M/s. Mercedes - Benz Research & Development India Private Limited, Bangalore V. Asst. Commissioner of Income Tax, Circle-4(1)(2), Bangalore

MA 77/BANG/2018

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 4048 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 21-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Transfer pricing; Opportunity of being heard
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE S HRI SUNIL KUMAR YADAV , JUDICIAL MEMBER AND SHRI JASON P BOAZ , ACCOUNTANT MEMBER M.P. NO.77/BANG/2018 (IN I.T . (TP) A. NO S . 269 & 381 /BANG/20 16 ) (ASSESSMENT YEAR : 20 11 - 12 ) MERCEDES B ENZ RESEARCH & DEVELOPMENT INDIA P. LTD., WHITEFIELD PALMS, PLOT NOS.9 & 10, EPIP ZONE, PHASE 1, WHITEFIELD ROAD, BANGALORE - 560 066 . . PETITIONER . VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE 4(1)(2), BANGALORE. .. RESPONDENT. PETITIONER / ASSESSEE BY : SHRI NAGESHWAR RAO, ADVOCATE. R E VENUE BY : SHRI SIDDAPPAJI R N , ADDL. CIT (D.R) DATE OF H EARING : 07.09.2018. DATE OF P RONOUNCEMENT : 10 .10 .201 8 . O R D E R PER SHRI JASON P BOAZ, A .M . : THIS MISCELLANEOUS PETITION ( M.P ), IS PREFERRED BY THE ASSESSEE, ON THE PREMISE TH AT CERTAIN MISTAKES APPARENT FROM THE R E CORD HAVE CREPT INTO THE ORDER OF THE TRIBUNAL IN IT(TP)A NOS.269 & 381/BANG/2016 DT.2.2.2018 FOR ASSESSMENT YEAR 2011 - 12. AS PER THE PETITIONER, THE 2 M P NO.77/BANG/2018 (IN IT (TP) A NO S . 269 & 381 /BANG/20 16 ) MISTAKES APPARENT FROM THE RECORD HAVE CREPT INTO THE TRIBUNAL S ORDER FOR ASSESSMENT YEAR 2011 - 12 FOR THE FOLLOWING REASONS : - 1. RE: GROUND NO. 6 (A ): THE LEARNED AO/TPO ERRED, IN LAW AND IN FACTS, BY REJECTING CERTAIN COMPARABLE COMPANIES IDENTIFIED BY THE APPELLANT FOR HAVING DIFFERENT ACCOU N TING YEAR (I.E. COMPA NIES HAVING ACCOUNTING YEAR OTHER THAN MARCH 31 OR COMPANIES WHOSE FINANCIAL STATEMENTS WERE FOR A PERIOD OTHER THAN 12 MONTHS). RE: GROUND NO. 9: THE LEARNED AO/TPO ERRED, IN LAW AND IN FACTS, BY ARTIFICIALLY RESTRICTING THE BENEFIT OF WORKING CAPITAL AD JUSTMENT OF THE APPELLANT AND INCORRECTLY COMPUTING THE SAME FOR CERTAIN COMPARABLE COMPANIES. PARAGRAPH 11.2 : AT PARAGR APH 11.2 ON THE PAGE 18 OF THE SUBJECT ORDER, THIS HON BLE T RIBUNAL HAS NOTED THE FOLLOWING : OBSERVATIONS OF HON BLE TRIBUNAL 11. GROU NDS 3 TO 12 TP ADJUSTMENTS UNDER TNMM. 11.1 THESE GROUNDS (SUPRA) PERTAIN TO ISSUES RELATED TO THE ADJUSTMENTS MADE BY THE TPO UNDER TNMM. SOME OF THESE GROUNDS ARE EITHER GENERAL OR CONCEPTUAL IN NATURE. BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSE MADE SUBMISSIONS ONLY IN RESPECT OF THE GROUNDS RELATED TO EXCLUSION/INCLUSION OF COMPANIES TO THE FINAL SET OF COMPARABLES SELECTED BY THE TPO 11.2 ADDITIONAL GROUNDS AT S.NOS.15, 16 &17 (SUPRA) W H EREIN THE ASSESSE HAS SPEC IFIED THE COMPANIES WHICH SEE KS EXCLUSION/INCLUSION. IN THIS VIEW OF THE MATTER, EXCEPT FOR THE GROUNDS AT S.NO.7 (SUPRA) AND ADDITIONAL GROUNDS 15 TO 17 (SUPRA), ALL OTHER GROUNDS (I.E. GROUNDS 3 TO 6, 8 TO 12) RAISED ON TP ISSUES WERE NOT URGED OR PRESSE D BEFORE US AND ARE ACCORDINGLY DISMISSED AS INFRUCTUOUS OUR SUBMISSION A) THE APPLICANT RESPECTFULLY SUBMITS THAT WITH REGARDS TO THE DIFFERENT ACCOUNTING YEAR ENDING FILTER APPLIED BY THE LEARNED TPO TO REJECT COMPARABLE COMPANIES, THE APPLICANT HAD CO NTENDED FOR NON - APPLICATION OF THIS FILTER PLACING RELIANCE ON JUDICIAL PRECEDENTS. IN FACT, CERTAIN COMPARABLE COMPANIES NAMELY I)R SYSTEMS INTERNATIONAL LIMITED, II) 3 M P NO.77/BANG/2018 (IN IT (TP) A NO S . 269 & 381 /BANG/20 16 ) SILVERLINE TECHNOLOGIES LIMITED, III) CALIBER POINT BUSINESS SOLUTION LIMITED AND IV) HE LIOS & MATHESON INFORMATION TECHNOLOGY LIMITED ARGUED FOR INCLUSION BY THE APPLICANT HAD DIFFERENT ACCOUNTING YEAR ENDING, WHICH ISSUE IS REMANDED TO THE FILES OF THE DRP IN THE ITAT ORDER. ACCORDINGLY, WE REQUEST THE HON BLE TRIBUNAL TO CONSIDER THE CONTE NTION OF THE APPLICANT AND RECALL THE ITAT ORDER WITH RESPECT TO HOLDING OF GROUND 6(B) PERTAINING TO DIFFERENT ACCOUNTING YEAR ENDING FILTER AS INFRUCTUOUS. B) THE APPLICANT RESPECTFULLY SUBMITS THAT WITH REGARDS TO THE ARTIFICIAL RESTRICTION OF WORKING CAPITAL BENEFIT BY THE LEARNED TPO AND UPHELD BY THE DRP, THE APPLICANT HAD PRAYED FOR RELIEF BEFORE THE HON BLE TRIBUNAL. HOWEVER, THE HON BLE TRIBUNAL IN THE ITAT ORDER MENTIONED THAT THE APPLICANT HAS NOT PRESSED ON THIS GROUND OF RESTRICTING THE WORK ING CAPITAL ADJUSTMENT, WHICH IS GROUND 9 . ACCORDINGLY, WE REQUEST THE HON BLE TRIBUNAL TO CONSIDER THE APPLICANT S PLEA AND DIRECT THE LEARNED TPO TO PROVIDE THE WORKING CAPITAL ADJUSTMENT WITHOUT ANY RESTRICTION . 2. RE : GROUND NO. 15: THE LEARNED AO/TPO AN D DRP ERRED IN ACCEPTING ACROPETAL TECHNOLOGIES LIMITED, E - INFOCHIPS LIMITED, E - ZEST SOLUTIONS LIMITED, ICRA TECHNO ANALYTICS LIMITED, INFOSYS LIMITED, TATA ELXSI LIMITED AND PERSISTENT SYSTEMS AND SOLUTIONS LIMITED AS COMPARABLE COMPANIES APPLYING UNREASO NABLE COMPARABILITY CRITERIA. PARAGRAPH 13& 14 : AT PARAGR APH 13 AND 14 ON THE PAGE 22 TO 25 OF THE SUBJECT ORDER, THIS HON BLE T RIBUNAL HAS NOTED THE FOLLOWING : OBSERVATIONS OF HON BLE TRIBUNAL WITH RESPECT TO ACROPETAL 13.3.1 WE HAVE HEARD THE RIVAL CON TENTIONS, PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMENTS CITED. WE FIND THAT THE DRP HAS OBSERVED THAT THIS COMPANY, ACROPETAL , OPERATED IN THREE SEGMENT AND THE SEGMENTAL RESULTS ARE AVAILABLE; WHILE ON TH E CONTRARY THE ASSESSE CONTENTS THAT ACROPETAL OPERATES IN FOUR SEGMENTS. FURTHER, IT IS SEEN THAT EVEN THOUGH THE ASSESSE HAS RAISED THE OTHER ISSUES BEFORE THE DRP, AS LAID OUT IN PARA 13.1 OF THIS ORDER, THE DRP HAS NOT RENDERED ANY FINDING THEREON. W E FIND THAT THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF AMD INDIA PVT. LTD. (SUPRA) RELIED ON BY THE ASSESSE HAS EXCLUDED ACROPETAL ON THE GROUND THAT IT FAILS THE SERVICE INCOME FILTER OF 75%; A GROUND APPARENTLY NOT PUT FORTH BY THE ASSESSE B EFORE THE AUTHORITIES BELOW. 13.3.2 CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, AS DISCUSSED ABOVE; THAT THE DRP HAS NOT RENDERED FINDINGS ON SOME OF THE ISSUES RAISED BY THE ASSESSE BEFORE IT AND THERE IS A CONTRADICTION IN THE NUMBER OF SEGMENT S THAT THIS COMPANY ACROPETAL OPERATES IN, WE ARE OF THE OPINION THAT IT IS NECESSARY TO REMAND THE ISSUE OF COMPARABILITY OF THIS COMPANY BACK TO THE FILE 4 M P NO.77/BANG/2018 (IN IT (TP) A NO S . 269 & 381 /BANG/20 16 ) OF THE DRP FOR EXAMINING AND ADJUDICATION OF THE ISSUES RAISED BY THE ASSESSE, AFTER AFFORDING TH E ASSESSE ADEQUATE OPPORTUNITY OF BEING HEARD IN THE MATTER AND TO FILE DETAILS/ SUBMISSIONS IN THIS REGARD, WHICH SHALL BE DULY CONSIDERED. WE HOLD AND DIRECT ACCORDINGLY. OUR SUBMISSION THE APPLICANT RESPECTFULLY SUBMITS THAT WITH REGARDS TO THE COMPAR ABILITY OF ACROPETAL, THE APPLICANT HAD RELIED ON JUDICIAL PRECEDENT IN CASE OF AMD INDIA PRIVATE LIMITED (IT.TP.A NO.1487/BANG/2015) , WHEREIN ACROPETAL WAS EXCLUDED FOR FAILING EMPLOYEE COST FILTER (PLEASE REFER PARA 6 ON PAGE 9 & 10 AND PARA 1 1 ON PAGE 32 OF THE AMD INDIA PRIVATE LIMITED CASE LAW) . HOWEVER, THE HON BLE TRIBUNAL IN THE ITAT ORDER HAS REMANDED THE ISSUE OF COMPARABILITY OF ACROPETAL TO THE FILES OF DRP FOR VERIFICATION OF SERVICE INCOME FILTER . ACCORDINGLY, WE REQUEST THE HON BLE TRIBUNA L TO REJECT THIS COMPANY FROM THE FINAL SET OF THE COMPARABLE COMPANIES AS IN THE CASE OF AMD INDIA PRIVATE LIMITED (SUPRA). OBSERVATION OF THE HON BLE TRIBUNAL WITH RESPECT TO E - ZEST 14.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED AND CAREFULLY CON SIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMENT CITED. WE FIND THAT THE ASSESSE HAS RAISED OBJECTIONS AGAINST THE INCLUSION OF THIS COMPANY E - ZEST AS A COMPARABLE BEFORE THE DRP, AND NOTICE THAT THE DRP HAS OBSERVED THAT THIS COMPANY S ACTIVITIES PREDOMINANTLY REVOLVE AROUND SOFTWARE DEVELOPMENT SERVICES AND THAT THIS COMPANY WAS SELECTED AS FUNCTIONALLY COMPARABLE TO THE ASSESSE IN THE ASSESSMENT YEAR 2007 - 08; AND THEREFORE RETAINED THIS COMPANY AS A COMPARABLE. WE FIND THAT A CO - ORD INATE BENCH OF THIS TRIBUNAL IN ITS DECISION IN THE CASE OF AMD INDIA PVT. LTD. (SUPRA) ALSO FOR ASSESSMENT YEAR 2011 - 12; FOLLOWING THE DECISION OF THE DELHI ITAT IN SAXO INDIA P. LTD. (SUPRA), WHICH WAS UPHELD BY THE ORDER OF THE HON BLE DELHI HIGH COURT (SUPRA), AT PARA 9 OF ITS ORDER HAS UPHELD THE INCLUSION OF THIS COMPANY IN THE LIST OF COMPARABLES HOLDING AS UNDER : - .. . 14.3.2 RESPECTIVELY FOLLOWING THE DECISION OF THE C O - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF AMD INDIA P. LTD. FOR ASSESSMENT YEAR 2011 - 12 (SUPRA). WE UPLOAD THE INCLUSION OF THIS COMPANY, E - ZEST SOLUTIONS LTD.IN THE LIST OF COMPARABLES. CONSEQUENTLY, THE ASSESSEE S GROUND ON THIS COMPANY FAILS. 5 M P NO.77/BANG/2018 (IN IT (TP) A NO S . 269 & 381 /BANG/20 16 ) OUR SUBMISSION THE APPLICANT RESPECTFULLY SUBMITS THAT WITH REGARDS TO THE COMPARABILITY OF THE E - ZEST, THE APPLICANT HAS PROVIDED DETAILED ARGUMENTS FOR EXCLUSION OF THE COMPANY IN THE SINGLE CHART SUBMITTED TO THE HON BLE ITAT DURING THE HEARING. THE AP PLICANT RELIED UPON THE JUDICIAL PRONOUNCEMENT IN THE CASE OF AMD INDIA PRIVATE LIMITED (SUPRA), WHEREIN, E - ZEST IS EXCLUDED FROM THE FINAL SET OF COMPARABLE COMPANIES. HOWEVER, THE HON BLE TRIBUNAL HAS RETAINED THE COMPARABLE COMPANIES CITING THAT THE COM PANY IS RETAINED IN THE AFOREMENTIONED MENTIONED CASE LAW. ACCORDINGLY, HON BLE TRIBUNAL MAY LIKE TO CONSIDER IMPACT OF SAID DECISION IN AMD INDIA PRIVATELIMITED (SUPRA) WHICH APPEARS TO NOT HAVE BEEN CONSIDERED IN THIS CONTEXT OF CONTENTION RELATING TO EX CLUSION OF E - ZEST AND DIRECT THE AO/ TPO TO REJECT THIS COMPANY FROM THE FINAL SET OF COMPARABLE COMPANIES. 