IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, BENGALURU BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER IT(TP)A NO.42/BANG/2018 (ASSESSMENT YEAR: 2013-14) M/S. ISG NOVASOFT TECHNOLOGIES LTD., MARUTHI SAPPHIRE, 2 ND FLOOR, MADIVALA MACHIDEVA ROAD (HAL OLD AIRPORT ROAD),MURGHESHPALYA, BENGALURU-560017. PAN: AABCI 2488 Q VS APPELLANT DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 3(1)(1), BENGALURU. RESPONDENT APPELLANT BY : SHRI PADAMCHAND KHINCHA, CA. RESPONDENT BY : SHRI PRADEEP KUMAR, CIT(DR) DATE OF HEARING: 25/03/2019 DATE OF PRONOUNCEMENT: 29/04/2019 O R D E R PER PAVAN KUMAR GADALE, JM: THE ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER OF THE ASSESSING OFFICER DATED 27/10/2017 PASSED US/ 143(3) R.W.S 144C(13) OF THE INCOME-TAX ACT,1961 ['THE ACT' FOR SHORT] IN PURSUANCE TO DIRECTIONS OF THE DISPUTE RESOLUTION PANEL (DRP) FOR THE ASSESSMENT YEAR 2013-14. IT(TP)A NO.42/BANG/2018 PAGE 2 OF 20 2. THE ASSESSEE HAS RAISED AS MANY AS 17 GROUNDS OF APPEAL. AT THE TIME OF HEARING, THE ASSESSEE HAS RAISED ADDITIONAL GROUNDS OF APPEAL. 3. BEFORE WE PROCEED, THE LEARNED AR SUBMITTED THAT THAT IN THE ORIGINAL GROUNDS OF APPEAL, GROUND NOS.1 TO 4 AND 6 ARE GENERAL IN NATURE AND GROUND NO.5 IS WITH RESPECT TO TRANSFER PRICING ADJUSTMENT. THE GROUND NO.7 IS WITH RESPECT TO EXCLUSION OF COMPARABLE, GROUND NOS.8 AND 9 ARE NOT PRESSED. GROUND NOS.10 & 11 ARE WITH RESPECT TO CONSIDERATION OF ESPO COST AND COMPUTATION OF MARGIN. GROUND NOS.12 AND 13 ARE WITH RESPECT TO CAPITAL ADJUSTMENT. GROUND NO.14 IS WITH REGARD TO CLAIM OF DEPRECIATION ON COMPUTER SOFTWARE AND GROUND NOS.15 AND 16 ARE WITH RESPECT TO REVERSAL OF LEAVE ENCASHMENT PROVISION AND GROUND NO.17 BEING CHARGING OF INTEREST US/ 234B AND 234C WHICH ARE CONSEQUENTIAL IN NATURE. THE LEARNED AR HAS ARGUED ON THE ADDITIONAL GROUND OF APPEAL AND ALSO EXCLUSION/INCLUSION OF COMPARABLES ONLY. 4. THE EFFECTIVE GROUNDS OF APPEAL ARGUED BY THE LEARNED AR ARE AS UNDER: 5. THE LEARNED AO/TPO ERRED IN REJECTING CERTAIN COMPARABLE COMPANIES BY APPLYING THE FOLLOWING QUANTITATIVE AND QUALITATIVE FILTERS: A) THE LEARNED AO/ TPO ERRED. IN LAW AND IN FACTS. BY REJECTING CERTAIN COMPARABLE COMPANIES IDENTIFIED BY THE APPELLANT FOR HAVING DIFFERENT ACCOUNTING YEAR IT(TP)A NO.42/BANG/2018 PAGE 3 OF 20 (I.E. COMPANIES HAVING ACCOUNTING YEAR OTHER THAN MARCH 31 OR COMPANIES WHOSE FINANCIAL STATEMENTS WERE FOR A PERIOD OTHER THAN 12 MONTHS); B) THE LEARNED AO/ TPO ERRED, IN LAW AND IN FACTS, BY USING EXPORT SALES LESS THAN 75% OF TOTAL SALES AS A COMPARABILITY CRITERION; C) THE LEARNED AO/ TPO ERRED, IN LAW AND IN FACTS, BY APPLYING ONLY THE LOWER TURNOVER FILTER OF LESS THAN INR 1 CRORE AS A COMPARABILITY CRITERION AND NOT APPLYING UPPER LIMIT TO THE TURNOVER FILTER. 7. THE LEARNED AO/TPO ERRED, IN LAW AND IN FACTS, BY ACCEPTING THE FOLLOWING FUNCTIONALLY DISSIMILAR COMPANIES BASED ON UNREASONABLE COMPARABILITY CRITERIA: I. HARTRON COMMUNICATIONS LIMITED; II. CAPGEMINI BUSINESS SERVICES (INDIA) PRIVATE LIMITED: III. INFOSYS BPO LIMITED 8. THE LEARNED AO/ TPO ERRED, IN LAW AND IN FACTS, BY NOT TAKING INTO CONSIDERATION PROVISION FOR BAD AND DOUBTFUL DEBTS AS OPERATING IN NATURE FOR THE PURPOSE OF COMPUTING THE OPERATING MARGIN; 11. THE LEARNED AO/ TPO ERRED, IN LAW AND IN FACTS, BY CONSIDERING ESOP COST AS OPERATING IN NATURE FOR THE PURPOSE OF COMPUTATION OF OPERATING MARGIN OF THE APPELLANT; 12. THE LEARNED AO/ TPO ERRED, IN LAW AND IN FACTS, BY INCORRECTLY COMPUTING THE WORKING CAPITAL ADJUSTMENT (BENEFIT BY CONSIDERING INCORRECT RECEIVABLE AND PAYABLE AMOUNT FOR SOME OF THE COMPARABLE COMPANIES AND ALSO BY UNDERTAKING A NEGATIVE WORKING CAPITAL ADJUSTMENT; 13. THE LEARNED AO/ TPO ERRED, IN LAW AND IN FACTS, BY NOT MAKING SUITABLE ADJUSTMENTS ON ACCOUNT OF DIFFERENCES IN THE RISK PROFILE OF THE APPELLANT VIS-A-VIS THE COMPARABLE COMPANIES, WHILE CONDUCTING COMPARABILITY ANALYSIS; 14.THE LEARNED AO HAS ERRED, IN LAW AND IN FACTS, IN TREATING COMPUTER SOFTWARE AS INTANGIBLE ASSETS AND RESTRICTING THE IT(TP)A NO.42/BANG/2018 PAGE 4 OF 20 DEPRECIATION CLAIM TO 25% INSTEAD OF 60% AS CLAIMED BY THE APPELLANT; 15.THE LEARNED AO HAS ERRED, IN LAW AND IN FACTS, IN DISALLOWING LEAVE ENCASHMENT EXPENSE OF INR. 48,47,299 WITHOUT APPRECIATING THE FACT THAT THE APPELLANT HAS ALREADY FACTORED THE PROVISION AND CLAIMED DEDUCTION FOR LEAVE ENCASHMENT ON NET BASIS; 16.THE LEARNED AO HAS ERRED, IN LAW AND IN FACTS, IN DISALLOWING THE REVERSAL OF LEAVE ENCASHMENT PROVISION (NET BASIS) OF INR. 46,21,399, WITHOUT APPRECIATING THAT THE PROVISION HAS BEEN VOLUNTARILY DISALLOWED BY THE APPELLANT IN THE PREVIOUS FINANCIAL YEARS. 5. THE LEARNED DR HAS NO SPECIFIC OBJECTIONS FOR ADMITTING THE ADDITIONAL GROUNDS OF APPEAL AND ACCORDINGLY WE ADMIT THE ADDITIONAL GROUND OF APPEAL WHICH READ AS UNDER: THE HONOURABLE DISPUTE RESOLUTION PANEL HAS ERRED IN DIRECTING TO EXCLUDE JINDAL INTELLICOM LIMITED AS A COMPARABLE DESPITE IT PASSING ALL THE FILTERS AND WAS SELECTED AS A COMPARABLE BY THE APPELLANT AS WELL AS THE LEARNED TPO 6. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN PROVIDING IT ENABLED SERVICES INCLUDING PRODUCT SUPPORT SERVICES, SOFTWARE DEVELOPMENT SERVICES, BUSINESS PROCESS OUTSOURCING, CATERING MAINLY TO MORTGAGE LENDING INDUSTRY IN USA. THE ASSESSEE FILED THE RETURN OF INCOME FOR ASSESSMENT YEAR 2013-13 ON 29/11/2013 DECLARING TOTAL INCOME OF RS.19,09,81,870/-. THE ASSESSEE HAS REPORTED RECEIPTS OF RS.1,03,04,47,000/- FROM THE ABOVE BUSINESS OPERATIONS. THE AO FOUND THAT THE ASSESSEE HAS CLAIMED IT(TP)A NO.42/BANG/2018 PAGE 5 OF 20 HIGHER DEPRECIATION OF 60% ON INTANGIBLE ASSETS BEING SOFTWARE, RESTRICTED THE CLAIM TO THE EXTENT OF 25% AND DISALLOWED EXCESS CLAIM OF DEPRECIATION. THE AO HAS DISALLOWED THE CLAIM U/S 43B ON PAYMENT OF LEAVE ENCASHMENT. SIMILARLY, ON THE REVERSAL OF CLAIM BY THE ASSESSEE FOR PROVISION FOR LEAVE ENCASHMENT, AND THE AO MADE ADDITION OF RS.46,21,399/-. 7. FURTHER, AO, ON PERUSAL OF FORM 3CEB FOUND THAT THE ASSESSEE HAS INTERNATIONAL TRANSACTION WITH ITS ASSOCIATED ENTERPRISES (AE) BEING MORE THAN RS.15 CRORES AND ACCORDINGLY MADE REFERENCE TO THE TRANSFER PRICING OFFICER (TPO) WITH THE PRIOR APPROVAL OF THE CIT. THE TPO, AFTER CONSIDERING THE COMPARABLES AND VARIOUS ASPECTS VIZ. FINANCIAL ANALYSIS AND FUNCTIONAL PROFILE DEALT ON THE ISSUE AND ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE. THE TPO, OUT OF THE 11 COMPARABLE COMPANIES SELECTED BY THE ASSESSEE, ACCEPTED ONLY 4 COMPARABLE COMPANIES AND ADDED 5 MORE COMPARABLE COMPANIES SELECTED BY HIM WHICH ARE AS UNDER: 1 ACROPETAL TECHNOLOGIES LTD 24.16% 2 MICROGENETIC SYSTEMS LTD. 1634% 3 JINDAL INTELLICOM LTD. - 3.00% 4 HARTRON COMMUNICATIONS LIMITED(SEG) 44.07% 5 MICROLAND LTD. 8.62% 6 CAPGEMINI BUSINESS SERVICES (INDIA) PVT. LTD. 26.78% 7 TECH MAHINDRA LTD. (SEG) 22.27% 8 E4E HEALTHCARE BUSINESS PRIVATE LIMITED 17.26% 9 INFOSYS BPOI TD. 29.28% AVERAGE 20.64% IT(TP)A NO.42/BANG/2018 PAGE 6 OF 20 THE TPO HAS WORKED OUT THE ALP AS UNDER: ITES ARM'S LENGTH MEAN MARGIN ON COST 20.64% LESS: WORKING CAPITAL ADJUSTMENT - 1.649 (AS PER ANNEX. C) ADJUSTED MARGIN 22.28% OPERATING COST 919,297,000 ARMS LENGTH PRICE(ALP) 1,124,105,478 122.28% OF OPERATING COST PRICE RECEIVED 1,080,301,000 VARIATION IN PRICE 43,804,478 3% OF PRICE RECEIVED 32,409,030 SHORTFALL BEING ADJUSTMENT 43,804,478 THE PLI/OPERATING PROFIT AND OPERATING COST (OP/OC) OF THE COMPARABLES SELECTED BY THE ASSESSEE WORKED OUT TO 11.78% WHEREAS THE TP HAS CONSIDERED 9 COMPARABLES AND THE PLI OF COMPARABLE WORKED OUT TO 21.64%. THE TPO HAVING CONSIDERED FACTS AND PERCENTAGES HAS WORKED OUT ALP WITH WORKING CAPITAL ADJUSTMENT OF RS.4,38,04,478/- AND THE AO HAS PASSED DRAFT ASSESSMENT ORDER WITH TRANSFER PRICING ADJUSTMENT OF RS.4,38,04,478/- AND WITH OTHER CORPORATE ADDITIONS, ASSESSED THE TOTAL INCOME OF RS.24,93,70,996/- VIDE ORDER DATED 21/12/2016 U/S 143(3) R.W.S. 144C OF THE ACT. 8. AGGRIEVED BY THE DRAFT ASSESSMENT ORDER, THE ASSESSEE FILED OBJECTIONS WITH THE DRP. THE DRP CONSIDERED THE OBJECTIONS AND THE SUBMISSIONS MADE BY THE ASSESSEE AND DISCUSSED THAT OUT OF 9 COMPARABLES SELECTED BY THE TPO, THE IT(TP)A NO.42/BANG/2018 PAGE 7 OF 20 DRP HAS REJECTED 3 COMPARABLES VIZ., (I) ACROPETAL TECHNOLOGIES LTD., (II) JINDAL INTELLICOM LTD., AND (III) TECH MAHINDRA LTD., AND CONFIRMED THE ADDITION MADE BY THE AO IN RESPECT OF REVERSAL OF PROVISION OF LEAVE ENCASHMENT AND THE FINAL ASSESSMENT ORDER DATED 27/10/2017 WAS PASSED ON 27/10/2017 U/S 143(3) R.W.S. 144C(13) OF THE ACT WITH TOTAL INCOME OF RS.28,52,59,448/-. 9. AGGRIEVED BY THE ORDER, THE ASSESSEE HAS FILED THE APPEAL BEFORE THE TRIBUNAL. AT THE TIME OF HEARING, LEARNED AR ARGUED GROUNDS OF APPEAL AND REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. THE LEARNED AR SUBMITTED A CHART AND PRAYED THAT THE 3 COMPARABLES SELECTED BY THE TPO VIZ., M/S.HARTRON COMMMUNICATIONS LTD. (SEG.), M/S.CAPEGEMINI BUSINESS SERVICES (INDIA) PVT. LTD., AND M/S.INFOSYS BPO LTD., BE EXCLUDED. THE LEARNED AR MADE SUBMISSIONS ON COMPARABLE M/S.HARTRON COMMUNICATIONS LTD. AND EXPLAINED THAT THE TURNOVER OF THIS COMPANY IS RS.18.43 CRORES AND HAS 0% RELATED PARTY TRANSACTIONS AND IS FUNCTIONALLY DIFFERENT. LEARNED AR REFERRED TO PAGE 1350 OF THE PAPER BOOK AND SUBMITTED THAT THIS COMPANY IS ENGAGED IN SOFTWARE DEVELOPMENT SERVICES AND HAS INTELLECTUAL PROPERTY SERVICES, WEB HOSTING, TECH SOLUTIONS APART FROM BACK OFFICE SERVICES. THE COMPANY HAS REVENUE FROM SOFTWARE DEVELOPMENT SERVICES AND THERE IS NO BIFURCATION IT(TP)A NO.42/BANG/2018 PAGE 8 OF 20 OF REVENUE FROM SOFTWARE DEVELOPMENT SERVICES AND BPO AND THE COMPANY IS FUNCTIONALLY DIFFERENT. THE LEARNED AR ALSO REFERRED TO PAGE 135 AND 136 IN RESPECT OF PROFITS OF THE COMPARABLES WHICH IS HIGHLY FLUCTUATING. THE CONTENTION OF THE LEARNED AR THAT INCOME FROM BPO SERVICES HAS INCREASED BY 483.71% FROM LAST YEAR AND WHEREAS THE BPO SERVICES HAS INCURRED LOSSES FOR THE FINANCIAL YEAR 2010-11, 2011-12, 2013- 14 AND 2014-15 EXCEPT FINANCIAL YEAR 2012-13. THE LEARNED AR EMPHASIZED THAT THE COMPARABLE IS FUNCTIONALLY DIFFERENT AND HAS EXCEPTIONAL YEAR OF OPERATIONS. THE LEARNED AR RELIED ON JUDICIAL DECISION AND PRAYED FOR EXCLUDING COMPARABLE M/S. HARTRON COMMMUNICATIONS LTD., CONTRA, THE LEARNED DR SUPPORTED THE ORDER OF THE AO/TPO AND FILED WRITTEN SUBMISSIONS. 10. WE HEARD RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. WE FOUND THE LEARNED AR HAS REFERRED TO FINANCIAL PROFILE OF THE COMPARABLE AND AT PAGES NO.133 & 134 OF PAPER BOOK THE ASSESSEE-COMPANY IS IN THE SOFTWARE DEVELOPMENT SERVICES FOR THE LAST 8 YEARS AND ALSO INVOLVED IN INTELLECTUAL PROPERTY SERVICES. FURTHER AT PAGE 135 AND 136 OF THE PAPER BOOK CONTAINING THE ANNUAL REPORT OF THE ASSESSEE WAS FILED AND IN PARTICULAR INCOME FROM OPERATIONS ARE NEGATIVE AND HENCE, THE PROFIT FIGURES FOR EARLIER YEARS CANNOT BE RELIED UPON. IT(TP)A NO.42/BANG/2018 PAGE 9 OF 20 WE FOUND STRENGTH IN THE SUBMISSION OF THE LEARNED AR THAT FINANCIAL RESULTS ARE FLUCTUATING AND WILL NOT GIVE CORRECT PICTURE. WE FOUND IN THE CASE OF PRINCIPAL CIT VS. ALLSCRIPTS (INDIA) (P.) LTD. (2016) ( 72 TAXMANN.COM 305)(GUJARAT), THE FOLLOWING OBSERVATIONS ARE MADE AT PARAS.6 AND 7 : 6. WITH RESPECT TO BODHTREE CONSULTING LTD., WE NOTICE THAT THE TRIBUNAL IN CASE OF ANOTHER ASSESSEE HAD NOTED THE COMPANY'S FINANCIAL RESULTS FOR FINANCIAL YEAR 2005-06 TO FINANCIAL YEAR 2012-13 AS UNDER : PARTICULARS FY05 - 06 FY 06 - 07 FY 07 - 08 FY 08 - 09 FY 09 - 10 FY 10 - 11 FY 11 - 12 FY 12 - 13 OP/TC 13.87% 80.15% 19.89% 62.27% 33/42% - 4.46% 3.29% - 11.53% 7. TERM 'OP' STANDS FOR OPERATION PROFIT AND 'TC' STANDS FOR TOTAL COST. IT CAN THUS BE SEEN THAT THIS RATIO HAS FLUCTUATED WIDELY FROM -11.53% TO 80.15% IN A SPAN OF ABOUT 7 YEARS. FROM YEAR TO YEAR ALSO, THIS RATIO HAS FLUCTUATED BETWEEN 13.87% TO 80.15%, BACK TO 19.89% UP AGAIN TO 62.27% AND SO ON. THEREFORE, ON ACCOUNT OF SUCH WIDELY FLUCTUATING AND ERRATIC RESULTS OF THE COMPANY, THE TRIBUNAL FOUND THAT IT WOULD BE UNSAFE TO ASSESS ARM'S LENGTH PRICE BASED ON TNMM TAKING INTO ACCOUNT THE RESULTS OF THIS COMPANY. WE DO NOT FIND THE DECISION OF THE TRIBUNAL GIVES RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THE REVENUE'S OBJECTION IN THIS REGARD THEREFORE, MUST BE TURNED DOWN. FURTHER THE LEARNED AR EMPHASIZED THAT THIS COMPARABLE COMPANY IS ALSO ENGAGED IN REAL ESTATE ACTIVITY. THE LEARNED AR REFERRED TO PAGE 1344 AND 1350 OF THE PAPER BOOK 2 AND EMPHASIZED THE ENTRY INTO REAL ESTATE BUSINESS. THE LEARNED AR MADE SUBMISSIONS ON THE TRADING OF SHARES OF THIS COMPANY AND RELIED ON THE OBSERVATIONS OF THE AUDITORS. WE FOUND THAT THE CHENNAI BENCH OF TRIBUNAL IN THE CASE OF M/S.CAMERON MANUFACTURING INDIA PVT. LTD. VS. DCIT IN ITA IT(TP)A NO.42/BANG/2018 PAGE 10 OF 20 NO.336/CHNY/2018 DATED 16/10/2018 HAS OBSERVED AT PARA 7 WHICH READ AS UNDER: 7. GROUND NO.2.3: M/S. HARTRON COMMUNICATIONS AS THE COMPARABLE COMPANY:- THE LD.AR SUBMITTED BEFORE US THAT M/S. HARTRON COMMUNICATIONS HAD DIVERSIFIED OPERATIONS AMONGST WHICH MANY RELATES TO ACTIVITIES THAT ARE NOT SIMILAR TO THE ACTIVITY OF THE ASSESSEE COMPANY. FURTHER IT WAS SUBMITTED THAT THE COMPANY M/S. HARTRON COMMUNICATIONS PROFIT FROM BPO BUSINESS BOTH EXPORT AND DOMESTIC FOR THE CURRENT YEAR IS 18.43 CRORES WHILE AS FOR THE PREVIOUS YEAR THE PROFIT WAS 3.81 CRORES WHICH SHOWS AN INCREASE OF PROFIT TO THE TUNE OF 483.72%. THEREFORE IN THE RELEVANT ASSESSMENT YEAR THERE WAS EXTRAORDINARY OPERATIONS AND HENCE 8 ITA NO.336/CHNY/2018 CANNOT BE TAKEN AS COMPARABLE COMPANY. BEFORE US THE FACTS PRESENTED BY THE LD.AR COULD NOT BE DISPUTED BY THE LD.DR. AFTER CONSIDERING THE ISSUE, WE ARE OF THE VIEW THAT WHEN THE COMPANY IS FUNCTIONALLY DISSIMILAR AND WHEN IN A PARTICULAR YEAR THERE IS AN EXTRAORDINARY PROFIT, THEN THE COMPANY CANNOT BE TAKEN AS A COMPARABLE COMPANY. IN THE CASE OF M/S. HARTRON COMMUNICATION, IT IS APPARENT THAT THE COMPANY HAS ACHIEVED EXTRAORDINARY PROFITS DURING THE RELEVANT ASSESSMENT YEAR AND FURTHER IT HAS DIVERSIFIED ACTIVITIES AND THEREFORE FUNCTIONALLY DISSIMILAR TO THAT OF THE ASSESSEE COMPANY. HENCE AS PLEADED BY THE LD.AR, WE ARE OF THE CONSIDERED VIEW THAT M/S. HARTRON COMMUNICATION CANNOT BE ACCEPTED AS A COMPARABLE COMPANY. WE, CONSIDERING THE SUBMISSIONS OF THE LEARNED AR AND THE DECISION OF CO-ORDINATE BENCH OF TRIBUNAL IN THE CASE OF M/S.CAMERON MANUFACTURING INDIA PVT .LTD. (SUPRA) ARE OF THE OPINION THE COMPANY HAS EXTRAORDINARY PROFITS/LOSSES IN SUBSEQUENT YEARS. WE ARE OF THE SUBSTANTIVE OPINION THAT THIS COMPANY CANNOT BE CONSIDERED AS COMPARABLE TO THE ASSESSEES IT(TP)A NO.42/BANG/2018 PAGE 11 OF 20 FUNCTIONAL PROFILE AND ACCORDINGLY, DIRECT THE AO/TPO TO EXCLUDE THIS THIS COMPARABLE FOR DETERMINING ALP. M/S.CAPEGEMINI BUSINESS SERVICES (INDIA) PVT. LTD.,: 11. THE LEARNED AR SUBMITTED THAT THIS COMPARABLE COMPANY HAS REVENUE FROM BUSINESS PROCESS MANAGEMENT SERVICES AND ASSURANCES AND COMPLIANCE SERVICES WHICH INCLUDE OPERATIONAL CONTROL, ASSESSMENTS, AND ALSO TURNOVER IS AROUND RS.518.19 CRORES AS AGAINST THE ASSESSEES TURNOVER OF RS.108 CRORES AND RPT TRANSACTIONS ARE VERY MUCH HIGHER AND ALSO WIDENED SCOPE OF SERVICES IN SUPPLY CHAIN, PROCUREMENT AND TECHNICAL PUBLICATIONS SERVICES. IS ALSO ENGAGED IN PROCUREMENT AND TECHNICAL PUBLICATION SERVICES AS UNDER: CA PGEMINI BUSINESS SERVICES (INDIA) PVT LTD FOR FY 2012 - 13 PARTICULARS AMOUNT AMOUNT TRADE MARK, METHODOLOGY AND INFORMATION SUPPORT 1,32,27,082 OTHER EXPENSES (BANK GUARANTEE CHARGES) 4,58,647 REVENUES CAPGEMINI AMERICA INC 1,38,34,00,945 CAPGEMINI OUTSOURCING SERVICES SAS 1,11,29,20,107 CAPGEMINI UK PLC 56,38,85,986 CAPGEMINI CANADA INC 51,76,50,927 OTHERS 24,73,18,736 3,82,51,76,701 EXPENDITURE NETWORK RELATED COST (CAPGEMINI SERVICES SAS, FRANCE) 6,44,33,165 IT(TP)A NO.42/BANG/2018 PAGE 12 OF 20 NETWORK RELATED COST (CAPGEMINI OUTSOURCING SERVICES SAS) 8,35,22,704 PROFESSIONAL AND CONSULTANCY (CAPGEMINI BUSINESS SERVICES (CHINA) LTD) 1,04,21,158 PROFESSIONAL AND CONSULTANCY (CAPGEMINI SINGAPORE PTE. LTD.) 73,99,408 EDP EXPENSES (CAPGEMINI INDIA PVT. LTD) 6,07,22,526 SERVICE FEES (CAPGEMINI OUTSOURCING SERVICES SAS) 14,87,17,789 SERVICE FEES (OTHERS) 1,42,30,206 TRAINING CHARGES (CAPGEMINI UNIVERSITE) 1,70,02,732 REIMBURSEMENT OF EXPENDITURE (CAPGEMINI SERVICES SAS) 27,17,661 REIMBURSEMENT OF EXPENDITURE (OTHERS) 15,89,465 41,07,56,814 TOTAL RPT 4,24,96,19,244 TOTAL REVENUE FROM OPERATIONS 5,16,22,18,012 RPT % 82.32% WHEREAS THE RPT IS 82% WHICH DOES NOT SATISFY THE ASSESSEES PROFILE AND ABOVE AND IT IS FUNCTIONAL DIFFERENT AND ACCORDINGLY, WE DIRECT TPO FOR EXCLUSION OF M/S.CAPEGEMINI BUSINESS SERVICES FROM THE LIST OF COMPARABLES FOR DETERMINING THE ALP. 12. SIMILARLY, THE LEARNED AR SUBMITTED FOR EXCLUSION OF M/S.INFOSYS BPO STATING THAT THIS COMPANY CANNOT BE COMPARABLE CONSIDERING THE BRAND VALUE, FUNCTIONAL DISSIMILARITY AND THE COMPANYS TURNOVER IS RS.1831.36 CRORES WHICH IS 10 TIMES MORE THAN TURNOVER FILTER AND WORKS AS UNDER: 1. THE COMPANY EARNS REVENUE FROM PROVISION OF HIGH END ITES IN THE NATURE OF BOTH KPO ET BPO, WHEREAS THE APPELLANT PROVIDES LOW END ITES IN THE NATURE OF BPO. THEREFORE, THE COMPANY IS FUNCTIONALLY DIFFERENT. IT(TP)A NO.42/BANG/2018 PAGE 13 OF 20 2. THE COMPANY IS AN ESTABLISHED PLAYER A MARKET LEADER AND ALSO OPERATES AS A FULL FLEDGED RISK BEARING ENTERPRENEUR. 3. IT HAS SIGNIFICANT SELLING, MARKETING & BRAND BUILDING EXPENSES. 4. IT COMMANDS A VERY HIGH BRAND VALUE AS IT ENJOYS PREMIUM PRICING. 5. IT OWNS SIGNIFICANT INTANGIBLES IN THE FORM OF GOODWILL. 6. EXTRAORDINARY EVENT OCCURRED DURING THE YEAR UNDER CONSIDERATION (I.E, ACQUISITION OF MARSH BPO). 7. IT FAILS EXPORT EARNING FILTER OF 75% (I.E, 74.06%) 8. FAILS UPPER TURNOVER FILTER OF RS.200 CRORES. 9. INCORRECT MARGIN COMPUTATION. FURTHER M/S. INFOSYS BPO LTD., FAILS THE REVENUE FILTER OF 75% AND FUNCTIONALLY DIFFERENT AND HAS LARGE COMPANY INTANGIBLES BRANDS AND ACQUISITION. THE LEARNED AR REFERRED TO ANNUAL REPORT AND THE EXPORT TURNOVER FILTER AND EMPHASIZED ON FUNCTIONALITY AND EXTRAORDINARY FILTERS AND RELIED ON ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2009-10 ON EXCLUSION OF THE THE COMPANY IN IT(TP)A NO.60/BANG/2014 DATED 15/02/2019 WHICH READS AS UNDER: 8. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. THE LEARNED AR HAS ARGUED GROUND NO.8 IN RESPECT OF EXCLUSION OF COMPARABLES AND OTHER GROUNDS AS ENVISAGED BY LEARNED AR SHALL BECOME ACADEMIC. THEREFORE, WE CONSIDER IT APPROPRIATE TO DEAL WITH GROUND NO.8 AND EXCLUSION OF COMPARABLES. WE FOUND, THE TPO HAS CONSIDERED INFOSYS BPO FOR THE TP STUDY WHEREAS THE ASSESSEE-COMPANY IS PROVIDING IT PRODUCTS AND SOLUTIONS CATERING TO ALL ASPECTS OF MORTGAGE LENDING AND ALSO ENGAGED IN SERVICING THE RESIDENTIAL MORTGAGE INDUSTRY AND ALSO PROVIDING FULL SPECTRUM OF MORTGAGE TECHNOLOGY SERVICES FOR ITS GROUP COMPANIES AND ADOPTED TNMM METHOD FOR INTERNATIONAL TRANSACTIONS. THE LEARNED AR CONTENTION THAT INFOSYS BPO LTD., IS PROVIDING HIGH END INTEGRATED SERVICES AND ALSO DIVERSIFIED SERVICES LIKE BUSINESS PLATFORMS, CUSTOMER SERVICE OUTSOURCING, FINANCE AND ACCOUNTING, HUMAN RESOURCING OUTSOURCING AND WHEREAS IT(TP)A NO.42/BANG/2018 PAGE 14 OF 20 THE ASSESSEES FUNCTIONALITY IS ITES. THE TURNOVER OF INFOSYS BPO IS RS.1081.5 CROES AND FAILS IN THE UPPER TURNOVER FILTER OF RS.200 CRORES AND HAS HIGH BRAND VALUE AND ENJOYS PREMIUM WHICH THE ASSESSEE COMPANY DOES NOT OWN. THE LEARNED AR REFERRED TO RELEVANT EXTRACT OF ANNUAL REPORT OF THE SAID COMPANY PLACED AT PAGE NO.657 OF THE PAPER BOOK 2. FURTHER SIMILAR EXCLUSION CONSIDERED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF E4E BUSINESS SOLUTIONS INDIA PVT. LTD., VS. DEPUTY COMMISSIONER OF INCOME-TAX IN IT(TP)A NO.1845/BANG/2013 DATED 10/11/2015. WE FIND THERE IS STRENGTH IN THE ARGUMENTS OF THE LEARNED AR DULY SUPPORTED WITH EVIDENCE ON SEGMENTAL DETAILS AND FUNCTIONAL DISSIMILARITIES. THE INFOSYS BPO WAS DEALT BY THE CO- ORDINATE BENCH IN ABOVE CASE FOR THE ASSESSMENT YEAR 2009- 10 AT PAGE 21 AT PARA. 11.3(II) WHICH READS AS UNDER: II) WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. WE NOTE THAT IN PARA 16.2.15 OF THE ANNUAL REPORT OF THIS COMPANY, IT HAS BEEN REPORTED THAT THERE WAS AMALGAMATION W.E.F 1/4/2008. THE RELEVANT PART OF THE INFORMATION PROVIDED IN THE ANNUAL REPORT READS AS UNDER: AMALGAMATION OF PAN FINANCIAL SERVICES INDIA PRIVATE LIMITED THE BOARD OF DIRECTORS IN THEIR MEETING HELD ON OCTOBER 6. 2008. APPROVED, SUBJECT TO THE APPROVAL OF THE HONORABLE HIGH COURTS OF KARNATAKA AND CHENNAI, A SCHEME OF AMALGAMATION ('THE SCHEME') TO AMALGAMATE PAN FINANCIAL SERVICES INDIA PRIVATE LIMITED (-PAN FINANCIAL'), A WHOLLY OWNED SUBSIDIARY OF THE COMPANY ENGAGED IN PROVIDING BUSINESS PROCESS MANAGEMENT OF SERVICES, WITH THE COMPANY WITH EFFECT FROM APRIL 1. 2008 ('EFFECTIVE DATE'). THE APPROVAL OF THE HIGH COURT WAS RECEIVED ON APRIL 6, 2009 AND FILED WITH THE RESPECTIVE REGISTRAR OF COMPANIES OF KARNATAKA AND TAMILNADU ON APRIL 6, 2009 AND MARCH 10, 2009 RESPECTIVELY. ACCORDINGLY ON THE SCHEME BECOMING EFFECTIVE, THE FINANCIAL STATEMENT OF PAN FINANCIAL HAS BEEN MERGED WITH THE COMPANY. IT IS CLEAR THAT THERE WAS EXTRAORDINARY EVENT OF AMALGAMATION DURING THE YEAR UNDER CONSIDERATION. THEREFORE, IN VIEW OF THE EXTRAORDINARY DEVELOPMENT OF AMALGAMATION OF ANOTHER COMPANY, THIS COMPANY CANNOT BE CONSIDERED AS A GOOD COMPARABLE FOR THE ASSESSMENT IT(TP)A NO.42/BANG/2018 PAGE 15 OF 20 YEAR UNDER CONSIDERATION. APART FROM THIS, WE FURTHER NOTE THAT AS PER THE SEGMENT REPORTING IN PARA.16.2.21 THIS COMPANY IS PROVIDING BUSINESS PROCESS MANAGEMENT SERVICES AS UNDER: SEGMENT REPORTING THE COMPANY'S OPERATIONS PRIMARILY RELATE TO PROVIDING BUSINESS PROCESS MANAGEMENT SERVICES TO ORGANIZATIONS THAT OUTSOURCE THEIR BUSINESS PROCESSES. ACCORDINGLY. REVENUES REPRESENTED ALONG INDUSTRY CLASSES COMPRISE THE PRIMARY BASIS OF SEGMENTAL INFORMATION SET OUT IN THESE FINANCIAL STATEMENTS. SECONDARY SEGMENTAL REPORTING IS PERFORMED ON THE BASIS OF THE GEOGRAPHICAL LOCATION OF CUSTOMERS. THE ACCOUNTING PRINCIPLES CONSISTENTLY USED IN THE PREPARATION OF THE FINANCIAL STATEMENTS ARE ALSO CONSISTENTLY APPLIED TO RECORD INCOME IN INDIVIDUAL SEGMENTS. THESE ARE SET OUT IN THE NOTE ON SIGNIFICANT ACCOUNTING POLICIES. THUS IT IS CLEAR THAT THE REVENUE EARNED BY THIS COMPANY IS FROM THE ACTIVITY INCLUSIVE OF OPERATION PRIMARILY RELATES TO PROVIDING BUSINESS PROCESS MANAGEMENT SERVICES TO OTHER ORGANIZATION ENGAGED IN OUTSOURCING BUSINESS PROCESS. THIS COMPANY IS NOT ENGAGED IN DIRECT ACTIVITY OF BPO BUT IT PROVIDES SERVICE TO BPOS AND THAT TOO MANAGEMENT SERVICE TO BPO. THEREFORE, IN OUR CONSIDERED VIEW, THIS COMPANY IS ENGAGED IN A DIFFERENT NATURE OF ACTIVITY TO THAT OF THE ASSESSEE PROVIDED TO ITS AE. ACCORDINGLY, WE DIRECT THE AO/TPO TO EXCLUDE THIS COMPANY FROM THE LIST OF COMPARABLES. WE FOUND THAT THERE IS SIMILARITY OF THE SEGMENTATION AND THE ASSESSEE COMPANY IS ENGAGED IN ITES. THEREFORE, WE, CONSIDERING THE TURNOVER, FUNCTIONALITY AND BRAND VALUE OF THE COMPANY, ARE OF THE VIEW THAT THE COMPANY CANNOT BE CHOSEN AS A COMPARABLE TO FUNCTIONAL PROFILE OF THE ASSESSEE COMPANY. ACCORDINGLY, WE ARE OF THE SUBSTANTIVE OPINION THAT INFOSYS BPO LTD., BE EXCLUDED AND DIRECT THE AO/TPO TO EXCLUDE THIS COMPANY FROM THE LIST OF COMPARABLES FOR CALCULATING ADJUSTMENT OF THE ALP. WE RELY ON FACTUAL ASPECT AND JUDICIAL DECISION AND DIRECT THE TPO TO EXCLUDE M/S.INFOSYS BPO FOR DETERMINATION OF ALP. IT(TP)A NO.42/BANG/2018 PAGE 16 OF 20 13. THE LEARNED AR ARGUED THE ADDITIONAL GROUND FOR INCLUSION OF M/S.JINDAL INTELLICOM LTD., THE LEARNED AR SUBMITTED THAT THIS COMPANY WAS EXCLUDED BY THE DRP WHEREAS THE TPO HAS CONSIDERED FOR ALP AND THE LEARNED AR REFERRED TO PAGES 1263, 1264 AND 1265 OF THE PAPER BOOK IN RESPECT OF THIS COMPANYS FUNCTIONAL INFORMATION. WHEREAS DRP AT PAGE 11 OF THE ORDER, MADE OBSERVATIONS THAT AS PER DIRECTORS REPORT AT PAGE 3 OF THE ANNUAL REPORT, IT WAS MENTIONED THAT THE COMPANY PROVIDES IT AND ITES SERVICES IN INTERNATIONAL TRANSACTION AND DOMESTIC MARKETS AND FOCUSING ON NICHE BUSINESSES LIKE CONSUMER SUPPORT AND SOFTWARE DEVELOPMENT AND THERE IS CLEAR INDICATION THAT THE COMPANY IS ENGAGED IN BOTH SOFTWARE DEVELOPMENT AND ITES SERVICES. AS THERE IS NO SEGMENTAL INFORMATION AVAILABLE IT IS DIFFICULT TO TREAT THIS COMPANY AS FUNCTIONALLY COMPARABLE AND THE LEARNED AR COULD NOT SUBSTANTIATE WITH COPY OF ANNUAL REPORT WHERE OBSERVATIONS ARE REFERRED. THEREFORE, WE ARE NOT IN A POSITION TO CONSIDER THESE ASPECTS FOR INCLUSION. SINCE TPO HAS ALREADY CONSIDERED THE PROFILE IN TP STUDY WE CONSIDER IT APPROPRIATE TO RESTORE THIS ISSUE TO THE FILE OF THE TPO TO CONSIDER THE OBSERVATIONS AND RELEVANT MATERIAL AND ACCORDINGLY, WE RESTORE TO THE FILE OF TPO. 14. THE LEARNED AR SUBMITTED THAT THE TPO HAS ERRED IN NOT CONSIDERING THE PROVISION FOR BADE DEBTS FOR COMPUTING MARGIN IT(TP)A NO.42/BANG/2018 PAGE 17 OF 20 AND THE TPO ALSO ERRED IN CONSIDERING ESOP COST AS OPERATING COST FOR THE PURPOSE OF COMPUTATION OF MARGINS. CONTRA, THE LEARNED DR SUPPORTED THE ORDER OF THE TPO/AO. 15. WE FOUND THESE ISSUES ARE TO BE GIVEN DUE CONSIDERATION IN CALCULATION BY THE TPO TO GET THE CORRECT PROFIT OPERATING MARGIN. ACCORDINGLY, WE RESTORE THESE ISSUES TO THE FILE OF THE TPO TO RE-CONSIDER FOR DETERMINING THE ALP. 16. FURTHER, LEARNED AR DEALT AND EXPLAINED THE ASPECT OF WORKING CAPITAL ADJUSTMENT, CONSIDERING THE RECEIVABLES IN RESPECT OF COMPARABLE COMPANIES AND RISK PROFILE. THIS ADJUSTMENT HAS TO BE RE-WORKED. ACCORDINGLY, WE REMIT THIS ISSUE ALSO TO THE FILE OF THE TPO FOR CONSIDERATION IN DETERMINATION OF ALP. 17. THE LEARNED AR ARGUED AND EXPLAINED THAT THE ASSESSEE- COMPANY HAS TREATED COMPUTER SOFTWARE AS INTANGIBLE ASSET AND CLAIMED DEPRECIATION AT 60% WHEREAS THE AO HAS RESTRICTED TO THE RATE OF 25%. THE LEARNED AR SUBMITTED THAT COMPUTER SOFTWARE IS ELIGIBLE FOR 60% DEPRECIATION. CONTRA, LEARNED DR SUPPORTED THE ORDER OF THE TPO. 18. WE HEARD RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. IN RESPECT OF CLAIM OF DEPRECIATION ON COMPUTER IT(TP)A NO.42/BANG/2018 PAGE 18 OF 20 SOFTWARE. WE FOUND THE CLAIM OF DEPRECIATION ON COMPUTER SOFTWARE IS COVERED BY THE DECISION OF THE SPECIAL BENCH OF TRIBUNAL IN THE CASE OF AMWAY INDIA ENTERPRISES VS. DY.CIT ( 111 ITD 112)(DELHI)SB) WHICH IS AS UNDER: SECTION 37(1) OF THE INCOME-TAX ACT, 1961 - BUSINESS EXPENDITURE - ALLOWABILITY OF - ASSESSMENT YEARS 1998-99, 2001-02 AND 2002-03 - WHETHER IN ORDER TO DECIDE NATURE OF EXPENDITURE AS TO WHETHER IT IS CAPITAL OR REVENUE, THREE TESTS, I.E., OWNERSHIP TEST, ENDURING BENEFIT TEST AND FUNCTIONAL TEST HAVE TO APPLIED - HELD, YES - WHETHER BY APPLYING SAID TESTS, EXPENDITURE IS TREATED AS CAPITAL EXPENDITURE EITHER WHEN IT RESULTS IN ACQUISITION OF CAPITAL ASSET BY ASSESSEE AS OWNER THEREOF OR WHEN IT RESULTS IN ACCRUAL OF ADVANTAGE OF ENDURING NATURE TO ASSESSEE IN CAPITAL FIELD - HELD, YES - WHETHER WHEN ASSESSEE ACQUIRES A COMPUTER SOFTWARE OR FOR THAT MATTER LICENCE TO USE SUCH SOFTWARE, HE ACQUIRES A TANGIBLE ASSET AND BECOMES OWNER THEREOF BUT, QUESTION AS TO WHETHER EXPENDITURE ON ACQUIRING COMPUTER SOFTWARE IS CAPITAL OR REVENUE CANNOT BE DECIDED ON BASIS OF OWNERSHIP TEST ALONE BUT HAS TO BE SEEN FROM POINT OF ITS UTILITY TO BUSINESSMAN AND HOW IMPORTANT AN ECONOMIC OR FUNCTIONAL ROLE IT PLAYS IN HIS BUSINESS - HELD, YES - WHETHER SINCE COMPUTER SOFTWARE BECOMES OBSOLETE WITH TECHNOLOGICAL INNOVATION AND ADVANCEMENT WITHIN A SHORT SPAN OF TIME, IT CAN BE SAID THAT WHERE LIFE OF COMPUTER SOFTWARE IS SHORTER (SAY LESS THAN 2 YEARS), IT MAY BE TREATED AS REVENUE EXPENDITURE; ANY SOFTWARE HAVING UTILITY TO ASSESSEE FOR A PERIOD BEYOND TWO YEARS CAN BE CONSIDERED AS ACCRUAL OF BENEFIT OF ENDURING NATURE, HOWEVER, THAT BY ITSELF WILL NOT MAKE EXPENDITURE INCURRED ON SOFTWARE AS CAPITAL IN NATURE AND FUNCTIONAL TEST ALSO NEEDS TO BE SATISFIED - HELD, YES - WHETHER FOR APPLICABILITY OF FUNCTIONAL TEST, ADVANTAGE WHICH AN ASSESSEE DERIVES FROM USE OF COMPUTER SOFTWARE HAS TO BE SEEN IN A COMMERCIAL SENSE; IF ADVANTAGE IS IN CAPITAL FIELD, THEN SAME WOULD BE CAPITAL EXPENDITURE AND, IF ADVANTAGE CONSISTS MERELY IN FACILITATING ASSESSEE'S TRADING OPERATIONS OR ENABLING MANAGEMENT AND CONDUCT OF ASSESSEE'S BUSINESS TO BE CARRIED ON MORE EFFICIENTLY OR MORE PROFITABLY, WHILE LEAVING FIXED CAPITAL UNTOUCHED, EXPENDITURE WOULD BE ON REVENUE ACCOUNT - HELD, YES - WHETHER THESE CRITERIA ARE REQUIRED TO BE APPLIED TO IT(TP)A NO.42/BANG/2018 PAGE 19 OF 20 DETERMINE EXACT NATURE OF EXPENDITURE INCURRED BY AN ASSESSEE FOR ACQUIRING DIFFERENT COMPUTER SOFTWARES - HELD, YES SECTION 32 OF THE INCOME-TAX ACT, 1961 - DEPRECIATION - ALLOWANCE/RATE OF - ASSESSMENT YEAR 1998-99, 2001-02 AND 2002-03 - WHETHER SINCE COMPUTER SOFTWARE CONTAINED IN A DISK IS TANGIBLE PROPERTY BY ITSELF, USE BY ASSESSEE OF SUCH SOFTWARE IN HIS BUSINESS IS ENOUGH TO ALLOW CLAIM FOR DEPRECIATION UNDER SECTION 32(1)(I) AT RATE OF 25 PER CENT - HELD, YES - WHETHER, HOWEVER, SINCE WITH EFFECT FROM 1-4- 2003, COMPUTER SOFTWARE HAS BEEN CLASSIFIED AS A TANGIBLE ASSET UNDER HEADING 'PLANT' IN APPENDIX-I TO INCOME-TAX RULES, 1962, ASSESSEE WOULD BE ENTITLED TO DEPRECIATION AT RATE OF 60 PER CENT FROM SAID DATE - HELD, YES - WHETHER SAID AMENDMENT IS PROSPECTIVE AND NOT CLARIFICATORY - HELD, YES WE SUPPORT OUR VIEW RELYING ON THE RATIO OF THE ABOVE DECISION OF THE TRIBUNAL AND ACCORDINGLY DIRECT THE AO TO ALLOW DEPRECIATION AT 60% INSTEAD OF 25% AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 19. IN RESPECT OF CLAIM ON LEAVE ENCASHMENT EXPENSES, THE ASSESSEE HAS MADE PROVISION AND CLAIMED DEDUCTION ON NET BASIS WHEREAS REVERSAL OF PROVISION WAS VOLUNTARILY DISALLOWED BY THE AO IN THE EARLIER YEARS. THE LEARNED AR REFERRED TO PAGE 924 OF THE PAPER BOOK WHERE LEAVE ENCASHMENT IS REFLECTED IN THE BALANCE SHEET FOR THE FINANCIAL YEARS 2011-12 AND 2012-13. THE CONTENTION OF THE LEARNED AR THAT THE CLAIM HAS TO BE ALLOWED TO THE ASSESSEE, WE FOUND THE FACTS EMERGING IN THE COURSE OF HEARING HAVE ARE NOT CONSIDERED BY THE LOWER AUTHORITIES. ACCORDINGLY, WE REMIT THIS ISSUE TO THE FILE OF THE IT(TP)A NO.42/BANG/2018 PAGE 20 OF 20 AO TO CONSIDER THE PROVISIONS AND MATERIAL FILED BY THE ASSESSEE SUPPORTING THE CLAIM AND GRANT RELIEF AFTER VERIFICATION AND EXAMINATION. ACCORDINGLY, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 20. THE LEARNED AR ARGUED ON THE CHARGING OF INTEREST U/S 234B AND 234C OF THE ACT, WHICH IS CONSEQUENTIAL AND WE DIRECT ACCORDINGLY. 21. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH APRIL, 2019. SD/- SD/- (B.R. BASKARAN) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : BENGALURU D A T E : 29/04/2019 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL BANGALORE