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

ITA 622/PUN/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9347 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 05-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Initiation of penalty proceedings; Difference of opinion
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 536 /P U N/20 1 5 / ASSESSMENT YEAR : 20 10 - 11 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 6, PUNE . / APPELLANT VS. M/S. SYNECHRON TECHNOLOGIES PVT. LTD., SYNECHRON IT TOWERS, MIDC KNOWLEDGE PARK, KHARADI, PUNE 411014 . / RESPONDENT PAN: AAICS2894R . / ITA NO. 622 /P U N/20 1 5 / ASSESSMENT YEAR : 20 10 - 11 M/S. SYNECHRON TECHNOLOGIES PVT. LTD., SYNECHRON IT TOWERS, MIDC KNOWLEDGE PARK, KHARADI, PUNE 411014 . / APPELLANT PAN: AAICS2894R VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 6, PUNE . / RESPONDENT ITA NO. 536 /P U N/20 1 5 ITA NO. 622 /P U N/201 5 CO NO.0 9 /P U N/201 7 2 . /CO NO.0 9 /P U N/201 7 / ASSESSMENT YEAR : 20 10 - 11 (OUT OF ITA NO.536/PUN/2015 ) M/S. SYN ECHRON TECHNOLOGIES PVT. LTD., SYNECHRON IT TOWERS, MIDC KNOWLEDGE PARK, KHARADI, PUNE 411014 / CROSS OBJECT OR PAN: AAICS2894R VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 6, PUNE . / RESPONDENT ASSESS EE BY : S HRI M.P. LOHIA REVENUE BY : SHRI RAJ EE V KUMAR, CIT / DATE OF HEARING : 01 . 06 . 201 7 / DATE OF PRONOUNCEMENT: 16 .06. 201 7 / ORDER PER SUSHMA CHOWLA, J M : THE CROSS APPEAL S FILED BY THE REVENUE AND THE ASSESSEE ARE AGAINST ORDER OF D CIT , CIRCLE - 6 , P UNE , DATED 26.02.2015 RELATING TO ASSESSMENT YEAR 20 10 - 11 PASSED UNDER SECTION 143(3) R.W.S. 92CA(3) AND 144C( 5 ) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . THE ASSESSEE ALSO FILED CROSS OBJECTI ONS AGAINST THE APPEAL OF REVENUE. 2 . T HE CROSS APPEALS FILED BY THE REVENUE AND THE ASSESSEE AND CROSS OBJECTIONS FILED BY THE ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 536 /P U N/20 1 5 ITA NO. 622 /P U N/201 5 CO NO.0 9 /P U N/201 7 3 3. FIRST, WE SH ALL TAKE UP THE APPEAL FILED BY THE REVENUE, WHEREIN THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED : - 1. THE ORDER OF THE DISPUTE RESOLUTION PANEL U/S 144C(5) OF THE INCOME - TAX ACT IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE DISPUTE RESOLUTION PANEL HAS ERRED IN INCLUDING CAT TECHNOLOGIES LTD., R S SOFTWARE (INDIA) LTD IN THE FINAL SET OF COMPARABLES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LA W, THE DISPUTE RESOLUTION PANEL HAS ERRED IN EXCLUDING FCS SOFTWARE LTD., INFOSYS TECHNOLOGIES LTD. FROM THE FINAL SET OF COMPARABLES. 