Appeal details
Counselvise Citation
[2022] 104 COUNSELVISE.COM (IT) 5093 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Miscellaneous Application
Pronouncement Date
27-02-2022
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
B
Assessment Year
2014-2015
Appeal Filed On
20-12-2021
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH : BANGALORE BEFORE SHRI. B.R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER M.P. No. 154/Bang/2021 (in IT(TP)A No. 3367/Bang/2018) Assessment Year : 2014-15 M/s. Synamedia India Pvt. Ltd. (Formerly known as Trilar Video Technologies India Pvt. Ltd.), Block 9A & 9B, Pritech Park, Survey No. 51-64/4, Sarjapur Outer Ring Road, Bellandur Village, Bangalore – 560 103. PAN: AACCN1140K Vs. The Assistant Commissioner of Income Tax, Circle 7(1)(1), Bangalore. APPELLANT RESPONDENT Assessee by : Shri Sharath Rao, CA Revenue by : Shri Priyadarshi Mishra, Addl. CIT (DR) Date of Hearing : 11-02-2022 Date of Pronouncement : 28-02-2022 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present Miscellaneous Petition filed by assessee arises out of order passed by this Tribunal dated 30.11.2021 in IT(TP)A No. 3367/Bang/2018. 2. The Ld.AR submitted that while passing the said order by this Tribunal, one comparable raised by assessee in ground no. 3.1 sought for exclusion was not adjudicated. It is submitted that Ld.AR had argued for exclusion of Thirdware Solutions Ltd. by relying on the decision of Hon’ble Delhi Tribunal in case of Avaya India Pvt. Ltd. vs. ACIT reported in (2019) 112 Page 2 of 6 M.P. No. 154/Bang/2021 (in IT(TP)A No. 3367/Bang/2018) taxmann.com 301 for A.Y. 2014-15. The Ld.AR submitted that the comparable sought for exclusion is considered by the said decision by Hon’ble Delhi Tribunal and assessee had filed various submissions in support of its exclusion. The Ld.DR though opposed the submissions of assessee, however, could not controvert that the said comparable was argued by the Ld.AR and has been missed out to be adjudicated. We have perused the submissions advanced by both sides in the light of records placed before us. 3. We note that this Tribunal has considered the comparables sought for exclusion in para 11.2 and that in ground no. 3.1 assessee raised Thirdware Solutions Ltd. for exclusion. We note that inadvertently, the said comparable though was mentioned in para 11 of the order, has been missed to be adjudicated upon while considering the remaining comparables in para 11.2. Accordingly, the comparable Thirdware Solutions Ltd. is being adjudicated as under. We note that Thirdware Solutions was considered by Hon’ble Pune Tribunal in FIS Solutions(I)Pvt.Ltd vs.DCIT in ITA No.1696/Pun/2018 by order dated 04/03/2020 by observing as under: “10. The Ld. Counsel for the assessee invited our attention again to the decision of the Co-ordinate Bench of the Tribunal, Pune in the case of Symantec Software India Private Limited. Vs. DCIT (supra.), wherein the Tribunal regarding this company has held as follows: "16. We have perused the case records and heard the rival contentions. We observe that Thirdware Solutions Limited is functionally dissimilar and is engaged in rendering software development implementation and support services and engaged in the development of software products and earns Page 3 of 6 M.P. No. 154/Bang/2021 (in IT(TP)A No. 3367/Bang/2018) revenue from sale of user licenses. Further, the margins of the company fluctuate year on year basis due to different revenue recognition model which the company has adopted. We find in the case of M/s. EMC Software and Services India Pvt. Ltd. Vs. JCIT (supra.), the Co-ordinate Bench of the Tribunal, Bangalore excluded Thirdware Solutions Limited from the list of comparable for determining the ALP by observing as follows: "8. We also notice that in A.Y 2008-09, the co-ordinate bench has excluded M/s. Thirdware Solutions Ltd also by following he decision rendered in the case of 3DPLM Software Solutions Ltd (supra), where in it was held that M/s. Thirdware Solutions Ltd. is engaged in product development and earns revenue from sale of licenses and subscription. Further, the segmental details were not available. 8.1 It was stated that there is no change in facts. Accordingly, following the decision rendered in the assessee's own case in A.Y:2008-09, we direct exclusion of M/s. Thirdware Solutions Ltd." The comparable Thirdware Solutions Ltd. has to be excluded as it is predominant in activity and segmental details are not available. Accordingly we direct the TPO/A.O to exclude this comparable from the list of comparables for determining the ALP." 17. We further find the same view has been taken by the Co- ordinate Bench of the Tribunal, Pune in the case of M/s. John Deere India Pvt. Ltd. Cybercity Vs. ACIT (supra.) wherein the Co-ordinate Bench of the Tribunal has exclude Thirdware Solutions Limited from the list of comparable for determining the ALP by observing as follows: “10. We have heard the rival submissions and gone through the relevant material on record. The Annual report of this company is available at page 415 onwards of the paper book. Profit and loss account of this company shows Sales of Rs.67,56,06,505/-. Break-up of such sale has been given in Schedule 12, which records Export from SEZ units- Rs.47,58,40,447/-; Export from STPI units-Rs.11,20,90,633; `Revenue from subscription-Rs.1,53,13,736/-; Sale of licence- Rs.1,51,38,618/-; and Software Services- Rs.5,72,23,072/-. This company has segments only on geographical basis and not on functional level. As such, there is no bifurcation of operating profit from Software Services and others including Sale of licence and Revenue from subscription etc. Even the first two major items of Exports from SEZ units and Export from STPI units‟ do not show as to whether these were exports of Software products or Software Services. In the absence Page 4 of 6 M.P. No. 154/Bang/2021 (in IT(TP)A No. 3367/Bang/2018) of the availability of any concrete information in respect of Software Services, we fail to comprehend as to how this company, also having software products in its portfolio, can be construed as comparable. The same is accordingly directed to be excluded." 18.We also observed in the case of M/s. ION Trading India Private Limited Vs. ITO (supra.) wherein the Co-ordinate Bench of the Tribunal, Delhi has exclude Thirdware Solutions Limited from the list of comparable for determining the ALP by observing as follows: "56. We have heard the rival submissions and perused and carefully considered the material on record. It is seen from the details on record that the functions of Thirdware are in contrast with the assessee which only provides software development in the finance domain as per the instruction of its AE. Also, Thirdware has incurred expenses towards import of software services, evidencing outsourcing of software services unlike the assessee. Since it is also engaged in outsourcing its activities as it has incurred expenses towards imports of software services, evidencing outsourcing of software services unlike the appellant company. Hence, it is functionally not comparable and cannot be treated as a comparable to assessee. We order accordingly." Respectfully, following the plethora of decisions of various Tribunals as referred hereinabove, Thirdware Solutions Limited cannot be treated as comparable company and the AO/TPO is directed to exclude Thirdware Solutions Limited from final list of comparable companies with regard to its software development service segment." 11. We observe again that our aforesaid findings pertains to the assessment year 2014-15 which is relevant assessment year under consideration before us at this present moment. It is therefore, natural that all parameters regarding this company would be same and respectfully, following our findings in Symantec Software India Private Limited. Vs. DCIT (supra.), we direct the TPO/AO to exclude this company i.e. Thirdware Solutions Limited from the final list of comparables.” Respectfully following the above view, we direct Thirdware Solutions Ltd., to be excluded from the final list of comparables. 4. Respectfully following the above, considering the fact that the assessee is a capital service provider has observed in the Page 5 of 6 M.P. No. 154/Bang/2021 (in IT(TP)A No. 3367/Bang/2018) FAR analysis by this Tribunal, the said comparable deserves to be excluded. The next issue raised by assessee is in respect of a typographic mistake that crept in para 11.4 while considering the comparable Akshaya Software Ltd. for inclusion. The observations by the Tribunal in said para reveals the said comparable deserves to be included however, in the conclusion a typographic mistake has crept in. 5. The said observation shall now be read as under: “11.....................On perusal of the...........Accordingly we uphold the inclusion of this comparable in the final list.” Accordingly, the M.P. filed by assessee stands allowed. The rest of the part of the order remains unchanged and the M.P. filed by assessee stands allowed. In the result, the Miscellaneous Petition filed by assessee stands allowed. Order pronounced in the open court on 28 th February, 2022. Sd/- Sd/- (B.R. BASKARAN) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 28 th February, 2022. /MS / Page 6 of 6 M.P. No. 154/Bang/2021 (in IT(TP)A No. 3367/Bang/2018) Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order Assistant Registrar, ITAT, Bangalore
