Income Tax Appellate Tribunal - Mumbai
Tracmail (India) P.Ltd, Navi Mumbai vs Dcit Cir 10(3), on 5 January, 2018
आयकर अपीलीय अिधकरण, अिधकरण, मुबं ई "के " खंडपीठ Income-tax Appellate Tribunal "K"Bench Mumbai सव ी राजे , लेखा सद य एवं रिवश सूद, याियक सद य Before S/Sh. Rajendra,Accountant Member & Ravish Sood, Judicial Member आयकर अपील सं./I.T.A./7519/Mum/2012, िनधा रण वष /Assessment Year: 2008-09 M/s. Tracmail( India) Private Limited DCIT-Circle-10(3) VAT-341, Tower#3, 4th Floor, Mumbai.
International Infotech Park, Vs. Vashi Railway Station Complex, Vashi, Navi Mumbai-400 705.
PAN:AAACT 8971 E
(अपीलाथ /Appellant) ( यथ / Respondent)
Revenue by: S/Shri Jayant Kumar-DR
Assessee by: S/Shri Ketan K Ved
सुनवाई क तारीख / Date of Hearing: 11/10/2017
घोषणा क तारीख / Date of Pronouncement: 05/01/2018
आयकर अिधिनयम,1961
अिधिनयम क धारा 254(1)केके अ
तग त आदे श
Order u/s.254(1)of the Income-tax Act,1961(Act)
लेखा सद
य,
सद
य राजे
के अनुसार /PER RAJENDRA, AM-
Challenging the order of the AO passed u/s. 143 r.w.s.144C (13) of the Act the assessee has filed the present appeal.Assessee-company,engaged in the business of providing Information Technology Enabled Services (ITES).The AO completed the assessment order on 23/12/2012 in pursuance of the DRP-directions,dated 02/08/2012,determining its income at Rs.14.61 crores.
2.1.During the course of hearing before us the Authorised Representative (AR) stated that Grounds of appeal No. 1,2 and 3.2 were general in nature.Hence, we are not adjudicating the same.He did not press Ground No.3 and 4.Therefore,both the grounds stand dismissed as not pressed.He further stated that only Ground No.3.1 and 3.3 were to be decided. 2.2.The asessee has filed additional Ground of appeal.It was argued before us,that the additional Ground were legal in nature and did not require verification of facts.We find that assertion made by AR is correct,therefore,we admit the additional grounds.
3.Effective Ground of appeal(GOA-3.1 and 3.3)is about Transfer Pricing(TP)adjustment of Rs7.34 crores.During the assessment proceedings,the AO found that the assessee had entered into International Transactions (IT) with its Associated Enterprise (AE).Therefore, he made a reference to the TPO to determine the ALP of such transactions.After considering available material the TPO suggested upward adjustment of Rs.9.41 crores.The AO accordingly issued 7519/M/12-(08-09) Tracmail India P.Ltd.
a draft order proposing the additions.The assessee filed the objections before the DRP.As stated earlier, the AO passed the order in pursuance of the DRP. During the TP proceedings, the TPO found that the assessee had entered into following IT.s and had used CUP as the most appropriate method for determining ALP.
Transaction Amount of
Transaction in Rs.
IT enabled services provided 1,62,00,000
IT enabled services provided 87,47,000
NCI paid on behalf of Tracmail India 3,91,87,000
Payment Received against NCI Dues 1,48,59,000
Payment Received Against services 97,12,000
Advances for future services 3,45,45,000
Payment Received on behalf of TracHolding LLC's Invoices 42,36,000
Payment Received on behalf of BACS, LLC 44,79,000
Advances for future services 1,45,47,000
Payment Received on behalf of TracHolding LLC's Invoices 21,78,000
Payment Received on behalf of TracHolding LLC against NCI dues 3,72,24,000
Payment Received Against Invoices 44,78,000
The assessee had worked the CUP as under :-
Name of the party Revenue Yearly Man Yearly Man
Amount $ Hours hour Rates
Tracholding LLC 4,03,422 70,244 5.74
Bay Credit Services LLC 2,19,855 37,205 5.91
Revenue From NCI (Third Party) 56,95,548 7,61,777 -
Expenses exclusively incurred by NCI for Tracmail 14,48,154 - -
Total revenue receipt from NCI post adjustment of 42,47,394 7,61,777 5.58
expenses
The TPO found that the assessee had compared the rates of AE and non-AE on the basis of per hour rate,that the invoices raised by it were not based on hourly bases,that the work done by it for AE and non-AE was different,that terms of agreements with the AE and non-AE were not the same,that the share of the assessee out of the liquidated amount was 85% in the case of non-AE and 30-35% in the case of AE .He observed that the very basic ingredients of CUP method were absent.He directed the assessee to show cause as to why the CUP method should not be rejected and TNMM should not be applied. The assessee was provided a set of 20comparables having margin of 29.2% alongwith the working of margins and search process.The comparables were,as per the TPO,engaged in ITES sector. He further directed the assessee to explain as to why the adjustment should not be made at entity level. The assessee filed objections in that regard.After considering the same,the TPO computed the arm's length price as under:
Operating Cost Rs.27,19,38,000
Arms Length Mean Margin 29.25% of oprating cost
Arms Length Price(ALP) @129.25% of operating cost Rs.35,14,79,865/-
Arms Length Price of Service rendered Rs.35,14,79,865/-
Price received (excluding other income) Rs.25,73,07,000/-
Shortfall being adjustment u/s. 92CA Rs.9,41,72,865/-
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7519/M/12-(08-09)
Tracmail India P.Ltd.
3.1.The AO issued draft order to the assessee.It filed objections before the DRP and made detailed submissions.It objected to the selection of the comparables stating that they were not functionally similar to the assessee.The DRP held that the assessee was in the business of outsourced interactive communication solutions,that the exact match for comparability was not easy to get,that TNMM being a residuary method was more broadbased, that the comparable selected were more or less in similar line of business, that CUP could not be applied to ITs entered into by the assessee with its AE,that services rendered by assessee to its AE.s and non-AE.s were not the same,that the assessee had objected to all the comparable selected by the TPO,the DRP directed AO/TPO to recalculate the margin of comparable by excluding four comparables, namely Mould Tech Technologies Ltd. Infosys, BPO Ltd. and Wipro Ltd.(segment).It further held that the action of the TPO in not considering the multiple year data was justified,that he had rightly applied filters of export turnover(above 25%), that TPO had rightly selected the comparables which were having revenue more than 75% of their ITs .
