Income Tax Appellate Tribunal - Delhi
Bc Management Services Pvt. Ltd.,, New ... vs Dcit , New Delhi on 25 May, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES, "I"-2 New Delhi
BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER
AND
SHRI AMIT SHUKLA, JUDICIAL MEMBER
ITA No. 6134/Del/2015
Assessment Year: 2011-12
BC Management Services Dy. Commissioner of
Pvt. Ltd., Income Tax,
17, KG Marg, New Delhi Circle 4(1)
Vs.
New Delhi
PAN-AAECB1224A
(Appellant) (Respondent)
ITA No. 5829/Del/2015
Assessment Year: 2011-12
Dy. CIT BC Management Services
Circle 4(1), Pvt. Ltd.,
New Delhi Vs. 17, KG Marg, New Delhi
PAN-AAECB1224A
(Appellant) (Respondent)
ITA No. 6572/Del/2016
Assessment Year: 2012-13
BC Management ACIT
Services Circle-4(1)
Pvt. Ltd., New Delhi
Vs.
Kasturba Gandhi Marg
New Delhi
PAN-AAECB1224A
(Appellant) (Respondent)
Assessee by Sh. S.P. Singh, AR, Sh.
Manoneet Dalal, Advocate, Sh.
Gaurav Bhutani, CA, Sh. Yishu
Goel, Advocate & Mrs. Pallavi
2
ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016
Chopra, CA
Revenue by Sh. T.M. Shivakumar, CIT (DR)
Date of hearing 23.03.2017
Date of 25.05.2017
pronouncement
ORDER
PER AMIT SHUKLA, J.M. :
The aforesaid appeals for the assessment year 2011-12 have been filed by the assessee as well as by the Revenue against final assessment order dated 29.9.2015, passed under section 143(3) read with section 144C in pursuance of direction given by the Dispute Resolution Panel-1, New Delhi (DRP); and the appeal for the assessment year 2012-13 has been filed by the assessee against final assessment order dated 28.10.2016, passed under section 143(3) read with section 144C in pursuance of directions given by the DRP. Since the issues involved in all the appeals are common arising out of identical set of facts, therefore, same were heard together and are being disposed off by way of consolidated order.
2. We will first take up the assessee's appeal for the assessment year 2011-12, wherein following grounds have been raised:
1. That on the facts and in the circumstances of the case and in law, the order passed by the Ld. Assessing Officer ("AO") is bad in law.
2. That on facts and circumstances of the case and in law, the Ld. AO/ Ld. TPO/ Ld. Dispute Resolution Panel ("DRP") erred in making an adjustment to the arm's length price ("ALP") of the Appellant's international transactions, relating to provision of finance/ IT-back office support services, with Associated 3 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016 Enterprises ("AEs") amounting to INR 20,744,853 by:
2.1. modifying the comparability analysis conducted in the transfer pricing documentation of the Appellant on inappropriate and inadequate grounds;
2.2. rejecting the applicability of functional filter applied in the search process by the Appellant;
2.3. rejecting Omega Healthcare Management Services Private Limited which were comparable to the Appellant, on ground of functional dissimilarity; 2.4. selecting E-clerx Services Limited, ICRA Techno Analytics Limited, Infosys BPO Limited and TCS E-
serve Limited, which were not comparable to the Appellant on various grounds;
2.5. erred in computing the margins of comparable companies selected;
2.6. confirming the selection of current year (i.e. financial year 2010-11) data for comparability; and 2.7.erred in not treating foreign exchange gain/ loss as operating in nature, while computing the operating margin.
3. That on the facts and circumstances of the case and in law the Ld. AO/ Ld. TPO/ Ld. DRP erred in the assessment of the ALP of the Appellant's international transactions with respect to the import of fixed assets as NIL, thereby resulting in the enhancement of total income by INR 4,805,127.
4. That on the facts and circumstances of the case and in law the Ld. AO/ Ld. TPO erred in treating delay in receipt of payment from the AE's, as unsecured loans advanced to the AE's and charging interest on the same.
5. That on the facts and circumstances of the case and in law the Ld. AO/ Ld. TPO erred in not examining the validity of initiation of penalty proceedings u/s 271 (1) (c) of the Act.
6. That on the facts and circumstances of the case and in law, the Ld. AO erred in charging and computing interest under section 234B and 234C of the Act.
3. The brief facts and background of the case are that Assessee Company was incorporated on May 12, 2010 as a subsidiary of 4 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016 'BC holdings (UK) Limited' with an objective to provide IT and Financial back office support services to various entities/ subsidiaries of its Parent Company all across the world. The assessee alongwith BC holdings (UK Limited) is a part of British Council which is an international organization based in UK, established for fostering educational opportunities and cultural relations. The assessee company commenced its operation in India from August, 2010 and hence the impugned assessment year is the first year of operations. In the transfer pricing study report, the assessee has characterized itself as a service provider and had reported following international transactions:
Nature of transactions Value (Rs.)
Provisions of Finance / IT 21,61,47,550/-
1. back office services
Purchased of fixed assets 2,86,67,478/-
2.
Reimbursement of expenses 1,64,07322/-
3. to AE
3. For bench marking its international transactions of
provisions of Finance/ IT back office supports services, the assessee had selected 'transactional net margin method' (TNMM) as the most appropriate method by adopting the PLI as OP / TC. The margin of the assessee was worked out at 17.83%. For the purpose of bench marking its margin, assessee had selected seven comparable companies whose average PLI margin was arrived at 14.94% and accordingly, it was reported that the assessee's margins are at Arm's Length Price. During the course of transfer pricing proceedings, the assessee submitted two new comparable 5 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016 companies and out of resultant nine comparables, the TPO had rejected seven comparable companies and retained two comparable of the assessee namely; (i) Jindal Intellicom Limited; and (ii) E 4e Health Care Limited. Before analyzing the Arms Length Price, the learned TPO examined the various functions performed by the assessee which has been highlighted by him from pages 2 to 5 of his order, which for the sake of ready reference are reproduced hereunder:
"The assessee's functions and services have been classified under two main heads accounts / financial supports services and I.T. support services. Under the finance support services the services rendered are basically transaction services like accounts payable, receivable, cash operations, general accounting in support services and centre of excellence like financial planning and analysis, financial control treasury and banking, data systems etc. Under the I.T. support services, the assessee's key function has been summarized in the following manner.
· Incident Resolution - IS: To resolve IT infrastructure issues which are assigned to BCMS within the · Global IT support model.
· Incident Resolution - SAP: The resolution of second and third-line technical SAP issues which cannot be solved at the first line stage by the GSD under the SEAL contract is referred to BCMS or the UK.
· Business Relationship Management: To support the South Asia (SA), Middle East and North Africa (MENA) and Sub Saharan Africa (SSA) regions in delivery of their strategy, by ensuring that business solutions are fully aligned with business needs.
· As a member of the Global Business Solution Team, to ensure that future options and solutions are scalable and aligned to corporate strategy.
· Incident and Service Request Management. · Problem Management.
· Knowledge Management.
· Change Management.
· Configuration Management: The Configuration and Release process is accountable for:6 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016
· IT Service Reporting.
· IT Service Management Governance.
· Service Level Management.
· Event Management.
· Technology Services Support Role.
· Procurement · IT Operations Management
4. The learned TPO then carried out his own search process and after discussing the various filters applied by him during the course of his search, identified six new comparable companies.
After inviting assessee's objections and detailed analysis, he finally selected following eight comparable with an average arithmetic mean of 29.53%. The details of the comparables selected by the TPO are as under:
S. No. Company Name OP/OC
1. Infosys BPO Ltd. 17.86
2. Jindal Intellicom Ltd 13.70
3. E4e Healthcare Business Services 9.77
Pvt. Ltd.
4. Accentia Technology Limited 29.18
5. Acropetal Tech Ltd. (seg.) 14.36
6. Eclerx Service Ltd. 56.82
7. ICRA techno analytics Ltd. 25.24
8. TCS e-Serve Ltd. 69.31
Average 29.53%
7
ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016
The Ld. TPO has also altered the PLI of assessee at 16.80%, instead of 17.83 % arrived at by the assessee by holding that foreign exchange gain/loss cannot be reckoned as operating in nature. Accordingly, an upward adjustments of Rs. 2,36,21,261/- was suggested by him on the aforesaid transaction.
5. So far as the transaction of 'Purchase of fixed assets' is concerned, the Ld. TPO held that it is a separate class of transaction and therefore, has bearing on profit. He observe that, since assessee could not provide proper documentation, therefore, in absence of any supporting evidence or third party invoice, the Arms Length Price of the purchase of assets was taken by him as 'Nil', which resulted into an adjustment of Rs. 48,05127/-.
6. The learned TPO on further perusal of the transactions, noted that there was certain delay in receipt of payment from the AE and observed that estimate period of 30 days would be considered as normal period for inter-company sales and services and any delay beyond the aforesaid period should be bench marked. After treating it as a part of loan transaction, he calculated the interest rate of 11.69% after taking outbound loan on the basis of SBI base rate and accordingly, further adjustment of Rs. 5,25,938/- was made.
7. From stage of the learned DRP, first of all the TPO's action for adjusting the margin at 16.80% instead of 17.83% as declared by the assessee, has been upheld. The Ld. DRP removed one of the comparable selected by the Ld. TPO namely, 'Accentia Technology Limited' and resultantly seven comparable companies 8 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016 have been confirmed by the DRP resulting into Arms Length margin of 27.98% and thereby adjustment was reduced marginally.
8. Before us, the learned counsel for the assessee submitted that so far as the first issue of transfer pricing adjustment of provision of Finance / IT back supports services is concerned, the assessee is mainly challenging the exclusion of three comparable companies, namely, (i) E-clerx Service Limited; (ii) TCS E-Serve Limited; and (iii) ICRA Technology Analytics Ltd. Besides this, the assessee is also challenging that foreign exchange gain / loss has not been treated as operating in nature by TPO as well as DRP.
9. Since, the learned counsel has argued only three comparable; therefore, our finding will be confined to these comparable companies only. He further pointed out that one of the DRP member so far as two comparable companies are concerned namely, ICRA Techno Analytics Limited; and E-Clerx, has given dissenting note in the order whereby she has accepted the contention of the assessee and held that these two companies are functionally not comparable. As far as the issue of inclusion / exclusion of three comparable companies, the relevant discussion and our finding shall be discussed herein after:-
i) E-Clerx:-
10. The Ld. TPO's/DRP's reasoning for rejecting the assessee's contention and including this company in the comparable list can be summarised in the following manner:-
9 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016a. The services provided by E-clerx are similar in nature to the several services provided by the assessee; b. Both high and low end comparables were selected by the assessee since all the services of the assessee are neither high end nor purely low in nature;
c. Data analytics and process outsourcing services provided by E-clerx are part of its ITeS, hence comparable to the assessee;
d. Outsourcing of work is not the criteria to reject a company as argued by the assessee;
e. No substantial presence of intangibles; f. The assessee has not demonstrated effect of the extra-
ordinary events in case of E-clerx.
10.1 The DRP has upheld the action of the TPO and further added that E-clerx is involved in diverse nature of services and can be considered as KPO, whereas assessee is also not providing low-end ITeS services as it includes financial accounting, financial planning and analysis etc., which is nothing but high-end services and therefore, both E-clerx and assessee have similar functions and services. However as noted above, one of the member of the DRP has given dissenting note stating that the functional profile do not exhibit similar nature services because, the assessee is essentially providing back office support services while E-clerx operates in data analytic and process outsourcing services segment. E-clerx is one of the biggest first KPO Company, whereas the assessee operates as a captive service provider on cost plus model providing back office support services only.10 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016
10.2 Before us, the learned counsel for the assessee made elaborate submissions which can be summarised in following way:-
a. E-clerx provides services though two business units; firstly, Financial services which includes consulting, business analysis and solution testing; and secondly, Sales & Marketing services which also includes web content management & merchandising execution, web analytics, etc. However, for these diverse activities segmental data is not available. These are very high-end services and forms part of KPO service portfolio.
b. The learned has TPO failed to appreciate the fact that ITeS industry is completely different from KPO industry.
c. E-clerx mostly operates through outsourcing model, that is, it outsources its major operation.
d. He further submitted that in the proceedings before Hon'ble DRP, one of the Hon'ble member was in agreement with the assessee that E-clerx is a KPO company and should not be accepted as comparable to the Assessee.
Finally in support of his contention, he strongly relied upon the following decisions:
i. Actis Global Services Pvt. Ltd. (ITA 417/2016)-(AY 2010-
11) ii. Actis Global Services Private Limited-ITA No. 6175/Del/2015-AY 2011-12.11 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016
iii. Delhi High Court in case of Rampgreen Solutions Pvt Ltd (ITA 102/2015)-(AY 2008-09).
10.3 On the other hand, learned CIT DR after referring to the various functions performed by the assessee which has been incorporated by the TPO in his order and also as appearing in the transfer pricing study report, pointed out that the assessee is providing various kind of support services some of which cannot be reckoned as low-end services and is catering to 190 countries. Therefore, looking to the host of services provided, it cannot be held that assessee is providing simply low-end ITeS services. He also drew our attention to annual report of E-clerx and submitted that by and large they are also performing same kind of functions which assessee has been performing. Thus, E-clerx has rightly held to be comparable company to bench mark the assessee's margin.
11. We have heard the rival submissions, perused the relevant finding given in the impugned orders as well as material referred to before us qua this comparable. The assessee is mainly providing back office support services to its AEs relating to Accounts/ Financial support services; and IT support services. Intra these heads of services, the assessee company is performing host of functions which have been illustrated by the TPO in his order from pages 2 to 5 and also finds mention in assessee's T.P. Study Report. The assessee has classified itself as the company providing low-end ITeS services and has distinguished itself from high end ITeS services or KPO service provider companies. One of the main plank of the argument of the learned counsel before us 12 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016 to exclude E-clerx is that, it is very high-end service provider and one of the leading KPO service company in the country and this company is into diverse nature of services. We find that one of the dissenting member of the DRP has also highlighted the functional differences between the assessee and E-clerx and has given a categorical finding that E-clerx operate more as a data analytics and process outsourcing services segment, whereas the assessee is merely providing back office support services.
12. However without entering into the semantics of arguments as to what kind of functions constitutes low-end ITeS service provider or high-end ITeS or KPO service provider, we would like to confine our finding on FAR analysis. Because, at times when host of services are performed under ITeS, likes of assessees', there becomes very thin line distinction between functions performed by the low-end ITeS service provider and high-end ITeS service provider and it is quite difficult to analyse in such situations as to how much value additions are there in deliverables in rendering of such kind of host of services. At the outset, on a perusal of the Financials and annual report of E-clerx for the relevant financial year as pointed out to us during the course of the hearing, we find that the E-clerx has outsourced most of its services to outsiders which is evident from the fact that the expenses under the head 'contract for the services' is more than Rs. 43.71 Crores during the year out of total expenses debited to profit & loss account of Rs. 91.29 Crores. The major operations appears to be based on outsource model, which is evident from the quantum of expenditure and notes to the financial account (the copy of which is appearing at page 840 of 13 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016 the assessee's paper book). In an outsourcing model, the assets deployed in the form of human resources, infrastructure and other intangibles differ from an entity which operates from its own resources. Whence, in the case of E-clerx, substantial work has been outsourced to various parties, as compared to the assessee, where the entire back office support services have been provided by the assessee itself, then on this ground alone, it would be very difficult to put E-clerx in the comparable basket. Another important fact which is borne out from the annual accounts is that, E-clerx is performing financial services as well as sales and marketing services for which there is no separate segmental information. It reflects only one primary segment which is data analytics and process outsourcing services. Sales and marketing activities again is a different function altogether which cannot be compared with the assessee which is performing purely back office support services. Under these circumstances also it would be very difficult to find out as to what is the profit margin from the sales and marketing services which is entirely a different from the functions carried out by the assessee. Further before us, the learned counsel has relied upon catena of decisions of this Tribunal and also High Courts, wherein E-clerx has been held to be incomparable with the companies providing purely back office support services. In view of aforesaid cumulative factors, we hold that E-clerx cannot be held to be a good comparable for bench marking the assessee's margin to arrive at ALP and accordingly, we direct the AO/TPO to remove this comparable.
(ii) ICRA Techno Analytics Limited:-
14 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/201613. The learned TPO has taken this comparable on the ground that on standalone basis, ICRA is engaged in business processing and analytics which is part of ITeS, whereas the assessee has used consolidated functional. From the reading of the DRP's, it is seen that there is no particular observation made by the DRP for rejection of ICRA, albeit one of the DRP member who has given her dissenting note has given a very categorical finding that, this company does not exhibit functional similarity with the nature of services being provided by the assessee for the reason that ICRA is engaged in 'software development and consultancy', 'engineering services web development and hosting', apart from business analytics and business process outsourcing. Before us, the learned DR has been unable to rebut such an observation of the dissenting member of the DRP which is also corroborated from material on record. The learned counsel has also pointed out that apart from the fact that it is functional not comparable, even the segmental information with regard to ITeS and Software development and consultancy are not available. Hence, its margin cannot be benchmarked with that of the assessee.
14. After considering the rival submissions and on perusal of annual report of ICRA Techno Analytics Limited, it is seen that following disclosures have been made:
"The company is engaged in the software development & consultancy, engineering services, web development & hosting and subsequently diversified itself into domain of business analytics and business process outsourcing."
From the said note, it is clear that there cannot be any functional similarity between a company which is providing pure back office 15 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016 services and the company which is also engaged in software development and consultancy, engineering services, web development and providing business analytic and business process outsourcing. Thus, on functional level itself this cannot be held to be a comparable. Moreover, as pointed out by the learned counsel, there is no segmental information and bifurcation between ITeS and Software development. Accordingly, we direct the AO to exclude this company from the comparability list.
(iii) TCS E-Serve Limited.
15. The learned TPO has included this company on the ground that services provided by the TCS E-Serve is more in the nature of BPO which is akin to assessee's function and so far as assessee's objection that it has a very high turnover is also not tenable, because high turnover does not necessarily has any co-relation with high profits earned. Further, the extraordinary event of acquisition of Citi BPO as pointed out by the assessee, does not affect FAR analysis of TCS E-Serve. The learned DRP too has merely confirmed the action of the TPO.
16. Before us, the Ld. Counsel's contention has been that:
a. Functionally different: TCS e-serve operations broadly comprise of transaction processing and technical services primarily to Citigroup entities globally, which cannot be compared to the functions performed by the assessee.
b. Technical services involve software testing, verification and validation of software at the time of implementation and data centre management activities which are clearly not comparable to the ITeS. However, segmental bifurcation 16 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016 between transaction processing and technical services is not available in the public domain.
c. TCS E-Serve, being earlier entrants in the industry, has developed domain expertise, process excellence; ability to leverage technology etc., whereas, this is the first year of operation, of the assessee, hence cannot be compared to the TCS E-Serve.
d. Presence of brand- TCS E-serve being a subsidiary of TATA Consultancy Services Limited and is a part of the eminent TATA Group, which inherently has an element of huge brand value associated with it, which tends to influence the pricing policy and thereby directly impacting the margins earned by the company. Huge payment has been made by TCS E-Serve to TATA Consultancy for use of brand name, TATA.
e. TCS E-Serve provides services pre-dominantly to Citi Group.
f. Abnormal profit- The Ld. TPO stated super normal profit making companies cannot be rejected unless peculiar economic circumstances of such companies are pointed out. The assessee clearly demonstrated the abnormal circumstances, which led to super normal profits earned by TCS E-Serve. The company earned supernormal profits during the year i.e. 69.31% on cost. This fact is also substantiated in the table provided below:
g. Abnormal fluctuations in profits: TCS e-serve's widely fluctuating growth in operating revenue, operating costs and margins.17 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016
h. Size of the company: The employee cost base is more than 64 times that of the assessee. Further, its turnover is more than 67 times to that of the Appellant (i.e. 1,442.42 crores).
i. In the recent case law of Baxter India Pvt. Ltd. (ITA No. 345/Del/2016) -- AY 2011-12, the Hon'ble Delhi Tribunal has excluded this comparable on the ground of functional differences and non- availability of segmental.
j. In the case of Equant Solutions India Pvt. Ltd (ITA No. 1202/Del/2015), the Hon'ble Delhi Tribunal has excluded TCS E-Serve as a comparable to ITeS provider for AY 2010- 11 on the ground that it carries on business of software testing, verification and validation for which no segmental bifurcation is available. Further, it owns huge intangibles and also uses 'Tata' brand. Though the above decision is for AY 2010-11, the facts are equally applicable.
17. The learned counsel also submitted that the issue of comparability of TCS E-Serve vis-a-vis., the company providing ITeS services had come up for consideration before this tribunal in the case of Amri Price India Private Limited vs. DCIT, ITA No. 2010/Del/2014 and ITA No. 7014/Del/2014 wherein this company has been held not comparable with the ITeS companies. This judgment of the tribunal has also been upheld by the Hon'ble High Court.
18. We have heard the rival submissions, perused the relevant finding giving in the impugned orders as well as the material placed on record. One of the main points of distinction which is 18 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016 quite ostensible is that the 'TCS E-Serve' is a subsidiary of 'Tata Consultancy Services Limited', which is one of the leading and giant company in the world and has an inherent element of very high brand value associated with it. Such a high brand value definitely has an impact on the pricing policy, niche market, contractual terms, etc. and thereby affecting the profit margins. Annual report of this company reflects that huge payments have been made by TCS E-Serve to 'TCS Limited' for the use of the brand as a "royalty". This fact itself shows the effect of brand value in the pricing mechanism. On a further analysis it is seen that the employee cost base is more than 64 times than the assessee and even the turnover is also more than 67 times as compared to the assessee. This only goes to suggest that assets employed by 'TCS E-Serve" alongwith huge intangibles in the form of brand value definitely has a huge effect in PLI and vitiates the comparability under FAR analysis with a company like assessee which is a captive service provider without much intangibles and risks. Another important thing which has been pointed out by learned counsel is that, the operation of 'TCS E-Serve' broadly comprise of transaction processing and technical services including software testing, verification and validation for which no segmental bifurcation is available. In absence of such vital information of the margins of such varied segments it becomes quite difficult to put such company in the comparability basket so as to bench mark the correct profit margin. All the aforesaid factors have been held so in various decisions of this Tribunal in several cases as relied upon by the Ld. Counsel, including the decision of Amri Price India Private Limited (supra). Thus, in our opinion 'TCS E-Serve' cannot be held to be a good comparable for 19 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016 the purpose of bench marking the assessee's PLI and accordingly, we direct the Ld. AO/TPO to exclude TCS E-Serve from the comparability list.
19. In view of our favourable finding given with regard to the above three comparable, then as submitted by the Ld. Counsel, the adjudication on the other comparable will become purely academic, because the assessee's margin will fall within the tolerance range of + / - 5%. Hence we are not adjudicating the other comparables.
20. The next issue relates to, whether foreign exchange gain / loss is operating income or not while computing the operating margin. The assessee has computed its PLI after taking into account foreign exchange gain/ loss as operating in nature, whereas the TPO has considered as non-operating and therefore, he has tinkered with the computation of PLI of the assessee. The learned DRP too has confirmed the said action of the TPO.
21. Before us, the Ld. Counsel submitted that, since assessee is providing back office support services to its AE in UK and all its invoices are raised in GBP (Great Britain Pound), therefore, it alone undertakes such foreign currency risk. If the Indian entity makes payment to its AE at the prevailing exchange rate then it alone bears the exchange risk related to credit period, i.e., during the period between invoicing and recovery. In support, he strongly relied upon the decision of Delhi High Court in the case of Amri Price India Private Limited, ITA No. 206/2016, wherein the Hon'ble Delhi High Court has held that foreign fluctuation resulting into gain or loss is part of operating income.
20 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/201622. On the other hand, learned DR strongly relied upon the order of the TPO as well as the DRP. As an alternative he submitted that in case if it is to be treated as operational income, then similar treatment should be given to the comparables.
23. We have heard the rival contentions and also perused the relevant finding given in the impugned orders. It is an undisputed fact that invoices are raised in GBP and the entire foreign currency risk is undertaken by the assessee and consequently the exchange risk relating to the credit period also pertains to the assessee. If TNMM is applied to a transaction in which the foreign exchange risk is borne by the tested party then foreign exchange gains or losses should be consistently accounted for and it has to be reckoned as part of operating income or loss. Now when this issue stands decided in favour of the assessee by the decision of Hon'ble Delhi High Court in the case of Amri Price India Private Limited (Supra), therefore without going into further analysis, we respectively following the ratio, hold that the foreign exchange gain has to be treated as part of operating income and therefore, the PLI has to be computed accordingly. Thus this issue stands decided in favour of the assessee. However, as suggested by the learned DR, we direct the TPO to see, whether similar treatment of foreign exchange gain should be given in the case of comparable companies if these companies are also undertaking similar foreign exchange risk.
24. The next issue relates to, whether the TPO or Ld. DRP was justified in law and on facts by treating the transaction of import of fixed assets as 'Nil' and thereby resulting into enhancement of 21 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016 income of Rs. 48,05,127/-. The assessee has imported certain fixed assets from its AE which are mainly office equipments, fixtures and furniture, computers and peripheral and lease holds implements. Besides this, certain software were also imported. The assessee's case before the authorities below had been that these assets were imported by the assessee so as to enable it to carry on its business operations in India. The assessee's contention had been that, once for the bench marking of the international transaction the assessee has applied TNMM as most appropriate method by taking OP / TC as PLI, then depreciation on such an asset already stands considered as operating cost for rendering back office support services. The TPO as well as the Ld. DRP have proceeded to determine the ALP at 'Nil' on the ground that the purchase are not supported by third party invoices and accordingly, the adjustments have been made.
25. Before us, the learned counsel, first of all rebutted the said finding of TPO and DRP by pointing out that the assessee has submitted all the necessary evidences before the TPO as well as the DRP in the form of copy of invoices to corroborate the Arm's Length character of imported equipment. In support, the assessee had also filed certificate from the management of British Council certifying that the fixed cost were imported on a cost to cost basis. Ld. Counsel further to controvert the finding and observations of the TPO & DRP, drew our attention to various details furnished before the TPO appearing in the paper book from pages 386 to
449. In any case, he submitted that this transaction is tax neutral because, if the amount of depreciation is to be taken at 'Nil', then the amount of income to that extent should also be taken at nil.
22 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016The reason being the mark up can be applied only to fixed depreciation cost to the assessee. In other words, the transaction of depreciation as a cost on one hand and the resultant revenue on the other go hand in hand. In support, he strongly relied upon the decisions of ITAT Delhi Bench in the case of Ciena India Private Limited, ITA No. 143/Del/2014.
26. On the other hand, the learned DR has strongly relied upon the order of the TPO as well as the DRP.
27. We have heard the rival submissions and also perused the relevant material referred to before us. At the outset, we are of the opinion that once the TPO himself says that it is a separate international transaction, then it was incumbent upon him to determine the Arms Length Price after carrying out comparability analysis from the uncontrolled comparable transactions by adopting any of the prescribed method. If the assessee has claimed that it has purchased the assets on cost to cost basis and there is no mark up, then it was all the more incumbent upon the TPO to examine the transaction, as to whether under a third party situation what would be he ALP of such transaction. The ALP cannot be determined 'Nil' unless it is brought on record by the TPO that in the third party situation, the cost to such an asset would also be nil. Hence in our opinion, the value of ALP determined for the transaction of purchase of capital asset cannot be taken at 'Nil' and therefore, at the threshold, such an action of the TPO as well as DRP cannot be upheld at all. Moreover, the plea of the assessee before us is that, it is a tax neutral transaction, which proposition finds support from the decision of 23 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016 the coordinate bench in the case of Ciena India Private Limited (Supra) wherein the Hon'ble Tribunal has observed and held as under:
15.2 "We have heard the rival submissions and perused the relevant material on record. It is noticed that the assessee purchased certain fixed assets from its AE with the declared value of Rs.33.50 crore. In our considered opinion the assessee rightly reported Purchase of fixed assets with the transacted value as an international transaction, since the same is covered within the definition given in sub-section (1) of section 92B, which provides that "international transaction"
means a transaction between two or more associated enterprises, either or both of whom are non-residents, in the nature of purchase, sale or lease of tangible or intangible property, or ..............'. Section 92(1) stipulates that: `Any income arising from an international transaction shall be computed having regard to the arm's length price'. The manner of computation of arm's length price is set out in section 92C. Sub-section (1) provides that the arm's length price in relation to an international transaction shall be determined by any of the methods given in the provision, being the most appropriate method, having regard to the nature of transaction or class of transaction etc. Amongst others, there is Comparable uncontrolled price (CUP) method and TNMM. The primary onus of proving that the international transaction is at ALP, is always on the assessee.
15.3. Reverting to the facts of the instant case, we find that the assessee applied TNMM as the most appropriate method for showing that this international transaction was at ALP. The TPO held that the correct method to be applied was CUP and as such the assessee was called upon to give uncontrolled comparable instances of the purchase of similar assets, which the assessee failed to do. This led the TPO to treat the ALP of this international transaction at Nil. Normally, if the assessee fails to give any comparable instance, then it becomes the duty of the TPO to search some comparable uncontrolled instances at his own and accordingly determine the ALP of the international transaction. In our view, both the assessee as well the TPO 24 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016 went wrong by not doing what was required to be done by them.
15.4. Once the ALP of an international transaction of purchase of fixed assets is determined, then the difference between the transacted value and the ALP does not directly lead to the transfer pricing adjustment. At this juncture, it is pertinent to note the language of section 92(1) which provides that any income arising from an international transaction shall be computed having regard to the arm's length price. It does not say that the total income is to be computed in accordance with the ALP. It is rightly so because the international transactions which have no direct bearing on the total income, cannot give rise to addition on account of difference between their transacted value and ALP. Since the transaction of purchase of fixed assets is a capital transaction, this, in itself, does not affect the total income of the assessee. It is only the off-shoot of such transaction in the capital field, being depreciation allowance on such ALP of the transaction, which affects the total income. To illustrate, if a fixed asset is purchased by an enterprise from its AE for a sum of Rs.100 and rate of depreciation on such asset is 10%, then the enterprise will charge depreciation amounting to Rs.10 in its Profit and Loss account. If the ALP of such transaction is determined at Rs. 80, then the difference of Rs.20 cannot be considered as income. Rather, the amount of depreciation will be restricted to Rs.8 instead of Rs.10, thereby increasing the total income by Rs. 2. When we advert to the facts of the extant case, it is found that the TPO has rightly held to the effect that it is the amount of depreciation on the purchase of such fixed assets, which will be considered for making addition and not the difference between the transacted value and the ALP determined at Nil.
15.5. Ordinarily an international transaction of purchase of fixed assets by an assessee engaged in a manufacturing or trading business is required to be determined on CUP method, which is usually the most appropriate method in such circumstances. The TNMM on entity level cannot be applied, because the transaction of purchase of fixed assets can have no relation with the transaction of purchase of raw material from AE or sales of goods to AEs. Rule 10A of the IT Rules, defines `transaction' as including `a number of closely linked 25 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016 transactions'. The Hon'ble Delhi High Court in its judgment of March, 2015 in Sony Ericsson Mobile Communications India Pvt. Ltd. has held that the related transactions should be considered jointly for determining their ALP. However, in order to consider more than one international transaction as one, it is sine qua non that such transactions must be closely and not remotely linked. Every transaction done by an enterprise is somehow or the other linked with the carrying on of the business. But in order to be eligible for processing two or more transactions jointly for determining their ALP, it is essential that they should be closely linked. If two transactions are not closely linked, then they cannot be considered jointly. Considering the above case of a manufacturer or a trader, it cannot be held that the transaction of purchase of fixed assets is closely linked with the purchase of raw material or sale of finished goods etc. In such a scenario, it becomes important to examine the transaction of purchase of fixed assets independent of other transactions.
15.6. However, the above rule of scrutinizing international transaction of purchase of fixed asset as independent of all other transactions is not universal. It has its own exceptions as well. The instant case is a glaring example of exception to the above rule. It is so for the reason that the assessee is getting remuneration from its AE at costs incurred plus a particular mark-up. The cost base includes not only direct but all the indirect costs. The amount of depreciation allowance on fixed assets, including those purchased from AE, is also compensated with the same mark-up. Thus we can say that depreciation allowance and remuneration to the assessee on such depreciation are inseparable transactions. The income in the shape of remuneration to this extent directly depends upon the amount of deprecation allowance. When the assessee is getting mark-up of 13%, the amount of deprecation at Rs.10 in our above hypothetical example will fetch remuneration of Rs.11.30. If the amount of depreciation is reduced to Nil, the amount of income to that extent will also be Nil, because the mark-up can be applied only if there is depreciation cost to the assessee. In other words, the transactions of depreciation on one hand and the resultant revenue on the other, go hand in hand. In such a case, where the income is directly based on the costs incurred including 26 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016 depreciation, then these two transactions become 'closely linked' transactions, eligible for processing under the TP provisions on a combined basis. It is illogical to compute the ALP of the transaction of purchase of fixed assets and consequently reduce or nullify the amount of depreciation allowance de hors the consideration of international transaction of the revenue from AE, which is equal to depreciation as claimed with mark-up. Both the transactions of claim of depreciation allowance and revenue of depreciation with mark-up have to be seen jointly. The TPO in the present case has simply reduced the amount of deprecation allowance to Nil without simultaneously considering the revenue side of this transaction. If we consider these closely linked transactions of deduction for depreciation allowance and revenue due to depreciation in unison, the position which follows is that no further addition can be made on account of transfer pricing adjustment due to one-sided consideration of depreciation allowance at Nil. Rather, the determination of ALP of the international transaction of purchase of fixed assets, in the facts and circumstances of the instant case, is tax neutral. As such, we order for the deletion of addition made by disallowing or reducing the amount of depreciation on the assets purchased from AE. This ground is allowed."
Though we have already held that the ALP cannot be determined at 'Nil', however following the principle and observation as discussed in the aforesaid decision, we also hold that being tax neutral transaction, no adjustment can be made by taking the value at 'Nil'. Thus, this issue too is decided in favour of the assessee.
28. The last relates to treating the delay in receipts of payments from AE to be in the nature of unsecured loan advanced to the AE and thereby charging interest by taking SBI base rate and adopting the interest rate of 11.69%. Before us, one of the main contention of the learned counsel had been that if the CUP is considered to be the MAM, then on the facts of the assessee's own 27 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016 case, it can be seen that the credit period to the third parties is much longer and extends upto 181 days which is evident from the details given at pages 703 and 706 of the paper book. Since no interest has been charged on the delayed payment made by the third parties, therefore, no interest should be imputed in respect of receivables outstanding from the AE also. Apart from that the learned counsel also submitted that the assessee is completely a debt free company and therefore, it cannot be held that its interest bearing funds have been locked up with the AE for a long period. The learned counsel in support had drawn our attention to pages 145 and 146 of the paper book, which is a copy of profit and loss account and statement of interest in financial charges. Further, he strongly relied upon the decision of the Tribunal in the case of Bechtel India Private Limited, ITA No. 1478 / Del / 2015 and also pointed out that, this decision has now been affirmed by the Hon'ble Delhi Court. On the other hand learned DR relied upon the orders or the TPO as well as DRP.
29. After considering the rival submissions and on perusal of the relevant material placed on record, we find that first of all, the assessee is a debt free company as it has neither received any interest from any creditors nor paid interest to any debtor. A perusal of profit and loss account show that interest and finance charges are only Rs. 73/-; and interest on corporate tax is Rs. 1,27,798/-. Apart from that there is no debt or loan with the assessee on which it has to pay any interest. Once it is an accepted fact that assessee does not have any interest bearing borrowed funds for extending any kind of loan to its AE, then it cannot be the reckoned that assessee has given any benefit to the 28 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016 AE by blocking its interest bearing funds to the AE by extending the credit period. This has been held so by this tribunal in the case of Bechtel India Private Limited (Supra). Moreover as pointed out by the learned counsel, the assessee has also given similar credit period to the third parties which are extending up to 181 days. If a similar credit period is given to the AE as given to third parties, then under the arms length scenario and looking into the similar conditions prevailing between controlled transaction and comparable uncontrolled transaction, then there cannot be any adjustment, because in a situation like this, there is a direct CUP to analyse such transaction. Accordingly, the transfer pricing adjustment as made by the TPO by the imputing interest on delay in receipt of payment is uncalled for on the facts of the present case and same is directed to be deleted.
30. Now we will take up Revenue's appeal, wherein following grounds have been raised are as under:
1. The Ld. DRP has erred in law and on facts and in circumstances of the case in directing the TPO to reduce the amount to Rs. 2,59,64,962/- in place of Rs. 2,89,52,326/-
which was added on account of Arm's Length Price to the taxable income of the assessee company.
2. The Ld. DRP has erred in law and on facts and in circumstances of the case in directing the TPO to exclude M/s Accentia technologies Pvt. Ltd. while ignoring the facts brought out by the TPO for including it as comparable being functionally similar to Taxpayer Company.
3. The Ld. DRP has erred in law and on facts and in circumstances of the case in rejecting the benchmarking of interest rate on the basis of SBI base rate for receivables outstanding by ignoring the CBDT notification on Safe Harbour Rules which defines the benchmarking of interest on the basis of SBI rate and ignoring that the Delhi High 29 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016 Court Judgment in the case of M/s Cotton Natural (I) Pvt. Ltd. dealt with the issue of interest on outbound loan given to the foreign AE's.
31. So far as ground no. 1 is concerned, the same is general and therefore, no separate education is required.
32. As regard ground no. 3 is concerned, the same has also become purely academic for the reasons that, we have already directed the TPO/AO to delete the interest as per our finding given in the assessee's appeal, herein above. Thus, ground no. 3 is treated as dismissed.
33. The only issue which remains for our adjudication in the departmental appeal is the DRP's direction to exclude, one comparable company, M/s Accentia Technologies Private Limited. The TPO has included this company on the ground that it is functionally similar and passes all the filters adopted by him. On the other hand, the DRP has excluded the said comparable on the ground that there were exceptional circumstances effecting the profit during the year.
34. The learned DR on functional comparability submitted that, the TPO has given his elaborate finding how it is functionally comparable to the assessee and also drew our attention to various observation of ld. TPO. On the other hand, learned counsel made following submissions qua this comparable:-
a. Functionally different: Accentia renders KPO services in the healthcare sector, by way of software as a service "SaaS"30 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016
model. The software helps in managing all the healthcare documentation needs, receivables management needs, performance tracking and reporting. It is also engaged in developing and designing a cloud based hosted application, hardware and bandwidth infrastructure, which are in the nature of software and software support services. Accentia is engaged in development and sale of products and provision of services. However, segmental break-up between software product division and medical transcription division are not available.
b. Presence of IPR - Accentia possesses goodwill / brand/ IPRs amounting to 49.27% of the Net Fixed Assets, which tends to influence the pricing policy and thereby directly impacting the margins earned by Accentia.
c. During FY 2010-11, Accentia acquired strategic Tangent Corporation which was a software development company having expertise in development of software related to EMR and SaaS.
d. Abnormal circumstances: Because of acquisitions between FYs 2007 and 2011, the revenues of Accentia have increased significantly. The Ld. TPO did not take this argument of the Assessee into consideration.
e. Margin at overall entity level- The Ld. TPO has considered the profitability of Accentia at an overall entity level which includes income from software development and therefore, such an approach is incorrect when no segmental information is available. Thus, on the basis of such incomplete information a company cannot be considered to 31 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016 be a comparable company.
35. We have heard the rival submissions and also perused the relevant finding given in the impugned order. It is an undisputed fact that during the financial year 2010-11, Accentia acquired strategic Tangent Corporation which was a software development company having expertise in development of software relating to EMR - SaaS. Due to this acquisition, the revenue of Accentia has been increased significantly and this factum as held by the learned DRP definitely is a very vital factor affecting the pricing and consequently the comparability as well as the profit margin. Apart from that, Accentia is also engaged in development and sale of products for the U.S. Market and there are no separate segments of the financials providing details of revenue/ profit from software product division and medical transcript division. On these circumstances also it would be very difficult to include Accentia for comparability analysis. Accordingly, on these grounds we uphold hold the order of the DRP excluding the said company. In the result, ground no. 2 as raised by the department is dismissed. In the result, appeal of the Revenue is dismissed.
36. Now we will take up the assessee's appeal for the assessment year 2012-13. In the grounds of appeal, the assessee has raised following grounds:
1. That on the facts and in the circumstances of the case and in law, the order passed under section 143 (3) r.w.s. 144C of the Act by the Learned Assessing Officer ("Td. AO") is erroneous and bad in law as well as in facts.
2. That on the facts and in the circumstances of the case and in law, the Ld. AO/ Ld. TPO/ Ld. Dispute Resolution Panel ("DRP") 32 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016 erred in making an adjustment to the arm's length price ("ALP") of the appellant's international transactions, relating to provision of finance/ IT-back office support services, with Associated Enterprises ("AEs") amounting to INR 25,972,178.
3. That on the facts and in the circumstances of the case and in law, the Ld. AO/ Ld. TPO/ Ld. DRP erred in application of Transactional Net Margin Method ("TNMM") by:
3.1. rejecting / modifying the economic analysis conducted in the transfer pricing documentation by the appellant, including the comparable companies selected for arm's length price determination, during the course of assessment proceedings;
3.2. applying inappropriate quantitative filters and instead applying new filters, which resulted in arriving at a cherry- picked result;
3.3. accepting companies that were functionally not comparable to the appellant in terms of functions, assets and risk profile; 3.4. computing erroneous margins of the companies selected for arm's length price determination;
3.5. confirming the selection of current year (i.e. financial year 2011-12) data for arm's length price determination; and 3.6. not treating foreign exchange gain/ loss as operating in nature, while computing the operating margin;
4. That on the facts and in the circumstances of the case and in law, the Ld. AO/Ld. TPO/ Ld. DRP erred in making a notional adjustment of interest amounting to INR 649,897 on outstanding receivables by treating it as international transaction. The Ld. AO/ Ld. TPO/ Ld. DRP erred by:
4.1. treating delay in receipt of payment from the AEs, as unsecured loans advanced to the AEs and charging interest on the same;
4.2. applying an adhoc methodology for benchmarking the balances outstanding from related parties and in ignoring the fact that the balances had already been benchmarked by the appellant as part of the TNMM analysis performed by it;33 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016
4.3. Ignoring the fact that the appellant had earned higher operating profit margin than working capital adjusted margin of the comparable companies on its international transactions and hence any notional interest on the extended credit period provided to AEs was factored in the pricing of these transactions.
4.4. Ignoring the fact that a higher period of credit was received by the appellant from third parties.
5. That on the facts and in the circumstances of the case and in law the Ld. AO/Ld. TPO erred in not examining the validity of initiation of penalty proceedings u/s 217(1)(c) of the Act.
6. That on the facts and in the circumstances of the case and in law, the Ld. AO erred in charging and computing interest under section 234B and 234C of the Act.
37. So far as the issue relating to transfer pricing adjustment on provision of Finance/ IT back office support services amounting to Rs. 2,59,72,178/-, the learned counsel submitted that in this year also the assessee is mainly challenging the exclusion of two comparable companies, E-clerx and TCS E-Serve Limited. If these two comparables are removed, then other comparables which has been included by the TPO and also upheld by the DRP will become purely academic. So far as these two comparables are concerned, he submitted that the facts are identical and there is no material change in the comparability analysis of companies' vis-à-vis the assessee, therefore, any finding given in the assessment year 2011-12 would be squarely applicable in this year also. This fact has also not been controverted by the learned CIT DR that facts and material for carrying out comparability analysis are the same.
34 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/201639. After considering the aforesaid submissions and on perusal of the impugned orders, we find that the comparable companies which have been finalized from the stage of the DRP are as under:
1. Accentia Technology Ltd.
2. Acropetal Technologies Ltd.
3. Caliber Point Business Solutions Limited.
4. Eclerx Services Ltd.
5. Excel Infoways Ltd.
6. Informed Technologies India Limited.
7. Infosys BPO Ltd.
8. Jindal Intellicom Ltd.
9. TCS E-Serve Ltd.
Out of theses comparable before us, the assessee is only challenging, E-clerx and TCS E-Serve Limited. Since both the parties are not disputing that the factors relating to comparability analysis in case of E-clerx and TCS E-Serve vis-a-vis the assessee are not different from the earlier year, therefore, our finding given regarding these two comparable as given in foregoing paras of earlier year appeal will apply mutatis mutandis. Thus, in view of finding given therein, we direct the TPO to exclude these two comparables from the comparability analysis and accordingly work out the arm's length price. Other comparable companies as challenged in grounds of appeal are therefore, not adjudicated.
40. The next issue relates to transfer pricing adjustment on account of imputing the interest on outstanding receivables. Here in this year also, the fact remains the same that assessee is a debt free and it has neither received any interest from any creditors nor paid interest to debtors and no borrowed funds have been utilized for extending the time period of the receivables. Apart from this, it is also a fact that credit period extended to third parties is also same as provide to the AE, hence no adjustment is required to be 35 ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016 made by treating it to be loan transaction and imputing interest on the delayed period receivables. Since similar facts and finding of Revenue authorities are permeating in this year also therefore, our finding given in the appeal for the AY 2011-12 would be squarely applicable and accordingly, this issue is decided in favour of the assessee.
41. Lastly, on the issue of whether the foreign exchange gain or loss is operating in nature, we have already held that it is part of the operating income and therefore, it cannot be removed from the computation/working of the PLI. Accordingly, in view of the finding given in the appeal in the assessment year 2012-13, this issue too his decided in favour of the assessee.
42. Since other grounds have not been argued before us, therefore, same are dismissed as not pressed. In the result, appeal of the assessee is partly allowed.
43. In the result appeals of the assessee for the AYs 2011-12 and 2012-13 are partly allowed, whereas, Revenue's appeal for the AY 2011-12 is dismissed.
Order pronounced in the open court on this day of May 2017.
Sd/- Sd/-
(J.S. REDDY) (AMIT SHUKLA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 25.5.2017
36
ITA Nos. 6134/Del/2015, 5829/Del/2015 & 6572/Del/2016
SH
Copy of order to: -
1) The Appellant;
2) The Respondent;
3) The CIT;
4) The CIT(A)-, New Delhi;
5) The DR, I.T.A.T., New Delhi;
By Order
//True Copy//
Assistant Registrar
ITAT, New Delhi
S.No. Details Date Initials Designation
1 Draft dictated on Sr. PS/PS
2 Draft placed before author Sr. PS/PS
Draft proposed & placed
3 JM/AM
before the Second Member
Draft discussed/approved
4 AM/AM
by Second Member
Approved Draft comes to
5 Sr. PS/PS
the Sr. PS/PS
6 Kept for pronouncement on Sr. PS/PS
7 File sent to Bench Clerk Sr. PS/PS
Date on which the file goes
8
to the Head Clerk
Date on which file goes to
9
the A.R.
10 Date of Dispatch of order