Knoah Solutiuons Pvt Ltd, Hyderabad V. ITO,Ward 2(1), Hyderabad

ITA 392/HYD/2014

• Counselvise Citation: 39222514 RSA 2014
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 07-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: A V RAGHURAM
• Keywords: Transfer pricing; International transaction; Wholly owned subsidiary
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.392/HYD/2014 : ASSESSMENT YEAR 2009 - 10 M/S. KNOAH SOLUTIONS PVT. LTD., HYDERABAD (PAN - AABCK 6861 B ) V/S. INCOME TAX OFFICER, WARD 2(1), HYDERABAD (APPELLANT) (RESPONDENT) AND ITA NO.291/HYD/2014 : ASSESSMENT YEAR 2009 - 10 INCOME TAX OFFICER, WARD 2(1), HYDERABAD V/S. M/S. KNOAH SOLUTIONS PVT. LTD., HYDERABAD (PAN - AABCK 6861 B ) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A.V.RAGHURAM REVENUE BY : SHRI P.SOMA SEKHAR REDDY DR DATE OF HEARING 29 . 1 0.2014 DATE OF PRONOUNCEMENT 31.10.2014 O R D E R PER P.M.JAGTAP, ACCOUNTANT MEMBER : THESE TWO APPEALS, ONE FILED BY THE ASSESSEE, BEING ITA NO.392/HYD/2014 AND THE OTHER FILED BY THE REVENUE, BEING ITA NO.291/HYD/2014, ARE CROSS APPEALS, WHICH ARE DIRECTED AGAINST THE ORDER OF THE INCOME TAX OFFICER, WARD 2(1), HYDERABAD (ASSESSING OFFICE R) DATED 26.12.2013 PASSED UNDER S.143(3) OF THE ACT READ WITH THE DIRECTIONS GIVEN BY THE DISPUTE RESOLUTION PANEL(DRP) UNDER S.144C(5) OF THE ACT. I TA NO. 292 & 391/H YD/20 14 M/S. K NOAH SOLUTIONS PVT. LTD., HYDERABAD 2 2. FIRST, WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE WHICH INVOLVES THE SOLITARY ISSUE RELATING TO THE ADDITION OF RS.2,17,81,312 MADE ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT. 3. THE ASSESSEE IN THE PRE SE N T CA S E IS A COMPANY WHICH IS ENGAGED IN THE BUSINESS O F PROVIDING CALL CENTER AND WEB BASED SERVICES IN TH E FI E LD OF VOICE, E - MAIL AND E - SUPPORT THROUGH INTERNET. IT IS A WHOLLY OWNED SUBSIDIARY OF K NOAH SOLUTIONS INC., U SA. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 27.9.2009 , DECLARING TOTAL INCOME OF RS.9,27,600, AFTER CLAIMING EXEMPTION UNDER S.10A OF THE ACT . DURING THE COU R SE OF ASSESSMENT, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE COMPANY HAS PROVIDED CALL CENTER SERVI CE S TO ITS AE, KNOAH SOLUTIONS INC, USA AND A TOTAL AMOUNT OF R S .32,13,75,110 WAS CHARGED FOR SUCH SERVI C ES. IN ORDER TO DE TERMINE THE ARMS LENGTH PRICE (ALP) OF TH ESE INTERNATIONAL TRANSACTION S OF THE ASSESSEE COMPANY WITH ITS ASSOCIATED ENTERPRISES (AE) , A REFERENCE WAS MADE BY THE ASSESSING OFFICER TO THE TRANSFER PRICING OFFICER (TPO) UNDER S.92CA(1) OF THE ACT. IN THE TP STUDY REPORT SUBMITTED BY THE ASSESSEE, TP ANALYSIS WAS DONE BY APPLYING TRANSACTIONAL NET MARGIN METHOD (TNMM) , TAKING OPERATING PROFIT TO OPERATING COST (OP/ O C) AS PRICE LEVEL INDICATOR (PLI) . IN THE SAID REPORT, SEVENTEEN COMPARABLES WERE SELECTED BY THE ASSESSEE BY APPLYING CERTAIN FILTERS AND SINCE THE ARITHMETIC MEAN OF OP/OC OF THE SAID SEVENTEEN COMPARABLES WAS 11.91%, AS AGAINST THE OP/OC OF 17.50 % O F THE ASSESSEE IN RELATION TO ITS INTERNATIONAL TRANSACTION S WITH AE, THE PRICE CHARGED TO THE AE IN RESPECT OF THESE TRANSACTIONS WAS CLAIMED BY THE ASSESSEE TO BE AS AT ARMS LENGTH. 4. AFTER GOING THROUGH THE RELEVANT DOCUMENTS MAINTAINED BY THE ASSESSEE AND AFTER ANALYZING THE RELEVANT TRANSACTIONS, THE TPO WAS OF THE OPINION THAT THE METHOD ADOPTED BY THE ASSESSEE I TA NO. 292 & 391/H YD/20 14 M/S. K NOAH SOLUTIONS PVT. LTD., HYDERABAD 3 FOR SELECTING THE COMPARABLES SUFFERED FROM DEFECTS AND THE SAME, THEREFORE, HAD RESULTED IN SELECTION OF INAPPROPRIATE COMPARABLES AND REJECTION OF APPROPRIATE COMPARABLES. HE ACCORDINGLY CONFR ONTED THE ASSESSEE WITH HIS OBSERVATIONS IN THIS REGARD, SEEKING THE LATTERS EXPLANATION/OBJECTIONS AND AFTER TAKING INTO CONSIDERATION THE OBJECTIONS RAISED BY THE ASSESSEE, THE NEW SEARCH CONDUCTED BY HIM FOR SELECTING THE APPROPRIATE COMPARABLES AND T HE ANALYSIS OF THE DATA BASE, THE RELEVANT ANNUAL REPORTS AND THE INFORMATION COLLECTED UNDER S.133(6) AS MADE BY HIM, THE TPO FINALLY SELECTED THE FOLLOWING 12 COMPANIES AS COMPARABLES WITH ARITHMETIC MEAN OF THEIR OP/ OC AT 27.42%. SL. NO. COMPANY NAME OPERATING REVENUE RS.(IN CRORES) PBIT/ COST % 1. ACCENTIA TECHNOLOGIES LIMITED 78.73 49.40 2. A C ROPETAL TECHNOLOGIES LTD. (SEG.) 33.13 25.01 3. ADITYA BIRLA MINACS WORLDWIDE LTD. 231.57 0.53 4. COSMIC GLOBAL LTD. 7.76 48.20 5. CROSSDOMAIN 33.76 29.38 6. ECLERX SERVICES LTD. 187.98 53.44 7. INFOSYS B P O LTD. 10 8 . 23 16.90 8. JEEVAN SOFTECH TECHNOLOGY LTD. 1.79 16.56 9. MICROLAND LIMITED 144.05 2.35 10. MICROGENETIC SYSTEMS LTD. 1.27 10.11 11. R.SYSTEMS INTERNATIONAL LTD.(SEG) 26.55 5.77 12. GENESYS INTERNATIONAL LTD. 83.18 71.50 AVERAGE 27.42 5 . AFTER ALLOWING WORKING CAPITAL ADJUSTMENT OF - 1 . 35 %, ARITHMETIC MEAN MARGIN OF THE SELECTED COMPARABLES AT 2 8 . 77 % I TA NO. 292 & 391/H YD/20 14 M/S. K NOAH SOLUTIONS PVT. LTD., HYDERABAD 4 WAS TAKEN BY THE TPO AS ADJUSTED ARMS LENGTH MARGIN AND APPLYING THE SAME TO THE CORRESPONDING OPERATING COST OF RS. 30,30,06,817 , THE ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS OF THE ASSESSEE COMPANY WITH ITS AE WAS WORKED OUT BY HIM AT RS.3 9 , 01 , 81 , 878 , AS AGAINST THE PRICE OF RS. 32,68,53, 821 CHARGED BY THE ASSESSEE. THE DIFFERENCE OF RS. 6,33,28,057 ACCORDINGLY WAS WORKED OUT BY THE TPO, AS TP ADJUSTMENT THAT IS REQUIRED TO BE MADE IN RESPECT OF INTERNATIONAL TRANSACTIONS OF THE ASSESSEE WITH ITS AES. 6 . WHEN THE ADDITION ON ACCOUN T OF TP ADJUSTMENT WORKED OUT BY THE TPO WAS PROPOSED TO BE MADE BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE IN THE DRAFT ASSESSMENT, OBJECTIONS WERE FILED BY THE ASSESSEE BEFORE THE DISPUTE RESOLUTION PANEL, WHICH INTER ALIA INCLUDED T HE OBJECTIONS OF THE ASSESSEE IN RESPECT OF COMPARABILITY ANALYSIS CARRIED OUT BY THE TPO AND THE APPLICATION OF ADDITIONAL FILTERS BY THE TPO, WHICH ACCORDING TO THE ASSESSEE, RESULTED IN INCLUSION OF CERTAIN COMPANIES IN THE COMPARABILITY ANALYSIS WHIC H DID NOT SATISFY THE TEST OF COMPARABILITY. THESE OBJECTION S RAISED BY TH E ASSESSEE W E RE FOUND TO BE ONLY PARTLY SUSTAINABLE BY THE DISPUTE RESOLUTION PANEL AND A C COR D INGLY THE ASSESSING OFFICER/ TPO WAS DIRECTED BY THE DRP TO INCLUDE DATA MATICS FIN A NCIAL S E RVI C ES P . LTD. IN THE FINAL LI S T OF COMPARABLES. THE ASSESSING OFFICER/TPO WAS ALSO DIRECTED BY THE DRP TO APPLY THE ARMS L ENG T H M ARGIN ONLY TO THE COST OF THE ASSESSEE RELATING TO THE INTERNATIONAL TRANSACTION WITH AE INSTEAD OF APPLYING THE SAME TO THE ENTIRE COST AS DONE BY THE ASSESSING OFFICER/TPO. AS PER THESE DIRECTION OF THE DRP, THE ASSESSING OFFICER/ TPO RECOMPUTED THE ARMS LENGTH PRICE OF THE IN T ERN A TIONAL TRAN S AC T IONS O F TH E ASSESSEE COMPANY WITH ITS AE AND BASED ON THAT, AN ADDITION OF R S .2,70,81,312 WAS MADE TO THE TOTAL IN C OM E O F TH E ASSESSEE ON ACCOUNT OF TP ADJUSTMENT IN TH E ASSESSMENT I TA NO. 292 & 391/H YD/20 14 M/S. K NOAH SOLUTIONS PVT. LTD., HYDERABAD 5 COMPLETED UNDER S.143(3) READ WITH S.92CA(3) AND S.144C(5) OF THE ACT, VIDE ORDER DATED 6 TH JANUARY, 2014. 7 . AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE HAS FIL E D THE PRESENT APPEAL BEFORE THE T R IBUNAL DISPUTING THE ADDITION MADE ON ACCOUNT OF TP ADJUSTMENT ON THE FOLLOWING G R OUNDS - 1 ) THE LEARNED ASSESSING OFFICER ACTING IN PURSUANCE OF THE DIRECTIONS OF THE DISPUTE RESOL UTION PANEL, HAS ERRED IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN REJECTING THE CON T E N TIONS OF THE ASSESSEE WITH REGARD TO COMPARABLE COMPANIES FOR THE PURPO S E OF TNMM AND CONSEQUENTLY MAKING AN ADDITION OF RS .2,70,81,312 TO THE TOTAL INCOME, U/S. 92CA(3)OF THE ACT. 2 ) THE ASSESSING OFFICER HAS ERED IN LAW AND INT EH FACTS AND CIRCUMSTANCES OF THE CASE IN NOT INCLUDING AXIS IT & T LTD. AS A COMPARABLE COMPANY EVEN THOUGH TEEH SEGMENT RESULTS OF ITES OF TEHDIVSIION OF THE COMPANY IS AVAILABLE. TE ASSESSING OFFICER WRONGLY REJCTEED THE COMPARISON BY APPLYING THE FILTER OF INCOME FROM ITES < 75% TO TEHE TOTAL ICNOEM FO LTEH COMPANY, ISTHEAD OF USING TEHE ITES SEGMENT RESULTS. 3) A) THE LEARNED ASSESSING OFFICER H AS ERRED IN LAW AND IN THE FACTS AN CIRCUMSTANCES OF THE CASE IN NOT EXCLUDING THE CASE OF GENESYS INTERNATIONAL CORPORATION LTD. AS A COMPARABLE COMPANY, WITHOUT TAKING INTO ACCOUNT THE FACT THAT THE SAID COMPANY IS ENGAGED IN GEOGRAPHICAL INFORMATION SE RVICES WHICH IS FUNCTIONALLY DIFFERENT FROM THE BPO SERVICES RENDERED BY THE APPELLANT COMPANY. B) THE ASSESSING OFFICER OUGHT TO HAVE ALSO NOTED THAT FOR THE YEAR UNDER CONSIDERATION, THE SAID COMPANY GENESYS INTERNATIONAL CORPORATION LTD. HAS REPORTED A SUBSTANTIAL INCREASE OF 77% IN SALES AND 107% INCREASE IN ITS PROFITS AS COMPARED TO THE EARLIER YEAR AND THUS IS I TA NO. 292 & 391/H YD/20 14 M/S. K NOAH SOLUTIONS PVT. LTD., HYDERABAD 6 EXCEPTIONAL AND NOT COMPARABLE DUE TO SUCH PECULIAR ECONOMIC CIRCUMSTANCES. 4) A) THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW AND IN TH E FACTS AND CIRCUMSTANCES OF THE CASE IN NOT EXCLUDING THE CASE OF ECLERX S E RVI C ES LTD., AS A COMPARABLE COMPA N Y WITHOUT TAKING INTO ACCOUNT THE FACT THAT THE SAID COMPANY IS INTO KPO BUSINESS PROVIDING DATA ANALYSIS AND DATA PROCESS SOLUTIONS WHEREAS TH E APP E LL A N T IS ENGAGED IN BPO SERVICES. B) THE LEARNED ASSESSING OFFICER OUGHT TO HAVE NOTED THAT THE HONBLE ITAT, HYDERABAD IN THE CASE OF MARKET TOOLS RESEARCH PVT. LTD., HAS EXCLUDED ECLERX SERVICES LTD. AS NOT COMPARABLE ON THE GROUND THAT THE SAID COMPANY BEING A KPO IS NOT COMPARABLE TO BPO. 5) THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN NOT EXCLUDING COSMIC GLOBAL LTD. AS A COMPARABLE COMPANY, WITHOUT TAKING INTO ACCOUNT THE FACT THAT THE SAID COMPANY FOLLOWS A DIFFERENT BUSINESS MODULE VIZ., OUTSOURCING ITS WORK AND HENCE IS NOT COMPARABLE. 8 . WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS SUBMI T TED BY THE LEARNED COUNSEL FOR THE ASSESS EE , GROUND NO.1 IS GENE R AL IN NATURE, WHICH D OES NO T REQUIRE ANY SPECIFIC ADJU D I C ATION. AS R E GA R DS THE ISSUE RAISED IN G R OUN D N O.2 REL A TIN G TO ASSESSEES CLAIM FOR INCLUSION OF AXIS IT & T LTD IN THE LIST OF FINAL COMPARABLES, IT IS OB SE RVED T H A T THE SAID COMPANY W AS FOUND TO BE ENGAGED IN TH E BU S IN ES S OF PROVIDING I TES SERVI C ES AS WELL AS SOFTWARE DEVELOPM E N T SERVI C ES AND THE R E VENUE GENERATED FROM I TES SERVI C ES WAS ONLY 53.26% OF THE TOTAL REVENUE. SIN C E THE RELEVANT DETAILS O F ITES SEGMENT WER E NO T AVAILABLE, TH E TPO HELD T HAT M /S. AXIS IT & T LTD. COULD NO T BE IN C LU D ED IN THE LI S T OF FINAL COMPARABLES. I TA NO. 292 & 391/H YD/20 14 M/S. K NOAH SOLUTIONS PVT. LTD., HYDERABAD 7 9 . AT THE TIM E O F H E ARING BEFORE US, LEARNED COUN S EL FOR TH E ASSESSEE HAS INVITED OUR ATTENTION TO THE DETAILS FURNISHED AT PAGE 121 OF THE PAP E R - B OOK TO SHOW THAT THE RELEVANT SEGMENTAL DETAILS OF AXIS I T&T LTD. ARE AVAILABLE. IN REPLY TO A QUERY RAISED BY THE BENCH IN THIS REGARD, HE , HO W EVER, ACCEPTED THAT THESE DETAILS ARE PREPARED BY TH E ASSESSEE ON THE BASIS OF TH E FINA L ACCOUNTS OF THE SAID COMPANY , VIZ. AXIS IT&T LTD. A CO M PARATIVE STUDY , HO WEV ER , SHOWS THAT THE D E TAILS PREPARED AND FURNISHED BY THE ASSESSEE AT PAGE 121 ARE NOT TALLYING WITH THE CORRESPONDING FIGURES APPEARING IN THE FINAL ACCOUNTS OF AXIS IT&T LT D. AS A MATTER OF FACT, POLICY ADOPTED BY AXIS IT&T LTD. FOR SEGMENT REPORTING IS GIVEN IN THE RELEVANT SCHEDULE FORMING PART OF THE CONSOLIDATED FINANCIAL ST AT EMENTS AT PAGE 110 OF THE PAPER - BOOK, WHI C H SHOWS THAT THERE ARE MANY ITEMS O F REVENUE AND EXPE NDITURE , WHICH R E L A TE TO THE GROUP AS A WHOLE , ARE NO T ALLOCABLE TO SEGMENTS ON A R E AS O NABLE BASIS. KEEPING IN VIEW THE SAME, WE FIND OURSELVES IN AGREEMENT WITH THE ASSESSING OFFICER/TPO THAT M /S. AXIS IT&T LTD. CANNOT B E IN C LU D ED IN THE LI S T OF FINAL CO MPARABLES IN TH E ABSENCE O F RE L IABLE SEGMENTAL DETAILS. GROUND NO.2 OF THE ASSESSEE S APPEAL IS ACCO RD INGLY DISMISSED. 1 0 . AS REGARDS GROUND NO.3, IT IS OBSERVED THAT THE ISSUE INVOLVED THEREIN RELATING TO THE CLAIM OF THE ASSESSEE FOR EXCLUSION OF GENESYS INTERNATIONAL CORPORATION LTD. FROM THE LIST OF FINAL COMPARABLE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL DATED 30.9.2014 IN THE CASE OF M/S. PAREXEL INTERNATIONAL (INDIA) PRIVATE LIMIT ED, HYDERABAD IN ITA NO.144/HYD/2014 FOR ASSESSMENT YEAR 2009 - 10, WHEREIN SIMILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL VIDE PARAGRAPHS 18 AND 19 THEREOF, WHICH READ AS FOLLOWS - I TA NO. 292 & 391/H YD/20 14 M/S. K NOAH SOLUTIONS PVT. LTD., HYDERABAD 8 18. AS REGARDS THE SELECTION OF GENESYS INTERNATIONA L LTD. AS COMPARABLE, IT IS OBSERVED THAT THIS COMPANY WAS ALSO EXCLUDED BY THE TRIBUNAL FROM THE LIST OF COMPARABLES IN THE CASE OF EXCELLENCE DATA RESEARCH P. LIMITED (SUPRA), FOLLOWING THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF MERC ER CONSULTING (INDIA) LTD. V/S DCIT (VIDE ORDER DATED 6 TH JUNE, 2014 IN ITA NO.966/DEL/2014) , WHEREIN M/S. GENESYS INTERNATIONAL LTD. WAS NOT ACCEPTED AS COMPARABLE BY THE TRIBUNAL FOR THE FOLLOWING REASONS GIVEN IN PARAS 14.2 AND 14.3 OF ITS ORD ER - 14.2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RIVAL MATERIALS ON RECORD. IT HAS BEEN NOTICED SUPRA THAT ASSESSEE IS BASICALLY PROVIDING VARIOUS SERVICES TO THE CUSTOMERS OF ITS AES IN RELATION TO HUMAN RESOURCES WHICH ARE MORE OR LESS CENTERED AROUND THE EMPLOYEES OF THE PROSPECTIVE CLIENTS. WHEN WE CONSIDER THE NATURE OF SERVICES PROVIDED BY GENESYS INTERNATIONAL CORPORATION LTD., IT COMES TO THE FOREFRONT THAT THEY ARE PROVIDING FULL RANGE OF GEOSPATIAL SERVICES TO ITS CUSTOMERS. IN SIMPLE TERMS, GEOSPATIAL SERVICES MEANS THE SERVICES RELATING TO THE RELATIVE POSITION OF THINGS ON THE EARTHS SURFACE. THESE BASI CALLY INCLUDE 3D MAPPING, NAVIGATION MAPS, IMAGE PROCESSING, CADASTRAL MAPPING, ETC. IF WE TAKE INTO ACCOUNT THE NATURE OF SERVICES PROVIDED BY THE ASSESSEE, BEING FINANCIAL AND RETIREMENT SECURITY, HEALTH, PRODUCTIVITY OF EMPLOYEES AND EMPLOYMENT RELATIONSHIPS AND THEN TRY TO COMPARE THEM WITH THOSE RENDERED BY GENESYS, IT IS MANIFESTED THAT BOTH ARE TOTALLY INCOMPARABLE. 14.3. THE TPO ON PAGE 48 OF HIS ORDER HAS EXAMINED CBDT CIRCUL AR SO 890 (E) DATED 26.9.2000 WHICH PROVIDES A DETAILED LIST OF PRODUCTS OR SERVICES THAT CAN BE COVERED UNDER THE ITES FOR THE PURPOSES OF SECTION 10A AND 10B OF THE ACT. IN THIS CIRCULAR, INFORMATION TECHNOLOGY ENABLED PRODUCTS/SERVICES HAVE BEEN DIVIDED INTO FIFTEEN CATEGORIES, STARTING WITH BANK OFFICE OPERATIONS, CALL CENTRES ETC. AND ENDING WITH WEBSITE SERVICES. FROM THE VERY DESCRIPTION OF SUCH SERVICES, IT I S PALPABLE THAT EVEN THOUGH THESE FALL UNDER THE OVERALL ITES CATEGORY, BUT SOME OF THEM ARE QUITE DIFFERENT FROM EACH OTHER. TO CITE, SERVICE AT SL.NO. (VI) OF THIS CIRCULAR IS GEOGRAPHIC INFORMATION SYSTEM SERVICES AND AT S L. NO. (VII) IS HUMAN RESOURCES SERVICES. NO DOUBT, ALL THESE FIFTEEN CATEGORIES OF PRODUCTS/SERVICES HAVE BEEN INCLUDED UNDER THE MAJOR HEAD OF INFORMATION TECHNOLOGY ENABLED SERVICES (ITES), BUT MOST OF THEM ARE QUITE DISTINGUISHABLE FROM OTHERS. IN OUR CONSIDERED I TA NO. 292 & 391/H YD/20 14 M/S. K NOAH SOLUTIONS PVT. LTD., HYDERABAD 9 OPINION, THE FIFTEEN BROAD CATEGORIES SET OUT IN THIS CIRCULAR CANNOT PER SE BE CLAIMED AS SIMILAR TO EACH OTHER. A CURSORY LOOK AT THESE PRODUCTS/SERVICES TRANSPIRES THAT S OME OF THEM ARE FUNCTIONALLY QUITE DIFFERENT FROM EACH OTHER. FURTHER THE LEVEL OF INVESTMENT REQUIRED FOR PROVIDING SUCH SERVICES IS ALSO NOT CONSISTENT. IN OUR CONSIDERED OPINION, THE MERE FACT THAT TWO SERVICES ARE PLACED UNDER THIS CATEGORY DO NOT BECOME AUTOMATICALLY COMPARABLE. IF A CASE PROVIDING ONE CATEGORY OF SERVICES UNDER ITES IS CLAIMED AS COMPARABLE WITH ANOTHER IN THE CATEGORY OF SERVICE UNDER ITES AS PER THIS CIRCULAR, THEN IT MUST BE SHOWN EX FACIE THAT IT IS BROADLY SIMILAR. ADVERTING TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE SERVICES RENDERED BY GENESYS FALL UNDER CLAUSE (VI) WITH THE HEADING GEOGRAPHICAL INFORMATION SYSTEMS SERVICES, WHEREAS THOSE RENDERED BY THE ASSESSEE FALL PARTLY UNDER CLAUSE (VII) WITH THE HEADING HUMAN RESOURCES SERVICES AND PARTLY UNDER CLAUSE (XI) WITH THE HEADING PAYROLL. ON JUXTAPOSITION EXAMINATION OF THESE TWO SETS OF SERVICES, WE FIND THAT THERE IS A VAST DIFFERENCE WHICH MAKE ONE QUITE DISTINCT FROM THE OTHER. IN VIEW OF SUCH FUNCTIONAL INCOMPARABILITY BETWEEN ASSESSEE AND GENESYS, WE HOLD THAT THIS COMPANY CANNOT BE TREATED AS COMPARABLE. WE, THEREFORE, DIRECT TO EXCLUDE TH IS CASE FROM THE LIST OF COMPARABLES. 19. AT THE TIME OF HEARING BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS RAISED A CONTENTION THAT M/S.EXCELLENCE DATA RESEARCH P. LTD. IS NOT FUNCTIONALLY SIMILAR WITH THAT OF THE ASSESSEE COMPANY, AND TH EREFORE, THE DECISION OF THE TRIBUNAL RENDERED IN THE CASE OF M/S. EXCELLENCE DATA RESEARCH LTD. (SUPRA) TO EXCLUDE GENESYS INTERNATIONAL LTD. FROM THE LIST OF COMPARABLES ON THE GROUND OF FUNCTIONAL DIFFERENCE, CANNOT BE STRAIGHT AWAY APPLIED IN THE CASE OF THE ASSESSEE, TO EXCLUDE THIS COMPARABLE. AS NOTED BY THE TRIBUNAL IN ITS ORDER, EXCELLENCE DATA RESEARCH P. LTD. WAS RENDERING BACK OFFICE/ DATA SEGREGATION, CONTENT DEVELOPMENT AND SUPPORT SERVICES IN RELATION TO ANALYSIS, CONTENT RESEARCH AND PROJE CTIONS FOR ALL TYPES OF BUSINESS INFORMATION, WHILE THE ASSESSEE COMPANY IN THE PRESENT CASE, AS POINTED BY THE TPO IN HIS ORDER, IS ENGAGED IN THE BUSINESS OF PROVIDING IT ENABLED SERVICES TO ITS GROUP CONCERNS, SUCH AS OPERATIONALISING THE CASE - REPORT FO RM IN THE COMPUTER SYSTEM, AND UNDERTAKING QUALITY CONTROL TESTS OF THE IMAGES SENT BY THE AES. AFTER HAVING CONSIDERED THE NATURE OF FUNCTIONS PERFORMED BY THE ASSESSEE COMPANY VIS - A - VIS I TA NO. 292 & 391/H YD/20 14 M/S. K NOAH SOLUTIONS PVT. LTD., HYDERABAD 10 M/S. EXCELLENCE DATA RESEARCH P. LTD., WE FIND THAT BOTH THESE COM PANIES BASICALLY ARE PROVIDING DATA MANAGEMENT AND DATA PROCESSING SERVICES WHICH ARE IN THE NATURE OF LOW END SERVICES, AND THE SAME THEREFORE, CANNOT BE CONSIDERED AS FUNCTIONALLY DIFFERENT FOR THE PURPOSE OF COMPARABILITY ANALYSIS. WE, THEREFORE, REJECT THE CONTENTION RAISED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, AND DIRECT THE ASSESSING OFFICER TO EXCLUDE GENESYS INTERNATIONAL LTD. FROM THE LIST OF COMPARABLES, IT BEING A FUNCTIONALLY DIFFERENT COMPANY. AS THE ISSUE INVOLVED IN THE PRESENT CAS E AS WELL AS ALL THE MATERIAL FACTS RELATING THERETO ARE SIMILAR TO THE CASE OF M/S. PAREXEL INTERNATIONAL (INDIA) PRIVATE LTD., WE RESPECTFULLY FOLLOW THE DECISION OF THE COORDINATE BENCH IN THAT CASE, AND DIRECT THE ASSESSING OFFICER/TPO TO EXCLUDE GENES YS INTERNATIONAL LIMITED FROM THE LIST OF COMPARABLES. 1 1 . AS REGARDS GROUND NO. 4 , IT IS OBSERVED THAT THE ISSUE INVOLVED THEREIN RELATING TO THE CLAIM OF THE ASSESSEE FOR EXCLUSION OF ECLERX SERVICES LTD. FROM THE LIST OF FINAL COMPARABLE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL DATED 30.9.2014 IN THE CASE OF M/S. PAREXEL INTERNATIONAL (INDIA) PRIVATE LIMITED, HYDERABAD IN ITA NO.144/HYD/2014 FOR ASSESSMENT YEAR 2009 - 10, WHEREIN SIMILAR ISS UE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL VIDE PARAGRAPHS 1 6 AND 1 7 THEREOF, WHICH READ AS FOLLOWS - 16. AS REGARDS SELECTION OF ECLERX SERVICES LTD. AS COMPARABLE, IT IS OBSERVED THAT THE SAID COMPANY WAS EXCLUDED BY THE TRIBUNAL FROM THE LIST OF COMPARABLES INTER ALIA IN THE CASE OF EXCELLENCE DATA RESEARCH P. LTD. (SUPRA), AFTER HAVING FOUND THE SAME TO BE FUNCTIONALLY DIFFERENT. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL AS RECORDED IN PARAGRAPH 16.2 OF ITS ORDER IN THAT CASE ARE REPRODU CED BELOW - 16.2 WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE A NNUAL REPORT AND THE OBJECTIONS I TA NO. 292 & 391/H YD/20 14 M/S. K NOAH SOLUTIONS PVT. LTD., HYDERABAD 11 OF ASSESSEE. AS SEEN FROM THE ANNUAL REPORT, THE ABOVE COMPANY IS INVOLVED IN DIVERSE NATURE OF SERVICES, AND THERE WAS NO SEGMENTAL DATA FOR DIVERSIFIED SERVICE PORT FOLIO. MOREOVER THIS COMPANY CAN BE CONSIDERED AS KPO AND WE ARE OF THE OPINION THAT THIS COMPANY IS NOT COMPARABLE TO ASSESSEES SERVICES. WE THEREFORE, DIRECT THE ASSESSING OFFICER/TPO TO EXCLUDE THIS COMPANY. 17. AT THE TIME OF HEARING BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS RAISED A CONTENTION THAT M/S.EXCELLENCE DATA RESE ARCH P. LTD. IS NOT FUNCTIONALLY SIMILAR WITH THAT OF THE ASSESSEE COMPANY, AND THEREFORE, THE DECISION OF THE TRIBUNAL RENDERED IN THE CASE OF M/S. EXCELLENCE DATA RESEARCH LTD. (SUPRA) TO EXCLUDE ECLERX SERVICES LTD. FROM THE LIST OF COMPARABLES ON THE GROUND OF FUNCTIONAL DIFFERENCE, CANNOT BE STRAIGHT AWAY APPLIED IN THE CASE OF THE ASSESSEE, TO EXCLUDE THIS COMPARABLE. AS NOTED BY THE TRIBUNAL IN ITS ORDER, EXCELLENCE DATA RESEARCH P. LTD. WAS RENDERING BACK OFFICE/ DATA SEGREGATION, CONTENT DEVELOP MENT AND SUPPORT SERVICES IN RELATION TO ANALYSIS, CONTENT RESEARCH AND PROJECTIONS FOR ALL TYPES OF BUSINESS INFORMATION, WHILE THE ASSESSEE COMPANY IN THE PRESENT CASE, AS POINTED BY THE TPO IN HIS ORDER, IS ENGAGED IN THE BUSINESS OF PROVIDING IT ENABLE D SERVICES TO ITS GROUP CONCERNS, SUCH AS OPERATIONALISING THE CASE - REPORT FORM IN THE COMPUTER SYSTEM, AND UNDERTAKING QUALITY CONTROL TESTS OF THE IMAGES SENT BY THE AES. AFTER HAVING CONSIDERED THE NATURE OF FUNCTIONS PERFORMED BY THE ASSESSEE COMPANY VIS - A - VIS M/S. EXCELLENCE DATA RESEARCH P. LTD., WE FIND THAT BOTH THESE COMPANIES BASICALLY ARE PROVIDING DATA MANAGEMENT AND DATA PROCESSING SERVICES WHICH ARE IN THE NATURE OF LOW END SERVICES, AND THE SAME THEREFORE, CANNOT BE CONSIDERED AS FUNCTIONAL LY DIFFERENT FOR THE PURPOSE OF COMPARABILITY ANALYSIS. WE, THEREFORE, REJECT THE CONTENTION RAISED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, AND DIRECT THE ASSESSING OFFICER TO EXCLUDE ECLERX SERVICES P. LTD. FROM THE LIST OF COMPARABLES, IT BEING A FUN CTIONALLY DIFFERENT COMPANY. AS THE ISSUE INVOLVED IN THE PRESENT CASE AS WELL AS ALL THE MATERIAL FACTS RELATING THERETO ARE SIMILAR TO THE CASE OF M/S. PAREXEL INTERNATIONAL (INDIA) PRIVATE LTD., WE RESPECTFULLY FOLLOW THE DECISION OF THE COORDINATE BENCH IN THAT CASE, AND DIRECT THE I TA NO. 292 & 391/H YD/20 14 M/S. K NOAH SOLUTIONS PVT. LTD., HYDERABAD 12 ASSESSING OFFICER/TPO TO EXCLUDE ECLERX SERVICES LIMITED FROM THE LIST OF COMPARABLES. 1 2 . AS REGARDS GROUND NO.5, IT IS OBSERVED THAT THE ISSUE INVOLVED THEREIN RE LATING TO THE CLAIM OF THE ASSESSEE FOR EXCLUSION OF COSMIC GLOBAL LTD. FROM THE LIST OF FINAL COMPARABLE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL DATED 30.9.2014 IN THE CASE OF M/S. PAREXEL IN TERNATIONAL (INDIA) PRIVATE LIMITED, HYDERABAD IN ITA NO.144/HYD/2014 FOR ASSESSMENT YEAR 2009 - 10, WHEREIN SIMILAR ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL VIDE PARAGRAPHS 14 AND 15 THEREOF, WHICH READ AS FOLLOWS - 14. AS REGARDS THE SELECTION OF COSMIC GLOBAL LTD. AS COMPARABLE, IT IS OBSERVED THAT THIS COMPANY WAS ALSO EXCLUDED BY THE TRIBUNAL FROM THE LIST OF COMPARABLES IN THE CASE OF EXCELLENCE DATA RESEARCH SERVICES P. LIMITED (SUPRA), FOLLOWING THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF MERCER CONSULTING (INDIA) LTD. V/S DCIT (VIDE ORDER DATED 6 TH JUNE, 2014 IN ITA NO.966/DEL/2014) , WHEREIN M/S. COSMIC GLOBAL LIMITED WAS NOT ACCEPTED AS COMPARABLE BY THE TRIBUNAL FOR THE FOLLOWING REASONS GIVEN IN PA RAS 13.2 AND 13.3 OF ITS ORDER - 13.2. NOW COMING TO THE FACTUAL MATRIX OF THIS CASE, WE FIND FROM THE MATERIAL ON RECORD THAT OUTSOURCING CHARGES OF THIS CASE CONSTITUTE 57.31% OF THE TOTAL OPERATING COSTS. THIS DOES NOT APPEAR TO US TO BE A VALID REASON FOR ELIMINATING THIS CASE FROM THE LIST OF COMPARABLES. ON GOING THROUGH THE ANNUAL ACCOUNTS OF COSMIC GLOBAL LIMITED, A COPY OF WHICH HAS BEEN PLACED ON RECORD, WE FIND THAT ITS TOTAL REVENUE FROM OPERATIO NS ARE AT RS.7.37 CRORE DIVIDED INTO THREE SEGMENTS, NAMELY, MEDICAL TRANSCRIPTION AND CONSULTANCY SERVICES AT RS.9.90 LACS, TRANSLATION CHARGES AT RS.6.99 CRORE AND ACCOUNTS BPO AT RS.27.76 LAC. THE LD. AR HAS MADE OUT A CASE THAT OUTSOURCI NG ACTIVITY CARRIED OUT BY THIS COMPANY CONSTITUTES 57% OF TOTAL EXPENSES. THE REASON FOR WHICH WE ARE NOT AGREEABLE WITH THE LD. AR IS THAT WE HAVE TO EXAMINE THE REVENUE OF THIS CASE ONLY FROM ACCOUNTS BPO SEGMENT AND NOT ON THE ENTITY LEVEL, BEING ALSO FROM MEDICAL TRANSCRIPTION AND TRANSLATION CHARGES. WHEN WE ARE EXAMINING THE RESULTS OF THIS COMPANY FROM THE ACCOUNTS BPO SEGMENT ALONE, THERE IS NO NEED TO EXAMINE THE POSITION UNDER I TA NO. 292 & 391/H YD/20 14 M/S. K NOAH SOLUTIONS PVT. LTD., HYDERABAD 13 OTHER SEGMENTS. THE ENTIRE OUTSOURCING IS CONFINED TO TRANSLATION CHARGES PAID AT RS.3.00 CRORE, WHICH IS STRICTLY IN THE REALM OF THE TRANSLATION SEGMENT, REVENUES FROM WHICH ARE TO THE TUNE OF RS.6.99 CRORE. IF T HIS SEGMENT OF TRANSLATION IS NOT UNDER CONSIDERATION FOR DECIDING AS TO WHETHER THIS CASE IS COMPARABLE OR NOT, WE CANNOT TAKE RECOURSE TO THE FIGURES WHICH ARE RELEVANT FOR SEGMENTS OTHER THAN ACCOUNTS BPO. THUS IT IS HELD THAT TH IS CASE CANNOT BE EXCLUDED ON THE STRENGTH OF OUTSOURCING ACTIVITY, WHICH IS ALIEN TO THE RELEVANT SEGMENT. 13.3. HOWEVER, WE FIND THIS CASE TO INCOMPARABLE ON THE ALTERNATIVE ARGUMENT ADVANCED BY THE LD. AR TO THE EFFECT THAT T OTAL REVENUE OF THE ACCOUNTS BPO SEGMENT OF COSMIC GLOBAL LIMITED IS VERY LOW AT RS.27.76 LACS. WE HAVE DISCUSSED THIS ASPECT ABOVE IN THE CONTEXT OF CGVAKS CASE AND HELD THAT A CAPTIVE UNIT CANNOT BE COMPARED WITH A GIANT CASE AND THUS EXCLUDED CG - VAK WITH TURNOVER FROM ACCOUNTS BPO SEGMENT AT RS.86.10 LACS. AS THE SEGMENTAL REVENUE OF BPO SEGMENT OF COSMIC GLOBAL LIMITED AT RS.27.76 LAC IS STILL ON MUCH LOWER SIDE, THE REASONS GIVEN ABOVE WOULD FULLY APPLY TO HOLD COSMIC GLOBAL LIMITED AS INCOMPARABLE. THIS CASE IS, THEREFORE, DIRECTED TO BE EXCLUDED FROM THE LIST OF COMPARABLES. 15. AS POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE FR O M THE RELE V ANT DETAILS PLACED AT PAGE NO.391 OF HIS PAPER - BOOK, SUBSTANTIAL WORK WAS OUTSOURCED BY M/S. COSMIC GLOBAL L IMITED IN THE RELEVANT YEAR, WHICH IS EVIDENT FROM THE FACT THAT THE OUTSOURCING COST WAS 57% OF THE TOTAL OPE RA TING COST OF THE SAID COMPANY. K EEPING IN V IEW THIS POSITION CLEARLY EVI D EN T FROM THE REL E VANT DETAILS FURNISHED ON RECORD, WH I CH IS NOT DISPUTED EVEN BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, WE RESPECTFULLY FOLLOW THE DECISION OF THE COORDINATE BENCH O F TH E T RIBUNAL IN THE C A S E OF ME RCER CON S ULTING I NDIA P . L TD. (SUPRA) AND E X CELLENCE D A TA R E SEARCH P. LTD. (SUPRA) TO HOL D THAT M /S. COSMIC GLOBAL LIMI TE D CANNOT B E C ON S I D ERED AS COMPARABLE WITH THE ASSESSEE - C OMPANY. ACCOR D INGLY, THE ASSESSING OFFICER IS DIRECTED TO EXCLUDE THE SAME FROM THE LI S T O F COMPARABLES. WE MAY CLARIFY HERE FOR THE SAKE O F COMPL E TEN ES S THAT THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS POINTED OUT AT THE TIM E OF H E ARING BEFORE US THAT M/S. COSMIC GLOBAL L IM I TED WAS INI T I A LLY SELECT E D BY THE ASSESSEE COMPANY IT SELF AS A COMPARABLE IN TH E TP STUDY REPORT. IN OUR OPINION, THIS ASPECT ON ITS OWN IS NO T SUFFICIENT TO IN C LU D E M/S. COSMIC GLOBAL L TD. IN THE LI S T OF COMPARABLES, A S THE ASSESSEE HAS ALWAYS A RIGHT TO OBJECT SELECT ION OF A COMPANY TAKEN A S COMPARABLE EARLIER, IF IT IS SUB S EQU E NTLY FOUND TO BE NOT CO M PARABLE, AS A RESULT I TA NO. 292 & 391/H YD/20 14 M/S. K NOAH SOLUTIONS PVT. LTD., HYDERABAD 14 OF DIFFERENCE IN FUN C TIONS PERFORMED ETC., AND SUCH OBJECTION IS REQUIRED TO BE CON S I D ERED ON MERITS. AS THE ISSUE INVOLVED IN THE PRESENT CASE AS WELL AS ALL THE MATERIAL FACTS RE LATING THERETO ARE SIMILAR TO THE CASE OF M/S. PAREXEL INTERNATIONAL (INDIA) PRIVATE LTD., WE RESPECTFULLY FOLLOW THE DECISION OF THE COORDINATE BENCH IN THAT CASE, AND DIRECT THE ASSESSING OFFICER/TPO TO EXCLUDE COSMIC GLOBAL LTD. FROM THE LIST OF COMPA RABLES. 1 3 . AS DISCUSSED ABOVE, TH R E E COMPARABLES, VIZ. (1) GENESYS INTERNATIONAL LTD., (2) EC LERX SERVICES LTD., AND ( 3 ) COSMIC GLOBAL LTD. OUT OF THE TWELVE COMPARABLES SELECTED BY THE TPO ARE THUS LIABLE TO BE EXCLUDED FROM THE FINAL LIST OF COMPARABLES FOR THE PURPOSE OF COMPARABILITY ANALYSIS . IN THIS REGARD, THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT IF IT IS DONE SO, THE ARIT HMETIC MEAN MARGIN OF ALL THE REMAINING NINE COMPARABLES WOULD COME TO 17.33% AND THE SAME BEING IN THE RANGE OF PLUS/MINUS 5% OF THE MARGIN OF THE ASSESSEE COMPANY CHARGED TO ITS AE IN RESPECT OF THE RELEVANT INTERNATIONAL TRANSACTIONS, NO ADDITION ON A CCOUNT OF TP ADJUSTMENT IS REQUIRED TO BE MADE IN THE CASE OF THE ASSESSEE. WE ACCORDINGLY DIRECT THE ASSESSING OFFICER/TPO TO RECOMPUTE THE ARMS LENGTH PRICE BY EXCLUDING THE ABOVE THREE COMPARABLES FROM THE FINAL LIST OF COMPARABLES AND ALLOW APPROPRI ATE RELIEF TO THE ASSESSEE ON THIS ISSUE. GROUNDS NO.3 TO 5 OF THE ASSESSEES APPEAL ARE ALLOWED . REVENUES APPEAL: ITA NO. 2 9 1 /HYD/2014 14 . NOW WE SHALL TAKE UP THE APPEAL OF THE REVENUE, WHICH INVOLVES A SOLITARY ISSUE REGARDING THE INCLUSION/EXCLU SION OF THE COMMUNICATION COSTS FROM THE TOTAL TURNOVER, WHILE COMPUTING THE DEDUCTION UNDER S.10A. I TA NO. 292 & 391/H YD/20 14 M/S. K NOAH SOLUTIONS PVT. LTD., HYDERABAD 15 15 . AT THE TIME OF HEARING BEFORE US, THE LEARNED REPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GEM PLUS JEWELLERY LTD. (330 ITR 175) , WHEREIN IT WAS HELD THAT ALTHOUGH THE EXPRESSION TOTAL TURNOVER HAS NOT BEEN DEFINED AT ALL BY THE PARLIAMENT FOR THE PURPOSES OF S.10A, WHEN THE DEFINITION OF EXPORT TURNOVER EXCLUDES SPECIFICALLY CERTAIN ITEMS, THE EXPRESSION TOTAL TURNOVER CANN OT HAVE A DIFFERENT MEANING THAN THE TOTAL TURNOVER ESPECIALLY WHEN THE EXPORT TURNOVER FORMS A CONSTITUENT PART OF THE TOTAL TURNOVER FOR THE PURPOSE OF THE APPLICATION OF THE FORMULA. HONBLE BOMBAY HIGH COURT THUS HELD THAT ANY ITEM WHICH IS EXCLUDED FOR THE PURPOSE OF COMPUTING EXPORT TURNOVER HAS NECESSARILY TO BE EXCLUDED FOR COMPUTING THE TOTAL TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER S.10A OF THE ACT. RESPECTFULLY FOLLOWING THE SAID DECISION OF THE HON'BLE BOMBAY HIGH COURT, WE FIND NO MERIT IN THE APPEAL OF THE REVENUE. THE SAME IS ACCORDINGLY DISMISSED. 16 . IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED, WHEREAS THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 31 ST OCTOBER, 2 0 1 4 SD/ - SD/ - ( SAKTIJIT DEY ) ( P.M.JAGTAP ) JUDICIAL MEMBER ACCOUNTANT MEMBER D T/ - 31 S T OCTOBER , 2014 COPY FORWARDED TO: 1. KNOAH SOLUTIONS PVT. LTD., 4 TH FLOOR, BUILDING 2A, MAXIMUMS TOWERS, RAHEJA MIND SPACE, HITECH CITY, MADHAPUR, HYDERABAD 500 081. 2 . INCOME TAX OFFICER WARD 2(1), HYDERABAD I TA NO. 292 & 391/H YD/20 14 M/S. K NOAH SOLUTIONS PVT. LTD., HYDERABAD 16 3. 4. DISPUTE RESOLUTION PANEL, HYDERABAD DIRECTOR GENERAL OF INCOME - TAX, INTERNATIONAL TAXATION, HYDERABAD 500 004. 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S