Verint Systems (India) Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 5927/DEL/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96983 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I1
• Next Hearing Date: 29-08-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 24-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY PRASAD
• Assessee Lawyers: MANASVANI BAJPAI
• Keywords: Transfer pricing; International transaction
• Section: 92C; 92F; 234B

Judgement Text

1 ITA 5927/DEL/2010 VARIENT SYSTEMS (INDIA) PVT. LTD. IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-1 NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI A.T. VARKEY : JUDICIAL MEMBER ITA NO. 5927/DEL/2010 ASSTT. YR: 2006-07 VERIENT SYSTEMS (INDIA) PVT. LTD., VS. INCOME-TAX OFFICER, N-8, GROUND FLOOR, GREATER KAILASH, WARD 17(2), NE W DELHI. NEW DELHI. PAN: AABCV 9348 Q ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI DEEPAK CHOPRA ADV., HARPREET SINGH ADV. & SHRI MANASVANI BAJPAI ADV. RESPONDENT BY : SHRI SANJAY PRASAD CIT(DR) DATE OF HEARING : 03/06/2015. DATE OF ORDER : 21/08/2015. O R D E R PER S.V. MEHROTRA, A.M.. : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ASSESSMENT ORDER DATED 20-10-2010 PASSED BY THE INCOME-TAX OFFICER, WARD 17(2), NEW DELHI, PURSUANT TO DRPS DIRECTIONS DATED 8-09-2010 U/S 14 4C OF THE INCOME-TAX ACT, 1961 (THE ACT IN SHORT), RELATING TO ASSTT. YEAR 2006-07, RAISING FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER ('THE LD. AO') HAS ERRED IN PASSING 2 ITA 5927/DEL/2010 VARIENT SYSTEMS (INDIA) PVT. LTD. THE ASSESSMENT ORDER DATED 20 OCTOBER 2010 U/S 143( 3) READ WITH SECTION 144C OF THE INCOME TAX ACT, 1961 ('THE ACT') IN CONFORMITY WITH THE DIRECTIONS OF THE HON'BLE DISPU TE RESOLUTION PANEL ('DRP') VIDE LETTER DATED 8 SEPTEM BER 2010 AND ADJUSTMENTS MADE BY THE LEARNED TRANSFER PRICIN G OFFICER ('THE LD. TPO') IN HIS ORDER DATED 13 OCTOBER 2009 PASSED U/S 92CA(3) OF THE ACT. THAT ON THE FACT AND IN CIRCUMSTANCES OF THE CASE A ND IN LAW, 1. THE LD. AO 1 DRP HAVE GROSSLY ERRED IN UPHOLDING THE ADJUSTMENT MADE BY THE LD. TPO OF RS. 3,028,346/- T O THE TOTAL INCOME OF THE APPELLANT VIDE THE TP ORDER DATED 13 OCTOBER 2009 PASSED U/S 92CA (3) OF THE ACT, ON ACCOUNT OF REDETERMINATION OF THE ARM'S LENGTH PRICE OF THE IN TERNATIONAL TRANSACTION ENTERED BY THE APPELLANT WITH ITS ASSOC IATED ENTERPRISES. 2. WHILE UNDERTAKING THE ADDITION OF RS. 3,028,346/ -, THE HON'BLE DRP AND LD. AO 1 TPO HAVE GROSSLY ERRED IN NOT APPRECIATING THAT THE APPELLANT HAD PREPARED THE DE TAILED CONTEMPORANEOUS TRANSFER PRICING DOCUMENTATION BONA FIDE AND IN COMPLIANCE WITH THE ACT AND INCOME TAX RULES 196 2 ('THE RULES') AND SELECTED UNCONTROLLED COMPARABLE COMPAN IES BASED ON A DETAILED FUNCTIONAL ASSET AND RISK (FAR) ANALY SIS FOLLOWING A METHODICAL BENCHMARKING PROCESS. 3. THE HON'BLE DRP AND LD. AO 1 TPO HAVE GROSSLY ER RED BY NOT ALLOWING THE USE OF MULTIPLE~ YEAR DATA AND DETERMINING THE ARM'S LENGTH PRICE ON THE BASIS OF FINANCIAL IN FORMATION OF THE COMPARABLES FOR THE FINANCIAL YEAR 2005-06 WHIC H WAS AVAILABLE IN THE PUBLIC DOMAIN AT THE TIME OF ASSES SMENT PROCEEDINGS AND NOT AT THE TIME WHEN THE APPELLANT CONDUCTED ITS ANALYSIS TO COMPLY WITH THE PROVISIONS OF RULES 10B( 4) AND 10D( 4). 3 ITA 5927/DEL/2010 VARIENT SYSTEMS (INDIA) PVT. LTD. 4. THE HON'BLE DRP AND LD. TPO 1 AO HAVE ERRED BY REJECTING COMPARABLE COMPANIES OUT OF THE SET OF CO MPANIES CONSIDERED AS COMPARABLES BY THE APPELLANT, WITHOUT PROVIDING SUFFICIENT BASIS FOR REJECTING THEM . THE HON'BLE D RP AND LD. TPOI AO HAVE WRONGLY REJECTED COMPANIES MOSTLY ON G ROUNDS OF BEING PERSISTENTLY LOSS MAKING. 5. THE HON'BLE DRP ADJUSTMENT TO THE AND LD. TPO 1 AO HAVE ERRED BY NOT APPLYING A WORKING CAPITAL RESULTS OF THE COMPANIES SELECTED BY THE LD. TPO TO ACCOUNT FOR DI FFERENCES BETWEEN THE WORKING CAPITAL REQUIREMENTS OF THE APP ELLANT VIS- A-VIS THESE COMPANIES. 6. THE HON'BLE DRP AND LD. AO I TPO HAVE GROSSLY ER RED BY IGNORING THE BUSINESS/ COMMERCIAL REALITY THAT S INCE THE APPELLANT UNDERTAKES MINIMAL BUSINESS RISKS AS AGAI NST COMPARABLE COMPANIES WHICH ARE FULL RISK BEARING ENTREPRENEUR(S), THEREBY ERRED IN NOT ALLOWING A RI SK ADJUSTMENT TO THE APPELLANT. 7. THE HON'BLE DRP AND TPO/AO HAVE GROSSLY ERRED BY DENYING THE BENEFIT OF THE ARM'S LENGTH RANGE AS PR OVIDED UNDER PROVISO TO SECTION 92C OF ACT FOR PURPOSES OF COMPU TING THE ARM'S LENGTH PRICE UNDER SECTION 92F OF THE ACT. 8. THAT THE LD. AO HAS FURTHER ERRED IN LAW AND ON FACTS IN LEVYING INTEREST UNDER SECTION 2348 OF THE ACT. 9. THE LD. AO HAS ERRED IN INITIATING PENALTY PROC EEDINGS UNDER SECTION 271(1)(C) OF THE ACT. 2. GROUND NO. 3 WAS NOT PRESSED AT THE HEARING. ACC ORDINGLY, GROUND NO. 3 STANDS DISMISSED BEING NOT PRESSED. GROUND NO. 9 IS PREMATURE AND STANDS DISMISSED ACCORDINGLY. 4 ITA 5927/DEL/2010 VARIENT SYSTEMS (INDIA) PVT. LTD. 3. GROUND NOS. 1,2 AND 4 TO 7: BRIEF FACTS OF THE C ASE ARE THAT THE ASSESSEE COMPANY, IN THE RELEVANT ASSESSMENT YEAR, WAS ENGA GED IN THE BUSINESS OF REPAIR SERVICES, COMPUTER HARDWARE AND SOFTWARE REL ATED SERVICES, ERECTION, COMMISSIONING AND INSTALLATION SERVICES. 3.1. THE ASSESSEE HAD FILED RETURN OF INCOME DECLAR ING LOSS OF RS. 53,91,090/-. A REFERENCE U/S 92CA(1) WAS MADE FOR D ETERMINING THE ARMS LENGTH PRICE (ALP IN SHORT) U/S 92CA(3) IN RESPEC T OF FOLLOWING INTERNATIONAL TRANSACTIONS UNDERTAKEN BY ASSESSEE W ITH ITS ASSOCIATED ENTERPRISES (AES IN SHORT): S. NO. NATURE OF TRANSACTION METHOD USED BY ASSESSEE VALUE OF TRANSACTION (IN RS.) 1. PROVISION OF PRE-SALES AND POST-SALES SUPPORT SERVICES TNMM 51,703,483 2. RECEIPT OF SUPPORT SERVICES TNMM 5,703,177 3. PAYMENT OF INTEREST ON ECB LOAN TNMM 96,406 4. REIMBURSEMENT OF EXPENSES TNMM 575,409 TOTAL 58,078,475 3.2. THE ASSESSEE HAD APPLIED TNMM AS THE MOST APPR OPRIATE METHOD FOR BENCHMARKING THE ALP AND THE PLI WAS OP/TC. THERE I S NO DISPUTE ON THIS. 3.3. LD. TPO CONSIDERED THE COMPARABLES SELECTED BY THE ASSESSEE IN THE TP REPORT, WHICH WERE 13 IN NUMBER HAVING ARITHMETIC M EAN OF 7.68% A AGAINST THE NP MARGIN OF ASSESSEE BEING 5.79%. AFTER CONSIDERIN G THE UPDATED MARGINS OF THE 5 ITA 5927/DEL/2010 VARIENT SYSTEMS (INDIA) PVT. LTD. COMPARABLES AND AFTER REMOVING THE CONSISTENT LOSS MAKING COMPANIES AND THE COMPANIES WHICH WERE NOT COMPARABLE OR WHOSE CURREN T YEAR FINANCIALS WERE NOT AVAILABLE, THE FINAL SET OF COMPARABLES FOR SEVEN C OMPANIES WAS ACCEPTED BY LD. TPO, THE ARITHMETIC MEAN OF WHICH WORKED OUT TO 11. 15%. IN DOING SO THE LD. TPO, INTER ALIA, HAD REJECTED CAPITAL TRUST LTD., HAVIN G ARITHMETIC MEAN OF -9.18%, FROM THE SET OF COMPARABLES. 3.4. THE MAIN DISPUTE IN THE PRESENT APPEAL IS REGA RDING EXCLUSION OF THIS COMPARABLE, WHICH THE ASSESSEE HAS TAKEN AS GROUND NO. 4 OF ITS GROUNDS OF APPEAL. THIS COMPARABLE WAS REJECTED BY LD. TPO ON THE GROU ND THAT IT WAS FUNCTIONALLY NOT COMPARABLE AND WAS INCURRING PERSISTENT LOSSES. THE MAIN REASONS FOR REJECTING THIS COMPARABLE BY LD. TPO WAS AS UNDER: I. THIS COMPANY WAS NOT INCURRING OCCASIONAL LOSS, BU T PERSISTENT LOSSES. II. THE ASSESSEE ITSELF HAD APPLIED FILTER OF PERSISTEN T LOSSES, WHICH IS INDEPENDENT OF THE NUMBER OF YEARS FOR WHICH THE FI NANCIALS OF COMPARABLES HAD BEEN USED. III. THIS COMPANY HAD SHOWN LOSSES (-19% IN AY 2004-05 A ND -9.8% IN AY 2006-07). IV. THE COMPANY WAS FUNCTIONALLY DIFFERENT BECAUSE THE SEGMENTAL RESULTS OF COMPANY SHOWED THAT IN FOREIGN CONSULTAN CY SEGMENT, CONSULTANCY WAS BEING OFFERED TO FOREIGN BANKS NOT HAVING ANY BRANCHES OR REPRESENTATIVE OFFICES IN INDIA. CONSUL TANCY SERVICES 6 ITA 5927/DEL/2010 VARIENT SYSTEMS (INDIA) PVT. LTD. RENDERED TO FOREIGN BANKS WAS VERY DIFFERENT FROM T HE BUSINESS OF THE ASSESSEE, BECAUSE ASSESSEE WAS ENGAGED IN THE P ROVISION OF PRE SALES AND POST SALES TECHNICAL AND MARKETING SUPPOR T SERVICES TO ITS AES, WHICH INCLUDED MARKET RESEARCH, COLLECTION & S UPPLY OF INFORMATION CONCERNING PRODUCTS AND SERVICES FOR CO MMUNICATION INTERCEPTION, DIGITAL VIDEO SECURITY, SURVEILLANCE AND ENTERPRISE BUSINESS INTELLIGENCE, WHEREAS CAPITAL TRUST, ON TH E OTHER HAND, PROVIDED SERVICES TO FOREIGN BANKS, WHICH INCLUDED DEVELOPING CORRESPONDING RELATIONSHIP OF THE FOREIGN BANKS WI TH INDIAN BANKS, PROMOTING THE SERVICES OFFERED BY THE FOREIGN BANKS , REFERRING TRADE FINANCE PROPOSALS, ASSISTING FOREIGN BANKS IN COUNT RY REVIEW ETC. 3.5. LD. DRP CONFIRMED THE LD. TPOS ACTION, INTER ALIA, OBSERVING THAT BESIDES THE ISSUE OF PERSISTENT LOSSES, THE NATURE OF SERVICES RENDERED IN THE TELECOM FIELD WERE VERY DIFFERENT FROM THE BANKING INDUSTRY. 4. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THO UGH PERSISTENT LOSS MAKING COMPANIES WERE TO BE REJECTED FROM THE SET O F COMPARABLES BUT CAPITAL TRUST LTD., WAS WRONGLY REJECTED BECAUSE LD . TPO FAILED TO TAKE INTO CONSIDERATION THE FACT THAT IN AY 2005-06, THIS COM PANY EARNED A PROFIT MARGIN OF 26.23%. 4.1. LD. COUNSEL REFERRED TO PAGE 390 OF THE PB, WH EREIN P&L A/C OF CAPITAL TRUST LTD. FOR THE PERIOD ENDED 31-3-2006 I S CONTAINED TO POINT OUT THAT THE COMPANY, INTER ALIA, HAD EARNED INCOME FRO M MANAGEMENT CONSULTANCY FEE. 7 ITA 5927/DEL/2010 VARIENT SYSTEMS (INDIA) PVT. LTD. 4.2. LD. COUNSEL FURTHER REFERRED TO PAGE 397 OF TH E PB, WHEREIN THE ANNUAL ACCOUNTS OF CAPITAL TRUST LTD. ARE CONTAINED AND PO INTED OUT THAT SEGMENTAL INFORMATION IN REGARD TO THIS SEGMENT IS CONTAINED IN WHICH FOREIGN CONSULTANCY HAS BEEN SEPARATELY MENTIONED. 4.3. LD. COUNSEL REFERRED TO THE DECISION OF THE IT AT DELHI BENCH I DATED 25-2-2014 IN THE CASE OF NORTEL NETWORKS INDIA P. L TD. (RENDERED IN ITA NOS. 4765/DEL/2011 AND 427/DEL/2013 FOR AY 2007-08 & 200 8-09), AND SUBMITTED THAT IN THAT CASE IT HAS BEEN HELD THAT C APITAL TRUST LTD.S CONSULTANCY SEGMENT IS SIMILAR TO THAT OF NORTEL IN DIA, WHICH WAS RENDERING ITE SERVICES LIKE ASSESSEE AND, THEREFORE, THIS COM PARABLE SHOULD NOT BE REJECTED MERELY ON THE GROUND OF INCURRING PERSISTE NT LOSSES AND FUNCTIONALLY NOT COMPARABLE. HE REFERRED TO PARA 7 OF THE SAID D ECISIONS, WHICH IS REPRODUCED HEREUNDER: 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. APROPOS CAPITAL TRUST COMPARAB LE, THE TPO HAS OBSERVED THAT PRIMARY BUSINESS OF THIS COMPANY IS A UTOMOBILES SALES AND SERVICE. WE ARE OF THE CONSIDERED VIEW THAT A COMPA NY CANNOT BE EXCLUDED FROM THE COMPARABLES MERELY FOR THE REASON OF HAVIN G LOW TURNOVER. IT IS TO BE APPRECIATED THAT NO TURNOVER FILTER WAS APPLI ED BY EITHER OF THE PARITIES. THE COMPARABLE HAS BEEN EXCLUDED BECAUSE THE TOTAL TURNOVER OF THIS COMPARABLE IS RS. 13.92 CRORES. THE ANALYSIS N EEDS TO BE CARRIED OUT ON THE BASIS OF FUNCTIONAL PROFILE AND NOT ON AN AR BITRARY OR ADHOC CRITERIA. FROM THE FACTS ON RECORD AND ARGUMENT ADV ANCED BEFORE US, IT EMERGES THAT THE FUNCTIONAL PROFILE OF CAPITAL TRUS T LIMITEDS CONSULTANCY SEGMENT IS SIMILAR TO THAT OF NORTEL INDIA THE SAME NEEDS TO BE INCLUDED IN THE FINAL COMPARABLES FOR WORKING THE ALP. THE AO W ILL ACCORDINGLY APPLY THIS COMPARABLE WHILE WORKING OUT THE ALP, THIS GRO UND OF ASSESSEE IS ALLOWED. 8 ITA 5927/DEL/2010 VARIENT SYSTEMS (INDIA) PVT. LTD. 4.4. LD. COUNSEL ALSO RELIED ON THE DECISION OF ITA T PUNE BENCH A DATED 9-10-2014 IN THE CASE OF M/S BOBST INDIA PVT. LTD. (RENDERED IN ITA NO. 1380/DEL/2010 FOR AY 2006-07) IN SUPPORT OF ITS CONTENTION THAT THE COMPANY CANNOT BE REJECTED MERELY ON THE BASIS OF I NCURRING LOSSES, WHEREIN IN PARA 5.2 OF THE ORDER IT HAS BEEN OBSERVED AS UN DER: 5.2. IN THIS REGARD, THE ASSESSEE HAS PLACED RELIAN CE ON VARIOUS JUDICIAL PRONOUNCEMENTS TO SUPPORT THE FACT THAT A COMPANY CAN BE REJECTED AS PERSISTENT LOSS MAKER IF IT HAS INCURRE D LOSSES FOR MORE THAN 3 YEARS. IN THE CASE OF QUARK SYSTEMS (P) LIMI TED VS. DCIT (2010) 38 SOT 307 (CHD.) (SB) OBSERVED THAT MERELY BECAUSE A COMPARABLE IS MAKING LOSS, IT CANNOT BE EXCLUDED FR OM THE LIST OF COMPARABLE FOR THE PURPOSE OF COMPUTATION OF ARM'S LENGTH PRICE. ITAT, MUMBAI 'K' BENCH IN THE CASE OF ADVANCE POWER DISPLAY SYSTEMS LIMITED VS. ACIT HELD THAT PERSISTENT LOSS MAKING COMPANY CANNOT BE CONSIDERED AS GOOD COMPARABLE FOR THE PUR POSE OF DETERMINING ALP. ITAT, HYDERABAD 'A' BENCH IN THE C ASE OF BRIGADE GLOBAL SERVICES PRIVATE LIMITED VS. ITO HEL D THAT IN CASE THERE IS CONTINUOUS LOSS YEAR BY YEAR, IN SUCH A SI TUATION, THAT COMPANY'S DATA CANNOT BE CONSIDERED AS COMPARABLE W ITH THE ASSESSEE COMPANY. 5. LD. CIT(DR) POINTED OUT THAT THE TURNOVER OF CAP ITAL TRUST LTD. WAS ONLY 12,71,21,256/- OUT OF WHICH THE INCOME FROM MA NAGEMENT CONSULTANCY WAS ONLY 24 LACS. THEREFORE, IT CANNOT BE SAID THAT CAPITAL TRUST LTD., IN ANY VIEW OF THE MATTER, CARRYING OUT THE SAME FUNCTION S AS THAT OF ASSESSEE AND CONSIDERING THE OVERALL RATIO BETWEEN THE INCOME FR OM CONSULTANCY TO THE TOTAL TURNOVER, IT CANNOT BE SAID THAT THE CONSULTA NCY WAS ONE OF THE MAIN FUNCTIONS BEING CARRIED OUT BY THE CAPITAL TRUST LT D. 9 ITA 5927/DEL/2010 VARIENT SYSTEMS (INDIA) PVT. LTD. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E PERUSED THE RECORD OF THE CASE. THE ASSESSEE WAS IN THE BUSINESS OF R EPAIR SERVICES, COMPUTER HARDWARE AND SOFTWARE RELATED SERVICES, ERECTION, C OMMISSIONING AND INSTALLATION SERVICES. CAPITAL TRUST LTD. WAS, INTE R ALIA, IMPARTING CONSULTANCY TO FOREIGN BANKS NOT HAVING ANY BRANCHES OR REPRESE NTATIVE OFFICES IN INDIA. THE ASSESSEES CONTENTION IS THAT THIS CONSULTANCY SEGMENT IS COMPARABLE TO THE SERVICES RENDERED BY ASSESSEE. WE ARE NOT INCLI NED TO ACCEPT THE ASSESSEES CONTENTION ON THIS GROUND BECAUSE THE CO NSULTANCY SERVICE RENDERED TO FOREIGN BANKS ARE IN NO WAY COMPARABLE WITH THE ASSESSEES BUSINESS. LD. COUNSEL HAS RELIED ON THE DECISION O F ITAT IN THE CASE OF NORTEL NETWORKS INDIA P. LTD. (SUPRA) AND M/S BOBST INDIA PVT. LTD. (SUPRA). WE FIND THAT IN THE CASE OF NORTEL NETWORKS INDIA P . LTD. (SUPRA) THE TRIBUNAL DID NOT ACCEPT THE TPOS ANALYSIS ON THE G ROUND OF EXCLUDING THE COMPARABLE BECAUSE THE TOTAL TURNOVER OF THE COMPAR ABLE WAS RS. 13.92 CRORES. THE TRIBUNAL SPECIFICALLY OBSERVED THAT THE ANALYSIS HAD TO BE CARRIED OUT ON THE BASIS OF FUNCTIONAL PROFILE AND NOT ON AN ARBITRARY OR AD HOC CRITERIA. WE ARE FULLY IN AGREEMENT WITH THE OBSERV ATION OF COORDINATE BENCH, BUT WHEN EXAMINED ON THE TOUCH STONE OF FUNCTIONAL PROFILE, WE FIND THAT NORTEL NETWORKS INDIA P. LTD. (SUPRA) WAS PROVIDING MARKETING AND AFTER SALES SUPPORT SERVICES TO NORTEL GROUP, WHEREAS THE ASSESSEE HEREIN IS NOT CARRYING OUT SUCH ACTIVITIES BUT WAS CARRYING ON CO MPUTER HARDWARE AND SOFTWARE RELATED SERVICES. WE, THEREFORE, ARE OF T HE OPINION THAT THE DECISION IN THE CASE OF NORTEL NETWORKS INDIA P. LTD. (SUPRA ) IS OF NO ASSISTANCE TO ASSESSEE. 6.1. AS FAR AS RELIANCE ON THE CASE OF M/S BOBST IN DIA PVT. LTD. (SUPRA) IS CONCERNED, WE ARE IN AGREEMENT WITH LD. COUNSEL FOR THE ASSESSEE THAT MERELY 10 ITA 5927/DEL/2010 VARIENT SYSTEMS (INDIA) PVT. LTD. BECAUSE A COMPARABLE HAS INCURRED LOSS IN A PARTICU LAR YEAR, THE SAME CANNOT BE EXCLUDED. HOWEVER, HERE WE ARE NOT CONFIRMING TH E ACTION OF LOWER AUTHORITIES ON THE BASIS OF LOSS BEING INCURRED IN TWO YEARS BY CAPITAL TRUST LTD., BUT ON THE GROUND THAT FUNCTIONAL PROFILE BEI NG ENTIRELY DIFFERENT FROM THAT OF THE ASSESSEE. FURTHER, WE FIND CONSIDERABLE FORCE IN THE ARGUMENT OF LD. CIT(DR) THAT SINCE THE CONSULTANCY SEGMENT IS V ERY MEAGER AS COMPARED TO THE OVERALL ACTIVITIES CARRIED ON BY ASSESSEE, T HEREFORE, IT CANNOT BE HELD THAT MERELY BECAUSE SEGMENTAL DETAILS ARE PROVIDED, THEREFORE, THE FINANCIAL CONSULTANCY TO FOREIGN BANK ASSUMES SIGNIFICANCE. WE, ACCORDINGLY, CONFIRM THE ASSESSMENT ORDER OF AO ON THE ISSUE IN QUESTIO N. ACCORDINGLY, GROUND NOS. 1, 2 AND 4 TO 7 ARE REJECTED. 8. GROUND NO. 8: THE CHARGING OF INTEREST U/S 234B IS CONSEQUENTIAL AND IS DISPOSED OF ACCORDINGLY. 9. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 21/08/2015.. SD/- SD/- (A.T. VARKETY) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:21/08/2015. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. 11 ITA 5927/DEL/2010 VARIENT SYSTEMS (INDIA) PVT. LTD. - + DATE INITIAL 1. DRAFT DICTATED ON - 07.2015 PS 2. DRAFT PLACED BEFORE AUTHOR .07.2015 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.