M/s Wissen Infotech Private Limited, Hyderabad V. DCIT., Circle-17(2), Hyderabad, Hyderabad

ITA 99/HYD/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6117 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 21-11-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 28-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: U MINICHANDRAN
• Keywords: Transfer pricing; Search and seizure; Principle of natural justice; International transaction
• Section: 92C; 143(3); 10AA; 115JB; 10B; 92

Judgement Text

ITA NOS 99 AND 311 OF 2015WISSEN INFOTECH P LTD HY DERABAD PAGE 1 OF 19 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.99/HYD/2015 (ASSESSMENT YEAR: 2010-11) M/S. WISSEN INFOTECH PRIVATE LIMITED HYDERABAD PAN: AAACW 3027 G VS DY. COMMISSIONER OF INCOME TAX CIRCLE 17 ( 2 ) HYDERABAD ITA NO.311/HYD/2015 (ASSESSMENT YEAR: 2010-11) DY. COMMISSIONER OF INCOME TAX CIRCLE 17 ( 2 ) HYDERABAD VS M/S. WISSEN INFOTECH PRIVATE LIMITED HYDERABAD PAN: AAACW 3027 G FOR ASSESSEE : SHRI P.V.S.S. PRASAD FOR REVENUE : SMT. U. MINI CHANDRAN, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. BOTH ARE CROSS APPEALS BY THE ASSESSEE AS WELL AS T HE REVENUE FOR THE A.Y 2010-11 AGAINST THE ASSESSMENT O RDER PASSED U/S 143(3) R.W.S. 144C(13) OF THE I.T. ACT, 1961 DA TED 31.12.2014. IN THE ASSESSEES APPEAL IN ITA NO.99/HYD/2016, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED(LD) ASSESSING OFFICER (AO)/LD DISPUTE RESOLUTION PANEL DATE OF HEARING : 18.01.2017 DATE OF PRONOUNCEMENT : 28.02.2017 ITA NOS 99 AND 311 OF 2015WISSEN INFOTECH P LTD HY DERABAD PAGE 2 OF 19 (DRP) ARE ERRONEOUS IN LAW AND ON THE FACTS OF THE CASE. 2. THE LD DRP/ LD AO OUGHT TO HAVE ACCEPTED THE PROFIT MARGIN OF 3.09% ADOPTED BY THE APPELLANT AS HAVING COMPLIED WITH THE ARMS LENGTH PRINCIPLE. 3. THE LD DRP/ LD AO ARE NOT JUSTIFIED IN LAW IN CONSIDERING WRONG COMPARABLES AND CONSEQUENTLY ARRIVING AT A HIGH ARITHMETIC MEAN OF 18.84% AS A RATIO OF OP/OC. 4. THE LD DRP /LD AO IS NOT JUSTIFIED IN LAW IN MAKING AN ADJUSTMENT U/S 92CA OF RS. 3,81,82,837/- TO THE PRICE RECEIVED BY THE APPELLANT. 5. THE LD DRP ERRED IN NOT ACCEPTING THE ASSESSEE'S CONTENTION OF REJECTING 12 COMPANIES ON THE GROUNDS OF FUNCTIONAL COMPARABILITY, SUPER PROFIT, HIGH TURNOVER COMPANIES. 6. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING WITH THE PRIOR APPROVAL OF THE HON'BLE TRIBUNAL. ADDITIONAL GROUNDS 1. THE LEARNED TPO/DRP ERRED IN MAKING/ CONFIRMING AN ADJUSTMENT WHEN THE APPELLANT COMPANY WAS CLAIMING EXEMPTION U/S 10A AND HENCE THERE IS NO INTENTION TO SHIFT PROFITS OUTSIDE INDIA AND MORE SO WHEN THE TAX RATES IN USA WHERE THE AE IS LOCATED WERE HIGHER THAN THOSE PREVAILING IN INDIA. ITA NOS 99 AND 311 OF 2015WISSEN INFOTECH P LTD HY DERABAD PAGE 3 OF 19 2. THE LEARNED AO AS WELL AS THE CIT (A) FAILED TO APPLY THEIR MIND TO THE TP STUDY REPORT OF THE APPELLANT COMPANY, WHILE MAKING REFERENCE TO THE LEARNED TPO U/S 92CA(1) OF THE I.T. ACT, 1961 AND ALSO FAILED IN GIVING AN OPPORTUNITY OF HEARING TO THE APPELLANT COMPANY BEFORE MAKING SUCH REFERENCE TO LEARNED TPO. 2. IT IS SUBMITTED BY THE LEARNED COUNSEL FOR THE A SSESSEE THAT THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE ARE NOT EMANATING FROM THE ORDER OF THE DRP BUT ARE PURELY LEGAL QUESTIONS TO BE ADJUDICATED AND HENCE PRAYED FOR TH EIR ADMISSION. WE FIND THAT THESE ADDITIONAL GROUNDS ARE NOT ARISI NG OUT OF THE ORDER OF THE DRP, BUT ARE RAISED FOR THE FIRST TIME BEFORE US AS ADDITIONAL GROUNDS AND BEING LEGAL IN NATURE, WE AR E INCLINED TO ADMIT AND ADJUDICATE THE SAME AS UNDER. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A CONCERN WHICH IS ELIGIBLE FOR CLA IMING EXEMPTION U/S 10A OF THE ACT AND THEREFORE, ALL OF ITS INCOME IS EXEMPT FROM TAX IN INDIA AND HENCE THERE IS NO INTENTION TO SHI FT ITS PROFIT OUTSIDE INDIA AND MORE SO, WHEN THE TAX RATES IN US A, WHERE THE AES ARE LOCATED, IS HIGHER THAN IN INDIA. IN SUPPOR T OF THE CONTENTION THAT THE AO AS WELL AS THE CIT(A), HAVE TO APPLY THEIR MIND TO THE TP STUDY BEFORE MAKING A REFERENCE TO T HE TPO U/S 92CA OF THE ACT, THE LEARNED COUNSEL FOR THE ASSESS EE HAS PLACED RELIANCE ON THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL AT MUMBAI IN THE CASE OF TATA CONSULTANCY SERVICES LTD IN ITA NO.7513/MUM/2010. FURTHER, HE ALSO PLACED RELIANCE U PON THE ITA NOS 99 AND 311 OF 2015WISSEN INFOTECH P LTD HY DERABAD PAGE 4 OF 19 ARTICLE ON PRINCIPLES OF NATURAL JUSTICE BY SHRI BR IJESH KUMAR, HON'BLE JUDGE OF THE HON'BLE ALLAHABAD HIGH COURT W HEREIN IT HAS BEEN STATED THAT THE PRINCIPLES OF NATURAL JUSTICE REQUIRES THAT NO MAN SHOULD BE CONDEMNED UNHEARD AND THAT BOTH THE S IDES MUST BE HEARD BEFORE PASSING ANY ORDERS. THEREFORE, THE OPPORTUNITY OF HEARING BEFORE MAKING ANY DECISIONS, WAS CONSIDERED TO BE A BASIC REQUIREMENT. IT WAS OBSERVED THAT THE APPLICATION O F PRINCIPLES OF NATURAL JUSTICE VARIES FROM CASE TO CASE DEPENDING UPON THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AO AND THE DRP, ON MERITS AND AS REGA RDS THE ADDITIONAL GROUNDS, THE ASSESSEES RELIANCE ON THE DECISION IN THE CASE OF TATA CONSULTANCY SERVICES (CITED SUPRA), SH E SUBMITTED THAT THE DECISION OF THE TATA CONSULTANCY SERVICES (CITED SUPRA) HAS BEEN CONSIDERED BY THE COORDINATE BENCH OF THE TRIBUNAL AT DELHI IN THE CASE OF GRUNER INDIA PVT. LTD VS. DCIT IN ITA NO.6794/DEL/2015 DATED 29.04.2016 AND IT HAS BEEN H ELD THAT THE SAID DECISION IS NOT APPLICABLE. 5. SHE ALSO PLACED RELIANCE UPON THE DECISION OF TH E HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF COCO COLA LTD VS. ACIT REPORTED IN (2009) 309 ITR 0194 WHEREI N IT WAS HELD THAT IT IS SUFFICIENT IF OPPORTUNITY IS GIVEN BY TH E TPO BEFORE MAKING ANY ALP ADJUSTMENT AND IT IS NOT NECESSARY T HAT THE AO SHOULD GIVE AN OPPORTUNITY BEFORE MAKING REFERENCE TO THE TPO. AS REGARDS THE ASSESSEES CONTENTION THAT THE TAX R ATES ARE VERY HIGH IN USA AS COMPARED TO THE TAX RATES IN INDIA, THE LEARNED DR HAS PLACED BEFORE US A DOCUMENT STATING THAT IN USA THE ITA NOS 99 AND 311 OF 2015WISSEN INFOTECH P LTD HY DERABAD PAGE 5 OF 19 STATUTORY AND CORPORATE INCOME TAX RATE IS RANGING FROM 15 TO 35%. THEREFORE, ACCORDING TO HER, THE TAX RATES IN U S ARE NOT HIGHER THAN IN INDIA AND THEREFORE, THE ASSESSEES CONTENTION THAT IT CANNOT HAVE ANY INTENTION TO SHIFT PROFIT FROM I NDIA TO US CANNOT BE ACCEPTED. THE LEARNED DR ALSO SUBMITTED T HAT THE DECISION IN THE CASE OF AZTECH SOFTWARE & TECHNOLOG Y SERVICES LTD & ANR. VS. ACIT COVERS THE ISSUE AS THE SPECIAL BEN CH OF THE TRIBUNAL AT BANGALORE, HAS CLEARLY HELD THAT BEFORE REFERRING TO THE TPO, THE AO NEED NOT GIVE ANY HEARING TO THE ASSESS EE. SHE SUBMITTED THAT THE DECISION OF THE SPECIAL BENCH ST ILL HOLDS THE GROUND AND THEREFORE, THE DECISION OF THE INCOME TA X APPELLATE TRIBUNAL, MUMBAI BENCH, IN THE CASE OF TATA CONSULT ANCY SERVICES LTD (CITED SUPRA) IS AGAINST THE PRINCIPLE S LAID DOWN BY THE SPECIAL BENCH AND HENCE IS NOT TO BE APPLIED TO THE FACTS OF THE CASE BEFORE US. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF TATA CONSULTANCY SERVICES LTD HAS HELD THAT THE AO IS REQUIRED TO GIVE THE ASSESSEE AN OPPORTUNITY OF HEA RING BEFORE MAKING ANY REFERENCE TO THE TPO. IN THE SAID CASE, WE FIND THAT THE FACTS AND CIRCUMSTANCES ARE DISTINGUISHABLE FRO M THE FACTS OF THE CASE BEFORE US. THE COORDINATE BENCH OF THE TRI BUNAL AT DELHI IN THE CASE OF GRUNER INDIA PVT. LTD VS. DCIT IN IT A NO.6794/DEL/2015 HAS CLEARLY BROUGHT OUT THE DISTIN CTION IN PARAS 9.1 TO 9.5 OF ITS ORDER. FOR THE SAKE OF CLAR ITY AND READY REFERENCE, THE RELEVANT PORTION IS REPRODUCED AS UN DER: V. WHETHER THE TP PROVISIONS APPLY WHEN DEDUCTION I S AVAILABLE UNDER THE ACT ? ITA NOS 99 AND 311 OF 2015WISSEN INFOTECH P LTD HY DERABAD PAGE 6 OF 19 9.1. THE LD. AR ARGUED THAT ITS PROFIT IS DEDUCTIBL E U/S 80IC OF THE ACT. HE VEHEMENTLY SUBMITTED THAT ONCE THE P ROFIT FROM RENDERING OF SOFTWARE DEVELOPMENT SERVICES IS DEDUCTIBLE, THEN, NO MOTIVE CAN BE ATTRIBUTED FOR ARTIFICIALLY REDUCING THE PROFIT BY MANIPULATING TH E PRICE WITH ITS AE. IT WAS ELABORATED THAT THE PROFIT OF A N ASSESSEE, ELIGIBLE FOR DEDUCTION UNDER SECTION 80I C, BECOMES TAX NEUTRAL IRRESPECTIVE OF ITS QUANTUM. HE , THEREFORE, URGED THAT EITHER THE INTERNATIONAL TRAN SACTION SHOULD NOT BE PROCESSED IN TERMS OF CHAPTER-X OF TH E ACT OR HIGHER AMOUNT OF DEDUCTION SHOULD BE ALLOWED CORRESPONDING TO THE AMOUNT OF ADDITION ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT. THIS WAS FORCEFULLY CO NTESTED BY THE LD. DR. 9.2. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL, WE FIND OURSELVES UNABLE TO ACCE PT BOTH THE SUBMISSIONS ADVANCED BY THE LD. AR ON THIS ASPE CT OF THE MATTER. IN SO FAR AS THE FIRST SUBMISSION FOR N OT CARRYING OUT ANY TRANSFER PRICING ADJUSTMENT IN VIE W OF THE BENEFIT ENJOYED BY IT U/S 80IC OF THE ACT IS CO NCERNED, WE FIND THAT NO EXCEPTION HAS BEEN CARVED OUT BY TH E STATUTE FOR NON- DETERMINATION OF THE ALP OF AN INTERNATIONAL TRANSACTION OF AN ASSESSEE WHO IS ELI GIBLE FOR THE BENEFIT OF DEDUCTION SECTION 10A/10B OR ANY OTH ER SECTION OF CHAPTER-VIA OF THE ACT. SECTION 92(1) CL EARLY PROVIDES THAT ANY INCOME ARISING FROM AN INTERNATIO NAL TRANSACTION IS REQUIRED TO BE COMPUTED HAVING REGAR D TO ITS ARM'S LENGTH PRICE. THERE IS NO PROVISION EXEMP TING THE COMPUTATION OF TOTAL INCOME ARISING FROM AN INTERNA TIONAL TRANSACTION HAVING REGARD TO ITS ALP, IN THE CASE O F AN ASSESSEE ENTITLED TO DEDUCTION U/S 80IC OR ANY OTHE R SUCH RELEVANT PROVISION. SECTION 92C DEALING WITH COMPUT ATION OF ALP CLEARLY PROVIDES THAT THE ALP IN RELATION TO AN INTERNATIONAL TRANSACTION SHALL BE DETERMINED BY ON E OF THE METHODS GIVEN IN THIS PROVISION. THIS SECTION A LSO DOES NOT IMMUNE AN INTERNATIONAL TRANSACTION FROM THE COMPUTATION OF ITS ALP WHEN INCOME IS OTHERWISE ELI GIBLE FOR DEDUCTION. ON THE CONTRARY, WE FIND THAT SUB- S ECTION (4) OF SECTION 92C PLAINLY STIPULATES THAT WHERE AN ALP IS DETERMINED, THE AO MAY COMPUTE THE TOTAL INCOME OF THE ASSESSEE HAVING REGARD TO THE ALP SO DETERMINED. TH IS SHOWS THAT THE TOTAL INCOME OF AN ASSESSEE ENTERING INTO AN INTERNATIONAL TRANSACTION, IS REQUIRED TO BE NECESS ARILY COMPUTED HAVING REGARD TO ITS ALP WITHOUT ANY EXCEP TION. THUS, THE LD. AR'S ARGUMENT THAT SINCE ITS INCOME I S SUBJECT TO DEDUCTION U/S 80IC, THE PROVISIONS OF THE CHAPTE R-X OF THE ACT SHOULD NOT BE APPLIED, IN OUR CONSIDERED OP INION, ITA NOS 99 AND 311 OF 2015WISSEN INFOTECH P LTD HY DERABAD PAGE 7 OF 19 HAS NO FORCE IN VIEW OF THE CLEAR STATUTORY MANDATE CONTAINED IN PROVISO TO SECTION 92C(4), WHICH READS AS UNDER:- `PROVIDED THAT NO DEDUCTION UNDER SECTION 10A OR SE CTION 10AA OR SECTION 10B OR UNDER CHAPTER VI-A SHALL BE ALLOWED IN RESPECT OF THE AMOUNT OF INCOME BY WHICH THE TOTAL INCOME OF THE ASSESSEE IS ENHANCED AFTER COMP UTATION OF INCOME UNDER THIS SUB-SECTION:'. 9.3. A CIRCUMSPECT PERUSAL OF THIS PROVISO READ ALO NG WITH SUB-SECTION (4) OF SECTION 92C DIVULGES THAT WHEN T HE TOTAL INCOME OF AN ASSESSEE FROM AN INTERNATIONAL TRANSAC TION IS COMPUTED HAVING REGARD TO ITS ALP, THEN, NO DEDUCTI ON U/S 10A OR ANY OTHER SECTION INCLUDING THOSE COVERED UN DER CHAPTER VIA OF THE ACT SHALL BE ALLOWED IN RESPECT OF THE AMOUNT OF INCOME BY WHICH THE TOTAL INCOME OF THE ASSESSEE HAS BEEN ENHANCED AFTER COMPUTATION OF INC OME DETERMINED ON THE BASIS OF THE ALP OF AN INTERNATIO NAL TRANSACTION. THE LEGISLATURE HAS UNCONDITIONALLY PR OVIDED FOR NOT ALLOWING THE BENEFIT OF DEDUCTION UNDER ANY SECTION IN RESPECT OF THE ADDITION MADE ON ACCOUNT OF TRANS FER PRICING ADJUSTMENT. NOT ALLOWING OF ANY BENEFIT U/S 80IC IN RESPECT OF AN ADDITION ON ACCOUNT OF TRANSFER PR ICING ADJUSTMENT PRE-SUPPOSES THE EXISTENCE OF TRANSFER P RICING ADDITION IN THE FIRST INSTANCE TO AN ASSESSEE WHO I S OTHERWISE ELIGIBLE TO THE BENEFIT OF DEDUCTION UNDE R THIS SECTION. IF ONE WAS TO PRESUME THAT NO ADDITION TOW ARDS TRANSFER PRICING ADJUSTMENT IS COMPREHENSIBLE IN TH E CASE OF AN ASSESSEE ENJOYING THE BENEFIT OF DEDUCTION U/ S 80IC, THEN THERE WAS NO NEED TO ENSHRINE AN EXPRESS PROVI SION FORBIDDING THE GRANT OF DEDUCTION UNDER THIS SECTIO N IN RESPECT OF ENHANCEMENT OF INCOME DUE TO TRANSFER PR ICING ADJUSTMENT. ONCE THE LEGISLATURE HAS ENGRAFTED AN UNAMBIGUOUS PROVISION EXPLICITLY SPELLING OUT THE N ON- GRANTING OF DEDUCTION U/S 80IC ON THE ENHANCED INCO ME DUE TO TRANSFER PRICING ADDITION, WE ARE AFRAID TO ACCEPT THE ASSESSEE'S CONTENTION, WHICH RUNS DIAGONALLY OP POSITE TO THE UNEQUIVOCAL LANGUAGE OF PROVISO TO SECTION 9 2C(4). THIS CONTENTION, IF TAKEN TO A LOGICAL CONCLUSION, WOULD AMOUNT TO OBLITERATING THE PROVISIO ITSELF, WHICH I S PATENTLY INCORRECT. 9.4. OUR VIEW IS FORTIFIED BY T HE SPECIAL BENCH ORDER IN THE CASE OF AZTECH SOFTWARE AND TECHNOLOGY SERVICES LTD. VS. ACIT (2007) 107 ITD 14 1 (SB) (BANGALORE) IN WHICH SIMILAR ISSUE HAS BEEN DECIDED BY THE SPECIAL BENCH BY HOLDING THAT AVAILABILITY OF EXEMP TION U/S 10A TO THE ASSESSEE IS NO BAR TO APPLICABILITY OF SECTIONS 92C AND 92CA. SIMILAR VIEW HAS BEEN TAK EN BY ITA NOS 99 AND 311 OF 2015WISSEN INFOTECH P LTD HY DERABAD PAGE 8 OF 19 PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. MSS INDIA (P) LTD. (2009) 123 TTJ 657 (PUNE) AND SEVERA L OTHER ORDERS. THE RELIANCE OF THE LD. AR ON THE OR DER OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS . TATA CONSULTANTS SERVICES LTD. (ITA NO. 7513/M/2010) DAT ED 4.11.2015, IN OUR CONSIDERED OPINION IS MISCONCEIVE D, BECAUSE, IN THAT CASE, THE TRIBUNAL PRIMARILY FOUND THAT THE AO ERRED IN NOT HIMSELF EXAMINING THE ISSUE OF TP AND FAILED TO APPLY HIS MIND TO THE TP REPORT FILED BY THE ASSESSEE. THE LAST SENTENCE IN PARA 54 OF THE ORDER UPHOLDING THE ASSESSEE'S CONTENTION THAT NO TP ADJU STMENT CAN BE MADE WHERE THE ASSESSEE ENJOYS BENEFIT OF DEDUCTION U/S 10A OR 80HHE, ETC., IS ONLY OBITER DI CTA INASMUCH AS THE ADDITION WAS FOUND TO BE NOT SUSTAI NABLE ON THE OTHER MAIN GROUNDS AS DISCUSSED IN THE BODY OF THE ORDER. ON THE CONTRARY, WE FIND THAT THE DECISION O F THE SPECIAL BENCH IN AZTECH SOFTWARE (SUPRA) PERMITTING THE APPLICABILITY OF SECTIONS 92C AND 92CA TO AN ASSESS EE AVAILING THE BENEFIT OF SECTION 80IC ETC. OF THE AC T IS ITS RATIO DECIDENDI. THE LD. AR HAS NOT POINTED OUT ANY JUDGMENT OF SOME HON'BLE HIGH COURT DECIDING THIS P OINT EITHER WAY. IN VIEW OF THE FACT THAT THERE IS ALREA DY A SPECIAL BENCH DECISION IN THE CASE OF AZTECH SOFTWA RE (SUPRA) WHICH SUPPORTS THE MAKING OF TRANSFER PRICI NG ADJUSTMENT NOTWITHSTANDING THE AVAILABILITY OF DEDU CTION UNDER SUCH SECTIONS TO THE ASSESSEE, APART FROM CLE AR STATUTORY MANDATE CONTAINED IN PROVISO TO SECTION 9 2C(4), WE ARE MORE INCLINED TO GO WITH THE VIEW OF THE SPE CIAL BENCH. 9.5. IT IS, THEREFORE, HELD THAT THE ELIGIBILITY OF THE ASSESSEE TO DEDUCTION U/S 80IC OF THE ACT DOES NOT OPERATE A S A BAR ON DETERMINING THE ALP OF INTERNATIONAL TRANSACTION UNDERTAKEN BY IT AND FURTHER THE ENHANCEMENT OF INC OME DUE TO SUCH TRANSFER PRICING ADDITION CANNOT BE CON SIDERED FOR ALLOWING THE BENEFIT OF DEDUCTION UNDER THIS SE CTION. SIMILAR VIEW HAS BEEN TAKEN BY THE DELHI BENCH OF T HE TRIBUNAL IN HEADSTRONG SERVICES INDIA PVT. LTD. VS. DCIT (IN ITA NO. 6200/DEL/2012) VIDE ITS ORDER DATED 11. 2.2016. THIS CONTENTION IS, THEREFORE, JETTISONED 7. FACTS AND CIRCUMSTANCES IN THE CASE BEFORE US ARE SIMILAR TO THE ABOVE AND RESPECTFULLY FOLLOWING THE DECISION OF THE ITA NOS 99 AND 311 OF 2015WISSEN INFOTECH P LTD HY DERABAD PAGE 9 OF 19 COORDINATE BENCH AT DELHI, WE DISMISS THE ADDITIONA L GROUND OF APPEAL RAISED BY THE ASSESSEE. 8. AS REGARDS THE OTHER GROUNDS OF APPEAL, WE FIND THAT THE ASSESSEE IS CHALLENGING THE ALP ADJUSTMENT MADE BY THE TPO. BRIEF FACTS LEADING TO THIS ISSUE ARE THAT THE ASSE SSEE, WHO IS ENGAGED IN THE BUSINESS OF RENDERING I.T. ENABLED S ERVICES TO ITS AES, FILED ITS RETURN OF INCOME FOR THE A.Y 2010-11 ON 14.10.2010 ADMITTING AN INCOME OF RS.1,00,475 AFTER CLAIMING E XEMPTION OF RS.72,49,133 U/S 10B OF THE ACT. THE ASSESSEE ADMIT TED AN INCOME OF RS.68,89,180 U/S 115JB OF THE ACT. DURING THE SCRUTINY PROCEEDINGS U/S 143(3) OF THE ACT, THE AO OBSERVED THAT THE ASSESSEE HAS ENTERED INTO INTERNATIONAL TRANSACTION S WITH ITS AES AND THEREFORE, HE REFERRED THE DETERMINATION OF THE ALP IN RESPECT OF THE INTERNATIONAL TRANSACTIONS TO THE TPO U/S 92 CA OF THE ACT. THE TPO ISSUED A NOTICE U/S 92CA OF THE ACT TO THE ASSESSEE ON 6.3.2013. THE ASSESSEE FILED ITS REPLY ON 23.7.2013 AND 5.12.2013. AFTER CONSIDERING THE T.P. REPORT FILED BY THE ASSESSEE AND ALSO THE ASSESSEES SUBMISSIONS AT LENGTH, THE AO OBSERVED THAT THE ASSESSEE IS OFFERING SPAN TECHNOLOGY CONSU LTING, APPLICATION SERVICES, SYSTEMS INTEGRATION, SOFTWARE DEVELOPMENT, MAINTENANCE, RE-ENGINEERING, INDEPENDENT TESTING SE RVICES, IT INFRASTRUCTURE SERVICES AND BUSINESS PROCESS OUTSOU RCING. HE OBSERVED THAT THE SERVICES INCLUDE MAINTENANCE, RE- ENGINEERING TECHNOLOGY, ARCHITECTURE, DESIGNING, TESTING, AND I MPLEMENTATION TECHNOLOGY AND BROAD FUNCTIONAL DEMEANOR. THEREFORE , ACCORDING TO THE TPO, THE ASSESSEE IS PROVIDING WIDE RANGE OF SERVICES TO ITS AES. THE INTERNATIONAL TRANSACTIONS REPORTED BY TH E ASSESSEE ARE FOR AN AMOUNT OF RS.25,02,22,520 FROM THE PROVISION OF SOFTWARE ITA NOS 99 AND 311 OF 2015WISSEN INFOTECH P LTD HY DERABAD PAGE 10 OF 19 DEVELOPMENT SERVICES. THE ASSESSEE HAS REPORTED A M ARGIN OF 3.09% BY ADOPTING THE TNMM METHOD. THE ASSESSEE HAD ADOPTED 5 COMPANIES AS COMPARABLES AND SINCE THE ALP OF THE ASSESSEE WAS WITHIN 5% RANGE OF THE ARITHMETIC MEAN MARGIN O F THE COMPARABLES, THE ASSESSEE TREATED THE INTERNATIONAL TRANSACTION TO BE AT ALP. THE TPO, HOWEVER, OBSERVED THAT THE MODE OF SEARCH ADOPTED BY THE ASSESSEE SUFFERS FROM DEFECTS WHICH RESULTED IN SELECTION OF INAPPROPRIATE COMPARABLES AND REJECTIO N OF COMPANIES THAT ARE APPROPRIATE COMPARABLES. HE THEREFORE, REJ ECTED THE TP STUDY OF THE ASSESSEE AND CONDUCTED INDEPENDENT ANA LYSIS UNDER THE TNMM. HE ACCEPTED 3 COMPARABLE COMPANIES ADOPTE D BY THE ASSESSEE AND REJECTED 2 COMPANIES. FURTHER, THE AO A LSO ARRIVED AT OTHER COMPANIES AND THE FINAL LIST OF COMPARABLE S IS AS UNDER: S.NO NAME OF THE COMPANY OP/OC 1 AVANI CIMCON TECHNOLOGIES LTD 3.39 2 CAT TECHNOLOGIES LTD 13.04 3 COMP-U-LEARN TECH INDIA LTD 19.96 4 E-INFOCHIPS BANGALORE LTD 72.32 5 EVOK TECH 18.61 6 E-ZEST SOLUTIONS LTD 22.1 7 INFOSYS TECHNOLOGY LTD 45.44 8 KALS INFORMATION SYSTEMS LTD (SEG) 22.05 9 KULIZA TECH 19.97 10 L&T INFOTECH LTD 19.97 11 MINDTREE LTD (SEG.) 20.47 12 PERSISTENT SYSTEMS & SOLUTIONS LTD (MERGED) 11.37 13 RS SOFTWARE (INDIA)LTD 9.88 14 SASKEN COMMUNICATION TECHNOLOGIES LTD 25.23 15 TATA ELXSI LTD 17.24 16 THINKSOFT GLOBAL SERVICES LTD 11.22 17 ZYLOG SYSTEMS LTD 18.62 18 PERSISTENT SYSTEMS LTD 31.57 9. AGAINST THIS FINAL LIST, THE ASSESSEE PREFERRED ITS OBJECTIONS BEFORE THE DRP AND THE DRP DIRECTED THE AO/TPO TO EXCLUDE INFOSYS TECHNOLOGIES LTD AND L&T INFOTECH L TD FROM THE ITA NOS 99 AND 311 OF 2015WISSEN INFOTECH P LTD HY DERABAD PAGE 11 OF 19 FINAL LIST OF COMPARABLES. AGAINST THIS DIRECTION O F THE DRP, THE REVENUE IS IN APPEAL BEFORE US WHILE THE ASSESSEE I S IN APPEAL AGAINST THE COMPARABLES CONFIRMED BY THE DRP. THUS, IN EFFECT, THE ASSESSEE IS IN APPEAL AGAINST THE COMPANIES INC LUDED BY THE TPO WHILE THE REVENUE IS IN APPEAL AGAINST THE EXCL USION OF ONLY INFOSYS TECHNOLOGIES LTD AND L&T INFOTECH LTD. THE COMPANIES WHICH ARE CHALLENGED BY THE ASSESSEE BEFORE US ARE AS UNDER: A) COMP-U-LEARN TECH INDIA LTD B) E-INFOCHIPS BANGALORE LTD C) EVOK TECH D) E-ZEST SOLUTIONS LTD E) INFOSYS TECHNOLOGIES LTD F) KALS INFORMATION SYSTEMS LTD (SEG.) G) KULZIA TECH H) L&T INFOTECH LTD I) MINDTREE LTD (SEG.) J) SASKEN K) TATA ELXSI (SEG.) L) ZYLOG M) PERSISTENT SYSTEMS LTD 10. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEES TURNOVER FROM THE INTERNATIONAL TRAN SACTION IS ONLY A SUM OF RS.25,02,22,520 WHEREAS THE TURNOVER OF TH E FOLLOWING 5 COMPANIES IS MORE THAN 300 CRORES AS GIVEN BELOW: S.NO NAME OF THE COMPANY OPERATING REVENUE OP/OC 1 MINDTREE LTD (SEG.) 7,38,41,68,041 20.47 2 SASKEN 4,19,37,03,000 25.23 3 TATA ELXSI (SEG.) 3,37,77,99,096 17.24 4 ZYLOG 7,83,64,08,467 18.62 5 PERSISTENT SYSTEMS LTD 5,09,12,50,000 31.57 11. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TURNOVER OF THESE COMPANIES WAS MORE THAN 12 TI MES THE ASSESSEES TURNOVER AND THEREFORE, APPLYING THE TUR NOVER FILTER, ITA NOS 99 AND 311 OF 2015WISSEN INFOTECH P LTD HY DERABAD PAGE 12 OF 19 THESE COMPANIES SHOULD BE EXCLUDED. IN SUPPORT OF T HE HIGH TURNOVER FILTER, THE LEARNED COUNSEL FOR THE ASSESS EE PLACED RELIANCE UPON THE FOLLOWING DECISIONS: 1. GENISYS INTEGRATING SYSTEMS (INDIA) (P) LTD V. DCLT [2012) 20 TAXMANN.COM 715 (BANG.) 2. CIT PENTAIR WATER INDIA P. LTD (2016)69 TAXMANN .COM 180 (BOMBAY) (HC) 3. AGNITY INDIA TECHNOLOGIES (P)LTD VS. CIT [2013 ) 36 TAXMANN.COM 289 (DELHI) (HC) 4. OBOPAY MOBILE TECHNLOGY INDIA (P) LTD V. DCLT [ 2016) 66 TAXMANN.COM 119 (BANG TRIB) 5. ITO V. AVALARA TECHNOLOGIES (P) LTD [2016] 69 TAXMANN.COM 453 (PUNE _ TRIB) 6. SYSARRIS SOFTWARE P. LTD V. DCIT (2016) 67 TAXMANN.COM 243 (BANG TRIB) 7. STARENT NETWORKS INDIA (P.) LTD 69 TAXMANN.COM 434 (PUNE-TRIB.) 8. PMC-SIERRA INDIA (P.) LTD. [2016) 74 TAXMANN.CO M 110 (BANGALORE _ TRIB.) 9. CAPITAL IQ INFORMATION SYSTEMS (INDIA) (P) LTD V. DCLT [2013) 32 TAXMANN.COM 21 (HYDERABAD - TRIB.) 10. TEVA INDIA (P.) LTD. V. DCIT [2011) 44 SOT 10 5 (MUM.) 11. ELECTRONIC ARTS GAMES (INDIA) PVT. LTD VS ACIT [2015) 58 TAXMANN.COM 13 (HYDERABAD TRIB.)/[2015]69 SOT 2 (HYDERABAD TRIB.){URO) 12. GOOGLE INDIA (P.) LTD. [2013]25 TAXMANN.COM 41 2 (BANGALORE-TRIB.) ITA NOS 99 AND 311 OF 2015WISSEN INFOTECH P LTD HY DERABAD PAGE 13 OF 19 12. THE LEARNED DR, HOWEVER, SUPPORTED THE ORDERS O F THE AO AND SUBMITTED THAT THE HIGH OR LOW TURNOVER DOES NOT AFFECT THE PROFIT MARGIN AND THEREFORE, THE TURNOVER FILTE R IS NOT TO BE ADOPTED. 13. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT IN THE CASE OF GENESYS INTE GRATING SYSTEMS (INDIA) P LTD (SUPRA), THE COORDINATE BENCH OF THE TRIBUNAL AT BANGALORE HAS HELD THAT THE TURNOVER FILTER IS AN A PPROPRIATE FILTER FOR ARRIVING AT THE COMPARABLE COMPANIES. FURTHER, O THER BENCHES HAVE ALSO UPHELD THE EXCLUSION OF THE COMPANIES ON THE BASIS OF THE TURNOVER WHERE IT WAS MORE/LESS THAN 10 TIMES T HE TURNOVER OF THE ASSESSEE. WE FIND THAT IN THE CASE BEFORE US, T HE ASSESSEES TURNOVER IS ONLY RS.25.00 CRORES AS COMPARED TO THE COMPANIES SELECTED BY THE TPO WHICH HAVE MORE THAN 12 TIMES T HE ASSESSEES TURNOVER. THEREFORE, WE ARE SATISFIED TH AT THESE 5 COMPANIES ARE TO BE EXCLUDED FROM THE FINAL LIST OF COMPARABLES ON THE GROUND OF HIGH TURNOVER. THE AO IS DIRECTED TO EXCLUDE THEM FROM THE FINAL LIST OF COMPARABLES. 14. FURTHER, WE ALSO FIND THAT THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF PEGASYSTEMS WORLDWIDE (P) L TD AND ALSO SYMPHONY SERVICES PUNE (P) LTD, PUNE, HAVE ALSO HEL D THESE COMPANIES TO BE FUNCTIONALLY DISSIMILAR AS WELL. ON THIS ACCOUNT ALSO, THESE COMPANIES ARE LIABLE TO BE EXCLUDED. 15. AS REGARDS E-INFOCHIPS BANGALORE LTD, IT IS THE CASE OF THE ASSESSEE THAT THIS COMPANY IS ENGAGED IN SOFTWA RE PRODUCT DESIGN FOR ISVS FOR SEMICONDUCTOR VENDORS AND ALSO IN GUI ITA NOS 99 AND 311 OF 2015WISSEN INFOTECH P LTD HY DERABAD PAGE 14 OF 19 SOFTWARE DESIGN FOR MANAGING DEVICES IN MEDICAL, AE ROSPACE AND DEFENCE, MEDIA AND BROADCASTING AND SECURITY & SURV EILLANCE INDUSTRY VERTICALS. THEREFORE, THIS COMPANY IS HAVI NG SUPER PROFIT OF 73.2% AND APART FROM THIS, THE ACTIVITIES CARRIE D OUT BY THE SAID COMPANY ARE FUNCTIONALLY DISSIMILAR TO THAT OF THE ASSESSEE COMPANY. IT IS ALSO SUBMITTED THAT THE COORDINATE B ENCH OF THIS TRIBUNAL IN THE CASE OF ELECTRONIC ARTS GAMES (INDI A) PVT. LTD VS. ACIT (TS-195-INCOME TAX APPELLATE TRIBUNAL-2015(HYD ) HAS REMITTED THE MATTER OF INCLUSION OF E-INFOCHIPS BAN GALORE LTD AS A COMPARABLE FOR THE A.Y 2010-11 FOR FRESH INVESTIGATI ON. THEREFORE, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS COMPANY MAY BE REMITTED TO THE FILE OF THE AO FOR RECONSIDE RATION. WE FIND THAT THE COORDINATE BENCH OF THIS TRIBUNAL IN THE C ASE OF PEGASYSTEMS WORLDWIDE (SUPRA) AND ALSO GOOGLE INDIA (P) LTD (SUPRA) HAS HELD THAT THE SUPER PROFIT COMPANIES AR E TO BE EXCLUDED FROM THE FINAL LIST OF COMPARABLES AS COMP ARED TO THE ASSESSEE. HOWEVER, THIS TRIBUNAL HAD REMITTED ITS CONSIDERATION TO THE AO IN THE CASE OF ELECTRONIC ARTS GAMES (IND IA) PVT. LTD (SUPRA). RESPECTFULLY FOLLOWING THE SAME, WE REMIT THE CONSIDERATION OF THIS COMPANY AS A COMPARABLE TO TH E ASSESSEE TO THE TPO. NEEDLESS TO MENTION THAT THE ASSESSEE SHAL L BE GIVEN A FAIR OPPORTUNITY OF HEARING. 16. AS REGARDS COMP-U-LEARN TECH INDIA LTD, THE LEA RNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS COMPAN Y IS FUNCTIONALLY DISSIMILAR AS IT IS ENGAGED IN INTERNE T BASED SOLUTION, EDUCATION AND TRAINING, E-COMMERCE SOLUTIONS, SOFTW ARE DESIGN/DEVELOPMENT, WEB DESIGNING/DEVELOPMENT AND T HEREFORE, IT IS DIFFERENT IN LINE FROM THE ACTIVITIES OF THE ASS ESSEE COMPANY. IT ITA NOS 99 AND 311 OF 2015WISSEN INFOTECH P LTD HY DERABAD PAGE 15 OF 19 IS ALSO SUBMITTED THAT THIS COMPANY HAS BEEN DIRECT ED TO BE EXCLUDED IN THE CASES OF PEGASYSTEMS WORLDWIDE, SYM PHONY SERVICES (P) LTD, AND E-INFOCHIPS BANGALORE LTD AND ALSO IN THE CASE OF 3 GLOBAL SERVICES AT MUMBAI. THE LEARNED DR HOWEVER, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 17. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT IN THE CASE OF PEGASYSTEMS WORLDWIDE, THE COORDINATE BENCH OF INCOME TAX APPELLATE TRIBUNAL H AS CONSIDERED SIMILAR ISSUE AND HAS DIRECTED FOR EXCLU SION OF IS COMPANY. RESPECTFULLY FOLLOWING THE SAID DECISION, WE DIRECT THE EXCLUSION OF THIS COMPANY FROM THE FINAL LIST OF CO MPARABLES. 18. AS REGARDS E-ZEST SOLUTIONS LTD AND KALS INFORM ATION SYSTEMS LTD, THE ASSESSEES SUBMISSIONS IS THAT THE SE COMPANIES ARE FUNCTIONALLY DISSIMILAR AS E-ZEST SOLUTIONS LTD IS INTO THE PRODUCT ENGINEERING SERVICES LIKE KALS INFORMATION SYSTEMS LTD AND VARIOUS BENCHES OF THIS TRIBUNAL HAVE CONSIDERE D THESE CONTENTIONS AND DIRECTED THAT THESE COMPANIES IS TO BE EXCLUDED FROM THE FINAL LIST OF COMPARABLES. ASSESSEE ALSO P LACED RELIANCE UPON THE DECISION OF THE PEGASYSTEMS WORLDWIDE (SUP RA) IN SUPPORT OF ITS CONTENTION. 19. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE COORDINATE BENCH OF THI S TRIBUNAL IN THE CASE OF PEGASYSTEMS WORLDWIDE HAS IN FACT OBSER VED AND DIRECTED THAT THESE COMPANIES ARE FUNCTIONALLY DISS IMILAR TO THE SOFTWARE DEVELOPMENT COMPANIES LIKE THE ASSESSEE AN D HAVE DIRECTED THEIR EXCLUSION FROM THE FINAL LIST OF COM PARABLES. ITA NOS 99 AND 311 OF 2015WISSEN INFOTECH P LTD HY DERABAD PAGE 16 OF 19 RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THAT THE SE 2 COMPANIES ARE TO BE EXCLUDED. 20. THE OTHER TWO COMPANIES WHICH ARE SOUGHT TO BE EXCLUDED ARE EVOK TECH AND KULIZA TECH ON THE GROUN D OF FUNCTIONAL DISSIMILARITIES. ACCORDING TO THE LEARNE D COUNSEL FOR THE ASSESSEE, EVOK TECH IS ENGAGED IN ACTIVITIES SUCH A S APPLICATION, DEVELOPMENT AND MAINTENANCE, QUALITY ASSURANCE AND SOFTWARE TESTING, E-COMMERCE, PRODUCT ENGINEERING, ORACLE EB S & ANALYTICS BIG DATA, BUSINESS PROCESS MANAGEMENT ETC ., AS IS EVIDENT FROM THE WEBSITE. THEREFORE, ACCORDING TO T HE ASSESSEE, IT IS ENGAGED IN ACTIVITIES DIFFERENT IN LINE TO THE A CTIVITIES OF THE ASSESSEE COMPANY AND IS THEREFORE, TO BE REJECTED A S A COMPARABLE. 21. AS REGARDS KULIZA TECH IS CONCERNED, IT IS THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE SAID COMPANY IS MORE INTO CLOUD CONSULTING, CLOUD MIGRAT ION AND MAINTENANCE SERVICE ETC., WHICH IS DIFFERENT FROM T HE LINE OF ACTIVITIES OF THE ASSESSEES BUSINESS AND THEREFORE , IS FUNCTIONALLY DIFFERENT AND CANNOT BE SELECTED AS A COMPARABLE. I N SUPPORT OF HIS CONTENTION THAT THE COMPANIES WHICH ARE FUNCTIO NALLY DISSIMILAR ARE TO BE EXCLUDED FROM THE FINAL LIST O F COMPARABLES AND PARTICULARLY WHERE THE SEGMENTED BREAK-UP OR IN FORMATION IN THE CASE OF SUCH COMPANIES IS NOT AVAILABLE, THEY A RE TO BE EXCLUDED, THE LEARNED COUNSEL FOR THE ASSESSEE PLAC ED RELIANCE UPON THE FOLLOWING DECISIONS: (A) GOOGLE INDIA (P) LTD (2013) 29 TAXMAN.COM 412 (BANG. TRIB) ITA NOS 99 AND 311 OF 2015WISSEN INFOTECH P LTD HY DERABAD PAGE 17 OF 19 (B) 3 GLOBAL SERVICES (P) LTD (2011) 11 TAXMANN.COM 136 (MUM.) (C) SAP LABS INDIA (P) LTD (2011) 44 SOT 156 (BANG.) (D) ITAT DECISION IN THE CASE OF PEGASYSTEMS WORLDWIDE (P) LTD (SUPRA). 22. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED TH AT AS PER THE WEBSITE INFORMATION AVAILABLE, THE ASSESSEE ALSO IS INTO SOFTWARE AND COMMERCE, SYSTEM INTEGRATION, RE-ENGIN EERING, INDEPENDENT TESTING SERVICES, ETC. AND THEREFORE, I T CANNOT BE CONSIDERED AS A SIMPLE SOFTWARE SERVICE PROVIDER AS CLAIMED BY THE ASSESSEE. THEREFORE, ACCORDING TO THE LEARNED DR, T HESE TWO COMPANIES ARE ALSO COMPARABLE TO THE ASSESSEE. 23. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAD CHALLENGED THE COMPARABILITY OF THE ABOVE TWO COMPANIES BEFORE THE TPO ON THE GROUND OF FUNCTIONAL DISSIMILARITY, BUT THE TPO HEL D THAT THE ASSESSEE HAS NOT SUBSTANTIATED ITS OBJECTION WITH A NY EVIDENCE AND HENCE REJECTED ASSESSEES OBJECTIONS. THE ASSES SEE OBJECTED TO THEIR COMPARABILITY BEFORE THE DRP ALONG WITH THE R ELEVANT MATERIAL, BUT THE DRP HAS NOT MADE ANY COMMENTS ABO UT THE SIMILARITY BETWEEN THE ASSESSEE AND THESE COMPANIES NOR HAS IT GIVEN ANY REASONS FOR BRUSHING ASIDE THE ASSESSEES OBJECTIONS. THEREFORE, WE DEEM IT FIT AND PROPER TO REFER THE I SSUE OF COMPARABILITY OF THESE TWO COMPANIES TO THE TPO FOR DE NOVO CONSIDERATION AFTER GIVING THE ASSESSEE A FAIR OPPO RTUNITY OF HEARING. ITA NOS 99 AND 311 OF 2015WISSEN INFOTECH P LTD HY DERABAD PAGE 18 OF 19 24. IN ADDITION TO THE ABOVE, THE ASSESSEE ALSO WAN TS INCLUSION OF INDIA COMNET INTL. PVT. LTD AND INTERT ECH TECHNOLOGIES LTD AS COMPARABLE TO THE ASSESSEE. ACC ORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE FILTERS ADOPT ED BY THE TPO FOR REJECTION OF THESE TWO COMPANIES ARE NOT SATISF IED AS THE AO/TPO APPLIED INCORRECT INFORMATION TO REJECT THES E 2 COMPANIES. THE LEARNED DR HOWEVER, SUBMITTED THAT T HE TPO/AO HAVE CLEARLY BROUGHT OUT THE DISTINGUISHING FEATURE S PARTICULARLY THAT THESE TWO COMPANIES ARE INTO DEVELOPMENT OF PR ODUCTS AND THEREFORE, HAVE REJECTED THE SAME. 25. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS FILED ALL THE DETAILS RELATING TO THESE TWO COMPANIES BOTH BEFORE THE TPO AS WELL AS THE DRP. THE TPO HAS REJECTED THE COMPANIES ON THE GROU ND THAT INDIA COMMET INTL. PVT. LTD FAILS DIMINISHING REVEN UE AND PERSISTENT LOSS FILTER APPLIED BY THE TPO, WHILE IN TERTECH TECHNOLOGIES LTD FAILED THE FOREX FILTER ADOPTED BY THE TPO. WE FIND THAT THE ASSESSEE FILED ALL THE DETAILS BEFORE THE DRP TO SUBSTANTIATE ITS CLAIM, BUT THE DRP HAS FAILED TO C ONSIDER THE SAME. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROPE R TO REMIT THE ISSUE OF COMPARABILITY OF THESE TWO COMPANIES ALSO TO THE FILE OF THE TPO WITH A DIRECTION TO CONSIDER THE SAME DE NO VO AFTER GIVING THE ASSESSEE A FAIR OPPORTUNITY OF HEARING. 26. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NOS 99 AND 311 OF 2015WISSEN INFOTECH P LTD HY DERABAD PAGE 19 OF 19 27. AS REGARDS REVENUES APPEAL AGAINST THE EXCLUSI ON OF INFOSYS TECHNOLOGIES LTD & L&T INFOTECH LTD, WE FIN D THAT IN SEVERAL CASES, THE COORDINATE BENCHES OF THIS TRIBU NAL HAVE DIRECTED EXCLUSION OF THESE COMPANIES AS THEY ARE H AVING SUPER PROFIT AND VERY HIGH TURNOVER AND WE FIND THAT THE ORDER OF THE DRP IS IN ACCORDANCE WITH THE SAID DECISIONS. THERE FORE, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE DRP ON TH ESE 2 COMPANIES AND THE REVENUE APPEAL IS ACCORDINGLY DIS MISSED. 28. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED AND THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2017. SD/- SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 28 TH FEBRUARY, 2017. VINODAN/SPS COPY TO: 1 PRASAD & PRASAD, CAS, FLAT NO.301, MJ TOWERS, 8-2- 698 ROAD NO.12, BANJARA HILLS, HYDERABAD 500034 2 DCIT CIRCLE 17(2) HYDERABAD 3 DRP HYDERABAD 4 DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) H YDERABAD 500004 5 CIT-III HYDERABAD 6 THE DR, ITAT HYDERABAD 7 GUARD FILE BY ORDER