KPIT Technologies Ltd., Pune V. Deputy Commissioner of Income-tax,

ITA 506/PUN/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9968 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 14-03-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 23-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S B PRASAD
• Keywords: Business income; Transfer pricing; International transaction

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.506/PUN/2016 / ASSESSMENT YEAR : 2011-12 KPIT TECHNOLOGIES LTD., PLOT NO.35/36, RAJIV GANDHI INFOTECH PARK, PHASE-1, MIDC, HINJEWADI, PUNE-411057. PAN : AABCC2531L ....... / APPELLANT / V/S. DCIT, CIRCLE-14, PUNE. / RESPONDENT ASSESSEE BY : SHRI MEHUL SHAH REVENUE BY : SHRI S. B. PRASAD, CIT / DATE OF HEARING : 14.03.2019 / DATE OF PRONOUNCEMENT : 24.05.2019 / ORDER PER D. KARUNAKARA RAO, AM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE DRP/TPO/AO FOR THE ASSESSMENT YEAR 2011-12. 2. THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL ARE AS UNDER :- 1. TRANSFER PRICING RELATED GROUND OF APPEAL 1.1 THE LEARNED LOWER AUTHORITIES ERRED IN LAW AND ON FACTS IN CARRYING OUT THE REVISED BENCHMARKING DURING THE TP PROCEEDINGS WITHOUT FORMING ANY OPINION AS REGARDS PROFIT PASSING AS REQUIRED U/S 92C(3) OF THE ITA, 1961. 1.2 THE LEARNED TRANSFER PRICING OFFICER (TPO) HAS ERRED IN LAW AND ON FACTS IN PROPOSING AND HONBLE DISPUTE RESOLUTION PANEL (DRP) ERRED IN LAW AND ON FACTS IN UPHOLDING THAT ONLY SINGLE YEAR DATA RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION CAN BE USED INSTEAD OF MULTIPLE YEAR DATA AS DONE BY THE ASSESSEE. 2 ITA NO.506/PUN/2016 1.3 THE LEARNED TRANSFER PRICING OFFICER ('TPO) HAS ERRED IN LAW AND ON FACTS IN PROPOSING AND HONBLE DISPUTE RESOLUTION PANEL (DRP) ERRED IN LAW AND ON FACTS IN UPHOLDING THAT NO ANY RISK ADJUSTMENT INCLUDING WORKING CAPITAL ADJUSTMENT IS REQUIRED TO BE GIVEN TO THE ASSESSEE. 1.4 THE LEARNED TPO HAS ERRED IN LAW AND ON FACTS IN PROPOSING AND HONBLE DRP ERRED IN LAW AND ON FACTS IN UPHOLDING THAT FOREX LOSSES/ GAINS ARE NOT OPERATIONAL IN NATURE AND HENCE SHOULD NOT BE CONSIDERED WHILE COMPUTING PROFIT LEVEL INDICATOR OF THE ASSESSEE AS WELL AS OF THE COMPARABLES. 1.5 THE LEARNED ASSESSING OFFICER (AO) AND TRANSFER PRICING OFFICER (TPO); HAS ERRED IN LAW AND ON FACTS IN PROPOSING AND HONBLE DISPUTE RESOLUTION PANEL ('DRP) ERRED IN LAW AND ON FACTS IN ACCEPTING PROPOSED TRANSFER PRICING ADJUSTMENT OF RS.9,80,851/- IN RESPECT OF ARMS LENGTH PRICE WITH RESPECT TO THE INTERNATIONAL TRANSACTIONS RELATING TO BPO SERVICE SEGMENT. 1.6 THE LEARNED AO AND TPO HAS ERRED IN LAW AND ON FACTS IN PROPOSING AND HON'BLE DRP ERRED IN LAW AND ON FACTS IN ACCEPTING THE REJECTION OF FOLLOWING COMPARABLES FOR RESPECTIVE REASONS - CALIBER POINT BUSINESS SOLUTIONS LIMITED (SEG) FOR DIFFERENT YEAR ENDING COMPARED WITH THE ASSESSEE COMPANY. - DATAMATICS FINANCIAL SERVICES LIMITED FOR HAVING EXPORT TURNOVER LESS THAN 75% OF THE TOTAL TURNOVER 1.7 THE LEARNED AO, TPO ERRED IN LAW AND ON FACTS IN PROPOSING FOLLOWING THREE ('3) NEW ADDITIONAL COMPARABLES AND THE LEARNED DRP ERRED IN LAW AND ON FACTS IN ACCEPTING THE SAME. - ACCENTIA TECHNOLOGIES LTD. - ACROPETAL TECHNOLOGIES LIMITED (SEG) - TCS E SERVE INTERNATIONAL LIMITED 2. CORPORATE TAXATION RELATED GROUND OF APPEAL 2.1 THE LEARNED ASSESSING OFFICER HAS ERRED LAW AND ON FACTS IN PROPOSING AND THE HONBLE DRP ERRED IN LAW AND ON FACTS IN ACCEPTING THAT INTEREST AMOUNTING TO RS.9,51,225 SHOULD BE EXCLUDED FROM THE ELIGIBLE PROFITS WHILE COMPUTING DEDUCTION U/S. 10A OF THE INCOME TAX ACT, AND TREATING THE SAME AS INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. 3. THE APPELLANT PRAYS TO ADD, TO AMEND, ALTER, MODIFY AND/OR DELETE ALL/ANY OF GROUND(S) OF APPEAL. 3. BRIEFLY STATED THE RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SOFTWARE CONSULTANCY, SOFTWARE DEVELOPMENT, SOFTWARE TRAINING, IMPLEMENTATION/TRADING AND MAINTENANCE. THE 3 ITA NO.506/PUN/2016 ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.28,40,491/-. CONSIDERING THE REPORTING OF THE INTERNATIONAL TRANSACTIONS WITH THE AES AND THE TRANSACTIONS WERE REFERRED TO THE TPO FOR BENCHMARKING EXERCISE UNDER TP PROVISIONS. THE TPO REJECTED SOME COMPARABLES OF THE ASSESSEE AND INCLUDED FEW OTHERS. AT THE END OF THE PROCEEDINGS BEFORE THE TPO, FINAL COMPARABLES AS SELECTED BY THE TPO ARE GIVEN IN PARA -11 OF HIS ORDER. COMPARING THE ASSESSEES MARGIN OF 14.27% TO THAT OF THE AVERAGE MARGIN OF THE SAID COMPARABLES OF THE TPO AT 27.45%, THE TPO COMPUTED THE ADJUSTMENTS AND MADE ADDITION OF RS.11,94,717/- TO THE BPO SEGMENT. REFERRING TO THE IT SERVICES SEGMENT AND THE TOTAL ADJUSTMENTS PROPOSED BY THE ASSESSING OFFICER, THE TPO WORKS OUT THE ADJUSTMENTS AT RS.5,13,74,522/-. THE RELEVANT PARA 11 TO 13 ARE EXTRACTED HEREUNDER :- 11. HENCE THE FINAL COMPARABLES OF THE TPO ARE AS UNDER: SL. NO. NAME OF THE COMPARABLE MARGINS (%) OP/TC COMPARABLE AS PER 1 CROSSDOMAIN SOLUTIONS PRIVATE LIMITED 25.08% ASSESSEE 2 I C R A TECHNO ANALYTICS LIMITED 25.24% ASSESSEE 3 INFORMED TECHNOLOGIES INDIA LTD. 9.65% ASSESSEE 4 E4E HEALTHCARE BUSINESS SERVICES PVT. LTD. 9.77% ASSESSEE 5 ACCENTIA TECHNOLOGIES LTD. 29.18% TPO 6 ACROPETAL TECHNOLOGIES LTD. (SEGMENTAL) 23.95% TPO 7 TCS E-SERVE INTERNATIONAL LTD. 69.31% TPO MEAN 27.45% ASSESSEES MARGIN 14.27 THE MEAN MARGIN OF 27.45% AS PER THE DEPARTMENTAL COMPARABLES IS APPLIED IN THE CASE OF THE ASSESSEE. 12. ADJUSTMENT: THE OP/TC OF BPO SERVICES IS 14.27% IS LESSER THAN THAT OP/TC OF 27.45% EARNED BY COMPARABLE COMPANIES. THE OP/TC OF THE BPO SERVICE SEGMENT IS OUTSIDE THE 5% RANGE AVAILABLE UNDER THE REGULATIONS. IT CAN THUS BE CONCLUDED THAT THE INTERNATIONAL TRANSACTIONS OF THE ASSESSEE ARE NOT AT ARMS LENGTH PRICE, AND THEREFORE AN ADJUSTMENT OF RS.11,94,717 IS MADE AS PER THE BELOW WORKING: THE OPERATING MARGIN OF ASSESSEE HAS BEEN COMPUTED BASED ON THE SAFE HARBOUR RULES AS PER THE NOTICE ISSUED TO THE ASSESSEE ON 19 DECEMBER, 2014 AND THE SAME HAS BEEN CONSIDERED WHILE COMPUTING THE ADJUSTMENT. 4 ITA NO.506/PUN/2016 WORKING OF TP ADJUSTMENT PARTICULARS ASSESSEES P&L A/C OF BPO SERVICES (AS PROVIDED BY THE ASSESSEE VIDE ATTACHMENT 1B TO SUBMISSION FILED ON 12 JANUARY 2015) ALP @ 27.56% REVENUE 1,03,54,937 1,15,49,654 TOTAL COST 90,62,106 90,62,106 OPERATING PROFIT 12,92,831 24,87,548 OP/TC 14.27% 27.45% ADJUSTMENT 11,94,717 IN VIEW OF THE ABOVE, THE ASSESSEE WILL SUFFER AN ADJUSTMENT OF RS.11,94,717/- 13. THEREFORE, A TOTAL ADJUSTMENT RS.5,13,74,522 IS MADE ON ACCOUNT OF THE FOLLOWING: PARTICULARS ADJUSTMENT (IN RS.) PROVISION OF IT SERVICES 5,01,79,805 PROVISION OF BPO SERVICES 11,94,717/- TOTAL ADJUSTMENT 5,13,74,522 4. DURING THE PROCEEDINGS BEFORE THE DRP, THE ASSESSEE MADE VARIOUS SUBMISSIONS ON THE COMPARABLES AND ALSO OTHER ISSUES. AT THE END OF THE PROCEEDINGS, THE DRP ALLOWED CERTAIN OBJECTIONS AND DISMISSED FEW OTHERS. CONSEQUENTLY, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ON 25.01.2016 AND MAKING ADDITION ON ACCOUNT OF ADJUSTMENT OF RS.5,13,74,522/-. THE ASSESSING OFFICER ALSO MADE OTHER ADDITION ON ACCOUNT OF INTEREST INCOME AMOUNTING TO RS.9,51,225/-. THUS, THE BUSINESS INCOME IS COMPUTED AT RS.47,72,570/- AFTER GIVING EFFECT TO THE DIRECTIONS OF THE DRP. BEFORE THE DRP, AS A RESULT OF COMPLYING WITH THE DIRECTION OF THE DRP, THE ADDITION ON ACCOUNT OF TP ADJUSTMENTS IS ONLY RS.9,80,851/- IN PLACE OF RS.5,13,74,522/-. THUS, THE NET ADDITION MADE BY THE ASSESSING OFFICER, AT THE END OF THE ASSESSMENT PROCEEDINGS, ON ACCOUNT OF TP ADJUSTMENTS IS RS.9,80,851/-. THE OTHER CORPORATE 5 ITA NO.506/PUN/2016 ADDITION OF RS.9,51,225/- WAS ALSO CONFIRMED BY THE DRP/ASSESSING OFFICER. 5. AGGRIEVED WITH THE SAME, THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL WITH THE ABOVE EXTRACTED GROUNDS. 6. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE GROUND NO.1 WITH SUB-GROUND NOS.1.1 TO 1.5 ARE GENERAL IN NATURE, THEY CAN BE DISMISSED AS GENERAL. ACCORDINGLY, WE ORDER. 7. REFERRING TO GROUND NO.1.6, LD. COUNSEL FAIRLY SUBMITTED THAT THIS GROUND RELATES TO THE COUPLE OF COMPARABLES, NAMELY, (I) CALIBER POINT BUSINESS SOLUTIONS LIMITED (SEG.) AND (II) DATAMATICS FINANCIAL SERVICES LIMITED ARE NOT PRESSED. OTHERWISE, BOTH THESE COMPARABLES WERE EXCLUDED BY THE ASSESSEE AND THEY WERE REJECTED BY THE TPO AND DRP DUE TO THE EXPORT TURNOVER FILTER. 8. CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THE GROUND NO.1.6 IS REQUIRED TO BE DISMISSED . THUS, THE GROUND NO.1.6 DECIDED IN FAVOUR OF THE REVENUE. 9. REFERRING TO THE GROUND NO.1.7, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TPO/DRP SELECTED/INCLUDED THE FOLLOWING COMPARABLES, NAMELY, (I) ACCENTIA TECHNOLOGIES LTD., (II) ACROPETAL TECHNOLOGIES LIMITED (SEG) AND (III) TCS E SERVE INTERNATIONAL LIMITED. SIMILAR INCLUSIONS WERE MADE BY THE TPO/DRP IN THE PAST ASSESSMENT YEAR 2010-11. THIS ISSUE TRAVELLED TO THE ITAT. THE ITAT ADJUDICATED 6 ITA NO.506/PUN/2016 THIS ISSUE ABOUT THE CORRECTNESS OF THE INCLUSION OF THESE COMPARABLES SPECIALLY (I) ACCENTIA TECHNOLOGIES LTD. AND (II) ACROPETAL TECHNOLOGIES LIMITED (SEG) AND DIRECTED FOR EXCLUSION OF THE SAME. IN THIS REGARD, LD. COUNSEL BROUGHT OUR ATTENTION TO THE ORDER OF THE TRIBUNAL IN THE CASE OF ITO VS. SYSTIME GLOBAL SOLUTIONS LTD. VIDE ITA NO.336/PUN/2015 FOR THE ASSESSMENT YEAR 2010-11 DATED 31.01.2017 AND READ OUT THE DECISION ON CORRECTNESS OF THE INCLUSION OF THE SAID TWO COMPARABLES. FURTHER, REFERRING TO PARA 13 TO 16 OF THE SAID ORDER OF THE TRIBUNAL (SUPRA), LD. COUNSEL MENTIONED THAT THE DIRECTION OF THE TRIBUNAL FOR EXCLUSION OF (I) ACCENTIA TECHNOLOGIES LTD. AND (II) ACROPETAL TECHNOLOGIES LIMITED (SEG) ARE RELEVANT IN THIS REGARD. FOR THE SAKE OF COMPLETENESS, THE RELEVANT PARA 13 TO 16 OF THE ORDER OF THE TRIBUNAL (SUPRA) ARE EXTRACTED HEREUNDER :- 13. THE ISSUE ARISING IN THE PRESENT APPEAL IS IDENTICAL TO THE ISSUE BEFORE THE TRIBUNAL IN M/S. APTARA TECHNOLOGIES PVT. LTD. VS. ACIT (SUPRA) AND SINCE THE CONCERN ACCENTIA TECHNOLOGIES LTD. WAS ENGAGED IN KPO SEGMENT AND ALSO BECAUSE OF EXTRAORDINARY EVENT DURING THE YEAR, IS TO BE EXCLUDED FROM THE FINAL LIST OF COMPARABLES. ACCORDINGLY, WE HOLD SO . 14. VIS--VIS SECOND CONCERN I.E. ACROPETAL TECHNOLOGIES LTD., THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IT WAS ENGAGED IN DESIGN ENGINEERING ACTIVITIES AND VARIOUS BENCHES OF TRIBUNAL INCLUDING THE PUNE BENCH OF TRIBUNAL IN VISTCON ENGINEERING CENTRE (INDIA) (P.) LTD. VS. ACIT (2016) 70 TAXMANN.COM 248 (PUNE TRIB.), HAD HELD THAT THE SAID CONCERN IS NOT COMPARABLE TO BPO SERVICES PROVIDED BY THE ASSESSEE. THE TRIBUNAL VIDE PARA 26 HAD HELD AS UNDER:- 26. SO FAR AS ACROPETAL TECHNOLOGIES LTD. IS CONCERNED IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE TPO HAS CONSIDERED OVERALL ENTITY LEVEL OPERATING MARGIN IN RESPECT OF COMPARABLE SEGMENTAL MARGIN. HE SUBMITTED THAT ACROPETAL TECHNOLOGIES LTD. GENERATES REVENUE FROM ENGINEERING DESIGN SERVICES AND INFORMATION TECHNOLOGY CONSULTANCY. THEREFORE, ONLY SEGMENTAL PROFITABILITY OF ENGINEERING DESIGN SERVICES NEEDS TO BE CONSIDERED FOR THE COMPARISON. THE DRP HELD THAT THE IT BASED SERVICES SEGMENT IS ALSO SIMILAR TO THE SEGMENT OF THE ENGINEERING DESIGN SERVICES AND ACCORDINGLY REJECTED THE GROUND RAISED BY THE ASSESSEE. HE SUBMITTED THAT THE OPERATING PROFIT/OPERATING COST OF THE RELEVANT SEGMENT OF THE SAID COMPARABLE COMPANY FOR THE YEAR UNDER CONSIDERATION IS 32.92% BEFORE CONSIDERING THE WORKING 7 ITA NO.506/PUN/2016 CAPITAL ADJUSTMENT. HE SUBMITTED THAT THE ENGINEERING DESIGN SERVICES CANNOT BE EQUATED WITH IT SERVICES, THEREFORE, ACROPETAL TECHNOLOGIES LTD. SHOULD NOT BE CONSIDERED AS COMPARABLE COMPANY. 15. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE DECISION OF DELHI BENCH OF TRIBUNAL IN AGILENT TECHNOLOGIES (INTERNATIONAL) PVT. LTD. VS. ACIT IN ITA NO.6047/DEL/2012, RELATING TO ASSESSMENT YEAR 2008-09, ORDER DATED 14.06.2013, WHEREIN ACROPETAL LTD. WAS INCLUDED. 16. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE LIMITED ISSUE RAISED IS VIS--VIS EXCLUSION OF ACROPETAL LTD. FROM THE FINAL LIST OF COMPARABLES, WHEREBY THE SAID CONCERN WAS ENGAGED IN PROVIDING DESIGN ENGINEERING ACTIVITIES AS AGAINST THE ASSESSEES ACTIVITIES OF PROVIDING BPO SERVICES. THE BANGALORE BENCH OF TRIBUNAL IN SYMPHONY MARKETING SOLUTIONS INDIA P. LTD. VS. ITO (2013) 27 ITR (TRIB) 753 (BANGALORE) AND AHMEDABAD BENCH OF TRIBUNAL IN LUBRIZOL ADVANCED MATERIALS INDIA PVT. LTD. VS. ACIT IN ITA NO.2898/AHD/2012, RELATING TO ASSESSMENT YEAR 2008-09, ORDER DATED 26.12.2016 HAVE HELD THAT THE SAID PROVISION OF ENGINEERING DESIGN SERVICES WERE AKIN TO KPO SERVICES AND NOT BPO SERVICES. ALTHOUGH THE DECISION OF DELHI BENCH IN AGILENT TECHNOLOGIES (INTERNATIONAL) PVT. LTD. VS. ACIT (SUPRA) IS AGAINST THE ASSESSEE BUT IN VIEW OF VARIOUS CONTRARY DECISIONS OF THE TRIBUNAL AND FOLLOWING THE RATIO LAID DOWN IN SYMPHONY MARKETING SOLUTIONS INDIA P. LTD. VS. ITO (SUPRA), WE HOLD THAT THE SAID CONCERN IS TO BE EXCLUDED FROM THE FINAL LIST OF MARGINS WHILE BENCHMARKING THE INTERNATIONAL TRANSACTIONS OF BPO SEGMENT OF THE ASSESSEE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FAIRLY POINTED OUT THAT IN CASE THESE TWO CONCERNS ARE EXCLUDED FROM THE FINAL LIST OF COMPARABLES, THEN THE MARGINS SHOWN BY THE ASSESSEE AS COMPARED TO THE ARITHMETIC MEAN OF COMPARABLES WOULD BE WITHIN RANGE OF +/- 5%. ACCORDINGLY, WE DECIDE THIS ISSUE AND DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 10. REGARDING THE OTHER COMPARABLE I.E. ACCENTIA TECHNOLOGIES LTD., WE FIND THE SAME WAS EXCLUDED BY THE TPO IN THE TP STUDY OF THE LATER OF INCLUSION. 11. ON HEARING BOTH THE SIDES ON THIS ISSUE OF THESE TWO COMPARABLES, WE FIND THE ORDER OF THE TRIBUNAL SQUARELY COVERS THE ISSUE RAISED BEFORE US WITH REFERENCE TO (I) ACCENTIA TECHNOLOGIES LTD. AND (II) ACROPETAL TECHNOLOGIES LIMITED (SEG). THESE COMPARABLES ARE NOT FUNCTIONALLY SIMILAR. ACCORDINGLY, WE ORDER IN FAVOUR OF THE ASSESSEE. 8 ITA NO.506/PUN/2016 12. NOW, COMING TO THE INCLUSION OF TCS E-SERVE INTERNATIONAL LIMITED. THE LD. COUNSEL SUBMITTED THAT THE SAME IS REQUIRED TO BE EXCLUDED IN VIEW OF THE TURNOVER ASPECTS. ARGUING ON THE CORRECTNESS OF EXCLUSION OF TCS E-SERVE INTERNATIONAL LIMITED, LD. COUNSEL SUBMITTED THAT THE SAID COMPANY IS NOWHERE COMPARABLE TO THAT OF THE ASSESSEE. REFERRING TO THE BRAND VALUE OF THE TCS E-SERVE INTERNATIONAL LIMITED, LD. COUNSEL SUBMITTED THAT THE ASSESSEE WITH 1.5 CRORES TURNOVER, THE ASSESSEE IS NO COMPARABLE TO THAT OF THE TCS E-SERVE INTERNATIONAL LIMITED, WHICH HAS A TURNOVER OF RS.1442.42 CRORES. OTHER ISSUES LIKE BRAND VALUE AND BROAD ASPECT OF SERVICES, THE DETAILS IMPLY STRONGLY THEY ARE ANOTHER COMPARABLE TO THE TOPIC OF THE ASSESSEE. FURTHER, LD. COUNSEL SUBMITTED THAT THE FACT OF REQUIREMENT OF EXCLUSION OF TCS E-SERVE INTERNATIONAL LIMITED WITH HUGE TURNOVER OF THE BRAND VALUE WAS APPROVED BY THE VARIOUS DECISIONS. CRITICISING THE DECISION OF THE DRP, LD. COUNSEL SUBMITTED THAT MERE FUNCTIONAL COMPARABILITY IS NOT FINALLY DEMONSTRATED WHEN THE TCS E- SERVE INTERNATIONAL LIMITED SERVICE IS GENERAL COMPANY QUA THE ASSESSEE WITH SMALL TURNOVER OF 1.5 CRORES. 13. IN THIS REGARD, WE PERUSED THE CONTENTS OF PARA 1.3.3 OF THE ORDER OF THE TPO AND 6.2.3 OF THE DRPS ORDER AND FIND THE SAID CONCLUSION OF THE REVENUE AUTHORITIES REQUIRES REVISION AND THE SAME ARE NOT APPROVED. ACCORDINGLY, THE ASSESSEE IS ENTITLED TO RELIEF FOR THE TCS E-SERVE INTERNATIONAL LIMITED ALSO. WE ALSO CONSIDERED THE FACT OF THE THREE COMPARABLES I.E. (I) ACCENTIA TECHNOLOGIES LTD., (II) ACROPETAL TECHNOLOGIES LIMITED (SEG) AND (III) TCS E SERVE INTERNATIONAL LIMITED WERE EXCLUDED BY THE TPO IN THE LATER ASSESSMENT YEARS. THEREFORE, THE ASSESSEE SHOULD BE 9 ITA NO.506/PUN/2016 ENTITLED TO RELIEF OF REQUIREMENT OF INCLUSION OF THE ABOVE THREE COMPARABLES. ACCORDINGLY, WE ORDER. 14. GROUND NOS.2 AND 3 RELATING TO CORPORATE ADDITIONS WERE NOT PRESSED BY THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING. THEREFORE, THE GROUND NOS.2 AND 3 ARE DISMISSED AS NOT PRESSED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 24 TH DAY OF MAY, 2019. SD/- SD/- ( /VIKAS AWASTHY) ( . /D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 24 TH MAY, 2019. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE DRP-3, MUMBAI. 4. THE CIT (DRP-3), MUMBAI. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.