Dy. CIT, Circle 1(1), Pune v. Affinity express India Pvt. Ltd.,, Pune

ITA 595/PUN/2013 | 2007-2008
Pronouncement Date: 29-04-2015 | Result: Dismissed

Appeal Details

RSA Number 59524514 RSA 2013
Assessee PAN AABCC1224C
Bench Pune
Appeal Number ITA 595/PUN/2013
Duration Of Justice 2 year(s) 1 month(s) 26 day(s)
Appellant Dy. CIT, Circle 1(1), Pune
Respondent Affinity express India Pvt. Ltd.,, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 29-04-2015
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 29-04-2015
Date Of Final Hearing 10-03-2015
Next Hearing Date 10-03-2015
Assessment Year 2007-2008
Appeal Filed On 04-03-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI R.K. PANDA ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY JUDICIAL MEMBER ITA. NO.595/PN/2013 (ASSESSMENT YEAR : 2007-08) DCIT CIRCLE-1(1) PUNE .. APPELLANT VS. AFFINITY EXPRESS INDIA PVT. LTD. SURVEY NO.247/2 HINJEWADI PUNE 411057 PAN NO.AABCC1224C .. RESPONDENT ASSESSEE BY : SHRI KETAN VED & SHRI VISHAL SOLANKI DEPARTMENT BY : SHRI B.C. MALAKAR DATE OF HEARING : 09-04-2015 DATE OF PRONOUNCEMENT : 29-04-2015 ORDER PER R.K. PANDA AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 21-12-2012 OF THE CIT(A)-IT/TP PUNE RELATING TO ASSESSMENT YEAR 2007-08. 2. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESS EE IS A COMPANY ENGAGED IN THE BUSINESS OF EMBROIDERY SOFTWARE DESI GNING AND DOCUMENT CREATION. IT FILED ITS RETURN OF INCOME O N 31-10-2007 DISCLOSING NIL INCOME. DURING THE COURSE OF ASSESSMENT PROCEE DINGS THE AO NOTED THAT THE ASSESSEE HAS ENTERED INTO INTERNATIONAL TR ANSACTIONS WITH THE RELATED PARTIES/ASSOCIATED ENTERPRISES THE DETAILS OF WHICH ARE AS UNDER: SR.NO. DESCRIPTION OF TRANSACTION AMOUNT (RS.) METHOD USED 1 PROVISIONS OF DIGITIZING SERVICES 11 48 73 761 TNMM 2 PROVISION FOR DATA CONVERSION/CREATION SERVICE 19 05 53 874 TNMM 3 IMPORT OF CAPITAL GOODS 0 2 4 IMPORT OF CONSUMABLES 1 18 265 TNMM 5 RECEIPT OF LOAN 1 10 88 000 TNMM 6 REPAYMENT OF LOAN 6 30 709 TNMM TOTAL 31 72 64 609 HE THEREFORE MADE A REFERENCE U/S.92CA(1) TO THE TP O. THE TPO THEREAFTER ISSUED NOTICE U/S.92CA(2) OF THE I.T. AC T TO THE ASSESSEE ALONG WITH A DETAILED QUESTIONNAIRE TO MAKE ITS SUBMISSIO NS/PRODUCE DOCUMENTS TO SUPPORT THE ALP COMPUTED BY IT IN FORM NO.3CEB. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE THE TPO NOTED THAT THE ASSESSEE COMPANY WAS INCORPORATED ON 10-05-1993 AND STARTED ITS COMMERCIAL PRODUCTION ON 01-01-1994. THE ASSESSEE AFFINITY EXPRESS (INDIA) PVT. LTD. (IN SHORT AEIPL) IS A 100% EX PORT ORIENTED UNIT AND IS A SUBSIDIARY OF CVJV. FURTHER DURING THE F.Y. 200 5-06 CVJV HAS BEEN TAKEN OVER BY AFFINITY EXPRESS INC USA (AEXP USA) AND AS A RESULT HOLDS 100% IN CVJV. AEIPL BASICALLY PROVIDES 2 TYP ES OF SERVICES TO ITS AE I.E. DIGITIZING SERVICES AND DATA CONVERSION/CR EATION SERVICES. BOTH THE SERVICES FALL UNDER THE AMBIT OF IT ENABLE SERV ICE. UNDER THE DIGITIZATION SERVICE THE COMPANY IS ENGAGED IN THE BUSINESS OF DEVELOPING AND EXPORTING OF COMPUTERIZED EMBROIDERY DESIGN EMBLEM ART WORKS DRAWINGS BADGES AND OTHER ALLIED PRODU CTS. THE COMPANY PROVIDES SERVICES FOR DRAWING AND DESIGNS. UNDER THE DATA CONVERSION SERVICES THE COMPANY DEVELOPS DOCUMENTS SUCH AS IN VITATION CARDS RESUMES BUSINESS CARDS LETTER HEADS LABELS AND B ROCHURES ETC. ON ORDER BASIS. THE TOTAL TURNOVER OF AEIPL FOR THE IMPUGNE D ASSESSMENT YEAR WAS RS.30.55 CRORES AND THE PROFIT BEFORE TAX WAS R S.2.11 CRORES. 3. THE TPO NOTED THAT THE ASSESSEE HAS USED TNM MET HOD AS THE MOST APPROPRIATE METHOD. FOR THE PURPOSE OF ANALYS IS THE INTERNATIONAL TRANSACTIONS HAVE BEEN AGGREGATED AND ENTITY LEVEL ADJUSTED OPERATING PROFIT OVER SALES HAS BEEN TAKEN AS PROFIT LEVEL IN DICATOR (PLI). A SET OF 5 3 EXTERNAL COMPARABLES HAVE BEEN TAKEN AND WEIGHTED A VERAGE OPERATING MARGIN HAS BEEN TAKEN AS PLI FOR THE SET OF COMPARA BLES THE DETAILS OF WHICH ARE AS UNDER : SR.NO. COMPANY OPERATING MARGIN RATIO 1 ACE SOFTWARE EXPORTS LTD. 0.63% 2 C.S. SOFTWARE ENTERPRISE LIMITED 17.37% 3 GENESYS INTERNATIONAL CORPORATION LTD. 5.83% 4 K L G SYSTEL LTD. 15.48% 5 VAMA INDUSTRIES LIMITED 8.88% GRAND AVERAGE 9.64% AEIPL 14.00% THE ASSESSEE ACCORDINGLY SUBMITTED THAT THE INTERNA TIONAL TRANSACTION OF PROVIDING OF SERVICES IS AT ARMS LENGTH. HOWEVER THE TPO IN THE ORDER WORKED OUT PROFIT LEVEL INDICATOR OF THE ASSESSEE COMPANY AT 7.41% AS AGAINST THE PLI OF COMPARABLE COMPANIES AT 14.78% THE DETAILS OF WHICH ARE AS UNDER : SR.NO. COMPANY OPERATING MARGIN OP/OC) 1 ACE SOFTWARE EXPORTS LTD. (-) 6.79% 2 C.S. SOFTWARE ENTERPRISE LIMITED 22.13% 3 GENESYS INTERNATIONAL CORPORATION LTD. 13.35% 4 VAMA INDUSTRIES LIMITED 9.18% 5 K L G SYSTEL LTD. 21.24% 6 BODHTREE CONSULTING LIMITED 29.58% MEAN 14.78% 4. THE TPO ACCEPTED THE COMPARABLE COMPANIES OF THE ASSESSEE AND INCLUDED ONE NEW COMPANY I.E. M/S. BODHREE CONSULT ING LTD. AND ACCORDINGLY MADE AN ADJUSTMENT OF RS.2 09 60 280/- ON THE VALUE OF INTERNATIONAL TRANSACTION OF PROVIDING SERVICES TO AE OF RS.28 44 00 000/-. 5. BEFORE CIT(A) THE ASSESSEE VEHEMENTLY CHALLENGED THE INCLUSION OF M/S. BODHTREE CONSULTING LTD. AS A COMPARABLE. IT WAS ARGUED THAT THE COMPANY IS INTO THE BUSINESS OF SOFTWARE DEVELOPMEN T SERVICES AND HENCE NOT FUNCTIONALLY SIMILAR TO THAT OF THE ASSES SEE. IT WAS ARGUED THAT AS PER THE BUSINESS DESCRIPTION IN ITS ANNUAL REPOR T FOR THE YEAR ENDED 31- 4 03-2007 NOT ONLY ITS LINE OF BUSINESS IS COMPLETELY DIFFERENT BUT ALSO ITS FAR IS DIFFERENT THAN THAT OF THE ASSESSEE AND CONS EQUENTLY IT IS NOT A COMPARABLE COMPANY FOR BENCHMARKING INTERNATIONAL T RANSACTION OF THE ASSESSEE. IT WAS ARGUED THAT M/S. BODHTREE CONSULT ING LTD. HAD HIVED OF ITS E-PAPER BUSINESS TO ITS SUBSIDIARY COMPANY VIZ. PRESSMART MEDIA LTD. FOR THE YEAR ENDED MARCH 2007. SINCE THE BUSINESS OF PML IS IN THE FIELD OF E-PAPER WHICH IS IN THE INDUSTRY OF INFORMATION TECHNOLOGY ENABLED SERVICES (ITES) IT WOULD BE APPROPRIATE TO CONSIDE R THE SUBSIDIARY COMPANY AS COMPARABLE IN THE ASSESSEES CASE WHICH IS ALSO IN ITES INDUSTRY. HOWEVER THE ARGUMENT OF THE ASSESSEE TH AT M/S. BODHTREE CONSULTING LTD. IS NOT FUNCTIONALLY COMPARABLE WAS NOT ACCEPTED BY THE TPO AND WAS RETAINED AS A COMPARABLE. 6. THE ASSESSEE BROUGHT TO THE NOTICE OF THE LD.CIT (A) THE FOLLOWING PARAGRAPH IN THE DIRECTORS REPORT IN THE ANNUAL RE PORT OF THE COMPANY: BODHTREE HAS ONLY ONE SEGMENT NAMELY SOFTWARE DEV ELOPMENT. BEING A SOFTWARE SOLUTIONS COMPANY IT IS ENGAGED I N PROVIDING OPEN AND END-TO-END WEB SOLUTIONS SOFTWARE CONSULT ANCY DESIGN AND DEVELOPMENT OF SOLUTIONS USING THE LATEST TECH NOLOGIES. 7. THE ASSESSEE ALSO DREW THE ATTENTION OF THE LD.C IT(A) TO THE DIFFERENT PARTS OF THE ANNUAL REPORT AND INFORMATIO N PROVIDED ON THE WEBSITE OF THE COMPANY TO CONTEND THAT M/S. BODHTRE E CONSULTING LTD. IS CLEARLY INTO SOFTWARE DEVELOPMENT WHEREAS THE ASSES SEE COMPANY PROVIDES ITES THEREFORE M/S. BODHTREE CONSULTING LTD. CANNOT BE CONSIDERED AS A COMPARABLE TO THE ASSESSEE. 8. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DIRECTED THE AO TO EXCLUDE M/S. BODHTREE CONSULTING LTD. FROM THE LIST OF COMPARABLES. WHILE DOING SO HE OBSERVED THAT T HE VARIOUS PARTS OF THE DIRECTORS REPORT AS WELL AS OTHER REFERENCES IN THE ANNUAL REPORT MAKE 5 IT CLEAR THAT M/S. BODHTREE CONSULTING LTD. IS INTO SOFTWARE DEVELOPMENT AND THEREFORE THIS COMPANY CANNOT BE TREATED AS COM PARABLE WITH THE ASSESSEE COMPANY WHICH RENDERS ITES. 9. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. THE ORDER OF THE LEARNED COMMISSIONER OF IN COME-TAX (APPEALS) IS CONTRARY TO LAW AND TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN ALLOWING THE ASSESSEE'S APPEAL INSTEAD OF CONFIRMING THE ASSESSI NG OFFICER'S ORDER. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) GROSSLY ERRED IN DIRECTING TO EXCLUDE M/S. BODHTREE CONSULTING LI MITED FROM THE SET OF SIX COMPARABLES SELECTED BY THE TRANSFER PRICING OF FICER BY HOLDING THAT THE SAID COMPANY IS ENGAGED IN SOFTWARE DEVELOPMENT. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) GROSSLY ERRED IN FAILING TO APPRECIATE THAT OUT OF THE SIX COMPAR ABLES FOUR COMPARABLES INCLUDING M/S. BODHTREE CONSULTING LTD. ARE ENGAGED IN SIMILAR TYPE OF SERVICES I.E. SOFTWARE DEVELOPMENT AND IT RELATED S ERVICES AND ALSO THAT THE ASSESSEE ITSELF HAS NOT OBJECTED TO THE COMPARA BILITY OF THE OTHER THREE COMPARABLES VIZ. M/S. ACE SOFTWARE EXPORTS LTD. M/S . C.S. SOFTWARE ENTERPRISES LIMITED(NOW KNOWN AS CSS TECHNOLOGY LTD. ) & M/S.VARNA INDUSTRIES LTD. 5. FOR THESE AND SUCH OTHER GROUNDS AS MAY BE URGED AT THE TIME OF HEARING THE ORDER OF THE LEARNED CIT (APPEALS) MAY BE VACATED A ND THAT OF THE ASSESSING OFFICER BE RESTORED. 6. THE APPELLANT CRAVES LEAVE TO ADD ALTER OR A MEND ANY OR ALL THE GROUNDS OF APPEAL. 10. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY CH ALLENGED THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE 6 COMP ARABLES TAKEN BY THE TPO IN THE COMPARABLES INCLUDING M/S. BODHTREE CONS ULTING LTD. ARE ENGAGED IN SIMILAR TYPE OF SERVICES I.E. SOFTWARE DEVELOPMENT AND IT RELATED SERVICES. FURTHER THE ASSESSEE ITSELF HAS NOT OBJECTED TO THE COMPARABILITY OF THE OTHER 3 COMPARABLES VIZ. M/S. ACE SOFTWARE EXPORTS LTD. M/S. C.S. SOFTWARE ENTERPRISES LTD. A ND M/S. VAMA INDUSTRIES LTD. HE SUBMITTED THAT THE TPO HAD RIGH TLY INCLUDED M/S. BODHTREE CONSULTING LTD. AS COMPARABLE. THE LD. CI T(A) WITHOUT ANY 6 JUSTIFIABLE GROUNDS HAS DIRECTED THE AO TO EXCLUDE THE SAME FROM THE LIST OF COMPARABLES WHICH IS NOT PROPER. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BE REVERSED ON THIS ISSUE. 11. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER H AND STRONGLY SUPPORTED THE ORDER OF THE CIT(A). HE SUBMITTED TH AT FROM A.Y. 2006-07 TILL DATE M/S. BODHTREE CONSULTING LTD. WAS NEVER I NCLUDED AS A COMPARABLE EXCEPT FOR THE IMPUGNED ASSESSMENT YEAR. THEREFORE FOLLOWING THE RULE OF CONSISTENCY ITSELF M/S. BODH TREE CONSULTING LTD. SHOULD BE EXCLUDED FROM THE LIST OF COMPARABLES AND THE ORDER OF THE LD.CIT(A) BE UPHELD. FOR THE ABOVE PROPOSITION TH E LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE PUNE BENCH O F THE TRIBUNAL IN THE CASE OF BRINTONS CARPETS ASIA PVT. LTD. VS. DCIT VI DE ITA NO.1296/PN/2010 ORDER DATED 15-06-2011 FOR A.Y. 200 6-07. 12. THE LD. COUNSEL FOR THE ASSESSEE DREW THE ATTEN TION OF THE BENCH TO THE FOLLOWING CHART WHICH GIVES YEAR ON YEAR COM PARISON OF FINANCIAL RESULTS FROM F.Y. 2003-04 TO 2013-14 : BODHTREE TECHNOLOGIES LTD YEAR-ON-YEAR COMPARISON OF FINANCIAL RESULTS SR.NO. PARTICULARS 2003-04 2004-05 2005-06 2006-07 2007-08 A OPERATING REVENUE (OR) 42 647 090 38 685 845 53 189 165 103 528 905 103 665 824 B YEAR-ON-YEAR VARIATION IN THE OR -9.29% 37.49% 94.64% 0.13% C OPERATING COST(OC) 35 399 302 30 985 406 46 709 532 57 294 338 85 803 159 D YEAR-ON-YEAR VARIATION IN THE OC -12.47% 50.75% 22.66% 49.76% E OPERATING PROFIT (OP) 7 247 788 7 700 439 6 479 6 33 46 234 567 17 862 665 F YEAR-ON-YEAR VARIATION IN THE OP 6.25% -15.85% 613.54% -61.37% G OP/OC 20.47% 24.85% 13.87% 80.70% 20.82% H YEAR-ON-YEAR VARIATION IN THE OP/OC 21.38% -44.18% 481.71% -74.20% 7 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 160 575 212 225 676 988 212 115 207 434 321 855 428 680 863 467 004 623 54.90% 40.54% -6.01% 104.76% -1.30% 8.94% 98 110 636 168 073 152 221 222 104 420 747 674 481 337 388 435 856 106 14.34% 71.31% 31.62% 90.19% 14.40% -9.45% 62 464 576 57 603 836 (9 106 897) 13 574 181 (52 656 525) 31 148 517 249.69% -7.78% -115.81% -249.05% -487.92% -159.15% 63.67% 34.27% -4.12% 3.23% -10.94% 7.15% 205.83% -46.17% -112.01% -178.37% -439.09% -165.33% REFERRING TO THE ABOVE HE SUBMITTED THAT THERE IS WIDE VARIATION IN THE OPERATING REVENUE AND OPERATING COST IN DIFFERENT Y EARS. 13. REFERRING TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF BARCLAYS TECHNOLOGY CENTRE VS. ACIT VIDE IT A NO.2279/PN/2012 THE LD. COUNSEL FOR THE ASSESSEE DR EW THE ATTENTION OF THE BENCH TO PARA NOS. 20 TO 24 OF THE ORDER OF THE TRIBUNAL AND SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HA S HELD THAT THE REVENUE RECOGNITION MODEL OF M/S. BODHTREE CONSULTING LTD. IS QUITE DIFFERENT FROM THE MODEL BEING PURSUED BY THE ASSESSEE. RELY ING ON VARIOUS DECISIONS THE TRIBUNAL ACCEPTED THE CONTENTION OF T HE ASSESSEE THAT M/S. BODHTREE CONSULTING LTD. SHOULD BE EXCLUDED FROM TH E LIST OF COMPARABLES. HE ACCORDINGLY SUBMITTED THAT THE ORD ER OF THE LD.CIT(A) BE UPHELD. 14. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THE ONLY DISPUTE IN THE GROUNDS RAISED BY THE REVENUE IS REGARDING THE EXCLUSION OF M/S. BODHTRE E CONSULTING LTD. AS A COMPARABLE WHICH HAS BEEN INCLUDED BY THE TPO AS A COMPARABLE. WE FIND THE LD.CIT(A) DIRECTED THE AO TO EXCLUDE THE S AME FROM THE LIST OF COMPARABLES ON THE GROUND THAT M/S. BODHTREE CONSUL TING LTD. IS 8 ENGAGED INTO SOFTWARE DEVELOPMENT WHEREAS THE ASSES SEE COMPANY RENDERS IT ENABLED SERVICES. THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT FROM A.Y. 2006-07 TILL DATE M/S. BODH TREE CONSULTING LTD. WAS NEVER CONSIDERED AS COMPARABLE EXCEPT FOR THE I MPUGNED ASSESSMENT YEAR COULD NOT BE CONTROVERTED BY THE LD . DEPARTMENTAL REPRESENTATIVE. THEREFORE WE FIND MERIT IN THE SU BMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT FOLLOWING THE RULE OF CONSISTENCY ITSELF M/S. BODHTREE CONSULTING LTD. SHOULD BE EXCLUDED FROM TH E LIST OF COMPARABLES. ALTHOUGH IT IS THE SETTLED PROPOSITIO N OF LAW THAT THE PRINCIPLE OF RESJUDICATA IS INAPPLICABLE TO IT MATT ERS HOWEVER THE SAME IS TRUE AS LONG AS THE FACTS ARE DIFFERENT IN DIFFEREN T ASSESSMENT YEARS. HOWEVER WHEN THE FACTS ARE SIMILAR THE RULE OF CO NSISTENCY IS RELEVANT TO IT MATTERS AND THE REVENUE AUTHORITIES CANNOT IGNOR E THE SAME. THERE SHOULD BE UNIFORMITY IN TREATMENT AND CONSISTENCY I N APPROACH WHEN THE FACTS AND CIRCUMSTANCES ARE IDENTICAL. 15. SO FAR AS THE FUNCTION OF M/S. BODHTREE CONSULT ING LTD. IS CONCERNED WE FIND THE PUNE BENCH OF THE TRIBUNAL I N THE CASE OF BARCLAYS TECHNOLOGY CENTRE (SUPRA) FOR A.Y. 2008-09 FOLLOWIN G THE DECISION OF THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF MIND TECK INDIA LTD. VIDE IT(TP) A. NO.70/BANG/2014 ORDER DATED 21-08-2014 AN D THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF NET H HAWK NETWORKS INDIA PVT. LTD. VIDE ITA NO.7663/M/2012 ORDER DATE D 06-11-2013 FOR A.Y. 2008-09 HAS DIRECTED TO EXCLUDE M/S. BODHTREE CONSULTING LTD. FROM THE LIST OF COMPARABLES. THE TRIBUNAL AT PARA NO.2 4 OF THE ORDER HAS OBSERVED AS UNDER : 24. THOUGH THE AFORESAID DISCUSSION BY THE BANGALORE BENCH OF THE TRIBUNAL IS IN RELATION TO THE ASSESSMENT YEAR 2009-10 BUT THE INFERENCES DRAWN WITH REGARD TO THE VARIATIONS IN THE PROFIT MARGINS 9 OF THE SAID CONCERN FOR DIFFERENT YEARS IS RELEVANT I N THE PRESENT CONTEXT ALSO. FURTHERMORE THE TRIBUNAL ALSO ANALYSED AND FOUND THAT THE SAID CONCERN WAS FOLLOWING FIXED PRICE PROJECT ME THOD WHEREBY REVENUE FROM SOFTWARE DEVELOPMENT SERVICES WAS BEING RE COGNIZED BASED ON THE SOFTWARE DEVELOPED AND BILLED TO THE CLI ENTS. IN SUCH A BUSINESS MODEL THE POSSIBILITY OF THE EXPENDITURE NOT B EING BOOKED ON THE BASIS OF THE MATCHING PRINCIPLE CANNOT BE RULE D OUT WHICH WOULD IMPART FLUCTUATION IN THE MARGINS OVER THE YEA RS. IN CONTRAST IN THE PRESENT CASE THE REVENUE IS BEING RECOGNIZED B ASED ON THE COST PLUS MARKUP BASIS. CLEARLY THE REVENUE RECOGNITIO N MODEL OF BODHTREE CONSULTING LTD. IS QUITE DIFFERENT FROM THE MODEL BEING PURSUED BY ASSESSEE AND SUCH DISTINCTION PREVAILED WITH TH E BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF MINDT ECK INDIA LTD. (SUPRA) TO EXCLUDE BODHTREE CONSULTING LTD. FROM THE LIST OF COMPARABLES. CONSIDERING SUCH DIFFERENCE IN OUR VIEW ASSESSEE IS JUSTIFIED IN ASSERTING THAT THE SAID CONCERN BE EXCLUD ED FROM THE LIST OF COMPARABLES. WE HOLD SO. 16. FURTHER FROM THE CHART FILED BY THE LD. COUNSE L FOR THE ASSESSEE SHOWING THE YEAR ON YEAR COMPARISON OF FINANCIAL RE SULTS WE FIND THERE IS LARGE VARIATION IN THE OPERATION REVENUE OPERATING COST AND OPERATING PROFIT OF M/S. BODHTREE CONSULTING LTD. BETWEEN DIF FERENT FINANCIAL YEARS WHICH HAS ALREADY BEEN REPRODUCED AT PARA NO.12 OF THE IMPUGNED ORDER. IN VIEW OF THE ABOVE DISCUSSION WE ARE OF THE CONSIDERED OPINION THAT M/S. BODHTREE CONSULTING LTD. WAS RIGHTLY EXCL UDED BY THE CIT(A) FROM THE LIST OF COMPARABLES. THEREFORE WE DO NOT ANY INFIRMITY IN HIS ORDER AND ACCORDINGLY UPHOLD THE SAME. THE GROUNDS RAISED BY THE REVENUE ARE ACCORDINGLY DISMISSED. 17. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 29-04-2015. SD/- SD/- (VIKAS AWASTHY) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER SATISH PUNE DATED: 29 TH APRIL 2015 10 COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. CIT(A)-IT/TP PUNE 4. CIT-IT/TP PUNE 5. THE D.R B PUNE BENCH 6. GUARD FILE BY ORDER // TRUE COPY // ASSISTANT REGISTRAR ITAT PUNE BENCHES PUNE