Outsourcepartners International Private Limited, Bangalore V. DCIT, Bangalore

ITA 443/BANG/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7414 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 22-06-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 16-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R N PARBAT CIT III
• Assessee Lawyers: K R VASUDEVAN
• Keywords: Capital asset; Depreciation; Transfer pricing; Opportunity of being heard; International transaction; Earning of tax free income; Cost of acquisition; Bad and doubtful debts
• Section: 92D; 10AA; 234B; 14A; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER IT(TP)A NOS. & ASSESSMENT YEARS APPELLANT RESPONDENT NO.443/BANG/2016 2011-12 M/S. OUTSOURCE PARTNERS INTERNATIONAL PVT. LTD., TOWER 2D, PHASE I, VIKAS TELECOM LTD., VRINDAVAN TECH VILLAGE, OUTER RING ROAD, DEVARABEESANAHALLI, BANGALORE- 560087. PAN: AAACO5734C DY. COMMISSIONER OF INCOME-TAX, CIRCLE-5(1)(2), BANGALORE. NO. 526/BANG/2016 2011-12 DY. COMMISSIONER OF INCOME-TAX, CIRCLE-5(1)(2), BANGALORE. M/S. OUTSOURCE PARTNERS INTERNATIONAL PVT. LTD., PAN: AAACO5734C NO.535/BANG/2017 2009-10 M/S. OUTSOURCE PARTNERS INTERNATIONAL PVT. LTD., PAN: AAACO5734C ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-5(1)(2), BANGALORE. ASSESSEE BY : SHRI. K. R. VASUDEVAN, ADVOCATE REVENUE BY : SHRI. R. N. PARBAT, CIT-III DATE OF HEARING : 23.08.2017 DATE OF PRONOUNCEMENT : 31.10.2017 O R D E R PER SUNIL KUMAR YADAV, JUDICIAL MEMBER THESE CROSS APPEALS ARE PREFERRED BY THE ASSESSEE A S WELL AS THE REVENUE AGAINST THE RESPECTIVE ORDERS OF THE AO PASSED CONS EQUENT TO THE DIRECTIONS OF DRP. SINCE ALL THESE APPEALS WERE HEARD TOGETHER, THESE ARE BEING DISPOSED OFF THROUGH THIS CONSOLIDATED ORDER. WE HOWEVER WE PREFER TO A DJUDICATE THEM ONE AFTER THE OTHER. IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 2 OF 35 2. IT(TP)A NO. 443/BANG/2016 THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST TH E ASSESSMENT ORDER PASSED CONSEQUENT TO THE DIRECTIONS OF DRP, INTER ALIA, ON FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE ORDER PASSED BY THE LD. ASSESSING OFFICER ('AO' ) IS BAD IN LAW. 2. THE LD. DISPUTE RESOLUTION PANEL ('DRP') ERRED IN C ONFIRMING THE LD. AO/ LD. TRANSFER PRICING OFFICER'S ('TPO') APPR OACH OF ENHANCING THE INCOME OF THE APPELLANT BY RS.15,39,2 4,517/- HOLDING THAT THE INTERNATIONAL TRANSACTIONS PERTAIN ING TO PROVISION OF INFORMATION TECHNOLOGY ENABLED SERVICES ('ITES') DO NOT SATISFY THE ARM'S LENGTH PRINCIPLE ENVISAGED UNDER THE ACT. IN DOING SO, THE LD. AO/ LD. TPO HAVE GROSSLY ERRED IN; 2.1. REJECTING THE TRANSFER PRICING ('TP') DOCUMENTATION MAINTAINED BY THE APPELLANT UNDER SECTION 92D OF THE ACT AND RULE 10D OF THE INCOME-TAX RULES, 1962 ('RULES') AND IN DOING SO NOT APPRECIATING THAT NONE OF THE CONDITIONS SET OUT IN SECTION 92C(3) OF THE ACT ARE SATISFIED IN THE PRESENT CASE; 2.2. IGNORING THE FACT THAT THE APPELLANT IS ENTITLED TO TAX HOLIDAY UNDER SECTION 10A AND 10AA OF THE ACT ON ITS PROFITS AND THEREFORE WOULD NOT HAVE ANY UNTOWARD MOTIVE OF DERIVING A TAX ADVANTAGE BY MANIPULATING TRANSFER PRICES OF ITS INTERNATIONAL TRANSACTIONS; 2.3. DISREGARDING THE ARM'S LENGTH PRICE ('ALP') AS DETERMINED BY THE APPELLANT IN THE TP DOCUMENTATION MAINTAINED BY IT IN TERMS OF SECTION 92D OF THE ACT READ WITH RULE 10D OF THE RULES AS WELL AS THE FRESH SEARCH AND IN PARTICULAR MODIFYING/ REJECTING THE FILTERS APPLIED BY THE APPELLANT; 2.4. DISREGARDING MULTIPLE YEAR/ PRIOR YEARS' DATA AS USED BY THE APPELLANT IN THE TP DOCUMENTATION AND HOLDING THAT CURRENT YEAR [(I.E. FINANCIAL YEAR ('FY') 2010-1 1] DATA FOR COMPARABLE COMPANIES SHOULD BE USED DESPITE THE FACT THAT THE SAME WAS NOT NECESSARILY AVAILABLE TO THE APPELLANT AT THE TIME OF PREPARING ITS TP DOCUMENTATION: 2.5. REJECTING THE ECONOMIC AND COMPARABILITY ANALY SIS IN THE TP DOCUMENTATION/ FRESH SEARCH AND IN CONDUCTING A REVISED COMPARABILITY ANALYSIS BASED ON APPLICATION OF THE FOLLOWING ADDITIONAL/ REVISED IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 3 OF 35 FILTERS IN DETERMINING THE ALP: 2.5.1. EXCLUSION OF COMPANIES WHOSE DATA FO R FY 2010-11 WAS NOT AVAILABLE; 2.5.2 EXCLUSION OF COMPANIES HAV ING DIFFERENT FINANCIAL YEAR ENDING (I.E., NOT MARCH 31, 2011) (I.E., CALIBER POINT BUS INESS SOLUTIONS LTD AND R SYSTEMS INTERNATIONAL LIMITED); 2.6. NOT APPROPRIATELY CONSIDERING THE FUNC TIONS, ASSETS AND RISK PROFILE OF THE COMPANIES USED FORCOMPARISON WITH TH E APPELLANT, THEREBY INCLUDING IN THE FINAL COMPARABLE SET CERTA IN COMPANIES WITH COMPLETELY DIFFERENT FUNCTIONAL PROFILE (I.E., ACCENTIA TECHNOLOGIES LTD, ACROPETAL TECHNOLOGIES LIMITED. I CRA ONLINE LIMITED, JEEVAN SCIENTIFIC TECHNOLOGY LTD);, 2.7. EXCLUDING CERTAIN COMPANIES ON ARBITR ARY/FRIVOLOUS GROUNDS EVEN THOUGH THEY ARE COMPARABLE TO THE APPELLANT IN TERM S OF FUNCTIONS PERFORMED, ASSETS EMPLOYED AND RISKS ASSU MED; 2.8. EXCLUDING PROVISION FOR DOUBTFUL DEBTS FROM THE COST BASE IN THE COMPUTATION OF MARKUP OF CERTAIN COMPARABLE COMPANI ES; 2.9. REJECTING APPELLANT'S CLAIM OF ADJUSTMEN T ON ACCOUNT OF ACCELERATED DEPRECIATION (I.E. HIGHER RATE OF DEPRE CIATION CHARGED VIS--VIS THOSE OF COMPARABLES) WHILE COMPU TING MARGIN OF COMPARABLES; 2.10. COMMITTING FACTUAL ERRORS IN THE COMPU TATION OF WORKING CAPITAL ADJUSTMENT; 2.11. INCLUDING COMPANIES HAVING HIGH MARGINS/ VOLATILE O PERATING MARGINS IN THE FINAL COMPARABLES' SET, THAT SIGNIFY HIGH ELEMENT OF ENTREPRENEURIAL RISK, THEREBY NOT APPRECIATING T HE RISK PROFILE OF THE SERVICES RENDERED BY THE APPELLANT AND RESTR ICTING RISK ADJUSTMENT TO 1% WITHOUT GIVING APPROPRIATE/ DUE RE GARD TO ECONOMIC CONSIDERATIONS APPLICABLE IN THE INSTANT C ASE; 3. THE LD. AO/ LD. TPO ERRED IN NOT SHARING THE BASIS OF ARRIVING AT THE REVISED TP ADJUSTMENT WHILE PASSING THE FINAL TP ORDER 4. THE REFERENCE MADE BY THE LD. AO SUFFERS FROM JURIS DICTIONAL ERROR AS THE LD. AO HAS NOT RECORDED ANY REASONS IN THE DRAFT ASSESS MENT ORDER BASED ON WHICH HE REACHED THE CONCLUSION THAT IT WAS 'NECESS ARY OR EXPEDIENT' TO REFER THE MATTER TO THE LD. TPO FOR COMPUTATION OF THE ALP, AS IS REQUIRED UNDER SECTION 92CA(1) OF THE ACT. 5. THE LD. AO/ LD. TPO HAS GROSSLY ERRED ON FACTS AND IN LAW BY DISREGARDING JUDICIAL PRONOUNCEMENTS IN INDIA IN UN DERTAKING THE TP ADJUSTMENT. 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO HAS ERRED IN INITIATING PENALTY PROCEEDINGS UNDER S ECTION 271(1)(C) OF THE ACT MECHANICALLY WITHOUT RECORDING ANY ADEQUATE SATISFACTION FOR SUCH INITIATION. 7. THE LD. AO HAS ERRED IN LAW AND ON THE FACTS OF THE CASE BY CHARGING AND COMPUTING INTEREST UNDER SECTION 234B OF THE INCOME TAX ACT, 1961. IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 4 OF 35 THE ABOVE GROUNDS OF APPEAL ARE MUTUALLY EXCLUSIVE AND WITHOUT PREJUDICE TO EACH OTHER. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR VARY ANY OF THE ABOVE GROUNDS EITHER BEFORE OR AT THE TIME OF HEARING AS WE MAY B E ADVISED. THE ARGUMENTS TAKEN HEREINABOVE ARE WITHOUT PREJUDICE TO EACH OTHER. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO HAS NOTED THAT ASSESSEE HAD INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTERPRISES OF MORE THAN RS.15 CRORES. ACCORDINGLY, IT WAS REFERRED TO TPO FOR DE TERMINATION OF ALP. THE TPO VIDE ORDER DATED 27.01.2015 DETERMINED THE ADJUSTME NT TO ALP TO THE TUNE OF RS.12,09,08,993/- AND THE SAME WAS ADOPTED IN THE D RAFT ASSESSMENT ORDER DATED 26.03.2015. AGGRIEVED WITH THE SAID ADJUSTMENT, TH E ASSESSEE APPROACHED THE DRP AND DRP VIDE ITS DIRECTION HAD DIRECTED THE TPO TO VERIFY CERTAIN OBJECTIONS AND RECOMPUTE THE ALP. THE TPO VIDE ITS REPORT DATED 2 5.01.2016 HAD DETERMINED THE ALP ADJUSTMENT AT RS.15,39,24,517/- AND THE SAME WA S ADOPTED BY THE AO AND ASSESSED THE TOTAL INCOME AT RS.20,07,42,914/-. AG AINST THE TP ADJUSTMENT, ASSESSEE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. 4. ASSESSEE HAS ALSO FILED THE BRIEF SYNOPSIS ALONG WITH THE CHART FOR INCLUSION/EXCLUSION OF CERTAIN COMPARABLES. ACCORD ING TO THE BRIEF SYNOPSIS AND THE ORDERS OF THE AUTHORITIES BELOW, THE ASSESSEE IS EN GAGED IN THE BUSINESS OF PROVIDING BUSINESS PROCESS OUTSOURCING TO ITS CLIENTS AND ITS SERVICE PROVIDER IS WILLING TO PROVIDE THE BUSINESS PROCESS OUTSOURCING SERVICES F OR APPROPRIATE CONSIDERATION. THE SERVICES THAT ARE PROVIDED BY THE SERVICE PROVI DER INCLUDES REMOTE DATA ENTRY SERVICES LIKE GENERAL ACCOUNTING, ACCOUNTS PAYABLE AND RECEIVABLE, BILLING, BANKING RECONCILIATION, FINANCIAL REPORTING, DOCUMENTARY CO MPLIANCE AND REMOTE TAX PROCESSING SERVICES LIKE INDEXING OF TAX WORKING DO CUMENTS, PREPARATION OF TAX RETURNS, QUALITY CHECKS ON THE RETURNS PREPARED ETC . THE ASSESSEE IS A PART OF BPO GROUP, BUSINESS PROCESS OUTSOURCING INC., CAYMAN IS LANDS, WHICH IS A LEADING IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 5 OF 35 OFFSHORE BUSINESS PROCESS OUTSOURCING SERVICE PROVI DER AND HEADQUARTERED IN USA. IN ORDER TO DETERMINE THE ALP OF THE INTERNATIONAL TRANSACTIONS, THE ASSESSEE HAS PREPARED THE TRANSFER PRICING STUDY AND HAS TAKEN 8 COMPARABLES WHEREAS THE TPO HAS FINALLY TAKEN 10 COMPARABLES FOR DETERMINING TH E ALP. THE LIST OF 10 COMPARABLES ARE AS UNDER: 1. ACCENTIA TECHNOLOGIES LTD., 2. ACROPETAL TECHNOLOGIES LTD., 3. COSMIC GLOBAL LTD., 4. E4E HEALTHCARE 5. ICRA ONLINE LTD., 6. JEEVAN SCIENTIFIC TECHNOLOGY LTD., 7. INFOSYS BPO LTD., 8. JINDAL INTELLICOM 9. MINDTREE LTD., 10. IGATE GLOBAL SOLUTIONS LTD., 5. ON THE BASIS OF TPOS REPORT, THE DRAFT ORDER WA S PREPARED BY THE AO AGAINST WHICH ASSESSEE HAS FILED THE OBJECTIONS BEFORE THE DRP. DRP HAS RE-EXAMINED THE CLAIM OF THE ASSESSEE AND HAS FINALLY TAKEN 7 COMPA RABLES AFTER REJECTING 3 COMPARABLES I.E., INFOSYS BPO LTD., MINDTREE LIMITE D AND IGATE GLOBAL SOLUTIONS LIMITED. 6. AGGRIEVED WITH THE FINDINGS OF THE DRP, ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND SOUGHT THE EXCLUSION OF ACC ENTIA TECHNOLOGIES LTD., ACROPETAL TECHNOLOGIES LTD., ICRA ONLINE LTD., AND JEEVAN SCIENTIFIC TECHNOLOGY LTD. DURING THE COURSE OF HEARING, THE LEARNED COU NSEL FOR THE ASSESSEE, THROUGH THE CHART DID NOT RAISE ANY OBJECTION WITH REGARD TO TH E INCLUSION OF ICRA ONLINE LTD. THEREFORE, WE FIND NO JUSTIFICATION TO EXCLUDE THIS COMPARABLE FROM THE LIST OF COMPARABLES. SO FAR AS EXCLUSION OF ACCENTIA TECHN OLOGIES LTD., ACROPETAL LTD., AND JEEVAN SCIENTIFIC TECHNOLOGY LTD., ARE CONCERNE D, THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THESE COMPARABLES ARE F UNCTIONALLY DIFFERENT AND NO IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 6 OF 35 SEGMENTAL INFORMATION IS AVAILABLE WITH REGARD TO A CCENTIA TECHNOLOGY LTD., AND JEEVAN SCIENTIFIC TECHNOLOGY LTD. THE LEARNED COUN SEL FOR THE ASSESSEE FURTHER CONTENDED THAT THE ISSUES OF EXCLUSION OF THESE COM PARABLES ARE COVERED BY THE JUDGMENT OF THE TRIBUNAL IN THE CASE OF SWISS RE SH ARES SERVICES (INDIA) PVT. LTD., VS. ACIT IN IT(TP) A NO.380/BANG/2016 REPORTED AT ( 2016) 76 TAXMANN.COM 22 (BANGALORE TRIB.) FOR THE ASSESSMENT YEAR 2011-12 I N WHICH THE ASSESSEE IS ALSO ENGAGED IN THE BUSINESS OF EXPORT OF CUSTOMIZED ELE CTRONIC DATA IN THE FIELD OF INSURANCE. THE LEARNED COUNSEL FOR THE ASSESSEE FU RTHER CONTENDED THAT EXCLUSION OF THESE 3 COMPARABLES WERE EXAMINED BY THE TRIBUNAL I N DETAIL IN ITS ORDER. THEREFORE, FOR THE SAME REASONS, THESE COMPARABLES SHOULD BE EXCLUDED FROM THE LIST OF COMPARABLES. THE LEARNED DR ON THE OTHER HAND H AS PLACED RELIANCE UPON THE ORDERS OF THE DRP. 7. HAVING CAREFULLY CONSIDERED THE ORDERS OF THE AU THORITIES BELOW AND JUDGMENTS REFERRED TO BY THE ASSESSEE, WE FIND THAT EXCLUSION OF THESE 3 COMPARABLES WERE EXAMINED BY THE TRIBUNAL IN THE CA SE OF SWISS RE SHARES SERVICES (INDIA) PVT. LTD., WHERE THE ASSESSEE WAS ALSO ENGAGED IN THE SIMILAR TYPE OF ACTIVITIES. THE TRIBUNAL HAS HELD THAT ALL THES E 3 COMPARABLES ARE FUNCTIONALLY DIFFERENT, THEREFORE THEY ARE TO BE EXCLUDED FROM T HE LIST OF COMPARABLES. FOR THE SAKE OF REFERENCE, WE EXTRACT THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL AS UNDER: ACCENTIA TECHNOLOGIES LIMITED 12. AS REGARDS THE SELECTION OF ACCENTIA TECHNOLOGI ES LIMITED AS COMPARABLE, THE LEARNED COUNSEL FOR THE ASSESSEE HAS RELIED ON THE DECISIONS OF THIS TRIBUNAL IN THE CASES OF CAPITAL IQ INFORMATION SYSTEMS (IND IA) PVT. LTD. V. ADDL./DY. COMMISSIONER OF INCOME-TAX, CIRCLE 1(2), HYDERABAD AND VICE VERSA (ITA NO.124 AND 170/HYD/2014 DATED 31.7.2014); EXCELLENC E DATA RESEARCH PVT. LTD., HYDERABAD V. ITO WARD 2(1), HYDERABAD (ITA NO .159/HYD/2014 DATED 31.7.2014); AND HYUNDAI MOTORS INDIA ENGINEERING P. LTD., HYDERABAD V. DCIT, CIRCLE 2(2), HYDERABAD (ITA NHO.255/HYD/2014 DATED 31.7.2014), WHEREIN M/S. ACCENTIA TECHNOLOGIES LIMITED(SEG) WAS EXCLUDED BY THE TRIBUNAL FROM THE LIST OF COMPARABLES ON THE GROUND THAT IT WAS A CASE OF MERGERS AND ACQUISITION, AND THE COMPANY WAS ALSO F OUND TO BE FUNCTIONALLY DIFFERENT. THE RELEVANT OBSERVATIONS OF THE TRIBUNA L AS RECORDED IN PARA 19.2 OF IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 7 OF 35 THE ORDER PASSED IN THE CASE OF EXCELLENCE DATA RES EARCH PVT. LTD., HYDERABAD (SUPRA), BEING RELEVANT IN THIS CASE, ARE REPRODUCE D BELOW- '19.2 WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND NOTICED THAT THIS COMPANY OPERATES IN A DIFFERENT BUSINESS STRATEGY OF ACQUIR ING COMPANIES FOR INORGANIC GROWTH AS ITS STRATEGY. IN EARLIER YEARS ON THE REA SON OF ACQUISITION OF VARIOUS COMPANIES, BEING AN EXTRAORDINARY EVENT WHICH HAD A N IMPACT ON THE PROFIT, THIS COMPANY WAS EXCLUDED. AS SUBMITTED BY THE LEAR NED COUNSEL, THIS YEAR ALSO, THE ACQUISITION OF SOME COMPANIES BY THAT COM PANY MAY HAVE IMPACT ON THE PROFIT. CONSIDERING THE PROFIT MARGINS OF THE C OMPANY AND INSUFFICIENT SEGMENTAL DATA, WE ARE OF IT(TP)A NO.146/BANG/2015 PAGE 42 OF 52 THE OPINION THAT THIS COMPANY CANNOT BE SELECTED AS A C OMPARABLE. MOREOVER, THIS IS ALSO NOT A COMPARABLE IN THE CASE OF M/S. MERCER CONSULTING (INDIA) (P.) LTD. (SUPRA), WHICH INDICATES THAT THE TPO THEREIN HAS E XCLUDED IT AT THE OUTSET. IN VIEW OF THIS, WE DIRECT THE ASSESSING OFFICER/TPO T O EXCLUDE THIS COMPARABLE, FROM THE LIST OF COMPARABLES SELECTED.' 13. AS POIN TED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE, THERE WAS ACQUISITION OF A COMPANY BY M/S. ACCENTIA TECHNOLOGIES LIMITED DURING THE RELEVANT YEAR, AND THE SAID COMPANY, THEREFORE, CANNOT BE CONSIDERED AS COMPARABLE DUE T O THIS EXTRAORDINARY EVENT WHICH OCCURRED IN THE RELEVANT YEAR AS RIGHTLY HELD BY THE TRIBUNAL INTER ALIA IN THE CASE OF EXCELLENCE DATA RESEARCH (P.) LTD. (SUP RA). ALTHOUGH THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS SOUGHT TO CONTEND T HAT THE ACQUISITION OF A COMPANY BY M/S. ACCENTIA TECHNOLOGIES LTD. TOOK PLA CE AT THE FAG END OF THE YEAR UNDER CONSIDERATION, THE LEARNED COUNSEL FOR T HE ASSESSEE HAS POINTED OUT THAT THE PROCESS OF ACQUISITION HAD STARTED ON 15.5 .2008 ITSELF, I.E. IN THE EARLIER PART OF THE YEAR UNDER CONSIDERATION. WE, THEREFORE , FOLLOW THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF EX CELLENCE DATA RESEARCH SERVICES PVT. LTD. (SUPRA) AND DIRECT THE AO/TPO TO EXCLUDE THE ACCENTIA TECHNOLOGIES LIMITED FROM THE LIST OF COMPARABLES. 21. ARGUING FOR EXCLUSION OF ACROPETAL TECHNOLOGIES LT D, (SEG), LD. AR SUBMITTED THAT ACROPETAL TECHNOLOGIES LTD, WAS RENDERING SERV ICE IN THE FIELD OF ENGINEERING DESIGN FOR HEALTH-CARE ENTERPRISE SOLUTIONS AND IT INFRASTRUCTURE SOLUTIONS. AS PER THE LD. AR, AO TOOK THE ENGINEERING DESIGN SERVICES DONE BY ACROPETAL TECHNOLOGIES LTD, AS A COMPARABLE SEGMENT WITH ITES SERVICES OF THE ASSESSEE. LD. AR POINTED OUT THAT ENGINEERING DESIGN SERVICES REN DERED BY M/S. ACROPETAL WAS ENTIRELY DIFFERENT FROM THE TYPE OF SERVICES DONE B Y THE ASSESSEE. FURTHER ACCORDING TO HIM HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF EXCELLENCE DATA RESEARCH (P.) LTD. V. ITO [2014] 66 SOT 15/49 TAXMANN.COM 409 (HYD. - TRIB.) HAD HELD THAT ACROPETAL TECHNOLOGIES LTD, WAS NOT A GOOD COMPARAB LE IN THE BPO SEGMENT. AS PER THE LD. AR M/S. EXCELLENCE DATA RESEARCH P. LTD , WAS RENDERING BACK OFFICE DATA CREATION, CONTENT DEVELOPMENT AND SUPPORT SERV ICES WHICH WERE NOT COMPARABLE TO WHAT ASSESSEE WAS DOING. THOUGH THE D ECISION OF THE HYDERABAD BENCH WAS FOR A. Y. 2009-10, AS PER THE LD. AR, M/S . ACROPETAL TECHNOLOGIES LTD, WAS DOING THE VERY SAME BUSINESS DURING THE RELEVAN T PREVIOUS YEAR ALSO AND THEREFORE IT COULD BE CONSIDERED AS A GOOD PRECEDEN T. IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 8 OF 35 22. PER CONTRA, LD. DR SUBMITTED THAT TPO HAD CONSIDER ED THE ARGUMENT OF THE ASSESSEE THAT BPO AND KPO HAD TO BE DISTINGUISHED. ACCORDING TO HIM, ACROPETAL TECHNOLOGIES LTD, WAS GIVING ENGINEERING DESIGN SER VICES AND THE ASSESSEE WAS RENDERING INSURANCE SUPPORT SERVICES. THOUGH THESE SERVICES DID NOT FIT IN THE SAME MOULD, THE LEVEL OF EXPERTISE REQUIRED STOOD MORE O R LESS ON THE SAME PEDESTAL. ACCORDING TO HIM, APPLYING THE YARDSTICKS LAID DOWN BY HON'BLE DELHI HIGH COURT IN THE JUDGMENT OF RAMPGREEN SOLUTIONS (P.) LTD. (S UPRA), ACROPETAL TECHNOLOGIES LTD, COULD BE TAKEN AS A GOOD COMPARABLE. 23. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CON TENTIONS. THERE IS NO DISPUTE THAT M/S. ACROPETAL WAS HAVING AT LEAST THREE SEGME NTS, NAMELY, ENGINEERING DESIGN SERVICES, IT SERVICE AND HEALTH CARE. TPO HAD TAKEN ENGINEERING DESIGN SERVICE AS A GOOD COMPARABLE WITH THAT OF THE SERVICES DONE BY T HE ASSESSEE. ENGINEERING DESIGN SERVICES THAT WERE BEING RENDERED BY ACROPET AL TECHNOLOGIES LTD, APPEARS AT PAGE 8 OF ITS ANNUAL REPORT. IT COMPRISED OF ARC HITECTURAL, STRUCTURAL, ELECTRICAL, PLUMBING, STEEL DETAILING, AND UTILITIES DESIGNING. ITS REVENUE MODEL APPEARS AT PAGE 9 OF ITS ANNUAL REPORT. IT IS MENTIONED THAT THE SA ID COMPANY WAS PROVIDING COMPREHENSIVE OFFERINGS USING ITS DEEP DOMAIN UNDER STANDING OF INFRASTRUCTURAL HEALTHCARE, ENGINEERING DESIGN AND ENTERPRISE SOLUT IONS. IN OUR OPINION, THE TYPE OF SERVICES THAT WAS BEING PROVIDED BY ACROPETAL TECHN OLOGIES LTD, WAS NOT AT ALL COMPARABLE WITH THE TYPE OF SERVICES THAT THE ASSES SEE WAS PROVIDING. IT IS ALSO MENTIONED IN THE ANNUAL REPORT OF THE SAID COMPANY THAT IT WAS PROVIDING HIGH END SERVICES IN THE ENGINEERING DESIGN SERVICES. NO DOU BT AS MENTIONED BY THE LD. DR, IT MAY NOT BE FEASIBLE TO HAVE COMPARABLES WHICH FIT I N THE EXACT MOULD AS THAT OF AN ASSESSEE IN TP ANALYSIS. HOWEVER, WHEN ONE COMPANY IS GIVING SOPHISTICATED SET OF SERVICES WHICH INVOLVES HIGHER LEVEL OF SKILL SETS, AND THE OTHER IS DOING IT ON A LOWER LEVEL, WE CANNOT SAY THAT THE FORMER SHOULD B E CONSIDERED AS A COMPARABLE TO THE LATTER. THOUGH FOR A DIFFERENT YEAR, COMPARABIL ITY OF ACROPETAL TECHNOLOGIES LTD, (SEG) HAD COME UP BEFORE HYDERABAD BENCH OF TH E TRIBUNAL IN THE CASE OF EXCELLENCE DATA RESEARCH (P.) LTD. (SUPRA). OBSERVA TIONS OF THE TRIBUNAL AS IT APPEARS AT PARA 18.1 READS AS UNDER : '18.1 AFTER CONSIDERING THE RIVAL CONTENTIONS, WE A GREE WITH THE OBJECTIONS RAISED BY ASSESSEE. AS SEEN FROM THE ANNUAL REPORT, THIS COMPANY IS INVOLVED IN ENGINEERING DESIGN SERVICES AND HAS PRODUCTS ALS O, WHICH MAKES IT FUNCTIONALLY NOT COMPARABLE. EVEN AT THE SEGMENTAL LEVEL, IT PROVIDES ENGINEERING DESIGN SERVICES, WHICH WAS CONSIDERED A S HIGH END, BY THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF HYU NDAI MOTORS INDIA ENGINEERING (SUPRA) IN EARLIER YEAR. THEREFORE, WE ARE OF THE OPINION THAT THIS COMPANY CANNOT BE SELECTED AS A COMPARABLE. WE ACCO RDINGLY DIRECT THE ASSESSING OFFICER/TPO TO EXCLUDE THIS COMPANY.' 24. CONSIDERING ALL THESE, WE ARE CONSTRAINED TO TAKE A VIEW THAT ENGINEERING DESIGN SERVICES SEGMENT OF M/S. ACROPETAL TECHNOLOG IES LTD, (SEG), CANNOT BE CONSIDERED AS A PROPER COMPARABLE FOR THE TP STUDY OF THE ASSESSEE. IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 9 OF 35 29. SEEKING EXCLUSION OF JEEVAN SCIENTIFIC TECHNOLOGIE S LTD, (SEG), LD. AR SUBMITTED THAT THE TURNOVER OF THE SAID COMPANY WAS LESS THAN RS.1 CRORE. AS PER THE LD. AR, TPO HIMSELF HAD EXCLUDED COMPANIES HAVI NG TURNOVER BELOW RS.1 CRORE. RELYING ON PAPER BOOK, PAGE 719, WHICH IS A PART OF THE ANNUAL REPORT OF JEEVAN SCIENTIFIC TECHNOLOGIES LTD, (SEG), LD. AR S UBMITTED THAT THE REVENUES FROM BPO OPERATIONS OF THE SAID COMPANY CAME TO ONLY RS. 79.21 LAKHS. AS PER THE LD. AR, THE TOTAL OPERATING REVENUE OF THE SAID COMPANY FOR THE RELEVANT PREVIOUS YEAR WAS ONLY RS.2.49 CRORES OF WHICH SUBSTANTIAL PART W AS FROM OTHER STREAMS OF OPERATION. 30. PER CONTRA, LD. DR SUBMITTED THAT THE SEGMENT CONS IDERED BY THE TPO HAD A TURNOVER OF RS.246,75,00,000/-. THUS ACCORDING TO H IM JEEVAN SCIENTIFIC TECHNOLOGIES LTD, (SEG), WAS A GOOD COMPARABLE. 31. WE HAVE HEARD THE RIVAL CONTENTIONS. AUDITED BALAN CE SHEET AND FINANCIAL STATEMENT OF JEEVAN SCIENTIFIC TECHNOLOGIES LTD, (S EG), TAKEN FROM CAPITALINE DATA BASE HAS BEEN FILED BEFORE US BY THE ASSESSEE AT PA PER BOOK PAGE.677 TO 740. NET REVENUE OF THE SAID COMPANY FOR THE RELEVANT PREVIO US YEAR FROM ITS OPERATION WAS RS.2,45,39,231/-, AS PER ITS INCOME STATEMENT AT PA PER BOOK PAGE 725. TPO HAD CONSIDERED THE REVENUE AS RS.2,46,75,000/-. HOWEVER SEGMENTAL REVENUE OF THE SAID COMPANY, AS IT APPEAR AT PAPER BOOK PAGE 719 SHOW I TS EARNINGS FROM BPO OPERATIONS IS RS.71.219 LAKHS. THUS TPO HAD CONSIDE RED THE TOTAL REVENUE INSTEAD OF THE SEGMENTAL REVENUE. THE TURNOVER OF THE SEGME NT WHICH WAS BEING COMPARED WAS LESS THAN RS.1 CRORE AND BY THE YARDSTICK APPLI ED BY THE TPO HIMSELF, THE COMPANY OUGHT HAVE BEEN EXCLUDED FROM THE LIST OF C OMPARABLES. WHETHER THE SEGMENTAL INFORMATION OF THE SAID COMPANY GIVEN BY THE ASSESSEE AT PAPER BOOK PAGE 719, NEVERTHELESS REQUIRES A VERIFICATION. WE THEREFORE SET ASIDE THE COMPARABILITY OF JEEVAN SCIENTIFIC TECHNOLOGIES LTD , (SEG), BACK TO THE FILE OF THE AO/TPO FOR CONSIDERATION AFRESH. IN CASE THE EARNIN G OF THE SAID COMPANY FROM ITS BPO OPERATIONS IS LESS THAN RS.1 CRORE IT HAS TO BE EXCLUDED FROM THE LIST OF COMPARABLES. 32. IN THE RESULT, WE DIRECT EXCLUSION OF ACCENTIA TEC HNOLOGIES LTD, ACROPETAL TECHNOLOGIES LTD, (SEG) FROM THE LIST OF COMPARABLE S, WHEREAS WE UPHOLD THE INCLUSION OF ICRA ONLINE LTD, (SEG) IN THE LIST OF COMPARABLES. HOWEVER, VIZ., JEEVAN SCIENTIFIC TECHNOLOGIES LTD, (SEG), WE ARE R EMITTING THE ISSUE OF ITS FITNESS FOR COMPARISON BACK TO THE AO/TPO FOR CONSIDERING T HE TURNOVER OF THE BPO SEGMENT OF THE SAID COMPANY. ORDERED ACCORDINGLY. 8. SINCE THE EXCLUSION OF THESE 3 COMPARABLES WERE EXAMINED BY THE TRIBUNAL IN THE FOREGOING CASE, WHERE THE ASSESSEE IS ENGAGE D IN SIMILAR ACTIVITIES, WE FIND NO JUSTIFICATION TO TAKE A CONTRARY VIEW IN THIS APPEA L. WE, ACCORDINGLY, FOLLOWING THE SAME, EXCLUDE 2 COMPARABLES I.E., ACCENTIA TECHNOLO GIES LTD., AND ACROPETAL TECHNOLOGIES LTD., FROM THE FINALIST OF COMPARABLES AND FOR JEEVAN SCIENTIFIC, WE IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 10 OF 35 RESTORE THE MATTER TO THE AO/TPO TO RE-EXAMINE IN T HE LIGHT OF OTHER COMPARABLES AS IN THE CASE OF SWISS RE SHARES SERVICES (INDIA) PVT . LTD., WHEREIN THE TRIBUNAL HAS DIRECTED FOR RECONSIDERATION ON THE BASIS OF TURNOV ER FILTER. WHEREAS, AFTER JUDGMENT OF CHRYSCAPITAL INVESTMENT VS. DCIT (2015) 56 TAXMANN. COM 417 , THE TURNOVER FILTER CANNOT BE HELD TO BE A GOOD FILTER UNLESS IT AFFECTS THE PROFITABILITY OF THE COMPARABLES. THEREFORE, JEEVAN SCIENTIFIC TECH NOLOGY LTD., BE RE-EXAMINED BY THE TPO IN THE LIGHT OF OTHER FILTERS. 9. THE ASSESSEE HAS ALSO SOUGHT THE INCLUSION OF TH E R SYSTEM INTERNATIONAL LTD., ON THE GROUND THAT TPO HAS EXCLUDED IT ON ACC OUNT OF DIFFERENT FINANCIAL YEAR. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER CONTEN DED THAT THE DATA FOR THE RELEVANT FINANCIAL YEAR I.E., APRIL TO MARCH CAN BE DERIVED FROM THE QUARTERLY DATA AVAILABLE ON THE WEBSITE OF THE COMPANY, THEREFORE THIS COMPA RABLE SHOULD BE INCLUDED IN THE LIST OF COMPARABLES. IN SUPPORT OF HIS CONTENTION THAT WHERE THE DATA CAN BE AVAILABLE FOR THE RELEVANT FINANCIAL YEAR, THE COMP ARABLE SHOULD BE INCLUDED IN THE LIST OF COMPARABLES, THE LEARNED COUNSEL FOR THE AS SESSEE HAS RELIED UPON THE ORDER OF THE TRIBUNAL IN THE CASE OF BUSINESS PROCESS OUTSOU RCING PVT. LTD., VS. ACIT IN IT(TP)NO.238/BANG/2016, M/S. MERCER CONSULTING INDI A PVT. LTD., VS. DCIT IN ITA NO.101/2015 (PUNJAB & HARYANA HIGH COURT) AND M CKINSEY KNOWLEDGE CENTRE INDIA PVT. LTD., IN ITA NO.217/2014 (DELHI H IGH COURT). COPY OF THESE ORDERS ARE PLACED ON RECORD. THE LEARNED DR PLACED RELIANCE UPON THE ORDER OF TH E DRP. 10. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOW ER AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT IT HAS BEEN REPEATE DLY HELD THROUGH VARIOUS ORDERS BY THE TRIBUNAL THAT WHEREVER THE DATA FOR THE RELE VANT FINANCIAL YEAR CAN BE DERIVED FROM THE DATA AVAILABLE ON THE WEBSITE AND THAT COM PARABLES STANDS ON OTHER FILTERS, THE SAME SHOULD BE INCLUDED IN THE LIST OF COMPARAB LES. IN THE INSTANT CASE, ASSESSEE HAS TRIED TO DEMONSTRATE THAT DATA FOR THE RELEVANT FINANCIAL YEAR (APRIL TO MARCH) CAN BE DERIVED FROM THE DATA AVAILABLE ON WEBSITE. THEREFORE, WE ARE OF THE OPINION IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 11 OF 35 THAT THIS COMPARABLE SHOULD BE INCLUDED IN THE LIST OF COMPARABLES AND BEFORE DOING SO THE AO/TPO WILL EXAMINE THE DETAILS AND IF THE D ATA FOR THE RELEVANT FINANCIAL YEAR CAN BE DERIVED FROM THE DATA AVAILABLE ON THE WEBSITE AND IT STANDS ON OTHER FILTERS, THE SAME CAN BE INCLUDED IN THE LIST OF CO MPARABLES. 11. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER CO NTENDED THAT WHILE DETERMINING THE ALP, THE CREDIT OF RISK ADJUSTMENT SHOULD BE GIVEN BECAUSE APPELLANT IS A CAPTIVE CONTRACT IT ENABLED SERVICE PROVIDER TO ITS AE AND BEING THE CAPTIVE SERVICE PROVIDER, THE APPELLANT IS DEVOID O F ANY SIGNIFICANT RISK RELATING TO BUSINESS OPERATIONS AS THE RISK ARE BORNE BY AE BEC AUSE IT OWNS ALL THE VALUABLE INTELLECTUAL PROPERTY RIGHTS (KNOW-HOW, COPYRIGHTS ETC.,) AND OTHER COMMERCIAL OR MARKETING INTANGIBLES. ACCORDINGLY, BEING A MERE S ERVICE PROVIDER, THE ASSESSEE DOES NOT OWN ANY INTEREST IN THESE INTANGIBLES AND PROVIDES MERE SERVICES BASED ON THE REQUIREMENT OF THE AE IN RETURN FOR A FIXED MAR K UP ON COST INCURRED IN RENDERING OF SERVICES. IT WAS FURTHER CONTENDED TH AT RISK TO ADJUST FOR THE MARKET RISK PER SE AS THE APPELLANT IS NOT SUBJECT TO ANY VOLATILITY OF THE MARKET AS OPPOSED TO THE COMPARABLE COMPANIES DURING THE ASSESSMENT Y EAR. THE COMPARABLE COMPANIES SELECTED BY THE TPO ARE INDEPENDENT, RISK BEARING ENTITIES WHEREAS THE SOFTWARE SEGMENT OF THE ASSESSE IS A RISK FREE ENTI TY THAT IS COMPENSATED ON A COST PLUS BASIS IRRESPECTIVE OF THE RESULT OF ITS OPERAT ION. IN THE OPEN MARKET ANY ENTITY ASSUMING INCREASED RISK WILL ALSO BE COMPENSATED BY AN INCREASE IN THE EXPECTED RETURN IN THE LONG RUN. HENCE IT IS ESSENTIAL TO M AKE A RISK ADJUSTMENT TO BRIDGE THE DISPARITIES IN RISK PROFILE BETWEEN THE APPELLANT A ND THE COMPARABLE COMPANIES SELECTED BY THE TPO. THE LEARNED COUNSEL FOR THE A SSESSEE FURTHER PLACED A RELIANCE UPON THE ORDER OF THE TRIBUNAL IN THE CASE OF INTEL LINET TECHNOLOGIES INDIA PVT. LTD., VS. ITO (ITA NO. 1237/BANG/2010) AND BEARING POINT BUSINESS CONSULTING PVT. LTD., VS. DCIT (ITA NO. 1124/BANG/2011). THE LEARNED DR PLACED RELIANCE UPON THE ORDER OF TH E DRP. 12. HAVING CAREFULLY EXAMINED THE ORDER OF THE LOWE R AUTHORITY IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THE LOWER AUTHORITIES HA VE NOT CONSIDERED THE FACTOR OF IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 12 OF 35 RISK ADJUSTMENT WHILE COMPUTING THE ALP FOR INTERNA TIONAL TRANSACTIONS. ACCORDING TO ASSESSEE, ASSESSEE IS A CAPTIVE CONTRACT IT ENAB LED SERVICE PROVIDER TO ITS AE. THEREFORE, BEING A MERE CAPTIVE SERVICE PROVIDER, T HE ASSESSEE DOES NOT OWN ANY INTEREST IN INTANGIBLES. IT PROVIDES MERE SERVICE IN RETURN OF FIXED MARK UP ON COST INCURRED IN GRANTING OF SERVICES. WHEREAS THE COMP ARABLES SELECTED BY THE TPO ARE INDEPENDENT RISK BEARING ENTITIES. IT IS AN ADMITT ED FACT THAT IN THE OPEN MARKET ANY ENTITY ASSUMING INCREASED RISK WILL ALSO BE COMPENS ATED BY INCREASE IN THE EXPECTED RETURN IN THE LONG RUN. UNDER THESE CIRCUMSTANCES WHERE RISK FACTOR IS DIFFERENT IN THE CASE OF ASSESSEE AS WELL AS COMPARABLES, RISK A DJUSTMENT SHOULD BE ALLOWED WHILE COMPUTING THE ALP FOR INTERNATIONAL TRANSACTI ONS. THIS ASPECT WAS EXAMINED BY THE TRIBUNAL IN THE CASE OF INTELLINET TECHNOLOGIES INDIA PVT. LTD., AND BEARIN G POINT BUSINESS CONSULTING PVT. LTD., (SUPRA) IN WHICH THE TRIBUNAL HAS DIRECTED THE TPO TO CONSIDER ALL THE CONTENTIONS OF THE ASSESSEE AND AFTER TAKING INTO ACCOUNT ALL THE RELEVANT MATERIAL DECIDE THE PERCENTAGE OF RISK ADJUSTMENT TO BE MADE IN ACCORDANCE WITH LAW. THE RELEVANT OBSERVATION OF T HE TRIBUNAL IN THE CASE OF INTELLINET TECHNOLOGIES LTD, IS EXTRACTED HEREUNDER : 7.1 AS SEEN FROM THE RECORDS, THE ASSESSEE HAD ACQUIRE D THE BUSINESS AND ALSO EARNED INCOME OUT OF THE SAID TRANSACTION BY C OST PLUS BASIS. THUS, IT CAN BE SEEN THAT THE ASSESSEE HAS NOT ENCOUNTERED T HE RISK OF HAVING A SINGLE CUSTOMER, WHEREAS THE SAME CANNOT BE SAID AS REGARDS THE COMPARABLES. AS POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE, THE COMPARABLES WERE DEALING IN OPEN MARKET AND THEREFO RE, THEY WERE PRONE TO THE MARKETING AND TECHNICAL RISKS. THEY WOULD HA VE INCURRED CERTAIN EXPENDITURE ON MARKETING SERVICES AND ALSO TO SAFEG UARD THE TECHNICAL USE BY THEM. IN SUCH A CASE, THE RISK ENCOUNTERED BY TH E ASSESSEE CANNOT BE SAID TO BE THE EQUIVALENT RISKS ATTACHED TO THE COM PARABLES. THE RISK ATTRIBUTED TO THE ASSESSEE BY THE TPO IS AN ANTICIP ATED RISK WHEREAS THE RISK ATTRIBUTED BY THE ASSESSEE TO THE COMPARABLES IS AN EXISTING RISK. IN SUCH SITUATION, THE TPO OUGHT TO HAVE GIVEN THE RIS K ADJUSTMENT TO THE NET MARGIN OF THE COMPARABLES FOR BRINGING THEM ON PAR WITH THE ASSESSEE COMPANY. THE ASSESSEE'S CONTENTION THAT THE RISK AD JUSTMENT SHOULD BE AT 5.5% OR AT THE DIFFERENCE OF PRIME LENDING RATE OF THE RBI AND THE BANKS IS NOT ACCEPTABLE TO US. THEREFORE, WE DIRECT THE TPO TO CONSIDER ALL THE CONTENTIONS OF THE ASSESSEE AND AFTER TAKING INTO A CCOUNT ALL THE RELEVANT MATERIAL DECIDE THE PERCENTAGE OF RISK ADJUSTMENT T O BE MADE IN ACCORDANCE WITH LAW. THIS GROUND IS ACCORDINGLY, AL LOWED FOR STATISTICAL PURPOSES. IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 13 OF 35 13. SINCE THE TRIBUNAL HAS REPEATEDLY HELD THAT IN SUCH CIRCUMSTANCES RISK ADJUSTMENT SHOULD BE GIVEN AFTER MAKING NECESSARY V ERIFICATION, WE ARE OF THE VIEW THAT IN THE INSTANT CASE WE SHOULD RESTORE THE MATT ER TO THE TPO TO CONSIDER THE CONTENTIONS OF THE ASSESSEE AND AFTER TAKING INTO A CCOUNT ALL RELEVANT FACTS MAKE THE RISK ADJUSTMENT WHILE DETERMINING THE ALP FOR INTER NATIONAL TRANSACTIONS. WE ORDER ACCORDINGLY. 14. THROUGH GROUND NO. 2.8, THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT DRP ALSO ERRED IN EXCLUDING PROVISION FOR DOUB TFUL DEBT FROM THE COST BASE IN THE COMPUTATION OF MARK UP OF CERTAIN COMPARABLE CO MPANIES. IN THIS REGARD, WE HAVE EXAMINED THE MATERIAL ON RECORD AND WE ARE OF THE VIEW THAT SAME TREATMENT SHOULD BE GIVEN WHILE EXCLUDING/INCLUDING THE PROVI SIONS FOR BAD AND DOUBTFUL DEBTS IN THE CASE OF THE ASSESSE COMPANY AND THE CO MPARABLES. IF THE PROVISIONS OF THE DOUBTFUL DEBTS HAVE BEEN EXCLUDED IN THE CASE O F ASSESSEE COMPANY, THE SAME BE EXCLUDED IN THE CASE OF COMPARABLES. TWO DIFFERENT TYPES OF TREATMENT CANNOT BE GIVEN IN THE CASE OF ASSESSEE COMPANY AND THE COMPA RABLES. THEREFORE WE ALSO RESTORE THE ISSUE TO THE AO/TPO TO EXAMINE THE FACT S RELATING TO PROVISION FOR DOUBTFUL DEBTS IN THE ASSESSE COMPANY AS WELL AS IN THE CASE OF COMPARABLES. 15. THROUGH GROUND NO. 2.9, THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THE DRP ERRED IN REJECTING THE ASSESSEES CLAI M OF ADJUSTMENT ON ACCOUNT OF ACCELERATED DEPRECIATION. IN THIS REGARD, THE LEAR NED COUNSEL FOR THE ASSESSE HAS CONTENDED THAT IT DEPRECIATES ITS ASSET AT HIGHER R ATE THEN THE RATES PRESCRIBED BY THE SCHEDULE XIV OF THE COMPANIES ACT, 1956. HOWEVER, MOST OF THE COMPARABLE COMPANIES CONSIDERED BY THE LEARNED TPO FOLLOWED RA TES AS PRESCRIBED UNDER COMPANIES ACT THEREBY CHARGING A LOWER RATE OF DEPR ECIATION. THEREFORE AN ADJUSTMENT ON ACCOUNT OF DIFFERENTIAL IN THE RATES OF DEPRECIATION CHARGED BY THE APPELLANT VIS--VIS, THE COMPARABLE SHOULD BE GIVEN . IN SUPPORT OF HIS CONTENTION, THAT WHEN APPLYING THE ARMS LENGTH PRINCIPLE, THE CONDITIONS OF THE CONTROLLED TRANSACTIONS (TRANSACTION BETWEEN THE TAX PAYER AND THE AE) ARE COMPARED TO THE CONDITIONS OF THE COMPARABLE UNCONTROLLED TRANSACTI ONS. IN THIS CONTEXT, TO BE IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 14 OF 35 COMPARABLES MEANS THAT NONE OF THE DIFFERENCES (IF ANY) BETWEEN THE SITUATIONS BEING COMPARED COULD MATERIALLY AFFECT THE CONDITIO NS BEING EXAMINED IN THE METHODOLOGY (I.E., PRICE/MARGIN). IN CASE, THERE ARE ANY SUCH DIFFERENCES, REASONABLY ACCURATE ADJUSTMENT NEED TO BE MADE TO E LIMINATE THE EFFECT OF ANY SUCH DIFFERENCE. IN SUPPORT OF THIS CONTENTION, THE LEA RNED COUNSEL FOR THE ASSESSEE HAS PLACED THE RELIANCE UPON THE JUDGMENT IN THE CASE O F OUTSOURCE PARTNERS INTERNATIONAL PVT. LTD, VS. DCIT IT(TP)A NO.337/BAN G/2015, EXL SERVICE.COM VS. ACIT IN ITA NO. 1939 AND 1981/2008. COPIES OF THE SAME ARE AVAILABLE ON RECORD. THE LEARNED DR ON THE OTHER HAND HAS PLACED THE REL IANCE UPON THE ORDER OF THE DRP AND TPO. 16. HAVING CAREFULLY EXAMINED THE MATERIAL AVAILABL E ON RECORD IN THE LIGHT OF RIVAL SUBMISSIONS WE FIND THAT WHEREVER RATES OF DE PRECIATION ARE DIFFERENT IN THE CASE OF ASSESSEE AND THE COMPARABLES, THE D EPRECIA TION ADJUSTMENT SHOULD BE ALLOWED. THIS ASPECT WAS EXAMINED BY THE TRIBUNAL IN THE AFORESAID JUDGMENTS REFERRED BY THE ASSESSEE. THE TRIBUNAL HAS REPEATE DLY HELD THAT ADJUSTMENT FOR DIFFERENCE IN DEPRECIATION RATE SHOULD BE ALLOWED I N ORDER TO DETERMINE THE ALP. THE RELEVANT OBSERVATION OF THE TRIBUNAL IN THE CAS E OF EXL SERVICE.COM VS. ACIT IN ITA NO. 1939 AND 1981/2008 IS EXTRACTED HEREUNDE R: 5.12 NOW THE MOOT QUESTION IS AS TO WHETHER VARIATION I N THE RATES OF DEPRECIATION CAN BE CONSIDERED AS A RELEVANT FACTOR NECESSITATING ADJUSTMENT IN THE OPERATING PROFIT MARGIN OF THE COMPARABLES. THE LD. DR RELIED ON DCIT V. SUMI MOTHERSON INNOVATIVE ENGINEERING LTD. (2014) 150 ITD 195 (DELHI) AND SOME OTHER DECISIONS TO BRING HOME HIS POINT OF VIE W OF NOT CARRYING OUT ANY ADJUSTMENT ON ACCOUNT OF DIFFERENCE IN DEPRECIATION . 5.13 THERE CAN BE NO DISPUTE ON THE PRINCIPLE THAT CALC ULATION OF 'OPERATING PROFIT' AS ENVISAGED UNDER RULE 10B(1)(E) EMBRACES CUMULATIVE EFFECT OF ALL THE ITEMS OF INCOME AND EXPENSES WHICH ARE OF OPERATING NATURE. ORDINARILY, THERE CAN BE NO QUESTION OF CONSIDERING EACH ITEM OF SUCH OPERATING EXPENSES OR INCOME IN ISOLATION DE HORS THE OTHER EXPENSES TO C LAIM ADJUSTMENT ON THE GROUND OF SUCH EXPENDITURE OR INCOME OF THE ASSESSEE ON TH E HIGHER SIDE SEEN INDIVIDUALLY OR AS A PERCENTAGE OF OTHER OPERATING EXPENSE/INCOM ES IN COMPARISON WITH ITS COMPARABLES. THE REASON IS OBVIOUS THAT WHEN WE CON SIDER THE OPERATING PROFIT MARGIN, THE EFFECT OF ALL THE INDIVIDUAL HIGHER OR LOWER ITEMS OF EXPENSES OR INCOMES GETS SUBMERGED IN THE OVERALL OPERATING PRO FIT MARGIN, RULING OUT THE IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 15 OF 35 NEED FOR ANY ADJUSTMENT ON ONE-TO-ONE COMPARISON. O NE COMPANY MAY HAVE TAKEN A BUILDING ON RENT FOR CARRYING ON ITS BUSINE SS, IN WHICH CASE, IT WILL PAY RENT WHICH WILL FIND ITS PLACE IN THE OPERATING COS TS. FOR THE PURPOSES OF MAKING COMPARISON, ONE CANNOT CONTEND THAT THE PAYMENT OF RENT BY ONE ENTERPRISE IN COMPARISON WITH A NON-PAYMENT OF RENT BY ANOTHER, S HOULD BE NEUTRALIZED BY GIVING PROPER ADJUSTMENT FROM THE OPERATING PROFIT OF THE COMPARABLE. THE MANIFEST REASON IS THAT THE OTHER ENTERPRISE MAY HA VE ITS OWN OFFICE PREMISES AND THE AMOUNT OF DEPRECIATION ON SUCH PREMISES WILL AL SO FORM PART OF ITS OPERATING COST. WHEN WE CONSIDER THE OPERATING PROFIT OF THE FIRST ENTERPRISE WHICH IS PAYING RENT AND THEN COMPARE IT WITH THE SECOND ENTERPRISE WHICH IS NOT PAYING ANY RENT BUT IS CLAIMING DEPRECIATION ON ITS OWN PREMISES, T HE OVERALL EFFECT OF RENT IN ONE CASE GETS COUNTERBALANCED WITH DEPRECIATION ON PREM ISES OF THE OTHER. SIMILAR IS THE POSITION OF A COMPANY HAVING PURCHASED NEW ASSE TS CHARGING HIGHER AMOUNT OF DEPRECIATION ALLOWANCE IN ITS BOOKS OF ACCOUNTS VIS-A-VIS ANOTHER COMPARABLE COMPANY USING OLD ASSETS WITH LOWER AMOUNT OF DEPRE CIATION. NO ADJUSTMENT ON ACCOUNT OF DIFFERENCE IN THE AMOUNTS OF DEPRECIATIO N OF TWO COMPANIES IS CALLED FOR WHEN THE OPERATING PROFITS ARE DETERMINED BECAU SE IN THE CASE OF A COMPANY HAVING PURCHASED NEW ASSET, THERE WILL BE LOWER REP AIR COST AND VICE VERSA. THE EFFECT OF ALL THE INDIVIDUAL ITEMS OF OPERATING EXP ENSES AND INCOMES CULMINATES INTO THE OPERATING PROFIT MARGIN. THAT IS WHY, THE LEGISLATURE HAS PROVIDED FOR COMPARING THE RATIO OF 'OPERATING PROFIT MARGIN' TO A SIMILAR BASE OF THE ASSESSEE WITH THAT OF ITS COMPARABLES, THEREBY DISPENSING WI TH THE NEED FOR MAKING ANY ADJUSTMENT ON ACCOUNT OF HIGHER OR LOWER AMOUNT OF INDIVIDUAL ITEMS OF EXPENSES AND INCOMES. MERELY BECAUSE THE AMOUNT OF DEPRECIAT ION OF ONE ENTERPRISE IS MORE OR LESS THAN THE OTHER, CAN NEVER BE A REASON TO SEEK ADJUSTMENT. SUCH HIGHER AMOUNT OF DEPRECIATION MAY BE DUE TO LARGE S CALE OF THE COMPANY AND HOST OF OTHER FACTORS. BY CONSIDERING PERCENTAGE OF OPER ATING PROFIT MARGIN UNDER THE TNMM OF THE ASSESSEE AS WELL AS COMPARABLES, THE HI GHER OR LOWER VOLUME OF TWO COMPANIES BECOMES IMMATERIAL AND SO IS THE QUAN TUM OF DEPRECIATION. THE NITTY-GRITTY OF THE MATTER IS THAT NO ADJUSTMENT CA N BE ALLOWED SIMPLY FOR THE REASON THAT ONE COMPANY HAS CHARGED HIGHER AMOUNT O F DEPRECIATION VIS-A-VIS ITS COMPARABLE COMPANIES. NOT ONLY NO ADJUSTMENT ON THI S SCORE IS PERMISSIBLE, THE ASSESSEE CANNOT ALSO SEEK AN EXCLUSION OR INCLUSION OF A COMPANY ON THE GROUND THAT THE RATIO OF ITS DEPRECIATION TO TOTAL EXPENSE S IS MORE OR LESS IN COMPARISON WITH COMPARABLES. IT IS SO FOR THE REASON THAT SUCH HIGHER PERCENTAGE OF DEPRECIATION TO TOTAL EXPENSES IS MARGINALIZED BY T HE LOWER PERCENTAGE OF REPAIRS AND OTHER INCIDENTAL COSTS OF THE ASSETS AND VICE V ERSA. 5.14 HOWEVER, THE POSITION MAY BE A LITTLE DIFFERENT WH EN THERE IS A DIFFERENCE IN THE RATES OF DEPRECIATION CHARGED BY TWO COMPANIES ON SIMILAR CATEGORY OF ASSETS. ONE COMPANY MAY ADOPT THE POLICY OF CHARGING DEPREC IATION ON ITS ASSETS IN CONFORMITY WITH THE RATES PRESCRIBED IN SCHEDULE XI V OF THE COMPANIES ACT AND OTHER COMPANY MAY ADOPT A POLICY OF CHARGING DEPREC IATION AT THE HIGHER RATES OR LOWER THAN THOSE PRESCRIBED UNDER SCHEDULE XIV. THIS CAN BE DEMONSTRATED WITH THE HELP OF AN EXAMPLE. OTHER THINGS BEING EQU AL, IF THE OPERATING PROFIT OF COMPANY A, AFTER CLAIMING DEPRECIATION OF RS.10 ON THE VALUE OF ASSET WORTH RS.50 WITH RATE OF DEPRECIATION 20%, IS RS.100, THE OPERATING PROFIT OF COMPANY B WITH EVERYTHING SAME INCLUDING THE VALUE OF ASSET S AT RS.50, BUT WITH RATE OF DEPRECIATION 30%, WILL BE RS.95. IT SHOWS THAT THE COMPARABILITY IS JEOPARDIZED IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 16 OF 35 DUE TO HIGHER RATE OF DEPRECIATION CHARGED BY COMPA NY B AT 30% IN COMPARISON WITH LOWER RATE OF DEPRECIATION CHARGED BY COMPANY A AT 20%. IN SUCH A SITUATION, ALTHOUGH BOTH THE COMPANIES USE SIMILAR TYPE OF ASSETS AND EVERYTHING ELSE IS ALSO EQUAL, BUT THEIR RESPECTIVE OPERATING PROFIT PERCENTAGES UNDERGO CHANGE DUE TO HIGHER OR LOWER RATE OF DEPRECIATION, THEREBY DISTORTING THEIR COMPARABILITY. IT IS THIS DIFFERENCE IN THE AMOUNTS OF DEPRECIATION DUE TO DIFFERENT RATES OF DEPRECIATION AND NOT DUE TO DIFFERENT QUAN TUMS OF DEPRECIATION SIMIPLICITOR, WHICH CALLS FOR BRINGING BOTH THE COM PANIES AT PAR. 5.15 AT THIS JUNCTURE, WE WILL CONSIDER THE RATIO OF THE DECISIONS RELIED BY THE LD. DR TO BOLSTER HIS SUBMISSION FOR NOT GRANTING ANY A DJUSTMENT ON ACCOUNT OF DIFFERENCE IN THE RATES OF DEPRECIATION ON SIMILAR ASSETS. IN SUMI MOTHERSON (SUPRA), THE ASSESSEE REQUESTED FOR SUITABLE REDUCT ION TOWARDS HIGHER DEPRECIATION CHARGED BY IT, THEREBY BOOSTING ITS PE RCENTAGE OF DEPRECIATION TO SALES AT A MUCH HIGHER LEVEL THAN THAT OF COMPARABL ES. REJECTING THIS CONTENTION, THE TRIBUNAL HELD THAT IT IS NOT ALLOWED TO COMPARE EACH AND EVERY ITEM OF THE OPERATING COST INCURRED BY THE ASSESSEE WITH SIMILA R COST IN THE CASE OF COMPARABLES TO ASK FOR ANY ADJUSTMENT. IT IS THE OV ERALL EFFECT OF ALL SUCH INDIVIDUAL ITEMS DESCENDING INTO OPERATING PROFIT, WHICH IS CONSIDERED FOR BENCHMARKING THE ASSESSEE'S INTERNATIONAL TRANSACTI ON AND IF THE AMOUNT OF DEPRECIATION IS DISTINCTLY COMPARED WITH COMPARABLE S, LEAVING ASIDE OTHER RELATED AND CONSEQUENTIAL ITEMS, SUCH AS REPAIR COS TS ETC., THEN THE RESULTS ARE LIKELY TO BE DISTORTED. IT WAS FURTHER OBSERVED THA T TO ASK FOR ADJUSTMENT, IT IS ESSENTIAL THAT THERE SHOULD BE SOME INDEPENDENT AND SUBSTANTIAL REASON. IT WAS HELD THAT : 'IN THE CONTEXT OF DEPRECIATION, ONE CA N RIGHTLY APPRECIATE THE NEED TO MAKE ADJUSTMENT, IF RATE OF DEPRECIATION CHARGED BY THE ASSESSEE VIS-A-VIS ITS COMPARABLES IS DIFFERENT. BUT THE SIMPLICITOR DIFFE RENCE IN THE AMOUNT OF DEPRECIATION IS INCONSEQUENTIAL.' 5.16 ALMOST SIMILAR PROPOSITION HAS BEEN LAID DOWN BY T HE DELHI BENCH OF THE TRIBUNAL IN NOKIA INDIA (P) LTD. V. DCIT 2014-TII-2 24-ITAT-DEL-TP BY DISAPPROVING THE EXCLUSION OF SOME COMPANIES ON THE STRENGTH OF THE FILTER OF LOWER OR HIGHER DEPRECIATION AS A PERCENTAGE OF TOT AL COSTS. IN SO HOLDING, IT OBSERVED THAT THE HIGHER AMOUNT OF DEPRECIATION IS USUALLY COUPLED WITH THE LOWER REPAIR COST ETC., AND VICE VERSA. THAT IS HOW , IT HELD THAT : 'THERE CAN BE NO JUSTIFICATION IN APPLYING THE FILTER OF REJECTING T HE COMPANIES WITH DEPRECIATION HIGHER OR LOWER THAN A PARTICULAR PERCENTAGE OF TOT AL COSTS.'. IT IS, THUS, OVERT THAT THESE TWO CASES RELIED BY THE LD. DR, IN FACT, SUPP ORT THE CASE OF THE ASSESSEE RATHER THAN THE REVENUE. 5.17 ANOTHER CASE RELIED BY THE LD. DR IN 24/7 CUSTOMER COM (P.) LTD. V. DY. CIT 2012-TII-143-ITAT-BANG-TP, AGAIN DOES NOT TAKE US A NY FURTHER. IN THAT CASE, THE ASSESSEE RAISED AN ADDITIONAL GROUND FOR SUITAB LE ADJUSTMENT TOWARDS HIGHER RATE OF DEPRECIATION CHARGED BY THE ASSESSEE VIS-A- VIS ITS COMPARABLES. IT IS PATENT FROM THE PENULTIMATE PARA OF THIS ORDER THAT THE TRIBUNAL EVENTUALLY REMITTED THE ISSUE OF DEPRECIATION, AS RAISED THROU GH THE ADDITIONAL GROUND, TO THE FILE OF THE AO/TPO FOR A FRESH CONSIDERATION AND DE CISION. SO, THIS ORDER ALSO DOES NOT SUPPORT THE CASE OF THE REVENUE. THE LAST CASE RELIED BY THE LD. DR IS LASON INDIA (P.) LTD. V. ACIT 2012-TII-47-ITAT-MAD- TP.THE ASSESSEE IN THAT CASE PROVIDED DEPRECIATION ON ASSETS UNDER SLM AT T HE RATES HIGHER THAN THOSE IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 17 OF 35 PROVIDED IN SCHEDULE XIV, WHEREAS THE COMPARABLES P ROVIDED FOR DEPRECIATION AS PER INCOME-TAX RULES ON WRITTEN DOWN VALUE METHOD. THE ASSESSEE CLAIMED BEFORE THE TRIBUNAL THAT IF DEPRECIATION OF THE ASS ESSEE IS ALSO BROUGHT TO THE W.D.V. METHOD, THEN ITS OPERATING PROFIT WOULD BE M ORE. THE TRIBUNAL REJECTED THIS CLAIM OF THE ASSESSEE. IN OUR CONSIDERED OPINION, T HE ADJUSTMENT HAS BEEN RIGHTLY DENIED BECAUSE THE METHOD OF CHARGING DEPRECIATION WAS DIFFERENT AND FURTHER THE ASSESSEE SOUGHT ADJUSTMENT FROM ITS PROFITS, WHICH IS NOT PERMISSIBLE AS WILL BE SEEN INFRA. THE LD. AR ALSO CANDIDLY ADMITTED THAT HIS POINT WAS LIMITED TO THE ADJUSTMENT DUE TO DIFFERENCE IN THE RATES OF DEPREC IATION FROM SLM OF THE ASSESSEE TO SLM OF THE COMPARABLES AND NOT OTHERWIS E AS IS THE POSITION IN LASON INDIA (P.) LTD. (SUPRA). 5.18 THE SUM AND SUBSTANCE OF THE ABOVE CASES IS THAT NE ITHER ANY ADJUSTMENT CAN BE MADE FOR A SIMPLICITOR HIGHER/LOWER AMOUNT OF DE PRECIATION IN ITSELF OR AS A PERCENTAGE OF THE TOTAL OPERATING EXPENSES NOR AN O THERWISE COMPARABLE COMPANY CEASES TO BE COMPARABLE BECAUSE OF THE ABOV E FACTORS. HOWEVER, AN ADJUSTMENT IS CALLED FOR WHEN THERE IS A DIFFERENCE IN THE RATES OF DEPRECIATION ON SIMILAR TYPES OF ASSETS UNDER SIMILAR METHOD OF CHA RGING DEPRECIATION. AT THE COST OF REPETITION, WE WANT TO ACCENTUATE THE LINE OF DI STINCTION BETWEEN TWO CASES, VIZ., FIRST IN WHICH THE AMOUNT OF DEPRECIATION IS MORE DUE TO HIGHER VALUE OF THE ASSETS EMPLOYED BY ONE COMPANY AND SECOND, IN WHICH THE AMOUNT OF DEPRECIATION IS MORE NOT DUE TO HIGHER VALUE OF THE ASSETS EMPLOYED BY ONE COMPANY BUT DUE TO HIGHER RATES OF DEPRECIATION. WH EREAS, THE FIRST SITUATION WOULD NOT CALL FOR ANY ADJUSTMENT, THE SECOND ONE W OULD WARRANT ADJUSTMENT IN THE OPERATING PROFIT OF THE COMPARABLE COMPANY. THA T IS WHERE RULE 10B(1)(E) (II) & (III) READ WITH RULES 10B(2) & (3) COME INTO PLAY FOR NEUTRALISING THE DIFFERENCE IN THE OPERATING PROFITS OF THE TWO OTHE RWISE COMPARABLE COMPANIES BY MAKING A 'REASONABLY ACCURATE ADJUSTMENT ... TO ELI MINATE THE MATERIAL EFFECTS OF SUCH DIFFERENCES'. 5.19 NOW THE NEXT QUESTION IS AS TO IN WHOSE HANDS THE ABOVE ADJUSTMENT SHOULD BE ALLOWED. THE LD. AR ARGUED THAT THE EXCESSIVE RA TE OF DEPRECIATION CHARGED BY THE ASSESSEE SHOULD BE LOWERED TO THE RATES AS PRES CRIBED UNDER SCHEDULE XIV TO THE COMPANIES ACT SO AS TO BRING A PARITY BETWEEN T HE RATES OF DEPRECIATION CHARGED BY THE ASSESSEE VIS-A-VIS ITS COMPARABLES. THIS CONTENTION IN OUR CONSIDERED OPINION, IS NOT TENABLE. IT HAS BEEN NOT ICED ABOVE THAT RULE 10B(1)(E)(III) CONTEMPLATES THE MAKING OF ADJUSTMEN T TO THE NET PROFIT MARGIN OF THE COMPARABLES DETERMINED UNDER SUB-CLAUSE (II) TO RULE 10B(1)(E). EVEN RULE 10B(3) ALSO REQUIRES THE MAKING OF ADJUSTMENT IN TH E HANDS OF COMPARABLES TO ELIMINATE THE MATERIAL EFFECTS OF DIFFERENCES. THUS , THE ADJUSTMENT CAN BE MADE ONLY IN THE HANDS OF THE COMPARABLES' OPERATING PRO FIT MARGIN AND NOT TO THAT OF THE ASSESSEE. 5.20 THE LD. DR PLEADED FOR NOT ALLOWING ANY ADJUSTMENT ON THIS SCORE BY ARGUING THAT THE DIFFERENCE IN THE RATES OF DEPRECI ATION BY THE ASSESSEE AND COMPARABLES DOES NOT AFFECT THE COMPUTATION OF THE NET OPERATING PROFIT MARGIN ON A LONG TERM BASIS. HE STATED THAT THE HIGHER RAT ES OF DEPRECIATION WOULD NO DOUBT LOWER THE PROFIT IN THE EARLIER YEARS, BUT SU CH REDUCTION OF PROFITS WOULD BE SET OFF WITH THE HIGHER AMOUNT OF PROFIT DUE TO LOW ER AMOUNT OF DEPRECIATION IN THE LATER YEARS, THEREBY, NULLIFYING THE EFFECT OF SUCH HIGHER RATE OF DEPRECIATION IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 18 OF 35 OVER THE LIFE TIME OF AN ASSET. ASSERTING ON THIS A RGUMENT, THE LD. DR STATED THAT NO ADJUSTMENT COULD BE ACCORDINGLY ALLOWED. 5.21 THIS CONTENTION, IN OUR CONSIDERED OPINION DOES NO T MOVE FORWARDS THE CASE OF REVENUE FOR THE REASON THAT CHAPTER X OF THE ACT REQUIRES COMPUTATION OF INCOME FROM INTERNATIONAL TRANSACTIONS HAVING REGAR D TO ALP ON YEAR TO YEAR BASIS. THERE IS NO PROVISION FOR DETERMINING THE AL P OF AN INTERNATIONAL TRANSACTION FOR MORE THAN ONE YEAR IN A CONSOLIDATE D MANNER. UNLIKE THE HITHERTO DETERMINATION OF UNDISCLOSED INCOME FOR THE BLOCK P ERIOD AS PROVIDED UNDER CHAPTER XIV-B OF THE ACT, AS OPPOSED TO YEAR-TO-YEA R BASIS, THERE IS NO SUCH PROVISION FOR DETERMINING THE ALP OF AN INTERNATION AL TRANSACTION FOR MORE THAN ONE YEAR BY CONSIDERING A FEW YEARS AS ONE UNIT DUR ING WHICH AN ASSET IS PUT TO USE. NOT ONLY IS THIS EXERCISE IMPERMISSIBLE UNDER THE LAW, BUT IS ALSO IMPRACTICAL OF APPLICATION. VARIOUS ASSETS WILL HAVE VARYING US EFUL LIFE SPANS DUE TO DIFFERENT RATES OF DEPRECIATION AND THEIR USEFUL LIFE WILL NO T TERMINATE AT ONE COMMON POINT OF TIME, SO AS TO FACILITATE THE MAKING OF ADJUSTME NT AT SUCH POINT OF TIME. BE THAT AS IT MAY, SINCE THE LEGISLATURE REQUIRES DETERMINA TION OF ALP OF AN INTERNATIONAL TRANSACTION ON YEARLY BASIS, WHAT WE NEED TO DO IS TO FIND OUT THE EFFECT OF DEPRECIATION ON YEAR TO YEAR BASIS AND NOT ON A CON SOLIDATED BASIS EXTENDING TO THE LIFE TIME OF SUCH ASSETS. 5.22.1 THE LD. DR MADE STILL ANOTHER CONTENTION OPPOSING THE ASSESSEE'S STAND. IT WAS ARGUED THAT RE-CALCULATING THE OPERATING PROFIT S OF THE COMPARABLE COMPANIES BY PROVIDING DEPRECIATION ON SLM IN THE H ANDS OF COMPARABLES AT THE HIGHER RATES, AT PAR WITH THE ASSESSEE'S, WOULD DIS TORT THE COMPARISON. HE EXPLAINED HIS POINT OF VIEW BY STATING THAT NO DOUB T WITH THE INCREASE IN THE RATES OF DEPRECIATION OF THE COMPARABLES FOR THE CURRENT YEAR AT PAR WITH THE ASSESSEE, WOULD ACHIEVE COMPARABILITY, BUT THIS WOULD ADVERSE LY AFFECT THE CALCULATION OF OPERATING PROFIT OF THE COMPARABLES BECAUSE OF THE INCLUSION OF PROPORTIONATE DEPRECIATION ALSO ON THE ASSETS WHICH STILL APPEAR IN THEIR BOOKS BUT ACTUALLY DEPRECIATED FULLY DUE TO PARITY WITH THE ASSESSEE'S HIGHER RATES OF DEPRECIATION. IT WAS EXPLAINED WITH THE HELP OF AN EXAMPLE IN WHICH THE ASSESSEE IS CHARGING DEPRECIATION UNDER SLM AT THE RATE OF 33.33% ON A P ARTICULAR ASSET CONSIDERING THE USEFUL LIFE OF THREE YEARS, AS AGAINST THE COMP ARABLES PROVIDING DEPRECIATION ON SIMILAR ASSET UNDER SLM AT THE RATE OF 16.21% BY IMPLIEDLY CONSIDERING ITS USEFUL LIFE A LITTLE OVER SIX YEARS. HE EXPLAINED T HAT THE COMPARABLE COMPANY PROVIDING DEPRECIATION AT 16.66% ON SLM WOULD CONTI NUE TO HOLD ASSETS IN 4TH, 5TH AND 6TH YEAR AS WELL AND THE AMOUNT OF DEPRECIA TION IN THESE THREE YEARS WILL ALSO BE AT 16.21% DESPITE THE FACT THAT THIS PARTIC ULAR ASSET HAS EXHAUSTED ITS USEFUL LIFE AFTER THREE YEARS AS HAS BEEN DONE BY T HE ASSESSEE. THIS PROPOSITION, IN THE OPINION OF THE LD. DR, WARRANTED REDUCTION IN T HE AMOUNT OF DEPRECIATION OF COMPARABLES COMPANIES TO THE EXTENT OF 16.21% OF TH E VALUE OF SUCH ASSET FROM 4TH TO 6TH YEARS. IT WAS THUS PLEADED THAT IF SOME ADJUSTMENT IS TO BE ALLOWED IN FAVOUR OF THE ASSESSEE IN LINE WITH THE ABOVE ARGUM ENTS OF THE LD. AR, THEN A SIMULTANEOUS NEGATIVE ADJUSTMENT ON ACCOUNT OF THE ABOVE FACTOR SHOULD ALSO BE DIRECTED. 5.22.2 THIS CONTENTION ADVANCED ON BEHALF OF THE REVENUE CAN BE PROPERLY APPRECIATED IF ONE UNDERSTANDS THE STRIKING DISSIMI LARITIES BETWEEN THE SCHEME OF CHARGING DEPRECIATION UNDER THE INCOME-TAX ACT, 196 1 AND THE COMPANIES ACT, IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 19 OF 35 1956. THE CONCEPT OF BLOCK OF ASSETS EXISTS UNDER T HE ACT BY WHICH ALL THE ASSETS OF A PARTICULAR SPECIES HAVING THE SAME RATE OF DEP RECIATION ARE CONSIDERED TOGETHER AS ONE UNIT. THIS CAN BE SEEN FROM SEC. 2( 11) OF THE ACT, WHICH DEFINES 'BLOCK OF ASSETS' TO MEAN 'A GROUP OF ASSETS FALLIN G WITHIN A CLASS OF ASSETS COMPRISING (A) TANGIBLE ASSETS, BEING BUILDINGS, M ACHINERY, PLANT OR FURNITURE; (B) INTANGIBLE ASSETS, BEING .., IN RESPECT OF WH ICH THE SAME PERCENTAGE OF DEPRECIATION IS PRESCRIBED'. UNDER THE SCHEME OF BL OCK OF ASSETS, DEPRECIATION IS CHARGED ON THE TOTAL WRITTEN DOWN VALUE OF SUCH BLO CK AS APPEARING AT THE END OF THE YEAR AT THE PRESCRIBED RATES. THERE IS NO PROVI SION FOR CHARGING DEPRECIATION ON INDIVIDUAL ASSETS. SIMILARLY, THERE IS NO MANDAT E FOR COMPUTING CAPITAL GAIN AT THE TIME OF TRANSFER OF SUCH INDIVIDUAL ASSETS, UNL ESS THE BLOCK OF ASSETS CEASES TO EXIST AS SUCH. CAPITAL GAINS ARE COMPUTED U/S 50 OF THE ACT UNDER TWO PRESCRIBED SITUATIONS BY CONSIDERING THE BLOCK OF ASSETS IN EN TIRETY DE HORS THE EVENT OF SALE OF INDIVIDUAL ASSET. FIRST IS THE SITUATION UNDER W HICH THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER OF THE ASSET TOGETHER WITH THE FULL VALUE OF SUCH CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF ANY OTHER CAPITAL ASSET FALLING WITHIN THE BLOCK OF THE ASSETS DURING THE PREVIOUS YEAR, EXCEEDS THE AGGREGATE OF (I) EXPENDI TURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER OR TRA NSFERS; (II) THE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS AT THE BEGINNING OF TH E PREVIOUS YEAR; AND (III) THE ACTUAL COST OF ANY ASSET FALLING WITHIN THE BLOCK O F ASSETS ACQUIRED DURING THE PREVIOUS YEAR. IT IS THIS EXCESS WHICH IS DEEMED TO BE THE CAPITAL GAINS ARISING FROM THE TRANSFER OF SHORT-TERM CAPITAL ASSETS. SEC OND IS THE SITUATION IN WHICH ANY BLOCK OF ASSETS CEASES TO EXIST AS SUCH, FOR TH E REASON THAT ALL THE ASSETS IN THAT BLOCK ARE TRANSFERRED DURING THE PREVIOUS YEAR . IN SUCH A SITUATION, THE COST OF ACQUISITION OF THE BLOCK OF ASSETS IS TAKEN AS T HE WRITTEN DOWN VALUE OF THE BLOCK OF ASSETS AT THE BEGINNING OF THE PREVIOUS YE AR, AS INCREASED BY THE ACTUAL COST OF ANY ASSET FALLING WITHIN THAT BLOCK OF ASSE TS, ACQUIRED BY THE ASSESSEE DURING THE PREVIOUS YEAR. THE INCOME RECEIVED OR AC CRUING AS A RESULT OF SUCH TRANSFER OR TRANSFERS IS DEEMED TO BE THE CAPITAL G AINS ARISING FROM THE TRANSFER OF SHORT-TERM CAPITAL ASSETS. A CAREFUL PERUSAL OF THE ABOVE PROVISIONS DECIPHERS THAT THE INDIVIDUAL ASSETS ON THEIR PURCHASE MERGE WITH OTHER ASSETS OF THAT BLOCK, THEREBY LOSING THEIR SEPARATE IDENTITY. DEPRECIATIO N IS PROVIDED ON THE BASIS OF THE WRITTEN DOWN VALUE OF SUCH BLOCK AND NOT THE W. D.V. OF SUCH INDIVIDUAL ASSETS. EVEN THE EVENT OF THEIR TRANSFER ALSO DOES NOT LEAD TO AUTOMATIC CHARGING OF CAPITAL GAINS, UNLESS THE CASE FALLS UNDER EITHER O F TWO CLAUSES OF SECTION 50. ASSESSEE GETS DEPRECIATION ON THE W.D.V. OF SUCH AS SETS, WHICH STAND MERGED WITH THE W.D.V. OF THE BLOCK, EVEN AFTER THEIR TRANSFER, OF COURSE SUBJECT TO THE PROVISIONS OF SECTION 50 AND OTHER RELEVANT SECTION S. 5.22.3 NOW LET US EXAMINE THE POSITION UNDER THE INDIAN C OMPANIES ACT, 1956. SECTION 349 DEALS WITH THE DETERMINATION OF NET PRO FITS. SUB-SECTION (1) PROVIDES THAT IN COMPUTING THE NET PROFITS OF A COMPANY IN A NY FINANCIAL YEAR, : '(A) CREDIT SHALL BE GIVEN FOR THE SUMS SPECIFIED IN SUB-SECTIO N (2) AND CREDIT SHALL NOT BE GIVEN FOR THOSE SPECIFIED IN SUB-SECTION (3); AND ( B) THE SUMS SPECIFIED IN SUB- SECTION (4) SHALL BE DEDUCTED, AND THOSE SPECIFIED IN SUB-SECTION (5) SHALL NOT BE DEDUCTED.'. CLAUSE (K) OF SUB-SECTION (4) STATES TH AT DEDUCTION SHALL BE ALLOWED FOR 'DEPRECIATION TO THE EXTENT SPECIFIED IN SECTION 35 0'. THE LATER SECTION, IN TURN PROVIDES THAT: 'THE AMOUNT OF DEPRECIATION TO BE DE DUCTED IN PURSUANCE OF CLAUSE IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 20 OF 35 (K) OF SUB-SECTION (4) OF SECTION 349 SHALL BE THE AMOUNT OF DEPRECIATION ON ASSETS AS SHOWN BY THE BOOKS OF THE COMPANY AT THE END OF THE FINANCIAL YEAR EXPIRING AT THE COMMENCEMENT OF THIS ACT OR IMMEDIATELY THEREAF TER AND AT THE END OF EACH SUBSEQUENT FINANCIAL YEAR, AT THE RATE SPECIFIED IN SCHEDULE XIV.' CLAUSE (D) OF SUB-SECTION (3) STATES THAT IN MAKING THE COMPUTATI ON AFORESAID, NO CREDIT SHALL BE GIVEN FOR 'PROFITS FROM THE SALE OF ANY IMMOVABL E PROPERTY OR FIXED ASSETS OF A CAPITAL NATURE COMPRISED IN THE UNDERTAKING OR ANY OF THE UNDERTAKINGS OF THE COMPANY, UNLESS THE BUSINESS OF THE COMPANY CONSIST S, WHETHER WHOLLY OR PARTLY, OF BUYING AND SELLING ANY SUCH PROPERTY OR ASSETS:' AT THIS STAGE, IT IS RELEVANT TO NOTE THE PRESCRIPTION OF THE PROVISO TO THIS CLAUSE WHICH STIPULATES THAT : 'WHERE THE AMOUNT FOR WHICH ANY FIXED ASSET IS SOLD EXCEEDS THE WRITTEN-DOWN VALUE THEREOF REFERRED TO IN SECTION 350, CREDIT SH ALL BE GIVEN FOR SO MUCH OF THE EXCESS AS IS NOT HIGHER THAN THE DIFFERENCE BETWEEN THE ORIGINAL COST OF THAT FIXED ASSET AND ITS WRITTEN DOWN VALUE.' CLAUSE (D) OF SU B-SECTION (5) FURTHER PROVIDES THAT IN MAKING THE COMPUTATION AFORESAID, NO DEDUCT ION SHALL BE ALLOWED FOR LOSS OF A CAPITAL NATURE INCLUDING LOSS ON SALE OF THE U NDERTAKING OR ANY OF THE UNDERTAKINGS OF THE COMPANY OR OF ANY PART THEREOF NOT INCLUDING ANY EXCESS REFERRED TO IN THE PROVISO TO SECTION 350 OF THE WR ITTEN-DOWN VALUE OF ANY ASSET WHICH IS SOLD, DISCARDED, DEMOLISHED OR DESTROYED O VER ITS SALE PROCEEDS OR ITS SCRAP VALUE. PROVISO TO SECTION 350 PROVIDES THAT: 'IF ANY ASSET IS SOLD, DISCARDED, DEMOLISHED OR DESTROYED FOR ANY REASON BEFORE DEPRE CIATION OF SUCH ASSET HAS BEEN PROVIDED FOR IN FULL, THE EXCESS, IF ANY, OF T HE WRITTEN-DOWN VALUE OF SUCH ASSET OVER ITS SALE PROCEEDS OR, AS THE CASE MAY BE , ITS SCRAP VALUE, SHALL BE WRITTEN OFF IN THE FINANCIAL YEAR IN WHICH THE ASSE T IS SOLD, DISCARDED, DEMOLISHED OR DESTROYED.' 5.22.4 ON A READING OF SECTION 349 IN CONJUNCTION WITH SE CTION 350 OF THE COMPANIES ACT, IT EMERGES THAT DEPRECIATION ON EACH ASSET IS SEPARATELY PROVIDED AT THE RATES SPECIFIED IN SCHEDULE XIV FOR THE PURP OSES OF THE DETERMINATION OF PROFIT. IF AN ASSET IS SOLD OR DISCARDED BEFORE PRO VIDING FULL DEPRECIATION ON IT, THEN THE EXCESS OF THE W.D.V. OF SUCH ASSET OVER IT S SALE PRICE/SCRAP VALUE, TO THE EXTENT PROVIDED, SHALL BE WRITTEN OFF IN THE FINANC IAL YEAR IN WHICH THE ASSET IS SOLD OR DISCARDED. IN THE CONVERSE SITUATION, WHERE THE AMOUNT FOR WHICH ANY FIXED ASSET IS SOLD EXCEEDS THE WRITTEN-DOWN VALUE THEREOF REFERRED TO IN SECTION 350, THEN CREDIT SHALL BE GIVEN FOR SO MUCH OF THE EXCESS, TO THE EXTENT PROVIDED, AS IS NOT HIGHER THAN THE DIFFERENCE BETWEEN THE OR IGINAL COST OF THAT FIXED ASSET AND ITS W.D.V. IN THE YEAR OF ITS SALE. THESE TWO S ITUATIONS CAN BE DEMONSTRATED WITH THE HELP OF A SIMPLE EXAMPLE. IF ASSET A WITH ORIGINAL COST OF RS. 100 HAVING W.D.V. OF RS.40 IS SOLD FOR RS.50, THEN THE PROFIT OF RS.10 IS TO BE CREDITED TO THE PROFIT AND LOSS ACCOUNT FOR THE YEAR OF SALE OF SUC H ASSET. IF ASSET A WITH ORIGINAL COST OF RS. 100 HAVING W.D.V. OF RS.40 IS SOLD FOR RS.30, THEN THE LOSS OF RS.10 IS TO BE DEBITED TO THE PROFIT AND LOSS ACCOUNT FOR THE Y EAR OF SALE/SCRAPPING OF SUCH ASSET. 5.22.5 ON A COMPARATIVE STUDY OF THE SCHEME FOR CHARGING DEPRECIATION AND TREATMENT OF PROFIT/LOSS ON THE SALE OF SPECIFIC AS SETS UNDER BOTH THE STATUTES, WE OBSERVE THAT WHEREAS, THE ACT DOES NOT RECOGNIZE IN DIVIDUAL ASSETS FOR THE PURPOSES OF ALLOWING DEPRECIATION AND GRANTS DEPREC IATION ON THE BLOCK OF ASSETS, THE COMPANIES ACT RECOGNIZES THE EXISTENCE OF SEPAR ATE ASSETS AND STIPULATES IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 21 OF 35 DEPRECIATION ON EACH ASSET DISTINCTLY IN THE PROFIT AND LOSS ACCOUNT. WHEN AN ASSET IS SOLD, THERE IS NO SCOPE FOR CALCULATING PR OFIT OR LOSS ON SALE OF EACH ASSET IN EXCESS OF ITS W.D.V. UNDER THE ACT. IT IS DONE O NLY FOR THE BLOCK OF ASSETS IN THE MANNER GIVEN AND TO THE EXTENT ENSHRINED IN SECTION 50. ON THE OTHER HAND, THE COMPANIES ACT MANDATES CLAIMING DEDUCTION FOR LOSS OR CREDITING GAIN ON THE SALE OF EACH ASSET SEPARATELY TO ITS PROFIT AND LOS S ACCOUNT, WHICH IS NOT IN EXCESS OF DIFFERENCE BETWEEN THE ORIGINAL COST AND THE W.D .V. OF SUCH ASSET. 5.22.6 WITH THE ABOVE LEGAL POSITION AT HAND, LET US EVAL UATE THE CONTENTION OF THE LD. DR THAT THE COMPARABLES COMPANIES' DEPRECIATION FOR THE CURRENT YEAR WOULD ALSO INCLUDE DEPRECIATION IN RESPECT OF THE ASSETS WHICH HAVE SEEN THE END OF THEIR USEFUL LIFE BUT STILL CONTINUE TO FORM PART OF THE SCHEDULE OF FIXED ASSETS BECAUSE OF PROVIDING DEPRECIATION AT LOWER RATES ON SUCH ASSET S IN COMPARISON WITH THE ASSESSEE. THIS CONTENTION OF THE LD. DR, THOUGH APP EARS ATTRACTIVE AT THE FIRST BLUSH, BUT LOSES ITS SHINE ON AN IN-DEPTH ANALYSIS. IT IS SEVERELY SIMPLE THAT IF AN ASSET HAS REACHED THE MILESTONE OF THE END OF ITS U SEFUL LIFE, THEN IT WOULD BE EITHER SOLD OR DISCARDED. ORDINARILY, NO COMPANY WOULD CON TINUE TO HOLD OBSOLETE ASSETS. ONCE AN ASSET IS SOLD AFTER ITS USEFUL LIFE , THE COMPANY WILL WRITE OFF THE UNAMORTIZED DEPRECIATION IN THE YEAR OF ITS SALE OR DISCARDING, BY CONSIDERING ITS SALE PRICE AND W.D.V. AND HENCE IT WOULD CEASE TO A PPEAR IN THE BOOKS OF ACCOUNT. ONCE IT DOES NOT APPEAR IN THE BOOKS OF ACCOUNT, TH ERE CAN BE NO QUESTION OF ANY DEPRECIATION ON IT IN THE LATER YEARS AS HAS BEEN P UT FORTH ON BEHALF OF THE REVENUE. CONTINUING WITH THE EXAMPLE GIVEN BY THE L D. DR, WE FIND THAT THE PARTICULAR ASSET ON THE COMPLETION OF ITS USEFUL LI FE OF THREE YEARS WOULD BECOME OBSOLETE IN FOURTH YEAR AND SOLD/DISCARDED BY THE C OMPANY AND THE SHORT-FALL IN THE AMOUNT AND DEPRECIATION CHARGED OVER ITS COST W OULD BE ACCORDINGLY WRITTEN OFF IN ITS ACCOUNTS. IN SUCH A SITUATION, THAT PART ICULAR ASSET WITH USEFUL LIFE OF THREE YEARS WOULD CEASE TO APPEAR IN THE SCHEDULE O F FIXED ASSETS OF THE COMPARABLE COMPANY AT THE END OF FOURTH, FIFTH AND SIXTH YEARS RESPECTIVELY, AS SUCH, NO VALUE OF SUCH ASSETS WILL BE AVAILABLE FOR DEPRECIATION IN THE NEXT YEAR(S). 5.23 TURNING TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE METHOD OF CHARGING DEPRECIATION, BOTH BY THE ASSESSEE AND ITS COMPARAB LES, IS BY AND LARGE THE SAME THAT IS SLM. THE ASSESSEE IS SEEKING ADJUSTMENT ONL Y DUE TO HIGHER RATES OF DEPRECIATION CHARGED BY IT UNDER SLM WITH THE LOWER RATES OF DEPRECIATION CHARGED BY FOUR COMPARABLE COMPANIES, OTHER THAN MA PRO INDUSTRIES LTD. AND KARVY CONSULTANTS LTD. IN VIEW OF ABOVE DISCUSSION, WE HOLD THAT THE OPERATING PROFIT MARGINS OF THESE FOUR COMPARABLE COMPANIES S HOULD BE RECOMPUTED BY THE TPO/AO IN LINE WITH THE RATES OF DEPRECIATION CHARG ED BY THE ASSESSEE UNDER SLM. TO PUT IT SIMPLY, THE AMOUNT OF DEPRECIATION O F THE FOUR COMPARABLE COMPANIES ON THEIR ASSETS SHALL ALSO BE RECOMPUTED UNDER THE SLM ALONE AS PER THE RATES AT WHICH THE ASSESSEE HAS PROVIDED DEPREC IATION. IN DOING SO, IF THE COMPARABLE COMPANIES HAVE CHARGED DEPRECIATION AT A LOWER RATE IN COMPARISON WITH THE ASSESSEE, THEN SUITABLE INCREASE SHOULD BE MADE TO THEIR AMOUNT OF DEPRECIATION AND IF THE COMPARABLES HAVE CHARGED DE PRECIATION AT A HIGHER RATE IN COMPARISON WITH THE ASSESSEE ON SOME OF THE ASSE TS, THEN SUITABLE REDUCTION SHOULD BE MADE IN THE AMOUNT OF THEIR DEPRECIATION. HERE IT IS SIGNIFICANT TO NOTE THAT ONE OF THESE FOUR COMPANIES, NAMELY, NUCLEUS N ETSOFT AND GIS INDIA LTD. HAS IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 22 OF 35 CHARGED DEPRECIATION ON ALL ITS ASSETS UNDER SLM EX CEPT FOR COMPUTERS, ON WHICH IT PROVIDED DEPRECIATION ON WRITTEN DOWN VALUE BASI S. THE TPO SHOULD SEE IF HE CAN CORRECTLY DEDUCE THE AMOUNT OF DEPRECIATION, ON THE BASIS OF DATA AVAILABLE, FOR THE YEAR ON 'COMPUTERS' ALSO UNDER SLM. IF DUE TO ONE REASON OR THE OTHER, SUCH PRECISE CALCULATION IS NOT POSSIBLE, THEN NO A DJUSTMENT SHOULD BE CARRIED OUT IN THE CALCULATION OF THE OPERATING PROFITS OF THIS COMPANY, EVEN ON OTHER ITEMS OF ASSETS. ORDINARILY, WE WOULD HAVE ORDERED FOR THE E XCLUSION OF THIS COMPANY FROM THE LIST OF COMPARABLES IN THE EVENT OF NO POSSIBIL ITY OF COMPUTING DEPRECIATION ON COMPUTERS UNDER THE SLM BY CONVERTING IT FROM W.D.V . METHOD, BECAUSE OF THIS BEING A MATERIAL FACTOR AND NOT QUANTIFIABLE. BUT S INCE NEITHER THE ASSESSEE NOR THE REVENUE SEEK THE EXCLUSION OF THIS COMPANY FROM THE LIST OF COMPARABLES, WE CANNOT SUO MOTU ORDER SO. WE, THEREFORE, SUM UP OUR CONCLUSION ON THIS ASPECT OF THE MATTER BY HOLDING THAT IF THE ASSESSEE AS WELL AS THE COMPARABLE COMPANIES ARE USING THE SLM AND THERE IS A DIFFERENCE IN THE RATES OF DEPRECIATION CHARGED BY THEM, THEN THERE IS A NEED TO MAKE SUITABLE ADJU STMENT TO THE PROFITS OF THE COMPARABLES. 17. THE TRIBUNAL HAS TAKEN A CONSISTENT VIEW THAT W HEREVER DIFFERENT RATES OF DEPRECIATION ARE CHARGED IN THE CASE OF ASSESSE AS WELL AS THE COMPARABLES, THE DEPRECIATION ADJUSTMENT SHOULD BE ALLOWED. IN THE INSTANT CASE, THE LEARNED COUNSEL FOR THE ASSESSEE HAS TRIED TO DEMONSTRATE THAT THE RATE OF DEPRECIATION CHARGED IN THE CASE OF ASSESSEE AND THE COMPARABLES ARE DIFFERENT. THEREFORE WE ARE OF THE VIEW THAT LET THIS MATTER BE RE-EXAMINED BY THE TPO/AO A ND IF THEY NOTICE THAT THE RATES OF DEPRECIATION ARE DIFFERENT IN THE CASE OF ASSESS EE AND THE COMPARABLE COMPANIES, THE REASONABLE DEPRECIATION ADJUSTMENT BE MADE IN O RDER TO DETERMINE THE ALP FOR THE INTERNATIONAL TRANSACTIONS. 18. THE NEXT ISSUE THROUGH GROUND NO. 2.10 AND 2.1 1 RELATE TO THE WORKING CAPITAL ADJUSTMENT AND IN THIS REGARD IT HAS BEEN R EPEATEDLY HELD BY THE TRIBUNAL THAT WORKING CAPITAL ADJUSTMENT SHOULD BE ALLOWED WHILE DETERMINING THE ALP WITHOUT PUTTING ANY CAP THEREON. THEREFORE, WE RESTORE THI S ISSUE TO THE FILE OF THE AO/TPO TO ALLOW THE WORKING CAPITAL ADJUSTMENT WHILE COMPU TING THE ALP FOR INTERNATIONAL TRANSACTIONS. OTHER GROUNDS RAISED IN THIS APPEAL ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY INDEPENDENT ADJUDICATION. 19. IT(TP)A NO. 526/BANG/2016 THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE AO PASSED CONSEQUENT TO THE ORDER OF DRP ON A SOLITARY GROUND THAT THE DRP HAS ERRED IN IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 23 OF 35 GRANTING 1% RISK ADJUSTMENT ARBITRARILY WITHOUT APP RECIATING THE FACTS OF THE CASE AND ITS COMPARABLES. IN THIS REGARD, THIS ISSUE HA S ALREADY BEEN ADJUDICATED BY US IN THE ASSESSEES APPEAL AND WE RESTORE THE MATTER TO THE FILE OF THE AO/TPO TO VERIFY THE FACTS AND TO ALLOW THE RISK ADJUSTMENT IF HE FI NDS THAT THE DIFFERENT NATURE OF RISK IS INVOLVED IN BUSINESS ACTIVITIES OF THE ASSESSEE S AND THE COMPARABLES. ACCORDINGLY, THIS GROUND IS DISPOSED OFF. 20. IT(TP)A NO. 535/BANG/2017 THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST TH E ASSESSMENT ORDER FRAMED CONSEQUENT TO DIRECTIONS OF DRP INTER ALIA ON FOLLO WING GROUNDS. 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE ORDER PASSED BY THE LD. ASSESSING OFFICER ('AO' ) IS BAD IN LAW. 2. THAT THE LD. DISPUTE RESOLUTION PANEL ('DRP')/ LD. AO ERRED IN LAW AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE I N REDUCING THE DEDUCTION ALLOWABLE UNDER SECTION 10AA OF THE ACT B Y RS.279,138. THE SAID ADJUSTMENT IS ON ACCOUNT OF EXPENDITURE INCURR ED ON TELECOMMUNICATION EXPENSES FROM THE EXPORT TURNOVER AND TOTAL TURNOVER. 2.1. THAT THE LD. DRP/ LD. AO OUGHT TO HAVE APPRECI ATED THAT THE TELECOMMUNICATION EXPENSES CAN BE REDUCED ONLY TO T HE EXTENT THEY ARE ATTRIBUTABLE TO DELIVERY OF ARTICLE/ THING OUTSIDE INDIA AND NOT FOR RENDERING OF SERVICES OUTSIDE INDIA. IN THE PRESENT FACTS OF THE APPELLANT, TELECOMMUNICATION EXPENSES HAVE BEEN INCURRED BY THE APPELLANT FOR PROVIDING SERVICES OU TSIDE INDIA. 2.2. THAT THE LD. DRP/ LD. AO HAS ERRED IN CONCLUDI NG THAT EXPENDITURE INCURRED ON TELECOMMUNICATION IS DEEMED TO HAVE BEEN INCURRED FOR PROVIDING SERVICES OUTSIDE INDIA. THE LD. DRP/ LD. AO HAS IGNORED THE SUBMISSION OF THE APPELLANT THAT THE SAID EXPENDITURE INCURRED CANNOT BE ATTRIBUTED TO PROVID ING SERVICES OUTSIDE INDIA SINCE THE APPELLANT COMPANY WORKS ON AN OFFSHORE MODEL. 2.3. THE LD. DRP/ LD. AC OUGHT TO HAVE APPRECIATED THAT THE INTENTION OF PROVISIONS OF SECTION 10AA OF THE ACT IS TO ENSURE THAT EXPORT PROFITS ARE NOT TAXED. HOWEVER, BY MAKI NG THE ABOVE MENTIONED REDUCTION, THE PROFITS ON EXPORTS ARE BEI NG TAXED IN THE HANDS OF THE APPELLANT, THEREBY DEFEATING THE P URPOSE OF SECTION 10AA OF THE ACT. 3. THAT THE LD. DRP/ LD. AC ERRED IN LAW AND ON THE FA CTS AND IN THE CIRCUMSTANCES OF THE CASE BY MAKING NOTIONAL ADDITI ON OF RS,2 18,382 PER PROVISIONS OF SECTION 14A OF THE ACT REA D WITH RULE 8D OF THE INCOME-TAX RULES, 1962 ('RULES'). IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 24 OF 35 3.1. THAT THE LD. DRP/ LD. AO ERRED IN LAW AND ON T HE FACTS AND IN THE CIRCUMSTANCES OF THE CASE WHILE MENTIONING T HAT THE INFRASTRUCTURAL EXPENSES AND MAN-POWER EXPENSES CAN NOT BE RULED OUT AND IGNORING THE FACT THAT THE EXEMPT DIV IDEND INCOME EARNED BY ASSESSEE IS AUTOMATICALLY REINVESTED AS P ER THE SCHEME AND NO SUCH EXPENSES HAVE BEEN INCURRED BY THE ASSE SSEE FOR EARNING THE EXEMPT INCOME. 3.2 THAT THE LD. DRP/LD. AO ERRED IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE BY NOT TAKING COGNIZANCE OF THE DETAILED SUBMISSION FILED BY THE APPELLANT. 3.3 WITHOUT PREJUDICE TO ABOVE GROUNDS, THE LD. DRP / LD. AO HAS ERRED IN DISREGARDING THE FACT THAT THE DISALLOWANCE OF RS. 218,382 PERTAINS TO THE SEZ UNIT OF THE ASSESSEE AND ADDITION MADE TO THE I NCOME OF THE ASSESSEE OF RS.218,382 SHOULD BE ENTITLED FOR ENHANCED DEDUC TION UNDER SECTION 10AA OF THE ACT. 4. THE LD. AO/ LD. TRANSFER PRICING OFFICER'S ('TPO ') ERRED ON FACTS AND IN LAW IN ENHANCING THE INCOME OF THE APPELLANT BY RS. 358,286,971 HOLDING THAT THE INTERNATIONAL TRANSACT IONS PERTAINING TO PROVISION OF INFORMATION TECHNOLOGY E NABLED SERVICES ('ITES') DO NOT SATISFY THE ARM'S LENGTH PRINCIPLE ENVISAGED URIREI- THE ACT. IN DOING SO, THE LD. AO/ LD. TPO HAVE GROS SLY ERRED IN: 4.1. REJECTING THE ARM'S LENGTH PRICE ('ALP') AS DE TERMINED BY THE APPELLANT IN THE TP DOCUMENTATION MAINTAINED BY IT IN TERMS OF SECTION 92D OF THE ACT READ WITH RULE 10D OF THE RU LES AS WELL AS THE FRESH SEARCH AND IN PARTICULAR MODIFYING/ REJEC TING THE FILTERS APPLIED BY THE APPELLANT; 4.2. DISREGARDING MULTIPLE YEAR/ PRIOR YEARS' DATA AS USED BY THE APPELLANT IN THE TP DOCUMENTATION AND HOLDING THAT CURRENT YEAR [I.E. FINANCIAL YEAR ('FY') 2011-12] DATA FOR COMPA RABLE COMPANIES SHOULD BE USED DESPITE THE FACT THAT THE SAME WAS NOT NECESSARILY AVAILABLE TO THE APPELLANT AT THE TIME OF PREPARING ITS TP DOCUMENTATION; 4.3. COLLECTING SELECTIVE INFORMATION OF THE COMPAN IES BY EXERCISING POWER GRANTED TO HIM UNDER SECTION 133(6) OF THE AC T THAT WAS NOT AVAILABLE TO THE APPELLANT IN THE PUBLIC DOMAIN AND RELYING ON THE SAME FOR COMPARABILITY PURPOSE (AND TO THE EXTE NT OF COMPLETELY IGNORING RELIABLE DATA AVAILABLE IN PUBL IC DOMAIN/ ANNUAL REPORTS IN NUMEROUS CASES). 4.4. REJECTING THE ECONOMIC AND COMPARABILITY ANALY SIS IN THE TP DOCUMENTATION/ FRESH SEARCH AND IN CONDUCTING A REV ISED COMPARABILITY ANALYSIS BASED ON APPLICATION OF THE FOLLOWING ADDITIONAL/ REVISED FILTERS IN DETERMINING THE ALP: 4.4.1. EXCLUSION OF COMPANIES HAVING REVENUE FROM S ERVICES LESS THAN 75% OF THE TOTAL OPERATING REVENUE; 4.4.2. EXCLUSION OF COMPANIES HAVING EMPLOYEE COST LESS THAN 25% OF THE IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 25 OF 35 SALES; 4.4.1 EXCLUSION OF COMPANIES WITH EXPORT SALES LESS THAN 75% OF THEIR TOTAL SALES; 4.4.4. EXCLUSION OF COMPANIES HAVING DIFFERENT FINA NCIAL YEAR ENDING (I.E. NOT MARCH 31, 2012); 4.5. NOT APPROPRIATELY CONSIDERING THE FUNCTIONS, A SSETS AND RISK PROFILE OF THE COMPANIES USED FOR COMPARISON WITH T HE APPELLANT, THEREBY INCLUDING IN THE FINAL COMPARABLE SET CERTA IN COMPANIES WITH COMPLETELY DIFFERENT FUNCTIONAL PROFILE; 4.6. EXCLUDING CERTAIN COMPANIES ON ARBITRARY/ FRIV OLOUS GROUNDS EVEN THOUGH THEY ARE COMPARABLE TO THE APPELLANT IN TERM S OF FUNCTIONS PERFORMED, ASSETS EMPLOYED AND RISKS ASSUMED; 4.7. REJECTING/IGNORING THE COMPANIES FOR WHICH CUR RENT YEAR DATA IS AVAILABLE IN THE PUBLIC DATABASES, AT THE TIME OF A SSESSMENT PROCEEDINGS, WHICH ARE COMPARABLE TO IT ENABLED BAC K-OFFICE SERVICES OF THE APPELLANT (WITHOUT PREJUDICE TO THE APPELLANT'S ARGUMENTS ON USE OF CURRENT YEAR DATA); 4.8 REJECTING APPELLANT'S CLAIM OF ADJUSTMENT ON ACCOUNT OF ACCELERATED DEPRECIATION I.E. HIGHER RATE OF DEPRECIATION CHARG ED VIS--VIS THOSE OF COMPARABLES) WHILE COMPUTING MARGIN OF COMPARABLES; 4.9 COMMITTING FACTUAL ERRORS IN THE COMPUTATION O F WORKING CAPITAL ADJUSTMENT; 4.10. INCLUDING COMPANIES HAVING ABNORMAL MARGINS/ VOLATILE OPERATING MARGINS IN THE FINAL COMPARABLES' SET, TH AT SIGNIFY HIGH ELEMENT OF ENTREPRENEURIAL RISK, THEREBY NOT APPREC IATING THE RISK PROFILE OF THE SERVICES RENDERED BY THE APPELLANT A ND NOT ALLOWING THE RISK ADJUSTMENT TO THE APPELLANT; 4.10.1. WITHOUT PREJUDICE, THAT IF RISK ADJUSTMENT IS NOT ALLOWED TO COMPENSATE FOR RISK FREE ACTIVITIES OF THE APPEL LANT AND HENCE CONSIDERED IT TO BE RISK BEARING, IN THAT CASE APPR OPRIATE TESTED PARTY FOR THE ARM'S LENGTH ANALYSIS SHOULD BE THE A PPELLANT'S OVERSEAS ASSOCIATED ENTERPRISE ('AE'); 4.11.COMMITTING A NUMBER OF FACTUAL/ COMPUTATIONAL ERRORS IN THE COMPUTATION OF THE OPERATING PROFIT MARGINS OF THE COMPARABLES; 5. LD. AO/ LD. TPO ERRED IN NOT GIVING APPROPRIATE EFF ECT TO THE DIRECTIONS PASSED BY THE HON'BLE DRP AND NOT SHARIN G THE BASIS OF ARRIVING AT THE REVISED TP ADJUSTMENT WHILE PASSING THE FINAL TP ORDER. IN THIS REGARD, A RECTIFICATION LETTER HAS B EEN FILED BEFORE THE LD. AO/ LD. TPO. 6. THE REFERENCE MADE BY THE LD. AO SUFFERS FROM JURIS DICTIONAL ERROR AS THE LD. AC HAS NOT RECORDED ANY REASONS IN THE D RAFT ASSESSMENT ORDER BASED ON WHICH HE REACHED THE CONC LUSION THAT IT WAS 'NECESSARY OR EXPEDIENT' TO REFER THE MATTER TO THE LD. TPO FOR COMPUTATION OF THE ALP, AS IS REQUIRED UNDER SECTIO N 92CA(1) OF THE ACT. IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 26 OF 35 7. THE LD. AO/LD. TPO HAS GROSSLY ERRED ON FACTS AND I N LAW BY DISREGARDING JUDICIAL PRONOUNCEMENTS IN INDIA IN UN DERTAKING THE TP ADJUSTMENT. 8. THAT THE LD. AO HAS GROSSLY ERRED ON FACTS AND IN L AW BY INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT MECHANICALLY AND WITHOUT RECORDING ANY SATISFACTION FOR ITS INITIATI ON. 9. THAT THE LD. AD HAS ERRED IN LAW AND ON THE FACTS O F THE CASE BY CHARGING INTEREST UNDER SECTION 234B AND SECTION 23 4C OF THE ACT. THE ABOVE GROUNDS OF APPEAL ARE MUTUALLY EXCL USIVE AND WITHOUT PREJUDICE TO EACH OTHER. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEN D OR VARY ANY OF THE ABOVE GROUNDS EITHER BEFORE OR AT THE TIME OF HEARING AS WE MAY BE ADVISED. 21. DURING THE COURSE OF HEARING, THE LEARNED COUNS EL FOR THE ASSESSE HAS MOVED AN APPLICATION FOR ADMISSION OF THE ADDITIONAL GROU NDS WITH THE SUBMISSION THAT IN THE ORIGINAL GROUNDS, THE ASSESSE HAS RAISED A GENE RAL PLEA WITH REGARD TO POINTING OUT THE POLICY IN THE CALCULATION OF ALP WHEREAS TH ROUGH ADDITIONAL GROUNDS THE COMPARABLES WHICH ARE REQUIRED TO BE EXCLUDED AND I NCLUDED ARE IDENTIFIED. 22. WE HAVE CAREFULLY EXAMINED THE ORIGINAL GROUNDS AND THE ADDITIONAL GROUNDS AND WE FIND THAT THE ADDITIONAL GROUNDS ARE CLARIFI CATORY IN NATURE AND CAN BE DISPOSED OFF ALONG WITH THE ORIGINAL GROUNDS. THER EFORE, WE ADMIT THE SAME AND PREFER TO ADJUDICATE THESE GROUNDS ALONG WITH THE O RIGINAL GROUNDS. WE HOWEVER FOR THE SAKE OF REFERENCE EXTRACT THE ADDITIONAL GROUND S AS UNDER: TRANSFER PRICING-ADDITIONAL GROUND OF APPEAL IT IS MOST HUMBLY PRAYED TO THE HON'BLE TRIBUNAL TO PERMIT THE APPELLANT TO RAISE THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL IN CONTINUATION TO THE EXISTING GROUNDS OF APPEAL AND SHALL BE READ WITH GROUND NO. 4.5, 4.6 AND 4.9. GROUND NO. 4.5A: COMPANIES TO BE REJECTED THE APPELLANT SUBMITS THAT THE LD. TPO/ LD. DRP HAS ERRED IN NOT EXCLUDING INFOSYS BPO LTD., TCS E-SERVE LTD., BNR UDYOG LTD., BNR UDYOG LTD., EXCEL INFOWAYS LTD. AND UNIVERSAL PRINT SYSTEMS LTD., COM PANIES WHICH ARE NOT COMPARABLE TO THE APPELLANT. GROUND NO. 4.6A: COMPANIES TO BE ACCEPTED THE APPELLANT SUBMITS THAT THE LD. TPO/ LD. DRP HAS ERRED IN EXCLUDING INFORMED TECHNOLOGIES TD., COSMIC GLOBAL LTD., CAME O CORPORATE SERVICES IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 27 OF 35 PVT. LTD., EXCEL CALLINET PVT LTD., OMEGA HEALTHCAR E MANAGEMENT SERVICES PVT. LTD., R SYSTEMS INTERNATIONAL LTD., AND CALIBE R POINT LTD., COMPANIES WHICH ARE COMPARABLE TO THE APPELLANT. REASON FOR FILING ADDITIONAL GROUND OF APPEAL THE APPELLANT DURING THE PREPARATION OF FORM 36B HA S TAKEN A GROUND ON THE REJECTION OF COMPARABLE COMPANIES FROM THE TPO'S PR OPOSED SET WHICH ARE NOT COMPARABLE TO THE AP PELLANT AND A GROUND ON THE ACCEPTANCE OF COMPANIES INCLUDED BY THE APPELLANT IN THE TP REPORT/FRESH SEARCH, WHICH ARE COM PARABLE TO THE APPELLANT. HOWEVER, IN ORDER TO BRING CLARITY ON THE EXISTING GROUND NO. 4.5 AND 4.6, WE ARE ELAB ORATING THE NAME OF EACH COMPARBLE COMPANY WHICH IS SOUGHT FOR REJECTION/ACCEPTANCE. ON THE ABOVE BASIS, WE HUMBLY REQUEST THE HON'BLE BENCH MEMBERS TO REJECT/ INCLUDE THE ABOVE-MENTIONE D COMPANIES FROM THE FINAL SET OF COMPARABLE. GROUND NO. 4.9A: WORKING CAPITAL ADJUSTMENT THE LD. TPO/ LD. DRP HAS ERRED IN NOT CONSIDERING T HE FACT THAT THE APPELLANT DOES NOT HAVE ANY WORKING CAPITAL RISK, T HEREFORE, NO NEGATIVE WORKING CAPITAL ADJUSTMENT SHOULD BE ALLOWED. REASON FOR FILING ADDITIONAL GROUND OF APPEAL THE APPELLANT DURING THE PREPARATION OF FORM 36B HA S TAKEN A GENERIC GROUND ON WORKING CAPITAL ADJUSTMENT. HOWEVER, IN ORDER TO BRING CLARITY ON THE EXISTING GROUND NO. 4.9, WE ARE ELABORATING THE GRO UND FOR EASIER UNDERSTANDING OF THE ISSUE AT HAND. ON THE ABOVE BA SIS, WE HUMBLY REQUEST THE HON'BLE BENCH MEMBERS TO NOT PROPOSE A NEGATIVE WOR KING CAPITAL ADJUSTMENT. 23. GROUND NO.1 IS GENERAL IN NATURE AND WITH RESPE CT TO GROUND NO. 2, IT WAS CONTENDED THAT THIS GROUND IS COVERED BY JUDGMENT O F JURISDICTIONAL HIGH COURT IN THE CASE OF TATA ELXSI LTD., 349 ITR 98 IN WHICH IT HAS BEEN HELD THAT WHENEVER ANY EXPENDITURES ARE TO BE EXCLUDED FROM THE EXPORT TUR NOVER, THE SAME SHOULD ALSO BE EXCLUDED FROM THE TOTAL TURNOVER. WE, ACCORDINGLY, FOLLOWING THE SAME, DIRECT THE AO/TPO TO EXCLUDE THE TELECOMMUNICATION CHARGES FRO M THE TURNOVER ALSO AS IT WAS EXCLUDED FROM THE EXPORT TURNOVER. 24. GROUND NO. 3 RELATE TO THE ADDITION OF RS.2,18, 382/- MADE HAVING INVOKED THE PROVISIONS OF SECTION 14A OF THE INCOME TAX ACT (HEREINAFTER CALLED AS AN ACT) READ WITH RULE 8D OF THE INCOME TAX RULES, 1 962 (RULES). THE LEARNED COUNSEL FOR THE ASSESSE HAS CONTENDED IN THIS REGAR D THAT THE AO HAS MADE THE ADDITION UNDER SECTION 14A HAVING NOTED THAT INFRAS TRUCTURE EXPENSES AND IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 28 OF 35 MANPOWER EXPENSES CANNOT BE RULED OUT. HE HAS NOT MADE OUT ANY CASE THAT ASSESSEE HAS INCURRED CERTAIN EXPENSES IN ALL THE I NVESTMENTS AS THE INVESTMENT WAS MADE OUT OF THE INTEREST FREE FUNDS. THE LEARNED D R ON THE OTHER HAND HAS CONTENDED THAT IT IS FOR THE ASSESSEE TO DEMONSTRAT E THAT INTEREST FREE FUNDS WERE INVESTED IN MUTUAL FUNDS, ETC. THE ASSESSEE FAILED TO EXPLAIN THAT THE INTEREST FREE FUNDS WERE INVESTED AND THERE WAS NO EXPENSES EITHE R INFRASTRUCTURE EXPENSES OR MAN POWER EXPENSES INCURRED IN EARNING THE INCOME. THEREFORE THE AO HAS RIGHTLY MADE THE ADDITIONS. 25. HAVING CAREFULLY EXAMINED THE ORDER OF THE LOWE R AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS WE FIND THAT THE ASSESSEE HAS MAD E SUBSTANTIAL INVESTMENTS OF RS.8,73,53,000/- AND HAS EARNED THE DIVIDEND INCOME OF RS.23,53,000/-. MUTUAL FUND IS EXEMPT UNDER SECTION 10(34) OF THE ACT. TH E AO HAVING EXAMINED THE CONTENTIONS OF THE ASSESSE HAS MADE THE ADDITIONS A FTER APPLYING THE RULE 8D OF THE RULES. IT IS NOT A CASE WHERE NO EXEMPTED INCOME I S EARNED. ASSESSEE HAS EARNED THE EXEMPTED INCOME AND THE AO HAS INVOKED THE PROV ISIONS OF SECTION 14A AND APPLIED RULE 8D FOR DETERMINING THE DISALLOWANCES. SINCE RULE 8D TAKES CARE OF ALL ASPECTS OF INTEREST BEARING FUNDS AND INTEREST FREE FUNDS AND EXPENDITURE INCURRED IN MANAGEMENT OF PORTFOLIOS ETC., WE ARE OF THE VIEW, THAT ONCE IT IS DECIDED THAT PROVISIONS OF SECTION 14A IS TO BE INVOKED, DISALLO WANCES ARE TO MADE AS PER RULE 8D OF THE RULES. ACCORDINGLY, WE FIND NO INFIRMITY IN THE ORDER OF THE AO. 26. GROUND NO. 4 RELATE TO THE TRANSFER PRICING ADJ USTMENTS. IN THIS REGARD, OUR ATTENTION WAS INVITED TO THE FACT THAT FOR DETERMIN ING THE ALP FOR THE INTERNATIONAL TRANSACTIONS, THE TPO HAS SELECTED 10 COMPARABLES. ON RECEIPT OF TPO ORDER, THE AO HAS PREPARED THE DRAFT ASSESSMENT ORDER AGAINST WHICH ASSESSE HAS FILED THE OBJECTIONS BEFORE THE DRP. DRP HAS CONSIDERED THE OBJECTIONS FILED BY THE ASSESSEE AND HAVING DEALT WITH THESE OBJECTIONS, THE DRP HAS EXCLUDED 2 COMPARABLES FROM THE LIST OF COMPARABLES, I.E., ACCENTIA TECHNOLOGIE S LTD., AND INFORMED TECHNOLOGIES AND FINALLY TAKEN 8 COMPARABLES FOR DE TERMINING THE ALP. OUT OF THESE 8 COMPARABLES, THE ASSESSEE HAS SOUGHT EXCLUS ION OF UNIVERSAL PRINT SYSTEM IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 29 OF 35 LTD., INFOSYS BPO LTD., TCS E-SERVE LTD., BNR UDYOG LTD., AND EXCEL INFOWAYS LTD. EXCLUSION OF UNIVERSAL PRINT SYSTEM, INFOSYS BPO AND TCS SERVICE LTD., ON THE GROUND OF FUNCTIONAL DISSIMILARITY. IT WAS FUR THER CONTENDED THAT EXCLUSION OF THESE COMPARABLES WERE EXAMINED BY THE TRIBUNAL IN THE CASE OF SWISS RE SHARED SERVICES (INDIA) PVT. LTD., (SUPRA). 27. IN SUPPORT OF HIS ARGUMENT, THE LEARNED COUNSEL FOR THE ASSESSEE HAS FILED A CONSOLIDATED CHART IDENTIFYING THE COMPARABLES OF W HICH EXCLUSION/INCLUSION IS SOUGHT FOR ON DIFFERENT GROUNDS. AS PER THIS CHART , OUT OF 8 COMPARABLES FINALLY TAKEN BY THE DRP, THE ASSESSEE SOUGHT THE EXCLUSION OF 5 COMPARABLES I.E., UNIVERSAL PRINT SYSTEM LTD., INFOSYS BPO LTD., TCS E-SERVE LTD., BNR UDYOG LTD., AND EXCEL INFOWAYS LTD., ON DIFFERENT GROUNDS . HE PLACED HEAVY RELIANCE UPON THE ORDER OF THE TRIBUNAL IN THE CASE SWISS RE GLOBAL BUSINESS SERVICES INDIA PVT. LTD., VS. DCIT IN ITA NO.2315/BANG/2016 FOR TH E ASSESSMENT YEAR 2012-13 WITH THE SUBMISSION THAT THESE COMPARABLES WERE EXA MINED BY THE TRIBUNAL IN THIS CASE AND THE TRIBUNAL HAS EXCLUDED THESE COMPARABLE S FROM THE LIST OF COMPARABLES. 28. THE LEARNED DR ON THE OTHER HAND HAS INVITED OU R ATTENTION THAT IN THE CASE OF SWISS RE GLOBAL BUSINESS SERVICES INDIA PVT. LTD., THOUGH THE REFERENCE WAS MADE OF 4 COMPARABLES I.E., UNIVERSAL PRINT SYSTEM LTD., INFOSYS BPO LTD., TCS E-SERVE LTD., AND BNR UDYOG LTD., BUT THEY WERE NOT DISCUSS ED IN DETAIL IN THAT ORDER AND THEY WERE EXCLUDED FOLLOWING THE JUDGMENT OF THE HO NBLE BOMBAY HIGH COURT IN THE CASE OF PENTAIR WATER INDIA PVT. LTD., REJECTED SUMMARILY ON THE GROUND OF TURNOVER FILTER. NOW, IN THE LIGHT OF JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CHRYSCAPITAL INVESTMENT(SUPRA) , THE TURNOVER FILTER IS NOT CONSIDERED TO BE A GOOD FILTER UNLESS AND UNTIL IT IS ESTABLISHED THAT IT EFFECTS THE PROFITABILITY OF THE COMPARABLES. THEREFORE THESE COMPARABLES CANNOT BE EXCLUDED FROM THE LIST OF COMPARABLES. 29. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND FRO M PERUSAL OF THE RECORD WE FIND THAT THE ASSESSEE HAS PUT EMPHASIS ON HIS ARGU MENT THAT THE COMPARABLES WERE EXAMINED BY THE TRIBUNAL IN THE CASE OF SWISS RE GL OBAL BUSINESS SERVICES INDIA IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 30 OF 35 PVT. LTD., (SUPRA). THEREFORE, FOLLOWING THE SAME, THESE COMPARABLES CAN BE EXCLUDED FROM THE LIST OF COMPARABLES. ON CAREFUL PERUSAL OF THE ORDER OF THE TRIBUNAL IN THE CASE OF SWISS RE GLOBAL BUSINESS SERVICES INDIA PVT. LTD., WE FIND THAT IN PARA 4, THE TRIBUNAL HAS MADE A REFERENCE O F THESE 4 COMPARABLES THAT TOO ALONG WITH THEIR TURNOVER AND RELYING UPON THE JUDG MENT OF THE HONBLE HIGH COURT IN THE CASE OF PENTAIR WATER INDIA PVT. LTD., OF BO MBAY HIGH COURT IN WHICH ONLY INFOSYS BPO WAS DISCUSSED, THE TRIBUNAL HAS EXCLUDE D ALL THE COMPARABLES FROM THE LIST OF COMPARABLES. FOR THE SAKE OF REFERENCE, WE EXTRACT THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL AS UNDER: 2. AFTER ALLOWING THE NEGATIVE WORKING CAPITAL ADJ USTMENT OF 1.74% THE TPO HAS ARRIVED AT THE ADJUSTED MEAN MARGIN OF 29.8 5%. ACCORDINGLY, THE TPO HAS PROPOSED AN ADJUSTMENT U/S. 92CA OF RS. 11, 67,33,647/-. THE ASSESSEE CHALLENGED THE ACTION OF THE TPO BEFORE TH E DRP. THE DRP HAS NOT ACCEPTED THE OBJECTIONS OF THE ASSESSEE HOWEVER SUOMOTO REJECTED ONE COMPANY FROM THE SET OF COMPARABLES ON THE GROUND O F DIFFERENT BUSINESS MODEL. THUS THE DRP HAS EXCLUDED M/S. ACCENTIA TEC HNOLOGIES LIMITED FROM THE SET OF COMPARABLES. AFTER THE DIRECTIONS OF THE DRP, THE FINAL ASSESSMENT ORDER WAS PASSED BY CONSIDERING THE NINE COMPARABLE COMPANIES. BEFORE THE TRIBUNAL, THE ASSESSEE IS SE EKING EXCLUSION OF SIX COMPARABLE COMPANIES OUT THE NINE COMPANIES FROM TH E SET OF COMPARABLES ARE AS UNDER: S.NO. COMPANY NAME TURNOVER AS PER TP ORDER (IN INR CRORES) 1. M/S. UNIVERSAL PRINT SYSTEMS LIMITED (SEGMENTAL) 6.18 2. M/S. INFORMED TECHNOLOGIES INDIA LIMITED 1.94 3. M/S. INFOSYS BPO LIMITED 1312.41 4 . M/S. MICROGENETIC SYSTEMS LIMITED 1.30 5. M/S. TCS E-SERVE LIMITED 1578.44 6. M/S. BNR UDYOG LIMITED (SEGMENTAL) 1.47 2. THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE T PO HAS APPLIED A TURNOVER FILTER OF LESS THAN ONE CRORE WHILE SELECTING THE C OMPARABLES WHEREAS NO HIGHER LIMIT OF TURNOVER WAS APPLIED BY THE TPO. H E HAS THUS SUBMITTED THAT WHEN TURNOVER WAS CONSIDERED AS A RELEVANT FACTOR B Y THE TPO THEN BOTH THE LOWER END AND HIGHER END OF TURNOVER FILTER SHOULD HAVE BEEN APPLIED. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DE CISION DATED 02.07.2015 IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 31 OF 35 OF HONBLE PUNJAB & HARYANA HIGH COURT IN CASE OF A GILENT TECHNOLOGIES (INTERNATIONAL) PVT. LTD. VS ACIT IN ITA NO. 121 OF 2014 (O & M) AND SUBMITTED THAT THE HONBLE HIGH COURT HAS UPHELD TH E ORDER OF THE TRIBUNAL FOR CONSIDERING THE IMPACT OF THE TURNOVER ON THE C OMPARABILITY. HE HAS ALSO RELIED UPON THE DECISION DATED 16.09.2015 OF HONBL E BOMBAY HIGH COURT IN CASE OF CIT VS M/S. PENTAIR WATER INDIA PVT. LTD. I N TAX APPEAL NO. 18 OF 2015. THUS, THE LD. AR HAS SUBMITTED THAT THE HON BLE HIGH COURT HAS AGAIN UPHELD THE ORDER OF THE TRIBUNAL WHEREIN THE COMPAN IES HAVING HUGE TURNOVER WERE EXCLUDED BY THE TRIBUNAL. THUS THE L D. AR HAS SUBMITTED THAT IF THE FILTER OF TEN TIMES OF THE TURNOVER OF THE A SSESSEE IS APPLIED ON BOTH SIDES THEN ALL THESE SIX COMPANIES HAVE TO BE EXCLU DED FROM THE SET OF COMPARABLES. 3. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT WH EN THE TPO HAS APPLIED ONLY LOWER TURNOVER FILTER THEN AT THIS STAGE OF PR OCEEDINGS IT CANNOT BE AMENDED OR CHANGED WHICH DISTURBS THE ENTIRE PROCES S OF SELECTION. SHE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 4. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD WE FIND THAT THE TURNOVER IS A RELEVANT FACT OR FOR THE PURPOSE OF DETERMINING THE COMPARABILITY OF THE PROPOSED COMPA NIES FOR THE PURPOSE OF DETERMINING THE ARMS LENGTH PRICE. THE HONBLE BOM BAY HIGH COURT IN CASE OF VS M/S. PENTAIR WATER INDIA PVT. LTD. (SUPRA) WH ILE DEALING WITH THE ISSUE OF THE COMPARABILITY OF COMPANIES HAVING HIGH TURNO VER IN COMPARISON TO THE ASSESSEE HELD IN PARA 5 AND 6 AS UNDER. 5. ON PE R USA L O F T HE I MPUGNED O R DER PASSED BY THE T R IBUNA L DATED 23 . 05 . 2014 , WE FIND THAT THE TRIBUNAL HAS RECORDED THE REASONS FOR NOT ACCEPTING THE SAID THREE COMPANIES ARE COMPARABLE BY STATING AS FOLLOWS: (I) HCL COMNET SYSTEMS & SERVICES LTD:- WE F I ND FORCE IN THE SUBMISSION OF THE ID . AR THAT THIS COMPANY CANNOT BE A COMPARABLE AS THE TURNOVER OF T HIS COMPANY IS 260 . 18 CRORES WHILE IN THE CASE OF THE ASSESSEE , THE TURNOVER IS AROUND RS.11 CRORES ONLY. WHILE MAKING THE SELECTIO N OF COMPARABLES, THE TURNOVER FILTER , IN OUR OPINION , HAS TO BE THE BASIS FOR SELECTION. A COMPANY HAVING TURNOVER OF RS.11 C RORES CANNOT BE COMPARED WITH A COMPANY WHICH IS HAVING TURNOVER OF RS . 260 CRORES WHICH IS MORE THAN 23 TIMES THE TURNOVER OF THE ASSESSEE. THIS COMPANY CANNOT BE REGARDED TO BE IN EQUAL SIZE TO THE ASSESSEE . WE , ACCORDINGLY , DIRECT THE AO TO EXCLUDE THIS COMPANY OUT OF THE COMPARABLES. (II) INFOSYS BPO LTD. :- IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 32 OF 35 IN THIS CASE ALSO WE NOTED THE TURNOVER IN RESPECT OF THIS COMPANY IS RS . 649 . 56 CRORES WHILE THE TURNOVER OF THE ASSESSEE COMPANY IS AROUND RS . 11 CRORES WHICH IS MUCH MORE THAN 65 TIMES OF THE ASSESSEE'S TURNOVER. WE, THEREFORE , DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER OF CIT(A) IN EXCLUDING TH IS COMPANY OUT OF THE COMPARABLES . ACCORDINGLY , WE CONFIRM THE ORDER OF THE CIT(A). (III) WIPRO LTD.:- AFTER HEARING THE RIVAL SUBMISSIONS , WE NOTED THAT THE CIT(A) APPLYING THE TURNOVER FILTER HAS EXCLUDED THIS COMP ANY OUT OF THE COMPARABLES . THE TURNOVER REPORTED IN THE CASE OF WIPRO LTD . I S RS . 939 . 78 CRORES WHILE IN THE CASE OF THE ASSESSEE THE TUR NOVER IS AROUND RS. 11 CRORES . THEREFORE , ON THE BASIS OF THE TURNOVER FILTER ITSELF THIS COMPANY CANNOT BE REGARDED TO BE COMPAR ABLE TO THE ASSESSEE COMPANY AND ACCORDINGLY , WE DO NOT FIND ANY INFIRMITY IN THE FINDING OF CIT(A) WHILE HE EXCLUDED THIS COM PANY ON THE TURNOVE R CRITER I A FOLLOW I NG THE DEC I S I ON O F THI S TRI B UN A L IN : SONY IND I A ( P ) LT D . VS . D CIT, 11 4 ITD 44 8 DELH I , E-GA I N COMMUN I CAT I ON , 20 08 T IOL 282 ITAT ( PU N E ) DELO I TTEE C ONSULT I NG IN D I A PV T . LT D . VS. DCIT , ITA NO . 1 082 / HYD / 2 01 0 GEN I SYS I NTEGRATING SYSTE M ( INDIA )(P.) L TD . VS DCIT, 53 SOT 159 (B ANG ) ' 6. THE SAID FINDINGS OF THE TRIBUNAL IN RESPECT OF THE SAID THREE COMPANIES ARE ON THE BASIS OF APPRECIATION OF EVIDE NCE ON RECORD. WE F I ND NO INFIRMITY IN THE SAID FINDINGS OF THE TRIBUNA L ON THAT COUNT . IN FACT , THE TRIBUNA L HAS ENDORSED THE VIEWS OF THE CIT APPEALS WHILST COMING TO SUCH CONCLUSIONS. T HE CONCURRENT FINDINGS OF FACTS ARRIVED AT BY THE AUTHORITIES BELOW , CA N NO T BE RE- APPRECIATED BY THIS COURT I N THE PRESENT APPEAL . 5. THUS THE HONBLE HIGH COURT HAS UPHELD THAT THERE W AS NO INFIRMITY IN FINDING OF THE TRIBUNAL ON THIS ISSUE WHEREIN IT WA S HELD THAT THE COMPANY HAVING TURNOVER OF MORE THAN 23 TIMES OF THE ASSESS EES TURNOVER CANNOT BE COMPARED WITH THE ASSESSEE. A SIMILAR VIEW HAS BEE N TAKEN BY THE HONBLE PUNJAB AND HARYANA HIGH COURT IN CASE OF AGILENT TE CHNOLOGIES (INTERNATIONAL) PVT. LTD. VS ACIT (SUPRA). IT IS P ERTINENT TO NOTE THAT THIS TRIBUNAL IN A SERIES OF DECISION HAS TAKEN A CONSIS TENT VIEW THAT IN CASE TURNOVER FILTER IS APPLIED IT SHOULD BE IN THE MULT IPLE OF THE ASSESSEES TURNOVER AND ACCORDINGLY THE TRIBUNAL HAS TAKEN A V IEW THAT IN NORMAL IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 33 OF 35 CIRCUMSTANCES TEN TIMES OF THE ASSESSEES TURNOVER ON BOTH SIDES LOWER AS WELL AS HIGHER WOULD BE AN APPROPRIATE TOLERANCE RA NGE OF TURNOVER WHILE SELECTING THE COMPARABLE COMPANIES. IN THE CASE IN HAND THE ASSESSEES TURNOVER IS RS. 71.37 CRORES. ACCORDINGLY BY APPLY ING THE SAID PARAMETER OF TEN TIMES OF ASSESSEES TURNOVER ON BOTH SIDES THE COMPANIES WHICH ARE HAVING LESS THAN RS. 7.1 CRORES AND MORE THAN RS. 7 13 CRORES ON TURNOVER WOULD BE EXCLUDED. THUS WE FIND FROM THE ABOVE DET AILS THAT THESE SIX COMPANIES ARE BREACHING THE SAID TOLERANCE RANGE OF TURNOVER EITHER ON THE LOWER SIDE OR ON THE HIGHER SIDE. IN VIEW OF THE A BOVE DISCUSSION AS WELL AS FACTS AND CIRCUMSTANCES OF THE CASE, WE DIRECT THE AO / TPO TO EXCLUDE THE ABOVE MENTIONED SIX COMPANIES FROM THE SET OF COMPA RABLES. 30. IN THIS ORDER OF THE TRIBUNAL, NO DISCUSSION WI TH RESPECT TO EXCEL INFOWAYS LTD., WAS AT ALL MADE. THIS COMPARABLE WAS SOUGHT TO BE EXCLUDED ON THE GROUND OF EXTRA ORDINARY EVENTS AND IT FAILS THE EMPLOYEE COS T FILTER BUT DETAILS WERE NOT FURNISHED DURING THE COURSE OF HEARING OF APPEAL. SIMPLY RELIANCE OF THIS ORDER OF TRIBUNAL WAS PLACED WITH THE SUBMISSION THAT THE EX CLUSION OF THIS COMPARABLE IS COVERED BY THE ORDER OF THE TRIBUNAL IN THE CASE OF SWISS RE GLOBAL BUSINESS SERVICES INDIA PVT. LTD., BUT WE FIND NO DISCUSSION IN THIS REGARD IN THAT ORDER. THEREFORE, WE FIND NO MERIT IN THE ASSESSEES CONTE NTIONS WITH REGARD TO EXCLUSION OF THIS COMPARABLE. 31. SO FAR AS REMAINING 4 COMPARABLES I.E., UNIVERS AL PRINT SYSTEM LTD., INFOSYS BPO LTD., TCS E-SERVE LTD., BNR UDYOG LTD., ARE CON CERNED, WE FIND THAT THE COMPARABLES WERE EXCLUDED BY THE TRIBUNAL ON THE GR OUND OF TURNOVER FILTER WHICH IS NOT CONSIDERED TO BE A GOOD FILTER IN THE LIGHT OF JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CHRYSCAPITAL INVESTMENT(SUPRA), THEREFORE, WE ARE OF THE VIEW THAT THE ISSUE OF EXCLUSION OF THIS COMPARABLE SHOU LD BE RE-EXAMINED BY THE LOWER AUTHORITIES INDEPENDENTLY WITHOUT BEING INFLUENCED WITH THE AFORESAID ORDER OF THE TRIBUNAL. WE ACCORDINGLY SET ASIDE THE ORDER OF TH E DRP IN THIS REGARD AND RESTORE THE MATTER TO THE AO/TPO TO RE-EXAMINE THE COMPARAB LES IN THE LIGHT OF OTHER FILTERS AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND THEREAFTER DETERMINE THE ALP IN ACCORDANCE WITH LAW. IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 34 OF 35 32. SO FAR AS INCLUSION OF R SYSTEMS INTERNATIONAL LTD., IS CONCERNED, THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT THIS CO MPARABLE WAS INCLUDED BY THE TPO AND THE DRP ON THE GROUND THAT IT HAS DIFFERENT FINANCIAL YEAR AND IT WAS CONTENDED THAT IT HAS BEEN REPEATEDLY HELD THAT COM PARABLE CANNOT BE EXCLUDED FOR DIFFERENT FINANCIAL YEAR AND IF RELEVANT DATA UPTO THE END OF THE FINANCIAL YEAR IS AVAILABLE. THE ISSUE HAS ALREADY BEEN EXAMINED BY US IN THE FOREGOING APPEALS AND FOLLOWING THE VIEW TAKEN THEREIN, WE SET ASIDE THE ORDER OF THE AO IN THIS REGARD AND RESTORE THE MATTER TO THE FILE OF AO/TPO TO READJUD ICATE THE ISSUE OF INCLUSION OF R SYSTEMS INTERNATIONAL LTD., IF FINANCIAL DATA OF TH E RELEVANT FINANCIAL YEAR IS AVAILABLE. 33. THE ISSUE WITH REGARD TO MARKET RISK ADJUSTMENT AND DEPRECIATION ADJUSTMENT HAS ALREADY BEEN ADJUDICATED BY US IN THE FOREGOING APPEALS AND FOLLOWING THE VIEW TAKEN THEREIN, WE RESTORE THE ISSUES TO THE AO/TPO TO READJUDICATE THE ISSUE AFRESH AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE A SSESSEE IN TERMS OF OBSERVATION MADE IN FOREGOING APPEALS. ACCORDINGLY, THIS APPEA L IS ALSO DISPOSED OFF. 34. IN THE RESULT, ALL APPEALS ARE PARTLY ALLOWED F OR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF OCTOBER, 2017. SD/- SD/- (JASON P BOAZ) (SUNIL KU MAR YADAV) ACCOUNTANT MEMBER J UDICIAL MEMBER BANGALORE. DATED: 31 ST OCTOBER, 2017. /NSHYLU/* IT(TP)A NOS.443,526/BANG/2016, NO.535/BANG/2017 PAGE 35 OF 35 COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. DR, ITAT, BANGALORE. 5. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME- TAX APPELLATE TRIBUNAL BANGALORE