4. FOR THIS AND SUCH OTHER REASONS AS MAY BE URGED AT THE TIME OF HEARING, THE ORDER OF THE DISPUTE RESOLUTION PANEL MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THE GROUNDS OF APPEAL NO.1 AND 4 ARE GENERAL IN NATURE AND HENCE, THE SAME ARE DISMISSED. 5. THE ISSUE IN GROUND OF APPEAL NO.2 IS AGAINST INCLUSION OF TWO CONCERNS IN THE FINAL LIST OF COMPAR ABLES I.E. CAT TECHNOLOGIES LTD. AND RS SOFTWARE (INDIA) LTD. FURTHER, THE REVENUE IS AGGRIEVED BY THE ORDER OF DISPUTE RESOLUTION PANEL (DRP) IN EXCLUDING FCS SOFTWARE LTD. AND INFOSYS TECHNOLOGIES LTD. FROM THE FINAL SET OF COMPARABLES. 6. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS ENGAGED IN THE SOFTWARE DEVELOPMENT AND RELATED SERVICES FROM ITS OFFSHORE DEVELOPMENT CENTRE (ODC) LOCATED IN PUNE. THE ASSESSEE HAD ENTERED INTO INTERNATIONAL TRANSACTIONS OF PROVIDING SOFTWARE DEVELOPMENT SERVI CES TO ITS ASSOCIATED ENTERPRISES AND REIMBURSEMENT OF AMOUNTS FROM ITS ASSOCIATED ENTERPRISES TOTALING RS.130.26 CRORES. THE SAID LIST OF INTERNATIONAL TRANSACTIONS WITH THE ASSOCIATED ENTERPRISES IS ENLISTED AT PAGES 1 AND 2 OF THE ORDER OF TRANSFER PRI CING OFFICER (TPO). THE ASSESSEE HAD FOLLOWED TNNM METHOD FOR BENCHMARKING ITS INTERNATIONAL ITA NO. 536 /P U N/20 1 5 ITA NO. 622 /P U N/201 5 CO NO.0 9 /P U N/201 7 4 TRANSACTIONS AND HAD SELECTED 16 COMPANIES AS COMPARABLE BY APPLYING AVERAGE DATA OF THREE YEARS. THE MEAN AVERAGE OF MARGINS OF THE COMPARABLES WAS DETERMINED A T 14.11%. THE ASSESSEE DURING THE COURSE OF TP PROCEEDINGS SUBMITTED SINGLE YEARS DATA AND THE MEAN AVERAGE OF THE MARGINS OF COMPARABLES WAS 14.11%. THE TPO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE BY USING CERTAIN FILTERS FOR SELECTING FUNCTIONALLY SI MILAR COMPARABLES TO THE ASSESSEE. THESE FILTERS WERE OTHER THAN THE FILTERS SELECTED BY THE ASSESSEE. THE FIRST OBJECTION WAS AGAINST THE USE OF MULTIPLE YEAR DATA AND SECOND OBJECTION / FILTER WAS THE COMPANIES WHO HAVE EXPORT SALES LESS THAN 75% OF TH E SALES TO BE EXCLUDED. THE TPO THUS, ENLISTED THE COMPANIES WHICH WERE EXCLUDED IN THE SHOW CAUSE NOTICE AND THE COMMENTS OF ASSESSEE IN THIS REGARD. THE ASSESSEE WAS IN AGREEMENT WITH THE TPO IN RESPECT OF EXCLUSION OF ALL CONCERNS EXCEPT THREE I.E. AK SHAY SOFTWARE TECHNOLOGIES LTD., RELIANCE INFOSOLUTIONS PVT. LTD. AND THINKSOFT GLOBAL SERVICES LTD. THE TPO ACCEPTED THE OBJECTION OF ASSESSEE EXCEPT FOR AKSHAY SOFTWARE TECHNOLOGIES LTD. THEREAFTER, THE TPO CONSIDERED THE COMPANIES WHICH WERE SELECTED BY HIM AND THE COMMENTS OF THE ASSESSEE, WHEREIN THE ASSESSEE HAD OBJECTED TO THE TPOS INCLUSION IN RESPECT OF ALL FIVE COMPARABLES. THE TPO REJECTED OBJECTIONS OF THE ASSESSEE AND INCLUDED THE FOLLOWING CONCERNS AS COMPARABLE: - SR. NO. NAME OF COMPANY 1 ACROPETAL TECHNOLOGIES LTD. (SEG) 2 KALS INFORMATION SYSTEM LTD. 3 THIRD - WARE SOLUTIONS LTD. 4 INFOSYS 5 FCS SOFTWARE SOLUTIONS LTD. 7. IN REPLY TO THE SHOW CAUSE NOTICE, THE ASSESSEE CARRIED OUT FRESH SEARCH AND REQUESTED FOR INCLUSION OF CERTAI N CONCERNS TOTALING SEVEN. HOWEVER, THE TPO REJECTED ALL THE SAID CONCERNS AND FINALLY SELECTED 13 COMPANIES IN THE FINAL ITA NO. 536 /P U N/20 1 5 ITA NO. 622 /P U N/201 5 CO NO.0 9 /P U N/201 7 5 SET OF COMPARABLES WHOSE AVERAGE OF ADJUSTED PLI WORKED OUT 24.82%. THE PLI OF ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS 15.21% AND CONSEQUENTLY, THE TPO PROPOSED AN ADJUSTMENT OF RS.10,92,90,108/ - . THE ASSESSING OFFICER ISSUED DRAFT ASSESSMENT ORDER TO THE ASSESSEE, AGAINST WHICH THE ASSESSEE FILED OBJECTIONS BEFORE THE DRP. THE DRP DIRECTED EXCLUSION OF FCS SOFTWARE SOLUTIONS L TD. AND INFOSYS SYSTEMS LTD. THE DRP ALSO DIRECTED THE INCLUSION OF CAT TECHNOLOGIES LTD. AND RS SOFTWARE (INDIA) LTD. IN THE FINAL SET OF COMPARABLES, CONSEQUENT TO WHICH THE TPO RE - WORKED THE AVERAGE OF ADJUSTED PLI OF FINAL SET OF COMPARABLES AT 18.99% AND THE TP ADJUSTMENT OF RS.10.9 CRORES AS EARLIER PROPOSED WAS DELETED. THE ASSESSING OFFICER CONSEQUENTLY, PASSED THE ASSESSMENT ORDER UNDER SECTION 143(3) R.W.S. 144C(13) OF THE ACT. 8. THE REVENUE IS IN APPEAL BEFORE US AGAINST THE DIRECTIONS OF D RP. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF TPO AND POINTED OUT THAT CAT TECHNOLOGIES LTD. WAS ENGAGED IN THE BUSINESS OF MEDICAL TRANS CRIPTION , TRAINING AND SOFTWARE DEVELOPMENT AND CONSULTANCY AND NO SE GMENTAL DATA WAS PROVIDED BY THE ASSESSEE BEFORE THE TPO IN THIS REGARD, HENCE, THE SAID CONCERN CANNOT BE INCLUDED IN THE FINAL SET OF COMPARABLES. IN RESPECT OF RS SOFTWARE (INDIA) LTD. , IT WAS POINTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE THAT THE ASSESSEE HIMSELF HAD REJECTED THE SAID CONCERN IN THE ORIGINAL S EARCH ON THE GROUND THAT IT FAILS QUANTITATIVE SCREENS, AND AT GEOGRAPHIC SEGMENT . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF TPO AND POINTED OUT THAT SUPER NORMAL PROFITS WOULD NOT BE DETERRENT FOR ITS INCLUSION OF FCS SOFTWARE SOLUTIONS LTD. AND INFOSYS TECHNOLOGIES LTD. IN THE FINAL SET OF COMPARABLES. ITA NO. 536 /P U N/20 1 5 ITA NO. 622 /P U N/201 5 CO NO.0 9 /P U N/201 7 6 10. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT T HAT THE DRP HAD INCLUDED THE SAID CONCERN IN THE FINAL SET OF COMPARABLES AS MAJORLY THE SAID CONCERN WAS ENGAGED IN SOFTWARE DEVELOPMENT. IN RESPECT OF CAT TECHNOLOGIES LTD., IT WAS POINTED OUT THAT OUT OF TURNOVER OF RS.7.92 CRORES, THE SAID CONCERN HAD SHOWN RECEIPT FROM SOFTWARE DEVELOPMENT AT RS.7.19 CRORES. FURTHER, RS SOFTWARE (INDIA) LTD. OUT OF TOTAL TURNOVER OF RS.158.70 CRORES, HAD DECLARED THE SOFTWARE DEVELOPMENT SERVICES AT RS. 115 CRORES. IN RESPECT OF EXCLUSION OF FCS SOFTWARE SOLUTIONS LT D . AND INFOSYS TECHNOLOGIES LTD., THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT BECAUSE OF HIGH TURNOVER AND BRANDS, THE SAID CONCERNS WERE NOT COMPARABLE. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE LIMI TED ISSUE WHICH ARISES BY WAY OF APPEAL FILED BY THE REVENUE IS AGAINST THE INCLUSION/EXCLUSION OF CERTAIN COMPARABLES IN THE FINAL LIST OF COMPARABLES. FIRST, WE SHALL TAKE UP THE COMPARABLES WHICH HAVE BEEN EXCLUDED ON THE DIRECTIONS OF DRP I.E. FCS SOF TWARE SOLUTIONS LTD. AND INFOSYS TECHNOLOGIES LTD. BOTH THESE CONCERNS HAVE HIGH TURNOVER AND ALSO INFOSYS TECHNOLOGIES LTD. HAS BRAND VALUE AND ALSO OWN S INTANGIBLES AND CONSEQUENTLY, THEY HAVE BEEN DIRECTED BY THE DRP TO BE EXCLUDED. 12. WE FIND THAT SIMILAR ISSUE OF EXCLUSION OF INFOSYS TECHNOLOGIES LTD. AND FCS SOFTWARE SOLUTIONS LTD. WERE HELD TO BE PRODUCT COMPANIES WHICH HAVE FUNCTIONALLY NOT COMPARABLE TO THE CONCERNS ENGAGED IN PROVIDING SOFTWARE SERVICES TO ITS ASSOCIATED ENTERPRISES, BY THE T RIBUNAL IN TIBCO SOFTWARE INDIA PVT. LTD. VS. DCIT AND VICE VERSA IN ITA NO.276/PUN/2015 & ITA NO.334/PUN/2015 AND CO NO.04/PUN/2016, RELATING TO ASSESSMENT YEAR 2010 - 11, ORDER DATED 31.01.2017 . FOLLOWING THE SAME PARITY OF REASONING, WHERE THE ITA NO. 536 /P U N/20 1 5 ITA NO. 622 /P U N/201 5 CO NO.0 9 /P U N/201 7 7 ASSESSEE B EFORE US IS ALSO A PROVIDER OF SOFTWARE SERVICES, THE TWO CONCERNS I.E. FCS SOFTWARE SOLUTIONS LTD. AND INFOSYS TECHNOLOGIES LTD. HAVE TO BE EXCLUDED FROM THE FINAL SET OF COMPARABLES AS THEY ARE FUNCTIONALLY NOT COMPARABLE. 13. NOW, COMING TO THE DIRECTI ONS OF DRP IN INCLUDING CAT TECHNOLOGIES LTD. AND RS SOFTWARE (INDIA) LTD. IN THE FINAL SET OF COMPARABLES. THE SAID CONCERNS WERE NOT PICKED UP BY THE ASSESSEE IN ITS TP STUDY REPORT. HOWEVER, WHEN THE TPO CHANGED THE FILTERS AND ASKED THE ASSESSEE TO A PPLY SINGLE YEAR DATA, THE ASSESSEE CARRIED OUT FRESH SEARCH AND INCLUDED BOTH THESE CONCERNS ALONG WITH OTHER COMPANIES AS COMPARABLE. THE CONCERN CAT TECHNOLOGIES LTD. WAS REJECTED BY THE TPO AS IT WAS FOUND TO BE ENGAGED IN THREE TYPES OF BUSINESSES I. E. MEDICAL TRANSCRIPTION, TRAINING AND SOFTWARE DEVELOPMENT AND CONSULTANCY. THE TPO ALSO REPORTS THAT NO SEGMENTAL DATA WAS PROVIDED BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE. IN RESPECT OF RS SOFTWARE (INDIA) LTD., THE TPO REPORTED THAT THE ASSESSEE HAD HIMSELF REJECTED THE SAID COMPANY IN THE ORIGINAL SEARCH, AS PER A/R MATRIX SUBMITTED BY THE ASSESSEE (ATTACHMENT 17 - REPLY TO SCN) ON THE GROUND THAT FAILS QUANTITATIVE SCREENS, AND AT GEOGRAPHIC SEGMENT. THE TPO OBSERVED THAT THIS AGA IN HIGHLIGHTS CHERRY PICK APPROACH OF THE ASSESSEE TO SELECT THE COMPANIES OF LOWER PLI AND INCONSISTENT APPROACH OF THE ASSESSEE NOT TO FOLLOW FAR ANALYSIS IN SELECTION OF COMPARABLES. 14. BEFORE THE DRP, THE ASSESSEE POINTED OUT THAT FROM THE WEBSITE OF CAT TECHNOLOGIES LTD., IT IS CLEAR THAT THE SAID COMPANY WAS MAINLY ENGAGED IN THE PROVISION OF SOFTWARE DEVELOPMENT AND CONSULTANCY SERVICES AND DURING THE SAID YEAR, THE COMPANY HAD EARNED AROUND 91% OF ITS TOTAL REVENUE FROM SOFTWARE ITA NO. 536 /P U N/20 1 5 ITA NO. 622 /P U N/201 5 CO NO.0 9 /P U N/201 7 8 DEVELOPMENT AND CONSULTANCY ACTIVITY. THE RELEVANT DETAILS IN THE PROFIT AND LOSS ACCOUNT WERE AS UNDER: - SCHEDULE 9 FOR THE YEAR ENDED ON INCOME FROM OPERATIONS 31.03.2010 31.03.2009 (RS.) (RS.) TRAINING INCOME 538,116 244,107 SOFTWAR E DEVELOPMENT & CONSULTING SERVICES 71,971,159 84,939,375 MEDICAL TRANSCRIPTION RECEIPTS 6,768,275 8,374,194 79,277,550 93,557,676 1 5 . THE DRP IN VIEW THEREOF, WHERE THE RECEIPT FROM SOFTWARE DEVELOPMENT AND CONSULTING CONSTITUTED MORE THAN 90% OF THE TOTAL RECEIPTS OF THE COMPANY, HELD THAT THE NET MARGINS FROM OTHER ACTIVITIES HAD ENTITY LEVEL WOULD NOT AFFECT THE OVERALL NET MARGINS OF THE COMPANY. THE DRP THUS, DIRECTED THE ASSESSING OFFICER TO ADOPT THE N ET MARGINS OF THE SAID COMPANY A S COMPARABLE IF OTHER FILTERS APPROVED BY DRP WERE SATISFIED. THE TPO GIVING EFFECT TO THE DIRECTIONS OF DRP HAS NOT OBJECTED AS TO WHETHER OTHER FILTERS WHICH WERE APPROVED BY THE DRP WE RE NOT SATISFIED. CONSEQUENTLY, WE FIND NO MERIT IN THE ISSUE RAISE D BY THE REVENUE IN THIS REGARD, WHEREIN MORE THAN 90% OF THE RECEIPTS OF THE SAID COMPANY WERE FROM SOFTWARE DEVELOPMENT AND CONSULTING SERVICES. HENCE, THE SAID CONCERN IS FUNCTIONALLY COMPARABLE TO THE ASSESSEE AND IS TO BE INCLUDED IN THE FINAL SET OF COMPARABLES. 16. IN RESPECT OF RS SOFTWARE (INDIA) LTD., THE FIRST CONTENTION RAISED BY THE ASSESSEE BEFORE THE DRP WAS THAT BASED ON THE RULINGS OF HONBLE HIGH COURT OF PUNJAB & HARYANA IN CIT VS. QUARK SYSTEMS PVT. LTD. IN ITA NO.594 OF 2010, JUDGME NT DATED 16.05.2011 , THE ASSESSEE SHOULD BE ALLOWED TO SELECT CERTAIN COMPARABLE COMPANIES DURING THE PROCEEDINGS. IT WAS FURTHER POINTED OUT FROM THE ANNUAL REPORT OF THE SAID CONCERN THAT THE COMPANY HAD MORE THAN 75% OF THE REVENUE FROM COMPUTER SOFTWA RE DEVELOPMENT SERVICES. THE RELEVANT EXTRACT ITA NO. 536 /P U N/20 1 5 ITA NO. 622 /P U N/201 5 CO NO.0 9 /P U N/201 7 9 OF THE PROFIT AND LOSS ACCOUNT WAS FILED BEFORE THE DRP AND IT WAS POINTED OUT THAT WITHOUT PREJUDICE TO THE OBJECTIONS OF EXPORT EARNING FILTER, THE SAID CONCERN SATISFIED 75% EXPORT EARNING FILTER. THE DRP DIRECTED THE INCLUSION OF THE SAID CONCERN IN CASE THE FILTERS APPROVED BY THE DRP WERE SATISFIED. THE TPO HAS NOT GIVEN ANY ADVERSE COMMENTS ON THE SATISFACTION OF THE FILTERS APPLIED BY THE DRP. CONSEQUENTLY, THE SAID CONCERN IS TO BE INCLUDED IN THE F INAL SET OF COMPARABLES, WHERE IT SATISFIED THE FILTER OF MORE THAN 75% OF EARNING FROM EXPORTS. CONSEQUENTLY, THE GROUNDS OF APPEAL NO.2 AND 3 RAISED BY THE REVENUE ARE DISMISSED. 1 7 . THE ASSESSEE IN ITA NO.622/PUN/2015 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - I. GROUNDS OF APPEAL IN RESPECT OF CORPORATE TAX ADDITIONS GROUND NO.1 ADDITION TO TOTAL INCOME ON ACCOUNT OF MISMATCH OF TAXES DEDUCTED AT SOURCE (TDS) AMOUNT ERRED IN FACTS BY MAKING AN ADJUSTMENT OF RS.14,79,098 TO THE TOTAL INCOME ON ACCOUNT OF MISMATCH OF TDS AMOUNT CLAIMED BY THE APPELLANT IN ITS RETURN OF INCOME WITH THE TDS REFLECTED IN FORM 26AS OF THE APPELLANT. II. OTHER GROUNDS OF APPEAL GROUND NO.2 INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT WIT HOUT PREJUDICE TO THE ABOVE GROUNDS, EVEN IF THE ADJUSTMENT IS SUSTAINED, THE LEARNED AO HAS ERRED IN INITIATING PENALTY PROCEEDINGS AGAINST THE APPELLANT UNDER SECTION 271(1)(C) OF THE ACT FOR FURNISHING OF INACCURATE PARTICULARS OF ITS INCOME ON ACCOUNT OF CORPORATE TAX ADDITION, WITHOUT APPRECIATING THE FACT THAT, THE CORPORATE TAX ADDITIONS IS ON ACCOUNT OF DIFFERENCE OF OPINION, INCOHERENT APPROACH OF THE LEARNED AO, DIFFERENCES IN INTERPRETATION OF THE PROVISIONS, NON - APPRECIATION OF FACTS, ETC. THE ABOVE GROUNDS OF APPEAL ARE MUTUALLY EXCLUSIVE AND WITHOUT PREJUDICE TO ONE ANOTHER. 1 8 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE GROUND OF APPEAL NO.1 HAS BECOME INFRUCTUOUS AS THE SAID CLAIM HAS BEEN ALLOWED VIDE ORDE R PASSED UNDER SECTION 154 OF THE ACT. IN RESPECT OF GROUND OF ITA NO. 536 /P U N/20 1 5 ITA NO. 622 /P U N/201 5 CO NO.0 9 /P U N/201 7 10 APPEAL NO.2 I.E. AGAINST INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ADMITTED THAT THE SAID GROUND OF APPEAL IS PREMATURE. CONSEQUENTLY, BOTH THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN ITS APPEAL ARE DISMISSED. 1 9 . THE ASSESSEE IN CO NO.09/PUN/2017 HAS RAISED THE FOLLOWING GROUNDS OF OBJECTIONS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEAR NED ASSESSING OFFICER (AO') HAS ERRED IN OBJECTING TO THE ORDER OF THE HONBLE DISPUTE RESOLUTION PANEL, PUNE [DRP], WHEREIN THE HONBLE DRP HAS A ) DIRECTED TO INCLUDE CAT TECHNOLOGIES LIMITED AND RS SOFTWARE INDIA PRIVATE LIMITED IN THE FINAL SET OF COMPAR ABLES. B ) DIRECTED TO EXCLUDE FCS SOFTWARE LIMITED AND INFOSYS TECHNOLOGIES LIMITED FROM THE FINAL SET OF COMPARABLES 2. WITHOUT PREJUDICE TO THE ABOVE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE HONBLE DRP HAS: - A ) ERRED ON FACTS AND IN CIRCUMST ANCES OF THE CASE AND IN LAW BY INAPPROPRIATELY APPLYING FILTER OF REJECTION OF COMPANIES WITH LESS THAN 75% EARNINGS FROM EXPORTS B ) ERRED IN ACCEPTING CERTAIN INAPPROPRIATE COMPANIES AS COMPARABLE TO THE APPELLANT C ) ERRED IN REJECTING CERTAIN OTHER COMPANIE S IDENTIFIED BY THE APPELLANT WHICH CAN BE CONSIDERED AS COMPARABLE D ) ERRED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW BY NOT MAKING ANY ADJUSTMENTS FOR DIFFERENCE IN RISK PROFILE OF COMPARABLE COMPANIES VIS - - VIS THE APPELLANT AND THEREBY COMPAR ING THE OPERATING MARGINS OF THE COMPARABLE COMPANIES ASSUMING HIGH BUSINESS RISK WITH THE APPELLANTS CAPTIVE RISK MITIGATED OPERATIONS. 20 . FURTHER, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE GROUNDS RAISED IN THE CROSS OBJECTIONS ARE IN SUPPORT OF THE ORDER OF DRP AND THEY WOULD BECOME ACADEMIC ONCE THE APPEAL OF REVENUE IS DISMISSED. ACCORDINGLY, WE DISMISS THE GROUNDS OF OBJECTIONS RAISED IN THE CROSS ITA NO. 536 /P U N/20 1 5 ITA NO. 622 /P U N/201 5 CO NO.0 9 /P U N/201 7 11 OBJECTIONS. CONSEQUENTLY, THE APPEAL OF REVEN UE AND THE ASSESSEE AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. 21 . IN THE RESULT, APPEAL OF REVENUE , APPEAL OF ASSESSEE AND CROSS OBJECTIONS OF ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THIS 16 TH DAY OF JUNE , 201 7 . SD/ - SD/ - ( ANIL CHATURVEDI ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 16 TH JUNE , 201 7 . GCV SR / COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT ; 2. THE RESPONDENT; 3. THE DRP, PUNE ; 4. THE DIT (TP/IT), PUNE ; 5. THE DR A , ITAT, PUNE; 6. GUARD FILE . / BY ORDER, // TRUE C OPY // / ASSISTANT REGISTRAR, , / ITAT, PUNE