Planet Online Pvt.Ltd., Hyd, Hyderabad V. ACIT, Circle-16(2), Hyderabad, Hyderabad

ITA 279/HYD/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6552 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 10-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Transfer pricing; Opportunity of being heard; International transaction; Additional evidence; Wholly owned subsidiary; Revenue expenditure
• Section: 92C; 143(3); 10AA; 80G; 10B

Judgement Text

ITA NO 279 OF 2016 PLANET ONLINE PVT LTD HYDERABAD. PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.279/HYD/2016 A.Y.2011-12 M/S. PLANET ONLINE PRIVATE LIMITED, HYDERABAD PAN: AAEC S1624F VS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 16(2) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI P. MURALI MOHAN RAO FOR REVENUE : SHRI J. S I R I KUMAR, DR PER SMT. P. MADHAVI DEVI, J.M. O R D E R THIS IS ASSESSEES APPEAL FOR THE A.Y 2011-12 AGAI NST THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 92CA( 3) R.W.S. 144C(5) OF THE I.T. ACT BY THE ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 16(2), HYDERABAD. THE ASSESSEE HAS RAISED TH E FOLLOWING GROUNDS OF APPEAL: EACH OF THE GROUNDS OF APPEAL IS MUTUALLY EXCLUSIVE OF, INDEPENDENT AND WITHOUT PREJUDICE TO EACH OTHER. BASED ON THE FACTS AND THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED ASSESSING OFFICER (AO), LEARNED TR ANSFER PRICING OFFICER (TPO) AND THE HONOURABLE DISPUTE RE SOLUTION PANEL (DRP)- 1. THE AO HAS ERRED IN LAW IN MAKING REFERENCE TO T HE TPO WITHOUT MEETING THE PRECONDITIONS FOR SUCH REFERENC E UNDER SECTION 92CA OF THE LT. ACT, 1961. DATE OF HEARING: 03.05.2018 DATE OF PRONOUNCEMENT: 18.07.2018 ITA NO 279 OF 2016 PLANET ONLINE PVT LTD HYDERABAD. PAGE 2 OF 10 L.A THE AO OUGHT TO HAVE APPRECIATED THAT THERE WAS NEITHER NECESSITY NOR EXPEDIENCY FOR SUCH REFERENCE TO THE TPO AS THERE WAS NO ATTEMPT ON THE PART OF THE APPELLANT TO UNDE RSTATE WILFULLY THE VALUE OF ITS INTERNATIONAL TRANSACTION S. L.B THE AO HAS ERRED IN NOT PROVIDING OPPORTUNITY O F BEING HEARD TO THE APPELLANT BEFORE REFERRING THE TRANSFER PRIC ING ISSUES TO THE TPO WHICH IS IN VIOLATION OF PRINCIPLES OF NATU RAL JUSTICE. 1.C THE AO OUGHT TO HAVE INDEPENDENTLY APPLIED HIS MIND TO THE ORDER OF THE TPO WITH DUE COGNIZANCE TO THE APPELLA NT'S VARIOUS REBUTTALS BEFORE ACCEPTING MECHANICALLY, THE CONCLU SIONS STATED IN THE TPO'S ORDER. 1.D THE TPO ERRED IN MAKING THE TP ADDITION WHERE T HE TAX RATE IN THE COUNTRY OF THE AE S IS HIGHER THAN THE RATE OF TAX IN INDIA AND WHERE THE ESTABLISHMENT OF TAX AVOIDANCE OR MAN IPULATION OF PRICES OR ESTABLISHMENT OF SHIFTING OF PROFITS I S NOT POSSIBLE. 2. ERRED IN MAKING THE TP ADDITION OF RS. 9,72,84,7 21/- TOWARDS THE SHORTFALL OF ALP ADJUSTMENT IN RESPECT TO THE TRANSACTIONS OF SOFTWARE DEVELOPMENT SERVICES. 3. ERRED IN CALCULATING THE OPERATING MARGIN OF THE COMPANY I.E. PROFIT LEVEL INDICATOR (PLI) (OP /OC) OF -0.79% WIT HOUT ACCEPTING THE ASSESSEE'S PLI(OP/OC) OF 25.44% . 3.A ERRED IN NOT RE-CALCULATING THE OPERATING COST OF THE ASSESSEE COMPANY AS PER THE DIRECTIONS OF HON'BLE DRP ISSUED IN ITS ORDER DATED 29.12.2015,WHEREIN IT HAS BEEN DIRECTED THAT DEFERRED REVENUE EXPENDITURE AND FINANCE COST SHOULD BE KEPT OUT FOR THE COMPUTATION OF MARGIN. 3.B ERRED IN NOT EXCLUDING THE DEFERRED REVENUE EXP ENDITURE OF RS. 1,17,49,359/ - FROM OPERATING COST AS PER THE F OLLOWING DIRECTIONS OF THE HON'BLE DRP DATED 29.12.2015. IN OUR VIEW THE AMORTIZATION OF DEFERRED REVENUE E XPENDITURE SHOULD BE KEPT OUT OF THE MARGIN COMPUTATION EXERCI SE ..... ' 3.C ERRED IN NOT EXCLUDING THE FINANCE COST OF RS. 29,02,092.92/- FROM OPERATING COST AS PER THE FOLLOWING DIRECTIONS OF THE HON'BLE DRP DATED 29.12.2015: THE TPO WAS NOT JUSTIFIED IN NOT EXCLUDING THE FIN ANCE COST WHILE WORKING OUT THE MARGIN IN THE CASE OF ASSESSE E COMPANY. THE AO IS DIRECTED TO RE-COMPUTE THE MARGIN OF THE ASSESSEE COMPANY.' ITA NO 279 OF 2016 PLANET ONLINE PVT LTD HYDERABAD. PAGE 3 OF 10 3.D ERRED IN NOT EXCLUDING THE EXCESS CAPACITY COST OF EMPLOYEES WHICH IS 15 % OF THE TOTAL EMPLOYEE COST, FROM THE OPERATING COST OF THE ASSESSEE AS IT IS NON-OPERATING IN NATURE AN D OUGHT TO HAVE FOLLOWED THE ASSESSEE'S OWN CASE FOR THE AY 20 09-10 WHEREAS THE HON'BLE ITAT ALLOWED THE EXCESS CAPACIT Y COST. 3.E OUGHT TO HAVE APPRECIATED THAT THE EXCESS CAPAC ITY COST IS NON-OPERATING COST IN NATURE BECAUSE IT DOES NOT GE NERATE ANY REVENUE ON A REGULAR BASIS AND THE ASSESSEE HAS TO MAINTAIN EXCESS STAFF CAPACITY AS COMPANY CANNOT QUICKLY HIR E PEOPLE WITH REQUIRED SKILLS, KNOWLEDGE AND EXPERIENCE. 3.F OUGHT TO HAVE APPRECIATED THE FACT THAT ASSESSE E COMPANY HAS STARTED TO INCUR EXTRA CAPACITY COST FROM AY 20 09-10 AND ACCORDINGLY EMPLOYEE COST HAS INCREASED FROM 9.25 C RORES TO 33.35 CRORES IN AY 2008-09 TO AY 2011. 12, WHICH IS HUGE INCREASE IN EMPLOYEE COST DUE TO THE EXCESS CAPACIT Y COST. 3.G OUGHT TO HAVE APPRECIATED THAT THE RATIO OF EMP LOYEE COST TO TURNOVER HAS BEEN DRASTICALLY INCREASED FROM 38.65% TO 76.00% IN ASST.YEARS 200809 TO 2011-12. 3.H. OUGHT TO HAVE APPRECIATED THE FACT THAT RATIO OF EMPLOYEE COST TO TURNOVER BORNE BY THE ASSESSEE IS 76% WHERE AS THE 3 COMPARABLES RETAINED BY THE DRP BEARS AN AVERAGE OF 58% ON TURNOVER. 3.I ERRED IN NOT APPRECIATING THE FACT THAT THE COM PARABLE COMPANIES DO NOT BEAR ANY IDLE COSTS IN TERMS OF EX CESS STAFF CAPACITY COSTS WHEREAS THE ASSESSEE COMPANY INCURS SIGNIFICANT IDLE EMPLOYEE COST. 3.J ERRED IN NOT EXCLUDING THE FOREIGN EXCHANGE LOS S OF RS.90,93,482J - FROM THE OPERATING COST, AS SUCH LO SS HAS NOT BEEN INCURRED DURING NORMAL COURSE OF BUSINESS AND SAME CANNOT BE CONSIDERED AS OPERATING IN NATURE. 3.K ERRED IN NOT EXCLUDING THE EXPENDITURE OF DONAT ION OF RS.10,50,000JFROM THE OPERATING COST AS SAME CANNOT BE CONSIDERED AS OPERATING IN NATURE. 4. ERRED IN REJECTING THE TP DOCUMENTATION, SEARCH PROCESS, FILTERS, COMPARABILITY ANALYSIS IMPLEMENTED BY THE ASSESSEE IN ACCORDANCE WITH THE PROVISIONS OF SECTION 92C AND R ULE 10D OF IT, RULES. 5. ERRED IN ELIMINATING THE FOLLOWING COMPANY WHICH IS NOT OBJECTED BY THE ASSESSEE FROM THE FINAL SET OF COMP ARABLES SELECTED BY THE TPO: 1. AKSHAY SOFTWARE TECHNOLOGIES LTD ITA NO 279 OF 2016 PLANET ONLINE PVT LTD HYDERABAD. PAGE 4 OF 10 5.A OUGHT TO HAVE FOLLOWED THE PROVISIONS OF SECTI ON 144C(11) OF THE ACT IN PROVIDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE REJECTING AKSHAY SOFTWARE TECHNOLOG IES LTD AS THE COMPARABLE TO THE ASSESSEE COMPANY. 5.B OUGHT TO HAVE APPRECIATED THE FACT THAT AKSHAY SOFTWARE TECHNOLOGIES LTD HAS BEEN CONSIDERED AS A COMPARABL E TO THE ASSESSEE COMPANY IN EARLIER YEARS BY THE TPO AS WEL L AS BY THE ASSESSEE COMPANY IN ITS COMPARABILITY ANALYSIS. 6. ERRED IN NOT ELIMINATING THE FOLLOWING COMPANIES FROM THE FINAL SET OF COMPARABLES SELECTED BY THE TPO: 1. PERSISTENT SYSTEMS & SOLUTIONS LTD 2. PERSISTENT SYSTEMS LTD 3. SASKEN COMMUNICATION TECHNOLOGIES LTD 6.A OUGHT TO HAVE APPRECIATED THE FACT THAT, IN THE ASSESSEES OWN CASE FOR THE A.Y 2009-10, THE HON'BLE ITAT HYDE RABAD VIDE ORDER IN ITA NO.464 & 608/HYD/2014 DATED 30.01.2015 , HAS EXCLUDED THE FOLLOWING COMPARABLES WITH ACCOMPANIES REASONS WHICH HOLDS GOOD EVEN FOR THE YEAR UNDER CONSIDERAT ION. COMPANY NAME REASON FOR REJECTION PERSISTENT SYSTEMS LTD ENGAGED IN PRODUCT DEVELOPMENT& PRODUCT DESIGN SERVICES; SEGMENT DATA IS NOT AVAILABLE. SASKEN COMMUNICATION SEGMENT DATA IS NOT TECHNOLOGIES LTD AVAILABLE. 6.B OUGHT TO HAVE APPRECIATED THE FACT THAT THE ABO VE 3 COMPARABLES CANNOT BE CONSIDERED AS COMPARABLES DUE TO THE FOLLOWING REASONS:- ~ FUNCTIONALLY DISSIMILAR ~ ENGAGED IN RENDERING OF SOFTWARE PRODUCT SERVICES ~ SEGMENTAL DETAILS NOT AVAILABLE IN THE ANNUAL REP ORT ~ HIGH TURNOVER EXCEEDING 200 CRORES ~ HIGH BRAND VALUE 6.C ERRED IN CALCULATING THE OPERATING MARGIN OF PE RSISTENT SYSTEMS LTD AT 26.68% BY CONSIDERING THE MISCELLANE OUS INCOME OF RS.11.51 MILLION AS PART OF OPERATING INC OME. 7. ERRED IN CALCULATING ADJUSTED ARM'S LENGTH MARGI N (ALM) OF COMPARABLE COMPANIES AT 22.75% (ALM AT 20.81 % - WC A AT (- )1.94%). 7.A OUGHT TO HAVE APPRECIATED THE FACT THAT THE TRA NSACTION ENTERED INTO BY THE ASSESSEE IS WITHIN THE ARM'S LE NGTH PRICE AND NO NEGATIVE WORKING CAPITAL ADJUSTMENT IS WARRA NTED. 7.B ERRED IN MAKING THE ADJUSTMENT TOWARDS WORKING CAPITAL OF (-) 1.94% WITHOUT APPRECIATING THE FACT THAT THE AS SESSEE HAS ITA NO 279 OF 2016 PLANET ONLINE PVT LTD HYDERABAD. PAGE 5 OF 10 INCURRED INTEREST EXPENDITURE OF RS. 29,02,092/ - W HICH IS 0.71 % ON OPERATING INCOME. 8. ERRED IN NOT GIVING THE RISK ADJUSTMENT TO THE A SSESSEE COMPANY WITHOUT APPRECIATING THE FACT THAT ASSESSEE COMPANY IS HAVING LOW RISK IN THE MARKET. 8.A OUGHT TO HAVE APPRECIATED THAT THE ASSESSEE ASS UMES LIMITED RISK, BEING A CAPTIVE SERVICE PROVIDER IN C OMPARISON TO FULL - FLEDGED RISK BEARING COMPARABLE COMPANIES. 8.B OUGHT TO HAVE APPRECIATED THAT AS PER RULE 10B (L)(E)(III) OF THE IT RULES, AN ADJUSTMENT SHOULD BE MADE TO THE P ROFIT MARGIN OF INDEPENDENT COMPARABLE COMPANIES TO TAKE INTO AC COUNT THE DIFFERENCES IN FUNCTIONS AND RISKS. 8.C OUGHT TO HAVE APPRECIATED THAT THE CENTRAL BOAR D FOR DIRECT TAXES, HAS ISSUED INSTRUCTION NO. 5/2011 DATED 5 MA RCH 2011 DIRECTING THE TAX AUTHORITIES TO TAKE THE OPINION O F TECHNICAL EXPERTS IN CASES INVOLVING COMPLEX TECHNICAL ISSUES . HENCE, THE TPO/AO OUGHT TO HAVE QUANTIFIED THE RISKS IN CONSUL TATION OF THE TECHNICAL EXPERTS. 9. ERRED IN NOT GIVING THE BENEFIT OF +/-5%, AS PRO VIDED UNDER FIRST PROVISO TO SECTION 92C(2) OF THE ACT. 10. ERRED IN CONFIRMING THE DISALLOWANCE OF THE CLA IM OF ASSESSEE COMPANY U/ S 80G OF THE ACT AMOUNTING TO R S. 1,12,790/-. 11. ERRED IN CONFIRMING THE DISALLOWANCE OF THE DED UCTION CLAIMED BY THE ASSESSEE COMPANY U/ S 10AA OF THE AC T FOR RS. 61,644/-. 11.A OUGHT TO HAVE APPRECIATED THE FACT THAT PROFIT FROM SEZ UNIT IS ALLOWABLE U/ S 10AA OF THE ACT. 11.B OUGHT TO HAVE APPRECIATED THAT THE CLAIM U/S 1 0AA IS BEING ALLOWED BY THE DEPARTMENT FOR THE EARLIER YEA RS. 12. ERRED IN INITIATING PENALTY PROCEEDINGS U/ S. 2 71G AND 271(1)(C) OF THE INCOME TAX ACT. 13. THE ASSESSEE MAY ADD, ALTER OR MODIFY ANY OTHER POINT TO THE GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2. THEREAFTER, THE ASSESSEE FILED THE PRECISE GROUN DS OF APPEAL AND ALSO THE ADDITIONAL GROUNDS OF APPEAL. H OWEVER, AT THE ITA NO 279 OF 2016 PLANET ONLINE PVT LTD HYDERABAD. PAGE 6 OF 10 TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT HE IS NOT PRESSING THE ADDITIONAL GROUNDS OF A PPEAL AS THEY ARE ALREADY PART OF THE ORIGINAL GROUNDS OF APPEAL. HE SUBMITTED THAT THE ASSESSEE IS ONLY PRESSING GROUNDS 3.A, 3.H AND 11 AND THE REMAINING GROUNDS ARE NOT PRESSED. THEREFORE, T HOSE GROUNDS ARE REJECTED AS NOT PRESSED. 3. BRIEF FACTS RELATING TO THE ISSUES BEFORE US ARE THAT THE ASSESSEE COMPANY, PROVIDES A RANGE OF SOFTWARE DEVE LOPMENT SERVICES TO ITS AES TO ENABLE THEM TO UPGRADE/ENHAN CE SPECIFIC SOFTWARE SOLUTIONS, WHICH INCLUDES PREPARATION OF F UNCTIONAL SPECIFICATION DOCUMENTS, PREPARATION OF TECHNICAL D ESIGNS, CODING, TESTING ETC., AND THE AE IS PROVIDING SOLUTIONS REL ATING TO THE INSURANCE AND FINANCIAL INDUSTRY. THE ASSESSEE IS A WHOLLY OWNED SUBSIDIARY OF PLANET SOFT INC. USA. IT HAD ENTERED INTO INTERNATIONAL TRANSACTION OF PROVIDING SOFTWARE DEV ELOPMENT SERVICES TO THE AES AND AFTER THE ECONOMIC ANALYSIS , HAS ARRIVED AT THE PROFIT MARGIN OF 15.96% AS AGAINST THE MARGIN O F THE COMPARABLES AT 14.48% AND THUS, TREATED THE TRANSAC TION TO BE AT ARMS LENGTH. 4. SINCE THE ASSESSEE HAS ENTERED INTO INTERNATIONA L TRANSACTIONS WITH ITS AE, THE AO REFERRED THE DETER MINATION OF THE ALP OF THE TRANSACTIONS TO THE TPO. THE TPO OBSERVE D THAT THE SEARCH PROCESS UNDERTAKEN BY THE ASSESSEE IS NOT IN CONFORMITY WITH THE TP RECOMMENDATIONS AND ALSO THAT THE CHOIC E OF FILTERS HAS RESULTED IN INAPPROPRIATE COMPARABLES. THEREFOR E, HE REJECTED THE TP DOCUMENTATION OF THE ASSESSEE AND CONDUCTED AN ITA NO 279 OF 2016 PLANET ONLINE PVT LTD HYDERABAD. PAGE 7 OF 10 INDEPENDENT ANALYSIS BY AGGREGATING ALL THE TRANSAC TIONS UNDER THE TNNM. THEREAFTER, THE TPO PROPOSED 19 COMPANIES AS COMPARABLE TO THE ASSESSEE. THE ASSESSEE FILED ITS OBJECTIONS, BUT THE TPO REJECTED THE SAME AND AFTER ALLOWING THE WO RKING CAPITAL ADJUSTMENT HAS ARRIVED AT 18 COMPANIES AS COMPARABL ES AND THEREFORE, THEIR AVERAGE MARGIN TO BE AT 22.75%. HE ACCORDINGLY PROPOSED THE ADJUSTMENT U/S 92CA(3) OF THE ACT. THE AO PROPOSED THE DRAFT ASSESSMENT ORDER IN ACCORDANCE W ITH THE TP ORDERS. AGGRIEVED, THE ASSESSEE PREFERRED ITS OBJEC TIONS BEFORE THE DRP. THE DRP PARTIALLY ACCEPTED THE ASSESSEES CONT ENTIONS AND THE FINAL ASSESSMENT ORDER WAS PASSED, AGAINST WHIC H, THE ASSESSEE IS IN APPEAL BEFORE US. 5. GROUND NO.3A IS AGAINST THE NON-RECALCULATION OF THE OPERATING COST OF THE ASSESSEE COMPANY AS PER THE D IRECTIONS OF THE HON'BLE DRP ISSUED ON 29.9.2015 TO KEEP THE DEF ERRED REVENUE EXPENDITURE AND FINANCE COST OUT OF THE COM PUTATION OF MARGIN. WE FIND THAT THOUGH THE DRP HAS GIVEN A DIR ECTION, THE AO HAS NOT CALCULATED THE MARGIN IN ACCORDANCE WITH THE DIRECTIONS OF THE DRP. WE THEREFORE, REMAND THIS IS SUE TO THE FILE OF THE AO WITH A DIRECTION TO RE-COMPUTE THE OPERAT ING COST OF THE ASSESSEE IN ACCORDANCE WITH THE DIRECTIONS OF THE D RP. GROUND NO.3.A IS ACCORDINGLY TREATED AS ALLOWED FOR STATIS TICAL PURPOSES. 6. AS FAR AS GROUND NO.3H IS CONCERNED, IT IS THE C ASE OF THE ASSESSEE THAT THE EMPLOYEE COST OF THE ASSESSEE IS 76% AS COMPARED TO THE EMPLOYEE COST OF THE 3 COMPARABLES RETAINED BY THE DRP BEING 58% OF THE TURNOVER. HE SUBMITTED THA T THE ITA NO 279 OF 2016 PLANET ONLINE PVT LTD HYDERABAD. PAGE 8 OF 10 COMPARABLE COMPANIES DID NOT BEAR ANY IDLE COST IN TERMS OF EXCESS STAFF, WHEREAS THE ASSESSEE COMPANY HAS BORN E SIGNIFICANT IDLE EMPLOYEE COST. THEREFORE, HE PRAYED THAT FOR T HE PURPOSE OF COMPUTING THE ALP, THE DISPARITY IN THE EMPLOYEES C OST MARGIN SHOULD BE TAKEN NOTE OF AND PROPER ADJUSTMENTS SHOU LD BE MADE. 7. THE LEARNED DR WAS ALSO HEARD. 8. ON GOING THROUGH THE MATERIAL ON RECORD AND HAVI NG REGARD TO THE RIVAL CONTENTIONS, WE FIND THAT THE D RP HAS RETAINED PERSISTENT SYSTEMS & SOLUTIONS LTD, PERSISTENT SYST EMS LTD AND SASKEN COMMUNICATION TECHNOLOGIES LTD AS COMPARABLE S AND THE AVERAGE RATIO OF THE EMPLOYEE COST TO SALES OF THES E THREE COMPANIES IS 58% AS AGAINST THE EMPLOYEE COST OF TH E ASSESSEE AT 76% AND THE DIFFERENCE IS 18%. THIS DIFFERENCE IS N OT NEGLIGIBLE TO BE IGNORED. EVERY DIFFERENCE WHICH IS LIKELY TO AFF ECT THE COMPARABILITY ANALYSIS HAS TO BE TAKEN NOTE OF AND SUITABLE ADJUSTMENT HAS TO BE MADE TO BRING THE COMPARABLES ON PAR WITH THE ASSESSEE FOR COMPARING OF THEIR OPERATING MARGI N. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPER TO REMIT THIS I SSUE ALSO TO THE FILE OF THE AO WITH A DIRECTION TO MAKE SUITABLE AD JUSTMENT TO THE EMPLOYEE COST OF THE ASSESSEE IF THERE IS ANY UNDER UTILIZATION OF EMPLOYEES AVAILABLE WITH THE ASSESSEE AND THEREAFTE R RE-COMPUTE THE OPERATING MARGIN OF THE COMPARABLES FOR ARRIVIN G AT THEIR AVERAGE MARGIN. GROUND OF APPEAL NO.3H IS ACCORDING LY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA NO 279 OF 2016 PLANET ONLINE PVT LTD HYDERABAD. PAGE 9 OF 10 9. REGARDING GROUND NO.10, ASSESSEE SUBMITTED THAT THE ASSESSEE DOES NOT WISH TO PRESS THE SAME AND THEREF ORE, IT IS REJECTED AS NOT PRESSED. 10. AS REGARDS GROUND NO.11, WE FIND THAT THE AO HA S DISALLOWED THE DEDUCTION U/S 10A OF THE ACT ON THE GROUND THAT THE ASSESSEE HAS NOT SUBMITTED THE EVIDENCES/RECEIP TS IN SUPPORT OF THE CLAIM OF DEDUCTION U/S 10AA OF THE ACT. AT T HE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE HAS D RAWN OUR ATTENTION TO THE ASSESSEES PETITION FILED BEFORE T HE TRIBUNAL SEEKING ADMISSION OF THE ADDITIONAL EVIDENCE BEING FORM NO.56F IN SUPPORT OF THE CLAIM AND SOUGHT ADMISSION OF THE SAME. SINCE THESE DOCUMENTS GOES TO THE ROOT OF THE MATTER, WE DEEM IT FIT AND PROPER TO REMAND THIS ISSUE TO THE FILE OF THE AO F OR VERIFICATION OF THE DOCUMENTS AND CONSIDER THE ALLOWABILITY OF DEDU CTION U/S 10AA OF THE ACT ON THE BASIS OF SUCH DOCUMENTS. 11. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JULY, 2018. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 18 TH JULY 2018. VINODAN/SPS ITA NO 279 OF 2016 PLANET ONLINE PVT LTD HYDERABAD. PAGE 10 OF 10 COPY TO: 1 P. MURALI & CO. CAS, 6-3-655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 500082 2 ASSTT. CIT, CIRCLE 16(2) HYDERABAD 3 DY.CIT (TP)-II, 3 RD FLOOR, D BLOCK, IT TOWERS, AC GUARDS, HYDERABAD 500004 4 PR. CIT - HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER