Element K India Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 6277/DEL/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3401 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I2
• Next Hearing Date: 13-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 19-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHWANI TANEJA
• Keywords: Transfer pricing; Principle of natural justice; International transaction
• Section: 133(6); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I-2 : NEW DELHI) BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.6277/DEL./2012 (ASSESSMENT YEAR : 2008-09) M/S. ELEMENT K INDIA PVT. LTD., VS. ITO, WARD 11 ( 1), NO.670, SECTOR 17, POCKET A, NEW DELHI. DWARKA, SOUTH DELHI, NEW DELHI 110 078. (PAN : AAACE9836D) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ASHWANI TANEJA, ADVOCATE AND SHRI SHANTANU JAIN, ADVOCATE REVENUE BY : SHRI H.K. CHOUDHARY, CIT DR DATE OF HEARING : 11.10.2017 DATE OF ORDER : 22.11.2017 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, M/S. ELEMENT K INDIA PVT. LIMITED (HEREINAFTER REFERRED TO AS THE TAXPAYER) BY FILI NG THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 17.10.2012, PASSED BY THE AO IN CONSONANCE WITH THE ORDERS PASS ED BY THE LD. DRP/TPO UNDER SECTION 143 (3) READ WITH SECTION 144 C OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) QUA THE ASSESSMENT YEAR 2008-09 ON THE GROUNDS INTER ALIA THAT :- ITA NO.6277/DEL/2012 2 GROUND NO.1 THE ASSESSMENT ORDER PASSED BY THE LEARNED ASSESSIN G OFFICER (HEREINAFTER REFERRED TO AS 'AO') PURSUANT TO THE DIRECTIONS OF THE HON'BLE DISPUTE RESOLUTION PA NEL (HEREINAFTER REFERRED TO AS 'DRP') IS BAD IN LAW AN D VOID AB-INITIO. GROUND NO.2: THE LEARNED AO/TRANSFER PRICING OFFICER (HEREINAFTE R REFERRED TO AS 'TPO') ERRED IN COMPUTATION OF ARM'S LENGTH PRICE (HEREINAFTER REFERRED TO AS 'ALP') WHI CH HAS RESULTED IN A PROPOSED ADDITION OF RS. 1,07,20, 111/- AND THE HON'BLE DRP IN CONFIRMING THE SAME. IN DOIN G SO, THEY HAVE GROSSLY ERRED: A) BY NOT APPRECIATING THE FACT THAT NONE OF THE CONDITIONS SET OUT IN SECTION 92((3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT') ARE SATISFIED; B) BY MAKING A REFERENCE WITHOUT RECORDING ANY REAS ONS BASED ON WHICH HE REACHED THE CONCLUSION THAT IT WA S 'EXPEDIENT AND NECESSARY' TO REFER THE MATTER TO TH E LEARNED TPO FOR COMPUTATION OF THE ARM'S LENGTH PRI CE, AS REQUIRED UNDER SECTION 92CA(1) OF THE ACT; C) BY IGNORING THE FACT THAT THE APPELLANT IS ENTIT LED TO TAX HOLIDAY UNDER SECTION 10A OF THE ACT ON ITS PRO FITS AND THEREFORE WOULD NOT HAVE ANY UNTOWARD MOTIVE OF DERIVING A TAX ADVANTAGE BY MANIPULATING TRANSFER PRICES OF ITS INTERNATIONAL TRANSACTIONS; D) BY UNDERTAKING THE FRESH SEARCH FOR COMPARABILIT Y ANALYSIS AS ON NOVEMBER 25, 2010, WHICH IS BEYOND T HE DATE OF COMPLIANCE RESULTING IN 'IMPOSSIBILITY OF PERFORMANCE' AND AGAINST THE PREMISE OF MAINTENANCE OF 'CONTEMPORANEOUS DOCUMENTATION. THE SAME ALSO VIOLATES THE LAW, RULE 106(4) READ WITH RULE 10D(4) OF THE INCOME TAX RULES, 1962 (HEREINAFTER REFERRED TO AS 'RULES'); ITA NO.6277/DEL/2012 3 E) BY DISREGARDING THE ALP, AS DETERMINED BY THE APPELLANT, BY EITHER REJECTING OR MODIFYING THE FIL TERS APPLIED BY THE APPELLANT FOR SELECTION OF COMPARABL E COMPANIES; F) BY DISREGARDING THE USE OF MULTIPLE YEAR DATA AD OPTED BY APPELLANT; G) BY BENCHMARKING THE APPELLANT WITH COMPANIES HAVING AN ENTIRELY DIFFERENT FUNCTIONAL PROFILE; H) BY EXERCISING HIS POWERS UNDER SECTION 133(6) OF THE ACT TO OBTAIN SELECTIVE INFORMATION, WHICH WAS NOT AVAILABLE IN THE PUBLIC DOMAIN; I) BY APPLYING ADDITIONAL ARBITRARY FILTERS; J) BY NOT APPLYING AN UPPER LIMIT TO THE 'TURNOVER FILTER'; K) BY IMPLICITLY ACCEPTING THE COMPANIES HAVING ABNORMAL/SUPER PROFITS AS COMPARABLE COMPANIES AND ON THE OTHER HAND, REJECTING COMPANIES INCURRING HU GE LOSSES; L) BY CHERRY-PICKING SOME COMPANIES AS COMPARABLE COMPANIES EVEN THOUGH THESE COMPANIES WERE NOT A PART OF THE CURRENT YEAR'S INITIAL SELECTION SET EX TRACTED BY THE LEARNED TPO HIMSELF OUT OF THE DATABASE; M) BY COMMITTING ERRORS IN COMPUTATION OF OPERATING PROFIT MARGINS OF COMPARABLE COMPANIES; N) BY NOT APPRECIATING THE RISK FREE NATURE OF THE APPELLANT AND BY NOT GRANTING AN ADJUSTMENT ON ACCOUNT OF DIFFERENTIAL RISK BORNE BY THE COMPARABL E COMPANIES; O) BY NOT GRANTING THE APPELLANT AN OPTION TO CHOOS E A PRICE THAT FALLS WITHIN + / - 5% RANGE OF THE ARITH METIC MEAN OF THE COMPARABLE COMPANIES, AS CONTEMPLATED UNDER THE PROVISO TO SECTION 92C(2) AS IT STOOD AT THE TIME OF PREPARING THE TP DOCUMENTATION. ACCORDINGLY , THIS HAS RESULTED IN HARDSHIP FOR APPELLANT, HAVING REGARD TO THE PRINCIPLE OF NATURAL JUSTICE. ITA NO.6277/DEL/2012 4 GROUND NO.3: THE LEARNED AO ERRED ON FACTS AND IN LAW IN CHARGIN G INTEREST UNDER SECTION 2346 OF THE ACT. GROUND NO.4: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED AO HAS ERRED IN INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT MECHANICALLY AND WITHOUT RECORDING ANY ADEQUATE REASONS FOR SUCH INITIATION. 4. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : M/S. ELEMENT K INDIA PVT. LTD., THE TAXPAYER IS AN IT SERVICE PROVIDER TO EK USA AND CL AIMED TO HAVE BEEN PROVIDING DESIGN AND DEVELOPMENT SUPPORT SERVI CES FOR ONLINE COURSEWARE TO ITS PARENT COMPANY. THE TAXPA YER PROVIDED SERVICES AT AN AGREED COST PLUS MARK UP. DURING TH E YEAR UNDER ASSESSMENT, THE TAXPAYER ENTERED INTO INTERNATIONAL TRANSACTIONS AS UNDER :- PROVISION OF COURSEWARE DEVELOPMENT SERVICES 15,44,23,557 COST RECHARGES 12,11,863 5. THE TAXPAYER IN ITS TP STUDY ADOPTED TRANSACTION AL NET MARGIN METHOD (TNMM) AS MOST APPROPRIATE METHOD (MA M), OPERATING PROFIT / TOTAL COST (OP/TC) AS THE PROFIT LEVEL INDICATOR (PLI) AND COMPUTED ITS OP/TC AT 12.36% BY USING CUR RENT YEAR ITA NO.6277/DEL/2012 5 DATA AND FOUND ITS INTERNATIONAL TRANSACTIONS QUA P ROVISION OF CONTRACT CONTENT / ONLINE COURSEWARE DEVELOPMENT SE RVICES AT ARMS LENGTH. LD. TPO SELECTED 21 COMPARABLES FOR BENCHM ARKING THE INTERNATIONAL TRANSACTIONS OUT OF WHICH THE LD. DRP HAS REJECTED TWO COMPARABLES AND COMPUTED THE OP/OC AT 22.16% AND MA DE TRANSFER PRICING ADJUSTMENT AT RS.1,07,20,111/-. I N COMPLIANCE TO THE ORDER PASSED BY TPO/DIRECTIONS ISSUED BY LD. DR P, AO COMPUTED THE ASSESSMENT. 6. THE TAXPAYER CARRIED THE MATTER BY WAY OF FILING OBJECTIONS BEFORE THE LD. DRP, WHICH HAVE BEEN REJECTED. FEEL ING AGGRIEVED, THE TAXPAYER HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 7. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO.1 8. GROUND NO.1 IS GENERAL IN NATURE AND DOES NOT RE QUIRE ANY ADJUDICATION. ITA NO.6277/DEL/2012 6 GROUND NO.2 9. AT THE VERY OUTSET, THE LD. AR FOR THE TAXPAYER CHALLENGING THE IMPUGNED ORDER PASSED BY TPO/DRP/AO TO CUT SHOR T HIS ARGUMENT SOUGHT EXCLUSION OF FOUR COMPARABLES VIZ. (I) INFOSYS TECHNOLOGIES LTD.; (II) KALS INFORMATION SYSTEMS; ( III) TATA ELEXI LTD. (SEG); AND (IV) WIPRO LIMITED OUT OF FINAL SET OF 19 COMPARABLES SELECTED BY THE TPO TO BENCHMARK THE IN TERNATIONAL TRANSACTIONS. 10. UNDISPUTEDLY, THE TNMM AS THE MOST APPROPRIATE METHOD HAVING OP/TC AS THE PLI USED BY THE TAXPAYER FOR BE NCHMARKING THE INTERNATIONAL TRANSACTIONS HAS BEEN ACCEPTED BY THE LD. TPO. IT IS ALSO NOT IN DISPUTE THAT ONLY ONE SEGMENT I.E. T RANSACTION QUA PROVISION OF CONTRACT CONTENT / ONLINE COURSEWARE D EVELOPMENT SERVICES HAS BEEN DISPUTED BY THE LD. TPO. PURSUAN T TO THE DIRECTIONS ISSUED BY LD. DRP, TPO HAS FINALLY CHOSE N 19 COMPARABLES HAVING ARITHMETIC MEAN PLI AT 22.16% WH ICH ARE AS UNDER :- S.NO. COMPANY NAME ADJUSTED PHIT/COST (%) 1. MINDTREE CONSULTING LTD. 18.03 2. PERSISTENT SYSTEMS LTD. 22.62 3. BODHTREE CONSULTING LTD. 23.59 4 . LANCO GLOBAL SYSTEM LTD. 29.02 5 . AVANI CINCOM TECHNOLOGIES 30.49 6. E-ZEST SOLUTIONS LTD. 31.85 7. FLEXTRONICS (ARICENT) 8.48 ITA NO.6277/DEL/2012 7 8 . IGATE GLOBAL SOLUTIONS LTD. 13.7 9 . INFOSYS TECHNOLOGIES LTD. 40.81 10 . KALS INFORMATION SYSTEMS 26.53 11. QUINTEGRA SOLUTIONS LTD. 20.65 12. R SYSTEMS INTL. (SEG.) 15.73 13. R S SOFTWARE (INDIA) LTD. 8.97 14. SASKEN COMMUNICATION TECHNOLOGIES (SEG.) 9.19 15 . TATA ELXSI 20.82 16 . THIRDWARE SOLUTIONS 18.63 17. WIPRO LTD. 31.45 18. SOFTSOL INDIA LTD. 25.57 19. SONATA SOFTWARE LTD. 24.84 AVERAGE 22.16 11. CONSEQUENTLY, TPO PROCEEDED TO COMPUTE THE TRAN SFER PRICING ADJUSTMENT AS UNDER :- ARITHMETIC MEAN PLI : 26.16% LESS : WORKING CAPITAL ADJUSTMENT (ANNEXURE-C) : (1.05%) ADJ. ARITHMETIC MEAN PLI : 27.21% OPERATING COST RS.135,186,369 ARMS LENGTH MARGIN 27.21% OF THE OPERATING COST ARMS LENGTH PRICE RS.171,970,580 22.6 PRICE RECEIVED VIS--VIS THE ARMS LENGTH PRI CE : THE PRICE CHARGED BY THE TAX PAYER TO ITS ASSOCIATE D ENTERPRISES IS COMPARED TO THE ARMS LENGTH PRICE AS UNDER :- ARMS LENGTH PRICE @ 127.21% OF OPERATING COST RS.17 1,970,580 PRICE CHARGED IN THE INTERNATIONAL TRANSACTION RS.154,423,557 SHORTFALL BEING ADJUSTMENT U/S 92CA RS.17,547,023 THE ABOVE SHORTFALL OF RS.17,547,023 IS TREATED AS TRANSFER PRICING ADJUSTMENT U/S 92CA. 12. NOW, WE WOULD EXAMINE THE SUITABILITY OF COMPAR ABLES VIZ. INFOSYS TECHNOLOGIES LIMITED, KALS INFORMATION SYS TEMS, TATA ELEXI LTD. AND WIPRO LIMITED FOR BENCHMARKING THE INTERNATIONAL ITA NO.6277/DEL/2012 8 TRANSACTIONS QUA PROVISION OF CONTRACT CONTENT/ONLI NE COURSEWARE DEVELOPMENT SERVICES ONE BY ONE. 13. LD. AR FOR THE TAXPAYER CONTENDED THAT ALL THE FOUR COMPARABLES NOW SOUGHT TO BE EXCLUDED FOR BENCHMARK ING THE INTERNATIONAL TRANSACTIONS WERE ORDERED TO BE EXCLU DED BY THE COORDINATE BENCH OF THE TRIBUNAL IN TAXPAYERS OWN CASE FOR AY 2007-08 ORDER DATED 14.11.2014 BY FOLLOWING THE ORDER PASSED BY TOLUNA INDIA PVT. LTD. IN ITA NO.5645/DEL/2011 DATE D 26.08.2014. HOWEVER, THE LD. DR RELIED UPON THE ORDER OF THE TPO. 14. UNDISPUTEDLY, THE TAXPAYER IS A LOW RISK CAPTIV E IT SERVICE PROVIDER IN THE FIELD OF SOFTWARE SERVICES DEVELOPM ENT TO ITS PARENT COMPANY. INFOSYS TECHNOLOGIES LIMITED (INFOSYS) 15. WHEN WE EXAMINE THE PROFILE OF THE TAXPAYER VIS --VIS INFOSYS, IT IS UNDISPUTED THAT INFOSYS IS A GIANT C OMPANY IN TERMS OF RISK PROFILE, NATURE OF SERVICES, NUMBER OF EMPLOYE ES, OWNERSHIP OF ITS BRANDED PRODUCTS AND BRAND RELATED PROFITS, HAV ING HUGE TURNOVER OF RS.15648 CRORES FOR FY 2007-08 AS AGAIN ST TAXPAYERS TURNOVER OF RS.150 CRORES WHICH IS 1043 TIMES OF TH E TURNOVER OF THE TAXPAYER. MOREOVER, INTANGIBLE ASSETS OF INFOS YS ARE AT ITA NO.6277/DEL/2012 9 RS.31863 CRORES AS ON MARCH 2008 AS PER BALANCE SHE ET AVAILABLE AT PAGE 301 OF THE PAPER BOOK AND INFOSYS IS ALSO INTO SOFTWARE PRODUCT AND INCURRING HUGE AMOUNT OF ITS R&D; AND A S SUCH CANNOT BE A SUITABLE COMPARABLE FOR BENCHMARKING THE INTER NATIONAL TRANSACTIONS. THE COORDINATE BENCH OF THE TRIBUNAL IN TAXPAYERS OWN CASE FOR AY 2007-08 ORDERED TO EXCLUDE INFOSYS FROM THE FINAL LIST OF COMPARABLES TO BENCHMARK THE INTERNATIONAL TRANSACTIONS BY FOLLOWING CIT VS. AGNITY INDIA TECHNOLOGIES PVT. LTD. (2013 ) 219 TAXMAN 26 (DEL.) . 16. HONBLE JURISDICTIONAL HIGH COURT IN AGNITY INDIA TECHNOLOGIES PVT. LTD. (SUPRA) HAS HELD INFOSYS AS NOT A VALID COMPARABLE KEEPING IN VIEW ITS GIANT SIZE, IN TERMS OF RISK PROFILE, NATURE OF SERVICES AND HUGE TURNOVER. MOREOVER, TH E TAXPAYER IS A CAPTIVE LOW RISK IT SERVICES PROVIDER IN THE FIELD OF SOFTWARE DEVELOPMENT TO ITS PARENT COMPANY. SO, WE HEREBY O RDERED TO EXCLUDE THIS COMPARABLE FROM THE FINAL SET OF COMPA RABLES CHOSEN BY THE TPO FOR BENCHMARKING THE INTERNATIONAL TRANS ACTION. KALS INFORMATION SYSTEMS (KALS) 17. THE TAXPAYER RAISED OBJECTION TO TAKE KALS AS C OMPARABLE ON GROUND OF FUNCTIONAL DISSIMILARITY AS IT IS A PR ODUCT COMPANY. THE COORDINATE BENCH OF THE TRIBUNAL IN TAXPAYERS OWN CASE FOR ITA NO.6277/DEL/2012 10 AY 2007-08 HAS ORDERED TO EXCLUDE THIS COMPANY ON T HE GROUND THAT SINCE THE TAXPAYER IS NOT ENGAGED IN IMPARTING ANY TRAINING ON COMMERCIAL BASIS OR SELLING ITS SOFTWARE PRODUCTS, IT CANNOT BE TAKEN AS A COMPARABLE TO THE TAXPAYER. 18. THIS COMPARABLE HAS ALSO ORDERED TO BE EXCLUDED BY THE COORDINATE BENCH OF THE TRIBUNAL IN TOLUNA INDIA PVT. LTD. (SUPRA), A COMPANY HAVING SAME PROFILE AS THAT OF THE TAXPAY ER ON THE SAME GROUND. SO, FOLLOWING THE ORDER PASSED BY THE COOR DINATE BENCH OF THE TRIBUNAL IN TAXPAYERS OWN CASE FOR AY 2007-08, WE HEREBY ORDER TO EXCLUDE KALS FROM THE FINAL LIST OF COMPAR ABLES. TATA ELXSI LTD. (SEG.) (TATA) 19. THE TAXPAYER SOUGHT EXCLUSION OF TATA ON THE GR OUND THAT IT IS INTO CREATION OF INTELLECTUAL PROPERTIES AND ITS R&D EXPENSES ACCOUNT FOR 3.39% OF SALES WHICH DOES NOT PASS THE R&D FILTER APPLIED BY THE TAXPAYER IN ITS TP STUDY. THE TATA IS HAVING TURNOVER OF RS.4015.51 CRORES AND NET FIXED ASSETS OF RS.9881.91 CRORES WHICH IS 246% OF THE SIZE OF THE TAXPAYER. TATA ALSO COME UP FOR SCRUTINY AS A COMPARABLE IN TAXPAYERS OWN C ASE FOR AY 2007-08 AND THE COORDINATE BENCH OF THE TRIBUNAL OR DERED TO EXCLUDE THE SAME FROM THE FINAL LIST OF COMPARABLES ON ACCOUNT OF ITS DISTINCT ACTIVITIES AS IT IS INTO DEVELOPMENT O F HARDWARE AND ITA NO.6277/DEL/2012 11 SOFTWARE FOR EMBEDDED PRODUCTS, SUCH AS MULTI MEDIA AND SOME OTHER ELECTRONIC ETC.; AND IT IS ALSO ENGAGED INTO MAKING SOME PROGRAMMES DEVELOPING TECHNOLOGY AND IS HAVING HUGE INTELLECTUAL PROPERTY. SO, KEEPING IN VIEW THE DISTINCT ACTIVIT IES BEING CARRIED OUT BY THE TAT, IT CANNOT BE A SUITABLE COMPARABLE, HENCE WE ORDER TO EXCLUDE THE SAME FORM THE FINAL SET OF COMPARABL ES. WIPRO LIMITED (SEG.) (WIPRO) 20. THE TAXPAYER SOUGHT TO EXCLUDE WIPRO ON THE GRO UNDS INTER ALIA THAT IT IS A GLOBAL COMPANY HAVING SIGNIFICANT INVESTMENT IN R&D FOR DEVELOPMENT OF IP AND PRODUCTS TO THE EXTEN T OF 11% OF THE REVENUE AND IT IS HAVING HUGE TURNOVER OF RS.11 955.6 CRORES FOR FY 2007-08 SO FAR AS IT SERVICE SEGMENT IS CONCERNE D AS AGAINST TAXPAYERS TURNOVER OF RS.15 CRORES; THAT THERE IS NO AVAILABILITY OF STANDALONE FINANCIAL DATA FOR FY 2007-08 AND IT IS HAVING SUBSTANTIAL INTANGIBLE ASSETS IN THE FORM OF GOODWI LL VALUED AT RS.4220.9 CRORES. 21. WIPRO HAS BEEN ORDERED TO BE EXCLUDED FROM THE LIST OF COMPARABLES BY THE ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL IN TAXPAYERS OWN CASE FOR AY 2007-08 BY TAKING INT O ACCOUNT ALL THE AFORESAID FACTUAL MATRIX DISCUSSED IN THE PRECE DING PARAS. ALL THE PARAMETERS TAKEN INTO ACCOUNT BY THE HONBLE HI GH COURT IN ITA NO.6277/DEL/2012 12 AGNITY INDIA TECHNOLOGIES PVT. LTD. (SUPRA) TO EXCLUDE INFOSYS FROM THE SET OF COMPARABLES ARE ALSO APPLICABLE TO WIPRO. 22. WIPRO HAS ALSO TO BE EXCLUDED BY THE COORDINATE BENCH OF THE TRIBUNAL IN CIENA INDIA PVT. LTD. VS. DCIT IN ITA NO.783/DEL./2015 ORDER DATED 22.03.2017, A SIMILARLY SITUATED COMPANY AS IN THE CASE OF THE TAXPAYER, BY RETURNIN G FOLLOWING FINDINGS :- 34. COORDINATE BENCH OF ITAT, DELHI IN ASSESSEES OWN CASE ORDERED TO EXCLUDE THIS COMPANY FROM THE FINAL LIST OF COMPARABLES BY MAKING FOLLOWING OBSERVATIONS :- 10.2. WE HAVE HEARD THE RIVAL SUBMISSIONS THE PERUSED THE RELEVANT MATERIAL ON RECORD. IT CAN BE OBSERVED FROM THE TPOS ORDER ITSELF THAT THE FACTS AND CIRCUMSTANCES OF WIPRO LTD., ARE SOMEWHAT SIMILAR TO INFOSYS TECHNOLOGIES LTD., INASMUCH AS HE HAS PROCEEDED TO REJECT THE ASSESSEES OBJECTIONS BY RELYING ON THE REASONING GIVEN BY HIM FOR THE INCLUSION OF INFOSYS LTD. IT I S FURTHER OBSERVED THAT WIPRO LIMITED (SEG.) WAS CONSIDERED AS COMPARABLE BY THE TPO IN THE CASE OF TOLUNA INDIA (SUPRA) AND LEAR AUTOMOTIVE (SUPRA). THE TRIBUNAL, IN BOTH THE CASES, HAS HELD WIPRO LTD. (SEG.) AS NOT COMPARABLE. THIS COMPANY IS ALSO OPERATING AS A FULL-FLEDGED RISK TAKING ENTITY; ENGAGED IN PROVIDING TECHNOLOGY INFRASTRUCTURE SERVICES, TESTING SERVICES, PACKAGE IMPLEMENTATION HAVING MORE THAN 82,000 EMPLOYEES. IT HAS ITS OWN R&D CENTRE. IT INCURRED AROUND 11% OF NET SALES AS EXPENDITURE ON RESEARCH AND DEVELOPMENT. NONE OF THE ABOVE FACTORS MATCH WITH THE ASSESSEE COMPANY. RESPECTFULLY FOLLOWING THE ABOVE PRECEDENTS, WE HOLD THAT THIS COMPANY IS NOT COMPARABLE. ITA NO.6277/DEL/2012 13 23. SO, IN VIEW OF THE FACTS AND CIRCUMSTANCES AND BY FOLLOWING THE DECISION RENDERED BY THE COORDINATE BENCH OF TH E TRIBUNAL IN TAXPAYERS OWN CASE FOR AY 2007-08, WE ORDER TO EXC LUDE WIPRO FROM THE FINAL SET OF COMPARABLES FOR BENCHMARKING THE TRANSACTION. 24. THE AO IS DIRECTED TO RECOMPUTE THE MARGIN AS P ER DISCUSSION IN THE PRECEDING PARAS. GROUND NO.3 25. GROUND NO.3 IS CONSEQUENTIAL IN NATURE. GROUND NO.4 26. GROUND NO.4 IS PREMATURE AND DOES NOT REQUIRE A NY ADJUDICATION. 27. RESULTANTLY, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 22 ND DAY OF NOVEMBER, 2017. SD/- SD/- (N.K. SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 22 ND DAY OF NOVEMBER, 2017 TS ITA NO.6277/DEL/2012 14 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A) 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.