3. RE : GROUND NO. 17: LARSEN & TOUBRO INFOTECH LIMITED, PERSISTENT SYSTEMS LIMITED AND SASKEN COMMUNICATION TECHNOLOGIES LIMITED WERE CHOSEN AS COMP ARABLES IN TRANSFER PRICING STUDY, HOWEVER UPON AVAILABILITY OF MORE DETAILES IN PUBLIC DOMAIN, THESE COMPANIES ARE FOUND TO BE NOT COMPARABLE AND SHOULD BE EXCLUDED FROM THE FINAL SET OF COMPARABLES. PARAGRAPH 16 : AT PARAGR APH 16 ON THE PAGE 26 TO 28 OF THE SUBJECT ORDER, THIS HON BLE T RIBUNAL HAS NOTED THE FOLLOWING : OBSERVATION OF TH E HON BLE TRIBUNAL WITH REGARDS GROUND NUMBER 17 16.1 IN THIS GROUND (SUPRA), THE ASSESSE SEEKS EXCLUSION OF THE FOLLOWING 3 COMPANIES FROM THE LIST OF COMPARABLES: - I) L&T I NFOTECH LIMITED II) PERSISTENT SYSTEMS LIMITED III) SASKEN COMMUNICATION TECHNOLOGIES LIMITED 16.2 DURING PROCEEDINGS BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSE STATED THAT THE ASSESSE DOES NOT WISH TO PRESS THE GROUND RELATED TO EXCLUSION OF SASKEN COMMUNICATION TECHNOLOGIES LIMITED, THEREFORE THIS GROUND IS DISMISSED AS NOT PRESSED AND CONSEQUENTLY SASKEN COMMUNICATION TECHNOLOGIES LTD. IS RETAINED IN THE FINAL LIST OF COMPARABLES. 16.3 ... THE LEARNED AUT HORISED REPRESENTATIVE HOWEVER SUBMITS THAT THE ASSESSE SEEKS EXCLUSION OF L&T INFOTECH LIMITED AND PERSISTENT SYSTEMS LIMITED, DUE TO MORE DETAILS BEING NOW AVAILABLE IN THE PUBLIC DOMAIN WHICH RENDER THESE TWO 6 M P NO.77/BANG/2018 (IN IT (TP) A NO S . 269 & 381 /BANG/20 16 ) COMPANIES AS NOT COMPARABLE TO THE ASSESSE A ND THEREFORE PRAYS THAT THEY BE EXCLUDED FROM THE LIST OF COMPARABLE COMPANIES. 16.5 AFTER HAVING HEARD BOTH PARTIES AND PERUSED AND CONSIDERED THE MATERIAL ON RECORD, WE FI ND THAT THE FUNCTIONAL COMPARABILITY OF THESE TWO COMPANIES I.E. I) L & T INFOTECH LIMITED AND II) SASKEN COMMUNICATION TECHNOLOGIES LIMITED HAVE BEEN CONSIDERED BY THE BENCHES OF THIS TRIBUNAL IN VARIOUS CASES, INCLUDING THOSE CITED BY THE LD.AR. BY WAY O F THIS ADDITIONAL GROUND, THE ASSESSE IS RAISING OBJECTIONS TO THE INCLUSION OF THESE COMPANIES ON THE ISSUE OF FUNCTIONAL DISSIMILARITY AND PRECLUDED FROM RAISING AN OBJECTION AGAINST INCLUSION OF A COMPANY EVEN IF THE SAID COMPANY WAS SELECTED BY THE ASS ESSE IN ITS TP STUDY. THIS VIEW WAS TAKEN BY THE SPECIAL BENCH OF ITAT, CHANDIGARH IN THE CASE OF QUARK SYSTEMS PVT. LTD. AS PER THE PRINCIPALS LAID DOWN IN THE AFORESAID DECISION OF THE SPECIAL BENCH (SUPRA), WE ADMIT THIS ADDITIONAL GROUND RAISED BY THE ASSESSE SEEKING EXCLUSION OF THESE TWO I) L & T INFOTECH LIMITED II) SASKEN COMMUNICATION TECHNOLOGIES LIMITED WITHOUT COMMENTING ON THE MERITS OF THE CASE AND REMIT THE MATTER OF THEIR COMPARABILITY ANALYSIS TO THE FILE OF THE TPO/AO FOR EXAMINATION OF TH E ASSESSEE S CLAIM AND TO ADJUDICATE THEREON AFTER PROVIDING THE ASSESSE ADEQUATE OPPORTUNITY OF BEING HEARD, WHICH SHALL BE DULY CONSIDERED. WE HOLD AND DIRECT ACCORDINGLY. OUR SUBMISSION THE APPLICANT RESPECTFULLY SUBMITS THAT THE HON BLE TRIBUNAL IN IT S ORDER HAS ACKNOWLEDGED THE FACT THAT THE APPLICANT HAS NOT PRESSED ON EXCLUSION OF SASKEN COMMUNICATIONS TECHNOLOGIES LIMITED. HOWEVER, THE HON BLE TRIBUNAL HAS REMANDED THE CASE TO THE FILES OF LEARNED AO/TPO. IN THIS REGARD, HON BLE TRIBUNAL MAY LIKE T O RECALL THE ORDER WITH REGARDS TO REMITTING BACK THE ISSUE OF COMPARABILITY OF SASKEN COMMUNICATIONS TECHNOLOGIES LIMITED TO THE FILES OF THE AO S /TPO. ADDITIONALLY, THE APPLICANT HAD RAISED A GROUND ON THE EXCLUSION OF PERSISTENT SYSTEMS LIMITED WHICH IS ALSO ACKNOWLEDGED BY THE HON BLE TRIBUNAL, HOWEVER, THE HON BLE TRIBUNAL HAS NOT DISCUSSED ON THE COMPARABILITY OF PERSISTENT SYSTEMS LIMITED IN THE ITAT ORDER. ACCORDINGLY, THE APPLICANT PRAYS BEFORE THE HON BLE TRIBUNAL TO CONSIDER THE APPLICANT S ARGUM ENTS WITH REGARDS TO PERSISTENT SYSTEMS LIMITED AND DIRECT THE AO/TPO TO REJECT THIS COMPANY FROM THE FINAL SET OF COMPARABLES. ACCORDINGLY, OBSERVATIONS MADE BY HON BLE TRIBUNAL IN PARAGRAPH 11.2, 13.3.1, 14.2, 14.3.1, 14.3.2 AND 16.5 OF THE SUBJECT ORDE R APPEAR TO BE A MISTAKE APPARENT FROM RECORD AND REQUIRING RECTIFICATION. 7 M P NO.77/BANG/2018 (IN IT (TP) A NO S . 269 & 381 /BANG/20 16 ) ACCORDINGLY BY PRESENT APPLICATION UNDER SECTION 254(2) OF THE ACT APPLICANT RESPECTFULLY PRAYS FOR RECTIFICATION OF THE MISTAKE IN ORDER DATED 02.02.2018 , AFTER GIVING SUITABLE OP PORTUNITY OF BEING HEARD. THE APPLICANT ALSO STATES AND CONFIRMS THAT IT HAS NOT FILED ANY MISCELLANEOUS APPLICATION UNDER SECTION 254(2) EARLIER BEFORE THE HON BLE TRIBUNAL AGAINST THE SUBJECT ORDER. 2. IN THE COURSE OF PROCEEDINGS BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE PETITIONER VEHEMENTLY ARGU ED ON ALL THE ISSUES RAISED IN THE M.P. PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR REVENUE OPPOSED THE ADMISSION / ACCEPTANCE OF THE PETITION CONTENDING THAT APART FROM THERE BEING NO MERIT IN THIS PETITION, THE CLAIMS RAISED THEREIN TENTAMOUNT TO SEEKING REVIEW OF THE TRIBUNAL S ORDER, WHICH IS NOT PERMISSIBLE UNDER SECTION 254(2) OF THE INCOME TAX ACT, 1961 ('THE ACT'). AT TH E OUTSET , IT WAS ASCERTAINED F R O M THE LEARN ED AUTHORISED REPRESENTATIVE THAT THE PETITIONER HAD NOT FILED APPEAL BEFORE THE HON'BLE KARNATAKA HIGH COURT ON THE ISSUES RAISED IN THIS PETITION. HENCE , WE PROCEED TO EXAMINE THE ISSUES RAISED BY THE PETITIONER IN THIS M.P. 3. ITEM NO.1 3.1 IN SUBMISSIONS MADE ON THIS ISSUE, THE PETITIONER HAS CONTENDED AS UNDER : A) THE APPLICANT RESPECTFULLY SUBMITS THAT WITH REGARDS TO THE DIFFERENT ACCOUNTING YEAR ENDING FILTER APPLIED BY THE LEARNED TPO TO REJECT COMPARABLE COMPANIES, THE APPLICANT HAD CO NTENDED FOR NON - APPLICATION OF THIS FILTER PLACING RELIANCE ON JUDICIAL PRECEDENTS. IN FACT, CERTAIN COMPARABLE COMPANIES NAMELY I)R SYSTEMS INTERNATIONAL LIMITED, II) SILVERLINE TECHNOLOGIES LIMITED, III) CALIBER POINT BUSINESS SOLUTION LIMITED AND IV) HE LIOS & MATHESON INFORMATION TECHNOLOGY LIMITED ARGUED FOR INCLUSION BY THE APPLICANT HAD DIFFERENT ACCOUNTING YEAR ENDING, WHICH ISSUE IS REMANDED TO THE FILES OF THE 8 M P NO.77/BANG/2018 (IN IT (TP) A NO S . 269 & 381 /BANG/20 16 ) DRP IN THE ITAT ORDER. ACCORDINGLY, WE REQUEST THE HON BLE TRIBUNAL TO CONSIDER THE CONTE NTION OF THE APPLICANT AND RECALL THE ITAT ORDER WITH RESPECT TO HOLDING OF GROUND 6(B) PERTAINING TO DIFFERENT ACCOUNTING YEAR ENDING FILTER AS INFRUCTUOUS. B) THE APPLICANT RESPECTFULLY SUBMITS THAT WITH REGARDS TO THE ARTIFICIAL RESTRICTION OF WORK ING CAPITAL BENEFIT BY THE LEARNED TPO AND UPHELD BY THE DRP, THE APPLICANT HAD PRAYED FOR RELIEF BEFORE THE HON BLE TRIBUNAL. HOWEVER, THE HON BLE TRIBUNAL IN THE ITAT ORDER MENTIONED THAT THE APPLICANT HAS NOT PRESSED ON THIS GROUND OF RESTRICTING THE W ORKING CAPITAL ADJUSTMENT, WHICH IS GROUND 9 . ACCORDINGLY, WE REQUEST THE HON BLE TRIBUNAL TO CONSIDER THE APPLICANT S PLEA AND DIRECT THE LEARNED TPO TO PROVIDE THE WORKING CAPITAL ADJUSTMENT WITHOUT ANY RESTRICTION . 3.2.1 ON A PERUSAL OF THE RE CORD, IT IS SEEN THAT THE ASSESSEE HAD RAISED GENERAL GROUNDS OF APPEAL IN FORM NO.36 REGARDING COMPARABLE COMPANIES. IN THE COURSE OF PROCEEDINGS BEFORE US, THE ASSESSEE RAISED ADDITIONAL GROUNDS SPECIFYING THE COMPANIES THAT IT SEEKS INCLUSION / EXCLUS ION OF. IN THE INTEREST OF JUSTICE, THE ADDITIONAL GROUNDS RAISED WERE ADMITTED AND SPECIFIC FINDINGS HAVE BEEN RENDERED ON THE COMPARABILITY OF EACH OF THOSE COMPANIES. 3.2.2 IT IS ALSO SEEN FORM THE RECORDS THAT THE LEARNED AUTHORISED REPRESE NTATIVE FOR THE PETITIONER SPECIFICALLY SUBMITTED THAT THE ENDS OF JUSTICE WILL BE MET IF THE ISSUE OF EXCLUSION / INCLUSION OF COMPARABLE COMPANIES ARE DECIDED AND ALL OTHER ISSUES WILL BECOME IRRELEVANT / ACADEMIC ONCE THE ISSUE OF COMPARABLES ARE DECID ED. THIS IS BORNE OUT OF THE TRIBUNAL S ORDER ITSELF, WHERE A CLEAR FINDING HAS BEEN RENDERED AT PARAS 11.1 AND 11.2 OF THE ORDER; WHICH IS EXTRACTED HEREUNDER : - 9 M P NO.77/BANG/2018 (IN IT (TP) A NO S . 269 & 381 /BANG/20 16 ) 11.1 THESE GROUNDS (SUPRA) PERTAIN TO ISSUES RELATED TO THE ADJUSTMENTS MADE BY THE TPO UNDER TNMM. SOME OF THESE GROUNDS ARE EITHER GENERAL OR CONCEPTUAL IN NATURE. BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE MADE SUBMISSIONS ONLY IN RESPECT OF THE GROUNDS RELATED TO EXCLUSION / INCLUSION OF COMPANIES TO THE FINAL SET OF COMPARABLES SELECTED BY THE TPO. 11.2 IN GROUND NO.7 (SUPRA) , THE ASSESSEE HAS CONTENDED THAT THE TPO ERRED IN ACCEPTING / REJECTING COMPANIES BASED ON UNREASONABLE COMPARABILITY CRITERIA. THIS GENERAL GROUND HAS BEEN EXPANDED IN THE A DDITIONAL GROUNDS AT S.NOS.15, 16 & 17 (SUPRA) WHEREIN THE ASSESSEE HAS SPECIFIED THE COMPANIES WHICH IT SEEKS EXCLUSION / INCLUSION. IN THIS VIEW OF THE MATTER, EXCEPT FOR THE GROUNDS AT S.NO.7 (SUPRA) AND ADDITIONAL GROUNDS 15 TO 17 (SUPRA), ALL OTHER GROUNDS (I.E. GROUNDS 3 TO 6, 8 TO 12) RAISED ON TP ISSUES WERE NOT URGED OR PRESSED BEFORE US AND ARE ACCORDINGLY DISMISSED AS INFRUCTUOUS. 3.2.3 AS CAN BE SEEN FROM THE ABOVE PARAGRAPHS (SUPRA), THE TRIBUNAL ORDER CLEARLY SPECIFIES THE GROUNDS W HICH WERE P RE SSED AND THOSE GROUNDS WHICH WERE NOT PRESSED BEFORE THE TRIBUNAL. FURTHER, THE WRITTEN SUBMISSIONS SUBMITTED DURING THE PROCEEDINGS BEFORE US DO NOT CONTAIN ANY SUBMISSIONS ON THESE TWO ISSUES AT ALL; WE ALSO OBSERVE THAT, WHILE THE PETITIO NER HAS SUBMITTED JUDICIAL PRONOUNCEMENTS IN RESPECT OF THE INCLUSION / EXCLUSION OF COMPANIES, NO SUCH SUBMISSION HAS BEEN MADE ON THESE TWO ISSUES, THOUGH THE M.P. STATES THAT THERE ARE JUDICIAL PRECEDENTS. EVEN DURING THE HEARING OF THIS PETITION, THE LEARNED AUTHORISED REPRESENTATIVE HAS NOT BROUGHT ON RECORD ANYTHING TO SHOW THAT HE HAD INDEED PRESSED THESE GROUNDS AND THE SAME HAS BEEN LEFT OUT OF ADJUDICATION. 10 M P NO.77/BANG/2018 (IN IT (TP) A NO S . 269 & 381 /BANG/20 16 ) 3.2.4 DIFFERENT FINANCIAL YEAR ISSUE . IN THE SUBMISSIONS PUT FORTH IN THIS P ETITION, THE PETITIONER STATES THAT THIS ISSUE HAS IMPLICATIONS IN THE CASES OF THE FOLLOWING COMPARABLE COMPANIES : - (I) R. SYSTEMS INTERNATIONAL LTD. (II) SILVERLINE TECHNOLOGIES LTD. (III) CALIBER POINT BUSINESS SOLUTION LTD. (IV) HELIOS & MATHESON INFORMATION TECHNOLOG Y LTD. 3.2.5 WE, HOWEVER FIND THAT THE PETITIONER HAS NOT RAISED THIS ISSUE AT ALL IN THE WRITTEN SUBMISSIONS FILED BEFORE US, WITH REGARD TO SILVERLINE TECHNOLOGIES LTD. AND CALIBER POINT BUSINESS SOLUTIONS LTD. WITH RESPECT TO R. SYSTEMS INTERNATION AL LTD. AND HELIOS & MATHESON INFORMATION TECHNOLOGY LTD., IT HAS BEEN SUBMITTED THAT EXTRAPOLATED DATA CAN BE CONSIDERED. WHEREVER THIS ARGUMENT HAS BEEN RAISED, THE TRIBUNAL HAS REMANDED THE MATTER TO THE TPO TO CONSIDER THE SAME AND GIVE A FINDING T HEREON. THEREFORE, WE ARE OF THE VIEW THAT BY RETRACTING ITS EARLIER STAND ON THIS ISSUE, THE PETITIONER IS SEEKING TO EXTEND THIS ISSUE TO ALL THESE COMPANIES, WHILE IT WAS NOT RAISED BEFORE US IN APPELLATE PROCEEDINGS. 3.2.6 ON FURTHER CAREFUL PERU S AL OF THE RECORDS, WE OBSERVE TH A T THE PETITIONER HAS NOT RAISED THE DIFFERENT FINANCIAL YEAR END ISSUE BEFORE THE DRP IN RESPECT OF ALL THE ABOVE 4 COMPANIES. THEREFORE, IN OUR VIEW, THE PETITIONER IS SEEKING ADJUDICATION ON AN ISSUE WHICH WAS N EVER RAISED BEFORE THE DRP SPECIFICALLY IN RESPECT OF THESE FOUR COMPANIES. THAT 11 M P NO.77/BANG/2018 (IN IT (TP) A NO S . 269 & 381 /BANG/20 16 ) BEING THE CASE, THE TRIBUNAL CANNOT ADJUDICATE ON THIS ISSUE AT THIS STAGE, THROUGH AN M.P. 3.2.7 WE ALSO DO NOT FIND ANY PREJUDICE CAUSED TO THE PETITIONER DUE TO THE A LLEGED OMISSION. IN ALL THE COMPARABLE COMPANIES REFERRED TO, THE TRIBUNAL HAS REMANDED THE ISSUE OF COMPARABILITY TO THE DRP FOR EXAMINING THE ISSUES RAISED BY THE PETITIONER WITH ADEQUATE OPPORTUNITY TO BE AFFORDED TO THE PETITIONER FOR MAKING SUBMISSIO NS. THE PETITION ER HAS FULL OPPORTUNITY TO RAISE ALL THE ISSUES, INCLUDING THE DIFFERENT FINANCIAL YEAR ISSUE BEFORE THE DRP IN THE REMANDED PROCEEDINGS. IF THE PETITIONER HAS NOT RAISED THE ISSUE BEFORE THE DRP AT THE FIRST INSTANCE, DUE TO WHICH THE DRP DID NOT ENTERTAIN THIS ISSUE, THERE IS NO WAY THAT THIS ISSUE CAN BE AGITATED BEFORE US, IN THE FORM OF AN M.P. AS THE ISSUE WAS NEVER ARGUED BEFORE US. 3.2.8 WE, THEREFORE, DISMISS THE GROUNDS RAISED ON THIS ISSUE, DUE TO THE FOLLOWING REASON S. (I) IT IS FACTUALLY INCORRECT TO STATE THAT THE TRIBUNAL HAS HELD THE ISSUE OF DIFFERENT FINANCIAL YEAR FILTER AS BEING INFRUCTUOUS. NO SUCH FINDING HAS BEEN RENDERED IN THE IMPUGNED ORDER. (II) THIS ISSUE WAS NOT ADJUDICATED BY THE TRIBUNAL AS THE LEARNED AUTHORISED REPRESENTATIVE FOR THE PETITIONER HAD SPECIFICALLY MENTIONED AT THE BAR THAT HE IS NOT PRESSING THE GROUND. A CLEAR FINDING TO THAT EFFECT HAS BEEN RENDERED IN THE TRIBUNAL S ORDER. (III) THAT THE ABOVE GROUND WAS NOT P RESSED IS BORNE OUT FROM THE RECORDS, AS DISCUSSED ABOVE. 12 M P NO.77/BANG/2018 (IN IT (TP) A NO S . 269 & 381 /BANG/20 16 ) (IV) AFTER HAVING GIVEN UP THE GROUND, THE PETITIONER C ANNOT NOW SEEK ADJUDICATION OF TH E GROUND BY WAY OF FILING AN M.P., THEREBY TRYING TO COVER UP ITS EARLIER MISTAKE OF NOT RAISING THI S ISSUE IN THE EARLIER APPELLATE PROCEEDINGS, WITH RESPECT TO SOME OF THE COMPARABLE COMPANIES. (V) NO GRIEVANCE HAS BEEN CAUSED TO THE PETITIONER TO MERIT A CONSIDERATION ON COMPASSIONATE GROUNDS ALSO. 3.3 WORKING CAPITAL ADJUSTMENT 3.3.1 AS REGARDS THE ISSUE OF WORKING CAPITAL ADJUSTMENT, ALL THE POINTS DISCU S SED ABOVE ARE EQUALLY APPLICABLE TO THIS ISSUE ALSO. AS THE GROUND WAS NOT PRESSED DURING APPELLATE PROCEEDINGS, THE PETITIONER CANNOT NOW TRY TO SEEK ADJUDICATION OF THIS GR OUND THROUGH AN M.P. IN ANY CASE, THE COMPUTATION OF WORKING CAPITAL ADJUSTMENT HAPPENS ONLY AFTER FINALISING THE SET OF COMPARABLE COMPANIES AND THE QUANTUM OF WORKING CAPITAL ADJUSTMENT DEPENDS ON THE COMPARABLE COMPANIES. SINCE THE TRIBUNAL HAS REMAN DED THE ISSUE OF COMPARABILITY OF MANY COMPANIES, THE QUANTUM OF WORKING CAPITAL ADJUSTMENT WOULD DEPEND ON THE DECISION OF THE TPO IN RESPECT OF THESE COMPANIES. THE QUESTION OF CAP ON WORKING CAPITAL ADJUSTMENT IS ONLY ACADEMIC AT THIS STAGE AND DOES N OT REQUIRE ADJUDICATION. THEREFORE, THE PLEA OF THE PETITIONER FOR RECALL OF THE TRIBUNAL S ORDER FOR ADJUDICATION ON THIS ISSUE IS UNTENABLE AND IS ACCORDINGLY DISMISSED. 13 M P NO.77/BANG/2018 (IN IT (TP) A NO S . 269 & 381 /BANG/20 16 ) ISSUE NO.2 - DECISION ON THE FOLLOWING COMPANIES. (I) ACROPETAL TECHNOLOGIES LTD. (II) E - ZEST SOLUTIONS LTD. 4.0 ACROPETAL TECHNOLOGIES LIMITED ( ACROPETAL ) 4.1 AS REGARDS THE CASE OF ACROPETAL , THE PETITIONER HAS PUT FORTH THE FOLLOWING SUBMISSIONS : - THE APPLICANT RESPECTFULLY SUBMITS THAT WITH REGARDS TO THE COMPARABILITY OF A CROPETAL, THE APPLICANT HAD RELIED ON JUDICIAL PRECEDENT IN CASE OF AMD INDIA PRIVATE LIMITED (IT.TP.A NO.1487/BANG/2015) , WHEREIN ACROPETAL WAS EXCLUDED FOR FAILING EMPLOYEE COST FILTER (PLEASE REFER PARA 6 ON PAGE 9 & 10 AND PARA 1 1 ON PAGE 32 OF THE AM D INDIA PRIVATE LIMITED CASE LAW) . HOWEVER, THE HON BLE TRIBUNAL IN THE ITAT ORDER HAS REMANDED THE ISSUE OF COMPARABILITY OF ACROPETAL TO THE FILES OF DRP FOR VERIFICATION OF SERVICE INCOME FILTER . ACCORDINGLY, WE REQUEST THE HON BLE TRIBUNAL TO REJECT THIS COMPANY FROM THE FINAL SET OF THE COMPARABLE COMPANIES AS IN THE CASE OF AMD INDIA PRIVATE LIMITED (SUPRA). 4.2 HOWEVER, ON A CAREFUL PERUSAL OF THE TRIBUNAL ORDER, WE FIND THAT THERE IS NO MISTAKE APPARENT FROM THE RECORD THEREIN THAT WARRANTS RECTIFICATION AND THE TRIBUNAL ORDER ON ACROPETAL AT PARA 13.3.2 AT PAGES 22 & 23 T HEREOF IS EXTRACTED HEREUNDER : - 13.3.2 CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, AS DISCUSSED ABOVE; THAT THE DRP HAS NOT RENDERED FINDINGS ON SOME OF THE ISSUES RAISED BY THE ASSESSEE BEFORE IT AND THERE IS A CONTRADICTION IN THE NUMBER OF SEGMENTS THAT THIS COMPANY ACROPETAL OPERATES IN, WE ARE OF THE OPINION THAT IT IS NECESSARY TO REMAND THE ISSUE OF COMPARABILITY OF THIS COMPANY BACK TO THE FIL E OF THE DRP FOR EXAMINING AND ADJUDICATION OF THE ISSUES RAISED BY THE ASSESSEE, AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD IN THE MATTER AND TO FILE DETAILS / SUBMISSIONS IN THIS REGARD, WHICH SHALL BE DULY CONSIDERED. WE HOLD AND DIRECT ACCORDINGLY. 14 M P NO.77/BANG/2018 (IN IT (TP) A NO S . 269 & 381 /BANG/20 16 ) 4.3 AS CAN BE SEEN FROM THE ABOVE, THE TRIBUNAL HAS REMANDED THE ISSUE BACK TO THE DRP ON THE FACTS OF THE CASE, WHERE THERE ARE CONTRADICTIONS IN THE STAND TAKEN ON THE PROFILE OF THE COMPANY AND THE FACT THAT THE DRP HAS NOT CONSIDERED ALL THE ISSUES RAISED BY THE ASSESSEE. THERE IS NO MENTION OF ANY VERIFICATION OF ANY FILTER, BE IT EMPLOYEE COST FILTER OR SERVICE INCOME FILTER. WHILE THE TRIBUNAL HAS NOTED THE RELIANCE OF THE ASSESSEE ON THE DECISION RENDERED IN THE CASE OF AMD INDI A PVT. LTD., THE DECISION TO R E MAND FOR VERIFICATION HAS BEEN RENDERED IN THE CONTEXT OF THE FACTS OF THE CASE. THEREFORE, THE AVERMENT OF THE PETITIONER ABOUT MISTAKES IN THE ORDER OF THE TRIBUNAL IS NOT CORRECT AND CONSEQUENTLY DISMISSE D. 4.4 AS REGARDS THE CASE OF AMD INDIA PVT. LTD., RELIED UPON BY THE PETITIONER, THE DECISION REGARDING ACROPETAL , IS AT PARA 16.4 ON PAGE 21 OF THE SAID ORDER AND IS EXTRACTED HEREUNDER : - ACROPETAL TECHNOLOGIES LTD.(SEG.) 16.1 THE DRP REJEC TED THIS COMPANY ON THE GROUND OF EMPLOYEE COST FILTER. THE LD. DR HAS SUBMITTED THAT THE TPO HAS APPLIED THE EMPLOYEE COST FILTER AND THIS COMPANY SATISFIES THE SAME. 16.2 ON THE OTHER HAND, THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS SUBMI TTED THAT THE TOTAL EMPLOYEE COST OF THIS COMPANY IS 11.51 OF THE TOTAL OPERATING REVENUE THEREFORE IT FAILS THE EMPLOYEE COST FILTER OF 25%. FURTHER HE HAS POINTED OUT THAT THIS COMPANY ALSO FAILS THE SOFTWARE DEVELOPMENT SERVICES REVENUE FILTER OF 75%. H E HAS REFERRED THE DETAILS AT PAGE NOS.39 AND 53 OF THE ANNUAL REPORT AND SUBMITTED THAT THE INCOME FROM SOFTWARE DEVELOPMENT IS RS.81.40 CRORES OUT OF TOTAL REVENUE OF RS.141 CRORES. THEREFORE THIS COMPANY FAILS THIS FILTER. 16.3 IN A REJOINDER THE LD. D R HAS SUBMITTED THAT THE TPO HAS CONSIDERED ONLY INFORMATION TECHNOLOGY TRANSACTIONS SEGMENT AND THEREFORE IT SATISFIES SOFTWARE DEVELOPMENT SERVICES INCOME FILTER AS WELL AS EMPLOYEE COST FILTER. 16.4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS TH E RELEVANT MATERIAL ON RECORD. AS PER THE SEGMENTAL REPORTING AT PAGE 53 OF THE ANNUAL 15 M P NO.77/BANG/2018 (IN IT (TP) A NO S . 269 & 381 /BANG/20 16 ) REPORT THE INCOME FROM INFORMATION TECHNOLOGY SERVICES IS RS.81.40 CRORES OUT OF THE TOTAL INCOME OF RS.141 CRORES. THEREFORE THE REVENUE FROM INFORMATION TECHNOLOGY TRA NSACTIONS SERVICES IS LESS THAN 75% AND CONSEQUENTLY THIS COMPANY DOES NOT SATISFY THE FILTER OF INFORMATION TECHNOLOGY REVENUE APPLIED BY THE TPO ITSELF. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE DRP FOR THIS ISSUE. 4.5 AS CAN BE SEEN FROM THE ABOVE EXTRACT, THE DECISION HAS BEEN RENDERED IN THE CONTEXT OF SERVICE INCOME FILTER AND THE TRIBUNAL HAS QUOTED THE SAID ORDER CORRECTLY. THE FACT OF THE MATTER IS THAT THE PETITIONER HAS NOT RAISED THE SERVICE INCOME F ILTER ISSUE AT ALL. YET, THE TRIBUNAL HAS REMANDED THE ISSUE TO THE FILE OF THE DRP AS THE DRP HAS NOT ADJUDICATED ON THE ISSUE OF EMPLOYEE COST FILTER AND OTHER ISSUES RAISED BY THE PETITIONER BEFORE DRP. IN THESE CIRCUMSTANCES, THE PETITIONER S CO NTENTION OF A MISTAKE APPARENT FORM THE ORDER OF THE TRIBUNAL IS NOT TENABLE AND THE SAME IS ACCORDINGLY DISMISSED. 5. E - ZEST SOLUTIONS LTD. 5.1 IN THE WRITTEN SUBMISSIONS PUT FORTH IN THIS M.P., THE PETITIONER HAS STATED AS UNDER : - THE APPLICANT RESPECTFULLY SUBMITS THAT THE HON BLE TRIBUNAL IN ITS ORDER HAS ACKNOWLEDGED THE FACT THAT THE APPLICANT HAS NOT PRESSED ON EXCLUSION OF SASKEN COMMUNICATIONS TECHNOLOGIES LIMITED. HOWEVER, THE HON BLE TRIBUNAL HAS REMANDED THE CASE TO THE FILES OF LEARNED AO/TPO. IN THIS REGARD, HON BLE TRIBUNAL MAY LIKE TO RECALL THE ORDER WITH REGARDS TO REMITTING BACK THE ISSUE OF COMPARABILITY OF SASKEN COMMUNICATIONS TECHNOLOGIES LIMITED TO THE FILES OF THE AOS/TPO. ADDITIONALLY, THE APPLICANT HAD RAI SED A GROUND ON THE EXCLUSION OF PERSISTENT SYSTEMS LIMITED WHICH IS ALSO ACKNOWLEDGED BY THE HON BLE TRIBUNAL, HOWEVER, THE HON BLE TRIBUNAL HAS NOT DISCUSSED ON THE COMPARABILITY OF PERSISTENT SYSTEMS LIMITED IN THE ITAT ORDER. ACCORDINGLY, THE APPLICANT PRAYS BEFORE THE HON BLE TRIBUNAL TO CONSIDER THE APPLICANT S ARGUMENTS WITH REGARDS TO PERSISTENT SYSTEMS LIMITED AND DIRECT THE AO/TPO TO REJECT THIS COMPANY FROM THE FINAL SET OF COMPARABLES. 16 M P NO.77/BANG/2018 (IN IT (TP) A NO S . 269 & 381 /BANG/20 16 ) 5.2 WE FIND FROM A PERUSAL OF THE RECORD THAT THE ISSUE OF COMPARABILITY OF THE COMPANY E - ZEST SOLUTIONS LTD. HAS BEEN SET ASIDE TO THE FILE OF THE TPO IN THE CASE OF AMD INDIA PVT. LTD. (SUPRA) AT PARA 8 THEREOF; AT PAGES 17 & 18 OF ITS ORDER, FOLLOWING THE DECISION IN THE CASE OF APPLIED MATERIALS INDIA PVT. LTD. WHEREIN AT PARAS 9.1 .1 TO 9.1.3 IT WAS HELD AS UNDER : - 9.1.1 THE LEARNED AUTHORISED REPRESENTATIVE HAS SUBMITTED THAT THE ASSESSEE RAISED THE OBJECTION BEFORE THE DRP FOR EXCLUSION OF THIS COMPANY FROM THE SET OF COMPARABLES BUT THE DRP HAS NOT ADJUDICATED THE OBJECTIONS OF THE ASSESSEE. HE HAS REFERRED THE OBJECTIONS RAISED BEFORE THE DRP AT PAGE NO. 1373 OF THE PAPER BOOK AS WELL AS REFERRED THE RELEVANT PART OF THE ANNUAL REPORT OF THIS COMPANY AT PAGE NOS.39, 42 & 50 OF THE ANNUAL REPORT. THE LEARNED AUTHORISED REPRESENTATIVE HAS SUBMITTED THAT THIS COMPANY IS ENGAGED IN THE DIVERSIFIED ACTIVITY AND REPORTED THE INCOME UNDER ONLY ONE SEGMENT. THEREFORE IT CANNOT BE CONSIDERED AS A COMPARABLE OF THE ASSESSEE'S SOFTWARE DEVELOPMENT S ERVICES SEGMENT. HE HAS RELIED UPON THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL DT.22.4.2016 IN THE CASE OF ELECTRONICS FOR IMAGING INDIA PVT. LTD. VS. DCIT IN IT(TP)A NOS.227 & 285/DEL/2013. 9.1.2 ON THE OTHER HAND, THE LEARNED DEPARTMENTAL RE PRESENTATIVE HAS SUBMITTED THAT THE MAIN ACTIVITY OF THIS COMPANY IS SOFTWARE DEVELOPMENT SERVICES. THEREFORE THE INSIGNIFICANT VARIATION IN ACTIVITY IF ANY CANNOT BE A DETERMINATIVE FACTOR WHILE COMPUTING THE ALP UNDER TRANSACTIONAL NET MARGIN METHOD (TNM M). HE HAS RELIED UPON THE DECISION OF THE DELHI BENCH OF ITAT IN THE CASE OF TOLUNA INDIA PVT. LTD. VS. ACIT (2014) 151 ITD 177. 9.1.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE HAS RAIS ED OBJECTIONS AGAINST THIS COMPANY BEFORE THE DRP. HOWEVER THE DRP DID NOT ADJUDICATE THE OBJECTIONS RAISED BY THE ASSESSEE. THE DECISION OF THIS TRIBUNAL IN THE CASE OF M/S. ELECTRONICS FOR IMAGING INDIA PVT. LTD. VS. DCIT (SUPRA) RELIED UPON BY THE LEARN ED AUTHORISED REPRESENTATIVE IS BASED ON TWO ASPECTS. (I) THE INFORMATION RECEIVED UNDER SECTION 133(6) OF THE ACT WAS CONSIDERED BY THE TPO WITHOUT SHARING WITH THE ASSESSEE AND (II) NATURE OF THE ACTIVITY IS KPO. IT IS PERTINENT TO NOTE THAT THE QUESTION OF BPO AND KPO IS RELEVANT ONLY IN ITES SEGMENT AND NOT FOR SOFTWARE DEVELOPMENT SERVICES SEGMENT. ON THE CONTRARY, THE DECISION IN THE CASE OF TOLUNA INDIA PVT. LTD. VS. ACIT (SUPRA), PERTAINS TO THE ASSESSMENT YEAR 2007 - 08, THEREFORE THE FACTS OF THE DI FFERENT YEAR CANNOT BE APPLIED WITHOUT VERIFICATION. ACCORDINGLY, WE SET ASIDE THIS ISSUE OF COMPARABILITY OF E - JUST SOLUTION LTD. TO THE RECORD OF THE 17 M P NO.77/BANG/2018 (IN IT (TP) A NO S . 269 & 381 /BANG/20 16 ) ASSESSING OFFICER / TPO FOR DECIDING THE SAME AFTER VERIFICATION OF THE RELEVANT FACTS AS WELL AS CONSID ERING THE OBJECTIONS OF THE ASSESSEE. 5.3 AS AGAINST THIS, THE TRIBUNAL HAS RELIED ON THE DECISION IN THE CASE OF SAXO INDIA PVT. LTD. IN ITA NO.6148/DEL/2015 OF THE ITAT, DELHI BENCH, WHICH WAS UPHELD BY THE HON'BLE DELHI HIGH COURT TO HOLD T HAT THIS COMPANY SHALL BE RETAINED IN THE SET OF COMPARABLE COMPANIES. BOTH THE AFORESAID DECISIONS HAVE BEEN RENDERED ON THE FACTS OF THE RESPECTIVE CASE AND THE TRIBUNAL HAS TAKEN A CLEAR AND CONSIDERED DECISION TO RELY ON THE DECISION IN THE CASE OF SAXO INDIA PVT. LTD. (SUPRA), BASED ON THE FACTS OF THE CASE. AS A CLEAR FINDING HAS BEEN RENDERED, IT IS NOT TENABLE FOR THE PETITIONER TO SEEK REVIEW OF THE DECISION BY MOVING A M.P. IT IS ALSO NOT ACCEPTABLE TO INSIST ON RELIANCE ON A PARTICULAR DECI SION AND TO REVIEW AN ORDER ALREADY DECIDED, WHICH IS BEYOND THE SCOPE OF AN M.P. UNDER SECTION 254(2) OF THE ACT; BY W HICH ONLY A MISTAKE APPARENT FRO M THE RECORD CAN BE CORRECTED. IN THIS VIEW OF THE MATTER, THIS ISSUE RAISED BY THE PETITIONER IS DISMI SSED. ISSUE NO.3 6. THIS GROUND OF THE PETITIONER PERTAINS TO THE COMPARABILITY OF THE FOLLOWING TWO COMPANIES : - (I) PERSISTENT SYSTEMS & SOLUTIONS LTD. (II) SASKEN COMMUNICATION TECHNOLOGIES LTD. 18 M P NO.77/BANG/2018 (IN IT (TP) A NO S . 269 & 381 /BANG/20 16 ) 7. PERSISTENT SYSTEMS & SOLUTIONS LTD. 7.1 IT IS THE PETITIONER S CONTENTION THAT THE TRIBUNAL ORDER HAS NOT DISMISSED THE ISSUE OF COMPARABILITY OF THIS COMPANY, EVEN THOUGH A GROUND WAS RAISED IN THE APPEAL. AS POINTED OUT EARLIER, AT PARA 12 OF THE TRIBUNAL ORDER, A DECISION HAS BEEN RENDERED W ITH REGARD TO THE EXCLUSION OF COMPANIES INCLUDING, INTER ALIA, THIS COMPANY ALSO. THE RELEVANT PARAGRAPHS 12.1 TO 12.31 THEREOF ARE EXTRACTED HEREUNDER : - 12.1 IN THIS ADDITIONAL GROUND (SUPRA), THE ASSESSEE SEEKS EXCLUSION OF THE FOLLOW ING SEVEN COMPANIES FROM THE TPO S SET OF COMPARABLES. I) ACROPETAL TECHNOLOGIES LIMITED II) E - INFOCHIPS LIMITED III) E - ZEST SOLUTIONS LTD. IV) ICRA TECHNO ANALYTICS LIMITED V) INFOSYS TECHNOLOGIES LIMITED VI) TATA ELXSI LIMITED (SEG.) AND VII) PERSISTE NT SYSTEMS & SOLUTIONS LTD. 12.2 BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE AFORESAID 7 COMPANIES NEED TO BE EXCLUDED FROM THE TPO S LIST OF COMPARABLES. THE SUBMISSIONS PUT FORTH BEFORE US INCLUDED A REITER ATION OF THOSE PUT FORTH IN OBJECTIONS RAISED BY THE ASSESSEE BEFORE THE DRP. IN SUPPORT OF THE ASSESSEE'S PLEA FOR EXCLUSION OF THESE COMPANIES FROM THE LIST OF COMPARABLES, THE LEARNED AUTHORISED REPRESENTATIVE PLACED RELIANCE, INTER ALIA, ON THE FOLLO WING DECISIONS OF THE CO - ORDINATE BENCHES OF THIS TRIBUNAL IN THE CASES OF - 19 M P NO.77/BANG/2018 (IN IT (TP) A NO S . 269 & 381 /BANG/20 16 ) I) AMD INDIA P. LTD. IN IT(TP)A NO.1487/BANG/2015 DT.6.4.2017 FOR ASSESSMENT YEAR 2011 - 12; AND II) APPLIED MATERIALS INDIA PVT. LTD. IN IT(TP)A NOS.17 & 39/BANG/2016 DT.21.9.20 16 FOR ASSESSMENT YEAR 2011 - 12. 12.3 PER CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW IN INCLUDING THESE COMPANIES IN THE FINAL SET OF COMPARABLES. 12.3.1 WE HAVE HEARD THE RIVAL CONTENT IONS, PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD; INCLUDING THE JUDICIAL PRONOUNCEMENTS CITED. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE GROUNDS OF OBJECTIONS RAISED BY THE ASSESSEE BEFORE THE DRP IN RESPECT OF THE ISSUE OF EXCLUSION OF THE AFORESAID 7 COMPANIES. IT IS SEEN THEREFROM, THAT WHILE THE ASSESSEE HAS FILED ITS OBJECTIONS IN RESPECT OF EXCLUSION OF THE AFORESAID COMPARABLES BEFORE THE DRP AT GROUND OF OBJECTION 9 AT PAGES 74 TO 98 THEREOF, THE DRP IN ITS ORDER HAS ONLY ADDRESSED THE ISSUE OF INCLUSION / EXCLUSION OF TWO OF THE ABOVE COMPARABLES; (I) ACROPETAL TECHNOLOGIES LTD. AND (II) E - ZEST SOLUTIONS LTD. AT PARAS 10.6 TO 10.7 OF ITS ORDER RESPECTIVELY WHILE DISPOSING OFF THE ASSESSEE'S GROUNDS OF OBJECTION NO.9. THE OBJECTIONS RAISED BY THE ASSESSEE IN RESPECT OF THE OTHER FIVE COMPANIES LISTED IN PARA 12.1 ABOVE I.E. I) E - INFOCHIPS LIMITED II) ICRA TECHNO ANALYTICS LTD. III) INFOSYS TECHNOLOGIES LTD. IV) TATA ELXSI LIMITED (SEG.) AND V) PERSISTENT SYSTEMS & SOLUTIONS LTD. HAVE NOT BEEN ADDRESSED BY THE DRP AND WE FIND THAT THERE IS NOT EVEN A MENTION OF THESE COMPANIES IN THE DRP S ORDER. IN THIS FACTUAL MATRIX OF THE CASE, WE DEEM IT ABSOLUTELY NECESSARY AND APPROPRIATE TO REMAND THE ISSUE OF COMPARABILI TY OF THE AFORESAID FIVE COMPANIES (SUPRA) TO THE FILE OF THE DRP FOR EXAMINATION AND ADJUDICATION ON THE OBJECTIONS RAISED BY THE ASSESSEE PRAYING FOR THEIR EXCLUSION IN THE LIGHT OF CERTAIN JUDICIAL PRONOUNCEMENTS AND THE FACTS OF THE CASE ON HAND, AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD IN THE MATTER. WE HOLD AND DIRECT ACCORDINGLY. 20 M P NO.77/BANG/2018 (IN IT (TP) A NO S . 269 & 381 /BANG/20 16 ) 7.2 AS CAN BE SEEN FROM THE ABOVE, THE TRIBUNAL HAS REMANDED THE ISSUE OF COMPARABILITY OF PERSISTENT SYSTEMS & SOLUTIONS LTD. TO THE FI LE OF THE DRP. THEREFORE, THE SUBMISSIONS OF THE PETITIONER, BEING FACTUALLY INCORRECT ARE LIABLE TO BE DISMISSED. 8. SASKEN COMMUNICATION TECHNOLOGIES LTD. ( SASKEN ) 8.1 ACCORDING TO THE PETITIONER, THE TRIBUNAL HAS WRONGLY REMANDED THE CO MPAR A BILITY OF THIS COMPANY, SASKEN TO THE FILE OF THE TPO, EVEN THOUGH THE ASSESSEE DID NOT PRESS FOR EXCLUSION OF THE SAME. THIS FACT HAVING BEEN OBSERVED BY THE TRIBUNAL AT PARA 16.2 OF ITS ORDER, THE PETITIONER HAS R E QUESTED FOR RECTIFICATION OF T HE IMPUGNED ORDER BY INCLUDING THE NAME OF PERSISTENT SYSTEMS LTD. , T HEREIN IN PLACE OF SASKEN COMMUNICATION TECHNOLOGIES LTD. . 8.2 IN THIS REGARD, ON A PERUSAL OF THE TRIBUNAL ORDER, AT PARA 16.2 THEREOF, A CLEAR FINDING HAS BEEN RENDERED THAT SASKEN COMMUNICATION TECHNOLOGIES LTD. IS RETAINED IN THE FINAL LIST OF COMPARABLES. THE MENTION OF SASKEN COMMUNICATION TECHNOLOGIES LTD. IN PARA 16.5 IS IN THE CONTEXT OF WHETHER THE ASSESSEE CAN RAISE OBJECTION AGAINST INCL USION OF A COMPANY EVEN IF THE SAID COMPANY WAS SELECTED BY THE ASSESSEE IN ITS TP STUDY. THERE WERE 3 SUCH COMPANIES, NAMELY I) L&T INFOTECH LTD. (II) SASKEN COMMUNICATION TECHNOLOGIES LTD. AND (III) PERSISTENT SYSTEMS LTD. IN THE LIGHT OF THE FINDING AT PARA 16.2 OF THE TRIB UNAL ORDER, THE REFERENCE TO SASKEN COMMUNICATION TECHNOLOGIES LTD. IN PARA 16.5 OF TRIBUNAL ORDER, IS A TYPOGRAPHICAL ERROR AND THE SAME MAY BE TAKEN TO BE 21 M P NO.77/BANG/2018 (IN IT (TP) A NO S . 269 & 381 /BANG/20 16 ) REFERRED TO AND READ AS PERSISTENT SYSTEMS LIMITED AND THE IMPUGNED ORDER STANDS MODIFIED TO TH AT EXTENT. 9. IN THE RESULT, THIS MISCELLANEOUS PETITION FOR ASSESSMENT YEAR 2011 - 12 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 10 TH OCT., 201 8 . SD/ - ( SUNIL KUMAR YADAV ) ACCOUNTANT MEMBER SD/ - ( JASON P BOAZ ) JUDICIAL MEMBER BANGALORE, DT. 10 .10.2018 *REDDY GP COPY TO : 1 APPELLANT 4 CIT(A) 2 RESPONDENT 5 DR. ITAT, BANGALORE 3 CIT 6 GUARD FILE ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL BANGALORE.