M/s EMC Software and Services India Private Limited , Bangalore V. Joint Commissioner of Income Tax Special Range-2 , Bangalore

ITA 3375/BANG/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0532 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 23-10-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 21-12-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: T SURYANARAYANA
• Keywords: Related party transaction; Transfer pricing; Principle of natural justice; International transaction; Wholly owned subsidiary
• Section: 143(3); 234B; 133(6); 10B; 201; 144C; 143(2); 64; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES C BENCH: BANGALORE BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER IT (TP) A. NO. 3375 /BANG/2018 (ASSESSMENT YEAR: 20 14 - 15 ) M/S. EMC SOFTWARE AND SERVICES INDIA PVT. LTD., BAGMANE DEVELOPERS PVT. LTD., DODDANEKKUNDI VILL. ROAD, BANGALORE - 560 037 .APPELLANT PAN AABCT0199B VS. JOINT COMMISSIONER OF INCOME TAX, SPEC IAL RANGE 2, BANGALORE. RESPONDENT. ASSESSEE BY: SHRI T. SURYANARAYANA, ADVOCATE. REVENUE BY: SHRI PRADEEP KUMAR, CIT (D.R) DATE OF HEARING : 23.10 .2019 DATE OF PRONOUNCEMENT : 18.12 .2019 O R D E R PER SHRI PAVAN KUMAR GADALE, JM : THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF FINAL ASSESSMENT ORDER UNDER SECTION 143(3) R.W.S. 144C(1) OF THE INCOME TAX ACT, 1961 DT.29.10.2018 PASSED IN PURSUANCE TO THE DIRECTIONS OF DISPUTE RESOLUTION PANEL (DRP) UNDER SECTION 144C (5) OF THE ACT DT.12.09.2018. 2 IT(TP)A NO.3375/BANG/2018 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1 ASSESSMENT AND REFERENCE TO LD. TRANSFER PRICING OFFICER ARE BAD IN LAW AND ON FACTS A) THE ORDER ISSUED BY THE JOINT COMMISSIONER OF INCOME - TAX, SPECIAL RANGE - 2 [JCIT OR LD. AO], UNDER SECTION 143(3) READ WITH SECTION 144C, PURSUANT TO THE DIRECTIONS ISSUED BY THE HONBLE DISPUTE RESOLUTION PANEL [DRP / LD. PANEL], IS BAD IN LAW AND ON FACTS AND IS IN VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. WITHOU T PREJUDICE TO THE GENERALITY OF THE ABOVE, THE ORDER PASSED BY THE LD.AO IS BAD IN LAW INSOFAR AS THE FACT THAT THE LD. AO DID NOT ISSUE TO THE APPELLANT A SHOW CAUSE NOTICE, AS PER PROVISO TO SECTION 92C(3) OF THE ACT B) THE LD. AO HAS ERRED IN LAW IN MAKIN G A REFERENCE TO THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX [TRANSFER PRICING (1)(2)(1)] [LD. TPO]. THE LD. PANEL ERRED IN UPHOLDING THE ACTIONS OF THE LD. AO/ TPO. C) THE DIRECTIONS ISSUED BY THE LD. PANEL DID NOT TAKE COGNIZANCE OF THE OBJECTIONS RAISE D BY THE APPELLANT WHILE ISSUING THE DIRECTIONS UNDER SECTION 144C(5). D) THE ORDER PASSED BY THE LD. AO IS WITHOUT JURISDICTION, INTER ALIA, IN SO FAR AS IT PURPORTS TO GIVE EFFECT TO INVALID DIRECTIONS OF THE LD. PANEL. E) THE DIRECTIONS ISSUED BY THE LD. PANE L AND THE ORDER PASSED BY THE LD.AO IS WITHOUT JURISDICTION, INTER ALIA, IN SO FAR AS IT PURPORTS TO GIVE EFFECT TO AN INVALID ORDER OF THE LD. TPO 2 THE LD. PANEL AND LD. AO/ LD. TPO HAS ERRED IN JUSTIFYING THE MOTIVE OF SHIFTING PROFITS ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. PANEL AND LD.AO / TPO ERRED IN NOT DEMONSTRATING THAT THE MOTIVE OF THE APPELLANT WAS TO SHIFT PROFITS OUTSIDE INDIA BY MANIPULATING THE PRICES CHARGED IN THE INTERNATIONAL TRANSACTION, WHICH IS A PRE - REQU ISITE CONDITION TO MAKE ANY ADJUSTMENT UNDER THE PROVISION OF CHAPTER X OF THE ACT. THE LD, PANEL ERRED IN UPHOLDING THE SAME 3 COMPARABILITY ANALYSIS ADOPTED BY THE LD. TPO FOR DETERMINATION OF ARMS LENGTH PRICE FOR THE SOFTWARE DEVELOPMENT SERVICES SEG MENT A) THE LD. AO / LD. TPO ERRED IN REJECTING THE VALUE OF INTERNATIONAL TRANSACTION OF PROVISION OF SOFTWARE DEVELOPMENT SERVICES, AS RECORDED IN THE BOOKS OF ACCOUNT AS THE ARM'S LENGTH PRICE. THE LD. PANEL ERRED IN UPHOLDING THE SAME B) THE LD. AO / LD. TPO ERRED IN DETERMINING A NEW ARM'S LENGTH PRICE IN SUBSTITUTION OF THE ARM'S LENGTH PRICE DETERMINED BY THE APPELLANT. THE LD. PANEL ERRED IN UPHOLDING THE SAME C) THE LD. PANEL AND THE LD. AO ERRED IN LAW IN UPHOLDING THE FRESH COMPARABILITY ANALYSIS USING NON - CONTEMPORANEOUS DATA CONDUCTED BY THE LD. TPO AND FURTHER SUBSTITUTING THE APPELLANT'S ANALYSIS WITH FRESH BENCHMARKING ANALYSIS ON HIS OWN CONJECTURES AND SURMISES, THUS, THE APPELLANT PRAYS THAT THE FRESH BENCHMARKING ANALYSIS CONDUCTED BY THE LD. T PO IS LIABLE TO BE QUASHED D) THE LD. AO/ LD. TPO GROSSLY ERRED ON FACTS IN BENCHMARKING THE TRANSACTIONS OF THE SOFTWARE DEVELOPMENT SERVICES SEGMENT OF THE APPELLANT WITH COMPANIES OPERATING AS FULL - FLEDGED ENTREPRENEURS WITHOUT CONSIDERING THE DIFFERENCES IN THE FUNCTIONS PERFORMED, ASSETS EMPLOYED AND RISK UNDERTAKEN BY THE APPELLANT VIS - A - VIS COMPARABLE COMPANIES. THE LD. PANEL ERRED IN UPHOLDING THE ACTIONS OF THE LD. AO/ LD. TPO 3 IT(TP)A NO.3375/BANG/2018 E) THE LD. AO/ LD. TPO ERRED ON FACTS IN REJECTING THE COMPARABLE COMPANIES AR RIVED AT IN THE TRANSFER PRICING STUDY WITHOUT CONSIDERING THE FUNCTIONAL AND RISK ANALYSIS OF THE APPELLANT AND THE LD. PANEL ALSO ERRED IN CONFIRMING THE SAME F) THE LD. AO/ LD. TPO ERRED IN LAW AND THE LD. PANEL FURTHER ERRED IN CONFIRMING NON - APPLICATION OF MULTIPLE - YEAR DATA WHILE COMPUTING THE MARGIN OF ALLEGED COMPARABLE COMPANIES AS SUCH DATA HAD AH INFLUENCE IN DETERMINING THE TRANSFER PRICING POLICY OF THE APPELLANT G) THE LD. AO/ LD. TPO ERRED IN LAW IN REJECTING THE QUANTITATIVE FILTERS APPLIED BY THE APPELLANT IN ITS TP STUDY SUCH AS (I) USE OF MULTIPLE YEAR DATA (II) REJECTING COMPANIES WITH R&D TO SALES OF MORE THAN 3% (III) REJECTING COMPANIES WITH NET FIXED ASSETS TO SALES OF LESS THAN 2OO% (IV) REJECTING COMPANIES WITH ADVERTISEMENT, MARKETING AN D DISTRIBUTION (AMD) EXPENSES TO SALES LESS THAN 3% AND LD. PANEL ERRED IN UPHOLDING THE ACTIONS OF THE LD. AO / LD. TPO H) THE LD. PANEL GROSSLY ERRED IN UPHOLDING THE REJECTING OF THE POSITIVE NET WORTH FILTER APPLIED BY THE APPELLANT, WHEN IN FACT, THE LD. TPO HAD ACCEPTED THE APPLICATION OF THE SAID FILTER I) THE LD. AO / LD. TPO ERRED IN LAW IN APPLYING ARBITRARY FILTERS AS CRITERION FOR REJECTION OF COMPANIES IDENTIFIED BY THE APPELLANT IN THE TRANSFER PRICING STUDY SUCH AS (I) COMPANIES WHOSE DATA FOR FINANCIAL YEAR (FY) 2013 - 14 WAS NOT AVAILABLE (II) COMPANIES WITH DIFFERENT FINANCIAL YEAR ENDING (I.E., OTHER THAN 31 MARCH 2014) (III) COMPANIES WITH EMPLOYEE COST LESS THAN 75% OF ITS TOTAL OPERATING REVENUES (VI) COMPANIES WHO HAVE EXPORT SERVICES IN COME LESS THAN 75% OF THE SALES (V) COMPANIES WITH EMPLOYEE COST LESS THAN 25% OF TURNOVER (VI) COMPANIES WITH PERSISTENT LOSS (COMPANIES REPORTING LOSS FOR ANY 2 YEARS OUT OF LAST THREE YEARS (VII) COMPANIES HAVING RELATED PARTY TRANSACTIONS GREATER THAN 25% OF THE SALES. THE LD. PANEL ALSO ERRED IN UPHOLDING THE ACTIONS OF THE LD. AO/LD. TPO J) THE LD. AO/LD. TPO ERRED IN CONSIDERING DATA OBTAINED U/S 133(6) OF THE ACT. THE LD. PANEL ERRED IN CONFIRMING THE SAME K) THE LD. AO/LD. TPO ERRED IN REJECTING (1) AKSH AY SOFTWARE TECHNOLOGIES LTD, (2) E - ZEST SOLUTIONS LIMITED (3) SASKEN COMMUNICATIONS TECHNOLOGIES LIMITED, DESPITE THESE COMPANIES BEING FUNCTIONALLY COMPARABLE. THE LD. PANEL ALSO ERRED IN CONFIRMING THE SAME L) THE LD. AO/LD. TPO ERRED IN REJECTING FOLLOWIN G COMPANIES FROM ITS OWN SEARCH WHICH ARE OTHERWISE FUNCTIONALLY COMPARABLE AND PASSES ALL THE FILTERS APPLIED IN THE TRANSFER PRICING ORDER (1) EVOKE TECHNOLOGIES LIMITED (2) MAVERIC SYSTEMS LIMITED (3) DAFFODILS SOFTWARE LIMITED (4) I2T2 INDIA LIMITED AN D (5) KIREETI SOFT TECHNOLOGIES LIMITED. THE LD. PANEL ALSO ERRED IN CONFIRMING THE SAME M) THE LD. AO/ LD. TPO ERRED IN REJECTING (L) EXILANT TECHNOLOGIES PVT. LIMITED (2) CELSTREAM TECHNOLOGIES LIMITED ON THE GROUND THAT FINANCIAL DATA WERE NOT AVAILABLE IN PUBLIC DOMAIN. THE LD. PANEL ALSO ERRED IN CONFIRMING THE SAME, AND ERRED IN FAILING TO APPRECIATE THAT THE COMPANIES ARE OTHERWISE FUNCTIONALLY COMPARABLE TO THE APPELLANT AND PASS ALL FILTERS APPLIED BY THE LD. TPO N) THE LD. AO/ LD. TPO ERRED IN INCLUDING (1) INFOSYS LIMITED, (2) LARSEN &TOUBRO INFOTECH LIMITED, (3) MINDTREE LIMITED, (4) PERSISTENT SYSTEMS LIMITED (5)THIRDWARE SOLUTIONS LIMITED AS COMPARABLE DESPITE THESE COMPANIES BEING FUNCTIONALLY DISSIMILAR TO THE APPELLANT. THE LD. PANEL ALSO ERRED IN CONFIRMING THE SAME O) THE LD. AO/ LD. TPO, WHILE APPLYING THE TURNOVER FILTER AT THE LOWER LIMIT SO AS TO REJECT COMPANIES HAVING TURNOVERS LESS THAN INR I CRORE IN FY 2013 - 14, ERRED IN NOT APPLYING THE 4 IT(TP)A NO.3375/BANG/2018 SAID FILTER AT THE UPPER END SO AS TO REJECT HIGH TURN OVER COMPANIES AS WELL. THE LD. PANEL ALSO ERRED IN CONFIRMING THE SAME P) THE LD. AO/ LD. TPO ERRED ON FACTS IN ARBITRARILY ACCEPTING COMPANIES WITHOUT CONSIDERING THE TURNOVER AND SIZE OF THE APPELLANT AND COMPARABLES. THE LD. PANEL ALSO ERRED IN CONFIRMING THE SAME Q) THE LD. AO /LD. TPO ERRED IN NOT APPLYING THE TURNOVER RANGE AT THE LOWER AND UPPER LIMIT SO AS TO REJECT HIGH/LOW TURNOVER COMPANIES R) THE LD. AO /KL. TPO ERRED IN NOT APPLYING THE ABNORMAL PROFIT EARNING FILTER TO REJECT COMPANIES WHICH HAD EARNE D ABNORMAL PROFITS, INDICATING THE EXISTENCE OF PECULIAR ECONOMIC CIRCUMSTANCE HAVING AN IMPACT ON THE MARGIN OF THE COMPANIES. THE LD. PANEL ERRED IN UPHOLDING THE SAME 4 COMPARABILITY ANALYSIS ADOPTED BY THE LD. TPO FOR DETERMINATION OF ARMS LENGTH PRICE FOR THE INFORMATION TECHNOLOGY ENABLED (ITE) SERVICES SEGMENT A) THE LD. AO/ IN. TPO ERRED IN REJECTING THE VALUE OF INTERNATIONAL TRANSACTION OF PROVISION OF INFORMATION TECHNOLOGY ENABLED SERVICES, AS RECORDED IN THE BOOKS OF ACCOUNT, AS THE ARM'S LENGT H PRICE. THE LD. PANEL ERRED IN UPHOLDING THE SAME B) THE LD. AO/ LD. TPO ERRED IN DETERMINING A NEW ARM'S LENGTH PRICE IN SUBSTITUTION OF THE ARM'S LENGTH PRICE DETERMINED BY THE APPELLANT. THE LD. PANEL ERRED IN UPHOLDING THE SAME C) THE LD. AO/TPO, CONTRARY T O THE PROVISIONS OF THE ACT AND RULES MADE THEREUNDER, ERRED IN COMPUTING THE ARM'S LENGTH PRICE OF THE ITE SERVICE SEGMENT BY ADOPTING THE OPERATING COST AND OPERATING INCOME OF BOTH THE INTERNATIONAL TRANSACTION AND THE DOMESTIC TRANSACTION. THE LD. PANE L ERRED IN UPHOLDING THE SAME D) THE LD. AO/TPO, WHILE ADOPTING THE OPERATING REVENUE EARNED BY THE ITE SERVICE SEGMENT OF THE APPELLANT, GROSSLY ERRED IN NOT TAKING INTO CONSIDERATION THE FOREIGN EXCHANGE GAIN ARISING FROM PROVISION OF THE SAID SERVICES. THE LD. PANEL ERRED IN UPHOLDING THE SAME. E) THE LD. PANEL AND THE LD. AO ERRED IN LAW IN UPHOLDING THE FRESH COMPARABILITY ANALYSIS USING NON - CONTEMPORANEOUS DATA CONDUCTED BY THE LD. TPO AND FURTHER SUBSTITUTING THE APPELLANT'S ANALYSIS WITH FRESH BENCHMARKIN G ANALYSIS ON HIS OWN CONJECTURES AND SURMISES. THUS, THE APPELLANT PRAYS THAT THE FRESH BENCHMARKING ANALYSIS CONDUCTED BY THE LD. TPO IS LIABLE TO BE QUASHED. F) THE LD. AO/ LD. TPO GROSSLY ERRED ON FACTS IN BENCHMARKING THE TRANSACTIONS OF THE ITE SERVICES SEGMENT OF THE APPELLANT WITH COMPANIES OPERATING AS FULL - FLEDGED ENTREPRENEURS WITHOUT CONSIDERING THE DIFFERENCES IN THE FUNCTIONS PERFORMED, ASSETS EMPLOYED AND RISK UNDERTAKEN BY THE APPELLANTS VIS - - VIS COMPARABLE COMPANIES. THE LD. PANEL ERRED IN UP HOLDING THE ACTIONS OF THE LD.AO/ LD. TPO G) THE LD. AO/ LD. TPO ERRED ON FACTS IN REJECTING THE COMPARABLE COMPANIES ARRIVED AT IN THE TRANSFER PRICING STUDY WITHOUT CONSIDERING THE FUNCTIONAL AND RISK ANALYSIS OF THE APPELLANT AND THE LD. PANEL ALSO ERRED I N CONFIRMING THE SAME H) THE LD. AO/ LD. TPO ERRED IN LAW AND THE LD. PANEL FURTHER ERRED IN CONFIRMING NON - APPLICATION OF MULTIPLE - YEAR DATA WHILE COMPUTING THE MARGIN OF ALLEGED COMPARABLE COMPANIES AS SUCH DATA HAD AN INFLUENCE IN DETERMINING THE TRANSFER PRICING POLICY OF THE APPELLANT 5 IT(TP)A NO.3375/BANG/2018 I) THE LD, AO/ LD. TPO ERRED IN LAW IN REJECTING THE QUANTITATIVE FILTERS APPLIED BY THE APPELLANT IN ITS TP STUDY SUCH AS (I) USE OF MULTIPLE YEAR DATA (II) REJECTING COMPANIES WITH R&D TO SALES OF MORE THAN 3% (III) REJECTING COMPANIES WITH NET FIXED ASSETS TO SALES OF LESS THAN 200% (IV) REJECTING COMPANIES WITH ADVERTISEMENT, MARKETING AND DISTRIBUTION (AMD) EXPENSES TO SALES LESS THAN 3% AND THE LD. PANEL ERRED IN UPHOLDING THE ACTIONS OF THE LD. AO/ LD. TPO J) THE LD. AO / LD . TPO ERRED IN LAW IN APPLYING ARBITRARY FILTERS AS CRITERION FOR REJECTION OF COMPANIES IDENTIFIED BY THE APPELLANT IN THE TRANSFER PRICING STUDY SUCH AS (I) COMPANIES WHOSE DATA FOR FINANCIAL YEAR (.FY') 2013 - 14 WAS NOT AVAILABLE (II) COMPANIES WITH DIFF ERENT FINANCIAL YEAR ENDING (I.E., OTHER THAN 3L MARCH 2OL4) (III) COMPANIES WHOSE ITES INCOME IS LESS THAN 75% OF ITS TOTAL OPERATING REVENUES (IV) COMPANIES WHO HAVE EXPORT SERVICE INCOME LESS THAN 75% OF THE SALES (V) COMPANIES WITH EMPLOYEE COST LESS THAN 25% OF TURNOVER (VI) COMPANIES WITH PERSISTENT ROSS (COMPANIES REPORTING LOSS FOR ANY 2 YEARS OUT OF LAST THREE YEARS (VII) COMPANIES HAVING RELATED PARTY TRANSACTIONS GREATER THAN 25% OF THE SALES THE LD. PANEL ALSO ERRED IN UPHOLDING THE ACTIONS OF THE LD. AO/ LD. TPO K) THE LD. AO/ LD. TPO ERRED IN CONSIDERING DATA OBTAINED U/S 133(6) OF THE ACT. THE LD. PANEL ERRED IN CONFIRMING THE SAME L) THE LD. AO/ LD. TPO ERRED IN REJECTING JINDAL INTELLICOM LIMITED DESPITE BEING FUNCTIONALLY COMPARABLE. THE LD. PAN EL ALSO ERRED IN CONFIRMING THE SAME M) THE LD. AO/ LD. TPO ERRED IN REJECTING TECH MAHINDRA BUSINESS SERVICES LIMITED, FROM ITS OWN SEARCH WHICH IS OTHERWISE FUNCTIONALLY COMPARABLE AND PASSES ALL THE FILTERS APPLIED IN THE TRANSFER PRICING ORDER. THE LD. PA NEL ALSO ERRED IN CONFIRMING THE SAME N) THE LD. AO/ LD. TPO ERRED IN REJECTING ACE BPO SERVICES PVT. LTD ON THE GROUND THAT RPT INFORMATION WAS NOT AVAILABLE IN PUBLIC DOMAIN. THE LD. PANEL ALSO ERRED IN CONFIRMING THE SAME, AND ERRED IN FAILING TO APPRECIAT E THAT THE COMPANY IS OTHERWISE FUNCTIONALLY COMPARABLE TO THE APPELLANT O) THE LD. AO/ LD. TPO ERRED IN REJECTING INFORMED TECHNOLOGIES LIMITED ON THE GROUND THAT THE COMPANY FAILS SERVICE REVENUE INCOME TO SALES FILTER OF 75%. THE LD. PANEL ALSO ERRED IN CO NFIRMING THE SAME AND ERRED IN FAILING TO APPRECIATE THAT THE COMPANY IS OTHERWISE FUNCTIONALLY COMPARABLE TO THE APPELLANT P) THE LD. PANEL ERRONEOUSLY ERRED IN REJECTING ACCENTIA TECHNOLOGIES LTD ON THE GROUND THAT THE RPT OF THE COMPANY EXCEEDS 25%, AND FA ILED TO APPRECIATE THE COMPANY IS OTHERWISE FUNCTIONALLY COMPARABLE TO THE APPELLANT Q) THE LD. AO/ LD. TPO ERRED IN INCLUDING (1) INFOSYS BPO LIMITED, (2) MICROLAND LIMITED, (3) ECLERX SERVICES LIMITED, (4) CROSSDOMAIN SOLUTIONS PRIVATE LIMITED, AS COMPARABL E DESPITE THESE COMPANIES BEING FUNCTIONALLY DISSIMILAR TO THE APPELLANT. THE LD. PANEL ALSO ERRED IN CONFIRMING THE SAME R) THE LD. AO/ LD. TPO, WHILE APPLYING THE TURNOVER FILTER AT THE LOWER LIMIT SO AS TO REJECT COMPANIES HAVING TURNOVERS LESS THAN INR 1 CRORE IN FY 2013 - 14, ERRED IN NOT APPLYING THE SAID FILTER AT THE UPPER END SO AS TO REJECT HIGH TURNOVER COMPANIES AS WELL. THE LD. PANEL ALSO ERRED IN CONFIRMING THE SAME S) THE LD. AO/ LD. TPO ERRED ON FACTS IN ARBITRARILY ACCEPTING COMPANIES WITHOUT CONSI DERING THE TURNOVER AND SIZE OF THE APPELLANT AND COMPARABLES. THE LD.PANEL ALSO ERRED IN CONFIRMING THE SAME T) THE LD. AO /LD. TPO ERRED IN NOT APPLYING THE TURNOVER RANGE AT THE LOWER AND UPPER LIMIT SO AS TO REJECT HIGH TURNOVER COMPANIES 6 IT(TP)A NO.3375/BANG/2018 5 ERRONEOUS DATA USED BY THE LD. AO / LD. TPO A) THE LD. AO/ LD. TPO ERRED IN LAW IN USING DATA, WHICH WAS NOT CONTEMPORANEOUS AND WHICH WAS NOT AVAILABLE IN THE PUBLIC DOMAIN AT THE TIME OF CONDUCTING THE TRANSFER PRICING STUDY BY THE APPELLANT. THE LD. PANEL ERRED IN UPHOLD ING THE SAME B) THE LD. AO/ LD. TPO ERRED IN LAW AND ON FACTS IN DISREGARDING THE APPLICATION OF MULTIPLE - YEAR DATA WHILE COMPUTING THE MARGINS OF COMPARABLE COMPANIES. THE LD. PANEL ERRED IN UPHOLDING THE SAME 6 NON - ALLOWANCE OF APPROPRIATE ADJUSTMENTS TO THE COMPARABLE COMPANIES, BY THE LD. TPO THE LD. AO/ LD. TPO ERRED IN LAW AND ON FACTS IN NOT ALLOWING APPROPRIATE ADJUSTMENTS UNDER RULE 10B OF THE RULES TO ACCOUNT FOR, INTER ALIA, DIFFERENCES IN (A) ACCOUNTING PRACTICES, (B) WORKING CAPITAL ADJUSTMENT (C) RISK PROFILE BETWEEN THE APPELLANT AND THE COMPARABLE COMPANIES. THE LD. PANEL ERRED IN CONFIRMING THE SAME. 7 VARIATION OF 3% FROM THE ARITHMETIC MEAN THE LD. AO/LD. TPO ERRED IN LAW IN NOT GRANTING THE BENEFITS OF PROVISO TO SECTION 92C(2) OF THE INCOME TA X ACT, 1961 (ACT) AVAILABLE TO THE APPELLANT. THE LD. PANEL ERRED IN UPHOLDING THE ACTIONS OF THE LD. AO/ LD. TPO. 8 THE LD. AO/LD. TPO ERRED IN LAW IN ERRONEOUSLY NOT GRANTING COMPLETE CREDIT FOR ADVANCE TAX AND SELF - ASSESSMENT TAX PAID BY THE APPELLANT, AS CLAIMED IN THE RETURN OF INCOME 9 THE LD. AO/LD. TPO ERRED IN LAW IN ERRONEOUSLY NOT GRANTING CREDIT FOR MINIMUM ALTERNATE TAX (MAT), AS CLAIMED IN THE RETURN OF INCOME UNDER SECTION 115JAA OF THE ACT. 10 THE LD. AO/LD. TPO ERRED IN LAW IN NOT GRANTING CONSE QUENTIAL RELIEF IN THE COMPUTATION OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT THE APPELLANT CRAVES LEAVE TO ADD TO OR ALTER, BY DELETION, SUBSTITUTION OR OTHEROWSE, THE ABOVE GROUNDS OF APPEAL, AT ANY TIME BEFORE OR DURING THE HEARING OF THE APPEAL . RELIEF A) THE APPELLANT PRAYS THAT THE APPEAL BE ALLOWED B) THE APPELLANT PRAYS THAT DIRECTIONS BE GIVEN TO GRANT ALL SUCH RELIEF ARISING FROM THE ABOVE GROUNDS AND ALSO ALL RELIEF CONSEQUENTIAL THERETO. THE APPELLANT FURTHER PRAYS THAT THE ADJUSTMENT IN RELA TION TO TRANSFER PRICING MATTERS MADE BY THE LD. AO/LD. TPO AND UPHELD BY THE HONBLE DRP BE DELETED. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT AND R ELATED SERVICES TO ITS ASSOCIATED ENTERPRISES (AES), SSIPL, WHOLLY SUBSIDIARY OF EMC CORPORATION, U SA AND THE ASSESSEE WAS REGISTERED UNDER SEZ ON 14 TH AUGUST, 2008 FOR RENDERING IT AND ITES TO EMC GROUP OF COMPANIES AND IS 7 IT(TP)A NO.3375/BANG/2018 COMPENSATED ON MARK UP ON COST BASI S FOR SERVICES PROVIDED AND K NOW HOW , COPY RIGHTS ETC. AND OTHER COMMERCIAL AND MARKETING SERVICES OWNED BY EMC. THE ASSESSEE HAS FILED THE RETURN OF INCOME FOR ASSESSMENT YEAR 2014 - 15 ON 27.11.2014 WITH TOTAL INCOME OF RS.1,04,44,44,710 AFTER CLAIMING DED UCTION UNDER CHAPTER VIA AND DEDUCTION UNDER SECTION10AA OF THE ACT. THE CASE WAS SELECTED FOR SCRUTINY. SUBSEQUENTLY, NOTICE UNDER SECTION 143(2) ALONG WITH EN CLOSURE HAS BEEN ISSUED. IN COMPLIANCE, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND THE CASE WAS DISCUSSED. THE ASSESSING OFFICER ON PERUSAL OF THE FINANCIAL STATEMENTS FOUND THAT THE ASSESSEE HAS INTERNATIONAL TRANSACTIONS AND WITH PRIOR APPROVAL OF PRIN. CIT, A REFERENCE HAS BEEN MADE TO TRANSFER PRICIN G OFFICER TO DETERMINE THE ARMS LENGTH PRICE . THE ASSESSEE HAS INTERNATIONAL TRANSACTIONS WITH ITS AE AS PER TP DOCUMENT IN THE F.Y. 2013 - 14 REFERRED AT PARA 2.2 OF THE TPO ORDER AND ALSO FINANCIAL PROFILE OF THE ASSESSEE O N SOFTWARE PRODUCT DEVELOPME NT AND ITES REFERRED AT PARA 2.3 WHICH I S READ AS UNDER : 8 IT(TP)A NO.3375/BANG/2018 9 IT(TP)A NO.3375/BANG/2018 4. THE ASSESSEE HAS INTERNATIONAL TRANSACTIONS IN RESPECT OF SOFTWARE DEVELOPMENT SERVICES AND ITES WHEREAS IN TP STUDY THE ASSESSEE HAS SELECTED 7 COMPARABLES IN RESPECT OF SOFTWARE D EVELOPMENT SERVICES SEGMENT AND 11 COMPARABLES IN ITES. THE ASSESSEE IN SOFTWARE DEVELOPMENT SERVICES TO ITS AES AD O P T E D TNMM METHOD AND THE PLI ON OP/TC (TOTAL COST) IS 14.18%. THE TPO HAS REJECTED TP STUDY AND CALLED FOR THE DOCUMENT S IN RESPECT OF COMPARABLES SELECTED FOR DETERMINATION OF ARMS LENGTH IN ACCORDANCE WITH SECTION 92C(1) AND 92C(2) OF THE ACT. THE TPO MADE COMPARISON AND EXAMINATION OF THE COMPARABLES SELECTED BY ASSESSEE AND FOUND THAT THE ASSESSEE HAS ADOPTED 7 COMP ARABLES ON SOFTWARE DEVELOPMENT SERVICES SEGMENT AND PROFIT LEVEL INDICATOR (PLI) I.E. OP/TC BEING 14.18%. WHEREAS T HE TPO HAS DEALT ON THE FILTER S IN THE TP STUDY AND CALCULATED THE AVERAGE ARITHMETIC MEAN (AM) OF COMPARABLES WHICH HAS WORKED OUT TO AVE RAGE OP/TC AT 11.91%. AFTER VERIFICATION AND EXAMINATION OF TP DOCUMENT, THE TPO F OU ND PERTINENT DEFECT S IN THE TP STUDY AND FINALLY TH E TPO HAS REJECTED THE COMPARABLES SELECTED BY THE ASSESSEE IN TP STUDY 10 IT(TP)A NO.3375/BANG/2018 AND APPLIED FILTERS WITH CRITERIA OF CURRENT Y EAR DATA WHERE THE COMPANIES WHOSE DATA FOR THE F.Y. 2013 - 14 IS EXCLUDED , THE COMPANIES HAVING DIFFERENT FINANCIAL YEAR ENDING FALLS WITHIN 12 MONTHS PERIOD FOR 1.4.2013 TO 31.3.2014 WERE REJECTED . THE COMPANIES WHOSE INCOME WAS LESS THAN RS.1 CRORE WERE EXCLUDED AND THE COMPANIES WERE SOFTWARE DEVELOPMENT SERVICES / ITES INCOME IS LESS THAN 75% WERE REJECTED. THE COMPANIES WHO HAVE MORE THAN 25% RELATED PARTY TRANSACTIONS (RPT) OF SALES WERE EXCLUDED. THE COMPANIES WHO HAVE EXPORT SALES FOR SERVICE LESS THAN 75% OF SALES ARE EXCLUDED AND COMPANIES WITH EMPLOYEES COST LESS THAN 25% OF TURNOVER WERE EXCLUDED. THE TPO APPLIED THE FILTERS ON THE COMPARABLES SELECTED BY THE ASSESSEE AT PAGES 12 & 13 OF THE ORDER I N SOFTWARE DEVELOPMENT SERVICES SEGMENT AND W ERE REJECTED. SIMILARLY, THE TPO HAS DEALT ON 11 COMPARABLES OF SELECTED BY THE ASSESSEE IN ITES SEGMENT. FURTHER THE TPO REJECTED THE COMPARABLES ON APPLICATIONOF FILTERS AND HAS SELECTED FINAL SET OF COMPARABLES AT PAGE 61 PARA 18 OF ORDER ON SOFTWARE DEVELOPMENT SERVICES SEGMENT WHICH ARE AS UNDER : 11 IT(TP)A NO.3375/BANG/2018 FURTHER, THE TPO CALCULATED THE ALP IN RESPECT OF SOFTWARE DEVELOPMENT SERVICES SEGMENT AT PAGE 62 PARA 19.4 WHICH ARE AS UNDER : 12 IT(TP)A NO.3375/BANG/2018 THE TPO HAS CALCULATED THE ALP OF ITES AT PAGE 64 PARA 21.4 AND SUMMARY OF TP ADJUSTMENT OF SOFTWARE DEVELOPMENT SEGMENT AND IT ES SEGMENT AT PARA 21 .4 AS UNDER : 13 IT(TP)A NO.3375/BANG/2018 THE TPO PASSED THE ORDER UNDER SECTION 92CA OF THE ACT WITH ADJUSTMENT IN SOFTWARE DEVELOPMENT SERVICES SEGMENT AND ITES SEGMENT OFRS.136,35, 28,8 07 VIDE ORDER DT.21.07.2017. SUBSEQUENTLY THE DRAFT ASSESSMENT ORDER WAS PASSED UNDER SECTION 143(3) R.W.S. 144C(1) DT.27.12.2017. AGGRIEVED BY DRAFT ASSESSMENT ORDER, THE ASSESSEE HAS FILED OBJECTIONS IN FORM 35A BEFORE THE DRP WHEREAS THE DRP CONSIDERI NG THE SUBMISSIONS AND FINDINGS OF THE TPO HAS PASSED ORDER UNDER SECTION 144C(5) DT.12.09.2018. FINALLY, IN PURSUANCE TO THE DIRECTIONS OF DRP, THE TPO HAS PASSED THE ASSESSMENT ORDER UNDER SECTION 143(3) R.W.S. 144C(1) OF THE ACT DT.29. 10.2018 ASSES SING THE TOTAL INCOME OF RS.239,45,82,870. 14 IT(TP)A NO.3375/BANG/2018 AGGRIEVED BY THE FINAL ASSESSMENT ORDER, THE ASSESSEE HAS FILED AN APPEAL WITH THE TRIBUNAL. 5. AT THE TIME OF HEARING, THE LD. AR SUBMITTED THAT THE ASSE SSEE HAS TWO SEGMENTS (I) SOFTWARE DEVELOPMENT SE RVICES (SDS) AND (II) ITES AND THE TURNOVER OF SDS SEGMENT IS RS.474 CRORES AND ITES IS RS.588 CRORES. THE LEARNED AUTHORISED REPRESENTATIVE REITERATED HIS SUBMISSIONS MADE BEFORE THE TP AUTHORITIES AND DRP AND SUBMITTED THAT UNDER THE SOFTWARE DEVELOPMEN T SERVICES SEGMENT 4 COMPARABLES ARE TO BE EXCLUDED AS THEY ARE FUNCTIONALLY DISSIMILAR AND SIMILARLY INCLUSION OF 7 COMPARABLES IN THE SOFTWARE DEVELOPMENT SERVICES SEGMENT. WHEREAS IN THE CASE OF ITES, THE LD. AR PRAYED FOR EXCLUSION OF 3 COMPARABLES AND INCLUSION OF 3 COMPARABLES AND FILED SYNOPSIS AND CHART IN SUPPORT OF HIS ARGUMENT S . THE ASSESSEE HAS ONLY ARGUED AND MADE SUBMISSIONS ON RELATED GROUNDS OF APPEAL ONLY. CONTRA, T HE LD. DR SUPPORTED THE ORDERS OF TPO AND DRP AND FILED WRITTEN SUBMISSIONS. 6. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS TWO SEGMENTS (I) SOFTWARE DEVELOPMENT SERVICES SEGMENT AND (II) ITES SEGMENT. WE SHALL DEAL WI TH THE EXCLUSION OF COMPARABLES AS SUBMITTED IN THE COURSE OF HEARING BY THE LEARNED AUTHORISED REPRESENTATIVE IN SOFTWARE DEVELOPMENT SERVICES SEGMENT. (I) INFOSYS LIMITED : THIS COMPANY IS FUNCTIONALLY DISSIMILAR AND PROVIDES END TO END BUSINESS SOL UTIONS LIKE BUSINESS CONSULTING TECHNOLOGY ENGINEERING AND 15 IT(TP)A NO.3375/BANG/2018 OUTSOURCING SERVICES AND NO SEGMENTAL DETAILS IN RESPECT OF SERVICES ARE AVAILABLE AND MADE INVESTMENTS AND PRODUCTS TO ESTABLISH AS A TRADABLE IPO OWNER. FURTHER THE COMPARABLE OWNS SIGNIFICANT B RAND VALUE PRODUCTS AND FOCUS ON BRAND BUILDING AND INCURRED EXPENDITURE ON R & D. THE COMPANY OWNS 7 EDGE PRODUCTS / PLATFORMS AND SIX OTHER PRODUCT BASED SOLUTIONS. THE COMPANY LEVERAGES ON ITS PREMIUM BANKING SOLUTION AND DURING THE YEAR THE COMPANY MERGED WITH ITS WHOLLY OWNED SUBSIDIARY INFOSYS CONSULTING INDIA LIMITED. WE FOUND THAT THE COMPANY WAS EXCLUDED FROM THE FINAL LIST OF COMPARABLES IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2011 - 12 BY THE DRP AND REVENUE HAS ACCEPTED. THE LEARNED AU THORISED REPRESENTATIVE SUPPORTED HIS ARGUMENTS RELYING ON THE DECISIONS IN THE CASE OF CIT VS. AGNITY (INDIA) TECHNOLOGIES PVT. LTD. (2013); CGI SYSTEMS AND MANAGEMENT LTD. VS. ACIT (2015) 94 TAXMAN.COM THE LEARNED AUTHORISED REPRESENTATIVE ALSO SUBSTA NTIATED THAT FOR THE ASSESSMENT YEAR 2014 - 15, THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF LG SOFT INDIA PVT. LTD. VS. DCIT IN IT(TP)A NO.3122/BANG/2018 FOR THE ASSESSMENT YEAR 2014 - 15 DT.28.5.2019. WE SUPPORT OUR VIEWS RELYING ON THE LG SOFT IN DIA PVT. LTD. VS. DCIT (SUPRA) WHERE THE TRIBUNAL HAS OBSERVED AT PARAS 6 AND 6.1 AS UNDER : 6. WE NOTICE THAT THE CO - ORDINATE BENCH HAS EXCLUDED M/S.INFOSYS LTD IN A.Y 2008 - 09 BY FOLLOWING THE DECISION RENDERED BY ANOTHER CO - ORDINATE BENCH IN THE CAS E OF 3DPLM SOFTWARE SOLUTIONS LTD (IT(TP)A NO.1303/BANG/2012 DATED 28.11.2013, WHEREIN THE DECISION RENDERED IN THE CASE OF TRIOLOGY E BUSINESS SOFTWARE INDIA P LTD. (ITA NO.1054/BANG/2011) WAS FOLLOWED AND IT WAS HELD THAT M/S. INFOSYS TECHNOLOGIES LTD IS NOT FUNCTIONALLY COMPARABLE SINCE IT OWNS SIGNIFICANT 16 IT(TP)A NO.3375/BANG/2018 INTANGIBLE AND HAS HUGE REVENUES FROM SOFTWARE PRODUCTS. IT WAS FURTHER OBSERVED THAT THE BREAK UP OF REVENUE FROM SOFTWARE SERVICES AND SOFTWARE PRODUCT IS NOT AVAILABLE. 6.1 IT WAS STATED THAT THE RE IS NO CHANGE IN FACTS. ACCORDINGLY, FOLLOWING THE DECISION RENDERED IN THE ASSESSEE'S OWN CASE IN A.Y 2008 - 09, WE DIRECT EXCLUSION OF M/S. INFOSYS LTD. WE FOUND THAT THE INFOSYS LTD . HAS SIGNIFICANT INTANGIBLES AND HUGE REVENUES FROM SOFTWARE PRODUCTS AND WAS CONSIDERED BY THE CO - ORDINATE BENCH OF THE TRIBUNAL FOR EX C L U S I O N IN THE ASSESSMENT YEAR 2014 - 15. ACCORDINGLY, WE DIRECT THE TPO TO EXCLUDE THE INFOSYS LTD. FROM THE FINAL LI ST OF COMPARABLES FOR DETERMINATION OF ALP. (II) L & T INFOTECH LIMITED : TH E COMPANY HAS A MARGIN OF 24.61% AND HAS HIGH BRAND VALUE AND IS A MARKET LEADER, HIGH PRESENCE AND THE INTANGIBLE INCOME IN PROPRIETARY PRODUCTS. SIGNIFICANT EXPENDITURE IN FOREIGN CURRENCY TO THE EXTENT OF 57.13%. DURING THE YEAR THE PRODUCT ENGINEERING BUSINESS SERVICE OF THE COMPANY WAS TRANSFERRED TO ITS SUBSIDIARY. THE COMPANY SEGMENTS ARE DIVIDED INTO SERVICE CLUSTER, INDUSTRIAL CLUSTER AND TELECOM BUSINESS. AS PER THE ANNUAL REPORT OF THE COMPANY, THE COMPANY HAS A SIGNIFICANT CAPITAL WORK - IN - PROGRESS AND THE COMPANY HAS DEVELOPMENTAL PRODUCTS. THE COMPARABLE WAS EXCLUDED F RO M THE FINAL LIST OF COMPARABLE IN ASSESSEE'S OWN CASE FOR THE ASSESSMENT YEAR 2011 - 12 BY T HE DRP AND FURTHER THE COMPARABLE COMPANY WAS EXCLUDED BY THE CO - ORDINATE BENCH OF DELHI TRIBUNAL IN THE CASE OF PITNEY BOWES SOFTWARE INDIA PVT. LTD. VS. ACIT 101 TAXMAN.COM 350. THE LEARNED AUTHORISED REPRESENTATIVE ALSO RELIED ON CGI 17 IT(TP)A NO.3375/BANG/2018 INFORMATION SY STEMS & MANAGEMENT CONSULTANTS (P) LTD. VS. ACIT (2018) 94 TAXMAN.COM 97 AND DCIT VS. TAXMAN INDIA PVT. LTD. (2016) 74 TAXMANN.COM 88 (DEL). WE FOUND THAT THE CO - ORDINATE BENCH OF TRIBUNAL IN M.P. NO.95/BANG/2019 IN IT(TP)A NO.3122/BANG/2018 FOR THE ASS ESSMENT YEAR 2014 - 15 HAS DEALT ON THE ISSUE AT PAGE 2 PARA 4 AS UNDER : 4. WE HEARD LD D.R AND PERUSED THE RECORD. WE FIND MERIT IN THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE. ACCORDINGLY FOLLOWING PARAGRAPH IS INSERTED AFTER PARAGRAPH 10 IN THE IMPUGNED ORDER OF THE TRIBUNAL, WHICH WILL ADJUDICATE THE ISSUE RELATING TO L & T INFOTECH LTD: - 10A THE ASSESSEE HAS SOUGHT EXCLUSION OF M/S L & T INFOTECH LTD ON THE GROUND THAT THERE WERE EXTRAORDINARY EVENTS DURING THE YEAR, IT POSSESSES BRA ND AND INTANGIBLES, IT HAS NOT PROVIDED SEGMENTAL INFORMATION AND IT HAS GOT SUB - CONTRACTING EXPENSES. THE LD A.R SUBMITTED THAT THE ABOVE SAID COMPANY HAS BEEN EXCLUDED BY THE CO - ORDINATE BENCH IN THE CASE OF METRIC STREAM INFOTECH P LTD (IT(TP)A NO.1418 & 2735/BANG/2017) RELATING TO AY 2013 - 14 AND ALSO IN THE CASE OF ELECTRONICS FOR IMAGING INDIA P LTD (IT(TP)A NO.1506/BANG/2016 RELATING TO AY 2011 - 12). THE LD A.R SUBMITTED THAT THERE IS NO CHANGE IN FACTS IN THIS YEAR ALSO AND ACCORDINGLY PRAYED FOR EX CLUSION OF THE ABOVE SAID COMPANY. 10A.1 WE HEARD LD D.R AND PERUSED THE RECORD. WE NOTICE THAT M/S L & T INFOTECH LTD HAS BEEN EXCLUDED BY THE CO - ORDINATE BENCH IN THE CASE OF METRIC STREAM INFOTECH P LTD (SUPRA) FOR AY 2013 - 14 AND ALSO IN THE CASE OF ELECTRONICS FOR IMAGING INDIA P LTD (SUPRA) FOR AY 2011 - 12. THE LD A.R SUBMITS THAT THERE IS NO CHANGE IN FACTS PREVAILING IN THE CURRENT YEAR VIS - A - VIS THE YEARS CONSIDERED BY THE CO - ORDINATE BENCHES IN THE ABOVE SAID CASES. ACCORDINGLY, FOLLOWING TH E ABOVE SAID DECISIONS, WE DIRECT EXCLUSION OF M/S L & T INFOTECH LTD. WE CONSIDERING THE FUNCTIONAL DISSIMILARITY AND JUDICIAL DECISIONS AND VARIOUS FACTS WHICH ARE NOT SIMILAR TO THE ASSESSEE'S FUNCTIONAL PROFILE, ACCORDINGLY DIRECT THE TPO TO EXCLUDE M/S. L & T INFOTECH LIMITED FROM THE FINAL LIST OF COMPARABLE IN DETERMINING THE ALP. 18 IT(TP)A NO.3375/BANG/2018 (III) PERSISTENT SYSTEMS LTD. : TH E COMPANY IS FUNCTIONALLY DIFFERENT AS IT IS ENGAGED IN RENDERING IT SERVICES AND IN THE DEVELOPMENT OF SOFTWARE PRODUCTS WITHOUT THERE BEING SUPPORT SEGMENTAL INFORMATION AND ENGAGED IN IP LED SOLUTIONS AND UNDERTAKES SIGNIFICANT R & D ACTIVITIES, OWNS IP . D URING THE YEA R THE COMPANY MADE ACQUISITIONS. THE COMPANY HAS MADE SIGNIFICANT INVESTMENT IN IP AND THEIR SOLUTIONS AND HAS A DEDICATED TEAM FOR RESEARCH AND IP DEVELOPMENT. THE LEARNED AUTHORISED REPRESENTATIVE RELIED ON DECISION OF TRIBUNAL IN THE CASE OF CGI INFORMATION & MANAGEMENT SYSTEMS PVT. LTD. VS. ACIT 94 TAXMAN.COM 97 AND PCIT VS. SAXO INDIA PVT. LTD. 74 TAXMA NN.COM 88 (DELHI) . WE RELIED ON THE DECISION OF CGI INFORMATION SYSTEMS & MANAGEMENT CONSULTANTS PVT. LTD. (SUPRA) AT PARAS 28 TO 30 AS UNDER : 19 IT(TP)A NO.3375/BANG/2018 WE RELY ON JUDICIAL DECISIONS AND FACTS IN RESPECT OF COMPARABLE PERSISTENT SYSTEMS LTD. AND DIRECT THE ASSESSING OFFICER TO EXCLUDE FROM THE FINAL LIST OF COMPARABLE FOR DETERMINATION OF ALP. (IV) THIRDWARE SOLUTIONS LTD. THE COMPANY IS FUNCTIONALLY DISSIMILAR AND IS ENGAGED IN RENDERING SOFTWARE DEVELOPMENT IMPLEMENTATION AND SUPPORT SERVICES AND ENGAGED IN THE DEVELOPMENT OF SOFTWARE PRODUCTS AND EARNS REVENUE FROM SALE OF USER LICENSES AND PURCHASE STOCK IN TRADE DURING THE YEAR AND HAS INTANGIBLES. 20 IT(TP)A NO.3375/BANG/2018 FURTHER THE MARGINS OF THE COMPANY FLUCTUATE YEAR ON YEAR BASIS DUE TO DIFFERENT REVENUE RECOGNITION MODEL WHICH THE COMPANY HAS ADOPTED. THE ABOVE COMPARABLE WAS EXCLUDED IN ASSESSEE'S OWN CASE ON FUNCTIONAL DISSIMILARITY IN THE ASSESSMENT YEARS 2005 - 06 AND 2007 - 08 AND LEARNED AUTHORISED REPRESENTATIVE ALSO RELIED ON LIME L ABS (INDIA) PVT. LTD. VS. ITO 101 TAXMAN.COM 201 (DELHI TRIB.) . WE FOUND THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF LG SOFTWARE INDIA PVT. LTD. VS. DCIT IN IT(TP)A NO.3122/BANG/2018 DT.28.05.2019 FOR THE AS SESSMENT YEAR 2014 - 15 HAS EXCLUDED THE COMPARABLE AS OBSERVED AT PARAS 8 & 8.1 AT PAGE 4 AS UNDER : 8. WE ALSO NOTICE THAT IN A.Y 2008 - 09, THE CO - ORDINATE BENCH HAS EXCLUDED M/S. THIRDWARE SOLUTIONS LTD ALSO BY FOLLOWING THE DECISION RENDERED IN THE CAS E OF 3DPLM SOFTWARE SOLUTIONS LTD (SUPRA), WHERE IN IT WAS HELD THAT M/S. THIRDWARE SOLUTIONS LTD. IS ENGAGED IN PRODUCT DEVELOPMENT AND EARNS REVENUE FROM SALE OF LICENSES AND SUBSCRIPTION. FURTHER, THE SEGMENTAL DETAILS WERE NOT AVAILABLE. 8.1 I T WAS STATED THAT THERE IS NO CHANGE IN FACTS. ACCORDINGLY, FOLLOWING THE DECISION RENDERED IN THE ASSESSEE'S OWN CASE IN A.Y 2008 - 09, WE DIRECT EXCLUSION OF M/S. THIRDWARE SOLUTIONS LTD. THE COMPARABLE THIRDWARE SOLUTIONS LTD. HAS TO BE EXCLUDED AS I T IS PREDOMINANT IN A C T I V I T Y AND SEGMENTAL DETAILS ARE NOT AVAILABLE . A C C O R D I N G LY WE DIRECT THE TPO/A.O TO EXCLUDE THIS COMPARABLE FROM THE LIST OF COMPARABLES FOR DETERMINING THE ALP. 21 IT(TP)A NO.3375/BANG/2018 7. NOW, WE SHALL TAKE UP THE COMPARABLES IN THE SOFTWARE DEVELOPMENT SERVICES SEGMENT TO BE INCLUDED. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT 7 COMPARABLES ARE TO BE INCLUDED AND MADE SUBMISSIONS. (I) AKSHAY SOFTWARE LTD. WHICH HAS A MARGIN OF 8.13%. THE INCOME FROM COMMISSION ON SALE OF SOFTWARE LICENSE CONSTITUTE MEAGER 0.5% OF TOTAL REVENUE AND TPO HAS NOT APPLIED TRANSFER DEVELOPMENT FILTER. THE SAID COMPANY WAS REJECTED BY THE TPO FOR THE REASON THAT THE COMPANY IS ENGAGED IN PROVIDING PROVISIONAL SERVICES, PROCUREMENT INSTALLATION, EMPLOYMENT SUPPORT OF ERP PRODUCTS. THE DRP HAS REJECTED THE COMPARABLE WITHOUT APPLYING THE FILTER AND THERE IS NO DIFFERENCE IN THE BUSINESS MODEL ADOPTED BY THE COMPANY AND THE ASSESSEE. W E ON PERUSAL OF THE ANNUAL REPORT AT PAGE 1373 OF PAPER BOOK, FOUND THAT MAJOR REVENUE S ARE FROM OPERATIONS AS PER NOTE 19 BEING INCOME FROM SOFTWARE SERVICES AND COMMISSION RECEIVED ON SALE OF SOFTWARE LICENSES. THE EARNINGS AS PER NOTE 28 AS PER THE FIN ANCIAL STATEMENTS, THE COMPANY HAS EARNING FROM EXPORT OF SOFTWARE AND IN THE F.Y. 2013 - 14 WHICH CONSTITUTE MORE THAN 95% OF INCOME. THEREFORE WE FOUND THESE FACTS ARE NOT CONSIDERED BY THE TPO OR DRP AND ACCORDINGLY WE RESTORE THIS ISSUE TO THE FILE OF TPO FOR EXAMINATION AND VERIFICATION. (II) SASKEN COMMUNICATION TECHNOLOGIES LTD. : TH E COMPANY HAS A MARGIN OF 10.25% AND WAS REJECTED BY THE TPO ON THE FUNCTIONAL DISSIMILARITY AND WAS CONFIRMED BY THE DRP OBSERVING THAT THE COMPANY FAILS EXPORT TUR NOVER FILTER. THE 22 IT(TP)A NO.3375/BANG/2018 COMPANY EARNS REVENUE FROM LICENSING AND SOFTWARE DEVELOPMENT AND ROYALTY AND THE COMPANY OFFERS SOFTWARE PRODUCTS. THE LEARNED AUTHORISED REPRESENTATIVE SUBMISSION S ARE THAT THE COMPANY IS FUNCTION ALLY SIMILAR TO THE ASSESSEE'S PROFIL E AND SERVICES RENDERED ARE PREDOMINANTLY SOFTWARE DEVELOPMENT SERVICES AND INCOME FROM SOFTWARE PRODUCTS CONSTITUTE A MEAGER AMOUNT OF TOTAL REVENUE SHALL NOT HAVE ANY IMPACT ON THE PROFITABILITY OF THE COMPANYS SOFTWARE DEVELOPMENT SEGMENT. THE LEARNE D AUTHORISED REPRESENTATIVE REFERRED TO THE PROFIT AND LOSS ACCOUNT AT PAGE 1455 WHERE THE ABRIDGED STATEMENT PROFIT AND LOSS ACCOUNT WAS DISCLOSED AND AS ON 31.3.2014, THE REVENUE FROM THE OPERATIONS OF SOFTWARE PRODUCTS IS RS.309.17 LAKHS AND SOFTWARE SE RVICES ARE RS.3508.49 LAKHS. THE LEARNED AUTHORISED REPRESENTATIVE EMPHASIZING THAT THERE IS NO IMPACT ON THE PROFITS. WE ARE OF THE OPINION THAT THE ASSESSEE COMPANY HAS CUSTOMERS IN US AND EUROPE AREA AND THE EXPORT REVENUE FILTER TEST HAS TO BE APPLI ED BY THE TPO. ACCORDINGLY WE RESTORE THIS ISSUE TO THE FILE OF TPO FOR FRESH CONSIDERATION. (III) MAVERIC SYSTEMS LIMITED : THIS COMPARABLE WAS REJECTED BY THE TPO AND IT WAS SOUGHT FOR INCLUSION BY THE ASSESSEE AND WHEREAS TPO HAS REJECTED WITHOUT ANY BASIS AND WAS EXCLUDED ON THE GROUND THA T THE COMPANY WAS ENGAGED IN R & D ACTIVITY AND EXPENDITURE IS 6% OF TOTAL TURNOVER. SIMILARLY, THE DRP HAS UPHELD THE EXCLUSION OF THE COMPANY. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT COMPANYS FU NCTION A L P R O F I L E I S COMPARABLE AND APPL IED THE TPO FILTERS . WHEREAS THE DRP HAS OBSERVED THAT THE COMPANY HAS INCURRED SUBSTANTIAL EXPENSES TO THE 23 IT(TP)A NO.3375/BANG/2018 TUNE OF 6% OF TURNOVER TOWARDS R & D AND THE TOLERABLE LIMIT IS 3%. WE FOUND THE OBSERVATIONS OF THE DRP ARE WITHOUT ANY BASIS . ACCORDINGLY WE RESTORE THIS ISSUE TO THE FILE OF TPO TO GIVE A LOGICAL CONCLUSION AND FINDINGS. (IV) I2T2 INDIA LIMITED : THIS COMPARABLE WAS SOUGHT TO BE INCLUDED BY THE ASSESSEE BUT WAS REJECTED BY THE TPO AND RPT DATA ARE NOT AVAILABLE IN THE ANNUAL REPORT. THE DRP HAS OBSERVED THAT THE COMPANY DOES NOT SPECIFY THE FILTERS ADOPTED BY THE TPO AND ON PERUSAL OF THE ANNUAL REPORT, THE COMPANY IS IN ITES INDUSTRY SERVICES AND IS NOT COMPARABLE TO THE ASSESSEE. ON PERUSAL OF THE ANNUAL REPO RT, PAPER BOOK PAGE 1581 AT PARA 2.13, THE INCOME FROM EXPORT OF SOFTWARE SERVICES IS HIGHER THEREFORE WE ARE OF THE OPINION THAT THE OBSERVATIONS OF THE TPO AND THE DRP ARE TO BE ACCEPTED AND HENCE THIS COMPARABLE IS REJECTED FOR INCLUSION. (V) KEERTHI SOFT TECHNOLOGIES LTD., WHERE THE MARGIN OF THE COMPANY IS 4.11%. THE OBSERVATIONS OF THE DRP THAT THE TPO HAS REJECTED THE COMPANY ON THE GROUND OF FUNCTIONAL DISSIMILARITY. ON PERUSAL OF PAPER BOOK AT PAGE 1641 WHERE STATEMENT OF PROFIT AND LOSS ACCOU NT WAS DISCLOSED, THE REVENUE FROM SALE OF PRODUCTS IS DISCLOSED AS NIL AND AT PAGE 1635, THERE IS NO SEGMENTAL REPORTING EXCEPT DOMESTIC AND EXPORT RE P ORTING AVAILABLE . WE ARE OF THE OPINION THAT THE DRP HAS MADE OBSERVATIONS ON THE FUNCTIONALITY OF THE COMPANY. THEREFORE WE CONSIDER IT APPROPRIATE TO RESTORE THIS ISSUE TO THE FILE OF TPO FOR VERIFICATION AND EXAMINATION. 24 IT(TP)A NO.3375/BANG/2018 (VI) EXCELLENT TECHNOLOGIES PVT. LTD. : THE TPO H AS REJECTED THIS COMPARABLE AS P & L ACCOUNT IS NOT AVAILABLE IN THE PUBLIC DOM AIN AND THE DRP HAS CONFIRMED THE OBSERVATIONS. BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE RELIED PAGE 1677 OF PAPER BOOK DISCLOSED THE FINANCIAL SUMMARY OF BUSINESS FOR THE RELEVANT YEAR. AS THIS INFORMATION IS AVAILABLE, WE CONSIDER IT PROPER T O RESTORE THIS COMPARABLE TO THE FILE OF TPO FOR EXAMINATION AND VERIFICATION. (VII) CELSTREAM TECHNOLOGIES LIMITED - THE TPO AND DRP HAS REJECTED THE COMPARABLE AS PROFIT AND LOSS ACCOUNT IS N OT AVAILABLE IN PUBLIC DOMAIN AND THE LEARNED AUTHORISED REPRESENTATIVE REFERRED TO PAGE 1755 TO 1786 OF PAPER BOOK WHERE THE DETAILS OF PROFIT AND LOSS ACCOUNT AND ANNUAL REPORT OF THE COMPANY ARE FILED. SINCE THE FINANCIAL STATEMENTS ARE AVAILABLE, WE RESTORE THIS ISSUE TO THE FILE OF THE TPO TO CONSIDER THE FINANCIAL STATEMENTS, PROFIT AND LOSS ACCOUNT AND DIRECTORS REPORT. ACCORDINGLY, WE RESTORE TH E COMPARABLE TO THE FILE OF TPO FOR VERIFICATION OF THE FINANCIAL STATEMENTS. 8. THE LEARNED AUTHORISED REPRESENTATIVE MADE SUBMISSIONS IN RESPECT OF EXCLUSION OF THREE COMPARABLES IN THE ITES SEGMENT AND SUBSTANTIATED WITH CHART AND PAPER BOOK. (I) INFOSYS BPO LIMITED - THE COMPARABLE IS FUNCTIONALLY DISSIMILAR AS IT IS ENGAGED IN PROVISION OF INTEGRATED IT AND END T O END BUSINESS PROCESS, OUTSOURCING SOLUTIONS AND HAS HIGH BRAND VALUE AND ALSO MADE SIGNIFICANT INVESTMENT CREATING INTANGIBLES AND MADE SEVERAL IPS. THE COMPARABLE ALSO ENGAGED IN CLOUD BASED SERVICES AS E - DICTIONARY. THE LEARNED AUTHORISED REPRESENTA TIVE SUPPORTED HIS STAND RELYING ON THE DECISIONS OF CGI INFORMATION SYSTEMS & MANAGEMENT 25 IT(TP)A NO.3375/BANG/2018 CONSULTANTS (P) LTD. VS. ACIT 94 TAXMAN.COM 97 AND PCIT VS. SAXO INDIA P. LTD. ON THE CONSTITUTION. WE FOUND THAT THE CO - ORDINATE BENCH OF TRIBUNAL IN THE CASE OF O C W EN FINANCIAL SOLUTIONS PVT. LTD. VS. JCIT (2019) 108 TAXMAN.CO M 306 WHERE AT PARAS 7 TO 7.41 AND DEALT ON COMPARABLE INFOSYS BPO LTD. AT PARA 7.4. 1 AND HELD AS UNDER : 26 IT(TP)A NO.3375/BANG/2018 27 IT(TP)A NO.3375/BANG/2018 WE FIND THE JUDICIAL DECIS ION S , APPLICABLE FOR THE ASSESSMENT YEAR 2014 - 15 AND BASED ON THE OBSERVATIONS OF THE CO - ORDINATE BENCH, WE CONSIDER THE COMPANY INFOSYS BPO LIMITED COMPARABLE HAS TO BE EXCLUDED AND ACCORDINGLY DIRECT THE TPO TO EXCLUDE THIS COMPANY FORM THE FINAL LIST OF COMPARABLES. (II) E - CLERX SERVICES LIMITED HA S A MARGIN OF 70.26% AND ENGAGED IN BOTH RENDERING KPO AND BPO SERVICES AND NO SEGMENTAL INFORMATION IS AVAILABLE AND THE COMPANY HAS ACQUIRED ENTIRE SHARE HOLDING OF AGILYST INC. THE COMPANY WAS EXCLUDED FOR THE ASSESSMENT YEAR 2014 - 15 IN THE CASE OF HY U NDAI MOTOR INDIA ENGINEERING PVT. LTD. VS. ACIT 109 TAXMANN.COM 429 AT PARA 32 WHICH READ AS UNDER : 28 IT(TP)A NO.3375/BANG/2018 WE FOUND THE DECISION OF THE CO - ORDINATE BENCH OF TRIBUNAL WHERE THE SAID COMPARABLE IS IN KPO SERVICES AND ACCORDINGLY WE DIRECT THE TPO TO EXCLUDE THE COMPARABLE FROM THE FINAL LIST OF COMPARABLES FOR DETERMINATION OF ALP. (III) CROSS DOMAIN SOLUTIONS PVT. LTD., THE COMPANY MARGIN IS 21.07% AND HAS TO BE EXCLUDED AS THE COMPANY IS PROVIDING VALUE BASED QUALITY SERVICES IN THE FIELDS OF HF, FINANC E, ADMINISTRATION, TAX PROCESS ETC AND FALLS WITHIN THE AMBIT OF KPO SERVICES AND DISSIMILAR TO ITES. THE KPO SERVICE PROVIDER CANNOT BE COMPARED TO THE ITES PROVIDER AND HAS TO BE EXCLUDED. THE COMPANY WAS EXCLUDED IN THE CO - ORDINATE BENCH DECISION IN T HE CASE OF SYMPHONY MARKETING SOLUTIONS INDIA PVT. LTD. VS. ITO 38 TAXMANN.COM 55 AT PARA S 18 & 19 HELD AS UNDER : 18. THIS COMPANY WAS CONSIDERED AS A COMPARABLE AND LISTED AT SL.NO.8 OF THE COMPARABLES CHOSEN BY THE TPO. IT IS THE STAND OF THE ASSES SEE THAT THIS COMPANY IS NOT FUNCTIONALLY COMPARABLE. AS OBSERVED IN THE CASE OF CORAL HUBS LTD., THE TPO REJECTED THE PLEA OF THE ASSESSEE ON THE BASIS OF A NON - EXISTENT TP ORDER PASSED FOR THE A.Y. 2007 - 08. IT IS SEEN THAT THE BUSINESS PROFILE OF THIS CO MPANY IS RE - ENGINEERED PAYROLL SERVICE. THIS COMPANY IS ALSO ENGAGED IN THE DEVELOPMENT OF INFORMATION SYSTEMS. THESE ACTIVITIES ARE TOTALLY DIFFERENT FROM THE ACTIVITIES OF THE ASSESSEE WHICH PERFORM VERY LIMITED/LOW END FUNCTIONS BACK OFFICE SERVICES. TH E REVIEW AND BUSINESS FUNCTIONS OF CROSS DOMAIN IS AS FOLLOWS: - WITH A DECADE OF EXPERIENCE IN PAYROLL OUTSOURCING, CROSSDOMAIN HAS CREATED A RE - ENGINEERED PAYROLL SERVICE EFFIPAY THAT PROCESSES AND DELIVERS ACCURATE PAYROLL TO CLIENTS WITH HEADCOUNT UP TO 1000 EMPLOYEES IN JUST 4 HOURS*. WITH EFFIPAY LITE AND EFFIP AY LITE PLUS, OUR BOUQUET OF SERVICES COVER END TO END PAYROLL, RETRIALS, REIMBURSEMENT, TAX PROOF VERIFICATIONS UPTO ISSUE OF FORM 16 FOR EMPLOYEES OF OUR CLIENTS ACROSS DIFFERENT INDUSTRY VERTICALS. OUR PROCESSES ARE HIGHLY SCALABLE AND PROVIDE END TO EN D PAYROLL SOLUTIONS TO CLIENTS WITH HEADCOUNT RANGING FROM 5 TO 65,000. CROSSDOMAINS IT KNOWLEDGE AND DOMAIN COMPETENCE HAS PROVIDED THE EDGE TO DEVELOP INFORMATION SYSTEMS TO IMPLEMENT PROCESS INNOVATION AND CONTINUOUSLY INCREASE EFFICIENCY AND TURN - AROUND - TIME FOR BUSINESS CRITICAL PROCESSES. SOURCE: HTTP://WWW.CROSS - DOMAIN.COM AS CAN BE SEEN FROM THE ABOVE, THE BUSINESS OF CROSS DOMAIN RANGES FROM HIGH END KPO SERVICES, DEVELOPMENT OF PRODUCT SUITES AND ROUTINE LOW END ITES SERVICE. HOWEVER, THERE IS NO BIFURCATION AVAILABLE FOR SUCH VERTICALS OF SERVICES. THEREFORE THE ASSESSEE CONTENDS THAT CROSS DOMAIN CANNOT BE COMPARED TO A ROUTINE ITES SERVICE PROVIDER. 29 IT(TP)A NO.3375/BANG/2018 19. WE ARE OF THE VIEW THAT IN THE ABSENCE OF ANY REASONS GIVEN TO THE CONTRARY EITHER BY THE TPO OR THE DRP FOR REGARDING THIS COMPANY AS A COMPARABLE, THIS COMPANY SHOULD BE EXCLUDED FROM THE LIST OF COMPARABLES, ACCEPTING THE PLEA OF THE ASSESSEE. WE HOLD ACCORDINGLY. ALSO IN THE CASE OF PCIT VS. BNY ME L LON INTERNATIONAL OPERATIONS (INDIA) (P.) LTD., 93 TAXMANN.COM 363 (BOM) THE HON'BLE BOMBAY HIGH COURT HAS HELD THE COMPARABLE CROSS DOMAIN SOLUTIONS PVT. LTD. IS IN THE NATURE OF KPO A ND OBSERVED AT PARAS 3 TO 8 AS UNDER : 30 IT(TP)A NO.3375/BANG/2018 FURTHER THE LEARNED AUTHORISED REPRESENTATIVE SUBSTANTIATED HIS ARGUMENT WITH ANNUAL REPORT OF COMPARABLE AND WE CONSIDER IT PROPER TO DIRECT THE TPO TO EXCLUDE THE COMPARABLE FROM THE LIST OF COMPARABLES FOR DETERMINATION OF ALP. 9. THE LEARNED AUTHORISED RE PRESENTATIVE ARGUED FOR INCLUSION OF THREE COMPARABLES IN ITES SEGMENT. (I) JINDAL INTELCOM LTD. , MARGIN IS 11.86% AND THE COMPANY WAS REJECTED BY TPO. THE ASSESSEE SOUGHT FOR INCLUSION . BUT THE TPO OBSERVED THAT IT IS DISSIMILAR AND IS ENGAGED IN CAL L CENTRE SERVICES AND DRP HAS CONFIRMED THE TPOS REJECTION. THE DRP HAS OBSERVED THAT IT IS ENGAGED IN IT AND ITES SERVICES AND NO SEGMENTAL REPORTING IS AVAILABLE. THE LEARNED AUTHORISED REPRESENTATIVE SUPPORTED WITH JUDICIAL DECISION IN THE CASE OF CGI INFORMATION SYSTEMS & MANAGEMENT CONSULTANTS (P.) LTD. VS. ACIT 94 TAXMANN.COM 97 (BANG. TRIB.) AND WE FOUND THE CO - ORDINATE BENCH DECISION FOR THE ASST. YEAR 2014 - 15 IN THE CASE OF OCEAN FINANCIAL SOLUTIONS PVT. LTD. VS. JCIT (SUPRA) HELD AT PARAS 12.1 TO 12.4.1 AS UNDER : 31 IT(TP)A NO.3375/BANG/2018 WE FOLLOW THE CO - ORDINATE BENCH DECISION AND THE INFO RMATION ENVISAGED BY THE LD. AR IN THE ANNUAL REPORT AND DIRECT THE TPO TO INCLUDE THE COMPARABLE FOR DETERMINATION OF ALP. (II) INFORMED TECHNOLOGIES LIMITED, WHICH HAS THE MARGIN OF 7.11% WHEREAS THE TPO HAS APPLIED THE FILTER, THE COMPANYS ITES SERV ICES ARE LESS THAN 75% OF THEIR TOTAL OPERATING REVENUES. THE COMPANY PASSES THE FILTER , AS ITS OPERATING REVENUE IS FROM ITES. WE FOUND THAT THIS ISSUE WAS CONSIDERED BY THE CO - ORDINATE BENCH IN THE CASE OF OC W EN FINANCIAL SOLUTIONS PVT. LTD. VS. JCIT (SUPRA) AT PARA 10.4.1 HEL D AS UNDER : 32 IT(TP)A NO.3375/BANG/2018 WE FOLLOW THE CO - ORDINATE BENCH DECISION AND DIRECT THE TPO TO INCLUDE COMPARABLE FOR DETERMINATION OF ALP. (III) ACCENTIA TECHNOLOGIES LIMITED, THE TPO HAS REJECTED THE COMPARABLE AND DRP HAS UPHELD THE EXCLUSION OF COMPARABLE ALTOGETHER ON A NEW BASIS THAT THE COMPANY FAILED THE RPT FILTER. THE DRP HAS OBSERVED THAT THE RPT IS MORE THAN 25% THEREFORE IT CANN OT BE COMPARABLE. CONSIDERING THE FACTS AND CIRCUMSTANCES AND MATERIAL ON HAND, WE CONSIDER IT PROPER TO RESTORE THIS ISSUE TO THE FILE OF THE TPO FOR VERIFICATION AND EXAMINATION. 10. FURTHER, THE LEARNED AUTHORISED REPRESENTATIVE ARGUED ON GROUND OF APPEAL NO.4C AND 4D IN RESPECT OF REVENUE NOT CONSIDERING THE FOREIGN EXCHANGE GAIN AN D WORKING CAPITAL ADJUSTMENT. WHEREAS T HE TP ADJUSTMENT WAS MADE TO NON - AE TRANSACTIONS AND FOREIGN EXCHANGE GAIN IN ITES HAS TO BE CONSIDERED. CONSIDERING THESE FAC TS, WE RESTORE THIS DISPUTED ISSUE TO THE FILE OF THE TPO TO 33 IT(TP)A NO.3375/BANG/2018 CONSIDER THE ASSESSEES SUBMISSIONS AND FACTS ENVISAGED FOR DETERMINATION OF ALP . ACCORDINGLY, GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 11. WHEREAS THE C HARGING OF INTEREST UNDER SECTIONS 234B & 234C ARE CONSEQUENTIAL IN NATURE AND WE DIRECT ACCORDINGLY. 12. IN THE RESULT, THE ASSESSEE'S APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1 8 T H D E C ., 2 019. S D / - S D / - ( B.R. B ASKARAN ) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 8 . 1 2 . 2019. *REDDY GP COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT (A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLAT E TRIBUNAL BANGALORE