Zenta Knowledge Services Private Limited, CHENNAI V. ACIT, CHENNAI

ITA 2149/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64209 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 21-06-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 28-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: KUNJ VAIDYA; PRASUN KUMAR MAITI
• Keywords: Transfer pricing; Opportunity of being heard; International transaction

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENNAI BEFORE DR. O. K. NARAYANAN, VICE PRESIDENT AND SHRI V. DURGA RAO, JUDICIAL MEMBER .. ITA NO. 2149/MDS/2011 ASSESSMENT YEAR : 2007-08 M/S. ZENTA KNOWLEDGE SERVICES PRIVATE LIMITED, 431, SPENCER PLAZA, PHASE-III,. 769, ANNA SALAI, CHENNAI-600 002. VS. THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-III(3), CHENNAI. (PAN : AABCG342P) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI KUNJ VAIDYA, CA & SHRI PRASUN KUMAR MAITI, CA RESPONDENT BY : SHRI SHAJI P. JACOB, ADDL. CIT DATE OF HEARING : 21.0 6.2012 DATE OF PRONOUNCEMENT : 21.08.201 2 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 30-03-2011 PASSED BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2007-08. ITA NO.2149/MDS /2011 2 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED I TS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION DISCLOSING AN INCOME OF ` 20,15,520/-. THE RETURN WAS SELECTED FOR SCRUTINY AND A NOTICE U/S. 143(2) WAS ISSUED TO THE ASSESSEE. THE ASSESSEE HAD MADE INTERNATIONAL TRANSACTIONS EXCEEDING ` 15 CRORES DURING THE RELEVANT PREVIOUS YEAR. THE ASSESSING OFFICER REPORTED THES E TRANSACTIONS TO THE TPO-III, CHENNAI FOR DETERMINATION OF THEIR ARM S LENGTH PRICES. ON RECEIPT OF THE REFERENCE FROM THE ASSESSING OFFI CER ON 12-05- 2010, THE TPO ISSUED A NOTICE U/S 92CA(2) REQUIRING THE ASSESSEE TO FURNISH THE TP DOCUMENTATION AND OTHER RELEVANT INF ORMATION. AFTER RECEIVING THE SAME, THE TPO CONSIDERED THE TP STUDY FURNISHED BY THE ASSESSEE AND NOTICED THE FOLLOWING POINTS AS ME NTIONED IN THE ORDER. 1. THE ASSESSEE HAS ENTERED INTO SERVICES AGREEMENT WITH ITS AFFILIATES FOR UNDERTAKING CONTRACT IT ENABLED SERVICES. AS PER THE SERVICES AGREEMENT THE ASSESSEE IS COMPENSATED AT COST PLUS 15%. 2. TNMM IS ADOPTED AS THE MOST APPROPRIATE METHOD. 3. THE SEARCH WAS CONDUCTED IN PROWESS AN D CAPITALINE DATABASES. THE INFORMATION AVAILABLE IN THESE DATA BASES WAS UPDATED TILL 15 TH FEBRUARY 2007. ITA NO.2149/MDS /2011 3 3. THE TPO NOTED THAT THE INCOME RELATING TO SUBLET TING WAS REDUCED FROM ITS OPERATING COST AND HENCE THE TPO R EWORKED THE ASSESSEES MARGIN AT 12.44%. THE TPO NOTED THAT THE ASSESSEE HAD IGNORED THE CURRENT YEAR DATA WHICH IS TO BE FOLLOW ED AS PER RULE 10B(4). THE TPO NOTED THAT THE ASSESSEE HAD IGNORE D THE CURRENT YEARS DATA AND THAT THE TP STUDY WAS BASED ENTIREL Y ON THE EARLIER YEAR DATA. IT WAS ALSO SEEN BY HER THAT THERE WAS NO JUSTIFICATION FROM THE ASSESSEE FOR USE OF EARLIER YEAR DATA. DE SPITE THE ASSESSEES COMPARABLES BEING BASED ON EARLIER YEARS DATA, SHE EXAMINED THEM IN THE LIGHT OF THEIR DATA FOR THE CU RRENT YEAR, THAT IS, THE RELEVANT FY 2006-07 AS REQUIRED BY THE RULE 10B( 4) AND ALSO USED THE INFORMATION GATHERED BY HER FOR TESTING THEIR S UITABILITY AS COMPARABLES. 4. THE TPO ALSO MADE A FRESH SEARCH ON THE BASIS OF THE CURRENT YEAR DATA AND THE FILTERS TO PICK UP THOSE COMPARAB LES WHICH HAD BEEN MISSED BECAUSE OF EXCLUSION OF CURRENT YEAR DA TA BY THE ASSESSEE. THE SEARCH RESULTED IN 17 COMPARABLES WITH AN AVERAGE PLI (OPERATING PROFIT/OPERATING COST) OF 30.38%. A S THE DIFFERENCE BETWEEN THE AVERAGE PLI OF THE COMPARABLES AND THE ASSESSEES PLI WAS BEYOND 5% OF ASSESSEES PLI, THE TPO CONCLUDED THAT THE INTERNATIONAL TRANSACTIONS OF IT ENABLED SERVICES M ADE BY THE ITA NO.2149/MDS /2011 4 ASSESSEE WERE NOT AT ARMS LENGTH. CONSEQUENTLY, T HE TPO ISSUED A NOTICE TO THE ASSESSEE. AFTER RECEIVING THE REPLY FROM THE ASSESSEE AND CONSIDERING THE ASSESSEES SUBMISSIONS AND FURT HER ANALYSIS OF THE COMPARABLES, SHE DETERMINED THE ALP OF THE INTE RNATIONAL TRANSACTIONS AT ` 59,13,58,346/- WHICH WAS ` 4,46,09,209/- MORE THAN THE PRICE RECEIVED BY THE ASSESSEE. THIS DI FFERENCE BEING BEYOND THE PERMISSIBLE LIMIT OF 5%, THE TPO PROPOSE D AN UPWARD ADJUSTMENT OF ` 4,46,09,209/-. THE ASSESSEES MARKUP WAS REWORKED AT 14.49% IN THE DRAFT ORDER AS OPPOSED TO 12.44% I N THE SHOW CAUSE NOTICE. THE COMPUTATION OF ADJUSTMENT AS CAL CULATED BY THE TPO VIDE HER ORDER DATED 26-10-2010 (PAGE NUMBER 30 ) IS AS UNDER: OPERATING REVENUE 54,67,49,137 OPERATING EXPENSE 47,75,42,773 OPERATING PROFIT 6,92,06,364 OP/TC 14.49% ARMS LENGTH PROFIT @ 22.83% 11,38,15,573 OPERATING COST PLUS ARMS LENGTH MARKUP 59, 13,58,346 +5% OF INTERNATIONAL TRANSACTIONS 57,40,86,594 -5% OF INTERNATIONAL TRANSACTIONS 46,19,23,329 ADJUSTMENT PROPOSED 4,46,09,209 5. THE TPO SENT A COPY OF HER ORDER U/S. 92CA(3) TO THE ASSESSING OFFICER VIDE HER LETTER DATED 26-10-2010. THE ASSE SSING OFFICER IN HIS DRAFT ORDER DATED 31-12-2010 GAVE EFFECT TO THE ABO VE ADJUSTMENT ITA NO.2149/MDS /2011 5 PROPOSED BY THE TPO AND ALSO RECALCULATED THE DEDUC TION U/S 10A AFTER MAKING THE FOLLOWING ADDITIONS/DISALLOWANCES: A) EXCLUSION OF EXPENSES INCURRED IN FOREIGN CURRENCY FROM EXPORT TURNOVER BUT NOT FROM TOTAL TURNOVER ` 57,88,818/-. B) EXCLUSION OF TELECOMMUNICATION EXPENDITURE INCURRED IN INR FROM EXPORT TURNOVER BUT NOT FROM TOTAL TURNOVER ` 1,63,85,844/-. 6. THE ASSESSING OFFICER FURTHER DISALLOWED A SUM O F ` 87,39,681/- TOWARDS DEFERRED RENT AND RECALCULATED THE DEDUCTIO N U/S 10A TO ` 7,55,03,539/-. THUS THE ASSESSING OFFICER COMPUTED THE TAXABLE INCOME AT ` 4,98,16,389/-. THE SAME WAS DISPUTED BY THE ASSES SEE BEFORE THE DISPUTE RESOLUTION PANEL (DRP). THE DRP AFTER CONSIDERING THE VARIOUS OBJECTIONS RAISED BY THE AS SESSEE DIRECTED THE TPO TO EXAMINE THE CLAIM OF THE ASSESSEE THAT THE M ARGIN OF THE ASSESSEE BE CONSIDERED AT 15% AS AGAINST 14.49% HEL D BY HER (AT PAGE 30 OF THE TP ORDER). SUBSEQUENT TO THE DIRECT IONS OF THE DRP, THE TPO VIDE ORDER DATED 28-10-2011 REVISED THE ASS ESSEES MARGIN CONSIDERING THE RENTAL EXPENSES OF ` 21,10,194/- ATTRIBUTABLE TO ITA NO.2149/MDS /2011 6 SUBLETTING AS NON-OPERATIONAL EXPENSE AND DETERMINE D THE ADJUSTMENT PROPOSED AT ` 3,72,24,700/- INSTEAD OF ` 4,46,09,209/- PROPOSED IN THE EARLIER TRANSFER PRICING ORDER. 7. THE ASSESSING OFFICER AFTER RECEIVING THE TP OR DER DATED 26-10- 2010 READ WITH ORDER DATED 28-10-2011 OF THE DRP, H AS DETERMINED THE MARGIN AT 15% ON THE INCOME FROM SUB-LETTING AN D EXPENSES THEREON OF THE ASSESSEE COMPANY AND FINALLY WORKED OUT AS UNDER : OPERATING REVENUE ` 54,67,49,137 OPERATING EXPENSE ` 47,54,32,579 OPERATING PROFIT ` 7,13,16,558 OP/TC ` 15% ARMS LENGTH PROFIT @ 22.83% ` 10,85,41,258 OPERATING COST PLUS ARMS LENGTH MARK UP ` 58,39,73,837 +5% OF INTERNATIONAL TRANSACTION ` 57,40,86,594 -5% OF INTERNATIONAL TRANSACTIONS ` 46,19,23,329 ADJUSTMENT PROPOSED ` `` ` 3,72,24,700 8. THE ABOVE TOTAL VALUE OF ADJUSTMENT RECOMPUTED B Y THE TRANSFER PRICING OFFICER WAS DULY INCORPORATED IN T HE ORDER ADDING THE SAID AMOUNT TO THE TOTAL INCOME. ITA NO.2149/MDS /2011 7 9. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL. GROUND NOS. 1 AND 2 ARE GENER AL IN NATURE AND NEED NO ADJUDICATION. 10. GROUND NO. 3(B) RELATING TO COMPARABILITY ANALY SIS DID NOT SATISFY THE TEST OF COMPARABILITY. THE TPO HAS TAK EN 13 COMPANIES AS COMPARABLES FOR THE PURPOSE OF DETERMINATION OF ARMS LENGTH PRICE. THE MAIN OBJECTION OF THE ASSESSEE IN THE P RESENT APPEAL IS THAT OUT OF 13 COMPANIES 5 COMPANIES ARE NOT COMPAR ABLE COMPANIES WITH THE ASSESSEE FOR THE PURPOSE OF DETERMINING TH E ARMS LENGTH PRICE. THEY ARE, 1. INDUSIND INFORMATION TECHNOLOGY LTD. 2. GALAXY COMMERCIALS. 3. ECLERX SERVICES LTD. 4. ICRA ONLINE LTD. 5. INFOSYS BPO LTD. 11. THE FIRST OBJECTION RAISED BY THE LEARNED COUNS EL FOR THE ASSESSEE IS THAT INDUSIND INFORMATION TECHNOLOGY LT D. TAKEN AS A COMPARABLE BY THE TPO ON THE GROUND THAT THE RELATE D PARTY TRANSACTION I.E. 92.89% OF THE TOTAL REVENUE HAS BE EN FROM A RELATED PARTY INDUS IND BANK. THERE IS FUNCTIONAL DIFFERE NCE BETWEEN THE ASSESSEE AND THE COMPARABLE THAT THE PRINCIPAL ACTI VITIES OF THE COMPANY IS PROVIDING MANAGEMENT CONSULTANCY SERVICE SIT ITA NO.2149/MDS /2011 8 DEVELOPMENT AND CUSTOMIZATION OF COMPUTER SOFTWARE PRODUCTS PRIMARILY FOR BANKING AND FINANCIAL SECTOR. THE LE ARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT HE HAD RAISED OBJEC TION BEFORE THE TPO WITH REGARD TO INDUSIND INFORMATION TECHNOLOGY LTD. AND CANNOT BE COMPARABLE WITH THE ASSESSEE. INDUSIND INFORMAT ION TECHNOLOGY LTD. IS PROVIDING TECHNOLOGY SUPPORT IN HANDLING NE FT TRANSACTIONS, IMPLEMENTED CENTRALIZED IMAGE BASED, CLEARING OPERA TIONS ETC. THE FUNCTIONS PERFORMED BY INDUSIND INFORMATION TECHNOL OGY LTD. FALL UNDER ITES/BPO SEGMENTS. WITHOUT CONSIDERING THE OB JECTIONS RAISED BY THE ASSESSEE THE TPO HAS CHOSEN INDUSIND INFORMATION TECHNOLOGY LTD. AS A COMPARABLE. THE LEARNED COUNS EL FOR THE ASSESSEE STRONGLY OPPOSED THE RELATED PARTY TRANSAC TION, THE FUNCTIONAL DIFFERENCE ETC. AND THEREFORE THIS CANN OT BE TAKEN AS A COMPARABLE. BEFORE US THE LEARNED COUNSEL FOR THE A SSESSEE HAS FILED THE ANNUAL REPORT OF INDUSIND BANK FOR THE YEAR 2006 -2007 AND SUBMITTED THAT THIS IS A VERY VITAL DOCUMENT TO DEC IDE THE ISSUE WHETHER INDUSIND INFORMATION TECHNOLOGY LTD. CAN BE TAKEN AS A COMPARABLE OR NOT. IT HAS TO BE DECIDED ON THE BAS IS OF THE ANNUAL REPORT OF INDUSIND BANK. THE LEARNED COUNSEL FOR TH E ASSESSEE HAS SUBMITTED THAT THIS DOCUMENT WAS NOT FILED BEFORE T HE LOWER AUTHORITIES. WE THEREFORE ADMIT THE SAME AND DIREC T THE ASSESSING ITA NO.2149/MDS /2011 9 OFFICER TO CONSIDER AND DECIDE THE MATTER AFRESH IN ACCORDANCE WITH LAW. 12. INSOFAR AS GALAXY COMMERCIALS IS CONCERNED, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE SAI D COMPANY HAS TWO SEGMENTS BPO OPERATIONS AND TRANSPORT OPERATIONS . THE REVENUE AND EXPENSES FOR BOTH THE OPERATIONS ARE ME NTIONED SEPARATELY I.E., THE INCOME AND EXPENDITURES FROM B OTH BPO AND TRANSPORT OPERATIONS ARE GIVEN SEPARATELY. HENCE T HE OTHER ADMINISTRATIVE AND GENERAL EXPENSES AND DEPRECIATIO N ARE COMMON FOR BOTH THE SEGMENTS AND THUS SHOULD BE APPORTIONE D TO THE TWO SEGMENTS BASED ON THE REVENUE. THUS THE REVISED MA RGIN OF 15.91% SHOULD BE CONSIDERED INSTEAD OF 34.87% AS CONSIDERE D BY THE TPO. IN OUR OPINION, THIS NEEDS RE-CONSIDERATION. 13.. INSOFAR AS ECLERX SERVICES LTD. IS CONCERNED, THE LEARNED COUNSEL FOR THE ASSESSEE HAS POINTED OUT THAT THIS CANNOT BE TAKEN AS A COMPARABLE FOR THE REASON THAT IT IS FUNCTIONALLY DIFFERENT AND MARGINS ARE EXTRA ORDINARY. THE COMPANY HAS REPORT ED SUPER NORMAL PROFIT OF 89.36% AS OPPOSED TO OTHER COMPARABLE COM PANIES AND HENCE IT WARRANTS EXCLUSION. 14. INSOFAR AS ICRA ONLINE LTD. IS CONCERNED, THE L EARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE COMPANY IS IN THE PROVISION ITA NO.2149/MDS /2011 10 OF HIGH QUALITY TECHNOLOGY SOLUTIONS IN THE FORM OF PRODUCTS TO BANKS, MUTUAL FUNDS AND FINANCIAL INTERMEDIARIES AND IS FO CUSING ON PROVIDING RESEARCH REPORTS. THE PRODUCTS ARE HIGHL Y CUSTOMIZED TO THE CLIENT NEEDS AND HELP THEM IN THE HIGH-END RESE ARCH, ANALYSIS AND DECISION-MAKING. ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE ABOVE DESCRIPTION CLEARLY IDENTIFIES THAT THE C OMPANY IS PROVIDING HIGH END SERVICES. 15. INSOFAR AS INFOSYS BPO LTD. IS CONCERNED, THE LE ARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REVENUE OF THE ASSESSEE IS ` 54.67 CRORES WHEREAS THE COMPARABLE SELECTED BY THE TPO HAS A REVENUE OF ` 649.57 CRORES WHICH IS 11.88 TIMES THAT OF THE ASS ESSEE AND THUS WARRANTS EXCLUSION. 16. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT COST + MARK UP WORKING ON CAPITAL ADJUSTMENT IS TO BE ADOP TED. 17. WE FIND THAT THE OBJECTIONS RAISED BY THE ASSES SEE AGAINST THE ABOVE DISCUSSED FIVE COMPARABLES NEED A FRESH EXAMI NATION BY THE ASSESSING AUTHORITY FOR WHICH COST + MARK UP METHOD MAY BE ADOPTED BY THE ASSESSING AUTHORITY. 18. IN VIEW OF THE ABOVE, WE FIND THAT THESE ABOVEM ENTIONED COMPARABLES ADOPTED BY THE TPO NEED RE-CONSIDERATIO N AND PROPER ADJUDICATION BY THE ASSESSING OFFICER. WE THEREFOR E DIRECT THE ITA NO.2149/MDS /2011 11 ASSESSING OFFICER TO RECONSIDER THE ISSUE WITH REGA RD TO THE ABOVE COMPARABLES ADOPTED BY THE TPO IN ACCORDANCE WITH L AW AFTER GIVING REASONABLE OPPORTUNITY TO THE ASSESSEE. 19. INSOFAR AS GROUNDS NO. 3(D) AND (E) RAISED BY T HE ASSESSEE WITH REGARD TO THE GROUND OF BENEFIT OF RISK ADJUSTMENT ARE CONCERNED, IT IS SUBMITTED THAT THE ASSESSEE IS CAPTIVE SERVICES PRO VIDER TO ITS ASSOCIATED ENTERPRISES. BEING A CAPTIVE SERVICE PRO VIDER, THE ASSESSEE IS DEVOID OF ANY SIGNIFICANT RISKS RELATIN G TO ITS BUSINESS OPERATIONS. FURTHER THE BUSINESS AND ENTREPRENEURI AL RISKS ARE BORNE BY THE ASSOCIATED ENTERPRISES (AES) AS IT OWNS ALL THE VALUABLE INTELLECTUAL PROPERTY RIGHTS (KNOW-HOW, COPYRIGHTS ETC) AND OTHER COMMERCIAL OR MARKETING INTANGIBLES (BRAND NAMES, T RADEMARKS ETC.) RELATED TO THE SERVICES BEING PROVIDED BY THE ASSES SEE. THE ASSESSEE BEING A MERE BACK OFFICE SERVICE PROVIDER, THE ASSE SSEE DOES NOT HAVE ANY INTEREST IN THESE INTANGIBLES AND PROVIDES MERE SERVICES BASED ON THE REQUIREMENTS OF THE AES IN RETURN FOR A FIXED MARK UP ON COST INCURRED IN RENDERING OF SERVICES. IT WAS SUBMITTED THAT THE ASSESSEE HAS A LIMITED RISK NATURE OF THE CAPTIVE S ERVICES PROVIDED BY THE ASSESSEE AND THE SERVICES PROVIDED BY FULL FLED GED ENTREPRENEURIAL COMPANIES SELECTED AS COMPARABLES AND THUS GRANT TH E BENEFIT OF APPROPRIATE ADJUSTMENT TOWARDS RISK DIFFERENTIAL. IF SO ADJUSTED FOR ITA NO.2149/MDS /2011 12 THE RISK DIFFERENTIAL, THE MEAN VALUE OF 23.83% ADO PTED BY TPO AND DRP WILL COME DOWN TO 19.21%. THE ASSESSEE HAS ALS O RAISED ANOTHER OBJECTION WITH REGARD TO THE CONCEPT OF BOX PLOT TO REMOVE THE OUTLIERS FROM THE SET OF COMPARABLE COMPANIES. WE DIRECT THE ASSESSING OFFICER TO CONSIDER THE ABOVE OBJECTIONS RAISED BY THE ASSESSEE AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD. 20. GROUND NO.4 RELATES TO THE DEDUCTION UNDER SECT ION 10A OF THE ACT. THE ASSESSEE HAS INCURRED AN AMOUNT OF ` 1,63,85,844/- TOWARDS TELECOMMUNICATION CHARGES AND AN AMOUNT OF ` 57,88,818/- TOWARDS EXPENSES INCURRED IN FOREIGN CURRENCY FOR P ROVIDING TECHNICAL SERVICES OUTSIDE INDIA. IN THE ASSESSMENT ORDER, T HE ASSESSING OFFICER HAS OBSERVED THAT AS PER THE PROVISIONS OF SECTION 10A THE ABOVE EXPENDITURE SHOULD BE REDUCED FROM THE EXPORT TURNOVER IN COMPUTING THE DEDUCTION UNDER SECTION 10A. THE L EARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT IF THE ABOVE TWO AMOUNTS, I.E. EXPENSES TOWARDS TELECO MMUNICATION CHARGES AND EXPENSES TOWARDS FOREIGN CURRENCY IF RE DUCED FROM THE EXPORT TURNOVER, THEN IT SHOULD BE REDUCED FROM THE TOTAL TURNOVER ALSO. FOR THAT HE RELIED ON THE DECISION OF THE TR IBUNAL, SPECIAL BENCH IN THE CASE OF ITO V. SAK SOFT DATED 06-03-2009. H OWEVER, THE ASSESSING OFFICER ONLY REDUCED THE ABOVE AMOUNTS FR OM THE EXPORT ITA NO.2149/MDS /2011 13 TURNOVER AND NOT FROM THE TOTAL TURNOVER FOR COMPUT ING THE DEDUCTION U/S 10A. ACCORDINGLY, THE DEDUCTION U/S 10A WAS RE -COMPUTED AT ` 7,55,03,539/-. 21. ON BEING AGGRIEVED, THE ASSESSEE CARRIED THE MA TTER BEFORE THE TRIBUNAL. BEFORE US THE LEARNED COUNSEL FOR THE AS SESSEE SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF IT O V. SAK SOFT LTD. (2009) TIOL-187-ITAT-MAD-SB; DECISION OF THE MUMBAI BENCH H IN THE CASE OF DCIT V. M/S BP INDIA SERVICES P. LTD. IN ITA NO. 4425/MUM/2010 DATED 23-09-2011 AND THE DECISION OF THE DELHI BENCH B OF THE TRIBUNAL IN THE CASE OF ITO V. CRM S ERVICES INDIA (P) LTD. IN ITA NO. 4068/DEL/2009 DATED 30-6-2011. 22. THE LEARNED DR, ON THE OTHER HAND, STRONGLY SUP PORTED THE ORDER PASSED BY THE ASSESSING OFFICER AND SUBMITTED THAT THE COUNSEL FOR THE ASSESSEE HAS NOT AT ALL ARGUED THE ISSUE BU T HAS SIMPLY RELIED ON VARIOUS DECISIONS AND IT HAS TO BE REJECTED. 23. WE HAVE HEARD BOTH THE SIDES, PERUSED THE RECO RDS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. ACCOR DING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE ISSUE IS COVERED IN I TS FAVOUR BY THE DECISIONS, CITED SUPRA. ACCORDING TO THE LEARNED DR THE FACTS ARE NOT AVAILABLE ON RECORD. WE THEREFORE SET ASIDE THE OR DER OF THE ITA NO.2149/MDS /2011 14 ASSESSING OFFICER WITH REGARD TO THE CALCULATION OF THE DEDUCTION U/S 10A AND DIRECT HIM TO CONSIDER THE ISSUE IN ACCORDA NCE WITH LAW AND ALSO IN THE LIGHT OF THE CASE LAWS RELIED UPON BY T HE LEARNED COUNSEL FOR THE ASSESSEE. 24. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON TUESDAY, THE 21 ST OF AUGUST, 2012, AT CHENNAI. SD/- SD/- (DR. O. K. NARAYANAN) ( V.DURGA RAO ) VICE PRESIDENT JUDICIAL MEMBER CHENNAI, DATED THE 21 ST AUGUST, 2012. H. COPY TO: 1. ASSESSEE 2. ASSESSING OFFICER 3. THE CIT(APPEALS) 4. THE CIT 5. THE DR 6. GUARD FILE