INautix Technologies India Private Limited, CHENNAI V. DCIT, CHENNAI

ITA 802/CHNY/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8664 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 03-08-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 13-04-2015
• Court: TRIBUNAL
• Department Lawyers: ARUN C BHARATH
• Assessee Lawyers: DR ANITHA SUMANTH
• Keywords: Transfer pricing; International transaction; Earning of tax free income
• Section: 92C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , . ' # , $ #% BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER . /ITA NO. 802/MDS/2015 / ASSESSMENT YEAR : 2010-11 INAUTIX TECHNOLOGIES INDIA PVT. LTD., NO.4, 10 TH FLOOR, TIDEL PARK, CANAL BANK ROAD, TARAMANI, CHENNAI 600 113. PAN AAACI6177K ( /APPELLANT) V. THE DEPUTY COMMISSIONER OF INCOME-TAX, CORPORATE CIRCLE-2(2), CHENNAI. RESPONDENT) / APPELLANT BY : DR. ANITHA SUMANTH, ADVOCATE / RESPONDENT BY : SHRI ARUN C. BHARATH, CIT ! / DATE OF HEARING : 03.08.2016 '# ! / DATE OF PRONOUNCEMENT : 24.08.2016 & / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ASSESSMENT ORDER DATED 28.3.2014 PASSED U/S.143(3) R.W. SECTIONS 92CA AND 144C(1) OF THE ACT CONSEQUENT TO THE - - ITA 802/15 2 DIRECTIONS OF THE DISPUTE RESOLUTION PANEL(DRP) DAT ED 16.12.2014 U/S.144C(5) OF THE ACT. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS RE LATING TO TP MATTERS : 2. INCORRECT TP ADJUSTMENT: THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED TPO, AO ERRED IN MAKING AN ADJUSTMENT IN THE ARMS LENGTH PRICE (AL P) OF THE APPELLANTS INTERNATIONAL TRANSACTIONS IN THE NATUR E OF PROVISION OF INFORMATION TECHNOLOGY ENABLED SERVICE S (ITES) WITH ITS ASSOCIATED ENTERPRISE (AE) OF INR 2,82,84,751, WHICH WAS ALSO CONFIRMED BY THE HONBL E DRP. 3. ERRONEOUS COMPARABILITY ANALYSIS: THE LEARNED T PO,/AO AND THE HONBLE DRP HAVE ERRED, IN LAW AND IN FACTS BY NOT ACCEPTING THE ECONOMIC ANALYSIS CONDUCTED BY THE AP PELLANT IN ACCORDANCE WITH THE PROVISIONS OF THE INCOME TAX ACT, 1961 (THE ACT) READ WITH INCOME TAX RULES. 1962 (TH E RULES) FOR DETERMINATION OF ARMS LENGTH PRICE OF THE INTE RNATIONAL TRANSACTION PERTAINING TO THE PROVISION OF INFORMAT ION TECHNOLOGY ENABLED SERVICES (ITES) TO ITS AE. THE LEARNED TPO ALSO CONDUCTED A FRESH ECONOMIC ANALYSIS FOR SE LECTION OF COMPARABLE COMPANIES WITHOUT PROVIDING ANY COGEN T REASONS FOR UNDERTAKING THE SAME. 4. APPLICATION OF INVALID FITTERS: THE LEARNED TPO /AO AND THE HONBLE DRP HAVE ERRED IN LAW AND IN FACTS BY A PPLYING CERTAIN ARBITRARY QUANTITATIVE AND QUALITATIVE FILT ERS FOR THE PURPOSE OF SELECTION OF COMPARABLES IN THE ITES SEG MENT. 5. ADOPTION OF FUNCTIONALLY DIS-SIMILAR COMPARABLES : THE LEARNED TPO/AO AND THE HONBLE DRP HAVE ERRED IN INCLUSION OF FUNCTIONALLY DIS-SIMILAR COMPANIES FOR THE PURPOSE OF DETERMINATION OF ALP UNDER SECTION 92C O F THE ACT. - - ITA 802/15 3 6. NON-INCLUSION OF VALID COMPARABLES: THE LEARNED TPO/AO AND THE HONBLE DRP HAVE ERRED IN FACTS BY NOT INCL UDING APPROPRIATE COMPARABLE COMPANIES SELECTED BY THE APPELLANT WITHOUT PROVIDING APPROPRIATE REASONS FOR DOING THE SAME. 7. USE OF SINGLE YEAR DATA (WHICH WAS NOT AVAILABLE AT THE TIME OF MAINTAINING TP DOCUMENTATION). THE LEARNED TPO/AO AND THE HONBLE DRP HAVE ERRED IN LAW AND IN FACTS, BY DETERMINING THE ARMS LENGTH MARGIN/PRICE USING ONLY FOR THE FINANCIAL YEAR (FY) 2009-10 DATA, AS A GAINST MULTIPLE YEAR DATA COVERING THE SUBJECT YEAR AND TW O PRIOR YEARS FOR THE PURPOSE OF ANALYSIS ADOPTED BY THE AP PELLANT. 3. AT THE TIME OF HEARING, THE LD. AR SUBMITTED THA T GROUND NOS. 5 & 6 ARE TO BE ADJUDICATED AND IT WOULD MEET THE ENDS OF JUSTICE AND OTHER GROUNDS ARE NOT TO BE ADJUDICATE D. 3.1 WE ACCEPT THE PRAYER OF THE LD. AR AND WE CONSI DER ONLY GROUND NOS.5 & 6 OUT OF GROUND NOS. 2 TO 7. 3.2 GROUND NOS. 5 & 6 ARE RELATING TO INCLUSION OR EXCLUSION OF CERTAIN COMPARABLE COMPANIES WHILE DETERMINING THE ALP. 4. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS I N THE BUSINESS OF SOFTWARE DEVELOPMENT SERVICES (SDS), PR OVIDING INFORMATION TECHNOLOGY ENABLED SERVICES (ITES), AND MANPOWER SUPPLY SERVICES (MSS) TO ITS ASSOCIATE ENTERPRISES( AE). THE TOTAL VOLUME OF AE TRANSACTIONS DURING THE FINANCIA L YEAR 2009- - - ITA 802/15 4 10, ON ACCOUNT OF PROVIDING SOFTWARE DEVELOPMENT S ERVICES, INFORMATION TECHNOLOGY ENABLED SERVICES AND PROVISI ON OF MANPOWER SUPPLY, IS 239.89 CRORES. THE ASSESSEE, IN ITS FORM NO.3CEB, APPLIED TNMM METHOD AS THE MOST APPROPRIAT E METHOD TO DETERMINE THE ALP OF ITS INTERNATIONAL TR ANSACTIONS. THE PROFIT MARGINS OF THE ASSESSEE SHOWN UNDER SOFT WARE DEVELOPMENT SERVICES (SDS), INFORMATION TECHNOLOGY ENABLED SERVICES (ITES), AND MANPOWER SUPPLY SERVICES (MSS) ARE 9.6%, 13.42% AND 2.88% RESPECTIVELY. THE ARITHMETIC MEAN OF THE COMPARABLES SELECTED BY THE ASSESSEE UNDER THESE TH REE SEGMENTS IS 11.33%, 7.37% AND 1.51% RESPECTIVELY. HENCE, THE ASSESSEE IN ITS TRANSFER PRICING REPORT CLAIMED THA T ITS INTERNATIONAL TRANSACTIONS WITH AES ARE AT ARMS LE NGTH. HOWEVER, HE TPO IN HIS ORDER DID NOT ACCEPT THE ASS ESSEES CLAIMS. THE TPO, AFTER CONDUCTING FRESH SEARCH AND EXAMINING THE VARIOUS COMPARABLES, REJECTED SOME OF THE COMPA RABLES SELECTED BY THE ASSESSEE AND ALSO INCLUDED SOME NEW COMPARABLES AND DETERMINED THE ARITHMETIC MEAN OF T HE SOFTWARE DEVELOPMENT SERVICES (SDS) AND INFORMATION TECHNOLOGY ENABLED SERVICES (ITES) SEGMENTS AT 24.5 5% AND - - ITA 802/15 5 31.49%, RESPECTIVELY, AS AGAINST THE PROFIT MARGINS OF 11.33% AND 7.37% SHOWN BY THE ASSESSEE. HENCE, THE TPO RE QUIRED THE ASSESSEE TO SHOW CAUSE AS TO WHY UPWARD ADJUSTM ENTS SHOULD NOT BE MADE TO THE ALPS OF THE INTERNATIONAL TRANSACTIONS. THE ASSESSEE FILED ITS OBJECTIONS BEFORE THE TPO. AFTER CONSIDERING THE VARIOUS OBJECTIONS RAISED BY THE AS SESSEE, THE TPO RE-DETERMINED THE ARITHMETIC MEAN OF THE COMPAR ABLES OF THE SDS SEGMENT AT 18.63% AND ITES SEGMENT AT 21.37 %. THUS, THE ARITHMETIC MEANS OF THE PROFIT LEVEL INDI CATORS OF THE COMPARABLES UNDER SDS AND ITES SEGMENTS ARE 9.03% ( 18.63% - 9.60%) AND 7.93% (21.37% - 13.42%) HIGHER THAN TH E PROFIT MARGINS SHOWN BY THE ASSESSEE. HENCE, THE TPO PROP OSED UPWARD ADJUSTMENTS OF 14,83,73,071/- (BEING THE ADDITIONAL PROFIT MARGIN COMPUTED AT ADDITIONAL 9.03% OF THE T OTAL OPERATING COST OF 164,31,12,638/ -) UNDER SDS SEGMENT; AND 2,82,84,751/- (BEING THE ADDITIONAL PROFIT MARGIN C OMPUTED AT ADDITIONAL 7.95% OF THE TOTAL OPERATING COST OF 35,57,83,034/-) UNDER ITES SEGMENT, TOTALING TO TOTAL UPWARDS ADJUS TMENTS OF 17,66,57,822/-. 4.1 THE TPO CONSIDERED THE FOLLOWING COMPARABLES : - - ITA 802/15 6 PARTICULARS UNDER SDS SEGMENT UNDER ITES SEGMENT 1.TOTAL COMPARABLES SELECTED BY ASSESSEE 24 8 2. COMPARABLES REJECTED BY THE TPO (OUT OF 1 ABOVE) 12 5 3. COMPARABLES ACCEPTED BY THE TPO (OUT OF 1 ABOVE) 12 3 4. FURTHER COMPARABLES SELECTED BY THE TPO 6 1.ACCELYA KALE SOLUTIONS LTD. 2.AFTEX LTD. 3.KALS INFORMATION SYSTEM LTD. 4.KIRTEEL SOFT TECHNOLOGIESLTD. 5.SPRY RESOURCES INDIA P. LTD. 6. TAKSHEEL SOLUTIONS LTD. 1. CORAL HUB LTD. 2. NITTANY OUTSOURCING SERVICES PVT. LTD. 3. JEEVAN SCIENTIFIC TECHNOLOGIES LTD. 4.FORTUNE INFOTECH LTD. 5. TOTAL NUMBER OF COMPARABLES CONSIDERED BY TPO (3+4 ABOVE) 19 7 THE ASSESSEE CARRIED THE MATTER AS WELL AS OTHER IS SUES TO THE DRP. REGARDING THE SELECTION OF COMPARABLES, THE A SSESSEE CHALLENGED THE FOLLOWING COMPARABLES : I) M/S. SOFTSOL INDIA LTD. II) M/S. TAKSHEEL SOLUTIONS LTD. III) M/S. SPRY RESOURCES INDIA P. LTD. IV) M/S. ACCELYA KALE CONSULTANTS LD. V) M/S. AFTEK LTD. VI) M/S. CORAL HUB LTD. VII) M/S. JEEVAN SCIENTIFIC TECHNOLOGIES LTD. VIII) M/S. NITTANY OUTSOURCING SERVICES P. LTD. 4.2 THE DRP DIRECTED THE TPO TO EXCLUDE M/S. SOFTSO L INDIA LTD. AS COMPARABLE. HOWEVER, IN RESPECT OF M/S. TA KSHEEL SOLUTIONS LTD., M/S. SPRY RESOURCES INDIA P. LTD., M/S. ACCELYA KALE CONSULTANTS LTD. AND M/S. AFTEK LTD. CONFIRMED THE SAME AS COMPARABLES. SIMILARLY, M/S. CORAL HUB LTD. AND M/ S. JEEVAN SCIENTIFIC TECHNOLOGIES LTD. ARE NOT CONSIDERED AS COMPARABLE. - - ITA 802/15 7 SIMILAR IS THE POSITION IN THE CASE OF M/S. NITTANY OUTSOURCING SERVICES P. LTD. 5. NOW, THE LD. AR CHALLENGED BEFORE US, THAT CORAL HUB LTD. AND JEEVAN SCIENTIFIC TECHNOLOGIES LTD. CANNOT B E CONSIDERED AS COMPARABLE TO THE ASSESSEES CASE SO AS TO DETER MINE THE ALP OF THE TRANSACTION. THESE COMPANIES ARE FUNCTI ONALLY DIFFERENT FROM THE ASSESSEE COMPANY. THE SERVICES PROVIDED BY THE COMPANY, CORAL HUB LTD. INCLUDE DATA CONVERSION , EPUBLISHING SERVICES AND CUSTOM APPLICATION DEVELOP MENT. DATA CONVERSION INVOLVES OPTICAL CHARACTER RECOGNIT ION (OCR) CONVERSION; SCANNING AND INDEXING; IMAGE PROCESSING ; MICROFILM SCANNING, AND EBOOK & EPUB CONVERSION, WHICH INVOLV ES EBOOK READER, KINDLE, OPEN EBOOK, MICROSOFT READER, MOBIP OCKET /SONY AND EPUB (IDPF). EPUBLISHING SERVICES INCLUD E EDITORIAL SERVICES COMPOSITION, ART & DESIGN, XML & NON-XML, WORKFLOW, INTERACTIVE & MULTI-MEDIA AND TWO DIMENSIONAL (2D)/ THREE DIMENSIONAL (3D) ANIMATION. CUSTOM APPLICATION DEV ELOPMENT INVOLVES E-COMMERCE AND ONLINE STORES, ENCRYPTION S OLUTIONS FOR DIGITAL CONTENT, IPHONE AND IPAD APPLICATIONS, CUST OMIZED - - ITA 802/15 8 SOFTWARE FOR PUBLISHERS AND BIOMETRIC SECURITY SOLU TIONS FOR NET WORK. 6. WE FIND FORCE IN THE ARGUMENT OF THE LD. AR, M ORE SO, THE DELHI HIGH COURT IN THE CASE OF RAMPGREEN SOLUTIONS PVT. LTD. IN ITA 102/2015 VIDE JUDGMENT DATED 10.8.2015 HELD AS UNDER : 36. AS POINTED OUT EARLIER, THE TRANSFER PRICING ANALYSIS MUST SERVE THE BROAD OBJECT OF BENCHMARKING AN INTERNATIONAL TRANSACTION FOR DETERMINING AN ALP. THE METHODOLOGY NECESSITATES THAT THE COMPARABLES MUST BE IN MATERIAL ASPECTS. THE COMPARABILITY MUST BE JUD GED ON FACTORS SUCH AS PRODUCT/SERVICE CHARACTERISTICS, FU NCTIONS UNDERTAKEN, ASSETS USED, RISKS ASSUMED. THIS IS ESSENTIAL TO ENSURE THE EFFICACY OF THE EXERCISE. THERE IS SUFFICIENT FLEXIBILITY AVAILABLE WITHIN THE STATUTO RY FRAMEWORK TO ENSURE A FAIR ALP. 37. APPLYING THE AFORESAID PRINCIPLES TO FACTS OF THE PRESENT CASE, IT IS ONCE AGAIN CLEAR THAT BOTH VISH AL AND ECLERX COULD NOT BE TAKEN AS COMPARABLES FOR DETERM INING THE ALP. VISHAL AND ECLERX, BOTH ARE INTO KPO SERV ICES. IN MAERSK GLOBAL CENTERS (INDIA) PVT. LTD. (SUPRA), THE SPECIAL BENCH OF THE TRIBUNAL HAD NOTED THAT ECLERX IS ENGAGED IN DATA ANALYTICS, DATA PROCESSING SERVICES , PRICING ANALYTICS, BUNDLING OPTIMIZATION, CONTENT O PERATION, SALES AND MARKETING SUPPORT, PRODUCT DATA MANAGEMEN T, REVENUE MANAGEMENT. IN ADDITION, ECLERX ALSO OFFER ED FINANCIAL SERVICES SUCH AS REAL-TIME CAPITAL MARKET S, MIDDLE AND BACK-OFFICE SUPPORT, PORTFOLIO RISK MANA GEMENT SERVICES AND VARIOUS CRITICAL DATA MANAGEMENT SERVI CES. CLEARLY, THE AFORESAID SERVICES ARE NOT COMPARABLE WITH THE SERVICES RENDERED BY THE ASSESSEE. FURTHER, TH E FUNCTIONS UNDERTAKEN (I.E. THE ACTIVITIES PERFORMED ) ARE ALSO NOT COMPARABLE WITH THE ASSESSEE. IN OUR VIEW , THE TRIBUNAL ERRED IN HOLDING THAT THE FUNCTIONS PERFOR MED BY - - ITA 802/15 9 THE ASSESSEE WERE BROADLY SIMILAR TO THAT OF ECLERX OR VISHAL. THE OPERATING MARGIN OF ECLERX, THUS, COUL D NOT BE INCLUDED TO ARRIVE AT AN ALP OF CONTROLLED TRANS ACTIONS, WHICH WERE MATERIALLY DIFFERENT IN ITS CONTENT AND VALUE. IN MAERSK GLOBAL CENTERS (INDIA) PVT. LTD. (SUPRA), TH E SPECIAL BENCH OF THE TRIBUNAL HAD NOTED THE SAME AN D HAD, THUS, EXCLUDED ECLERX AS A COMPARABLE. IT IS FURTHER OBSERVED THAT THE COMPARABILITY OF ECLERX HAD ALSO BEEN EXAMINED BY THE HYDERABAD BENCH OF THE TRIBUNAL IN M/S. CAPITAL IQ INFORMATION SYSTEMS (INDIA) (P.) LTD. V. ADDITIONAL COMMISSIONER OF INCOME-0TAX (SUPRA), WHEREIN, THE TRIBUNAL DIRECTED THE EXCLUSION OF ECL ERX AS A COMPARABLE FOR THE REASON THAT IT WAS ENGAGED IN PROVIDING KPO SERVICES AND FURTHER THAT IT HAD ALSO RETURNED SUPERNORMAL PROFITS. 38. IN OUR VIEW, EVEN VISHAL COULD NOT BE CONSIDER ED AS A COMPARABLE, AS ADMITTEDLY, ITS BUSINESS MODEL WAS COMPLETELY DIFFERENT. ADMITTEDLY, VISHALS EXPENDI TURE ON EMPLOYMENT COST DURING THE RELEVANT PERIOD WAS A SM ALL FRACTION OF THE PROPORTIONATE COST INCURRED BY THE ASSESSEE, APPARENTLY, FOR THE REASON THAT MOST OF I TS WORK WAS OUTSOURCED TO OTHER VENDORS/SERVICE PROVIDERS. THE DRP AND THE TRIBUNAL ERRED IN BRUSHING ASIDE THIS V ITAL DIFFERENCE BY OBSERVING THAT OUTSOURCING WAS COMMON IN ITES INDUSTRY AND THE SAME WOULD NOT HAVE A BEARING ON PROFITABILITY, PLAINLY, A BUSINESS MODEL WHERE SERV ICES ARE RENDERED BY EMPLOYING OWN EMPLOYEES AND USING ONES OWN INFRASTRUCTURE WOULD HAVE A DIFFERENT COST STRU CTURE AS COMPARED TO A BUSINESS MODEL WHERE SERVICES ARE OUTSOURCED. THERE WAS NO MATERIAL FOR THE TRIBUNAL TO CONCLUDE THAT THE OUTSOURCING OF SERVICES BY VISHAL WOULD HAVE NO BEARING ON THE PROFITABILITY OF THE SAID EN TITY. IN VIEW OF THE ABOVE, IN OUR OPINION, CORAL HUB LTD . CANNOT BE CONSIDERED AS COMPARABLE TO THE ASSESSEES CASE. - - ITA 802/15 10 7. NEXT COMPARABLE IS WITH REGARD TO JEEVAN SCIENTI FIC TECHNOLOGIES LTD. THE LD. AR SUBMITTED THAT THIS IS A MEDICAL PRESCRIPTION COMPANY WHICH IS DEDICATED TO PROVIDIN G RELIABLE, COST-EFFECTIVE AND TECHNOLOGY-DRIVEN CLINICAL RESEA RCH SERVICES AND SOLUTIONS TO CLIENTS GLOBALLY. THE ASSESSEES SERVICE PORTFOLIO ENABLES TO PROVIDE INTEGRATED SOLUTION FO R THE MANAGEMENT OF CLINICAL RESEARCH DATA RIGHT FROM INC EPTION TO COMPLETION. THE ASSESSEES WORLD-CLASS TEAM OF HIG HLY-QUALIFIED AND EXPERIENCED SCIENTISTS, CLINICIANS AND MULTIDIS CIPLINARY STAFF ARE COMMITTED TO PROVIDING QUALITY SOLUTIONS ACROSS A WIDE RANGE OF THERAPEUTIC AREAS. THE ASSESSEES COMMITMENT TO QUALITY AND CUSTOMER-FOCUSED APPROACH, BUNDLED WITH OUTSTANDING EXPERTISE DISTINGUISHES US FROM OTHERS. THE ASSESSEE MANAGES THE PROJECTS BASED ON THE CLIENTS REQUIREMENTS AND PRO VIDE CUSTOMIZED SOLUTIONS. THE ASSESSEE IS HAVING IMMEN SE TALENT POOL TO RELIABLY MEET THE NEEDS OF CLIENTS AND DELI VER WELL WITHIN TIMELINES. THE SERVICES AT JEEVAN SCIENTIFIC TECHN OLOGIES LTD. INCLUDE MEDICAL WRITING, CLINICAL DATA MANAGEMENT, BIOSTATISTICS AND OTHER SERVICES INCLUDING COPY EDITING, PROOFREA DING, FORMATTING, QUALITY ASSURANCE, LITERATURE SEARCH, G RAPHIC DESIGN - - ITA 802/15 11 AND SUBMISSIONS TO JOURNALS AND CONGRESSES. FURT HER, THE LD. AR SUBMITTED THAT AS THE ASSESSEE IS AN IT COMPANY, JEEVAN SCIENTIFIC TECHNOLOGIES LTD. CANNOT BE CONSIDERED A S COMPARABLE TO THE ASSESSEES CASE. IN OUR OPINION, THERE IS FORCE IN THE ARGUMENT OF THE LD. AR. THERE IS NO D ISPUTE THAT JEEVAN SCIENTIFIC TECHNOLOGIES LTD. IS BEING ITES, IT CANNOT BE COMPARED TO THE MEDICAL PRESCRIPTION COMPANY. ACCO RDINGLY, WE ARE INCLINED TO DIRECT THE TPO TO EXCLUDE JEEVAN AS COMPARABLE TO THE ASSESSEES CASE. 7.1 FURTHER, THE ASSESSEE PLEADED BEFORE US THAT MICROGENETICS SYSTEMS LTD. TO BE CONSIDERED AS COMP ARABLE TO THE ASSESSEES CASE AND SHOULD BE INCLUDED AS COMPA RABLE. 8. WE CONSIDERED THE ARGUMENT OF THE LD. AR. THE T URNOVER OF MICROGENETICS SYSTEMS LTD. IS VERY LOW I.E. 62.5 CRORES, WHEREAS THE ASSESSEES TURNOVER IS 600 CRORES AND NOT PROPER TO COMPARE. ON THIS BASIS, WE ARE INCLINED TO HOLD THAT MICROGENETICS SYSTEMS LTD. IS NOT COMPARABLE TO THE ASSESSEES CASE. THIS ARGUMENT IS REJECTED. - - ITA 802/15 12 9. THE ASSESSEE RAISED ANOTHER GROUND THAT THE ASSE SSEE HAS FURNISHED VARIOUS DOCUMENTS WITH REFERENCE TO D ISALLOWANCE U/S.14A BEFORE THE DRP AND THEY HAVE NOT CONSIDERED THE SAME AND PLEADED THAT THE ISSUE MAY BE REMITTED TO THE D RP TO CONSIDER THE SAME AFRESH. TO SUPPORT THE ASSESSEE S CLAIM, THE LD. AR DREW OUR ATTENTION TO THE DOCUMENTS SUBMITTE D BEFORE THE DRP WITH REGARD TO THE CLAIM OF THE ASSESSEE U/S.14 A R.W.R8D. 10. THE DR RELIED ON THE ORDER OF THE DRP. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, THE ASSESSEE FILED DOCUMENT S BEFORE THE DRP REGARDING THE COMPUTATION OF DISALLOWANCE U/S.1 4A R.W.R8D HOWEVER, THERE IS NO DISCUSSION BY THE DRP IN THEIR ORDER. HE OBSERVED THAT THERE IS NO SEGREGATION OF EXPENSES A TTRIBUTABLE TO INVESTMENT WHICH WILL EXEMPT INCOME. IN OUR OPINIO N, THE DOCUMENTS FURNISHED BY THE ASSESSEE TO BE LOOKED IN TO AND THEREAFTER THE DRP HAS TO GIVE DIRECTION TO THE TPO . WE DIRECT THE ASSESSEE TO FURNISH THE SAME DOCUMENTS WHAT IS FURNISHED BEFORE THE DRP ON EARLIER OCCASION FOR THEIR CONSID ERATION AND - - ITA 802/15 13 THE DRP SHALL DECIDE THE ISSUE IN ACCORDANCE WITH L AW AFTER CONSIDERING THE SAME. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON WEDNESDAY, THE 24 TH OF AUGUST, 2016 AT CHENNAI. SD/- SD/- ( $% & ) ( ' ( ) $ ) *%+,-,./01,2345,.62,+778,293 : ;< /JUDICIAL MEMBER ! ;<=>>70.?,.?@A1BA2 ': /CHENNAI, C; /DATED, THE 24 TH AUGUST, 2016. MPO* ;D EFGF /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. H3 /CIT(A) 4. H /CIT 5. FIJ K /DR 6. JLM /GF.