INTELENT GLOBAL SERVICES P.LTD, MUMBAI V. ASST CIT CIR 1(2), MUMBAI

ITA 483/MUM/2013

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8387 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Assessment Year: 2008-2009
• Appeal Filed On: 16-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Transfer pricing; International transaction; Question of law; TDS
• Section: 143(3); 133(6); 144C; 43; 13; 22; 92CA; 92

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL K BENCH MUMB AI BEFORE SHRI R.C. SHARMA ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.483/MUM/2013 (ASSESSMENT YEAR 2008-09) ITA NO.1808/MUM/2014 (ASSESSMENT YEAR 2009-10) M/S. TELEPERFORMENCE GLOBAL SERVICES PRIVATE LIMITED, (EARLIER KNOWN AS INTEL GLOBAL SERVICES PRIVATE LIMITED), TELEPERFORMENCE TOWERS, PLOT CST NO. 1406-A/28, MINDSPACE, MALAD, (WEST) MUMBAI-400090 P AN: AAACI 7387 P VS. ACIT, CIRCLE 1(2), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. APPELLANT RESPONDENT APPELLANT BY : SHRI J.D. MISTRY SR ADVOCATE A/W SH. MADHUR AGARWAL ADVOCATE REVENUE BY : SH. ANAND MOHAN CIT-DR DATE OF HEARING : 02.03.2020 DATE OF PRONOUNCEMEN T : 16.06.2020 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THESE TWO BY ASSESSEE ARE DIRECTED AGAINST THE ASSE SSMENT ORDER PASSED IN PURSUANCE OF DIRECTIONS OF DISPUTE RESOLUTION PENAL (DRP) FOR ASSESSMENT YEARS 2008-09 AND 2009-10. IN BOTH THE A PPEALS THE ASSESSEE HAS RAISED CERTAIN COMMON GROUNDS OF APPEAL, THEREF ORE, BOTH THE APPEALS WERE CLUBBED, HEARD TOGETHER AND ARE DECIDED BY COM MON ORDER. ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 2 2. THE ASSESSEE IN ITS APPEAL FOR AY 200-08-09 HAS RA ISED HAS RAISED AS MANY YEARS 7 GROUNDS OF APPEAL AND VARIOUS SUB- GRO UNDS OF APPEAL, WHICH ARE NARRATIVE OR ARGUMENTATIVE. WE HAVE SUMMA RIZED THE GROUND OF APPEAL IN THE FOLLOWING MANNER. I TRANSFER PRICING (1) GENERAL 1.1 THE LEARNED AO/DISPUTE RESOLUTION PANEL (DRP) ERRED IN UPHOLDING THE UPWARD ADJUSTMENT OF 47.28 CRORE TOWARDS PROVISION OF CALL CENTRE AND DATA PROCESSING SERVICES, 1,09,738/-TOWARDS INTEREST RECEIVED ON PROVISION OF LOAN TO ASSOCIATED ENTERPRISES AND 2.47 CRORE TOWARDS PROVISION OF GUARANTEE MADE BY THE LEARNED TRANS FER PRICING OFFICER (TPO ). 1.2 THE LEARNED AO/DRP ERRED IN CONFIRMING THAT THE LEA RNED TPO HAS NOT VIOLATED THE PRINCIPLE OF RES-JUDICATA IN MAKING TH E TRANSFER PRICING ADJUSTMENT . (2) TRANSFER PRICING ADJUSTMENT AS REGARDS PROVISION OF CALL CENTRE AND DATA PROCESSING SERVICES TO THE AE. (3) TRANSFER PRICING ADJUSTMENT AS REGARDS PROVISION CO RPORATE GUARANTEE TO THE AE. (4) TRANSFER PRICING ADJUSTMENT AS REGARD PROVISION OF LAW TO AES. II DIRECT TAX (5) INCOME FROM SUB-LEASE TREATED AS INCOME FROM OTHER SOURCES. (6) RENT EXPENDITURE NOT ALLOWED AS DEDUCTION FROM INC OME FROM OTHER SOURCES. (7) GENERAL, FOR INITIATING PENALTY PROCEEDING UNDER SE CTION 271(1). 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPA NY IS ENGAGED IN PROVIDING BUSINESS PROCESS SERVICES (INFORMATION TE CHNOLOGY ENABLED SERVICES) AND CLAIMING TO BE A LEADER IN ITS BUSINE SS. THE ASSESSEE- ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 3 COMPANY FILED ITS RETURN OF INCOME FOR ASSESSMENT Y EAR 2008-09 ON 23.09.2009 DECLARING TOTAL INCOME AT RS. NILL AFTER CLAIMING DEDUCTION UNDER SECTION 10A. ALONG WITH THE RETURN OF INCOME, THE ASSESSEE FURNISHED REPORT UNDER FORM 3CEB AND REPORTED INTER NATIONAL TRANSACTION WITH ITS ASSOCIATED ENTERPRISES (AES). THE RETURN W AS SELECTED FOR SCRUTINY. THE ASSESSING OFFICER CONSEQUENT ON REPOR TING INTERNATIONAL TRANSACTION MADE REFERENCE TO THE TRANSFER PRICING OFFICER (TPO) FOR COMPUTATION OF ARMS LENGTH PRICE (ALP) OF INTERNATI ONAL TRANSACTION. THE TPO ON RECEIPT OF REFERENCE NOTED THAT THE ASSESSEE IN THE REPORT UNDER FORM 3CEB REPORTED THE FOLLOWING INTERNATIONAL TRA NSACTIONS: SR. NO. INTERNATIONAL TRANSACTION NAME OF AE AMOUNT (RS.) 1 CALL CENTRE AND DATA PROCESSING SERVICES BARCLAYS BANK 136,02,09,196/- 2 BUSINESS OUTSOURCES EXPENSES INTELNET AMERICA INC 7,37,80,817/- INTELNET INC USA 5,85,923/- INTELNET UK LTD 52,48,014 3 IT ENABLED SERVICES INTELNET INC USA 53,60,26,55 9/- 4 IT ENABLED SERVICES INTELNET (UK) LTD 14,85,01,08 9/- 5 INTEREST RECEIVED FROM SHORT TERM LOAN INTELNET AMERICA INC SNOW HOLDING CO. LTD 215,637/- 958,949/- TOTAL 212,55,26,184/- ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 4 4. THE ASSESSEE BENCH MARKED ITS ALP UNDER COMPARABLE UNCONTROLLED PRICE METHOD (CUP) WITH REGARD TO THE TRANSACTION F OR PROVISIONS OF CALL CENTER AND DATA PROCESSING ACTIVITIES. THE TPO REJE CTED THE CUP METHOD AND APPLIED TRANSACTION NET MARGIN METHOD (TNMM) AS MOST APPROPRIATE METHOD FOR COMPUTATION OF ALP WITH REGA RD TO THE TRANSACTION FOR PROVISIONS OF CALL CENTER AND DATA PROCESSING ACTIVITIES. THE TPO SELECTED 22, FOLLOWING COMPARABLE COMPANY F OR BENCHMARKING THE TRANSACTION. 1. MOLD TEK TECHNOLOGIES, 2. ECLERCK SERVICES LTD 3. ACCENTIA TECHNOLOGIES LTD. (SEG) 4. ACCROPETAL TECHNOLOGY LTD (SEG), 5. DATAMATICS FINANCIAL LTD, (SEG) 6. HCL COMNET SYSTEMS & SERVICES LTD (SEG), 7. WIPRO LTD. (SEG), 8. CROSSDOMAIN SOLUTION LTD, 9. TRITON CAPITAL LTD, 10. COSMIC GLOBAL LTD. 11. MAPLE ESOLUTIONS LTD, 12. INFOSYS BPO LTD. 13. E4E HEALTHCARE BUSINESS SERVICES LTD, 14. SPENCO LTD, 15. CALIBER POINT BUSINESS SOLUTIONS LTD., 16. I SERVICES INDIA PVT. LTD. 17. ASIT C MEHTA FINANCIAL SERVICES LTD, (SEG), 18. R SYSTEMS INTERNATIONAL LTD. (SEG), 19. ADITYA BIRLA MINACS WORLDWIDE 20. JINDAL INTELLICOM PVT LTD. ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 5 21. CORAL HUBS LTD AND 22. GENESYS INTERNATIONAL CORPORATION LTD. 5. THE TPO AFTER INCLUDING/ SELECTING 22 COMPARABLE W ORKED OUT ARITHMETIC MEAN OF MARGIN OF 27.53% AND WORKED OUT DIFFERENCE BETWEEN ALP OF SALES AND VALUE OF INTERNATIONAL TRA NSACTION AND MADE ADJUSTMENT OF RS. 47.28 CRORE IN THE FOLLOWING MAN NER: 1 OPERATING COST RS. 360,34,63,527/- 2 ARMS LENGTH MEAN MARGIN 27.53% OF OPERATING COST 3 ALP @ 127.53 % OF OPERATING COST RS. 459,54,97,0 36/- 4 PRICE RECEIVED RS. 412,26,26,719/- 5 SHORTFALL BEING ADJUSTMENT U/S 92CA RS. 47,28,70, 317/- 6. THE TPO ALSO NOTED THAT THE ASSESSEE HAS EXTENDED C ORPORATE GUARANTEE FOR SECURED LOAN GRANTED BY ICICI CANADA AND PERFOR MANCE GUARANTEE FOR ITS AE IN CANADA AND UK. THE TPO AFTER ISSUING SHOW CAUSE NOTICE CHARGED 3% INTEREST ON SUCH GUARANTEE AND SUGGESTED ADJUSTMENT OF RS. 2.47 CRORE ON SUCH CORPORATE GUARANTEE AND PERFORMA NCE GUARANTEE. BESIDES THAT THE ASSESSEE PROVIDED LOAN TO ITS AES AND CHARGED INTEREST @ LIBOR PLUS 200 BPS. THE TPO REJECTED THE WORKING ANALYSIS OF THE ASSESSEE AND CHARGED INTEREST @ 14.39% ON THE BASIS OF INFORMATION OBTAINED FROM CRISIL UNDER SECTION 133(6) AND SUGGE STED UPWARD ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 6 ADJUSTMENT OF RS.109,378/-. ON RECEIPT OF REPORT OF TPO, THE ASSESSING OFFICER MADE UPWARD ADJUSTMENT/ADDITION SUGGESTED B Y TPO. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE H AS CLAIMED DEDUCTION UNDER SECTION 10A OF RS. 89,55,93,571/- AGAINST BUS INESS INCOME. THE ASSESSEE ALSO CREDITED A SUM OF RS. 6,53,13,864/- B Y SUB-LEASING THE PROPERTY TAKEN ON LEASE. THE ASSESSING OFFICER TREA TED THE SAID INCOME OF RS. 6,53,13,864/- AS INCOME FROM OTHER SOURCES AND PASSED THE DRAFT ASSESSMENT ORDER. 7. THE COPY OF DRAFT ASSESSMENT ORDER WAS SERVED ON TH E ASSESSEE. THE ASSESSEE EXERCISED ITS OPTION TO FILE OBJECTION BEF ORE DISPUTE RESOLUTION PENAL (DRP). THE LD. DRP AFTER CONSIDERING THE OBJE CTIONS OF THE ASSESSEE, ON THE ISSUE OF TP ADJUSTMENT ON ACCOUNT OF PROVISIONS OF CALL CENTER AND DATA PROCESSING ACTIVITIES DIRECTED THE AO/TPO TO RECOMPUTE THE ADJUSTMENT AFTER EXCLUDING TWO COMPARABLE I.E. CORAL HUBS LTD AND GENESYS INTERNATIONAL CORPORATION LTD, FROM SET OF COMPARABLES AND UPHELD THE INCLUSION OF REMAINING 20 COMPARABLES. H OWEVER, ON THE ISSUE OF CORPORATE GUARANTEE THE INTEREST RATE WAS RESTRI CTED TO 1.5%, THUS GRANTED PARTIAL RELIEF. ON THE OBJECTION / ISSUE OF INTEREST ON LOAN TO AE THE AP/TPO WAS DIRECTED TO ADOPT THE DOMESTIC COST OF BORROWING. AND THE TREATMENT OF INCOME FROM SUB-LEASE WAS UPHELD. ON RECEIPT OF THE ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 7 DIRECTIONS OF THE DRP THE ASSESSING OFFICER PASSED THE FINAL ASSESSMENT ORDER DATED 8.11.2012 UNDER SECTION 143(3) RWS 144C (13) AND MADE ADDITION/ ADJUSTMENT. THUS, FURTHER AGGRIEVED THE A SSESSEE HAS FILED THIS APPEAL BEFORE THIS TRIBUNAL. 8. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPR ESENTATIVE (AR) OF THE ASSESSEE AND THE LEARNED DEPARTMENTAL REPRESENT ATIVE (CIT-DR) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON R ECORD. THE LD. AR FOR THE ASSESSEE SUBMITS THAT GROUND NO.1 IS GENERAL AN D NEEDS NO SPECIFIC ADJUDICATION, THEREFORE DISMISSED. GROUNDS NO. 2 RE LATES TO TP ADJUSTMENT REGARDING PROVISIONS OF CALL CENTRE AND DATA PROCESSING ACTIVITIES. THE LD AR FOR THE ASSESSEE SUBMITS THAT HE IS MAKING LIMITED SUBMISSIONS ONLY TO EXAMINE THE COMPARABILITY OF 8 COMPARABLE NAMELY; MOLD-TECK TECHNOLOGY, ECLERX SERVICES LIMITED, ACCE NTIA TECHNOLOGY LIMITED, WIPRO LIMITED, ACCROPETAL TECHNOLOGY LIMIT ED, INFOSYS BPO LIMITED, HCL COMNET SYSTEM & SERVICES LTD AND CROSS DOMAIN SOLUTION LTD, WHICH ARE NOT COMPARABLE WITH THE ASS ESSEE. THE LD. AR FOR THE ASSESSEE FURTHER SUBMITS THAT EXCLUSION OF EACH COMPARABLE FOR BENCHMARKING THE INTERNATIONAL TRANSACTION IN CASE OF A COMPANY ENGAGED IN SIMILAR ITES/ BPO SEGMENT HAS BEEN CONSIDERED BY TRIBUNAL FOR SAME ASSESSMENT YEAR (AY) THAT IS 2008-09. AND IN CASE, IF THESE EIGHT ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 8 COMPARABLE ARE EXCLUDED THE MARGINS OF THE ASSESSEE WOULD BE WITHIN THE TOLERANCE RANGE. THE LD AR FOR THE ASSESSEE FILED T HE FOLLOWING CASE LAW COMPILATION; WNS GLOBAL SERVICES PVT LTD VS ITO (ITA NO. 7378/MU M/2012), FLEXTRONICS TECHNOLOGIES LTD (INDIA) (P) LTD (ITA N O. 1559/M/BANG/2012, DIALOGIC NETWORK (INDIA)(P) LTD (ITA NO. 7280/M/201 2 AND GOLDMAN SACH (I) SECURITIES (P) LTD (ITA NO. 6912/M UM/2012. 9. ON THE OTHER HAND THE LD. DR FOR THE REVENUE SUBMIT S THAT THE TPO AND THE LD. DRP HAS GIVEN DETAILED REASONING FOR INCLUS ION OF THE COMPARABILITY OF VARIOUS COMPARABLE AND HE RELY OF THEIR ORDER. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED REPRESENTATIVES OF THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE LOW ER AUTHORITIES AND ALSO DELIBERATED ON THE CASE LAWS RELIED BY LD. AR FOR THE ASSESSEE. THE TPO IN PARA 5 OF HIS ORDER AS ACCEPTED THAT PRIMARY FUN CTION OF THE ASSESSEE IS TO PROVIDE BUSINESS PROCESS OUTSOURCING SERVICES (B PO), CONSISTING OF INBOUND CUSTOMER SERVICES, OUTBOUND COLLECTIONS, TR ANSACTION PROCESSING, FINANCING AND ACCOUNTING SERVICES, KNOWLEDGE MANAGE MENT OF COMPLEX TECHNOLOGIES, TELEMARKETING AND INVOICE PROCESSING. THE ASSESSING OFFICER HAS ALSO RECORDED THE NATURE OF BUSINESS ACTIVITIES OF THE ASSESSEE AS INFORMATION TECHNOLOGY ENABLED SERVICES (ITES). THO UGH, THE ASSESSEE ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 9 BENCHMARKED ITS TRANSACTION BY ADOPTING MOST APPROP RIATE METHOD AS CUP. THE TPO NOT ACCEPTED THE METHOD ADOPTED BY ASS ESSEE. THE TPO APPLIED TNMM METHOD AS APPROPRIATE METHOD FOR BENCH MARKING THE TRANSACTION RELATING TO PROVISION OF CALL CENTRE AN D THAT A PROCESSING ACTIVITIES. BEFORE US THE LEARNED AR OF THE ASSESSE E MADE HIS LIMITED SUBMISSION ONLY FOR SEEKING EXCLUSION OF 8 COMPARAB LE, WHICH IS ACCORDING TO LEARNED AR OF THE ASSESSEE ARE NOT COM PARABLE WITH THE ASSESSEE. FOR EXCLUSION OF THOSE 8 COMPARABLE THE L EARNED AR OF THE ASSESSEE MAINLY RELIED UPON THE FOUR CASE LAWS REFE RRED ABOVE AND WOULD SUBMIT THAT THOSE COMPARABLE ARE NOT AT ALL COMPARA BLE WITH THE ASSESSEE AS HELD BY COORDINATE BENCH OF TRIBUNAL, WITH THAT ASSESSEE(S) ENGAGED IN SIMILAR BUSINESS ACTIVITIES (BPO/ITES) AS UNDERTAKE N BY ASSESSEE. WE HAVE NOTED THAT MUMBAI TRIBUNAL IN WNS GLOBAL SERVI CES PVT LTD (SUPRA) FOR SAME AY I.E. 2008-09, CONSIDERED THE EX CLUSION OF HCL COMNET SYSTEM AND SERVICES LTD AND PASSED THE FOLL OWING ORDER; COMPARABLES UNDER ITES SEGMENT I) HCL COMNET SYSTEMS AND SERVICES LTD . (SEGMENT) 79. OBJECTING TO THE SELECTION OF THE AFORESAID COM PANY, THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED, THE TRANSFER PR ICING OFFICER WHILE SELECTING / REJECTING COMPARABLES HAS APPLIED RELAT ED PARTY TRANSACTION (RPT) FILTER AND HAS REJECTED ALL COMPANIES WHICH HAS RPT OF MORE THAN 25% OF THE REVENUE. HE SUBMITTED, APPLYING THE AFORESAID FILTE R THE TRANSFER PRICING ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 10 OFFICER HAS REJECTED SOME OF THE COMPARABLES SELECT ED BY THE ASSESSEE. HE SUBMITTED, APPLYING THE SAME LOGIC, THIS COMPANY HA S TO BE REJECTED AS THE RPT OF THE COMPANY IS MORE THAN THE THRESHOLD LIMIT OF 25% APPLIED BY THE TRANSFER PRICING OFFICER. HE SUBMITTED, THE RPT OF THIS COMPANY AS A PERCENTAGE OF THE REVENUE WORKS OUT TO 28.19%. THER EFORE, IT CANNOT BE TREATED AS A COMPARABLE. IN SUPPORT OF SUCH CONTENTION, HE RELIED UPON THE DECISION OF THE TRIBUNAL, DELHI BENCH, IN H&S SOFTWARE DEVELOPM ENT AND KNOWLEDGE MANAGEMENT CENTRE PVT. LTD., ITA NO.436 AND 496/DEL ./2013, DATED 20TH MARCH 2018. WITHOUT PREJUDICE TO THE AFORESAID CONT ENTION, THE LEARNED SR. COUNSEL SUBMITTED, THE COMPANYS ACCOUNTING YEAR EN DS ON 30TH JUNE, WHEREAS, ASSESSEES ACCOUNTING YEAR ENDS ON 31ST MA RCH. THUS, HE SUBMITTED, THE COMPANY CANNOT BE TREATED AS A COMPARABLE DUE T O DIFFERENT ACCOUNTING YEAR ENDING. FOR SUCH PROPOSITION, HE RELIED UPON T HE DECISION OF THE TRIBUNAL, MUMBAI BENCH, IN DIALOGIC NETWORK INDIA PVT. LTD. V /S ACIT, ITA NO.7280/MUM./2012, DATED 27TH JULY 2018. 80. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE DRP AND THE TRANSFER PRICING OFFICER. 81. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSE D MATERIAL ON RECORD. AS COULD BE SEEN FROM PARA7 OF THE ORDER PASSED BY TH E TRANSFER PRICING OFFICER, FOR SELECTING / REJECTING COMPARABLES INDEPENDENTLY HE HAS APPLIED CERTAIN FILTERS WHICH INCLUDE REJECTION OF COMPANIES HAVING RPT OF MORE THAN 25% OF THE OPERATING REVENUE AS WELL AS COMPANIES HAVING D IFFERENT FINANCIAL YEAR ENDING. IN OTHER WORDS, HE HAS REJECTED COMPANIES W HICH DO NOT HAVE THEIR FINANCIAL YEAR ENDING ON 31ST MARCH 2008. IT IS THE SPECIFIC CONTENTION OF THE LEARNED SR. COUNSEL BEFORE US THAT NOT ONLY THE RPT OF THIS COMPANY AS A PERCENTAGE OF OPERATING REVENUE WORKS OUT TO 28.19% THEREBY EXCEEDING THE THRESHOLD LIMIT OF 25% FIXED BY THE TRANSFER PRICIN G OFFICER, BUT, THE COMPANY HAS A DIFFERENT ACCOUNTING YEAR ENDING WHICH IS 30T H JUNE. IT IS NOTICED THAT IN CASE OF H&S SOFTWARE DEVELOPMENT AND KNOWLEDGE CENT RE PVT. LTD. (SUPRA), THE TRIBUNAL, DELHI BENCH, TAKING NOTE OF THE FACT THAT THE RPT OF THE COMPANY ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 11 EXCEEDS THE THRESHOLD LIMIT OF 25% FIXED BY THE TRA NSFER PRICING OFFICER HIMSELF AND FURTHER IT HAS A DIFFERENT FINANCIAL YE AR ENDING HAS HELD THAT IT CANNOT BE TREATED AS A COMPARABLE. THE TRIBUNAL, MU MBAI BENCH, IN DIALOGIC NETWORK INDIA PVT. LTD. (SUPRA) HAS ALSO REJECTED T HIS COMPANY AS A COMPARABLE SINCE IT HAS A DIFFERENT FINANCIAL YEAR ENDING. SINCE, THE AFORESAID DECISIONS OF THE TRIBUNAL PERTAIN TO THE VERY SAME ASSESSMENT YEAR, RESPECTFULLY FOLLOWING THE RATIO LAID DOWN THEREIN, WE EXCLUDE THIS COMPANY FROM THE LIST OF COMPARABLES. 11. WE HAVE FURTHER NOTED THAT BANGALORE TRIBUNAL IN F LEXTRONICS TECHNOLOGIES (INDIA) (P) LTD (SUPRA) WHILE CONSIDER ING THE EXCLUSION OF MOLD-TECK TECHNOLOGY, ECLERX SERVICES LIMITED, ACCE NTIA TECHNOLOGY LIMITED, WIPRO LIMITED, ACCROPETAL TECHNOLOGY LIMIT ED, INFOSYS BPO LIMITED, AND CROSS DOMAIN SOLUTION LTD FOR SAME AY I.E. 2008-09, PASSED FOLLOWING ORDER; 12. THE LD. COUNSEL FOR THE ASSESSEE, SHRI AJAY JAIN, SUBMITTED A CHART AND STATED THAT ACCENTIA TECHNOLOGIES LTD. IS UNCOMPARA BLE AS ITS FINANCIAL RESULTS ARE ARISING OUT OF AMALGAMATION. HE RELIED ON THE D ECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SYMPHONY MARKETING SOLUTIONS INDIA (P.) LTD. V . ITO [2013] 38 TAXMANN.COM 55 (BANG.-TRIB.) , WHEREIN IT HAS BEEN HELD AS FOLLOWS: '(1) ACCENTIA TECHNOLOGIES LTD. (SEG.) 10. THIS WAS CONSIDERED AS A COMPARABLE BY THE TPO AND LISTED AT SL. NO.1 OF THE COMPARABLE COMPANIES CHOSEN BY THE TPO. THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE FACT THA T MERE ARE EXTRAORDINARY EVENTS THAT OCCURRED DURING THE PREVI OUS YEAR IN THIS COMPANY. OUR ATTENTION WAS DRAWN TO THE ANNUAL REPO RT OF THIS COMPANY FOR THE A.Y. 2007-08 WHEREIN THE FACT THAT THIS COM PANY HAD ACQUIRED THUNGA SOFTWARE PVT. LTD., GSR PHYSICIANS BILLING S ERVICES INC., GSR ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 12 SYSTEMS INC. AND DERAFIED INC. IS MENTIONED. OUR AT TENTION WAS ALSO DRAWN TO THE DECISION OF THE HYDERABAD ITAT BENCH I N THE CASE OF CAPITAL IQ INFORMATION SYSTEMS INDIA PVT. LTD. V. DCIT [2013] 32 TAXMAN.COM 21 (HYD. TRIB) . IN THE AFORESAID DECISION, THE HYDERABAD BENCH OF THE TRIBUNAL HAD TO DEAL WITH A CASE OF DE TERMINATION OF ALP IN THE CASE OF AN ASSESSEE WHO WAS PROVIDING ITES BUSI NESS SUPPORT SERVICES FOR THE A.Y. 2007-08. THE TPO HAD CONSIDER ED ACCENTIA TECHNOLOGIES LTD. AS A COMPARABLE. THE DRP HOWEVER HELD THAT THE SAID COMPANY CANNOT BE COMPARED AS A COMPARABLE OWING TO EXTRAORDINARY EVENTS THAT TOOK PLACE DURING THE PREVIOUS YEAR. TH E TRIBUNAL UPHELD THE ORDER OF THE DRP OBSERVING AS FOLLOWS: 'I. ACCENTIA TECHNOLOGIES LTD. 10. IT IS THE SUBMISSION OF THE ASSESSEE THAT THIS COMPANY CANNOT BE TREATED AS A COMPARABLE BECAUSE OF UNCOMPARABLE FIN ANCIAL RESULTS ARISING OUT OF AMALGAMATION IN THE COMPANY. IN THIS REGARD, THE ASSESSEE HAS RELIED UPON THE ORDER OF THE DRP FOR THE ASSESS MENT YEAR 2008-09 IN ASSESSEE'S OWN CASE. IT IS SEEN THAT THE DRP WHILE CONSIDERING SIMILAR OBJECTION PLACED BY THE ASSESSEE IN THE CASE OF ANO THER COMPANY, VIZ. MOLD TEK TECHNOLOGIES LTD., IN THE PROCEEDINGS RELA TING TO THE ASSESSMENT YEAR 2008-09, HAS OBSERVED IN THE FOLLOW ING MANNER '17.5. IN ADDITION TO THE ABOVE, THE DIRECTOR'S REP ORT OF THE COMPANY FOR