M/s. Nokia Siemens Networks Pvt. Ltd., Gurgaon V. ACIT, New Delhi

ITA 332/DEL/2013

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 8249 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I2
• Next Hearing Date: 24-07-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 17-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJAY I BARA
• Keywords: Depreciation; Transfer pricing; Double taxation relief; Principle of natural justice; International transaction; Additional evidence
• Section: 92C; 143(3); 234B; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: I-1 NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER ITA NO. 332/DEL/2013 ( A.Y 2008-09) NOKIA SIEMENS NETWORKS PVT. LTD. 7 TH FLOOR, BUILDING NO. 9A DLF CYBER CITY, SECTOR-25A GURGAON AACCN3871F (APPELLANT) VS ACIT CIRCLE-13(1), ROOM NO. 406, C. R. BUILDING, I. P. ESTATE NEW DELHI (RESPONDENT) APPELLANT BY MRS. RASHMI CHOPRA, ADV, SH. AMIT SRIVASTAVA, ADV, SH. ANKUL GOYAL, ADV RESPONDENT BY SH. SANJAY I. BARA, CIT DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE A SSESSMENT ORDER DATED 30/11/2012 PASSED BY THE ASSESSING OFFICER U/S 144C READ WITH SECTION 143(3) OF THE INCOME TAX ACT, 1961. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE IMPUGNED ORDER OF ASSESSMENT FRAMED BY THE LEARNED ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 13(1), NEW DELHI (HEREINAFTER RE FERRED TO AS THE LEARNED AO) PURSUANT TO THE DIRECTIONS OF THE HONBLE DISP UTE RESOLUTION PANEL - II (HEREINAFTER REFERRED TO AS THE HONBLE DRP) UNDE R SECTION 143(3) READ WITH SECTION 144C OF THE INCOME-TAX ACT, 1961 (ACT), I S A VITIATED ORDER HAVING BEEN PASSED IN VIOLATION OF PRINCIPLES OF NATURAL J USTICE AND IS OTHERWISE DATE OF HEARING 03.07.2018 DATE OF PRONOUNCEMENT 01.10.2018 ARBITRARY AND IS THUS BAD IN LAW AND VOID AB-INITIO . 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE DRP/ LEARNED AO HAS ERRED IN REDUCING THE RATE OF T AX DEPRECIATION ALLOWABLE ON CERTAIN ITEMS, CHARACTERIZED AS COMPUTERS BY T HE APPELLANT (VIZ. UPS, LAN/ WAN EQUIPMENT, CATALYST SWITCHES, NETWORK EQUI PMENTS, ETC.) FROM 60 PERCENT TO 15 PERCENT, BY TREATING THE SAME AS PLAN T AND MACHINERY AND THUS, DISALLOWING DEPRECIATION AMOUNTING TO RS 19,33,295 TO THE APPELLANT. 2.1. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE HONBLE DRP/ LEARNED AO HAS FAILED TO APPRECIATE THAT UPS, LAN/ WAN EQUIPMENT, CATALYST SWITCHES, NETWORK EQUIPMENT, ETC. ARE INTEGRAL PART OF THE COMPUTER SYSTEM AND HAVE BEEN HELD TO BE IN THE NATURE OF COMPUTER S BY THE HONBLE JURISDICTIONAL DELHI HIGH COURT IN THE CASE OF BSES RAJDHANI POWERS LTD. (ITA NO. 1266/ 2010), ORIENT CERAMICS AND INDS LTD. (ITA NO. 65 AND 66 OF 2011) AND CITICORP MARUTI FINANCE LTD. (ITA NO. 1712 AND 1714 OF 2010) AND BY THE HONBLE SPECIAL BENCH OF MUMBAI TRIBUNAL IN THE CAS E OF DATACRAFT INDIA LIMITED (ITA NO.7462 AND 754/MUM/2007). 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE DRP/LEARNED AO HAS ERRED IN MAKING A DISALLOWANCE O F RS. 33,27,776 UNDER SECTION 40(A)(I) OF THE ACT BY ALLEGING THAT THE SA ID PAYMENTS MADE BY THE APPELLANT TANTAMOUNT TO INCOME CHARGEABLE TO TAX IN THE HANDS OF THE RECIPIENT UNDER THE PROVISIONS OF THE APPLICABLE DOUBLE TAXAT ION AVOIDANCE AGREEMENT (DTAA) AND/ OR THE ACT AND THE APPELLANT HAS FAIL ED TO WITHHOLD TAXES UNDER THE PROVISIONS OF SECTION 195 OF THE ACT IN RESPECT OF THE SAID EXPENSES INCURRED BY IT IN FOREIGN CURRENCY. 3.1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE HONBLE DRP HAS ERRED IN UPHOLDING THE DISALLOWANCE , ON THE BASIS THAT THE APPELLANT WAS REQUIRED TO APPROACH THE TAX OFFICER FOR A NIL WITHHOLDING ORDER WITHOUT APPRECIATING THE PROVISIONS OF SECTION 195 OF THE ACT READ WITH THE ORDER OF THE HONBLE SUPREME COURT IN THE CASE OF G E INDIA TECHNOLOGY CENTRE PRIVATE LIMITED (CIVIL APPEALS NOS 7541-7542 OF 201 0) WHICH CLEARLY PROVIDES THAT THE APPELLANT WAS REQUIRED TO APPROACH THE TAX OFFICER ONLY WHERE THE PAYMENTS WERE CHARGEABLE TO TAX IN INDIA. 3.2. WITHOUT PREJUDICE, ON THE FACTS AND CIRCUMSTAN CES OF THE CASE AND IN LAW, THE HONBLE DRP/ LEARNED AO HAS ERRED IN MAKIN G A DISALLOWANCE AMOUNTING TO RS 10,71,227 UNDER SECTION 40(A)(I) OF THE ACT, BY HOLDING THAT PAYMENTS TO: A) HEMISPHERE CONSULTING PTE. LTD, SINGAPORE (RS 34,4 73) B) FITCH DESIGN PTE LIMITED, SINGAPORE (RS 2,78,199) C) BARLWORLD OPTIMUS UK (RS 7,58,555) QUALIFY AS FEE FOR TECHNICAL SERVICES (FTS) UNDER THE PROVISIONS OF ARTICLE 12 OF INDIA - SINGAPORE DTAA AND ARTICLE 13 OF INDIA - UK DTAA, RESPECTIVELY, WITHOUT APPRECIATING THAT THE UNDERLYING SERVICES D O NOT QUALIFY AS FTS UNDER THE RESTRICTIVE PROVISIONS OF THE DTAA. 3.3. WITHOUT PREJUDICE, ON THE FACTS AND CIRCUMSTAN CES OF THE CASE AND IN LAW, THE HONBLE DRP/ LEARNED AO HAS ERRED IN MAKIN G A DISALLOWANCE AMOUNTING TO RS 17,17,572 IN RESPECT OF PAYMENT TO NOKIA SIEMENS NETWORKS MEA-FZ, LLC, UAE UNDER SECTION 40(A)(I) OF THE ACT, WITHOUT APPRECIATING THAT THE SAID AMOUNT IS NOT CHARGEABLE TO TAX IN INDIA A S FTS IN THE ABSENCE OF ANY SPECIFIC CLAUSE RELATED TO FTS UNDER THE PROVIS IONS OF INDIA - UAE DTAA. 3.4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE HONBLE DRP/ LEARNED AO HAS ERRED IN MAKING A DISALLOWANCE AMOUNTING TO RS 5,38,977 IN RESPECT OF PAYMENT TO NOKIA HUNGARY KFT , UNDER SECTION 40(A)(I) OF THE ACT, WITHOUT APPRECIATING THAT THE SAID AMOU NT IS NOT CHARGEABLE TO TAX IN INDIA AS FTS UNDER ARTICLE 12 OF INDIA - HUNGARY DTAA, IN VIEW OF THE RESTRITIVE DEFINITION OF FTS PROVIDED UNDER ARTICLE 12 READ WITH THE PROTOCOL TO INDIA - HUNGARY DTAA. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN NOT GRANTING DEPRECIATION A T THE RATE OF 25 PERCENT UNDER THE PROVISIONS OF SECTION 32 OF THE ACT IN RE SPECT OF GOODWILL AMOUNTING TO RS. 9,81,15,000 ACCOUNTED FOR BY THE APPELLANT I N ITS BOOKS OF ACCOUNTS ARISING OUT OF PURCHASE OF NETWORKS BUSINESS, DESPI TE OF A SPECIFIC CLAIM HAVING BEEN MADE BY THE APPELLANT BEFORE FINALIZATI ON OF THE ORDER DATED NOVEMBER 30, 2012 BY THE LEARNED AO. 4.1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED AO HAS FAILED TO APPRECIATE THAT THE SAID D EPRECIATION CLAIM MADE BY THE APPELLANT IS DULY SUPPORTED BY THE HONBLE SUPR EME COURT DECISION SUBSEQUENTLY PRONOUNCED IN THE CASE OF CIT VS SMIFS SECURITIES LTD (CIVIL APPEAL NO 5961 OF 2012) AND ACCORDINGLY WAS OPEN TO BE GIVEN EFFECT TO AS PER CIRCULAR NO. 68 DATED NOVEMBER 17, 1971 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES. 4.2. WITHOUT PREJUDICE, ON THE FACTS AND CIRCUMSTAN CES OF THE CASE AND IN LAW, THE LEARNED AO HAS FAILED TO APPRECIATE THAT A S PER CIRCULAR NO. 14 (XL- 35) OF 1955 DATED APRIL 11, 1955, THE BENEFIT OF CL AIM OF DEPRECIATION AS MADE BY THE APPELLANT BEFORE FINALIZATION OF THE ORDER D ATED NOVEMBER 30, 2012 SHOULD BE ACCORDED TO THE ASSESSEE. 5. THAT, ON THE FACTS AND IN LAW, THE LEARNED AO HA S GROSSLY ERRED IN MAKING A TRANSFER PRICING ADDITION OF RS. 3,57,02,972 IN R ESPECT OF CERTAIN INTERNATIONAL TRANSACTIONS OF THE APPELLANT WHILE C OMPUTING THE INCOME OF THE APPELLANT. THE ADDITION SO MADE TO THE RETURNED INC OME IS HIGHLY UNJUSTIFIED AND ALSO SUFFERS FROM MISTAKES APPARENT FROM RECORD . 5.1. THAT, IN FRAMING THE IMPUGNED ASSESSMENT, THE REFERENCE MADE BY THE LEARNED AO TO THE LEARNED TRANSFER PRICING OF FICER (HEREINAFTER REFERRED TO AS THE LEARNED TPO') U/S 92CA (1) OF THE ACT SUFFE RS FROM JURISDICTIONAL ERROR, AS THE LEARNED AO HAD NOT RECORDED ANY REASONS NOR HE HAD ANY MATERIAL WHATSOEVER ON THE BASIS OF WHICH HE COULD EVEN REAC H A PRIMA-FACIE OPINION, THAT IT WAS NECESSARY OR EXPEDIENT TO REFER THE M ATTER TO THE LEARNED TPO FOR COMPUTATION OF ARMS LENGTH PRICE (ALP). 5.2. THAT, ON THE FACT AND THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LEARNED TPO/ HONBLE DRP HAS GROSSLY ERRED IN NOT A CCEPTING THE ECONOMIC ANALYSIS OF CERTAIN INTERNATIONAL TRANSACTIONS OF T HE APPELLANT AND RE- DETERMINING THE ALP WHICH IS NOT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT READ WITH THE INCOME TAX RULES, 1962 (THE RULES). 5.3. THAT, ON THE FACTS AND THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LEARNED TPO/ HONBLE DRP HAS ERRED IN REJECTING CER TAIN COMPARABLES SELECTED BY THE APPELLANT FOR INTERNATIONAL TRANSAC TION RELATED TO PROVISION OF SOFTWARE DEVELOPMENT SERVICES TO ASSOCIATED ENTERPR ISES AND ADDITIONALLY SELECTING CERTAIN NEW SET OF COMPARABLES FOR THE DE TERMINATION OF THE ALP BY ADOPTING FLAWED APPROACH AND CERTAIN ARBITRARY FILT ERS. 5.4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED TPO/ HONBLE DRP HAS ERRED BY NOT ACCEPTING THE COMBINED TRANSACTION APPROACH FOLLOWED BY THE APPELLANT FOR THE INTERNATIONAL TRANSACTIONS RELATED TO NETWORKS DIVISION FOR ARM S LENGTH ANALYSIS AND INSTEAD CONDUCTING SEPARATE ANALYSIS FOR CERTAIN IN TERNATIONAL TRANSACTIONS OF NETWORKS DIVISION NAMELY PROVISION OF MARKETING SUP PORT SERVICES, WARRANTY SERVICES AND OTHER SUPPORT SERVICES USING TRANSACTI ONAL NET MARGIN METHOD (TNMM) WITHOUT GIVING COGNIZANCE TO THE FUNCTIONS , RISKS AND ASSETS (FAR) ANALYSIS OF THE APPELLANT VIS- A-VIS ITS ASSOCIATED ENTERPRISES FOR INTERNATIONAL TRANSACTIONS REASSOCIATE THE NETWORKS DIVISION. 5.5 THAT WITHOUT PREJUDICE, THE LEARNED TPO/ HONBL E DRP HAS ERRED, IN LAW AND ON FACTS, IN NOT SEPARATELY BIFURCATING THE COSTS OF THE MARKETING TEAM ATTRIBUTABLE TOWARDS THE SUPPORT PROVIDED ON T HE SALES MADE BY THE APPELLANT ITSELF VIS-A-VIS SUPPORT PROVIDED TO THE ASSOCIATED ENTERPRISES AND ERRONEOUSLY ATTRIBUTED ENTIRE COSTS OF THE OF MARKE TING TEAM TOWARDS THE MARKETING SUPPORT SERVICES PROVIDED TO THE ASSOCIAT ED ENTERPRISES WHILE UNDERTAKING SEPARATE TRANSACTION BY TRANSACTION ANA LYSIS USING TNMM. 5.6. THAT WITHOUT PREJUDICE, THE LEARNED TPO/ HON BLE DRP HAS ERRED, IN LAW AND ON FACTS IN THE APPLICATION OF TNMM FOR TRA NSACTION BY TRANSACTION ANALYSIS OF CERTAIN INTERNATIONAL TRANSACTIONS OF N ETWORKS DIVISION USING CERTAIN ARBITRARY FILTERS. 5.7. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED TPO/ HONBLE DRP HAS ERRED IN (A) REJECTING THE DATA USED BY THE APPELLANT WHICH WAS AVAILABLE TO IT AT THE RELEVANT TIME AND PROCEEDING TO USE THE DATA WHICH WAS AVAILABLE ONLY AT THE TIME OF TRANSFER PRICING ASSESSMENT; AND (B) USING DATA FOR A SINGLE YEAR INSTEAD OF MULTIPLE YE AR DATA. 5.8. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED TPO/ HONBLE DRP HAS ERRED BY NOT MAKING AP PROPRIATE ADJUSTMENTS ON ACCOUNT OF WORKING CAPITAL DIFFERENCES BETWEEN T HE APPELLANT VIS-A-VIS THE COMPARABLES COMPANIES WHILE REDETERMINING THE ALP O F THE CERTAIN INTERNATIONAL TRANSACTIONS OF THE APPELLANT. 5.9. THAT, ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED TPO/ HONBLE DRP HAS ERRED BY NOT ALLOWING A RISK ADJUSTMENT TO THE APPELLANT ON ACCOUNT OF THE FACT THAT THE APPELLAN T IS REMUNERATED ON A COST PLUS BASIS IRRESPECTIVE OF THE OUTCOME OF THE SERVI CES PROVIDED AND HENCE UNDERTAKES NO MARKET RISK, SERVICE LIABILITY RISK, CREDIT AND COLLECTION RISK AS AGAINST THE COMPARABLE COMPANIES IDENTIFIED BY THE LEARNED TPO/ HONBLE DRP WHICH WERE FULL FLEDGED RISK TAKING ENTREPRENEU RS. 5.10 THAT, ON THE FACTS AND THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LEARNED AO/ TPO IGNORED THE FACT THAT THE APPELLANT IS ENTITLED TO A TAX HOLIDAY UNDER SECTION 10A OF THE ACT ON ITS PROFITS EARNED FROM THE PROVISION OF SOFTWARE SERVICES TO ASSOCIATED ENTERPRISES AND HE NCE DIDNT HAVE AN ULTERIOR MOTIVE OF SHIFTING PROFITS OUTSIDE INDIA. 5.11. THAT WITHOUT PREJUDICE, ON THE FACTS AND CIRC UMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO/ TPO/ HONBLE DRP HAS ERRED IN NOT ALLOWING THE BENEFIT OF DOWNWARD ADJUSTMENT OF 5 PERCENT, AS PRO VIDED IN THE PROVISO TO SECTION 92C OF THE ACT, FROM THE ALP OF THE INTERNA TIONAL TRANSACTIONS AS DETERMINED BY THEM. 6. WITHOUT PREJUDICE, ON THE FACTS AND CIRCUMSTANCE S OF THE CASE AND IN LAW, THE HONBLE DRP/ LEARNED AO HAS ERRED IN GRANTING S HORT CREDIT IN RESPECT OF TDS CLAIMED BY THE APPELLANT IN ITS RETURN OF INCOM E. 7. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN INITIATING PENALTY PROCEEDINGS UND ER SECTION 271 (1 )(C) OF THE ACT. 8. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN LEVYING INTEREST UNDER SECTION 234B AND SECTION 234D OF THE ACT. 9. THAT, WITHOUT PREJUDICE TO GROUND 8 ABOVE, ON TH E FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN CALCULATION OF INTEREST UNDER SECTION 234B AND SECTION 234D OF THE ACT. 3. THE ASSESSEE COMPANY INCORPORATED IN INDIA UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956. FOR THE ASSESSMENT YEAR 2008-0 9, THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF MANUFACTURIN G AND TRADING OF TELECOMMUNICATION NETWORK EQUIPMENT AND PROVISION O F RELATED SERVICES SUCH AS NETWORK DESIGN, INSTALLATION AND COMMISSIONING. THE COMPANY ALSO PROVIDED SUPPORT SERVICES TO MAJOR TELECOM OPERATORS AND IP SERVICE PROVIDERS IN INDIA AND TO CUSTOMERS OF ITS ASSOCIATED ENTERPRISES (AE) . FURTHER, THE COMPANY ALSO PROVIDED SOFTWARE DEVELOPMENT AND CERTAIN NETWORK M ANAGEMENT SUPPORT SERVICES. FURTHERMORE, NOKIA SIEMENS NETWORKS PRIVA TE LIMITED INDIA RENDERED CERTAIN MARKETING SUPPORT SERVICES TO ITS AES SUCH AS PROVIDING INFORMATION ON POTENTIAL CUSTOMERS, PROVIDING ASSISTANCE IN MARKET ING PRODUCTS ITS AE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR A.Y. 2008- 09, THE ASSESSING OFFICER REFERRED THE MATTER TO TRANSFER PRICING OFFICER (TP O) MADE TRANSFER PRICING ADJUSTMENT TO THE PRICES OF TWO INTERNATIONAL TRANS ACTIONS ENTERED INTO BY THE ASSESSEE VIZ. PROVISION OF SOFTWARE DEVELOPMENT SER VICES (RS.10,47,38,287) AND MARKETING SUPPORT SERVICES (RS.12,49,95,967). THERE FORE, THE TPO MADE A TOTAL TRANSFER PRICING ADJUSTMENT OF RS.22,97,34,254 VIDE ORDER DATED 31.10.2011. THE ASSESSING OFFICER PASSED THE DRAFT ASSESSMENT O RDER DATED 27.12.2011. THE ASSESSEE FILED ITS OBJECTIONS UNDER SECTION 144C(2) (B) OF THE ACT WITH THE DISPUTE RESOLUTION PANEL (DRP) AGAINST THE TRANSFER PRICING ADJUSTMENT PROPOSED BY THE TPO/AO. THE DRP PROVIDED CERTAIN RE LIEF (I.E. REJECTED CERTAIN NON-COMPARABLE COMPANIES SELECTED BY THE TPO AND CO RRECTED COMPUTATIONAL ERRORS COMMITTED BY THE TPO) TO THE ASSESSEE AND RE DUCED THE QUANTUM OF TRANSFER PRICING ADJUSTMENT. THE AO PASSED THE FINA L ASSESSMENT ORDER DATED 30.11.2012 IN CONFORMITY WITH THE DRP DIRECTIONS WH EREIN THE TRANSFER PRICING ADJUSTMENT WAS RS.3,57,02,972 (RS. 2,50,08,872 FOR PROVISION OF SOFTWARE DEVELOPMENT SERVICES AND RS.1,06,94,100 FOR PROVISI ON OF MARKETING SUPPORT SERVICES). 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED PRESENT APPEAL BEFORE US. 5. THE LD. AR SUBMITTED THAT GROUND NO. 1 IS GENERA L IN NATURE, HENCE THE SAME IS NOT ADJUDICATED. 6. GROUND NOS. 2 AND 2.1 RELATES TO DEPRECIATION CL AIMED ON CERTAIN ITEMS CHARACTERIZED AS COMPUTERS BY THE ASSESSEE (VIZ. UPS, LAN/WAN EQUIPMENT, CATALYST SWITCHES, NETWORK EQUIPMENTS, ETC.) FROM 6 0% TO 15%, BY TREATING THE SAME AS PLANT AND MACHINERY AND THUS, DISALLOWING D EPRECIATION AMOUNTING TO RS.19,33,295 TO THE ASSESSEE. THE LD. AR SUBMITTED THAT THIS ISSUE IS COVERED BY THE TRIBUNAL DECISION FOR ASSESSMENT YEAR 2008-0 9 IN ITA NO.333/DEL/2013 M/S NOKIA SIEMENS NETWORKS INDIA VS . ACIT DATED 16.02.2018). THE LD. DR RELIED UPON THE ASSESSMENT ORDER. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS FOUND THAT THE ISSUE IS IDENTICAL IN NATURE TO THAT OF M/S NOKIA SIEMENS NETWORKS INDIA (SUPRA) FOR A.Y. 2 008-09 AND NO DISTINGUISHING FACTORS WERE POINTED OUT BY THE LD. DR DURING THE HEARING. THE TRIBUNAL FOR A.Y. 2008-09 IN CASE OF M/S NOKIA SIEM ENS NETWORKS INDIA (SUPRA) HELD AS UNDER:- 5. COMING TO GROUND NO. 2 AND 2.1, RELATING TO THE DEPRECIATION ON COMPUTER PERIPHERALS, ASSESSEE CLAIMED DEPRECIATION ON THE E QUIPMENT LIKE UPS, STABILIZER, LAN/WAN, CATALYST SWITCHES, NETWORK SWI TCHES ETC. AT 60%. HOWEVER LEARNED AO DISALLOWED SUCH A CLAIM TO AN EX TENT OF RS.1,44,75,008/- ON THE GROUND THAT THEY FORM PART OF THE BLOCK OF ASSETS UNDER PLANT AND MACHINERY, IN RESPECT OF WHICH DEPR ECIATION IS ALLOWED ONLY AT 15%. BASING ON THE DECISION OF THE HONBLE JURIS DICTIONAL HIGH COURT IN CIT VS. BSES YAMUNA POWER LTD. (2013) 358 ITR 47 (DEL), ASSESSEE ARGUED BEFORE THE LEARNED DRP THAT THESE PERIPHERALS FORM AN INTE GRAL PART OF COMPUTER SYSTEM, AND THEREFORE, 60% DEPRECIATION MUST BE ALL OWED. LEARNED CIT(A), HOWEVER, OBSERVED THAT THE ISSUE OF ALLOWABILITY OF DEPRECIATION ON COMPUTER PERIPHERALS IS PENDING BEFORE THE HONBLE SUPREME C OURT, AND SINCE IT DID NOT ATTAIN FINALITY, THE PLEA OF THE ASSESSEE CANNOT BE ENTERTAINED. 6. IT IS THE ARGUMENT OF THE LEARNED AR THAT THE EQ UIPMENT IN RESPECT OF WHICH THE DEPRECIATION AT 60% IS CLAIMED DOES NOT FUNCTIO N ON THEIR OWN AND FOR DERIVING ANY FUNCTIONALITY THEY MUST BE CONNECTED T O THE COMPUTER EQUIPMENT, AS SUCH THEY ARE PART AND PARCEL OF THE COMPUTER SY STEMS IN RESPECT OF WHICH DEPRECIATION AT 60% HAS TO BE ALLOWED. HE PLACED RE LIANCE ON THE DECISIONS REPORTED IN BSES YAMUNA (2013) 358 ITR 47 (DEL); NO KIA INDIA (P.) LTD. VS. ACIT (2012) 22 TAXMANN.COM 109 (DEL-TRI) & (2012) 2 0 TAXMANN.COM 810 (DEL); ACIT VS. TIMEX WATCHES LTD. (2016) 71 TAXMAN N.COM 177 (DEL-TRI.); GE CAPITAL BUSINESS PROCESS MANAGEMENT SERVICES (P) LT D. VS. ACIT (2015) 64 TAXMANN.COM 156 (DEL-TRI.) IN SUPPORT OF HIS CONTEN TIONS. 7. IN BSES YAMUNA (SUPRA) THE HONBLE JURISDICTIONA L HIGH COURT HAS HELD AS UNDER: 6. WE ARE IN AGREEMENT WITH THE VIEW OF THE TRIBUN AL THAT COMPUTER ACCESSORIES AND PERIPHERALS SUCH AS PRINTERS, SCANN ERS AND SERVER, ETC., FORM AN INTEGRAL PART OF THE COMPUTER SYSTEM. IN FA CT, THE COMPUTER ACCESSORIES AND PERIPHERALS CANNOT BE USED WITHOUT THE COMPUTER. CONSEQUENTLY, AS THEY ARE THE PART OF THE COMPUTER SYSTEM, THEY ARE ENTITLED TO DEPRECIATION AT THE HIGHER RATE OF 60 P ER CENT. 8. IN THE CASE OF NOKIA INDIA (P.) LTD. (SUPRA), WH EREIN A CO-ORDINATE BENCH OF THIS TRIBUNAL HAS HELD AS UNDER:- 13.1 THIS ISSUE PERTAINS TO CLAIM OF DEPRECIATION @ 60% ON UPS, LAN/WAN EQUIPMENT, SWITCHES, NETWORK EQUIPMENT AND VISUAL STUDIO ETC. 13.2 WE FIND THAT THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN IT APPEAL NO. 1266 (DELHI) OF 2010 IN THE CASE OF C.I.T. VS. BSES RAJDHANI POWERS LTD. VI DE ORDER DATED 31.8.2010 WHEREIN IT WAS HELD THAT THE COURT WAS IN AGREEMENT WITH THE VIEW OF THE TRIBUNAL THAT THE COMPUTER PERIPHERALS SUCH AS PRINTER, SCANNER ETC. FORM AN INTEGRAL PART OF COMPUTER SYSTEM. IN F ACT THE COMPUTER ACCESSORIES AND PERIPHERALS CANNOT BE USED WITHOUT THE COMPUTER. CONSEQUENTLY, AS THEY ARE THE PART OF THE COMPUTER SYSTEM, THEY ARE ENTITLED TO DEPRECIATION @ 60%. RESPECTFULLY FOLLOW ING THE ABOVE PRECEDENT, WE SET ASIDE THE ORDER OF THE ASSESSING OFFICER AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 9. IT IS THE FURTHER ARGUMENT OF THE LEARNED AR THA T BY ORDER DATED 14.2.2014 IN CIT VS. BIRLASOFT LTD. (SLP NO. 20645 OF 2012), THE HONBLE SUPREME COURT DISMISSED THE DEPARTMENTAL APPEAL AGAINST THE ORDER OF THE HONBLE JURISDICTIONAL HIGH COURT IN ITA NO. 71 OF 2010 WHE REIN THE DELHI HIGH COURT HELD THAT THE DEPRECIATION ON COMPUTER ACCESSORIES AND PERIPHERALS WOULD BE ADMISSIBLE AT THE RATE OF 60%. LASTLY, HE BROUGHT T O OUR NOTICE THAT THE LEARNED DRP WHILE DEALING WITH THIS ASPECT IN ASSESSEES OW N CASE FOR THE AY 2009- 10 AND 2010-11 FOLLOWED THIS LEGAL POSITION AND TH E DEPARTMENT ALSO ACCEPTED THE SAME. 10. IN VIEW OF THE ABOVE LEGAL POSITION, WE FIND TH AT THE EQUIPMENT FORMS INTEGRAL PART OF THE COMPUTER SYSTEMS AND THE ASSES SEE IS ENTITLED TO THE CLAIM OF DEPRECIATION AT 60% BY TREATING THE PERIPHERALS AS PART OF BLOCK OF COMPUTERS. GROUNDS NO. 2 AND 2.1 ARE ALLOWED ACCORD INGLY. THUS, THE FACTS IN THE PRESENT CASE ARE ALSO IDENT ICAL. THEREFORE, GROUND NOS. 2 AND 2.1 ARE ALLOWED. 8. THE LD. AR SUBMITTED THAT GROUND NOS. 3, 3.1, 3. 2, 3.3 AND 3.4 RELATED TO DISALLOWANCE U/S 40(A)(I) AGGREGATING TO RS.33,2 7,776 ON THE GROUND THAT PAYMENT MADE TO FOLLOWING COMPANIES WAS IN THE NATU RE OF FTS AND HENCE, ASSESSEE WAS LIABLE TO DEDUCT TAX ON THE SAME. THE LD. AR SUBMITTED THAT AT THE TIME OF THE ASSESSMENT PROCEEDINGS, THE ASSESSE E COULD NOT PRODUCED THE DETAILS AS THE DETAILS WERE NOT RECEIVED FROM THE T HIRD PARTIES, BUT SINCE THE SAME ARE NOW AVAILABLE WITH THE ASSESSEE, THEREFORE , THE ASSESSEE IS FILING ADDITIONAL EVIDENCE WHICH HAS TO BE DECIDED BY THE ASSESSING OFFICER. THUS, THE LD. AR PRAYED THAT THIS ISSUE BE RESTORED TO TH E FILE OF THE ASSESSING OFFICER. THE LD. DR DID NOT OBJECT THE SAME. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIAL AVAILABLE ON RECORD. SINCE AT THE TIME OF THE ASSE SSMENT PROCEEDINGS, THE ASSESSEE COULD NOT PRODUCED THE EVIDENCES DUE TO NO N-AVAILABILITY AT THAT TIME, THEREFORE, IT WILL BE APPROPRIATE IN THE INTEREST O F NATURAL JUSTICE THAT THE SAID ADDITIONAL EVIDENCE BE ADMITTED. HENCE, THE ADDITIO NAL EVIDENCE IS ADMITTED AND THE MATTER IS REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN RESPECT OF THIS ISSUE. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLES OF N ATURAL JUSTICE. GROUND NOS. 3, 3.1, 3.2, 3.3 AND 3.4 ARE PARTLY ALLOWED FOR STATIS TICAL PURPOSES. 10. AS REGARDS TO GROUND NO. 4, 4.1 AND 4.2 RELATIN G TO DEPRECIATION AT 25% ON GOODWILL ACQUIRED FROM PURCHASE OF NETWORKS BUSI NESS DISALLOWED AT RS.9,81,15,000/-, THE LD. AR SUBMITTED THAT THESE W ERE FRESH CLAIMS WERE RAISED BEFORE THE ASSESSING OFFICER THROUGH SUBMISS IONS DATED 04.10.2012. THUS, THE LD. AR REQUESTED THAT THE ADDITIONAL GROU NDS MAY BE ADMITTED AND THE ISSUE MAY BE REMANDED BACK TO THE FILE OF THE A SSESSEE. THE LD. AR RELIED UPON THE DECISION OF THE TRIBUNAL IN CASE OF RAKESH SINGH VS. ACIT (2012) 26 TAXMANN.COM 240 (BANG). THE LD. DR OPPOSED THE ADM ISSION OF THE FRESH CLAIMS. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ADDITIONAL CLAIMS TAKEN BE FORE US WERE ALREADY SUBMITTED BEFORE THE ASSESSING OFFICER VIDE SUBMISS IONS DATED 04.10.2012, THEREFORE, WE ARE INCLINED TO ADMIT THE CLAIMS. WE REMAND BACK THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCI PLES OF NATURAL JUSTICE. GROUND NOS. 4, 4.1 AND 4.2 ARE PARTLY ALLOWED FOR S TATISTICAL PURPOSES. 12. THE LD. AR SUBMITTED THAT GROUND NOS. 5, 5.1 & 5.2 RELATING TO TRANSFER PRICING ISSUE ARE GENERAL AND HENCE NOT PRESSED. T HEREFORE, GROUND NOS. 5, 5.1 AND 5.2 ARE DISMISSED. 13. AS REGARDS TO GROUND NO. 5.3 RELATING TO SOFTWA RE DEVELOPMENT SEGMENT, THE LD. AR SUBMITTED THAT AS FAR AS THE SOFTWARE DE VELOPMENT SEGMENT IS CONCERNED, THE ASSESSEES FUNCTIONALITY IS IDENTICA L TO THAT OF THE ERSTWHILE ENTITY. THE LD. AR RELIED UPON THE ORDER OF TRIBUNA L IN CASE OF M/S NOKIA SIEMENS NETWORKS INDIA (SUPRA) FOR ASSESSMENT YEAR 2008-09 WHEREIN IT IS HELD AS UNDER: 33. ASSESSEE AS A TESTED PARTY HAS BEEN CHARACTERI ZED AS PROVIDER OF SOFTWARE DEVELOPMENT SERVICES TO ITS AES WHICH HAD USED TRANSACTIONAL NET MARGIN METHOD (TNMM) AS THE MOST APPROPRIATE METHOD FOR ITS BENCHMARKING OF INTERNATIONAL TRANSACTION. SEARCH FOR UNCONTROLL ED COMPARABLES WAS MADE USING PROWESS AND CAPITOLINE DATABASE BY THE ASSESS EE IN ITS TRANSFER PRICING STUDY. ASSESSEE HAD TAKEN 16 COMPARABLES IN ITS TP STUDY WITH AN ARITHMETIC MEAN OF 9.71%. ASSESSEE COMPUTED ITS PRO FIT LEVEL INDICATOR (PLI) AT 4.26% ON COST WHICH WAS FALLING WITHIN THE ARMS LE NGTH RANGE OF +/-5%. THE LD. AR SUBMITTED THAT THE ASSESSEE IS ALSO ENGA GED IN PROVIDING SOFTWARE DEVELOPMENT SERVICES TO ITS AES. THUS, IT IS AN UND ISPUTED POSITION THAT ASSESSEES FUNCTIONAL PROFILE QUA THE SOFTWARE DEVE LOPMENT SERVICE DIVISION IS IDENTICAL TO THAT OF THE ERSTWHILE ENTITY WHICH HAS BEEN CONSIDERED BY THE TRIBUNAL IN M/S NOKIA SIEMENS NETWORKS INDIA (SUPRA ). THE TPO SELECTED 25 COMPARABLES TO BENCHMARK THE TRANSACTION PERTAINING TO SOFTWARE DEVELOPMENT SERVICES DIVISION. SUBSEQUENTLY, DRP DELETED ONE OF THE COMPARABLES SELECTED BY TPO AND THUS THE FINAL SET OF COMPARABLES COMES TO 24. OUT OF THESE 24 COMPARABLES, THE ASSESSEE WANTS TO EXCLUDE 18 COMPA RABLES AND FURTHER WANTS INCLUSION OF THREE COMPARABLES. THUS, THE LD. AR SU BMITTED THAT ALL THE COMPARABLES UNDER CHALLENGE WERE CONSIDERED BY THIS TRIBUNAL IN CASE OF M/S NOKIA SIEMENS NETWORKS INDIA (SUPRA) FOR THE SAME B USINESS AND SAME ASSESSMENT YEAR. THE COMPARABLES SELECTED BY THE TP O FOR M/S NOKIA SIEMENS NETWORKS PRIVATE LTD. ARE REPRODUCED BELOW ALONG WI TH THE FINDING RENDERED BY THE TRIBUNAL IN CASE OF M/S NOKIA SIEMENS NETWORKS INDIA (SUPRA): S.NO. COMPARABLES TREATMENT AFFORDED BY TRIBUNAL IN ITA 333/D/2012 1. AKSHAY SOFTWARE TECHNOLOGIES LTD. NOT DISPUTED 2. BODHTREE CONSULTING LTD. EXCLUDED 3. CAT TECHNOLOGIES LTD. EXCLUDED 4. E-INFOCHIPS BANGALORE LTD. EXCLUDED 5. E-INFOCHIPS LTD. EXCLUDED 6. F C S SOFTWARE SOLUTIONS LTD. EXCLUDED 7. GOLDSTONE TECHNOLOGIES LTD. EXCLUDED 8. HELIOS & MATHESON INFORMATION TECHNOLOGY LTD. EXCLUDED 9. IGATE GLOBAL SOLUTIONS LTD. EXCLUDED 10. INFOSYS LTD. EXCLUDED 11. K P I T CUMMINS INFOSYSTEM LTD. NOT DISPUTED 12. KALS INFORMATION SYSTEMS LTD. (SEG) EXCLUDED 13. LANCO GLOBAL SYSTEMS LTD. EXCLUDED 14. LARSEN & TOUBRO INFOTECH LTD. EXCLUDED 15. MINDTREE LTD. EXCLUDED 16. PERSISTENT SYSTEMS LTD. EXCLUDED 17. QUINTEGRA SOLUTIONS LTD. EXCLUDED 18. R S SOFTWARE (INDIA) LTD. NOT DISPUTED 19. R SYSTEMS INTERNATIONAL (SEG) EXCLUDED 20. SASKEN COMMUNICATION TECHNOLOGIES LTD. (SEG) NOT DISPUTED 21. SOFTSOL INDIA LTD. INCLUDED 22. TATA ELXI LTD. (SEG) EXCLUDED 23. VMF SOFTECH LTD. NOT DISPUTED 24. ZYLOG SYSTEMS LTD. NOT DISPUTED INCLUSIONS 25. CG-VAK SOFTWARE EXPORTS LTD. REMANDED TO TPO TO APPLY EMPLOYEE FILTER PROPERLY 26. SIP TECHNOLOGIES LTD. INCLUDED 27. INDIUM SOFTWARE INDIA LTD. EXCLUDED THE LD. AR SUBMITTED THAT THE FUNCTIONAL PROFILE OF THE ASSESSEE IS IDENTICAL TO THAT OF M/S NOKIA SIEMENS NETWORKS INDIA (SUPRA), T HUS, THE ORDER PASSED BY THE TRIBUNAL IN ITA 333/D/2012 DESERVES TO BE FOLLO WED. THE LD. DR RELIED UPON THE ORDER OF THE TPO/AO, BUT COULD NOT DISTING UISH THE FACTS OF THE ASSESSEES CASE RELATING TO THE COMPARABLES DISPUTE D BY THE ASSESSEE IN PRESENT ASSESSMENT YEAR AND THAT TO THE COMPARABLES DEALT B Y THE TRIBUNAL IN CASE OF M/S NOKIA SIEMENS NETWORKS INDIA (SUPRA). 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE FUNCTIONAL PROFILE OF THE ASSESSEE COMPANY AND M/S NOKIA SIEMENS NETWORKS INDIA (SUPRA) ARE IDENTICAL AND THERE IS NO DISPUTE RAISED BY THE REVENUE AT ANY POINT OF TIME. THEREFO RE, THE TREATMENT GIVEN TO THE COMPARABLES IN CASE OF M/S NOKIA SIEMENS NETWOR KS INDIA (SUPRA) BY THE TRIBUNAL HAS TO BE FOLLOWED IN THE PRESENT ASSESSEE S CASE AS WELL. GROUND NO. 5.3 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 15. AS REGARDING TO GROUND NO. 5.4 RELATING TO NETW ORK DIVISION I.E. SUPPORT SERVICE SEGMENT, THIS SEGMENT IS SEPARATE FROM THE SOFTWARE DEVELOPMENT SERVICE SEGMENT. THE LD. AR SUBMITTED THAT FOUR COM PARABLES TO BE EXCLUDED HAS TO BE EXCLUDED WHICH ARE APITCO LTD., IDC (INDI A) LTD., RITES (SEG), WPCOS LTD. (SEG). THE LD. AR SUBMITTED THAT THESE ARE AL L FUNCTIONALLY DIFFERENT COMPARABLES. THEREFORE, THE SAME SHOULD BE EXCLUDE D. THE LD. AR SUBMITTED THAT ICRA MANAGEMENT CONSULTING SERVICES LTD. IS AC CEPTED BY THE ASSESSEE. THE LD. DR RELIED UPON THE ORDER OF THE TPO/AO. 16. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. WE ARE GIVING OUR FINDINGS FOR EACH COMPARABLES HEREINAFTER. 16.1 APITCO LTD.: THIS COMPANY IS A GOVERNMENT UND ERTAKING AND ENGAGED IN TURNKEY IMPLEMENTATION, PREPARATION OF REPORTS AND INTO CORE ACTIVITIES AND ALSO PROVIDES HIGH END TECHNICAL CONSULTANCY. THE S UBSTANTIAL CONTRACTS OF THIS COMPANY ARE WITH THE GOVERNMENT INSTITUTIONS. THERE IS NO SEGMENTAL DATA AVAILABLE OF THIS COMPANY. THIS COMPANY ALSO FAILS THE TPOS OWN FILTER OF EXPORT INCOME OF ATLEAST 25% OF TOTAL INCOME. THE A SSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF TEL ECOMMUNICATION NETWORK EQUIPMENT AND PROVISION OF RELATED SERVICES SUCH AS NETWORK DESIGN, INSTALLATION AND COMMISSIONING. THE COMPANY ALSO PR OVIDED SUPPORT SERVICES TO MAJOR TELECOM OPERATORS AND IP SERVICE PROVIDERS IN INDIA AND TO CUSTOMERS OF ITS ASSOCIATED ENTERPRISES (AE). FURTHER, THE COMPA NY ALSO PROVIDED SOFTWARE DEVELOPMENT AND CERTAIN NETWORK MANAGEMENT SUPPORT SERVICES. THUS, THIS COMPANY IS FUNCTIONALLY DIFFERENT FROM THE ASSESSEE COMPANY. THEREFORE, WE DIRECT THE TPO TO EXCLUDE THIS COMPARABLE. 16.2 IDC (INDIA) LTD.: THIS COMPANY IS A RESEARCH C OMPANY, PRIMARILY DEALING IN RESEARCH AND SURVEY SERVICES AND PRODUCTS. ITS A HIGH END SERVICE PROVIDER RENDERING VARIED SERVICES IN THE NATURE OF DATA MEA SUREMENT PRODUCTS, SUBSCRIPTION SERVICES, INDUSTRY RESEARCH, IT EXECUT IVE PROGRAM, CUSTOM SOLUTIONS AND EVENTS. WHEREAS THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF TELECOMMUN ICATION NETWORK EQUIPMENT AND PROVISION OF RELATED SERVICES SUCH AS NETWORK DESIGN, INSTALLATION AND COMMISSIONING. THE COMPANY ALSO PR OVIDED SUPPORT SERVICES TO MAJOR TELECOM OPERATORS AND IP SERVICE PROVIDERS IN INDIA AND TO CUSTOMERS OF ITS ASSOCIATED ENTERPRISES (AE). FURTHER, THE COMPA NY ALSO PROVIDED SOFTWARE DEVELOPMENT AND CERTAIN NETWORK MANAGEMENT SUPPORT SERVICES. THUS, THIS COMPANY IS FUNCTIONALLY DIFFERENT FROM THE ASSESSEE COMPANY. THEREFORE, WE DIRECT THE TPO TO EXCLUDE THIS COMPARABLE. 16.3 RITES (SEG): THIS COMPANY PROVIDES COMPREHENSI VE ENGINEERING AND PROJECT MANAGEMENT SERVICES SUCH AS PRE-PROJECT PLA NNING INVOLVING PROJECT IDENTIFICATION, FEASIBILITY STUDIES AND PROJECT APP RAISAL. THIS COMPANY IS FULL RISK BEARING COMPANY AND THUS CANNOT BE COMPARED TO A SERVICE PROVIDER LIKE ASSESSEE. ITS A GOVERNMENT UNDERTAKING AND HAS DIF FERENT MODEL OF REVENUE RECOGNITION. BESIDES THAT THE COMPANY HAS INTANGIBL E ASSETS AND THERE IS NO SEGMENTAL DATA AVAILABLE. THUS, THIS COMPANY IS FUN CTIONALLY DIFFERENT FROM THE ASSESSEE COMPANY. THEREFORE, WE DIRECT THE TPO TO E XCLUDE THIS COMPARABLE. 16.4 WAPCOS LTD. (SEG): THIS COMPANY IS INTO PROVIS ION OF ENGINEERING CONSULTANCY SERVICES AND TURNKEY PROJECTS AND HAS D IVERSE BUSINESS ACTIVITIES. THIS COMPANY HAS GRANT IN AID BY GOVERNMENT AND THE SAME ARE TREATED AS FEE FROM OTHER SERVICES. THUS, THIS COMPANY IS FUNCTION ALLY DIFFERENT FROM THE ASSESSEE COMPANY. THEREFORE, WE DIRECT THE TPO TO E XCLUDE THIS COMPARABLE. 17. THEREFORE, WE REMAND BACK THE ISSUE TO THE FILE OF THE TPO/AO AS PER ABOVE DIRECTIONS GIVEN FOR EACH COMPARABLES. THUS, GROUND NO. 5.4 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 18. AS REGARDS GROUND NOS. 5.5, 5.6, 5.7, THE LD. A R SUBMITTED THAT THE ISSUE SHOULD BE KEPT OPEN FOR FUTURE, BUT AT THIS J UNCTURE, THE ASSESSEE IS NOT PRESSING AND THIS STATEMENT SHOULD NOT BE TAKEN IN TO CONSIDERATION IN FUTURE AS IT IS RELATED TO THIS ASSESSMENT YEAR ONLY. THE LD. DR DID NOT OBJECT TO THE SAME. THEREFORE, WE DISMISSED GROUND NOS. 5.5, 5.6 AND 5.7 AS NOT PRESSED BY THE ASSESSEE. 19. AS RELATES TO GROUND NO. 5.8 REGARDING NOT MAKI NG APPROPRIATE ADJUSTMENTS ON ACCOUNT OF WORKING CAPITAL DIFFERENC ES BETWEEN THE ASSESSEE VIS--VIS THE COMPARABLES COMPANIES WHILE RE-DETERM INING THE ALP OF THE CERTAIN INTERNATIONAL TRANSACTIONS OF THE ASSESSEE, THE LD. AR SUBMITTED THAT THE DRP HAS TAKEN THE COGNIZANCE OF TRIBUNALS DECI SION AND THE SAME SHOULD BE GIVEN BY THE TPO/ASSESSING OFFICER. THE LD. DR R ELIED UPON THE ORDER OF THE TPO/AO. 20. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE TRIBUNAL IN CASE OF M/S N OKIA SIEMENS NETWORKS INDIA (SUPRA) HELD AS UNDER: 129. IN VIEW OF THIS LEGAL AND FACTUAL POSITION, WE CONS IDER IT JUST AND PROPER TO DIRECT THE LD. TPO TO GRANT WORKING CAPIT AL ADJUSTMENT TO ACCOUNT FOR DIFFERENCE IN WORKING CAPITAL EMPLOYED BY THE ASSES SEE AND THE COMPARABLE COMPANIES. SINCE THERE IS CASE TO ALLOW WORKING CAPITAL ADJUST MENT IN ASSESSEES CASE AS HELD IN CASE OF M/S NOKIA SIEMENS NETWORKS INDIA (S UPRA). THE ISSUE IS IDENTICAL AND HENCE WE DIRECT THE TPO TO GRANT WORK ING CAPITAL ADJUSTMENT TO ACCOUNT FOR DIFFERENCE IN WORKING CAPITAL EMPLOYED BY THE ASSESSEE AND THE COMPARABLE COMPANIES. GROUND NO. 5.8 IS PARTLY ALLO WED FOR STATISTICAL PURPOSE. 21. AS RELATES TO GROUND NO. 5.9, 5.10 BOTH ARE NOT PRESSED BY THE LD. AR, HENCE DISMISSED. 22. AS RELATED TO GROUND NO. 6, THE LD. AR SUBMITTE D THAT THE SHORT CREDIT OF TDS BE DECIDED BY THE ASSESSING OFFICER WITHIN TIME BOUND PERIOD. THUS, THIS ISSUE SHOULD BE REMANDED BACK TO THE FILE OF THE AS SESSING OFFICER. THE LD. DR RELIED UPON THE ASSESSMENT ORDER. 23. WE HAVE HEARD BOTH THE PARTIES. SINCE THE ISSUE IS HAS NOT BEEN PROPERLY DEALT BY THE ASSESSING OFFICER, IT WILL BE APPROPRI ATE TO REMAND BACK THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER. NEEDLESS TO S AY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLES OF N ATURAL JUSTICE. GROUND NO. 6 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 24. THE LD. AR SUBMITTED THAT GROUND NO. 7, 8, 9 AR E CONSEQUENTIAL. GROUND NOS. 7, 8 AND 9 ARE CONSEQUENTIAL, THEREFORE, NOT A DJUDICATED UPON AT THIS JUNCTURE. 25. IN RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 1ST OCTOBE R, 2018 . SD/- SD/- (N. K. SAINI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 01/10/2018 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 03.07.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 03.07.2018 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 0 3 .10.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 04.10 .2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 04.10.2018 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER