIONS OF THE/DRP TO COMPUTE COMPARABLES OPERATING MARGINS FOLLOWING THE GUIDELINES OF SAFE HARBOUR RULES, AND EXCEEDING THEIR AUTHORITY IN INCORRECTLY COMPUT ING THE OPERATING MARGINS OF THE COMPARABLE COMPANIES. 8. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE AO/TPO ERRED IN QUESTIONING THE COMMERCIAL EXPE DIENCY OF THE LICENSING ARRANGEMENT ENTERED INTO BY THE APPELLANT WITH THE AE. 9. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO/ DRP/ TPO ERRED IN NOT PROVIDING APPROPRIATE ECONOMIC ADJUSTMENTS, VIZ. IN WORKING CAPITAL ADJUSTMENT AND ON ACCOUNT OF DIFFERENCE IN RISK PROFILE OF THE APPELLANT, AS REQ UIRED UNDER RULE 10B(1)(E)(III) OF THE INCOME TAX RULES, 1962 (RULE S). 10. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO/ DRP/ TPO ERRED IN TREATING FOREX GAIN / LOS S AS NON- OPERATIVE FOR COMPUTING ALP MARGINS. 11. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO/ DRP/ TPO ERRED IN IGNORING THE PROVISIONS O F RULE 10B(4) OF THE RULES AND JUDICIAL PRONOUNCEMENTS, WHICH ADVOCA TES THE USAGE OF MULTIPLE YEAR DATA OF COMPARABLE COMPANIES FOR T HE PURPOSE OF DETERMINATION OF THE ARMS LENGTH PRICE AS DEFINED UNDER SECTION 92F OF THE ACT. 12. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO/ DRP/ TPO ERRED IN NOT APPLYING THE RANGE C ONCEPT AS NOTIFIED BY THE CENTRAL BOARD OF DIRECT TAXES (CBD T) VIDE S.O. NO. 2860 (E) DATED OCTOBER 19, 2015 AND NOT DETERMINING THE ALP OF 6 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT THE INTERNATIONAL TRANSACTION IN ACCORDANCE WITH RU LE 10CA OF THE RULES. 13. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO/ DRP/ TPO ERRED IN NOT PROVIDING THE APPELLA NT THE BENEFIT OF (+/-) 5% RANGE AS PROVIDED BY THE PROVISO TO SEC TION 92C(2) OF THE ACT. OTHER GROUNDS 14. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO HAS ERRED IN NOT GRANTING KR' 1 ' BENEFIT OF TAX CREDIT AS PER THE PROVISIONS OF SECTION 90 OF THE ACT READ WITH A RTICLE 23 OF THE V DOUBLE TAXATION AVOIDANCE AGREEMENT BETWEEN INDIA A ND JAPAN (DTAA). 15. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO HAS ERRED IN GRANTING SHORT CREDIT OF TAX DE DUCTED AT SOURCE TO THE EXTENT OF INR 7,87,286. 16. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO HAS ERRED IN LEVYING INTEREST UNDER SECTION 234B OF THE ACT AMOUNTING TO INR 1,50,85,294. 17. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO HAS ERRED IN INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C ) OF THE ACT. EACH OF THE GROUNDS OF INDEPENDENT AND WITHOUT PREJ UDICE TO THE OTHER GROUNDS OF APPEAL PREFERRED BY THE APPELLANT. THE APPELLANT PRAYS FOR LEAVE TO ADD, ALTER VARY OM IT, SUBSTITUTE OR AMEND THE ABOVE GROUNDS OF APPEAL, AT ANY TIME BEFO RE OR AT, THE TIME OF HEARING, OF THE APPEAL. 7 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT 3.0 THE LD. AR SUBMITTED THAT AS FAR AS GROUND NO. 1 OF THE APPEAL WAS NOT CONCERNED, THE SAME WAS GENERAL IN NATURE NOT REQUIRING ANY SEPARATE ADJUDICATION. 3.1 REGARDING GROUND NO.2 WHICH CHALLENGED T HE ACTION OF THE LOWER AUTHORITIES IN MAKING THE ADJUSTMENT OF RS.5, 66,24,721/- TO THE ARMS LENGTH PRICE IN RESPECT OF THE INTERNATIONAL T RANSACTION PERTAINING TO PAYMENT OF ROYALTY BY THE ASSESSEE TO ITS ASSOCIATE D ENTERPRISES, IT WAS SUBMITTED THAT THIS PAYMENT HAD BEEN MADE UNDER THE SOFTWARE TRADING SEGMENT. IT WAS SUBMITTED THAT THE PAYMENT OF ROYALT Y WAS DULY REPORTED IN FORM 3CEB TRANSFER PRICING STUDY AT RS.43,38,56, 048/- WHEREIN IT WAS ALSO MENTIONED THAT THE ASSESSEE HAD RECEIVE CREDIT OF RS.82,74,484/- FROM ITS ASSOCIATE ENTERPRISE AND THUS THE ACTUAL P AYMENT OF ROYALTY WAS ONLY RS.42,55,81,564/- I.E., AFTER DEDUCTING THE SA ID CREDIT NOTE. IT WAS SUBMITTED THAT HOWEVER THE LOWER AUTHORITIES HAVE C ONSIDERED THE AMOUNT OF RS.43,38,56,048/- AS THE PAYMENT OF ROYALTY INST EAD OF THE NET ACTUAL PAYMENT OF RS.44,55,81,564/-. IT WAS FURTHER SUBMITT ED THAT THEREFORE, THE ADJUSTMENT TO THE ARMS LENGTH PRICE SHOULD HAVE BEEN MADE AFTER CONSIDERING CORRECT AMOUNT OF PAYMENT OF ROYALTY AS AFORESAID. 8 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT 3.2 WITH RESPECT GROUND NOS.3 & 8 CHALLENGING T HE REJECTION OF THE TRANSFER PRICING STUDY AND QUESTIONING THE COMM ERCIAL EXPEDIENCY OF THE LICENSING AGREEMENT ENTERED INTO BY THE ASSESSE E WITH THE ASSOCIATED ENTERPRISES RESPECTIVELY, THE LD. AUTHORIZED REPRES ENTATIVE SUBMITTED THAT THESE GROUNDS WERE NOT BEING PRESSED. 3.3 WITH RESPECT TO GROUND NOS.4 & 6 CHALLENGING THE CERTAIN COMPARABLES BY SPECIFIC CHALLENGING REJECTION OF SO ME OF THE ASSESSEES COMPARABLES AND ALSO CHALLENGING INTRODUCING NEW COM PARABLES BY THE LD. TPO/AO, THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT AMONGST THE 6 COMPARABLES SELECTED BY THE ASSESSEES, FIVE COMPAR ABLES HAD BEEN ACCEPTED BY THE LD. TPO/AO BUT WHILE REJECTING ONE COMPARABLES SELECTED BY THE ASSESSEE COMPANY, AO/ LD. TPO PICKED UP FIVE ADDITIONAL COMPARABLES AND INCLUDED THEM IN THE FINAL SET OFF COMPARABLES. IT WAS SUBMITTED THAT THE FIVE COMPARABLES INCLUDED BY THE LD. TPO/AO WERE NOT COMPARABLE TO THE ASSESSEES SOFTWARE TRADING SCHEME ON ACCOUNT OF VARIOUS REASONS. THE LD. AUTHORIZED REPRESENTATIVE ADVANCED HIS ARGUMENTS AGAINST THE INCLUSION OF THE FIVE COMPARA BLES BY THE LD. TPO/ASSESSING OFFICER AS UNDER: 9 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT (I) ACROPETAL TECHNOLOGIES:- THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THIS COMPANY REQUIRED TO BE EXCLUDED FROM THE LIST OF COMPARABLES AS THIS COMPANY WAS FUNCTIONALLY DIFFERENT FROM THE ASS ESSEE COMPANY AS THIS COMPANY WAS ENGAGED IN PROVIDING ENGINEERING DE SIGN SERVICES, HEALTHCARE AND INFORMATION TECHNOLOGY SERVICES. IT WAS ALSO SUBMITTED THAT APART FROM THIS IN IT SERVICES, THE COMPANY WAS ENGAGED IN THE DEVELOPMENT WHICH (PRODUCTION) OF COMPUTER SOFTWARE AND ITS SALES. OUR ATTENTION WAS DRAWN TO THE ANNUAL REPORT TO THE COMPA NY AS MENTIONED IN THE BALANCE SHEET ABSTRACT WHEREIN SOFTWARE DEVELOPME NT WAS MENTIONED AS THE PRINCIPAL PRODUCT/SERVICE OF THIS COMPANY. I T WAS ALSO SUBMITTED THAT 59% OF THE TOTAL EXPENDITURE OF THIS COMPANY P ERTAINED TO SOFTWARE DEVELOPMENT EXPENSES, AND ONSITE SOFTWARE DEVELOPMEN T EXPENSES APPROXIMATELY 80% OF THE TOTAL SOFTWARE DEVELOPMENT EXPENSES WHICH WAS EVIDENT FROM ANNUAL REPORT OF THE COMPANY. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT IN CONTRAST THE COMPA NY IS ENGAGED ONLY IN DISTRIBUTION OF SOFTWARE PRODUCTS AND DEVELOPMENT OF SOFTWARE PRODUCT IS CARRIED OUT BY THE ASSOCIATED ENTERPRISES. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE COMPANY PURCHASES THE PRODUCTS FROM ITS AE AND DISTRIBUTES THE SAME WITHOU T ANY VALUE ADDITION. 10 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT THE ASSESSEE ALSO ARGUED BY THE LD. AR THAT ANOTHER REASON FOR NON COMPARABILITY OF THIS COMPANY WAS THE REASON THAT ON PERUSAL OF THE SEGMENTAL DATA OF THIS COMPANY, IT IS SEEN THAT ALL OCATED EXPENSES ARE NOT ALLOCATED TO ANY SEGMENT. THUS, THE SEGMENTAL WERE INCOMPLETE. THE LD. AUTHORIZED REPRESENTATIVE ALSO ARGUED THAT THIS COM PANY HAS EXTENSIVE INVOLVEMENT IN RESEARCH DEVELOPMENT (R&D) ACTIVIT IES-COMPANY HAS CREATED AN INCUBATION BUSINESS UNIT TO INVEST IN NE W PRODUCT IDEAS/INITIATIVE. IT WAS ALSO ARGUED THAT THIS COMPA NY HAS ITS ART DEVELOPMENT CENTRE, WHEREAS THE ASSESSEE COMPANY DID NOT HAVE ANY RESEARCH AND DEVELOPMENT ACTIVITIES AND THEREFORE C OMPANY WAS NOT A COMPARABLE COMPANY. APART FROM THIS IT WAS ALSO ARGU ED THAT THE TOTAL EMPLOYEE COSTS OF THE COMPANY TO TURNOVER IN THE CA SE OF THIS COMPANY WAS ONLY 1.5% WHEREAS IN THE CASE OF THE ASSESSEE TH E EMPLOYEE COSTS TO THE TURNOVER WAS 22.46% AND THEREFORE, ON THIS COUNT ALSO, THIS COMPANY WAS NOT COMPARABLE COMPANY. THE LD. AR ALSO PLACED R ELIANCE ON NUMEROUS JUDICIAL PRECEDENTS/CASE LAWS WHEREIN THIS COMPANY HAD BEEN EXCLUDED FROM THE LIST OF COMPARABLES. (II) NUCLEUS SOFTWARE EXPORTS LTD.- WITH RESPECT OF THIS, THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THIS COMPA NY WAS ALSO TO BE 11 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT EXCLUDED FOR THE REASON OF BEING FUNCTIONALLY DIFFE RENT AS THIS COMPANY WAS ENGAGED IN THE BUSINESS OF SOFTWARE PRODUCT DEVEL OPMENTS. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THIS COMPA NY HAS EVEN DEVELOPED ITS OWN SOFTWARE NAMELY FINNONE AND CA SH @ WILL. THE LD. AUTHORIZED REPRESENTATIVE ALSO SUBMITTED PROJECT DE VELOPMENT EXPENSES AMOUNTED TO 66.73% OF THE TOTAL REVENUE FROM THE OP ERATIONS. THE LD. AUTHORIZED REPRESENTATIVE ALSO SUBMITTED THAT THE R EVENUE RECOGNITION OF THIS COMPANY HAS BEEN CATEGORIZED UNDER SOFTWARE DEV ELOPMENT SERVICES AND PROJECTS WHILE NO SEGMENTAL INFORMATION WAS AVAIL ABLE SPECIFICALLY TO THE TRADING ACTIVITIES. THE AUTHORIZED REPRESENTATI VE ALSO SUBMITTED THAT THIS COMPANY IS IN THE PROCESS OF HAVING ITS OWN DEV ELOPMENT CENTRE AND TECHNOLOGY ACCUBATION UNIT AND THE EXPENDITURE IN R ESEARCH AND DEVELOPMENT CONSTITUTED APPROXIMATELY 10.83% OF THE TOTAL REVENUE AND THE RESEARCH AND DEVELOPMENT EXPENSES CONSTITUTED A LMOST 12% OF THE OPERATING A COSTS OF THE COMPANY WHEREAS THE ASSESSE E COMPANY WAS INVOLVED ONLY IN THE TRADING OF SOFTWARE PRODUCTS PU RCHASED FROM ITS AES WHEN ANY VALUE ADDITION. (III) KALS INFORMATION SYSTEMS LIMITED:- IT WAS SUBMITTED THAT THIS COMPANY WAS ALSO FUNCTIONALLY DIFFERENT AS WELL COMP ANY WAS ENGAGED IN 12 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT THE DEVELOPMENT OF SOFTWARE AND SOFTWARE PRODUCTS. IT WAS ALSO SUBMITTED THAT THIS COMPANY HAD A TRADING CENTRE ENGAGED IN T RAINING OF SOFTWARE PROFESSIONALS ONLINE PROJECTS. THE LD. AUTHORIZED R EPRESENTATIVE FURTHER SUBMITTED THAT THIS COMPANY HAD EARNED REVENUE FROM TWO SEGMENTS NAMELY (A) APPLICATIONS SOFTWARE AND TRAINING AND TR ANSLATION & INTERPRETATION INCOME WHEREAS THE ANNUAL REPORT OF T HE COMPANY FOR THE YEAR UNDER CONSIDERATION DID NOT DISCLOSED ANY SEGM ENT INFORMATION FOR ANY SOFTWARE SALES MADE THEM (IF ANY). IT WAS ALSO AR GUED THAT THE LD. TPO SHOULD HAVE ADOPTED THE SEGMENTAL MARGIN FOR APPLIC ATION SOFTWARE SEGMENT WHICH AMOUNTED TO RS.8.15% WHEREAS THE LD. TP O/AO HAVE CONSIDERED 20.78% ENTITY LEVEL MARGIN WHILE PRAYING FOR EXCLUSION, AUTHORIZED REPRESENTATIVE ALSO PLACED RELIANCE ON N UMEROUS JUDICIAL PRECEDENTS WHEREIN THIS COMPANY HAD BEEN EXCLUDED. (IV) POLARIS SOFTWARE LAB LIMITED:- WITH RESPECT TO THIS COMPANY, THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THIS COMPA NY WAS ALSO LIABLE TO BE EXCLUDED AS THIS COMPANY WAS FUNCTIONALLY DIFFERE NT AS COMPARED TO THE ASSESSEE COMPANY BECAUSE THIS COMPANY WAS ENGAGE D IN THE BUSINESS OF IT SERVICES AND IT ENABLED SERVICES DELIVERING C USTOMIZED SOFTWARE SOLUTIONS AND PRODUCTS IN THE DOMAIN OF CONTEMPORAR Y SERVICES WHICH 13 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT INCLUDE BANKING AND FINANCIAL SERVICES. IT WAS ALSO SUBMITTED THAT THIS COMPANY EARNED ITS REVENUE FROM SOFTWARE DEVELOPMEN T SERVICES AND BUSINESS PROCESS MANAGEMENT. THE LD. AUTHORIZED REP RESENTATIVE ALSO SUBMITTED THAT AS PER PROFIT AND LOSS ACCOUNT THE R EVENUE FROM SOFTWARE DEVELOPMENT SERVICES AMOUNTED TO APPROXIMATELY 95% OF THE TOTAL REVENUE AND SOFTWARE PROJECT DEVELOPMENT EXPENSES AM OUNT TO 67.60% OF THE TOTAL REVENUE FROM OPERATIONS. WHILE ARGUING FO R EXCLUSION OF THE LD. AUTHORIZED REPRESENTATIVE ALSO SUBMITTED THAT THIS COMPANY HAD SIGNIFICANT RESEARCH AND DEVELOPMENT RELATED ACTIVI TIES AND THE COMPANY WAS ASSOCIATED WITH THE GLOBAL LEADERS IN BANKING, FI NANCIAL SERVICE & INSURANCE ETC. THROUGH AND THERE WAS CONTINUOUS RESE ARCH AND DEVELOPMENT IN ALL PERVASIVE AREAS OF INFORMATION T ECHNOLOGY LIKE USER INTERFACE & BUSINESS ANALYSIS, ETC. THE LD. AUTHORI ZED REPRESENTATIVE ALSO SUBMITTED THAT THIS COMPANY HAD ALSO ACQUIRED A COM PANY INDIGO TX SOFTWARE PVT. LTD. DURING THE YEAR. (V) SANKHYA INFOTECH LIMITED:- IT WAS SUBMITTED THAT THIS COMPANY WAS ALSO FUNCTIONALLY DIFFERENT AS THIS COMPANY PROVIDE S SIMULATION AND TRAINING SOLUTIONS CUSTOMIZED FOR END USER WHICH WAS FUNCTIONALLY DIFFERENT FROM THE ASSESSEES SOFTWARE DISTRIBUTIONS SEGMENT. IT WAS FURTHER 14 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT SUBMITTED THAT EVEN OTHERWISE THIS COMPANY COULD NOT BE CONSIDERED AS A COMPARABLE SINCE THE SEGMENTAL WERE INCOMPLETE. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT DEPRECIATION AND INTE REST HAD NOT BEEN LOCATED TO ANY SEGMENT. THE LD. AUTHORIZED REPRESEN TATIVE ALSO ARGUED THAT THE ANOTHER GROUND FOR EXCLUSION OF THIS COMPA NY WAS THAT THIS COMPANY WAS HAVING SEGMENT RESEARCH AND DEVELOPMENT ACTIVITIES AND CREATION OF NICHE SOLUTIONS FOR DESIGNING AND INSTA LLATION OF SIMULATION TECHNOLOGIES AND THE COMPANY HAD ITS RESEARCH AND D EVELOPMENT CENTER. THE LD. AUTHORIZED REPRESENTATIVE ALSO SUBMITTED TH AT THIS COMPANY HAD INTANGIBLE ASSETS AMOUNTING TO RS.3378.61 LACS WHERE AS THE ASSESSEE COMPANY HAD NO INTANGIBLE ASSETS. 3.4 THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE FINAL SET OF COMPARABLES AFTER THE DIRECTIONS OF THE DRP HAD 10 COMPARABLES AND THE ASSESSEE WAS NOT CONTESTING THE OTHER FIVE COMPA RABLES VIZ. (VI) ADVANCE TECHNOLOGY LTD. (TP STUDY) (VII) SOFTCELL TECHNOLOGIES LTD.(TP STUDY) (VIII) SONATA INFORMATION (IX) TECHNOLOGY LIMITED (TP STUDY) (X) EMPOWER INDIA LIMITED (TP STUDY) 15 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT 3.5 THE LD. AR FURTHER SUBMITTED THAT IN GROUND NO .9, THE ASSESSEE WAS CONTESTING THE ACTION OF THE LOWER AUTHORITIES I N NOT PROVIDING APPROPRIATE WORKING CAPITAL ADJUSTMENT ON ACCOUNT OF DIFFERENCE IN THE RISK PROFILE OF THE ASSESSEE BUT IF THE ASSESSEES ARGUMENTS AGAINST THE FIVE COMPARABLES ARE ACCEPTED THEN THIS GROUND WILL BECAM E ACADEMIC IN NATURE. 3.6 WITH RESPECT TO GROUND NO.5 CHALLENGING THE R EJECTION OF ASSESSEES ONE OF THE COMPARABLES BY THE LOWER AUTH ORITIES I.E., FINTEC COMMUNICATIONS LTD. AS BEING FUNCTIONALLY NOT COMPA RABLE, THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT THIS GROUN D WAS NOT BEING PRESSED. 3.7 WITH RESPECT GO GROUND NO.7, IT WAS SUBMITTE D THAT THE LD. TPO/AO HAD ERRED IN NOT COMPLYING WITH THE DIRECTION S OF THE DRP TO COMPUTE THE OPERATING MARGINS OF THE COMPARABLES BY FOLLOWING THE GUIDELINES PROVIDED BY THE SAFE HARBOUR RULES, AND HAD THUS INCORRECTLY COMPUTE THE OPERATING MARGIN OF THE COMPARABLES COM PANIES. IT WAS SUBMITTED THAT THE LD. DRP HAD GIVEN DIRECTIONS TO THE ASSESSING OFFICER IN PARA 4.3 OF THE DIRECTIONS BUT THE SAME WERE NOT FOLLOWED. THE LD. 16 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT AUTHORIZED REPRESENTATIVE PRAYED THAT SUITABLE DIRE CTIONS MAY BE GIVEN TO THE ASSESSING OFFICER/LD. TPO IN THIS REGARD FOLLOWI NG DIRECTIONS OF THE LD. DRP IT WAS ALSO SUBMITTED THAT IN SUCH A SITUATION G ROUND NO.10 CHALLENGING THE ACTION OF THE LOWER AUTHORITIES IN TREATING FOREIGN EXCHANGE GAIN/LOSS AS NON-OPERATIVE WOULD BECOME ACADEMIC IN NATURE. 3.8 THE LD. AUTHORIZED REPRESENTATIVE ALSO SUBMIT TED THAT GROUND NO.11,12 AND 13 WERE NOT BEING PRESSED. 3.9 WITH RESPECT TO GROUND NO.14 CHALLENGING THE ACTION OF THE LD. LOWER AUTHORITIES IN NOT GRANTING THE BENEFIT OF TA X CREDIT, THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT SUITABLE D IRECTIONS MAY BE GIVEN TO THE LOWER AUTHORITIES IN THIS REGARD. 3.10 WITH RESPECT TO GROUND NO.15 REGARDING ERRE D IN GRANTING SHORT CREDIT OF TAX DEDUCTED AT SOURCE. THE LD. AUT HORIZED REPRESENTATIVE PRAYED FOR SIMILAR DIRECTIONS. 3.11 WITH RESPECT TO GROUND NO.16 REGARDING LEVY O F PENALTY OF INTEREST U/S 234B OF THE ACT, THE LD. AUTHORIZED RE PRESENTATIVE FAIRLY ACCEPTED THAT THIS GROUND WAS CONSEQUENTIAL AND THAT GROUND NO.17 17 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT REGARDING INITIATION OF PENALTY PROCEEDINGS U/S 271 (1)(C) OF THE ACT WAS PREMATURE. 4.0 IN RESPONSE TO THE ARGUMENTS OF THE LD. AUTHO RIZED REPRESENTATIVE, THE LD. CIT-DR SUBMITTED THAT THE O BSERVATIONS OF BOTH THE TPO AS WELL AS THE LD. DRP SHOULD BE GIVEN DUE CONSIDERATION. THE LD. CIT-DR SUBMITTED THAT LD. DRP HAS UPHELD THE COMPAR ABLES FINALLY SELECTED BY THE LD. TPO AND THEREFORE, IT CANNOT BE SAID THAT COMPARABLES SELECTED BY THE LD. TPO WERE INCORRECT. THE LD. CIT -DR READ OUT THE COMMENTS OF THE LD. TPO IN RESPECT OF EACH OF THE C OMPARABLES SELECTED BY THE TPO HAS CONTAINED IN THE ORDER PASSED BY HIM AN D PLACED HEAVY RELIANCE ON THE SAME. THE LD. CIT-DR VEHEMENTLY ARG UED THAT ALL THE ISSUES RAISED BY THE ASSESSEE HAD DULY CONSIDERED B Y THE LD. DRP AND APPROPRIATE RELIEF HAD BEEN GIVEN WHEREVER IT WAS REQ UIRED AND NOW THE ASSESSEES APPEAL WAS LIABLE TO BE DISMISSED. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE A LSO PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO CONSIDERED THE PAP ER BOOK (PB) FILED BY THE ASSESSEE. OUR ADJUDICATION ON THE VARIOUS COMPA RABLES CHALLENGED BY THE ASSESSEE IS AS UNDER: 18 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT (I) ACROPETAL TECHNOLOGIES :-THE LD. AR HAS OBJECTED TO THE INCLUSION OF THIS COMPANY ON THE GROUND THAT THIS COMPANY IS FUN CTIONALLY DIFFERENT. WE HAVE PERUSED THE ANNUAL REPORT OF THI S COMPANY PLACED AT PAGE-97 OF VOLUME-2 OF THE PB AND IT IS SEEN THA T THE FUNCTION OF THIS COMPANY IS DESCRIBED AS SOFTWARE DEVELOPMENT. FURTHER THE ANNUAL REPORT AT PAGE-95 STATES THAT THIS COMPANY I S ENGAGED IN ENGINEERING DESIGN SERVICES, HEALTHCARE AND INFORMA TION TECHNOLOGIES SERVICES. ON THE OTHER HAND, THE ASSES SEE IS ONLY ENGAGED IN THE DISTRIBUTION OF SOFTWARE PRODUCTS AND AS PER THE RECORDS, IT HAS NOT ENGAGED IN ANY PRODUCT DEVELOPM ENT. THE HONBLE DELHI HIGH COURT IN THE CASE OF RAMPGREEN SOLUTION (PVT.) LTD. VS. CIT REPORTED IN [2015] 377 ITR 533 (DELHI) HAS HELD THAT THE COMPARABLES SHOULD BE FUNCTIONALLY COMPARABLE. THEREFORE, THIS COMPANY IS LIABLE TO BE EXCLUDED ON THE BASIS OF FUNCTIONAL DISSIMILA RITY. THE ASSESSING OFFICER IS DIRECTED TO EXCLUDE THIS COMPANY FROM TH E FINAL SET OF COMPARABLES. (II) NUCLEUS SOFTWARE EXPORTS:- THIS COMPANY HAS ALSO BEEN OBJECTED TO BY THE ASSESEE ON THE GROUND FUNCTIONAL DISSIMILARI TY. IT IS SEEN FROM 19 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT THE ANNUAL REPORT OF THIS COMPANY PLACED AT PAGE-24 5 OF VOLUME-2 OF THE PB THAT THIS COMPANY IS ENGAGED IN THE BUSINESS OF SOFTWARE PRODUCT DEVELOPMENT. IT IS ALSO SEEN FROM THE ANNUA L REPORT AT PAGES 193, 220 & 221 OF VOLUME-2 OF THE PB THAT THIS COMP ANY HAS ALSO DEVELOPED ITS OWN SOFTWARE FINNONE AND PRODUCT DEVE LOPMENT EXPENSES AMOUNT TO 67.73% OF THE TOTAL REVENUE FROM OPERATIONS. ON THE OTHER HAND THE ASSESSEE COMPANY, ADMITTEDLY, IS ONLY INVOLVED IN TRADING OF SOFTWARE PRODUCTS PURCHASED FROM ITS ASSO CIATE ENTERPRISE AND IS NOT INVOLVED IN ANY KIND OF PRODUCT DEVELOPM ENT. THEREFORE, THIS COMPANY IS NOT FUNCTIONALLY COMPARABLE TO THE ASSESSEE COMPANY AND RELYING ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF RAMPGREEN SOLUTION (PVT.) LTD VS. CIT (SUPRA) WE DIRECT THE AO TO DELETE THIS COMPANY FROM THE FINAL SET OF COMPARABLES. (III) KALS INFORMATION SYSTEMS LTD. :- THIS COMPANY HAS BEEN OBJECTED TO ON THE GROUND OF FUNCTIONAL DISSIMILARITY. ON PERUS AL OF PAGE-151 OF VOLUME-2 OF THE PB, IT IS SEEN THAT THIS COMPANY IS ENGAGED IN THE DEVELOPMENT OF SOFTWARE PRODUCTS. IT ALSO HAS A TRAI NING CENTER ENGAGED IN TRAINING OF SOFTWARE PROFESSIONALS ON ONL INE PROJECTS AND 20 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT THE REVENUE IS EARNED FROM TWO STREAMS VIZ. APPLICA TIONS SOFTWARE AND TRAINING AND TRANSLATIONS & INTERPRETATION INCO ME. ON THE OTHER HAND, THE ASSESSEE COMPANY IS ADMITTEDLY ONLY DOING DISTRIBUTION OF SOFTWARE PRODUCTS. THUS, THIS COMPANY CANNOT BE SAID TO BE FUNCTIONALLY COMPARABLE WITH THE ASSESSEE COMPANY. W E ALSO NOTE THAT THIS COMPANY WAS EXCLUDED AS A COMPARABLE BY TH E HONBLE BOMBAY HIGH COURT IN THE CIT VS. PR. GLOBAL SERVICES PVT. LTD. REPORTED IN [2018] 257 TAXMAN 244 (BOMBAY ) ON THE GROUND OF FUNCTIONAL DISSIMILARITY. EVEN THE HONBLE DELHI HI GH COURT IN THE CASE OF RAMPGREEN SOLUTION PVT. LTD. VS. CIT (SUPRA) HAS HELD THAT COMPARABLES SHOULD BE FUNCTIONALLY COMPARABLE. RESP ECTFULLY FOLLOWING THESE JUDICIAL PRECEDENTS, WE DIRECT THE A O TO EXCLUDE THIS COMPANY FROM THE FINAL SET OF COMPARABLES. (IV) POLARIS SOFTWARE LAB LIMITED:- IT HAS BEEN ARGUED THAT THIS COMPANY IS ALSO FUNCTIONALLY DIFFERENT FROM THE ASSESSEE CO MPANY. WE HAVE GONE THROUGH PAGES 403 AND 405 OF VOLUME-2 OF PB WHI CH CONTAINS THE PROFILE OF THIS COMPANY AND IT IS SEEN THAT THI S COMPANY IS ENGAGED IN THE BUSINESS OF DELIVERING CUSTOMIZED SO FTWARE SOLUTIONS AND PRODUCTS TO SECTORS LIKE BANKING AND FINANCIAL SERVICES. PAGE-351 21 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT AND PAGE 457 OF VOLUME-2 OF THE PB ALSO SHOWS THAT T HIS COMPANY EARNS IT REVENUE FROM SOFTWARE DEVELOPMENT SERVICES AND BUSINESS PROCESS MANAGEMENT. IT IS ALSO SEEN FROM PAGES 390 & 454 OF VOLUME-2 OF PB THAT THIS COMPANY EARNS REVENUE FROM SOFTWARE DEVELOPMENT SERVICES WHICH ACCOUNTS FOR APPROXIMATEL Y 95% OF THE TOTAL REVENUE. ON THE OTHER HAND, THE ASSESSEE COMP ANY IS ONLY ENGAGED IN THE DISTRIBUTION OF SOFTWARE PRODUCTS. TH EREFORE, THIS COMPANY ALSO CANNOT BE SAID TO BE FUNCTIONALLY COMP ARABLE AND, THEREFORE, PLACING RELIANCE ON THE JUDGMENT OF HON BLE DELHI HIGH COURT IN THE CASE OF RAMPGREEN SOLUTION PVT. LTD. (SUPRA) WE DIRECT THAT THIS COMPANY ALSO TO BE EXCLUDED FROM THE FINA L SET OF COMPARABLES. (V) SANKHYA INFOTECH LIMITED :- THIS COMPANY HAS ALSO BEEN OBJECTED TO ON THE GROUND ON FUNCTIONAL DISSIMILARITY. WE HAVE GONE THROUGH THE ANNUAL REPORT OF THE COMPANY PLACED AT PAGE 501 OF VOLUME-2 OF THE PB WHEREIN IT HAS MENTIONED THAT THIS COMPANY IS A S IMULATION AND TRAINING SOLUTION PROVIDER AND PROVIDING END TO END SIMULATION SOLUTIONS CUSTOMIZED FOR THE END-USER. ON THE OTHER HAND, THE ASSESSEE IS ONLY INTO SOFTWARE DISTRIBUTION. ACCORDI NGLY, WE HAVE NO 22 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT HESITATION IN HOLDING THAT THIS COMPANY IS ALSO FUN CTIONALLY DISSIMILAR TO THE ASSESSEE COMPANY AND PLACING RELIANCE ON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF RAMPGREEN SOLUTION PVT. LTD. VS. CIT (SUPRA), WE DIRECT THE AO TO EXCLUDE THIS COMPANY FROM THE FINAL SET OF COMPARABLES. 5.1 IN GROUND NO.2, THE ASSESSEE HAS CHALLENGED TH E COMPUTATION ERROR IN MAKING THE TRANSFER PRICING ADJUSTMENT WITH RESPECT TO ROYALTY WHEREIN IT HAS BEEN STATED THAT WHILE MAKING THE ADJ USTMENT, THE TPO HAS NOT CONSIDERED THE CREDIT OF RS.82,74,484/- REC EIVED FROM ITS ASSOCIATED ENTERPRISES. THE TPO IS DIRECTED TO CONS IDER THE SAME AFTER MAKING DUE VERIFICATION. 5.2 GROUND NOS.3 & 4 HAVE NOT BEEN PRESSED AND THE SAME ARE, THEREFORE, DISMISSED AS NOT PRESSED. 5.3 IN GROUND NO.7, THE ASSESSEE HAS STATED THAT TH E MARGINS HAVE BEEN INCORRECTLY COMPUTED BY THE TPO AND ARE NOT IN COMPLIANCE WITH THE DIRECTIONS OF THE LD. DRP. THE LD. AR HAS SUBMI TTED A CHART WHICH AS PER THE ASSESSEE IS THE CORRECT COMPUTATION OF M ARGINS BASED ON SAFE HARBOR RULES. THIS CHART IS BEING REPRODUCED HERE I N UNDER FOR A READY REFERENCE: 23 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT 5.3.1 THE ASSESSEE HAS ALSO SUBMITTED REVISED MARGI NS OF COMPARABLES FOR BENCHMARKING THE TRANSACTIONS OF PAYMENT OF ROY ALTIES. THE RELEVANT CHART IS AS UNDER: S.NO. COMPANY NAME OP/OR (%) 1 ACROPETAL TECHNOLOGIES 24.98 2 AVANCE TECHNOLOGIES LIMITED 0.17 3 SOFTCELL TECHNOLOGIES LIMITED 2.81 4 SONATA INFORMATION TECHNOLOGY LIMITED 2.19 5 SVAM SOFTWARES LIMITED - 0.54 6 NUCLEUS SOFTWARE EXPORTS 11.15 7 POLARIS SOFTWARE LAB LIMITED 11.60 8 SANKHYA INFOTECH (SEGMENT) 22.37 9 KALS INFORMATION SYSTEMS LTD 11.17 10 EMPOWER INDIA LIMITED (EMPOWER INDUSTRIES INDIA LIMITED) - 0.45 AVERAGE 8.55 5.3.2 THE TPO IS DIRECTED TO CONSIDER THE ABOVE TWO CHARTS SUBMITTED BY THE ASSESSEE AND THEREAFTER PASS THE ORDER COMPU TING THE CORRECT NAME OF COMPANY AS PER TPO/AO IN ORIGINAL TP ORDER & TP ORDER GIVING EFFECT TO DRP DIRECTIONS AS PER SAFE HARBOR RULES AS DIRECTED BY DRP SOFT TECHNOLOGIES LIMITED 6.37 2.81 SONATA INFORMATION TECHNOLOGY LIMITED 2.22 2.19 NUCLEUS SOFTWARE EXPORTS 11.4 11.15 POLARIS SOFTWARE LAB LIMITED 13.1 11.60 SANKHYA INFOTECH (SEGMENT) 28.19 22.37 KALS INFORMATION SYSTEMS LTD. 20.78 11.17 EMPOWER INDIA LIMITED (EMPOWER INDUSTRIES INDIA LIMITED -0.19 -0.45 24 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT MARGINS AS PER THE DIRECTIONS OF THE LD. DRP. THUS GROUND NO.7 STANDS ALLOWED FOR STATISTICAL PURPOSES. 5.4 WITH RESPECT TO GROUND NO.9 REQUESTING GRANT O F ADEQUATE WORKING CAPITAL ADJUSTMENT AND RISK ADJUSTMENT, IT H AS BEEN SUBMITTED BY THE LD. AR THAT IF THE ASSESSEES ARGUMENTS AGAI NST THE FIVE COMPARABLES ARE ACCEPTED, THEN THIS GROUND WILL BECO ME ACADEMIC IN NATURE. AS WE HAVE ALREADY DIRECTED FOR EXCLUSION O F THE FIVE COMPARABLES OBJECTED TO BY THE ASSESSEE, THIS GROUN D IS DISMISSED AS NOT PRESSED. 5.5 GROUND NOS.11 & 12 ARE ALSO DISMISSED AS NOT PR ESSED. 5.6 GROUND NO.13 IS CONSEQUENTIAL NOT REQUIRING ANY SEPARATE ADJUDICATION. 5.7 GROUND NO.14 IS REGARDING NON-GRANTING OF BENE FIT OF TAX CREDIT AND GROUND NO.15 IS REGARDING ERRONEOUS GRANTING OF SHORT CREDIT OF TAX DEDUCTED AT SOURCE. THE AO IS DIRECTED TO GRANT PRO PER CREDIT AS PER THE PROVISIONS OF THE ACT AFTER DUE VERIFICATION. THUS, GROUND NOS.14 &15 ARE ALLOWED FOR STATISTICAL PURPOSES. 5.8 GROUND NO.16 CHALLENGING THE LEVY OF INTEREST U /S 234B IS CONSEQUENTIAL AND REQUIRES NO SEPARATE ADJUDICATION . 25 ITA NO.1911/DEL/2016 DASSAULT SYST EMS INDIA PVT. LTD. VS. DCIT 5.9 GROUND NO.17 CHALLENGING THE INITIATION OF PENA LTY PROCEEDINGS IS PREMATURE AS IS DISMISSED. 6.0 IN THE FINAL RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED. ORDER PRONOUNCED ON 01/05/2020. SD/- SD/- (O.P.KANT) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 01/05/2020 PK/PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI