Siemens Industry Software (India) Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 318/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6185 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2010-2011
• Appeal Filed On: 15-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: H K CHOUDHARY CITA
• Keywords: Transfer pricing; Business expenditure; Principle of natural justice; International transaction; Rule of consistency; Wholly owned subsidiary
• Section: 92C; 92D; 37; 2

Judgement Text

1 ITA NO. 318/DEL/2015 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: I-2 NEW DELHI BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A. NO. 318/DEL/201 5 (A.Y 2010-11) SIEMENS INDUSTRY SOFTWARE (INDIA) PVT. LTD. (FORMERLY KNOWN AS PRODUCT LIFECYCLE MANAGEMENT SOFTWARE (INDIA) PVT. LTD.) E-20, 1 ST & 2 ND FLOOR, HAUZ KHAS NEW DELHI AABCS7638E (APPELLANT) VS DCIT CIRCLE-8(1) NEW DELHI (RESPONDENT) APPELLANT BY SH. RAVI SHARMA, ADV & SH. ANUBHAV RASTOGI, ADV RESPONDENT BY SH. H. K. CHOUDHARY, CIT(A) DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE AS SESSMENT ORDER DATED 13/11/2014 PASSED BY THE ASSESSING OFFICER U/S 143 (3) READ WITH SECTION 144C OF THE INCOME TAX ACT, 1961 FOR ASSESSMENT YEA R 2010-11. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND IN LAW, THE LEARNED DEPUTY COMMIS SIONER OF INCOME TAX, CIRCLE 8(1), NEW DELHI (LD. AO) ERRED IN PAS SING THE IMPUGNED ASSESSMENT ORDER DATED 13 NOVEMBER 2014 PURSUANT TO THE DIRECTIONS OF THE DATE OF HEARING 23.01.2019 DATE OF PRONOUNCEMENT 28.01.2019 2 ITA NO. 318/DEL/2015 HONBLE DISPUTE RESOLUTION PANEL (HONBLE DRP) AN D COMPUTING THE TOTAL INCOME OF THE APPELLANT FOR ASSESSMENT YEAR (AY) 2010-11 AT RS. 543,791,460 AS AGAINST THE RETURNED INCOME OF RS. 2 68,459,314. 2. THE LD. AO ERRED IN PROPOSING AND THE HON'BLE DRP F URTHER ERRED IN CONFIRMING THE ADDITION OF RS. 275,332,146 TO THE APPELLANTS RETURNED INCOME OF RS. 268,459,314. TRANSFER PRICING ADJUSTMENT - RS. 238,365,237 3. ON THE FACTS AND IN LAW, THE LEARNED JOINT DIRECTOR OF INCOME TAX, TRANSFER PRICING OFFICER-II(2) (LD. TPO) AND THE LD. AO ER RED IN PROPOSING AND THE HONBLE DRP ERRED IN CONFIRMING THE ADJUSTMENT OF RS. 238,365,237 IN RELATION TO THE INTERNATIONAL TRANSACTIONS OF PROVI SION OF SOFTWARE DEVELOPMENT SERVICES, PROVISION OF COMPETENCY CENTER SERVICES, PROVISION OF IT SUPPORT SERVICES AND PAYMENT OF ROYALTY AND LICENSE FEES FO R MAINTENANCE ENHANCEMENT SUPPORT ENTERED INTO BY THE APPELLANT W ITH ITS ASSOCIATED ENTERPRISES (AES) DURING THE RELEVANT PREVIOUS YE AR. 4. ON FACTS AND IN LAW, THE LD. TPO/ LD. AO AND HONB LE DRP FURTHER ERRED IN DISREGARDING THE TRANSACTION-BY-TRANSACTION ANAL YSIS CARRIED OUT BY THE APPELLANT IN COMPLIANCE WITH RULE 10B(L)(E) OF THE RULES READ WITH SECTION 92C OF THE ACT AND DETERMINING THE ARMS LENGTH PRICE A T ENTITY LEVEL BY MERGING THE PURCHASE OF SOFTWARE SEGMENT WITH SOFTWARE DEVE LOPMENT SEGMENT. IN DOING SO: 4.1 THE LD.TPO/ LD. AO ERRED IN NOT APPRECIATING T HAT THE FUNCTIONAL, ASSET AND RISK PROFILE UNDER THESE TWO SEGMENTS ARE ENTIRELY DIFFERENT 4.2. THE LD. TPO/A.O ERRED IN CONTRADICTING HIS OWN POSITION TAKEN IN EARLIER YEARS WHERE THE PURCHASE OF SOFTWARE SEGMEN T WAS NOT MERGED WITH THE SOFTWARE DEVELOPMENT SEGMENT 4.3. THE HONBLE DRP ERRED IN MERELY RELYING UPON T HE FINDINGS OF THE LD. TPO WITHOUT PROVIDING ANY COGENT REASON FOR DISREGA RDING THE OBJECTIONS RAISED BY THE APPELLANT. 5. ON FACTS AND IN LAW, THE LD. TPO/ LD. AO AND HONBL E DRP ERRED IN REJECTING THE ECONOMIC ANALYSIS AND FILTERS APPLIED IN THE TRANSFER PRICING (TP) DOCUMENTATION MAINTAINED BY THE APPELLANT U/S 92D O F THE INCOME TAX ACT, 1961 (THE ACT) READ WITH RULE 10D OF THE INCOME T AX RULES, 1962 (THE RULES), WITHOUT PROVIDING ANY COGENT REASON AND AR BITRARILY APPLYING ADDITIONAL FILTERS. 3 ITA NO. 318/DEL/2015 6. ON THE FACTS AND IN LAW, THE LD. TPO/ LD. AO AND HO NBLE DRP VIOLATED THE PROVISIONS OF RULE 10B(2) OF THE RULES BY ARBITRARI LY REJECTING THE COMPANIES SELECTED BY THE APPELLANT IN THE TP DOCUMENTATION/ FRESH SEARCH WHICH ARE FUNCTIONALLY COMPARABLE TO THE APPELLANT. 7. ON FACTS AND IN LAW, THE LD. TPO/ LD. AO ERRED IN NOT ACCEPTING THE COMPARABLES, NAMELY CG-VAK SOFTWARE & EXPORT LTD AN D GOLDSTONE TECHNOLOGY LIMITED IDENTIFIED BY THE APPELLANT IN I TS TP DOCUMENTATION WHEN THE SAME WERE ACCEPTED IN THE PRIOR YEAR(S) AND THA T THERE IS NO CHANGE IN FACTS OF THE APPELLANTS CASE IN THE CURRENT YEAR. 8. ON THE FACTS AND IN LAW, THE LD. TPO/ LD. AO AND HO NBLE DRP VIOLATED THE PROVISIONS OF RULE 10B(2) OF THE RULES BY ARBITRARI LY INTRODUCING COMPANIES NAMELY, ACCELYA KALE SOLUTIONS LTD., KULIZA TECHNOL OGIES PVT. LTD., THINKSOFT GLOBAL SERVICES LTD., LARSEN AND TUBRO INFOTECH LTD ., PERSISTENT SYSTEMS AND SOLUTIONS LIMITED AND WIPRO TECHNOLOGY SERVICES LIM ITED, DISREGARDING THAT THE FUNCTIONAL PROFILES OF THE SAID COMPANIES ARE E NTIRELY DIFFERENT FROM THAT OF THE APPELLANT. 9. ON THE FACTS AND IN LAW, THE HONBLE DRP ERRED IN N OT PROVIDING ANY COGENT REASON FOR ACCEPTING COMPANIES SELECTED BY THE LD. TPO AND MERELY STATING THAT THE COMPANIES SATISFY QUANTITATIVE FILTERS WIT HOUT APPRECIATING THAT THE COMPANIES SELECTED BY THE LD. TPO HAVE DIFFERENT FU NCTIONAL AND RISK PROFILE AND THUS, FAIL TO SATISFY QUALITATIVE CRITERIA. 10. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, ON FACTS AN D IN LAW, THE LD. AO/ LD. TPO ERRED IN IGNORING THE DIRECTIONS OF THE HON BLE DRP AND INCORRECTLY COMPUTING THE OPERATING PROFIT MARGIN OF THE FINALL Y SELECTED COMPANIES BY THE LD. TPO. 11. ON THE FACTS, THE LD. TPO/ LD. AO AND HONBLE DRP ERRED IN NOT CONSIDERING THE SUO-MOTO ADJUSTMENT OF RS. 18,966,0 29 OFFERED BY THE APPELLANT IN THE TAX RETURN OF YEAR UNDER CONSIDERA TION (I.E. AY 2010-11) FOR THE PURCHASE OF SOFTWARE SEGMENT. 4 ITA NO. 318/DEL/2015 12. ON FACTS AND IN LAW, THE LD. TPO/ LD. AO AND HONB LE DRP ERRED IN USING THE DATA FOR THE CURRENT YEAR (I.E. FINANCIAL YEAR 2009-10) WHICH WAS NOT CONTEMPORANEOUS AND WHICH WAS NOT AVAILABLE IN THE PUBLIC DOMAIN AT THE TIME OF PREPARING THE TP DOCUMENTATION BY THE APPEL LANT, THEREBY GROSSLY MISINTERPRETING THE REQUIREMENT OFCONTEMPORANEOUS DATA IN THE RULES TO NECESSARILY IMPLY CURRENT YEAR DATA, THEREBY BREACH ING THE PRINCIPLES OF NATURAL JUSTICE AND IMPOSSIBILITY OF PERFORMANCE. 13. ON THE FACTS AND IN LAW, THE LD. TPO/ LD. AO AND T HE HONBLE DRP GROSSLY ERRED IN NOT ALLOWING THE RISK ADJUSTMENT IN ACCORD ANCE WITH THE PROVISIONS OF RULE 10B(3) OF THE RULES TO ACCOUNT FOR THE DIFFERE NCES IN THE RISK PROFILE OF THE APPELLANT AND THE COMPARABLE COMPANIES. ADJUSTMENT ON ACCOUNT OF ADVANCE BILLING- INR 37,11 9,144 14. ON THE FACTS AND IN LAW, THE LD. AO ERRED IN MAKIN G AND THE HONBLE DRP ERRED IN CONFIRMING AN AD-HOC ADDITION OF RS. 37,11 9,144 (BEING 45% OF RS. 82,486,986) ON ACCOUNT OF INCOME FROM MAINTENANCE, ENHANCEMENT AND SUPPORT SERVICES (ADVANCE BILLING / DEFERRED REVENU E) WITHOUT APPRECIATING THAT NO INCOME HAS ACCRUED TO THE APPELLANT FOR THE YEAR UNDER CONSIDERATION AND THAT ON SIMILAR FACTS, THE HONBLE TRIBUNAL DEL ETED SUCH ADDITIONS IN EARLIER YEARS. 15. WITHOUT PREJUDICE TO ABOVE AND IN ALTERNATE, LD. A O AND THE HONBLE DRP HAS ERRED ON FACTS AND IN LAW IN DISREGARDING THE R EGULAR AND THE CONSISTENT METHOD OF ACCOUNTING BEING FOLLOWED BY THE APPELLAN T IN RECOGNIZING THE REVENUE FROM MAINTENANCE, ENHANCEMENT AND SUPPORT S ERVICES PROVIDED BY THE APPELLANT TO ITS CUSTOMERS. ADJUSTMENT ON ACCOUNT OF BUSINESS PROMOTION EXPENSE S - INR 4,197,074 16. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO ERRED IN MAKING AND THE HONBLE DRP ERRED IN CONFIR MING AN AD-HOC DISALLOWANCE OF RS.4,197,074 BEING BUSINESS PROMOTI ON EXPENSES TREATING THEM TO BE OF CAPITAL IN NATURE AND HAVING AN ENDUR ING BENEFIT AND THEREFORE AMORTISING THEM OVER A PERIOD OF FIVE YEARS. 17. ON FACTS AND IN LAW, THE LD. AO AND THE HONBLE DR P COMPLETELY ERRED IN NOT APPRECIATING THAT BUSINESS PROMOTION EXPENSES C ONSTITUTE REVENUE 5 ITA NO. 318/DEL/2015 EXPENDITURE FOR THE APPLICANT. 18. ON THE FACTS AND IN LAW, THE LD. AO ERRED IN INITI ATING PENALTY PROCEEDINGS U/S 271(1 )(C ) OF THE ACT. THE ABOVE GROUNDS OF APPEAL ARE INDEPENDENT AND WITHOUT PREJUDICE TO EACH OTHER. THE APPELLANT CRAVES LEAVE TO SUPPLEMENT, WITHDRAW , AMEND, ADD AND/OR OTHERWISE ALTER OR MODIFY, ANY OR ALL, GROUNDS OF T HE APPEAL STATED HEREINABOVE AND TO SUBMIT SUCH STATEMENTS, DOCUMENT S AND PAPERS AS MAY BE CONSIDERED NECESSARY EITHER BEFORE OR DURING THE APPEAL HEARING. 3. SIEMENS PRODUCT LIFECYCLE MANAGEMENT SOFTWARE (I NDIA) PVT. LTD (NOW KNOWN AS SIEMENS INDUSTRY SOFTWARE INDIA PRIVATE LI MITED) IS A PRIVATE LIMITED COMPANY INCORPORATED UNDER THE COMPANIES AC T 1956. THE ASSESSEE COMPANY IS A WHOLLY OWNED SUBSIDIARY OF UGS CORP. ( ASSOCIATED ENTERPRISE OR A.E). DURING THE YEAR UNDER CONSIDERATION, THE AS SESSEE COMPANY IS ENGAGED IN THE BUSINESS OF SALE AND SERVICE OF COMPUTER SOF TWARE DEVELOPMENT AND RUNNING SOFTWARE CONSULTANCY AND OTHER SERVICES. DU RING THE RELEVANT FY, THE ASSESSEE COMPANY UNDERTOOK THE FOLLOWING INTERNATIO NAL TRANSACTIONS WITH ITS AES WHICH WERE DULY REPORTED IN THE ACCOUNTANTS RE PORT (FORM NO. 3CEB), FILED ALONG WITH THE ASSESSEE COMPANYS RETURN OF I NCOME: SR. NO. INTERNATIONAL TRANSACTION AMOUNT (RS.) 1 PAYMENT OF ROYALTY FOR SOFTWARE 18,84,66,897 2 PURCHASE OF SOFTWARE AND PAYMENT OF LICENSE FEES FOR MAINTENANCE, ENHANCEMENT AND SUPPORT OF SOFTWARE 17,94,90,302 3 PROVISION OF SOFTWARE DEVELOPMENT SERVICES 1,08,09,46,382 4 PROVISION OF COMPETENCY CENTRE SERVICES 3,70,21,317 5 PROVISION OF IT SUPPORT SERVICES 13,30,62,645 6 PAYMENT OF APHQ CHARGES 3,62,51,053 6 ITA NO. 318/DEL/2015 7 RECEIPT OF APHQ CHARGES 1,21,64,775 8 INFRASTRUCTURE UTILIZATION EXPENSES 4,56,47,025 9 REIMBURSEMENT OF EXPENSES 1,47,58,023 10 RECOVERY OF EXPENSES 2,99,83,257 WITH REGARD TO PROVISION OF SOFTWARE DEVELOPMENT, C OMPETENCY CENTRE AND IT SUPPORT SERVICES, THE ASSESSEE COMPANY OPERATES AS A CONTRACT SERVICES PROVIDER FOR GROUP COMPANIES. WITH REGARD TO THE SE GMENT OF PURCHASE OF SOFTWARE, THE ASSESSEE COMPANY HAS BEEN GRANTED A N ONEXCLUSIVE, NONTRANSFERABLE LICENSE AUTHORIZING THE AFFILIATE T O USE THE SOFTWARE FOR INTERNAL BUSINESS, DEMONSTRATE, MARKET DISTRIBUTE OR SUBLICE NSE THE SOFTWARE FOR END TO END CUSTOMERS. THE ASSESSEE COMPANYS BENCHMARKING APPROACH IS SUMMARIZED BELOW: PARTICULARS SOFTWARE DEVELOPMENT PAGE REF SOFTWARE TRADING PAGE REF. NO. OF COMPARABLES 12 1265 5 1259 COMPARABLE MEAN MARGIN 13.27 1265 1.87 1259 APPELLANTS MARGIN 15.37% NA 4.79% NA 4. THE REFERENCE WAS MADE TO THE TPO BY THE ASSESSI NG OFFICER IN RESPECT OF INTERNATIONAL TRANSACTIONS AND THE TPO AFTER TAKING INTO CONSIDERATION. THE DETAILS GIVEN BY THE ASSESSEE MERGED THE SEGMENT OF SOFTWARE TRADING WITH SOFTWARE DEVELOPMENT WHICH CONSIST OF SOFTWARE DEVE LOPMENT, COMPETENCY CENTRE AND IT SUPPORT SERVICES. THE TPO APPLIED HI S OWN FILTERS AND REJECTED/MODIFIED THE QUANTITATIVE AND QUALITATIVE FILTERS APPLIED BY THE ASSESSEE AND ARRIVED AT HIS OWN SET OF COMPARABLES. THE MINIMUM MARGIN OF 7 ITA NO. 318/DEL/2015 THE COMPARABLES WAS CONSIDERED BY THE TPO AT 25.4%. FINALLY, THE TPO PROPOSED AN ADJUSTMENT OF RS. 27.28 CRORES TO THE I NCOME OF THE ASSESSEE. THE ASSESSING OFFICER PASSED DRAFT ASSESSMENT ORDER 25/ 2/2014. THE ASSESSEE COMPANY FILED OBJECTION BEFORE THE DRP. THE DRP EX CLUDED INFOSYS LTD. FROM THE FINAL COMPARABLE SET AND UPHELD THE ORDER OF TH E TPO ON ALL OTHER MATTERS. THE ASSESSING OFFICER PASSED ASSESSMENT ORDER VIDE ORDER DATED 13/11/2014 THEREBY MAKING ALP ADJUSTMENT OF RS.23,83,65,237/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER ALSO MADE VARIOUS OTHER ADDITIONS WHICH AMOUNTED TO RS. 54,37,91,460/-. 5. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE IS BEFORE US. 6. THE LD. AR SUBMITTED THAT GROUND NO. 4.2 IS THE MAIN ISSUE CONTESTED BY THE ASSESSEE BEFORE THE DRP AS WELL AS BEFORE TH E ASSESSING OFFICER /TPO I.E. THE TPO/A.O. THE LD. AR SUBMITTED THAT THE TPO CO NTRADICTED THE STAND OF THE REVENUE TAKEN IN EARLIER YEARS WHEREIN THE PURC HASE OF SOFTWARE SEGMENT WAS NOT MERGED WITH THE SOFTWARE DEVELOPMENT SEGMEN T. THE LD. AR SUBMITTED THAT IF THIS ISSUE IS DECIDED THEN THERE IS NO NEED TO GO INTO THE DETAILS OF COMPARABILITY AND OTHER ASPECTS OF THE TRANSFER PRI CING WHICH ARE CONTESTED IN GROUND NOS. 1, 2, 3, 4, 4.1, 4.3, 5, 6, 7, 8, 9, 10 , 11, 12, AND 13. THE LD. AR SUBMITTED THAT THERE IS A DIFFERENT FAR IN BOTH SEG MENT I.E. SOFTWARE TRADING AND SOFTWARE DEVELOPMENT. THESE TWO SEGMENTS ARE S EPARATE. THE LD. AR FURTHER SUBMITTED THE TPO ERRED IN REJECTING THE SE GMENTATION CARRIED OUT BY THE ASSESSEE AND IN FURTHER COMBINING THE TRADING S EGMENT WITH THE SERVICE SEGMENT BECAUSE THE FUNCTIONAL, ASSET AND RISK PROF ILE UNDER THESE TWO SEGMENTS ARE ENTIRELY DIFFERENT WHICH ARE AS BELOW: POINTS FOR CONSIDERATION SOFTWARE TRADING SEGMENT SOFTWARE DEVELOPMENT SEGMENT TRANSACTIONS COVERED PURCHASE OF SOFTWARE FOR RE-SELLING PROVISION OF SOFTWARE DEVELOPMENT SERVICES 8 ITA NO. 318/DEL/2015 PRICING MODEL PAYMENT TRANSACTION LICENSE AND ROYALTY PAID AS A PERCENTAGE OF SALES INCOME TRANSACTION COST PLUS MARK-UP RECEIVED CUSTOMERS THIRD PARTY DOMESTIC CUSTOMERS ASSOCIATED ENTERPRISE RISK ASSUMED ASSESSEE BEARS MARKET RISK, PRICE RISK, CREDIT RISK, ETC. ASSESSEE IS LOW RISK BEARING CAPTIVE SERVICE PROVIDER THUS, THE LD. AR SUBMITTED THAT THE TPO CHANGED THE CHARACTERIZATION WHICH IS NOT PROPER IN RESPECT OF THE TRANSFER PRICING ISSUE S. THE LD. AR FURTHER SUBMITTED THAT THE TPO HAS INCORRECTLY STATED THAT THE ASSESSEE HAS A FULL- FLEDGED MANUFACTURING FACILITY. IN-FACT, THE ASSE SSEE IS ONLY ENGAGED IN DUPLICATING THE PLM SOFTWARE AND RESELLING SUCH SOF TWARES IN THE INDIAN MARKET. FOR SUCH TRADING/RE-SELLING ACTIVITIES, IT CANNOT BE CHARACTERIZED AS A MANUFACTURER. THE LD. AR FURTHER SUBMITTED THAT T HE ASSESSEE HAD FOLLOWED THE SAME APPROACH I.E. BENCH MARKING THE SOFTWARE T RADING SEGMENT AND SOFTWARE DEVELOPMENT SEGMENT SEPARATELY AND THE SAM E WAS ACCEPTED BY THE TPO IN ALL EARLIER YEARS AS WELL AS IN PRECEDING YE AR. THE LD. AR SUBMITTED THAT ADJUSTMENT IN TRADING SEGMENT RESULTED ADJUSTMENT I N THIRD PARTY TRANSACTIONS. SINCE UNDER THE PURCHASE OF SOFTWARE SEGMENT, THE REVENUE WAS DERIVED FROM SALE TO UNRELATED PARTIES, IMPUTIN G A MARK-UP ON COST AND EXPECTING THAT THE ASSESSEE WOULD HAVE EARNED HIGHE R REVENUE FROM THE DEALINGS WITH UNRELATED PARTIES, IS TOTALLY CONTRAR Y TO THE TRANSFER PRICING PROVISIONS. THE LD. AR SUBMITTED THAT MOST OF THE SOFTWARE DISTRIBUTION COMPARABLES SELECTED BY THE ASSESSEE COMPANY HAS BE EN ACCEPTED BY THE TRANSFER PRICING OFFICER FOR THE PRECEDING YEARS. THE LD. AR FURTHER SUBMITTED THAT THERE IS A WRONG APPLICATION OF FILTERS BY THE TPO IN RESPECT OF SELECTION OF COMPARABLES IN SOFTWARE DEVELOPMENT SERVICES SEGMEN T FOR REJECTING THE ASSESSEES COMPARABLES FOR THE SOFTWARE DISTRIBUTIO N SEGMENT. THE LD. AR 9 ITA NO. 318/DEL/2015 RELIED UPON THE DECISION OF THE TRIBUNAL FOR ASSESS MENT YEAR 2008-09 IN CASE OF SIEMENS PRODUCT LIFECYCLE MANAGEMENT SOFTWARE (INDI A) PVT. LTD. VS. ACIT (2018) 90 TAXMANN.COM 165 (DELHI TRIBUNAL). IN CAS E OF SIEMENS INDUSTRY SOFTWARE INDIA PVT. LTD. VS. DCIT A.Y. 2009-10 BEIN G ITA NO. 1307/DEL/2014 ORDER DATED 14.09.2018 ALSO THE REVENUE AS SEPARATE LY TAKEN INTO ACCOUNT SOFTWARE TRADING SEGMENT AND SOFTWARE DEVELOPMENT S EGMENT AS CAN BE SEEN FROM THE TRIBUNALS ORDER IN PARA 3,4,5. THE LD. A R FURTHER RELIED UPON THE ORDER OF THE TPO FOR ASSESSMENT YEAR 2011-12 WHEREI N THESE TWO SEGMENTS WERE SEPARATELY TAKEN INTO ACCOUNT. THE LD. AR ALS O RELIED UPON THE DECISIONS OF THE DELHI TRIBUNAL AND MUMBAI TRIBUNAL IN CASE O F DCIT VS. ALLIED DOMECQ SPIRITS AND WINE INDIA PVT. LTD. (193 TTJ 920 DEL. TRI.) AND PARADIGM GEOPHYSICAL (I) (P) LTD. VS. DCIT (2016) 72 TAXMANN .COM 108. 7. THE LD. DR SUBMITTED THAT THE TPO WAS RIGHT IN AGGREGATING THESE TWO SEGMENTS AND RELIED UPON THE ORDER OF THE TPO. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THIS IS THE FIRST TIME THAT THE TPO HAS TAK EN A DIFFERENT VIEW FROM THE EARLIER ASSESSMENT YEARS AS WELL AS SUBSEQUENT ASSE SSMENT YEARS BY AGGREGATING SOFTWARE TRADING SEGMENT WITH SOFTWARE DEVELOPMENT SEGMENT, BUT WHILE DOING SO, THERE WAS NO FINDING AS TO WHY THESE TWO SEGMENTS HAS BEEN AGGREGATED/MERGED/CLUBBED BY THE TPO. THEREFO RE, IT WILL BE APPROPRIATE TO REMAND BACK THIS ISSUE TO THE FILE OF TPO/A.O. T O DECIDE THE SAME AFRESH BY TAKING INTO ACCOUNT FAR ANALYSIS GIVEN BY THE ASSES SEE IN TP STUDY AS WELL AS PRINCIPLE OF CONSISTENCY. THEREFORE, GROUND NO. 4. 2 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. SINCE THIS ISSUE IS REMANDED B ACK, THE SUBSEQUENT GROUNDS WHICH WERE RAISED BY THE ASSESSEE IN RESPECT OF TRA NSFER PRICING ADJUSTMENT WILL ALSO BE DECIDED BY THE TPO/A.O. ACCORDING TO T HE DECISION OF AGGREGATION/SEGREGATION OF THESE TWO SEGMENTS. THE REFORE, GROUND NOS. 1 TO 13 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. 10 ITA NO. 318/DEL/2015 9. AS REGARDS GROUND NOS. 14 &15 RELATING TO ADJUST MENT ON ACCOUNT OF ADVANCE BILLING, THE LD. AR SUBMITTED THAT THIS IS SUE IS ALREADY COVERED IN FAVOUR OF ASSESSEE VIDE ORDER PASSED BY THE CO-ORD INATE BENCH OF THE TRIBUNAL IN ITA NOS. 584 & 585/DEL/2006 & 322/DEL/2007 FOR ASSESSMENT YEARS 2001-02 TO 2003-04 IN UGS INDIA PVT. LTD. VS. ACIT AND ALSO IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2008-09 AND 2007-08 (9 0 TAXMAN.COM 165). 10. THE LD. DR RELIED UPON THE ORDER OF THE TPO/A.O BUT COULD NOT DISTINGUISH THE FACTUAL ASPECT OF THE TRIBUNALS DE CISIONS. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THIS ISSUE IS SQUARELY COVERED IN FAVOUR O F THE ASSESSEE BY THE DECISION OF THE CO-ORDINATE BENCH IN ASESSEES OWN CASE FOR ASSESSMENT YEARS 2008-09 & 2007-08. THUS, GROUND NOS. 14 & 15 ARE ALLOWED. 12. AS REGARDS GROUND NO. 16 & 17 RELATING TO ADJUS TMENT ON ACCOUNT OF BUSINESS PROMOTION AND CONFERENCE, THE LD. AR SUBMI TTED THAT FROM THE DETAILS OF EXPENSES GIVEN BY THE ASSESSEE BEFORE THE A.O., IT CAN BE CLEARLY SEEN THAT THESE BUSINESS PROMOTION EXPENSES WERE INCURRED WHO LLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND WERE NECESSITATED IN VI EW OF COMMERCIAL EXIGENCY AND ARE EARNED YEAR ON YEAR. HENCE, THE LD. AR PRA YED THAT THE SAME MAY BE ALLOWED AS BUSINESS EXPENSES U/S 37 OF THE ACT. BE SIDES THAT THE LD. AR SUBMITTED THAT THIS ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009-10 (ITA NO. 1307/ DEL/2014). 13. THE LD. DR COULD NOT CONTROVERT THIS ASPECT. 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SINCE, THIS ISSUE IS COVERED IN FAVOUR O F THE ASSESSEE IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009-10. GROUND NO. 1 6 & 17 ARE ALLOWED. 11 ITA NO. 318/DEL/2015 15. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH JANUARY, 2019 . SD/- SD/- (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 28/01/2019 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 12 ITA NO. 318/DEL/2015 DATE OF DICTATION 21.01.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21.01.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 2 8 .01.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 2 8 .01.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 2 8 .01.2019 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK