United Online Software Development (India) Pvt.Ltd., Hyd, Hyderabad V. DCIT, Circle-17(2), Hyd, Hyderabad

ITA 400/HYD/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1063 (ITAT-HYDERABAD)
• Duration Of Justice: 5 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 30-01-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 10-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Keywords: Transfer pricing; International transaction; Question of law; Bad and doubtful debts; Revenue expenditure; TDS; Set aside; Capital Gains
• Section: 143(3); 260A; 144C; 13; 92CA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 400/HYD/15 2010-11 UNITED ONLINE SOFTWARE DEVELOPMENT (INDIA) PRIVATE LIMITED, HYDERABAD [PAN: AAACJ9549G] THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-17(2), HYDERABAD 419/HYD/15 2010-11 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-17(2), HYDERABAD UNITED ONLINE SOFTWARE DEVELOPMENT (INDIA) PRIVATE LIMITED, HYDERABAD [PAN: AAACJ9549G] FOR ASSESSEE : SHRI RAVI BHARADWAJ, AR FOR REVENUE : SHRI Y.V.S.T.SAI, CIT-DR DATE OF HEARING : 30-01-2020 DATE OF PRONOUNCEMENT : 04-06-2020 O R D E R PER SMT. P. MADHAVI DEVI, J.M. : THE ABOVE APPEALS ARE FILED BY BOTH THE ASSESSEE AS WELL AS THE REVENUE AGAINST THE ASSESSMENT ORDER DATED 13.02.2015 PASSED U/S 143(3) R.W.S. 144C OF THE I.T. ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT. IT FI LED ITS RETURN OF INCOME FOR THE A.Y 2010-11 DISCLOSING A TOTAL INCOME OF RS.2,21,65,000/-. SINCE THE ASSESSEE HAD ENTERED I NTO AN INTERNATIONAL TRANSACTION WITH ITS AE, THE AO REFERRED THE ITA NOS. 400/HYD/2015 & 419/HYD/2015 :- 2 -: DETERMINATION OF THE ALP OF INTERNATIONAL TRANSACTION TO THE TPO. THE TPO VIDE ORDERS DATED 24.09.2013 PASSED AN ORDER U/S 92CA OF THE I.T. ACT DETERMINING THE ADJUSTMENT TOWAR DS THE ALP AT RS.3,57,69,069/-. IN ACCORDANCE WITH THE TP O ORDER, THE AO PROPOSED THE DRAFT ASSESSMENT ORDER DATED 24.03.2014 PROPOSING AN ADDITION OF RS.3,57,69,069/ - TOWARDS TP ADJUSTMENT AND ALSO AN ADDITION OF RS.6,78,371/- B EING THE DISALLOWANCE FROM OUT OF THE HEAD REPAIRS TO COMPUTERS AND OTHER EQUIPMENT ON THE GROUND THAT THE SAME CANNOT BE ALLOWED AS REVENUE EXPENDITURE. AGGRIEVED, THE ASSESS EE PREFERRED ITS OBJECTIONS TO THE DRP. THE DRP GRANTED PAR TIAL RELIEF BY EXCLUDING TWO COMPANIES I.E. M/S INFOSYS TECHNOLOGIES LTD AND L&T INFO LTD. ON THE FILTER OF HI GH TURNOVER AND BRAND VALUE, WHILE IT CONFIRMED THE OTHER COMPANIES TAKEN BY THE TPO. AGAINST THE RELIEF GRANTED BY THE DRP, THE REVENUE IS IN APPEAL BEFORE US AND AGAINST T HE CONFIRMATION OF THE BALANCE OF THE DRAFT ASSESSMENT ORDE R, THE ASSESSEE IS IN APPEAL BEFORE US. THE ASSESSEE HAS R AISED THE FOLLOWING GROUNDS OF APPEAL: GROUNDS OF APPEAL FOR ITA NO.400/HYD/2015: BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED ASSESSING OFFICER (AO) / LEARNED TRANSFER PRICING OFFICER ('TPO') AND THE HON'BLE DI SPUTE RESOLUTION PANEL ('DRP') ERRED IN: TRANSFER PRICING MATTERS - RELATING TO DETERMINATION OF ARM'S LENGTH PRICE (ALP) UNDER TRANSACTIONAL NET MARGIN METHOD ('TNMM') IN RESPECT OF SOFTWARE SERVICES PROVIDED TO THE ASSOCIATED ENTERP RISES ('AES') REJECTION OF TRANSFER PRICING DOCUMENTATION MAINTAI NED 1. REJECTION OF THE TRANSFER PRICING DOCUMENTATION MAINTAINED BY THE APPLICANT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT READ WITH THE INCOME-TAX RULE S, ITA NOS. 400/HYD/2015 & 419/HYD/2015 :- 3 -: 1962 ('RULES') AND MAKING AN ADJUSTMENT OF RS.3,22,58,649 TO THE INTERNATIONAL TRANSACTIONS RE LATING TO PROVISION OF SOFTWARE SERVICES TO ITS AE BY UNDE RTAKING A FRESH ECONOMIC ANALYSIS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. REJECTION OF USE OF CONTEMPORANEOUS DATA AND MULTIP LE YEAR DATA 2. USING THE SINGLE YEAR DATA (FY 2009-10) OF COMPA RABLE COMPANIES SELECTED WHICH WAS NOT AVAILABLE AT THE T IME OF COMPLYING WITH THE TRANSFER PRICING DOCUMENTATIO N REQUIREMENTS AND REJECTING THE USE OF MULTIPLE YEAR DATA IN COMPUTING THE ARM'S LENGTH PRICE OF INTERNATIONA L TRANSACTIONS. USE OF ADDITIONAL FILTERS 3. INTER-ALIA USE OF THE FOLLOWING ADDITIONAL/MODIF IED FILTERS IN UNDERTAKING THE COMPARATIVE ANALYSIS AND REJECTING COMPARABLE COMPANIES HAVING: A) DIMINISHING REVENUES; B) PERSISTENT LOSSES; C) DIFFERENT FINANCIAL YEAR-END; AND D) EXPORT SALES LESS THAN 75% OF THE SALES. SELECTION OF COMPARABLES 4. NOT UNDERTAKING AN OBJECTIVE COMPARATIVE ANALYSI S AND INTER ALIA SELECTING THE FOLLOWING COMPANIES AS COMPARABLE TO THE SOFTWARE SERVICES OF THE APPELLAN T: A) COMP-U-LEARN TECH INDIA LTD; B) E INFOCHIPS BANGALORE LTD; C) KALS INFO SYSTEMS LTD; D) TATA ELXSI LTD (SEG); REJECTION OF COMPARABLES 5. NOT UNDERTAKING AN OBJECTIVE COMPARATIVE ANALYSI S AND INTER ALIA REJECTING THE FOLLOWING COMPARABLE COMPANIES: A) AKSHAY SOFTWARE TECHNOLOGIES LTD; B) CG V AK SOFTWARE AND EXPORTS LTD; AND C) SATYAM COMPUTERS SERVICES LTD. ERROR IN MARGIN COMPUTATION 6. COMPUTATION OF NET MARGINS OF THE FOLLOWING COMP ANIES SELECTED AS COMPARABLES: ITA NOS. 400/HYD/2015 & 419/HYD/2015 :- 4 -: A) CONSIDERING PROVISION FOR BAD DEBTS AS NON-OPERA TING EXPENSES IN COMPUTING MARGINS FOR THE FOLLOWING COMPANIES: I) E-INFOCHIPS BANGALORE LTD; II) E-ZEST SOLUTIONS LTD; III) KULIZA TECHNOLOGIES PRIVATE LIMITED; B) COMPUTING THE NET MARGINS OF CAT TECHNOLOGIES LT D BY EXCLUDING ADVERTISEMENT EXPENSES WRITTEN OFF CONSID ERING IT AS INOPERATIVE EXPENSES. C) NOT ALLOWING UNALLOCABLE COST IN THE COMPUTATION OF NET MARGINS FOR THE FOLLOWING: I) KALS INFORMATION SYSTEMS LTD (SEG); AND II) TATA ELXSI LTD (SEG). FOREIGN EXCHANGE LOSS 7. NOT APPRECIATING THE FACT THAT FOREIGN EXCHANGE LOSS OF RS.L,30,72,615 IS AN EXTRAORDINARY ITEM FOR THE YEA R AND HENCE ADJUSTMENT SHOULD BE PROVIDED FOR THE SAME. NEGATIVE WORKING CAPITAL ADJUSTMENT 8. MAKING A NEGATIVE WORKING CAPITAL ADJUSTMENT WIT HOUT APPRECIATING THE FACT THAT THE COMPANY DOES NOT BEA R ANY WORKING CAPITAL RISKS. ADJUSTMENT FOR RISK DIFFERENCES 9. NOT ADJUSTING THE NET MARGINS OF THE COMPARABLE COMPANIES TAKING INTO ACCOUNT THE FUNCTIONAL AND RI SK DIFFERENCES BETWEEN THE INTERNATIONAL TRANSACTION O F THE APPELLANT AND THE COMPARABLE COMPANIES IN ACCORDANC E WITH THE PROVISIONS OF RULE 10B(1)(E). CORPORATE TAX ISSUES 10. DISALLOWING THE EXPENDITURE INCURRED TOWARDS MAINTENANCE AND REPLACEMENT OF COMPUTER PARTS AND SOFTWARE LICENSE CONSIDERING IT AS CAPITAL EXPENDIT URE: 11. NON - GRANT OF TDS CREDIT TO THE EXTENT OF RS. 4,443 12. ADDING THE REFUND ISSUED OF RS.31,82,740 TO THE CURRENT YEAR TAX DEMAND WHICH WAS ADJUSTED OTHER YEARS TAX DEMAND, WHERE NO TAX DEMAND WAS OUTSTANDING. ITA NOS. 400/HYD/2015 & 419/HYD/2015 :- 5 -: 3. IN ADDITION TO THE ABOVE GROUNDS, THE ASSESSEE HAS ALSO RAISED THE FOLLOWING ADDITIONAL GROUND OF APPEAL: ADDITIONAL GROUND OF APPEAL - TRANSFER PRICING MATT ERS SELECTION OF COMPARABLES 13. NOT UNDERTAKING AN OBJECTIVE COMPARATIVE ANALYS IS AND INTER ALIA SELECTING THE FOLLOWING COMPANIES AS COMPARABLE TO THE SOFTWARE SERVICES OF THE APPELLAN T: A) PERSISTENT SYSTEMS LTD; B) SASKEN COMMUNICATION TECHNOLOGIES LTD; C) E - ZEST SOLUTIONS LTD; D) MINDTREE LTD; AND E) ZYLOG SYSTEMS LTD; F) EVOKE TECHNOLOGIES PRIVATE LIMITED; G) KULIZA TECHNOLOGIES PRIVATE LIMITED; 4. THE REVENUE IN ITS APPEAL HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: GROUNDS OF APPEAL FOR ITA NO.419/HYD/2015: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE DRP IS JUSTIFIED IN REJECTING THE COMPARA BLE COMPANIES ON THE GROUND OF EXCEPTIONALLY LARGE SCAL E OF OPERATIONS AND THEREBY IGNORING THE FACT THAT HIGH OR LOW TURNOVER DO NOT INFLUENCE THE MARGINS OF THE COMPARABLES? 2. ANY OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING THE APPEAL . 5. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE, SHRI RAVI BHARADWAJ, SUBMITTED THAT THE ASSES SEE IS NOT PRESSING GROUNDS 1, 2, 3 & 9 AND THESE GROUNDS AR E ACCORDINGLY REJECTED AS NOT PRESSED. 6. THE LEARNED COUNSEL FOR THE ASSESSEE PRAYED FOR ADMISSION OF THE ADDITIONAL GROUNDS OF APPEAL STATING TH AT IN THE ADDITIONAL GROUND, THE ASSESSEE IS ONLY CHALLENGI NG THE COMPARABILITY OF THE COMPANIES MENTIONED THEREIN, AS ITA NOS. 400/HYD/2015 & 419/HYD/2015 :- 6 -: ACCORDING TO HIM, AO & THE DRP HAVE NOT TAKEN ANY COMPARATIVE ANALYSIS FOR SELECTING THESE COMPANIES. F URTHER, HE ALSO SUBMITTED THAT THAT PERSISTENT SYSTEMS LTD. & SASK EN COMMUNICATION TECHNOLOGIES LTD. WERE CONSIDERED AS COMPARABLE BY THE ASSESSEE IN ITS TP DOCUMENTATION ON THE BASIS OF INFORMATION AVAILABLE ABOUT THE SAID COMPANI ES AT THAT POINT OF TIME, BUT, SINCE SOME MORE INFORMATION IS AVAI LABLE ABOUT THESE COMPANIES SUBSEQUENTLY, THE ASSESSEE IS NOW CHALLENGING THE COMPARABILITY OF THESE COMPANIES ALSO . 7. THE LEARNED DR, HOWEVER, OBJECTED TO THE ADMISSION OF THE ADDITIONAL GROUND STATING THAT THE OBJECTIONS OF THE ASSESSEE ARE ON FACTUAL ASPECTS OF THE COMPARABLE C OMPANIES WHICH WERE NEVER TAKEN BEFORE THE AO/TPO OR BEFORE TH E DRP AND THEREFORE, THEY CANNOT BE TAKEN AT THIS POINT OF TIME. IN SUPPORT OF THIS CONTENTION, HE PLACED RELIANCE UPON THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CAS E OF PR. CIT BANGALORE VS. SOFTBRANDS INDIA (P) LTD REPORTED IN (2018) 94 TAXMANN.COM 426 (KARNATAKA) AND THE DECISION OF THE HON'BLE ANDHRA PRAESH HIGH COURT IN THE CASE OF CIT VS. BEGUM NOOR BANU REPORTED IN (1993) 69 TAXMANN 565 (A .P). 8. THE LEARNED COUNSEL FOR THE ASSESSEE HOWEVER, SUB MITTED THAT THE DECISIONS RELIED UPON BY THE LEARNED DR ARE DISTINGUISHABLE ON FACTS AND SINCE TRANSFER PRICING ANALYSIS ITSELF IS FACTUAL, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS ALSO FACTUAL AND THE TRIBUNAL BEING THE FINAL FACT FIND ING ITA NOS. 400/HYD/2015 & 419/HYD/2015 :- 7 -: AUTHORITY, THE TRIBUNAL MAY ADMIT THE SAME AND ADJUDICA TE THE SAID GROUND. 9. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERI AL ON RECORD AND PARTICULARLY THE ADMISSIBILITY OF THE AD DITIONAL GROUND AND THE DECISIONS RELIED UPON BY THE LEARNED DR, WE FIND THAT THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF PR.CIT VS. SOFTBRANDS INDIA (P) LTD (SUPRA) HAS HELD THAT THE QUESTION AS TO WHETHER THE COMPARABLES HAD BEEN RIGHT LY PICKED OR NOT, FILTERS FOR ARRIVING AT CORRECT LIST OF C OMPARABLES HAD BEEN RIGHTLY PICKED OR NOT, DO NOT GIVE RISE TO AN Y SUBSTANTIAL QUESTION OF LAW; AND UNLESS A PERVERSITY IN FINDINGS OF FACT IN THESE MATTERS IS ESTABLISHED BEFORE THE HON'BL E HIGH COURT, NO SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSI DERATION U/S 260A. THIS FINDING IS, IN OUR OPINION, WITH REGA RD TO THE MAINTAINABILITY OF THE APPEAL BEFORE THE HON'BLE HIG H COURT AS THE HON'BLE HIGH COURTS JURISDICTION U/S 260A IS MAI NLY ON SUBSTANTIAL QUESTIONS OF LAW. THEREFORE, THIS DECISIO N IS NOT STRICTLY APPLICABLE TO THE ADMISSIBILITY OF THE ADDITION AL GROUND BY THE TRIBUNAL AS THE ITAT IS THE FINAL FACT FINDING AUTHORITY AND THE FACTS RELATING TO MOST OF THESE COMPANIES ARE AL READY ON RECORD. THEREFORE, THERE IS NO PREJUDICE CAUSED TO THE REVENUE BY ADMITTING THE ADDITIONAL GROUND. 10. IN THE CASE OF CIT VS. BEGUM NOOR BANU (SUPRA), THE HON'BLE A.P HIGH COURT WAS CONSIDERING WHETHER THE AP PELLATE TRIBUNAL HAS JURISDICTION TO GRANT RELIEF ON CONSIDER ATION OF AN ADDITIONAL GROUND RAISED BEFORE IT BY THE ASSESSEE FOR THE FIRST ITA NOS. 400/HYD/2015 & 419/HYD/2015 :- 8 -: TIME ALTHOUGH SUCH GROUND RELATED TO AN ITEM OF ASSESSME NT WHICH WAS NOT DISPUTED AT ANY OF THE EARLIER STAGES AND WHETHER THE ASSESSEE WHO RETURNED INCOME FROM CAPITAL GAINS VOLUNTARILY FOR ASSESSMENT AND NEVER OBJECTED TO INCLUS ION OF THAT PART OF INCOME BEFORE THE AAC. THE HON'BLE HIGH CO URT HELD THAT AN ASSESSEE COULD NOT DISPUTE THE ASSESSMENT OF TAX ON CAPITAL GAINS BEFORE TRIBUNAL IN SUCH CIRCUMSTANCE S. WE FIND THAT THIS DECISION IS ALSO DISTINGUISHABLE ON FA CTS BECAUSE IN THE CASE BEFORE US, THE ASSESSEES OBJECTION IS THAT THE AO HAS NOT CONDUCTED OBJECTIVE ANALYSIS BEFORE TAKING THES E COMPANIES AS COMPARABLES AND IT IS PURELY A FACTUAL I SSUE AND ALL THE COMPANIES AGAINST WHOM OBJECTIONS ARE RAISED E XCEPT THE FIRST TWO COMPANIES ARE THE COMPANIES TAKEN BY THE TPO AFTER REJECTING THE ASSESSEES TP ANALYSIS. THEREFORE , WE ARE OF THE OPINION THAT THIS DECISION IS ALSO NOT APPLICABLE TO THE CASE ON HAND AND THE ASSESSEES ADDITIONAL GROUND OF APPEA L CAN BE ADMITTED. 11. COMING TO THE MERITS OF THE ASSESSEES AS WELL AS REVENUES APPEAL, WE FIND THAT THE ASSESSEE HAS SELEC TED 21 COMPANIES ITS TP STUDY, OUT OF WHICH TPO HAS ACCEPTED 7 COMPANIES AS COMPARABLES. THEREAFTER, THE TPO CONDUC TED AN INDEPENDENT STUDY AND ARRIVED AT 19 COMPANIES AS COMP ARABLE INCLUDING THE ABOVE 7 COMPANIES TAKEN BY THE ASSESSE E. THESE 7 COMPANIES INCLUDE NOT ONLY PERSISTENT SYSTEMS LTD. A ND SASKEN COMMUNICATION TECHNOLOGIES LTD. BUT ALSO ZYLONG SYSTEMS LTD. AND MIND TREE LTD., WHICH WERE ALSO SELE CTED BY THE ASSESSEE IN ITS TP STUDY. OUT OF THE TOTAL 19 COMPANI ES SELECTED BY THE TPO, NOW BEFORE US, ONLY 5 COMPANIES ARE ITA NOS. 400/HYD/2015 & 419/HYD/2015 :- 9 -: ACCEPTED BY THE ASSESSEE. OUT OF THE BALANCE 13 COMPA NIES, THE DRP HAS DIRECTED EXCLUSION OF TWO COMPANIES I.E. INFOSYS LTD AND L&T INFOTECH LTD ON THE GROUND OF HIGH TURNO VER AS WELL AS BRAND VALUE. 12. WE HAVE GONE THROUGH THE T.P ORDER AND ALSO DRP S DIRECTIONS AND HAVE ALSO CONSIDERED THE ARGUMENT OF TH E LEARNED COUNSEL FOR THE ASSESSEE THAT MOST OF THESE CO MPANIES ARE NOT COMPARABLE TO THE ASSESSEE IN THE LIGHT OF THE VA RIOUS DECISIONS OF THE TRIBUNAL IN SIMILAR CASES. WE FIND THAT THE ASSESSEE HAS RETURNED A MARGIN OF 9.02% AS AGAINST THE AVERAGE MARGIN OF THE FINAL COMPARABLES ADOPTED BY THE TPO AT 22.69%. IT IS THE CASE OF THE ASSESSEE THAT THE DECISIONS OF THE ITAT ON VARIOUS COMPARABLES THOUGH CITED BY THE ASSESS EE, HAVE NOT BEEN CONSIDERED BY THE AUTHORITIES BELOW. 13. AFTER HEARING BOTH THE PARTIES AND AFTER CONSIDERING THE RIVAL CONTENTIONS AND SINCE BOTH THE PARTIES HAVE TENTATIV ELY AGREED FOR A REMAND OF THE ISSUE TO THE TPO, WE DEEM IT FIT AND PROPER TO SET ASIDE THE ISSUES TO THE TPO FOR DENOVO CONSIDERATION. WE MAKE IT CLEAR THAT THE TPO SHALL EXAMI NE WHETHER THE ASSESSEES CASE IS SIMILAR TO THE CASES ON WHICH HE HAS PLACED RELIANCE UPON AND WHETHER THEDISTINGUISHABL E FACTORS FOR EXCLUSION OF THE COMPARABLES IN THOSE CAS ES ALSO EXISTED IN THE ASSESSEES CASE. IF IT IS FOUND THAT THE ASSESSEES CASE IS SIMILAR AND THE DISTINGUISHING FACTORS EXIST, THEN THE TPO SHALL EXCLUDE SUCH COMPANIES FROM THE FINAL LIST OF COMPARABLES AND THE TPO SHALL BE FREE TO ADOPT ANY OTHE R ITA NOS. 400/HYD/2015 & 419/HYD/2015 :- 10 -: COMPARABLE COMPANIES IF THEY ARE SO COMPARABLE TO THE ASSESSEE. 14. AS FAR AS THE REVENUES APPEAL IS CONCERNED, WE FIND THAT THE DRP HAS DIRECTED EXCLUSION OF THESE TWO COMPANIES NOT ONLY BY APPLYING THE TURNOVER FILTER BUT HAS ALSO HELD THEM TO BE NOT COMPARABLE DUE TO BRAND VALUE. THE TPO SHALL EXAMINE THIS FACT ALSO AND IF THESE TWO COMPANIES HAVE BRAND V ALUE, THEN THEY SHALL NOT BE CONSIDERED AS COMPARABLE TO THE ASSESSEE. 15. AS REGARDS GROUND NO.6 RELATING TO PROVISIONS FO R BAD DEBTS BEING CONSIDERED AS NON-OPERATING EXPENDITURE IN COMPUTING THE MARGIN OF ONLY 3 COMPANIES MENTIONED IN GROUND NO.6, WE DIRECT THE AO/TPO TO RECONSIDER THE SA ME AND BRING OUT THE REASONS FOR CONSIDERING THE SAME AS NON- OPERATING IN THE CASE OF THESE THREE COMPANIES ONLY, BECAUSE THE AO/TPO HAVE TO FOLLOW A UNIFORM AND CONSISTENT MAN NER IN ADOPTING A FILTER AND CANNOT DEVIATE FROM THE SAME I N RESPECT OF SOME COMPANIES. 16. WITH REGARD TO THE SUB GROUNDS IN GROUND NOS. 6, 7 & 8 ALSO, THE AO/TPO MAY RECONSIDER THE ISSUE DENOVO. AS REGARDS GROUND NO.7, WE ARE NOT CONVINCED THAT THE FOREIGN EXC HANGE LOSS IS AN EXTRA-ORDINARY ITEM IN THE YEAR TO THE ASSESS EE ALONE. SIMILAR FOREIGN EXCHANGE LOSS WOULD HAVE BEEN INCUR RED BY THE COMPARABLE COMPANIES AS WELL AND THEREFORE, IT IS NOT A ITA NOS. 400/HYD/2015 & 419/HYD/2015 :- 11 -: DISTINGUISHING FACTOR TO BE CONSIDERED FOR ARRIVING AT THE ALP OF THE INTERNATIONAL TRANSACTION. 17. AS REGARDS THE CORPORATE TAX ISSUES ARE CONCERNED, WE FIND THAT THEY ARE CONSEQUENTIAL IN NATURE AND THEREFORE, THE AO MAY GRANT CONSEQUENTIAL RELIEF, IF ANY, TO THE ASSE SSEE, IN ACCORDANCE WITH LAW. THE AO/TPO SHALL RECONSIDER ALL THE ISSUES DENOVO IN ACCORDANCE WITH THE LAW AND IN THE L IGHT OF PRECEDENTS ON THE ISSUE. 18. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE AND ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH JUNE 2020. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 4 TH JUNE, 2020. VINODAN/SPS COPY TO: 1 UNITED ONLINE SOFTWARE DEVELOPMENT (INDIA)(P) LTD., 6-3- 1099/1100, 1 ST & 6 TH FLOORS, BABUKHAN MILLENNIUM CENTRE, SOMAJIGUDA, HYDERABAD 2 DY. CIT, CIRCLE 17(2), 5 TH FLOOR, SIGNATURE TOWERS, KONDAPUR., HYDERABAD 500084 3 CIT (INTERNATIONAL TAXATION) IT TOWERS, 10-2-3 AC G UARDS, HYDERABAD 500004 4 5 TPO/ADDL. CIT (TP) HYDERABAD 500004 CIT-5 HYDERABAD 500004 6 THE DR, ITAT HYDERABAD 7 GUARD FILE BY ORDER