ITO, V. M/S Acusis Software India Private Limited, Bangalore

ITA 842/BANG/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0260 (ITAT-BANGALORE)
• Duration Of Justice: 6 year(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-07-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 30-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR SHANKAR PRASAD BENGALURU
• Keywords: Depreciation; Transfer pricing; International transaction; Question of law; Unabsorbed depreciation
• Section: 10AA; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN , ACCOUNTANT MEMBER IT (TP) A NO. 697/BANG/2013 ASSESSMENT YEAR : 2008 - 09 ACUSIS SOFTWARE INDIA PVT. LTD., NO.17/2, DOLLARS CHAMBERS, LALBAGH ROAD, LALBAGH, BANGALORE 560 027. PAN: AADCA 2415P VS. THE INCOME TAX OFFICER, WARD 11(1), BANGALORE. APPELLANT RESPONDENT IT(TP)A NO.842/BANG/2013 ASSESSMENT YEAR : 2008 - 09 THE INCOME TAX OFFICER, WARD 11(1), BANGALORE. VS. ACUSIS SOFTWARE INDIA PVT. LTD., NO.17/2, DOLLARS CHAMBERS, LALBAGH ROAD, LALBAGH, BANGALORE 560 027. PAN: AADCA 2415P APPELLANT RESPONDENT ASSESSEE BY : SHRI CHAVALI NARAYAN, CA RE VENUE BY : DR. SHANKAR PRASAD, ADDL.CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 11 .0 6 .2019 DATE OF PRONOUNCEMENT : 28 . 0 6 .201 9 IT(TP)A NO.697 & 842/ BANG/2013 PAGE 2 OF 19 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT THESE ARE CROSS APPEALS BY THE ASSESSEE AND REV ENUE DIRECTED AGAINST THE ORDER DATED 12.03.2013 OF THE CIT(APPEA LS)-IV, BENGALURU RELATING TO ASSESSMENT YEAR 2008-09. 2. WE SHALL FIRST TAKE UP FOR CONSIDERATION IT(TP)A NO.842/BANG/2013, THE APPEAL BY REVENUE . GROUNDS NO.5 TO 13 RAISED BY THE REVENUE ARE WITH REGARD TO DETERMINATION OF ARMS LENGTH PRICE (ALP) IN RESPECT OF INTERNATIONAL TRANSACTION OF RENDERIN G INFORMATION TECHNOLOGY ENABLED SERVICES (ITES) BY THE ASSESSEE TO ITS ASSO CIATED ENTERPRISE (AE). GROUNDS 5 TO 13 RAISED BY THE REVENUE READ AS FOLLO WS:- 5. THE LD. CIT(A) ERRED IN REJECTING THE DIMINISHI NG REVENUE FILTER USED BY THE TPO TO EXCLUDE COMPANIES THAT DO NOT REFLECT THE NORMAL INDUSTRY TREND. 6. THE LEARNED CIT(A) ERRED IN HOLDING THAT THE SIZ E AND TURNOVER OF THE COMPANY ARE DECIDING FACTORS FOR TR EATING A COMPANY AS A COMPARABLE, AND CONSEQUENTLY ERRED IN EXCLUDING M/S INFOSYS TECHNOLOGY LTD. AND WIPRO LTD. (SEGMENT ) AS A COMPARABLES IN THE CASE OF THE TAXPAYER. 7. THE LD CIT(A) HAS REJECTED COMPANIES ON THE BASI S OF ABNORMAL PROFIT WITHOUT DEFINING WHAT CONSTITUTES A BNORMAL PROFIT FILTER AND HOW THE SAME IS DETERMINED AND CONSEQUEN TLY ERRED IN EXCLUDING ADITIYA BIRLA MINACS WORLDWIDE LTD., CORA L HUBS LTD., ECLERX SERVICES LTD., JINDAL INTELLICOM PVT. LTD., MOLD-TEK TECHNOLOGIES LTD. AND ALLSEC TECHNOLOGIES LTD. AS C OMPARABLES IN THE CASE OF THE TAXPAYER. IT(TP)A NO.697 & 842/ BANG/2013 PAGE 3 OF 19 8. THE LD. CIT(A) HAS ERRED IN FAILING TO APPRECIAT E THAT THE DIFFERENT YEAR ENDING FILTER APPLIED BY THE TPO IS NECESSARY TO EXCLUDE COMPANIES WHICH DO NOT HAVE THE SAME OR COM PARABLE FINANCIAL CYCLE AS THE TESTED PARTY. 9. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN REJECTING M/S ACCENTIA TECHNOLOGIES LTD. AS COMPARABLE IN THE CASE OF THE TAXPAYER, HOLDING THA T EVENTS OF ACQUISITIONS AND AMALGAMATIONS HAS IMPACTED ITS PRO FITABILITY. 10. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO DELETE M/S GENESYS INT ERNATIONAL CORPORATION LTD., FROM THE FINAL SET OF COMPARABLES IN THE TIES SEGMENTS, IN THE CASE OF THE TAXPAYER. 11. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE ABOVE SET OF 10 COMPANIES SHOULD BE CONSIDERED FOR DETERMINATION OF THE AVERA GE MARGIN OF COMPARABLES AND APPROPRIATE WORKING CAPITAL ADJUSTM ENT PROVIDED. 12. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE CIT(A) BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RESTO RED. 13, THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AMEND OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. 3. THESE GROUNDS OF APPEAL OF THE REVENUE CAN BE CO NVENIENTLY DECIDED TOGETHER WITH THE ADDITIONAL GROUND NOS. 6 & 7 RAISED BY THE ASSESSEE IN ITS APPEAL, WHICH READS AS FOLLOWS: 6) THE LEARNED CIT(A) HAS ERRED IN REJECTING THE F OLLOWING COMPANIES ONLY ON ABNORMAL PROFIT BASIS AND HAS FUR THER ERRED IN NOT CONSIDERING FUNCTIONAL DIFFERENCES WHI LE REJECTING THE SAID COMPANIES: MOLD-TEK TECHNOLOGIES LIMITED ECLERX SERVICES LIMITED IT(TP)A NO.697 & 842/ BANG/2013 PAGE 4 OF 19 7) THE LEARNED CIT(A) HAS ERRED IN REJECTING CORAL HUBS LIMITED (NOW KNOWN AS VISHAL INFORMATION TECHNOLOGI ES LIMITED) ONLY ON THE BASIS OF ABNORMAL PROFITS AND HAS ERRED IN NOT CONSIDERING FUNCTIONAL DIFFERENCES ON ACCOUN T OF OUTSOURCING BUSINESS MODEL AND LOW EMPLOYEE COST. 4. THE ADDITIONAL GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN ITS APPEAL IS WITH REGARD TO COMPARABILITY OF CERTAIN COMPANIES E XCLUDED BY THE CIT(APPEALS). IT IS THE PLEA OF THE ASSESSEE IN TH ESE ADDITIONAL GROUNDS THAT THESE COMPANIES ARE REQUIRED TO BE EXCLUDED ON THE BASIS OF FUNCTIONAL COMPARABILITY, APART FROM ITS EXCLUSION BY THE CIT( APPEALS) ON THE GROUND THAT THE PROFITS SHOWN BY THESE COMPANIES WERE ABNO RMAL AND DID NOT REFLECT THE NORMAL PROFIT MARGIN IN THE CONCERNED I NDUSTRY. THE ADDITIONAL GROUNDS BEING A GROUND ON COMPARABILITY IS ADMITTED FOR ADJUDICATION AS THE ISSUE SOUGHT TO BE RAISED IN THE ADDITIONAL GROUND ARISES OUT OF ORDER OF CIT(APPEALS) AND HAS BEEN RAISED BY THE ASSESSEE BE FORE THE CIT(A). 5. AS FAR AS THE QUESTION OF DETERMINATION OF ALP OF THE INTERNATIONAL TRANSACTION IS CONCERNED, THE FACTS ARE THAT THE AS SESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF DEVELOPMENT OF SOFTWARE AND RENDERING OF ITES. DURING THE PREVIOUS YEAR, THE ASSESSEE PROVIDED TRA NSCRIPTION SERVICES TO ITS AE IN USA. THE ASSESSEE RECEIVED A SUM OF RS.2 6,24,05,361 FOR PROVIDING MEDICAL TRANSCRIPTION SERVICES TO ITS AE. THE OPERATING PROFIT TO OPERATING COST (OP:OC) RATIO IN THE MATTER OF PROVI DING ITES TO AE WAS AS FOLLOWS:- DESCRIPTION IT ENABLED SERVICES OPERATING REVENUE RS.26,24,05,361 OPERATING COST RS.22,51,66,145 OPERATING PROFIT (PBIT) RS.3,72,39,216 OPERATING PROFIT TO COST RATIO 16.53% IT(TP)A NO.697 & 842/ BANG/2013 PAGE 5 OF 19 6. THE PRICE RECEIVED IN THE INTERNATIONAL TRANSA CTION HAS TO SATISFY THE ARMS LENGTH TEST AS LAID DOWN IN SECTION 92 OF THE INCOME-TAX ACT, 1961 [THE ACT]. IN SUPPORT OF ITS CLAIM THAT THE PRI CE RECEIVED FROM THE AE WAS AT ARMS LENGTH, THE ASSESSEE FILED A TP STUDY IN W HICH THE ASSESSEE CHOSE TO TRANSACTIONAL NET MARGIN METHOD (TNMM) AS THE MO ST APPROPRIATE METHOD (MAM) FOR DETERMINING THE ALP. THE PROFIT L EVEL INDICATOR (PLI) CHOSEN FOR THE PURPOSE OF COMPARISON OF THE PROFIT MARGIN OF THE ASSESSEE WITH THE COMPARABLE COMPANIES WAS OP TO OC. THE AS SESSEE IN ITS TP STUDY HAD APPLIED A DIFFERENT CRITERION FOR ACCEPTI NG AND REJECTING THE COMPARABLE COMPANIES. THE TPO REJECTED SOME OF THE COMPARABLE COMPANIES CHOSEN BY THE ASSESSEE IN ITS TP STUDY AN D ON HIS OWN, DID A SELECTION OF COMPARABLE COMPANIES AND FINALLY ARRIV ED AT A SET OF 20 COMPARABLE COMPANIES AND THE AVERAGE PROFIT MARGIN OF THESE COMPARABLE COMPANIES WAS AS FOLLOWS:- SL NO. PARTICULARS MARGIN 1 A LL SEC TECHNOLOGIES LIMITED - 13.29% 2 CALIBER POINT BUSINESS SOLUTIONS LIMITED 10.97 % 3 COSMIC GLOBAL LIMITED 23.30% 4 GENESYS INTERNATIONAL CORPORATION LIMITED 47.40% 5 R SYSTEMS INTERNATIONAL LIMITED 4.30% 6 SP ANC O TELESYSTEMS AND SOLUTIONS LIMITED 8.81% 7 CORAL HUBS LIMITED (FORMERLY KNOWN AS VISHAL INFORMATION TECHNOLOGIES LIMITED) 50.68% 8 ACCENTIA TECHNOLOGIES LIMITED 41.77% 9 ACROPETAL TECHNOLOGIES LIMITED (SEG.) 35.30% 10 ADITYA BIRLA MINACS WORLDWIDE LIMITED -4.00% 11 ASIT C. MEHTA FINANCIAL SERVICES LIMITED 9.42% IT(TP)A NO.697 & 842/ BANG/2013 PAGE 6 OF 19 12 CROSSDOMAIN SOLUTIONS LIMITED 27.30% 13 DATAMATICS FINANCIAL SERVICES LIMITED 29.11% 14 E4E HEALTHCARE SOLUTIONS LIMITED 18.54% 15 INFOSYS BPO LIMITED 19.66% 16 ISERVICES INDIA PRIVATE LIMITED 10.77% 17 JINDAL INTELLICOM PRIVATE LIMITED -10.29% 18 MOLD-TEK TECHNOLOGIES LIMITED 96.66% 19 WIPRO LIMITED 30.05% 20 ECLERX SERVICES LIMITED 58.80% ARITHMETIC MEAN 24.75% LESS: WORKING CAPITAL AND RISK ADJUSTMENT 1.14% ADJUSTED ARITHMETIC MEAN 23.61% 7. AFTER PROVIDING FOR WORKING CAPITAL ADJUSTMENT , THE TPO ARRIVED AT THE ALP AND ADDITION TO BE MADE TO THE TOTAL INCOME OF THE ASSESSEE AT A SUM OF RS.1,59,22,510 AS FOLLOWS:- 4.4. COMPUTATION OF ARMS LENGTH PRICE : THE ARITHMETIC MEAN OF THE PROFIT LEVEL INDICATORS IS TAKEN AS THE ARMS LENGTH MARGIN. (PLEASE SEE ANNEXURE B FOR DETAILS O F COMPUTATION OF PLI OF THE COMPARABLES). BASED ON THIS, THE ARMS LE NGTH PRICE OF THE SOFTWARE DEVELOPMENT SERVICES RENDERED BY THE TAXPA YER TO ITS AE(S) IS COMPUTED AS UNDER: ARM'S LENGTH MEAN MARGIN ON COST 24.75% LESS: WORKING CAPITAL ADJUSTMENT (AS PER ANNEXURE - C) 1.14 ADJUSTED MEAN MARGIN OF THE COMPARABLES 23.61 OPERATING COST RS. 22,51,66,145 ARMS LENGTH PRICE(ALP)@ 123.61% OF OPERATIN G CO ST 27,83,27,871 PRICE RECEIVED RS.26,24,05,361 SHORT FALL BEING ADJUSTMENT U/S.92CA RS.1,59,22,510 IT(TP)A NO.697 & 842/ BANG/2013 PAGE 7 OF 19 THE ABOVE SHORTFALL OF RS.1,59,22,510/- IS TREATED AS TRANSFER PRICING ADJUSTMENT U/S 92CA IN RESPECT OF SOFTWARE DEVELOPM ENT SEGMENT OF THE TAXPAYER'S INTERNATIONAL TRANSACTIONS. 8. THE ADDITIONS SUGGESTED BY THE TPO WAS INCORPOR ATED BY THE AO IN THE FINAL ORDER OF ASSESSMENT. AGGRIEVED BY THE AF ORESAID ADDITION, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(APPEALS). 9. THE CIT(APPEALS) EXCLUDED SOME OF THE COMPARABL E COMPANIES CHOSEN BY THE TPO AND CONSEQUENT TO THE ORDER OF CI T(APPEALS), THE PRICE CHARGED BY THE ASSESSEE WAS TO BE REGARDED AS AT AR MS LENGTH. THE REVENUE BY ITS GROUNDS OF APPEAL SOUGHT TO ASSAIL T HE FINDINGS OF THE CIT(APPEALS). 10. AS FAR AS GROUND NO.5 OF THE RAISED BY REVENUE IS CONCERNED, THERE IS NO COMPANY WHICH WAS EXCLUDED BY THE CIT(APPEALS ) BY APPLYING DIMINISHING REVENUE FILTER AND THEREFORE GROUND NO. 5 BY THE REVENUE HAS NO BASIS AND HENCE DISMISSED. 11. AS REGARDS GROUND NO.6, THE CIT(APPEALS) TOOK THE VIEW THAT SIZE AND TURNOVER OF A COMPANY ARE MATERIAL FOR DECIDING THE COMPARABILITY. THE ASSESSEES TURNOVER WAS RS.26.24 CRORES. THE CIT(A PPEALS) TOOK THE VIEW THAT COMPANIES WHOSE TURNOVER WAS MORE THAN RS.200 CRORES HAVE TO BE REGARDED AS LARGE SIZE COMPANIES AND HENCE NOT COMP ARABLE TO THE ASSESSEE. BY DOING SO, HE HAD EXCLUDED INFOSYS BPO LTD. AND WIPRO LTD. FROM THE LIST OF COMPARABLE COMPANIES CHOSEN BY THE TPO. THE REVENUE IS AGGRIEVED BY THE AFORESAID ACTION OF THE CIT(A) AND HAS RAISED GROUND NO.6 BEFORE THE TRIBUNAL. IT(TP)A NO.697 & 842/ BANG/2013 PAGE 8 OF 19 12. AS FAR AS EXCLUDING THE COMPANIES ON THE BASIS OF TURNOVER IS CONCERNED, THE ISSUE HAS BEEN SETTLED IN SEVERAL DE CISIONS OF THE TRIBUNAL AND HAS BEEN ELABORATELY DISCUSSED BY THIS TRIBUNAL IN THE CASE OF AUTODESK INDIA PVT. LTD. V. DCIT IN IT(TP)A NO.540 & 541/BANG/2013, ORDER DATED 06.07.2018. THE TRIBUNAL IN THIS DECIS ION AFTER REVIEW OF ENTIRE CASE LAWS ON THE SUBJECT, CONSIDERED THE QUESTION, WHETHER COMPANIES HAVING TURNOVER MORE THAN 200 CRORES UPTO 500 CRORE S HAS TO BE REGARDED AS ONE CATEGORY AND THOSE COMPANIES CANNOT BE REGAR DED AS COMPARABLES WITH COMPANIES HAVING TURNOVER OF LESS THAN 200 CRO RES, THE TRIBUNAL HELD AS FOLLOWS:- 17.7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. T HE SUBSTANTIAL QUESTION OF LAW (QUESTION NO.1 TO 3) WHICH WAS FRAM ED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CHRYSCAPITA L INVESTMENT ADVISORS (INDIA) PVT.LTD., (SUPRA) WAS AS TO WHETHE R COMPARABLE CAN BE REJECTED ON THE GROUND THAT THEY HAVE EXCEPT IONALLY HIGH PROFIT MARGINS OR FLUCTUATION PROFIT MARGINS, AS CO MPARED TO THE ASSESSEE IN TRANSFER PRICING ANALYSIS. THEREFORE AS RIGHTLY SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE T HE OBSERVATIONS OF THE HON'BLE HIGH COURT, IN SO FAR AS IT REFERS T O TURNOVER, WERE IN THE NATURE OF OBITER DICTUM. JUDICIAL DISCIPLINE RE QUIRES THAT THE TRIBUNAL SHOULD FOLLOW THE DECISION OF A NON-JURISD ICTION HIGH COURT, EVEN THOUGH THE SAID DECISION IS OF A NON-JU RISDICTIONAL HIGH COURT. WE HOWEVER FIND THAT THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PENTAIR WATER INDIA PVT.LTD. TA X APPEAL NO.18 OF 2015 JUDGMENT DATED 16.9.2015 HAS TAKEN THE VIEW THAT TURNOVER IS A RELEVANT CRITERION FOR CHOOSING COMPANIES AS C OMPARABLE COMPANIES IN DETERMINATION OF ALP IN TRANSFER PRICI NG CASES. THERE IS NO DECISION OF THE JURISDICTIONAL HIGH COURT ON THIS ISSUE. IN THE CIRCUMSTANCES, FOLLOWING THE PRINCIPLE THAT WHERE T WO VIEWS ARE AVAILABLE ON AN ISSUE, THE VIEW FAVOURABLE TO THE A SSESSEE HAS TO BE ADOPTED, WE RESPECTFULLY FOLLOW THE VIEW OF THE HON 'BLE BOMBAY HIGH COURT ON THE ISSUE. RESPECTFULLY FOLLOWING THE AFORESAID DECISION, WE UPHOLD THE ORDER OF THE DRP EXCLUDING 5 COMPANIES FROM THE LIST OF COMPARABLE COMPANIES CHOSEN BY THE TPO ON THE IT(TP)A NO.697 & 842/ BANG/2013 PAGE 9 OF 19 BASIS THAT THE 5 COMPANIES TURNOVER WAS MUCH HIGHER COMPARED TO THAT THE ASSESSEE. 17.8. IN VIEW OF THE ABOVE CONCLUSION, THERE MAY N OT BE ANY NECESSITY TO EXAMINE AS TO WHETHER THE DECISION REN DERED IN THE CASE OF GENISYS INTEGRATING (SUPRA) BY THE ITAT BAN GALORE BENCH SHOULD CONTINUE TO BE FOLLOWED. SINCE ARGUMENTS WE RE ADVANCED ON THE CORRECTNESS OF THE DECISIONS RENDERED BY THE ITAT MUMBAI AND BANGALORE BENCHES TAKING A VIEW CONTRARY TO THA T TAKEN IN THE CASE OF GENISYS INTEGRATING (SUPRA), WE PROCEED TO EXAMINE THE SAID ISSUE ALSO. ON THIS ISSUE, THE FIRST ASPECT W HICH WE NOTICE IS THAT THE DECISION RENDERED IN THE CASE OF GENISYS I NTEGRATING (SUPRA) WAS THE EARLIEST DECISION RENDERED ON THE I SSUE OF COMPARABILITY OF COMPANIES ON THE BASIS OF TURNOVER IN TRANSFER PRICING CASES. THE DECISION WAS RENDERED AS EARLY AS 5.8.2011. THE DECISIONS RENDERED BY THE ITAT MUMBAI BENCHES C ITED BY THE LEARNED DR BEFORE US IN THE CASE OF WILLIS PROCESSI NG SERVICES (SUPRA) AND CAPEGEMINI INDIA PVT.LTD. (SUPRA) ARE T O BE REGARDED AS PER INCURIUM AS THESE DECISIONS IGNORE A BINDING CO -ORDINATE BENCH DECISION. IN THIS REGARD THE DECISIONS REFERRED TO BY THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTS THE PLEA OF THE L EARNED COUNSEL FOR THE ASSESSEE. THE DECISIONS RENDERED IN THE CA SE OF M/S.NTT DATA (SUPRA), SOCIETE GENERALE GLOBAL SOLUTIONS (SU PRA) AND LSI TECHNOLOGIES (SUPRA) WERE RENDERED LATER IN POINT O F TIME. THOSE DECISIONS FOLLOW THE RATIO LAID DOWN IN WILLIS PROC ESSING SERVICES (SUPRA) AND HAVE TO BE REGARDED AS PER INCURIUM. T HESE THREE DECISIONS ALSO PLACE RELIANCE ON THE DECISION OF TH E HONBLE DELHI HIGH COURT IN THE CASE OF CHRISCAPITAL INVESTMENT ( SUPRA). WE HAVE ALREADY HELD THAT THE DECISION RENDERED IN THE CASE OF CHRISCAPITAL INVESTMENT (SUPRA) IS OBITER DICTA AND THAT THE RATIO DECIDENDI LAID DOWN BY THE HONBLE BOMBAY HIGH COUR T IN THE CASE OF PENTAIR (SUPRA) WHICH IS FAVOURABLE TO THE ASSESSEE HAS TO BE FOLLOWED. THEREFORE, THE DECISIONS CITED BY THE LEARNED DR BEFORE US CANNOT BE THE BASIS TO HOLD THAT HIGH TUR NOVER IS NOT RELEVANT CRITERIA FOR DECIDING ON COMPARABILITY OF COMPANIES IN DETERMINATION OF ALP UNDER THE TRANSFER PRICING REG ULATIONS UNDER THE ACT. FOR THE REASONS GIVEN ABOVE, WE UPHOLD THE ORDER OF THE CIT(A) ON THE ISSUE OF APPLICATION OF TURNOVER FILT ER AND HIS ACTION IT(TP)A NO.697 & 842/ BANG/2013 PAGE 10 OF 19 IN EXCLUDING COMPANIES BY FOLLOWING THE RATIO LAID DOWN IN THE CASE OF GENISYS INTEGRATING (SUPRA). 13. IN VIEW OF THE AFORESAID DECISION OF THE TRIBU NAL, WE FIND NO MERIT IN GROUND NO.6 RAISED BY THE REVENUE. 14. AS FAR AS GROUND NO.7 RAISED BY THE REVENUE IS CONCERNED, GRIEVANCE OF THE REVENUE IS THAT THE CIT(APPEALS) E XCLUDED THE FOLLOWING 6 COMPANIES ON THE GROUND THAT THESE COMPANIES REFLEC TED ABNORMAL PROFITS. THEY WERE; (1) ADITYA BIRLA MINACS WORLDWIDE LTD. (2) CORAL HUBS LTD. (3) ECLERX SERVICES LTD. (4) JINDAL INTELLICOM PVT. LTD. (5) MOLD-TEK TECHNOLOGIES LTD. & (6) ALLSEC TECHNOLOGIES LTD. T HE DECISION OF THE CIT(APPEALS) IN EXCLUDING THESE COMPANIES IS CONTAI NED IN PARA 165 OF THE CIT(A)S ORDER. THERE IS, HOWEVER, NO DISCUSSION A S TO HOW ABNORMAL PROFITS WOULD HAVE IMPACT ON THE COMPARABILITY OF A COMPANY. ON A PERUSAL OF THE ORDER OF CIT(A), WE FIND THAT THE DISCUSSION ON TURNOVER AND ABNORMAL PROFITS AND LOSSES FILTER STARTS AT PARA 1 56 AND TILL PARA 164, THERE A DISCUSSION ONLY ABOUT TURNOVER FILTER AND NO DISC USSION ON ABNORMAL PROFITS & LOSSES FILTER. HOWEVER, IN CONCLUSION AT PARA 165, THE CIT(A) HAS HELD THAT ABNORMALLY HIGH PROFITS OR LOSSES MAKING COMPANIES SHOULD BE EXCLUDED. THEREFORE, THE GRIEVANCE PROJECTED BY TH E REVENUE IN GROUND NO.6 NEEDS TO BE ACCEPTED. 15. HOWEVER, IN ADDITIONAL GROUNDS 6 & 7 RAISED BY THE ASSESSEE IN ITS APPEAL, THE ASSESSEE HAS POINTED OUT THAT 3 OUT OF 6 COMPANIES EXCLUDED BY APPLYING ABNORMAL PROFIT OR LOSS FILTER ARE FUNC TIONALLY NOT COMPARABLE VIZ., MOLD-TEK TECHNOLOGIES LTD., ECLERX SERVICES L TD. AND CORAL HUBS LTD. IN THIS REGARD, THE LD. COUNSEL FOR THE ASSESSEE D REW OUR ATTENTION TO IT(TP)A NO.697 & 842/ BANG/2013 PAGE 11 OF 19 DECISION OF THE TRIBUNAL RENDERED IN THE CASE OF FLEXTRONICS TECHNOLOGIES INDIA PVT. LTD. V. DCIT IN IT(TP)A NO.1559/BANG/201 2 , ORDER DATED 23.10.2015 RENDERED FOR AY 2008-09 IN THE CASE OF A SIMILAR CO MPANY SUCH AS THE ASSESSEE. IN PARA 14 OF THIS ORDER, THE TRI BUNAL HAS CONSIDERED THE COMPARABILITY OF THESE COMPANIES AND CAME TO THE CO NCLUSION THAT CORAL HUBS LTD. CANNOT BE REGARDED AS A COMPARABLE COMPAN Y, AS THE BUSINESS MODEL OF THIS COMPANY WAS SUB-CONTRACTING AND OUTSO URCING. AS FAR AS MOLD-TEK TECHNOLOGIES LTD. IS CONCERNED, IN PARA 19 OF THIS AFORESAID ORDER, THIS COMPANY WAS REGARDED AS FUNCTIONALLY NO T COMPARABLE AS IT PROVIDED ENGINEERING SERVICES LIKE CIVIL AND STRUCT URAL ENGINEERING AND GIS SERVICES. AS FAR AS ECLERX SERVICES LTD. IS CONCER NED, THE TRIBUNAL CAME TO THE CONCLUSION THAT EXTRA-ORDINARY EVENTS AND PECUL IAR CIRCUMSTANCES PREVAILED IN THE RELEVANT PREVIOUS YEAR OF THIS COM PANY WHICH HAD AN IMPACT ON THE PROFIT MARGINS AND THEREFORE THIS COM PANY HAD TO BE EXCLUDED FROM THE LIST OF COMPARABLE COMPANIES. FO LLOWING THE AFORESAID DECISION, WE HOLD THAT THE AFORESAID 3 COMPANIES I. E., CORAL HUBS LTD., MOLD-TEK TECHNOLOGIES LTD. AND ECLERX SERVICES LTD. HAVE TO BE REMOVED FROM THE FINAL LIST OF COMPARABLES CHOSEN BY THE TP O ON FUNCTIONAL COMPARABILITY. 16. AS FAR AS THE REMAINING 3 COMPANIES I.E., ADIT YA BIRLA MINACS WORLDWIDE LTD., JINDAL INTELLICOM PVT. LTD. AND AL LSEC TECHNOLOGIES LTD. ARE CONCERNED, THE ISSUE; WHETHER ABNORMAL PROFIT OR LO SS SHOULD RESULT IN EXCLUSION OF A COMPANY; IS REMITTED TO THE TPO FOR FRESH CONSIDERATION IN THE LIGHT OF LAW THAT HAS EVOLVED SINCE THE PASSING OF THE ORDER OF THE TPO. GROUND NO.7 RAISED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND ADDITIONAL GROUNDS 6 & 7 OF THE ASSESSEE ARE AL LOWED. IT(TP)A NO.697 & 842/ BANG/2013 PAGE 12 OF 19 17. GROUND NO.8 RAISED BY THE REVENUE IS ACADEMIC BECAUSE NO COMPANY WAS EXCLUDED OR INCLUDED BY APPLYING DIFFER ENT YEAR ENDING FILTER. 18. AS FAR AS GROUNDS 9 & 10 OF THE REVENUE ARE CO NCERNED, THE SAME RELATES TO EXCLUDING ACCENTIA TECHNOLOGIES LTD. AND GENESYS INTERNATIONAL CORPORATION LTD. FROM THE LIST OF COMPARABLE COMPAN IES CHOSEN BY THE TPO BY THE ORDER OF CIT(APPEALS). THE CIT(APPEALS) EX CLUDED ACCENTIA TECHNOLOGIES LTD. ON THE GROUND THAT ABNORMAL FEATU RES OF THIS COMPANY DID NOT REPRESENT THE INDUSTRY TREND AND THEREFORE THIS COMPANY HAD TO BE REGARDED AS NOT COMPARABLE. IT IS NOT IN DISPUTE BEFORE US THAT IN THE CASE OF FLEXTRONICS TECHNOLOGIES INDIA PVT. LTD. (SUPRA) , IN PARA 12 THIS TRIBUNAL HELD THAT THIS COMPANY WAS NOT TO BE REGARDED AS CO MPARABLE COMPANY RENDERING ITES BECAUSE OF THE EXTRA-ORDINARY EVENTS LIKE MERGER AND DE- MERGER WHICH HAD IMPACT ON THE PROFIT MARGINS OF TH IS COMPANY. 19. AS FAR AS GENESYS INTERNATIONAL CORPORATION LT D. IS CONCERNED, THE CIT(A) IN PARA 197 OF HIS ORDER EXCLUDED THIS COMPA NY ON THE GROUND THAT THIS COMPANY WAS RENDERING GEOGRAPHICAL INFORMATION SYSTEMS SERVICES AND CANNOT BE COMPARED WITH A COMPANY PROVIDING ITE S. IT IS NOT IN DISPUTE BEFORE US THAT THE ITAT BANGALORE BENCH IN THE CASE OF FLEXTRONICS TECHNOLOGIES INDIA PVT. LTD. (SUPRA) VIDE PARA 17 HAD EXCLUDED THIS COMPANY ON THE SIMILAR GROUND ON WHICH IT WAS EXCLU DED BY THE CIT(A). IN VIEW OF THE AFORESAID DECISION, WE FIND NO MERITS I N GROUND NOS. 8, 9 & 10 RAISED BY THE REVENUE IN ITS APPEAL. 20. GROUND NOS.11 TO 13 BY THE REVENUE ARE GENERAL IN NATURE AND CALL FOR NO SPECIFIC ADJUDICATION. 21. AS FAR AS GROUND NOS.1 TO 4 BY THE REVENUE ARE CONCERNED, THE SAME READS AS FOLLOWS:- IT(TP)A NO.697 & 842/ BANG/2013 PAGE 13 OF 19 1. THE ORDER OF THE LEARNED CIT (APPEALS), IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, IS OPPOSED TO LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE CIT(A) WAS NOT JUSTIFIED IN DIRECTING THE A O TO RECOMPUTE THE DEDUCTION ALLOWABLE U/S 10A OF THE I. T. ACT AFTER REDUCING THE INTERNET CHARGES OF RS.27,27,786 /- AND FOREIGN CURRENCY INCURRED FOR FOREIGN TRAVEL AMOUNT ING TO RS.4,80,079/- FROM THE TOTAL TURNOVER ALSO. 3. THE LD.CIT(A) OUGHT TO HAVE APPRECIATED THAT THE RE IS NO PROVISION IN SECTION 10A WHICH REQUIRES THE CONCERN ED EXPENSES, WHICH ARE REQUIRED TO BE REDUCED FROM THE EXPORT TURNOVER AS PER CLAUSE (IV) OF THE EXPLANATION TO S ECTION 10A TO BE REDUCED FROM THE TOTAL TURNOVER ALSO. 4. THE LD.CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THAT THE JURISDICTIONAL HIGH COURT DECISION RELIED UPON BY H IM HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND SLP HAS BEEN FI LED BEFORE THE HON'BLE SUPREME COURT WHICH IS STILL PEN DING. 22. THE ISSUE RAISED IN THE ABOVE GROUNDS IS WIT H REGARD TO EXCLUDING INTERNET CHARGES OF RS.27,27,786 AND EXPENDITURE IN CURRED IN FOREIGN CURRENCY FOR TRAVEL AMOUNTING TO RS.4,80,079 FROM T HE EXPORT TURNOVER AS WELL AS TOTAL TURNOVER. 23. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. TAK ING INTO CONSIDERATION THE DECISION RENDERED BY THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT V. TATA ELXSI LTD [2012] 349 ITR 98 (KARN) , WE ARE OF THE VIEW THAT INTERNET CHARGES AND EXPE NDITURE INCURRED IN FOREIGN CURRENCY FOR TRAVEL SHOULD BE EXCLUDED BOTH FROM EXPORT TURNOVER AND TOTAL TURNOVER. WE ARE OF THE VIEW THAT AS OF TODAY, LAW DECLARED BY THE HON'BLE HIGH COURT OF KARNATAKA WHICH IS THE JURISD ICTIONAL HIGH COURT IS IT(TP)A NO.697 & 842/ BANG/2013 PAGE 14 OF 19 BINDING ON US. MOREOVER, THE ORDER OF THE HONBLE KARNATAKA HIGH COURT HAS BEEN UPHELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT V. HCL TECHNOLOGIES LTD. IN CIVIL APPEAL NO.8489-98490 OF 2013 & ORS. DATED 24.04.2018 . THEREFORE, WE FIND NO MERITS IN THE GROUNDS NO .1 TO 4 RAISED BY THE ASSESSEE AND THE SAME ARE DISMISSED . 24. IN THE RESULT, THE APPEAL BY THE REVENUE IS TR EATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 25. IT(TP)A NO.697/BANG/2013 (ASSESSEES APPEAL) 26. GROUND NO.1 RAISED BY THE ASSESSEE READS AS FOLLOWS :- 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND FACTS, BY HOLDING THAT AO IS JUSTIFIED IN SETTING OFF THE BROUGHT FOR WARD UNABSORBED DEPRECIATION OF RS 240,221 BEFORE COMPUTING THE DED UCTION UNDER SECTION 10A. FURTHER, THE LEARNED CIT(A) HAS ERRED BY NOT RELYING ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS YOKOGAWA INDIA LTD [ITA NO. 248/2007] WHICH IS B INDING ON THE LEARNED CIT(A). 27. AS FAR AS THIS GROUND IS CONCERNED, THE ISSUE IS WITH REGARD TO THE SET OFF OF BROUGHT FORWARD UNABSORBED DEPRECIATION IN THE EARLIER ASST. YEARS WHILE ALLOWING DEDUCTION U/S.10A OF THE INCOME TAX ACT, 1961 (ACT). THE ASSESSEE HAD CLAIMED DEDUCTION U/S 10A OF THE ACT B EFORE SETTING OF UNABSORBED DEPRECIATION OF EARLIER YEARS. THE AO W AS OF THE VIEW THAT DEDUCTION U/S 10A OF THE ACT WAS NOT IN THE NATURE OF EXEMPTION PROVISION AND, THEREFORE, THE BUSINESS LOSS AND UNABSORBED DE PRECIATION OF THE EARLIER YEARS HAS TO BE FIRST SET OFF AGAINST THE I NCOME OF THE ELIGIBLE UNIT AND ONLY ON THE REMINDER DEDUCTION U/S 10A OF THE A CT HAS TO BE ALLOWED. IT(TP)A NO.697 & 842/ BANG/2013 PAGE 15 OF 19 THE VIEW OF THE AO WAS CONFIRMED BY THE CIT(A), HEN CE THIS GROUND OF APPEAL BY THE ASSESSEE BEFORE THE TRIBUNAL. 28. AT THE TIME OF HEARING IT WAS AGREED BY THE P ARTIES BEFORE US THAT THIS ISSUE IS NO LONGER RES INTEGRA AND HAS BEEN CO NCLUDED BY THE HONBLE SUPREME COURT IN THE CASE OF YOKOGAWA INDIA LTD., 3 91 ITR 274 BY ITS ORDER DATED 16.12.2016 AND IN THE AFORESAID DECISIO N THE HONBLE SUPREME COURT TOOK THE FOLLOWING VIEW :- THAT FROM A READING OF THE RELEVANT PROVISIONS OF SECTION 10A IT IS MORE THAN CLEAR THAT THE DEDUCTIONS CONTEMPLATED TH EREIN IS QUA THE ELIGIBLE UNDERTAKING OF AN ASSESSEE STANDING ON ITS OWN AND WITHOUT REFERENCE TO THE OTHER ELIGIBLE OR NON-ELIGIBLE UNI TS OR UNDERTAKINGS OF THE ASSESSEE. THE BENEFIT OF DEDUCTION IS GIVEN BY THE ACT TO THE INDIVIDUAL UNDERTAKING AND RESULTANTLY FLOWS TO THE ASSESSEE. THIS IS ALSO MORE THAN CLEAR FROM THE CONTEMPORANEO US CIRCULAR NO. 794, DATED 9-8-2000. IF THE SPECIFIC PROVISIONS OF THE ACT PROVIDE [FIRS T PROVISO TO SECTIONS 10A(1); 10A(1A) AND 10A(4)] THAT THE UNIT THAT IS CONTEMPLATED FOR GRANT OF BENEFIT OF DEDUCTION IS T HE ELIGIBLE UNDERTAKING AND THAT IS ALSO HOW THE CONTEMPORANEOU S CIRCULAR OF THE DEPARTMENT (NO.794 DATED 9-8-2000) UNDERSTOOD T HE SITUATION, IT IS ONLY LOGICAL AND NATURAL THAT THE STAGE OF DE DUCTION OF THE PROFITS AND GAINS OF THE BUSINESS OF AN ELIGIBLE UN DERTAKING HAS TO BE MADE INDEPENDENTLY AND, THEREFORE, 'IMMEDIATELY AFTER THE STAGE OF DETERMINATION OF ITS PROFITS AND GAINS. AT THAT STAGE THE AGGREGATE OF THE INCOMES UNDER OT HER HEADS AND THE PROVISIONS FOR SET OFF AND CARRY FORWARD CONTAI NED IN SECTIONS 70, 72 AND 74 WOULD BE PREMATURE FOR APPLICATION. T HE DEDUCTIONS UNDER SECTION 10A THEREFORE WOULD BE PRIOR TO THE C OMMENCEMENT OF THE EXERCISE TO BE UNDERTAKEN UNDER CHAPTER VI F OR ARRIVING AT THE TOTAL INCOME OF THE ASSESSEE FROM THE GROSS TOT AL INCOME. THE SOMEWHAT DISCORDANT USE OF THE EXPRESSION 'TOTAL IN COME OF THE ASSESSEE' IN SECTION 10A HAS ALREADY BEEN DEALT WIT H EARLIER AND IN IT(TP)A NO.697 & 842/ BANG/2013 PAGE 16 OF 19 THE OVERALL SCENARIO UNFOLDED BY THE PROVISIONS OF SECTION 10A THE AFORESAID DISCORD CAN BE RECONCILED BY UNDERSTANDIN G THE EXPRESSION 'TOTAL INCOME OF THE ASSESSEE' IN SECTIO N 10A AS 'TOTAL INCOME OF THE UNDERTAKING'. FOR THE AFORESAID REASONS IT IS HELD THAT THOUGH SE CTION 10A, AS AMENDED, IS A PROVISION FOR DEDUCTION, THE STAGE OF DEDUCTION WOULD BE WHILE COMPUTING THE GROSS TOTAL INCOME OF THE ELIGIBLE UNDERTAKING UNDER CHAPTER IV AND' NOT AT THE STAGE OF COMPUTATION OF THE TOTAL INCOME UNDER CHAPTER VI. 29. THE EFFECT OF THE AFORESAID DECISION WOULD BE T HAT THE PROVISION OF SET OFF AND CARRY FORWARD AS CONTEMPLATED UNDER CHA PTER-VI OF THE ACT WOULD NOT BE ATTRACTED AND THEREFORE INTRA HEAD SET OFF SOUGHT BY SEEKING TO RELY ON THE PROVISION OF SECTION 70(1) OF THE ACT A ND SEEKING TO RESTRICT THE DEDUCTION U/S 10A AND 10AA OF THE ACT TO THE EXTENT OF GROSS TOTAL INCOME AS CONTEMPLATED U/S 80A(2) OF THE ACT, CANNOT BE SU STAINED. WE THEREFORE HOLD THAT DEDUCTION U/S.10A OF THE ACT HAS TO BE AL LOWED WITHOUT SETTING OFF THE BROUGHT FORWARD BUSINESS LOSSES AND UNABSORBED DEPRECIATION OF NON- SEC.10A UNITS BEFORE ALLOWING THE DEDUCTION UNDER S ECTION 10A OF THE ACT. IN VIEW OF THE AFORESAID DECISION OF THE HONBLE SU PREME COURT, THE AO IS DIRECTED NOT TO SET OFF THE BROUGHT FORWARD UNABSOR BED DEPRECIATION OF NON- 10A UNITS AGAINST PROFITS OF 10A UNITS BEFORE ALLOW ING DEDUCTION U/S. 10A OF THE ACT. 30. GROUNDS 2 TO 5 RAISED BY THE ARE WITH REGARD TO DIS ALLOWANCE MADE U/S. 40(A)(I) OF THE ACT. AS FAR AS THIS ISSUE RAI SED BY THE ASSESSEE IS CONCERNED, IT WOULD BE SUFFICIENT IF GROUND NO.5 IS ADJUDICATED, WHICH READS AS FOLLOWS:- 5. THE LEARNED CIT(A) HAS ERRED IN LAW AND FACTS, BY NOT CONSIDERING THE ALTERNATIVE PLEA THAT, IF ANY DISAL LOWANCE IS MADE UNDER SECTION 40(A)(I) OF THE ACT, THE SAME SHOULD BE CONSIDERED TOWARDS 'PROFITS OF THE UNDERTAKING' IN COMPUTING T HE ELIGIBLE DEDUCTION UNDER SECTION 10A OF THE ACT. IT(TP)A NO.697 & 842/ BANG/2013 PAGE 17 OF 19 31. THE ISSUE IS WITH REGARD TO DISALLOWANCE OF EXP ENSES U/S.40(A)(I) OF THE ACT. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBM ITTED THAT EVEN ASSUMING DISALLOWANCE U/S. 40(A)(I) OF THE ACT HAS TO BE SUSTAINED, THE ADDITION MADE CONSEQUENT TO SUCH DISALLOWANCE WILL GO TO INCREASE THE PROFITS OF THE UNIT WHICH IS ENTITLED TO CLAIM DEDU CTION ON SUCH PROFITS U/S. 10A OF THE ACT AND THEREFORE THE IMPUGNED ADDITION EVEN IF SUSTAINED, WILL BE TAX NEUTRAL. IN OTHER WORDS, THE ASSESSEE CLAIM S THAT EVEN ON THE ADDITION MADE CONSEQUENT TO DISALLOWANCE U/S. 40(A) (I) OF THE ACT, DEDUCTION U/S. 10A SHOULD BE ALLOWED. 32. IN THIS REGARD, THE DL. COUNSEL FOR THE ASSESS EE HAS PLACED RELIANCE ON THE DECISION OF TWO HIGH COURTS VIZ., HONBLE BO MBAY HIGH COURT IN THE CASE OF CIT V. GEM PLUS JEWELLERY INDIA LTD. (2010) 194 TAX MAN 192 (BOM) AND HONBLE GUJARAT HIGH COURT IN THE CASE OF ITO V. KEWAL CONSTRUCTION, 354 ITR 13 (GUJ) . IN THE DECISION OF THE HONBLE GUJARAT HIGH COURT, IT WAS HELD THAT WHEN DISALLOWANCE U/S. 40(A )(IA) OF THE ACT GOES TO ENHANCE THE PROFITS THAT ARE ELIGIBLE FOR DEDUCTION UNDER CHAPTER VIA OF THE ACT, THE DEDUCTION UNDER CHAPTER VIA SHOULD BE ALLO WED ON SUCH INCREASED PROFIT. THIS POSITION HAS ALSO BEEN NOW CONFIRMED BY THE CBDT IN ITS CIRCULAR NO.37/2016 DATED 02.11.2016 WHEREIN THE BO ARD HAS OBSERVED AS FOLLOWS:- 3. IN VIEW OF THE ABOVE, THE BOARD HAS ACCEPTED T HE SETTLED POSITION THAT THE DISALLOWANCES MADE UNDER SECTIONS 32, 40(A)(IA), 40A(3), 43B, ETC. OF THE ACT AND OTHER SPECIFIC DIS ALLOWANCES, RELATED TO THE BUSINESS ACTIVITY AGAINST WHICH THE CHAPTER VI-A DEDUCTION HAS BEEN CLAIMED, RESULT IN ENHANCEMENT O F THE PROFITS OF THE ELIGIBLE BUSINESS, AND THAT DEDUCTION UNDER CHA PTER VI-A IS ADMISSIBLE ON THE PROFITS SO ENHANCED BY THE DISALL OWANCE. IT(TP)A NO.697 & 842/ BANG/2013 PAGE 18 OF 19 33. IN VIEW OF THE ABOVE, WE ACCEPT GROUND NO.5 OF THE ASSESSEE AND DIRECT THE AO TO ALLOW DEDUCTION U/S. 10A OF THE AC T ON THE AMOUNT DISALLOWED U/S. 40(A)(I) OF THE ACT. THUS, GROUND NO.5 RAISED BY THE ASSESSEE IS ALLOWED. IN VIEW OF THE DECISION ON GR OUND NO.5, GROUNDS ABOVE, THE OTHER GROUNDS 2 TO 4 RAISED BY THE ASSES SEE NEEDS NO ADJUDICATION. 34. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS A LLOWED; WHILE THAT OF REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF JUNE, 2019. SD/- SD/- ( B.R. BASKARAN ) ( N.V. VASUDEVAN ) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, THE 28 TH JUNE, 2019. / D ESAI S MURTHY / IT(TP)A NO.697 & 842/ BANG/2013 PAGE 19 OF 19 COPY TO: 1. ASSESSEE 2. REVENUE 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.