Deputy Commissioner of Income-tax, V. PTC Software India Pvt. Ltd., Pune

ITA 572/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7281 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 24-10-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 28-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHWIN TANEJA
• Keywords: Related party transaction; Transfer pricing; International transaction
• Section: 10B

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.572/PUN/2015 / ASSESSMENT YEAR : 2010-11 DCIT, CIRCLE-4, PUNE . /APPELLANT VS. PTC SOFTWARE (INDIA) PRIVATE LIMITED, SURVEY NO.15, MARISOFT-II, VADGAONSHERI, KALYANINAGAR, PUNE 411 014 PAN : AABCC1268J . / RESPONDENT C.O. NO.38/PUN/2015 (ARISING OUT OF ITA NO.572/PUN/2015) / ASSESSMENT YEAR : 2010-11 PTC SOFTWARE (INDIA) PRIVATE LIMITED, SURVEY NO.15, MARISOFT-II, VADGAONSHERI, KALYANINAGAR, PUNE 411 014 PAN : AABCC1268J . CROSS OBJECTOR VS. DCIT, CIRCLE-4, PUNE . / RESPONDENT . / ITA NO.352/PUN/2015 / ASSESSMENT YEAR : 2010-11 PTC SOFTWARE (INDIA) PRIVATE LIMITED, SURVEY NO.15, MARISOFT-II, VADGAONSHERI, KALYANINAGAR, PUNE 411 014 PAN : AABCC1268J . /APPELLANT VS. DCIT, CIRCLE-4, PUNE . / RESPONDENT ASSESSEE BY : SHRI ASHWIN TANEJA REVENUE BY : SHRI RAJEEV KUMAR, CIT / DATE OF HEARING : 24.10.2017 / DATE OF PRONOUNCEMENT: 27.10.2017 ITA NOS.352, 572/PUN/2015 AND CO NO.38/PUN/2015 PTC SOFTWARE (INDIA) PVT. LTD. 2 / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE 3 APPEALS UNDER CONSIDERATION AGAINST THE ORDERS/DIRECTIONS OF THE AO/TPO/DRP FOR THE A.Y. 2010-11. 2. IN THE REVENUES APPEAL, THREE GROUNDS ARE RAISE D AND ALL THE THREE GROUNDS REVOLVE AROUND THE ISSUE RELATING TO THE TR ANSFER PRICING ADJUSTMENTS AND QUESTIONS THE RELIEF GRANTED BY THE DRP TO THE ASSESSEE. GROUNDS OF APPEAL RAISED BY THE REVENUE ARE EXTRACTED AS UNDER : 1. THE DRP ERRED TO EXCLUDE FCS SOFTWARE LTD. FRO M THE LIST OF COMPARABLE COMPANIES, WHEN DELHI ITAT HAS HELD IN THE CASE OF NAVISITE INDIA (P) TO BE A SOFTWARE COMPANY. 2. THE DRP ERRED BY ACCEPTING ASSESSEES CONTENTION THAT COMPARABLES SELECTED BY IT AFTER CONDUCTING TP STUDY SHOULD BE CONSIDERED WHEN RULE 10D(4) MAINTAINS THAT DOCUMENTS AND INFORMATION SHO ULD EXISTS LATEST BY THE SPECIFIED DATE SPECIFIED IN S.92F94, I.E. THE DUE DATE FOR FILING THE ROI. 3. THE DRP ERRED TO EXCLUDE ECLERX SERVICES LIMITED FROM THE LIST OF COMPARABLE AS IT IS KPO COMPANY, WHEN CBDTS CIRCULA R NO.890 (E) DATED 26-09-2000 CLEARLY MENTIONS THAT KPO SERVICES ARE A LSO INFORMATION TECHNOLOGY ENABLED PRODUCTS OF SERVICES. 3. SIMILARLY, IN THE ASSESSEES APPEAL, THE ASSESSE E RAISED 4 GROUNDS, WHICH HAS MANY SUB-GROUNDS, QUESTIONING THE TRANSFER PRIC ING ADJUSTMENT AMOUNTING TO RS.69,68,175/- CONFIRMED BY THE DRP. ALL THE GR OUNDS RAISED BY THE ASSESSEE ARE EXTRACTED AS UNDER : O N TH E F A CT S AND C IR C UM S TANCES OF THE CASE , AND IN LAW : 1. THE LD ASSESSING OFFICER (AO') PURSUANT TO THE DIRECTIONS OF THE LD . DISPUTE RESOLUTION PANEL (DRP') ERRED IN REJECTING THE BENCHMARKING APPROACH ADOPTED/CONTEMPORANEOUS DOCUMENTATION MAINTAINED B Y THE APPELLANT AND THEREBY MAKING A TRANSFER PRICIN G ADJUSTM E NT OF RS. 69 , 68,175 TO THE INCOME OF THE APPELLANT BY HOLDING THAT TH E INTERNATIONAL TRANSACTIONS PERTAINING TO PROVISION OF CUSTOMER SUPPORT BACK OFFICE SERVICES ( ' ITES SERVIC E S ' ) TO TH E ASSOCIATED ENTERPRISE (AE') ARE NOT AT ARM'S LENGT H UND E R TH E INCOM E -TAX ACT , 1961 (TH E ACT ' ) . 2. ON TH E FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. AO/DRP ERRED IN MODIFYING TH E BENCHMARKING ANALYSIS , AS CONDUCTED BY THE APPELLANT USING TRANSACTIONAL NET MARGIN METHOD (TNMM') FOR BENCHM ARKING ITS INTERNATIONAL ITA NOS.352, 572/PUN/2015 AND CO NO.38/PUN/2015 PTC SOFTWARE (INDIA) PVT. LTD. 3 TRANSACTIONS PERTAINING TO PROVISION OF ITES S E R V ICES TO THE AE, AND THER E B Y MODIFYING THE SET OF COMPARABLES . IN DOING SO , TH E LD AO/DRP SP E CIFICALL Y ERR E D IN : A) CONDU C TING SEL EC TI VE FRESH ANAL YS IS (WITHOUT SHARING THE FR E SH SEARCH WO RKINGS WITH TH E AS SES S EE ) RESULTING IN CHERR Y PICKING OF COMPARABLES WHICH CONTRADICTS W ITH TH E PRIN C IPL ES OF C ONDUCTING S EA RCH (FOR COMPARABLES) IN A SCIENTIFIC MANN E R; B) DISR E GARDING TH E FRESH SEARCH PROVIDED BY TH E ASSESSEE (ON A WITHOUT PREJUDICE B A SIS) USING THE DATA FOR FY 2009-10, WHEREAS TH E LD . AO/TPO HAD HIMSELF CONDUCTED A FR E SH S E ARCH/ ANALYSIS . C) INCLUDING COMPANIES WHICH ARE NOT FUNCTIONALLY COMP ARABLE TO THE ITES S E R V IC E S R E ND E R E D B Y TH E APPELLANT IN FINAL SET OF COMPARABLES (IDENTIFIED BASED ON THE FR E SH SEARCH / ANAL YS I S CONDUCTED B Y TH E LD TPO). D) REJECTING COMPANI E S FUNCTIONALLY SIMILAR TO THAT OF THE APP E LLANT ' S BUSIN E SS OP E R A TIONS FROM FINAL SET OF COMPARABLES (AND ALSO IDENT IFIED BASED ON THE FRESH SEARCH CONDUCT E D B Y TH E APPELLANT ON A WITHOUT PREJUDICE BASIS). 3. TH E LD. DRP / AO E RR E D IN CONSID E RING THE SINGLE YEAR DATA FOR THE COMPARABL E S I .E. DATA FOR FY 2009-10 ONL Y AND DISR EGA RDING MULTIPLE Y EAR DATA WHICH WAS C ONSIDER E D B Y TH E A PP E LLANT IN A CC O RD A N CE W ITH TH E PR OV ISIONS OF RUL E 10B(4) OF TH E INCOM E -TAX RULE , 1962 ( ' RUL E S ' ) . 4. TH E LD. DRP / AO E RR E D IN NOT ALLOWING AN ADJUSTMENT FOR THE DIFFER E NC E B E TW EE N THE L EVE L OF RISK BORN E /ASSETS E MPLO Y ED B Y THE COMPARABLES AND THE APP E LLANT A S PRO V IDED B Y TH E APPELLANT , WITHOUT PRO V IDING ANY COG E NT REASONS, AND DISREGARDING THE PROVISIONS OF RUL ES 10B (3) R E AD WITH RUL E 10C OF TH E RULES . IN DOING SO, THE LD DRP / AO ERRED B Y : I. FAILING TO CAPTURE THAT THE APPELLANT IS A ROUTINE CAPTIVE SERVICE PROVIDER AS AGAINST THE COMPARABLE COMPANIES SELECTED BY THE LD.TPO WHICH INCLUDE ENTREPRENEURIAL COMPANIES AND HENCE AN ADJU STMENT IS NECESSARY. II. DISREGARDING THE PROVISIONS OF RULE 10B(3) READ WIT H RULE 10C OF THE RULES. THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTH ER. 4. FURTHER, BRINGING OUR ATTENTION TO THE CROSS OBJ ECTION, I.E. C.O.NO.38/PUN/2015 FILED BY THE ASSESSEE, LD. AR FO R THE ASSESSEE SUBMITTED THAT THE SAID CROSS OBJECTIONS BECOMES AN ACADEMIC ISSUE ONCE THE GROUNDS RAISED BY THE REVENUE ARE ADJUDICATED IN FAVOUR OF THE ASSESSEE, LD. AR OPINES THAT THE ISSUES RAISED BY THE REVENUE ARE OF COVERE D NATURE BY THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE EARLIER A.Y. 2009-10. THEREFORE, WE SHALL NOW TAKE UP THE REVENUES APPEAL TO EXAMINE THE CLAIM OF COVERED NATURE OF THE ISSUES RELATING TO THE TRANSFER PRICI NG ADJUSTMENT. ITA NOS.352, 572/PUN/2015 AND CO NO.38/PUN/2015 PTC SOFTWARE (INDIA) PVT. LTD. 4 ITA NO.572/PUN/2015 (BY REVENUE) : 5. GROUND NO.1 OF THE REVENUE RELATES TO THE CORREC TNESS OF THE EXCLUSION OF FCS SOFTWARE LTD. AS A COMPARABLE AGAINST THE DE CISION OF THE TPO WHO CONSIDERED THE SAME AS A GOOD COMPARABLE. 6. LD. DR RELIED ON THE ORDER OF THE AO AND ALSO ON THE ORDER OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF NAVISITE INDIA PVT. LTD., WHICH IS ACTUALLY REFERRED IN THE GROUND NO.1 OF REVENUES APPEAL. I N CONNECTION WITH THE EXCLUSION OF M/S. ECLERX SERVICES LTD. (A KPO SOMPA NY), LD. DR FOR THE REVENUE ALSO RELIED ON THE CIRCULAR OF THE CBDT FOR THE PRO POSITION THAT THE KPO SERVICES OF ECLERX SERVICES LTD. ARE FUNCTIONALLY COMPARABLE TO THE ITES OF THE ASSESSEE. 7. IN THIS REGARD, THE CASE OF THE AO AND THE TPO I S THAT FCS SOFTWARE LTD. BEING A SOFTWARE DEVELOPER THE SAME CONSTITUTES A G OOD COMPARABLE. HOWEVER, THE DRP FOUND THAT THE SAID COMPANY EARNED 42% OF REVENUE FROM SOFTWARE SERVICES AND 37% OF REVENUE EARNED FROM ED UCATION AND 21% OF THE REVENUE IS EARNED FROM INFRASTRUCTURE MANAGEMENT. WITH THE SAID 42% OF THE REVENUE FROM SOFTWARE SERVICES, THE SAME DOES NOT C ONSTITUTE A GOOD COMPARABLE AND THEREFORE THE DRP DIRECTED THE AO/TP O TO EXCLUDE THE SAME FROM THE LIST OF COMPARABLES FOR BENCHMARKING THE I NTERNATIONAL TRANSACTIONS OF THE ASSESSEE. 8. IN CONNECTION WITH THE SAID DIRECTION OF THE DRP , LD. AR FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE FCS SOFTWARE LTD. WITH 42% OF THE TOTAL REVENUE FROM THE SOFTWARE SERVICES CANNOT BE CONSIDERED AS A GOOD COMPARABLE IN CASE OF BENCHMARKING OF TRANSACTIONS BY A SOFTWARE COMPA NY. BRINGING OUR ATTENTION TO THE ORDER OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE A.Y. 2008- 09 VIDE ITA NO.2546/PUN/2012, LD. AR FOR THE ASSESS EE SUBMITTED THAT SAID COMPARABLE WAS CONSIDERED AS A GOOD COMPARABLE BY T HE TPO/AO. IN THIS ITA NOS.352, 572/PUN/2015 AND CO NO.38/PUN/2015 PTC SOFTWARE (INDIA) PVT. LTD. 5 YEAR, THE TPO CONSIDERED THE FILTER OF 75% OF THE T OTAL RECEIPTS FROM THE SOFTWARE SERVICES. ON FINDING THAT THE TOTAL RECEI PTS ARE BELOW THE SAID BENCHMARK, THE TRIBUNAL DECIDED THE CASE IN FAOVUR OF THE ASSESSEE AND CONSIDERED THE FACT THAT FCS SOFTWARE LTD. DOES NOT QUALIFY THE SAID FILTER OF 75%. COPY OF THE SAID ORDER IS PLACED IN THE PAPE R BOOK AT PAGE 873 OF THE LEGAL COMPENDIUM. ON SIMILAR GROUND, THE TRIBUNAL EXCLUDED THE SAID COMPANY WHILE ADJUDICATING ANOTHER SOFTWARE COMPANY NAMED T IBCO SOFTWARE (INDIA) PVT. LTD. IN ITA NO.2536/PUN/2012 FOR THE A.Y. 2008 -09 (PLACED IN THE PAPER BOOK AT PAGES 14 TO 16 AND 65 OF THE LEGAL COMPENDI UM). 9. ON HEARING BOTH THE PARTIES ON THIS ISSUE, WE FI ND THAT FCS SOFTWARE LTD. WAS NOT CONSIDERED AS A GOOD COMPARABLE WHEN IT COM ES TO FAR (FUNCTIONS ASSETS AND RISKS ANALYSIS) TEST AS WELL AS THE REVE NUE SEGMENT OF THE SOFTWARE SERVICES EARNED BY THE SAID COMPANY. FOR THE SAKE OF COMPLETENESS, WE EXTRACT THE RELEVANT PARAGRAPHS FROM THE ORDER OF T HE TRIBUNAL IN THE ASSESSEES OWN CASE (SUPRA) AND THE SAME READ AS UNDER : 12. BOTH SIDES HEARD. THE ASSESSEE HAS ASSAILED IN CLUSION OF FCS SOFTWARE SOLUTION LTD. IN FINAL SET OF COMPARABLES PRIMARILY ON GROUND THAT THE COMPANY IS FUNCTIONALLY DIFFERENT, FAILS TO QUALIFY FILTER OF 75% INCOME FROM SOFTWARE DEVELOPMENT SERVICES AND HAS ABNORMALLY HIGH PROFIT S. WE FIND THAT THE ISSUE REGARDING EXCLUSION/INCLUSION OF FCS SOFTWARE SOLUT IONS LTD. HAS BEEN CONSIDERED BY THE CO-ORDINATE BENCH OF TRIBUNAL IN THE CASE OF TIBCO SOFTWARE INDIA PVT. LTD. VS. DY. COMMISSIONER OF INCOME TAX (SUPRA). THE LD. COUNSEL HAS GIVEN A COMPARATIVE ANALYSIS AS TO HOW THE ACTI VITIES OF THE ASSESSEE AND TIBCO SOFTWARE INDIA PVT. LTD. ARE AT PAR WITH EACH OTHER. THE LD. DR HAS NOT DISPUTED THE SAME. IN THE CASE OF TIBCO SOFTWARE IN DIA PVT. LTD. VS. DY. COMMISSIONER OF INCOME TAX (SUPRA) THE TRIBUNAL HAS EXCLUDED FCS SOFTWARE SOLUTIONS LTD. BY OBSERVING AS UNDER : '23. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS. IN FACT, THE TPO HAS REPRODUCED IN PARA 15.7 THE WRITTEN SUBMISS IONS OF THE ASSESSEE ON THIS ASPECT. THE FIRST PLEA RAISED BY T HE ASSESSEE WAS THAT INCOME EARNED BY THE SAID CONCERN FROM RENDERING OF APPLICATION SUPPORT SERVICES AND INFRASTRUCTURE MANAGEMENT SERV ICES, WHICH CONSTITUTE 11% AND 15% RESPECTIVELY OF THE TOTAL RE VENUE, ARE IN THE NATURE OF IT ENABLED SERVICES AND NOT LINKED TO THE SOFTWARE DEVELOPMENT SERVICES. ON THIS BASIS, IT WAS SOUGHT TO BE POINTED OUT THAT IF THE AFORESAID INCOME STREAMS ARE EXCLUDED F ROM THE SEGMENT OF SOFTWARE DEVELOPMENT SERVICES, THEN THE INCOME FROM SOFTWARE DEVELOPMENT SERVICES SEGMENT FALLS BELOW 75% OF THE TOTAL INCOME. THE TPO HAD APPLIED A FILTER TO EXCLUDE SUCH CONCERNS F ROM THE LIST OF ITA NOS.352, 572/PUN/2015 AND CO NO.38/PUN/2015 PTC SOFTWARE (INDIA) PVT. LTD. 6 COMPARABLES, WHEREIN THE INCOME FROM SOFTWARE DEVEL OPMENT SERVICES WAS LESS THAN 75% OF THE TOTAL INCOME. IN FACT, IN THE DISCUSSION MADE BY THE TPO IN RESPONSE TO ASSESSEES AFORESAID ASSE RTIONS, THERE IS NO DENIAL TO THE SAME. THOUGH THE TPO GOES ON TO RELY ON THE CBDTS CIRCULAR DATED 26.09.2000 (SUPRA), BUT THAT IS IN R ELATION TO THE ACTIVITY OF E-LEARNING AND DIGITAL CONSULTING BEING CARRIED OUT BY THE ASSESSEE. THE SEGMENT OF E-LEARNING AND DIGITAL CONSULTING IS A DIFFERENT SEGMENT. IN ANY CASE, ASSESSEES PLEA BASED ON THE NATURE OF SERVICES ON ACCOUNT OF APPLICATION SUPPORT SERVICES SEGMENT AND INFRAST RUCTURE MANAGEMENT SERVICES SEGMENT HAVE NOT BEEN REBUTTED BY THE TPO. THEREFORE, WE ARE INCLINED TO HOLD THAT THE APPLICATION SUPPORT SERVI CES AND INFRASTRUCTURE MANAGEMENT SERVICES, WHICH CONSTITUTE 11% AND 15% R ESPECTIVELY OF THE TOTAL INCOME, ARE IT ENABLED SERVICES AND NOT L INKED TO THE SOFTWARE DEVELOPMENT SERVICES. 24. MOREOVER, THE ASSESSEE HAD REFERRED TO THE FOLL OWING EXTRACT FROM THE ANNUAL REPORT OF THE SAID CONCERN IN RELATION T O THE E-LEARNING AND DIGITAL CONSULTING BEFORE THE TPO TO SAY THAT IT IS IN THE NATURE OF IT ENABLED SERVICES:- 'E-LEARNING AND DIGITAL CONSULTING SERVICES: US CORPORATIONS LOOK AT E-LEARNING OF WEB / CD BASE D TRAINING PROGRAMS AS ONE OF THE WAYS TO ACHIEVE ORGANIZATIONAL GROWTH AND IMPROVED BUSINESS PERFORMANCE. E-LEARNING HELPS EMPLOYEES, V ENDORS, AND DEALERS OF A COMPANY TO BETTER THEIR PERFORMANCE AN D DEAL WITH FAST- CHANGING ENVIRONMENTS. E-LEARNING MAKES TRAINING HI GHLY EFFICIENT, BY MAKING IT AVAILABLE ANYTIME, ANYWHERE AND REDUCES T OTAL COST OF TRAINING. E-LEARNING IS USED TO TRAIN EMPLOYEES, CU STOMERS AND SERVICE TECHNICIANS ON PRODUCT KNOWLEDGE, CONCEPTS, STRATEG IES, RISK AND FINANCE, COMPLIANCE AND TECHNOLOGY.' 25. OSTENSIBLY, THE AFORESAID SERVICES INVOLVE SETT ING UP OF SUPPORT CENTRES AND REMOTE MAINTENANCE, WHICH HAVE BEEN DUL Y CATEGORIZED AS ITES BY THE CBDTS CIRCULAR DATED 26.09.2000 ITSELF , WHICH HAS BEEN REPRODUCED BY THE TPO IN THE IMPUGNED ORDER. THEREF ORE, EVEN THE SAID SEGMENT IS NOT TO BE INCLUDED AS PART OF THE SOFTWA RE DEVELOPMENT SERVICES, AS ASSERTED BY THE ASSESSEE. ONCE THE SEG MENT OF APPLICATION SUPPORT AND INFRASTRUCTURE MANAGEMENT SERVICES ARE REMOVED ALONG WITH THE EXCLUSION OF E-LEARNING AND DIGITAL CONSUL TING SEGMENT, THEN THE INCOME OF THE SAID CONCERN FROM SOFTWARE DEVELO PMENT SERVICES FALLS BELOW 75% OF ITS TOTAL INCOME AND THEREFORE, IT DES ERVES TO BE EXCLUDED EVEN ON THE BASIS OF THE FILTER APPLIED BY THE TPO. THUS, ON THIS ASPECT, ASSESSEE SUCCEEDS.' 13. RELIANCE HAS ALSO BEEN PLACED BY THE ASSESSEE O N THE DECISION OF BARCLAYS TECHNOLOGY CENTRE VS. ACIT (SUPRA) TO CONTEND THAT FCS SOFTWARE SOLUTIONS LTD. HAS ABNORMALLY HIGH PROFIT MARGIN. THE CO-ORDI NATE BENCH OF TRIBUNAL WHILE EXCLUDING FCS SOFTWARE SOLUTIONS LTD. IN THE SAID C ASE HAS HELD AS UNDER : '28. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS. THE ARGUMENT OF THE ASSESSEE IN ORDER TO EXCLUDE FCS SOFTWARE SO LUTIONS LTD. FROM THE FINAL SET OF COMPARABLES IS BASED ON TWIN GROUNDS. FIRSTLY, IT IS CONTENDED THAT THE SAID CONCERN HAS DECLARED AN ABN ORMALLY HIGH PROFIT MARGIN OF 57.02% FOR THE FINANCIAL YEAR UNDER CONSI DERATION; AND, SECONDLY, THAT THE MARGINS OF THE SAID CONCERN WID ELY FLUCTUATE IN OVER THE YEARS. IN THE CONTEXT OF THE EXCLUSION OF ABNOR MAL PROFIT MAKING CONCERNS, THE FOLLOWING DISCUSSION MADE BY THE SPEC IAL BENCH OF THE TRIBUNAL IN THE CASE OF MAERSK GLOBAL CENTREA (INDI A) PVT. LTD. (SUPRA) IS WORTHY OF NOTICE: ITA NOS.352, 572/PUN/2015 AND CO NO.38/PUN/2015 PTC SOFTWARE (INDIA) PVT. LTD. 7 'IN GENERALITY, WE ARE OF THE VIEW THAT THE ANSWER TO THIS QUESTION WILL DEPEND ON THE FACTS AND CIRCUMSTANCES OF EACH CASE INASMUCH AS POTENTIAL COMPARABLE EARNING ABNORMALLY HIGH PROFIT MARGIN SHOULD TRIGGER FURTHER INVESTIGATION IN ORDER TO ESTABLISH WHETHER IT CAN BE TAKEN AS COMPARABLE OR NOT. SUCH INVESTIGATION SHOULD BE TO ASCERTAIN AS TO WHETHER EARNING OF HIGH PROFIT REFLECTS A NORMAL BU SINESS CONDITION OR WHETHER IT IS THE RESULT OF SOME ABNORMAL CONDITION S PREVAILING IN THE RELEVANT YEAR. THE PROFIT MARGIN EARNED BY SUCH ENT ITY IN THE IMMEDIATELY PRECEDING YEAR/S MAY ALSO BE TAKEN INTO CONSIDERATION TO FIND OUT WHETHER THE HIGH PROFIT MARGIN REPRESENTS THE NORMAL BUSINESS TREND. THE FAR ANALYSIS IN SUCH CASE MAY BE REVIEWE D TO ENSURE THAT THE POTENTIAL COMPARABLE EARNING HIGH PROFIT SATISF IES THE COMPARABILITY CONDITIONS. IF IT IS FOUND ON SUCH INVESTIGATION TH AT THE HIGH MARGIN PROFIT MAKING COMPANY DOES NOT SATISFY THE COMPARAB ILITY ANALYSIS AND OR THE HIGH PROFIT MARGIN EARNED BY IT DOES NOT REF LECT THE NORMAL BUSINESS CONDITION, WE ARE OF THE VIEW THAT THE HIG H PROFIT MARGIN MAKING ENTITY SHOULD NOT BE INCLUDED IN THE LIST OF COMPARABLE FOR THE PURPOSE OF DETERMINING THE ARM'S LENGTH PRICE OF AN INTERNATIONAL TRANSACTION. OTHERWISE, THE ENTITY SATISFYING THE C OMPARABILITY ANALYSIS WITH ITS HIGH PROFIT MARGIN REFLECTING NORMAL BUSIN ESS CONDITION SHOULD NOT BE REJECTED SOLELY ON THE BASIS OF SUCH ABNORMA L HIGH PROFIT MARGIN.' 29. THE AFORESAID DISCUSSION OF THE SPECIAL BENCH R EVEALS THAT A CONCERN WHICH HAS EARNED ABNORMALLY HIGH PROFIT MARGIN CANN OT BE EXCLUDED FROM THE LIST OF COMPARABLES STRAIGHTAWAY WITHOUT M AKING APPROPRIATE INVESTIGATIONS. AS PER THE SPECIAL BENCH, IT WOULD BE APPROPRIATE T O ASCERTAIN AS TO WHETHER THE HIGH PROFIT MARGIN DECLARED BY THE CONC ERN REFLECTS A NORMAL BUSINESS PHENOMENON OR IT HAS RESULTED BECAU SE OF CERTAIN ABNORMAL CONDITIONS PREVAILING IN A PARTICULAR YEAR . AS PER THE SPECIAL BENCH, IN ORDER TO CARRY OUT THE AFORESAID ANALYSIS , THE PROFIT MARGINS EARNED BY SUCH CONCERN IN THE PROXIMATE PRECEDING A ND SUCCEEDING YEARS SHOULD ALSO BE TAKEN INTO CONSIDERATION SO AS TO ESTABLISH WHETHER THE HIGH PROFIT MARGINS REFLECT A NORMAL BUSINESS T REND OR OTHERWISE. IN THIS BACKGROUND OF THE MATTER, WE FIND THAT IN THE CASE OF FCS SOFTWARE SOLUTIONS LTD., THE MARGINS FOR THE TWO PRECEDING F INANCIAL YEARS ARE 14.75% AND 19.94%, WHEREAS IN THE FINANCIAL YEAR SU CCEEDING TO THE YEAR UNDER CONSIDERATION, THE MARGIN IS 37.07%; AND , THE MARGIN DECLARED FOR THE YEAR UNDER CONSIDERATION IS 57.02% . AT THE TIME OF HEARING, THE LD. REPRESENTATIVE POINTED OUT THAT IN THE FINANCIAL YEAR 2007-08 RELEVANT TO THE ASSESSMENT YEAR UNDER CONSI DERATION THE SAID CONCERNS REVENUES FROM THE SOFTWARE ACTIVITY WAS R S.86.73 CRORES AS AGAINST RS.143.43 CRORES IN IMMEDIATELY PRECEDING Y EAR. ON THE CONTRARY THE EXPENDITURE INCURRED ON DEVELOPMENT OF SOFTWARE FOR THE YEAR UNDER CONSIDERATION STOOD AT RS.30.44 CRORES AS AGAINST R S.104.35 CRORES IN THE IMMEDIATELY PRECEDING YEAR. IT IS POINTED OUT T HAT THE RATIO OF SOFTWARE DEVELOPMENT EXPENDITURE TO TOTAL INCOME HA S FALLEN DRASTICALLY FROM 72.75% TO 35.10%, WHICH SHOWS THAT THE CURRENT YEAR HAS WITNESSED ABNORMAL EVENTS. ALL THE AFORESAID FACTUA L ASPECTS OF THE MATTER HAVE NOT BEEN DISPUTED BY THE REVENUE BEFORE US. FROM THE AFORESAID ANALYSIS, IT IS CLEAR THAT THE OPERATING MARGINS OF THE SAID CONCERN DO NOT REFLECT A CONSISTENT TREND OVER THE YEARS, AND IN ANY CASE, THE CURRENT YEARS OPERATIONS IN COMPARISON T O THE EARLIER YEARS ARE QUITE ABNORMAL. CONSIDERING THE ENTIRETY OF CIR CUMSTANCES, IN OUR VIEW, THE FINANCIAL RESULTS DECLARED BY THE SAID CO NCERN DO NOT REFLECT A NORMAL BUSINESS TREND AND THEREFORE IN OUR VIEW THE SAID CONCERN IS LIABLE TO BE EXCLUDED FROM THE FINAL SET OF COMPARA BLES. WE HOLD SO.' ITA NOS.352, 572/PUN/2015 AND CO NO.38/PUN/2015 PTC SOFTWARE (INDIA) PVT. LTD. 8 THE LD. DR HAS NOT CONTROVERTED THE DECISIONS OF CO -ORDINATE BENCH IN REJECTING FCS SOFTWARE SOLUTIONS LTD. FROM THE FINA L LIST OF COMPARABLES. THUS, IN VIEW OF THE FACTS OF THE CASE AND THE DECI SIONS DISCUSSED ABOVE WE FIND THAT FCS SOFTWARE SOLUTIONS LTD. IS NOT A G OOD COMPARABLES AND HENCE, IS LIABLE TO BE EXCLUDED FROM FINAL SET OF C OMPARABLES. WE HOLD AND DIRECT, ACCORDINGLY. 10. IN THIS YEAR UNDER CONSIDERATION TOO, THE MODIF IED FILTER OF THE TPO QUA THE PERCENTAGE OF TOTAL RECEIPTS OUT OF THE IT SERV ICES, THE ASSESSEE RECORDED 42%. THE SAME IS BELOW THE FILTER SET BY THE TPO F OR BENCHMARKING. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSUE, WE ARE OF THE OPINION THAT THE DIRECTION GIVEN BY THE DRP IN EXCLUDING THE FCS SOFTWARE LTD. AS A GOOD COMPARABLE IS FAIR AND REASONABLE AND IT DOES NOT C ALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO.1 RAISED BY THE REVENUE IS D ISMISSED. 11. GROUND NO.3 RAISED BY THE REVENUE RELATES TO RE JECTION OF ASSESSEES CLAIM FOR FRESH SEARCH OF COMPARABLES. BRINGING OU R ATTENTION TO THE DIRECTION OF THE DRP, IT IS THE SUBMISSION OF THE ASSESSEE THAT THE GROUND IS MIS-CONCEIVED BY THE REVENUE AS THE SAME IS RAISED BY THE ASSESSE E IN ITS APPEAL VIDE GROUND NO.2(B) OF THE GROUNDS OF APPEAL OF THE ASSESSEE. CONSIDERING THE SAME, AFTER HEARING BOTH THE PARTIES, WE DISMISS THE SAME AS MI S-CONCEIVED. 12. GROUND NO.2 RAISED BY THE REVENUE RELATES TO EX CLUSION OF ECLERX SERVICES LTD. FROM THE LIST OF COMPARABLES. THE AO AND THE TPO CONSIDERED THE SAME AS A GOOD COMPARABLE DESPITE THE FACT THAT THE SAID COMPANY IS ENGAGED IN KPO SERVICES. WITHOUT DISPUTING THE SAME IS A K PO COMPANY, IT IS THE CASE OF THE REVENUE THAT THE KPO SERVICES ARE AKIN TO TH E IT SOFTWARE SERVICES OF THE ASSESSEE COMPANY AND RELIED HEAVILY ON THE CBDT CIRCULAR NO.890 (E) DATED 26-09-2000. RELYING ON THE SAID CIRCULAR, REVENUE REASONS THAT THE KPO SERVICES CONSTITUTES INFORMATION TECHNOLOGY SERVICE S AND THEREFORE, THE SAME CONSTITUTES A GOOD COMPARABLE. REVENUE IS AGGRIEVE D AGAINST THE DIRECTION OF ITA NOS.352, 572/PUN/2015 AND CO NO.38/PUN/2015 PTC SOFTWARE (INDIA) PVT. LTD. 9 THE DRP WHO DIRECTED FOR EXCLUSION OF THE SAME FOR THE REASONS GIVEN IN THEIR DIRECTION AT PARA 25 OF THE ORDER OF THE DRP DATED 28-12-2014. 13. BEFORE THE DRP, ASSESSEE REASONED THAT THE KPO (KNOWLEDGE, PROCESS AND OUTSOURCING) SERVICES ARE NEITHER THE IT SOFTWA RE SERVICES NOR THE ITES SERVICES. FOR THIS PROPOSITION, ASSESSEE RELIED ON VARIOUS DECISIONS. FURTHER, IT IS THE CASE OF THE ASSESSEE THAT THE SAID CIRCULAR OF CBDT IS NOT UP-TO-DATE IN VIEW OF THE SUBSEQUENT STAND OF THE CBDT ON THIS IS SUE. BRINGING OUR ATTENTION TO THE COPY OF THE CBDT SAFE HARBOUR RULES DATED 18 -09-2013 (PAGE 324 OF THE PAPER BOOK), LD. AR FOR THE ASSESSEE DEMONSTRATED T HAT THE FACT OF CBDT DISTINGUISHING THE KPO SERVICES FROM THE BPO SERVIC ES WHILE FIXING DIFFERENT SAFE HARBOUR MARGINS FOR THE DIFFERENT SERVICES. THUS, THE LD. AR FOR THE ASSESSEE DEMOLISHED THE TPOS VIEW ON THE SIMILARITY OF BPP SERVICES WITH THAT OF KPO SERVICES. REFERRING TO THE ORDER OF THE DRP, LD. A R FOR THE ASSESSEE SUBMITTED THAT THE DRP GAVE THE RELIEF TO THE ASSESSEE AS PER THE DISCUSSION GIVEN IN PAGES 46 TO 49 OF THE ORDER. AGGRIEVED WITH THE SA ME, THE REVENUE IS IN APPEAL WITH GROUND NO.3. 14. BRINGING OUR ATTENTION TO THE SAID SAFE HARBOUR RULES NOTIFIED BY THE CBDT DATED 18-09-2013, COPY OF WHICH IS PLACED AT P AGE NO.324 AND 325 OF THE PAPER BOOK FILED IN CONNECTION WITH THE STAY PROCEE DINGS, LD. AR FOR THE ASSESSEE SUBMITTED THAT THE KPO SERVICES ARE NOT CA TEGORIZED UNDER THE ITES SERVICES. THE FACT OF EXCLUDING M/S.ECLERX SERVICE S LTD. WAS ALSO DEMONSTRATED BY FILING A COPY OF THE JUDGMENT OF THE HONBLE DEL HI HIGH COURT IN THE CASE OF RAMPGREEN SOLUTIONS PVT. LTD. VS. CIT REPORTED IN T S-387-HC-2015 (DEL.)-TP (PAGES 108, 109 AND 121 OF THE PAPER BOOK). THE SA ID JUDGMENT IS CATEGORICAL IN STATING THAT THE KPO SERVICES CANNOT BE COMPARED TO AN ENTITY, WHICH IS ENGAGED IN THE FUNCTION OF RENDERING VOICE CALL SER VICES WHICH ARE CONTEMPLATES TO BE THE LOWER END OF THE ITES SERVICES. THE KPO SERVICES ARE CONSIDERED ITA NOS.352, 572/PUN/2015 AND CO NO.38/PUN/2015 PTC SOFTWARE (INDIA) PVT. LTD. 10 ADVANCE SKILLS REPRESENTING HIGHER END OF ITES IN T ERMS OF VALUE ADDITION. RELEVANT WRITTEN SUBMISSIONS SUBMITTED BY THE LD. A R FOR THE ASSESSEE ARE EXTRACTED AS UNDER : AT STAY PB 314 - 317, IS THE RESPONDENT'S SUBMISSION BEFORE THE TPO. THE LD . TPO HAS DISCUSSED ABOUT THE SAID COMPARABLE AT APPEAL PB 102-103 AND 105. AT APPEAL PB 184 - 189 IS THE APPELLANT'S SUBMISSION BEFORE THE LD. DRP. AT APPEAL PB 35, THE DRP HAS REJECTED THE SAID COMPANY ON ACCOUNT OF BEING A KPO COMPANY. THE LD DRP HAS RELIED ON THE CBDT'S SAFE HARBOUR RULES FOR DIFFERENTIATING KPO AND BPO ACTIVITIES . FURTHER , THE DRP HAS ALSO RELIED ON VARIOUS HON. TRIBUNAL DECISIONS WHICH HAVE REJECTED E CLERX ON ACCOUNT OF BEING A KPO COMPANY. AS PER THE LD. TPO, BPO AND KPO SERVICES ARE SIMILA R IN NATURE. HENCE THE COMPANY IS FUNCTIONALLY COMPARABLE TO THE ASSESSEE. AS PER ADDITIONAL SUPPLEMENTARY PB- 1019 AND .1037 , E CLERX IS A KNOWLED G E PROCESS OUTSOURCING (KPO). FURTHER, IT RENDERS DIVE RSIFIED SERVICES LIKE: AT ADDITIONAL SUPPLEMENTARY PB- 1038, CAPITAL MARKETS - PROVIDES END-TO-END FINANCIAL TRANSACTION SUPPORT SERVICES SUCH AS TRAD E BOOKING , TRADE CONFIRMATION , ASSET SERVICING, CASH SETTLEMENTS, C LIENT SERVICING , RISK MANAGEMENT AND REFERENCE DATA INTEGRITY ACROSS ALL ASSET CLASSES, AND ITS SERVICES SPAN BOTH SELL- SIDE (THE LARGE BANKS) AND BUY-SIDE (THE FUNDS A ND ASSET MANAGERS). AT ADDITIONAL SUPPLEMENTARY PB - 1038, SALES AND MA RKETING SUPPORT - THE COMPANY SUPPORTS CLIENTS IN ALL ELEMENTS OF PRODUCT AND SERVICES MARKETING AND SALES-WITH A FOCUS ON ONLINE SUPPORT TO INCLUDE CON TENT DEVELOPMENT AND MANAGEMENT, SEARCH ENGINE MANAGEMENT, WEB OPERATION S, PRICING AND CUSTOMER ANALYTICS, PRODUCT DATABASE MANAGEMENT AND CATALOG AUDITS. THE ASSESSEE HAS ALSO HIGHLIGHTED THE DIFFERENCES B ETWEEN KPO AND BPO SERVICES AT APPEAL PB 187-188. AT STAY PB 324-325, THE ASSESSEE HAS ALSO HIGHLIGHT ED THAT THE SAFE HARBOUR RULES NOTIFIED BY THE CENTRAL BOARD OF DIRECT TAXES ON SEPTEMBER 18,2013 (WHICH IS POST THE CBDTS CIRCULAR NO. 890(E) DATED 20/09/2000), WHEREIN THE KPO SERVICES HAVE NOT BEEN CATEGORIZED UNDER THE IT ES SERVICES. FURTHER, THE ASSESSEE PLACES RELIANCE ON THE FOLLOW ING DECISIONS WHICH HAVE REJECTED THE SAID COMPANY ON ACCOUNT OF IT HAVING S UPERNORMAL PROFIT AND IT IS ENGAGED IN PROVIDING KPO SERVICES: AT LEGAL COMPENDIUM PB 108, 109 AND 121, THE HON. D ELHI HIGH COURT IN THE CASE OF RAMPGREEN SOLUTIONS PVT. LTD (TS-387-HC-2015 (DEL)-TP) HAS HELD THAT ECLERX, RENDERING KPO SERVICES CANNOT BE COMPA RED TO AN ENTITY RENDERING VOICE CALL SERVICES. THE HON HIGH COURT FURTHER STA TES THAT VOICE CALL SERVICES CONTEMPLATE LOWER END OF ITES SERVICES INVOLVING CU STOMER SUPPORT, PROCESSING OF ROUTINE DATA WHILE KPO SERVICES INVOLVE ADVANCE SKILLS REPRESENTING HIGHER END OF ITES IN TERMS OF VALUE ADDITION. LEGAL COMPENDIUM PB 927, 928 AND 907 THE HON'BLE PU NE TRIBUNAL IN CASE OF CUMMINS TURBO TECHNOLOGY LTD (ITA NO. 438/PUN/2015) FOR AY 2010-11 AND ITA NOS.352, 572/PUN/2015 AND CO NO.38/PUN/2015 PTC SOFTWARE (INDIA) PVT. LTD. 11 APTARA TECHNOLOGIES PVT. LTD. A NO. 579/PN/2015) FOR AY 2010- 11 HAS REJECTED ECLERX ON ACCOUNT OF BRING FUNCTION ALLY NON COMPARABLE TO THE ASSESSEE AS IT IS ENGAGED IN KPO SERVICES AND HAS D IRECTED TO EXCLUDE THE SAID COMPANY AS IT IS FUNCTIONAL DIFFERENT. LEGAL COMPENDIUM PB 155 IN CASE OF THE ASSESSEE FOR AY 09-10 (ITA NO.336/PN/2014), THE HON. PUNE TRIBUNAL HAS REJECTE D ECLERX ON ACCOUNT OF BEING FUNCTIONALLY NON-COMPARABLE TO THE ASSESSEE A S IT IS ENGAGED IN HIGH END KPO SERVICES AND IS THEREBY EARNING HIGH PROFITS. L E GAL COM PE NDIUM P B 177 . CAPITAL IQ INFORMATION SYSTEMS (INDIA) PVT. LTD. , V/S. DY. COMMISSIONER OF INCOME - TAX (ITA NO . 196 1/HYD/20 11), LEGA L CO M PE N D IU M P B 1 89. MARKET TOOLS RESEARCH PVT. LTD. (ITA NO. 2066 / HYD / 2011, TS - 35-ITAT - 2013(HYD) - TP , ITAT HYDERABAD) LEGA L CO MP E NDIU M PB 1 9 9. COGNIZANT TECHNOLOGY SERVICES PVT. L TD. [ITA NO . 21 06/HYD/20 11 (AY 2007 - 08) LEGA L COMPE NDIUM P B 22 7. ZAVATA INDIA PRIVATE LIMITED (ITA NO. 1 7 811HYD / 2011 , TS - 156 - ITAT - 2013(HYD) - TP, ITAT H Y DERABAD) 15. FURTHER, BRINGING OUR ATTENTION TO THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF CUMMINS TURBO TECHNOLOGIES LTD. VS. DCIT AND VICE VERSA IN ITA NOS. 593 AND 438/PUN/2015 ORDER DATED 28-12-2016, LD. AR FOR THE ASSESSEE DEMONSTRATED THAT THE SAID COMPANY M/S .ECLERX SERVICES LTD. WAS EXCLUDED AS THE SAME IS NOT FUNCTIONALLY FOUND COMP ARABLE WITH THAT OF THE COMPANY WHICH IS ENGAGED IN SOFTWARE SERVICES LIKE THE PRESENT ASSESSEE. 16. FINALLY, BRINGING OUR ATTENTION TO THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y. 2009-10 IN ITA NO.336/PUN2014 ORDER DATED 31-10-2014 (PAGE 155 OF THE PAPER BOOK), LD. AR FOR THE ASSESS EE SUBMITTED THAT THE PUNE BENCH HAS REJECTED THE SAID COMPANY ECLERX SERVICES LTD. AS A GOOD COMPARABLE AS THE SAME IS ENGAGED IN KPO SERVICES O NLY WHICH ARE NOT FUNCTIONALLY COMPARABLE TO THAT OF THE ASSESSEE. 17. LD. DR FOR THE REVENUE RELIED HEAVILY ON THE OR DER OF THE AO AND THE CBDT CIRCULAR NO.890 (E) DATED 20-09-2000. ITA NOS.352, 572/PUN/2015 AND CO NO.38/PUN/2015 PTC SOFTWARE (INDIA) PVT. LTD. 12 18. WE HEARD BOTH THE PARTIES ON THE ISSUE OF EXCLU SION OF ECLERX SERVICES LTD. FROM THE LIST OF COMPARABLES AS THE SAME CON STITUTES KPO SERVICES. THE CASE OF THE AO AND THE TPO IS THAT THE COMPANY WITH KPO SERVICES IS COMPARABLE TO THAT OF THE ASSESSEE WHICH IS A SOFTW ARE DEVELOPERS. REVENUE RELIES HEAVILY ON THE CBDT CIRCULAR NO.890 (E) DATE D 20-09-2000. PER CONTRA, THE CASE OF THE ASSESSEE IS ANOTHER CBDT NOTIFICATI ON ISSUED IN 2013 IN CONNECTION WITH THE PUBLISHING OF SAFE HARBOUR RULE S DEFINES CLEARLY THE KPO SERVICES FROM THAT OF BPO SERVICES/ITES SERVICES. 19. ON HEARING BOTH THE PARTIES, WE FIND THE ARGUME NTS OF THE LD. AR FOR THE ASSESSEE REQUIRES TO BE ACCEPTED. FURTHER, WE EXAM INED THE ORDER OF THE TRIBUNAL IN ITA NO.336/PN/2014 ORDER DATED 31-10-2 014 IN THE ASSESSEES OWN CASE FOR THE A.Y. 2009-10. THE SAID COMPANY ECLERX SERVICES LTD. IS FOUND EXCLUDED BY THE TRIBUNAL AS THE SAME IS ENGAGED IN KPO SERVICES WHICH IS FOUND TO BE NOT COMPARABLE FUNCTIONALLY WITH THAT OF THE ASSESSEES FUNCTIONS OF SOFTWARE SERVICES/ITES SERVICES. WE FIND FROM THE SAID CBDT NOTIFICATION DATED 18-09-2013 THAT THE KPO SERVICES COMMAND SAFE HARBO UR RANGE OF 25% WHEREAS IT ENABLED SERVICES IS ONLY 20%. THE SAID DIFFERENTIATION SUPPORTS THE ASSESSEES ARGUMENT THAT THE KPO SERVICES ARE NOT I DENTICAL TO THE IT ENABLED SERVICES. WE PROCEED TO EXTRACT THE FINDING GIVEN BY THE TRIBUNAL ON THIS ISSUE AND THE SAME READS AS UNDER : 48. THE NEXT OBJECTION OF THE ASSESSEE WAS THAT WI TH REGARD TO INCLUSION OF ECLERX SERVICES LTD. WHICH ADMITTEDLY WAS ENGAGED I N PROVIDING KPO SERVICES I.E. KNOWLEDGE PROCESS OUTSOURCING, WHEREAS THE ASS ESSEE WAS ENGAGED IN BPO SERVICES. THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MAERSK GLOBAL CENTRES (INDIA) PVT. LTD. (SUPRA) VIDE ORDER DATED 21.08.2014 HAD EXCLUDED THE SAID COMPANY AS A COMPARABLE WHILE DETERMINING THE MARGINS UNDER ITES SEGMENTS. THE SPECIAL BENCH OF THE TRIBUNAL VIDE PA RAS 82 AND 83 AT PAGES 73 AND 74 OF THE ORDER, HAD OBSERVED AS UNDER:- 'KEEPING IN VIEW THE NATURE OF SERVICES RENDERED BY M/S ECLERX SERVICES PVT. LTD. AND ITS FUNCTIONAL PROFILE, WE ARE OF THE VIEW THAT THIS COMPANY IS ALSO MAINLY ENGAGED IN PROVIDING HIGH-END SERVIC ES INVOLVING SPECIALIZED KNOWLEDGE AND DOMAIN EXPERTISE IN THE F IELD AND THE SAME ITA NOS.352, 572/PUN/2015 AND CO NO.38/PUN/2015 PTC SOFTWARE (INDIA) PVT. LTD. 13 CANNOT BE COMPARED WITH THE ASSESSEE COMPANY WHICH IS MAINLY ENGAGED IN PROVIDING LOW-END SERVICES TO THE GROUP CONCERNS.' 49. FOLLOWING THE SAME PARITY OF REASONING, WE DIRE CT THE TPO TO EXCLUDE M/S. ECLERX SERVICES LTD. AS COMPARABLE. 20. THUS, IT IS A SETTLED ISSUE IN FAVOUR OF THE AS SESSEE BY THE DECISION OF THE COORDINATE BENCH IN THE ASSESSEES OWN CASE (SUPRA) . THERE ARE OTHER JUDGMENTS IN FAVOUR OF THE ASSESSEE. THE CBDTS NO TIFICATION DATED 18-09- 2013 STRENGTHENS THE CASE OF THE ASSESSEE IN ITS FA VOUR. CONSIDERING THE ABOVE SETTLED NATURE OF THE ISSUE IN THE ASSESSEES OWN C ASE APART FROM MANY OTHERS, WE ARE OF THE OPINION THAT THE DIRECTION GIVEN BY T HE DRP ON THIS ISSUE IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFE RENCE. ACCORDINGLY, GROUND NO.3 RAISED BY THE REVENUE IS DISMISSED. 21. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. C.O. NO.38/PUN/2015 (BY ASSESSEE) : 22. IT IS THE SUBMISSION OF THE LD. AR FOR THE ASSE SSEE THAT THE CROSS OBJECTION FILED BY THE ASSESSEE IN CONNECTION WITH THE REVENUES APPEAL IN ITA NO.572/PUN/2015 BECOMES ACADEMIC ONCE THE REVENUE A PPEAL IS DISMISSED ON ALL THE GROUNDS. WE HAVE ADJUDICATED THE APPEAL OF THE REVENUE IN THE ABOVE PARAGRAPHS AND DISMISSED THE APPEAL OF THE REVENUE IN ITS ENTIRETY. CONSEQUENTLY, AS STATED BY THE LD. AR FOR THE ASSES SEE, WE ARE OF THE OPINION THAT THE OBJECTIONS RAISED BY THE ASSESSEE ARE REQU IRED TO BE DISMISSED AS ACADEMIC. ACCORDINGLY, THE CROSS OBJECTIONS RAISED BY THE ASSESSEE IS DISMISSED. 23. IN THE RESULT, THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ITA NOS.352, 572/PUN/2015 AND CO NO.38/PUN/2015 PTC SOFTWARE (INDIA) PVT. LTD. 14 ITA NO.352/PUN/2015 (BY ASSESSEE) : 24. BEFORE US AT THE OUTSET, DEVIATING FROM THE SPE CIFIC GROUNDS RAISED IN ITS APPEAL, LD. AR FOR THE ASSESSEE MENTIONED THAT THE TP ADJUSTMENTS ARE REQUIRED TO BE DELETED IF THREE OF THE COMPARABLES WHICH ARE CONSIDERED BY THE TPO WHILE BENCHMARKING THE INTERNATIONAL TRANSACTIO NS OF ITES SERVICES SEGMENT, ARE EXCLUDED. NAMING THE SAME, LD. COUNSE L FOR THE ASSESSEE SUBMITTED THAT THE AO/TPO INCLUDED (A) ACCENTIA TEC HNOLOGIES LTD. (2) INFOSYS BPO LTD. AND (3) BNR UDYOG LTD. FOR ARRIVING AT ARI THMETIC MEAN OF THE 11 COMPARABLES OF 25.35%. THIS IS WORKED OUT AGAINST THE ASSESSEES ARITHMETIC MEAN OF 17.30% (OP/TC). AS PER THE ASSESSEE, THE S AID 3 COMPARABLES ARE NOT TO BE CONSIDERED AS GOOD COMPARABLE FOR VARIOUS REA SONS AND THEREFORE IF THE SAME ARE DECIDED ACCORDINGLY THE ARITHMETIC MEAN OF THE ASSESSEE WILL BE IN THE PERMITTED RANGE OF AROUND 20%, WHICH IS WITHIN THE RANGE +/-5% QUA THAT OF THE ASSESSEE. IN ORDER TO SUBSTANTIATE THE SAME, T HE LD. AR FOR THE ASSESSEE WENT ON ARGUING ABOUT EACH OF THE 3 COMPARABLES TO DEMONSTRATE THAT THEY ARE REQUIRED TO BE EXCLUDED FROM THE SAID 11 COMPARABLE S IDENTIFIED BY THE TPO. ACCENTIA TECHNOLOGIES LTD. : 25. BRINGING OUR ATTENTION TO THE ORDER OF THE TPO, LD. AR FOR THE ASSESSEE SUBMITTED THAT WITH 41.35% REVENUE RECEIVED FROM T HE SOFTWARE SERVICES, THE SAID COMPANY CANNOT BE CONSIDERED AS COMPARABLE. T PO REJECTED THE SAID CONTENTION OF THE ASSESSEE AND THE SAME IS CONFIRME D BY THE DRP AND AGAINST THE ASSESSEE. THE SUMMARY OF THE REASONS PROVIDED BY THE DRP IN REJECTING THE CONTENTION OF THE ASSESSEE ARE AS FOLLOWS : THE COMPANY IS OFFERING BPO SOLUTIONS IN HEALTHCA RE, FINANCIAL AND INSURANCE SECTORS AND IS THE FIRST COMPANY TO OFFER SAAS (SOF TWARE AS A SERVICE) MODEL IN HEALTHCARE RECEIVABLE CYCLE MANAGEMENT (HRCM) AREA. THE COMPANY IS A BPO AND SOFTWARE AS A SERVICE PROV IDER IN HEALTHCARE INDUSTRY. ITA NOS.352, 572/PUN/2015 AND CO NO.38/PUN/2015 PTC SOFTWARE (INDIA) PVT. LTD. 15 SOFTWARE DESIGNED FOR RENDERING THE SERVICE AND SIN CE THE COMPANY IS INTO HRCM, THE BILLINGS AND COLLECTION ARE FROM THAT ARE A. MEDICAL TRANSCRIPTION IS CONSIDERED AS A PART OF SA FE HARBOUR RULES. 26. ATTENDING TO THE ABOVE REFERRED REASONING GIVEN BY THE DRP, LD. AR FOR THE ASSESSEE SUBMITTED THE FOLLOWING WRITTEN SUBMIS SION WE PROCEED TO EXTRACT THE SAME AS UNDER : AT APPEAL PB-178 IT WAS SUBMITTED THAT IT RENDERS MEDICAL TRANSCRIPTION SERVICES, MEDICAL CODING, MEDICAL BILLING, RECEIVAB LES MANAGEMENT WITH RESPECT TO THE HEALTHCARE RECEIVABLES CYCLE MANAGEMENT SECT OR. FURTHER, THE SAID COMPANY DEVELOPS ITS OWN SOFTWARE PRODUCTS AND OWNS INTANGIBLES IN THE FORM OF GOODWILL. SUCH SOFTWARE PRODUCTS ARE PRIMARILY THE PLATFORMS REQUIRED FOR RENDERING MEDICAL TRANSCRIPTION SERVICES. THE ANALYSIS DEMON STRATED THAT ACCENTIA OWNS SUCH PLATFORMS AND THEREFORE WOULD BE DISTINGUISHED FROM OTHER MEDICAL TRANSCRIPTION SERVICE PROVIDERS. (REFER SUPPLEMENT ARY PB-467, 502, 505-508 FOR RELEVANT ANNUAL REPORT EXTRACTS). FURTHER AT SUPPL EMENTARY PB-502, THE ANNUAL REPORT OF THE SAID COMPANY MENTIONS ON THE SOFTWARE AS A SERVICE (SAAS) MODEL. IT IS EVIDENT FROM THE ABOVE THAT THE COMPA NY IS PROVIDING SOFTWARE SOLUTIONS IN THE HEALTHCARE RECEIVABLES CYCLE MANAG EMENT SECTOR AND ALSO THAT IT HAS MADE ACQUISITIONS DURING THE YEAR TO ENHANCE ITS CAPABILITIES IN SAAS. THIS CLEARLY INDICATES THAT THE COMPANY IS INTO PRO VIDING SOFTWARE SERVICES WHICH IS DIFFERENT TO THE SERVICES PROVIDED BY THE APPELLANT . FURTHER AT SUPPLEMENTARY PB - 547, THE ANNUAL REPORT OF THE COMPANY SPECIFIE S SOFTWARE AS GENERIC PRINCIPAL PRODUCT / SERVICE OF THE COMPANY ALONG WI TH SERVICES . THE LD DRP AT STAY PB 56 ALSO CONFIRMS THAT THE COMPANY ALSO REND ERING SOFTWARE SERVICES. FURTHER, AT ADDITIONAL SUPPLEMENTARY PB 744 , THE WEBSITE OF THE COMPANY CLEARLY MENTIONS OF THE SOFTWARE PRODUCTS THAT ACCE NTIA HAS DEVELOPED FOR RENDERING HEALTHCARE SERVICES. FURTHER, AT SUPPLEMENTARY PB 467, 480, 516-518, THE ANNUAL REPORT OF THE SAID COMPANY MENTIONS THAT IT HAS DIVERSIFIED ITS BUSINE SS INTO RENDERING HIGH END SERVICES LIKE KPO AND LPO WHICH IS FUNCTIONALLY DIF FERENT FROM THAT OF THE APPELLANT'S BUSINESS. THE SAME IS ALSO EVIDENCED FR OM THE FACT THAT THE COMPANY HAS DEDICATED MANAGEMENT PERSONNEL LEADING THE LPO SERVICES. AT SUPPLEMENTARY PB-501, 503 AND 504, MENTIONS ABOU T ACQUISITION OF IQ GROUP OF COMPANIES WHICH ARE ENGAGED IN THE AREA OF SOFTWARE PRODUCT DEVELOPMENT AND IT INFRASTRUCTURE SOLUTIONS. AT SUPPLEMENTARY PB 542 THE COMPANY IN ITS ANNUAL R EPORT MENTIONS THAT IT HAS MADE CERTAIN ACQUISITIONS IN EARLIER YEARS THE EFFE CT OF WHICH HAS BEEN GIVEN TO FINANCIAL STATEMENTS IN THE CURRENT YEAR. THE COMPA NY ALSO MENTIONS THAT BECAUSE OF THE ACQUISITIONS, THE FINANCIALS ARE NOT COMPARABLE TO EARLIER YEARS, WHICH EVIDENCES THE FACT THAT PECULIAR ECONOMIC CIR CUMSTANCES HAVE AFFECTED ITS MARGINS FOR THE YEAR. AT SUPPLEMENTARY PB-536, IN ITS ANNUAL REPORT MENTI ONS THAT THE COMPANY HAS DEVELOPED / ACQUIRED SIGNIFICANT INTELLECTUAL PROPE RTY RIGHTS ( ' IPRS') AND THE SAME IS ALSO EVIDENT FROM THE ANNUAL REPORT FOR THE FY 09-10. ITA NOS.352, 572/PUN/2015 AND CO NO.38/PUN/2015 PTC SOFTWARE (INDIA) PVT. LTD. 16 THE LD DRP HAS NOT REBUTTED THE ABOVE CONTENTIONS O F THE APPELLANT IN ITS DIRECTIONS. THE APPELLANT HAS PLACED RELIANCE ON THE HON. PUNE TRIBUNAL DECISION IN THE APPELLANT'S OWN CASE FOR AY 2009-10 (ITA NO. 336/PN/2014) (REFER LEGAL COMPENDIUM PAGES- 154 & 155) WHEREIN IT WAS H ELD THAT THE COMPANY WAS ENGAGED IN DEVELOPING SOFTWARE PRODUCTS, EXTRAO RDINARY EVENTS ON ACCOUNT OF ACQUISITIONS AND AMALGAMATIONS AND HENCE, WARRAN TS FOR REJECTION. SIMILARLY, THE HON'BLE PUNE TRIBUNAL IN APPELLANT'S CASE FOR AY 2008-09 (I TA NO. 2546/PUN/2012) HAS REJECTED ACCENTIA ON SIMILAR REA SONS. (REFER LEGAL COMPENDIUM PAGES - 882 AND 883) RELIANCE IS ALSO PLACED ON THE FOLLOWING CASE LAWS WHERE THE SAID COMPANY WAS REJECTED ON ACCOUNT OF FUNCTIONAL DISSIMILARITY. BNY ME LLO N INT ER NA T IONAL OPERATION S ( INDI A) P V T L TD ( I T A N O . 2 3 / PN / 2 014 ) (LEGAL COMPENDIUM PAGES - 673 TO 674) MAERS K GLOB A L SER V IC E CENTRES ( INDIA) P V T LTD ( I T A N O . 2 594/MUM / 2 014) (LEGAL COMPENDIUM PAGES - 693 & 694) THE APPELLANT FURTH E R W ISHES TO PLACE RELIANCE ON RUL I N G OF HON'BLE PUNE TRIBUNAL DECISION IN CASE OF APTARA TECHNOLOGIES PV T. LTD. (ITA 259/PN/2015) FOR AY 2010-11 AND CUMMINS TURBO TECHNOLOGIES LTD (I TA 593/PUN/2015) FOR AY 2010-11 W HER EI N ACCENTIA W AS REJECTED BECAUSE OF E X TRA-ORDINARY EVENTS DURING THE YEAR DUE TO WHICH T HE COMPANY I S NOT COMPARABLE TO THE ENTITIES ENGAGED IN ITES SERVICES. (LEGAL COMPENDIUM PAGES - 8 94 TO 896, 922 TO 9 24 & 942 TO 9 43) GI V EN THE ABO V E , THE SAID COMPAN Y HAS A DIFFERENT FUNCTIONAL PROFILE/ REVENUE MOD E L COMPARED TO THE APPELLANT AND HAS PECULIAR ECONOM IC CIRCUMSTANCES DURING THE Y EA R . HENCE THIS COMPAN Y IS NOT COMPARABLE TO THE APPELLANT'S IT E NABLED SER V ICES SE G MENT , AND SHOULD BE REJECTED . 27. ON HEARING BOTH THE PARTIES AND PERUSING THE SA ID WRITTEN SUBMISSIONS OF THE ASSESSEE, AMONGST MANY ARGUMENTS, WE FIND THAT ACCENTIA TECHNOLOGIES LTD. WAS NOT FOUND TO BE A GOOD COMPARABLE BY THE T RIBUNAL IN THE ASSESSEES OWN CASE FOR THE A.Y. 2008-09 AND 2009-10 VIDE ITA NO.336/PUN/2014 AND ITA NO.2546/PUN/2012 RESPECTIVELY. FOR THE SAKE OF COM PLETENESS, WE PROCEED TO EXTRACT THE RELEVANT PARAGRAPHS FROM PAGE 154 AND 1 55 AND 882 AND 883 OF THE LEGAL COMPENDIUM : EXTRACT FROM ITA NO.336/PUN/2014 : 47. THE NEXT OBJECTION OF THE LEARNED AUTHORIZED R EPRESENTATIVE FOR THE ASSESSEE WAS WITH REGARD TO THE INCLUSION OF M/S. A CCENTIA TECHNOLOGIES LTD. WHICH ADMITTEDLY WAS ENGAGED IN DEVELOPING ITS OWN SOFTWARE PRODUCTS AND WAS RENDERING MEDICAL TRANSCRIPTION SERVICES. FURTH ER, THE SAID COMPANY DURING THE YEAR UNDER CONSIDERATION HAD MADE CERTAIN ACQUI SITIONS WHICH IN TURN AFFECTED THE MARGINS OF THE YEAR OF THE ACQUISITION . WE FIND THAT HYDERABAD ITA NOS.352, 572/PUN/2015 AND CO NO.38/PUN/2015 PTC SOFTWARE (INDIA) PVT. LTD. 17 BENCH OF THE TRIBUNAL IN THE CASE OF CAPITAL IQ INF ORMATION SYSTEMS (INDIA) PVT. LTD. (SUPRA) HAD REJECTED ACCENTIA TECHNOLOGIES LTD. FOR HAVING EXTRA- ORDINARY CIRCUMSTANCES I.E. AMALGAMATION. FOLLOWING THE PARITY OF REASONING AS ADOPTED BY THE HYDERABAD BENCH OF THE TRIBUNAL, WE HOLD THAT THE SAID COMPANY HAD DIFFERENT FUNCTIONAL PROFILE AS CO MPARED TO THE ASSESSEE, WHICH IN TURN EXPLAINED THE ABNORMALLY HIGH PROFIT MARGINS EARNED BY THE SAID COMPANY AS COMPARED TO THE ASSESSEE.ACCORDINGLY, WE ACCEPT THE PLEA OF THE ASSESSEE AND HOLD THAT THE SAID COMPANY IS NOT TO B E USED AS COMPARABLE IN ITES SEGMENTS OF THE ASSESSEE. EXTRACT FROM ITA NO.2546/PUN/2012 : 26. BOTH SIDES HEARD. WE FIND THAT THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEE'S OWN CASE IN ITA NO. 336/PN/2014 (SUPRA) HAS EXCLUDED ACCENTIA TECHNOLOGIES LTD. FROM THE LIST OF COMPARABLES BY OBSERVING AS UNDER : '47. THE NEXT OBJECTION OF THE LEARNED AUTHORIZED R EPRESENTATIVE FOR THE ASSESSEE WAS WITH REGARD TO THE INCLUSION OF M/S. A CCENTIA TECHNOLOGIES LTD. WHICH ADMITTEDLY WAS ENGAGED IN DEVELOPING ITS OWN SOFTWARE PRODUCTS AND WAS RENDERING MEDICAL TRANSCRIPTION SE RVICES. FURTHER, THE SAID COMPANY DURING THE YEAR UNDER CONSIDERATION HA D MADE CERTAIN ACQUISITIONS WHICH IN TURN AFFECTED THE MARGINS OF THE YEAR OF THE ACQUISITION. WE FIND THAT HYDERABAD BENCH OF THE TR IBUNAL IN THE CASE OF CAPITAL IQ INFORMATION SYSTEMS (INDIA) PVT. LTD. (S UPRA) HAD REJECTED ACCENTIA TECHNOLOGIES LTD. FOR HAVING EXTRA-ORDINAR Y CIRCUMSTANCES I.E. AMALGAMATION. FOLLOWING THE PARITY OF REASONING AS ADOPTED BY THE HYDERABAD BENCH OF THE TRIBUNAL, WE HOLD THAT THE S AID COMPANY HAD DIFFERENT FUNCTIONAL PROFILE AS COMPARED TO THE ASS ESSEE, WHICH IN TURN EXPLAINED THE ABNORMALLY HIGH PROFIT MARGINS EARNED BY THE SAID COMPANY AS COMPARED TO THE ASSESSEE. ACCORDINGLY, W E ACCEPT THE PLEA OF THE ASSESSEE AND HOLD THAT THE SAID COMPANY IS N OT TO BE USED AS COMPARABLE IN ITES SEGMENTS OF THE ASSESSEE.' 27. FURTHER, ON PERUSAL OF ANNUAL REPORT OF ACCENTI A TECHNOLOGIES LTD. FOR THE FINANCIAL YEAR 2007-08 WE FIND THAT THE SAID COMPANY HAD ACQUIRED THUNGA SOFTWARE PVT. LTD. A MEDICAL TRANSCRIPTION A ND CODING COMPANY, CONSOLIDATED THE OPERATIONS OF ASSCENT INFOSERVE P VT. LTD. ONE OF ITS SUBSIDIARY, IRIDIUM TECHNOLOGIES AND GEOSOFT TECHNO LOGIES AMALGAMATED INTO PARENT COMPANY I.E. ACCENTIA TECHNOLOGIES LTD. THE COMPANY HAD ALSO ACQUIRED 3 COMPANIES IN THE USA. THUS, ON ACCOUNT OF EXTRA-O RDINARY EVENTS VIZ. MERGER, CONSOLIDATION AND AMALGAMATION THERE WOULD BE ABERR ATION IN THE FINANCIAL RESULTS OF THE COMPANY. IT IS A WELL SETTLED PRINCI PLE THAT WHERE THERE ARE EXTRAORDINARY EVENTS IN A PARTICULAR FINANCIAL YEAR OF A COMPANY, THE SAID COMPANY SHOULD NOT BE SELECTED AS COMPARABLE. THUS, IN THE LIGHT OF FACTS OF THE CASE AND THE DECISION OF CO-ORDINATE BENCH OF T RIBUNAL, ACCENTIA TECHNOLOGIES LTD. CANNOT BE CONSIDERED AS GOOD COMP ARABLE. THEREFORE, THE SAME IS DIRECTED TO BE EXCLUDED FROM THE FINAL LIST OF COMPARABLES. 28. CONSIDERING THE ABOVE STATED POSITION, WE ARE O F THE VIEW THAT THE SAID COMPANY IS HELD TO BE NOT A GOOD COMPARABLE AND THE RE IS NO CHANGE IN FACTS IN THIS YEAR ALSO. THERE ARE EXTRAORDINARY EVENTS EXI ST IN THIS YEAR UNDER CONSIDERATION AS WELL. IN OUR OPINION, THE LD. DRP IS NOT PRIVY TO THE SAID ORDERS OF THE TRIBUNAL AS THE TRIBUNAL PASSED THESE ORDERS SUBSEQUENTLY ITA NOS.352, 572/PUN/2015 AND CO NO.38/PUN/2015 PTC SOFTWARE (INDIA) PVT. LTD. 18 POSTERIOR TO THE ORDER OF THE DRP. THEREFORE, WE A RE OF THE VIEW THAT THE DIRECTIONS GIVEN BY THE DRP ON THIS ISSUE ARE REQUI RED TO BE AMENDED ACCORDINGLY. INFOSYS BPO LTD. : 29. THE CASE OF THE ASSESSEE ON THIS COMPARABLE INC LUDE THAT THE SAID COMPANY CONSTITUTES A GIANT COMPANY AND DEALS WITH VARIETY OF FUNCTIONS AND INTEGRATED SERVICES. CONSIDERING THE HIGH BRAND VA LUE AND THE SKILL OF OPERATIONS THE SAID INFOSYS BPO LTD. CANNOT BE CONS IDERED AS COMPARABLE TO THE CASE OF THE ASSESSEE. REFERRING TO THE VARIOUS DECISIONS INCLUDING THAT OF THE ASSESSEE IN ITS OWN CASE FOR THE A.Y. 2009-10 A S WELL AS IN THE CASE OF AEGIS LTD. IN ITA NO.7694/MUM/2014 FOR A.Y. 2010-11 THE T RIBUNAL HELD THAT ON SAME GROUNDS INFOSYS BPO LTD. DOES NOT CONSTITUTE A GOOD COMPARABLE. RELEVANT WRITTEN SUBMISSIONS IN THIS REGARD ARE EXTRACTED AS UNDER : IN THIS REGARD , THE APPELLANT W ISHES PLACE RELIANCE ON THE FOLLOWING HON. PUNE TRIBU NAL RULI NG S W HEREIN THE HON . TRIBUNAL HAS HELD THAT W HERE A COMPARABLE W AS INCLUDED B Y THE APPELLANT IN T HE TP STUD Y REPORT AND NOT CHALLENGED BEFORE THE LD T PO AND A L SO THE L D COMMISSIONE R O F I NCOME-TA X ( APPEAL ) , THE SAME CAN BE CHALLEN G ED BEFOR E TH E HON. TRIBUNAL FOR T H E F IRS T T I ME: Q L OGIC IN DI A P VT . LTD. ( ITA NO. 2 2 7 1 PN I 2014 ) (LEGAL COMPENDIUM PAGE- 714- 715) JOHN DEERE INDIA P V T. LTD. ( ITA NO. 1319 I PN / 20 11 ) (LEGAL COMPENDIUM PAGES- 761 TO 762) PTC SOFTWARE (INDIA) PVT. LTD. (ITA NO.336/PM/2014 (LEGAL COMPENDIUM PAGES 155-156) TIBCO SOFT W ARE IND I A P V T LTD (ITA NO . 94 / PN / 2014) (LEGAL COMPENDIUM PAGES- 85 FURTHER , AT ADD I TIONAL S U PPLEMENTA R Y PB 755 , THE ANNUAL REPORT O F THE C OMP ANY MENTIONS THAT DURIN G THE Y EAR , IT HAS ACQUIRED MCCAMISH S Y ST E MS LLC , A COMPAN Y IN U SA FOR 170 CRORE W HICH E V IDENCES THE FACT THAT THERE ARE E X CEPTIONAL CI R CUMSTAN CES DURING THE YEAR BASIS W HICH THE COMPANY CANNOT BE CONSIDERED A S COMPARABLE . F URTHE R, AT ADDITI O NAL S U PPL E MENTARY P B 799 , THE COMPAN Y MENTIONS ABOUT AN AMALGAMATION O F A COMPANY IN ITS ACCOUNTS. RELIANCE HAS BEEN PLACED ON THE HON. PUNE TRIBUNAL JUDGEMENT IN THE CASE OF PRINCIPAL GLOBAL SERVICES PVT. LTD. (ITA NO. 2 8 0/PN/2014) W HERE THE SAID COMPAN Y HAS B EEN REJ E CTED ON THE GROUND O F O W NING INTANGIBLE S. (REFER LEGAL COMPENDIUM PAGE 357) ITA NOS.352, 572/PUN/2015 AND CO NO.38/PUN/2015 PTC SOFTWARE (INDIA) PVT. LTD. 19 F URTHER , TH E APPELLANT PLACES RELIANCE ON THE HON. PUNE TRIBUNAL DECISION IN THE APPE LL ANT'S OWN CASE FOR AY 2009-10 (ITA NO. 336 / PN/21 04) (REFER LEGAL COMPE N DIUM PAGES - 154 ) WHEREIN A COMPANY WAS REJECTED A COMPAN Y ON ACCOUN T O F HAVING EXTRAORDINARY EVENTS SUCH AS ACQUISITIONS AND AMALGAMATIONS. IN CASE OF AEGIS LTD. FOR AY 2010-11 (ITA NO.7694/MU M/2014) (REFER LEGAL COMPENDIUM PAGE 947 & 948), THE HONBLE TRIBUNAL RE JECTED SAID COMPANY AS IT WAS ENGAGED IN PROVIDING HIGH END INTEGRATED SER VICES WHEREAS THE ASSESSEE WAS PROVIDING ROUTINE BPO SERVICES TO ITS AES AND O BSERVED THAT THIS COMPANY HAD A SIGNIFICANTLY LARGE SCALE OF OPERATIONS AND A HIGH BRAND VALUE, WHICH MADE IT INCOMPARABLE WITH THE ASSESSEE ON A QUALITA TIVE BASIS. FURTHER , IN THE CASE O F SYM PHO NY MA RK ETING SO L UT ION S INDIA PVT LTD (PRESENTL Y MERGED WITH GENPACT IND I A) (IT/TP) A NO . 1316/BANG/2012) (REFER LEGAL COMPENDIUM PAGES - 790 - 79 1) , THE HON. TRIBUNAL HAS REJECTED THE SAID COMPAN Y O N ACCOUNT OF BEING A SUBSIDIAR Y O F INFOSYS LTD , THIS COMPAN Y HA S BRAND VA LUE ASSOCIA T ED WITH IT. THE HON. TRIBUNAL HELD TH A T THIS IS APPARENT FROM THE PRESENCE O F BRAND RELATED EXPENSES INCURRED BY THIS COMPANY AND THE PRESENCE OF A BRAND COMMANDS PREMIUM P RIC E WHICH CUSTOMERS WOULD BE WILLIN G TO PA Y . FURTHER , THE HON . TRIBUNAL HAS HELD THAT INFO SYS BPO IS A N E S TABLISHED PLA Y ER W HO I S NOT ONLY A MA R KET LEADER BUT AL S O A C OMP ANY E MPLO Y IN G S HE E R BREADTH IN TERM S O F E C ONOMIE S O F SCA LE AND D IVE R S IT Y A ND GE O G RAPHI CAL DISPERSION O F CUSTOMER S . ACCORDIN G L Y, T HE SAID COMP A N Y W AS REJ ECTED B Y T HE H ON . T RIBUNAL. FURTHER , THE SAID COMPANY IS ALSO REJECTED BY THE HON. HYDER ABAD TRIBUNAL FOR HA V IN G BRAND VALUE ASSOCIATED WITH IT IN CASE OF THE FOLLO WING CASES: CAPITAL IQ INFORMATION SYSTEMS (INDIA) PVT. LTD. [T S-229-ITAT-2014 (HYD)-TP] (REFER LEGAL COMPENDIUM PAGES 803- 804) EXCELLENCE DATA RESEARCH PVT. LTD. [TS-230-ITAT-201 4 (HYD)-TP] (REFER LEGAL COMPENDIUM PAGES- 823-824) HYUNDAI MOTORS INDIA ENGINEERING PVT. LTD. [TS-59-I TAT-2014(HYD)-TP] (REFER LEGAL COMPENDIUM PAGES- 850-851) 30. FROM THE ABOVE STATED POSITION, WE ARE OF THE V IEW THAT THE ORDERS OF THE TRIBUNAL IN THE ASSESSEES OWN CASE AND OTHERS STAT ED ABOVE ARE NOT AVAILABLE TO THE DRP AT THE RELEVANT POINT OF TIME. WITH THE TURNOVER OF RS.1,126 CRORES, THE SAID COMPANY INFOSYS BPO LTD. CANNOT BE CONSIDE RED AS A GOOD COMPARABLE TO THAT OF THE ASSESSEE WHICH RECORDED ONLY AROUND RS.11 CRORES OF TURNOVER. CONSIDERING THE SAME, WE ARE OF THE OPINION THAT LD ARS ARGUMENTS FOR EXCLUDING INFOSYS BPO LTD. AS NOT A GOOD COMPARABLE HAS TO BE ACCEPTED AND IN FAVOUR OF THE ASSESSEE. ITA NOS.352, 572/PUN/2015 AND CO NO.38/PUN/2015 PTC SOFTWARE (INDIA) PVT. LTD. 20 BNR UDYOG LTD. : 31. NARRATING THE FACTS RELATING TO BNR UDYOG LTD. AS NOT A GOOD COMPARABLE AS THE RPT FILTER IS NOT JUSTIFIED QUA THAT OF THE ASSESSEE, LD. AR FOR THE ASSESSEE DREW OUR ATTENTION TO THE WRITTEN SUBMISS ION FILED BY HIM. WE PROCEED TO EXTRACT THE SAME AS UNDER : THE FOLLOWING IS THE SUMMARY OF THE REASONS PROVID ED BY THE LD DRP FOR REJECTING THE CONTENTIONS OF THE APPELLANT: THE SAID COMPANY IS APPELLANT'S OWN SELECTION. RELATED PARTY TRANSACTION ( ' RPT') WAS REFUTED BY TPO THROUGH DOCUMENTARY EVIDENCE. IN CASE OF B N R UDYOG LTD. , THE MEDICAL TRANSCRIPTION SEGMENT WAS SELECTED AS COMPARABLE BY THE APPELLANT IN THE TP STUDY REPORT (WHICH IS NOT DISPUTED BY THE LD DRP AT STAY PB 59). HOWEVER, THE SAID COMPAN Y WAS REJECTED BY THE APPELLANT AS THE RPT TRANSACTIONS WERE 739.62% OF S ALES FOR FY 2009-10 WHICH FAILS THE RPT THRESHOLD FILTER OF 10% APPLIED BY TH E APPELLANT IN THE TP STUDY REPORT AND 25% THRESHOLD ON SALES APPLIED BY THE LD TPO IN THE TP ASSESSMENT PROCEEDINGS. THE WORKING FOR THE SAME IS PROVIDED B ELOW (REFER SUPPLEMENTARY PB - 571 AND 581 FOR RELEVANT ANNUAL REPORT EXTRACT S): NATURE OF RPT TRANSACTIONS AMOUNT (RS.) PURCHASES OF SALES & SERVICES 106,964,256 COMMISSION 75,127 RPT 107,039,383 SALES 14,472,194 RPT/SALES 739.62% THE LD. TPO HAS NOT DEMONSTRATED THE QUANTUM OF REL ATED PARTY TRANSACTIONS MENTIONED IN THE SCHEDULE OF THE COMPANY THAT PERTA INS TO THE MEDICAL TRANSCRIPTION SEGMENT OF THE COMPANY. FURTHER, THE APPELLANT WISHES TO HIGHLIGHT THAT THE SAID COMPANY WAS REJECTED BY THE LD TPO DURING THE COURSE OF TP ASSESSMENT PR OCEEDINGS FOR AY 09-10 ON ACCOUNT OF THE RPT TRANSACTIONS BEING GREATER THAN 25%. THE LD. TPO HAS ACCEPTED THE RPT WORKING FOR AY 2009 - 10 WHICH HAS THE S AME NOMENCLATURE OF ITEMS IN THE RPT SCHEDULE OF ANNUAL REPORT OF BNR U DYOG. (REFER S UPPL E ME NTARY P B - 72 1 T O 735 FO R S HO W C A U SE NOTICE AND EXTRA C TS OF TP O RDER P ERTAI N ING TO AY 2 009 -10). MOREOVER, THE SAID COMPANY WAS ALSO REJECTED BY TH E LD. TPO IN AY 2008-09 TP ASSESSMENT PROCEEDINGS ON ACCOUNT OF HAVING RPT TRANSACTIONS MORE THAN 25% OF SALES . THIS AMPLY EVIDENCES COMPLETE SHIFT IN THE APPROACH ADOPTED BY THE LD. TPO AND LACKS CONSISTENCY (REFER S UPPL E M E NTA RY P B - 7 02 T O 72 0 FO R S HO W CAUSE N O TI C E AND EXTRACTS O F T P O RDER P E RTA ININ G TO AY 2008 - 09 ) . ACCORDINGLY, BASED ON THE ABOVE INCONSISTENT APPROA CH OF THE TPO, THE SAID COMPANY NEEDS TO BE EXCLUDED FROM THE FINAL SET OF COMPARABLES. ITA NOS.352, 572/PUN/2015 AND CO NO.38/PUN/2015 PTC SOFTWARE (INDIA) PVT. LTD. 21 32. LD. DR FOR THE REVENUE RELIED HEAVILY ON THE OR DERS OF AO/TPO. 33. THE TPO ADOPTED THE RPT FILTER OF 25% IN THIS Y EAR AGAINST THE 10% OF THE EARLIER YEAR. WHEREAS THE RPT OF THE SAID COMP ARABLE (BNR UDYOG LTD.) IS IN THE RANGE OF 739%. THIS COMPARABLE WAS NOT CONS IDERED A GOOD COMPARABLE IN THE YESTER YEAR TOO. THUS, IT IS THE CASE OF TH E ASSESSEE THAT SUCH COMPARABLE IS, NOT A GOOD COMPARABLE FOR BENCHMARKI NG THE INTERNATIONAL TRANSACTIONS OF THE ASSESSEE. THEREFORE, THE DECIS ION OF THE DRP SILENTLY APPROVING THE TPOS DECISION IS NOT SUSTAINABLE. 34. CONSIDERING THE ABOVE WRITTEN SUBMISSIONS AND T HE REASONING OF THE LD. AR, WE FIND THAT IT IS EVIDENT FROM THE RECORDS THA T THE TPO RULED OUT THE FILTER ON THE RELATED PARTY TRANSACTIONS AT 25% AND EXCLUD ED THIS COMPANY AS A GOOD COMPARABLE IN THE EARLIER YEARS. IGNORING THE SAME , IN THE YEAR UNDER CONSIDERATION, IN VIOLATION OF THE PRINCIPLES OF CO NSISTENCY, THE TPO CONSIDERED THE SAME AS A GOOD COMPARABLE WHEN THE RPT OF THE S AID COMPARABLE HAS EXCEEDED SUBSTANTIALLY THE FILTER SET BY THE TPO DU RING THE BENCHMARKING EXERCISE. THEREFORE, WE ARE OF THE VIEW THAT THE S AID COMPARABLE SHOULD BE CONSIDERED AS A GOOD COMPARABLE CONSIDERING THE CON SISTENT STAND OF THE TPO OVER THE YEARS IN THE ASSESSEES OWN CASE. ACCORDI NGLY, THE DIRECTION OF THE DRP ON THIS ISSUE IS REQUIRED TO BE REVERSED AND IN FAVOUR OF THE ASSESSEE. 35. THUS, OUR FINDING WITH THE DIRECTION OF THE DRP IS REQUIRED TO BE REVERSED ON THE COMPARABILITY OF THE COMPANIES, I.E. ACCENTI A TECHNOLOGIES LTD., INFOSYS BPO LTD, AND BNR UDYOG LTD. FOR THE REASONS DISCUSS ED ABOVE. CONSIDERING THE SAID CONCLUSIONS ON THESE COMPARABLES, WE ARE OF TH E OPINION THAT LD. ARS ARGUMENT THAT THE ADJUDICATION OF OTHER ISSUES RAIS ED BY THE ASSESSEE IN THE GROUNDS BECOMES AN ACADEMIC EXERCISE IS ACCEPTED. FURTHER, THE OTHER ASPECTS ITA NOS.352, 572/PUN/2015 AND CO NO.38/PUN/2015 PTC SOFTWARE (INDIA) PVT. LTD. 22 RAISED BY THE ASSESSEE ARE DISMISSED AS ACADEMIC. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE PARTLY ALLOWED. 36. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. 37. TO SUM UP, ITA NO.572/PUN/2015 FILED BY THE REV ENUE AND THE CROSS OBJECTION NO.38/PUN/2015 FILED BY THE ASSESSEE ARE DISMISSED. ITA NO.352/PUN/2015 FILED BY THE ASSESSEE IS PARTLY AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF OCTOBER, 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 27 TH OCTOBER, 2017. COPY OF THE ORDER FORWARDED TO : BY ORDER // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE THE APPELLANT THE RESPONDENT THE CIT(A)-IT/TP, PUNE CIT-II, PUNE , , A BENCH PUNE; GUARD FILE.