THE FY 2007-08 REVEALED THE MERGER AND THE DEMERGER . A COMPANY KNOWN AS TECHMEN TOOLS PVT. LTD. HAD AMALGAMATED WI TH MOLD-TEK TECHNOLOGIES LTD. WITH EFFECT FROM 1ST OCTOBER, 200 6, THERE WAS A DE- MERGER OF PLASTIC DIVISION OF THE COMPANY AND THE R ESULTING COMPANY IS KNOWN AS MOLDTEK PLASTICS LIMITED. THE DE-MERGER FR OM THE MOLDTEK TECHNOLOGIES TOOK PLACE WITH EFFECT FROM 1ST APRIL, 2007. THE MERGER AND THE DE-MERGER NEEDED THE APPROVAL OF THE HON'BL E HIGH COURT OF ANDHRA PRADESH AND ALSO THE APPROVAL OF THE SHAREHO LDERS. THE SHAREHOLDERS OF THE COMPANY GAVE APPROVAL FOR THE M ERGER AND THE DE- MERGER ON 25.01.2008 AND THE HON'BLE HIGH COURT OF ANDHRA PRADESH HAD APPROVED THE MERGER AND DE-MERGER ON 25TH JULY, 2008. SUBSEQUENTLY, THE ACCOUNTS OF MOLDTEK TECHNOLOGIES FOR FY 2007-08 WERE REVISED. ON A PERUSAL OF THE ANNUAL REPORT IT IS NOTICED THAT TECKMEN TOOLS PVT. LTD. AND THE PLASTIC DIVISION OF THE COMPANY WERE DEMERGED AND THE RESULTING COMPANY WAS NAMED AS MOL DTEK PLASTICS ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 13 LTD. THE KPO BUSINESS REMAINED WITH THE COMPANY. A PERUSAL OF THE ANNUAL REPORT REVEALED THAT TO GIVE EFFECT TO THE M ERGER AND DEMERGER, THE FINANCIAL STATEMENTS WERE REVISED AND RESTATED AFTER SIX MONTHS FROM THE END OF THE FINANCIAL YEAR 31.3.2008. THE A SSESSEE FILED FORM NO. 21 UNDER THE COMPANIES ACT WITH THE REGISTRAR O F COMPANIES ON 26TH AUGUST, 2008. THUS THE EFFECTIVE DATE OF THE S CHEME OF MERGER AND DEMERGER WAS 26TH AUGUST, 2008. THE ANNUAL REPORT S UPPORTED THE ARGUMENT OF THE ASSESSEE THAT THERE WERE MERGER AND DEMERGER IN THE FINANCIAL YEAR AND IT WAS AN EXCEPTIONAL YEAR OF PE RFORMANCE AS FINANCIAL STATEMENTS WERE REVISED BY THIS COMPANY MUCH AFTER THE CLOSURE OF THE PREVIOUS YEAR. THE PANEL AGREES WITH THE CONTENTION OF THE ASSESSEE THAT IT IS AN EXCEPTIONAL YEAR HAVING SIGNIFICANT IMPACT ON THE PROFITABILITY ARISING OUT OF MERGER AND DEMERGER.' 11. ON CAREFUL CONSIDERATION OF THE MATTER, WE ALSO AGREE WITH THE AFORESAID VIEW OF THE DRP THAT EXTRA- ORDINARY EVEN T LIKE MERGER AND DE- MERGER WILL HAVE AN EFFECT ON THE PROFITABILITY OF THE COMPANY IN THE FINANCIAL YEAR IN WHICH SUCH EVENT TAKES PLACE. IT IS THE CONTENTION OF THE ASSESSEE THAT IN CASE OF THE AFORESAID COMPANY, THE RE IS AMALGAMATION IN DECEMBER, 2006, WHICH HAS IMPACTED THE FINANCIAL RE SULT. THIS FACT HAS TO BE VERIFIED BY THE TPO. IF IT IS FOUND UPON SUCH VERIFICATION THAT THE AMALGAMATION IN FACT HAS TAKEN PLACE, THEN THE AFOR ESAID COMPARABLE HAS TO BE EXCLUDED.' 11. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. C OUNSEL FOR THE ASSESSEE AND ARE OF THE VIEW THAT THE RATIO LAID DO WN BY THE HYDERABAD BENCH OF THE ITAT IS SQUARELY APPLICABLE TO THE PRE SENT CASE ALSO. IT IS CLEAR THAT DURING THE PREVIOUS YEAR THERE WERE EXTR AORDINARY EVENTS THAT TOOK PLACE IN THIS COMPANY WHICH WARRANTS EXCLUSION OF THIS COMPANY AS A COMPARABLE. WE THEREFORE HOLD THAT THIS COMPANY C ANNOT BE CONSIDERED AS A COMPARABLE.' 13. WITH RESPECT TO ACROPETAL TECHNOLOGIES LTD ., THE LD. COUNSEL FOR THE ASSESSEE AGAIN RELIED ON THE DECISION OF THE COORDINATE BENC H OF THIS TRIBUNAL IN SYMPHONY MARKETING SOLUTIONS INDIA (P.) LTD.'S CASE ( SUPRA ) WHEREIN IT HAS BEEN HELD THAT THIS COMPANY IS NOT FUNCTIONALLY COMPARABLE AT PARA S 12 & 13 OF ITS ORDER: '(2) ACROPETAL TECHNOLOGIES LTD. (SEG.) ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 14 12. THIS COMPANY IS LISTED AT SL.NO. 2 OF THE COMPA RABLES CHOSEN BY THE TPO. AS FAR AS THIS COMPANY IS CONCERNED, THE OBJEC TION OF THE ASSESSEE IS THAT THIS COMPANY IS NOT FUNCTIONALLY COMPARABLE . THE ASSESSEE IS A BPO COMPANY THAT PROVIDES MARKET ANALYTICS AND DATA MANAGEMENT SERVICES. TO PROVIDE MARKET ANALYTICS SOLUTIONS, TH E ASSESSEE GIVES STRATEGIES THAT IMPACT ON CLIENT REVENUE INCLUDING DATA BASED MARKETING STRATEGIES FOR CUSTOMER ACQUISITION, DEVISING CUSTO MER RETENTION STRATEGIES AND EXCLUDING LOSS MITIGATION STRATEGIES THROUGH CUTTING EDGE FORECASTING TOOLS. THE DATA MANAGEMENT SERVICES PRO VIDED BY THE ASSESSEE INCLUDE ROUTINE BUSINESS DATA REPORTING AN D MANAGEMENT, WEBSITE MANAGEMENT, MARKETING DATA ANALYSIS AND TOP LINE REPORTING. AS FAR AS ACROPETAL TECHNOLOGIES LTD. IS CONCERNED, TH IS COMPANY DOES THE BUSINESS OF EXPORT OF SOFTWARE SERVICES. IT IS ALSO SEEN FROM THE SEGMENTAL REVENUE OF THIS COMPANY (NOTE 15 TO THE N OTES ON ACCOUNTS TO ANNUAL REPORT FOR 07-08) THAT IT DERIVES INCOME FROM ENGINEERING DESIGN SERVICES AND SOFTWARE DEVELOPMENT SERVICES. IT IS ALSO PERTINENT TO POINT OUT THAT BEFORE THE TPO, THE ASSESSEE RAIS ED AN OBJECTION THAT THIS COMPANY PERFORMS DIFFERENT FUNCTIONS AND MAINL Y ENGAGED IN THE AREA OF SOFTWARE DEVELOPMENT SERVICES AND ENGINEERI NG DESIGN SERVICES. THE TPO IN HIS ORDER HAS OBSERVED THAT THE SERVICES RENDERED BY THIS COMPANY FALL IN THE DEFINITION OF ITES. 13. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LEARN ED COUNSEL FOR THE ASSESSEE. ON A PERUSAL OF THE NOTE NO. 15 OF NOTES TO ACCOUNTS WHICH GIVES SEGMENTAL REVENUE OF THIS COMPANY, IT IS CLEA R THAT THE MAJOR SOURCE OF INCOME FOR THIS COMPANY IS FROM PROVIDING ENGINEERING DESIGN SERVICE AND INFORMATION TECHNOLOGY SERVICES. THE FU NCTIONS PERFORMED BY THE ENGINEERING DESIGN SERVICES SEGMENT OF THE C OMPANY CANNOT BE CONSIDERED AS COMPARABLE TO THE ITES/BPO FUNCTIONS PERFORMED BY THE ASSESSEE. THE PERFORMANCE OF ENGINEERING DESIGN SER VICES IS REGARDED AS PROVIDING HIGH-END SERVICES AMONG THE BPO WHICH REQ UIRES HIGH SKILL WHEREAS THE SERVICES PERFORMED BY THE ASSESSEE ARE ROUTINE LOW-END ITES FUNCTIONS. WE THEREFORE HOLD THAT THIS COMPANY COULD NOT HAVE BEEN SELECTED AS A COMPARABLE, ESPECIALLY WHEN IT P ERFORMS ENGINEERING DESIGN SERVICES WHICH ONLY A KNOWLEDGE PROCESS OUTS OURCING [KPO] WOULD DO AND NOT A BUSINESS PROCESS OUTSOURCING [BP O].' 14. --------- ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 15 15. AS REGARDS CROSS DOMAIN SOLUTIONS LTD ., THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS FUNCTIONALLY NOT COMPARABLE RE LYING ON THE DECISION OF THE COORDINATE BENCH DECISION OF THIS TRIBUNAL IN THE C ASE OF SYMPHONY MARKETING SOLUTIONS INDIA (P.) LTD. ( SUPRA ), WHEREIN IT WAS HELD AT PARAS 18 TO 19 OF ITS ORD ER AS UNDER: '(4) CROSS DOMAIN SOLUTIONS LTD. 18. THIS COMPANY WAS CONSIDERED AS A COMPARABLE AND LISTED AT SL. NO. 8 OF THE COMPARABLES CHOSEN BY THE TPO. IT IS THE STAND OF THE ASSESSEE THAT THIS COMPANY IS NOT FUNCTIONALLY COMPARABLE. AS OBSERVED IN THE CASE OF CORAL HUBS LTD., THE TPO REJECTED THE PLEA OF THE ASSESSE E ON THE BASIS OF A NON- EXISTENT TP ORDER PASSED FOR THE A.Y. 2007-08. IT I S SEEN THAT THE BUSINESS PROFILE OF THIS COMPANY IS RE-ENGINEERED PAYROLL SE RVICE. THIS COMPANY IS ALSO ENGAGED IN THE DEVELOPMENT OF INFORMATION SYSTEMS. THESE ACTIVITIES ARE TOTALLY DIFFERENT FROM THE ACTIVITIES OF THE ASSESS EE WHICH PERFORM VERY 'LIMITED/LOW-END FUNCTIONS BACK OFFICE SERVICES. TH E REVIEW AND BUSINESS FUNCTIONS OF CROSS DOMAIN IS AS FOLLOWS: 'WITH A DECADE OF EXPERIENCE IN PAYROLL OUTSOURCING , CROSS DOMAIN HAS CREATED A RE-ENGINEERED PAYROLL SERVICE EFFIPAY - T HAT PROCESSES AND DELIVERS ACCURATE PAYROLL TO CLIENTS WITH HEADCOUNT UP TO 1000 EMPLOYEES IN JUST 4 HOURS*. WITH EFFIPAY LITE AND EFFIPAY LITE P LUS, OUR BOUQUET OF SERVICES COVER END TO END PAYROLL, RETRIALS, REIMBURSEMENT, TAX PROOF VERIFICATIONS UPTO ISSUE OF FORM 16 FOR EMPLOYEES OF OUR CLIENTS ACROSS DIFFERENT INDUSTRY VERTICALS. OUR PROCESSES ARE HIGHLY SCALABLE AND PR OVIDE END TO END PAYROLL SOLUTIONS TO CLIENTS WITH HEADCOUNT RANGING FROM 5 TO 65,000.' 'CROSS DOMAIN'S IT KNOWLEDGE AND DOMAIN COMPETENCE HAS PROVIDED THE EDGE TO DEVELOP INFORMATION SYSTEMS TO IMPLEMENT PR OCESS INNOVATION AND CONTINUOUSLY INCREASE EFFICIENCY AND TURN-AROUND-TI ME FOR BUSINESS CRITICAL PROCESSES.' SOURCE: HTTP://WWW.CROSS-DOMAIN.COM AS CAN BE SEEN FROM THE ABOVE, THE BUSINESS OF CROS S DOMAIN RANGES FROM HIGH-END KPO SERVICES, DEVELOPMENT OF PRODUCT SUITE S AND ROUTINE LOW-END ITES SERVICE. HOWEVER, THERE IS NO BIFURCATION AVAI LABLE FOR SUCH VERTICALS OF SERVICES. THEREFORE THE ASSESSEE CONTENDS THAT CROS S DOMAIN CANNOT BE COMPARED TO A ROUTINE ITES SERVICE PROVIDER. ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 16 19. WE ARE OF THE VIEW THAT IN THE ABSENCE OF ANY R EASONS GIVEN TO THE CONTRARY EITHER BY THE TPO OR THE DRP FOR REGARDING THIS COMPANY AS A COMPARABLE, THIS COMPANY SHOULD BE EXCLUDED FROM TH E LIST OF COMPARABLES, ACCEPTING THE PLEA OF THE ASSESSEE. WE HOLD ACCORDI NGLY.' 16. AS FAR AS ECLERX SERVICES LTD . IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT HAD SUPER NORMAL PROFIT AND IS FU NCTIONALLY NOT COMPARABLE WITH THE ASSESSEE COMPANY RELYING ON THE COORDINATE BENCH DECISION OF THIS TRIBUNAL IN THE CASE OF SYMPHONY MARKETING SOLUTIONS INDIA (P.) LTD. ( SUPRA ), WHEREIN IT WAS HELD AT PARAS 20 & 21 OF ITS ORDER A S UNDER: '(5) ECLERX SERVICES LTD. 20. THIS COMPANY IS LISTED AT SL. NO. 11 IN THE LIS T OF COMPARABLE COMPANIES CHOSEN BY THE TPO. IT IS THE STAND OF THE ASSESSEE THAT THIS COMPANY OFFERS SOLUTIONS THAT INCLUDE DATA ANALYTICS, OPERATIONS M ANAGEMENT, AUDITS AND RECONCILIATION AND THEREFORE HAS TO BE CLASSIFIED A S HIGH-END KPO. IN SUPPORT OF THE STAND OF THE ASSESSEE, EXTRACTS FROM THE ANN UAL REPORT OF THIS COMPANY HAVE BEEN POINTED OUT. IT HAS FURTHER BEEN SUBMITTED THAT EXTRAORDINARY EVENTS AND PECULIAR CIRCUMSTANCES PRE VAIL IN THE CASE OF THE ASSESSEE INASMUCH AS THIS COMPANY ACQUIRED A UK BAS ED COMPANY WHICH HAS SIGNIFICANTLY CONTRIBUTED TO THE INCREASE IN TH E CUSTOMER AND REVENUE BASE OF THE COMPANY. THIS TRIBUNAL IN THE CASE OF CAPITAL IQ INFORMATION SYSTEMS INDIA (P.) LTD. (SUPRA) HAD AN OCCASION TO DEAL WITH COMPARABILITY OF THIS COMPANY IN THE CASE OF AN ITES COMPANY SUCH AS THE ASSESSEE AND THE TRIBUNAL HELD AS FOLLOWS: '14. THE ASSESSEE HAS OBJECTED FOR THIS COMPANY BEI NG TAKEN AS COMPARABLE MAINLY ON THE GROUND THAT IT WAS HAVING A SUPERNORM AL PROFIT OF 89%, AND AS SUCH IT CANNOT BE TAKEN AS A COMPARABLE IN VIEW OF THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE M/S. TEVA INDIA LTD. ( SUPRA ). THAT APART, RELYING UPON THE ANNUAL REPORT OF THE COMPAN Y, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE HAS CONT ENDED THAT THE CONCERNED COMPANY IS ENGAGED IN PROVIDING KNOWLEDGE PROCESS OUTSOURCING (KPO) SERVICES. 15. ON CONSIDERING THE OBJECTIONS OF THE ASSESSEE I N RELATION TO THIS COMPANY, WE ACCEPT THE CONTENTION OF THE ASSESSEE T HAT THIS COMPANY CANNOT BE TAKEN AS A COMPARABLE BOTH FOR THE REASON S THAT IT WAS HAVING ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 17 SUPERNORMAL PROFIT AND IT IS ENGAGED IN PROVIDING K PO SERVICES, WHICH IS DISTINCT FROM THE NATURE OF SERVICES PROVIDED BY TH E ASSESSEE.' 21. WE ARE OF THE VIEW THAT IN THE LIGHT OF THE DEC ISION OF THE HYDERABAD BENCH REFERRED TO ABOVE, THIS COMPANY CANNOT BE REG ARDED AS A COMPARABLE FOR THE REASON THAT IT WAS FUNCTIONALLY DIFFERENT.' 17. ------------ 18. AS REGARDS INFOSYS BPO LTD ., THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT HAD A DIFFERENT SCALE OF OPERATIONS ON ACCOUNT OF B RAND VALUE OF THE PARENT COMPANY AND RELIED ON THE DECISION OF THE COORDINAT E BENCH DECISION OF THIS TRIBUNAL IN THE CASE OF SYMPHONY MARKETING SOLUTIONS INDIA (P.) LTD. ( SUPRA ), WHEREIN IT WAS HELD AT PARA 24 OF ITS ORDER AS UNDE R: '(7) INFOSYS BPO LTD 24. THIS COMPANY IS LISTED AT SL. 13 IN THE LIST OF COMPARABLE COMPANIES CHOSEN BY THE TPO. AS FAR AS THIS COMPANY IS CONCER NED, IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THIS COMPA NY HAS A BRAND VALUE AND THEREFORE THERE WOULD BE SIGNIFICANT INFLUENCE IN T HE PRICING POLICY WHICH WILL IMPACT THE MARGINS. SCHEDULE 13 TO THE PROFIT & LOS S ACCOUNT OF THIS COMPANY FOR THE F.Y. 2007-08 SHOWS THAT THIS COMPAN Y INCURRED HUGE SELLING AND MARKETING EXPENSES. PAGE 133 OF THE ANNUAL REPO RT OF THIS COMPANY FOR THE F.Y. 2007-08 SHOWS THAT THIS COMPANY REALIZING ITS BRAND VALUE HAS CHOSEN TO VALUE THE SAME ON THE BASIS OF ITS EARNIN GS AND THAT OF INFOSYS. THE BRAND VALUE OF THE ASSESSEE AND INFOSYS HAS BEE N VALUED AT RS. 31,863 CRORES. INFOSYS BPO, BEING A SUBSIDIARY OF INFOSYS, HAS AN ELEMENT OF BRAND VALUE ASSOCIATED WITH IT. THIS IS ALSO CLEAR FROM T HE PRESENCE OF BRAND RELATED EXPENSES INCURRED BY THIS COMPANY. PRESENCE OF A BR AND COMMANDS PREMIUM PRICE AND THE CUSTOMERS WOULD BE WILLING TO PAY, FOR THE SERVICES/PRODUCTS OF THE COMPANY. INFOSYS BPO IS AN ESTABLISHED PLAYER WHO IS NOT ONLY A MARKET LEADER BUT ALSO A COMPANY EMPL OYING SHEER BREADTH IN TERMS OF ECONOMIES OF SCALE AND DIVERSITY AND GEOGR APHICAL DISPERSION OF CUSTOMERS. THE PRESENCE OF THE AFORESAID FACTORS WI LL TAKE THIS COMPANY OUT OF THE LIST OF COMAPARABLES. WE THEREFORE ACCEPT TH E CONTENTION OF THE ASSESSEE THAT THIS COMPANY CANNOT BE REGARDED AS A COMPARABLE.' 19. REGARDING MOLD-TEK TECHNOLOGIES LTD., THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS NOT FUNCTIONALLY COMPARABLE TO THAT OF THE ASSESSEE COMPANY AND RELIED ON THE COORDINATE BENCH DECISION OF THIS TRIBUNAL IN THE CASE OF ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 18 SYMPHONY MARKETING SOLUTIONS INDIA (P.) LTD. ( SUPRA ), WHEREIN IT WAS HELD AT PARA 25 OF ITS ORDER AS UNDER: '(8) MOLD-TEK TECHNOLOGIES LTD. 25. THIS COMPANY IS LISTED AT SL. NO. 16 OF THE LIS T OF COMPARABLE COMPANIES CHOSEN BY THE TPO. AS FAR AS THIS COMPANY IS CONCER NED, THE SUBMISSION OF THE ASSESSEE BEFORE US IS THAT IT IS IN THE BUSINES S OF KNOWLEDGE PROCESS OUTSOURCING AND CANNOT BE CONSIDERED AS A COMPARABL E. THE FUNCTIONAL PROFILE OF THIS COMPANY IS AS FOLLOWS: AS PER THE ANNUAL REPORT FOR THE F.Y. 2007-08, THE COMPANY PRIMARILY OPERATES IN TWO BUSINESS SEGMENTS: PLASTIC DIVISION : THE PLASTIC DIVISION IS ENGAGED IN THE MANUFACTUR E OF TUBE & OILS, PAINTS, PET PRODUCTS, CONSUMER PRODUCTS, ETC. THE COMPANY DEMERGED THE SAID SEGMENT EFFECTIVE 1 APRIL, 2007 AND TRANSF ERRED THE BUSINESS UNIT TO THE COMPANY PLASTICS LTD. THE EXTRACT FROM THE ANNU AL REPORT CONFIRMS THE FACT THAT THE COMPANY HAD RESTRUCTURED ITS OPERATIO NS RESULTING IN DEMERGING THE PLASTIC SEGMENT BUSINESS. INFORMATION TECHNOLOGY (IT) DIVISION : THE IT DIVISION (ALSO REFERRED TO AS THE KPO DIVISION BY THE COMPANY) OF THE COMPANY SPECIAL IZES IN PROVIDING STRUCTURAL DESIGN AND DETAILING SERVICES WHICH CAN BE CATEGORIZED AS STRUCTURAL ENGINEERING SERVICES. THE STRUCTURAL ENG INEERING SERVICES PROVIDED BY THE IT DIVISION OF THE COMPANY CANNOT BE CLASSIF IED AS FALLING WITH THE SCOPE AND AMBIT OF ITES SERVICES. ON THE CONTRARY, THE SAID SERVICES WOULD FALL UNDER THE CATEGORY OF ENGINEERING SERVICES. EXCERPTS FROM THE ANNUAL REPORT OF THE COMPANY PAGE 10 OF THE ANNUAL REPORT FOR THE FY 2007-08 CON TAINS THE FOLLOWING OBSERVATION REGARDING THE KPO DIVISION OF THE COMPA NY: THE COMPANY HAS ACHIEVED ABOUT 56.49% GROWTH IN 200 7-08 TO REGISTER A TURNOVER OF RS.17.86 CRORE. THE COMPANY HAVING ESTA BLISHED ITS CREDENTIALS IN STRUCTURAL ENGINEERING SERVICES TO US CLIENTS IS DEVISING AGGRESSIVE MARKETING STRATEGY TO ACHIEVE RAPID GROWTH. THIS COMPANY IS ALSO ENGAGED IN PROVIDING A HOST OF ENGINEERING SERVICES LIKE CIVIL AND STRUCTURAL ENGINEERING SERVICES, MECHANIC AL PRODUCT DESIGN, PLANT ENGINEERING, IT SERVICES AND GIS SERVICES. AS WE HA VE ALREADY SEEN, THIS ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 19 COMPANY IS TO BE CLASSIFIED AS KPO AND CANNOT BE CO MPARED WITH THE ASSESSEE. THE DECISION OF THE BANGALORE BENCH OF TH E ITAT IN THE CASE OF FIRST ADVANTAGE OFFSHORE SERVICES LTD. ( SUPRA ) WHICH WE HAVE REFERRED TO IN THE EARLIER PART OF THIS ORDER WILL CLEARLY APPLY TO TH IS COMPANY. WE THEREFORE DIRECT THIS COMPANY TO BE EXCLUDED FROM THE LIST OF COMPARABLES.' 20. WITH REGARD TO WIPRO LTD. (SEG ), THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS DISTINGUISHABLE FOR DIFFERENT SCALE OF O PERATIONS ON ACCOUNT OF BRAND VALUE OF PARENT COMPANY AND NOT COMPARABLE WITH THE ASSESSEE RELYING ON THE DECISION OF THE COORDINATE BENCH DECISION OF THIS T RIBUNAL IN THE CASE OF SYMPHONY MARKETING SOLUTIONS INDIA (P.) LTD. ( SUPRA ), WHEREIN IT WAS HELD AT PARA 26 OF ITS ORDER AS UNDER: '(8) WIPRO LTD . 26. THIS COMPANY IS LISTED AT SL. NO. 18 IN THE LIS T OF COMPARABLE COMPANIES CHOSEN BY THE TPO. AS FAR AS THIS COMPANY IS CONCER NED, THE DISCUSSION MADE WHILE DECIDING INFOSYS BPO LTD. AS A COMPARABL E WILL EQUALLY APPLY TO THIS COMPANY ALSO. THIS COMPANY OWNS SUBSTANTIAL IN TELLECTUAL PROPERTY ON SOFTWARE PRODUCTS. THIS COMPANY CANNOT THEREFORE BE REGARDED AS A COMPARABLE. FOR THE REASONS GIVEN WHILE DISREGARDIN G INFOSYS BPO LTD. AS A COMPARABLE, THIS COMPANY IS ALSO DIRECTED TO BE EXC LUDED FROM THE LIST OF COMPARABLES.' *( BOLD AND UNDERLINE IS IN THE QUOTED DECISIONS IS MA DE BY US ) 12. IN VIEW OF THE ABOVE DISCUSSIONS AND RESPECTFULLY F OLLOWING THE DECISIONS OF COORDINATE BENCH, WE DIRECT THE AO/TPO TO EXCLUD E THE 8 COMPARABLE NAMELY; MOLD-TECK TECHNOLOGY, ECLERX SERVICES LIMIT ED, ACCENTIA TECHNOLOGY LIMITED, WIPRO LIMITED, ACCROPETAL TECHN OLOGY LIMITED, INFOSYS BPO LIMITED, HCL COMNET SYSTEM & SERVICES L TD AND CROSS DOMAIN SOLUTION LTD AND RECOMPUTE THE APL AS PER DI RECTION/ ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 20 OBSERVATION HEREINABOVE. IN THE RESULT THE GROUND N O. 2 OF THE APPEAL IS PARTLY STATISTICALLY. 13. GROUND NO.3 RELATES TO ADJUSTMENT ON ACCOUNT OF PR OVISION OF CORPORATE AND PERFORMANCE GUARANTEE. THE LD. AR FOR THE ASSES SEE SUBMITS THAT PROVISION OF CORPORATE GUARANTEE DOES NOT LEAD TO A NY INCOME GENERATION FOR THE ASSESSEE AND HENCE, DOES NOT FALL WITHIN TH E AMBIT IF SECTION 92OF THE ACT. THE GUARANTEE ARRANGEMENT IS A BANK FORMAL ITY. SIMILARLY THERE IS NO RISK AS REGARDS THE PERFORMANCE GUARANTEE AND IT IS THE ASSESSEE WHO IS GUARANTEEING ITS OWN PERFORMANCE. IN SUPPORT OF HIS SUBMISSIONS THE LD AR FOR THE ASSESSEE RELIED ON THE FOLLOWING CASE LA WS; BHARTI AIRTEL LIMITED VS ADD CIT [2014] 43 TAXMANN. COM 150(DELHI TRIB), VIDEOCON INDUSTRIES LTD VS ACIT [2015] 55 TAXMANN.C OM 263 (MUM TRIB), MARICO LTD VS ACIT [2016] 70 TAXMANN.COM 214 (MUMBA I TRIB), REDINGTON (INDIA) LTD ( ITA 513 & 516(MDS)/2014 AND M SURESH COMPANY PRIVATE LTD (ITA 1853/MUM/2016) 14. IN ALTERNATIVE THE LD AR FOR THE ASSESSEE SUBMITS T HAT IN ANY CASE THE ADJUSTMENT ON THIS ISSUE SHOULD NOT EXCEEDS .5% OF TOTAL AMOUNT OF GUARANTEE AND ALSO FURNISHED THE WORKING THEREOF. ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 21 15. ON THE OTHER HAND THE LD. DR FOR THE REVENUE SUPPOR TED THE ORDER OF THE AUTHORITIES BELOW. THE LD. DR FOR THE REVENUE SUBMI TS THAT .5% OF THE AMOUNT OF THE WOULD BE REASONABLE AS HELD BY HONBL E BOMBAY HIGH COURT IN CIT VS EVEREST KANTO CYLINDERS LTD [2015] 58 TAXMANN.COM 254 (BOMBAY). 16. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. WE HAV E ALSO DELIBERATED ON THE VARIOUS CASE LAWS RELIED BY THE ASSESSEE. THE L D. AR FOR THE ASSESSEE VEHEMENTLY SUBMITTED THAT MERE EXTENDING CORPORATE AND PERFORMANCE GUARANTEE DOES NOT LEAD TO ANY INCOME GENERATION FO R THE ASSESSEE AND HENCE, DOES NOT FALL WITHIN THE AMBIT IF SECTION 92 OF THE ACT AND RELIED ON THE DECISIONS OF COORDINATE BENCH(SUPRA). HOWEVER, THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF EVEREST KE NTO CYLINDERS LTD. VS DCIT (SUPRA), WHILE CONSIDERING A SIMILAR SITUATION , WHERE IN THE MATTER OF GUARANTEE COMMISSION FEE THE ADJUSTMENT MADE BY THE INCOME-TAX AUTHORITIES WAS BASED ON INSTANCES OF COMMERCIAL BA NKS PROVIDING GUARANTEES. THE HONBLE HIGH COURT HAS EXPLAINED TH AT INSTANCES OF COMMERCIAL BANKS PROVIDING GUARANTEES COULD NOT BE COMPARED TO INSTANCES OF ISSUANCE OF CORPORATE GUARANTEE. AS PE R BOMBAY HIGH COURT, WHEN COMMERCIAL BANKS ISSUE BANK GUARANTEES, THE SA ME IS QUITE DISTINCT ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 22 IN CHARACTER THAN THE SITUATION WHERE A CORPORATE I SSUES GUARANTEE TO THE EFFECT THAT, IF A SUBSIDIARY ASSOCIATED ENTERPRISE DOES NOT REPAY A LOAN, THE SAME WOULD BE MADE GOOD BY SUCH CORPORATE. KEEPING THE AFORESAID RATIO OF THE BOMBAY HIGH COURT, IT IS QUITE CLEAR THAT TH E MANNER IN WHICH THE TRANSFER PRICING OFFICER HAS PROCEEDED TO DETERMINE THE ARM'S LENGTH RATE BASED ON THE PROBABLE RATE BEING CHARGED BY THE COM MERCIAL BANKS IS NOT JUSTIFIED. IN THIS VIEW OF THE MATTER, THREE PER CE NT RATE OF GUARANTEE COMMISSION FEE DETERMINED AS ARM'S LENGTH RATE BY T HE INCOME-TAX AUTHORITIES CANNOT BE APPROVED, THOUGH THE LD. DRP IN ITS DIRECTION HAS ALREADY RESTRICTED IT TO 1.5%. IN THE ALTERNATIVE, THE ADDITION THAT IS REQUIRED TO BE SUSTAINED IS THE POSITION CANVASSED BY THE ASSESSEE BEFORE THE TRANSFER PRICING OFFICER I.E. ADOPTION OF 0.50 PER CENT AS ARM'S LENGTH RATE FOR THE PURPOSE OF DETERMINING THE ARM'S LENGT H INCOME ON ACCOUNT OF GUARANTEE COMMISSION FEE IN THE INSTANT CASE. CONSI DERING THE ENTIRETY OF FACTS AND CIRCUMSTANCES OF THE CASE AND ON THE BASI S OF THE MATERIAL AVAILABLE ON RECORD, THE RATE OF 0.50 PER CENT IS T O BE UPHELD FOR THE PURPOSE OF DETERMINING THE ARM'S LENGTH RATE OF THE GUARANTEE COMMISSION FEE. IN THE RESULT THIS GROUND OF APPEAL IS PARTLY ALLOWED. 17. GROUND NO. 4 RELATES TO ADJUSTMENT ON ACCOUNT OF PR OVISION OF LOAN TO AES. THE LD. AR FOR THE ASSESSEE SUBMITS THAT THE ASSESSEE PROVIDED ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 23 LOANS TO ITS AES VIZ; USD 3,000,000/- UNSECURED LOA N TO AE IN MAURITIUS AT LIBOR PLUS 200 VIDE AGREEMENT DATED 25.01.2008 A ND LOAN OF USD 500,000/- AE IN AMERICA AT LIBOR PLUS 2% VIDE AGREE MENT DATED 23.03.2009, EFFECTIVE FROM JANUARY 2008. THE TPO MA DE ADJUSTMENT BASED ON THIRD PARTY DOMESTIC RATE I.E. CRISIL TAKI NG THE RATE @ 14.39%. THE DRP REJECTED THE TPOS APPROACH AND DIRECTED TO MADE ADJUSTMENT BASED ON DOMESTIC COST OF BORROWING + 3% MARKUP, WH ICH RESULTED IN TO TOTAL RATE TO 8.8%. THE LD AR FOR THE ASSESSEE SUBM ITS THAT INTEREST RATE FOR LOAN ADVANCED TO FOREIGN COMPANY SHOULD BE COMPUTED BASED ON MARKET DETERMINED INTEREST RATE APPLICABLE TO CURRENCY AND THE COUNTRY IN WHICH THE LOAN IS TO BE REPAID. IN SUPPORT OF HIS SUBMISS ION THE LD AR FOR THE ASSESSEE RELIED ON THE FOLLOWING CASE LAWS; CIT VS COTTON NATURALS (P) LTD [2015] 55 TAXMANN.CO M 523 (DELHI), ION EXCHANGE (I) LTD (ITA NO. 5109/MUM/2013) HINDUJA GLOBAL SOLUTIONA LTD (2013) TAXMANN.COM 34 8 (MUM TRI), AURINPRO SOLUTION LTD [2013] 33TAXMANN.COM 187(MUM TRIB), TATA AUTOCOMP SYSTEM LTD ( ITA NO. 7354/MUM/2011) 18. ON THE OTHER HAND THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF THE LOWER AUTHORITIES. ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 24 19. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. WE HAV E ALSO DELIBERATED ON THE VARIOUS CASE LAWS RELIED BY THE ASSESSEE. THE T PO MADE ADJUSTMENT ON ACCOUNT OF LOAN BASED ON THIRD PARTY DOMESTIC RA TE I.E. CRISIL TAKING THE RATE @ 14.39%. THE DRP AFTER CONSIDERING THE SUBMIS SIONS ON THE OBJECTIONS OF THE ASSESSEE AND DIRECTED TO MADE ADJ USTMENT BASED ON DOMESTIC COST OF BORROWING + 3% MARKUP. THE LD. AR FOR THE ASSESSEE VEHEMENTLY SUBMITTED THAT DIRECTION OF LD. DRP RESU LTED IN TO TOTAL RATE OF INTEREST AT 8.8%. THE HONBLE DELHI HIGH COURT IN C IT VS COTTON NATURALS (I) (P) LTD (SUPRA) WHILE CONSIDERING THE QUESTION OF LAW WHETHER THE INCOME-TAX APPELLATE TRIBUNAL WAS RIGHT IN HOLDING THAT THE INTEREST @ 4% P.A. CHARGED BY THE RESPONDENT ASSESS EE FROM ITS SUBSIDIARY I.E. THE ASSOCIATED ENTERPRISE WAS ARM'S LENGTH RAT E OF INTEREST AND THE ADJUSTMENT MADE IN THE ASSESSMENT ORDER DETERMINING THE ARMS' LENGTH RATE OF INTEREST AT 12.20% WAS UNWARRANTED, HELD TH AT ARM'S LENGTH INTEREST RATE FOR LOAN ADVANCED TO FOREIGN SUBSIDIA RY BY INDIAN COMPANY SHOULD BE COMPUTED BASED ON MARKET DETERMINED INTER EST RATE APPLICABLE TO CURRENCY IN WHICH LOAN HAS TO BE REPAID. 20. FURTHER, THE HONBLE JURISDICTIONAL HIGH COURT IN C IT VS TATA AUTOCOMP SYSTEM LTD (SUPRA) ALSO HELD THAT WHERE ASSESSEE AD VANCED LOANS TO ITS ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 25 AE SITUATED IN GERMANY, RATE OF INTEREST WAS TO BE DETERMINED ON BASIS OF RATE PREVAILING IN GERMANY WHERE LOAN HAD BEEN CONS UMED. CONSIDERING THE AFORESAID DECISIONS OF HONBLE HIGH COURTS, WE DIRECT THE AO/TPO TO RECOMPUTE THE ADJUSTMENT OF INTEREST ON LOAN BY FOL LOWING THE DECISION OF CIT VS TATA AUTOCOMP SYSTEM LTD (SUPRA). THE ASSESS EE IS DIRECTED TO PROVIDE NECESSARY DETAILS TO AO/TPO. IN THE RESULT THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 21. GROUND NO. 5 RELATES TO TREATING THE INCOME FROM S UB-LEASE AS INCOME FROM OTHER SOURCES. THE LD. AR FOR THE ASSESSEE SUB MITS THAT DURING THE RELEVANT PERIOD UNDER CONSIDERATION THE ASSESSEE HA D TAKEN A LEASE OF PROPERTY FROM MAGNUS PROPERTIES PRIVATE LIMITED. SI NCE, THE ASSESSEE COULD NOT USE THE ENTIRE PREMISES FOR THE PURPOSE O F ITS BUSINESS AND IN ORDER TO AVOID EXCESSIVE EXPENDITURE, THE ASSESSEE SUBLEASED THE PART OF AFORESAID PROPERTY TO HONG KONG AND SHANGHAI BANK C ORPORATION (HSBC) AT THE SAME RATE AT WHICH IT HAD TAKEN THE P REMISES ON LEASE. THE ASSESSEE PROVIDED THE COPY OF LEASE AGREEMENT WITH THE LESSER AND THE COPY OF SUBLEASE WITH THE HSBC TO THE LOWER AUTHORI TIES, THE COPY OF LEASED DEED AND SUBLEASE IS FILED ON RECORD. AS TH E PROPERTY WAS TAKEN ON LEASE FOR THE PURPOSE OF BUSINESS, AND IT WAS ONLY BECAUSE IT WOULD NOT BE USED FOR THE PURPOSE OF BUSINESS AND TO AVOID EXCES SIVE EXPENDITURE, THE ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 26 ASSESSEE HAD SUBLEASE THE PROPERTY AT THE SAME RATE . THE INCOME FROM SUBLETTING IS BUSINESS INCOME AND NOT TO BE TAXED A S INCOME FROM OTHER SOURCES. IN ALTERNATIVE SUBMISSION THE LEARNED AR O F THE ASSESSEE SUBMITS THAT EVEN IF IT IS HELD THAT INCOME HAS TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES, THEN REQUESTED DEDUCTION FOLLIE S EXPENSES TO HAVE BEEN GIVEN TO THE ASSESSEE INTERIM OF SECTION 57(II I) OF THE ACT. 22. ON THE OTHER HAND THE LD. DR SUBMITS THAT THE DRP H AS ALREADY PASSED THE ORDER ON THE APPLICATION FOR RECTIFICATION APPLICAT ION MOVED BY THE ASSESSEE AND HAS GIVEN DIRECTION TO THE AO/TPO TO G RANT DEDUCTION UNDER SECTION 57, VIDE ORDER DATED 21.12.2012, THUS, THE ASSESSEE IS ALREADY GRANTED RELIEF ON THIS GROUND OF APPEAL. 23. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. DURING THE ASSESSMENT THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS CLAIM ED DEDUCTION UNDER SECTION 10 A AGAINST THE BUSINESS INCOME LIST OF TH E ASSESSEE ALSO CREDITED A RENTAL INCOME OF 6.53 CRORE IN ITS PROFIT AND LOSS ACCOUNT AND THE SAME WAS INCLUDED IN THE HEAD OF INCOME FROM BUSINESS ON WHICH THE ASSESSEE CLAIMED DEDUCTION UNDER SECTION 10A. THE ASSESSING OFFICER TOOK HIS VIEW THAT THE RENTAL INCOME IS NOT ELIGIBLE FOR DEDUCTIO N UNDER SECTION 10A. THE DRP AFFIRM THE ACTION OF ASSESSING OFFICER AS T HE SAME IS NOT ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 27 QUALIFIED FOR DEDUCTION UNDER SECTION 10A. BEFORE U S, THE LEARNED AR OF THE ASSESSEE FAILED TO BRING ANY CONVINCING FACT TO TREAT THE SAID RENTAL INCOME AS A BUSINESS INCOME OF THE ASSESSEE. 24. WE HAVE NOTED THAT THE DRP ON THE APPLICATION OF AS SESSEE FOR SEEKING RECTIFICATION FOR ITS DIRECTION DATED 07/09/2012, V IDE ORDER DATED 21 ST DECEMBER 2012 HAS ALREADY DIRECTED THE ASSESSING OF FICER/TPO TO ALLOW EXPENDITURE INCURRED IN EARNING SUCH INCOME. THEREF ORE, IN OUR CONSIDERED VIEW NO FURTHER DIRECTION IS REQUIRED. H OWEVER THE AO/TPO IS DIRECTED TO GIVE EFFECT TO THE ORDER OF DRP DATED 2 1 DECEMBER 2012. IN THE RESULT THE GROUND NO. 5 OF THE APPEAL IS PARTLY ALLOWED. 25. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA 1808/MUM/2014 BY ASSESSEE FOR AY 2009-10 26. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL ; (1) ADJUSTMENT OF RS. 3,08,50,500/- AS REGARDS PRO VISION OF GUARANTEE. (2) ADJUSTMENT OF RS. 2,47,46,270/- AS REGARDS PROV ISION OF LOANS. (3) SHORT CREDIT OF TDS HAS BEEN ALLOWED TO THE EXT ENT OF RS. 2,07,96,985/- 27. WE HAVE NOTED THAT THE GROUND NO. 1 IS IDENTICAL TO THE GROUND NO. 3 IN APPEAL FOR AY 2008-09, WHICH WE HAVE PARTLY ALLOWED , THEREFORE, THE AO/TPO IS DIRECTED TO RECOMPUTE THE ADJUSTMENT BY F OLLOWING THE AFORESAID DIRECTIONS. IN THE RESULT THIS GROUND OF APPEAL IS PARTLY ALLOWED. ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 28 28. GROUND NO. 2 IS IDENTICAL TO THE GROUND NO.4 IN APP EAL FOR AY 2008-09, WHICH WE HAVE ALLOWED FOR STATISTICAL PURPOSE, THER EFORE, THE AO/TPO IS DIRECTED TO RECOMPUTE THE ADJUSTMENT BY FOLLOWING O UR AFORESAID DIRECTION. IN THE RESULT THIS GROUND OF APPEAL IS A LSO ALLOWED FOR STATISTICAL PURPOSE. 29. GROUND NO. 3 RELATES TO SHORT CREDIT OF TDS. THE L D AR FOR THE ASSESSEE SUBMITS THAT THE AO ALLOWED CREDIT OF TDS OF RS. 7, 40,94,166/-, INSTEAD OF RS. 9,48,91,151/-. NO OPPORTUNITY WAS GIVEN TO T HE ASSESSEE WHILE GRANTING CREDIT OF TDS. THE LD. AR FOR THE ASSESSEE PRAYED TO ALLOW THE CREDIT OF THE ENTIRE TDS. 30. ON THE OTHER HAND THE LD. DR FOR THE REVENUE FAIRLY SUBMITS THAT THE AO MAY BE DIRECTED TO VERIFY THE DETAILS OF TDS AND TO ALLOWED CREDIT TO THE ASSESSEE. 31. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIES A ND FIND THAT IN TAX COMPUTATION FORM THE AO HAS GIVEN CREDIT OF TDS OF RS. 7,40,94,166/-. HOWEVER, BEFORE US THE LD AR FOR THE ASSESSEE VEHEM ENTLY SUBMITTED THAT THE ASSESSEE IS ENTITLED FOR THE CREDIT OF TDS OF R S 9,48,91,151/- AND THAT BEFORE GRANTING CREDIT OF TDS NO OPPORTUNITY WAS GI VEN TO THE ASSESSEE. THUS, CONSIDERING THE FACTS AND CIRCUMSTANCES OF TH E CASE WE DIRECT THE AO TO VERIFY THE FACTS AND GRANT CREDIT OF TDS TO T HE ASSESSEE IN ITA NO. 483/M/2013 & 1808/M/2014 FOR AY 2008-09 & 2009-10 29 ACCORDANCE WITH LAW. THE ASSESSEE IS ALSO DIRECTED TO PROVIDE NECESSARY DETAIL AND EVIDENCE TO THE AO. NEEDLESS TO ORDER T HAT BEFORE PASSING THE ORDER THE AO SHALL GRANT OPPORTUNITY OF HEARING TO THE ASSESSEE. 32. IN THE RESULT THE APPEAL FOR AY 2009-10 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/06/ 2020. SD/- SD/- R.C. SHARMA PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 16.06.2020 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR K BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI