Ariba India Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 876/DEL/2015

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9750 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 4 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2010-2011
• Appeal Filed On: 12-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Keywords: Related party transaction; Transfer pricing; Opportunity of being heard; International transaction; Wholly owned subsidiary; Bad and doubtful debts
• Section: 271(1)(c); 92D; 234B; 195; 48; 13; 22; 154; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I-1 : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.876/DEL./2015 (ASSESSMENT YEAR : 2010-11) ITA NO.4175/DEL./2016 (ASSESSMENT YEAR : 2011-12) ARIBA INDIA PRIVATE LIMITED, VS. DCIT, CIRCLE 3 (1 ), 15 TH FLOOR, EROS CORPORATE TOWERS, NEW DELHI. NEHRU PLACE, NEW DELHI 110 019. (PAN : AAFCA0120K) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MANONEET DALAL, ADVOCATE SHRI YEESH GOEL, AR REVENUE BY : SHRI SURENDER PAL, CIT DR DATE OF HEARING : 05.03.2020 DATE OF ORDER : 18.06.2020 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : SINCE COMMON QUESTIONS OF FACTS AND LAW HAVE BEEN R AISED IN BOTH THE AFORESAID APPEALS, THE SAME ARE BEING D ISPOSED OFF BY WAY OF CONSOLIDATED ORDER TO AVOID REPETITION OF DI SCUSSION. 2. APPELLANT, ARIBA INDIA PRIVATE LIMITED (HEREINAF TER REFERRED TO AS THE TAXPAYER) BY FILING THE PRESENT APPEALS SOUGHT TO SET ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 2 ASIDE THE IMPUGNED ORDERS DATED 29.12.2014 & 29.01. 2016 PASSED BY THE AO IN CONSONANCE WITH THE ORDERS PASSED BY T HE LD. DRP/TPO UNDER SECTION 143 (3) READ WITH SECTION 154 /144C OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) QUA THE ASSESSMENT YEARS 2010-11 & 2011-12RESPECTIVELY ON THE GROUNDS INTER ALIA THAT:- ASSESSMENT YEAR 2010-11 1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE ORDER PASSED BY THE LD. ASSESSING OFFIC ER ('AO') IS BAD IN LAW AND VOID AB-INITIO. 2 THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE REFERENCE MADE BY THE LD. AO SUFFERS FROM JURIS DICTIONAL ERROR AS THE LD. AO DID NOT RECORD ANY REASONS IN T HE DRAFT ASSESSMENT ORDER BASED ON WHICH HE REACHED THE CONC LUSION THAT IT WAS 'EXPEDIENT AND NECESSARY' TO REFER THE MATTE R TO THE LD. TRANSFER PRICING OFFICER ('TPO') FOR COMPUTATION OF THE ARM'S LENGTH PRICE, AS IS REQUIRED UNDER SECTION 92CA(1) OF THE INCOME TAX ACT, 1961 ('ACT'). 3 THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO/LD. TPO/LD. DISPUTE RESOLUTION PANEL ('D RP') ERRED IN MAKING AN ADDITION OF RS.11,206,867 TO THE RETURNED INCOME OF THE APPELLANT BY RE-COMPUTING THE ARM'S L ENGTH PRICE (ALP') OF THE INTERNATIONAL TRANSACTION OF PROVISI ON OF ITES SERVICES TO ITS ASSOCIATED ENTERPRISE ('HEREIN AFTE R REFERRED TO AS THE AE'). THUS, IN PASSING THE ORDER THE LD. AO/LD. TPO/LD. DRP ERRED IN UNDER SECTION 92 OF THE ACT. 3.1 NOT ACCEPTING THE FILTERS SELECTED BY THE ASSE SSEE IN ITS TRANSFER PRICING DOCUMENTATION AND HAS INSTEAD APPL IED HIS OWN ADDITIONAL FILTERS WHICH LACKED VALID AND SUFFICIEN T REASONING; 3.2 REJECTING THE COMPARABLE COMPANIES SELECTED BY THE APPELLANT; 3.3 ACCEPTING COMPANIES WHICH WERE FUNCTIONALLY NO T COMPARABLE TO THE APPELLANT IN TERMS OF FUNCTIONS, ASSETS AND RISK PROFILE AND INCLUDING COMPANIES WITH HIGH/SUPE RNORMAL MARGINS; ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 3 3.4 NOT PROVIDING THE BENEFIT OF ECONOMIC ADJUSTME NT ON ACCOUNT OF DIFFERENCE IN RISK PROFILE IN ARRIVING A T THE ARM'S LENGTH MEAN MARGIN. 4 THAT THE LD. AOI LD. TPO ERRED IN DISREGARDING T HE MULTIPLE YEAR DATA SELECTED BY THE APPELLANT IN THE TP DOCUMENTATION AND IN SELECTING THE CURRENT YEAR (I. E. FINANCIAL YEAR 2009-10) DATA FOR COMPARABILITY DESPITE THE FA CT THAT AT THE TIME OF COMPARISON DONE BY THE APPELLANT, THE COMPL ETE DATA FOR FINANCIAL YEAR 2009-10 WAS NOT AVAILABLE WITHIN THE PUBLIC DOMAIN. 5 THAT THE LD. AO ERRED IN FACTS AND IN LAW IN REJ ECTING THE BENCHMARKING ANALYSIS CONDUCTED BY THE APPELLANT FO R THE INTERNATIONAL TRANSACTION PERTAINING TO PAYMENT OF FEE FOR RECEIPT OF TECHNICAL SERVICES WITHOUT UNDERSTANDING THE BUS INESS OF THE APPELLANT AND BENEFITS DERIVED BY THE APPELLANT IN LIEU OF THE PAYMENT MADE FOR SUCH SERVICES. 6 THAT THE LD. 0 ERRED IN FACTS AND IN LAW IN DETE RMINING THE ARM'S LENGTH PRICE OF THE PAYMENT OF FEE FOR RECEIP T OF TECHNICAL SERVICES AS NIL. 7 THAT THE LD. AO AND LD. DRP ERRED IN FACTS AND I N LAW IN DISALLOWING RS. 26,23,889 ON ACCOUNT OF TRAVELLING & CONVEYANCE EXPENSES APPEARING AS CREDIT CARD PAYMENTS IN THE A IR. 7.1 THAT THE LD. AO AND THE LD. DRP ERRED IN NOT APPRECIATING THAT THE CREDIT CARDS ARE ISSUED BY TH E BANK TO THE EMPLOYEES OF THE APPELLANT. THE STATEMENTS THEREOF ARE ISSUED BY THE BANK DIRECTLY TO THE EMPLOYEES. THE CREDIT CARD S AND STATEMENTS THEREOF ARE NOT ISSUED BY THE BANK TO TH E APPELLANT. ACCORDINGLY, THE APPELLANT IS UNABLE TO PRODUCE DET AILS IN RESPECT OF SUCH CREDIT CARDS APPEARING IN THE AIR. 8 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO HAS ERRED IN INITIATING PENALTY PRO CEEDINGS U/S 271(1)(C) OF THE INCOME TAX ACT, 1961, MECHANICALLY AND WITHOUT RECORDING ANY ADEQUATE SATISFACTION FOR SUCH INITIA TION. 9 THAT THE LD. AO ERRED IN FACTS AND IN LAW IN CHA RGING AND COMPUTING INTEREST UNDER SECTION 234B OF THE INCOME TAX ACT, 1961.' ASSESSMENT YEAR 2011-12 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE ORDER PASSED BY THE LD. ASSESSING OFFIC ER ('AO') IS BAD IN LAW AND VOID AB-INITIO WHEREIN THE RETURNED INCOME OF ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 4 INR 1,27,46,777 OF THE APPELLANT WAS ASSESSED AT IN R 4,03,77,010. 2 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE REFERENCE MADE BY THE LD. AO SUFFERS FR OM JURISDICTIONAL ERROR AS THE LD. AO DID NOT RECORD A NY REASONS IN THE ASSESSMENT ORDER BASED ON WHICH HE REACHED THE CONCLUSION THAT IT WAS 'EXPEDIENT AND NECESSARY' TO REFER THE MATTER TO THE LD. TRANSFER PRICING OFFICER ('TPO') FOR COMPUTATIO N OF THE ARM'S LENGTH PRICE, AS IS REQUIRED UNDER SECTION 92 CA(L) OF THE INCOME TAX ACT, 1961 ('ACT'). TRANSFER PRICING 3 THE LD. AO/ LD. TRANSFER PRICING OFFICER ('LD. T PO')/ LD. DISPUTE RESOLUTION PANEL ('DRP') ERRED ON FACTS AND IN CIRCUMSTANCES OF THE CASE IN DETERMINING THE ARM'S LENGTH ADJUSTMENT TO THE APPELLANT'S INTERNATIONAL TRANSAC TIONS FROM ASSOCIATED ENTERPRISES ('AES') AND THEREBY RESULTIN G IN THE ENHANCEMENT OF RETURNED INCOME OF THE APPELLANT BY INR 19,337,357 (FOR PAYMENT FOR INTRA-GROUP SERVICES/ T ECHNICAL FEE INR 17,375,854 AND FOR ALLEGED INTEREST ON ACCOUNTS RECEIVABLE INR 1,961,503). 4 THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN THE ASSESSMENT OF THE ARM'S LENGTH PRICE OF THE APP ELLANT'S INTERNATIONAL TRANSACTIONS WITH AES IN THE FOLLOWIN G MANNER: 4.1 THE LD. AO/LD. TPOI LD. DRP ERRED IN FACTS AND IN LAW TO MODIFY, BASED ON HIS SUBJECTIVE GROUNDS AND PRES UMPTIONS, THE COMPARABILITY ANALYSIS CONDUCTED BY THE APPELLANT F OR DETERMINING THE ARM'S LENGTH PRICE IN TERMS OF SECT ION 92D OF THE ACT READ WITH RULE 10D OF THE RULES AS WELL AS FRES H SEARCH. 4.2 THE LD. AO/LD. TPO ERRED IN REJECTING THE QUANT ITATIVE FILTERS AND THEREBY THE COMPARABLES SELECTED BY THE APPELLANT IN THE TP DOCUMENTATION BY APPLYING ADDITIONAL/MODIFIE D QUANTITATIVE FILTERS WHICH LACKED VALID AND COGENT REASONING; 4.3 THE LD. AO/ LD. TPO/ LD. DRP HAS ERRED BY SELE CTING CERTAIN COMPANIES WHICH WERE NOT COMPARABLE BY WAY OF FUNCTIONS AND ASSETS IN ORDER TO DETERMINE THE ARM' S LENGTH MARGIN APPLICABLE TO THE APPELLANT. FURTHER, THE LD . TPO ERRED IN REJECTING COMPANIES WHICH WERE FUNCTIONALLY COMP ARABLE TO THE APPELLANT'S IT-ENABLED SERVICES SEGMENT. 4.4 THE LD. AO/ LD. TPO/ LD. DRP HAS ERRED IN INCO RRECTLY COMPUTING MARGINS OF SEVERAL COMPARABLE COMPANIES S ELECTED IN THE FINAL COMPARABLE SET. ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 5 5 THE LD. AO/ LD. TPO/ LD. DRP ERRED IN ARBITRARIL Y REJECTING THE RISK ANALYSIS CONDUCTED BY THE APPELL ANT IN ITS TRANSFER PRICING SUBMISSIONS WITHOUT TAKING COGNIZA NCE OF THE FACT THAT THE APPELLANT WAS OPERATING AS A RISK FRE E ENTITY RATHER THAN AN ENTREPRENEUR AND HENCE ERRED IN DENYING THE ECONOMIC ADJUSTMENT FOR THE DIFFERENCE IN RISK PROFILE OF TH E APPELLANT VIS A VIS COMPARABLES. 6 THAT THE LD. AOI LD. TPOI LD. DRP ERRED IN DISREGARDING THE MULTIPLE YEAR DATA SELECTED BY THE APPELLANT IN THE TP DOCUMENTATION AND IN SELECTING THE CURRENT Y EAR (I.E. FINANCIAL YEAR 2010-11) DATA FOR COMPARABILITY DESP ITE THE FACT THAT AT THE TIME OF COMPARISON DONE BY THE APPELLAN T, THE COMPLETE DATA FOR FINANCIAL YEAR 2010-11 WAS NOT AV AILABLE WITHIN THE PUBLIC DOMAIN. PAYMENT OF FEES FOR INTRA-GROUP/ TECHNICAL SERVICES 7 THE LD. AO / LD. TPO/ LD. DRP ERRED ON FACTS AND IN LAW IN DETERMINING THE ARM'S LENGTH PRICE ('ALP') OF TH E APPELLANT'S INTERNATIONAL TRANSACTIONS PERTAINING TO PAYMENT OF INTRA-GROUP SERVICES/ TECHNICAL FEE AS NIL AGAINST THE SUM OF I NR 1,73,75,854 INCURRED BY THE APPELLANT AND IN DOING SO, HAVE GRO SSLY ERRED IN THE FOLLOWING MANNER- 7.1 THE LD. AO/ LD. TPO/ LD. DRP ERRED IN FACTS AN D IN LAW IN HOLDING THAT NEITHER THE APPELLANT HAS RECEIVED ANY SERVICE AND/ OR BENEFIT IN LIEU OF THE PAYMENT MADE BY IT F OR SERVICES AVAILED NOR WAS THERE WAS ANY NEED FOR SUCH SERVICE S/ PAYMENTS; THEREBY CHALLENGING THE COMMERCIAL WISDOM OF THE AP PELLANT IN MAKING SUCH PAYMENTS WHILE PASSING THE ORDER IN CON TRAST WITH THE RECENT JUDICIAL PRONOUNCEMENTS IN THIS REGARD; 7.2 THE LD. AO/ LD. TPO/ LD. DRP ERRED IN FACTS AN D IN LAW BY NOT CONSIDERING AND THEREBY ARBITRARILY REJECTIN G THE TRANSACTIONAL ET MARGIN METHOD ('TNMM') ANALYSIS AD OPTED BY THE APPELLANT AS THE MOST APPROPRIATE METHOD FOR BE NCHMARKING THE SAID TRANSACTION AND IN DOING SO HAVE GROSSLY E RRED IN (I) RE- COMPUTING THE ARM'S LENGTH PRICE; AND (II) NOT APPR ECIATING THAT PAYMENT MADE IS CLOSELY LINKED TO THE PRIMARY BUSIN ESS FUNCTIONS OF THE APPELLANT; 7.3 THE LD. AO/ LD. TPO/ LD. DRP ERRED IN FACTS AN D IN LAW IN APPLYING COMPARABLE UNCONTROLLED PRICE ('CUP') M ETHOD MERELY BASED ON PRESUMPTIONS AND WITHOUT FURNISHING DETAILS OF PRICE CHARGED IN ANY COMPARABLE UNCONTROLLED TRANSA CTION WHICH IS IN CONTRAVENTION OF THE PROVISIONS OF RULE L0B O F THE RULES. 7.4 THE LD. AO/ LD. TPO/ LD. DRP ERRED IN FACTS AN D IN LAW BY NOT CONSIDERING THAT SUCH PAYMENT WAS MADE BY TH E APPELLANT ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 6 IN THE EARLIER YEARS ALSO AND NO ADVERSE INFERENCE WAS DRAWN BY THE LD. TPO IN THOSE YEARS. ALLEGED INTEREST ON ACCOUNTS RECEIVABLE 8 THAT THE LD. AO/ LD. TPO/ LD. DRP ERRED ON FACTS AND IN LAW IN MAKING A NOTIONAL ADDITION OF INR 1,96 I ,50 3 ON ACCOUNT OF ALLEGED INTEREST ON PERCEIVED DELAY IN COLLECTIO N OF RECEIVABLES FROM THE AES WITHOUT TAKING DUE COGNIZANCE OF THE B USINESS MODEL AND SUBMISSIONS MADE BY THE APPELLANT 8.1 THAT THE LD. AO/ LD. TPO/ LD. DRP HAS GROSSLY E RRED IN OVERLOOKING THE FACT THAT BEFORE MAKING AN ADJUSTME NT NEITHER A COMPARABLE TRANSACTION ENTERED INTO HAS BEEN IDENTI FIED NOR THE ENTERPRISE WHICH HAS BEEN ENTERED INTO SUCH A TRANS ACTION HAS BEEN IDENTIFIED AS MANDATED AND NECESSITATED AS PER RULE 10B(2) OF THE RULES. 8.2 THAT THE LD. AO/ LD. TPO/ LD. DRP ERRED IN FAC T AND IN LAW IN DETERMINING THE ARM'S LENGTH INTEREST RATE A T 10.84% FOR ARRIVING AT THE ALLEGED INTEREST ON ACCOUNTS RECEIV ABLE AND HAS WRONGLY TREATED THE ACCOUNTS RECEIVABLE AS MEDIUM T ERM LOAN. 8.3 THAT THE LD. AO/ LD. TPO/ LD. DRP ERRED IN FAC T AND IN LAW BY MAKING A SEPARATE NOTIONAL ADDITION OF ALLEG ED INTEREST ON ACCOUNTS RECEIVABLES DESPITE THE FACT THAT THE SAME HAS ALREADY BEEN COUNTED BY WAY OF WORKING CAPITAL ADJUSTMENT O N THE COMPARABLES. 8.4 THAT THE LD. AO/ LD. TPO/ LD. DRP HAS ERRED IN THE COMPUTATION OF ALLEGED INTEREST ON ACCOUNTS RECEIVA BLES CORPORATE TAX 9 THAT THE LD. AO AND LD. DRP ERRED IN FACTS AND I N LAW IN DISALLOWING INR 82,92,871 ON ACCOUNT OF TRAVELLING & CONVEYANCE EXPENSES APPEARING AS CREDIT CARD PAYMEN TS IN THE AIR. 9.1 THAT THE LD. AO AND THE LD. DRP ERRED IN NOT APPRECIATING THAT THE CREDIT CARDS ARE ISSUED BY TH E BANK TO THE EMPLOYEES OF THE APPELLANT. THE STATEMENTS THEREOF ARE ISSUED BY THE BANK DIRECTLY TO THE EMPLOYEES. THE CREDIT CARD S AND STATEMENTS THEREOF ARE NOT ISSUED BY THE BANK TO TH E APPELLANT. ACCORDINGLY, THE APPELLANT IS UNABLE TO PRODUCE DET AILS IN RESPECT OF SUCH CREDIT CARDS APPEARING IN THE AIR. 10 THAT THE LD. AO ERRED IN NOT GIVING CREDIT OF T DS IN THE FINAL ASSESSMENT ORDER. 11 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO HAS ERRED IN INITIATING PENALTY PRO CEEDINGS U/S ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 7 271(1)(C) OF THE INCOME TAX ACT, 1961, MECHANICALLY AND WITHOUT RECORDING ANY ADEQUATE SATISFACTION FOR SUCH INITIA TION. 12 THAT THE LD. AO ERRED IN FACTS AND IN LAW IN CH ARGING AND COMPUTING INTEREST UNDER SECTIONS 234A, 2348 AND 23 4C OF THE INCOME TAX ACT, 1961. ITA NO.876/DEL/20115 (AY 2010-11) 3. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ARIBA INDIA PRIVATE LIMIT ED , THE TAXPAYER IS A SUBSIDIARY OF ARIBA INTERNATIONAL HOLDINGS INC., USA (FORMERLY KNOWN AS FREEMARKETS INTERNATIONAL HOLDINGS INC., USA), W HICH IS IN TURN A WHOLLY OWNED SUBSIDIARY OF ARIBA INC., WHICH IS ENG AGED IN THE PROVISION OF SOURCING AND PROCUREMENT SOLUTIONS UTI LIZING THE GROUPS TECHNOLOGY PLATFORM/KNOW-HOW BUNDLED WITH VARIOUS V ALUE ADDED SERVICES TO CUSTOMERS IN INDIAN MARKETS. THE MAIN SOLUTIONS PROVIDED BY THE TAXPAYER IN THE INDIAN MARKET DURING THE YEA R UNDER ASSESSMENT WERE FULLSCURCE AND ARIBA SOURING. THE TAXPAYER IS INTO TWO BUSINESS SEGMENTS VIZ. (I) PROVISION OF SPEND MANAGEMENT SOL UTION AND (II) PROVISION OF CAPTIVE IT ENABLED SUPPORT (ITES) SERV ICES TO GROUP COMPANIES. DURING THE YEAR UNDER ASSESSMENT, THE T AXPAYER ENTERED INTO INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTE RPRISES (AE) AS UNDER:- S.NO. INTERNATIONAL TRANSACTION AMOUNT (IN RS.) 1 PROVISION OF INFORMATION TECHNOLOGY ENABLES SERVICES 6,43,03,147/- 2 FEE FOR RECEIPT OF TECHNICAL SERVICES FOR PROVISION OF SPEND MANAGEMENT SOLUTIONS 1,67,15,886/- 3 REIMBURSEMENT OF EXPENSES FROM AES 4,32,181/- 4 RECHARGES RECEIVED 11,29,535/- ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 8 4. THE TAXPAYER IN ORDER TO BENCHMARK ITS INTERNATI ONAL TRANSACTIONS QUA ITES SEGMENT USED TRANSACTIONAL NE T MARGIN METHOD (TNMM) WITH OPERATING PROFIT/TOTAL COST (OP/ TC) AS PROFIT LEVEL INDICATOR (PLI) CHOSEN 15 COMPARABLES AND WORKED OUT THE MARGIN AT 15.68% AS AGAINST TAXPAYERS OWN MARGIN OF 17% AND FOUND ITS TRANSACTION AT ALP. HOWEVER, LD. TPO ACCEPTED THE METHOD ADOPTED BY THE TAXPAYER BUT REJECTED FIVE CO MPARABLES CHOSEN BY THE TAXPAYER AND INTRODUCED FIVE NEW COMP ARABLES AND COMPUTED THEIR MARGIN AT 31.43% AND COMPUTED THE PR OPOSED ADJUSTMENT AT RS.1,31,87,922/- IN ITES SEGMENT. 5. IN CASE OF SPEND MANAGEMENT SOLUTIONS SERVICES/F EE FOR TECHNICAL SERVICES, TAXPAYER AGAIN ADOPTED TRANSACT IONAL NET MARGIN METHOD (TNMM) WITH OPERATING PROFIT/SALES (O P/SALES) AS PROFIT LEVEL INDICATOR (PLI) SELECTED FOUR COMPA RABLES AND COMPUTED THEIR MARGIN AT 2.20% WITH TAXPAYERS MARG IN OF 3% AND FOUND ITS TRANSACTION AT ALP. HOWEVER, LD. TPO RE JECTED THE METHOD ADOPTED BY THE TAXPAYER AND APPLIED COMPARAB LE UNCONTROLLED PRICE (CUP) METHOD AND COMPUTED THE AL P OF THE TAXPAYER AT NIL. 6. AO/DRP HAVE ALSO DISALLOWED AN AMOUNT OF RS.26,2 3,898/- ON ACCOUNT OF TRAVELLING AND CONVEYANCE EXPENSES AP PEARING AS ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 9 CREDIT CARD PAYMENTS IN THE AIR ON THE GROUND THAT NO BILLS/VOUCHERS ARE PRODUCED BY THE TAXPAYER. 7. THE TAXPAYER CARRIED THE MATTER BEFORE THE LD. D RP BY WAY OF FILING OBJECTIONS WHO HAS PARTLY ALLOWED THE OBJ ECTIONS AND CONSEQUENTLY MARGIN OF THE COMPARABLE COMPANIES QUA ITES SEGMENT REDUCED TO 28.07% (AFTER WORKING CAPITAL AD JUSTMENT) AS AGAINST THE TAXPAYERS MARGIN OF 17% AND LD. TPO AF TER GIVING EFFECT TO THE LD. DRPS DIRECTIONS PROPOSED THE ADJ USTMENT QUA ITES SERVICES OF RS.1,12,06,867/- AND PROPOSED THE ALP OF PAYMENT FOR FEE FOR TECHNICAL SERVICES AT RS.47,08, 941/-. 8. FEELING AGGRIEVED, THE TAXPAYER HAS COME UP BEFO RE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 9. 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. GROUNDS NO.1 & 2 10. GROUNDS NO.1 & 2 ARE GENERAL IN NATURE AND DO N OT REQUIRE ANY ADJUDICATION. ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 10 TRANSFER PRICING ISSUES GROUNDS NO.3, 3.1, 3.2, 3.3, 3.4, 3.5 & 4 11. UNDISPUTEDLY, THE LD. TPO AS WELL AS LD. DRP HA VE NOT DISPUTED THE TNMM WITH OP/OC AS THE PLI ADOPTED BY THE TAXPAYER IN ORDER TO BENCHMARK ITS INTERNATIONAL TR ANSACTIONS. LD. TPP/DRP HAVE ALSO NOT DISPUTED THE TAXPAYERS OWN M ARGIN AT 17%. LD. AR FOR THE TAXPAYER IN ORDER TO COMPRESS T HE CONTROVERSY AT HAND CHALLENGED INCLUSION OF THREE COMPARABLES V IZ. TCS E SERVE INTERNATIONAL LTD., TCS E SERVE LTD. AND ACCE NTIA TECHNOLOGY LTD., CHOSEN BY THE LD. TPO IN ORDER TO BENCHMARK ITS INTERNATIONAL TRANSACTIONS QUA ITES SEGMENT, SUITAB ILITY OF AFORESAID COMPARABLES EXAMINE ONE BY ONE AS UNDER. TCS E SERVE INTERNATIONAL LTD. (TCS E SERVE INTERNATIONAL) 12. BEFORE THE LD. TPO, THE TAXPAYER CHALLENGED INC LUSION OF TCS E SERVE INTERNATIONAL ON THE GROUND THAT IT IS FUNCTIONALLY INCOMPARABLE; THAT IT HAS HUGE BRAND VALUE; THAT TC S E SERVE INTERNATIONAL HAS SHOWN ABNORMAL GROWTH IN OPERATIO N IN FY 2009- 10; THAT THERE IS NO SEGMENTAL INFORMATION OF THE C OMPANY; THAT IT PROVIDES SERVICES PREDOMINANTLY TO THE CITI GROUP A S A CAPTIVE SERVICE PROVIDER; THAT THIS COMPARABLE HAS BEEN REJ ECTED BY THE LD. TPO IN THE SUBSEQUENT YEAR I.E. AY 2011-12. HOWEVE R, LD. TPO ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 11 REJECTED ALL THE OBJECTIONS RAISED BY THE TAXPAYER AND RETAINED IT AS A COMPARABLE. 13. SIMILARLY, LD. DRP ALSO RETAINED THIS COMPARABL E FOR BENCHMARKING THE INTERNATIONAL TRANSACTIONS BY RATI FYING THE REASONS GIVEN BY THE LD. TPO. 14. WHEN WE EXAMINE ANNUAL REPORT OF TCS E SERVE INTERNATIONAL, AVAILABLE AT PAGES 716 TO 791 OF THE PAPER BOOK VOLUME III, RELEVANT PAGE 747, ITS PRINCIPAL ACTIVI TIES ARE :- TCS E-SERVE INTERNATIONAL LIMITED IS ENGAGED IN TH E BUSINESS OF PROVIDING INFORMATION TECHNOLOGY ENABLED SERVICES (ITES)/BUSINESS PROCESSING OUTSOURCING (BPO) SERVIC ES, PRIMARILY TO CITIGROUP ENTITIES GLOBALLY. THE COMPANYS OPERATIONS BROADLY COMPRISE OF TRANSA CTION PROCESSING AND TECHNICAL SERVICES. TRANSACTION PRO CESSING INCLUDES THE BROAD SPECTRUM OF ACTIVITIES INVOLVING THE PROCESSING, COLLECTIONS, CUSTOMER CARE AND PAYMENTS IN RELATION TO THE SERVICES OFFERED BY CITIGROUP TO ITS CORPORA TE AND RETAIL CLIENTS. TECHNICAL SERVICES INVOLVE SOFTWARE TESTI NG, VERIFICATION AND VALIDATION OF SOFTWARE AT THE TIME OF IMPLEMENT ATION AND DATA CENTRE MANAGEMENT ACTIVITIES. 15. MOREOVER TCS E SERVE INTERNATIONAL IS ENGAGED I N THE BUSINESS OF PROVIDING ITES/BPO SERVICES PRIMARILY T O CITI GROUP ENTITY GLOBALLY MEANING THEREBY IT IS INTO RELATED PARTY TRANSACTIONS. FURTHERMORE, TCS E SERVE INTERNATIONAL HAS BEEN REJ ECTED BY THE LD. TPO IN TAXPAYERS OWN CASE IN AY 2011-12 ON ACC OUNT OF FUNCTIONAL DISSIMILARITY, WHICH ACTION HAS NOT BEEN CHALLENGED BY THE REVENUE. TCS E SERVE INTERNATIONAL IS HAVING H UGE BRAND VALUE ON ACCOUNT OF ITS ACQUISITION BY TATA GROUP W HICH HAS ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 12 IMPACTED ITS PRICING POLICY AND MARGIN EARNED. TCS E SERVE INTERNATIONAL HAS PAID RS.3,737 THOUSANDS AS A TATA BRAND LOYALTY AS IS EVIDENT FROM PAGE 746 OF THE PAPER BOOK. WHE N WE EXAMINE FINANCIAL RESULTS OF TCS E SERVE INTERNATIONAL FOR THE YEAR UNDER ASSESSMENT AT PAGE 723 OF THE PAPER BOOK, IT HAS SH OWN HUGE ALL AROUND GROWTH IN VOLUMES OF BUSINESS AND PROFITABIL ITY DURING THE YEAR UNDER ASSESSMENT. FURTHERMORE, TCS E SERVE IN TERNATIONAL IS INTO ITES/ BPO SERVICES AND TECHNICAL SERVICES (WHI CH ARE IN THE NATURE OF SOFTWARE TESTING, VERIFICATION AND VALIDA TION) BUT THERE IS NO SEGMENTAL INFORMATION TO BIFURCATE THE INCOME AN D EXPENDITURE QUA BOTH THE SEGMENTS. 16. TCS E SERVE INTERNATIONAL HAS BEEN FOUND TO BE NOT A SUITABLE COMPARABLE VIS--VIS ITES PROVIDER BY THE HONBLE DELHI HIGH COURT IN CASE OF AVAYA INDIA PVT. LTD. VS. ACI T IN ITA 532/2019 IN AY 2010-11 ON GROUND OF HAVING GIVEN HUGE AMOUNT TO TATA SONS LTD. TOWARDS BRAND EQUITY; HAVING NO S EGMENTAL BIFURCATION BETWEEN TRANSACTION PROCESSING AND TECH NICAL SERVICES; HAVING HUGE INTANGIBLE IN THE FORM OF BRAND VALUE H AVING CONSIDERABLE EFFECT ON ITS PLI. 17. ALL THE AFORESAID FACTS GO TO PROVE THAT TCS E SERVE INTERNATIONAL, ADMITTEDLY REJECTED BY THE LD. TPO I N AY 2011-12, IS ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 13 NOT A SUITABLE COMPARABLE FOR BENCHMARKING THE INTE RNATIONAL TRANSACTIONS QUA ITES SEGMENT, HENCE ORDERED TO BE EXCLUDED. TCS E SERVICE LTD. (TCS E SERVE) 18. BEFORE THE LD. TPO, THE TAXPAYER CHALLENGED INC LUSION OF TCS E SERVE AS A COMPARABLE ON GROUNDS OF FUNCTIONA L DISSIMILARITY; EXCEPTIONAL YEAR OF OPERATION; INSUF FICIENT SEGMENTAL INFORMATION AND DISSIMILARITY IN SCALE OF OPERATION . HOWEVER, LD. TPO REJECTED ALL THE OBJECTIONS AND RETAINED IT AS A VALID COMPARABLE. LD. DRP ALSO RATIFIED THE REASONS FOR INCLUSION OF TCS E SERVE AS A VALID COMPARABLE GIVEN BY THE LD. TPO. 19. WHEN WE EXAMINE THE FUNCTIONAL PROFILE OF TCS E SERVE, AT PAGE 894 OF THE PAPER BOOK VOLUME III ANNUAL REPORT , IT READS AS UNDER :- TCS E-SERVE LIMITED IS ENGAGED IN THE BUSINESS OF PROVIDING INFORMATION TECHNOLOGY - ENABLED SERVICES (LTES) / BUSINESS PROCESS OUTSOURCING (BPO) SERVICES, PRIMARILY TO CI TIGROUP ENTITIES GLOBALLY. THE COMPANY'S OPERATIONS BROADLY COMPRISE OF TRANSA CTION PROCESSING AND TECHNICAL SERVICES. TRANSACTION PROC ESSING INCLUDES THE BROAD SPECTRUM OF ACTIVITIES INVOLVING THE PROCESSING, COLLECTIONS, CUSTOMER CARE AND PAYMENTS IN RELATION TO THE SERVICES OFFERED BY CITIGROUP TO ITS CORPORA TE AND RETAIL CLIENTS. TECHNICAL SERVICES INVOLVE SOFTWARE TESTIN G, VERIFICATION AND VALIDATION OF SOFTWARE AT THE TIME OF IMPLEMENT ATION AND DATA CENTRE MANAGEMENT ACTIVITIES. ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 14 20. TCS E SERVE IS ENGAGED IN THE BUSINESS ITES/BPO SERVICES PRIMARILY TO CITI GROUP ENTITIES GLOBALLY. SO, WHE N TCS E SERVE IS ENGAGED IN HIGH END TRANSACTION PROCESSING, TECHNIC AL SERVICES INVOLVING SOFTWARE TESTING, VERIFICATION AND VALIDA TION OF SOFTWARE AT THE TIME OF IMPLEMENTATION AND DATA CENTRE MANAG EMENT ACTIVITIES, IT IS FUNCTIONALLY DISSIMILAR TO THE TA XPAYER WHICH IS A ROUTINE ITES PROVIDER. 21. MOREOVER, TCS E SERVE IS HAVING HUGE TURNOVER O F RS.1440.71 CRORES AS AGAINST TAXPAYERS TURNOVER FR OM ITES AT RS.6.43 CRORES REPORTED AT PAGE 880 OF THE ANNUAL R EPORT PAPER BOOK VOLUME III. FURTHERMORE, TCS E SERVE IS A HUGE BRA ND HAVING SUPPORTED BY TATA GROUP IN TERMS OF ITS LARGE SCALE OPERATIONS AND CLIENTELE AND IT HAS PAID RS.42097 THOUSANDS TO TAT A SONS LTD. AS TATA BRAND LOYALTY. EVEN THERE IS NO SEGMENTAL INF ORMATION TO BIFURCATE THE INCOME AND EXPENSES BETWEEN ITES/BPO SERVICES AND TECHNICAL SERVICES. 22. HONBLE DELHI HIGH COURT IN CASE OF AVAYA INDIA PVT. LTD. VS. ACIT (SUPRA) HAS FOUND TCS E SERVE AS NOT A SUITABLE COMPARABLE VIS--VIS ROUTINE SERVICE PROVIDER ON GR OUNDS OF ITS LARGE SCALE OF OPERATION AND CLIENTELE BASE HAVING HUGE TURNOVER AND HAVING GIVEN HUGE AMOUNT TO TATA SONS LTD. TOWA RDS BRAND ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 15 LOYALTY AND HAVING NO SEGMENTAL BIFURCATION BETWEEN TRANSACTION PROCESSING AND TECHNICAL SERVICES. 23. ALL THE AFORESAID FACTS GO TO PROVE THAT TCS E SERVE INTERNATIONAL, ADMITTEDLY REJECTED BY THE LD. TPO I N AY 2011-12, IS NOT A SUITABLE COMPARABLE FOR BENCHMARKING THE INTE RNATIONAL TRANSACTIONS, HENCE ORDERED TO BE EXCLUDED. ACCENTIA TECHNOLOGY LIMITED 24. THE TAXPAYER HAS NOT PRESSED ACCENTIA TECHNOLOG Y LTD. BY THE LD. AR FOR THE TAXPAYER DURING THE COURSE OF AR GUMENTS. ADDITIONAL GROUND NO.3.5 25. BY MOVING A SEPARATE APPLICATION, ASSESSEE COMP ANY SOUGHT TO RAISE ADDITIONAL GROUND FOR THE REASON THAT THE SAME GO TO THE ROOT OF THE CASE WHICH ARE AS UNDER :- 3.5 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CAS E AND IN LAW, THE HONBLE DRP/LD.TPO/LD. AO ERRED IN CONSIDE RING THE OPERATING COST OF THE APPELLANT AT INR 58,959,955 I NSTEAD OF ACTUAL OPERATING COST AMOUNTING TO INR 54,959,955 W HICH IS A MISTAKE APPARENT FROM RECORD THEREBY RESULTING IN D ECREASE IN THE OPERATING MARGIN OF THE APPELLANT FROM 17.00% TO 9. 06%. 26. KEEPING IN VIEW THE FACT THAT THE ADDITIONAL GR OUND SOUGHT TO BE RAISED BY THE ASSESSEE, WHICH IS A LEGAL GROUND AND CAN BE RAISED AT ANY STAGE OF THE PROCEEDINGS, IS OTHERWISE NECES SARY FOR COMPLETE ADJUDICATION OF THE CONTROVERSY AT HAND, T HE APPLICATION FOR ADDITIONAL GROUND IS HEREBY ALLOWED. ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 16 27. LD. AR FOR THE TAXPAYER CONTENDED THAT THE LD. DRP/TPO HAVE ERRONEOUSLY CONSIDERED THE OPERATING COST OF T HE TAXPAYER AT RS.5,89,59,955/- INSTEAD OF ACTUAL OPERATING COST O F RS.5,49,59,955/- RESULTING INTO DECREASE IN THE OPE RATING MARGIN OF THE TAXPAYER FROM 17% TO 9.06% AND HAS GIVEN THE CO RRECT FIGURES AS UNDER : PARTICULARS OPERATING EXPENSES OP/OC AS PER TPO 5,89,59,955 9.06% AS PER TP REPORT 5,49,59,955 17.00% 28. SINCE BOTH THE LD. AR FOR THE TAXPAYER AS WELL AS LD. DR FOR THE REVENUE HAVE FAIRLY CONCEDED THAT IT IS A MISTA KE APPARENT ON RECORD, THE AO/TPO ARE DIRECTED TO RECTIFY THE MIST AKE AFTER DULY VERIFYING THE RECORDS/DOCUMENTS. GROUND NO.3.5 IS DETERMINED IN TAXPAYERS FAVOUR. GROUND NO.4 29. GROUND NO.4 IS DISMISSED HAVING NOT BEEN PRESSE D DURING THE COURSE OF ARGUMENTS. GROUNDS NO.5 & 6 30. DURING THE YEAR UNDER ASSESSMENT THE TAXPAYER E NTERED INTO INTERNATIONAL TRANSACTIONS WITH ITS AE QUA FEE FOR RECEIPT OF TECHNICAL SERVICES FOR PROVISIONS OF SPEND MANAGEME NT SOLUTIONS TO ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 17 THE TUNE OF RS.1,67,15,886/-. THE TAXPAYER IN ORDE R TO BENCHMARK ITS INTERNATIONAL TRANSACTIONS APPLIED TNMM WITH OP /SALES AS PLI BY SELECTING FOUR COMPARABLES WITH MARGIN OF 2.20% AS AGAINST TAXPAYERS MARGIN OF 3%. HOWEVER, LD. TPO REJECTED THE METHOD ADOPTED BY THE TAXPAYER, APPLIED COMPARABLE UNCONTR OLLED PRICE (CUP) METHOD AND COMPUTED THE ALP OF THE TRANSACTIO N AT NIL. 31. HOWEVER, LD. DRP AGREED WITH THE TAXPAYERS APP ROACH OF ALP DETERMINATION BY RETURNING FOLLOWING FINDINGS : - FROM THE ABOVE OBSERVATION THIS PANEL AGREES WITH T HE SUBMISSION THAT ABOVE MENTIONED EXPENDITURE ON SOFT WARE SOLUTION/ PLATFORM OR E-COMMERCE/ E-AUCTIONING IS N ECESSARY FOR ITS THIRD PARTY BUSINESS, WITH REGARD TO THE VALUE OF SUCH SOFTWARE SOLUTION/ PLATFORM THE TAXPAYER INSPITE OF BEING SP ECIFICALLY ASKED BY THE TPO AS WELL AS THIS PANEL HAS NOT PROVIDED I TEM-WISE DETAILS OF THE VALUE OF INTRA GROUP SERVICES CLAIME D TO HAVE BEEN AVAILED FROM ITS AE. THEREFORE, IN ORDER TO DETERMI NE ARM'S LENGTH VALUE OF SUCH SOFTWARE SOLUTION/ PLATFORM AV AILED BY THE TAXPAYER, THIS PANEL HAD A LOOK AT THE SEGMENTAL PR OVIDED BY THE TAXPAYER ON PAGE 59 OF THE TP DOCUMENT PROVIDED BY IT WHICH IS REPRODUCED AS UNDER: THE SEGMENTED FINANCIAL INFORMATION OF ARIBA INDIA FOR THE YEAR ENDED MARCH 31, 2010, AS PROVIDED BY THE COMPANY AS FOLLOWS: PARTICULARS IT ENABLED SERVICES PROVISION(S) SPEND MANAGEMENT TOTAL SALES/OPERATING INCOME 64,303,147 133,727,094 198,030,241 LESS : OPERATING EXPENSES 54,959,955 141,722,226 196,682,181 OPERATING PROFIT 9,343,192 (7,995,132) 13,48,060 OP/TC 17% ADD : VOLUNTARY TP ADJUSTMENT 12,006,945 REVISED OP 4,011,813 REVISED OP/SALES 3% ADD : OTHER INCOME 4,419,047 PROVISION FOR BAD DEBTS 127,395 ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 18 (UTILIZED DURING THE YEAR) LESS : OTHER EXPENSES LOSS ON SALE OF ASSETS 1,511,838 FINANCIAL EXPENSES 59,889 PROFIT BEFORE TAX 4,322,775 FROM THE ABOVE TABLE IT IS OBSERVED THAT UNDER THE SEGMENT 'PROVISION OF SPEND MANAGEMENT' THE TAXPAYER HAS SH OWN A LOSS OF RS.7.995,132/-. AS AGAINST THIS LOSS, THE TAXPAYER HAS CARRIED OUT A VOLUNTARY TP ADJUSTMENT ON ACCOUNT OF THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION RELAT ING TO INTRA GROUP SERVICES AVAILED FROM ITS AE. AS THE SERVICES CHARGE PAID TO THE AE FOR SUCH INTRA GROUP SERVICES IS RS.16,715,8 86/-, THE ALP IS WORKED OUT AT RS.47,08,941/- AFTER REDUCING THE AMOUNT OF VOLUNTARY ADJUSTMENT OF RS.12,006,945 MADE BY THE T AXPAYER ON THIS ACCOUNT. THIS AMOUNT OF RS.47,08,941/- IS 2.3% OF THE TOTAL THIRD PARTY RECEIPT OF RS.133,727,094/-. THIS PANEL CONSIDERS THIS VALUE TO BE REASONABLE CONSIDERING THE NECESSITY OR SOFTWARE SOLUTION/PLATFORM FOR THE BUSINESS OF THE TAXPAYER AND ACCORDINGLY, UPHOLDS THE SAME. THE TPO IS THEREFORE DIRECTED TO CONSIDER RS.47,08,941/- AS THE ALP OF INTRA GROUP S ERVICES OF PROVIDING OF SOFTWARE SOLUTION/PLATFORM BY ARIBA IN C. AFTER GIVING CREDIT FOR VOLUNTARY TP ADJUSTMENT AS MENTIONED ABO VE. THIS VOLUNTARY ADJUSTMENT HAS BEEN DULY REFLECTED IN THE COMPUTATION INCOME OF THE TAXPAYER AS SUBMITTED ON PAGE 8 OF TH E PAPER-BOOK. THE GROUND OF OBJECTION ARE DISPOSED OF ACCORDINGLY . THE TAXPAYER IN IT SUBMISSION HAS ALSO MENTIONED THAT A RECTIFICATION APPLICATION 26.03.2014 IS PENDING WITH THE TPO ON T HIS ISSUE. THE TPO IS DIRECTED TO GIVE PREDICT OF THE VOLUNTAR Y ADJUSTMENT OF RS.1,20,06,945/- OUT OF THE CLAIMED INTRA GROUP SER VICES PAYMENT OF RS.16,715,886/-. 32. HOWEVER, WHEN WE EXAMINE THE ORDER DATED 26.12. 2014 PASSED BY THE LD. TPO GIVING EFFECT TO THE LD. DRP DIRECTIONS DATED 14.11.2014 HE HAS NOT FOLLOWED THE DIRECTIONS OF LD . DRP. IN THESE CIRCUMSTANCES, THIS ISSUE IS REMITTED BACK TO THE L D. TPO/AO TO FOLLOW THE DIRECTIONS GIVEN BY THE LD. DRP AND TO P ASS THE ORDER ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 19 ACCORDINGLY. GROUNDS NO.5 & 6 ARE ALLOWED IN FAVOU R OF THE TAXPAYER FOR STATISTICAL PURPOSES. CORPORATE TAX ISSUES GROUND NO.7 33. AO/DRP HAVE DISALLOWED AN AMOUNT OF RS.26,23,88 9/- ON ACCOUNT OF TRAVELLING AND CONVEYANCE EXPENSES APPEA RING AS CREDIT CARD PAYMENT IN THE AIR. UNDISPUTEDLY, CREDIT CARD QUA WHICH PAYMENTS HAVE BEEN DISALLOWED ARE ISSUED BY THE BAN K IN THE NAME OF THE EMPLOYEES OF THE TAXPAYER AND STATEMENTS OF WHICH ARE ALSO ISSUED BY THE BANK IN THE NAME OF EMPLOYEES AND THE TAXPAYER COMPANY WAS NOT IN PICTURE. 34. AO/DRP DISALLOWED THE SAME ON THE GROUND THAT N O DOCUMENT EVIDENCE VIZ. BILLS/VOUCHERS IN SUPPORT OF ITS CLAIM HAS BEEN BROUGHT ON RECORD BY THE TAXPAYER TO ESTABLISH THAT THE EXPENSES REIMBURSED BY THE TAXPAYER TO THE EMPLOYEE S HAVE BEEN DULY CONSIDERED IN COMPUTING THE TAXPAYERS INCOME. NO DOUBT, THE TAXPAYER IS HAVING DETAILS OF EXPENSES CLAIMED AS REIMBURSEMENT BY THE EMPLOYEES BUT IN ORDER TO AUTH ENTICATE THE SAME IT HAS NOT TAKEN ON RECORD THE COPIES OF THE C REDIT CARD BILLS OF ITS EMPLOYEES TO PROVE THAT THE EXPENSES HAVE BEEN INCURRED BY THE EMPLOYEES FOR THE BUSINESS PURPOSES. IN THESE CIRC UMSTANCES, WE ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 20 ARE OF THE CONSIDERED VIEW THAT THE ISSUE IS REQUIR ED TO BE REMITTED BACK TO THE AO TO DECIDE AFRESH BY PROVIDING AN OPP ORTUNITY OF BEING HEARD TO THE TAXPAYER TO EXPLAIN THE DETAILS OF THE AMOUNT REIMBURSED TO THE EMPLOYEES. SO, GROUND NO.7 IS AL LOWED IN FAVOUR OF THE TAXPAYER FOR STATISTICAL PURPOSES. ITA NO.4175/DEL/2016 (AY 2011-12) 35. DURING THE YEAR UNDER ASSESSMENT, THE TAXPAYER WAS PRIMARILY ENGAGED IN PROVIDING SOURCING SOLUTIONS T O THE CUSTOMERS. THE SOURCING SOLUTIONS OFFERED BY THE TAXPAYER ENCO MPASS ASSISTING ITS CUSTOMERS IDENTIFICATION, SCREENING ETC. OF SUP PLIERS TO SHORTLIST THE POTENTIAL SUPPLIERS WHOSE CAPABILITIES BEST MAT CH WITH CLIENTS NEED, CONDUCTING ONLINE AUCTIONS, PROVIDING NETWORK ACCESS TO THE NECESSARY TECHNOLOGY PLATFORM ON WHICH THE AUCTIONS ARE RUN AND UNDERTAKING BID EVALUATION THEREAFTER. APART FROM THE PROVISION FOR SPEND MANAGEMENT SOLUTIONS, THE TAXPAYER ALSO PROVI DES ITES TO ITS PARENT COMPANY ON COST PLUS BASIS. THE TAXPAYE R OPERATES IN TWO SEGMENTS VIZ. PROVISION OF SPEND MANAGEMENT SOL UTIONS AND PROVISION OF CAPTIVE ITES TO GROUP COMPANIES. 36. DURING THE YEAR UNDER ASSESSMENT, THE TAXPAYER ENTERED INTO INTERNATIONAL TRANSACTIONS WITH ITS AE AS UNDER :- ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 21 S.NO. INTERNATIONAL TRANSACTION AMOUNT (IN RS.) 1 PROVISION OF IT ENABLED SUPPORT SERVICE 73862727 2 FEE FOR RECEIPT OF TECHNICAL SERVICES FOR PROVISION OF SPEND MANAGEMENT SOLUTIONS 17375854 3 RECHARGES RECEIVED / RECEIVABLE 8323041 37. THE TAXPAYER IN ORDER TO BENCHMARK ITS TRANSACT IONS QUA ITES ADOPTED TNMM WITH OP/OC AS PLI AS MAM CHOSEN 1 4 COMPARABLES WITH MARGIN OF 6.51% AS AGAINST TAXPAYE RS MARGIN OF 17/%. HOWEVER, ON THE OTHER HAND, LD. TPO REJECTED 11 COMPARABLES CHOSEN BY THE TAXPAYER AND INTRODUCED 3 NEW COMPARABLES TOTALING 6 COMPARABLES AND COMPUTED THE IR MARGIN AT 27.51% AS AGAINST TAXPAYERS MARGIN OF 23.46% WITHO UT WORKING CAPITAL ADJUSTMENT. 38. THE TAXPAYER IN ORDER TO BENCHMARK ITS INTERNAT IONAL TRANSACTIONS QUA PAYMENT FOR FEE OF INTRA GROUP FOR TECHNICAL SERVICES IN RESPECT OF SPEND MANAGEMENT SOLUTIONS A GAIN ADOPTED TNMM WITH OP/SALES AS PLI AS MAM CHOSEN 7 COMPARABL ES WITH MARGIN OF 1.55% AS AGAINST TAXPAYERS MARGIN OF 4.1 3%. HOWEVER, LD. TPO REJECTED THE METHOD ADOPTED BY THE TAXPAYER APPLIED COMPARABLE UNCONTROLLED PRICE METHOD AND RECOMPUTED THE ALP AT NIL. LD. TPO ALSO MADE ADJUSTMENT ON ACCOUNT OF DE LAYED RECEIVABLES TO THE TUNE OF RS.19,61,503/-. 39. AO/DRP HAVE MADE ADDITION OF RS.82,92,871/- BEI NG THE PAYMENT MADE BY THE TAXPAYER DURING THE YEAR UNDER ASSESSMENT ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 22 AGAINST THE CREDIT CARD BILLS ON THE GROUND THAT TH E TAXPAYER HAS FAILED TO BRING ON RECORD THE DOCUMENTARY EVIDENCE VIZ. BILLS/VOUCHERS TO PROVE ITS CLAIM. 40. THE TAXPAYER FILED THE OBJECTIONS BEFORE THE LD . DRP BY WAY OF FILING APPEAL WHO HAS PARTLY ALLOWED THE OBJECTI ONS. FEELING AGGRIEVED, THE TAXPAYER HAS COME UP BEFORE THE TRIB UNAL BY WAY OF FILING THE PRESENT APPEAL. TRANSFER PRICING ISSUES GROUNDS NO.1, 2 & 3 41. GROUNDS NO.1, 2 & 3 ARE GENERAL IN NATURE AND D O NOT REQUIRE ANY ADJUDICATION. GROUNDS NO.4, 5, & 6 42. UNDISPUTEDLY, TNMM WITH OP/OC AS PLI ADOPTED B Y THE TAXPAYER AS THE MAM HAS BEEN ACCEPTED BY THE LD. TP O WHO HAS REJECTED 8 OF THE COMPARABLES OUT OF 40 SELECTED BY THE TAXPAYER IN ITES SEGMENT. IT IS ALSO NOT IN DISPUTE THAT WORKI NG CAPITAL ADJUSTMENT HAS BEEN ALLOWED BY THE LD. DRP TO THE T AXPAYER IN ORDER TO EXAMINE COMPARABILITY. IN ORDER TO COMPRE SS THE CONTROVERSY AT HAND, THE LD. AR FOR THE TAXPAYER AT THIS STAGE HAS ONLY GRIEVANCE AGAINST INCLUSION OF TCS E SERVE LTD . AS A COMPARABLE AND QUA INCORRECT COMPUTATION OF MARGIN BY THE TPO/DRP. ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 23 43. SO FAR AS QUESTION OF INCLUSION OF TCS E SERVE LTD. IN THE FINAL SET OF COMPARABLES BY THE TAXPAYER DESPITE OB JECTIONS RAISED BY THE TAXPAYER IS CONCERNED, PERUSAL OF THE ANNUAL REPORT SHOWS THAT TCS E SERVE LTD. IS FUNCTIONALLY NOT COMPARABL E VIS--VIS THE TAXPAYER; IT HAS HUGE BRAND VALUE; HAVING NO SEGMEN TAL INFORMATION AND SERVICES ARE BEING PROVIDED BY IT AS A CAPTIVE SERVICE PROVIDER PREDOMINANTLY TO CITI GROUP. 44. WE HAVE ALREADY DISCUSSED IN DETAIL THE SUITABI LITY OF TCS E SERVE LTD. VIS-A-VIS THE TAXPAYER IN PRECEDING PARA S NO.18 TO 23 WHILE DECIDING TAXPAYERS APPEAL NO.876/DEL/2015 FO R AY 2010-11 OF THIS ORDER AND FOUND THE SAME TO BE NOT A SUITAB LE COMPARABLE. APART FROM THE DISCUSSION MADE IN PRECEDING PARAS, IT IS ALSO A MATTER OF RECORD THAT THE TURNOVER OF TCS E SERVE L TD. IS 195 TIMES OF THE TAXPAYER. 45. HONBLE DELHI HIGH COURT IN CASE OF AVAYA INDIA PVT. LTD. VS. ACIT (SUPRA) HAS FOUND TCS E SERVE LTD. AS NOT A SUITABL E COMPARABLE BUSINESS ROUTINE SERVICE PROVIDER ON GRO UNDS OF ITS LARGE SCALE OF OPERATION AND CLIENTELE BASE HAVING HUGE TURNOVER AND HAVING GIVEN HUGE AMOUNT TO TATA SONS LTD. TOWA RDS BRAND LOYALTY AND HAVING NO SEGMENTAL BIFURCATION BETWEEN TRANSACTION PROCESSING AND TECHNICAL SERVICES. ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 24 46. ALL THE AFORESAID FACTS GO TO PROVE THAT TCS E SERVE INTERNATIONAL, ADMITTEDLY REJECTED BY THE LD. TPO I N AY 2011-12, IS NOT A SUITABLE COMPARABLE FOR BENCHMARKING THE INTE RNATIONAL TRANSACTIONS, HENCE ORDERED TO BE EXCLUDED. 47. SO FAR AS QUESTION OF INCORRECT COMPUTATION OF MARGIN BY THE LD. TPO/DRP IS CONCERNED AS ALLEGED BY THE TAXPAYER , THE TAXPAYER HAS COME UP WITH CORRECT MARGIN OF COMPARABLE COMPA NIES CHOSEN BY THE TPO/DRP AS UNDER:- S.NO. COMPARABLE AS PER TP ORDER (UNADJUS TED MARGINS) CORRECT MARGIN COMPUTATION BY APPELLANT (UNADJUSTED MARGINS) CORRECT WORKING CAPITAL ADJUSTED MARGIN COMPUTATION BY APPELLANT 1 ACCENTIA TECHNOLOGY LTD. 29.18% 23.13% 16.70% 2 TCS E-SERVE LTD. 69.31% 69.66% 64.73% 3 E4WE HEALTHCARE PVT. LTD. 9.77% 9.14% 5.47% 4 ICRA TECHNO ANALYTICS LTD. 25.24% 24.83% 18.72% 5 INFOSYS BPO LTD. 17.86% 17.86% 12.59% 6 JINDAL INTELLICON LTD. 13.70% 10.92% 7.94% ARITHMETIC MEAN 27.51% 25.92% 21.03% ARIBA INDIAS MARGIN 17% 48. NEEDLESS TO SAY THAT IN ORDER TO COMPUTE THE CO RRECT MARGIN, TCS E SERVE LTD. IS TO BE EXCLUDED AS DISCUSSED IN THE PRECEDING PARAS SINCE IT APPEARS TO BE A MISTAKE APPARENT ON RECORD. SO, LD. TPO/AO IS DIRECTED TO VERIFY THE CORRECT MARGIN GIV EN BY THE AO AND PROCEED IN ACCORDANCE WITH LAW. ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 25 GROUND NO.7 49. LD. TPO AS WELL AS LD. DRP HAVE REJECTED THE TN MM WITH OP/SALES AS PLI AS THE MAM TO BENCHMARK ITS INTERNA TIONAL TRANSACTIONS QUA FEE FOR INTRA-GROUP / TECHNICAL SE RVICES AND PROCEEDED TO RECOMPUTE THE ALP OF THE TRANSACTION A T NIL BY APPLYING CUP METHOD. 50. UNDISPUTEDLY, IN AY 2010-11, IN TAXPAYERS OWN CASE, TNMM ANALYSIS ADOPTED BY THE TAXPAYER WAS UPHELD BY THE LD. DRP AND HELD THE VALUE FOR FEE FOR TECHNICAL SERVIC ES AT ARMS LENGTH BUT DURING THE YEAR UNDER ASSESSMENT I.E. 20 11-12, LD. DRP HAVE TAKEN OPPOSITE VIEW WITHOUT POINTING OUT ANY D ISSIMILARITY OF FACTS PARTICULARLY WHEN IT IS ADMITTED FACT THAT TH ERE IS NO CHANGE IN THE FUNCTIONAL PROFILE OF THE TAXPAYER DURING AYS 2 010-11 AND 2011-12. 51. LD. DR FOR THE REVENUE RELIED UPON THE ORDER PA SSED BY THE LD. DRP/TPO AND ALSO RELIED UPON THE ORDER OF THE SAFRAN ENGINEERING SERVICES INDIA (P.) LTD. VS. ACIT, CIRC LE 6(1)(1), BENGALURU (2018) 89 TAXMANN.COM 77 (BENGALURU TRI B.) . 52. IT IS ALSO THE CASE OF THE TAXPAYER THAT FOR RU NNING ITS BUSINESS, THERE WAS A DIRE NEED OF INTRA G ROUP SERVICES I.E. E-COMMERCE AUCTION PLATFORM FOR WHICH IT WAS IMMENS ELY BENEFITED BY UTILIZING HIGH END PLATFORM/KNOW-HOW D EVELOPED BY ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 26 ARIBA INC. AND AS SUCH, TECHNICAL SERVICES RECEIVED FROM ARIBA INC. WERE CRITICAL FOR RUNNING THE BUSINESS OF SPEND MAN AGEMENT SOLUTIONS BY ARIBA INDIA. IT IS ALSO THE CONTENTIO N OF THE LD. AR FOR THE TAXPAYER THAT FEE FOR TECHNICAL SERVICES HAS BE EN ACCEPTED BY THE REVENUE IN CASE OF AES I.E. ARIBA INC. AND SIMILAR PAYMENT HAS BEEN MADE IN THE PREVIOUS YEARS. IT IS ALSO CONTEN DED BY THE LD. AR FOR THE TAXPAYER THAT THERE IS NO CHANGE IN THE PRI CING BASIS OF THE TRANSACTIONS VIS--VIS PRIOR YEARS. 53. HOWEVER, LD. TPO HAS TAKEN THE VIEW AFTER PERUS ING THE PROFIT AND LOSS ACCOUNT THAT THE TAXPAYER HAS INCUR RED PERSONNEL EXPENSES, FEE FOR TECHNICAL SERVICES, LEGAL AND PRO FESSIONAL EXPENSES TO THE TUNE OF RS.11,34,29,790/-, RS.1,73, 75,854/- & RS.77,97,755/- RESPECTIVELY WHICH IS IN THE NATURE OF DUPLICATIVE SERVICES. LD. TPO ALSO PROCEEDED TO HOLD THAT THE TAXPAYER HAS NOT BEEN ABLE TO SHOW AS TO WHAT COST BENEFIT ANALYSIS HAS BEEN DONE WITH REGARD TO THE PURPORTED RECEIPT OF SERVICES FR OM THE AE AND NO INDEPENDENT PARTY WOULD HAVE MADE A PAYMENT IN UNCO NTROLLED CIRCUMSTANCES. IT IS SETTLED PRINCIPLE OF LAW THAT REVENUE AUTHORITIES ARE NOT EMPOWERED TO QUESTION THE COMMERCIAL WISDOM /REASONING APPLIED BY THE BUSINESSMEN TO RUN ITS BUSINESS. TH E TAXPAYER HAS COME UP WITH COMPLETE FINANCIAL DATA THAT THE TECHN ICAL SERVICES ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 27 RECEIVED FROM AE HAS IMMENSELY INCREASED THE SALE O F THE TAXPAYER DURING THE FYS 2010-11 TO 2013-14 WHICH IS AS UNDE R :- FINANCIAL YEAR THIRD PARTY REVENUE FROM PROVISION OF SPEND MANAGEMENT SOLUTIONS YOY GROWTH IN REVENUE FEE FOR TECHNICAL SERVICES FY 2009-10 133,727,094 16,715,886 FY 2010-11 139,006,833 3.95% 17,373,854 FY 2011-12 147,899,633 6.40% 18,487,454 FY 2012-13 194,630,137 31.60% 24,328,767 FY 2013-14 290,078,940 49.04% 38,107,544 54. IT IS ALSO THE CASE OF THE TAXPAYER THAT EVEN A FTER INCLUDING FEE FOR TECHNICAL SERVICES THE OPERATING EXPENSES R ATIO OF THE TAXPAYER IS LOWER THAN THAT OF COMPARABLE COMPANIES AND ITS PROFIT MARGIN IS ALSO MORE THAN COMPARABLE COMPANIES AS PE R ANALYSIS GIVEN AT PAGES 160 & 161 OF THE PAPER BOOK. LD. TP O/DRP HAVE IGNORED ALL THESE FACTS AND HAS NOT PREFERRED TO DI SCUSS THE SAME AND PREFERRED TO DECIDE THE ISSUE ON THE BASIS OF T HE FACT THAT THE TAXPAYER HAS NOT BEEN ABLE TO SHOW THE BENEFIT WHIC H HAS BEEN ACCRUED TO THE TAXPAYER, WHICH IS NOT PERMISSIBLE U NDER LAW. 55. LD. DRP IN ITS ORDER IN PARA B.1 (AT PAGE 48 OF THE APPEAL FILE) THOUGH AGREED WITH THE CONTENTION RAISED BY T HE TAXPAYER THAT SOME BENEFIT HAS BEEN ACCRUED TO THE TAXPAYER IN TH E FORM OF PLATFORM TO CONDUCT THE E-AUCTION AND ALSO WHERE TH E TRANSACTIONS OUGHT TO HAVE BEEN BENCHMARKED SEPARATELY AFTER EXA MINING THE FUNCTIONAL PROFILE BECAUSE THIS SERVICE IS SO INTER -RELATED TO THE ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 28 BUSINESS OF THE TAXPAYER BUT DECLINED TO GRANT THE RELIEF ON THE GROUND THAT THE TAXPAYER HAS FAILED TO DISCHARGE TH E ONUS OF ADDUCING PROPER EVIDENCE TO SHOW NATURE OF BENEFIT RECEIVED AND WHETHER THE COST CHARGED FOR IT WAS AT ARMS LENGTH AND NOT DUPLICATIVE. 56. TO OUR MIND, IT IS ERRONEOUS APPROACH BECAUSE W HEN SERVICES HAVE BEEN RECEIVED IN THE FORM OF PLATFORM TO CONDU CT THE E-AUCTION BY THE TAXPAYER AND THERE IS NOT AN IOTA OF MATERIA L ON THE FILE IF THE SERVICES ARE DUPLICATIVE IN NATURE, DRAWING THE BEN EFIT, IF ANY, BY THE TAXPAYER IS IMMATERIAL AS IT IS PREROGATIVE OF THE BUSINESSMAN AS TO HOW THE BUSINESS IS TO BE RUN. 57. SO, IN THESE CIRCUMSTANCES, THIS ISSUE IS REQUI RED TO BE REMITTED BACK TO THE TPO/DRP/AO TO DECIDE AFRESH AF TER PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE TAXPAYER AND B Y FOLLOWING A CONSISTENT APPROACH PARTICULARLY WHEN THERE IS NO C HANGE IN THE FUNCTIONAL PROFILE AND NATURE OF TRANSACTIONS DURIN G THE YEAR UNDER ASSESSMENT VIS--VIS EARLIER YEAR IN CONSONANCE WIT H AN APPROACH ADOPTED BY THE LD. DRP IN AY 2010-11. SO, GROUND NO .7 IS DETERMINED IN FAVOUR OF THE TAXPAYER FOR STATISTICA L PURPOSES. GROUND NO.8 58. LD. TPO/DRP HAVE MADE NOTIONAL ADDITION OF RS.19,61,503/- BY DETERMINING ARMS LENGTH INTEREST RATE AT 10.85% ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 29 ON ACCOUNT OF INTEREST ON DELAYED COLLECTION OF REC EIVABLES FROM ITS AE. LD. AR FOR THE TAXPAYER CONTENDED THAT TPO/DRP HAVE ERRED IN MAKING A SEPARATE NOTIONAL ADDITION OF THE ALLEG ED INTEREST ON ACCOUNT OF RECEIVABLES DESPITE THE FACT THAT THIS C OST HAS ALREADY BEEN COUNTED BY WAY OF WORKING CAPITAL ADJUSTMENT O N THE COMPARABLES. 59. UNDISPUTEDLY, IN AY 2010-11, IN TAXPAYERS OWN CASE, LD. DRP HELD THAT THE PERIOD OF DELAY MAY BE RESTRICTED TO THE VERY SAME ACCOUNTING YEAR FOR WHICH BENCHMARKING IS BEIN G DONE I.E. TILL 31 ST MARCH AND INTEREST SHOULD BE COMPUTED ACCORDINGLY TO THE PERIOD OF DELAY ONLY. IT BEING AN IDENTICAL ISSUE CONSISTENT APPROACH BY THE REVENUE AUTHORITIES IS REQUIRED TO ADOPT IN ORDER TO STOP UNNECESSARY LITIGATION. SO, WE ARE OF THE CON SIDERED VIEW THAT THE ISSUE IS REQUIRED TO BE REMITTED BACK TO THE AO /TPO TO DECIDE IN ACCORDANCE WITH THE VIEW TAKEN IN AY 2010-11 AS WELL AS LAW LAID DOWN BY HONBLE HIGH COURT OF DELHI IN KUSUM HEALTHCARE PVT. LTD. IN ITA NO.765/2016 DATED 25.04.2017. SO, GROUND NO.8 IS DETERMINED IN FAVOUR OF THE TAXPAYER FOR STATIST ICAL PURPOSES. CORPORATE ISSUES GROUND NO.9 60. THE TAXPAYER CHALLENGED THE ACTION OF AO/DRP IN DISALLOWING AN AMOUNT OF RS.82,98,871/- CLAIMED ON ACCOUNT OF ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 30 TRAVELLING AND CONVEYANCE EXPENSES APPEARING AS CRE DIT CARD PAYMENTS IN AIR. UNDISPUTEDLY, CREDIT CARDS ARE IS SUED BY THE BANK IN THE NAME OF EMPLOYEES OF THE TAXPAYER AND S TATEMENTS THEREOF HAVE BEEN DIRECTLY ISSUED TO THE EMPLOYEES. THE AMOUNT HAS BEEN DISALLOWED BY THE AO/DRP ON THE GROUND THA T THE TAXPAYER HAS FAILED TO PRODUCE DOCUMENTARY EVIDENCE I.E. BILLS/VOUCHERS IN RESPECT OF SUCH CREDIT CARDS. NO DOUBT, THE TAXPAYER IS HAVING DETAILS OF EXPENSES CLAIMED AS R EIMBURSEMENT BY THE EMPLOYEES BUT IN ORDER TO AUTHENTICATE THE S AME IT HAS NOT TAKEN ON RECORD THE COPIES OF THE CREDIT CARD BILLS OF ITS EMPLOYEES TO PROVE THAT THE EXPENSES HAVE BEEN INCURRED BY TH E EMPLOYEES FOR THE BUSINESS PURPOSES. IN THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE IS REQUIRED TO BE RE MITTED BACK TO THE AO TO DECIDE AFRESH AND TO PROVIDE AN OPPORTUNITY O F BEING HEARD TO THE TAXPAYER TO EXPLAIN THE DETAILS OF THE AMOUN T REIMBURSED TO THE EMPLOYEES. GROUND NO.9 IS ALLOWED IN FAVOUR OF THE TAXPAYER FOR STATISTICAL PURPOSES. GROUND NO.10 61. GROUND NO.10 IS DISMISSED HAVING NOT BEEN PRESS ED DURING THE COURSE OF ARGUMENTS. GROUND NO.11 62. GROUND NO.11 BEING PREMATURE NEEDS NO SPECIFIC FINDINGS. ITA NO.876/DEL./2015 ITA NO.4175/DEL./2016 31 GROUND NO.12 63. GROUND NO.12 BEING CONSEQUENTIAL IN NATURE NEED S NO SPECIFIC FINDINGS. 64. RESULTANTLY, THE APPEALS OF THE TAXPAYER FOR AY S 2010-11 & 2011-12 ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN OPEN COURT ON THIS 18 TH DAY OF JUNE, 2020. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 18 TH DAY OF JUNE, 2020 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A). 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.