3.2.During the course of hearing before us, the AR stated that four of the comparables namely Accentia Technologies Ltd.-Seg.(ATL);Coral Hubs Ltd.(CHL);Eclerx Services Ltd. (ESL);Genesys International Corpn Ltd.(GICL).He referred to the case of IGS Imaging Services(I.)(P)Ltd.(67taxmann.com148),Rampgreen SolutionsP.Ltd.(60taxmaan.com355).He further stated that if these four comparables were excluded the margin would be at about 10%,that the assessee had shown margin of 1%,that if margin of 9% was added to the income of the assessee it would not have any objection.He contended that out of total IT.s of Rs.25 crores,AE transactions were of Rs.2.49 crores,that the AE transactions of Rs.23.22 crores, that the AO had made adjustment of Rs.7.34 crores, that the adjustment should have been restricted to only AE transactions.The DR supported the order of AO/TPO.
3.3.We have heard the rival submissions and perused the material before us. We find that the assessee had shown margin of 1%, that it had used CUP to determine the ALP of the ITES entered into by it, that the TPO applied TNMM for benchmarking the transactions, that TPO made TP adjustments at entity level,that he used 21 comparables,that DRP excluded 4 comparables,that the assessee had requested to exclude four more comparables.Now,we would deal with those comparables.
3.4.We find that in the case of IS Imaging Services(supra)the assessee was rendering ITES and BPO services to its AE,that while deciding the appeals the Tribunal has dealt with the 3 7519/M/12-(08-09) Tracmail India P.Ltd.
four comparable objected to by the assessee.We are reproducing the relevant part of the order the Tribunal and it reads as follow:
14. With regard to assessee's contention that companies having extra ordinary events which had influenced its revenues during the relevant previous year were to be excluded, CIT (A) was of the opinion that M/s.Accentia Technologies Ltd, would go out of the list of comparables on account of this. According to him M/s. Accentia Technologies Ltd, not only failed to provide segmental data in relation to its ITES segment in its published accounts, but had in its relevant previous year acquired one Indian company and three foreign companies. By accepting this contention of the assessee, CIT (A) directed exclusion of M/s. Accentia Technologies Ltd, from the list of comparables.
15. Vis-a-vis contention of the assessee for excluding those companies having different functional profiles CIT (A) was of the opinion that M/s.Acropetal Technologies Ltd, M/s. Asit C. Mehta Financial Services Ltd, M/s. Caliber Point Business Solutions Ltd, M/s. Cross Domain Solutions P.Ltd, M/s. Datamatics Financial Services Ltd, and M/s. Spanco Ltd, were not having activities which were functionally different from that of the assessee. He thus upheld the order of ITO in respect of the comparability of the above companies were concerned. However, he accepted the contention of the assessee that M/s. Genesys International Corporation Ltd, was functionally different from that of the assessee, since it performed R & D activities to develop proprietory products and also owned intangibles.
16. CIT (A) also rejected the general contention of the assessee that companies which were involved in knowledge process outsourcing, eventhough it fell within the ITES segment had to be excluded from the comparison.
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23.We have heard the rival contentions. In so far as application of turnover filter is concerned, by virtue of Hon'ble Bombay High Court judgment in Pentair Water India P. Ltd, (supra), we are of the opinion that it is a valid criteria that could be adopted for inclusion or exclusion of companies in a comparability study. Hon'ble Bombay High Court had followed earlier decision of Hon'ble Delhi High Court in the case of CIT v.Agnity India Technologies P. Ltd [93 DTR 375]. No doubt Hon'ble Delhi High Court in the case of Cryscapital Investment Advisors India P. Ltd (supra) had taken a different line of thinking that exceptionally high profit margins or fluctuating profits margin or turnover would by itself may not be a reason for exclusion. However in view of the judgment of Bombay High Court in the case of Pentair Water India P. Ltd, (supra) and also that of Hon'ble Delhi High Court in the case of Agnity India Technologies P. Ltd (supra) we are inclined to go by the decision of the coordinate bench in the case of Genesys International Corporation Ltd, (supra). Thus exclusion of Infosys BPO Ltd, which had a turnover of Rs.855 crores and M/s. Wipro Ltd (seg) which had a turnover of Rs.1,157 crores, by the CIT (A) cannot be faulted.
However out of these companies assessee states that M/s. Coral Hub Ltd, M/s. Eclerx Services Ltd, and M/s. Moldtek Technologies Ltd, were functionally different from that of the assessee. This contention of the assessee will be taken up by us while disposing the appeal of the assessee.
25. Vis-a-vis ground.3 raised by the Revenue, Ld. DR had argued that exclusion of the M/s. Accentia Technologies Ltd, was inappropriate. We find that Ld. AR has placed before us a decision of the coordinate bench in the case of Symphony Marketing Solutions India p. Ltd, [IT(TP)A.1316/Bang/2012, dt.14.08.2013]. Said company was also providing ITES services to its AE abroad and the list of comparables considered by the TPO for analysing the value of international transactions also included M/s. Accentia Technologies Ltd. Case before the Tribunal was also for the very same assessment year. Therefore in our opinion the decision of the Tribunal mentioned supra would apply here as well. In relation to M/s. Accentia Technologies Ltd, it was held as under at para 10 and 11 of the order dt.14.08.2013 as under :
"10. This was considered as a comparable by the TPO and listed at Sl.No.1 of the comparable companies chosen by the TPO. The ld.counsel for the assessee drew our attention to the fact that there are extra ordinary events that occurred during the previous year in this company. Our attention was draw to the annual report of this company for the A.Y. 2007-08 wherein the fact 4 7519/M/12-(08-09) Tracmail India P.Ltd.
that this company had acquired Thunga Software Pvt. Ltd., GSR Physicians Billing Services Inc., GSR Systems Inc. and Denmed Inc. is mentioned. Our attention was also drawn to the decision of the Hyderabad ITAT Bench in the case of Capital IQ Information Systems India Pvt. Ltd. v. DCIT [ 2013] 32 Taxman.com 21 (Hyd. Trib). In the aforesaid decision, the Hyderabad Bench of the Tribunal had to deal with a case of determination of ALP in the case of an assessee who was providing ITES business support services for the A.Y. 2007-08. The TPO had considered Accentia Technologies Ltd. as a comparable. The DRP however held that the said company cannot be compared as a comparable owing to extra ordinary events that took place during the previous year. The Tribunal upheld the order of the DRP observing as follows:-
"I. Accentia Technologies Ltd.
10. It is the submission of the assessee that this company cannot be treated as a comparable because of uncomparable financial results arising out of amalgamation in the company. In this regard, the assessee has relied upon the order of the DRP for the assessment year 2008-09 in assessee's own case. It is seen that the DRP while considering similar objection placed by the assessee in the case of another company, viz. Mold Tek Technologies Ltd., in the proceedings relating to the assessment year 2008-09, has observed in the following manner- "17.5. In addition to the above, the Director's Report of the company for the FY 2007-08 revealed the merger and the demerger. A company known as Techmen Tools Pvt. Ltd. had amalgamated with Mold-tek Technologies Ltd. with effect form 1st October, 2006. There was a de-merger of Plastic Division of the company and the resulting company is known as Moldtek Plastics Limited. The de-merger from the Moldtek Technologies took place with effect from 1st April, 2007. The merger and the de-merger needed the approval of the Hon'ble High Court of Andhra Pradesh and also the approval of the shareholders. The shareholders of the company gave approval for the merger and the de-merger on 25.01.2008 and the Hon'ble High Court of Andhra Pradesh had approved the merger and de-merger on 25th July, 2008. Subsequently, the accounts of Moldtek Technologies for FY 2007-08 were revised. On a perusal of the annual report it is noticed that Teckmen Tools Pvt. Ltd. and the Plastic Division of the company were demerged and the resulting company was named as Moldtek Plastics Ltd. The KPO business remained with the company. A perusal of the Annual report revealed that to give effect to the merger and demerger, the financial statements were revised and restated after six months form the end of the financial year 31.3. 2008. The assessee filed Form No.21 under the Companies Act with the Registrar of Companies on 26th August, 2008. Thus the effective date of the scheme of merger and demerger was 26th August, 2008. The Annual Report supported the argument of the assessee that there were merger and demerger in the financial year and it was an exceptional year of performance as financial statements were revised by this company much after the closure of the previous year. The Panel agrees with the contention of the assessee that it is an exceptional year having significant impact on the profitability arising out of merger and demerger."
11. On careful consideration of the matter, we also agree with the aforesaid view of the DRP that extra-ordinary event like merger and de-merger will have an effect on the profitability of the company in the financial year in which such event takes place. It is the contention of the assessee that in case of the aforesaid company, there is amalgamation in December, 2006, which has impacted the financial result. This fact has to be verified by the TPO. If it is found upon such verification that the amalgamation in fact ahs taken place,then the aforesaid comparable has to be excluded."
11.We have considered the submissions of the ld. counsel for the assessee and are of the view that the ratio laid down by the Hyderabad Bench of the ITAT is squarely applicable to the present case also. It is clear that during the previous year there were extra ordinary events that took place in this company which warrants exclusion of this company as a comparable. We therefore hold that this company cannot be considered as a comparable.We are therefore of the opinion that CIT (A) was justified in direction exclusion of M/s. Accentia Technologies Ltd.
26.Vide ground 4, Revenue is assailing exclusion of Genesys International Corporation Ltd, from the list of comparables. We find that the said company was also considered by the Tribunal in the decision of M/s. Symphony Marketing Solutions India P. Ltd (supra). In relation to Genesys International Corporation Ltd,it was held as under at para 22 and 23 of the order :
57519/M/12-(08-09) Tracmail India P.Ltd.
' 22. This company is listed at Sl. No.12 in the list of comparable companies chosen by the TPO. As far as this company is concerned, the stand of the assessee has been that this company is functionally not comparable and that it has a different employee skill set and that this company performs R&D services and also owns intangibles. This company is a geospatial services content provider specialising in land based technologies. From the notes to accounts of this company, it is seen that this company is engaged in providing geographical information services comprising of photogrammetry, remote sensing cartography, data conversion related computed based services and other related services. Further the business of this company requires skilled manpower and scientists, civil engineers, etc. The assessee is a routine ITES provider who does not require such highly skilled employees. Besides the above, this company also carries out R&D services and own intangibles. The aforesaid facts, in our view, will take this company out of the list of comparables. We may also point out that the objection of the assessee in this regard has been disregarded by the TPO by mere observation that it cannot be rejected on the basis that it is into different functional line within ITES. In this regard, we may refer to the decision of the ITAT Bangalore Bench in the case of First Advantage Offshore Services Ltd. (supra), wherein it was observed as under:-
"39. Having heard both the parties and having considered their rival contentions, we find that the assessee had raised elaborate objections to each of the comparables in group 3 before the TPO. The TPO has also reproduced the said objection in his order para 6.5.1. of page 178 of his order. He has rejected the contention of the assessee by holding that every function within BPO sector can be from low end to high end and the activities of the assessee such as accounting, web management, network management are BPO services using technology but these services are not categorized as KPO. He held that a call centre may offer support services like telemarketing to high end services like technical support services, where not only the level of knowledge, skill required would be high, but the technical knowledge as well would be high. According to him, back office transaction process services may be as remarkable and as complicated as insurance/market transaction processing services. He, therefore, rejected the contention of the assessee and treated the BPO as equivalent to KPO services.
40. We have to now consider whether a BPO and KPO are functionally similar and are comparable to each other. BPO is a sub-set of outscoring and involves the contracting of the operations and responsibilities of specific business functions or process to a third party services provider. Often business processes outsourcing are information technology based and referred to as ITES-BPO. KPO is one of the sub-segment of the BPO industry. It involves outsourcing of core information related business activities which are competitively important or form an integral part of a company's value chain. It thus requires advanced analytical and technical skills as well as a high degree of specialist expertise.The KPO services include all kinds of research and information IT(TP)A.470/Bang/2013 Page - 19 CO No.150/Bang/2015 gathering. Thus it can be seen that even though both BPO and KPO are offering information Technology based services, the skill and expertise and may be even the tools required are different which may result in different economic results of both the segments. Thus, in such circumstances, we are of the opinion that they cannot be compared with each other and have to be excluded from the list of comparables."
23.It is thus clear from the aforesaid decision of the Tribunal that among the ITES companies there is a hierarchy in terms of skill required to provide services. It ranges from providing routine services where no skills and required and providing services where highly professionalized skills are required. Depending on the skills required to perform ITES the comparability has to be done. In view of the above, we are of the view that this company cannot be regarded as a comparable and deserves to be excluded from the list of comparables.We are therefore of the opinion that CIT (A) was justified in directing exclusion of this company as well.
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29. Now we take the cross objection of the assessee. Grounds taken by the assessee in its cross objection are reproduced hereunder :
On facts and circumstances of the case and in law, the Ld. AO/Ld.TPO erred in objecting to the exclusion of Coral Hubs Limited ("Coral Hubs") by the Hon'ble CIT(A). Without prejudice to 6 7519/M/12-(08-09) Tracmail India P.Ltd.
the above, the Hon'ble CIT(A) ought to have adjudicated on the ground pertaining to functional non- comparability and application of employee cost greater than 25% filter for Coral Hubs. On facts and circumstances of the case and in law, the Ld. AO/Ld. TPO erred in objecting to the exclusion of Eclerx Services Limited ("Eclerx") by the Hon'ble CIT(A). Without prejudice to the above, the Hon'ble CIT(A) erred in not adjudicating on the grounds pertaining to extraordinary circumstances (amalgamation during the year), application of related party transaction greater than 10% filter, abnormal growth in CAGR and significant advertisement expenditure incurred by the Eclerx. Further, the learned CIT(A) also erred in concluding that Eclerx is functionally comparable to the Respondent.
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4. On facts and circumstances of the case and in law, the Ld. AO/ Ld. TPO erred in objecting to the rejection of Accentia Technologies Limited ("Accentia") by the Hon'ble CIT(A) on the basis that the company witnessed extraordinary events like acquisitions and amalgamations during the relevant year.
Without prejudice to the above ground, the Hon'ble CIT(A) ought to have adjudicated on the other ground pertaining to non-availability of segmental data for the Information Technology enabled Services segment in the audited financial statements of Accentia.
5. On facts and circumstances of the case and in law, the Ld. AO / Ld. TPO erred in objecting to the exclusion of Genesys International Corporation Limited ("Genesys") by the Hon'ble CIT(A), on the basis of functional non-comparability. The Ld. AO / Ld. TPO has failed to take cognizance of the fact that the company has been additionally rejected on the ground of abnormal growth by the Hon'ble CIT(A).
30. A reading of ground 1 show that assessee is seeking exclusion of M/s. Coral Hub Ltd, and M/s. Eclerx Services Ltd, which come back to the list of comparables. In the case of M/s. Coral Hub Ltd, assessee says that it was functionally uncomparable and in the case of Eclerx Services Ltd, it says that there were extra-ordinary events during the relevant previous year which took it out of the realm of comparable. In this regard, Ld. AR placed reliance on the decision of coordinate bench in the case of M/s. Symphony Marketing Solutions India P. Ltd.
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32. We have heard the rival contentions. In so far as M/s. Coral Hub Ltd, is concerned, the coordinate bench in the case of M/s. Symphony Symphony Marketing Solutions India P. Ltd, (supra) has held as under at paras 14 to 17 of its order :
14. This company is listed at Sl.No.6 of the list of comparable companies chosen by the TPO. As far as this company is concerned, it is seen that this company was earlier known as Vishal Information Technologies Ltd. The comparability of this company in the case of an ITES company by name 24 x 7 Customer.com Pvt. Ltd. was considered by the Tribunal in the Tribunal held that this company is not functionally comparable with ITES for the following reason:-
"17.3 Vishal Information Technologies Ltd. (VIT) - In the case of this comparable, we find that the Mumbai Tribunal in the case of Mearsk Global Services (I) Pvt Ltd in ITA No.3774/Mum/2011 by order dt.9.11.2011 has held that since Vishal Information Technologies Ltd is outsourcing most of its work it has to be excluded from the list whereas the assessee in the cited case was carrying out the work by itself. In the instant case of the assessee also the assessee was carrying out its work by itself whereas in the case of VITL, it is outsourcing most of its work. We are therefore of the considered opinion that the decision of the ITAT, Mumbai in the cited case on the issue of excluding VITL as a comparable squarely applies. This decision was followed by the decision of the co-ordinate bench of this Tribunal in the case of Netlinx India(P) Ltd in ITA No.454/Bang/2011 dt.19.10.2012 wherein it was held that Vishal Information Technologies Ltd cannot be considered as a comparable. We, therefore, respectfully following the decision of the Mumbai Tribunal in the case of Mearsk Global Services (I) Pvt Ltd, direct the Assessing Officer / TPO to exclude Vishal Information Technologies Ltd. from the list of comparables."
15.Following the decision of the Tribunal referred to above, we hold that Coral Hubs Ltd. cannot be considered as a comparable. It may also be relevant to point out that the TPO in his order has observed that this company is retained as a comparable on the basis of detailed discussion in the TP order for the A.Y. 2007-08. In fact in A.Y. 2007- 08, there was no determination of ALP and 7 7519/M/12-(08-09) Tracmail India P.Ltd.
therefore there was no occasion for any order being passed by the TPO. It is also seen that this company entered into an area of business known as New Vertical Digital Library & Print on Demand in F.Y. 2007-08. In the case of Capital IQ Information Systems India Pvt. Ltd. (supra), the ITAT Hyderabad Bench in the case of ITES company considered the comparable of this company as an ITES company and held as follows:-
"IV. Coral Hub Limited (Earlier known as Vishal Information Technologies Ltd.):
16. The assessee has objected for this company being taken as comparable mainly on the ground that the activities of the company is not only functionally different, but the business model of the company is also different as it sub-contracts majority of its ITES works to third party vendors and has also made significant payments to those vendors. The payments made to vendors towards the data entry charges also supports the fact that the company outsources its works. In the circumstances, it cannot be taken as a comparable to the ITES functions performed by the assessee. Since this company is acting as agent only by outsourcing its works to the third party vendors. In this context, the assessee relied upon the order of the DRP in assessee's own case for the assessment year 2008-09, wherein the DRP, after taking into consideration, the aforesaid aspect, has accepted the claim of the assessee. The assessee further submitted that the Income-tax Appellate Tribunal Mumbai Bench in the case of Asstt. CIT v. Maersk Global Service Centre (India) (P.) Ltd. [2011] 133 ITD 543/16 taxmann.com 47 (Mum.), a copy of which is submitted before us, has also directed for the exclusion of the aforesaid company since it has outsourced a considerable portion of its business.
17. After considering the submissions of the learned Authorised Representative for the assessee, we find that the DRP, in the proceedings for the assessment year 2008-09 in assessee's own case, after taking note of the composition of the vendor payments of Coral Hub for the last three years, and the fact that it has also commenced a new line of business of Printing on Demand(POD), wherein it prints upon clients request, concluded as follows- "18.4. In view of this major difference in functionality and the business model, this Panel is of the view that 'Coral Hub' is not a suitable comparable to the taxpayer and hence needs to be dropped form the final list of comparables."
