AI Insights
The case involves M/s. Symantec Software & Services India Pvt. Ltd., which appealed against the final assessment order passed by the Assistant Commissioner of Income Tax, Chennai, concerning the determination of ALP for international transactions with its associated enterprises. The Tribunal examined the selection of comparables by the TPO and the application of the Transactional Net Margin Method (TNMM) as the Most Appropriate Method (MAM). The Tribunal found that certain comparables used by the TPO were functionally dissimilar and directed their exclusion. Additionally, the Tribunal addressed the issue of working capital adjustment, noting that the TPO had not adequately considered this aspect in his assessment.
Appeal Details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 632995 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Appellant
Respondent
Appeal Type
Income Tax (Transfer Pricing) Appeal
Pronouncement Date
13-06-2025
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
D
Assessment Year
2014-2015
Judgement Text
"आयकर अपीलीय अिधकरण, ’डी’ \u0001यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH: CHENNAI \u0001ी एबी टी. वक , ाियक सद\u0011 एवं एवं एवं एवं \u0001ी अिमताभ शु\u0018ा, लेखा सद क े सम\u001b BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER IT (TP) A No.77/Chny/2018 िनधा\u000eरणवष\u000e/Assessment Year: 2014-15 M/s. Symantec Software & Services India Pvt. Ltd., 1/124, Shivaji Gardens, DLF Info City, Block No.1C, 5th Floor, Moonlight Stop, Nandambakkam, Chennai-600 089. v. The DCIT, Corporate Circle-6(2), Chennai. [PAN: AAKCS 5422 K] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent) अपीलाथ\u0016 क\u001a ओर से/ Appellant by : Mr.Nageshwara Rao, Advocate (virtual) \u0017\u0018यथ\u0016 क\u001a ओर से /Respondent by : Mr.A. Sasikumar, CIT सुनवाईक\u001aतारीख/Date of Hearing : 07.04.2025 घोषणाक\u001aतारीख /Date of Pronouncement : 13.06.2025 आदेश / O R D E R PER ABY T. VARKEY, JM: This appeal preferred by the assessee is against the final assessment order dated 27.09.2018 passed by the Assistant Commissioner of Income Tax, Central Circle-6(2), Chennai, u/s.143(3) r.w.s.92CA(4) r.w.s.144C(13) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘) pursuant to the directions issued by the Dispute Resolution Panel (hereinafter referred to as ‘DRP‘), Bangalore, dated 31.08.2018 u/s.144C(5) of the Act. 2. The brief facts of the case business of rendering software services”] and Information Technology enabled Services [ During the relevant AY 2014 ITeS to its Non-Resident, Associated Enterprise (AE) which were reported as international transaction assessee had drawn up the internal segmental accounts of services segment and (ii) Appropriate Method (MAM) be OP/OC. Subsequently, the case was selected for scrutiny referred the matters to determination of Arm's Length Price (ALP) in relation to int transactions with AE. The TPO information of (i) SWD services PLI was computed by the assessee at 12.86% & 11.73% respectively. TPO observed that the assessee compan analysis and selected segment whose ALP PLI was 10.56% Segment, whose ALP PLI was % IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 2 :: Resolution Panel (hereinafter referred to as ‘DRP‘), Bangalore, dated 31.08.2018 u/s.144C(5) of the Act. The brief facts of the case are that the assessee is engaged in the ess of rendering software development services [in short Information Technology enabled Services [in short ‘ During the relevant AY 2014-15, the assessee rendered SWD services and ent, Associated Enterprise (AE) which were reported international transactions in terms of Section 92 of the Act. The assessee had drawn up the internal segmental accounts of segment and (ii) ITES segment and applied TNMM as Most riate Method (MAM) to both these segments and PLI was taken to OP/OC. Subsequently, the case was selected for scrutiny referred the matters to the Transfer Pricing Officer (TPO) for determination of Arm's Length Price (ALP) in relation to int . The TPO is noted to have perused the SWD services segment and (ii) ITES segment PLI was computed by the assessee at 12.86% & 11.73% respectively. ed that the assessee company had undertaken an economic selected 13 (thirteen) comparables for whose ALP PLI was 10.56% and seven (7) comparables for , whose ALP PLI was %. Since the PLI(s) of the assessee was /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. Resolution Panel (hereinafter referred to as ‘DRP‘), Bangalore, dated assessee is engaged in the in short “SWD in short ‘ITES’]. the assessee rendered SWD services and ent, Associated Enterprise (AE) which were reported 92 of the Act. The assessee had drawn up the internal segmental accounts of (i) SWD applied TNMM as Most PLI was taken to OP/OC. Subsequently, the case was selected for scrutiny and the AO the Transfer Pricing Officer (TPO) for determination of Arm's Length Price (ALP) in relation to international perused the segmental segment, whose PLI was computed by the assessee at 12.86% & 11.73% respectively. The y had undertaken an economic comparables for SWD services comparables for ITES Since the PLI(s) of the assessee was higher than the comparables transactions were claimed to be at arm’s length. 3. Though the TPO accepted the internal segmentation of the financial statements, application of TNMM as MAM and selection of OP/OC as the PLI; the TPO rejected the assessee. The TPO identified his own set of eleven (11) comparables for the SWD services segment, which are as follows: Sl.No. Name of the comparable 1 CG-VAK Software & Exports Ltd. (in millions) 2 Cigniti Technologies Limited 3 Mindtree Ltd. (in millions) 4 Persistent Systems Ltd. (in millions) 5 R S Software (India) Ltd. (in lakhs) 6 Tech Mahindra Ltd. (Seg) (in Crores) 7 Thirdware Solution Ltd. (in 8 Infosys Ltd. 9 Larsen & Toubro Infotech Ltd. 10 SQS India B F S I Ltd. 11 Tata Elxsi Limited (Segmental) Average 4. The TPO accordingly worked out the arm’s length PLI for SWD services segment at 25.03% which was higher than the PLI of the assessee and accordingly made TP adjustment of Rs.14,40,19,430/ TPO in the ITES segment comparables and computed the arm’s length PLI at 19.10% and consequently made TP adjustment of Rs.5,25,43,650/ IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 3 :: higher than the comparables for both the segments, the international transactions were claimed to be at arm’s length. Though the TPO accepted the internal segmentation of the financial statements, application of TNMM as MAM and selection of OP/OC as the PLI; the TPO rejected the economic analysis set out in TP study of the assessee. The TPO identified his own set of eleven (11) comparables for the SWD services segment, which are as follows:- Name of the comparable Margin (OP/OC) VAK Software & Exports Ltd. (in Cigniti Technologies Limited Mindtree Ltd. (in millions) Persistent Systems Ltd. (in millions) R S Software (India) Ltd. (in lakhs) Tech Mahindra Ltd. (Seg) (in Crores) Thirdware Solution Ltd. (in lakhs) Infosys Ltd. Larsen & Toubro Infotech Ltd. SQS India B F S I Ltd. Tata Elxsi Limited (Segmental) The TPO accordingly worked out the arm’s length PLI for SWD services segment at 25.03% which was higher than the PLI of the assessee and accordingly made TP adjustment of Rs.14,40,19,430/ segment identified the following set of and computed the arm’s length PLI at 19.10% and consequently made TP adjustment of Rs.5,25,43,650/-. /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. for both the segments, the international Though the TPO accepted the internal segmentation of the financial statements, application of TNMM as MAM and selection of OP/OC as the economic analysis set out in TP study of the assessee. The TPO identified his own set of eleven (11) comparables for (OP/OC) 9.27 27.62 21.64 22.99 24.11 23.01 44.68 36.13 24.71 22.25 18.94 25.03 The TPO accordingly worked out the arm’s length PLI for SWD services segment at 25.03% which was higher than the PLI of the assessee and accordingly made TP adjustment of Rs.14,40,19,430/-. The set of seven (7) and computed the arm’s length PLI at 19.10% and Sl.No. Name of the comparable 1 Infosys BPO Ltd. 2 Microgenetic Systems Ltd. 3 Microland Ltd. 4 Jindal Intellicom Ltd. 5 BNR Udyog Ltd. (Seg) 6 Crossdomain Solutions Pvt Ltd 7 ACE BPO Services Private Limited Average 5. Pursuant to the above order passed u/s 92CA(3) of the Act, the AO framed the draft assessment the assessee filed objections before the DRP. It is noted that the DRP only directed exclusion of one (1) comparable viz., M/s.Tech Mahindra Ltd. (segment), identified by the TPO, from the SWD services segment and corrected the margin computation of one (1) comparable in the ITES segment. Consequently, in the final assessment, the upward adjustment for SWD services segment and ITES segment worked out to Rs.14,64,33,899/- & Rs.5,08,60,621/ final assessment order, the assessee has filed the present appeal before us. 6. At the time of hearing, the effective grounds of appeal only and supported the arguments with chart and paper book. The Ld. AR submitt IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 4 :: Name of the comparable Margin (OP/OC) (%) Infosys BPO Ltd. 35.71 Microgenetic Systems Ltd. 18.06 Microland Ltd. 20.07 Jindal Intellicom Ltd. 7.89 BNR Udyog Ltd. (Seg) 25.08 Crossdomain Solutions Pvt 21.06 ACE BPO Services Private Limited 5.85 Average 19.10 Pursuant to the above order passed u/s 92CA(3) of the Act, the AO framed the draft assessment order u/s 144C(1) of the Act against which the assessee filed objections before the DRP. It is noted that the DRP only directed exclusion of one (1) comparable viz., M/s.Tech Mahindra Ltd. (segment), identified by the TPO, from the SWD services segment and corrected the margin computation of one (1) comparable in the ITES segment. Consequently, in the final assessment, the upward adjustment for SWD services segment and ITES segment worked out to & Rs.5,08,60,621/- respectively. Aggrieved b final assessment order, the assessee has filed the present appeal before At the time of hearing, the Ld. AR restricted his effective grounds of appeal only and supported the arguments with chart and paper book. The Ld. AR submitted that, five (5)out of the ten (10) /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. Margin (OP/OC) (%) Pursuant to the above order passed u/s 92CA(3) of the Act, the AO order u/s 144C(1) of the Act against which the assessee filed objections before the DRP. It is noted that the DRP only directed exclusion of one (1) comparable viz., M/s.Tech Mahindra Ltd. (segment), identified by the TPO, from the SWD services segment and corrected the margin computation of one (1) comparable in the ITES segment. Consequently, in the final assessment, the upward adjustment for SWD services segment and ITES segment worked out to respectively. Aggrieved by this final assessment order, the assessee has filed the present appeal before arguments to effective grounds of appeal only and supported the arguments with chart , five (5)out of the ten (10) comparables are to be excluded in Ltd., (ii) Persistent Systems Ltd., (iii) Thirdware Solutions Ltd., (iv) Larsen & Toubro Infotech Ltd., (v) SQS India BFSI Ltd., and three (3) comparables namely (i) CAT Technologies Ltd., (ii) Lucid Software Ltd., (iii) Akshay Software Technologies Ltd. the ALP. Further, he contended that, three (3) out of seven (7) comparables were to be excluded in the ITES segm comparables of the assessee were to be included. The Ld. AR further claimed risk and working capital adjustment, which was denied by the lower authorities. The Ld. CIT, DR, on the other hand, order(s) of the lower authorities. 7. We heard the rival contentions and perused the material on record. We first take up the issue concerning exclusion/ inclusion of comparables in the SWD services segment. The Ld. Counsel for the assessee brought to our notice inter alia, that similar ca SWD services provider, came up before the coordinate bench of this Tribunal at Bangalore for the same AY 2014 Revenue had chosen similar/same set of comparables as that of the assessee for the very same assessment year and therefore according to him, the ratio decidendi unless any change in facts to distinguish the case of the assessee, is IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 5 :: comparables are to be excluded in SWD services segment viz., (i) Infosys Ltd., (ii) Persistent Systems Ltd., (iii) Thirdware Solutions Ltd., (iv) Larsen & Toubro Infotech Ltd., (v) SQS India BFSI Ltd., and three (3) namely (i) CAT Technologies Ltd., (ii) Lucid Software Ltd., (iii) Akshay Software Technologies Ltd. are to be included for determining . Further, he contended that, three (3) out of seven (7) comparables were to be excluded in the ITES segment and two (2) comparables of the assessee were to be included. The Ld. AR further claimed risk and working capital adjustment, which was denied by the lower authorities. The Ld. CIT, DR, on the other hand, of the lower authorities. We heard the rival contentions and perused the material on record. We first take up the issue concerning exclusion/ inclusion of comparables in the SWD services segment. The Ld. Counsel for the assessee brought , that similar cases as that of assessee, who were SWD services provider, came up before the coordinate bench of this Tribunal at Bangalore for the same AY 2014-15, in whose cases also the Revenue had chosen similar/same set of comparables as that of the ery same assessment year and therefore according to ratio decidendi laid down in these decisions ought to be followed unless any change in facts to distinguish the case of the assessee, is /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. SWD services segment viz., (i) Infosys Ltd., (ii) Persistent Systems Ltd., (iii) Thirdware Solutions Ltd., (iv) Larsen & Toubro Infotech Ltd., (v) SQS India BFSI Ltd., and three (3) namely (i) CAT Technologies Ltd., (ii) Lucid Software Ltd., are to be included for determining . Further, he contended that, three (3) out of seven (7) ent and two (2) comparables of the assessee were to be included. The Ld. AR further claimed risk and working capital adjustment, which was denied by the lower authorities. The Ld. CIT, DR, on the other hand, supported the We heard the rival contentions and perused the material on record. We first take up the issue concerning exclusion/ inclusion of comparables in the SWD services segment. The Ld. Counsel for the assessee brought ses as that of assessee, who were SWD services provider, came up before the coordinate bench of this 15, in whose cases also the Revenue had chosen similar/same set of comparables as that of the ery same assessment year and therefore according to laid down in these decisions ought to be followed unless any change in facts to distinguish the case of the assessee, is pointed out by the Revenue. The relevant decisions relied AR were as follows:- - EMC Software and S 3375/Bang/2018] (Pages 279 - Microsoft Research Lab India Pvt. Ltd. vs. DCIT 3131/Bang/2018) - Citrix R&D vs. DCIT [ 256 of PB] 8. Having gone through the material placed before us and the above decisions (supra), we take up the five (5) comparables sought to be excluded by the assessee. It is noted that, Infosys Ltd. (ii) Persistent Systems Limited, (iii) L & T Infotech Limited and (iv) Thirdware Solutions Ltd. functionally dissimilar to a SWD provider [ like the assessee, in the present case], by this Tribunal in the case Services India Pvt. Ltd M/s Infosys Limited, it was noted by the Tribunal that, this company had significant intangibles and huge revenues from software products therefore cannot be reg findings taken note of by us, is as follows: IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 6 :: pointed out by the Revenue. The relevant decisions relied upon by the Ld. EMC Software and Services India Pvt Ltd vs. JCIT [ ang/2018] (Pages 279 – 311 of PB) Microsoft Research Lab India Pvt. Ltd. vs. DCIT /2018) [Page 214 to 235 of PB] Citrix R&D vs. DCIT [IT(TP)A No. 3134/Bang/2014) Having gone through the material placed before us and the above decisions (supra), we take up the five (5) comparables sought to be excluded by the assessee. It is noted that, four (4) comparables i.e., Infosys Ltd. (ii) Persistent Systems Limited, (iii) L & T Infotech Limited and (iv) Thirdware Solutions Ltd. were examined and functionally dissimilar to a SWD provider [ like the assessee, in the present case], by this Tribunal in the case of EMC Software and Ltd. v. JCIT (supra) in AY 2014-15. In respect of M/s Infosys Limited, it was noted by the Tribunal that, this company had significant intangibles and huge revenues from software products therefore cannot be regarded as a SWD services provider. The relevant findings taken note of by us, is as follows:- /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. upon by the Ld. ervices India Pvt Ltd vs. JCIT [IT(TP)A Microsoft Research Lab India Pvt. Ltd. vs. DCIT [ITA /2014) [Page 236 to Having gone through the material placed before us and the above decisions (supra), we take up the five (5) comparables sought to be four (4) comparables i.e., (i) Infosys Ltd. (ii) Persistent Systems Limited, (iii) L & T Infotech Limited were examined and found to be functionally dissimilar to a SWD provider [ like the assessee, in the EMC Software and 15. In respect of M/s Infosys Limited, it was noted by the Tribunal that, this company had significant intangibles and huge revenues from software products and arded as a SWD services provider. The relevant “..(1) Infosys Limited: provides end to and business solutions like business consulting technology engineering and outsourcing services and no segmental details in respect of services are available and made investments and products to establish as a tradable IPO owner. Further the comparable owns significant brand value products and focus on brand building and incurred expenditure on R & D. The company owns 7 edge products/platforms and six other product based solutions. The company leverages on its premium banking solution and during the year the company merged with its wholly owned subsidiary Infosys Consulting India Limited. We found that the company was excluded from the final list of comparables in assessee's own case for the Assess 2011-12 by the DRP and revenue has accepted. The Learned Authorised Representative supported his arguments relying on the decisions in the case of CIT Vs. Agnity (India) Technologies Pvt. Ltd. (2013); CGI Systems and Management Ltd. Vs. ACIT (201 learned Authorised Representative also substantiated that for the Assessment Year 2014 case of LG Soft India Pvt. Ltd. Vs. DCIT in IT(TP)A No.3122/Bang/2018 for the Assessment Year 2014 relying on the LG Soft India Pvt. Ltd. Vs. DCIT (supra) where the Tribunal has observed at paras 6 and 6.1 as under: 6. We notice that the co A.Y 2008-09 by following the bench in the case of 3DPLM Software Solutions Ltd (IT(TP)A No. 1303/Bang/2012 dated 28.11.2013, wherein the decision, rendered in the case of Triology E Business Software India P Link (ITA No. 1054/Bang/2011) was fo Technologies Lad is not functionally comparable since it owns significant intangible and has huge revenues from software products. It was observed that the breakup of revenue from software services and software product is not available. 6.1 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 direct exclusion of Ms. Infosys Ltd.\" We found that the Infosys Ltd. has significant intan revenues from software products and was considered by the co Bench of the Tribunal for exclusion in the Assessment Year 2014 Accordingly, we direct the TP exclude the Infosys Ltd. from the final list of comparables for determin 9. We further find that in the same decision rendered in the case of EMC Software and Services India Pvt Persistent Systems Limited be software product companies whose IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 7 :: Infosys Limited: This company is functionally dissimilar and provides end to and business solutions like business consulting technology engineering and outsourcing services and no segmental details in respect of services are available and made investments and establish as a tradable IPO owner. Further the comparable owns significant brand value products and focus on brand building and incurred expenditure on R & D. The company owns 7 edge products/platforms and six other product based solutions. The company erages on its premium banking solution and during the year the company merged with its wholly owned subsidiary Infosys Consulting India Limited. We found that the company was excluded from the final list of comparables in assessee's own case for the Assess 12 by the DRP and revenue has accepted. The Learned Authorised Representative supported his arguments relying on the decisions in the case of CIT Vs. Agnity (India) Technologies Pvt. Ltd. (2013); CGI Systems and Management Ltd. Vs. ACIT (2015) 94 taxman.com The learned Authorised Representative also substantiated that for the Assessment Year 2014-15, the co-ordinate Bench of the Tribunal in the case of LG Soft India Pvt. Ltd. Vs. DCIT in IT(TP)A No.3122/Bang/2018 for the Assessment Year 2014-15 D128.5.2019. We support our views relying on the LG Soft India Pvt. Ltd. Vs. DCIT (supra) where the Tribunal has observed at paras 6 and 6.1 as under: 6. We notice that the co-ordinate bench bas excluded Mis. Infosys Ltd in 09 by following the decision rendered by another co bench in the case of 3DPLM Software Solutions Ltd (IT(TP)A No. 1303/Bang/2012 dated 28.11.2013, wherein the decision, rendered in the case of Triology E Business Software India P Link (ITA No. 1054/Bang/2011) was followed and it was held that M/s. Infosys Technologies Lad is not functionally comparable since it owns significant intangible and has huge revenues from software products. It was observed that the breakup of revenue from software services and uct is not available. 6.1 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 direct exclusion of Ms. Infosys Ltd.\" We found that the Infosys Ltd. has significant intangibles and huge revenues from software products and was considered by the co Bench of the Tribunal for exclusion in the Assessment Year 2014 Accordingly, we direct the TP exclude the Infosys Ltd. from the final list of comparables for determination of ALP.” We further find that in the same decision rendered in the case of EMC Software and Services India Pvt. Ltd. v. JCIT (supra) Persistent Systems Limited and M/s L & T Infotech Limited be software product companies whose segmental information on SWD /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. This company is functionally dissimilar and provides end to and business solutions like business consulting technology engineering and outsourcing services and no segmental details in respect of services are available and made investments and establish as a tradable IPO owner. Further the comparable owns significant brand value products and focus on brand building and incurred expenditure on R & D. The company owns 7 edge products/platforms and six other product based solutions. The company erages on its premium banking solution and during the year the company merged with its wholly owned subsidiary Infosys Consulting India Limited. We found that the company was excluded from the final list of comparables in assessee's own case for the Assessment Year 12 by the DRP and revenue has accepted. The Learned Authorised Representative supported his arguments relying on the decisions in the case of CIT Vs. Agnity (India) Technologies Pvt. Ltd. (2013); CGI 5) 94 taxman.com The learned Authorised Representative also substantiated that for the ordinate Bench of the Tribunal in the case of LG Soft India Pvt. Ltd. Vs. DCIT in IT(TP)A No.3122/Bang/2018 15 D128.5.2019. We support our views relying on the LG Soft India Pvt. Ltd. Vs. DCIT (supra) where the ordinate bench bas excluded Mis. Infosys Ltd in decision rendered by another co-ordinate bench in the case of 3DPLM Software Solutions Ltd (IT(TP)A No. 1303/Bang/2012 dated 28.11.2013, wherein the decision, rendered in the case of Triology E Business Software India P Link (ITA No. llowed and it was held that M/s. Infosys Technologies Lad is not functionally comparable since it owns significant intangible and has huge revenues from software products. It was observed that the breakup of revenue from software services and 6.1 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 gibles and huge revenues from software products and was considered by the co-ordinate Bench of the Tribunal for exclusion in the Assessment Year 2014-15. Accordingly, we direct the TP exclude the Infosys Ltd. from the final list We further find that in the same decision rendered in the case of v. JCIT (supra), M/s L & T Infotech Limited were found to egmental information on SWD services was not available comparables. The findings rendered by the Tribunal, in relation thereto, are noted to be as follows: “(ii) L&T Infotech Limited: has high brand value and is a market leader, high presence and the intangible income in proprietary products. Significant expenditure in foreign currency to the extent of 57.13%. During the year the product engineering business service of the subsidiary. The company segments are divided into service cluster, industrial cluster and telecom business. As per the Annual Report of the company, the company has a significant capital work the company has d excluded from the final list of comparable in assessee's own case for the Assessment Year 2011 company was excluded by the co case of Pitney Bowes Software India Pvt. Ltd. Vs. ACIT 101 Tasman.com 350. The learned Authorized Representative also relied on CGI Information Systems & Management Consultants (P) Ltd. Vs. ACTT (2018) 94 man.com 97 and DCTT Vs. Taman India Pvt. L.sd. (2016) 74 Taxmann.com 88 (Del). We found that the co in M.P. No.95/Bang/2019 IT(TP)A No.3122/Bang/2018 for the Assessment Year 2014 under: “4. We heard Ld.DR and perused the record. We find mer miscellaneous petition filed by the assessee. Accordingly following paragraph is inserted after paragraph 10 in the impugned order of the Tribunal, which will adjudicate the issue relating to \"L&T Infotech Lid\": “10A The assessee has sought exclu the ground that there were extraordinary events during the year, it possesses brand and intangibles, it has not provided segmental information and it has got sub submitted that the above said ordinate bench in the case of Metric Stream Infotech P Ltd., (IT(TP)A No.1418 & 2735/Bang/2017) relating to AY 2013 case of Electronics for Imaging India P Ltd., (IT(TP)A No.1506/Bang/2016 relating to that there is no change in facts in this year also and accordingly prayed for exclusion of the above said company. 10A.1 We heard Ld D.R and perused the record. We notice that M/s.L&T Infotech Ltd has been excluded by the the case of Metric Stream Infotech P Lad (supra) for AY 2013 also in the case of Electronics for Imaging India P Ltd (supra) for AY 2011-12. The Ld A.R submits that there is no change in facts IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 8 :: services was not available and were therefore excluded from the list of comparables. The findings rendered by the Tribunal, in relation thereto, are noted to be as follows:- “(ii) L&T Infotech Limited: The company has a margin of 24.61% and has high brand value and is a market leader, high presence and the intangible income in proprietary products. Significant expenditure in foreign currency to the extent of 57.13%. During the year the product engineering business service of the company was transferred to its subsidiary. The company segments are divided into service cluster, industrial cluster and telecom business. As per the Annual Report of the company, the company has a significant capital work-in-progress and the company has developmental products. The comparable was excluded from the final list of comparable in assessee's own case for the Assessment Year 2011-12 by the DRP and further the comparable company was excluded by the co-ordinate Bench of Delhi Tribunal in the Pitney Bowes Software India Pvt. Ltd. Vs. ACIT 101 Tasman.com 350. The learned Authorized Representative also relied on CGI Information Systems & Management Consultants (P) Ltd. Vs. ACTT (2018) 94 man.com 97 and DCTT Vs. Taman India Pvt. L.sd. (2016) 74 axmann.com 88 (Del). We found that the co-ordinate Bench of Tribunal in M.P. No.95/Bang/2019 IT(TP)A No.3122/Bang/2018 for the Assessment Year 2014-15 has dealt on the sue at page 2 para 4 as “4. We heard Ld.DR and perused the record. We find mer miscellaneous petition filed by the assessee. Accordingly following paragraph is inserted after paragraph 10 in the impugned order of the Tribunal, which will adjudicate the issue relating to \"L&T Infotech “10A The assessee has sought exclusion of M/s.L&T Infotech Ltd on the ground that there were extraordinary events during the year, it possesses brand and intangibles, it has not provided segmental information and it has got sub-contracting expenses. The Ld A.R submitted that the above said company has been excluded by the co ordinate bench in the case of Metric Stream Infotech P Ltd., (IT(TP)A No.1418 & 2735/Bang/2017) relating to AY 2013-14 and also in the case of Electronics for Imaging India P Ltd., (IT(TP)A No.1506/Bang/2016 relating to AY 2011-12). The Ld.AR submitted that there is no change in facts in this year also and accordingly prayed for exclusion of the above said company. 10A.1 We heard Ld D.R and perused the record. We notice that M/s.L&T Infotech Ltd has been excluded by the co-ordinate bench in the case of Metric Stream Infotech P Lad (supra) for AY 2013 also in the case of Electronics for Imaging India P Ltd (supra) for AY 12. The Ld A.R submits that there is no change in facts /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. and were therefore excluded from the list of comparables. The findings rendered by the Tribunal, in relation thereto, f 24.61% and has high brand value and is a market leader, high presence and the intangible income in proprietary products. Significant expenditure in foreign currency to the extent of 57.13%. During the year the product company was transferred to its subsidiary. The company segments are divided into service cluster, industrial cluster and telecom business. As per the Annual Report of the progress and evelopmental products. The comparable was excluded from the final list of comparable in assessee's own case for the 12 by the DRP and further the comparable ordinate Bench of Delhi Tribunal in the Pitney Bowes Software India Pvt. Ltd. Vs. ACIT 101 Tasman.com 350. The learned Authorized Representative also relied on CGI Information Systems & Management Consultants (P) Ltd. Vs. ACTT (2018) 94 man.com 97 and DCTT Vs. Taman India Pvt. L.sd. (2016) 74 ordinate Bench of Tribunal in M.P. No.95/Bang/2019 IT(TP)A No.3122/Bang/2018 for the 15 has dealt on the sue at page 2 para 4 as “4. We heard Ld.DR and perused the record. We find merit in the miscellaneous petition filed by the assessee. Accordingly following paragraph is inserted after paragraph 10 in the impugned order of the Tribunal, which will adjudicate the issue relating to \"L&T Infotech sion of M/s.L&T Infotech Ltd on the ground that there were extraordinary events during the year, it possesses brand and intangibles, it has not provided segmental contracting expenses. The Ld A.R company has been excluded by the co- ordinate bench in the case of Metric Stream Infotech P Ltd., (IT(TP)A 14 and also in the case of Electronics for Imaging India P Ltd., (IT(TP)A 12). The Ld.AR submitted that there is no change in facts in this year also and accordingly 10A.1 We heard Ld D.R and perused the record. We notice that ordinate bench in the case of Metric Stream Infotech P Lad (supra) for AY 2013-14 and also in the case of Electronics for Imaging India P Ltd (supra) for AY 12. The Ld A.R submits that there is no change in facts prevailing in the current year vis co-ordinate benches in the above said cases. Accordingly. following the above said decisions, we direct exclusion of M/s.L & T Infotech Ltd.”. We considering the functional dissimilarity and judicial decisions and various facts which are not similar to the assessee's functional profile, accordingly direct the TPO to exclude M/s. L. & T Infotech Limited from the final list of comparable in determining the ALP. (iii) Persistent Systems Ltd.: The company is functionally differ is engaged in rendering IT services and in the development of software products without there being support segmental information and engaged in IP led solutions and undertakes significant R & D activities, owns IP. During the year the company ma has made significant investment in IP and their solutions and has a dedicated team for Research and IP development. The learned Authorized Representative relied on decision of Tribunal in the case of CGI Information & Managemen Taxman.com 97 and PCIT Vs. Saxo India Pvt. Ltd. 74 taxmann.com 88 (Delhi). We relied on the decision of CGI Information Systems & Management Consultants Pvt. Lltd. (supra) at paras 28 to 30 as under: 28. The learned counsel the comparability of the 3 companies out of the aforesaid 4 companies which the Assessee seeks to exclude from the list of comparable companies chosen by the TPO viz, Infosys Ltd., Larsen & Toubro Infotech Ltd. and the ITAT Delhi Bench in the case of Agilis Information Technologies India (P.) Ltd. v. Asstt. CIT [2018] 89 taxmann.com 440 (Delhi for the same AY 2012 functional profile of the Assessee is same as that of the assessee in the case of Agilis Information Technologies India (P) Ltd., (supra), is identical much as the said company was also involved in providing SWD services to its AE and the TPO had chosen 16 compara companies out of which 6 companies chosen by the TPO in the case of the assessee for the purpose of comparability were the same. His submission was that the decision rendered by the Tribunal in the case of Agilis Information Technologies India (P) Ltd. equally applicable to the assessee in the present case also. The learned DR. submitted that the DRP in its directions has merely accepted with the reasoning of the IPO and therefore the issue of exclusion of these companies should be dir afresh by the DRP. 29. We have considered the rival submissions. In the case of Agilis Information Technologies India (P) Ltd., (supra), this Tribunal considered the comparability of the 3 companies which the assessee seeks to exclude the TPO. The functional profile of me assessee and that of the assessee in the case of Agilis Information Technologies India (P) Ltd., (supra) is identical inasmuch as the said company was also involved in providing SWD services to its AE and the TPO had chosen some IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 9 :: prevailing in the current year vis-a-vis the years considered by the ordinate benches in the above said cases. Accordingly. following the above said decisions, we direct exclusion of M/s.L & T Infotech We considering the functional dissimilarity and judicial decisions and facts which are not similar to the assessee's functional profile, accordingly direct the TPO to exclude M/s. L. & T Infotech Limited from the final list of comparable in determining the ALP. (iii) Persistent Systems Ltd.: The company is functionally differ is engaged in rendering IT services and in the development of software products without there being support segmental information and engaged in IP led solutions and undertakes significant R & D activities, owns IP. During the year the company made acquisitions. The company has made significant investment in IP and their solutions and has a dedicated team for Research and IP development. The learned Authorized Representative relied on decision of Tribunal in the case of CGI Information & Management Systems Pvt. Ltd. Vs. ACIT 94 Taxman.com 97 and PCIT Vs. Saxo India Pvt. Ltd. 74 taxmann.com 88 (Delhi). We relied on the decision of CGI Information Systems & Management Consultants Pvt. Lltd. (supra) at paras 28 to 30 as under: 28. The learned counsel for the Assessee submitted before us that the comparability of the 3 companies out of the aforesaid 4 companies which the Assessee seeks to exclude from the list of comparable companies chosen by the TPO viz, Infosys Ltd., Larsen & Toubro Infotech Ltd. and Persistent Systems Ltd., were considered by the ITAT Delhi Bench in the case of Agilis Information Technologies India (P.) Ltd. v. Asstt. CIT [2018] 89 taxmann.com 440 (Delhi for the same AY 2012-13, is this regard it was submitted that the al profile of the Assessee is same as that of the assessee in the case of Agilis Information Technologies India (P) Ltd., (supra), is identical much as the said company was also involved in providing SWD services to its AE and the TPO had chosen 16 compara companies out of which 6 companies chosen by the TPO in the case of the assessee for the purpose of comparability were the same. His submission was that the decision rendered by the Tribunal in the case of Agilis Information Technologies India (P) Ltd., (supra) would be equally applicable to the assessee in the present case also. The learned DR. submitted that the DRP in its directions has merely accepted with the reasoning of the IPO and therefore the issue of exclusion of these companies should be directed to be examined afresh by the DRP. 29. We have considered the rival submissions. In the case of Agilis Information Technologies India (P) Ltd., (supra), this Tribunal considered the comparability of the 3 companies which the assessee seeks to exclude from the list of comparable companies chosen by the TPO. The functional profile of me assessee and that of the assessee in the case of Agilis Information Technologies India (P) Ltd., (supra) is identical inasmuch as the said company was also involved oviding SWD services to its AE and the TPO had chosen some /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. vis the years considered by the ordinate benches in the above said cases. Accordingly. following the above said decisions, we direct exclusion of M/s.L & T Infotech We considering the functional dissimilarity and judicial decisions and facts which are not similar to the assessee's functional profile, accordingly direct the TPO to exclude M/s. L. & T Infotech Limited from (iii) Persistent Systems Ltd.: The company is functionally different as it is engaged in rendering IT services and in the development of software products without there being support segmental information and engaged in IP led solutions and undertakes significant R & D activities, de acquisitions. The company has made significant investment in IP and their solutions and has a dedicated team for Research and IP development. The learned Authorized Representative relied on decision of Tribunal in the case of t Systems Pvt. Ltd. Vs. ACIT 94 Taxman.com 97 and PCIT Vs. Saxo India Pvt. Ltd. 74 taxmann.com 88 (Delhi). We relied on the decision of CGI Information Systems & Management Consultants Pvt. Lltd. (supra) at paras 28 to 30 as under: for the Assessee submitted before us that the comparability of the 3 companies out of the aforesaid 4 companies which the Assessee seeks to exclude from the list of comparable companies chosen by the TPO viz, Infosys Ltd., Larsen & Persistent Systems Ltd., were considered by the ITAT Delhi Bench in the case of Agilis Information Technologies India (P.) Ltd. v. Asstt. CIT [2018] 89 taxmann.com 440 (Delhi-Trib) 13, is this regard it was submitted that the al profile of the Assessee is same as that of the assessee in the case of Agilis Information Technologies India (P) Ltd., (supra), is identical much as the said company was also involved in providing SWD services to its AE and the TPO had chosen 16 comparable companies out of which 6 companies chosen by the TPO in the case of the assessee for the purpose of comparability were the same. His submission was that the decision rendered by the Tribunal in the case , (supra) would be equally applicable to the assessee in the present case also. The learned DR. submitted that the DRP in its directions has merely accepted with the reasoning of the IPO and therefore the issue of ected to be examined 29. We have considered the rival submissions. In the case of Agilis Information Technologies India (P) Ltd., (supra), this Tribunal considered the comparability of the 3 companies which the assessee from the list of comparable companies chosen by the TPO. The functional profile of me assessee and that of the assessee in the case of Agilis Information Technologies India (P) Ltd., (supra) is identical inasmuch as the said company was also involved oviding SWD services to its AE and the TPO had chosen some comparable companies which were also chosen by the TPO in the case of assessee for the purpose of comparability. In the aforesaid decision, the Tribunal held on the comparability of the 3 companies which the Assessee seeks to exclude as follows: (a) Infosys Ltd was excluded from the list of comparable companies by following the decision of the Hon'ble Delhi High Court in the case of CIT v Agnity India Technologies (P) Ltd (2013) 36 taxmann.com 289/219. Taxman 20. (De) The discussion is contained in paragraphs 4.5 to 4.7 of the Tribunal's order. The Tribunal accepted that Infosys Ltd. is a giant risk taking company and engaged in development and sale of software products and also owns intangible asse therefore not comparable with a software development service provider such as the Assessee in that case. (b) Larsent & Tourbro Infotech Ltd., was excluded from the list of comparable companies by relying on the decision of the Delhi Bench of ITAT in the case of Saxo India (P) Ltd. v. Asstt. CIT (20161. 67 taxmann.com 155 (Delhi paragraphs 4.8 to 4.10 of the Tribunal's order. The Tribunal held that L&T Infotech Ltd., was a software product company and segmental information on SWD services was not available. The Tribunal also noticed that the appeal filed by the revenue against the tribunal’s order was dismissed by the Hon'ble Delhi High Court in ITA No 682/2016. (c) Persistent Systems Ltd., was excluded from the list companies on the ground that this company was a software product company and segmental information on SWD services was not available. The Tribunal in coming to the above conclusion referred to the decision rendered by ITAT Delhi Bench in the India (P.) Lid. v. ITO ITA No.64/Del/2015 order dated 23.9.2015 and the decision of Hon'ble Delhi High Court in the case of Saxo India Pvt. Ltd. (supra). The findings in this regard are contained in Paragraphs 4.14 to 4.16 of its order. 30. Respectfully following the decision of the Tribunal we hold that the aforesaid 3 companies be excluded from the final list of comparable companies for the purpose of arriving at the arithmetic mean of comparable companies for the purpose of comparison w the profit margins. In this regard we are also of the view that the plea of the learned DR for a remand of the issue to the DRP on the ground that the DRP has not given any reasons in its directions cannot be accepted. The DRP has endorsed the view of directions and therefore the reasons given by the TPO should be regarded as the conclusions of the DRP. We rely on judicial decisions and facts in respect of comparable Persistent Systems Ltd. and direct the Assessing Officer to exclude from the final list of comparable for determination of ALP.” IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 10 :: comparable companies which were also chosen by the TPO in the case of assessee for the purpose of comparability. In the aforesaid decision, the Tribunal held on the comparability of the 3 companies which the Assessee seeks to exclude as follows: (a) Infosys Ltd was excluded from the list of comparable companies by following the decision of the Hon'ble Delhi High Court in the case of CIT v Agnity India Technologies (P) Ltd (2013) 36 taxmann.com 219. Taxman 20. (De) The discussion is contained in paragraphs 4.5 to 4.7 of the Tribunal's order. The Tribunal accepted that Infosys Ltd. is a giant risk taking company and engaged in development and sale of software products and also owns intangible asse therefore not comparable with a software development service provider such as the Assessee in that case. (b) Larsent & Tourbro Infotech Ltd., was excluded from the list of comparable companies by relying on the decision of the Delhi Bench the case of Saxo India (P) Ltd. v. Asstt. CIT (20161. 67 taxmann.com 155 (Delhi-Th. The discussion is contained in paragraphs 4.8 to 4.10 of the Tribunal's order. The Tribunal held that L&T Infotech Ltd., was a software product company and segmental mation on SWD services was not available. The Tribunal also noticed that the appeal filed by the revenue against the tribunal’s order was dismissed by the Hon'ble Delhi High Court in ITA No (c) Persistent Systems Ltd., was excluded from the list of comparable companies on the ground that this company was a software product company and segmental information on SWD services was not available. The Tribunal in coming to the above conclusion referred to the decision rendered by ITAT Delhi Bench in the case of Cash Edge India (P.) Lid. v. ITO ITA No.64/Del/2015 order dated 23.9.2015 and the decision of Hon'ble Delhi High Court in the case of Saxo India Pvt. Ltd. (supra). The findings in this regard are contained in Paragraphs 4.14 to 4.16 of its order. 0. Respectfully following the decision of the Tribunal we hold that the aforesaid 3 companies be excluded from the final list of comparable companies for the purpose of arriving at the arithmetic mean of comparable companies for the purpose of comparison w the profit margins. In this regard we are also of the view that the plea of the learned DR for a remand of the issue to the DRP on the ground that the DRP has not given any reasons in its directions cannot be accepted. The DRP has endorsed the view of the TPO in its directions and therefore the reasons given by the TPO should be regarded as the conclusions of the DRP. We rely on judicial decisions and facts in respect of comparable Persistent Systems Ltd. and direct the Assessing Officer to exclude from the final list of comparable for determination of ALP.” /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. comparable companies which were also chosen by the TPO in the case of assessee for the purpose of comparability. In the aforesaid decision, the Tribunal held on the comparability of the 3 companies (a) Infosys Ltd was excluded from the list of comparable companies by following the decision of the Hon'ble Delhi High Court in the case of CIT v Agnity India Technologies (P) Ltd (2013) 36 taxmann.com 219. Taxman 20. (De) The discussion is contained in paragraphs 4.5 to 4.7 of the Tribunal's order. The Tribunal accepted that Infosys Ltd. is a giant risk taking company and engaged in development and sale of software products and also owns intangible assets and therefore not comparable with a software development service (b) Larsent & Tourbro Infotech Ltd., was excluded from the list of comparable companies by relying on the decision of the Delhi Bench the case of Saxo India (P) Ltd. v. Asstt. CIT (20161. 67 Th. The discussion is contained in paragraphs 4.8 to 4.10 of the Tribunal's order. The Tribunal held that L&T Infotech Ltd., was a software product company and segmental mation on SWD services was not available. The Tribunal also noticed that the appeal filed by the revenue against the tribunal’s order was dismissed by the Hon'ble Delhi High Court in ITA No of comparable companies on the ground that this company was a software product company and segmental information on SWD services was not available. The Tribunal in coming to the above conclusion referred to case of Cash Edge India (P.) Lid. v. ITO ITA No.64/Del/2015 order dated 23.9.2015 and the decision of Hon'ble Delhi High Court in the case of Saxo India Pvt. Ltd. (supra). The findings in this regard are contained in Paragraphs 0. Respectfully following the decision of the Tribunal we hold that the aforesaid 3 companies be excluded from the final list of comparable companies for the purpose of arriving at the arithmetic mean of comparable companies for the purpose of comparison with the profit margins. In this regard we are also of the view that the plea of the learned DR for a remand of the issue to the DRP on the ground that the DRP has not given any reasons in its directions the TPO in its directions and therefore the reasons given by the TPO should be We rely on judicial decisions and facts in respect of comparable Persistent Systems Ltd. and direct the Assessing Officer to exclude from 10. Likewise, we note that the Tribunal in the case of Services India Pvt. Ltd. (supra) be functionally dissimilar and held it to be non consequently directed exclusion of this comparable by observing as under: “(iv) Thirdware Solutions Ltd and is engaged in rendering software development implementation and support services and engaged in the and earns revenue from sale of user licenses and purchase stock in trade during the year and has intangibles. Further the margins of the company fluctuate year on year basis due to different revenue recognition model which The above comparable was excluded in assessee's own case on functional dissimilarity in the Assessment Years 2005 and learned Authorized Representative also relied on Lime Labs (India) Pvt. Ltd. Vs. ITO 101 Taxman.co ordinate Bench of the Tribunal in the case of LG Software India Pvt. Ltd. Vs. DCIT in IT(TP)A No.3122/Bang/2018 dt.28.05.2019 for the Assessment Year 2014 paras 8 & 8.1 at p \"8. We also notice that in A.Y 2008 excluded M/s.Thirdware Solutions Ltd also by following the decision rendered in the case of 3DPLM Software Solutions Ltd (supra), where in it was held that M/s.Thirdware Solu 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 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 list of comparables for determining the ALP.” 11. Following the above decision (supra) and having regard to the fact that the assessee is also providing similar SWD services and there being no change of fact pointed out by the Ld. CIT, DR, we find merit in the IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 11 :: Likewise, we note that the Tribunal in the case of EMC Software & Services India Pvt. Ltd. (supra), also held M/s.Thirdware Sales Ltd., be functionally dissimilar and held it to be non-compara consequently directed exclusion of this comparable by observing as Thirdware Solutions Ltd. the company is functionally dissimilar and is engaged in rendering software development implementation and support services and engaged in the development of software products and earns revenue from sale of user licenses and purchase stock in trade during the year and has intangibles. Further the margins of the company fluctuate year on year basis due to different revenue recognition model which the company has adopted. The above comparable was excluded in assessee's own case on functional dissimilarity in the Assessment Years 2005-06 and 2007 and learned Authorized Representative also relied on Lime Labs (India) Pvt. Ltd. Vs. ITO 101 Taxman.com 201 (Delhi Trib.). We found the co ordinate Bench of the Tribunal in the case of LG Software India Pvt. Ltd. Vs. DCIT in IT(TP)A No.3122/Bang/2018 dt.28.05.2019 for the Assessment Year 2014-15 has excluded the comparable as observed at paras 8 & 8.1 at page 4 as under: \"8. We also notice that in A.Y 2008-09, the co-ordinate bench has excluded M/s.Thirdware Solutions Ltd also by following the 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 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/AO to exclude this comparable from the list of comparables for determining the ALP.” Following the above decision (supra) and having regard to the fact that the assessee is also providing similar SWD services and there being no change of fact pointed out by the Ld. CIT, DR, we find merit in the /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. EMC Software & , also held M/s.Thirdware Sales Ltd., to comparable and consequently directed exclusion of this comparable by observing as . the company is functionally dissimilar and is engaged in rendering software development implementation and development of software products and earns revenue from sale of user licenses and purchase stock in Further the margins of the company fluctuate year on year basis due to the company has adopted. The above comparable was excluded in assessee's own case on 06 and 2007-08 and learned Authorized Representative also relied on Lime Labs (India) m 201 (Delhi Trib.). We found the co- ordinate Bench of the Tribunal in the case of LG Software India Pvt. Ltd. Vs. DCIT in IT(TP)A No.3122/Bang/2018 dt.28.05.2019 for the 15 has excluded the comparable as observed at ordinate bench has excluded M/s.Thirdware Solutions Ltd also by following the decision rendered in the case of 3DPLM Software Solutions Ltd (supra), where in tions Ltd. is engaged in product development and earns revenue from sale of licenses and subscription 8.1 It was stated that there is no change in facts. Accordingly. following assessee's own case in A.Y 2008-09, we The comparable Thirdware Solutions Ltd., has to be excluded as it is predominant in activity and segmental details are not available. O to exclude this comparable from the Following the above decision (supra) and having regard to the fact that the assessee is also providing similar SWD services and there being no change of fact pointed out by the Ld. CIT, DR, we find merit in the contention of the Ld. AR of the assessee and four (4) comparables i.e. (i) Infosys Ltd., (ii) Thirdware Solutions Ltd., & (iv) L&T Infotech Ltd., comparable in determining the ALP 12. The last comparable sought to be e SQS India BFSI Ltd. It is noted that, the assessee has not objected for exclusion of this comparable before the TPO as well as before the DRP, but has now raised this claim by filing an additional ground before us. According to the assessee, this comparable fails related party transaction (RPT) filter of 25% since the RPT to revenue from operations works out to be 33.168 %. The Ld. AR took us through the relevant Page No.38 & 55 of its Annual Report, which was placed at Page accordingly urged us to exclude this comparable as well. 13. Per contra, the Ld. CIT, DR vehemently objected to the admission of this additional ground raised by the assessee. According to him, when the assessee had not disputed TPO, then this objection cannot be raised at this stage. On merits, he further submitted that, the assessee was a 100% captive service provider for its foreign AE and therefore the RPT filter had no relevance. 14. We first take up the legal plea raised by the Revenue for non admissibility of this claim raised by the assessee. IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 12 :: contention of the Ld. AR of the assessee and direct the TPO to exclude the four (4) comparables i.e. (i) Infosys Ltd., (ii) Persistent Systems Ltd. Thirdware Solutions Ltd., & (iv) L&T Infotech Ltd.,from the final list of comparable in determining the ALP. The last comparable sought to be excluded by the assessee is M/s. SQS India BFSI Ltd. It is noted that, the assessee has not objected for exclusion of this comparable before the TPO as well as before the DRP, but has now raised this claim by filing an additional ground before us. g to the assessee, this comparable fails related party transaction (RPT) filter of 25% since the RPT to revenue from operations works out to be 33.168 %. The Ld. AR took us through the relevant Page No.38 & 55 of its Annual Report, which was placed at Page 718 of the Paper Book. He accordingly urged us to exclude this comparable as well. Per contra, the Ld. CIT, DR vehemently objected to the admission of this additional ground raised by the assessee. According to him, when the assessee had not disputed this comparable before the Ld. DRP & the TPO, then this objection cannot be raised at this stage. On merits, he further submitted that, the assessee was a 100% captive service provider for its foreign AE and therefore the RPT filter had no relevance. take up the legal plea raised by the Revenue for non admissibility of this claim raised by the assessee. It is noted that similar /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. direct the TPO to exclude the Persistent Systems Ltd.,(iii) from the final list of xcluded by the assessee is M/s. SQS India BFSI Ltd. It is noted that, the assessee has not objected for exclusion of this comparable before the TPO as well as before the DRP, but has now raised this claim by filing an additional ground before us. g to the assessee, this comparable fails related party transaction (RPT) filter of 25% since the RPT to revenue from operations works out to be 33.168 %. The Ld. AR took us through the relevant Page No.38 & 55 718 of the Paper Book. He Per contra, the Ld. CIT, DR vehemently objected to the admission of this additional ground raised by the assessee. According to him, when this comparable before the Ld. DRP & the TPO, then this objection cannot be raised at this stage. On merits, he further submitted that, the assessee was a 100% captive service provider for its foreign AE and therefore the RPT filter had no relevance. take up the legal plea raised by the Revenue for non- It is noted that similar objection as raised by Ld. CIT, DR (supra) was raised by the Revenue in the case of M/s. Citrix R&D India Pvt. Ltd. v also, as in the present case, the assessee did not object to the inclusion/exclusion of comparable before the DRP but agitated the same before this Tribunal. The Tribunal is noted to have repelled this objection raised by the Ld. DR, by holding as under: “12. As far as CG Vak Software & excluded the aforesaid company for the reason that this company was engaged in both SWD services and ITeS and no segmental details were available. Before the DRP, the assessee did not challenge the exclusion of this company from the list of comparable companies by the TPO. However, before the Tribunal, the assessee has sought inclusion of this company in the final list of comparables on the ground that segmental details between SWD services and ITeS is available in the and 98.12% of income of this company is from rendering SWD services. In this regard, our attention was drawn to PB page 1646 of the annual report compendium, which shows that total revenue from operation is Rs.8.95 crores out of which 8.78 c services. It is the plea of assessee that for AY 2013 was regarded as a comparable company by the TPO himself. 13. We have given careful consideration to the submission made by the ld. counsel for the as comparability of this company needs to be looked into afresh by the TPO, in the light of facts brought to our notice by the ld. counsel for the assessee. The fact that the assessee did not object to the exclus this company by the TPO before the DRP cannot be the basis, not to consider the claim of assessee before the Tribunal. We derive support for the above conclusion from the decision of Special Bench Chandigarh in DCIT Vs. Quark Systems Pvt. Ltd. 38 wherein it was held that the Revenue authorities, including TPO were required to apply statutory provisions and consider for purposes of comparison functions, assets and risks (turnover), profit and technology employed by the te comparable. Statutory duty is cast on them to undertake above exercise. If this has not been, the Tribunal as a fact take into account all the relevant material and determine the question as per the statutory regulations. We therefore remand the question of inclusion of this company as a comparable company to the TPO for fresh consideration in the facts brought to our notice referred to above and after affording due opportunity of being heard to [emphasis given] IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 13 :: objection as raised by Ld. CIT, DR (supra) was raised by the Revenue in Citrix R&D India Pvt. Ltd. v. DCIT (supra) also, as in the present case, the assessee did not object to the inclusion/exclusion of comparable before the DRP but agitated the same before this Tribunal. The Tribunal is noted to have repelled this objection , by holding as under: 12. As far as CG Vak Software & Exports Ltd. is concerned, the TPO excluded the aforesaid company for the reason that this company was engaged in both SWD services and ITeS and no segmental details were available. Before the DRP, the assessee did not challenge the exclusion pany from the list of comparable companies by the TPO. However, before the Tribunal, the assessee has sought inclusion of this company in the final list of comparables on the ground that segmental details between SWD services and ITeS is available in the public domain and 98.12% of income of this company is from rendering SWD services. In this regard, our attention was drawn to PB page 1646 of the annual report compendium, which shows that total revenue from operation is Rs.8.95 crores out of which 8.78 crores is revenue from software services. It is the plea of assessee that for AY 2013-14, this company was regarded as a comparable company by the TPO himself. 13. We have given careful consideration to the submission made by the ld. counsel for the assessee and are of the view that the issue of comparability of this company needs to be looked into afresh by the TPO, in the light of facts brought to our notice by the ld. counsel for the The fact that the assessee did not object to the exclus this company by the TPO before the DRP cannot be the basis, not to consider the claim of assessee before the Tribunal. We derive support for the above conclusion from the decision of Special Bench Chandigarh in DCIT Vs. Quark Systems Pvt. Ltd. 38 SOT 307 (SB)(Chandigarh) wherein it was held that the Revenue authorities, including TPO were required to apply statutory provisions and consider for purposes of comparison functions, assets and risks (turnover), profit and technology employed by the tested party and other enterprises taken as . Statutory duty is cast on them to undertake above exercise. If this has not been, the Tribunal as a fact-finding body has to take into account all the relevant material and determine the question the statutory regulations. We therefore remand the question of inclusion of this company as a comparable company to the TPO for fresh consideration in the facts brought to our notice referred to above and after affording due opportunity of being heard to the assessee. [emphasis given] /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. objection as raised by Ld. CIT, DR (supra) was raised by the Revenue in . DCIT (supra), wherein also, as in the present case, the assessee did not object to the inclusion/exclusion of comparable before the DRP but agitated the same before this Tribunal. The Tribunal is noted to have repelled this objection Exports Ltd. is concerned, the TPO excluded the aforesaid company for the reason that this company was engaged in both SWD services and ITeS and no segmental details were available. Before the DRP, the assessee did not challenge the exclusion pany from the list of comparable companies by the TPO. However, before the Tribunal, the assessee has sought inclusion of this company in the final list of comparables on the ground that segmental public domain and 98.12% of income of this company is from rendering SWD services. In this regard, our attention was drawn to PB page 1646 of the annual report compendium, which shows that total revenue from operation is rores is revenue from software 14, this company was regarded as a comparable company by the TPO himself. 13. We have given careful consideration to the submission made by the sessee and are of the view that the issue of comparability of this company needs to be looked into afresh by the TPO, in the light of facts brought to our notice by the ld. counsel for the The fact that the assessee did not object to the exclusion of this company by the TPO before the DRP cannot be the basis, not to consider the claim of assessee before the Tribunal. We derive support for the above conclusion from the decision of Special Bench Chandigarh SOT 307 (SB)(Chandigarh) wherein it was held that the Revenue authorities, including TPO were required to apply statutory provisions and consider for purposes of comparison functions, assets and risks (turnover), profit and technology sted party and other enterprises taken as . Statutory duty is cast on them to undertake above finding body has to take into account all the relevant material and determine the question the statutory regulations. We therefore remand the question of inclusion of this company as a comparable company to the TPO for fresh consideration in the facts brought to our notice referred to above and the assessee.” 15. In view of the above, the preliminary objection raised by the Revenue to the admissibility of the contention seeking exclusion of M/s.SQS India BFSI Ltd from the final list of comparables, is rejected. On merits, it was brought to our notice that, the Ld. DRP in their decision rendered in the case of excluded M/s.SQS India BFSI Ltd from the final list of comparables, for failing the RPT filter. However, in the fitness of th and appropriate to remit this matter back to the file of the TPO/AO for de novo consideration of the claim of the taxpayer seeking exclusion of M/s. SQS India BFSI Ltd, after giving an opportunity of being heard. We order accordingly. 16. We now come to the three (3) comparables (i) M/s.CAT Tec Technologies, (ii) M/s.Lucid Software Ltd., & (iii) Akshay Software Technologies Ltd., which are sought to be included by the assessee. 16.1 M/s.CAT Technologies company is engaged in medical transcriptions, etc., and no segmental details are available, and therefore he didn’t include this company as a comparable. The finding of the TPO was confirmed by Ld. DRP which held that the activity of medical tran software development and also this comparable fails the persistent operation loss filter. To this, the Ld. AR took us through the financials of IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 14 :: In view of the above, the preliminary objection raised by the Revenue to the admissibility of the contention seeking exclusion of SQS India BFSI Ltd from the final list of comparables, is rejected. On was brought to our notice that, the Ld. DRP in their decision rendered in the case of M/s. Citrix R&D India Pvt. Ltd. (supra) SQS India BFSI Ltd from the final list of comparables, for failing the RPT filter. However, in the fitness of the matters, we deem it fit and appropriate to remit this matter back to the file of the TPO/AO for de novo consideration of the claim of the taxpayer seeking exclusion of M/s. SQS India BFSI Ltd, after giving an opportunity of being heard. We order We now come to the three (3) comparables (i) M/s.CAT Tec Technologies, (ii) M/s.Lucid Software Ltd., & (iii) Akshay Software Technologies Ltd., which are sought to be included by the assessee. M/s.CAT Technologies - The TPO was of the view company is engaged in medical transcriptions, etc., and no segmental details are available, and therefore he didn’t include this company as a comparable. The finding of the TPO was confirmed by Ld. DRP which held that the activity of medical transcription cannot be characterized as software development and also this comparable fails the persistent operation loss filter. To this, the Ld. AR took us through the financials of /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. In view of the above, the preliminary objection raised by the Revenue to the admissibility of the contention seeking exclusion of SQS India BFSI Ltd from the final list of comparables, is rejected. On was brought to our notice that, the Ld. DRP in their decision M/s. Citrix R&D India Pvt. Ltd. (supra) had SQS India BFSI Ltd from the final list of comparables, for e matters, we deem it fit and appropriate to remit this matter back to the file of the TPO/AO for de novo consideration of the claim of the taxpayer seeking exclusion of M/s. SQS India BFSI Ltd, after giving an opportunity of being heard. We order We now come to the three (3) comparables (i) M/s.CAT Tec Technologies, (ii) M/s.Lucid Software Ltd., & (iii) Akshay Software Technologies Ltd., which are sought to be included by the assessee. The TPO was of the view that this company is engaged in medical transcriptions, etc., and no segmental details are available, and therefore he didn’t include this company as a comparable. The finding of the TPO was confirmed by Ld. DRP which held scription cannot be characterized as software development and also this comparable fails the persistent- operation loss filter. To this, the Ld. AR took us through the financials of M/s.CAT Technologies [Page No.1152 of the PB engaged in any medical transcription activity during the year under consideration [AY 2014 reported profit in AY 2012 company cannot be classified as a persistent loss referred the decision of the Hon’ble Bombay High Court in the case of v. Goldman Sachs (India) Securities Pvt. Ltd., [ITA No.2222 of 2013] wherein the Hon’ble High Court held that a company cannot be termed as a persistent loss making, if it out of previous three years. Per contra, the Ld. CIT, DR supported the action of the TPO/DRP and doesn’t want us to interfere. 16.2 Having gone through the submissions put forth by the assessee and the orders of the lowe reported profit in one of the preceding three years i.e. AY 2012 noted above, and therefore, following the decision of Hon’ble Bombay High Court in the case of (supra), we agree with the assessee that this company cannot be excluded by applying the persistent loss their financials for the relevant year reveals that, this company was rendering SWD services and hence, is seen to It was also brought to our notice that, this company was accepted as IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 15 :: M/s.CAT Technologies [Page No.1152 of the PB-2] to show that it was not aged in any medical transcription activity during the year under consideration [AY 2014-15]. He also showed that this company had reported profit in AY 2012-13 and therefore, according to him, this company cannot be classified as a persistent loss-making c referred the decision of the Hon’ble Bombay High Court in the case of v. Goldman Sachs (India) Securities Pvt. Ltd., [ITA No.2222 of wherein the Hon’ble High Court held that a company cannot be termed as a persistent loss making, if it has earned operating profit in one out of previous three years. Per contra, the Ld. CIT, DR supported the action of the TPO/DRP and doesn’t want us to interfere. Having gone through the submissions put forth by the assessee and the orders of the lower authorities, we note that, this company had reported profit in one of the preceding three years i.e. AY 2012 noted above, and therefore, following the decision of Hon’ble Bombay High Court in the case of Goldman Sachs (India) Securities Pvt. Ltd., , we agree with the assessee that this company cannot be excluded by applying the persistent loss-making filter. Further, perusal of their financials for the relevant year reveals that, this company was rendering SWD services and hence, is seen to be functionally comparable. It was also brought to our notice that, this company was accepted as /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. 2] to show that it was not aged in any medical transcription activity during the year under 15]. He also showed that this company had 13 and therefore, according to him, this making company. He referred the decision of the Hon’ble Bombay High Court in the case of CIT v. Goldman Sachs (India) Securities Pvt. Ltd., [ITA No.2222 of wherein the Hon’ble High Court held that a company cannot be has earned operating profit in one out of previous three years. Per contra, the Ld. CIT, DR supported the Having gone through the submissions put forth by the assessee and r authorities, we note that, this company had reported profit in one of the preceding three years i.e. AY 2012-13, as noted above, and therefore, following the decision of Hon’ble Bombay Goldman Sachs (India) Securities Pvt. Ltd., , we agree with the assessee that this company cannot be making filter. Further, perusal of their financials for the relevant year reveals that, this company was be functionally comparable. It was also brought to our notice that, this company was accepted as functionally comparable by the Ld. DRP in the preceding AY 2013 there is no change in the functions and business profile of M/s.CAT Technologies during the year, for the reasons discussed in the foregoing, we direct inclusion of this company as comparable. 16.3 M/s.Lucid Software Ltd lower authorities by applying the persistent loss DRP had also observed that this company derives income from service and products and therefore, was not functionally similar. It was brought to our notice that, this company had reported profit in the AY 2012 Our attention was drawn to Page No.778 of the PB which sho company had earned operating profit of Rs.51,20,424/ Rs.41,16,808/- in AY 2012 profit in one of the preceding three years, following the decision of the Hon’ble Bombay High Court Securities Pvt. Ltd., (supra) rejected on the ‘persistent loss 16.4 On the functional comparability, we note that the Ld. DRP in assessee’s own case for AY 2013 functionally comparable even though rejected by TPO. It was also brought to our notice that the Bangalore Bench of this Tribunal in Microsoft Research Lab India Pvt. Ltd. [IT(TP)A No. IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 16 :: functionally comparable by the Ld. DRP in the preceding AY 2013 there is no change in the functions and business profile of M/s.CAT the year, for the reasons discussed in the foregoing, we direct inclusion of this company as comparable. M/s.Lucid Software Ltd – This company was rejected by the lower authorities by applying the persistent loss-making filter. The Ld. served that this company derives income from service and products and therefore, was not functionally similar. It was brought to our notice that, this company had reported profit in the AY 2012 Our attention was drawn to Page No.778 of the PB which sho company had earned operating profit of Rs.51,20,424/- and book profit of in AY 2012-13. Therefore, as the company had reported profit in one of the preceding three years, following the decision of the Hon’ble Bombay High Court in the case of Goldman Sachs (India) Securities Pvt. Ltd., (supra) we hold that this company cannot be rejected on the ‘persistent loss-making’ filter. On the functional comparability, we note that the Ld. DRP in assessee’s own case for AY 2013-14 had accepted this company as functionally comparable even though rejected by TPO. It was also brought to our notice that the Bangalore Bench of this Tribunal in the case of Microsoft Research Lab India Pvt. Ltd. [IT(TP)A No. /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. functionally comparable by the Ld. DRP in the preceding AY 2013-14. As there is no change in the functions and business profile of M/s.CAT the year, for the reasons discussed in the foregoing, This company was rejected by the making filter. The Ld. served that this company derives income from service and products and therefore, was not functionally similar. It was brought to our notice that, this company had reported profit in the AY 2012-13. Our attention was drawn to Page No.778 of the PB which showed that this and book profit of 13. Therefore, as the company had reported profit in one of the preceding three years, following the decision of the Goldman Sachs (India) we hold that this company cannot be On the functional comparability, we note that the Ld. DRP in 14 had accepted this company as functionally comparable even though rejected by TPO. It was also brought the case of M/s. Microsoft Research Lab India Pvt. Ltd. [IT(TP)A No. 3131/Bang/2018] dated 05.02.2020 assessee rendering SWD services had held this company as comparable by observing as under:- “(v) Lucid Software Limited turnover is Rs.3.60 Crores. It was rejected on the ground that it is engaged in the business of software development and rendering software services to the global non sciences industry and previous year ending March, 2013 and March, 2014. The Ld.AR submit that the comparable is functionally similar and is engaged in the business of software development and passes all the filters, and whereas persistent loss filters has been incorrectly applied. The learned Authorized Representative relied on the decision of Pune Bench Tribunal Yazaki India Pvt Ltd Vs DCit in ITA No.621/Pune/2014 Dt.11.7.2019 at paras 21 to 23 which is read as under: \"21. The Hon'ble jurisdictional High Court in CIT Vs. Goldman Sachs (India) Securities (P) Ltd. (2016) 290 CTR 236 (Bom.) considered a similar issue of persistent loss making companies. In that case, the TPO excluded Capital Trust Ltd. on the ground of persistent los making company. The Tribunal included this company by noticing that it was not a persistent loss making company as for the A.Y. 2005-06 it made profit although it was loss for subsequent two years, namely, A.Y. 2006 obtaining in the instant case, it is seen that though FCI Technology Services Ltd. suffered loss for the A.Y. 2008 consideration but, in fact, there was profit for the AY. 2007 5.08%. As this company earned profit of it ceases to be a persistent loss making company in so far as the A.Y. 2009-10 is concerned, since one of the three years is in profit though the other two years are in loss. 22. The Id. DR invited our attention towards the dire the DRP on page 12 in which it has returned a categorical finding that FCI Technology Services Ltd. started manufacturing connectors during the A.Y. 2008 connectors during the A.Y. 2007 claiming that this company has positive PLI. 23. We have gone through the Annual report of this company relevant for the A.Yrs. 2009 book for the assessment year under consideration gives details of stock, production and sales for the year ending 31 has opening stock of connectors as well. Similar is the position for the preceding year as well, which depicts that there was opening stock of connectors. In that view of the matter, it becomes evid company was already into manufacturing of connectors, which IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 17 :: 3131/Bang/2018] dated 05.02.2020 for AY 2014-15 in the context of assessee rendering SWD services had held this company as comparable - Lucid Software Limited, has a margin of (-) 0.57% and the turnover is Rs.3.60 Crores. It was rejected on the ground that it is engaged in the business of software development and rendering software services to the global non-destructive testing and material sciences industry and further the company has incurred losses for the previous year ending March, 2013 and March, 2014. The Ld.AR submit that the comparable is functionally similar and is engaged in the business of software development and passes all the filters, and ersistent loss filters has been incorrectly applied. The learned Authorized Representative relied on the decision of Pune Bench Tribunal Yazaki India Pvt Ltd Vs DCit in ITA No.621/Pune/2014 Dt.11.7.2019 at paras 21 to 23 which is read as under: n'ble jurisdictional High Court in CIT Vs. Goldman Sachs (India) Securities (P) Ltd. (2016) 290 CTR 236 (Bom.) considered a similar issue of persistent loss making companies. In that case, the TPO excluded Capital Trust Ltd. on the ground of persistent los making company. The Tribunal included this company by noticing that it was not a persistent loss making company as for the A.Y. 06 it made profit although it was loss for subsequent two years, namely, A.Y. 2006-07 and 2007-08. Considering the factua obtaining in the instant case, it is seen that though FCI Technology Services Ltd. suffered loss for the A.Y. 2008-09 and the year under consideration but, in fact, there was profit for the AY. 2007 5.08%. As this company earned profit of 5.08% for the A.Y. 2007 it ceases to be a persistent loss making company in so far as the A.Y. 10 is concerned, since one of the three years is in profit though the other two years are in loss. 22. The Id. DR invited our attention towards the direction given by the DRP on page 12 in which it has returned a categorical finding that FCI Technology Services Ltd. started manufacturing connectors during the A.Y. 2008-09 and there was no manufacturing of connectors during the A.Y. 2007-08, for which the claiming that this company has positive PLI. 23. We have gone through the Annual report of this company relevant for the A.Yrs. 2009-10 and 2008-09. Page 467 of the paper book for the assessment year under consideration gives details of production and sales for the year ending 31-12 has opening stock of connectors as well. Similar is the position for the preceding year as well, which depicts that there was opening stock of connectors. In that view of the matter, it becomes evid company was already into manufacturing of connectors, which /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. 15 in the context of assessee rendering SWD services had held this company as comparable ) 0.57% and the turnover is Rs.3.60 Crores. It was rejected on the ground that it is engaged in the business of software development and rendering destructive testing and material further the company has incurred losses for the previous year ending March, 2013 and March, 2014. The Ld.AR submit that the comparable is functionally similar and is engaged in the business of software development and passes all the filters, and ersistent loss filters has been incorrectly applied. The learned Authorized Representative relied on the decision of Pune Bench Tribunal Yazaki India Pvt Ltd Vs DCit in ITA No.621/Pune/2014 Dt.11.7.2019 at n'ble jurisdictional High Court in CIT Vs. Goldman Sachs (India) Securities (P) Ltd. (2016) 290 CTR 236 (Bom.) considered a similar issue of persistent loss making companies. In that case, the TPO excluded Capital Trust Ltd. on the ground of persistent loss making company. The Tribunal included this company by noticing that it was not a persistent loss making company as for the A.Y. 06 it made profit although it was loss for subsequent two years, 08. Considering the factual position obtaining in the instant case, it is seen that though FCI Technology 09 and the year under consideration but, in fact, there was profit for the AY. 2007-08 at 5.08% for the A.Y. 2007-08, it ceases to be a persistent loss making company in so far as the A.Y. 10 is concerned, since one of the three years is in profit though ction given by the DRP on page 12 in which it has returned a categorical finding that FCI Technology Services Ltd. started manufacturing connectors 09 and there was no manufacturing of 08, for which the assessee is 23. We have gone through the Annual report of this company 09. Page 467 of the paper book for the assessment year under consideration gives details of 12-2007 which has opening stock of connectors as well. Similar is the position for the preceding year as well, which depicts that there was opening stock of connectors. In that view of the matter, it becomes evident that this company was already into manufacturing of connectors, which product has been considered as similar by the DRP. Ex consequenti, the relevant contrary finding recorded by the DRP about that company not engaged in manufacturing of connectors dur 2007-08 is, therefore, not correct. As FCI Technology Services Ltd. is not a persistent loss making company and further the functional similarity has not been disputed by the TPO, we order to include this company in the list of comparables.\" We found this comparable was included by the Pune Bench of the Tribunal for the Assessment Year 2009 the Assessment Year is 2014 that it is a loss making company for the year ending M March, 2014. Considering the functionality and precedent losses and the decision of the co comparable to the file of TPO to examine and verify the functional profile for inclusion in determinat 16.5 Since the Revenue was unable to point out any distinguishable facts and particularly because the Ld. DRP had also included this comparable in the final list for AY 2013 comparable. 16.6 M/s.Akshay Software Technologies Ltd. based on website of this company, it is functionally different. Though the DRP did not dispute the functional comparability but rejected this company on the ground that the revenue model of this compan different as foreign branch expenditure is 85%. The Ld. AR took us through the Annual report of M/s 2013-14, which shows the break rendering software development services and sell is observed that 98.55% of its revenue is generated from software development services and only 1.19% is from selling ERP products [Refer note 19 on page 1054, 1056 0f PB IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 18 :: product has been considered as similar by the DRP. Ex consequenti, the relevant contrary finding recorded by the DRP about that company not engaged in manufacturing of connectors dur 08 is, therefore, not correct. As FCI Technology Services Ltd. is not a persistent loss making company and further the functional similarity has not been disputed by the TPO, we order to include this company in the list of comparables.\" e found this comparable was included by the Pune Bench of the Tribunal for the Assessment Year 2009-10. whereas in the present case, the Assessment Year is 2014-15 and also the observations of the TPO that it is a loss making company for the year ending March, 2013 and March, 2014. Considering the functionality and precedent losses and the decision of the co-ordinate Bench of the Tribunal, we restore this comparable to the file of TPO to examine and verify the functional profile for inclusion in determination of ALP.” Since the Revenue was unable to point out any distinguishable facts and particularly because the Ld. DRP had also included this comparable in the final list for AY 2013-14, we direct inclusion of this company as a hay Software Technologies Ltd. - According to the TPO, based on website of this company, it is functionally different. Though the DRP did not dispute the functional comparability but rejected this company on the ground that the revenue model of this compan different as foreign branch expenditure is 85%. The Ld. AR took us through the Annual report of M/s.Akshay Software Technologies for FY 14, which shows the break-up of revenue generated by it from rendering software development services and selling ERP products and it is observed that 98.55% of its revenue is generated from software development services and only 1.19% is from selling ERP products [Refer note 19 on page 1054, 1056 0f PB-2]. The Ld. AR has rightly pointed out /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. product has been considered as similar by the DRP. Ex consequenti, the relevant contrary finding recorded by the DRP about that company not engaged in manufacturing of connectors during the A.Y. 08 is, therefore, not correct. As FCI Technology Services Ltd. is not a persistent loss making company and further the functional similarity has not been disputed by the TPO, we order to include this e found this comparable was included by the Pune Bench of the 10. whereas in the present case, 15 and also the observations of the TPO arch, 2013 and March, 2014. Considering the functionality and precedent losses and the ordinate Bench of the Tribunal, we restore this comparable to the file of TPO to examine and verify the functional profile Since the Revenue was unable to point out any distinguishable facts and particularly because the Ld. DRP had also included this comparable in 14, we direct inclusion of this company as a According to the TPO, based on website of this company, it is functionally different. Though the DRP did not dispute the functional comparability but rejected this company on the ground that the revenue model of this company is different as foreign branch expenditure is 85%. The Ld. AR took us Akshay Software Technologies for FY up of revenue generated by it from ing ERP products and it is observed that 98.55% of its revenue is generated from software development services and only 1.19% is from selling ERP products [Refer 2]. The Ld. AR has rightly pointed out that, neither TPO nor DRP had applied a filter to reject the companies having substantial branch expenses. Accordingly, the reasoning given by DRP to reject this comparable is found to be untenable. The Ld.AR further brought to our notice that Bangalore Tribunal in the case o Microsoft Research Lab India Pvt. Ltd. (supra) M/s. Verizon Data Services India Pvt. Ltd. ( No.56/Chny/2018)for AY 2014 Software Technologies Ltd in the same SWD segment on similar fa circumstances as involved in the present case. The relevant findings rendered in the case of M/s. Microsoft Research Lab India Pvt. Ltd., is noted as under: “(i) Akshay Software Technologies Ltd., the company's margin is 1.81% and was rejected by t total cost. Whereas RPT is 3.49% of total sales and Ld.AR referred to page 1705 and 1714 of paper book. Further the company was rejected by the TPO on the RPT filter and the observations are incorrect, The company is functionally similar and is engaged in providing Software Development Services including procurement, implementation and maintenance of ERP Products and also services in India and overseas which does not have impact on functional operations. Where assessee own case for the Assessment Year 2016 comparable. Accordingly, considering the functional profile, and it was accepted by the Revenue in subsequent Asst Years, we direct the TPO to include the comparable company in the ALP.” 16.7 We also gainfully refer to the following observations made by this Tribunal in the case of (supra) while dealing with the comparable M/s. Akshay Software Technologies Ltd., which is as under: IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 19 :: r DRP had applied a filter to reject the companies having substantial branch expenses. Accordingly, the reasoning given by DRP to reject this comparable is found to be untenable. The Ld.AR further brought to our notice that Bangalore Tribunal in the case o Microsoft Research Lab India Pvt. Ltd. (supra) and in the case of M/s. Verizon Data Services India Pvt. Ltd. ( for AY 2014-15has directed inclusion of M/s. Akshay Software Technologies Ltd in the same SWD segment on similar fa circumstances as involved in the present case. The relevant findings rendered in the case of M/s. Microsoft Research Lab India Pvt. Ltd., is (i) Akshay Software Technologies Ltd., the company's margin is 1.81% and was rejected by the DRP as a foreign brand expenditure is 85% of total cost. Whereas RPT is 3.49% of total sales and Ld.AR referred to page 1705 and 1714 of paper book. Further the company was rejected by the TPO on the RPT filter and the observations are incorrect, The mpany is functionally similar and is engaged in providing Software Development Services including procurement, implementation and maintenance of ERP Products and also services in India and overseas which does not have impact on functional operations. Where assessee own case for the Assessment Year 2016-17 it was accepted as comparable. Accordingly, considering the functional profile, and it was accepted by the Revenue in subsequent Asst Years, we direct the TPO to include the comparable company in the final list for determination of We also gainfully refer to the following observations made by this Tribunal in the case of M/s. Verizon Data Services India Pvt. Ltd. while dealing with the comparable M/s. Akshay Software Technologies Ltd., which is as under: /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. r DRP had applied a filter to reject the companies having substantial branch expenses. Accordingly, the reasoning given by DRP to reject this comparable is found to be untenable. The Ld.AR further brought to our notice that Bangalore Tribunal in the case of M/s. and in the case of M/s. Verizon Data Services India Pvt. Ltd. (IT(TP)A has directed inclusion of M/s. Akshay Software Technologies Ltd in the same SWD segment on similar facts and circumstances as involved in the present case. The relevant findings rendered in the case of M/s. Microsoft Research Lab India Pvt. Ltd., is (i) Akshay Software Technologies Ltd., the company's margin is 1.81% he DRP as a foreign brand expenditure is 85% of total cost. Whereas RPT is 3.49% of total sales and Ld.AR referred to page 1705 and 1714 of paper book. Further the company was rejected by the TPO on the RPT filter and the observations are incorrect, The mpany is functionally similar and is engaged in providing Software Development Services including procurement, implementation and maintenance of ERP Products and also services in India and overseas which does not have impact on functional operations. Whereas in 17 it was accepted as comparable. Accordingly, considering the functional profile, and it was accepted by the Revenue in subsequent Asst Years, we direct the TPO to final list for determination of We also gainfully refer to the following observations made by this M/s. Verizon Data Services India Pvt. Ltd. while dealing with the comparable M/s. Akshay Software “8.1 The Ld. TPO excluded this entity on the ground that this entity was functionally dissimilar as it was engaged in product development. The Ld. DRP confirmed the same against which the assessee is in further appeal before us. 8.2 The Ld. AR has submitt since the extract made from annual report of this entity are not with respect to the assessee but with respect to assessee’s wholly owned subsidiary vis. Akshay Software International Inc. The Ld. AR submitted that this entity is functionally similar since it is engaged in providing professional services, procurement, installation, implementation, support and maintenance of ERP products and services in India and overseas. The revenue from software services is mo revenues which is one of the filter applied by Ld. TPO. The Ld. AR submitted that this entity has been accepted by Bangalore Tribunal in the decision of Mercedes (95 Taxmann.Com 134) as well Labvantage Solution Pvt. Ltd. (ITA No.1051/Kol/2015 & ors. dated 19.10.2016). The Ld. CIT-DR opposed inclusion of the same on the ground that it was a low-profile company carrying out functionally different activitie its turnover could not be compared with assessee’s turnover. 8.3 We find that the observation made by Ld. TPO, as rightly pointed out by Ld. AR, are erroneous. The observations have been made in the Annual Report not with respect to the assessee bu another entity. This entity meets filters applied by Ld. TPO while carrying out comparable analysis. In the cited decision of Bangalore Tribunal in Mercedes (supra), this entity has been accepte Therefore, we direct Ld. TPO to accept this entity as comparable entity. The corresponding grounds raised b 16.8 In view of the above, we direct the TPO/AO to include this company in the list of comparables for computing the ALP. 17. We now come to the dispute relating to exclusion/ inclusion of comparables in the ITES segment. At the time of hearing, the assessee sought exclusion of three (3) comparables viz., (i) M/s. Infosys BPO Ltd., (ii) M/s. Cross domain Solutions Pvt. Ltd. & (iii) M/s. Micro land Ltd. and inclusion of two comparables i.e., (i) M/s All sec M/s Informed Technologies. IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 20 :: 8.1 The Ld. TPO excluded this entity on the ground that this entity was functionally dissimilar as it was engaged in product development. The Ld. DRP confirmed the same against which the assessee is in further appeal before us. 8.2 The Ld. AR has submitted that the inference of Ld. TPO is erroneous since the extract made from annual report of this entity are not with respect to the assessee but with respect to assessee’s wholly owned subsidiary vis. Akshay Software International Inc. The Ld. AR submitted that this entity is functionally similar since it is engaged in providing professional services, procurement, installation, implementation, support and maintenance of ERP products and services in India and overseas. The revenue from software services is more than 75% of total revenues which is one of the filter applied by Ld. TPO. The Ld. AR submitted that this entity has been accepted by Bangalore Tribunal in the decision of Mercedes-Benz Research & Development India (P.) Ltd. (95 Taxmann.Com 134) as well as Kolkata Tribunal in the decision of Labvantage Solution Pvt. Ltd. (ITA No.1051/Kol/2015 & ors. dated DR opposed inclusion of the same on the ground that it was profile company carrying out functionally different activitie its turnover could not be compared with assessee’s turnover. 8.3 We find that the observation made by Ld. TPO, as rightly pointed out by Ld. AR, are erroneous. The observations have been made in the Annual Report not with respect to the assessee but with respect to another entity. This entity meets filters applied by Ld. TPO while carrying out comparable analysis. In the cited decision of Bangalore Tribunal in Mercedes-Benz Research & Development India (P.) Ltd. (supra), this entity has been accepted to be a comparable entity. Therefore, we direct Ld. TPO to accept this entity as comparable entity. The corresponding grounds raised by the assessee stand allowed.” In view of the above, we direct the TPO/AO to include this company mparables for computing the ALP. We now come to the dispute relating to exclusion/ inclusion of comparables in the ITES segment. At the time of hearing, the assessee sought exclusion of three (3) comparables viz., (i) M/s. Infosys BPO Ltd., ross domain Solutions Pvt. Ltd. & (iii) M/s. Micro land Ltd. and inclusion of two comparables i.e., (i) M/s All sec Technologies Ltd M/s Informed Technologies. /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. 8.1 The Ld. TPO excluded this entity on the ground that this entity was functionally dissimilar as it was engaged in product development. The Ld. DRP confirmed the same against which the assessee is in further ed that the inference of Ld. TPO is erroneous since the extract made from annual report of this entity are not with respect to the assessee but with respect to assessee’s wholly owned subsidiary vis. Akshay Software International Inc. The Ld. AR submitted that this entity is functionally similar since it is engaged in providing professional services, procurement, installation, implementation, support and maintenance of ERP products and services in India and re than 75% of total revenues which is one of the filter applied by Ld. TPO. The Ld. AR submitted that this entity has been accepted by Bangalore Tribunal in Benz Research & Development India (P.) Ltd. as Kolkata Tribunal in the decision of Labvantage Solution Pvt. Ltd. (ITA No.1051/Kol/2015 & ors. dated DR opposed inclusion of the same on the ground that it was profile company carrying out functionally different activities and its turnover could not be compared with assessee’s turnover. 8.3 We find that the observation made by Ld. TPO, as rightly pointed out by Ld. AR, are erroneous. The observations have been made in the t with respect to another entity. This entity meets filters applied by Ld. TPO while carrying out comparable analysis. In the cited decision of Bangalore Benz Research & Development India (P.) Ltd. d to be a comparable entity. Therefore, we direct Ld. TPO to accept this entity as comparable entity. y the assessee stand allowed.” In view of the above, we direct the TPO/AO to include this company We now come to the dispute relating to exclusion/ inclusion of comparables in the ITES segment. At the time of hearing, the assessee sought exclusion of three (3) comparables viz., (i) M/s. Infosys BPO Ltd., ross domain Solutions Pvt. Ltd. & (iii) M/s. Micro land Ltd. and Technologies Ltd and (ii) 18. The Ld. Counsel for the assessee drew our attention to the decision rendered by the Hyderabad Bench of this Tribunal in the case of Infor (I) Pvt. Ltd. v. DCIT [2019] 109 taxmann.com 435 decided case, the assessee who was similarly engaged in rendering ITES services and the TPO had inter alia included the three (3) compara viz., (i) M/s. Infosys BPO Ltd., (ii) M/s. Cross domain Solutions Pvt. Ltd. & (iii) M/s. Micro land Ltd. for benchmarking the ALP. On appeal, this Tribunal is noted to have held these three (3) comparables to be functionally dissimilar in the same AY “(i) Infosys BPO Ltd. “51. As regards the comparability of Infosys BPO Services Ltd. is concerned, the learned Counsel for the assessee submitted that it is a large company operating at high economies of scale with turnover INR 2023 crores compared to the assessee having turnover of Rs.26.25 crores only. Further, it is submitted that it has a brand value and it employs substantial portion of its fixed assets in intangible assets. He submitted that the comparability of the consideration in the assessee's own case for the earlier A.Y 2011 also in 2013-14. In A.Y 2011 while in 2013-14, the DRP itself had directed its exclusion and the Revenue has not filed any appeal as against the same. He placed reliance upon the decision of the Hon'ble Delhi High Court in the case of Aginity India Ltd. (supra) wherein the said company has been directed to be excluded.” (ii) Cross Domain Solutions P. Ltd. “57. As regards Cross Domain Solutions Ltd is concerned, the case of the assessee is that it is functionally dissimilar as it renders KPO services. The learned DR, however, supported the orders of the TPO & DRP. 58. As regards the services rendered by this compan Page 172 of the Paper Book which is the Website printout, it is shown as a \"knowledge center\". The learned DR had submitted that if the contents of a Website given by a company is taken into consideration, then even the assessee would be Process Outsourcing. The learned DR, except for relying upon his IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 21 :: The Ld. Counsel for the assessee drew our attention to the decision he Hyderabad Bench of this Tribunal in the case of Infor (I) Pvt. Ltd. v. DCIT [2019] 109 taxmann.com 435 decided case, the assessee who was similarly engaged in rendering ITES services and the TPO had inter alia included the three (3) compara viz., (i) M/s. Infosys BPO Ltd., (ii) M/s. Cross domain Solutions Pvt. Ltd. & (iii) M/s. Micro land Ltd. for benchmarking the ALP. On appeal, this Tribunal is noted to have held these three (3) comparables to be functionally dissimilar in the same AY 2014-15, by observing as under: (i) Infosys BPO Ltd. “51. As regards the comparability of Infosys BPO Services Ltd. is concerned, the learned Counsel for the assessee submitted that it is a large company operating at high economies of scale with turnover INR 2023 crores compared to the assessee having turnover of Rs.26.25 crores only. Further, it is submitted that it has a brand value and it employs substantial portion of its fixed assets in intangible assets. He submitted that the comparability of the said company had come up for consideration in the assessee's own case for the earlier A.Y 2011 14. In A.Y 2011-12, the Tribunal had directed its exclusion 14, the DRP itself had directed its exclusion and the not filed any appeal as against the same. He placed reliance upon the decision of the Hon'ble Delhi High Court in the case of Aginity India Ltd. (supra) wherein the said company has been directed (ii) Cross Domain Solutions P. Ltd. regards Cross Domain Solutions Ltd is concerned, the case of the assessee is that it is functionally dissimilar as it renders KPO services. The learned DR, however, supported the orders of the TPO & 58. As regards the services rendered by this company, we find that at Page 172 of the Paper Book which is the Website printout, it is shown as a \"knowledge center\". The learned DR had submitted that if the contents of a Website given by a company is taken into consideration, then even the assessee would be falling in the same category i.e. Knowledge Process Outsourcing. The learned DR, except for relying upon his /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. The Ld. Counsel for the assessee drew our attention to the decision he Hyderabad Bench of this Tribunal in the case of M/s. Infor (I) Pvt. Ltd. v. DCIT [2019] 109 taxmann.com 435. In the decided case, the assessee who was similarly engaged in rendering ITES services and the TPO had inter alia included the three (3) comparables viz., (i) M/s. Infosys BPO Ltd., (ii) M/s. Cross domain Solutions Pvt. Ltd. & (iii) M/s. Micro land Ltd. for benchmarking the ALP. On appeal, this Tribunal is noted to have held these three (3) comparables to be 15, by observing as under:- “51. As regards the comparability of Infosys BPO Services Ltd. is concerned, the learned Counsel for the assessee submitted that it is a large company operating at high economies of scale with turnover of INR 2023 crores compared to the assessee having turnover of Rs.26.25 crores only. Further, it is submitted that it has a brand value and it employs substantial portion of its fixed assets in intangible assets. He said company had come up for consideration in the assessee's own case for the earlier A.Y 2011-12 and 12, the Tribunal had directed its exclusion 14, the DRP itself had directed its exclusion and the not filed any appeal as against the same. He placed reliance upon the decision of the Hon'ble Delhi High Court in the case of Aginity India Ltd. (supra) wherein the said company has been directed regards Cross Domain Solutions Ltd is concerned, the case of the assessee is that it is functionally dissimilar as it renders KPO services. The learned DR, however, supported the orders of the TPO & y, we find that at Page 172 of the Paper Book which is the Website printout, it is shown as a \"knowledge center\". The learned DR had submitted that if the contents of a Website given by a company is taken into consideration, then even falling in the same category i.e. Knowledge Process Outsourcing. The learned DR, except for relying upon his argument that the assessee is also into high been able to point out that Cross Domain Solutions Ltd is not a BPO. Therefore, we direct exclusion of this company also from the final list of comparables.” (iii) Microland Ltd. “60. As regards Microland Ltd is concerned, the case of the assessee is that it is into business of rendering hybrid IT Infrastructure and it also undertakes R&D activities and has achieved abnormal growth of 149% during the current A.Y. without prejudice to the above, the assessee also submitted that the correct margin of this company should be considered. 61. The learned DR, however, submitted that this up by the Assessee itself as comparable before the TPO and further that in the earlier A.Y.2013 comparable. Therefore, he submitted that it should be retained as a comparable. 62. Having regard to we find that this company is into R & D activities and has achieved abnormal growth during the current A.Y. In the case of S & P Capital IQ (India) Ltd., we have considered the comparability of this company ITeS company and has directed its exclusion. Respectfully following the same, we direct its exclusion for this A.Y as well.” 19. Following the above decision (supra) which is found to be squarely applicable to the given facts in the present case, the above three(3) companies should be excluded from the comparable companies for computing the ALP of the ITES segment. 20. As far as the inclusion of two (2) comparables Technologies Ltd., & M/s.Informed Tech we deal with each of them separately below. 20.1 M/s. All Sec Technologies Ltd. this comparable for the reason that the company incurred consistent losses for two out of three years. By re the case of Goldman Sachs (India) Securities Pvt. Ltd., (supra), we have IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 22 :: argument that the assessee is also into high-end BPO services, has not been able to point out that Cross Domain Solutions Ltd is not a BPO. ore, we direct exclusion of this company also from the final list of (iii) Microland Ltd. “60. As regards Microland Ltd is concerned, the case of the assessee is that it is into business of rendering hybrid IT Infrastructure and it also takes R&D activities and has achieved abnormal growth of 149% during the current A.Y. without prejudice to the above, the assessee also submitted that the correct margin of this company should be considered. 61. The learned DR, however, submitted that this company was taken up by the Assessee itself as comparable before the TPO and further that in the earlier A.Y.2013-14 this company has been accepted as a comparable. Therefore, he submitted that it should be retained as a 62. Having regard to the rival contentions and the material on record, we find that this company is into R & D activities and has achieved abnormal growth during the current A.Y. In the case of S & P Capital IQ (India) Ltd., we have considered the comparability of this company ITeS company and has directed its exclusion. Respectfully following the same, we direct its exclusion for this A.Y as well.” Following the above decision (supra) which is found to be squarely applicable to the given facts in the present case, we are of the view that companies should be excluded from the comparable companies for computing the ALP of the ITES segment. As far as the inclusion of two (2) comparables viz., M/s. All Sec Technologies Ltd., & M/s.Informed Technologies India Ltd. we deal with each of them separately below. M/s. All Sec Technologies Ltd. – The lower authorities rejected this comparable for the reason that the company incurred consistent losses for two out of three years. By relying on the decision of Bombay in the case of Goldman Sachs (India) Securities Pvt. Ltd., (supra), we have /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. end BPO services, has not been able to point out that Cross Domain Solutions Ltd is not a BPO. ore, we direct exclusion of this company also from the final list of “60. As regards Microland Ltd is concerned, the case of the assessee is that it is into business of rendering hybrid IT Infrastructure and it also takes R&D activities and has achieved abnormal growth of 149% during the current A.Y. without prejudice to the above, the assessee also submitted that the correct margin of this company should be considered. company was taken up by the Assessee itself as comparable before the TPO and further that 14 this company has been accepted as a comparable. Therefore, he submitted that it should be retained as a the rival contentions and the material on record, we find that this company is into R & D activities and has achieved abnormal growth during the current A.Y. In the case of S & P Capital IQ (India) Ltd., we have considered the comparability of this company to ITeS company and has directed its exclusion. Respectfully following the Following the above decision (supra) which is found to be squarely e of the view that companies should be excluded from the list of comparable companies for computing the ALP of the ITES segment. viz., M/s. All Sec nologies India Ltd., is concerned, The lower authorities rejected this comparable for the reason that the company incurred consistent lying on the decision of Bombay in the case of Goldman Sachs (India) Securities Pvt. Ltd., (supra), we have already held earlier, that a company cannot be held to be a ‘persistent loss making company’ if the company earned operating profit in one year out of the three previous years. On the given facts, it is noticed that, this company had reported profit of Rs.5.43 Crs. 2014-15and was providing OS data services to its clients in the ITeS Segment. Having regard to the foregoing, results/losses in preceding two assessment years cannot be reason to exclude this company by applying persistent loss 20.2 The Ld. DRP is noted to have additionally held that the export Revenue bearing to this be taken as a comparable. The Ld. AR has rightly pointed out that, the export turnover filter of 25% was applied in the TP study and that the TPO had not disturbed the same. Also, prescribed this filter of 50% instead of 25% in their order. This finding of the DRP is therefore whimsical/arbitrary direct inclusion of this company in the final list of comparable companies. 20.3 M/s. Informed Technologies India excluded by the TPO on the ground that even though said company is engaged in the business of running BPO, the Revenue from ITeS is less than 75% of the Revenue as other income is more than 47.52%. The assessee challenged the exclus IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 23 :: already held earlier, that a company cannot be held to be a ‘persistent loss making company’ if the company earned operating profit in one year of the three previous years. On the given facts, it is noticed that, this company had reported profit of Rs.5.43 Crs. in FY 2013-14 and was providing OS data services to its clients in the ITeS Segment. Having regard to the foregoing, according to us, the earlier results/losses in preceding two assessment years cannot be reason to exclude this company by applying persistent loss-making filter. The Ld. DRP is noted to have additionally held that the export Revenue bearing to this segment was only 50% and therefore it cannot be taken as a comparable. The Ld. AR has rightly pointed out that, the export turnover filter of 25% was applied in the TP study and that the TPO had not disturbed the same. Also, the Ld. DRP has nowhere bed this filter of 50% instead of 25% in their order. This finding of whimsical/arbitrary. For the foregoing reasons, we direct inclusion of this company in the final list of comparable companies. M/s. Informed Technologies India Ltd. - This company was excluded by the TPO on the ground that even though said company is engaged in the business of running BPO, the Revenue from ITeS is less than 75% of the Revenue as other income is more than 47.52%. The assessee challenged the exclusion of this company before the DRP and /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. already held earlier, that a company cannot be held to be a ‘persistent loss making company’ if the company earned operating profit in one year of the three previous years. On the given facts, it is noticed that, this 4 relevant to AY and was providing OS data services to its clients in the ITeS according to us, the earlier results/losses in preceding two assessment years cannot be reason to making filter. The Ld. DRP is noted to have additionally held that the export segment was only 50% and therefore it cannot be taken as a comparable. The Ld. AR has rightly pointed out that, the export turnover filter of 25% was applied in the TP study and that the the Ld. DRP has nowhere bed this filter of 50% instead of 25% in their order. This finding of . For the foregoing reasons, we direct inclusion of this company in the final list of comparable companies. This company was excluded by the TPO on the ground that even though said company is engaged in the business of running BPO, the Revenue from ITeS is less than 75% of the Revenue as other income is more than 47.52%. The ion of this company before the DRP and brought to its notice that the Annual Report shows more than 50 % of the Revenue was from ITeS. The Ld. DRP took note from the Annual Report that the sale of service was to the tune of Rs.2,58,53,362/ total Revenue of Rs.3,81,86,665/ accordingly fails the service income filter of 75% applied by the TPO. 20.4 At the time of hearing, the Ld.AR drew our attention to the Annual Report of M/s. Informed Technologies India Ltd., 1920 & 1928 of Paper Book engaged in BPO services and that the Schedule(s) of the P&L A/c shows that, there is no ‘other income’ and asserted that, it has derived 100% of its revenue from render this comparable cannot be excluded on the pretext of failing the service income filter, which though was not applied elsewhere but, in any case resulted in incorrect rejection. The Ld. CIT, DR however does n to interfere with the action of the lower authorities. 20.5 Having heard both the parties, we first of all find that, there is no dispute on this company being functionally comparable. Perusal of the Annual Report of M/s. Informed Technologies Nos. 1888 to 1940, and especially Page No.1920, Para No.1.14 Segment Reporting, it is noted that, the said company is principally engaged in the business of Business Process Outsourcing (BPO) which is the only IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 24 :: brought to its notice that the Annual Report shows more than 50 % of the Revenue was from ITeS. The Ld. DRP took note from the Annual Report that the sale of service was to the tune of Rs.2,58,53,362/ tal Revenue of Rs.3,81,86,665/- which comes to only 67.7% and accordingly fails the service income filter of 75% applied by the TPO. At the time of hearing, the Ld.AR drew our attention to the Annual Report of M/s. Informed Technologies India Ltd., kept at Page Nos.1918, 1920 & 1928 of Paper Book-II and showed that the company is only engaged in BPO services and that the Schedule(s) of the P&L A/c shows that, there is no ‘other income’ and asserted that, it has derived 100% of its revenue from rendering of BPO services. He accordingly claimed that this comparable cannot be excluded on the pretext of failing the service income filter, which though was not applied elsewhere but, in any case resulted in incorrect rejection. The Ld. CIT, DR however does n to interfere with the action of the lower authorities. Having heard both the parties, we first of all find that, there is no dispute on this company being functionally comparable. Perusal of the Annual Report of M/s. Informed Technologies India Ltd., kept at Page Nos. 1888 to 1940, and especially Page No.1920, Para No.1.14 Segment Reporting, it is noted that, the said company is principally engaged in the business of Business Process Outsourcing (BPO) which is the only /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. brought to its notice that the Annual Report shows more than 50 % of the Revenue was from ITeS. The Ld. DRP took note from the Annual Report that the sale of service was to the tune of Rs.2,58,53,362/- against the which comes to only 67.7% and accordingly fails the service income filter of 75% applied by the TPO. At the time of hearing, the Ld.AR drew our attention to the Annual kept at Page Nos.1918, II and showed that the company is only engaged in BPO services and that the Schedule(s) of the P&L A/c shows that, there is no ‘other income’ and asserted that, it has derived 100% of ing of BPO services. He accordingly claimed that this comparable cannot be excluded on the pretext of failing the service income filter, which though was not applied elsewhere but, in any case resulted in incorrect rejection. The Ld. CIT, DR however does not want us Having heard both the parties, we first of all find that, there is no dispute on this company being functionally comparable. Perusal of the India Ltd., kept at Page Nos. 1888 to 1940, and especially Page No.1920, Para No.1.14 Segment Reporting, it is noted that, the said company is principally engaged in the business of Business Process Outsourcing (BPO) which is the only reportable segment as per Accounting Standard from operation’ is shown at Page No.1928 as Rs.2,58,53,362/ considered view therefore, this company satisfies the comparability criteria and we thus direct inclusion of the same in the list of compara companies. Our view is supported by the decision of this Tribunal in the case of M/s. Verizon Data Services India Pvt. Ltd., (supra) it was held as under: “12. M/s Informed Technologies India Ltd. 12.1 This entity has been excluded by Ld. TPO on the ground of functional differences. The Ld. DRP confirmed the same against which the assessee is in further appeal before us. 12.2 The Ld. AR submitted that this entity operates as ITeS segment which is evident from disclosures made in the Annual Report. Reliance has been placed on the decision of Bangalore Tribunal in Ocwen Financial Solutions P. Ltd. (108 Taxmann.com 306) to support the arguments. The Ld. CIT different. 12.3 We find that this entity has been held to be a comparable entity under ITeS segment by Bangalore Tribunal in Ocwen Financial Solutions P. Ltd. (supra). As per Directors’ Report (Page No.1210 of paper book), this entity is operating as IT content provider to the securities and financial research industry. Its entire revenue is out of revenue information technology services (Page 1299 of the paper book). These functions are similar to assessee’s functions. Therefore, we direct for inclusion of this entity. 21. The last effective grounds that remains for consideration is against the non-grant of working capital adjustment and risk adjustment while arriving at average arithmetic margin of comparable c lower authorities are noted to have refused to allow the working capital & risk adjustment. IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 25 :: s per Accounting Standard-17 and the ‘Revenue from operation’ is shown at Page No.1928 as Rs.2,58,53,362/ considered view therefore, this company satisfies the comparability criteria and we thus direct inclusion of the same in the list of compara companies. Our view is supported by the decision of this Tribunal in the M/s. Verizon Data Services India Pvt. Ltd., (supra) . M/s Informed Technologies India Ltd. 12.1 This entity has been excluded by Ld. TPO on the ground of functional differences. The Ld. DRP confirmed the same against which the assessee is in further appeal before us. 12.2 The Ld. AR submitted that this entity operates as ITeS segment vident from disclosures made in the Annual Report. Reliance has been placed on the decision of Bangalore Tribunal in Ocwen Financial Solutions P. Ltd. (108 Taxmann.com 306) to support the arguments. The Ld. CIT-DR submitted that this entity was functionall 12.3 We find that this entity has been held to be a comparable entity under ITeS segment by Bangalore Tribunal in Ocwen Financial Solutions P. Ltd. (supra). As per Directors’ Report (Page No.1210 of paper book), this entity is operating as IT enabled Service provider and is a leading content provider to the securities and financial research industry. Its entire revenue is out of revenue information technology services (Page 1299 of the paper book). These functions are similar to assessee’s ctions. Therefore, we direct for inclusion of this entity.” effective grounds that remains for consideration is against grant of working capital adjustment and risk adjustment while arriving at average arithmetic margin of comparable companies. Both the lower authorities are noted to have refused to allow the working capital & /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. 17 and the ‘Revenue from operation’ is shown at Page No.1928 as Rs.2,58,53,362/-. In our considered view therefore, this company satisfies the comparability criteria and we thus direct inclusion of the same in the list of comparable companies. Our view is supported by the decision of this Tribunal in the M/s. Verizon Data Services India Pvt. Ltd., (supra), wherein 12.1 This entity has been excluded by Ld. TPO on the ground of functional differences. The Ld. DRP confirmed the same against which 12.2 The Ld. AR submitted that this entity operates as ITeS segment vident from disclosures made in the Annual Report. Reliance has been placed on the decision of Bangalore Tribunal in Ocwen Financial Solutions P. Ltd. (108 Taxmann.com 306) to support the DR submitted that this entity was functionally 12.3 We find that this entity has been held to be a comparable entity under ITeS segment by Bangalore Tribunal in Ocwen Financial Solutions P. Ltd. (supra). As per Directors’ Report (Page No.1210 of paper book), enabled Service provider and is a leading content provider to the securities and financial research industry. Its entire revenue is out of revenue information technology services (Page 1299 of the paper book). These functions are similar to assessee’s effective grounds that remains for consideration is against grant of working capital adjustment and risk adjustment while ompanies. Both the lower authorities are noted to have refused to allow the working capital & 22. Having heard both the parties, we note that similar issue had come up before the Bangalore Tribunal in the case of Pvt. Ltd. v. DCIT (supra) assessee company and the Tribunal is noted to have observed as under: “18. The ld. counsel for the assessee submitted that a co ITAT Bangalore in the case of No.1939/Bang/2017 adjustment. The Tribunal held that a Rules read with Sec.92CA of the Act, would clearly margin arising in comparable uncontrolled take into account the differences, if any,between the international transaction and the comparable uncontrolled materially affect the amount of net Tribunal also referred to Guidelines for Multinational Enterprises and Tax the “TPG”) which contains extensive guidance transfer pricing purposes. Guidance on paragraphs 3.47-3.54 and in the version of this guidance was 2010. In paragraph 2 of comparability adjustment. The guideline explains that when applying the arm’s length principle, the conditions of a controlled transaction (i.e. a transaction between a taxpayer and an associate compared to the conditions of comparable uncontrolled transactions. In this context, to be comparable means that: • None of the differences (if any) between the situations being compared could materially affect the condition be methodology (e.g. price or margin), or • Reasonably accurate adjustments can be made to eliminate effect of any such differences. These are called adjustments. 19. The Tribunal analyzed Paragraph 13 to 16 of the afor guidelines, which highlights the need for working capital adjustment as follows:- “13. In a competitive environment, money has a time value. If company provided, say, 60 days trade terms for payment of accounts, the price of the goods should immediate payment plus 60 days of interest on the immediate payment price. By carrying high accounts receivable a company allowing its customers a relatively long period to pay their It would need to borrow money to fun a reduction in the amount of cash surplus IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 26 :: Having heard both the parties, we note that similar issue had come up before the Bangalore Tribunal in the case of M/s. Citrix R&D India Ltd. v. DCIT (supra), wherein, identical plea was raised by the assessee company and the Tribunal is noted to have observed as under: 18. The ld. counsel for the assessee submitted that a co-ordinate ITAT Bangalore in the case of Huawei Technologies India Pvt. No.1939/Bang/2017 has dealt with the issue of granting of working capital adjustment. The Tribunal held that a reading of Rule10B(1)(e)(iii) of the Rules read with Sec.92CA of the Act, would clearly show that the net pr margin arising in comparable uncontrolled transactions has to be adjusted to take into account the differences, if any,between the international transaction and the comparable uncontrolled transactions, which could materially affect the amount of net profit margin in the open market. The Tribunal also referred to Chapters I and III of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (hereafter the “TPG”) which contains extensive guidance on comparability transfer pricing purposes. Guidance on comparability adjustments is found in 3.54 and in the Annex to Chapter III of the TPG. A revised version of this guidance was approved by the Council of the OECD on 22 July aph 2 of those guidelines it has been explained as to what is adjustment. The guideline explains that when applying the principle, the conditions of a controlled transaction (i.e. a between a taxpayer and an associated enterprise) are generally to the conditions of comparable uncontrolled transactions. In this be comparable means that: None of the differences (if any) between the situations being compared could materially affect the condition being examined in the methodology (e.g. price or margin), or Reasonably accurate adjustments can be made to eliminate effect of any such differences. These are called “comparability 19. The Tribunal analyzed Paragraph 13 to 16 of the afor guidelines, which highlights the need for working capital adjustment as “13. In a competitive environment, money has a time value. If company provided, say, 60 days trade terms for payment of accounts, the price of the goods should equate to the price for immediate payment plus 60 days of interest on the immediate payment price. By carrying high accounts receivable a company allowing its customers a relatively long period to pay their It would need to borrow money to fund the credit terms and/or suffer a reduction in the amount of cash surplus which it would otherwise /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. Having heard both the parties, we note that similar issue had come M/s. Citrix R&D India , wherein, identical plea was raised by the assessee company and the Tribunal is noted to have observed as under: ordinate Bench of Ltd. IT(TP)A working capital reading of Rule10B(1)(e)(iii) of the the net profit transactions has to be adjusted to take into account the differences, if any,between the international transactions, which could the open market. The OECD Transfer Pricing Administrations (hereafter on comparability analyses for comparability adjustments is found in Annex to Chapter III of the TPG. A revised approved by the Council of the OECD on 22 July those guidelines it has been explained as to what is adjustment. The guideline explains that when applying the principle, the conditions of a controlled transaction (i.e. a d enterprise) are generally to the conditions of comparable uncontrolled transactions. In this None of the differences (if any) between the situations being examined in the Reasonably accurate adjustments can be made to eliminate the “comparability 19. The Tribunal analyzed Paragraph 13 to 16 of the aforesaid OECD guidelines, which highlights the need for working capital adjustment as “13. In a competitive environment, money has a time value. If a company provided, say, 60 days trade terms for payment of equate to the price for immediate payment plus 60 days of interest on the immediate payment price. By carrying high accounts receivable a company is allowing its customers a relatively long period to pay their accounts. terms and/or suffer which it would otherwise have available to invest. In a should therefore include an and compensate for the 14. The opposite applies to higher levels of accounts payable. carrying high accounts payable, a company is benefitting relatively long period to pay its suppliers. It would need less money to fund its purchases and/or b the amount of cash surplus available to invest. In a environment, the cost of goods sold should include reflect these payment terms and compensate for 15. A company with high levels o either borrow to fund the purchase, or reduce the amount surplus which it is able to invest. Note that the interest 2010 Page 6 might be affected by the funding structure(e.g. where the purchase of inve associated with holding specific types of 16. Making a working capital adjustment is an attempt to the differences in time value of money between the potential comparab be reflected in profits. The underlying • A company will need funding to cover the time gap between the time it invests money (i.e. pays money to supplier) and the time it collects the customers) • This time gap is calculated as: the period needed to sell inventories to customers + (plus) the period needed to collect money from customers debts to suppliers. 20. In the aforesaid decision, the reasons for not allowing adjustment to profit margins on account of working capital differences between the party and the comparable companies for the very same reasons for CIT(A) refused to allow working capita Assessee in this appeal and those reasons were as follows: (i) The daily working capital levels of the tested party and the comparables was the only reliable basis of determining be made on account of working basis of working capital deployed (ii) Segmental working capital is not disclosed in the annual of companies engaged in different segments and comparison cannot be made. (iii) Disclose in the balance sheet does not contain break up of and non-trade debtors and creditors and therefore IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 27 :: have available to invest. In a competitive environment, the price should therefore include an element to reflect these payment terms and compensate for the timing effect. 14. The opposite applies to higher levels of accounts payable. carrying high accounts payable, a company is benefitting relatively long period to pay its suppliers. It would need less money to fund its purchases and/or benefit from an increase in the amount of cash surplus available to invest. In a environment, the cost of goods sold should include an element to reflect these payment terms and compensate for the timing effect. 15. A company with high levels of inventory would similarly either borrow to fund the purchase, or reduce the amount surplus which it is able to invest. Note that the interest 2010 Page 6 might be affected by the funding structure(e.g. where the purchase of inventory is partly funded by equity)or by the risk associated with holding specific types of inventory) 16. Making a working capital adjustment is an attempt to the differences in time value of money between the tested party and potential comparables, with an assumption that the difference should be reflected in profits. The underlying reasoning is that: A company will need funding to cover the time gap between the time it invests money (i.e. pays money to supplier) and the time it collects the investment (i.e. collects money from customers) This time gap is calculated as: the period needed to sell inventories to customers + (plus) the period needed to collect money from customers – (less) the period granted to pay debts to suppliers. the aforesaid decision, the reasons for not allowing adjustment to profit margins on account of working capital differences between the party and the comparable companies for the very same reasons for CIT(A) refused to allow working capital adjustment in the case of the Assessee in this appeal and those reasons were as follows: (i) The daily working capital levels of the tested party and the comparables was the only reliable basis of determining adjustment to be made on account of working capital because that would be on the basis of working capital deployed throughout the year. (ii) Segmental working capital is not disclosed in the annual of companies engaged in different segments and therefore proper comparison cannot be made. iii) Disclose in the balance sheet does not contain break up of trade debtors and creditors and therefore working capital /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. competitive environment, the price element to reflect these payment terms 14. The opposite applies to higher levels of accounts payable. By carrying high accounts payable, a company is benefitting from a relatively long period to pay its suppliers. It would need to borrow an increase in the amount of cash surplus available to invest. In a competitive an element to the timing effect. f inventory would similarly need to either borrow to fund the purchase, or reduce the amount of cash surplus which it is able to invest. Note that the interest rate July 2010 Page 6 might be affected by the funding structure(e.g. where ntory is partly funded by equity)or by the risk 16. Making a working capital adjustment is an attempt to adjust for tested party and the difference should A company will need funding to cover the time gap between the time it invests money (i.e. pays money to supplier) and investment (i.e. collects money from This time gap is calculated as: the period needed to sell inventories to customers + (plus) the period needed to collect (less) the period granted to pay the aforesaid decision, the reasons for not allowing adjustment to the profit margins on account of working capital differences between the tested party and the comparable companies for the very same reasons for which l adjustment in the case of the (i) The daily working capital levels of the tested party and the adjustment to that would be on the (ii) Segmental working capital is not disclosed in the annual reports therefore proper iii) Disclose in the balance sheet does not contain break up of trade working capital adjustment done without such break up being skewed. (iv) Cost of capital would be different therefore working capital adjustment made disregarding based on broad approximations, estimations and not lead to reliable results. 21. The CIT(A) in the decision cited by the learned counsel for also placed reliance on a decision of Chennai ITAT in the case of ITA No.2112/Mds/2011 (2013) 38 taxmann.com said decision was based on the factual aspect that the to demonstrate how working capital adjustment was Assessee. 22. The Tribunal further held that in the matter of determination of Arm’s Length Price, it cannot be said that the burden is on the Assessee or the Department to show what is the Arm’s Length the Assessee and the Department would be the starting point and on the facts and circumstances of a case further details can be far as the Assessee is concerned, the facts and figures with business has to be furnished. Regarding comparable fall back upon only on the information available in information is insufficient, it is beyond the power the correct informatio on the other hand powers, to compel the comparable companies. If that truth then it is no defense to say that required details and on that score deny capital differences. Regarding applying receivables and payables for computing Tribunal in the decision cited by the learned us, relied on the decision of the Delhi Value Serve.com (2016) 75taxmann.com 195 (Del that insisting on daily working capital adjustment is not proper as it will be impossible to carry out such exercise and that working capital adjustment has to be based on the opening and closing working capital deployed. The Bench has also observed that in Transfer Pricing Analysis there is always an element of estimation because it is not an exact science. One has to see that reasonable adjustment is being made so as to bring both comparable and test party on same footing. The Tribunal held that on working adjustment based on unavailable daily working capital requirements data. The Tribunal also held that there is also no merit in the objection of the CIT(A) regarding absence of segmental details availab working capital requirements of comparable companies chosen and absence of details of trade and non details are beyond the power of the Assessee to obtain, unless these details are available in public do funds, the OECD guidelines clearly advocates adopting rate(s) of interest applicable to a commercial enterprise operating in the same market as the tested party. IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 28 :: adjustment done without such break up would result in computation being skewed. (iv) Cost of capital would be different for different companies therefore working capital adjustment made disregarding based on broad approximations, estimations and assumptions may not lead to reliable results. 21. The CIT(A) in the decision cited by the learned counsel for also placed reliance on a decision of Chennai ITAT in the case of ITA No.2112/Mds/2011 (2013) 38 taxmann.com. The Tribunal said decision was based on the factual aspect that the Assessee was not able ow working capital adjustment was arrived at by the 22. The Tribunal further held that in the matter of determination of Arm’s Length Price, it cannot be said that the burden is on the Assessee or the Department to show what is the Arm’s Length Price. The data available the Assessee and the Department would be the starting point and on the facts and circumstances of a case further details can be far as the Assessee is concerned, the facts and figures with regard to h business has to be furnished. Regarding comparable companies, one has to fall back upon only on the information available in the public domain. If that information is insufficient, it is beyond the power of the Assessee to produce the correct information about the comparable companies. The Revenue has, on the other hand powers, to compel production of the required details from the comparable companies. If that power is not exercised to find out the truth then it is no defense to say that the Assessee has not furnished the required details and on that score deny adjustment on account of working capital differences. Regarding applying the daily balances of inventory, receivables and payables for computing working capital adjustment, the sion cited by the learned counsel for the Assessee before us, relied on the decision of the Delhi Bench of ITAT in the case of Value Serve.com (2016) 75taxmann.com 195 (Del-Trib) wherein it was held that insisting on daily balances of working capital requirements to compute adjustment is not proper as it will be impossible to carry out and that working capital adjustment has to be based on the closing working capital deployed. The Bench has also observed Transfer Pricing Analysis there is always an element of estimation it is not an exact science. One has to see that reasonable being made so as to bring both comparable and test party on The Tribunal held that there is little merit in CIT(A)’s objection adjustment based on unavailable daily working capital The Tribunal also held that there is also no merit in the CIT(A) regarding absence of segmental details availab requirements of comparable companies chosen and absence trade and non-trade debtors of comparable companies as these beyond the power of the Assessee to obtain, unless these details available in public domain. Regarding absence of cost of working capital funds, the OECD guidelines clearly advocates adopting rate(s) of interest applicable to a commercial enterprise operating in the same market as the /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. would result in computation for different companies and this different assumptions may the Assessee also placed reliance on a decision of Chennai ITAT in the case of Mobis India held that the Assessee was not able arrived at by the 22. The Tribunal further held that in the matter of determination of Arm’s Length Price, it cannot be said that the burden is on the Assessee or the Price. The data available with the Assessee and the Department would be the starting point and depending called for. As regard to his companies, one has to the public domain. If that of the Assessee to produce companies. The Revenue has, production of the required details from power is not exercised to find out the not furnished the adjustment on account of working the daily balances of inventory, working capital adjustment, the counsel for the Assessee before Bench of ITAT in the case of ITO Vs. E wherein it was held ital requirements to compute adjustment is not proper as it will be impossible to carry out and that working capital adjustment has to be based on the closing working capital deployed. The Bench has also observed Transfer Pricing Analysis there is always an element of estimation it is not an exact science. One has to see that reasonable being made so as to bring both comparable and test party on there is little merit in CIT(A)’s objection adjustment based on unavailable daily working capital The Tribunal also held that there is also no merit in the CIT(A) regarding absence of segmental details available of requirements of comparable companies chosen and absence trade debtors of comparable companies as these beyond the power of the Assessee to obtain, unless these details main. Regarding absence of cost of working capital funds, the OECD guidelines clearly advocates adopting rate(s) of interest applicable to a commercial enterprise operating in the same market as the 23. The Tribunal finally concluded that th denying adjustment on account of working capital adjustment. 24. In the case of the Assessee in this appeal, neither the TPO nor the have gone into the quantum of adjustment that is to be given towards working of working capital adjustment, we are of the view that it would be just and appropriate to remand the issue of granting of working capital adjustment to the TPO/AO for fresh consideration in accordance with law after due opportunity of being afforded to the Assessee. accordingly.” 23. It is noted that in the above decision (supra), the Tribunal had also considered the earlier decision rendered by th case of Mobis India Ltd Vs DCIT relied upon by the Ld. DRP to deny the impugned working capital & risk adjustment. We find merit in the contention of the assessee that the decision in the case of peculiar facts, as the assessee was u working capital adjustment was arrived by it, which is not the case before us. Therefore, we are inclined to follow the decision of the Bangalore Tribunal in the case of aside this issue back to the file of the TPO and direct him to re the issue of grant of working capital adjustment in the light of the decision of Citrix R&D India Pvt. Ltd (supra). Thus, Ground are answered accordingly. IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 29 :: 23. The Tribunal finally concluded that the CIT(A) was not justified in denying adjustment on account of working capital adjustment. 24. In the case of the Assessee in this appeal, neither the TPO nor the have gone into the quantum of adjustment that is to be given towards capital adjustment, we are of the view that it would be just and appropriate to remand the issue of granting of working capital adjustment to the TPO/AO for fresh consideration in accordance with law after due opportunity of being afforded to the Assessee. We hold and direct It is noted that in the above decision (supra), the Tribunal had also considered the earlier decision rendered by this Tribunal, Chennai in the Ltd Vs DCIT (38 taxmann.com 231 relied upon by the Ld. DRP to deny the impugned working capital & risk adjustment. We find merit in the contention of the assessee that the decision in the case of Mobis India Ltd (supra)was passed on their peculiar facts, as the assessee was unable to demonstrate as to how working capital adjustment was arrived by it, which is not the case before us. Therefore, we are inclined to follow the decision of the Bangalore Tribunal in the case of Citrix R&D India Pvt. Ltd., (supra) issue back to the file of the TPO and direct him to re the issue of grant of working capital adjustment in the light of the Citrix R&D India Pvt. Ltd (supra). Thus, Ground are answered accordingly. /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. e CIT(A) was not justified in 24. In the case of the Assessee in this appeal, neither the TPO nor the DRP have gone into the quantum of adjustment that is to be given towards capital adjustment, we are of the view that it would be just and appropriate to remand the issue of granting of working capital adjustment to the TPO/AO for fresh consideration in accordance with law We hold and direct It is noted that in the above decision (supra), the Tribunal had also , Chennai in the 38 taxmann.com 231), which was relied upon by the Ld. DRP to deny the impugned working capital & risk adjustment. We find merit in the contention of the assessee that the was passed on their nable to demonstrate as to how working capital adjustment was arrived by it, which is not the case before us. Therefore, we are inclined to follow the decision of the Bangalore Citrix R&D India Pvt. Ltd., (supra) and set issue back to the file of the TPO and direct him to re-consider the issue of grant of working capital adjustment in the light of the Citrix R&D India Pvt. Ltd (supra). Thus, Ground Nos. 9 & 10 24. In the light of the a compute ALP as per the directions given above, after affording opportunity of being heard to the assessee. 25. In the result, appeal filed by the assessee is partly allowed. Order pronounced on the Sd/- (अिमताभ शु\u0018ा) (AMITABH SHUKLA लेखासद\u0007य/ACCOUNTANT MEMBER चे\u0003ई/Chennai, \u0005दनांक/Dated: 13th June, 20 TLN आदेश क \u000eितिलिप अ\u0014ेिषत/Copy to 1. अपीलाथ /Appellant 2. \u000e\u000fथ /Respondent 3. आयकरआयु\u0015/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय\u000eितिनिध/DR 5. गाड फाईल/GF IT (TP) A No.77/Chny/201 M/s. Symantec Software & Services India Pvt. Ltd. :: 30 :: In the light of the aforesaid discussion, we direct the TPO/AO to compute ALP as per the directions given above, after affording opportunity of being heard to the assessee. In the result, appeal filed by the assessee is partly allowed. Order pronounced on the 13th day of June, 2025, in Chennai. AMITABH SHUKLA) /ACCOUNTANT MEMBER Sd/ (एबी टी. (ABY T. VARKEY याियकसद\u0007य/JUDICIAL MEMBER , 2025. Copy to: , Chennai / Madurai / Salem / Coimbatore. /Chny/2018 (AY 2014-15) M/s. Symantec Software & Services India Pvt. Ltd. foresaid discussion, we direct the TPO/AO to compute ALP as per the directions given above, after affording In the result, appeal filed by the assessee is partly allowed. , in Chennai. Sd/- . वक ) ABY T. VARKEY) /JUDICIAL MEMBER , Chennai / Madurai / Salem / Coimbatore. "
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