ITO, New Delhi v. M/s. E Value Serve.Com, New Delhi

ITA 393/DEL/2010 | 2005-2006
Pronouncement Date: 30-09-2016 | Result: Dismissed

Appeal Details

RSA Number 39320114 RSA 2010
Assessee PAN AAACE8014F
Bench Delhi
Appeal Number ITA 393/DEL/2010
Duration Of Justice 6 year(s) 8 month(s) 1 day(s)
Appellant ITO, New Delhi
Respondent M/s. E Value Serve.Com, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted I1
Tribunal Order Date 30-09-2016
Date Of Final Hearing 18-08-2016
Next Hearing Date 18-08-2016
Assessment Year 2005-2006
Appeal Filed On 28-01-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI KULDIP SINGH : JUDICIAL MEMBER ITA NO. 393/DEL/2010 U/S 2005-06 INCOME TAX OFFICER VS. E VALUE SERVE.COM WARD-11(2) NEW DELHI. 701 GURU APARTMENTS SECTOR-14 ROHINI NEW DELHI. PAN: AAACE 8014 F AND C.O. NO. 85/DEL/2010 ( ITA NO. 393/DEL/2010 ) U/S 2005-06 E VALUE SERVE.COM VS. INCOME TAX OFFICER 701 GURU APARTMENTS WARD-11(2) NEW DELHI. SECTOR-14 ROHINI NEW DELHI. (APPELLANT) ( RESPONDENT) DEPARTMENT BY : SHRI NEERAJ KUMAR SR. DR ASSESSEE BY : SHRI SALIL KAPOOR ADV. SHRI SANAT KAPOOR ADV. MS. ANANYA KAPOOR ADV. SHRI SUMIT LAL CHANDANI ADV. DATE OF HEARING : 22/08/2016. DATE OF ORDER : 30/09/2016. O R D E R PER S.V. MEHROTRA A.M: THE APPEAL BY THE REVENUE AND THE CROSS-OBJECTION B Y THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 27.11.2009 PASSED BY THE LD. CIT(APPEALS)-XX NEW DELHI IN APPEAL NO. 10/2008-09/CIT(A)-XX RELAT ING TO AY 2005-06. BOTH 2 THE MATTERS WERE HEARD TOGETHER AND ARE BEING DISPO SED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEF FACTS OF THE CASE ARE THAT AS PER TP REPOR T OF ASSESSEE IN THE RELEVANT ASSESSMENT YEAR THE ASSESSEE WAS ENGAGED IN THE BU SINESS OF PROVIDING HIGH END IT ENABLED SERVICES TO ITS ASSOCIATED ENTERPRISE. T HE COMPANY WAS REGISTERED WITH SOFTWARE TECHNOLOGY PARK OF THE GOVERNMENT OF INDIA . THE ASSESSEE CONDUCTED RESEARCH ACTIVITIES AND PROVIDED KNOWLEDGE MANAGEME NT SERVICES TO ITS ASSOCIATED ENTERPRISE. THE ASSESSEE DERIVED BUSINESS FROM FOLL OWING MAJOR SEGMENTS: - BUSINESS INFORMATION - INTELLECTUAL PROPERTY - INVESTMENT RESEARCH AND FINANCIAL ANALYTICS - MARKET RESEARCH (PRIMARY) 3. IN THE BUSINESS INFORMATION SEGMENT THE ASSESSE E PRIMARILY RENDERED RESEARCH SERVICE TO ITS AE. EVALUESERVE ANALYSTS C OVERED A RANGE OF INDUSTRIES INCLUDING BANKING INSURANCE TELECOM MUNICATIONS PHARMA & BIO-TECH CHEMICALS ENERGY CONSUMER GOODS. IT HAD PERFORMED RESEARCH IN AROUND 200 COUNTRIES. THE ASSESSEE UTILIZED PRIMARY AND SECONDARY SOURCES TO CONDUCT ITS RESEARCH AND ANALYSIS IN THIS SEGMEN T. 4. IN THE MARKET RESEARCH (PRIMARY) SEGMENT THE ASSESSEE ACTED AS BACK OFFICE RESEARCH CENTRE (MAINLY A CAPTIVE UNIT) AND DID NOT HAVE ANY DIRECT COMPETITION IN INDIA AS IT PROVIDED SERVICES MAINLY TO ITS AE. 5. FURTHER THE ASSESSEE HAD NO DIRECT INTERACTION WITH THE MARKET DUE TO THE FACT THAT WORK WAS OUTSOURCED TO THE INDIAN ENT ITY FROM ITS AE. THE ASSESSEE HAD ENTERED INTO THE FOLLOWING INTERNATION AL TRANSACTIONS: 3 S.NO. NATURE OF TRANSACTION VALUE 1. INCOME FROM BACK OFFICE OPERATIONS (RESEARCH SERVICES) RS. 297 157 913 TOTAL RS. 297 157 913 6. THE ASSESSEE HAD SELECTED TNMM AS THE MOST APPRO PRIATE METHOD FOR BENCH MARKING THIS TRANSACTION. IT HAD ALSO SELECT ED OP/TC AS THE MOST APPROPRIATE PROFIT LEVEL INDICATOR FOR THE BENCH MA RKING OF THE INTERNATIONAL TRANSACTIONS. IN THE TP REPORT THE ASSESSEE HAD SEL ECTED FOLLOWING SEVEN COMPARABLE COMPANIES: S. NO. NAME OF THE COMPARABLE 1 ACE SOFTWARE EXP 2 ALPHAGEO (INDIA ) LTD. 3 BRELS INFOTECH 4 C S S TECHNERGY LTD. 5 KLG SYSTEL 6 ONLINE MEDIA SOL 7 VAMAN TECHNOLOGY 7. THE ASSESSEE HAD ADOPTED UPPER FILTER OF RS. 50 CRORES TURNOVER FOR SELECTION WHICH RESULTED INTO THE ABOVE SEVEN COM PARABLES. THE AVERAGE OPERATING MARGIN OF THESE COMPARABLES WAS 7.22% WHE REAS THAT OF THE ASSESSEE WAS 6.50% AND ACCORDINGLY ASSESSEE CONCL UDED THAT THE INTERNATIONAL TRANSACTION ENTERED INTO WITH AE WAS AT ARMS LENGTH. 8. LD. TPO INCREASED THE UPPER SALES FILTER TO RS. 150 CRORES AND ALSO DIRECTED FOR USING CURRENT YEAR DATA ON THE BASIS O F WHICH THE ASSESSEE FOUND 4 21 COMPARABLES. SINCE 12 COMPARABLES WERE HAVING RP T MORE THAN 15% THEREFORE THEY WERE REJECTED BY ASSESSEE AND ONLY 9 WERE LIFTED WHICH WERE AS UNDER: S. NO. NAME OF THE COMPARABLE 1 ACE SOFTWARE EXP 2 ALPHAGEO (INDIA) LTD. 3 BRELS INFOTECH 4 C S S TECHNERGY LTD. 5 KLG SYSTEL 6 ALLSEC TECHNOLOGY LTD. 7 BT TECHNET LTD. 8 TRANSWORKS INFORMATION SERVICES LTD. 9 TUTIS TECHNOLOGY LTD. 9. OUT OF THE ABOVE NINE COMPARABLES TPO REJECTED TWO COMPARABLES ON THE GROUND OF DIFFERENT YEAR ENDINGS: (I) M/S BT TECHNET LTD. FOR WHICH THE YEAR ENDED MARCH 2004; AND (II) M/S BRELS INFOTCH FOR WHICH YEAR ENDED WAS JUNE 20 04. 10. M/S BT TECHNET LTD. WAS ALSO REJECTED ON THE GR OUND THAT IT HAD NO FOREIGN EXCHANGE EARNINGS. LD. TPO ALSO SCRUTINIZED THE COMPARABLES REJECTED BY ASSESSEE ON THE GROUND THAT RELATED PAR TY TRANSACTIONS WERE MORE THAN 15% AND POINTED OUT THAT FOLLOWING TWO COMPARA BLES WERE TO BE INCLUDED AS THEY PERFORMED SIMILAR FUNCTIONS: (I) ICRA TECHNO ANALYTICS LTD.; AND (II) TECH MAHINDRA (R&D SERVICES LTD.) 5 ACCORDINGLY LD. TPO PROPOSED TO USE THE FOLLOWING COMPARABLES FOR THE BENCHMARKING OF THE INTERNATIONAL TRANSACTION: S. NO. FINANCIAL HEAD YEAR END OP/TC % 1 ACE SOFTWARE EXPORTS 2005 MARCH 14.92% 2 ALLSEC TECHNOLOGIES LTD. 2005 MARCH 27.24% 3 ALPHAGEO (INDIA) LTD. 2005 MARCH 23.78% 4 C S S TECHNERGY LTD. 2005 MARCH 11.15% 5 K L G SYSTEL LTD. 2005 MARCH 7.95% 6 TRANSWORKS INFORMATION SERVICES 2005 MARCH 2.71% 7 TUTIS TECHNOLOGIES LTD. 2005 MARCH 7.28% 8 TECH MAHINDRA (R&D) 2005 MARCH 19.8% 9 ICRA TECHNO ANALYTICS LTD 2005 MARCH 27.65% AVERAGE 15.83% 11. BEFORE LD. TPO THE ASSESSEE HAD INTER ALIA SU BMITTED THAT THE MARGIN OF THESE TWO ADDITIONAL COMPARABLES HAD TO BE RECOM PUTED. LD. TPO ACCEPTED THE ASSESSEES CONTENTION AS PER HIS FINDI NG ON PAGES 47 & 48 OF HIS ORDER IN REGARD TO TECH MAHINDRA (R&D SERVICES LTD.) AND ALSO IN REGARD TO ICRA TECHNO ANALYTICS LTD. THE FINDINGS OF WHIC H ARE CONTAINED AT PAGES 49 & 50 OF HIS ORDER. HE FURTHER POINTED OUT THAT T HE MARGINS OF THE REMAINING SEVEN COMPARABLES ON THE LINES OF THE CO MPUTATION OF THESE TWO COMPARABLES IS TO BE DONE AGAIN. HE ACCORDINGLY RECOMPUTED THE MARGINS 6 OF ALL THE OTHER SEVEN COMPARABLES THE DETAILS OF WHICH ARE CONTAINED FROM PAGES 51 TO 55 OF HIS ORDER AND ACCORDINGLY FINAL SELECTION OF COMPARABLES WAS DONE AS UNDER: S. NO. FINANCIAL HEAD YEAR END OP/TC % 1 ACE SOFTWARE EXPORTS 2005 MARCH 21.72% 2 ALLSEC TECHNOLOGIES LTD. 2005 MARCH 28.03% 3 ALPHAGEO (INDIA) LTD. 2005 MARCH 34.07% 4 C S S TECHNERGY LTD. 2005 MARCH 12.14% 5 K L G SYSTEL LTD. 2005 MARCH 8.53% 6 TRANSWORKS INFORMATION SERVICES 2005 MARCH 12.19% 7 TUTIS TECHNOLOGIES LTD. 2005 MARCH 9.59% 8 TECH MAHINDRA (R&D) 2005 MARCH 10.43% 9 ICRA TECHNO ANALYTICS LTD 2005 MARCH 21.11% AVERAGE 17.53% 12. LD. TPO ALSO REJECTED THE WORKING CAPITAL ADJUS TMENT AS CLAIMED BY THE ASSESSEE OBSERVING AT PAGE 50 OF HIS ORDER THAT ASSESSEE HAD NOT DEMONSTRATED THAT THERE WAS A NEED FOR EXTRA WORKIN G CAPITAL TO CARRY OUT THE INTERNATIONAL TRANSACTION DURING FY 2004-05. HE POI NTED OUT THAT IN THE LAST TWO YEARS ASSESSEE HAD CARRIED OUT SUBSTANTIAL EXPA NSION ACTIVITY WITHIN INDIA AND OUTSIDE INDIA. THIS COMPANY ALSO OPENED A CENTRE IN CHILE. HE POINTED OUT THAT IT WAS NOT CLEAR WHETHER THE WORKI NG CAPITAL ADJUSTMENT 7 SOUGHT BY THE ASSESSEE WAS FOR THE EXPANSION ACTIVI TY OR FOR THE EXECUTION OF THE INTERNATIONAL TRANSACTION CARRIED OUT BY THE AS SESSEE. HE OBSERVED THAT THE WORKING CAPITAL ADJUSTMENT COULD ONLY BE PROVIDED I F THE ASSESSEE COULD DEMONSTRATE THAT THE WORKING CAPITAL WAS NOT ADEQUA TE FOR THE NORMAL BUSINESS ACTIVITIES RELATING TO INTERNATIONAL TRANS ACTIONS. HE ACCORDINGLY REJECTED THE ASSESSEES CLAIM FOR WORKING CAPITAL A DJUSTMENT. 13. LD. TPO DETERMINED THE ALP AS UNDER: DETERMINATION OF ARMS LENGTH PRICE OP/TC = 17.53% TOTAL COST = 29 00 37 918 ARMS LENGTH REVENUE = 17.53% X 29 00 37 918 = RS. 34 08 81 565 BOOK VALUE OF REVENUE = RS. 30 86 86 545 DIFFERENCE = RS. 3 21 95 020/- 14. LD. CIT(A) UPHELD THE LD. TPOS FINDING REGARDI NG APPLYING UPPER LIMIT OF SALES FILTER OF RS. 150 CRORES. HOWEVER H E REJECTED FOLLOWING FOUR COMPARABLES OUT OF NINE SELECTED BY LD. TPO: - ACE SOFTWARE EXP - C S S TECHNERGY LTD. - KLG SYSTEL - TECH MAHINDRA (R&D SERVICES LTD.) 15. FURTHER HE ALLOWED THE WORKING CAPITAL ADJUSTM ENT ONLY IN REGARD TO INTEREST ON LOANS TAKEN BY BOTH THE COMPARABLES AS WELL AS THE ASSESSEE. 16. LD. CIT(A) FURTHER EXAMINED THE TPOS COMPUTATI ON OF OPERATING PROFIT AND HELD THAT STOCK ADJUSTMENT AND MISC. INC OME IS TO BE TREATED AS 8 OPERATING INCOME AND FINANCE CHARGES AND MISC. EXPE NSES WERE TO BE TREATED AS OPERATING EXPENSES FOR BOTH THE TESTED PARTY AS WELL AS THE COMPARABLES. 17. LD. CIT(A) COMPUTED THE ALP ON THE BASIS OF REC OMPUTED MARGINS AS UNDER: S.NO. NAME OF COMPANY OP/TC 1 ALPHAGEO (INDIA) LTD. 14.22% 2 ALLSEC TECHNOLOGIES LTD. 23.34% 3 TRANSWORKS INFORMATION SERVIECS LTD. 1.41% 4 TUTIS TECHNOLOGIES LTD. 4.34% 5 I C R A TECHNO ANALYTICS LTD. 13.60% AVERAGE 11.38% 18. ACCORDINGLY HE HELD THAT SINCE THE OP/TC MARGI N EARNED BY THE ASSESSEE WAS WITHIN 5% RANGE PERMISSIBLE UNDER PRO VISO TO SECTION 92C(2) OF THE ARMS LENGTH MARGIN THEREFORE THE INTERNAT IONAL TRANSACTIONS OF THE ASSESSEE WERE HELD TO BE AT ARMS LENGTH. AFTER ADJ UDICATING THE CORPORATE ISSUES LD. CIT(A) FINALLY PARTLY ALLOWED THE ASSES SEES APPEAL. BEING AGGRIEVED WITH THE ORDER OF LD. CIT(A) THE DEPARTM ENT IS IN APPEAL BEFORE US AND THE ASSESSEE HAS FILED CROSS OBJECTION. 19. ITA NO. 393/DEL/2010 ( DEPARTMENTAL APPEAL) : 20. THE DEPARTMENT HAS FILED ADDITIONAL GROUND OF A PPEAL WHICH IS REPRODUCED HEREUNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE W HETHER THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN ALLOWING WO RKING CAPITAL ADJUSTMENTS TO THE ASSESSEE WITHOUT CONSIDE RING THE DETAILED FINDING OF THE TRANSFER PRICING OFFICER IN HIS ORDER U/S 92CA(3) DATED 30.09.2008. 9 2. THE APPELLANT CRAVES LEAVE TO ADD ALTER OR AMEND A NY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 21. LD. COUNSEL SUBMITTED THAT THE ADDITIONAL GROUN D RAISED BY THE DEPARTMENT SHOULD NOT BE ENTERTAINED BECAUSE AO HAS NOT FILED THIS ADDITIONAL GROUND. HE FURTHER SUBMITTED THAT NO RE ASON HAS BEEN GIVEN AS TO WHY THIS GROUND WAS NOT TAKEN EARLIER. 22. WE HAVE CONSIDERED THE OBJECTIONS RAISED BY LD. COUNSEL FOR THE ASSESSEE BUT DO NOT FIND MUCH SUBSTANCE IN THE S AME BECAUSE THE COVERING LETTER DATED 30.1.2014 BY WHICH THE ADDITIONAL GROU ND HAS BEEN RAISED WAS SIGNED BY AO. HE HAS ANNEXED THE COPY OF AUTHORIZAT ION OF CIT DELHI-IV NEW DELHI DATED 24.1.2014 IN ORIGINAL AND THEREFOR E THE SAME FORMS PART OF THE ITOS LETTER. FURTHER AS REGARDS NO REASONS BE ING GIVEN FOR NOT TAKING THIS GROUND EARLIER WE FIND THAT THIS ISSUE HAS BE EN CONSIDERED BY TPO AS WELL AS BY LD. CIT(A) AND ALL THE FACTS ARE ON RECO RD AND THIS BEING A LEGAL ISSUE HAS TO BE CONSIDERED IN ORDER TO IMPART SUBS TANTIAL JUSTICE TO THE DEPARTMENT. WE ACCORDINGLY ADMIT THIS ADDITIONAL GROUND. 23. LD. DR SUBMITTED THAT LD. CIT(A) HAS NOT TAKEN INTO CONSIDERATION THE OBJECTIONS RAISED BY LD. TPO IN NOT ALLOWING THE WO RKING CAPITAL ADJUSTMENT. HE POINTED OUT THAT LD. TPO CLEARLY OBSERVED THAT T HE WORKING CAPITAL ADJUSTMENT COULD ONLY BE PROVIDED IF THE ASSESSEE C OULD DEMONSTRATE THAT THE WORKING CAPITAL WAS INADEQUATE FOR THE NORMAL BUSIN ESS ACTIVITIES RELATING TO INTERNATIONAL TRANSACTIONS. HOWEVER LD. CIT(A) COM PLETELY DISREGARDED THIS ASPECT AND HELD THAT THE INTEREST ON LOANS TAKEN B Y BOTH THE COMPARABLES AS WELL AS THE ASSESSEE SHOULD BE TREATED AS PART OF OPERATING EXPENSE. 10 24. LD. COUNSEL REFERRED TO PARA 15.4 OF CIT(A)S O RDER WHEREIN HE HAS OBSERVED THAT FOR THE PURPOSE OF COMPUTING REASONAB LE ACCURATE ADJUSTMENT ON ACCOUNT OF WORKING CAPITAL THE NEED FOR THE ADJU STMENT ARISES ONLY IF THE ELEMENTS OF WORKING CAPITAL I.E. DEBTORS AND CREDIT ORS ARE AFFECTED BY THE INTERNATIONAL TRANSACTIONS WHICH THE TESTED PARTY UNDERTAKES WITH ITS AES. HE FURTHER OBSERVED THAT AS A FIRST STEP IF THE INTERN ATIONAL TRANSACTIONS WITH AE DO NOT IMPACT ANY OF THE ELEMENTS OF THE WORKING CA PITAL THERE SHOULD BE NO NEED FOR A WORKING CAPITAL ADJUSTMENT. 25. LD. COUNSEL POINTED OUT THAT THE BASIC PREMISE ON WHICH WORKING CAPITAL ADJUSTMENT HAS BEEN CONSIDERED BY LD. CIT(A ) IS NOT CORRECT BECAUSE WORKING CAPITAL ADJUSTMENT IS ALWAYS IN RESPECT OF COMPARABLES AND NOT IN RESPECT OF TESTED PARTY. HE POINTED OUT THAT OPENI NG AND CLOSING WORKING CAPITAL DATA IS SUFFICIENT TO ALLOW ADJUSTMENT AS HAS BEEN HELD IN THE FOLLOWING ORDERS OF ITAT: - NEW RIVER SOFTWARE SERVICES PVT. LTD. VS. ACIT IT A NO. 451/DEL/13 DATED 27.3.2015. - NAVISITE INDIA PVT. LTD. VS. ITO ITA NO. 5329/DEL /12 DATED 31.5.2013. 26. THE ASSESSEE HAS ALSO FILED CROSS OBJECTION ON THIS ISSUE. 27. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE RECORD OF THE CASE. WE ARE NOT IN AGREE MENT WITH THE FINDINGS OF LD. CIT(A) THAT WORKING CAPITAL ADJUSTMENT CANNOT B E COMPUTED ON THE BASIS OF YEAR END FIGURES. WE FIND THAT IN THE CASE OF NAVISITE INDIA PVT. LTD. (SUPRA) IT HAS BEEN HELD THAT THE OPENING WORKING CAPITAL DEPLOYED AND THE CLOSING WORKING CAPITAL DEPLOYED HAS TO BE TAKEN IN TO CONSIDERATION FOR MEETING ANY ADJUSTMENT TO THE WORKING CAPITAL DEPLO YED IN THE CASE OF A 11 COMPARABLE. IF WE ACCEPT THE CONTENTION OF LD. CIT( A) THEN IT WILL BECOME IMPOSSIBLE TO ALLOW ANY WORKING CAPITAL ADJUSTMENT TO ASSESSEE BECAUSE IT IS IMPOSSIBLE TO ARRIVE AT WORKING CAPITAL REQUIREMENT ON DAY TO DAY BASIS. IN TP ANALYSIS THERE IS ALWAYS AN ELEMENT OF ESTIMATIO N BECAUSE IT IS NOT AN EXACT SCIENCE. ONE HAS TO SEE THAT REASONABLE ADJUS TMENT IS BEING MADE SO AS TO BRING BOTH COMPARABLE AND TESTED PARTY ON SAME F OOTING. ACCORDINGLY THE ADDITIONAL GROUND RAISED BY THE DEPARTMENT IS REJEC TED. 28. LD. DR SUBMITTED THAT ASSESSEE IS KPO. IN THIS REGARD HE REFERRED TO PARA 2.3 OF TPOS ORDER AND ALSO REFERRED TO PAGE 6 6 OF TPOS ORDER WHEREIN LD. TPO HAS OBSERVED AS UNDER: IT IS SEEN FROM THE SELF DECLARATION OF THE COMPANY ON ITS WEBSITE THAT THIS COMPANY IS ENGAGED IN THE HIGH EN D ACTIVITIES OF KPO SEGMENT AND THIS COMPANY IS A LEADER IN K PO SEGMENT. IDEALLY SPEAKING THERE ARE NO COMPARABLES FOR THIS COMPANY IN THE INDIAN BUSINESS ENVIRONMENT WHICH IS EVIDENT FROM THE CONTENTS OF THE COMPANY WEBSITE. THEREFORE THE COMPARABILITY ANALYSIS WHICH ASSESSEE HAD CARRIED O UT @ IN THE TRANSFER PRICING DOCUMENTATION IS INADEQUATE TO BEN CH MARK THE INTERNATIONAL TRANSACTIONS. THEREFORE IN THE COMPA RABILITY ANALYSIS THE COMPARABLES WHICH HAVE BEEN IDENTIFIE D ARE IN A DISADVANTAGEOUS POSITION IN COMPARISON TO THE ASSES SEE. 8.3. IT MAY BE MENTIONED THAT THE ASSOCIATED ENTERP RISES WITH WHICH THE ASSESSEE HAD UNDERTAKEN THE INTERNATIONAL TRANSACTION ARE LOCATED IN LOW-TAX JURISDICTIONS OR TAX HEAVEN COUNTRY NAMELY BERMUDA. THERE EXISTS A MARKED DIFFE RENCE IN TAX STRUCTURE IN INDIA AND BERMUDA. THIS LEADS TO A N OPPORTUNITY FOR THE TAX ARBITRAGE FOR ANY ASSESSEE WHO IS CARRYING OUT BUSINESS IN THE CIRCUMSTANCES IDENTICA L OF THE ASSESSEE IS OPERATING . 12 29. HE SUBMITTED THAT ASSESSEE WAS THE FIRST KPO E STABLISHED IN THE COUNTRY AND WAS HIGH-END SERVICE PROVIDER. LD. DR F URTHER SUBMITTED THAT LD. CIT(A) HAS TAKEN INTO CONSIDERATION ALL COMPARABLES WHICH WERE BPO. HE FURTHER POINTED OUT THAT MARGINS WERE RECOMPUTED FO R ALL COMPARABLES WITHOUT AFFORDING ANY OPPORTUNITY TO ASSESSEE. HE S UBMITTED THAT NO REASON HAS BEEN GIVEN BY LD. CIT(A) FOR REJECTING THREE CO MPARABLES ON THE GROUND THAT FOREIGN EXCHANGE EARNINGS WAS LESS THAN 50%. F URTHER HE REJECTED TECH MAHINDRA N(R&D) ON THE GROUND THAT THE SAME WAS FU NCTIONALLY NOT COMPARABLE TO ASSESSEE. HE REFERRED TO PAGE 57 OF C IT(A)S ORDER WHERE LD. CIT(A) HAS GIVEN FINDINGS ON VARIOUS ITEMS IN REGAR D TO DETERMINATION OF OPERATING PROFIT. HE POINTED OUT THAT LD. TPO HAD N EVER OPPORTUNITY FOR CONSIDERING ADJUSTMENTS ALLOWED BY LD. CIT(A). HE P OINTED OUT THAT LD. CIT(A) HAD ARRIVED AT MARGINS LESSER THAN ARRIVED A T BY ASSESSEE AFTER WORKING CAPITAL ADJUSTMENT. HE POINTED OUT THAT THE MARGINS ARRIVED AT BY LD. CIT(A) WERE 14.22% A AGAINST MARGINS ARRIVED AT 21. 88% BY ASSESSEE ITSELF AFTER ALLOWING WORKING CAPITAL ADJUSTMENT. LD. DR F URTHER REFERRED TO PAGE 6 OF CIT(A)S ORDER WHEREIN THE GROUND RAISED BEFORE LD. CIT(A) ARE CONCERNED IN WHICH GROUND NO. 4.1 READS AS UNDER: 4.1. THE LD. AO/LD. TPO ERRED IN INTERPRETING THAT THE IT ENABLED SERVICES ACTIVITIES OF THE APPELLANT CAN E CATEGORIZED AS A HIGH END SERVICE AND CAN BE PLACED HIGH IN THE VA LUE CHAIN OF THE IT ENABLED SERVICES INDUSTRY IN INDIA AND THAT THE APPELLANT IS ENGAGED IN SOFTWARE DEVELOPMENT AND CALL CENTRE ACTIVITIES. 30. LD. DR SUBMITTED THAT LD. CIT(A) HAS NOT ADJUDI CATED THIS GROUND AND THERE IS NO CHALLENGE IN CO ON THIS COUNT. THEREFOR E THE FACT THAT ASSESSEE IS KPO RENDERING HIGH END SERVICES IS NOT DISPUTED. 13 31. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT TEC H MAHINDRA (R&D) HAS BEEN REJECTED BY LD. CIT(A) WHICH WAS AN ITES AND THEREFORE NOW THIS GROUND CANNOT BE TAKEN BY THE DEPARTMENT. HE FURTHE R POINTED OUT THAT NONE OF THE COMPANIES SELECTED BY LD. TPO WERE ENGAGED I N ANY KPO ACTIVITIES AND THEREFORE NOW THIS ISSUE CANNOT BE AGITATED. HE POINTED OUT THAT ASSESSEE WAS PRIMARILY RENDERING A CALL CENTRE. 32. LD. COUNSEL FURTHER POINTED OUT THAT AT PAGE 47 OF TPOS ORDER WHEREIN HE HAS CONSIDERED THE ISSUE REGARDING BT T ECHNET LTD. AND HAD REJECTED THIS COMPANY BECAUSE IT HAD ALMOST NIL FOR EIGN EXCHANGE REVENUE EARNED IN FY 2004-05 WHEREAS IN THE CASE OF ASSESS EE THE ENTIRE REVENUE WAS IN FOREIGN EXCHANGE. ON THE SAME FOOTING LD. CI T(A) REJECTED OTHER THREE COMPARABLES NOTED EARLIER. 33. AS REGARDS TECH MAHINDRA (R&D) IS CONCERNED LD . COUNSEL REFERRED TO PAGE 40 OF LD. CIT(A)S ORDER WHEREIN HE HAS OB SERVED HOW THIS COMPARABLE WAS FUNCTIONALLY DIFFERENT FROM ASSESSEE AS IT WAS PROVIDING SOFTWARE DEVELOPMENT SERVICES. HE SUBMITTED THAT NO THING HAS BEEN BROUGHT ON RECORD BY REVENUE TO DISLODGE THIS FINDING OF LD . CIT(A). 34. AS REGARDS LD. DRS SUBMISSION REGARDING COMPUT ATION OF OPERATING MARGINS BY LD. CIT(A) HE SUBMITTED THAT THE MAIN I SSUE WAS WHETHER CERTAIN EXPENSES WERE OPERATING OR NON-OPERATING IN NATURE. HE REFERRED TO PAGE 268 OF PB WHEREIN COMPUTATION OF OPERATING PROFIT MARG INS WSS FILED BEFORE AO ON 7.7.2008. LD. COUNSEL SUBMITTED THAT RULE 46A I S NOT APPLICABLE BECAUSE NO FRESH EVIDENCE WAS FILED BEFORE LD. CIT(A). HE F URTHER SUBMITTED THAT LD. DR HAS NOT POINTED OUT ANY FRESH EVIDENCE BEING FIL ED BEFORE LD. CIT(A). AS 14 THERE WAS NO ADDITIONAL EVIDENCE FILED BEFORE LD. CIT(A) THERE IS NO QUESTION OF APPLICABILITY OF RULE 46A. 35. LD. COUNSEL REFERRED TO PB II FILED ON 22.8.20 16 WHEREIN SHOW CAUSE NOTICE RECEIVED FROM TPO DATED 25.7.2008 IS CONTAIN ED FROM PAGES 1 TO 26. LD. COUNSEL REFERRED TO PAGE 285 OF PB WHEREIN ASS ESSEES REPLY DATED 11.8.2008 IS CONTAINED WHEREIN AT PAGE 289 CHART W AS FILED FOR DETERMINING THE OPERATING PROFIT MARGINS. LD. COUNSEL REFERRED TO PAGE 55 OF TPOS ORDER AND POINTED OUT THAT AFTER CONSIDERING THESE MISTAK ES LD. TPO DETERMINED THE PLI AT 17.53% AS AGAINST 15.83% IN SHOW CAUSE N OTICE. LD. COUNSEL REFERRED TO PB II FILED ON 22.8.2016 AND REFERRED TO PAGE 72 OF THE SAME WHEREIN IN REGARD TO GROUND NO. 4.6 RAISED BEFORE L D. CIT(A) IN REGARD TO COMPUTATION OF OPERATING PROFIT/ TOTAL COST EARNED BY THE COMPARABLE COMPANY FOR MAKING TP ADDITIONS WAS MENTIONED. 36. LD. CIT(A) CONSIDERED THESE SUBMISSIONS AND TH EREAFTER ARRIVED AT PROFIT MARGIN OF 11.38% FOR WHICH DETAILS WERE FURN ISHED AT PAGES 122 TO 122A OF THE SUBMISSIONS. HE THEREFORE SUBMITTED T HAT ONLY THE COMPUTATIONAL ERRORS WERE CORRECTED BY LD. CIT(A). 37. AS REGARDS THE ISSUE RAISED BY LD. DR REGARDING KPO/BPO LD. COUNSEL SUBMITTED THAT LD. CIT(A) RIGHTLY TREATED THE ASSES SEE AS ITES. HE POINTED OUT THAT ON THIS COUNT THERE WAS NO SHOW CAUSE ISSU ED BY LD. TPO AND THERE IS NO GROUND OF APPEAL. HE FURTHER POINTED OUT THAT TH E CONCEPT OF BPO AND KPO IS ALWAYS OVERLAPPING. HE REFERRED TO PAGE 43 O F PB-II DATED 22.8.2016 WHEREIN THE SUBMISSIONS MADE BEFORE LD. CIT(A) ARE CONTAINED AND POINTED OUT THAT SPECIFIC GROUND WAS TAKEN BEFO RE LD. CIT(A) THAT LD. AO/ TPO ERRED IN INTERPRETING THAT THE IT ENABLED S ERVICE ACTIVITIES OF THE 15 ASSESSEE COULD BE CATEGORIZED AS HIGH END SERVICE AND COULD BE PLACED HIGH IN THE VALUE CHAIN OF THE ITES INDUSTRY. HE POINTE D OUT THAT IN THIS REGARD ASSESSEE HAD REFERRED TO TP DOCUMENTATION AND HAD P OINTED OUT THAT ASSESSEE DERIVED BUSINESS FROM 4 MAJOR SEGMENTS WHICH INCLU DED BUSINESS INFORMATION AND MARKET RESEARCH (PRIMARY). THIS ASP ECT HAS BEEN REFERRED TO EARLIER ALSO. 38. LD. COUNSEL POINTED OUT THAT ASSESSEE IS ONLY I N DATA CALCULATION AND THERE IS NO VALUE ADDITION AT ASSESSEES END. ASSE SSEE ACTUALLY ACTS AS SUPPORT SERVICE PROVIDER. LD. COUNSEL RELIED ON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF RAMPGREEN SOLUTION PVT. LTD. VS. CIT (ITA NO. 102/2015 DATED 10.08.2015) 377 ITR 533 WHEREIN THE HONBLE DELHI HIGH COURT HAS NOTED WITH REFERENCE TO THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN MAERSK GLOBAL CENTERS (INDIA ) PVT. LTD . (ITA 7466/MUM/2012) THAT THERE MIGHT BE A CASE WHERE AN ENTITY MAY BE RENDERING A MIX OF SERVICES SOME OF WHICH MAY BE FUNCTIONALLY COMPARABLE TO KPO WHILE OTHER SERVICES MAY NOT. IN SUCH CASE CLASSIFICATION OF BPO AND KPO MAY NOT BE FEASIBLE. ACCORDINGLY IT WAS HELD THAT NO STRAIT JACKET FORMULA CAN BE APPLIED. FURTHER IT WAS HELD THAT IN CASE WHERE THE CATEGORIZATION OF SERVICES RENDERED CANNOT BE DEFIN ED WITH CERTAINTY IT WOULD BE APPOSITE TO EMPLOY THE BROAD FUNCTIONALITY TEST AND THEN EXCLUDE UNCONTROLLED ENTITIES WHO WERE FOUND TO BE MATERIA LLY DIS-SIMILAR IN ASPECTS AND FEATURES THAT HAVE A BEARING ON THE PROFITABILI TY OF THOSE ENTITIES. 39. IT WAS FURTHER HELD THAT WHERE THE CONTROLLED T RANSACTIONS WERE CLEARLY IN THE NATURE OF LOW-END ITES SUCH AS CALL CENTRES ETC. FOR RENDERING DATA 16 PROCESSING NOT INVOLVING DOMAIN KNOWLEDGE INCLUSIO N OF ANY KPO SERVICE PROVIDER AS A COMPARABLE WOULD NOT BE WARRANTED. 40. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE RECORD OF THE CASE. WE MAY POINT OUT TH AT DEPARTMENT HAS NOT SPECIFICALLY OBJECTED TO REJECTION/ INCLUSION OF CO MPARABLES BY LD. CIT(A). HOWEVER SINCE THE SELECTION OF COMPARABLES HAS A B EARING ON THE DETERMINATION OF ALP THEREFORE WE PROCEED TO CONS IDER THE INCLUSION/ EXCLUSIONS OF COMPARABLES DONE BY LD. CIT(A). 41. NOW COMING TO THE ISSUE OF COMPARABLES WE FIND THAT AS FAR AS REJECTION OF THREE COMPARABLES VIZ. ACE SOFTWARE EX P. C S S TECHNERGY LTD. AND KLG SYSTEL IS CONCERNED LD. CIT(A) HAS RE JECTED THESE COMPARABLES FOR THE REASON THAT IT HAD NO FOREIGN E XCHANGE EARNINGS. THIS HAS BEEN DONE BECAUSE BT TECHNET LTD. WAS REJECTED BY LD. TPO ON THE GROUND THAT IT HAD NO FOREIGN EXCHANGE EARNINGS. W E DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) ON THIS C OUNT BECAUSE LD. TPO WAS REQUIRED TO BE CONSISTENT IN HIS APPROACH IN REJECT ION/ SELECTION OF COMPARABLES. TECH MAHINDRA (R&D) : 42. AS FAR AS THIS COMPARABLE IS CONCERNED WE FIND THAT LD. CIT(A) HAS OBSERVED AT PAGE 40 AS UNDER: TECH MAHINDRA (R&D): 17 I HAVE PERUSED THE ANNUAL REPORT AND WEBSITE OF TEC H MAHINDRA (R&D). THE NOTES TO ACCOUNTS CLEARLY STATES THAT TH E COMPANY IS ENGAGED IN SOFTWARE DEVELOPMENT SERVICES WHILE EVAL UE SERVE INDIA IS ENGAGED IN PROVISION OF IT ENABLED RESEARC H SERVICES. NASSCOM HAS DISTINGUISHED BETWEEN THESE TWO DIFFERE NT SET OF SERVICE PROVIDERS. I IT SERVICES OR SOFTWARE SERVIC ES CONSIST OF APPLICATIONS SOFTWARE (ENTERPRISE TECHNICAL AND EN TERTAINMENT SOFTWARE AIMED AT BUSINESSES AND HOME USERS) AND SYSTEMS/DATABASE MANAGEMENT SOFTWARE. ON THE OTHER HAND IT ENABLED SERVICES ESSENTIALLY INCLUDES BACK OFFICE S ERVICES IN THE NATURE OF CUSTOMER SUPPORT TECHNICAL SUPPORT TELE MARKETING INSURANCE PROCESSING DATA PROCESSING INTERNET / O NLINE / WEB RESEARCH AND SO ON. THUS IT IS EVIDENT THAT THE FU NCTIONAL PROFILE OF A COMPANY ENGAGED IN IT SERVICES AND IT ENABLED SERVICES IS DIFFERENT. ACCORDINGLY BASED ON THE ABOVE I REJECT TECH MAHI NDRA (R&D) AS A COMPARABLE COMPANY FOR THE APPELLANT. 43. NOTHING HAS BEEN BROUGHT ON RECORD TO CONTROVER T THE FINDINGS RECORDED BY LD. CIT(A). IT IS NOT DISPUTED THAT ASS ESSEE IS NOT IN SOFTWARE DEVELOPMENT SERVICES AND IS PRIMARILY PROVIDING IT ENABLED SERVICES TO ITS AES. IN THE TP STUDY IT HAS BEEN DESCRIBED AS HIGH END IT ENABLED SERVICE BECAUSE THE ASSESSEE CONDUCTS RESEARCH ACTIVITY AND PROVIDE KNOWLEDGE MANAGEMENT SERVICES TO ITS AES. BUT THIS COULD NOT BE COMPARED WITH A COMPANY WHICH WAS ENGAGED IN SOFTWARE DEVELOPMENT S ERVICES. THE ASSESSEES ESSENTIAL SERVICE WERE IT ENABLED SERVIC ES ONLY. WE ACCORDINGLY CONFIRM THE ORDER OF LD. CIT(A) ON THIS COUNT. 44. GROUND NOS. 4 & 5: NOW COMING TO THE ISSUE REGA RDING COMPUTATION OF OPERATING PROFIT MARGIN OF COMPARABLES: IN THIS REGARD THE DEPARTMENT IN GROUND NO. 4 HAS ASSAILED THE FINDINGS OF LD. CIT(A ) FOR ACCEPTING THE 18 ASSESSEES CONTENTION THAT STOCK ADJUSTMENT SHOULD BE TREATED AS PART OF OPERATING EXPENSE WHEREAS THE TPO HAD TREATED THE S AME AS PART OF OPERATING INCOME. WE FIND THAT LD. CIT(A) HAS OBSERVED IN THI S REGARD AS UNDER: A) STOCK ADJUSTMENT- THE APPELLANT IN ITS ABOVE SUB MISSIONS HAS STATED THAT STOCK ADJUSTMENT HAS BEEN TREATED A S OPERATING INCOME WHILE CALCULATING THE PLI. THE APPELLANT FUR THER STATES SINCE IT PERTAINS TO RAW MATERIAL IN~ENTORY THEREF ORE IT SHOULD BE CONSIDERED AS PART OF OPERATING EXPENSE. AS STOC K ADJUSTMENTS PERTAIN TO PURCHASES MADE THEREFORE IT SHOULD BE TREATED AS A COST ITEM. I HAVE CONSIDERED THE ABOVE SUBMISSION OF THE APPEL LANT AND IT IS OBSERVED THAT SCHEDULE VI OF THE COMPANIES ACT 1956 DOES NOT SPECIFY ANY FORMAT FOR THE PROFIT AND LOSS ACCO UNT. ACCORDINGLY COMPANIES IN GENERAL PRACTICE EITHER FOLLOW THE 'T' FORMAT OR THE VERTICAL' FORMAT FOR PREPARATION OF PROFIT AND LOSS ACCOUNT. FURTHER IN BOTH THE FORMATS THE 'CH ANGE IN STOCK' IS DISCLOSED EITHER IN 'INCOME' SIDE OR ADJU STED IN 'EXPENDITURE' SIDE. DIFFERENT COMPANIES ADOPT VARYI NG PRESENTATIONS FOR DISCLOSING 'CHANGE IN STOCK'. DIF FERENCE IN DISCLOSURE/ PRESENTATION SHOULD NOT LEAD TO DIFFERE NT PLI CALCULATIONS OF COMPANIES. ACCORDINGLY IT IS NECES SARY TO ADOPT A CONSISTENT WAY OF TREATING CHANGE IN STOCKS FOR P LI COMPUTATION PURPOSES. BASED ON THE VARIOUS ACCOUNTING PRINCIPLES AND STAN DARDS I AM OF THE VIEW THAT 'CHANGE IN STOCK' SHOULD IDEALLY B E ADJUSTED IN EXPENDITURE SO THAT ONE CAN HAVE A BETTER VIEW OF T HE COST INCURRED FOR MAKING SALES DURING A PARTICULAR PERIO D. THEREFORE IN MY VIEW FOR CALCULATING OPERATING PRO FIT FROM TP PERSPECTIVE ONE MUST ARRIVE AT THE COST OF GOODS S OLD AND THE FOLLOWING FORMULAE GIVES THE TRUE AND CORRECT PICTU RE OF COST OF GOODS SOLD. COST OF GOODS SOLD OPENING STOCK + PURCHASES + DIRE CT EXPENSES - CLOSING STOCK 19 WHEREAS THE REVENUE IS THE GROSS INFLOW FROM SALE OF GOO S OR FROM RENDERING SERVICES AND OTHER REVENUE STREAM W HICH IS LINKED WITH THE BUSINESS OPERATIONS. BASED ON THE ABOVE I AGREE WITH THE CONTENTION OF THE APPELLANT THAT STOCK ADJUSTMENTS SHOULD BE TREATED AS A PART OF OPERATING EXPENSES. 45. THE AFOREMENTIONED REASONING GIVEN BY LD. CIT(A ) CANNOT BE DISPUTED BECAUSE CHANGE IN STOCK HAS BEEN CONSIDERED AS AN E XPENDITURE SINCE THIS ESSENTIALLY REFERS TO THE COST OF GOODS SOLD. IT IS NOT DISPUTED THAT CONSISTENT METHOD HAS BEEN ADOPTED FOR ALL THE COMPARABLES UND ER CONSIDERATION IN THIS REGARD. WE DO NOT FIND ANY REASON TO INTERFERE WITH THESE FINDINGS OF LD. CIT(A) GROUND NO. 4 IS DISMISSED. 46. AS REGARDS GROUND NO. 5 SEEKING INVOCATION OF RULE 46A WE FIND THAT COMPUTATION OF OPERATING PROFIT MARGIN WAS CONSIDER ED BY LD. TPO ALSO AND BEFORE LD. CIT(A) THE ASSESSEE HAD GIVEN THE CORREC T MODE OF COMPUTATION BUT NO ADDITIONAL EVIDENCE WAS FILED. THEREFORE TH ERE WAS NO VIOLATION OF RULE 46A. ACCORDINGLY WE DO NOT FIND ANY REASON T O INTERFERE WITH THE ORDER OF LD. CIT(A) GROUND NO. 5 IS DISMISSED. 47. GROUND NO. 6: THE MAIN CONTENTION OF DEPARTMENT IS THAT LD. CIT(A) HAD CONCLUDED THAT MISC. INCOME AND MISC. EX PENSES WERE OPERATING PROFITS WITHOUT VERIFYING THEIR NATURE. WE FIND THA T LD. CIT(A) HAS OBSERVED IN REGARD TO MISC. INCOME THAT THE SAME PERTAINED T O INCOME FROM OTHER SOURCES AND THE MISC. INCOME WAS INCLUDED AS PART O F OPERATING PROFIT IN THE 20 CASE OF COMPARABLE COMPANY. THEREFORE THERE COULD NOT BE ANY PREJUDICE TO REVENUE ON THIS COUNT. AS REGARDS MISC. EXPENSES L D. CIT(A) HAS OBSERVED THAT THE SAME INCLUDED A MULTITUDE OF EXPENSES THAT WERE TOO SMALL IN VALUE. BUT SINCE THEY PERTAINED TO THE OPERATIONS OF THE C OMPANY THEY WERE TREATED AS OPERATING EXPENSES FOR BOTH THE TESTED PARTY AS WELL AS THE COMPARABLE COMPANIES. THE TP ANALYSIS AS WE HAVE EARLIER OBSE RVED IS NOT AN EXACT SCIENCE AND WE HAVE TO ARRIVE AT REASONABLE CONCLUS IONS WHICH WOULD NOT MATERIALLY AFFECT THE PROFIT MARGINS. THEREFORE WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDING OF LD. CIT(A) ON THIS CO UNT. IN THE RESULT GROUND NO. 6 IS DISMISSED. 48. GROUND NO. 7: THE DEPARTMENT HAS ASSAILED THE F INDING OF LD. CIT(A) IN CONSIDERING THE FINANCE CHARGES FOR COMPUTATION OF OPERATING PROFITS AND IN NOT QUANTIFYING THE FINANCE CHARGES BROUGHT IN AS OPERATING EXPENSE AND PROVIDING A LINE BY LINE CALCULATION OF THE OPERATI NG MARGIN. WE FIND THAT LD. CIT(A) HAS OBSERVED THAT FINANCE CHARGES WERE IN TH E NATURE OF BANK CHARGES WHICH PERTAINED TO THE BUSINESS OPERATIONS OF A COM PANY. HE FURTHER REFERRED TO THIS OBSERVATION IN REGARD TO WORKING CAPITAL AD JUSTMENT WHEREIN HE HAD HELD THAT THE INTEREST ON LOANS TAKEN BY BOTH THE C OMPARABLES AS WELL AS THE ASSESSEE SHOULD BE TREATED AS PART OF OPERATING EX PENSE. THESE FINDINGS HAVE NOT AT ALL BEEN CONTROVERTED. THEREFORE WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDING OF LD. CIT(A). GROUND NO . 7 IS DISMISSED. 49. IN THE RESULT DEPARTMENTS APPEAL IS DISMISSED. 21 50. AS WE HAVE DISMISSED THE REVENUES APPEAL BY UP HOLDING THE LD. CIT(A)S ORDER THE CROSS-OBJECTION FILED BY ASSESS EE HAS BECOME INFRUCTUOUS BECAUSE AFTER THE CIT(A)S ORDER THERE IS NO ADJUST MENT LEFT TO BE MADE. 51. IN THE RESULT DEPARTMENTAL APPEAL AS WELL AS T HE ASSESSEES CROSS OBJECTION ARE DISMISSED. ORDER PRONOUNCEMENT IN OPEN COURT ON 30/09/2016. SD/- SD/- (KULDIP SINGH) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30/09/2016. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI.