Appeal Details
Counselvise Citation
[2016] 133 COUNSELVISE.COM (IT) 0467 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
3 year(s) 1 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
22-04-2016
Appeal Filed By
Department
Order Result
Partly Allowed
Bench Allotted
A
Next Hearing Date
18-04-2016
Assessment Year
2008-2009
Appeal Filed On
06-03-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER IT(TP)A NO.227/BANG/2013 ASSESSMENT YEAR : 2008-09 M/S. ELECTRONICS FOR IMAGING INDIA PVT. LTD., KALYANI PLATINA, 4 TH FLOOR, BLOCK-I, 24 EPIP ZONE, PHASE II, WHITEFIELD, BANGALORE 560 066. PAN: AAACG 6053E VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 11(3), BANGALORE. APPELLANT RESPONDENT IT(TP)A NO.285/BANG/2013 ASSESSMENT YEAR : 2008-09 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 11(3), BANGALORE. VS. M/S. ELECTRONICS FOR IMAGING INDIA PVT. LTD., WHITEFIELD, BANGALORE 560 066. PAN: AAACG 6053E APPELLANT RESPONDENT ASSESSEE BY : SHRI PADAMCHAND KHINCHA, CA REVENUE BY : DR. P.K. SRIHARI, ADDL. CIT (DR) DATE OF HEARING : 18.04.2016 DATE OF PRONOUNCEMENT : 22.04.2016 O R D E R PER A.K. GARODIA, ACCOUNTANT MEMBER THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE WHICH ARE DIRECTED AGAINST THE ORDER OF LD. CIT (APPEALS)-IV BANGALORE DATED 18.12.2012 FOR THE ASSESSMENT YEAR 2008-09. IT(TP)A NO.227 & 285/BANG/2013 PAGE 2 OF 40 2. THE GROUNDS RAISED BY THE ASSESSEE IN ITS APPEAL ARE AS UNDER:- GROUNDS RELATING TO LEGAL ISSUES 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - IV TO THE EXTENT PREJUDICIAL TO THE APPELLANT IS BAD IN LAW. 2. THE LEARNED ASSESSING OFFICER HAS ERRED IN MAKING A REFERENCE TO TRANSFER PRICING OFFICER FOR DETERMINING ARM'S LENGTH PRICE WITHOUT DEMONSTRATING AS TO WHY IT WAS NECESSARY AND EXPEDIENT TO DO SO. THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS) - IV HAS ERRED IN CONFIRMING T HE ACTION OF THE ASSESSING OFFICER. 3. THE LEARNED ASSESSING OFFICER, LEARNED TRANSFER PRI CING OFFICER AND COMMISSIONER OF INCOME TAX (APPEALS) - IV HAVE ERRE D IN A. PASSING THE ORDERS IN THE MANNER PASSED BY THEM. THE ORDERS BEING BAD IN LAW ARE LIABLE TO BE QUASHED. B. PASSING THE ORDER WITHOUT DEMONSTRATING THAT APP ELLANT HAD MOTIVE OF TAX EVASION. C. NOT APPRECIATING THAT THE CHARGING OR COMPUTATIO N PROVISION RELATING TO INCOME UNDER THE HEAD 'PROFITS & GAINS OF BUSINESS OR PROFESSION' DO NOT REFER TO OR INCLUDE THE AMOUNTS COMPUTED UNDER CHAPTER X AND THEREFORE ADDITION MADE UNDER CHAPTER X IS BAD IN L AW. D. ADOPTING A FLAWED PROCESS FOR ISSUING NOTICES U/ S 133(6) AND RELYING ON THE SAME WITHOUT PROVIDING COMPLETE INFORMATION OR AN OPPORTUNITY TO CROSS EXAMINE THE COMPANIES CONCERNED. GROUNDS ON COMPARABLES AND REJECTION OF TP ANALYSIS OF THE APPELLANT 4. THE LEARNED ASSESSING OFFICER, LEARNED TRANSFER PRI CING OFFICER AND COMMISSIONER OF INCOME TAX (APPEALS) - IV HAVE ERRE D IN A. COMPUTING THE ARM'S LENGTH PRICE BASED ON THE DA TA FOR THE FINANCIAL YEAR 2007-08 OF THE COMPARABLES, WHICH WAS NOT AVAILABLE WHEN THE APPELLANT UNDERTOOK TRANSFER PRICING DOCUMENTATION AND REPORT ING OBLIGATIONS; B. REJECTING THE COMPARABLES SELECTED BY THE APPELL ANT ON UNJUSTIFIABLE GROUNDS; C. REJECTING THE ADDITIONAL COMPARABLES PROPOSED B Y THE APPELLANT ON UNJUSTIFIABLE GROUNDS; AND IT(TP)A NO.227 & 285/BANG/2013 PAGE 3 OF 40 D. REJECTING THE TRANSFER PRICING ANALYSIS UNDERTAK EN BY THE APPELLANT ON UNJUSTIFIABLE GROUNDS. GROUNDS RELATING TO TP ANALYSIS OF THE TPO 5. THE LEARNED ASSESSING OFFICER, LEARNED TRANSFER PRICING OFFICER AND COMMISSIONER OF INCOME TAX (APPEALS) - IV HAVE ERRE D IN: A. PERFORMING FRESH TRANSFER PRICING ANALYSIS AND ADOPTING INAPPROPRIATE FILTERS IN DOING FRESH TRANSFER PRICING ANALYSIS. B. ADOPTING COMPANIES AS COMPARABLES EVEN THOUGH T HEY ARE NOT COMPARABLE TO THE APPELLANT. C. INAPPROPRIATELY COMPUTING THE OPERATING MARGINS OF COMPARABLES AND THE APPELLANT. D. NOT APPRECIATING THAT THE LAW DOES NOT COMPEL A DOPTING MANY (OR ANY MINIMUM) COMPANIES AS COMPARABLES AND THAT THE APPE LLANT COULD JUSTIFY THE PRICE PAID/CHARGED ON THE BASIS OF ANY ONE COMP ARABLE ONLY. E. NOT MAKING PROPER ADJUSTMENT FOR ENTERPRISE LEV EL AND TRANSACTIONAL LEVEL DIFFERENCES BETWEEN THE APPELLANT AND THE COMPARABL E COMPANIES, INCLUDING THE DIFFERENCES IN FUNCTIONS PERFORMED, A SSETS EMPLOYED AND RISKS UNDERTAKEN. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) - IV HAS ERRED IN A. CONFIRMING COMPANIES SELECTED BY THE TPO AS COM PARABLES IGNORING THE SUBMISSIONS OF THE APPELLANT. B. NOT APPROPRIATELY COMPUTING THE WORKING CAPITAL ADJUSTMENT. 7. THE LEARNED ASSESSING OFFICER, LEARNED TRANSFER PRICING OFFICER AND COMMISSIONER OF INCOME TAX (APPEALS) - IV HAVE ERRE D IN NOT ALLOWING THE BENEFIT OF THE +/- 5% RANGE PRESCRIBED IN THE PROVI SO TO SECTION 92C(2). 8. THE LEARNED ASSESSING OFFICER HAS ERRED IN LEVYI NG INTEREST UNDER SECTION 234B AND 234D OF THE INCOME TAX ACT, 1961. ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND LAW APPLICABLE, INTEREST UNDER SECTION 234B AND 234D IS NOT LEVIABLE. THE APPELLANT DENIES ITS LIABILITY TO PAY INTEREST UNDER SECTION 234B AND 234D. PRAYER 9. ON AN OVERALL CONSIDERATION OF THE FACTS OF THE CASE, AND THE LAW APPLICABLE: A. THE ALP AS DETERMINED BY THE TRANSFER PRICING OF FICER, AS ADOPTED BY THE ASSESSING OFFICER AND AS CONFIRMED BY THE CIT(A ), TO THE EXTENT IT(TP)A NO.227 & 285/BANG/2013 PAGE 4 OF 40 PREJUDICIAL TO THE APPELLANT, BEING NOT CORRECT IS TO BE QUASHED AND THE FIGURES AS DETERMINED AND RETURNED BY THE APPELLANT BEING CORRECT ARE TO BE ACCEPTED. B. INTEREST UNDER SECTION 234B AND 234D BE DELETED. THE APPELLANT SUBMITS THAT EACH OF THE ABOVE GROUND S/ SUB-GROUNDS ARE INDEPENDENT AND WITHOUT PREJUDICE TO ONE ANOTHER. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, VARY, OMI T, SUBSTITUTE OR AMEND THE ABOVE GROUNDS OF APPEAL, AT ANY TIME BEFORE OR AT, THE TI ME OF HEARING, OF THE APPEAL, SO AS TO ENABLE THE INCOME-TAX APPELLATE TRIBUNAL TO D ECIDE THE APPEALS ACCORDING TO LAW. THE APPELLANT PRAYS ACCORDINGLY. 3. THE GROUNDS RAISED BY THE REVENUE IN ITS APPEAL ARE AS UNDER:- 1. THE ORDER OF THE LEARNED CIT (APPEALS), IN SO F AR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, IS OPPOSED TO LAW AND T HE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE SIZ E AND TURNOVER OF THE COMPANY ARE DECIDING FACTORS FOR TREATING A COM PANY AS A COMPARABLE AND ACCORDINGLY ERRED IN EXCLUDING M/S. FLEXTRONICS LTD., IGATE GLOBAL SOLUTIONS LTD., INFOSYS TECHNOLOGIES LTD., MINDTREE LTD., PERSISTENT SYSTEMS LTD., SASKEN COMMUNICATION TECHNOLOGIES LTD ., TATA ELXSI LTD. AND WIPRO LTD. AS COMPARABLES. 3. THE LEARNED CIT (A), ON THE FACTS AND IN THE CIR CUMSTANCES OF THE CASE, ERRED IN HOLDING THAT THE COMPANY VGL SOFTECH LTD SHOULD BE CONSIDERED AS A COMPARABLE IN THE CASE OF THE TAXPA YER WHEN THE TAXPAYER ITSELF HAS NOT SELECTED THE COMPANY AS AN UNCONTROL LED COMPARABLE. 4. THE LEARNED CIT (A) ERRED IN HOLDING THAT M/S AVANI CINCOM TECHNOLOGIES, CANNOT BE TAKEN AS A COMPARABLE AS SE GMENTAL COMPARABLE WITHOUT APPRECIATING THE FACT THAT THE COMPANY OPER ATES IN ONLY ONE SEGMENT. 5. THE LEARNED CIT (A) ERRED IN HOLDING THAT M/S. CELESTIAL BIOLABS LTD BEING FUNCTIONALLY DIFFERENT, CANNOT BE TAKEN AS A COMPARABLE. 6. THE LEARNED CIT (A) ERRED IN ARRIVING AT THE CON CLUSION THAT M/S. KALS INFORMATION SYSTEMS LTD. HAD NET MARGIN ON COS T OF 30.92% AS AGAINST 41.94% COMPUTED BY THE TPO. IT(TP)A NO.227 & 285/BANG/2013 PAGE 5 OF 40 7. THE LEARNED CIT (A) WAS NOT JUSTIFIED IN DIRECTI NG THAT THE FINAL SET OF 11 COMPANIES RETAINED BY HIM SHOULD BE CONSIDERE D AS COMPARABLES FOR DETERMINATION OF THE AVERAGE MARGIN OF COMPARABLES. 8. THE LEARNED CIT (A) ERRED IN NOT CONSIDERING THE ENTIRE SET OF TPOS COMPARABLES IN TOTO. 9. THE LEARNED CIT (A) ERRED IN NOT APPRECIATING TH AT A PIECEMEAL APPROACH NEGATES THE WHOLE CONCEPT OF COMPARABILITY ANALYSIS. 10. THE LEARNED CIT (A) ERRED IN NOT APPRECIATING T HAT ANY DISTURBANCE IN ANY ONE OF THE CRITERIA OF THE TAX PAYER OR THE TPO RESULTS IN FRESH COMPARABILITY ANALYSIS. 11. THE LEARNED CIT (A) ERRED IN DIRECTING THE AO T O EXCLUDE FROM THE TOTAL TURNOVER THE LEASELINE CHARGES OF RS 6,41,835 AND FOREIGN EXCHANGE LOSS OF RS 45,97,211 ATTRIBUTABLE TO DELIVERY OF TH E PRODUCT OR SOFTWARE OUTSIDE INDIA, EXCLUDED FROM EXPORT TURNOVER BY THE AO AND ACCORDINGLY MODIFY THE COMPUTATION OF RELIEF ALLOWABLE UNDER SE CTION 10A. 12. THE CIT(A) ERRED IN NOT APPRECIATING THAT THERE IS NO PROVISION IN THE ACT WHICH REQUIRES THE CONCERNED EXPENSES WHICH ARE REQUIRED TO BE REDUCED FROM THE EXPORT TURNOVER AS PER CLAUSE (IV) OF THE EXPLANATION TO SECTION 10A TO BE REDUCED FROM THE TOTAL TURNOVER. 13. 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 CIT (A) BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 14. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AMEND OR TO DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEA RING OF THE APPEAL. 4. AT THE OUTSET, IT WAS SUBMITTED BY THE LD. AR OF ASSESSEE THAT AS PER TRIBUNALS ORDER RENDERED IN THE CASE OF KODIAK NETWORKS INDIA PVT. LTD. V. DCIT IN IT(TP)A NO.1540/BANG/2012 DATED 05.06.2015 FOR THE SAME ASSESSMENT YEAR (COPY AVAILABLE AT PAGES 236 TO 290 OF PB), THE TRIBUNAL HAS DECIDE D SIMILAR ISSUE UNDER SIMILAR FACTS IN FAVOUR OF THE ASSESSEE, BY FOLLOWING VARIOUS OTH ER TRIBUNALS ORDERS AND IT WAS HELD BY THE TRIBUNAL IN THAT CASE THAT OUT OF SAME 20 COMPARABLES CONSIDERED BY THE TPO/AO IN THAT CASE AS IN THE PRESENT CASE, 12 COMP ARABLES NOTED IN PARA NO.25 OF THAT TRIBUNALS ORDER ARE TO BE EXCLUDED. IT WAS FURTHER SUBMITTED THAT AFTER THESE 12 IT(TP)A NO.227 & 285/BANG/2013 PAGE 6 OF 40 COMPARABLES ARE EXCLUDED IN THE PRESENT CASE, THE A VERAGE ARMS LENGTH MARGIN ON THE BASIS OF REMAINING 8 COMPARABLES COMES TO 14.35 % AND AFTER ADJUSTMENT OF WORKING CAPITAL MARGIN, IT GOES FURTHER DOWN TO 13. 86% AS AGAINST MARGIN REPORTED BY ASSESSEE OF 9.60% BEING OPERATING PROFIT/OPERATING COST OF THE ASSESSEE AND THEREFORE, THE SAME IS WITHIN +/- 5% RANGE AND HENC E, NO TP ADJUSTMENT IS CALLED FOR U/S. 92CA OF THE ACT. 5. THE LD. AR OF THE ASSESSEE HAS ALSO SUBMITTED TH AT ADDITIONAL GROUNDS ARE ALSO RAISED BY THE ASSESSEE WHICH ARE AS UNDER:- 1. THE LOWER AUTHORITIES HAVE ERRED IN SELECTING Q UINTEGRA SOLUTIONS LTD., E-ZEST SOLUTIONS LTD., THIRDWARE SOLUTIONS LTD., AN D LUCID SOFTWARE LTD. AS COMPARABLES DESPITE THEM BEING FUNCTIONALLY DIFFERENT FROM THE APPELLANT. 2. THE LOWER AUTHORITIES HAVE ERRED IN SELECTING SO FT SOL LTD. AS COMPARABLE DESPITE IT FAILING 15% RPT FILTER. 3. THE CIT (A) HAS ERRED IN REJECTING INDIUM SOFTWA RE LTD. AS A COMPARABLE ON THE GROUND IT IS LOSS MAKING. 6. REGARDING ADDITIONAL GROUNDS, IT IS SUBMITTED TH AT GROUND NOS.1 AND 2 OF THE ADDITIONAL GROUNDS ARE COVERED IN FAVOUR OF ASSESSE E BY THE SAME TRIBUNALS ORDER IN THE CASE OF KODIAK NETWORKS INDIA PVT. LTD. V. DCIT (SUPRA) . 7. REGARDING GROUND NO.3 OF ADDITIONAL GROUNDS, THE LD. AR OF ASSESSEE MADE VARIOUS ARGUMENTS FOR INCLUSION OF ONE MORE COMPARA BLE I.E., INDIUM SOFTWARE INDIA LTD. BUT AT THIS POINT, IT WAS POINTED OUT BY THE B ENCH THAT INCLUSION OF THIS COMPARABLE IN THE FACTS OF THE PRESENT CASE IS OF A CADEMIC INTEREST ONLY BECAUSE EVEN WITHOUT INCLUDING THIS COMPARABLE ALSO, THE AR MS LENGTH MARGIN IS ONLY 13.86% AS AGAINST 9.6% REPORTED BY THE ASSESSEE AND THE SA ME IS WITHIN +/- 5% RANGE AND THEREFORE, INCLUSION OR NON-INCLUSION OF THIS COMPA RABLE I.E., INDIUM SOFTWARE INDIA IT(TP)A NO.227 & 285/BANG/2013 PAGE 7 OF 40 LTD. HAVING MARGIN OF (-) 2.30% IS OF ACADEMIC INTE REST ONLY. IN REPLY, THE LD. AR OF ASSESSEE HAD NOTHING TO SAY. 8. THE LD. DR OF THE REVENUE SUPPORTED THE ASSESSME NT ORDER AND TPOS ORDER TOWARDS HIS SUBMISSION THAT THE REASONING AND BASIS GIVEN BY THE LD. CIT (APPEALS) FOR EXCLUSION OF SOME COMPARABLES AND INCLUSION OF ONE COMPARABLE I.E., VGL SOFTECH LTD. ARE DIFFERENT THAN THE BASIS AND REASO NING GIVEN BY THE TRIBUNAL IN THE CASE OF KODIAK NETWORKS INDIA PVT. LTD. V. DCIT (SUPRA) AND THEREFORE, THE MATTER MAY BE RESTORED TO THE FILE OF AO/TPO FOR FRESH DEC ISION. 9. REGARDING GROUND NO.6 RAISED BY THE REVENUE, IT IS SUBMITTED BY THE LD. DR OF THE REVENUE THAT THE WORKING OF CIT (APPEALS) REGAR DING NET MARGIN OF THE COMPARABLE I.E., KALS INFORMATION SYSTEMS LTD. AT 3 0.92% AS AGAINST 41.94% COMPUTED BY THE TPO IS NOT CORRECT. AT THIS JUNCTUR E, IT WAS POINTED OUT BY THE BENCH THAT AS PER THE TRIBUNALS ORDER IN THE CASE OF KODIAK NETWORKS INDIA PVT. LTD. V. DCIT (SUPRA) , WHEN THIS COMPARABLE I.E., KALS INFORMATION SYSTE MS LTD. HAS TO BE EXCLUDED, THEN THE PERCENTAGE OF MARGIN OF THAT COM PARABLE IS NOT RELEVANT AND THE SAME IS OF ACADEMIC INTEREST ONLY. IN REPLY, THE L D. DR OF REVENUE HAD NOTHING TO SAY. 10. REGARDING GROUND NOS. 11 & 12 OF THE REVENUES APPEAL, IT WAS SUBMITTED BY THE LD. DR OF REVENUE THAT LEASE LINE CHARGES OF RS . 6,41,835 AND FOREIGN EXCHANGE LOSS OF RS. 45,97,211 ATTRIBUTABLE TO DELIVERY OF THE PRODUCT O R SOFTWARE OUTSIDE INDIA SHOULD NOT BE EXCLUDED FROM TOTAL TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION U/S. 10A OF THE I.T. ACT. IT(TP)A NO.227 & 285/BANG/2013 PAGE 8 OF 40 11. IN THE REJOINDER, IT WAS SUBMITTED BY THE LD. A R OF ASSESSEE THAT AS PER JUDGMENT OF HONBLE HIGH COURT OF KARNATAKA RENDERE D IN THE CASE OF CIT V. TATA ELXSI LTD., 349 ITR 98 (KARN) , TOTAL TURNOVER IS SUM TOTAL OF EXPORT TURNOVER AN D DOMESTIC TURNOVER AND THEREFORE, IF AN ITEM IS EXCL UDED FROM EXPORT TURNOVER, TOTAL TURNOVER ALSO GOES DOWN BY THAT AMOUNT AS A CONSEQU ENCE. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT IN THE PRESENT CASE, THE TPO HAS CONSIDERED 20 COMPARABLES AND WORKED OU T THE AVERAGE MARGIN OF TOTAL 20 COMPARABLES AT 23.65% AND THEREAFTER, HE ALLOWED RELIEF ON ACCOUNT OF WORKING CAPITAL ADJUSTMENT OF 0.76% AND WORKED OUT THE ADJU STED MEAN MARGIN OF THE COMPARABLES AT 22.89%. THE FINAL SET OF THESE 20 C OMPARABLES AS PER TPO AT PARA 3.5.4 OF THE TPOS ORDER PASSED U/S. 92CA OF THE I. T. ACT IS REPRODUCED BELOW:- SL.NO. NAME OF THE COMPANY OP/TC % 1 AVANI CINCOM TECHNOLOGIES 25.62 2 BODHTREE CONSULTING LTD 18.72 3 CELESTIAL BIOLABS 87.94 4 E-ZEST SOLUTIONS LTD. 29.81 5 FLEXTRONICS (ARICENT) 7.86 6 IGATE GLOBAL SOLUTION LTD. 13.99 7 INFOSYS 40.37 8 KALS INFORMATION SYSTEMS LTD (SEG) 41.94 9 LGS GLOBAL LTD. 27.52 10 MINDTREE LTD (SEG) 16.41 11 PERSISTENT SYSTEMS LTD. 20.31 12 QUINTEGRA SOLUTION LTD. 21.74 13 R SYSTEMS INTERNATIONAL (SEG) 15.30 14 R S SOFTWARE (INDIA) LTD. 7.41 15 SASKEN COMMUNICATIONTECHNOLOGIES LTD. (SEG) 7.58 16 TATA ELXSI (SEG) 18.97 17 THIRDWARE SOLUTION LTD. 19.35 18 WIPRO LTD. (SEG) 28.45 19 SOFTSOL INDIA LTD. 17.89 20 LUCID SOFTWARE LTD. 16.50 AVERAGE 23.65 IT(TP)A NO.227 & 285/BANG/2013 PAGE 9 OF 40 13. NOW, WE FIND THAT IN THE CASE OF KODIAK NETWORKS INDIA PVT. LTD. V. DCIT (SUPRA) ALSO, THE SAME 20 COMPARABLES WERE CONSIDERED BY T HE TPO WITH ARITHMETIC MEAN OF 23.65% AND THIS ISSUE WAS DECIDED BY THE TR IBUNAL IN THAT CASE IN FAVOUR OF ASSESSEE BY HOLDING THAT 12 COMPARABLES OUT OF THOS E 20 COMPARABLES ARE TO BE EXCLUDED FROM THE LIST OF COMPARABLES AS CONSIDERED BY THE TPO. THE RELEVANT PARA OF THIS TRIBUNALS ORDER ARE PARAS NO.17 TO 25 AVAI LABLE ON PAGES 246 TO 272 OF THE PB. THESE PARAS ARE REPRODUCED HEREINBELOW FOR REA DY REFERENCE:- 17. THE ASSESSEE HAS TAKEN GROUNDS OF APPEAL NO.9 TO 23, HOWEVER, THE ONLY EFFECTIVE AND RELEVANT GROUND IS GROUND NO.9 A ND OTHER GROUNDS ARE SUPPORTING IN NATURE WHICH ARE IN RESPECT OF TRANSF ER PRICING ADJUSTMENT. 18. THE ASSESSEE COMPANY IS A SUBSIDIARY OF KODIAN NETWORKS INC, USA (KODIAK US). THE ASSESSEE PROVIDES SOFTWARE DEV ELOPMENT AND RELATED SERVICE AND CUSTOMER SUPPORT SERVICES IN SHORT CSS OR ITES TO KODIAK US. THE ASSESSEE RENDERED THESE SERVICES E XCLUSIVELY TO ITS GROUP COMPANIES AND IS COMPENSATED ON COST PLUS MARGIN OF 10% FOR ITS SERVICES. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS REPORTED THE INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED COMPANIES (AE) WHI CH ARE AS UNDER : S.NO PARTICULARS RS. 1 RENDERING OF SOFTWARE DEVELOPMENT AND RELATED SER VICES 26,72,70,160 2 RENDERING OF CUSTOMER SUPPORT SERVICES 2,93,14,6 32 3 RENDERING OF SALES AND MARKETING SUPPORT SERVICES 3,88,437 4 IMPORT OF CAPITAL GOODS 35,91,861 5 REIMBURSEMENT OF EXPENSES RECEIVED 91,99,469 THE ASSESSEE HAS PROVIDED SERVICES TO ITS AE UNDER TWO SEGMENTS VIZ (I) SOFTWARE DEVELOPMENT & RELATED SERVICES AND (II) CUSTOMER AN D SUPPORT SERVICES BEING ITES. WE WILL FIRST TAKE UP THE ISSUE OF TRAN SFER PRICING ADJUSTMENT IN RESPECT OF INTERNATIONAL TRANSACTION OF PROVIDING S OFTWARE DEVELOPMENT SERVICES TO THE AE. THE SOFTWARE APPLICATIONS DEVELOPED BY THE ASSESSEE ARE IN THE FIELD OF TELECOM CALL PROCESSING, ELEMENT MANAGEMENT SYSTEMS AND SIGNALING PROTOCOL ADAPTION. THE ARCHITECTURE AND SPECIFICATIONS FOR THE APPLICATION ARE DEVELOPED BY THE ASSOCIATED ENTERPRISE BASED ON WHICH THE ASS ESSEE DEVELOPS THE SOFTWARE MODULES AND DELIVERS THE SAME TO THE ASSOCIATED ENT ERPRISE. THUS, THE ASSESSEE IS PROVIDING PURELY SOFTWARE DEVELOPMENT SERVICES TO I TS AE. IN ITS TRANSFER PRICE STUDY ANALYSIS THE ASSESSEE HAS BENCH MARKED ITS SE RVICES BY ADOPTING THE TRANSACTIONAL NET MARGIN METHOD (TNMM) AS MOST AP PROPRIATE METHOD WITH IT(TP)A NO.227 & 285/BANG/2013 PAGE 10 OF 40 OP/TC AS PROFIT LEVEL INDICATOR (PLI) AND SELECTED 17 COMPARABLES. THE ASSESSEE HAS COMPUTED ARITHMETIC MEAN OF THE COMPAR ABLES AT 14.76% IN COMPARISON TO THE ASSESSEES OPERATING MARGIN ON CO ST AT 10.73% AND ACCORDINGLY THE ASSESSEE CLAIMED THAT MARGIN OF THE ASSESSEE IS WITHIN 5% RANGE OF THE ARMS LENGTH PRICE (AL)/ ARITHMETIC MEAN O F THE COMPARABLES .THE TPO REJECTED 16 OUT OF 17 COMPANIES SELECTED BY T HE AS SESSEE AND CARRIED OUT FRESH SEARCH BY APPLYING THE FILTER AS UNDER : O COMPANIES WHOSE DATA IS NOT AVAILABLE FOR FY 2007-0 8 WERE EXCLUDED. O COMPANIES WHOSE SOFTWARE DEVELOPMENT SERVICE INCOME IS LESS THAN RS.1 CRORE WERE EXCLUDED. O COMPANIES WHOSE SOFTWARE DEVELOPMENT SERVICE REVENU E IS LESS THAN 75% OF THE TOTAL OPERATING REVENUES WERE EXCLUDED. O COMPANIES HAVING MORE THAN 25% RELATED PARTY TRANSA CTIONS (SALES AS WELL AS EXPENDITURE COMBINED) OF THE OPERATING REVENUES WERE EXCLUDED. O COMPANIES HAVING LESS THAN 25% OF THE REVENUE AS E XPORT SALES WERE EXCLUDED. O COMPANIES WHOSE ONSITE INCOME IS MORE THAN 75% OF T HE EXPORT REVENUES WERE EXCLUDED. O COMPANIES WHOSE EMPLOYEE COST TO REVENUES IS LESS T HAN 25% OF THE REVENUES WERE EXCLUDED. O COMPANIES WHO HAVE DIMINISHING REVENUES/PERSISTENT LOSSES FOR THE PERIOD UNDER CONSIDERATION WERE EXCLUDED. O COMPANIES HAVING DIFFERENT FINANCIAL YEAR (I.E., NO T MARCH 31, 2008) OR DATA OF THE COMPANY DOES NOT FALL WITHIN 12 MONTH P ERIOD I.E. 01-04-2007 TO 31-03-2008, WERE REJECTED. O COMPANIES THAT ARE FUNCTIONALLY DIFFERENT FROM THAT OF TAXPAYER WERE REJECTED. APPLYING THE ABOVE FILTERS, THE LEARNED TPO SELECTE D 20 COMPANIES AS COMPARABLES AND DETERMINED THE ARITHMETIC MEAN MARG IN OF THE COMPARABLES AT 23.65%. IT(TP)A NO.227 & 285/BANG/2013 PAGE 11 OF 40 S.NO. NAME OF THE COMPANY OPERATING MARGIN ON COST 1 AVANI CIMCON TECHNOLOGIES LTD 25.62% 2 BODHTREE LTD 18.72% 3 CELESTIAL BIOLABS LTD 87.94% 4 E-ZEST SOLUTIONS LTD 29.81% 5 FLEXTRONICS SOFTWARE SYSTEMS LTD 7.86% 6 IGATE GLOBAL SOLUTIONS LTD 13.99% 7 INFOSYS TECHNOLOGIES LTD 40.37% 8 KALS INFORMATION SYSTEMS LTD (SEG.) 31.29% 9 LGS GLOBAL LTD (LANCO GLOBAL SOLUTIONS LTD) 27.5 2% 10 MINDTREE LTD 16.41% 11 PERSISTENT SYSTEMS LTD 20.31% 12 QUINTEGRA SOLUTIONS LTD 21.74% 13 R SYSTEMS INTERNATIONAL LTD (SEG.) 15.30% 14 R S SOFTWARE (INDIA) LTD 7.41% 15 SASKEN COMMUNICATION TECHNOLOGIES LTD (SEG.) 7.58% 16 TATA ELXSI LTD (SEG.) 18.97% 17 THIRDWARE SOLUTIONS LTD (SEG) 19.35% 18 WIPRO LTD (SEG.) 28.45% 19 SOFTSOLE INDIA LTD 17.89% 20 LUCID SOFTWARE LTD 16.50% ARITHMETIC MEAN 23.65% ACCORDINGLY, THE TPO PROPOSED THE ADJUSTMENT IN RES PECT OF SOFTWARE DEVELOPMENT SEGMENT AT RS.3,45,24,884/- THE ASSESSE E OBJECTED THE ADJUSTMENT PROPOSED BY THE TPO BEFORE THE DRP. THE DRP CONFI RMED THE ADJUSTMENT ON ACCOUNT OF ALP OF SOFTWARE DEVELOPMENT SERVICES PR OVIDED BY THE ASSESSEE WHILE PASSING THE IMPUGNED DIRECTION. 19. BEFORE US, THE LD. AR HAS SUBMITTED THAT 12 OU T OF 20 COMPANIES CONSIDERED BY THE TPO FOR DETERMINATION OF ALP IN RESPECT O F INTERNATIONAL TRANSACTIONS FOR PROVIDING SOFTWARE DEVELOPMENT SERVICES, ARE NOT CO MPARABLE WITH THE ASSESSEE. THUS, THE LD. AR SUBMITTED THAT THESE 12 COMPANIES SHOULD BE EXCLUDED FROM THE SET OF COMPARABLES FOR DETERMINATION OF THE AL P. HE HAS CONTENDED THAT ALL THESE 12 COMPANIES HAVE BEEN CONSIDERED BY THE CO-O RDINATE BENCH OF THIS TRIBUNAL IN THE SERIES OF DECISIONS INCLUDING THE D ECISION IN THE CASE OF M/S 3DPLM SOFTWARE SOLUTIONS LTD V/S DCIT IN IT(TP)A N O.1303/BANG/2012 (AY-2008-09) DATED 28.11.2013. THUS, THE LD. AR HAS POINTED OUT THAT THIS TRIBUNAL IN VARIOUS CASES HAS HELD THAT THESE COMP ANIES CANNOT BE CONSIDERED AS COMPARABLES WITH THE SOFTWARE DEVELOPMENT SERVICES AS PROVIDED BY THE IT(TP)A NO.227 & 285/BANG/2013 PAGE 12 OF 40 ASSESSEE. HE HAS ALSO INVITED OUR ATTENTION TO VAR IOUS DECISIONS OF THIS TRIBUNAL WHEREIN THESE COMPANIES WERE REJECTED AS COMPARABLE S OF SOFTWARE DEVELOPMENT SERVICES PROVIDER. APART FROM THESE 12 COMPANIES, THE LD.AR IS ALSO SEEKING EXCLUSION OF M/S BODHTREE LTD FROM THE LIST OF COM PARABLES AS ADDITIONAL GROUND RAISED BY THE ASSESSEE ON THE GROUND THAT IN CASE O F M/S MINDTECH (INDIA) LTD, V/S DCIT IN IT(TP) NO.70/BAN/2014 (AY-2009-10) DATE D 21.8.2014 THIS TRIBUNAL HAS HELD THAT M/S BODHTREE LTD CANNOT BE C ONSIDERED AS COMPARABLES. THUS, THE LD. AR HAS SUBMITTED THAT AFTER EXCLUDIN G THESE 13 COMPANIES FROM THE LIST OF COMPARABLES THE MEAN MARGIN OF REMAINING C OMPANIES SELECTED BY THE TPO COMES TO 13.72 % AND AFTER ADJUSTMENT OF WORKIN G CAPITAL IT COMES TO 13.50 % IN COMPARISON THE OPERATING MARTIN OF THE ASSESSE E AT 11.30% WHICH IS WITHIN THE RANGE OF 5% AND THEREFORE NO ADJUSTMENT IS CAL LED FOR. 20. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT T PO TOOK SEGMENTAL DATA IN CASE OF M/S KALS INFORMATION SYSTEMS LTD (SEG.), M/ S TATA ELXSI LTD (SEG.) AND M/S WIPRO LTD (SEG.), THEREFORE, THE OBJECTION RAI SED BY THE ASSESSEE THAT THESE COMPANIES ARE FUNCTIONALLY NOT COMPARABLE WITH THE ASSESSEE IS NOT SUSTAINABLE. AS REGARD M/S QUINTEGRA SOLUTIONS LTD, THE LD. DR S UBMITTED THAT IT IS ASSESSEES OWN COMPARABLE INCLUDED IN THE TP STUDY REPORT AND THEREFORE, THE ASSESSEE CANNOT ASK FOR REJECTION OF THE SAID COMPANY AS COM PARABLE. HE HAS RELIED UPON THE ORDERS OF AUTHORITIES BELOW. IN REJOINDER, THE LD. AR HAS SUBMITTED THAT THOUGH M/S QUINTEGRA SOLUTIONS LTD WAS PART OF THE TP STUDY OF THE ASSESSEE BUT IT WAS FOUND THAT THE SAID COMPANY IS NOT COMPARABL E WITH THE FUNCTION OF THE ASSESSEE AND THEREFORE, IT CANNOT BE INCLUDED IN TH E LIST OF COMPARABLES FOR DETERMINATION OF ALP. HE HAS RELIED UPON THE DECIS ION OF SPECIAL BENCH OF ITAT OF CHANDIGARH BENCH IN THE CASE OF DCIT V/S QU ARK SYSTEMS (P.) LTD. [2010] 38 SOT 307 (ITAT [CHAND]). THE LD. AR HAS F URTHER POINTED OUT THAT IN CASE OF M/S KALS INFORMATION SYSTEMS LTD (S EG.), M/S TATA ELXSI LTD (SEG.) AND M/S WIPRO LTD (SEG.), THE RESULT OF SOF TWARE SEGMENT ARE INCLUDED IN SOFTWARE PRODUCT AND NO SEPARATE DATA FOR SOFTWARE DEVELOPMENT SEGMENT ARE GIVEN BY THESE COMPANIES, THEREFORE, THE REVENUE A ND THE MARGIN OF COMPOSITE SEGMENT OF SOFTWARE PRODUCT AND SOFTWARE DEVELOPMEN T SERVICE CANNOT BE COMPARED WITH THE REVENUE AND MARGIN OF THE ASSES SEE FROM SOFTWARE DEVELOPMENT ALONE. 21. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND RE LEVANT MATERIAL AVAILABLE ON RECORD. AS WE HAVE NARRATED THE FACTS IN THE FOREGO ING PARAS THAT THE TPO HAS DETERMINED THE ALP BY TAKING INTO CONSIDERATION THE SET OF 20 COMPARABLES. THE ASSESSEE HAS RAISED OBJECTION REGARDING 13 COMPARAB LES OUT OF 20 SELECTED BY THE TPO. THE COMPANIES AGAINST WHICH THE ASSESSEE RAIS ED OBJECTIONS ARE AS UNDER: IT(TP)A NO.227 & 285/BANG/2013 PAGE 13 OF 40 S.NO. NAME OF THE COMPANY 1 AVANI CIMCON TECHNOLOGIES LTD 2 BODHTREE LTD 3 CELESTIAL BIOLABS LTD 4 E-ZEST SOLUTIONS LTD 5 INFOSYS TECHNOLOGIES LTD 6 KALS INFORMATION SYSTEMS LTD (SEG.) 7 LUCID SOFTWARE LTD 8 PERSISTENT SYSTEMS LTD 9 QUINTEGRA SOLUTIONS LTD 10 SOFTSOLE INDIA LTD 11 TATA ELXSI LTD (SEG.) 12 THIRDWARE SOLUTIONS LTD (SEG 13 WIPRO LTD (SEG.) 22. WE NOTE THAT THE COMPARABILITY OF THESE 13 COMP ANIES HAVE BEEN EXAMINED BY THIS TRIBUNAL IN SERIES OF DECISION AS REFERRE D BY THE LD. AR. IN THE CASE OF M/S 3DPLM SOFTWARE SOLUTIONS LTD (SUPRA), THE CO-OR DINATE BENCH OF THIS TRIBUNAL HAS CONSIDERED THE COMPARABILITY OF THESE COMPANIES IN PARAS 7 TO 19.3 OF THE ORDER WHICH HAVE BEEN REPRODUCED BELOW: 7.0 AVANI CINCOM TECHNOLOGIES LTD. 7.1 THIS COMPANY WAS SELECTED BY THE TPO AS A COMP ARABLE. THE ASSESSEE OBJECTS TO THE INCLUSION OF THIS COMPANY A S A COMPARABLE ON THE GROUND THAT THIS COMPANY IS NOT FUNCTIONALLY COMPAR ABLE TO THE ASSESSEE AS IT IS INTO SOFTWARE PRODUCTS WHEREAS THE ASSESSEE O FFERS SOFTWARE DEVELOPMENT SERVICES TO ITS AES. THE TPO HAD REJECT ED THE OBJECTIONS OF THE ASSESSEE ON THE GROUND THAT THIS COMPARABLE COM PANY HAS CATEGORIZED ITSELF AS A PURE SOFTWARE DEVELOPER, JUST LIKE THE ASSESSEE, AND HENCE SELECTED THIS COMPANY AS A COMPARABLE. FOR THIS PUR POSE, THE TPO HAD RELIED ON INFORMATION SUBMITTED BY THIS COMPANY IN RESPONSE TO ENQUIRIES CARRIED OUT UNDER SECTION 133(6) OF THE ACT FOR COL LECTING INFORMATION ABOUT THE COMPANY DIRECTLY. 7.2 BEFORE US, THE LEARNED AUTHORISED REPRESENTATI VE REITERATED THE ASSESSEES OBJECTIONS FOR THE INCLUSION OF THIS COM PANY FROM THE LIST OF COMPARABLE COMPANIES ON THE GROUND THAT THIS COMPAN Y IS NOT FUNCTIONALLY COMPARABLE TO THE ASSESSEE AS IT IS INTO SOFTWARE P RODUCTS. IT IS ALSO SUBMITTED THAT THE SEGMENTAL DETAILS OF THIS COMPAN Y ARE NOT AVAILABLE AND THE ANNUAL REPORT AVAILABLE IN TH E PUBLIC DOMAIN IS NOT COMPLETE. IT WAS FURTHER CONTENDED THAT THE INFORMA TION OBTAINED BY THE TPO UNDER SECTION 133(6) OF THE ACT, ON THE BASIS O F WHICH THE TPO IT(TP)A NO.227 & 285/BANG/2013 PAGE 14 OF 40 INCLUDED THIS COMPANY IN THE FINAL LIST OF COMPARAB LE COMPANIES, HAS NOT BEEN SHARED WITH THE ASSESSEE. IN SUPPORT OF THIS C ONTENTION, THE LEARNED AUTHORISED REPRESENTATIVE PLACED RELIANCE ON THE FO LLOWING JUDICIAL DECISIONS: I) TRILOGY E-BUSINESS SOFTWARE INDIA PVT. LTD. V DC IT (ITA NO.1054/BANG/2011) II) TELECORDIA TECHNOLOGIES INDIA PVT LTD V ACIT (I TA NO.7821/MUM/2011) IT WAS ALSO SUBMITTED THAT THIS COMPANY HAS BEEN HE LD TO BE FUNCTIONALLY NOT COMPARABLE TO THE ASSESSEE BY A CO-ORDINATE BEN CH OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2007-08 IN ITA NO.845/BANG/2011 DT.22.2.2013. 7.3 THE LEARNED AUTHORISED REPRESENTATIVE FURTHER S UBMITTED THAT THE FACTS PERTAINING TO THIS COMPANY HAS NOT CHANGED FROM THE EARLIER YEAR (I.E. ASSESSMENT YEAR 2007-08) TO THE PERIOD UNDER CONSID ERATION (I.E. ASSESSMENT YEAR 2008-09). IN SUPPORT OF THIS CONTEN TION, IT WAS SUBMITTED THAT:- (I) THE EXTRACT FROM THE WEBSITE OF THE COMPANY CLE ARLY INDICATES THAT IT IS PRIMARILY ENGAGED IN DEVELOPMENT OF SOFTWARE PRODUC TS. THE EXTRACT MENTIONS THAT THIS COMPANY OFFERS CUSTOMISED SOLUTI ONS AND SERVICES IN DIFFERENT AREAS; (II) THE WEBSITE OF THIS COMPANY EVIDENCES THAT THI S COMPANY DEVELOPS AND SELLS CUSTOMIZABLE SOFTWARE SOLUTIONS LIKE DX CHANGE, CARMA, ETC. 7.4 THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT A CO-ORDINATE BENCH OF THE TRIBUNAL IN ITS ORDER IN CURRAM SOFTWA RE INTERNATIONAL PVT. LTD., IN ITS ORDER IN ITA NO.1280/BANG/2012 DT.31.7 .2013 HAS REMANDED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICE R / TPO TO EXAMINE THE COMPARABILITY OF THIS COMPANY AFRESH, BY MAKING THE FOLLOWING OBSERVATIONS AT PARAS 9.5.2 AND 9.5.3 THEREOF:- 9.5.2 AS REGARDS THE SUBMISSION OF THE LEARNED AUT HORISED REPRESENTATIVE, WE ARE UNABLE TO AGREE THAT THIS COMPANY HAS TO BE DELETED FROM THE LIST OF COMPARABLES ONLY BECAUSE IT HAS BEEN DELETED FROM T HE SET OF COMPARABLES IN THE CASE OF TRIOLOGY E-BUSINESS SOFTWARE INDIA P VT. LTD. (SUPRA). NO DOUBT THIS COMPANY HAS BEEN DELETED AS A COMPARABLE IN THE CASE OF TRIOLOGY E-BUSINESS SOFTWARE INDIA PVT. LTD. (SUPRA ) AND THIS CAN BE A GOOD GUIDANCE TO DECIDE ON THE COMPARABILITY IN THE CASE ON HAND ALSO. THIS ALONE, HOWEVER, WILL NOT SUFFICE FOR THE FOLLO WING REASONS:- IT(TP)A NO.227 & 285/BANG/2013 PAGE 15 OF 40 (I) THE ASSESSEE NEEDS TO DEMONSTRATE THAT THE FAR ANALYSIS AND OTHER RELEVANT FACTS OF THE TRIOLOGY CASE ARE EQUALLY APP LICABLE TO THE FACTS OF THE ASSESSEE'S CASE ALSO. UNLESS THE FACTS AND THE FAR ANALYSIS OF TRIOLOGY CASE ARE COMPARABLE TO THAT OF THE ASSESSEE IN THE CASE ON HAND, COMPARISON BETWEEN THE TWO IS NOT TENABLE. (II) AFTER DEMONSTR ATING THE SIMILARITY AND THE COMPARABILITY BETWEEN THE ASSESSEE AND THE TRIO LOGY CASE, THE ASSESSEE ALSO NEEDS TO DEMONSTRATE THAT THE FACTS APPLICABLE TO THE ASSESSMENT YEAR 2007-08, THE YEAR FOR WHICH THE DECISION IN CASE OF TRIOLOGY E-BUSINESS SOFTWARE INDIA PVT. LTD. (SUPRA) WAS RENDERED ARE A LSO APPLICABLE TO THE YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2008- 09. 9.5.3 IT IS A WELL SETTLED PRINCIPLE THAT THE ASSES SEE IS REQUIRED TO PERFORM FAR ANALYSIS FOR EACH YEAR AND IT IS QUITE POSSIBLE THAT THE FAR ANALYSIS CAN BE DIFFERENT FOR EACH OF THE YEARS. TH AT BEING SO, THE PRINCIPLE APPLICABLE TO ONE PARTICULAR YEAR CANNOT BE EXTRAPO LATED AUTOMATICALLY AND MADE APPLICABLE TO SUBSEQUENT YEARS. TO DO THAT, IT IS NECESSARY TO FIRST ESTABLISH THAT THE FACTS AND ATTENDANT FACTORS HAVE REMAINED THE SAME SO THAT THE FACTORS OF COMPARABILITY ARE THE SAME. VIEWED I N THAT CONTEXT, THE ASSESSEE HAS NOT DISCHARGED THE ONUS UPON IT TO EST ABLISH THAT THE DECISION RENDERED IN THE CASE OF TRIOLOGY E-BUSINESS SOFTWAR E INDIA PVT. LTD. (SUPRA) CAN BE APPLIED TO THE FACTS OF THE CASE AND THAT TOO OF AN EARLIER YEAR I.E. ASSESSMENT YEAR 2007-08. THE ASSESSEE, IN OUR VIEW, HAS NOT DEMONSTRATED THAT THE FACTS OF TRIOLOGY E-BUSINESS SOFTWARE INDIA PVT. LTD. (SUPRA) ARE IDENTICAL TO THE FACTS OF THE CASE ON H AND AND THAT THE PROFILE OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION IS SI MILAR TO THAT OF THE EARLIER ASSESSMENT YEAR 2007-08. IN VIEW OF FACTS AS DISCUS SED ABOVE, WE DEEM IT FIT TO REMAND THE MATTER BACK TO THE FILE OF THE AS SESSING OFFICER / TPO TO EXAMINE THE COMPARABILITY OF THIS COMPANY AFRESH BY CONSIDERING THE ABOVE OBSERVATIONS. THE TPO IS DIRECTED TO MAKE AVA ILABLE TO THE ASSESSEE INFORMATION OBTAINED UNDER SECTION 133(6) OF THE AC T AND TO AFFORD THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD AND TO MAKE ITS SUBMISSIONS IN THE MATTER, WHICH SHALL BE DULY CONSIDERED BEFOR E PASSING ORDERS THEREON. IT IS ORDERED ACCORDINGLY. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITS THAT THIS COMPANY WAS SELECTED AS A COMPARABLE BY THE TPO NOT BY ANY FAR ANALYSIS OR AS PER THE SEARCH PROCESS CONDUCTED BY THE TPO, BUT ONLY AS AN ADDITIONAL COMPARABLE FOR THE REASON THAT IT WAS SELECTED AS A COMPARABLE IN THE EARLIER YEAR I.E. ASSESSMENT YEAR 2007-08 ON THE BASIS OF INFORMATION OBTAINED UNDER SECTION 133(6) OF THE ACT. IN THIS R EGARD, THE LEARNED AUTHORISED REPRESENTATIVE TOOK US THROUGH THE RELEV ANT PORTIONS OF THE TP ORDER UNDER SECTION 92CA OF THE ACT AND THE SHOW CA USE NOTICES FOR BOTH THE EARLIER YEAR I.E. ASSESSMENT YEAR 2007-08 AND F OR THIS YEAR AND CONTENDED THAT THE SELECTION OF THIS COMPANY AS A C OMPARABLE VIOLATES THE PRINCIPLE ENUNCIATED IN CURRAM SOFTWARE INTERNATION AL PVT. LTD. (SUPRA) THAT A COMPANY CAN BE SELECTED AS A COMPARA BLE ONLY ON THE BASIS OF IT(TP)A NO.227 & 285/BANG/2013 PAGE 16 OF 40 FAR ANALYSIS CONDUCTED FOR THAT YEAR AND THEREFORE PLEADED FOR ITS EXCLUSION. THE LEARNED AUTHORISED REPRESENTATIVE AL SO SUBMITTED THAT HE HAS BROUGHT ON RECORD SUFFICIENT EVIDENCE TO SHOW T HAT THE FUNCTIONAL PROFILE OF THIS COMPANY REMAINS UNCHANGED FROM THE EARLIER YEAR AND HENCE THE FINDINGS RENDERED BY THE CO-ORDINATE BENC HES OF THE TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2007-08 (SUPRA) AND IN OTHER CASES LIKE TRIOLOGY E-BUSINESS SOFTWARE INDIA PVT. LTD. (SUPRA) ARE APPLICABLE TO THE YEAR UNDER CONSIDERATION AS WELL. 7.5 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTA TIVE SUPPORTED THE ORDER OF THE TPO / DRP FOR INCLUSION OF THIS COMPAN Y AVANI CINCOM TECHNOLOGIES LTD. IN THE FINAL SET OF COMPARABLES. 7.6.1 WE HAVE HEARD BOTH PARTIES AND PERUSED AND CA REFULLY CONSIDERED THE MATERIAL ON RECORD. IT IS SEEN FROM THE RECORD THAT THE TPO HAS INCLUDED THIS COMPANY IN THE FINAL SET OF COMPARABLES ONLY ON THE BASIS OF INFORMATION OBTAINED UNDER SECTION 133(6) OF THE ACT. IN THESE CIRCUMSTANCES, IT WAS THE DUTY OF THE TPO TO HAVE NECESSARILY FURNISHED THE I NFORMATION SO GATHERED TO THE ASSESSEE AND TAKEN ITS SUBMISSIONS THEREON I NTO CONSIDERATION BEFORE DECIDING TO INCLUDE THIS COMPANY IN ITS FINAL LIST OF COMPARABLES. NONFURNISHING THE INFORMATION OBTAINED UNDER SECTIO N 133(6) OF THE ACT TO THE ASSESSEE HAS VITIATED THE SELECTION OF THIS COM PANY AS A COMPARABLE. 7.6.2 WE ALSO FIND SUBSTANTIAL MERIT IN THE CONTENT ION OF THE LEARNED AUTHORISED REPRESENTATIVE THAT THIS COMPANY HAS BEE N SELECTED BY THE TPO AS AN ADDITIONAL COMPARABLE ONLY ON THE GROUND THAT THIS COMPANY WAS SELECTED IN THE EARLIER YEAR. EVEN IN THE EARLIER Y EAR, IT IS SEEN THAT THIS COMPANY WAS NOT SELECTED IT(TP)A 1380/BANG/2012 PAG E 7 OF 34 ON THE BASIS ON ANY SEARCH PROCESS CARRIED OUT BY THE TPO BUT ONLY ON THE BASIS OF INFORMATION COLLECTED UNDER SECTION 133(6) OF THE A CT. APART FROM PLACING RELIANCE ON THE JUDICIAL DECISION CITED ABOVE, INCL UDING THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2007-08, THE ASSESSEE HAS BROUGHT ON RECORD EVIDENCE THAT THIS COMPANY IS FUNCTIONALLY DIS-SIMI LAR AND DIFFERENT FROM THE ASSESSEE AND HENCE IS NOT COMPARABLE. THEREFORE THE FINDING EXCLUDING IT FROM THE LIST OF COMPARABLES RENDERED IN THE IMM EDIATELY PRECEDING YEAR IS APPLICABLE IN THIS YEAR ALSO. SINCE THE FUNCTION AL PROFILE AND OTHER PARAMETERS BY THIS COMPANY HAVE NOT UNDERGONE ANY C HANGE DURING THE YEAR UNDER CONSIDERATION WHICH FACT HAS BEEN DEMONS TRATED BY THE ASSESSEE, FOLLOWING THE DECISIONS OF THE CO-ORDINATE BENCHES OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2007-08 IN ITA NO.845/BANG/2011 DT.22.2.2013, AND IN THE CASE OF T RIOLOGY E-BUSINESS SOFTWARE INDIA PVT. LTD. (ITA NO.1054/BANG/2011), W E DIRECT THE A.O./TPO TO OMIT THIS COMPANY FROM THE LIST OF COMP ARABLES. IT(TP)A NO.227 & 285/BANG/2013 PAGE 17 OF 40 8.0 BODHTREE CONSULTING LTD. 8.1 THIS COMPANY HAS BEEN SELECTED AS A COMPARABLE COMPANY TO THE ASSESSEE BY THE TPO; THE INCLUSION OF WHICH WAS NOT OBJECTED TO BY THE ASSESSEE BEFORE BOTH THE TPO AND THE DRP. THE ASSES SEE HAS NOT OBJECTED TO THE INCLUSION OF THIS COMPANY IN THE LIST OF COMPARABLES, AS CAN BE SEEN FROM THE GROUNDS OF APP EAL RAISED IN FORM 36B BEFORE THIS TRIBUNAL. 8.1 HOWEVER IN THE COURSE OF PROCEEDINGS BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE OBJECTED TO THE INCLUSION OF THIS COMPANY AS A COMPARABLE FOR THE FOLLOWING REASONS: (I) THIS COMPANY HAS REPORTED ABNORMALLY FLUCTUATIN G MARGINS IN THE PERIOD FROM 2005 TO 2011, WHICH INDICATE ABNORMAL BUSINESS FACTORS AND ABNORMAL PROFIT MARGINS AND HENCE SHOULD NOT BE CONSIDERED A S COMPARABLE TO THE ASSESSEE. (II) THE ABNORMALLY FLUCTUATING MARGINS INDICATE TH AT THIS COMPANY BEARS HIGHER RISK IN CONTRAST TO THE ASSESSEE WHO HAS EAR NED CONSISTENT MARGINS OVER THE YEARS, INDICATING DIFFERENCE IN THE RISK P ROFILE BETWEEN THIS COMPANY AND THE ASSESSEE. (III) THIS COMPANY HAS REGISTERED EXPONENTIAL GROWT H OF 67% IN TERMS OF REVENUE AND 41% IN TERMS OF PROFITS OVER THE IMMEDI ATELY PRECEDING YEAR WHICH CAN BE ATTRIBUTED TO THE DEVELOPMENT OF A SOF TWARE APPLICATION, MIDAS (MULTI INDUSTRY DATA ANOMALY) WHICH WAS MADE AVAILABLE FOR CUSTOMERS AS SAAS (SOFTWARE AS A SERVICE). 8.3 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTA TIVE OPPOSED THE EXCLUSION OF THIS COMPANY FROM THE LIST OF COMPARAB LE COMPANIES. THE LEARNED DEPARTMENTAL REPRESENTATIVE CONTENDED THAT SINCE THE ASSESSEE HAD ACCEPTED THE TPOS PROPOSAL FOR INCLUSION OF THIS C OMPANY IN THE SET OF COMPARABLES AND HAD NOT OBJECTED TO ITS INCLUSION E VEN BEFORE THE DRP, THE OBJECTIONS RAISED BY THE ASSESSEE IN THIS REGARD, A T THIS STAGE, OUGHT TO BE REJECTED. 8.4.1 WE HAVE HEARD BOTH PARTIES AND PERUSED AND CA REFULLY CONSIDERED THE MATERIAL ON RECORD. ADMITTEDLY, THERE IS NO DISPUTI NG THE FACT THAT THE ASSESSEE HAD NEVER OBJECTED TO THE INCLUSION OF THI S COMPANY IN THE SET OF COMPARABLES IN EARLIER PROCEEDINGS BEFORE THE TPO A ND THE DRP. IT IS ALSO SEEN THAT EVEN IN THE GROUNDS OF APPEAL RAISED BEFO RE US, THE ASSESSEE HAS NOT RAISED ANY GROUNDS CHALLENGING THE INCLUSION OF THIS COMPANY IN THE LIST OF COMPARABLES. IN FACT IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2007-08, THIS COMPANY WAS SELECTED AS A COMPARABLE BY THE ASSESSEE ITSELF. WE, THEREFORE, FIND NO MERIT I N THE CONTENTIONS RAISED BY THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESS EE IN RESPECT OF THIS COMPANY AT THIS STAGE OF PROCEEDINGS. IT(TP)A NO.227 & 285/BANG/2013 PAGE 18 OF 40 8.4.2 IT IS ALSO SEEN FROM THE SUBMISSIONS MADE BEF ORE US THAT THE ASSESSEE HAS ONLY POINTED OUT FLUCTUATING MARGINS IN THE RES ULTS OF THIS COMPANY OVER THE YEARS. THIS, IN ITSELF, CANNOT BE REASON ENOUGH TO ESTABLISH DIFFERENCES IN FUNCTIONAL PROFILE OR ANY CLINCHING FACTUAL REAS ON WARRANTING THE EXCLUSION OF THIS COMPANY FROM THE LIST OF COMPARABLES. IN THIS VIEW OF THE MATTER, THE CONTEN TIONS OF THE ASSESSEE ARE REJECTED AND THIS COMPANY IS HELD TO BE COMPARABLE TO THE ASSESSEE AND ITS INCLUSION IN THE LIST OF COMPARABLE COMPANIES IS UP HELD. 9. CELESTIAL BIOLABS LTD. 9.1 THIS COMPARABLE WAS SELECTED BY THE TPO FOR INC LUSION IN THE FINAL LIST OF COMPARABLES. BEFORE THE TPO, THE ASSESSEE HAD OB JECTED TO THE INCLUSION OF THIS COMPANY IN THE LIST OF COMPARABLES FOR THE REASONS THAT IT IS FUNCTIONALLY DIFFERENT FORM THE ASSESSEE AND THAT I T FAILS THE EMPLOYEE COST FILTER. THE TPO, HOWEVER, BRUSHED ASIDE THE OBJECTI ONS RAISED BY THE ASSESSEE BY STATING THAT THE OBJECTIONS OF FUNCTION AL DISSIMILARITY HAS BEEN DEALT WITH IN DETAIL IN THE T.P. ORDER FOR ASSESSME NT YEAR 2007-08. AS REGARDS THE OBJECTION RAISED IN RESPECT OF THE EMPL OYEE COST FILTER ISSUE, THE TPO REJECTED THE OBJECTIONS BY OBSERVING THAT THE E MPLOYEE COST FILTER IS ONLY A TRIGGER TO KNOW THE FUNCTIONALITY OF THE COM PANY. 9.2 BEFORE US, THE LEARNED AUTHORISED REPRESENTATIV E CONTENDED THAT THIS COMPANY IS NOT FUNCTIONALLY COMPARABLE, AS THE COMP ANY IS INTO BIO- INFORMATICS SOFTWARE PRODUCT /SERVICES AND THE SEGM ENTAL BREAK UP IS NOT PROVIDED. IT WAS SUBMITTED THAT:- (I) THIS COMPANY IS ENGAGED IN THE DEVELOPMENT OF PRODUCTS IN THE FIELD OF BIO-TECHNOLOGY, PHARMACEUTICALS, ETC. AND THEREFORE IS NOT FUNCTIONALLY COMPARABLE TO THE ASSESSEE; (II) THIS COMPANY HAS BEEN HELD TO BE FUNCTIONALLY INCOMPARABLE TO SOFTWARE SERVICE PROVIDERS BY THE DECISION OF THE C O-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2007-08 (SUPRA); (III) THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN IT S ORDER IN THE CASE OF TRIOLOGY EBUSINESS SOFTWARE INDIA PVT. LTD. (SUPRA) AT PARA 43 THEREOF HAD OBSERVED ABOUT THIS COMPANY THAT .. AS EXPLAINED EARLIER, IT IS A DIVERSIFIED COM PANY AND THEREFORE CANNOT BE CONSIDERED AS COMPARABLE FUNCTIONALLY WITH THE A SSESSEE. THERE HAS BEEN NO ATTEMPT TO IDENTIFY, ELIMINATE AND MAKE ADJUSTME NT OF THE PROFIT MARGINS SO THAT THE DIFFERENCE IN FUNCTIONAL COMPARABILITY CAN BE ELIMINATED. BY NOT RESORTING TO SUCH A PROCESS OF MAKING ADJUSTMENTS, THE TPO HAS RENDERED IT(TP)A NO.227 & 285/BANG/2013 PAGE 19 OF 40 THIS COMPANY AS NOT QUALIFYING FOR COMPARABILITY. W E THEREFORE ACCEPT THE PLEA OF THE ASSESSEE IN THIS REGARD. (IV) THE REJECTION / EXCLUSION OF THIS COMPANY AS A COMPARABLE FOR ASSESSMENT YEAR 2007-08 FOR SOFTWARE SERVICE PROVID ERS HAS BEEN UPHELD BY THE CO-ORDINATE BENCHES OF THIS TRIBUNAL IN THE CASES OF LG SOFT INDIA PVT. LTD. IN ITA NO.112/BANG/2011, CSR INDIA PVT. L TD. IN IT (TP) A NO.1119/BANG/2011 AND BY THE ITAT, DELHI BENCH IN T HE CASE OF TRANSWITCH INDIA PVT. LTD. IN ITA NO.6083/DEL/2010. (V) THE FACTS PERTAINING TO THIS COMPANY HAVE NOT CHANGED FROM ASSESSMENT YEAR 2007- 08 TO ASSESSMENT YEAR 2008-09 AND THEREFORE THIS COMPANY CANNOT BE CONSIDERED FOR THE PURPOSE OF COM PARABILITY IN THE INSTANT CASE AND HENCE OUGHT TO BE REJECTED. IN SUP PORT OF THIS CONTENTION, THE ASSESSEE HAS ALSO REFERRED TO AND QUOTED FROM V ARIOUS PARTS OF THE ANNUAL REPORT OF THE COMPANY. 9.3 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTA TIVE SUPPORTED THE INCLUSION OF THIS COMPANY IN THE LIST OF COMPARABLE COMPANIES. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE DECI SIONS CITED AND RELIED ON BY THE ASSESSEE ARE FOR ASSESSMENT YEAR 2007-08 AND THEREFORE THERE CANNOT BE AN ASSUMPTION THAT IT WOULD CONTINUE TO B E APPLICABLE FOR THE PERIOD UNDER CONSIDERATION I.E. ASSESSMENT YEAR 200 8-09. 9.4.1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED AN D CAREFULLY CONSIDERED THE MATERIAL ON RECORD. WHILE IT IS TRUE THAT THE D ECISIONS CITED AND RELIED ON BY THE ASSESSEE WERE WITH RESPECT TO THE IMMEDIATEL Y PREVIOUS ASSESSMENT YEAR, AND THERE CANNOT BE AN ASSUMPTION THAT IT WOU LD CONTINUE TO BE APPLICABLE FOR THIS YEAR AS WELL, THE SAME PARITY O F REASONING IS APPLICABLE TO THE TPO AS WELL WHO SEEMS TO HAVE SELECTED THIS COMPANY AS A COMPARABLE BASED ON THE REASONING GIVEN IN THE TPO S ORDER FOR THE EARLIER YEAR. IT IS EVIDENTLY CLEAR FROM THIS THAT THE TPO HAS NOT CARRIED OUT ANY INDEPENDENT FAR ANALYSIS FOR THIS COMPANY FOR THIS YEAR VIZ. ASSESSMENT YEAR 2008-09. TO THAT EXTENT, IN OUR CONSIDERED VIE W, THE SELECTION PROCESS ADOPTED BY THE TPO FOR INCLUSION OF THIS COMPANY IN THE LIST OF COMPARABLES IS DEFECTIVE AND SUFFERS FROM SERIOUS I NFIRMITY. 9.4.2 APART FROM RELYING ON THE AFORE CITED JUDICIA L DECISIONS IN THE MATTER (SUPRA), THE ASSESSEE HAS BROUGHT ON RECORD IT (TP) A 1380/BANG/2012 PAGE 8 OF 34 SUBSTANTIAL FACTUAL EVIDENCE TO ESTABL ISH THAT THIS COMPANY IS FUNCTIONALLY DIS-SIMILAR AND DIFFERENT FROM THE ASS ESSEE IN THE CASE ON HAND AND IS THEREFORE NOT COMPARABLE AND ALSO THAT THE F INDINGS RENDERED IN THE CITED DECISIONS FOR THE EARLIER YEARS I.E. ASSESSME NT YEAR 2007-08 IS APPLICABLE FOR THIS YEAR ALSO. WE AGREE WITH THE SU BMISSIONS OF THE ASSESSEE THAT THIS COMPANY IS FUNCTIONALLY DIFFERENT FROM TH E ASSESSEE. IT HAS ALSO BEEN SO HELD BY CO-ORDINATE BENCHES OF THIS TRIBUNA L IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2007-08 (SUPRA) AS WELL AS IN THE CASE OF IT(TP)A NO.227 & 285/BANG/2013 PAGE 20 OF 40 TRIOLOGY E-BUSINESS SOFTWARE INDIA PVT. LTD. (SUPRA ). IN VIEW OF THE FACT THAT THE FUNCTIONAL PROFILE OF AND OTHER PARAMETERS OF THIS COMPANY HAVE NOT CHANGED IN THIS YEAR UNDER CONSIDERATION, WHICH FAC T HAS ALSO BEEN DEMONSTRATED BY THE ASSESSEE, FOLLOWING THE DECISIO N OF THE CO-ORDINATE BENCHES OF THE TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2007-08 IN ITA NO.845/BANG/2011 AND TRIOLOGY E-BUSI NESS SOFTWARE INDIA PVT. LTD. IN ITA NO.1054/BANG/2011, WE HOLD T HAT THIS COMPANY OUGHT TO BE OMITTED FROM THE LIST OF COMPARABLES. T HE A.O. /TPO ARE ACCORDINGLY DIRECTED. 10. KALS INFORMATION SYSTEMS LTD . 10.1 THIS IS A COMPARABLE SELECTED BY THE TPO. BEFO RE THE TPO, THE ASSESSEE HAD OBJECTED TO THE INCLUSION OF THIS COMP ANY IN THE SET OF COMPARABLES ON GROUNDS OF FUNCTIONAL DIFFERENCES AN D THAT THE SEGMENTAL DETAILS HAVE NOT BEEN PROVIDED IN THE ANNUAL REPORT OF THE COMPANY WITH RESPECT TO SOFTWARE SERVICES REVENUE AND SOFTWARE P RODUCTS REVENUE. THE TPO, HOWEVER, REJECTED THE OBJECTIONS OF THE ASSESSEE OBSERVING THAT THE SOFTWARE PRODUCTS AND TRAINING C ONSTITUTES ONLY 4.24% OF TOTAL REVENUES AND THE REVENUE FROM SOFTWARE DEVELO PMENT SERVICES CONSTITUTES MORE THAN 75% OF THE TOTAL OPERATING RE VENUES FOR THE F.Y. 2007-08 AND QUALIFIES AS A COMPARABLE BY THE SERVIC E INCOME FILTER. 10.2 BEFORE US, THE LEARNED AUTHORISED REPRESENTATI VE CONTENDED THAT THIS COMPANY IS NOT FUNCTIONALLY COMPARABLE TO THE ASSES SEE AND OUGHT TO BE REJECTED /EXCLUDED FROM THE LIST OF COMPARABLES FOR THE FOLLOWING REASONS:- (I) THIS COMPANY IS FUNCTIONALLY DIFFERENT FROM TH E SOFTWARE ACTIVITY OF THE ASSESSEE AS IT IS INTO SOFTWARE PRODUCTS. (II) THIS COMPANY HAS BEEN HELD TO BE FUNCTIONALLY NOT COMPARABLE TO SOFTWARE SERVICE PROVIDERS FOR ASSESSMENT YEAR 2007 -08 BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE. THIS COMPANY HAS BEEN HELD TO BE DIFFERENT FROM A SOFTWARE DEVELOPMENT COMPANY IN THE DECISION OF THE TRIBUNAL IN THE CASE OF BINDVIEW INDIA PVT. LTD. V DCIT IN ITA NO.1386/PN/2 010. (III) THE REJECTION OF THIS COMPANY AS A COMPARABLE HAS BEEN UPHELD BY CO- ORDINATE BENCHES OF THE TRIBUNAL IN THE CASE OF (A) TRIOLOGY E-BUSINESS SOFTWARE INDIA PVT. LTD. (ITA NO.1054/BANG/2011). (B) LG SOFT INDIA PVT. LTD.IT (TP) A NO.112/BANG/2011) (C) CSR INDIA PVT. LTD.IT (TP) A NO.1119/BANG/2011) AND (D) TRANSWITCH INDIA PVT. LTD.ITA NO.6083/DEL/2010) IT(TP)A NO.227 & 285/BANG/2013 PAGE 21 OF 40 (IV) THE FACTS PERTAINING TO THIS COMPANY HAS NOT C HANGED FROM ASSESSMENT YEAR 2007- 08 TO ASSESSMENT YEAR 2008-09 AND THEREF ORE THIS COMPANY CANNOT BE CONSIDERED FOR THE PURPOSE OF COMPARABILI TY IN THE CASE ON HAND AND HENCE OUGHT TO BE EXCLUDED FROM THE LIST OF COMPARABLES. IN SUPPORT OF THIS CONTENTION, THE LEARNED AUTHORISED REPRESENTATIVE DREW OUR ATTENTION TO VARIOUS PARTS OF THE ANNUAL REPORT OF THIS COMPANY. (V) THIS COMPANY IS ENGAGED NOT ONLY IN THE DEVELOP MENT OF SOFTWARE PRODUCTS BUT ALSO IN THE PROVISION OF TRAINING SERV ICES AS CAN BE SEEN FROM THE WEBSITE AND THE ANNUAL REPORT OF THE COMPANY FO R THE YEAR ENDED 31.3.2008. (VI) THIS COMPANY HAS TWO SEGMENTS; NAMELY, A) APPLICATION SOFTWARE SEGMENT WHICH INCLUDES SOFT WARE PRODUCT REVENUES FROM TWO PRODUCTS I.E. VIRTUAL INSURE AN D LA-VISION AND B) THE TRAINING SEGMENT WHICH DOES NOT HAVE ANY PRO DUCT REVENUES. 10.3 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENT ATIVE CONTENDED THAT THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUN AL IN THE CASE OF TRIOLOGY E-BUSINESS SOFTWARE INDIA PVT. LTD. (SUPRA ) WAS RENDERED WITH RESPECT TO F.Y.2006-07 AND THEREFORE THERE CANNOT B E AN ASSUMPTION THAT IT WOULD CONTINUE TO BE APPLICABLE TO THE YEAR UNDER C ONSIDERATION I.E. A.Y. 2008-09. TO THIS, THE COUNTER ARGUMENT OF THE LEARN ED AUTHORISED REPRESENTATIVE IS THAT THE FUNCTIONAL PROFILE OF TH IS COMPANY CONTINUES TO REMAIN THE SAME FOR THE YEAR UNDER CONSIDERATION AL SO AND THE SAME IS EVIDENT FROM THE DETAILS CULLED OUT FROM THE ANNUAL REPORT AND QUOTED ABOVE (SUPRA). 10.4 WE HAVE HEARD BOTH PARTIES AND PERUSED AND CAR EFULLY CONSIDERED THE MATERIAL ON RECORD. WE FIND FROM THE RECORD THAT TH E TPO HAS DRAWN CONCLUSIONS AS TO THE COMPARABILITY OF THIS COMPANY TO THE ASSESSEE BASED ON INFORMATION OBTAINED U/S.133 (6) OF THE ACT. THI S INFORMATION WHICH WAS NOT IN THE PUBLIC DOMAIN OUGHT NOT TO HAVE BEEN USE D BY THE TPO, MORE SO WHEN THE SAME IS CONTRARY TO THE ANNUAL REPORT OF T HE COMPANY, AS POINTED OUT BY THE LEARNED AUTHORISED REPRESENTATIVE. WE AL SO FIND THAT THE CO- ORDINATE BENCHES OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2007-08 (SUPRA) AND IN THE CASE OF TRIOLOGY E- BUSINESS SOFTWARE INDIA PVT. LTD. (SUPRA) HAVE HELD THAT THIS COMPANY WAS DEVELOPING SOFTWARE PRODUCTS AND WAS NOT PURELY OR MAINLY A SO FTWARE SERVICE PROVIDER. APART FROM RELYING OF THE ABOVE CITED DEC ISIONS OF COORDINATE BENCHES OF THE TRIBUNAL (SUPRA), THE ASSESSEE HAS A LSO BROUGHT ON RECORD EVIDENCE FROM VARIOUS PORTIONS OF THE COMPANYS ANN UAL REPORT TO IT(TP)A NO.227 & 285/BANG/2013 PAGE 22 OF 40 ESTABLISH THAT THIS COMPANY IS IT(TP)A 1380/BANG/20 12 PAGE 9 OF 34 FUNCTIONALLY DIS-SIMILAR AND DIFFERENT FORM THE ASS ESSEE AND THAT SINCE THE FINDINGS RENDERED IN THE DECISIONS OF THE COORDINAT E BENCHES OF THE TRIBUNAL FOR ASSESSMENT YEAR 2007-08 (CITED SUPRA) ARE APPLI CABLE FOR THIS YEAR I.E. ASSESSMENT YEAR 2008-09 ALSO, THIS COMPANY OUGHT TO BE EXCLUDED FROM THE LIST OF COMPARABLES. IN THIS VIEW OF THE MATTER , WE HOLD THAT THIS COMPANY I.E. KALS INFORMATION SYSTEMS LTD., IS TO B E OMITTED FROM THE LIST OF COMPARABLE COMPANIES. IT IS ORDERED ACCORDI NGLY. 11.0 INFOSYS TECHNOLOGIES LTD. 11.1 THIS WAS A COMPARABLE SELECTED BY THE TPO. BEF ORE THE TPO, THE ASSESSEE OBJECTED TO THE INCLUSION OF THE COMPANY I N THE SET OF COMPARABLES, ON THE GROUNDS OF TURNOVER AND BRAND A TTRIBUTABLE PROFIT MARGIN. THE TPO, HOWEVER, REJECTED THESE OBJECTIONS RAISED BY THE ASSESSEE ON THE GROUNDS THAT TURNOVER IT(TP)A 1380/BANG/2012 PAGE 24 OF 34 AND BRAND ASPECTS WERE NOT MATERIALLY RELEVANT IN THE S OFTWARE DEVELOPMENT SEGMENT. 11.2 BEFORE US, THE LEARNED AUTHORISED REPRESENTATI VE CONTENDED THAT THIS COMPANY IS NOT FUNCTIONALLY COMPARABLE TO THE ASSES SEE IN THE CASE ON HAND. THE LEARNED AUTHORISED REPRESENTATIVE DREW OU R ATTENTION TO VARIOUS PARTS OF THE ANNUAL REPORT OF THIS COMPANY TO SUBMI T THAT THIS COMPANY COMMANDS SUBSTANTIAL BRAND VALUE, OWNS INTELLECTUAL PROPERTY RIGHTS AND IS A MARKET LEADER IN SOFTWARE DEVELOPMENT ACTIVITIES, WHEREAS THE ASSESSEE IS MERELY A SOFTWARE SERVICE PROVIDER OPERATING ITS BU SINESS IN INDIA AND DOES NOT POSSESS EITHER ANY BRAND VALUE OR OWN ANY INTAN GIBLE OR INTELLECTUAL PROPERTY RIGHTS (IPRS). IT WAS ALSO SUBMITTED BY TH E LEARNED AUTHORISED REPRESENTATIVE THAT:- (I) THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE C ASE OF 24/7 CUSTOMER.COM PVT. LTD. IN ITA NO.227/BANG/2010 HAS HELD THAT A C OMPANY OWNING INTANGIBLES CANNOT BE COMPARED TO A LOW RISK CAPTIV E SERVICE PROVIDER WHO DOES NOT OWN ANY INTANGIBLE AND HENCE DOES NOT HAVE AN ADDITIONAL ADVANTAGE IN THE MARKET. IT IS SUBMITTED THAT THIS DECISION IS APPLICABLE TO THE ASSESSEE'S CASE, AS THE ASSESSEE DOES NOT OWN A NY INTANGIBLES AND HENCE INFOSYS TECHNOLOGIES LTD. CANNOT BE COMPARABLE TO T HE ASSESSEE; (II) THE OBSERVATION OF THE ITAT, DELHI BENCH IN TH E CASE OF AGNITY INDIA TECHNOLOGIES PVT. LTD. IN ITA NO.3856 (DEL)/2010 AT PARA 5.2 THEREOF, THAT INFOSYS TECHNOLOGIES LTD. BEING A GIANT COMPANY AND MARKET LEADER ASSUMING ALL RISKS LEADING TO HIGHER PROFITS CANNOT BE CONSIDERED AS COMPARABLE TO CAPTIVE SERVICE PROVIDERS ASSUMING LI MITED RISK ; (III) THE COMPANY HAS GENERATED SEVERAL INVENTIONS AND FILED FOR MANY PATENTS IN INDIA AND USA; IT(TP)A NO.227 & 285/BANG/2013 PAGE 23 OF 40 (IV) THE COMPANY HAS SUBSTANTIAL REVENUES FROM SOFT WARE PRODUCTS AND THE BREAK UP OF SUCH REVENUES IS NOT AVAILABLE; (V) THE COMPANY HAS INCURRED HUGE EXPENDITURE FOR R ESEARCH AND DEVELOPMENT; (VI) THE COMPANY HAS MADE ARRANGEMENTS TOWARDS ACQU ISITION OF IPRS IN AUTOLAY, A COMMERCIAL APPLICATION PRODUCT USED IN DESIGNING HIGH PERFORMANCE STRUCTURAL SYSTEMS. IN VIEW OF THE ABOVE REASONS, THE LEARNED AUTHORISE D REPRESENTATIVE PLEADED THAT, THIS COMPANY I.E. INFOSYS TECHNOLOGIE S LTD., BE EXCLUDED FROM THE LIST OF COMPARABLE COMPANIES. 11.3 PER CONTRA, OPPOSING THE CONTENTIONS OF THE AS SESSEE, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT COMPARAB ILITY CANNOT BE DECIDED MERELY ON THE BASIS OF SCALE OF OPERATIONS AND THE BRAND ATTRIBUTABLE PROFIT MARGINS OF THIS COMPANY HAVE NO T BEEN EXTRAORDINARY. IN VIEW OF THIS, THE LEARNED DEPARTMENTAL REPRESENTATI VE SUPPORTED THE DECISION OF THE TPO TO INCLUDE THIS COMPANY IN THE LIST OF COMPARABLE COMPANIES. 11.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE HAS BROUGHT ON RECORD SUFFICIENT EVIDENCE TO ESTABLISH THAT THIS C OMPANY IS FUNCTIONALLY DIS- SIMILAR AND DIFFERENT FROM THE ASSESSEE AND HENCE I S NOT COMPARABLE AND THE FINDING RENDERED IN THE CASE OF TRILOGY E-BUSINESS SOFTWARE INDIA PVT. LTD. (SUPRA) FOR ASSESSMENT YEAR 2007-08 IS APPLICABLE T O THIS YEAR ALSO. WE ARE INCLINED TO CONCUR WITH THE ARGUMENT PUT FORTH BY T HE ASSESSEE THAT INFOSYS TECHNOLOGIES LTD IS NOT FUNCTIONALLY COMPARABLE SIN CE IT OWNS SIGNIFICANT INTANGIBLE AND HAS HUGE REVENUES FROM SOFTWARE PROD UCTS. IT IS ALSO SEEN THAT THE BREAK UP OF REVENUE FROM SOFTWARE SERVICES AND SOFTWARE PRODUCTS IS NOT AVAILABLE. IN THIS VIEW OF THE MATTER, WE HO LD THAT THIS COMPANY OUGHT TO BE OMITTED FROM THE SET OF COMPARABLE COMPANIES. IT IS ORDERED ACCORDINGLY. 12. WIPRO LTD. 12.1 THIS COMPANY WAS SELECTED AS A COMPARABLE BY T HE TPO. BEFORE THE TPO, THE ASSESSEE HAD OBJECTED TO THE INCLUSION OF THIS COMPANY IN THE LIST OF COMPARABLES ON SEVERAL GROUNDS LIKE FUNCTIONAL D IS-SIMILARITY, BRAND VALUE, SIZE, ETC. THE TPO, IT (TP) A 1380/BANG/2012 PAGE 26 OF 34 HOWEVER, BRUSHED ASIDE THE OBJECTIONS OF THE ASSESS EE AND INCLUDED THIS COMPANY IN THE SET OF COMPARABLES. IT(TP)A NO.227 & 285/BANG/2013 PAGE 24 OF 40 12.2 BEFORE US, THE LEARNED AUTHORISED REPRESENTATI VE OF THE ASSESSEE CONTENDED THAT THIS COMPANY I.E. WIPRO LTD., IS NOT FUNCTIONALLY COMPARABLE TO THE ASSESSEE FOR THE FOLLOWING REASON S:- (I) THIS COMPANY OWNS SIGNIFICANT INTANGIBLES IN TH E NATURE OF CUSTOMER RELATED INTANGIBLES AND TECHNOLOGY RELATED INTANGIB LES, OWNS IPRS AND HAS BEEN GRANTED 40 REGISTERED PATENTS AND HAS 62 PENDI NG APPLICATIONS AND ITS ANNUAL REPORT CONFIRMS THAT IT OWNS PATENTS AND INT ANGIBLES. (II) THE ITAT, DELHI OBSERVATION IN THE CASE OF AGN ITY INDIA TECHNOLOGIES PVT. LTD. IN ITA NO.3856(DEL)/2010 AT PARA 5.2 THER EOF, THAT INFOSYS TECHNOLOGIES LTD. BEING A GIANT COMPANY AND A MARKE T LEADER ASSUMING ALL RISKS LEADING TO HIGHER PROFITS, CANNOT BE CONSIDER ED AS COMPARABLE TO CAPTIVE SERVICE PROVIDERS ASSUMING LIMITED RISK; (III) THE CO-ORDINATE BENCH OF THE ITAT, MUMBAI IN THE CASE OF TELECORDIA TECHNOLOGIES INDIA PVT. LTD. (ITA NO.7821/MUM/2011) HAS HELD THAT WIPRO LTD. IS NOT FUNCTIONALLY COMPARABLE TO A SOFT WARE SERVICE PROVIDER. (IV) THIS COMPANY HAS ACQUIRED NEW COMPANIES PURSU ANT TO A SCHEME OF AMALGAMATION IN THE LAST TWO YEARS. (V) WIPRO LTD. IS ENGAGED IN BOTH SOFTWARE DEVELOP MENT AND PRODUCT DEVELOPMENT SERVICES. NO INFORMATION IS AVAILABLE O N THE SEGMENTAL BIFURCATION OF REVENUE FROM SALE OF PRODUCTS AND SO FTWARE SERVICES. (VI) THE TPO HAS ADOPTED CONSOLIDATED FINANCIAL ST ATEMENTS FOR COMPARABILITY PURPOSES AND FOR COMPUTING THE MARGIN S, WHICH IS IN CONTRADICTION TO THE TPOS OWN FILTER OF REJECTING COMPANIES WITH CONSOLIDATED FINANCIAL STATEMENTS. 12.3 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENT ATIVE SUPPORTED THE ACTION OF THE TPO IN INCLUDING THIS COMPANY IN THE LIST OF COMPARABLES. 12.4.1 WE HAVE HEARD BOTH PARTIES AND CAREFULLY PER USED AND CONSIDERED THE MATERIAL ON RECORD. WE FIND MERIT IN THE CONTENTION S OF THE ASSESSEE FOR EXCLUSION OF THIS COMPANY FROM THE SET OF COMPARABL ES. IT IS SEEN THAT THIS COMPANY IS ENGAGED BOTH IN SOFTWARE DEVELOPMENT AND PRODUCT DEVELOPMENT SERVICES. THERE IS NO INFORMATION ON TH E SEGMENTAL BIFURCATION OF REVENUE FROM SALE OF PRODUCT AND SOFTWARE SERVIC ES. THE TPO APPEARS TO HAVE ADOPTED THIS COMPANY AS A COMPARABLE WITHOUT D EMONSTRATING HOW THE COMPANY SATISFIES THE SOFTWARE DEVELOPMENT SALE S 75% OF THE TOTAL REVENUE FILTER ADOPTED BY HIM. ANOTHER MAJOR FLAW I N THE COMPARABILITY ANALYSIS CARRIED OUT BY THE TPO IS THAT HE ADOPTED COMPARISON OF THE CONSOLIDATED FINANCIAL STATEMENTS OF WIPRO WITH THE STAND ALONE FINANCIALS OF THE ASSESSEE; WHICH IS NOT AN APPROPRIATE COMPAR ISON. 12.4.2 WE ALSO FIND THAT THIS COMPANY OWNS INTELLECTUAL PROPERTY I N THE FORM OF REGISTERED IT(TP)A NO.227 & 285/BANG/2013 PAGE 25 OF 40 PATENTS AND SEVERAL PENDING APPLICATIONS FOR GRANT OF PATENTS. IN THIS REGARD, THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE O F 24/7 CUSTOMER.COM PVT. LTD. (ITA NO.227/BANG/2010) HAS HELD THAT A CO MPANY OWNING INTANGIBLES CANNOT BE COMPARED TO A LOW RISK CAPTIV E SERVICE PROVIDER WHO DOES NOT OWN ANY SUCH INTANGIBLE AND HENCE DOES NOT HAVE AN ADDITIONAL ADVANTAGE IN THE MARKET. AS THE ASSESSEE IN THE CAS E ON HAND DOES NOT OWN ANY INTANGIBLES, FOLLOWING THE AFORESAID DECISION O F THE CO-ORDINATE BENCH OF THE TRIBUNAL I.E. 24/7 CUSTOMER.COM PVT. LTD. (S UPRA), WE HOLD THAT THIS COMPANY CANNOT BE CONSIDERED AS A COMPARABLE TO THE ASSESSEE. WE, THEREFORE, DIRECT THE ASSESSING OFFICER/TPO TO OMIT THIS COMPANY FROM THE SET OF COMPARABLE COMPANIES IN THE CASE ON HAND FOR THE YEAR UNDER CONSIDERATION. 13. TATA ELXSI LTD . 13.1 THIS COMPANY WAS A COMPARABLE SELECTED BY THE TPO. BEFORE THE TPO, THE ASSESSEE HAD OBJECTED TO THE INCLUSION OF THIS COMPANY IN THE SET OF COMPARABLES ON SEVERAL COUNTS LIKE, FUNCTIONAL D IS-SIMILARITY, SIGNIFICANT R&D ACTIVITY, BRAND VALUE, SIZE, ETC. THE TPO, HOWE VER, REJECTED THE CONTENTION PUT FORTH BY THE ASSESSEE AND INCLUDED T HIS COMPANY IN THE SET OF COMPARABLES. 13.2 BEFORE US IT WAS REITERATED BY THE LEARNED AUT HORISED REPRESENTATIVE THAT THIS COMPANY IS NOT FUNCTIONALLY COMPARABLE TO THE ASSESSEE AS IT PERFORMS A VARIETY OF FUNCTIONS UNDER SOFTWARE DEVE LOPMENT AND SERVICES SEGMENT NAMELY - ( A ) PRODUCT DESIGN, ( B ) INNOVATION DESIGN ENGINEERING AND ( C ) VISUAL COMPUTING LABS AS IS REFLECTED IN THE ANNU AL REPORT OF THE COMPANY. THE LEARNED AUTHORISED REPRESENTATIVE SUBM ITTED THAT, (I) THE CO-ORDINATE BENCH OF THE MUMBAI TRIBUNAL I N THE CASE OF TELCORDIA TECHNOLOGIES (P.) LTD. ( SUPRA ) HAS HELD THAT TATA ELXSI LTD . IS NOT A FUNCTIONALLY COMPARABLE FOR A SOFTWARE DEVELOPMENT SERVICE PROVIDER. (II) THE FACTS PERTAINING TO TATA ELXSI LTD . HAVE NOT CHANGED FROM THE EARLIER YEAR I.E. ASSESSMENT YEAR 2007-08 TO THE PERIOD UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2008-09 AND THEREFORE THIS COMPANY CANNOT BE CONSIDERED AS A COMPARABLE TO THE ASSESSEE IN THE CASE ON HAND. (III)TATA ELXSI LTD . IS PREDOMINANTLY ENGAGED IN PRODUCT DESIGNING SER VICES AND IS NOT PURELY A SOFTWARE DEVELOPMENT SERVICE PR OVIDER. IN THE ANNUAL REPORT OF THIS COMPANY THE DESCRIPTION OF TH E SEGMENT ' SOFTWARE DEVELOPMENT SERVICES' RELATES TO DESIGN SE RVICES AND ARE NOT TO SOFTWARE SERVICES PROVIDED BY THE ASSESSEE. IT(TP)A NO.227 & 285/BANG/2013 PAGE 26 OF 40 (IV) TATA ELXSI LTD . INVESTS SUBSTANTIAL FUNDS IN RESEARCH AND DEVELOP MENT ACTIVITIES WHICH HAVE RESULTED IN THE 'EMBEDDED PRO DUCT DESIGN SERVICES SEGMENT' OF THE COMPANY TO CREATE A PORTFO LIO OF REUSABLE SOFTWARE COMPONENTS, READY TO DEPLOY FRAME WORKS, LICENSABLE IPS AND PRODUCTS. THE LEARNED AUTHORISED REPRESENTA TIVE PLEADS THAT IN VIEW OF THE ABOVE REASONS; TATA ELXSI LTD . IS CLEARLY FUNCTIONALLY DIFFERENT/DIS-SIMILAR FROM THE ASSESSEE AND THEREFO RE OUGHT TO BE OMITTED FROM THE LIST OF COMPARABLES. 13.3 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENT ATIVE SUPPORTED THE STAND OF THE TPO IN INCLUDING THIS COMPANY IN THE L IST OF COMPARABLES. 13.4 WE HAVE HEARD BOTH PARTIES AND CAREFULLY PERUS ED AND CONSIDERED THE MATERIAL ON RECORD. FROM THE DETAILS ON RECORD, WE FIND THAT THIS COMPANY IS PREDOMINANTLY ENGAGED IN PRODUCT DESIGNING SERVICES AND NOT PURELY SOFTWARE DEVELOPMENT SERVICES. THE DETAILS I N THE ANNUAL REPORT SHOW THAT THE SEGMENT SOFTWARE DEVELOPMENT SERVICE S' RELATES TO DESIGN SERVICES AND ARE NOT SIMILAR TO SOFTWARE DEVELOPMEN T SERVICES PERFORMED BY THE ASSESSEE. 13.5 THE HON'BLE MUMBAI TRIBUNAL IN THE CASE OF TELCORDIA TECHNOLOGIES INDIA (P.) LTD. ( SUPRA ) HAS HELD THAT TATA ELXSI LTD . IS NOT A SOFTWARE DEVELOPMENT SERVICE PROVIDER AND THEREFORE IT IS NO T FUNCTIONALLY COMPARABLE. IN THIS CONTEXT THE RELEVANT PORTION OF THIS ORDER IS EXTRACTED AND REPRODUCED BELOW: ' . TATA ELXSI IS ENGAGED IN DEVELOPMENT OF NICHE PRODUCT AND DEVELOPMENT SERVICES WHICH IS ENTIRELY DIFFERENT FR OM THE ASSESSEE COMPANY. WE AGREE WITH THE CONTENTION OF THE LEARNE D AUTHORISED REPRESENTATIVE THAT THE NATURE OF PRODUCT DEVELOPED AND SERVICES PROVIDED BY THIS COMPANY ARE DIFFERENT FROM THE ASSESSEE AS HAVE BEEN NARRATED IN PARA 6.6 ABOVE. EVEN THE SEGMENTAL DETAILS FOR REVE NUE SALES HAVE NOT BEEN PROVIDED BY THE TPO SO AS TO CONSIDER IT AS A COMPA RABLE PARTY FOR COMPARING THE PROFIT RATIO FROM PRODUCT AND SERVICE S. THUS, ON THESE FACTS, WE ARE UNABLE TO TREAT THIS COMPANY AS FIT FOR COMP ARABILITY ANALYSIS FOR DETERMINING THE ARM'S LENGTH PRICE FOR THE ASSESSEE , HENCE, SHOULD BE EXCLUDED FROM THE LIST OF COMPARABLE PORTION.' AS CAN BE SEEN FROM THE EXTRACTS OF THE ANNUAL REPO RT OF THIS COMPANY PRODUCED BEFORE US, THE FACTS PERTAINING TO TATA EL XSI HAVE NOT CHANGED FROM ASSESSMENT YEAR 2007-08 TO ASSESSMENT YEAR 200 8-09. WE, THEREFORE, HOLD THAT THIS COMPANY IS NOT TO BE CONS IDERED FOR INCLUSION IN THE SET OF COMPARABLES IN THE CASE ON HAND. IT IS O RDERED ACCORDINGLY. IT(TP)A NO.227 & 285/BANG/2013 PAGE 27 OF 40 14. E-ZEST SOLUTIONS LTD. 14.1 THIS COMPANY WAS SELECTED BY THE TPO AS A COMP ARABLE. BEFORE THE TPO, THE ASSESSEE HAD OBJECTED TO THE INCLUSION OF THIS COMPANY AS A COMPARABLE ON THE GROUND THAT IT WAS FUNCTIONALLY D IFFERENT FROM THE ASSESSEE. THE TPO HAD REJECTED THE OBJECTIONS RAISE D BY THE ASSESSEE ON THE GROUND THAT AS PER THE INFORMATION RECEIVED IN RESP ONSE TO NOTICE UNDER SECTION 133(6) OF THE ACT, THIS COMPANY IS ENGAGED IN SOFTWARE DEVELOPMENT SERVICES AND SATISFIES ALL THE FILTERS. 14.2 BEFORE US, THE LEARNED AUTHORISED REPRESENTATI VE CONTENDED THAT THIS COMPANY OUGHT TO BE EXCLUDED FROM THE LIST OF COMPA RABLES ON THE GROUND THAT IT IS FUNCTIONALLY DIFFERENT TO THE ASSESSEE. IT IS SUBMITTED BY THE LEARNED AUTHORISED REPRESENTATIVE THAT THIS COMPANY IS ENGA GED IN 'E-BUSINESS CONSULTING SERVICES', CONSISTING OF WEB STRATEGY SE RVICES, I T DESIGN SERVICES AND IN TECHNOLOGY CONSULTING SERVICES INCL UDING PRODUCT DEVELOPMENT CONSULTING SERVICES. THESE SERVICES, TH E LEARNED AUTHORISED REPRESENTATIVE CONTENDS, ARE HIGH END ITES NORMALLY CATEGORISED AS KNOWLEDGE PROCESS OUTSOURCING ('KPO') SERVICES. IT IS FURTHER SUBMITTED THAT THIS COMPANY HAS NOT PROVIDED SEGMENTAL DATA I N ITS ANNUAL REPORT. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITS THAT SINCE THE ANNUAL REPORT OF THE COMPANY DOES NOT CONTAIN DETAILED DES CRIPTIVE INFORMATION ON THE BUSINESS OF THE COMPANY, THE ASSESSEE PLACES RE LIANCE ON THE DETAILS AVAILABLE ON THE COMPANY'S WEBSITE WHICH SHOULD BE CONSIDERED WHILE EVALUATING THE COMPANY'S FUNCTIONAL PROFILE. IT IS ALSO SUBMITTED BY THE LEARNED AUTHORISED REPRESENTATIVE THAT KPO SERVICES ARE NOT COMPARABLE TO SOFTWARE DEVELOPMENT SERVICES AND THEREFORE COMP ANIES RENDERING KPO SERVICES OUGHT NOT TO BE CONSIDERED AS COMPARABLE T O SOFTWARE DEVELOPMENT COMPANIES AND RELIED ON THE DECISION OF THE CO-ORDI NATE BENCH IN THE CASE OF CAPITAL IQ INFORMATION SYSTEMS (INDIA) (P.) LTD. V. DY. CIT (INTERNATIONAL TAXATION) [2013] 32 TAXMANN.COM 21 (HYD. - TRIB.) AND PRAYED THAT IN VIEW OF THE ABOVE REASONS, THIS COMP ANY I.E. E-ZEST SOFTWARE LTD ., OUGHT TO BE OMITTED FROM THE LIST OF COMPARABLES . 14.3 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENT ATIVE SUPPORTED THE INCLUSION OF THIS COMPANY IN THE LIST OF COMPARABLE S BY THE TPO. 14.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. IT IS SEEN FROM THE RECORD THAT THE TPO HAS INCLUDED THIS COMPANY IN THE LIST OF COMPARABLE S ONLY ON THE BASIS OF THE STATEMENT MADE BY THE COMPANY IN ITS REPLY TO T HE NOTICE UNDER SECTION 133(6) OF THE ACT. IT APPEARS THAT THE TPO HAS NOT EXAMINED THE SERVICES RENDERED BY THE COMPANY TO GIVE A FINDING WHETHER T HE SERVICES PERFORMED IT(TP)A NO.227 & 285/BANG/2013 PAGE 28 OF 40 BY THIS COMPANY ARE SIMILAR TO THE SOFTWARE DEVELOP MENT SERVICES PERFORMED BY THE ASSESSEE. FROM THE DETAILS ON RECO RD, WE FIND THAT WHILE THE ASSESSEE IS INTO SOFTWARE DEVELOPMENT SERVICES, THIS COMPANY I.E. E- ZEST SOFTWARE LTD ., IS RENDERING PRODUCT DEVELOPMENT SERVICES AND HI GH END TECHNICAL SERVICES WHICH COME UNDER THE CATEGORY OF KPO SERVICES. IT HAS BEEN HELD BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF CAPITAL I- Q INFORMATION SYSTEMS (INDIA) (P.) LTD. ( SUPRA ) THAT KPO SERVICES ARE NOT COMPARABLE TO SOFTWARE DEVELOPMENT SERVICES AND ARE THEREFORE NOT COMPARABLE. FOLLOWING THE AFORESAID DECISION OF THE CO-ORDINATE BENCH OF THE HYDERABAD TRIBUNAL IN THE AFORESAID CASE, WE HO LD THAT THIS COMPANY, I.E. E-ZEST SOFTWARE LTD . BE OMITTED FROM THE SET OF COMPARABLES FOR THE PERIOD UNDER CONSIDERATION IN THE CASE ON H AND. THE A.O. /TPO ARE ACCORDINGLY DIRECTED. 15. THIRDWARE SOLUTIONS LTD. (SEGMENT) 15.1 THIS COMPANY WAS PROPOSED FOR INCLUSION IN THE LIST OF COMPARABLES BY THE TPO. BEFORE THE TPO, THE ASSESSEE OBJECTED T O THE INCLUSION OF THIS COMPANY IN THE LIST OF COMPARABLES ON THE GROUND TH AT ITS TURNOVER WAS IN EXCESS OF RS. 500 CRORES. BEFORE US, THE ASSESSEE H AS OBJECTED TO THE INCLUSION OF THIS COMPANY AS A COMPARABLE FOR THE R EASON THAT APART FROM SOFTWARE DEVELOPMENT SERVICES, IT IS IN THE BU SINESS OF PRODUCT DEVELOPMENT AND TRADING IN SOFTWARE AND GIVING LICE NSES FOR USE OF SOFTWARE. IN THIS REGARD, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT: (I) THIS COMPANY IS ENGAGED IN PRODUCT DEVELOPMENT AND EARNS REVENUE FROM SALE OF LICENCES AND SUBSCRIPTION. IT HAS BEEN POINTED OUT FROM THE ANNUAL REPORT THAT THE COMPANY HAS NOT PROVIDED ANY SEPARATE SEGMENTAL PROFIT AND LOSS ACCOUNT FOR SOFTWARE DEVE LOPMENT SERVICES AND PRODUCT DEVELOPMENT SERVICES. (II) IN THE CASE OF E-GAIN COMMUNICATIONS (P.) LTD. V. ITO [2009] 118 ITD 243/ [2008] 23 SOT 385 (PUNE) , THE TRIBUNAL HAS DIRECTED THAT THIS COMPANY BE OMITTED AS A COMPARABLE FOR SOFTWARE SER VICE PROVIDERS, AS ITS INCOME INCLUDES INCOME FROM SALE OF LICENCES WH ICH HAS INCREASED THE MARGINS OF THE COMPANY. THE LEARNED A.R. PRAYED THAT IN THE LIGHT OF THE AB OVE FACTS AND IN VIEW OF THE AFORE CITED DECISION OF THE TRIBUNAL (SUPRA), T HIS COMPANY OUGHT TO BE OMITTED FROM THE LIST OF COMPARABLES. 15.2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENT ATIVE SUPPORTED THE ACTION OF THE TPO IN INCLUDING THIS COMPANY IN THE LIST OF COMPARABLES. IT(TP)A NO.227 & 285/BANG/2013 PAGE 29 OF 40 15.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. IT IS SEEN FROM THE MATERIAL ON RECORD THAT THE COMPANY IS ENGAGED IN PRODUCT DEVELOPMENT AND EARNS REVENUE FROM SALE OF LICENSES AND SUBSCRIPTION. HOWEVER, TH E SEGMENTAL PROFIT AND LOSS ACCOUNTS FOR SOFTWARE DEVELOPMENT SERVICES AND PRODUCT DEVELOPMENT ARE NOT GIVEN SEPARATELY. FURTHER, AS POINTED OUT B Y THE LEARNED AUTHORISED REPRESENTATIVE, THE PUNE BENCH OF THE TRIBUNAL IN T HE CASE OF E-GAIN COMMUNICATIONS (P.) LTD. ( SUPRA ) HAS DIRECTED THAT SINCE THE INCOME OF THIS COMPANY INCLUDES INCOME FROM SALE OF LICENSES, IT O UGHT TO BE REJECTED AS A COMPARABLE FOR SOFTWARE DEVELOPMENT SERVICES. IN TH E CASE ON HAND, THE ASSESSEE IS RENDERING SOFTWARE DEVELOPMENT SERVICES . IN THIS FACTUAL VIEW OF THE MATTER AND FOLLOWING THE AFORE CITED DECISION O F THE PUNE TRIBUNAL ( SUPRA ), WE DIRECT THAT THIS COMPANY BE OMITTED FROM THE LIST OF COMPARABLES FOR THE PERIOD UNDER CONSIDERATION IN T HE CASE ON HAND. 16. LUCID SOFTWARE LTD. 16.1 THIS COMPANY WAS SELECTED AS A COMPARABLE BY T HE TPO. BEFORE US, THE ASSESSEE HAS OBJECTED TO THE INCLUSION OF THIS COMPANY AS A COMPARABLE ON THE GROUNDS THAT IT IS INTO SOFTWARE PRODUCT DEV ELOPMENT AND THEREFORE FUNCTIONALLY DIFFERENT FROM THE ASSESSEE. IN THIS R EGARD, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT (I) THIS COMPANY IS ENGAGED IN THE DEVELOPMENT OF SOFTWARE PRODUCTS. (II) THIS COMPANY HAS BEEN HELD TO BE FUNCTIONALLY DIFFERENT AND THEREFORE NOT COMPARABLE TO SOFTWARE SERVICE PROVIDERS BY THE ORDER OF A CO- ORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEE'S OW N CASE FOR ASSESSMENT YEAR 2007-08 (IT(TP)A NO.845/BANG/2011), FOLLOWING THE DECISION OF MUMBAI TRIBUNAL IN THE CASE OF TELCORDIA TECHNOLOGIES INDIA (P.) LTD.(ITA NO.7821/MUM/2011) (III)THE REJECTION OF THIS COMPANY AS A COMPARABLE TO SOFTWARE SERVICE PROVIDERS HAS BEEN UPHELD BY THE CO-ORDINATE BENCHE S OF THIS TRIBUNAL IN THE CASES OF LG SOFT INDIA (P.) LTD AND CSR INDIA (P.) LTD. ( SUPRA ) AND BY THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF TRANSWITCH INDIA (P.) LTD. ( SUPRA ).(ITA NO.6083/DEL/2010) (IV) THE FACTUAL POSITION AND CIRCUMSTANCES PERTAIN ING TO THIS COMPANY HAS NOT CHANGED FROM THE EARLIER ASSESSMENT YEAR 2007-0 8 TO THE PERIOD UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2008-09 AN D THEREFORE ON THIS BASIS, THIS COMPANY CANNOT BE CONSIDERED AS A COMPA RABLE IN THE CASE ON HAND. (V) THE RELEVANT PORTION OF THE ANNUAL REPORT OF TH IS COMPANY EVIDENCES THAT IT IS IN THE BUSINESS OF PRODUCT DEVELOPMENT. IT(TP)A NO.227 & 285/BANG/2013 PAGE 30 OF 40 THE LEARNED AUTHORISED REPRESENTATIVE PRAYS THAT IN VIEW OF THE FACTUAL POSITION AS LAID OUT ABOVE AND THE DECISIONS OF THE CO-ORDINATE BENCHES OF THE TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSM ENT YEAR 2007-08 AND OTHER CASES CITED ABOVE, IT IS CLEAR THAT THIS COMP ANY BEING INTO PRODUCT DEVELOPMENT CANNOT BE CONSIDERED AS A COMPARABLE TO THE ASSESSEE IN THE CASE ON HAND WHO IS A SOFTWARE SERVICE PROVIDER AND THEREFORE THIS COMPANY I.E. LUCID SOFTWARE LTD ., OUGHT TO BE OMITTED FROM THE LIST OF COMPARABLES. 16.2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENT ATIVE SUPPORTED THE ACTION AND FINDING OF THE TPO IN INCLUDING THIS COM PANY IN THE LIST OF COMPARABLES. 16.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. IT IS SEEN FROM THE DETAILS ON RECORD THAT THE COMPANY I.E. LUCID SOFTWARE LTD ., IS ENGAGED IN THE DEVELOPMENT OF SOFTWARE PRODUCTS WHEREAS THE ASSESSEE, IN THE C ASE ON HAND, IS IN THE BUSINESS OF PROVIDING SOFTWARE DEVELOPMENT SERVICES . WE ALSO FIND THAT, CO-ORDINATE BENCHES OF THE TRIBUNAL IN THE ASSESSEE 'S OWN CASE FOR ASSESSMENT YEAR 2007-08 (IT (TP) A NO.845/BANG/2011 ), LG SOFT INDIA (P.) LTD. ( SUPRA ), CSR INDIA (P.) LTD. ( SUPRA ); THE ITAT, MUMBAI BENCH IN THE CASE OF TELCORDIA TECHNOLOGIES INDIA (P.) LTD ( SUPRA ) AND THE DELHI ITAT IN THE CASE OF TRANSWITCH INDIA (P.) LTD. ( SUPRA ) HAVE HELD THAT SINCE THIS COMPANY, IS ENGAGED IN THE SOFTWARE PRODUCT DE VELOPMENT AND NOT SOFTWARE DEVELOPMENT SERVICES, IT IS FUNCTIONAL LY DIFFERENT AND DIS- SIMILAR AND IS THEREFORE TO BE OMITTED FROM THE LIS T OF COMPARABLES FOR SOFTWARE DEVELOPMENT SERVICE PROVIDERS. THE ASS ESSEE HAS ALSO BROUGHT ON RECORD DETAILS TO DEMONSTRATE THAT THE FACTUAL A ND OTHER CIRCUMSTANCES PERTAINING TO THIS COMPANY HAVE NOT CHANGED MATERIA LLY FROM THE EARLIER YEAR I.E. ASSESSMENT YEAR 2007-08 TO THE PERIOD UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2008-09. IN THIS FACTUAL MATRIX AN D FOLLOWING THE AFORE CITED DECISIONS OF THE CO-ORDIN ATE BENCHES OF THIS TRIBUNAL AND OF THE ITAT, MUMBAI AND DELHI BENCHES ( SUPRA ), WE DIRECT THAT THIS COMPANY BE OMITTED FROM THE LIST OF COMPA RABLES FOR THE PERIOD UNDER CONSIDERATION IN THE CASE ON HAND. 17. PERSISTENT SYSTEMS LTD. 17.1 THIS COMPANY WAS SELECTED BY THE TPO AS A COMP ARABLE. THE ASSESSEE OBJECTED TO THE INCLUSION OF THIS COMPANY AS A COMP ARABLE FOR THE REASONS THAT THIS COMPANY BEING ENGAGED IN SOFTWARE PRODUCT DESIGNING AND ANALYTIC SERVICES, IT IS FUNCTIONALLY DIFFERENT AND FURTHER THAT SEGMENTAL RESULTS ARE NOT AVAILABLE. THE TPO REJECTED THE ASS ESSEE'S OBJECTIONS ON THE GROUND THAT AS PER THE ANNUAL REPORT FOR THE COMPAN Y FOR FINANCIAL YEAR IT(TP)A NO.227 & 285/BANG/2013 PAGE 31 OF 40 2007-08, IT IS MAINLY A SOFTWARE DEVELOPMENT COMPAN Y AND AS PER THE DETAILS FURNISHED IN REPLY TO THE NOTICE UNDER SECT ION 133(6) OF THE ACT, SOFTWARE DEVELOPMENT CONSTITUTES 96% OF ITS RE VENUES. IN THIS VIEW OF THE MATTER, THE ASSESSING OFFICER INCLUDED THIS COM PANY I.E. PERSISTENT SYSTEMS LTD ., IN THE LIST OF COMPARABLES AS IT QUALIFIED THE F UNCTIONALITY CRITERION. 17.2 BEFORE US, THE ASSESSEE OBJECTED TO THE INCLUS ION OF THIS COMPANY AS A COMPARABLE SUBMITTING THAT THIS COMPANY IS FUNCTION ALLY DIFFERENT AND ALSO THAT THERE ARE SEVERAL OTHER FACTORS ON WHICH THIS COMPANY CANNOT BE TAKEN AS A COMPARABLE. IN THIS REGARD, THE LEARNED AUTHOR ISED REPRESENTATIVE SUBMITTED THAT: ( I ) THIS COMPANY IS ENGAGED IN SOFTWARE DESIGNING SERVI CES AND ANALYTIC SERVICES AND THEREFORE IT IS NOT PUREL Y A SOFTWARE DEVELOPMENT SERVICE PROVIDER AS IS THE A SSESSEE IN THE CASE ON HAND. ( II ) PAGE 60 OF THE ANNUAL REPORT OF THE COMPANY FOR F.Y . 2007-08 INDICATES THAT THIS COMPANY, IS PREDOMINANT LY ENGAGED IN 'OUTSOURCED SOFTWARE PRODUCT DEVELOPMEN T SERVICES' FOR INDEPENDENT SOFTWARE VENDORS AND ENTE RPRISES. ( III ) WEBSITE EXTRACTS INDICATE THAT THIS COMPANY IS IN T HE BUSINESS OF PRODUCT DESIGN SERVICES. ( IV ) THE ITAT, MUMBAI BENCH IN THE CASE OF TELCORDIA TECHNOLOGIES INDIA (P.) LTD. ( SUPRA ) WHILE DISCUSSING THE COMPARABILITY OF ANOTHER COMPANY, NAMELY LUCID SOFT WARE LTD. HAD RENDERED A FINDING THAT IN THE ABSENCE OF SEGMENTAL INFORMATION, A COMPANY BE TAKEN INTO ACCOUNT FOR COMPARABILITY ANALYSIS. THIS PRINCIPLE IS SQUARELY APPLICABLE TO THE COMPANY PRESENTLY UNDER CONSIDERATION, WHICH IS INTO PRODUCT DEVELOPMENT AND PRODUCT DESIGN SERVICES AND FOR WHICH THE SEGMENTAL DATA IS NOT AVAILABLE. THE LEARNED AUTHORISED REPRESENTATIVE PRAYS THAT IN VIEW OF THE ABOVE, THIS COMPANY I.E. PERSISTENT SYSTEMS LTD . BE OMITTED FROM THE LIST OF COMPARABLES. 17.2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENT ATIVE SUPPORT THE ACTION OF THE TPO IN INCLUDING THIS COMPANY IN THE LIST OF COMPARABLES. IT(TP)A NO.227 & 285/BANG/2013 PAGE 32 OF 40 17.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. IT IS SEEN FROM THE DETAILS ON RECORD THAT THIS COMPANY I.E. PERSISTENT SYSTEMS LTD ., IS ENGAGED IN PRODUCT DEVELOPMENT AND PRODUCT DESIGN SERVICES WHILE THE A SSESSEE IS A SOFTWARE DEVELOPMENT SERVICES PROVIDER. WE FIND THAT, AS SUB MITTED BY THE ASSESSEE, THE SEGMENTAL DETAILS ARE NOT GIVEN SEPARATELY. THE REFORE, FOLLOWING THE PRINCIPLE ENUNCIATED IN THE DECISION OF THE MUMBAI TRIBUNAL IN THE CASE OF TELCORDIA TECHNOLOGIES INDIA (P.) LTD. ( SUPRA ) THAT IN THE ABSENCE OF SEGMENTAL DETAILS/INFORMATION A COMPANY CANNOT BE T AKEN INTO ACCOUNT FOR COMPARABILITY ANALYSIS, WE HOLD THAT THIS COMPANY I .E. PERSISTENT SYSTEMS LTD . OUGHT TO BE OMITTED FROM THE SET OF COMPARABLES F OR THE YEAR UNDER CONSIDERATION. IT IS ORDERED ACCORDINGLY. 18. QUINTEGRA SOLUTIONSLTD. 18.1 THIS CASE WAS SELECTED BY THE TPO AS A COMPARA BLE. BEFORE THE TPO, THE ASSESSEE OBJECTED TO THE INCLUSION OF THIS COMP ANY IN THE SET OF COMPARABLES ON THE GROUND THAT THIS COMPANY IS FUNC TIONALLY DIFFERENT AND ALSO THAT THERE WERE PECULIAR ECONOMIC CIRCUMSTANCE S IN THE FORM OF ACQUISITIONS MADE DURING THE YEAR. THE TPO REJECTED THE ASSESSEE'S OBJECTIONS HOLDING THAT THIS COMPANY QUALIFIES ALL THE FILTERS APPLIED BY THE TPO. ON THE ISSUE OF ACQUISITIONS, THE TPO REJECTED THE ASSESSEE'S OBJECTIONS OBSERVING THAT THE ASSESSEE HAS NOT ADDU CED ANY EVIDENCE AS TO HOW THIS EVENT HAD ANY INFLUENCE ON THE PRICING OR THE MARGIN EARNED. 18.2 BEFORE US, THE ASSESSEE OBJECTED TO THE INCLUS ION OF THIS COMPANY FOR THE REASON THAT IT IS FUNCTIONALLY DIFFERENT AND AL SO THAT THERE ARE OTHER FACTORS FOR WHICH THIS COMPANY CANNOT BE CONSIDERED AS A COMPARABLE. IT WAS SUBMITTED THAT, ( I ) QUINTEGRA SOLUTIONS LTD., THE COMPANY UNDER CONSIDE RATION, IS ENGAGED IN PRODUCT ENGINEERING SERVICES AND NOT IN PURELY SOFTWARE DEVELOPMENT SERVICES. THE ANNUAL RE PORT OF THIS COMPANY ALSO STATES THAT IT IS ENGAGED IN PREPARATORY SOFTWARE PRODUCTS AND IS THEREFORE NOT SIMILAR TO THE ASSESSEE IN THE CASE ON HAND. ( II ) IN ITS ANNUAL REPORT, THE SERVICES RENDERED BY THE COMPANY ARE DESCRIBED AS UNDER : 'LEVERAGING ITS PROVEN GLOBAL MODEL, QUINTEGRA PROV IDES A FULL RANGE OF CUSTOM IT SOLUTION (SUCH AS DEVELOPME NT, IT(TP)A NO.227 & 285/BANG/2013 PAGE 33 OF 40 TESTING, MAINTENANCE, SAP, PRODUCT ENGINEERING AND INFRASTRUCTURE MANAGEMENT SERVICES), PROPRIETARY SO FTWARE PRODUCTS AND CONSULTANCY SERVICES IN IT ON VARIOUS PLATFORMS AND TECHNOLOGIES.' ( III ) THIS COMPANY IS ALSO ENGAGED IN RESEARCH AND DEVELO PMENT ACTIVITIES WHICH RESULTED IN THE CREATION OF INTELL ECTUAL PROPRIETARY RIGHTS (IPRS) AS CAN BE EVIDENCED FROM THE STATEMENTS MADE IN THE ANNUAL REPORT OF THE COMPANY FOR THE PERIOD UNDER CONSIDERATION, WHICH IS AS UNDER : 'QUINTEGRA HAS TAKEN VARIOUS MEASURES TO PRESERVE I TS INTELLECTUAL PROPERTY. ACCORDINGLY, SOME OF THE PRO DUCTS DEVELOPED BY THE COMPANY HAVE BEEN COVERED BY THE PATENT RIGHTS. THE COMPANY HAS ALSO APPLIED FOR TRADE MARK REGISTRATION FOR ONE OF ITS PRODUCTS, VIZ. INV ESTOR PROTECTION INDEX FUND (IPIF). THESE MEASURES WILL H ELP THE COMPANY ENHANCE ITS PRODUCTS VALUE AND ALSO MITIGAT E RISKS.' ( IV ) THE TPO HAS APPLIED THE FILTER OF EXCLUDING COMPANI ES HAVING PECULIAR ECONOMIC CIRCUMSTANCES. QUINTEGRA F AILS THE TPO'S OWN FILTER SINCE THERE HAVE BEEN ACQUISIT IONS IN THIS CASE, AS IS EVIDENCED FROM THE COMPANY'S ANNUA L REPORT FOR F.Y. 2007-08, THE PERIOD UNDER CONSIDERA TION. THE LEARNED AUTHORISED REPRESENTATIVE PRAYS THAT IN VIEW OF THE SUBMISSIONS MADE ABOVE, IT IS CLEAR THAT INTER ALIA, THIS COMPANY I.E. QUINTEGRA SOLUTION LTD . BEING FUNCTIONALLY DIFFERENT AND POSSESSING ITS O WN INTANGIBLES/IPRS, IT CANNOT BE CONSIDERED AS A COMP ARABLE TO THE ASSESSEE IN THE CASE ON HAND AND THEREFORE OUGHT TO BE EXCLUDED FROM THE LIST OF COMPARABLES FOR THE PERIOD UNDER CONSIDERATION. 18.3 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENT ATIVE SUPPORTED THE ACTION OF THE TPO IN INCLUDING THIS COMPANY IN THE SET OF COMPARABLES TO THE ASSESSEE FOR THE PERIOD UNDER CONSIDERATION. 18.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. IT IS SEEN FROM THE DETAILS BROUGHT ON RECORD THAT THIS COMPANY I.E. QUINTEGRA SOLUTIONS LTD . IS ENGAGED IN PRODUCT ENGINEERING SERVICES AND IS NOT PURELY A SO FTWARE DEVELOPMENT SERVICE PROVIDER AS IS THE ASSESSEE IN THE CASE ON HAND. IT IS ALSO SEEN THAT THIS COMPANY IS ALSO ENGAGED IN PROPRIETARY SOFTWAR E PRODUCTS AND HAS IT(TP)A NO.227 & 285/BANG/2013 PAGE 34 OF 40 SUBSTANTIAL R&D ACTIVITY WHICH HAS RESULTED IN CREA TION OF ITS IPRS. HAVING APPLIED FOR TRADE MARK REGISTRATION OF ITS PRODUCTS , IT EVIDENCES THE FACT THAT THIS COMPANY OWNS INTANGIBLE ASSETS. THE CO-ORDINAT E BENCH OF THIS TRIBUNAL IN THE CASE OF 24/7 CUSTOMER.COM (P.) LTD . ( SUPRA ) HAS HELD THAT IF A COMPANY POSSESSES OR OWNS INTANGIBLES OR IPRS, TH EN IT CANNOT BE CONSIDERED AS A COMPARABLE COMPANY TO ONE THAT DOES NOT OWN INTANGIBLES AND REQUIRES TO BE OMITTED FROM THE LIST OF COMPARA BLES, AS IN THE CASE ON HAND. 18.5 WE ALSO FIND FROM THE ANNUAL REPORT OF QUINTEG RA SOLUTION LTD . THAT THERE HAVE BEEN ACQUISITIONS MADE BY IT IN THE PERI OD UNDER CONSIDERATION. IT IS SETTLED PRINCIPLE THAT WHERE EXTRAORDINARY EV ENTS HAVE TAKEN PLACE, WHICH HAS AN EFFECT ON THE PERFORMANCE OF THE COMPA NY, THEN THAT COMPANY SHALL BE REMOVED FROM THE LIST OF COMPARABLES. 18.6 RESPECTFULLY FOLLOWING THE DECISION OF THE CO- ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF 24/7 CUSTOMER.COM (P.) LTD. ( SUPRA ), WE DIRECT THAT THIS COMPANY I.E. QUINTEGRA SOLUTION LTD . BE EXCLUDED FROM THE LIST OF COMPARABLES IN THE CASE ON HAND SINCE IT IS ENGAGED IN PROPRIETARY SOFTWARE PRODUCTS AND OWNS ITS OWN INTANGIBLES UNLIKE THE AS SESSEE IN THE CASE ON HAND WHO IS A SOFTWARE SERVICE PROVIDER. 19. SOFTSOL INDIA LTD. 19.1 THIS COMPANY WAS SELECTED BY THE TPO AS A COMP ARABLE. THE ASSESSEE OBJECTED TO THE INCLUSION OF THIS COMPANY AS A COMP ARABLE ON THE GROUNDS THAT THIS COMPANY IS FUNCTIONALLY DIFFERENT AND DIS -SIMILAR FROM IT. THE TPO REJECTED THE ASSESSEE'S OBJECTIONS ON THE GROUND TH AT AS PER THE COMPANY'S REPLY TO THE NOTICE UNDER SECTION 133(6) OF THE ACT , THE COMPANY HAS CATEGORIZED ITSELF AS A PURE SOFTWARE DEVELOPER AND THEREFORE INCLUDED THIS COMPANY AS A COMPARABLE AS THE ASSESSEE WAS ALSO A PROVIDER OF SOFTWARE DEVELOPMENT SERVICES. BEFORE US, IN ADDITION TO THE PLEA THAT THE COMPANY WAS FUNCTIONALLY DIFFERENT, THE ASSESSEE SUBMITTED THAT THIS COMPANY WAS EXCLUDED FROM THE LIST OF COMPARABLES BY THE ORDER OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASS ESSMENT YEAR 2007-08 (ITA NO. 845/BANG./2011) ON THE GROUND THAT THE 'RE LATED PARTY TRANSACTIONS ('RPT') IS IN EXCESS OF 15%. THE LEARN ED AUTHORISED REPRESENTATIVE SUBMITTED THAT FOR THE CURRENT PERIO D UNDER CONSIDERATION, THE RPT IS 18.3% AND THEREFORE THIS COMPANY REQUIRE S TO BE OMITTED FROM THE LIST OF COMPARABLES. 