ORGA Systems India Private Limited, Kolkata V. DCIT, Circle-7(2), Kolkata, Kolkata

ITA 2152/KOL/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3535 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 07-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G MALLIKARJUNA
• Assessee Lawyers: SAURABH BAGARIA
• Keywords: Related party transaction; Transfer pricing; International transaction

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI J. SUDHAKAR REDDY, AM & SHRI A.T. VAR KEY, JM] I.TA NO. 2152/KOL/2016 ASSESSMENT YEAR: 2012-13 M/S. ORGA SYSTEMS INDIA PVT. LTD. (PAN: AABCO 4121 G) VS. DCIT, CIRCLE-7(2), KOLKATA APPELLANT RESPONDENT DATE OF HEARING 26.06.2018 DATE OF PRONOUNCEMENT 21.08.2018 FOR THE APPELLANT SHRI SAURABH BAGARIA, FCA FOR THE RESPONDENT SHRI G. MALLIKARJUNA, CIT ORDER PER SHRI A.T. VARKEY, JM THE ASSESSEE COMPANY HAS FILED THIS APPEAL AGAINST THE ORDER OF ASSESSMENT PASSED BY THE ASSESSING OFFICER FOR ASSESSMENT YEAR 2012-13 BY OR DER DATED 31.08.2016 AFTER GIVING EFFECT TO THE DISPUTE RESOLUTION PANEL (DRP) ORDER DATED 30 .06.2016. 2. THE FOLLOWING GROUNDS OF APPEAL HAS BEEN RAISED BY THE ASSESSEE: 1. THAT THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 7 (2), KOLKATA (HERE-IN-AFTER REFERRE D TO AS ASSESSING OFFICER) HAS ERRED IN LAW AND ON FACTS IN DETERMINING THE TOTAL INCOME AT RS.1,33,62,076/- . 2. THAT THE COMPUTATION OF TOTAL INCOME AS WELL AS THE MODE OF COMPUTATION IS BAD IN LAW AND AGAINST T HE ACTUAL FACTS AND EVIDENCE ON RECORD. 3. THAT THE AO HAS ERRED IN LAW AND ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN MAKING REFERENCE TO THE TRANSFER PRICING OFFICER (TPO) MECHANICALLY WITHOUT CONSIDERING THE MERIT OF THE CASE. 4. THAT THE HONBLE DISPUTE RESOLUTION PANEL (DRP) ERRED IN DIRECTING THE TPO TO INCLUDE CERTAIN COMPA NIES IN THE LIST OF COMPARABLES AS BEING FUNCTIONALLY SI MILAR, WITHOUT APPRECIATING THE FACT THAT THESE COM PANIES FAIL TO QUALIFY ALL THE QUALITATIVE AND QUANTITATIVE FIL TERS APPLIED BY THE TPO. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES THE T PO HAS ERRED IN NOT PROPERLY INTERPRETING THE ACCOUNTS/ANNUAL REPORTS AS WELL AS THE DIRECTIONS O F THE DISPUTE RESOLUTION PANEL FOR THE EXCLUSION/IN CLUSION OF THE COMPARABLE COMPANIES WHILE COMPUTING THE ARMS LENGTH PRICE. 6. THAT THE AO AS WELL AS THE TPO, HAVE ERRED ON FA CTS AND IN THE CIRCUMSTANCES OF THE CASE IN MAKING AN UPWARD ADJUSTMENT OF RS.64,97,696/- IN THE PRICE AS PER BOOKS OF ACCOUNT. 7. THAT THE TPO HAS GROSSLY ERRED IN COMPUTING THE ARM'S LENGTH PRICE BY TAKING INTO ACCOUNT THE FOLLO WING IN THE LIST OF COMPARABLES ALTHOUGH THESE FAIL THE ACC EPTED FILTERS FOR COMPARISON:- I. SPRY RESOURCES (INDIA) PVT. LTD - FAILS THE EMPLOYE E COST FILTER OF 50% 2 M/S. ORGA SYSTEMS INDIA PVT. LTD. I.TA NO. 2152/KOL/2016 ASSESSMENT YEAR: 2012-13 II. LUCID SOFTWARE LIMITED - FUNCTIONALLY DIFFERENT AS ITS INCOME FROM OPERATIONS INCLUDE SALE OF PRODUCTS AND IT FAILS THE EMPLOYEE COST FILTER OF 50% III. PRELUDESYS (INDIA) LIMITED - FUNCTIONALLY DIFFERENT AND FAILS THE EMPLOYEE COST FILTER OF 50% IV. ASM TECHNOLOGIES LIMITED - FAILS THE RELATED PARTY TRANSACTIONS FILTER OF 25% V. E-LNFOCHIPS LTD - FUNCTIONALLY DIFFERENT AS ITS PRO FILE SHOWS THAT IT HAS SALES OF OWN PRODUCTS IN ADD ITION TO SOFTWARE SERVICES. VI. LNFOSYS CONSULTING INDIA LIMITED - HAVING TURNOVER OF THEIR SERVICES AND PRODUCTS AS HIGH AS RS.31,254 CRORE COMPARED WITH THE APPELLANT HAVING TURNOVER O F SOFTWARE SERVICES TO THE EXTENT OF ONLY RS.10.83 CRORE FOR THE PURPOSES OF COMPUTING ARM'S LENGTH PR ICE, TOTALLY DISREGARDING THEREBY THE VOLUME OF BUSINESS FILTER OF RS. 1 CRORE TO RS.200 CRORE. 8. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE AO HAS ERRED IN CHARGING INTEREST AND THE APPEL LANT DENIES ITS LIABILITY FOR INTERESTS AMOUNTING TO RS. 1,68,851 UNDER SECTION 234C AND RS.2,52,841/- UNDER SECTION 234D OF THE INCOME TAX ACT, 1951. 9. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, A MEND, AMPLIFY OR MODIFY ANY OR ALL OF THE ABOVE GRO UNDS OF APPEAL ON OR BEFORE THE TIME OF HEARING OF APPEAL. 3. AT THE OUTSET ITSELF, THE LD. AR OF THE ASSESSEE BROUGHT TO OUR NOTICE THAT ASSESSEE IS A COMPANY INCORPORATED IN INDIA, ENGAGED IN PERFORMIN G FUNCTIONS RELATED TO INFORMATION TECHNOLOGY SOFTWARE SERVICES. SO, IT IS A KPO AND NOT BPO. IT WAS BROUGHT TO OUR NOTICE THAT ASSESSEE IS ENGAGED IN SOFTWARE DEVELOPMENT SERVICES AS A CAPTI VE UNIT FOR ITS ASSOCIATES ENTERPRISES (AE) WHICH IS ITS HOLDING COMPANY M/S. ORGA SYSTEMS GMBH (OSGMBF). DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE UNDERTOOK THE FOLLOWI NG INTERNATIONAL TRANSACTIONS WITH AE IN RELATION TO WHICH THE ADDITIONS WERE PROPOSED BY THE TRANSFE R PRICING OFFICER (TPO): SL. NO. NATURE OF INTERNATIONAL TRANSACTIONS AMOUNT (IN RS.) 1 SOFTWARE DEVELOPMENT SERVICES 10,83,44,567 4. THE DCIT(TRANSFER PRICING)-II, KOLKATA VIDE HIS ORDER PASSED U/S 92CA(3) OF THE I.T. ACT, 1961 (ACT) DATED 31.12.2015 HAS MADE TOTAL UPWARD ADJUSTMENT FOR RS.1,05,57,733/- ON ACCOUNT OF THE VARIATION BETWEEN THE PRICE CHARGED BY THE A SSESSEE AND THE ARMS LENGTH PRICE COMPUTED BY HIM. SO, TPO VIDE HIS ORDER AT PARA 6.0 HAS GIVEN T HE COMPUTATION OF ARMS LENGTH PRICE AND ADJUSTMENT AS UNDER: 3 M/S. ORGA SYSTEMS INDIA PVT. LTD. I.TA NO. 2152/KOL/2016 ASSESSMENT YEAR: 2012-13 SL. NO. PARTICULARS AMOUNT (IN RS.) 1 TOTAL COST AS PER PLI COMPUTATION OF THE ASSESSEE VIDE PARA 4.0 OF THE SCN REPRODUCED 9,44,19,360/- 2 ARMS LENGTH MARGIN 25.93% 3 ALP OF OR (125.93% OF 94419360/-) 11,89,02,300/- 4 OPERATIONAL REVENUE 10,83,44,567/- 5 VALUE OF INTERNATIONAL TRANSACTION (100% OF OR) 1 0,83,44,567/- 6 ALP OF INTERNATIONAL TRANSACTION 11,89,02,300/- 7 EXCESS OF ALP OVER VALUE AS PER BOOKS OF A/CS (6- 5) 105,57,733/- 5. CONSIDERING THE TOTAL UPWARD ADJUSTMENT MADE BY THE TPO AT RS.1,05,57,733/-, A DRAFT ASSESSMENT ORDER WAS PASSED ON 29.02.2016 AS PER TH E DIRECTION U/S 144C OF THE ACT. THEREAFTER, THE ASSESSEE COMPANY FILED AN OBJECTION BEFORE THE LD. DRP AGAINST THE DRAFT ORDER PASSED BY THE A.O INCORPORATING THE ADJUSTMENT STATED ABOVE. THE DRP AFTER HEARING ASSESSEES CONTENTIONS PASSED ITS DIRECTIONS DATED 30.06.2016, MADE CERTAIN DIRECTION TO THE A.O/TPO TO TAKE ACTION ACCORDINGLY. THEREAFTER, THE A.O RECEIVED AN ORDER FROM THE DCIT (TRANSFER PRICING)-II, KOLKATA WHICH WAS RECEIVED BY THE A.O ON 26.08.2016 WHEREIN THE TPO H AS GIVEN HIS ORDER AS FOLLOWS: IN VIEW OF THE DIRECTIONS AND THE COMPLIANCES, THE FINAL LIST OF COMPARABLES AND THE SIMPLE ARITHMETI C MEAN FOR THE RE-COMPUTATION OF ARMS LENGTH PRICE APPEAR TO BE AS GIVEN BELOW: SL. NO. COMPARABLES O.P/TOTAL COST % 1. AKSHAY SOFTWARE TECHNOLOGIES LTD. 9.71% 2. CAT TECHNOLOGIES LIMITED 9.23% 3. CG-VAK SOFTWARE & EXPORTS LIMITED -13.31% 4. CTIL LTD. 11.47% 5. DATAMATICS CONSULTING (INDIA) LTD. 14.09% 6. INFOSYS CONSULTING (INDIA) LTD. 17.05 % 7. SPRY RESOURCES (INDIA) PVT. LTD. 35.12% 8. LUCID SOFTWARE LTD. 13.42% 9. PRELUDESYS (INDIA) LTD. 56.38% 10. ASM TECHNOLOGIES LTD. 16.41% 11. E-INFOCHIPS LTD. 74.97% 12. ONWARD TECHNOLOGIES LTD. 13.61% 13. THIRDWARE SOLUTIONS (P) LTD. 25.24% 14. E-ZEST SOLUTIONS PVT. LTD. 16.06% 15. SAVEN TECHNOLIGIES LTD. 25.58% 16. ACROPETAL TECHNOLOGIES LIMITED (SEGMENTED) 20.6 7% 17. INDIUM SOFTWARE INDIA LTD. 23.06% ARITHMETIC MEAN OF THE COMPARABLES 21.63% ASSESSEES OP/TC 14.75% THUS, THE MEAN PLI OF THE COMPARABLES EXCEEDED THE PLI OF THE ASSESSEE AND ACCORDINGLY THE ABOVE MEAN PLI (21.63%) OF THE COMPARABLES IS TAKEN AS ARMS LENGT H MARGIN IN THIS INSTANT CASE. 4 M/S. ORGA SYSTEMS INDIA PVT. LTD. I.TA NO. 2152/KOL/2016 ASSESSMENT YEAR: 2012-13 THE AMOUNT OF ADJUSTMENT IS COMPUTED AS UNDER: 1 TOTAL COST AS PER TPOS ORIGINAL ORDER 9,44,19,3 60/- 2 ARMS LENGTH MARGIN 21.63% 3 ARMS LENGTH PRICE OF ORGA 21.63% OF TOTAL COST 11,48,42,268/- 4 OPERATIONAL REVENUE 10,83,44,567/- 5 VALUE OF REVENUE FROM AE 10.83,44,567/- 6 PERCENTAGE OF INTERNATIONAL TRANSACTION 100% 7 ARMS LENGTH PRICE OF INTERNATIONAL TRANSACTION 11,48,42,268/- 8 SHORTFALL BEING ADJUSTMENT (7-5) 64,97,696/- THUS THE REVISED UPWARD ADJUSTMENT IS RS.64,97,696/ -. 6. THEREAFTER, THE AO PASSED THE FINAL ORDER INCORPO RATING THE TOTAL UPWARD ADJUSTMENT MADE BY THE TPO AT RS.64,97,696/- WHICH WAS ADDED BACK T O THE TOTAL INCOME. AGGRIEVED BY THE AFORESAID UPWARD ADJUSTMENT OF RS.64,97,696/- AND C ONSEQUENT ASSESSMENT OF TOTAL INCOME AT RS.1,33,62,080/-, THE ASSESSEE IS BEFORE US. 7. THE MAIN GRIEVANCES OF THE ASSESSEE ARE IN RESPE CT OF THE GROUND NO.7. ACCORDING TO THE LD. AR, THE TPO HAD ADOPTED AND APPLIED QUANTITATIVE FI LTERS WHICH HAVE BEEN REPRODUCED BY THE LD. DRP AT PAGE 4 & 5 OF ITS ORDER WHICH IS REPRODUCED AS UNDER: I) ADOPTED NEW SEARCH CRITERIA AND APPLIED THE FOLL OWING MODIFIED QUANTITATIVE FILTERS: COMPANIES HAVING SOFTWARE SERVICES INCOME EXCEEDING RS.1 CRORE BUT BELOW RS.200 CRORE HAVE BEEN CONSIDERED COMPANIES WHERE REVENUE FROM SERVICES IS LESS THAN 75% OF THE TOTAL OPERATING INCOME ARE REJECTED COMPANIES HAVING THE EMPLOYEES COSTS TO SALES LESS THAN 50% WERE REJECTED COMPANIES WHO HAVE RPT SALES/PURCHASE THAN 25% OF T URNOVER/SALES/PURCHASE IN AGGREGATE ARE SELECTED COMPANIES WHO HAVE PERSISTENT LOSSES FOR THE PERIOD OR NEGATIVE NET WORTH FOR TWO CONSECUTIVE YEARS INCLUDING THE YEAR UNDER CONSIDERATION WERE EXCLUDE D COMPANIES HAVING DIFFERENT FY ENDING (I.E. NOT MARC H 31,2012) OR THAT OF THE COMPANY DOES NOT FALL WITHIN 12 MONTHS PERIOD I.E. 01.04.2011 TO 31.03.20 12 WERE REJECTED COMPANIES THAT ARE FUNCTIONALLY DIFFERENT FROM THAT OF TAXPAYER OR WORKING PECULIAR ECONOMIC CIRCUMSTANCES, AFTER GIVING VALID REASONS, WERE EXC LUDED. 8. IT WAS POINTED OUT BY THE LD. AR THAT TPO HAS BE NCHMARKED THE EMPLOYEES COST TO SALES LESS THAN 50% AS ONE OF THE FILTERS TO REJECT THE COMPAR ABLES AND ANOTHER FILTER WAS THAT THE RELATED PARTY TRANSACTION (RPT) SALES/PURCHASE MUST BE MORE THAN 25% OF THE TURNOVER/SALES/PURCHASES IN 5 M/S. ORGA SYSTEMS INDIA PVT. LTD. I.TA NO. 2152/KOL/2016 ASSESSMENT YEAR: 2012-13 AGGREGATE ARE TO BE ONLY SELECTED FROM COMPARABLES. THE LD. AR DREW OUR ATTENTION TO THE CHART PREPARED IN RESPECT OF STATEMENT OF DISCREPANCIES W ITH DRP DIRECTIONS WHEREIN COMING TO THE FIRST COMPARABLE COMPANY (I) M/S. SPRY RESOURCES (INDIA) PVT. LTD., THE ASSESSEE POINTED OUT TO THE LD. DRP THAT THIS COMPANY DOES NOT CLEAR THE EMPLOYEES COST FILTER OF 50% BENCHMARKED BY THE TPO. THOUGH THE DRP DIRECTED THE TPO TO EXAMINE WHETHER THIS COMPANY PASSES THE FILTER OF EMPLOYEES COST, ACCORDING TO LD. AR, THE TPO HAS N OT IMPLEMENTED THE DIRECTION OF THE LD. DRP. IT WAS BROUGHT TO OUR NOTICE THAT EMPLOYEES COST O F THIS COMPANY WAS ONLY 27.5% AND, THEREFORE, IT WOULD NOT PASS THE FILTER OF EMPLOYEES COST AS BEN CHMARKED BY THE TPO. SINCE THE TPO HAS HIMSELF APPLIED THE FILTER TO EXCLUDE COMPANIES HAV ING EMPLOYEES COST TO SALE LESS THAN 50% FROM THE COMPARABLES AND THE ASSESSEES CONTENTION THAT M/S. SPRY RESOURCES (INDIA) PVT. LTD. EMPLOYEES COST TO SALES COMES TO 27.33% AS IS EVID ENT FROM THE ANNUAL REPORT, THEN THE SAID COMPANY SHOULD NOT BE INCLUDED. WE NOTE THAT THE L D. DRP HAS ALSO DIRECTED THE TPO TO VERIFY THIS FACT WHICH HAS NOT BEEN CARRIED OUT BY THE TPO , WHICH ACTION OF TPO CANNOT BE COUNTENANCED. IN ANY CASE, WE SET ASIDE THIS ISSUE BACK TO TPO TO VERIFY THE CONTENTION OF LD. AR THAT M/S. SPRY RESOURCES (INDIA) PVT. LTD. DOES NOT CLEAR THE EMPL OYEES COST TO SALES BENCH MARKED BY TPO AT 50% NEED TO BE EXAMINED AFRESH AND IN CASE THE CONT ENTION OF THE ASSESSEE IS CORRECT THEN THE SAID COMPANY SHOULD BE EXCLUDED FROM THE LIST OF COMPARA BLES. WE, THEREFORE, SET ASIDE THIS COMPARABLE INCLUDED BY THE TPO TO EXAMINE AS DIRECTED BY US. W ITH THIS DIRECTION, THE GROUND TAKEN IN RESPECT OF M/S. SPRY RESOURCES (INDIA) PVT. LTD. IS DISPOSE D OF. 9. COMING TO THE NEXT GROUND OF M/S. LUCID SOFTWARE LIMITED, IT WAS BROUGHT TO OUR NOTICE THAT THIS COMPANY ALSO FAILS IN THE EMPLOYEES COST TO S ALES OF THE COMPANY AND WAS ONLY 39.17% WHEREAS THE TPO HAS BENCHMARKED THIS FILTER AT MORE THAN 50%. THEREFORE, THIS COMPANY SHOULD HAVE BEEN EXCLUDED. IN THE AFORESAID SCENARIO, WE S ET ASIDE THE INCLUSION OF THIS COMPARABLE COMPANY AND REMAND THIS ISSUE BACK TO THE FILE OF T PO TO VERIFY THE CONTENTION AS TO WHETHER THE SAID COMPANY PASSES THE FILTER OF EMPLOYEES COST T O SALES AS BENCH MARKED BY TPO. IN CASE, IF THE ASSESSEE SUCCEEDS THEN THIS COMPARABLE COMPANY HAS TO BE EXCLUDED. 10. COMING TO THE NEXT GROUND, THAT IS PERTAINING T O M/S. PRELUDESYS (INDIA) LTD. IN RESPECT TO THIS COMPANY, THE LD. AR BROUGHT TO OUR NOTICE THAT TPO HAS APPLIED THE RPT FILTER OF 25%. SINCE, 6 M/S. ORGA SYSTEMS INDIA PVT. LTD. I.TA NO. 2152/KOL/2016 ASSESSMENT YEAR: 2012-13 THE PRELUDESYS (INDIA) LTD. WAS HAVING RELATED PART Y TRANSACTION OF RS.11.33 CRORES WHICH AMOUNT TO 67.97% OF THE TOTAL INCOME FROM OPERATIONS. AND SINCE THE RELATED PART TRANSACTIONS BEING MORE THAN 25%, THIS COMPANY SHOULD HAVE BEEN EXCLUDED. T HE AFORESAID CONTENTION OF THE ASSESSEE NEEDS TO BE VERIFIED BY THE TPO IN THE LIGHT OF THE BENCH MARK FIXED BY THE TPO IN RESPECT OF RPT FILTER. THEREFORE, WE SET ASIDE THE COMPARABLE INCLUDED BY THE TPO AND DIRECT THE TPO TO VERIFY AS TO WHETHER THE SAID COMPANY CLEARS THE RPT FILTER FIXE D BY TPO AND IN CASE THIS COMPANY DOES NOT CLEAR THE BENCHMARK IN RESPECT OF RPT TRANSACTION F ILTER THEN THIS COMPANY SHOULD BE EXCLUDED. 11. COMING TO THE NEXT GROUND TO THE M/S. ASM TECHN OLOGIES LTD., IT WAS BROUGHT TO OUR NOTICE THAT THIS COMPARABLE FAILS THE RPT FILTER ADOPTED B Y THE TPO. IT WAS BROUGHT TO OUR NOTICE THAT THIS COMPANY HAD RELATED PARTY TRANSACTION AS VERIFIED F ROM THE PUBLISHED ANNUAL REPORT OF THE SAID COMPANY COMES TO 36.59% AND DESPITE THIS FACT BEING BROUGHT TO THE NOTICE OF THE LD. DRP IT HAD NOT DIRECTED THE TPO TO VERIFY AS TO WHETHER THIS C OMPARABLE FAILS RPT FILTER ADOPTED BY THE TPO. IN THE LIGHT OF THE AFORESAID SPECIFIC CONTENTION O F THE LD. AR, WE SET ASIDE THE ADOPTION OF THIS COMPARABLE COMPANY AND DIRECT THE TPO TO VERIFY AS TO WHETHER THIS COMPARABLE FAILS RPT FILTER ADOPTED BY THE TPO AND IF IT FAILS RPT FILTER AS BE NCH MARKED BY THE TPO (SUPRA), THIS COMPANY SHOULD BE EXCLUDED FROM THE LIST OF COMPARABLES. 12. COMING NEXT TO M/S. E-INFOCHIPS LTD., IT WAS BR OUGHT TO OUR NOTICE THAT RELATED PARTY TRANSACTIONS OF THE ENTITY AMOUNT TO 27.76 CRORE WH ICH IS 26.84% OF THE INCOME FROM OPERATIONS AND AS SUCH IT FAILS RPT FILTER OF 25%. IT WAS ALSO BROUGHT TO OUR NOTICE THAT THE EMPLOYEES COST OF THE ENTITY IS 35.53% WHICH IS LESS THAN 50% AND AS SUCH THE ENTITY FAILS THE EMPLOYEES COST FILTER ALSO. IT WAS ALSO BROUGHT TO OUR NOTICE THAT EXTRAO RDINARY ACTIVITIES HAPPENED I.E. THE AMALGAMATION OF THIS COMPANY HAS HAPPENED BECAUSE OF THE ORDER O F THE HONBLE HIGH COURT AND, THEREFORE, THIS COMPANY CANNOT BE TAKEN AS A COMPARABLE. IT WAS BRO UGHT TO OUR NOTICE THAT DESPITE THE AFORESAID DATA WAS AVAILABLE ON RECORD STILL THE LD. DRP DID NOT BOTHER TO GIVE ANY SPECIFIC FINDING ON THE AFORESAID CONTENTIONS RAISED BEFORE IT. WE NOTE THA T MAIN GRIEVANCE OF THE LD. AR OF THE ASSESSEE IS THAT THIS COMPANY DOES NOT PASS THE RPT FILTER AS W ELL AS EMPLOYEES COST FILTER ADOPTED BY THE TPO WHICH HAS NOT BEEN ADDRESSED BY TPO/DRP. THEREFORE, WE SET ASIDE THE INCLUSION OF THIS COMPANY AS A COMPARABLE BY THE TPO AND DIRECT THE TPO TO VE RIFY AND ADJUDICATE AFRESH THE CONTENTION OF 7 M/S. ORGA SYSTEMS INDIA PVT. LTD. I.TA NO. 2152/KOL/2016 ASSESSMENT YEAR: 2012-13 THE ASSESSEE AND IN CASE IF THE COMPANY FAILS IN TH E EMPLOYEES COST FILTER OR RPT FILTER OR THE AMALGAMATION OF THE COMPANY IN THIS FY HAS RESULTED IN NOT MAKING THIS COMPANY ELIGIBLE TO BE CONSIDERED AS COMPARABLE, THEN IT SHOULD BE EXCLUDE D. SO, WE REMAND THE MATTER BACK TO THE FILE OF THE TPO FOR FRESH CONSIDERATION. 13. COMING NEXT TO M/S. INFOSYS CONSULTING (INDIA) LTD., IT WAS POINTED OUT TO US THAT THE ASSESSEE HAS TURNOVER OF RS.10 CRORE WHEREAS THE M/ S. INFOSYS CONSULTING (INDIA) LTD. HAS MORE THAN RS. 31,000 CRORE. THEREFORE, IT WAS BROUGHT TO OUR NOTICE THAT M/S. INFOSYS CONSULTING (INDIA) LTD. WAS FUNCTIONALLY DIFFERENT FROM ASSESSEE COMPA NY AS IT HAS HUGE VOLUME OF INCOME FROM SALES, SERVICES AND PRODUCTS. IT WAS POINTED OUT THAT THE EMPLOYEES COST OF THIS COMPANY COMES TO 49.45% WHEREAS THE FILTER ADOPTED BY THE TPO IS MOR E THAN 50%, THEREFORE, THIS COMPANY CANNOT BE COMPARED WITH THAT OF THE ASSESSEE COMPANY. WE FIND FORCE IN THE ARGUMENT OF THE LD. AR THAT INFOSYS CONSULTING (INDIA) LTD. SHOULD HAVE BEEN EX CLUDED. WE NOTE THAT THE TURNOVER OF THE ASSESSEE COMPANY IS RS.10 CRORE WHEREAS THE TURNOVE R OF M/S. INFOSYS CONSULTING (INDIA) LTD. IS RS. 31,000 CRORE SO IT CANNOT BE COMPARED SINCE EQU ALS SHOULD BE TREATED EQUALLY AND UNEQUALS CAN NEVER BE TREATED EQUALLY. NOT ONLY THAT THE LD. AR HAD BROUGHT TO OUR NOTICE THAT THIS COMPANY HAS FAILED TO PASS THE EMPLOYEES COST FILTER ADOPTED B Y THE TPO TO BE MORE THAN 50% AND THE INFOSYS CONSULTING (INDIA) LTD. EMPLOYEES COST TO SALES IS 49.45%. THEREFORE, WE DIRECT EXCLUSION OF THIS COMPANY. WE DISPOSE OF THIS APPEAL WITH THE AFORES AID DIRECTIONS TO THE TPO/A.O. IN VIEW OF THE AFORESAID DISCUSSION ON EACH OF THE COMPARABLE COMP ANIES, THE A.O IS DIRECTED TO COMPLETE THE ASSESSMENT AFTER THE TPO DOES THE EXERCISE AS DIREC TED ABOVE AND ADJUDICATE ON THE ISSUES AS DISCUSSED ABOVE. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 21.08.2018. SD/- SD/- [J. SUDHAKAR REDDY] [A. T. VARKEY] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21.08.2018 [RS, SR. PS] 8 M/S. ORGA SYSTEMS INDIA PVT. LTD. I.TA NO. 2152/KOL/2016 ASSESSMENT YEAR: 2012-13 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT/ASSESSEE ORGA SYSTEMS INDIA PVT. LTD . (NOW KNOWN AS REDKNEE INDIA OS PVT. LTD.), DLF IT PARK-II, PLOT NO.IIF/I, ACTION AREA-I I, BLOCK-IC, 3 RD FLOOR, RAJARHAT, KOLKATA 700 156. 2. REVENUE/RESPONDENT- DCIT, CIRCLE-7(2), AAYAKAR B HAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA 700 069. 3. CIT(A)- 15, KOLKATA 4. CIT , KOLKATA 5. CIT(DR), KOLKATA BENCHES, KOLKATA TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE, DDO, KOLKAT A BENCHES, KOLKATA