In case of Maersk Global service Centre India (P.) Ltd. (supra), the ITAT Mumbai Bench has also directed for exclusion of the aforesaid company, by observing in the following manner-
"Insofar as the cases of tulsyan Technologies Limited and Vishal Information Technologies Limited are concerned, it is noticed from their annual accounts that these companies outsourced a considerable portion of their business. As the assessee carried out entire operations by itself, in our considered opinion, these two cases were rightly excluded."
In view of the observations made by the DRP as well as the decision of the ITAT Mumbai in the case of Maersk Global Service Centre, (supra), we accept that this company cannot be taken as a comparable."
16. It is also further noticed that the employee cost/operating sales of this company is a mere 3%, whereas the threshold limit for acceptance as a comparable on the basis of employee cost to sales should be at least 25%. This Tribunal in the case of First Advantage Offshore Services Ltd. v. CIT, IT(TP)A No.1086/Bang/2011, order dated 30.4.2013, has taken the following view:-
"36. Having heard both the parties and having considered their rival contentions and the material on record, we find that this issue had arisen in the assessee's own case for the assessment year 2006-07. This Tribunal has held that employee cost filter is to be the same even for ITES segment also. The learned DR's argument that the employee cost filter is applicable only to software development segment and not to ITES segment is not acceptable. Though it is without any dispute that the software development would require skilled employees and, therefore, the employee cost would definitely be more than 25% of the total expenses, it cannot be said that the said filter is not applicable to ITES segment, where comparably less skilled employees are employed. In the ITES segment, the entire work is to be done by the employees and, therefore, even though they may be less skilled compared to software development segment, the number of employees would definitely be more and thus the employee cost would be high and thus application of employee cost filter to the ITES 8 7519/M/12-(08-09) Tracmail India P.Ltd.
sector is also justified. In view of the same, we direct the TPO to apply the employee cost filter to exclude companies with employee cost of less than 25% from the list of comparables for the computation of ALP."
17. Applying the aforesaid decisions, we are of the view that Coral Hubs Ltd. cannot be considered as a comparable.
33. In so far as M/s. Eclerx Services Ltd, is concerned, in the very same decision this Tribunal had held as under at paras 20 and 21 of its order :
'20. This company is listed at Sl.No.11 in the list of comparable companies chosen by the TPO. It is the stand of the assessee that this company offers solutions that include data analytics, operations management, audits and reconciliation and therefore has to be classified as high end KPO. In support of the stand of the assessee, extracts from the annual report of this company have been pointed out. It has further been submitted that extra ordinary events and peculiar circumstances prevail in the case of the assessee in as much as this company acquired a UK based company which has significantly contributed to the increase in the customer and revenue base of the company. This Tribunal in the case of Capital IQ Information Systems India Pvt. Ltd. (supra) had an occasion to deal with comparability of this company in the case of an ITES company such as the Assessee and the Tribunal held as follows:-
"14. The assessee has objected for this company being taken as comparable mainly on the ground that it was having a supernormal profit of 89%, and as such it cannot be taken as a comparable in view of the decision of the Mumbai Bench of the tribunal in the case M/s. Teva India Ltd. (supra). That apart, relying upon the annual report of the company, the learned Authorised Representative for the assessee has contended that that the concerned company is engaged in providing Knowledge Process Outsourcing(KPO) Services.
15. On considering the objections of the assessee in relation to this company, we accept the contention of the assessee that this company cannot be taken as a comparable both for the reasons that it was having supernormal profit and it is engaged in providing KPO services, which is distinct from the nature of services provided by the assessee."
21. We are of the view that in the light of the decision of the Hyderabad Bench referred to above, this company cannot be regarded as a comparable for the reason that it was functionally different.
xxxxx Following the above we are of the opinion that M/s. Coral Hub Ltd, and M/s. Eclerx Services Ltd, have to be excluded from the list of comparables for reasons other than abnormal losses. Directed accordingly.
39.In respect of ground 4, we find that in relation to Revenue's appeal we have held M/s. Accentia Technologies Ltd, was rightly excluded from the list of comparables by the CIT (A). Therefore, this ground raised by the assessee has also become infructuous.
40.With respect to ground 5 of the assessee,we have already held that CIT (A) was justified in excluding M/s. Genesys International Corporation Ltd, from the list of comparable companies. Hence ground 5 is also treated as infructuous."
3.5.We find that the Hon'ble Delhi High Court in case of Rampgreen Solutions P. Ltd. (supra)has also dealt with the similar issue wherein the assessee was providing ITE Services to its AE. In its order,the Hon'ble High Court has dealt with the validity of inclusion of CHL and ESL for comparing the services provided by them vis-a-vis the services provided by the assessee.We are reproducing relevant portions of the judgment of Hon'ble Delhi High Court in Rampgreen Solutions P. Ltd.(supra)which reads as under:
97519/M/12-(08-09) Tracmail India P.Ltd.
"2.The Assessee is, essentially, aggrieved by the TP Adjustments made in respect of the consideration for the services rendered by the Assessee to its overseas holding company. The TP Adjustments have been made on the basis of the average operating profit margin (operating profit as a percentage of operating costs) declared by other companies - eight in number - selected as comparables for the purposes of ascertaining the Arm's Length Price (hereafter 'ALP'). According to the Assessee, two of the companies chosen as comparable by the concerned authority, namely, Vishal Information Technology Ltd. (hereafter 'Vishal') and eClerx Services Ltd. (hereafter 'eClerx') could not be considered as comparables as the functions performed and the services rendered by the said companies were materially different from those performed by the Assessee.
3. This Court, by an order dated 27th February, 2015, admitted the present appeal and framed the following questions of law:-
"1. Did the ITAT fall into error in the given circumstances of the case in confirming the transfer pricing adjustment to the extent of Rs.5,92,07,428/- upholding the inclusion of two comparable, i.e., e-Clerx Services Limited and Vishal Information Technologies Limited, now called as Coral Hub Ltd.?
2. Did the ITAT fall into error in not appreciating the terms of Rule l0B (2) of the Rules in respect of the analysis of functionally comparable companies?
xxxxx
11. We have heard the counsel for the parties.
12. At the outset, it is necessary to bear in mind that the object and purpose of introducing provisions relating to transfer pricing adjustment in the Act. By virtue of Finance Act, 2001, Section 92 of the Act was substituted by Sections 92 to 92F of the Act with effect from 1st April, 2002. Section 92 of the Act, as was in force prior to 1st April, 2002, enabled the AO to bring the correct profits to tax in relation to certain cross-border transactions. However, with a large number of multi-national companies establishing operations in India, either through their subsidiaries or through other related ventures, a need was felt to provide a statutory framework to ensure that there is no avoidance of tax by transfer of income from India to other tax jurisdictions. Circular no. 14 of 2001 issued by the CBDT indicates that the provisions of Section 92 to 92F of the Act were introduced "With a view to provide a detailed statutory framework which can lead to computation of reasonable, fair and equitable profits and tax in India".
13. The heading of Chapter X also clearly indicates that it contains "special provisions relating to avoidance of tax". The object of Chapter X of the Act is not to tax any notional income but to ensure that the real income is brought to tax under the Act. This has also been explained by a Division Bench of this Court in Sony Ericsson Mobile Communications India Pvt. Ltd. and Ors. v. Commissioner of Income Tax-III and Ors. 374 ITR 118 in the following words:-
'77. As a concept and principle Chapter X does not artificially broaden, expand or deviate from the concept of "real income". "Real income", as held by the Supreme Court in Poona Electricity Supply Company Limited versus CIT, : [1965] 57 ITR 521 (SC), means profits arrived at on commercial principles, subject to the provisions of the Act. Profits and gains should be true and correct profits and gains, neither under nor over stated. Arm's length price seeks to correct distortion and shifting of profits to tax the actual income earned by a resident/domestic AE. The profit which would have accrued had arm's length conditions prevailed is brought to tax. Misreporting, if any, on account of non-arm's length conditions resulting in lower profits, is corrected.'
22. In the facts of the present case, it is not disputed that Vishal and eClerx are entities engaged in Knowledge Process Outsourcing Services (KPO Services). Thus, the principal question to be addressed is whether a KPO Service provider could be considered as a comparable for benchmarking international transactions entered into by an entity rendering voice call services -
such as the Assessee -with its associated enterprise by using TNMM and taking operating profit margin as the PLI .
23. In this case, the Tribunal noted that eClerx was engaged in data processing and analytics services and held that the activities of the Assessee were functionally similar to those of eClerx. The Tribunal concluded that voice call services and KPO services were essentially ITeS and, therefore, entities rendering the aforesaid services could be considered as comparables for the 10 7519/M/12-(08-09) Tracmail India P.Ltd.
purpose of benchmarking international transactions by using TNMM. The Tribunal held that further sub-division of ITeS was not permissible. The Tribunal followed its earlier decision in Willis Processing Services (I) (P.) Ltd. v. Dy. CIT 30 ITR (Trib)129 (Mumbai) 2014.
24. It is not disputed that voice call services are considered to be the lower-end of ITeS. KPO on the other hand are ITeS where the service providers have to employ advanced level of skills and knowledge. Notification No. SO2810(E) dated 18th September 2013 issued by the CBDT notifying Safe Harbour Rules also indicates the above. Rule 10TA(g) of the said Rules defines KPO Services as under:-
" (g) "knowledge process outsourcing services" means the following business process outsourcing services provided mainly with the assistance or use of information technology requiring application of knowledge and advanced analytical and technical skills, namely:‐
(i)geographic information system;
(ii) human resources services;
(iii)engineering and design services;
(iv) animation or content development and management;
(v) business analytics;
(vi) financial analytics; or
(vii) market research, but does not include any research and development services whether or not in the nature of contract research and development services;"
25.Whilst Voice Call Center represents the lower-end of ITeS, KPO represents services involving a higher level of skills and knowledge. India has vast human resources and a large number of highly-skilled technical professionals. The expression "KPO" indicates the involvement of domain knowledge in providing ITeS. Typically, KPO includes involvement of advance skills; the services provided may include analytical services, market research, legal research, engineering and design services, intellectual management etc. On the other hand, Voice Call Centers are normally involved in customer support and processing of routine data. In the case of Maersk Global Centers (India) Pvt. Ltd. v. ACIT (supra) a Special Bench of the Tribunal had referred to a report prepared by National Skill Development Corporation (NSDC) on Human Resource and Skill Requirements in IT and ITES Sector (2022) and noted that the KPO sector has been described as "a value play". The said report also indicates that KPO services are likely to span activities such as "patent advisory, high-end research and analytics, online market research and legal advisory".
26. A Knowledge Process is understood as a high value added process chain wherein the processes are dependent on advanced skills, domain knowledge and the experience of the persons carrying on such processes.
27. The Government of Rajasthan (Department of Information Technology & Communication) has also floated a scheme on 12th December, 2011 known as "The Rajasthan Incentive Scheme for BPO Centers and KPO Centers, 2011". The said scheme is for providing incentives to promote ITeS and to generate further employment opportunities. In terms of the said scheme, "Business Process Outsourcing (BPO)" is defined to mean "the transfer of an organization's entire non-core but critical business process/function to an external centre which uses an IT- based service delivery" and "Knowledge Processing Outsourcing (KPO)" has been defined to mean "allocation of relatively high-level tasks to an outside organization or a different group (possibly in a different location) within the same organization. KPO is, essentially, high-end Business Process Outsourcing (BPO)".
28. In our view, the definition of KPO provided under the aforementioned scheme also indicates that KPO services are understood as the higher-end of ITeS in terms of value addition.
29. It is apparent from the above that while entities rendering Voice Call Center services for customer support and a KPO service provider may be employing IT-based delivery systems, the characteristics of services, the functional aspects, business environment, risks and the quality of human resource employed would be materially different. It plainly follows that benchmarking international transactions on the basis of comparing the PLI of high-end KPO service providers with the PLI of Voice Call Centers would be unreliable and possibly flawed.
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31.In the present case, the Tribunal noted that Vishal and eClerx were both engaged in rendering ITeS. The Tribunal held that, "once a service falls under the category of ITeS, then there is no sub-classification of segment". Thus, according to the Tribunal, no differentiation could be made between the entities rendering ITeS. We find it difficult to accept this view as it is contrary to the fundamental rationale of determining ALP by comparing controlled transactions/entities with similar uncontrolled transactions/entities. ITeS encompasses a wide spectrum of services that use Information Technology based delivery. Such services could include rendering highly technical services by qualified technical personnel, involving advanced skills and knowledge, such as engineering, design and support. While, on the other end of the spectrum ITeS would also include voice-based call centers that render routine customer support for their clients. Clearly, characteristics of the service rendered would be dissimilar. Further, both service providers cannot be considered to be functionally similar. Their business environment would be entirely different, the demand and supply for the services would be different, the assets and capital employed would differ, the competence required to operate the two services would be different. Each of the aforesaid factors would have a material bearing on the profitability of the two entities. Treating the said entities to be comparables only for the reason that they use Information Technology for the delivery of their services, would, in our opinion, be erroneous.
32.It has been pointed out that whilst the Tribunal in Willis Processing Services (India) Pvt. Ltd. v. DCIT (supra) held that no distinction could be made between KPO and BPO service providers, however, a contrary view had been taken by several benches of the Tribunal in other cases. In Capital IQ Information System India (P.) Ltd. v. Dy. CIT, (IT) [2013] 32 taxmann.com 21 and Lloyds TSB Global Services Pvt. Ltd. v. DCIT, (ITA No. 5928/Mum/2012 dated 21th November 2012), the Hyderabad and Mumbai Bench of the Tribunal respectively accepted the view that a BPO service provider could not be compared with a KPO service provider.
33. The Special Bench of the Tribunal in Maersk Global Centers (India) Pvt. Ltd. (supra) struck a different cord. The Special Bench of the Tribunal held that even though there appears to be a difference between BPO and KPO Services, the line of difference is very thin. The Tribunal was of the view that there could be a significant overlap in their activities and it may be difficult to classify services strictly as falling under the category of either a BPO or a KPO. The Tribunal also observed that one of the key success factors of the BPO Industry is its ability to move up the value chain through KPO service offering. For the aforesaid reasons, the Special Bench of the Tribunal held that ITeS Services could not be bifurcated as BPO and KPO Services for the purpose of comparability analysis in the first instance. The Tribunal proceeded to hold that a relatively equal degree of comparability can be achieved by selecting potential comparables on a broad functional analysis at ITeS level and that the comparables so selected could be put to further test by comparing specific functions performed in the international transactions with uncontrolled transactions to attain relatively equal degree of comparability.
34. We have reservations as to the Tribunal's aforesaid view in Maersk Global Centers (India) Pvt. Ltd. (supra). As indicated above, the expression 'BPO' and 'KPO' are, plainly, understood in the sense that whereas, BPO does not necessarily involve advanced skills and knowledge; KPO, on the other hand, would involve employment of advanced skills and knowledge for providing services. Thus, the expression 'KPO' in common parlance is used to indicate an ITeS provider providing a completely different nature of service than any other BPO service provider. A KPO service provider would also be functionally different from other BPO service providers, inasmuch as the responsibilities undertaken, the activities performed, the quality of resources employed would be materially different. In the circumstances, we are unable to agree that broadly ITeS sector can be used for selecting comparables without making a conscious selection as to the quality and nature of the content of services. Rule 10B(2)(a) of the Income Tax Rules, 1962 mandates that the comparability of controlled and uncontrolled transactions be judged with reference to service/product characteristics. This factor cannot be undermined by using a broad classification of ITeS which takes within its fold various types of services with completely different content and value. Thus, where the tested party is not a KPO service provider, an entity rendering KPO services cannot be considered as a comparable for the purposes of Transfer Pricing analysis. The perception that a BPO service provider may have the ability to move up the value chain by offering KPO services cannot be a ground for assessing the transactions relating to 12 7519/M/12-(08-09) Tracmail India P.Ltd.
services rendered by the BPO service provider by benchmarking it with the transactions of KPO services providers. The object is to ascertain the ALP of the service rendered and not of a service (higher in value chain) that may possibly be rendered subsequently.
35. As pointed out by the Special Bench of the Tribunal in Maersk Global Centers (India) Pvt. Ltd. (supra), there may be cases where an entity may be rendering a mix of services some of which may be functionally comparable to a KPO while other services may not. In such cases a classification of BPO and KPO may not be feasible. Clearly, no straitjacket formula can be applied. In cases where the categorization of services rendered cannot be defined with certainty, it would be apposite to employ the broad functionality test and then exclude uncontrolled entities, which are found to be materially dissimilar in aspects and features that have a bearing on the profitability of those entities. However, where the controlled transactions are clearly in the nature of lower-end ITeS such as Call Centers etc. for rendering data processing not involving domain knowledge, inclusion of any KPO service provider as a comparable would not be warranted and the transfer pricing study must take that into account at the threshold.
36. As pointed out earlier, the transfer pricing analysis must serve the broad object of benchmarking an international transaction for determining an ALP. The methodology necessitates that the comparables must be similar in material aspects. The comparability must be judged on factors such as product/service characteristics, functions undertaken, assets used, risks assumed. This is essential to ensure the efficacy of the exercise. There is sufficient flexibility available within the statutory framework to ensure a fair ALP.
37. Applying the aforesaid principles to the facts of the present case, it is once again clear that both Vishal and eClerx could not be taken as comparables for determining the ALP. Vishal and eClerx, both are into KPO Services. In Maersk Global Centers (India) Pvt. Ltd. (supra), the Special Bench of the Tribunal had noted that eClerx is engaged in data analytics, data processing services, pricing analytics, bundling optimization, content operation, sales and marketing support, product data management, revenue management. In addition, eClerx also offered financial services such as real-time capital markets, middle and back-office support, portfolio risk management services and various critical data management services. Clearly, the aforesaid services are not comparable with the services rendered by the Assessee. Further, the functions undertaken (i.e. the activities performed) are also not comparable with the Assessee. In our view, the Tribunal erred in holding that the functions performed by the Assessee were broadly similar to that of eClerx or Vishal. The operating margin of eClerx, thus, could not be included to arrive at an ALP of controlled transactions, which were materially different in its content and value. In Maersk Global Centers (India) Pvt. Ltd. (supra), the Special Bench of the Tribunal had noted the same and had, thus, excluded eClerx as a comparable. It is further observed that the comparability of eClerx had also been examined by the Hyderabad Bench of the Tribunal in M/s Capital Iq Information Systems (India) (P.) Ltd. v. Additional Commissioner of Income-tax (supra), wherein, the Tribunal directed the exclusion of eClerx as a comparable for the reason that it was engaged in providing KPO Services and further that it had also returned supernormal profits.
38. In our view, even Vishal could not be considered as a comparable, as admittedly, its business model was completely different. Admittedly, Vishal's expenditure on employment cost during the relevant period was a small fraction of the proportionate cost incurred by the Assessee, apparently, for the reason that most of its work was outsourced to other vendors/service providers. The DRP and the Tribunal erred in brushing aside this vital difference by observing that outsourcing was common in ITeS industry and the same would not have a bearing on profitability. Plainly, a business model where services are rendered by employing own employees and using one's own infrastructure would have a different cost structure as compared to a business model where services are outsourced. There was no material for the Tribunal to conclude that the outsourcing of services by Vishal would have no bearing on the profitability of the said entity.
39.It is also relevant to note that in the case of Maersk Global Centers (India) Pvt. Ltd. (supra), the DRP itself had accepted the objection of the Assessee and had excluded Vishal as a comparable for the reason as quoted below:-
137519/M/12-(08-09) Tracmail India P.Ltd.
"... that it had a very low employment cost and very high cost on account of venture payment, which suggested that its business model was that of an outsourcing company and in view of this functional difference, Vishal Ltd. could not be considered as a comparable."
40. The Assessee had also sought the exclusion of eClerx and Vishal on the ground that both the companies had returned supernormal profits. Whereas the operating margins (operating margin over total cost) in case of Vishal and eClerx were 50.68% and 65.88% respectively, the PLIs of all other comparables were in the range of 2.2% to 24%. In our view, it would not be apposite to exclude comparables only for the reason that their profits are high, as the same is not provided for in the statutory framework. The OECD Guidelines suggest that a quartile method be adopted which excludes entities that fall in the extreme quartiles for comparability. However, neither Chapter X of the Act nor the Rules made by CBDT provide for exclusion for such statistical reason.
41. Having stated the same, it may be necessary to bear in mind that supernormal profits may in certain cases indicate a functional dissimilarity or dissimilarity with respect to a feature that has a material bearing on the profitability. In such circumstances, it would be necessary to undertake further analysis to eliminate the possibility of the high profits resulting on account of any material dissimilarity between the tested party and the chosen comparable. A wide deviation in the PLI amongst selected comparables could be indicative that the comparables selected are either materially dissimilar or the data used is not reliable. The Tribunal proceeded on the basis that an adjustment could be made only in cases where supernormal profits resulted from the factors indicated in Rule 10B of the Income Tax Rules, 1962. In our view, the factors mentioned in Rule 10B are not exhaustive. The principal object of benchmarking international transactions against uncontrolled transactions is to impute an ALP to those transactions. This exercise would fail if a factor, which has a material bearing on the value or the profitability, as the case may be, depending on the method used, is ignored.
42. Before concluding, there is yet another aspect of the matter that needs consideration. The Tribunal proceeded on the basis that while applying TNMM method, broad functionality is sufficient and it is not necessary that further effort be taken to find a comparable entity rendering services of similar characteristics as the tested entity. The DRP held that TNMM allows flexibility and tolerance in selection of comparables, as functional dissimilarities are subsumed at net margin levels, as compared to Resale Price Method or Comparable Uncontrolled Price Method and, therefore, the functional dissimilarities pointed out by the Assessee did not warrant rejection of eClerx and Vishal as comparables.
43. In our view, the aforesaid approach would not be apposite. Insofar as identifying comparable transactions/entities is concerned, the same would not differ irrespective of the transfer pricing method adopted. In other words, the comparable transactions/entities must be selected on the basis of similarity with the controlled transaction/entity. Comparability of controlled and uncontrolled transactions has to be judged, inter alia, with reference to comparability factors as indicated under rule 10B(2) of the Income Tax Rules, 1962. Comparability analysis by TNMM method may be less sensitive to certain dissimilarities between the tested party and the comparables. However, that cannot be the consideration for diluting the standards of selecting comparable transactions/entities. A higher product and functional similarity would strengthen the efficacy of the method in ascertaining a reliable ALP. Therefore, as far as possible, the comparables must be selected keeping in view the comparability factors as specified. Wide deviations in PLI must trigger further investigations/analysis.
44. Consideration for a transaction would reflect the functions performed, the significant activities undertaken, the assets or resources used/consumed, the risks assumed.Thus, comparison of activities undertaken/functions performed is important for determining the comparability between controlled and uncontrolled transactions/entity. It would not be apposite to ignore functional dissimilarity only for the reason that its impact may be reduced on account of using arithmetical mean of the PLI. The DRP had noted that eClerx was functionally dissimilar, but ignored the same relying on an assumption that the functional dissimilarity would be subsumed in the profit margin. As noted, the content of services provided by the Assessee and the entities in question were not similar. In addition, there were also functional dissimilarities between the Assessee and the two entities in question. In our view, these comparability factors could not be 14 7519/M/12-(08-09) Tracmail India P.Ltd.
ignored by the Tribunal. While using TNMM, the search for comparables may be broadened by including comparables offering services/products which are not entirely similar to the controlled transaction/entity. However, this can be done only if (a) the functions performed by the tested party and the selected comparable entity are similar including the assets used and the risks assumed; and (b) the difference in services/products offered has no material bearing on the profitability."
3.6.We find that the services offered by the assessee and above mentioned four comparables are not in same field therefore respectfully following the above judgment/order of the Hon'ble Delhi High and the Tribunal,we direct that the above mentioned four comparables should be taken out from list of valid comparables.
3.7.In the case of Fire Stone International (P.) Ltd. The Hon'ble Bombay High Court has held that TP adjustments had to be restricted to the transactions made with the AE.s.Therefore, in our opinion the TPO/DRP was not justified in holding that TP adjustments had to be made for the non-AE transactions also.
3.8.Accordingly,the TPO/AO is directed to determine the TP adjustment after excluding yhese comparables. We find that the AR has fairly conceded adjustment @9% (approx.) of AE transaction which would not be objected to by the assessee. AO is directed to work out exact adjustment. Effective ground of appeal is allowed in favour of the assessee,in part.
As a result, appeal filed by the assessee stands partly allowed.
फलतःिनधा रती ारा दािखल क गई अपील अंशतः मंजूर क जाती है.
Order pronounced in the open court on 5th January, 2018.
आदेश क घोषणा खुले यायालय म दनांक 05 जनवरी, 2018 को क गई ।
Sd/- Sd/-
(रिवश सूद /Ravish Sood) (राजे / RAJENDRA)
याियक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER
मुंबई Mumbai; दनांक/Dated : 05 .01.2018.
Jv.Sr.PS.
आदेश क ितिलिप अ ेिषत/Copy of the Order forwarded to :
1.Appellant /अपीलाथ 2. Respondent /
यथ
3.The concerned CIT(A)/संब अपीलीय आयकर आयु , 4.The concerned CIT /संब आयकर आयु
5.DR "K" Bench, ITAT, Mumbai /िवभागीय ितिनिध, खंडपीठ,आ.अिध.मुंबई
6.Guard File/गाड फाईल स यािपत ित //True Copy// आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार Dy./Asst. Registrar आयकर अपीलीय अिधकरण, मुंबई /ITAT, Mumbai.
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