TMI Blog2017 (3) TMI 1381X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome’ nor anything as regards the same had been submitted before us by either of the parties during the course of hearing of the appeal, we therefore keeping in view the fact that as the issue as regards determining the quantum of deduction u/s 10A, as claimed by the assessee in its return of income had been restored by us to the file of the A.O, therefore restore this issue also to the file of the A.O. That in case if the ‘Miscellaneous income" falls within the bracket of ‘‘Profits derived from export of articles or things or computer software”, then the A.O shall be precluded from excluding the same from the scope of the profits eligible for claim of deduction u/s 10A. - I.T.A. No. 6877/Mum/2012 - - - Dated:- 22-3-2017 - SHRI G.S. PANNU, AM AND SHRI RAVISH SOOD, JM For The Appellant : Sh. R.R Vora and Nikhil Tiwari For The Respondent : Sh. Debashis Chanda ORDER RAVISH SOOD, JUDICIAL MEMBER : The present appeal has been filed by the assessee against the order passed by the Assistant Commissioner of Income-tax (OSD)-2(3) (for short ACIT ) under Sec. 143(3) r.w Section 144C of the Income-tax act, 1961(for short Act ), dated 26.03.2012 The assessee ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... work to third party vendors and hence is functionally different from the Appellant. 8. erred in considering Eclerx Services Limited and Mold-Tek Technologies Limited as comparables disregarding the fact that the companies are engaged in high end knowledge process outsourcing services as compared to Appellant which is engaged in provision of routine IT enabled services. 9. erred in violating the rules of natural justice by not providing sharing the complete details of the bench marking analysis, carried out by him, Use of data obtained under Section 133 (6) of the Act 10. erred in using data/information obtained from various Third party companies under Section133 (6) of the Act, Erroneous margin computation 11. erred in not considering the evidence provided by the appellant in relation to the errors committed by the TPO while computing the operating margins of certain comparable companies. Working capital adjustment 12. erred in not allowing the Appellant the benefit of the working capital adjustment ignoring the fact that working capital adjustment has been previously allowed in Appellant's own case by the TPO for AY 2006-07. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n pursuance of the directions Issued by the Dispute Resolution Panel-II, Mumbai ( Hon ble DRP ), on the following grounds: On the facts and in the circumstances of the case and in law, the TP0 has: Rejection of comparables on extraordinary activities. 21. erred in considering Accentia Technologies Limited and Mold-Tek Technologies Limited as comparable to the Appellant, without appreciating that the companies have earned supernormal profits due to extraordinary events. 22. erred in considering Eclerx Services Limited as comparabIe without appreciating the fact that an extraordinary event took place during the year and hence the company cannot be considered comparable to the Appellant Rejection of comparable on related party transaction filter 23. erred in considering HCL, Connect Systems and Services Limited and BNR Udyog Limited as comparable without appreciating the fact that The company fails the related party transactions ( RPT') to sales filter of 25% applied by the TPO. Segmental results should not be considered when direct comparables are available 24. erred in considering the segmental results of certain companies viz: HCL Connect Systems a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its AE during the year under consideration, in respect of which adjustment had been made by the TPO, were as under: Nature of International transactions. Amount (Rs.) Method applied Operating profit Provision of processing services. 60,69,23,951 Transaction Net Margin Method ( TNMM ) 12.50% 4. The assessee had taken TNMM as the most appropriate method ( MAM ) to determine the ALP. That for the application of TNMM the assessee had conducted search for identifying the comparable companies on 'Prowess' and Capitaline database. The assessee had selected 7 comparable companies with similar functional profile and identified the comparable companies using certain filters, as under:- S.No. Name of the Company PLI % (Cost plus ratio) 1. BNR Udyog 17.86 2. Galaxy Commercial Ltd. 11.63 3. ICRA Online Ltd. 15.48 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hta Financial Services Limited 8.55 4 BNR Udyog Ltd. (Seg) 39.22 5 Caliber Point Business Solutions Limited 10.70 6 Coral Hub (earlier Vishal Information Technologies Limited) 50.72 7 Cosmic Global Limited 24.30 8 Crossdomain Solution Private Limited 27.00 9 Datamtics Financial Services Limited (seg) 34.87 10 e4e (earlier known as Nittany Outsourcing Services Limited) 17.23 11 Elcerx Services Limited. 65.87 12 HCL Connect Systems Services Limited (seg) 32.97 13 ICRA Limited. 