19.2 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENT ATIVE SUPPORTED THE ACTION OF THE TPO IN INCLUDING THIS COMPANY IN THE LIST OF COMPARABLES AS THIS COMPANY WAS A PURE SOFTWARE DEVELOPMENT SERVIC E PROVIDER LIKE THE ASSESSEE. IT(TP)A NO.227 & 285/BANG/2013 PAGE 35 OF 40 19.3 WE HAVE HEARD BOTH PARTIES AND PERUSED AND CAR EFULLY CONSIDERED THE MATERIAL ON RECORD. WE FIND THAT THE CO-ORDINATE BE NCH OF THIS TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2007-08 IN ITA NO.845/BANG/2011 HAS EXCLUDED THIS COMPANY FROM THE SET OF COMPARABLES FOR THE REASON THAT RPT IS IN EXCESS OF 15% FOLLOWI NG THE DECISION OF ANOTHER BENCH OF THIS TRIBUNAL IN THE CASE OF 24/7 CUSTOMER.COM (P.) LTD. ( SUPRA ). AS THE FACTS FOR THIS YEAR ARE SIMILAR AND MATER IAL ON RECORD ALSO INDICATES THAT RPT IS 18.3%, FOLLOWING THE AFORE CITED DECISIONS OF THE CO-ORDINATE BENCHES ( SUPRA ), WE HOLD THAT THIS COMPANY IS TO BE OMITTED FROM THE LIST OF COMPARABLES TO THE ASSESSE E IN THE CASE ON HAND. 23. THUS, IT IS CLEAR FROM THE FINDINGS OF THE CO- ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF M/S 3DPLM SOFTWARE SOLUTIONS LTD (SU PRA) THAT EXCEPT BODHTREE LTD ALL OTHER 12 COMPANIES WERE FOUND TO BE NOT GOOD COMPARABLES OF THE SOFTWARE DEVELOPMENT SERVICES AS PROVIDED BY ASS ESSEE. 24. AS REGARD THE OBJECTION OF THE LD. DR THAT QUI NTEGRA SOLUTION LTD . HAS BEEN SELECTED BY THE ASSESSEE ITSELF, WE NOTICE THAT THE FUNCTIONAL COMPARABILITY OF THIS COMPANY HAS BEEN EXAMINED BY THE TRIBUNAL IN THE CA SE OF M/S 3DPLM SOFTWARE SOLUTIONS LTD (SUPRA) AND IT WAS FOUND THAT THE SAI D COMPANY IS ENGAGED IN THE DIFFERENT FIELD OF SERVICES I.E. PRODUCT DESIGNING AND ANALYTIC SERVICES AS WELL AS IN PROPRIETARY OF SOFTWARE PRODUCT AND ARE IN RESEARCH AND DEVELOPMENT ACTIVITY WHICH HAS RESULTED IN CREATION OF ITS INTELLECTUAL PROPERTY RIGHTS. THEREFORE, THE SAID COMPANY IS NOT FUNCTIONALLY COMPARABLE WITH PU RE SOFTWARE DEVELOPMENT SERVICE ACTIVITY. ONCE THE COMPANY IS FOUND TO BE A NON-COMPARABLE COMPANY WITH THE ASSESSEE, THE SAME IS REQUIRED TO BE EXCLU DED FROM THE SET OF COMPARABLES EVEN IF THE SAID COMPANY IS SELECTED BY THE ASSESSEE ITSELF. THIS VIEW WAS TAKEN BY THE DECISION OF THE SPECIAL BENCH OF CHANDIGARH TRIBUNAL IN THE CASE QUARK SYSTEMS (P.) LTD (SUPRA). 25. THUS, OUT OF 20 COMPARABLES, 12 COMPANIES ARE REQUIRED TO BE EXCLUDED FROM THE LIST OF COMPARABLES FOR DETERMINING THE ALP. A CCORDINGLY, WE DIRECT THE TPO/AO TO EXCLUDE THE FOLLOWING COMPANIES FROM THE SET OF COMPARABLES AND RECOMPUTED THE ALP AFTER CONSIDERING THE CLAIM OF RISK ADJUSTMENT AS WELL AS WORKING CAPITAL ADJUSTMENT: S.NO. NAME OF THE COMPANY 1 AVANI CIMCON TECHNOLOGIES LTD 2 CELESTIAL BIOLABS LTD 3 E-ZEST SOLUTIONS LTD 4 INFOSYS TECHNOLOGIES LTD 5 KALS INFORMATION SYSTEMS LTD (SEG.) 6 LUCID SOFTWARE LTD 7 PERSISTENT SYSTEMS LTD 8 QUINTEGRA SOLUTIONS LTD 9 SOFTSOLE INDIA LTD IT(TP)A NO.227 & 285/BANG/2013 PAGE 36 OF 40 10 TATA ELXSI LTD (SEG.) 11 THIRDWARE SOLUTIONS LTD (SEG 12 WIPRO LTD (SEG.) 14. FROM THE ABOVE PARA 25 OF THE TRIBUNALS ORDER REPRODUCED, IT IS SEEN THAT OUT OF SAME 20 COMPARABLES, IT WAS HELD BY THE TRIBUNAL THAT 12 COMPANIES ARE REQUIRED TO BE EXCLUDED FROM THE LIST OF COMPARABLES FOR DET ERMINING THE ALP. NO DIFFERENCE IN FACTS COULD BE POINTED OUT BY THE LD. DR OF REVE NUE IN THE PRESENT CASE AND IN THAT CASE I.E. KODIAK NETWORKS INDIA PVT. LTD. V. DCIT (SUPRA). IN THAT CASE ALSO, THE ISSUE IN DISPUTE WAS REGARDING TP ADJUSTMENT IN RESPECT O F SOFTWARE DEVELOPMENT ACTIVITY OF THE ASSESSEE AS IN THE PRESENT CASE. THE 20 COM PARABLES SELECTED BY THE TPO IN THE PRESENT CASE AND IN THAT CASE ARE THE SAME. THE REASONING GIVEN BY THE TRIBUNAL IN THAT CASE FOR EXCLUSION OF 12 COMPARABLES IS THI S THAT THESE COMPANIES ARE FUNCTIONALLY DISSIMILAR AND DIFFERENT. IN THE PRES ENT CASE, THE FUNCTION OF THE ASSESSEE COMPANY IS CLAIMED TO BE SIMILAR TO THAT C OMPANY I.E. KODIAK NETWORKS INDIA PVT. LTD. V. DCIT (SUPRA) AND THE LEARNED DR OF THE REVENUE COULD NOT POINT O UT ANY DIFFERENCE IN THE FUNCTION OF THE PRESENT ASSES SEE COMPANY AND THAT COMPANY I.E. KODIAK NETWORKS INDIA PVT. LTD. V. DCIT (SUPRA). T HEREFORE, BY RESPECTFULLY FOLLOWING THAT TRIBUNAL ORDER, WE HOLD THAT IN THE PRESENT CASE ALSO, THE SAME 12 COMPARABLES ARE TO BE EXCLUDED FOR WORKING OUT THE ALP, AS WAS HELD BY THE TRIBUNAL IN THAT CASE. AS PER THE WORKING SUBMITTE D BY THE LD.AR OF THE ASSESSEE, IT IS SEEN THAT WHEN THE SAID 12 COMPARABLES ARE EXCLU DED, THE ALP AS PER THE WORKING OF REMAINING 8 COMPARABLES IS 14.35% WITHOUT ADJUST MENT ON ACCOUNT OF WORKING CAPITAL MARGIN AND 13.86% AFTER ADJUSTMENT ON ACCOU NT OF WORKING CAPITAL MARGIN AND THE SAID WORKING SUBMITTED BY THE ASSESSEE ON P AGE 11 OF WRITTEN SUBMISSIONS FILED BEFORE US ON THE DATE OF HEARING IS REPRODUCE D HEREINBELOW:- IT(TP)A NO.227 & 285/BANG/2013 PAGE 37 OF 40 SI.NO. NAME OF THE COMPANY OPERATING MARGIN ADJ. MARGIN 1 LGS GLOBAL LTD (LANCO GLOBAL SOLUTIONS 27.52% 26.95% 2 R S SOFTWARE (INDIA) LTD 7.41% 8.68% 3 R SYSTEMS INTERNATIONAL LTD (SEG.) 15.30% 13.79% 4 BODHTREE LTD 18.72% 19.60% 5 FLEXTRONICS SOFTWARE SYSTEMS LTD 7.86% 6.42% 6 IGATE GLOBAL SOLUTIONS LTD 13.99% 12.58% 7 MINDTREE CONSULTING (SEG) 16.41% 15.68% 8 SASKEN COMMUNICATION TECHNOLOGIES LTD 7.58% 7.14% ARM'S LENGTH MARGIN 14.35% 13.86% 15. AS PER THE ABOVE WORKING, EVEN IF WE CONSIDER T HE OPERATING MARGIN WITHOUT EXCLUDING THE WORKING CAPITAL ADJUSTMENT, THE SAME IS 14.35% WHICH IS WITHIN +/- 5% RANGE OF THE ASSESSEES OPERATING PROFIT REPORTED A T 9.60% AND THEREFORE NO TP ADJUSTMENT IS CALLED FOR. WE HOLD ACCORDINGLY. 16. THIS TAKES CARE OF ALL THE MAIN GROUNDS OF THE ASSESSEES APPEAL AS WELL AS ADDITIONAL GROUNDS 1 & 2. REGARDING ADDITIONAL GROU ND NO. 3 OF THE ASSESSEE, IN RESPECT OF INCLUSION OF ONE MORE COMPARABLE I.E., I NDIUM SOFTWARE INDIA LTD., WE HOLD THAT NO ADJUDICATION IS CALLED FOR ON THIS ASPECT I N THE FACTS OF THE PRESENT CASE BECAUSE EVEN WITHOUT INCLUDING THIS COMPARABLE, NO TP ADJUSTMENT IS JUSTIFIED AS PER OUR DECISION ABOVE BY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL RENDERED IN THE CASE OF KODIAK NETWORKS INDIA PVT. LTD. V. DCIT (SUPRA) . 17. REGARDING VARIOUS GROUNDS BEING GROUND NO.1 TO 10 OF REVENUES APPEAL REGARDING EXCLUSION OF VARIOUS COMPARABLES, WE FIND THAT REGARDING VARIOUS COMPARABLES NOTED IN GROUND NO.2 OF REVENUES APPEA L I.E., M/S. FLEXTRONICS LTD., M/S. IGATE GLOBAL SOLUTIONS LTD., M/S. MINDTREE LTD . AND M/S. SASKEN COMMUNICATION TECHNOLOGIES LTD., IT WAS HELD BY THE TRIBUNAL IN T HE CASE OF KODIAK NETWORKS INDIA IT(TP)A NO.227 & 285/BANG/2013 PAGE 38 OF 40 PVT. LTD. V. DCIT (SUPRA) THAT THESE COMPARABLES ARE NOT TO BE EXCLUDED AND THEREFORE, IN THE PRESENT CASE ALSO, WE HAVE HELD T HAT THESE COMPARABLES ARE NOT TO BE EXCLUDED. TO THIS EXTENT, GROUND NO.2 OF THE RE VENUES APPEAL STANDS ALLOWED. 18. REGARDING THE REMAINING COMPARABLES NOTED BY TH E REVENUE IN GROUND NO.2, I.E., INFOSYS TECHNOLOGIES LTD., PERSISTENT SYSTEMS LTD., TATA ELXSI LTD. AND WIPRO LTD., IT WAS HELD BY THE TRIBUNAL IN THAT CASE THAT THESE COMPARABLES ARE TO BE EXCLUDED AND THEREFORE, THIS PART OF GROUND NO.2 OF THE REVENUES APPEAL STANDS REJECTED BY FOLLOWING THE DECISION OF THE COORDINAT E BENCH OF THE TRIBUNAL IN THE CASE OF KODIAK NETWORKS INDIA PVT. LTD. V. DCIT (SUPRA) . 19. REGARDING GROUND NO.3 OF REVENUES APPEAL, WE F IND THAT EVEN WITHOUT INCLUDING THIS COMPARABLE I.E., VGL SOFTECH LTD., N O TP ADJUSTMENT IS JUSTIFIED AS PER OUR DECISION ABOVE BY FOLLOWING THE COORDINATE BENC HS DECISION OF THE TRIBUNAL AND EVEN IF THIS COMPARABLE IS INCLUDED, THIS COMPARABL E HAS OPERATING MARGIN ON COST OF 12.39% AND THEREFORE, IT WILL FURTHER REDUCE THE AR MS LENGTH MARGIN COMPUTED AT 13.86% ON THE BASIS OF 8 COMPARABLES. SINCE INCLUS ION OR NON-INCLUSION OF THIS COMPARABLE I.E., M/S. VGL SOFTECH LTD. IS NOT MAKIN G ANY IMPACT ON THE FINAL DECISION BECAUSE IN BOTH THE SITUATIONS, THE ARMS LENGTH MA RGIN REMAINS WITHIN +/- 5% MARGIN OF THE ASSESSEES REPORTED MARGIN, WE HOLD THAT THI S GROUND NO.3 OF REVENUES APPEAL IS OF ACADEMIC INTEREST AND THEREFORE, WE DO NOT GIVE ANY FINDING ON THIS GROUND. 20. REGARDING OTHER 3 COMPARABLES AS PER GROUNDS NO S. 4, 5 & 6 OF THE REVENUES APPEAL I.E., M/S. AVANI CINCOM TECHNOLOG IES LTD., M/S. CELESTIAL BIOLABS LTD., AND KALS INFORMATION SYSTEMS LTD.; WE FIND TH AT THESE 3 COMPARABLES ARE TO BE EXCLUDED AS PER DECISION OF THE COORDINATE BENCH OF TRIBUNAL RENDERED IN THE CASE OF IT(TP)A NO.227 & 285/BANG/2013 PAGE 39 OF 40 KODIAK NETWORKS INDIA PVT. LTD. V. DCIT (SUPRA) AND THEREFORE, THERE IS NO MERIT IN THESE THREE GROUNDS NO.4 TO 6 OF REVENUES APPEAL A ND THE SAME ARE REJECTED. 21. WE WOULD ALSO LIKE TO OBSERVE THAT IN GROUND NO .6, THE REVENUE HAS OBJECTED REGARDING NET MARGIN RATE ADOPTED BY CIT(APPEALS) A T 30.92% AS AGAINST 41.94% COMPUTED BY THE TPO, BUT WHEN THIS COMPARABLE IS BE ING EXCLUDED, THE DIFFERENCE IN MARGIN RATE OF THIS COMPARABLE IS IMMATERIAL. 22. NOW WE WILL DECIDE GROUND NOS. 11 & 12 OF REVEN UES APPEAL IN RESPECT OF DEDUCTION U/S. 10A OF THE I.T. ACT. 23. THE CLAIM OF REVENUE IS THAT LEASE LINE CHARGES OF RS.6,41,835 AND FOREIGN EXCHANGE LOSS OF RS.45,97,211 SHOULD BE EXCLUDED FR OM THE EXPORT TURNOVER BUT SHOULD NOT BE EXCLUDED FROM THE TOTAL TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION U/S. 10A OF THE I.T. ACT. IN THIS REGAR D, WE FIND THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF ASSESSEE BY JUDGMENT OF HONBL E JURISDICTIONAL HIGH COURT RENDERED IN THE CASE OF CIT V. TATA ELXSI LTD. (SUPRA) , WHEREIN IT WAS HELD BY THE HONBLE JURISDICTIONAL HIGH COURT THAT TOTAL TURNOV ER IS SUM TOTAL OF EXPORT TURNOVER AND DOMESTIC TURNOVER. HENCE, WHEN THESE TWO ITEMS OF EXPENSES ARE TO BE EXCLUDED FROM EXPORT TURNOVER, IT AUTOMATICALLY GET S EXCLUDED FROM TOTAL TURNOVER BECAUSE IT CANNOT BE SAID THAT THESE EXPENSES ARE P ART OF DOMESTIC TURNOVER AND THEREFORE, WHEN EXPORT TURNOVER IS REDUCED, TOTAL T URNOVER IS AUTOMATICALLY REDUCED BECAUSE TOTAL TURNOVER AS PER THIS JUDGMENT OF HON BLE JURISDICTIONAL HIGH COURT IS SUM TOTAL OF EXPORT TURNOVER + DOMESTIC TURNOVER. THEREFORE, RESPECTFULLY FOLLOWING THIS JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT OF KARNATAKA, THESE TWO GROUNDS OF REVENUE I.E., GROUND NOS.11 & 12 ARE REJECTED. IT(TP)A NO.227 & 285/BANG/2013 PAGE 40 OF 40 24. REMAINING GROUNDS OF REVENUES APPEAL ARE GENER AL IN NATURE AND THESE GROUNDS DO NOT CALL FOR ANY SEPARATE ADJUDICATION. 25. IN THE RESULT, THE APPEAL OF REVENUE IS PARTLY ALLOWED, WHEREAS THE APPEAL OF ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF APRIL, 2016. SD/- SD/- ( VIJAY PAL RAO ) ( A.K. GARODIA ) JUDICIAL MEMBER ACCO UNTANT MEMBER BANGALORE, DATED, THE 22 ND APRIL, 2016. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.
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