Income Tax Appellate Tribunal - Pune
Dy, Cit Cir-1[1] Pune, Pune vs Amberpoint Technology India P .Ltd, ... on 15 February, 2017
आयकर अपील य अ धकरण पण
ु े यायपीठ "ए" पण
ु े म
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "A", PUNE
सु ी सुषमा चावला, या यक सद य एवं ी अ नल चतुव!द , लेखा सद य के सम$
BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM
आयकर अपील सं. / ITA No.266/PUN/2012
नधा&रण वष& / Assessment Year: 2006-07
Assistant Commissioner of Income Tax,
Circle-1(1), Pune .... अपीलाथ /Appellant
Vs.
M/s. Amberpoint Technology India
Pvt. Ltd.,104-106, Ist floor,
Price Silicon Plaza,
106/A/2A/7, Senapati Bapat Road,
Pune - 411 016
PAN : AAFCA0749Q .... यथ / Respondent
आयकर अपील सं. / ITA No.1862/PUN/2012
नधा&रण वष& / Assessment Year: 2006-07
M/s. Amberpoint Technology India
Pvt. Ltd.,104-106, Ist floor,
Price Silicon Plaza,
106/A/2A/7, Senapati Bapat Road,
Pune - 411 016
PAN : AAFCA0749Q .... अपीलाथ /Appellant
Vs.
Assistant Commissioner of Income Tax,
Circle-1(1), Pune .... यथ / Respondent
Assessee by : Shri Dhanesh Bafna
Revenue by : Shri Suhas Kulkarni
सन
ु वाई क तार ख / घोषणा क तार ख /
Date of Hearing : 22.11.2016 Date of Pronouncement: 15.02.2017
2 ITA Nos.266 & 1862/PUN/2012
M/s. Amberpoint Technology India Pvt. Ltd.
आदे श / ORDER
PER SUSHMA CHOWLA, JM:
The cross appeals filed by the Revenue and assessee are against order of CIT(A)-I, Pune, dated 28-07-2011 relating to assessment year 2006-07 against order passed under section 143(3) of the Income Tax Act, 1961 (in short 'the Act').
2. The cross appeals were heard together and are being disposed of by this consolidated order for the sake of convenience.
3. The Revenue in ITA No.266/PUN/2012 has raised the following grounds of appeal :
1. The Ld.CIT(A) has grossly erred in allowing the benefit of (+_/-)5% on Arms' Length Price ignoring the clear language of proviso to section 92C(2) of the Income Tax Act, 1961 which was explained by subsequent issue of press note by Government of India (Department of Revenue) on 22-08-2001 and by issue of CBDT Circular No.12 dated 23-08-2011.
2. For these and such other reasons as may be urged at the time of hearing, the order of the Ld.CIT(A) may be vacated and that of the Assessing Officer be restored.
3. The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal during the course of appellate proceedings before the Hon'ble Tribunal."
4. The only issue raised by the revenue in its appeal is against the order of CIT(A) in allowing the benefit of +/-5% on Arms Length Price.
5. Both the authorized representatives fairly admitted that the issue now stands covered against the assessee by the order of the Special Bench in M/s.
IHG IT Services India Private Ltd. Vs. ITO in ITA No.5890/Del/2010 relating to A.Y. 2006-07 order dated 30-04-2013.
3 ITA Nos.266 & 1862/PUN/2012
M/s. Amberpoint Technology India Pvt. Ltd.
6. The Special Bench of the Delhi Bench of the Tribunal has held as under:
"13. Coming back to the provisions of the Income-tax Act, we are of the opinion that after the retrospective amendment to the second proviso to section 92C(2) by the Finance Act, 2012, there remains no ambiguity that the benefit of tolerance margin is available only when the variation between the arm's length price as determined under section 92C(1) and the price at which the international transaction has actually been undertaken does not exceed the tolerance margin. Once it exceeds the tolerance margin, no benefit under the proviso would be available to the assessee and the ALP as determined under section 92C(1) shall be considered. The question referred to the Special Bench is answered accordingly, i.e. in favour of the Revenue and against the revenue."
7. The second proviso to section 92C(2) of the Act has been inserted by the Finance Act, 2012 with retrospective effect. In view of the amendment of second proviso to section 92C(2) of the Act the benefit of +/-5% on Arms Length Price on the variation between the Arms Length Price and the Price at which the International Transaction was actually undertaken is to be seen in order to determine the Arms Length Price of the international transaction, while applying the transfer pricing provision. Thus, the benefit of margin is available only if the variation is within the tolerance margin. Once the variation exceeds the tolerance margin no benefit is to be allowed on account of +/-5%.
8. The Ld. AR for the assessee fairly pointed that if the margins of the assessee were within the tolerance limits of the margins of the comparables, then no deduction would be claimed by the assessee on account of +/-5%. Accordingly, we allow the grounds of appeal raised by the revenue.
9. The assessee in ITA No.1862/PUN/2012 has raised the following grounds of appeal :
4 ITA Nos.266 & 1862/PUN/2012
M/s. Amberpoint Technology India Pvt. Ltd.
The grounds hereinafter taken by the Appellant are without prejudice to one another.
1. That the order passed by the Learned Commissioner of Income Tax (Appeals)-I, Pune ['CIT (Appeals)'] to the extent prejudicial to the Appellant, is bad in law and liable to be quashed.
2. That the Learned CIT (Appeals) erred in upholding the rejection of Transfer Pricing ("TP") documentation by the learned Assessing Officer ('AO') and erred in arriving at adjustment in computation of arms length price in respect of software development services of the Appellant.
3. That on the facts and in the circumstances of the case, the learned CIT(Appeals) erred in ;
(a) Upholding the rejection of comparability analysis of the Appellant in the TP documentation and confirming the comparability analysis as adopted by the learned AO in the Assessment Order.
(b) Arriving at a set of companies as comparable to the software development services of the Appellant, by rejecting companies that are otherwise functionally comparable to the Appellant and by inclusion of companies that otherwise fail the test of comparability.
(c) Ignoring the limited risk nature of the services provided by the Appellant as detailed in the TP documentation and in upholding the conclusion of the learned AO that no adjustment on account of risk differential is required while determining the Arm's Length Price of the international transaction of the Appellant.
(d) Not appreciating the nature of costs of the pre-operative expenses and upholding the approach followed by the learned AO regarding inclusion of pre-operative expenses as part of operating costs for the purpose of computation of return on total cost.
4. The learned CIT (Appeals) erred in upholding the charging of interest under section 234B and 234C of the Act.
10. Now coming to the appeal filed by assessee wherein various grounds of appeal have been raised, the Ld. AR for the assessee at the outset pointed out that the grounds of appeal No.1 and 3(a) are general in nature and hence the same are dismissed. Further, ground of appeal No.3(c) was claimed to be academic in nature and hence the same is dismissed. Ground of appeal No.4 by the assessee is against charging of interest under section 234B and 234C of the Act is consequential and hence the same is also dismissed. 5 ITA Nos.266 & 1862/PUN/2012
M/s. Amberpoint Technology India Pvt. Ltd.
11. Now coming to the ground of appeal No.3(b) i.e. against rejection of companies which are claimed to be functionally comparable and by inclusion of companies that otherwise fail the test of comparability. By way of Ground of appeal No.3(d) the assessee is aggrieved by the order of the CIT(A) in not appreciating the nature of cost of preoperative expenses and by its inclusion as part of operating cost for the purpose of computation of return on total cost.
12. The assessee has also raised certain additional grounds of appeal against the inclusion of certain comparables but the Ld. Authorised Representative for the assessee pointed out that without adjudicating the issue of the several companies picked up as comparables or accepted from the final list of comparables, the only comparable whose inclusion is being opposed was Infosys Systems Ltd. He further pointed out that in case margins of Infosys Systems Ltd. are excluded from the final set of comparables, no adjustment would have to be made in the Arms Length Price of the international transaction. He said that the additional grounds of appeal No. 5 to 7 would thus become academic in nature.
13. Briefly, in the facts of the case, the assessee for the year under consideration had furnished return of income declaring total loss of Rs.30,44,910/- and book profit of Rs.2,023/- under section 115JB of the Act. The assessee was engaged in the business of Software Development and Exports. The assessee had provided software Development Services to its Associated Enterprises (in short 'the AEs') Amberpoint, Inc, USA. The services were in connection with development of functional specification and requirement analysis for the software modules as well as coding of the software for the AE. The assessee was providing the services at cost plus markup of 11%. The assessee has considered TNMM to be the most appropriate method in order to benchmark its international transaction. The 6 ITA Nos.266 & 1862/PUN/2012 M/s. Amberpoint Technology India Pvt. Ltd.
case of the assessee was taken up for scrutiny. The Assessing Officer issued show cause notice to the assessee and the first issue raised by assessee was applicability of transfer pricing provisions to a company enjoying tax holiday under section 10A of the Act, was rejected by the Assessing Officer.
14. The next issue was in respect of rejection of certain comparable companies identified by assessee, wherein in the show cause notice, 15 companies out of 36 companies selected by the assessee were rejected by the Assessing Officer. The assessee raised objection to the exclusion of the said concerns which has been dealt in by the Assessing Officer elaborately. However, we are not making reference to the said decision in view of the confession of the assessee during the course of arguing present appeal, wherein it has only pleaded the exclusion of Infosys Systems Ltd. from the final set of comparables on the basis of turnover filter. The Ld. Authorised Representative for the assessee in this regard pointed out that the total turnover of the assessee was Rs.2.18 crores whereas the turnover of Infosys Systems Ltd. was Rs.69,522 crores and the brand name had a valuation of Rs.915 crores, hence the said concern was not functionally comparable to the assessee.
15. The next aspect which was adjudicated by the Assessing Officer was the pre-operative expenses which were excluded by assessee for calculating the operating profits. The case of the assessee was for computing operating profits, pre-operative expenses amounting to Rs.39,14,814/- were the expenses incurred prior to commencement of software development services, i.e. during the period upto 30-07-2005, were reduced from the operating cost as pre-operating expenses were non-recurring in nature and independent of the regular business operations of assessee. The Assessing Officer however was of the view that the said pre-operating expenses were part of ordinary 7 ITA Nos.266 & 1862/PUN/2012 M/s. Amberpoint Technology India Pvt. Ltd.
operating expenses and had to be included for computing operating profits of the assessee. The Assessing Officer issued a show cause notice to the assessee in this regard. The submissions of the assessee are reproduced under Para 6.3 at pages 37 to 39 of the assessment order. The assessee stressed that even the contract with the AE stated that the non-operating expenses had to be excluded from the cost on which markup was to be allowed by the AE. The said expenses were claimed to have been incurred during the course of its India operations and were not specifically for provision of services to the AE and were not part of operating cost. Reference was made to the definition of operating profit wherein it is held that net profit would be arising from normal operations and activities of the enterprises, without taking into account extraneous transactions and expenses of purely financial nature. It has been also pointed out by the assessee that even while calculating the operating margins of comparable companies non operating expenses had to be reduced in the calculation of operating costs. The TPO at page 40 has tabulated the list of expenses which the assessee claimed to be non-operating expenses. The Assessing Officer noted that the said expenses incurred by assessee were the normal and routine business expenses and since none of the expenses were of extraneous nature then the same were to be included as part of operating cost. Further, the Assessing Officer referred to the definition of operating profits from different websites and the Assessing Officer rejected the plea of assessee that the pre-operating expenses were non operating expenses. The Assessing Officer took note in the first part of non operating of the alleged non operating expenses, i.e. employee cost including recruitment cost and relocation expenses and pointed out that the same would go to the benefit of the company in the long run. Further, the administrative expenses on rent for premises, communication expenses, printing and stationery, legal and professional and other expenses including 8 ITA Nos.266 & 1862/PUN/2012 M/s. Amberpoint Technology India Pvt. Ltd.
insurance charges, repairs and maintenance except preliminary expenses written off were held to be operating expenses and were to be included as integral part of the cost while determining operating profits of the assessee. The assessee had claimed that expenses incurred prior to the date of approval from STPI and commencement of its operations for rendering software development services to its parent company was the material date from which the AE had reimbursed the assessee's cost with markup. The said plea of the assessee was rejected and where the assessee was captive service provider, the Assessing Officer held it to be a risk mitigated. There was no merit in the exclusion of pre-operating expenses which were going to benefit its operation in India. Referring to the terms of the contract, the Assessing Officer pointed out that the term, cost, was to exclude non-operating expenses and not pre- operating expenses. Another aspect noted by the Assessing Officer was the date of start of operations which was claimed by the assessee to be from 01- 07-2005. Referring to the website of the assessee and the press release dated 23-05-2005 the Assessing Officer concluded by holding that the operations of the assessee company started well before the particular date which inturn is evident from the statement of CEO of the assessee. Hence the submission of the assessee to exclude pre-operating expenses from operating cost was rejected. The next set of arguments of assessee was adjustment of working capital and risk adjustment out of which working capital adjustment was allowed out of final margins of the comparables. The Assessing Officer accordingly made adjustment of Rs.60,44,269/-.
16. The CIT(A) first considered inclusion of the concerns at length and gave certain directions which are not needed to adjudicate the present issue as the assessee has restricted its arguments to the exclusion of Infosys Systems Ltd. only on the turnover filter. The next issue raised before CIT(A) was rejection 9 ITA Nos.266 & 1862/PUN/2012 M/s. Amberpoint Technology India Pvt. Ltd.
of the claim to exclude expenses of prior period, i.e. pre-operative expenses. The CIT(A) vide para 7 at page 45 onwards has deliberated upon the issue after considering the submissions of the assessee wherein the first plea was that when the STPI registration was received on 01-07-2005 and the services to the AE commenced then the expenses incurred prior to 01-07-2005 should be excluded from the operating cost. The CIT(A) did not accept the claim of the assessee that in view of the terms of the contract, expenses incurred prior to the STPI registration were not to be included as operating cost. The CIT(A) held that where the assessee and its AE were two interested parties, therefore, the terms of the agreement could not be considered sacrosanct for determining the issue with tax implications. The CIT(A) held that the employees cost which is so important to this kind of undertaking by assessee, had to be incurred for accepting start up services and therefore it cannot be said that the same was not part of operating cost relating to providing of services to the AE. The said ground of appeal raised by the assessee was thus rejected.
17. The assessee is in appeal against the order of CIT(A). The first issue referred by the Ld. Authorised Representative for the assessee was against inclusion of Infosys Systems Ltd. It was pointed out that where the turnover of the said concern was huge as against the total turnover of the assessee at Rs.2.18 crores the said concern was not functionally comparable.
18. The Ld. Authorised Representative for the assessee elaborately took us through the terms of agreement entered into between the assessee and its AE wherein it was provided that the agreement would be operational only from the date of approval from the STPI and it was also provided that the cost which is to be reimbursed to the assessee with markup by its AE, would not include pre-operative expenses. The Ld. Authorised Representative for the assessee pointed out that the STPI approval was w.e.f. 01-07-2005 and the assessee 10 ITA Nos.266 & 1862/PUN/2012 M/s. Amberpoint Technology India Pvt. Ltd.
started doing its work w.e.f. 01-07-2005. He further pointed out that the statement of work entered between the assessee and its AE though dated 01-07-2005 but was executed on 28-09-2005. The Ld. Authorised Representative for the assessee pointed out that there was no dispute of dates. Our attention was drawn to the list of pre-operative expenses placed at page 40 of the assessment order and he pointed out that the assessee had set up its business which had started but the assessee did not render any services to AE and the assessee did not receive reimbursement of cost of the pre- operative expenses from AE. He stressed that the PLI as computed by the assessee in such circumstances merits to be accepted. Reliance was placed on the ratio laid down in the following cases :
1. M/s. Market Tools Research Pvt. Ltd. Vs. DCIT in ITA No.1150/Hyd/2011 order dated 05-02-2014
2. M/s. KHF Components Pvt. Ltd. Vs. ITO - IT (TP) A.No.1748/Bang/2013 order dated 17-06-2016
19. The Ld. Authorised Representative for the assessee further referred to the safe harbour rules and pointed out that clause (j) defines operating expenses which would not include pre-operating expenses. Reliance was placed on Notification No.73/2013 dated 18-09-2013.
20. The Ld. Departmental Representative for the revenue on the other hand pointed out that the safe harbour rules cannot be relied upon. He further stated that the assessee incurred certain expenses on its own cost and he claims that he does not earn markup on such cost. However, the list of the expenses reveal that none of the expenses were per se pre-operative expenses. The Ld. Departmental Representative for the revenue thus pointed out that there was no merit in the submission made by the assessee and he also referred to the decision of Hyderabad Bench of the Tribunal in the case of M/s. Market Tools 11 ITA Nos.266 & 1862/PUN/2012 M/s. Amberpoint Technology India Pvt. Ltd.
Research Pvt. Ltd. Vs. DCIT (supra) and stated that the same was decided more on facts of that case.
21. The Ld. Authorised Representative for the assessee in rejoinder pointed out that relying on the meaning of pre-operative expenses, the view of the CBDT is to be accepted wherein term "operating expenses" have been defined.
22. We have heard the rival contentions and perused the record. The assessee was incorporated on 28-01-2005 and was wholly owned subsidiary of Amberpoint Technology Mauritious Pvt. Ltd. which in turn was held by Amberpoint Inc., USA during the year under consideration. The unit of the assessee was registered under the STPI scheme vide letter of permission dated 17-06-2005. The assessee was engaged in software development, installation and implementation, system analysis and design, data processing and computer programming. The assessee was providing software development activities to its Associated Enterprise w.e.f. 01-07-2005. The international transaction undertaken during the year was receipt on account of S-Software Development Services for Rs.2.18 crores. The assessee claimed that it was providing Software Development Services to its Associated Enterprises based on service agreements which were entered into between the assessee and Amberpoint Inc., USA and was being compensated on total cost plus markup.
23. The Ld. Authorised Representative for the assessee pointed out that the Transfer Pricing adjustment was made by the Assessing Officer by picking up fresh comparables resulting in adjustment of Rs.60,44,269/-. The limited plea which was raised before us during the course of argument was that in case the margins of Infosys Technologies Ltd. are excluded from the final list of 12 ITA Nos.266 & 1862/PUN/2012 M/s. Amberpoint Technology India Pvt. Ltd.
comparables, then the margins shown by the assessee are within +/-5% and no adjustment is to be made in the hands of the assessee accordingly. The case of the assessee before us is that in case the turnover filter is applied, then Infosys Technologies Ltd. having huge turnover cannot be compared with the assessee. The turnover of the assessee for the year under consideration was Rs.2.16 crores as against the turnover of Infosys Systems Ltd. at Rs.69,522 crores and the valuation of the branch was Rs.915 crores.
24. We find merit in the claim of the assessee that the margins of concerns with such huge turnover are not comparable with the margins of the assessee which is a limited risk entity. Accordingly, we direct the Assessing Officer to exclude the margins of Infosys Systems Ltd. from the final set of comparables in order to benchmark the international transaction undertaken by the assessee. As admitted by the Ld. Authorised Representative for the assessee during the course of arguments other issues raised in respect of the Transfer Pricing adjustments are not being adjudicated. The ground No.3(b) is partly allowed.
25. The assessee has also raised additional grounds of appeal against Transfer Pricing adjustment against which the assessee pointed out that the grounds of appeal No.5 to 7 would become academic. Accordingly, the same are dismissed.
26. Now coming to the other issue raised including the pre-operative expenses in operating expenses for the purpose of computation of operating profits. The assessee had entered into a Software Development/services agreement dated 01-04-2005 with Amberpoint Inc., USA, copy of which is placed at pages 91 to 108 of the paper book. The case of the assessee before us is that as per the agreement entered into between the parties, the cost of 13 ITA Nos.266 & 1862/PUN/2012 M/s. Amberpoint Technology India Pvt. Ltd.
the services were to be reimbursed with markup, from the date on the receipt of registration under the scheme of STPI. As per the understanding between the parties the reimbursement of cost with markup would only be in respect of such cost which were incurred after the date of STPI registration. All the other expenses which are incurred, before date of registration under the STPI scheme, would be pre-operative expenses on which the assessee was not entitled to receive any markup. Hence the assessee treated the said expenses as pre-operative expenses. Though the agreement was entered on 01-04-2005 but since the STPI registration was dated 17-06-2005, the same as per the assessee, was effective from 17-06-2005. The assessee claims that after obtaining the STPI registration had prepared the statement of working i.e. SOW of 01-07-2005, for provision of Software Development Services Our attention was drawn to the various terms of the agreement wherein "cost, margin, project and statement of working" were defined and the assessee pointed out that where it started providing services to its Associated Enterprises only from 01-07-2005, and was reimbursed the said cost with markup from 01-07-2005, then the said cost becomes the operating cost of the assessee for working the PLI of the assessee for the year under consideration.
27. A perusal of the agreement reflect that the term "projects" is defined by clause 1.1.7 to meant the working as described in a particular statement of working. Clause 1.1.8 defines services to mean production of computer software, design, analysis etc. which 'services' and duties were to be provided to Amberpoint Inc., USA under the agreement, and in a statement of working issued under this agreement. Clause 1.1.6 defines the 'margins' to be 11% as markup of cost. Further, cost is defined under clause 1.1.2 of the agreement to mean the total cost, including foreign exchange gain/loss, operating expenses incurred by Amberpoint Inc., USA in respect of projects but 14 ITA Nos.266 & 1862/PUN/2012 M/s. Amberpoint Technology India Pvt. Ltd.
excluding tax and non operating expenses. The agreement between the parties were to come into effect on the receipt of registration under the STPI scheme as per clause 1.2.4 of the agreement.
28. The assessee before us was incorporated in January 2005 but it started providing services to its Associated Enterprises w.e.f. 01-07-2005, i.e. after the registration under STPI scheme. The assessee was compensated for the services provided on cost plus markup basis from 01-07-2005. However, before 01-07-2005, the assessee had incurred certain expenses on employee cost, rent, administrative expenses etc. totaling Rs.39,14,844/- which the assessee claims to be the cost for setting up of the India operations. The said expenses which were incurred before the commencement of operations, i.e. providing services to the Associated Enterprises, the assessee treated the same to be pre-operative expenses and excluded the same from the operating cost while determining the PLI of the assessee.
29. The issue which arises before us is whether the said pre-operative cost are to be included as part of the operating cost while determining the PLI of the assessee. The question has to be seen from the businessman's point of view wherein admittedly there is contract between the parties, i.e. assessee which is incurring the expenses and its Associate Enterprise which is reimbursing the cost with markup. The question which arises is that all such expenses which have been incurred by the assessee for establishing its business of providing Software Development Services to its Associate Enterprise, before its registration under the STPI scheme, can the same be part of the operating cost of giving services to the Associate Enterprise. The answer to the question is NO, because the expenses which have been incurred by the assessee are for establishment of its business and not for rendering services of Software 15 ITA Nos.266 & 1862/PUN/2012 M/s. Amberpoint Technology India Pvt. Ltd.
Development Services. The said business of providing Software Development Services to the Associate Enterprise starts only after the assessee gets registration under the STPI scheme. The clear cut terms of the agreement agreed upon between the parties effectively determine the understanding agreed upon, under which the Associate Enterprise is to reimburse the assessee, only, in respect of such costs which are incurred for providing services to it after the assessee receives the recognition under the STPI scheme. The date of registration in the present case is 17-06-2005 and the Associated Enterprise has compensated the assessee for the services provided on cost plus markup basis w.e.f. 01-07-2005. The earlier costs incurred by the assessee for setting up of the business, i.e. for rent, employee cost and administrative expenses cannot form part of the operating cost of the assessee, as the understanding between the parties decide the date from which the assessee would be reimbursed the cost with markup. Accordingly, we hold that the cost of Rs.39,14,814/- which is the pre-operative expenditure incurred by the assessee, i.e. before starting its activity of providing services to its Associate Enterprise is to be excluded from the operating cost while computing the operating profits.
30. We find before the Hyderabad Bench of the Tribunal in M/s. Market Tools Research Pvt. Ltd. Vs. DCIT similar issue of pre-operating expenses arose, where the assessee was incorporated on 04-06-2004 and the agreement was entered with the Associated Enterprise on 01-09-2004. The question was in respect of the pre-operative expenses prior to the date of the agreement and it was held that there is no question of considering the pre- operating expenses as part of the operating cost. Similar proposition has been laid down by the Bangalore Bench of the Tribunal in KHF Components Pvt. Ltd. Accordingly, we direct the Assessing Officer to exclude the pre-operative 16 ITA Nos.266 & 1862/PUN/2012 M/s. Amberpoint Technology India Pvt. Ltd.
expenditure from the operating cost and also similarly make adjustments, if any, in the case of comparable companies finally selected, to benchmark the international transaction of the assessee. Accordingly, grounds of appeal No.3(d) raised by the assessee is allowed.
31. In the result, the appeal of the assessee is partly allowed and the appeal of the revenue is allowed.
Order pronounced on this 15th day of February, 2017.
Sd/- Sd/-
(ANIL CHATURVEDI) (SUSHMA CHOWLA)
लेखा सद य / ACCOUNTANT MEMBER या यक सद य / JUDICIAL
MEMBER
पण
ु े / Pune; दनांक Dated : 15 February, 2017.
th
Satish
आदे श क( ) त*ल+प अ,े+षत/Copy of the Order is forwarded to :
1. The Appellant;
2. The Respondent;
3. The CIT(A)-IT/TP, Pune;
4. The DIT (TP/IT), Pune;
5. The DR 'A', ITAT, Pune;
6. Guard file.
आदे शानुसार/ BY ORDER,स या //True Copy// सहायक रिज12ार/Assistant Registrar आयकर अपील य अ8धकरण ,पुणे / ITAT, Pune