10.42 14 Infosys BPO Limited 20.03 15 Iservices India Private Limited HCL Connect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. The A.O thereafter issued a draft assessment order u/s 143(3) r.w Sec. 144C, dated 23/11/2011, therein proposing to assess the total income at ₹ 14,46,43,127/- (including adjustment of ₹ 7,14,97,299/- made by the TPO) to the returned income of the assessee company. 8. The A.O further excluded the Miscellaneous income of ₹ 2,47,374/- included by the assessee for computing the profits eligible for claim of deduction u/s 10A, and not finding favor with the method adopted and the resultant claim of deduction of ₹ 6,70,56,096/- raised by the assessee u/s 10A, therein carried out the following disallowances/additions to the income of the assessee, as under:- Sr. No. Particulars Amount (in Rs.) 1 Transfer Pricing Adjustment ₹ 7,14,97,299 2 Disallowance of claim for deduction under section 10A of the Act ₹ 6,70,56,096 3 Restricted the claim u/s 10A of the Act by excluding miscellaneous income in computing profits derived from the business of the underta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aced on record a chart, marked as Summary of Objections raised by it in context of the 5 comparables adopted by the TPO for determining the ALP of the assessee. We thus in the backdrop of the aforesaid chart and the relevant pages of the Fact sheet / APB to which reference was made by the Ld. A.R during the course of hearing of the appeal, therein advert to and deal with the aforementioned 5 comparables, as under:- (A).CORAL HUB LIMITED (earlier known as Vishal Information Technology Ltd.): (1). That it was submitted by the Ld. A.R that the TPO/AO had erred in considering Coral Hub (earlier known as Vishal Information Technology Limited) as a comparable, and in order to drive home his contention had referred to Page 1190 of the Chart , as well as the relevant pages of the Fact sheet / APB , as stood mentioned therein. It was submitted before us that the TPO had erred in failing to appreciate that unlike the assessee the aforesaid comparable had a very low employee cost, from where it could be safely gathered that it had outsourced a major portion of its work to third party vendors and hence was functionally different from the assessee company. The Ld. A.R distinguish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,636.41 6,069.24 Personnel cost a percentage of total revenue 47.86% 54.45% 48.47% 52.38% Personnel cost as a percentage of total cost 52.80% 59.79% 62.23% 57.68% (2). That in the backdrop of the aforesaid facts, it was claimed by the Ld. A.R that the comparable did not operate like a pure play ITES company where the average employee cost to sales is relatively high as employees are the major assets employed by ITES companies. It was further claimed that the employee cost of the assessee company for A.Y: 2008-09 worked out to 57.68% of its revenue, while for the average employee cost of all the other comparables considered by the TPO was around 25% of revenue. That it was further submitted by the Ld. A.R that the Hon ble Delhi High court in the case of: Rampgreen Solution Pvt. Ltd vs. CIT (ITA 102/2015) had rejected the aforesaid comparable, viz. Coral hub Ltd., on the basis of the functional dissimilarity of the aforesaid comparable, viz. Cora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing and conversion and E-publishing, and thus in the absence of segmental break-up for its ITES segment, the same was liable to be rejected as being functionally different. That it was further submitted before us that as the aforesaid comparable was earning super normal profits, therefore the same was liable to be excluded from the list of the comparables for the said very reason, because such alike companies have a tendency to skew the results and thus cannot be considered as a representative of the industry. That in support of the contention that companies which are showing abnormal profits are not to be adopted as comparable, reliance had been placed by the assessee on the following orders passed by the coordinate benches of the Tribunal:- (i). M/s Adobe Systems India Private Limited (ITA No. 5043/Del/2010) (ii). SAP Labs Pvt Ltd (ITA No. 398/Bang/20). (iii). Teva India Pvt Ltd (6107/Mum/2009). (iv) Saunay Jewels Pvt Ltd (5758/Mum/2007). (v). Mentor Graphics (P) Ltd (112 TTJ 408). (4). That it was thus submitted before us that the aforesaid comparable, viz. Coral Hub Limited (earlier known as Vishal Information Technology Limited) was functionally different, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess 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. We further find that as averred by the Ld. A.R, a coordinate bench of the Tribunal, viz ITAT, Mumbai while disposing of the assesses own appeal for A.Y. 2005-06 had rejected the aforesaid comparable on the basis that the latters personnel cost as a percentage of its turnover was only 0.95%, which signified that the said company was not carrying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the factors other than the factor specified under Rule 10B(2). Hence, the objections of the assessee cannot be accepted that because of the abnormal profit margin this company should be rejected as a comparable. Thus in light of the aforesaid view already taken by the Tribunal while disposing of the assesses own appeal for the immediately preceding year, viz. A.Y. 2007-08, that inclusion and exclusion of the comparables cannot be decided on the basis of the factors other than those specified under Rule 10B(2), we are thus unable to persuade ourselves to subscribe to the aforesaid contention of the Ld. A.R that because of the abnormal profit margin the aforesaid comparable should be rejected as a comparable. (6). We though in light of our aforesaid observations had partly disagreed with certain grounds as had been averred by the Ld. A.R to facilitate exclusion of the aforesaid comparable, however as observed by us hereinabove that the aforesaid comparable viz. Coral Hub Limited (earlier known as Vishal Information Technology Limited) had a business model where services are outsourced, as against the business model of the assessee where services are rendered by employing ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further submitted that the Annual report of the comparable company, viz. Crossdomain Solutions Private Limited did not provide adequate information on the company's operations, on the basis of which its functional comparability could be evaluated. That in order to fortify the claim that the aforesaid comparable was a KPO provider, reference had been made to the website extract of the aforesaid comparable, which proved the said fact. It was further submitted that even the logo of the aforesaid comparable, viz. Crossdomain Solutions Private Limited highlights that it is a Partner of Choice for Knowledge Process Outsourcing Services , which clearly specifies that the said comparable functions as a KPO service provider, and not as a Business process outsourcing ('BPO') service provider. Thus in the backdrop of the aforesaid facts, it was submitted before us that as the primary business of the aforesaid comparable, viz. Crossdomain Solutions Private Limited is provision of high end KPO services, which varies from a routine low end ITES service provider in terms of skill sets used and nature of services provided, therefore the said comparable, viz. Crossdomain Solutions P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the said comparable was functionally different, and as such could not be adopted as a comparable. That our aforesaid view stands fortified by the order passed by the Tribunal while disposing of the appeal of the assessee for the immediately succeeding year, viz. A.Y. 2009-10, titled as : DCIT Vs. M/s Willis Processing Services (India) Limited (ITA No. 2152/Mum/2014; Dt. 10/10/2014) wherein the Tribunal on the basis that the said comparable, viz. Crossdomain Solutions Private Limited was a KPO engaged in providing value based quality services in payroll, HR Finance, accounting, administration and tax processes, etc., had therein concluded that the same thus could not be considered as a comparable to the assessee company which is a routine BPO service provider. Thus finding no reason to take a different view as against that arrived at by the coordinate bench of the Tribunal in the assesses own case for A.Y. 2009-10, we herein conclude that as the aforesaid comparable, viz. Crossdomain Solutions Private Limited was functionally different from the assessee company, therefore the same is liable to be excluded from the list of the final comparables, and hence direct accordingly. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it could by no means be compared to the aforesaid comparable, viz. Eclerx Services Limited which was providing KPO services. (2). That the Ld. A.R by referring to the relevant pages of the Fact sheet had therein submitted that the Special bench of the Tribunal in the case of Maersk Global Centres (India) Pvt. Ltd. Vs. ACIT [A.Y: 2008-09] 39 CCH 130 (Mum); dated. 07.03.2014, had specifically rejected the aforesaid comparable, viz. Eclerx Services Limited, on the basis that companies predominantly engaged in KPO services cannot be considered as a comparable to a company predominantly engaged in BPO activities, by observing as under:- Keeping in view the nature of services rendered by M/s eClerx Services Pvt. Ltd. and its functional profile, we are of the view that this company is also mainly engaged in providing high end services involving specialized knowledge and domain expertise in the field and the same cannot be compared with the assessee company which is mainly engaged in providing low-end services to the group concerns. That it was further submitted that the aforesaid comparable had also been rejected by the Hon ble High Court of Delhi in the case of : Ram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or AY 2011-12) BP India Services Private Limited Vs ACIT (ITA No. 6977/Mum/2012) [AY 2008-09] dated 21 January 2015. Maersk Global Centres (India) Pvt. Ltd. Vs. ACIT [AY 2009-10] ITA NO. 2594/Mum/2014 dated 16 January 2015. Maersk Global Centres (India) Pvt. Ltd. Vs. ACIT [AY 2008-09] 39 CCH 130 (Mum) dated 7 March 2014. Stream International Services Private Limited Vs. ACIT (ITA No. 8290/Mum/2011) [AY 2007-08] dated 10 October 2014. Lionbridge Technologies Private Limited Vs. ITO ITA No. 7498/Mum/2012 [AY 2008-09] dated 9 July 2014. Mindcrest (India) Pvt Ltd. Vs. DCIT [AY 2008-09] ITA No. 7289/Mum/2012] dated 12 December 2014. Market Tolls Research Pvt. Vs. DCIT. 37 CCH 605 [AY 2008-09] (Hyd) dated 24 October 2013. United Health Group Information Services Pvt. Ltd. Vs. ACIT [AY 2008-09] ITA No. 6312/Del/2012 dated 28 August 2014 M/s Symphony Marketing Solutions India P. Ltd. 37 CCH 253 {AY 2008-09] (Bang) 14 August 2013. Zavata India Private Limited Vs DCIY 36 CCH 136 (AY 2007-08) (Hyd) dated 7 June 2013. Cognizant Technology Services Pvt. Ltd VS. ACIT 37 CCH 155 [AY 2007-08 2008-09] (Hyd),dated 22 may 2013 M/s Hyundai Motors India Enginee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed company, viz. Ignetica Travel Solutions Ltd.(for short ITS) during the year under consideration, the aforesaid company could not have been safely selected as a comparable, therein referring to the relevant pages of the Annual report of the said comparable (Page 796 of APB ) averred that a perusal of the Annual report did not reveal as to whether the company which had been taken over, i.e ITS was engaged in the same line of business as that of the aforesaid comparable, or not. Thus in the backdrop of the aforesaid facts, the Ld. D.R taking support of the order of the Tribunal passed in the assesses own case for A.Y. 2007-08, viz. Wills Processing Services (I) Ltd. Vs. DCIT-2(3), Mumbai (2013) 30 taxmann.com 350 (Mumbai-Trib) (copy placed on record by the Ld. D.R), therein referred to the observations of the Tribunal at Para 18.3 of the order, wherein it had been held that even if there is an extraordinary event in the form of merger/demerger, it is only when it is shown that pursuant to such extraordinary event the comparable had become functionally different, and as such incomparable, it is only then that the same would render it liable to be excluded as a comparable. It w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xmann.com 350 (Mumbai-Trib), wherein the Tribunal had answered the said issue, by observing as under:- We are also of the view that if extraordinary events like merger and de-merger or amalgamation took place during the financial year relevant to the Assessment year under consideration, and because of the merger/de-merger the company became functionally different then the said company should be excluded from the comparables. However, if the merger of two functionally similar companies took place then event of merger itself cannot be taken as a factor for exclusion of the said comparable. Accordingly, we direct the AO/TPO to verify this fact and accordingly decide the comparability of the company namely Accentia Technologies Ltd. We find ourselves to be in agreement with the view taken by the Tribunal in the assesses own case for A.Y. 2007-08, that merely the event of acquisition by the aforesaid comparable company, viz. Eclerx Services Limited of the UK-based company, viz. Ignetica Travel Solutions Limited ( ITS ) on July 27, 2007, itself cannot ipso facto form the basis for exclusion of the aforesaid comparable. That neither from a perusal of the Annual report it is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the department by accepting the said order of the DRP for A.Y. 2011-12 by not carrying the matter in further appeal before the Tribunal, had thus allowed itto attain finality. We further find that in the assesse s own case for the immediately succeeding year, i.e A.Y 2009-10, the DRP as well as the Tribunal had held that companies engaged in KPO services cannot be compared to the routine BPO services provided by the assessee. That still further the Tribunal while disposing of the appeal of the assesses for AY 2010-11 had held that as the assessee was a routine BPO service provider, therefore it cannot be compared to high end KPO service providers such as Eclerx Service Limited. We further find that the Special bench of the Tribunal in the case of Maersk Global Centres (India) Pvt. Ltd. Vs. ACIT [A.Y: 2008-09] 39 CCH 130 (Mum); dated. 07.03.2014, had specifically rejected the aforesaid comparable, viz. Eclerx Services Limited, on the basis that companies predominantly engaged in KPO services cannot be considered as a comparable to a company predominantly engaged in BPO activities. We are thus of the considered view that in the backdrop of the view taken by the Tribunal whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee referring to the Annual report of the aforesaid comparable, viz. Mold-Tek Technologies Limited, therein submitted that at Page 10 of the said report (Page 843 of APB), under the head Review of Operations the company had mentioned that it is engaged in KPO business. It was further submitted that as per the website of the company, viz. www.moldtekindia.com/about-us.html (Page 1051 of the APB ), which read as under: Mold-Tek Technologies is a leading KPO in Engineering and Design Services. Located in Hyderabad, Mold-Tek specializes in Civil, Structural and Mechanical Engineering Services. MoldTek has a strong team of Skilled resources with world class resources and skill sets complemented by two subsidiaries in USA - CROSSROADS DETAILING, INC. Indianapolis, IN RMM Global LLC Akron, OH. , it could safely be gathered that the aforesaid comparable, viz. Mold-Tek Technologies Limited was a leading KPO. (3). That it was further submitted by the assessee that the aforesaid comparable, viz. Mold-Tek Technologies Limited was rejected by the TPO himself in the assesses own case for AY 2006-07 on the basis that as it was found to be an extreme outlier, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration had witnessed an amalgamation between M/s Teck-men Tools Private Limited (TPL), the transferor company and the aforesaid comparable, viz. Mold-Tek Technologies Limited. It was thus submitted that on the said ground itself the aforesaid comparable, viz. Mold-Tek Technologies Limited was liable to be excluded from the list of the comparables. That on the other hand the Ld. Departmental representative (for short D.R ) had placed heavy reliance on the order of the TPO/AO and therein submitted that the lower authorities after thorough vetting of the various factors, had as such rightly selected the aforesaid comparable, viz. Mold-Tek Technologies Limited. The Ld. D.R further adverting to the contention which was raised by the assessee that on the basis of an additional ground of appeal, that in light of the extraordinary event as that of amalgamation between M/s Teck-men Tools Private Limited (TPL) and the aforesaid comparable, viz. Mold-Tek Technologies Limited during the year under consideration, the aforesaid company could not have been taken as a comparable, therein referring to the relevant pages of the Annual report of the said comparable (Page 842 of APB ), there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein held that a company which is otherwise functionally comparable will not be rejected solely on the ground of super normal profits, and in order to fortify his contention, therein relied on the judgment of the Hon ble High Court of Delhi in the case of : Chryscapital Investment advisors (India) (P). Ltd. Vs. DCIT (2015) 56 taxmann.com 417 (Delhi), Thus in the backdrop of his aforesaid contention, it was submitted by the Ld. D.R that the contention of the assessee, therein seeking exclusion of the aforesaid comparable thus was liable to be rejected. (7). We have heard both the Ld. Representatives, perused the orders of the lower authorities and the records made available before us. We find that the aforesaid comparable, viz. Mold-Tek Technologies Limited was engaged in high end knowledge process outsourcing (KPO) services, and therein providing high end structural engineering consulting services, which is a high end segment service, as in comparison to the assessee company which was engaged in providing routine IT enabled services. We find that that the said comparable, viz. Mold-Tek Technologies Limited was rejected by the TPO himself in the assesses own case for AY 2006-07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (E). ACCENTIA TECHNOLOGIES LTD : (1). The Ld. A.R had submitted at the very outset that the aforesaid comparable, viz. Accentia Technologies Ltd. was rejected by the DRP in assesses own case for A.Y 2009-10 for the reason that unlike the assessee company the said comparable earned revenue from sale of software services and was thus functionally different, as well as the fact that there was no separate segmental information available in this regard. That it was submitted that the said order of the DRP was not further carried in appeal by the Department before the ITAT, and by so doing the said findings of the DRP could safely be held to have been accepted by the department, and as such had been allowed to attain finality. It was further submitted that the TPO himself had rejected the said comparable in the case of the assessee for A.Y 2010-11 and A.Y 2011-12, for the reason that the said comparable, unlike the assessee was engaged in software development services and was thus functionally different from the assessee company. The Annual report of the aforesaid comparable, viz. Accentia Technologies Ltd. for the year under consideration therein reveals that its operations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no appeal was filed against the same before the Tribunal. Thus in the backdrop of the aforesaid facts, it was submitted before us that as the comparable company, viz. Accentia Technologies Ltd., was functionally incomparable, therefore it had wrongly been selected as a comparable. (2). That still further, it was submitted that Page 29 of the Annual report of the aforesaid comparable, viz. Accentia Technologies Ltd.(Page 717 of APB ) revealed that during the year, two of the companies, viz. M/s Geosoft Technologies (Trivandrum) Limited (a company engaged in provision of medical transcription services) and M/s Indium Technologies India Pvt. Ltd.,(a company engaged in product development for healthcare industry) had amalgamated into the parent company, viz. Accentia Technologies Ltd. That still further during the year the aforesaid comparable, viz. Accentia Technologies Ltd., had acquired certain companies viz Thunga Software Private Limited, GSR systems Inc., GSR Physician billing services Inc., Denmed Transcription services Inc and Accentia FZE. Thus in the backdrop of the aforesaid facts it was submitted that as one of amalgamating company was functionally not comparable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal passed in the assesses own case for A.Y. 2007-08, wherein it had been held that even if there is an extraordinary event in the form of merger/demerger, it is only when it is shown that pursuant to such extraordinary event the comparable had become functionally different, and as such incomparable, that the same would render it liable to be excluded as a comparable. It was thus averred by the Ld. D.R that in light of the aforesaid facts, the contention of the assessee that the aforesaid comparable may be excluded from the list of the final comparables, thus could not be accepted. (3). We have heard both the Ld. Representatives, perused the orders of the lower authorities and the records made available before us. We find that the aforesaid comparable, viz. Accentia Technologies Ltd. was engaged in software development services and was thus functionally different from the assessee company. We find that the fact that the aforesaid comparable was functionally different from the assessee company had duly been acknowledged by the TPO himself who for the said reason had rejected the said comparable, viz. Accentia Technologies Ltd. in the case of the assessee for A.Y 2010-11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nctionally different, thus cannot be taken as a comparable, and therefore direct the exclusion of the same from th list of the comparables. That as the aforesaid comparable, viz. Accentia Technologies Ltd., being found to be functionally different, has been directed to be excluded from the list of the comparables, therefore the remaining issues on the basis of which the inclusion of the said comparable had been assailed before us are rendered as infructuous and are thus not being adjudicated upon. We in light of the contention of the Ld. A.R that if the aforesaid 5 comparables are excluded from the list of the comparables and the ALP of the International transactions of the assessee company with its AE is recomputed by taking into consideration the arithmetic mean of the margins of the remaining comparables, the difference between such ALP and the price charged by the assessee would be within the safe harbor limit of 5%, thus requiring no TP adjustment. We accordingly direct the A.O to recompute the ALP of the transactions of the assessee company with its AE by applying the average profit margin of the remaining comparables, after giving effect to our aforesaid directions as reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f his Paper book (Page 504-505 of APB ). It was further submitted by the Ld. A.R that the said order of the Tribunal had thereafter been followed by the DRP in the assesses own case for AY 2009-10 (Page 964-968 of APB ), which was accepted by the department by not assailing the same before the Tribunal. 12. We have heard the Ld. Representatives of both the parties, perused the orders of the lower authorities and the records produced before us. Briefly stated, the facts leading to the issue under consideration are that the assessee had two Units located at Vikhroli and Thane. The unit at Vikhroli which was formed in the year relevant to A.Y. 2000-01, i.e. after 1st April 1994 as specified in Section 10A(2)(i)(b), thus qualified for claim of deduction under Section 10A of the Act, while for the unit at Thane was a non-STPI unit. The assessee had a unit in SEEPZ which was closed in December 2003. That as the entire income of the Vikhroli unit were by way of earnings from the services rendered to Trinity Processing Services Limited, UK; Willis Processing Services Inc. USA and Trinity Processing Services Pty. Limited, Australia, therefore the same qualified for deduction under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction must be arrived at. We have perused the order of the Tribunal passed in the assesses own case for AY 2006-07 in ITA No. 8772/Mum/2010), dated 7 December 2012, wherein the Tribunal after perusing the methodology which had consistently been followed by the assessee for computing its claim for deduction u/s 10A, had found favor with the same and held that the assessee was entitled towards claim for deduction u/s 10A and had remanded the case to the A.O for the limited purpose of determining the quantum of deduction. We further find that the DRP in the case of the assessee for A.Y. 2009-10 had followed the order of the Tribunal, and the department by not assailing the same before the Tribunal, thus can safely be concluded to have accepted the same by allowing it to attain finality. We thus in the backdrop of the aforesaid facts as they so remain, in the absence of any material being placed on record or averment by the Ld. D.R which could prove either any perversity in the aforesaid orders or any fact which could go to prove that the case or the facts involved therein during the year under consideration were distinguishable as against those of A.Y. 2006-07, thus are persuaded to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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