Broadcom Communication Technologies Private Limited, Bangalore V. DCIT, Bangalore

ITA 704/BANG/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4917 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 12-10-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 01-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BIJAY KUMAR PANDA BENGALURU
• Keywords: Transfer pricing; Opportunity of being heard; International transaction; TDS; FORM 26AS
• Section: 43B; 139(5); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI A K GARODIA , ACCOUNTANT MEMBER IT (TP) A NO. 704/BANG/2016 ASSESSMENT YEAR: 2011 - 12 LSI INDIA RESEARCH & DEVELOPMENT INDIA PRIVATE LIMITED, [ERSTWHILE BROADCOM COMMUNICATIONS TECHNOLOGIES PRIVATE LTD. SINCE MERGED], S1, WIPRO ELECTRONIC CITY, SPECIAL ECONOMIC ZONE, DODDATHOGUR VILLAGE, BEGUR HOBLI, ELECTRONICS CITY, BANGALORE 560 100. PAN: AAECM 1677N VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 4(1)(1) [FORMERLY CIRCLE 1(2)(2)], BANGALORE 560 095. APPELLANT RESPONDENT APPELLANT BY : SHRI SHARATH RAO, CA RESPONDENT BY : SHRI BIJAY KUMAR PANDA, CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 12 . 1 0.2020 DA TE OF PRONOUNCEMENT : 16 . 1 0.2020 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER DATED 29.01.2016 OF DCIT, CIRCLE 1(1)(2), BANGALORE (HERE INAFTER REFERRED TO AS THE ASSESSING OFFICER / AO IN SHORT) PASSED U/S .143(3) R.W.S. 144C(13) OF INCOME-TAX ACT, 1961 [THE ACT] IN RELATION TO AY 2011-12. IT(TP)A NO.704/BANG/2016 PAGE 2 OF 11 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVI SION OF SOFTWARE DEVELOPMENT SERVICES (SWD SERVICES) TO ITS WHOLLY O WNED HOLDING COMPANY. IN TERMS OF THE PROVISIONS OF SEC.92A OF THE ACT, THE ASSESSEE AND ITS WHOLLY OWNED HOLDING COMPANY WERE ASSOCIATE D ENTERPRISES ('AES'). IN TERMS OF SEC.92B(1) OF THE ACT, THE TRA NSACTION OF PROVIDING SWD SERVICES AND MSS WERE INTERNATIONAL TRANSACTIO N I.E., A TRANSACTION BETWEEN TWO OR MORE ASSOCIATED ENTERPRISES, EITHER OR BOTH OF WHOM ARE NON-RESIDENTS, IN THE NATURE OF PURCHASE, SALE OR L EASE OF TANGIBLE OR INTANGIBLE PROPERTY, OR PROVISION OF SERVICES, OR L ENDING OR BORROWING MONEY, OR ANY OTHER TRANSACTION HAVING A BEARING ON THE PR OFITS, INCOME, LOSSES OR ASSETS OF SUCH ENTERPRISES, AND SHALL INCLUDE A MUT UAL AGREEMENT OR ARRANGEMENT BETWEEN TWO OR MORE ASSOCIATED ENTERPRI SES FOR THE ALLOCATION OR APPORTIONMENT OF, OR ANY CONTRIBUTION TO, ANY CO ST OR EXPENSE INCURRED OR TO BE INCURRED IN CONNECTION WITH A BENEFIT, SERVIC E OR FACILITY PROVIDED OR TO BE PROVIDED TO ANY ONE OR MORE OF SUCH ENTERPRISES. IN TERMS OF SEC.92(1) OF THE ACT, THE ANY INCOME ARISING FROM AN INTERNAT IONAL TRANSACTION SHALL BE COMPUTED HAVING REGARD TO THE ARMS LENGTH PRICE. I N THIS APPEAL BY THE ASSESSEE, THE DISPUTE IS WITH REGARD TO DETERMINATI ON OF ARMS LENGTH PRICE (ALP) IN RESPECT OF THE AFORESAID INTERNATIONAL TRA NSACTION OF RENDERING SWD SERVICES TO THE AE. 3. AS FAR AS THE PROVISION OF SWD SERVICES ARE CONC ERNED, THE ASSESSEE FILED A TRANSFER PRICING STUDY (TP STUDY) TO JUSTIFY THE PRICE PAID IN THE INTERNATIONAL TRANSACTION AS AT ALP BY ADOPT ING THE TRANSACTION NET MARGIN METHOD (TNMM) AS THE MOST APPROPRIATE METHOD (MAM) OF DETERMINING ALP. THE ASSESSEE SELECTED OPERATING PR OFIT/OPERATING COST (OP/OC) AS THE PROFIT LEVEL INDICATOR (PLI) FOR THE PURPOSE OF COMPARISON. THE OP/OC OF THE ASSESSEE WAS ARRIVED AT 14.63% IN ITS TP STUDY. THE OPERATING INCOME WAS RS.27,86,04,151 AND THE OPERAT ING COST WAS RS.24,30,47,814. THE OPERATING PROFIT (OPERATING I NCOME OPERATING COST IT(TP)A NO.704/BANG/2016 PAGE 3 OF 11 WAS RS.3,55,56,537. THUS THE OP/TC WAS ARRIVED AT 14.63%. THE ASSESSEE CHOSE COMPANIES ENGAGED IN PROVIDING SIMIL AR SERVICES SUCH AS THE ASSESSEE. IT IDENTIFIED 8 COMPANIES WHOSE AVER AGE ARITHMETIC MEAN OF PROFIT MARGIN WAS COMPARABLE WITH THE OPERATING MAR GIN OF THE ASSESSEE. THE ASSESSEE THEREFORE CLAIMED THAT THE PRICE IT CH ARGED IN THE INTERNATIONAL TRANSACTION SHOULD BE CONSIDERED AS A T ARMS LENGTH. 4. THE TRANSFER PRICING OFFICER (TPO) TO WHOM THE D ETERMINATION OF ALP WAS REFERRED TO BY THE AO, ACCEPTED TNMM AS THE MAM AND ALSO USED THE SAME PLI FOR COMPARISON I.E., OP/TC. HE A LSO SELECTED COMPARABLE COMPANIES FROM DATABASE. THE TPO ACCEPT ED 3 COMPANIES CHOSEN BY THE ASSESSEE AS COMPARABLE COMPANIES VIZ. , R S SOFTWARE (INDIA) LTD., SASKEN COMMUNICATION TECHNOLOGIES LTD . AND TATA ELXSI LTD. THE TPO ON HIS OWN IDENTIFIED 10 OTHER COMPANIES AS COMPARABLE WITH THE ASSESSEE COMPANY AND WORKED OUT THE AVERAGE ARITHME TIC MEAN OF THEIR PROFIT MARGINS AS FOLLOWS:- SL. NO NAME SALES COST PLI 1 ACROPETAL TECHNOLOGIES LTD. (SEG) 814,016,893 616,754,876 3 1.98% 2 E ZEST SOLUTIONS (FROM CAPITALINE) 112866098 93255341 21.03% 3 E-INFOCHIPS LTD 260384251 166447527 56.44% 4 EVOKE (FROM CAPITALINE) 144869912 133996568 8.11% 5 I C R A TECHNO ANALYTICS LTD. (IN 000) 158401000 126894000 24.83% 6 INFOSYS LTD 253850000000 177,030,000,00 0 43.39% 7 LARSEN & TOUBRO INFO TECH LTD. 23318122096 19,764,861,289 19.83% 8 MINDTREE LTD.(SEG) 8,783,000,000 7,937,143,242 10.66% 9 PERSISTENT SYSTEMS & SOLUTIONS LTD. 189,490,457 155,172,089 2 2.12% 10 PERSISTENT SYSTEMS LTD. 6,101,270,000 4,971,860,000 22.84% 11 R S SOFTWARE (INDIA) LTD. 1,882,638,471 1,617,804,170 16.37% 12 SASKEN COMMUNICATION TECHNOLOGIES LTD. 3,941,962,000 3,175,61 6,000 24.13% 13 TATA ELXSI LTD (SEG) 3,581,985,000 2,962,533,352 20.91% AVERAGE MARGIN 24.82% IT(TP)A NO.704/BANG/2016 PAGE 4 OF 11 5. THE TPO COMPUTED THE ADDITION TO TOTAL INCOME ON ACCOUNT OF ADJUSTMENT TO ALP AS FOLLOWS:- ARM'S LENGTH MEAN MARGIN ON COST 24.82% LESS: WORKING CAPITAL ADJUSTMENT 1.27% (AS PER ANNEX. C) ADJUSTED MARGIN 23.55% OPERATING COST 243,07,814 ARMS LENGTH PRICE(ALP) 300,285,574 (123.55% OF OPERATING COST) PRICE RECEIVED 278,604,151 SHORTFALL BEING ADJUSTMENT U/S 92CA: 21,681,423 THUS A SUM OF RS.21,681,423 WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF DETERMINATION OF ALP FOR PRO VISION OF SWD SERVICES BY THE ASSESSEE TO ITS AE. 6. THE ASSESSEE FILED OBJECTIONS BEFORE THE DISPUTE S RESOLUTION PANEL (DRP) AGAINST THE DRAFT ASSESSMENT ORDER PASSED BY THE AO WHEREIN THE ADDITION SUGGESTED BY THE TPO AS ADJUSTMENT TO ALP WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE BY THE AO. THE DRP GA VE EXCLUDED 10 OUT OF 13 COMPARABLE COMPANIES CHOSEN BY THE TPO. THREE C OMPANIES REMAIN AS COMPARABLE COMPANIES AFTER THE DIRECTIONS OF THE DRP VIZ., PERSISTENT SYSTEMS AND SOLUTIONS LTD., PERSISTENT SYSTEMS LTD. AND SASKEN COMMUNICATION TECHNOLOGIES LTD. BASED ON THE DIREC TIONS OF THE DRP, THE AO PASSED THE FINAL ORDER OF ASSESSMENT. TO THE EX TENT THE ASSESSEE DID NOT GET RELIEF FROM THE DRP, THE ASSESSEE HAS PREFE RRED APPEAL BEFORE THE TRIBUNAL. 7. THOUGH THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEAL, GROUNDS 9 TO 12 WITH REGARD TO DETERMINATION OF ALP AND CONSEQUENT ADDITION MADE TO TOTAL INCOME, AT THE TIME OF HEARI NG THE LD. COUNSEL FOR THE ASSESSEE PRESSED FOR ADJUDICATION OF EXCLUSION OF 3 COMPARABLE COMPANIES AND INCLUSION OF 3 COMPARABLES. THE 3 C OMPANIES SOUGHT TO IT(TP)A NO.704/BANG/2016 PAGE 5 OF 11 BE EXCLUDED ARE PERSISTENT SYSTEMS AND SOLUTIONS LT D., PERSISTENT SYSTEMS LTD. AND SASKEN COMMUNICATION TECHNOLOGIES LTD. TH E 3 COMPANIES SOUGHT FOR INCLUSION AS COMPARABLES ARE R S SOFTWAR E (INDIA) LTD., MINDTREE LTD. AND EVOKE TECHNOLOGIES LTD. 8. FRIST WE SHALL TAKE UP FOR CONSIDERATION THE PL EA OF ASSESSEE FOR INCLUSION OF 3 AND EXCLUSION OF 3 COMPARABLE COMPAN IES THAT REMAIN AFTER THE ORDER OF DRP. THE LD. COUNSEL FOR THE ASSESSEE IN THIS REGARD DREW OUR ATTENTION TO A DECISION OF ITAT BANGALORE BENCH IN THE CASE OF LSI INDIA RESEARCH PVT. LTD. [2017] 83 TAXMANN.COM 357 [BANG. TRIB.] WHEREIN IN A CASE OF ASSESSEE ENGAGED IN PROVIDING SWD SERVICES SUCH AS THE ASSESSEE AND IN WHICH CASE THE VERY SAME 13 COMPARA BLE COMPANIES CHOSEN AS IN THE PRESENT APPEAL WERE CHOSEN AS COMP ARABLES, THE TRIBUNAL EXCLUDED THE AFORESAID 3 COMPANIES AND ALSO DIRECTE D INCLUSION OF 3 COMPANIES WHICH THE ASSESSEE SEEKS IN THIS APPEAL. THE FOLLOWING WERE THE RELEVANT OBSERVATIONS OF THE TRIBUNAL IN THE AF ORESAID ORDER:- 9. NOW WE DECIDE ABOUT THE REMAINING SIX COMPARABL ES EXCLUDED BY THE DRP AND OTHER FOUR COMPARABLES RETA INED BY THE DRP FOR WHICH THE ASSESSEE IS SEEKING EXCLUSION. WE FIND THAT OUT OF THESE SIX COMPARABLES EXCLUDED BY THE DRP, O NE COMPARABLE I.E. ICRA TECHNO ANALYTICS LTD. IS HAVIN G RPT IN EXCESS OF 15% AND THEREFORE, FOR THIS REASON ALONE THIS COMPANY HAS TO BE EXCLUDED ALTHOUGH, THE DRP HAS EXCLUDED I T FOR A DIFFERENT REASON THAT IT IS HAVING VARIOUS ACTIVITI ES AND THE SEGMENTAL DATA ARE NOT AVAILABLE. WE HOLD THIS EXCL USION ON ACCOUNT OF RPT FILTER. IN FACT, WE FIND THAT PARA-8 & 9 OF THE TRIBUNAL ORDER RENDERED IN THE CASE COMMSCOPE NETWO RKS (INDIA) (P.) LTD. (SUPRA) IS RELEVANT IN RESPECT OF INCLUSI ON/EXCLUSION OF NINE COMPANIES DIRECTED TO BE EXCLUDED BY DRP AND A LSO IN RESPECT OF EXCLUSION OF FOUR COMPANIES WHICH WERE R ETAINED BY DRP BUT IT WAS THE CONTENTION OF THE ASSESSEE FOR E XCLUSION THEREOF. WE THEREFORE, RE-PRODUCE PARA-8 & 9 OF THE TRIBUNAL ORDER FOR THE SAKE OF READY REFERENCE; IT(TP)A NO.704/BANG/2016 PAGE 6 OF 11 '8. WE DECIDE THE ISSUE OF VARIOUS EXCLUSIONS AND INCLUSIONS IN THESE CROSS APPEALS. REGARDING INCLUSION OF 3 COMPARABLES OUT OF 9 COMPARABLES EXCLUDED BY DRP, WE FIND THAT WHEN BOTH SIDES ARE SEEKING INCLUSION OF THESE 3 COMPARABLES BEING 1 (EVOKE TECHNOLOGIES PVT LTD., 2) MINDTREE LTD. (SEG) AND 3) R S SOFTWARE (INDIA) LTD. AND THEIR INCLUSION IS PROPER AS PER THE TRIBUNAL ORDER RENDERED IN THE CASE OF APPLIED MATERIALS INDIA PVT. LTD. V. ACIT AS REPORTED IN TS-815- ITAT - 2016, WE REVERSE THE ORDER; OF DRP; ABOUT EXCLUSION OF THESE 3 '' COMPARABLES AND 'DIRECT THE AO/TPO TO INCLUDE THESE THREE IN FINAL LIST OF COMPARABLES. 9. NOW WE DECIDE ABOUT THE REMAINING 6 COMPARABLES EXCLUDED BY DRP AND 4 COMPARABLES RETAINED BY DRP B UT FOR WHICH THE ASSESSEE IS SEEKING EXCLUSION. OUT OF THESE 6 COMPARABLES EXCLUDED BY DRP, ONE COMPARABLE ICRA TECHNO ANALYTICS LTD. IS HAVING RPT IN EXCESS OF 15 % AND THEREFORE, FOR THIS REASON ALONE, THIS COMPARABLE H AS TO BE EXCLUDED ALTHOUGH DRP HAS EXCLUDED IT FOR A DIFFERE NT REASON THAT IT IS HAVING VARIOUS ACTIVITIES AND SEG MENTAL DATA ARE NOT AVAILABLE. WE UPHOLD ITS EXCLUSION ON ACCOUNT OF RPT FILTER. EXCLUSION OF ACROPETAL TECHNOLOGIES LTD. (SEG) IS COVERED IN FAVOUR OF THE ASSESSEE BY THE S AME TRIBUNAL ORDER RENDERED IN THE CASE OF APPLIED MATE RIALS INDIA PVT. LTD. V. ACIT (SUPRA). RESPECTFULLY FOLLO WING THE SAME, WE UPHOLD ITS EXCLUSION. EXCLUSION OF 1) E - ZEST SOLUTIONS LTD., 2) INFOSYS LTD., 3) LARSEN & TOUBRO INFOTECH LTD., 4) PERSISTENT SYSTEMS & SOLUTIONS LT D., 5) PERSISTENT SYSTEMS LTD., 6) SASKEN COMMUNICATION TECHNOLOGIES LTD. AND 7) TATA ELXSI LTD. ARE ALSO C OVERED IN FAVOUR OF THE ASSESSEE BY THE SAME TRIBUNAL ORDE R RENDERED IN THE CASE OF APPLIED MATERIALS INDIA PVT . LTD. V. ACIT (SUPRA). RESPECTFULLY FOLLOWING THE SAME, WE U PHOLD THE EXCLUSION OF THESE SEVEN COMPARABLES ALSO. EXCL USION OF E - INFOCHIPS LTD. IS COVERED IN FAVOUR OF THE A SSESSEE BY THE TRIBUNAL ORDER RENDERED IN THE CASE OF SAXO IND IA PVT. LTD. V. ACIT IN ITA NO, 6148/DEL/2015 DATED 05.02.2 016 PARA 10.1 & 10.2 AVAILABLE AT PAGES 221 TO 223. RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD ITS EXCL USION. IN THIS MANNER, WE UPHOLD THE EXCLUSION OF SIX COMPARABLES EXCLUDED BY DRP OUT OF 9 COMPARABLES EXCLUDED BY DRP AND EXCLUDE 4 COMPARABLES RETAINED BY DRP AND WE HAVE ALREADY HELD THAT OUT OF 9 COMPARAB LES IT(TP)A NO.704/BANG/2016 PAGE 7 OF 11 EXCLUDED BY DRP, 3 HAVE TO COME BACK BEING 1. EVOKE TECHNOLOGIES PVT, LTD., 2) MINDTREE LTD. (SEG) AND 3) R S SOFTWARE (INDIA) LTD. NOW, WE DECIDE ABOUT LGS GLOB AL LTD. AS PER THE TRIBUNAL ORDER RENDERED IN THE CASE OF APPLIED MATERIALS INDIA PVT. LTD. V. ACIT (SUPRA), THIS IS A GOOD COMPARABLE AND THEREFORE, WE DIRECT THE A.O. A ND TPO TO INCLUDE THIS COMPARABLE. SO, THERE SHOULD BE 4 COMPARABLES IN THE FINAL LIST OF COMPARABLE AND ON THE BASIS OF THAT, THE AO/TPO SHOULD WORK OUT THE ALP'. 10. AS PER THE ABOVE TWO PARAS, REPRODUCED FROM THE ORDER OF THE TRIBUNAL RENDERED IN THE CASE COMMSCOPE NETWORKS (I NDIA) (P.) LTD. (SUPRA), WE FIND THAT IN THAT CASE, THE TRIBUN AL HELD THAT OUT OF 9 COMPARABLES EXCLUDED BY DRP, 3 HAVE TO COME BA CK BEING 1) EVOKE TECHNOLOGIES PVT. LTD., 2) MINDTREE LTD. (SEG) AND 3) R S SOFTWARE (INDIA) LTD. OUT OF REMAINING 10 COMPARABLE COMPANIES SELECTED BY TPO, THE TRIBUNAL IN THAT CASE EXCLUDED. 9 COMPANIES BEING 1) ICRA TECHNO ANALYTIC S LTD., 2) ACROPETAL TECHNOLOGIES LTD. (SEG), 3) E - ZEST SOLU TIONS LTD., 4) INFOSYS LTD., 5) LARSEN & TOUBRO INFOTECH LTD., 6) PERSISTENT SYSTEMS & SOLUTIONS LTD., 7) PERSISTENT SYSTEMS LTD ., 8) SASKEN COMMUNICATION TECHNOLOGIES LTD, AND 9) TATA ELXSI LTD. HENCE, IN THAT CASE, ONLY FOUR COMPANIES WERE LEFT IN THE FINAL LIST OF COMPARABLES BEING J) 1) EVOKE TECHNOL OGIES PVT. LTD., 2) MINDTREE LTD. (SEG) AND 3) R S SOFTWARE (I NDIA) LTD. AND 4) LARSEN & TOUBRO INFOTECH LTD. 9. THE LD. DR, HOWEVER, REITERATED THE STAND OF THE REVENUE AS REFLECTED IN THE ORDER OF DRP. IN THIS REGARD, WE FIND THAT THE 3 COMPANIES THAT WERE EXCLUDED BY THE DRP WERE ACCEPTED AS COMPARABLES BY THE TPO AND WERE EXCLUDED BY THE DRP SUO MOTU . IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT WHEN THE TPO AND ASSESSEE AGREE ON CERTAI N COMPARABLES, IT IS NOT OPEN TO THE DRP TO SUO MOTU EXCLUDE COMPARABLE COMPANIES. WE ARE THEREFORE OF THE VIEW THAT THE RATIO LAID DOWN IN T HE DECISION CITED ABOVE, AS FAR AS INCLUSION OF COMPARABLE COMPANIES ARE CONCER NED, IS EQUALLY APPLICABLE TO THE PRESENT CASE. AS FAR AS THE GRIE VANCE OF THE ASSESSEE IN THE ACTION OF THE DRP IN EXCLUDING ARE CONCERNED, V IZ., PERSISTENT SYSTEMS AND SOLUTIONS LTD., PERSISTENT SYSTEMS LTD. AND SAS KEN COMMUNICATION IT(TP)A NO.704/BANG/2016 PAGE 8 OF 11 TECHNOLOGIES LTD., WE FIND THAT PERSISTENT SYSTEMS AND SOLUTIONS LTD., AND PERSISTENT SYSTEMS LTD., WERE CLAIMED BY THE ASSESS EE TO BE ENGAGED IN SOFTWARE DEVELOPMENT, CONSULTANCY AND SYSTEMS INTEG RATION AND OUTSOURCED SOFTWARE PRODUCT DEVELOPMENT AND SEGMENT AL DETAILS WERE NOT AVAILABLE. THE DRP HOWEVER GAVE A FINDING THAT EXC EPT SWD SERVICES NO OTHER SERVICES WERE RENDERED AND CHOSE TO RELY ON S OME OBSERVATIONS IN THE ANNUAL REPORT. HOWEVER THE TRIBUNAL IN THE DEC ISIONS CITED ACCEPTED THE ARGUMENT OF THE ASSESSEE AND HELD THESE TWO COM PANIES TO BE NOT COMPARABLE. AS FAR AS SASKEN COMMUNICATION TECHNOL OGIES LTD., IS CONCERNED, WE FIND THAT THE ASSESSEE DID NOT DISPUT E THE COMPARABILITY OF THIS COMPANY BEFORE THE TPO AND THE DRP BUT SEEKS T O NOW RAISE AN ISSUE REGARDING COMPARABILITY OF THIS COMPANY WITH THE FU NCTIONAL PROFILE OF THE ASSESSEE. A SPECIFIC GROUND OF APPEAL HAS BEEN RAI SED FOR EXCLUSION OF THIS COMPANY AS A COMPARABLE COMPANY IN GRD.NO.11.6 . THE SPECIAL BENCH OF THE ITAT CHANDIGARH BENCH IN THE CASE OF DCIT V. QUARK SYSTEMS PVT. LTD. 38 SOT 207(SB)(CHD.) HAS TAKEN THE VIEW THAT IT IS OPEN TO THE PARTIES IN TRANSFER PRICING CASES TO TAKE A STAND CONTRARY TO THEIR TP STUDY, IF THEY CONTEND THAT THE STAND TAKEN IN THE TP STUDY IS CONTRARY TO FACTS OR WAS ERRONEOUS. SUCH A CLAIM CANNOT BE DIS REGARDED ONLY ON THE BASIS THAT IT IS CONTRARY TO ASSESSEES OWN STAND I N THE TP STUDY. WE ARE ALSO OF THE VIEW THAT IN THE CASE OF COMPANIES PROV IDING SOFTWARE DEVELOPMENT SERVICES SUCH AS THE ASSESSEE, INCLUSIO N OF THE AFORESAID COMPANY AS A COMPARABLE HAS ALWAYS BEEN AN ISSUE. T HE ASSESSEE HAS NOW CONTENDED THAT THIS COMPANY IS FUNCTIONALLY DIF FERENT. SINCE THE ISSUE HAS BEEN RAISED BY THE ASSESSEE FOR THE FIRST TIME BEFORE ITAT, WE DEEM IT FIT AND PROPER TO REMAND THE QUESTION OF COMPARABIL ITY OF THIS COMPANY TO THE AO/TPO AFRESH. 10. THEREFORE, 2 COMPANIES VIZ., PERSISTENT SYSTEM S AND SOLUTIONS LTD., AND PERSISTENT SYSTEMS LTD., ARE DIRECTED TO BE EX CLUDED AND THE IT(TP)A NO.704/BANG/2016 PAGE 9 OF 11 COMPARABILITY OF SASKEN COMMUNICATION TECHNOLOGIES LTD., IS REMANDED TO THE TPO/AO FOR FRESH CONSIDERATION. THE 3 COMPANIE S VIZ., R S SOFTWARE (INDIA) LTD., MINDTREE LTD. AND EVOKE TECHNOLOGIES LTD. ARE DIRECTED TO BE INCLUDED IN THE FINAL LIST OF COMPARABLE COMPANIES. WE HOLD AND DIRECT ACCORDINGLY. THE TPO IS DIRECTED TO COMPUTE THE A LP IN THE LIGHT OF DIRECTIONS GIVEN ABOVE, AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 11. THE OTHER CORPORATE TAX ISSUE WHICH REQUIRES TO BE DECIDED IS THE CLAIM OF ASSESSEE FOR DEDUCTION U/S. 43B OF THE ACT TOWARDS EMPLOYEE RELATED LIABILITY LIKE GRATUITY, LEAVE COMPENSATION AND BONUS. THERE WAS A MERGER OF RENESES MOBILE INDIA PVT. LTD. [RMIPL] BR OADCOM COMMUNICATIONS TECHNOLOGIES PVT. LTD. [BCTPL] EFFEC TIVE FROM 1.4.2014. AS PER THE PROVISIONS OF SECTION 43B OF THE ACT, ST ATUTORY LIABILITIES WHICH ARE NOT PAID WILL NOT BE ALLOWED AS DEDUCTION. CER TAIN STATUTORY DUES HAVE BEEN PAID BY RMIPL BEFORE THE DUE DATE FOR FILING R ETURN OF INCOME FOR AY 2011-12 AND ASSESSEE WAS ELIGIBLE TO CLAIM DEDUCTIO N U/S. 43B OF THE ACT. IN THE RETURN OF INCOME THE ASSESSEE HAS NOT CLAIME D THE SAME, HOWEVER, A CLAIM WAS MADE FOR DEDUCTION BEFORE THE AO IN TERMS OF SECTION 43B. THE AO REFUSED TO ENTERTAIN THE CLAIM OF ASSESSEE AS RE VISED RETURN HAD NOT BEEN FILED AS REQUIRED U/S. 139(5) OF THE ACT. THE DRP CONFIRMED THE ORDER OF AO BY FOLLOWING THE DECISION OF HONBLE HIGH COU RT IN THE CASE OF ORISSA RURAL HOUSING DEVELOPMENT CORPORATION LTD., 343 ITR 316 ( ORI ) AND THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD., 284 ITR 323 (SC) . ACCORDING TO THE DRP, WITHOUT FILING A REVISED R ETURN, THE ASSESSEE CANNOT MAKE A CLAIM FOR DEDUCTION. AGGRIE VED BY THE AFORESAID ORDER, THE ASSESSEE HAS RAISED GROUNDS 3 TO 6 BEFOR E THE TRIBUNAL. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS. IN OUR VI EW, THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) IS APPLICABLE ONLY WHEN A CLAIM IS MADE BEFORE THE AO AND IS NOT APPLICABLE IT(TP)A NO.704/BANG/2016 PAGE 10 OF 11 TO THE APPELLATE AUTHORITIES UNDER THE ACT. THOUGH THE HONBLE ORISSA HIGH COURT IN THE DECISION CITED BY THE LD. COUNSEL FOR THE ASSESSEE IN THE ORDER OF DRP HAS APPLIED THE SAID DECISION IN THE CONTEXT OF POWER OF APPELLATE AUTHORITY, HOWEVER SEVERAL OTHER HIGH COURTS HAVE T AKEN A CONTRARY VIEW. THE HONBLE PUNJAB & HARYANA HIGH COURT IN CIT V. RAMCO INTERNATIONAL, 221 CTR 491 (P&H) AND HONBLE DELHI HIGH COURT IN T HE CASE OF JAI PARABOLIC SPRINGS LTD., 306 ITR 42 (DEL) HAVE TAKEN THE VIEW THAT RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) IS NOT APPLICABLE TO THE APPELLATE AUTHORITIES UNDE R THE ACT. IN THE LIGHT OF THE AFORESAID DECISIONS, WE ARE OF THE VIE W THAT THE DRP OUGHT TO HAVE EXAMINED THE CLAIM OF ASSESSEE. WE ACCORDINGL Y DIRECT THAT THE CLAIM OF ASSESSEE FOR DEDUCTION IN TERMS OF SECTION 43B S HOULD BE EXAMINED BY THE AO. WE ACCORDINGLY REMIT THIS ISSUE TO THE AO FOR FRESH CONSIDERATION, AFTER ALLOWING THE ASSESSEE OPPORTUNITY OF BEING HE ARD. 13. THE OTHER CORPORATE TAX ISSUES ARE GROUND NO.7 WITH REGARD TO NON- GRANT OF CREDIT IN RESPECT OF TDS . THE AO IS DIRE CTED TO EXAMINE THE CLAIM OF ASSESSEE AND GIVE CREDIT, IF THE STAND OF ASSESS EE THAT THE CREDIT APPEARS IN FORM 26AS IS CORRECT. THE AO IS ALSO DIRECTED T O EXAMINE THE CLAIM OF ASSESSEE IN GROUND NO.8 WITH REGARD TO THE PERIOD O F LEVY OF INTEREST U/S. 234C OF THE ACT IN ACCORDANCE WITH LAW. 14. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 16 TH DAY OF OCTOBER, 2020. SD/- SD/- ( A K GARODIA ) ( N V VASUDEVAN ) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, THE 16 TH OCTOBER, 2020. / DESAI S MURTHY / IT(TP)A NO.704/BANG/2016 PAGE 11 OF 11 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.