Brocade Communications Systems Private Limited, Bangalore v. Asst.C.I.T., Bangalore

ITA 331/BANG/2015 | 2010-2011
Pronouncement Date: 21-10-2016 | Result: Allowed

Appeal Details

RSA Number 33121114 RSA 2015
Assessee PAN AACCB4490N
Bench Bangalore
Appeal Number ITA 331/BANG/2015
Duration Of Justice 1 year(s) 7 month(s) 16 day(s)
Appellant Brocade Communications Systems Private Limited, Bangalore
Respondent Asst.C.I.T., Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 21-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 21-10-2016
Date Of Final Hearing 18-10-2016
Next Hearing Date 18-10-2016
Assessment Year 2010-2011
Appeal Filed On 06-03-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI S. JAYARAMAN ACCOUNTANT MEMBER IT(TP)A NO.331/BANG/2015 ASSESSMENT YEAR : 2010-11 BROCADE COMMUNICATION SYSTEMS PVT. LTD. 4 TH FLOOR A WING TOWER 3 PHASE I VRINDAVAN TECH VILLAGE SEZ OUTER RING ROAD DEVARABEESANAHALLI VILLAGE VARTHUR HOBLI BANGALORE 560 037. PAN: AACCB 4490N VS. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 2(1)(1) BANGALORE. APPELLANT RESPONDENT IT(TP)A NO.167 /BANG/2015 ASSESSMENT YEAR : 2010-11 THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 2(1)(1) BANGALORE. VS. BROCADE COMMUNICATION SYSTEMS PVT. LTD. 4 TH FLOOR BANGALORE 560 037. PAN: AACCB 4490N APPELLANT RESPONDENT ASSESSEE BY : SHRI RISHI HARLALKA CA REVENUE BY : SHRI KAMALADHAR SR. COUNSEL DATE OF HEARING : 18.10.2016 DATE OF PRONOUNCEMENT : 21.10.2016 IT(TP)A NOS.331 & 167/BANG/2015 PAGE 2 OF 15 O R D E R PER SUNIL KUMAR YADAV JUDICIAL MEMBER THESE CROSS APPEALS ARE FILED BY THE ASSESSEE AS WELL AS REVENUE AGAINST THE ORDER OF THE AO PASSED CONSEQUENT TO TH E ORDER OF THE DRP. SINCE BOTH THESE APPEALS WERE HEARD TOGETHER THESE ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER. IT(TP)A NO.331/BANG/2015 2. THIS APPEAL IS PREFERRED BY THE ASSESSEE INTER ALIA ON THE FOLLOWING GROUNDS:- GROUNDS OF APPEAL 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED ASSESSING OFFICER ('AO') / LEARNED TRANSFER PRICING OFFICER ('TPO') AND THE HON'BLE DISPUTE RESOLUTION PANEL ('DRP') ERRED IN M AKING AN ADDITION OF RS.31 309 364 TO THE RETURNED INCOME OF THE APPELLA NT FOR THE AY 2010-11. GROUNDS OF APPEAL RELATING TO TRANSFER PRICING ADJU STMENT 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED AO /LEARNED TPO AND THE HON'BLE DRP ERRED IN DETERMINI NG AN ADJUSTMENT OF RS. 13 476 048 TO THE APPELLANT'S TOTAL INCOME BASE D ON PROVISIONS OF CHAPTER X OF THE INCOME TAX ACT 1961 ( THE ACT'). 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED AO / LEARNED TPO AND THE HON'BLE DRP ERRED IN REJECTING THE TRANSFER PRICING DOCUMENTATION MAINTAINED BY THE APPELLANT IN ACCORD ANCE WITH THE PROVISIONS OF THE INCOME-TAX ACT 1961 ('ACT') READ WITH THE INCOME TAX RULES 1962 ('RULES') THEREBY UNDERTAKING A FRESH ECONOMIC ANALYSIS DURING THE COURSE OF ASSESSMENT PROCEEDINGS. NOT ALLOWING USE OF MULTIPLE YEAR DATA/CONTEMPORANE OUS DATA 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED AO / LEARNED TPO AND THE HON'BLE DRP ERRED IN NOT ALLO WING THE USE OF MULTIPLE YEAR DATA AS PRESCRIBED UNDER RULE 1OB(4) OF THE RULES. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED AO / LEARNED TPO AND THE HON'BLE DRP ERRED IN USING DATA WHICH WAS NOT AVAILABLE AT THE TIME OF FILING RETURN OF INCOME FO R AY 2010-11 BY REJECTING APPELLANT'S OBJECTIONS ON USE OF CONTEMPO RANEOUS DATA AND IT(TP)A NOS.331 & 167/BANG/2015 PAGE 3 OF 15 IGNORING THE PRINCIPLE OF IMPOSSIBILITY OF PERFORMA NCE AS PER PRINCIPLES ENSHRINED IN VARIOUS DECISIONS OF THE AP EX COURT. REJECTING THE SEARCH PROCESS ADOPTED BY THE APPELLA NT AND PROPOSING A NEW SEARCH PROCESS 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED AO / LEARNED TPO AND THE HON'BLE DRP ERRED IN REJECTING THE USE OF THE SEARCH PROCESS APPLIED BY THE APPELLANT IN THE DOCU MENTATION MAINTAINED UNDER SECTION 920 OF THE ACT. IT(TP)A NOS.331 & 167/BANG/2015 PAGE 4 OF 15 3. DURING THE PENDENCY OF THE APPEAL THE ASSESSEE HAS ALSO MOVED AN APPLICATION FOR RAISING ADDITIONAL GROUND WHICH IS AS UNDER:- 13A. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. TRANSFER PRICING OFFICER (TPO) HAS I N HIS FRESH TRANSFER PRICING STUDY ERRED IN ACCEPTING ASIAN BU SINESS EXHIBITION & CONFERENCES LIMITED AS COMPARABLE TO T HE APPELLANT. THE APPELLANT CRAVES LEAVE TO ADD TO OR ALTER BY D ELETION SUBSTITUTION MODIFICATION OR OTHERWISE THE ABOVE GROUND OF APPEAL EITHER BEFORE OR DURING THE HEARING OF THE APPEAL. IT(TP)A NOS.331 & 167/BANG/2015 PAGE 5 OF 15 4. IN SUPPORT OF ADMISSION OF THIS ADDITIONAL GROU ND THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT INCLUSION OF THIS C OMPARABLE WAS NOT DISPUTED BEFORE THE DRP AS THE DATAS OF THE COMPAR ABLE WERE NOT AVAILABLE BUT NOW THE ISSUE IS COVERED BY VARIOUS JUDGMENTS THAT ASIAN BUSINESS EXHIBITION & CONFERENCES LTD. [HEREINAFTER REFERRED TO AS ABEC LTD.] CANNOT BE TAKEN AS COMPARABLE ON ACCOUNT OF FUNCTIONAL DISSIMILARITY. IN SUPPORT OF HIS CONTENTION HE HAS PLACED RELIANC E UPON THE ORDER OF THE TRIBUNAL IN THE CASE OF DCIT V. ELECTRONICS FOR IMAGING INDIA PVT. LTD. IT(TP)A NO.212/BANG/2015 . COPY OF THIS ORDER IS PLACED ON RECORD. IT WAS ALSO CONTENDED THAT NOW IT IS SETTLED POSITION OF L AW THAT INCLUSION OF COMPARABLES CAN BE DISPUTED BEFORE THE TRIBUNAL EVE N FOR THE FIRST TIME THOUGH IT WAS NOT DISPUTED BEFORE THE DRP. 5. THE LD. DR ON THE OTHER HAND HAS SUBMITTED THA T ONCE THE ASSESSEE HAS NOT DISPUTED THE INCLUSION OF PARTICUL AR COMPARABLES BEFORE THE DRP IT IS PRECLUDED TO RAISE ANY DISPUTE WITH RESPECT TO INCLUSION OF THAT PARTICULAR COMPARABLE BEFORE THE TRIBUNAL. 6. HAVING CAREFULLY EXAMINED THE RIVAL CONTENTIONS IN THIS REGARD WE ARE OF THE VIEW THAT NOW THIS CONTROVERSY HAS BEEN RESOLVED THROUGH VARIOUS JUDICIAL PRONOUNCEMENTS THAT ASSESSEE CAN R AISE DISPUTE WITH RESPECT TO PARTICULAR COMPARABLES BEFORE THE TRIBUN AL THOUGH IT WAS NOT DISPUTED BEFORE THE DRP. IN THE LIGHT OF THESE FAC TS WE ADMIT THE ADDITIONAL IT(TP)A NOS.331 & 167/BANG/2015 PAGE 6 OF 15 GROUND AND PREFER TO ADJUDICATE THE SAME ALONG WITH OTHER GROUNDS RELATING TO INCLUSION/EXCLUSION OF COMPARABLES WHILE COMPUTI NG THE ALP. 7. GROUND NOS. 1 TO 14 AND THE ADDITIONAL GROUND RE LATE TO THE INCLUSION OF THE COMPARABLES AND NECESSARY ADJUSTMENTS ON ACC OUNT OF WORKING CAPITAL WHILE DETERMINING THE ALP. 8. DURING THE COURSE OF HEARING THE LD. COUNSEL FO R THE ASSESSEE HAS INVITED OUR ATTENTION THAT HE HAS OBJECTION WITH RE GARD TO INCLUSION OF TWO COMPARABLES; ONE IS ABEC LTD. AND THE OTHER IS H C C A BUSINESS SERVICES PVT. LTD. WITH REGARD TO THE FIRST COMP ARABLE I.E. ABEC LTD. THE ASSESSEE HAS NOT INITIALLY RAISED THE DISPUTE BEFOR E THE DRP BUT THE OTHER COMPARABLE WAS DISPUTED BEFORE THE DRP AND BEING CO NVINCED WITH THE CONTENTIONS OF THE ASSESSEE THE DRP HAS ISSUED DIR ECTIONS TO THE TPO/AO TO EXCLUDE H C C A BUSINESS SERVICES PVT. LTD. AND COMPUTE AFRESH THE ALP BUT THE AO HAS NOT PASSED THE CONSEQUENTIAL OR DER. IN THIS REGARD WE ARE OF THE VIEW THAT IF THE AO HAS NOT PASSED TH E ORDER CONSEQUENT TO THE DIRECTIONS OF DRP THE ASSESSEE CAN APPROACH TH E APPROPRIATE AUTHORITIES FOR COMPLIANCE OF THE DIRECTIONS BY THE TPO/AO. 9. SO FAR AS EXCLUSION OF OTHER COMPARABLES I.E. AB EC LTD. IS CONCERNED THE LD. COUNSEL FOR THE ASSESSEE HAS SUB MITTED THAT THE BUSINESS PROFILE OF ABEC LTD. IS TO ORGANIZE EXHIBI TIONS AND EVENTS AND THEREFORE IS NOT COMPARABLE WITH THE SUPPORT SERVIC ES PROVIDED BY THE ASSESSEE TO ITS AE. IN SUPPORT OF HIS CONTENTION THE LD. COUNSEL HAS IT(TP)A NOS.331 & 167/BANG/2015 PAGE 7 OF 15 INVITED OUR ATTENTION TO THE BUSINESS PROFILE OF TH E ASSESSEE AND AS MENTIONED IN THE TPOS ORDER ACCORDING TO WHICH T HE ASSESSEE IS ENGAGED IN PROVIDING SUPPORT FUNCTIONS TO THE SALES ORGANIZATIONS WITH THE OBJECTIVE OF CONVERTING EVERY SALES OPPORTUNITY EFF ECTIVELY AND EFFICIENTLY WHEREAS THE PROFILE OF ABEC LTD. WAS DISCUSSED IN T HE ORDER OF TRIBUNAL IN THE CASE OF DCIT V. ELECTRONICS FOR IMAGING INDIA PVT. LTD. IN IT(TP)A NO.212/BANG/2015 WHEREIN IN PARA 52 OF THE ORDER IT WAS OBSERVED THAT ABEC LTD. IS MAINLY ENGAGED IN ORGANIZATION OF EXHI BITIONS AND EVENTS AS WELL AS CONDUCTING CONFERENCES ON BEHALF OF VARIOUS CLIENTS FOR VARIOUS PRODUCTS AND BUSINESS. THEREFORE THE COMPANY CANN OT BE COMPARED AS GOOD COMPARABLE WITH THE ASSESSEE WHO WAS ENGAGED IN THE SUPPORT SERVICES. A COPY OF THE ORDER IS PLACED ON RECORD . 10. THE LD. DR SIMPLY PLACED RELIANCE ON THE ORDER OF DRP. 11. HAVING CAREFULLY EXAMINED THE ORDERS OF LOWER A UTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS WE FIND THAT UNDISPUTEDLY THE ASSESSEE IS ENGAGED IN PROVIDING SUPPORT FUNCTIONS TO SALES ORGANIZATIONS WITH THE OBJECTIVE OF CONVERTING EVERY SALES OPPORTUNITY EFFECTIVELY AND EFFICIENTLY TO ITS AE; WHEREAS ABEC LTD. IS ENGAGED IN THE ORGANIZING EXHI BITIONS AND EVENTS OR CONFERENCES. THE ISSUE WHETHER ABEC LTD. CAN BE C ALLED TO BE A GOOD COMPARABLE WITH THE ASSESSEE WHERE THE ASSESSEE IS ENGAGED IN SUPPORT SERVICES WAS EXAMINED BY THE TRIBUNAL IN TH E CASE OF DCIT V. ELECTRONICS FOR IMAGING INDIA PVT. LTD. (SUPRA) AND IT WAS CATEGORICALLY HELD IT(TP)A NOS.331 & 167/BANG/2015 PAGE 8 OF 15 THAT ABEC LTD. CANNOT BE CONSIDERED TO BE AS GOOD C OMPARABLE WITH THE ASSESSEE. THE RELEVANT OBSERVATION OF THE TRIBUNAL IS EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE:- 50. THE ASSESSEE HAS RAISED VARIOUS OBJECTIONS IN THE CO. HOWEVER WE FIND THAT THE ONLY EFFECTIVE GROUND RAI SED BY THE ASSESSEE IN THE MARKETING SUPPORT SEGMENT IS REGARD ING ASIAN BUSINESS EXHIBITION & CONFERENCE LTD. A COMPARABLE SELECTED BY THE TPO AND RETAINED BY THE DRP. 51. THE ASSESSEE OBJECTED AGAINST THIS COMPANY ON THE GROUND THAT THIS COMPANY IS FUNCTIONALLY DIFFERENT AS IT I S ENGAGED IN ORGANIZING EXHIBITIONS AND CONFERENCES. THE DRP DI D NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND HELD THAT THIS C OMPANY RECEIVED INCOME IN THE NATURE OF CONSULTANCY FOR OR GANIZING EXHIBITIONS AND EVENTS. THEREFORE THIS COMPANY IS FUNCTIONALLY SIMILAR TO THE FUNCTIONS CARRIED OUT BY THE ASSESSE E. 52. BEFORE US THE LD. AR OF THE ASSESSEE HAS SUBM ITTED THAT FUNCTIONAL COMPARABILITY OF THIS COMPANY HAS BEEN E XAMINED BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF RGA SERVICES INDIA PVT. LTD. VIDE ORDER DATED 20.11.2015 IN ITA NO.22/MUM/2015 AND SUBMITTED THAT THE MUMBAI TRIBUNAL HAS HELD THAT THE OPERATION OF ORGANIZING EXHIBITION AN D EVENTS IS NOT COMPARABLE WITH SUPPORT SERVICES PROVIDED BY THE AS SESSEE TO ITS AE IN RESPECT OF REINSURANCE AND ACTUARIAL ACTIVITI ES. THUS THE LD. AR HAS SUBMITTED THAT THIS COMPANY CANNOT BE CONSID ERED AS FUNCTIONALLY COMPARABLE WITH THE ASSESSEES ACTIVIT Y OF PROVIDING SALES AND MARKETING SERVICES TO ITS AE. 53. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND C ONSIDERED THE RELEVANT MATERIAL ON RECORD. AS IT IS CLEAR TH AT THE ASSESSEE IS PROVIDING SALES AND MARKETING SERVICES TO ITS AE WH ICH INCLUDES IDENTIFYING POTENTIAL CUSTOMERS BY CONDUCTING ROAD SHOWS PRESENTATION AND THE LIKE THE WORKING ALSO INCLUDE S EDUCATING POTENTIAL USERS OF THE BENEFIT AND FEATURES OF THE AES RANGE OF PRODUCTS. HOWEVER PRODUCTS FOR WHICH THE ASSESSEE IS PROVIDING SALES AND MARKETING SERVICES IS ONLY SOFTWARE/INFOR MATION TECHNOLOGY PRODUCTS. THEREFORE ASIAN BUSINESS EXH IBITION & CONFERENCE LTD. WHICH IS MAINLY ENGAGED IN THE ORGA NIZATION OF EXHIBITIONS AND EVENTS AS WELL AS CONDUCTING CONFE RENCES ON IT(TP)A NOS.331 & 167/BANG/2015 PAGE 9 OF 15 BEHALF OF THE VARIOUS CLIENTS FOR THEIR VARIOUS PRO DUCTS AND BUSINESSES. THE FUNCTIONS OF THIS COMPANY ARE ENTI RELY DIFFERENT FROM THE ASSESSEE WHO IS PROVIDING SALES AND MARKET ING SUPPORT SERVICES TO ITS AE FOR SOFTWARE/IT PRODUCTS. THE M UMBAI BENCH OF THE TRIBUNAL IN THE CASE OF RGA SERVICES INDIA PVT. LTD. (SUPRA) WHILE CONSIDERING THE FUNCTIONAL COMPARABILITY OF THIS COMPANY HAS HELD AT PARAS 11 AND 12 AS UNDER:- 11. WE HAVE CONSIDERED THE SUBMISSION OF THE PARTIES AND PERUSED THE RELEVANT MATERIAL ON RECORD . ON PERUSAL OF THE ORDER PASSED BY THE TPO IT IS NOTICE D THAT THE TPO WHILE DEALING WITH ASSESSEES OBJECTION WIT H REGARD TO SELECTION OF ASIAN BUSINESS EXHIBITION AND CONFERENCES LIMITED AS A COMPARABLE HAS ADMITTED TH AT THE NATURE OF FUNCTION PERFORMED BY THIS COMPANY IS EVENT MANAGEMENT. IT IS FURTHER RELEVANT TO OBSERVE ON P ERUSAL OF ANNUAL REPORT OF THIS COMPANY IT IS SEEN THAT AS PER DIRECTORS REPORT THE MAIN OPERATION IS ORGANIZING EXHIBITION AND EVENTS. FURTHER SCHEDULE 12 OF THE PROFIT AND LOSS ACCOUNT AS WELL AS NOTES TO THE ACCOUNTS R EVEALS REVENUE EARNED BY THE COMPANY IS FROM SPONSORSHIP DELEGATES ATTENDING CONFERENCES EVENTS AND ENTRY F EES CHARGED FROM VISITORS FOR VISITING EXHIBITION SALE OF STALL PLACE ETC. 12. THUS ON OVERALL ANALYSIS OF FACTS AND MATERIA LS PLACED ON RECORD IT IS VERY MUCH CLEAR THAT THE BUS INESS MODEL OF THE ASSESSEE AND ASIAN BUSINESS EXHIBITION AND CONFERENCES LIMITED ARE TOTALLY DIFFERENT. WHILE A SSESSEE UNDOUBTEDLY IS PROVIDING SUPPORT SERVICES TO ITS OV ERSEAS AES ASIAN BUSINESS EXHIBITION AND CONFERENCES LIMIT ED IS PRIMARILY AND FUNDAMENTALLY ENGAGED IN EVENT MANAGEMENT. THUS UNDER NO CIRCUMSTANCES IT CAN BE CONSIDERED AS A COMPARABLE TO THE ASSESSEE. THEREFO RE FOR THE AFORESTATED REASONS THE DRP IN OUR VIEW WAS J USTIFIED IN EXCLUDING THIS COMPANY AS A COMPARABLE. AS FAR AS THE CONTENTION OF LEARNED DR THAT REASONS ON WHICH THIS COMPANY WAS EXCLUDED EQUALLY APPLIES TO OTHER COMPARABLES RETAINED BY THE DRP WE MAY OBSERVE SU CH ARGUMENT OF LEARNED DR IS NOT AT ALL RELEVANT AS TH E ISSUE RAISED BY THE DEPARTMENT IN THE PRESENT APPEAL IS C ONFINED TO EXCLUSION OF ASIAN BUSINESS EXHIBITION AND CONFER ENCES LIMITED AS A COMPARABLE. AS FAR AS OBJECTION OF LEAR NED DEPARTMENTAL REPRESENTATIVE THAT ASSESSEE ITSELF HA S SELECTED THIS COMPANY AS A COMPARABLE WE MAY OBSER VE THAT CANNOT BE THE SOLE CRITERIA TO REJECT ASSESSEE S IT(TP)A NOS.331 & 167/BANG/2015 PAGE 10 OF 15 OBJECTION WITH REGARD TO SELECTION OF A COMPARABLE. AT THE TIME OF PREPARING T.P. STUDY REPORT ASSESSEE HAD SE LECTED SOME COMPARABLES BY CONSIDERING MULTIPLE YEAR DATA AND INFORMATION AVAILABLE AT THE RELEVANT TIME. HOWEVER IF SUBSEQUENTLY ON THE BASIS OF INFORMATION AVAILABLE IN PUBLIC DOMAIN IT IS FOUND ON THE BASIS OF FUNCTIONA LITY OR SOME OTHER REASON A COMPANY IS NOT AT ALL COMPARABL E ASSESSEE CANNOT BE PRECLUDED FROM OBJECTING TO SELE CTION OF THE COMPANY AS A COMPARABLE. THIS LEGAL PROPOSIT ION IS FAIRLY WELL SETTLED BY THE DECISION IN CASE OF DCIT V/S. QUARK SYSTEMS (P) LTD. (2010)132TTJ(CHD)(SB)1 AS WE LL AS DECISIONS RELIED UPON BY THE COUNSEL FOR THE ASS ESSEE. IN VIEW OF THE AFORESAID WE DO NOT FIND ANY INFIRMITY IN THE DIRECTIONS OF DRP IN EXCLUDING ASIAN BUSINESS EXHIBI TION AND CONFERENCES LIMITED AS A COMPARABLE. THE GROUND RAISED IS THEREFORE DISMISSED. 54. IN VIEW OF THE ABOVE FACTS AS WELL AS DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL THIS COMPANY CANNOT B E CONSIDERED AS A GOOD COMPARABLE WITH THE ASSESSEE. 12. SINCE IDENTICAL ISSUE HAS BEEN EXAMINED BY THE TRIBUNAL IN SIMILAR SET OF FACTS WE FIND NO JUSTIFICATION TO TAKE A CO NTRARY VIEW IN THIS CASE. ACCORDINGLY FOLLOWING THE SAME WE HOLD THAT ABEC L TD. CANNOT BE CALLED TO BE A GOOD COMPARABLE WITH THE ASSESSEE THEREFORE W E DIRECT THE TPO/AO TO EXCLUDE IT WHILE COMPUTING THE FRESH ALP. 13. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO RAISE D AN ISSUE WITH REGARD TO REASONABLE ADJUSTMENT ON ACCOUNT OF WORKI NG CAPITAL BUT DURING THE COURSE OF HEARING HE HAS CANDIDLY ADMITTED THA T HE HAS NOT FURNISHED THE DATA WITH REGARD TO WORKING CAPITAL OF THE ASSE SSEE AS WELL AS OTHER COMPARABLES; BUT HE CONTENDED THAT THE MATTER BE R ESTORED BACK TO THE IT(TP)A NOS.331 & 167/BANG/2015 PAGE 11 OF 15 TPO TO READJUDICATE THE ISSUE AFRESH IN THE LIGHT O F DETAILS OF WORKING CAPITAL OF ASSESSEE AS WELL AS OTHER COMPARABLES FOR COMPUT ING THE ALP. 14. THE LD. DR ON THE OTHER HAND HAS ALSO AGREED THAT THE WHOLE ISSUE BE EXAMINED BY THE TPO WHILE COMPUTING FRESH ALP IN TERMS OF THE ORDER OF THE TRIBUNAL. 15. HAVING CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS WE FIND THAT REASONABLE ADJUSTMENT ON ACCOUNT OF WORKING CAPITAL SHOULD BE MADE WHILE COMPUTING THE ALP. ACCORDINGLY WE DIRECT THE TPO TO EXAMINE THE ISSUE OF ADJUSTMENT ON ACCOUNT OF WORKING CAPITAL OF THE ASSESSEE AS WELL AS OTHER COMPARABLES IN ACCORDANCE WITH LAW. 16. WITH REGARD TO GROUND NO.15 THE LD. COUNSEL FO R THE ASSESSEE HAS CONTENDED THAT THE AO HAS NOT ALLOWED DEDUCTIONS ON ACCOUNT OF DISALLOWANCE OF ESOP EXPENSES. IN SUPPORT OF HIS C LAIM HE HAS PLACED RELIANCE UPON CERTAIN JUDGMENTS. WHICH ARE AS UNDER :- (A) PRECISION CAMSHAFTS LTD. [ITA NO.70/PN/2012] (B) M/S. POLARIS FINANCIAL TECHNOLOGY LTD. V. DCIT [ 20 13-TIOL- 774-ITAT-MAD] (C) PERFORMICA SOFTWARE PVT. LTD. V. DCIT [2013-TIOL-10 30-ITAT- HYD] (D) M/S. COGNIZANT TECHNOLOGY SOLUTIONS INDIA PVT. LTD. V. ACIT [2013-TIOL-745-ITAT-MAD] (E) BATRONICS INDIA LTD. [ITA NO.2188/HYD/2011 AND 2189 /HYD/2011 IT(TP)A NOS.331 & 167/BANG/2015 PAGE 12 OF 15 (F) M/S. INTERNATIONAL GOLD CO. LTD. V. ITO [2010-TIOL- 652-ITAT- MUM] (G) VIRINCHI TECHNOLOGIES LTD. V. DCIT [ITA NO.209/HYD/ 2010] (H) ZAVATA INDIA PVT. LTD. V. ACIT [ITA NO.1100/HYD/200 9] 17. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ON ACCOUNT OF DISALLOWANCE THE INCOME HAS BEEN INCREASED AND ASS ESSEE IS ENTITLED FOR DEDUCTION THEREON U/S. 10B OF THE ACT. 18. WE HAVE CAREFULLY EXAMINED THE ISSUE AND THE SU BMISSIONS OF THE ASSESSEE AND WE FIND THAT THE ASSESSEE HAS NOT RAIS ED ANY DISPUTE IN THIS REGARD BEFORE THE DRP. SINCE WE ARE RESTORING THE MATTER OF RECOMPUTATION OF THE ALP TO THE TPO/AO IN THE TERMS INDICATED IN THE ORDER THE ASPECT OF CLAIM OF DEDUCTION U/S. 10B ON DISALLOWANCE ON ACCO UNT OF ESOP EXPENSES BE EXAMINED BY THE AO WHILE PASSING THE CONSEQUENTI AL ORDER. ACCORDINGLY THIS ISSUE IS RESTORED TO THE AO TO AD JUDICATE IT IN THE LIGHT OF THE JUDGMENTS REFERRED TO BY THE ASSESSEE IN ACCORD ANCE WITH LAW. IT(TP)A NO.167/BANG/2015 19. THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF DRP INTER ALIA ON VARIOUS GROUNDS WHICH ARE AS UNDER:- IT(TP)A NOS.331 & 167/BANG/2015 PAGE 13 OF 15 IT(TP)A NOS.331 & 167/BANG/2015 PAGE 14 OF 15 20. DURING THE COURSE OF HEARING THE LD. COUNSEL F OR THE ASSESSEE HAS PLACED RELIANCE ONLY UPON TPO/AOS ORDER. HE HAS N OT POINTED OUT ANY SPECIFIC DEFECT IN THE ORDER OF DRP. HOWEVER WE H AVE CAREFULLY EXAMINED THE ORDER OF DRP AND WE FIND THAT GROUND NOS. 1 TO 4 RAISED IN THE REVENUES APPEAL RELATE TO THE EXCLUSION OF THE EXP ENDITURE INCURRED IN FOREIGN CURRENCY FROM THE EXPORT TURNOVER AND THIS ISSUE WAS EXAMINED BY THE DRP IN THE LIGHT OF JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. M/S. TATA ELXSI LTD. AND THEREFORE WE FIND NO INFIRMITY IN THE ORDER OF DRP. ACCORDINGLY WE CONFIRM THE SAME. 21. WITH REGARD TO THE OTHER ISSUE OF INCLUSION/EXC LUSION OF COMPARABLES WE FIND THAT THIS ISSUE WAS EXAMINED BY US IN THE A SSESSEES APPEAL AND WE HAVE ISSUED CERTAIN DIRECTIONS TO THE TPO/AO TO RECOMPUTE THE ALP IN THE TERMS INDICATED IN THE ORDER. THEREFORE WE DO NOT FIND ANY JUSTIFICATION TO DEAL WITH THE ISSUES AGAIN. ACCORDINGLY THESE GROUNDS ARE DISPOSED OF. 22. IN THE RESULT THE APPEAL OF ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES AND THAT OF THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF OCTOBER 2016. SD/- SD/- ( S. JAYARAMAN ) (SUNIL KUMAR YA DAV ) ACCOUNTANT MEMBER JUDIC IAL MEMBER BANGALORE DATED THE 21 ST OCTOBER 2016. /D S/ IT(TP)A NOS.331 & 167/BANG/2015 PAGE 15 OF 15 COPY TO: 1. APPELLANT 2. RESPONDENTS 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE.