TMI Blog2017 (10) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee need to be deselected from final list of comparability. T.P. Adjustment on account of interest on outstanding receivables - Held that:- We direct the TPO to first of all examine the working capital adjustment worked out by the assessee vis-à-vis the comparables and then to see whether the assessee has factored the impact of the receivables on the working capital and thereby pricing/profitability vis-à-vis that of the comparables and see the impact of capital adjustment on outstanding receivables. Foreign exchange fluctuation cost - whether is operating or not? - Held that:- As regard the issue whether forex loss is to be regarded as operating cost or not, is no longer debatable issue as foreign exchange gain or loss relatable to an international transaction is always part and parcel of such underlined transaction. When an international transactions are entered into with the AE, one of whom is resident of other contracting state and the transactions are in foreign currency, then any gain or loss on account of forex is inherent item of cost or profit. For the purpose of determining the profit realized on the international transaction, all operating costs incurred for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of software development services, provision of Information Technology ( IT') back office support service and pre-sales marketing and postsales technical support service (impugned transactions ) 4. That on facts of the case and in law, the DRPI TPO/AO have erred in rejecting certain companies and adding certain companies to the final set of alleged comparable companies on an ad-hoc basis, thereby resorting to cherry picking of comparable companies for benchmarking the impugned transactions. 5. That on facts of the case and in law, the DRP ITPO/AO have erred by identifying companies which are engaged in providing Knowledge Process Outsourcing services as compared to the Appellant for the benchmarking of the international transaction pertaining to IT back office support services. 6. That on facts of the case and in law, the DRP/ TPO/AO have erred in selecting companies in the final set of alleged comparables which have different business/operating models as compared to the Appellant for the impugned transactions. 7. That on facts of the case and in law, the DRP ignored the principle of natural justice by not a giving a finding on the additional evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of software development services, IT back office support services and presales marketing and post-sales technical support service: Rejecting companies having turnover less than INR 5 Crores; Rejecting companies having different accounting year than that of the Appellant; and Rejection of companies identified by the Appellant on account of having peculiar economic circumstances which are not in line with the industry trend, - companies which showed diminishing revenue trend; For international transaction pertaining to provision of software development services, IT back office support services: Rejecting companies having export revenue less than 75 percent of the operating revenue. For international transaction pertaining to provision of software development services: Rejecting companies having employee cost less than 25 percent of the total sales. 13. That on facts of the case and in law, the DRP/TPO/AO have erred by selecting certain companies which are earning super normal profits as comparable to the Appellant for the impugned transactions. 14. That on facts of the case and in law, the DRP/TPO/AO have erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstance of the case and in law, the AO/ DRP erred in holding that the Appellant intentionally debited director's salary to non STP unit to reduce its taxable income, without appreciating the operating model (cost plus markup) of the Appellant. 22. Without prejudice to grounds 20 and 21 above, the AO/ DRP erred in not shifting the income linked with director's remuneration cost, from non-STP unit to STP unit, based on the operating model of the Appellant. 23. That on the facts and in the circumstances of the case, the Learned AO has erred in initiating penalty under section 271 (1 )(c) of the Act, as consequences of the additions made in the assessment order passed under section 143(3) read with section 144C of the Act. 24. That on the facts and in the circumstances of the case, the Learned AO has erred in charging interest under section 2348, 234C and 234D of the Act, as consequences of the additions made in the assessment order passed under section 143(3) read with section 144C of the Act. 1. At the outset, ground nos. 8, 11, 13, 17, 18 19 have not been pressed by the Ld. Counsel, therefore, these grounds are dismissed as not pressed. Ground nos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Provision of software research and development services TNMM 1,719,316,641 2 Provision of IT back office support services TNMM 470,689,564 3 Provision of pre-sales marketing and post-sales technical support services TNMM 250,438,819 4 Provision of bank guarantee TNMM 127,400 5 Payment of interest towards foreign currency loan CUP 10,481,177 6 Purchase of free of cost assets from associated enterprise - No benchmarking required 7 Employee stock purchase plan from associated enterprise - No benchmarking required I. Provision for Software Research Development Services: - 5. We will first take up the Transfer Pricing Adjustment made by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standard specifications. Cadence India generates and makes available documentation for the software developed and transferred. The software developed by Cadence India is subsequently integrated into the final software product by CDS and other Cadence group entities. * Project management Although the day-to-day management of the project is undertaken by Cadence India, CDS is responsible for the overall project management. Cadence India's responsibility is confined to the project management and the end deliverables with respect to the module of the software being developed by it. CDS also regularly conducts meetings to analyse the progress and monitors the project plan. However, the ultimate responsibility of the work undertaken by Cadence India rests with CDS. * Quality control, testing and integration Cadence India is responsible for ensuring that requisite quality/ performance standards are complied with while rendering services. Cadence India is responsible to ensure that services provided meet certain quality and performance requirements and adhere to established prescribed standards. 5.1 So far as the risk analysis is concerned, it was st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AVG. Mean 26.98 5.2 The DRP also confirmed the said comparables as shortlisted by the TPO and only granted working capital adjustment, and finally the average profit margins of comparables was worked out to 23.45%. Accordingly, adjustment of ₹ 13,51,99,075/- was made in the following manner:- Operating Cost : 1,502,240,356 Arm s Length Margin (%): 23.45 Arm s Length Price (ALP): 1,854,515,719 Price received: 1,719,316,644 Shortfall being adjustment u/s 92CA: 135,199,075 5.3 Before us, the ld. Counsel for the assessee, Shri Nageshwar Rao after explaining the relevant facts and background, submitted that under this segment the assessee before this Tribunal is only challenging the exclusion of three comparables viz. (i) Bodhtree Consulting Limited; (ii) Infosys Technologies Limited; and (iii) Sonata Software Limited and inclusion of one comparable viz. (i) Gold Stone Technologies. ( A) BODHTREE CON ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e TPO, the 14 assessee has taken comparables from wide/broad spectrum and when on such criteria a comparable is shortlisted then it cannot be held that approach of TPO is not correct. In the case of Fiserv India (P.) Ltd. (supra) as relied upon by the ld. Counsel for the assessee, he submitted that this company was purely in software development services whereas the assessee is into R D and it is also not clear whether FAR analysis of Fiserv India (P.) Ltd. was more similar to that of assessee. He also pointed out that in Fiserv s case, Mindtree Ltd. was excluded, whereas in the case of the assessee, it is a part of comparables. In the case of other comparables also which has not been disputed by the assessee, he pointed out that some of them are into development of software products and search criteria adopted by the assessee itself has thrown such comparables. In such circumstances, the assessee is asking for exclusion based on deep scrutiny functionality which otherwise under TNMM is not required. Otherwise, this matter should be restored back to the file of the TPO by adopting different search criteria by not including the companies which are into software products. 6.4 We h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s comparable has been excluded after considering various decisions of the Tribunal. Coming to the arguments of the ld. Sr. D.R. that during the course of search analysis, the assessee too has chosen the companies by adopting search criteria of company into software products and therefore, the assessee now is precluded from making a distinction that software product companies should be excluded. In our opinion, such a contention of the ld. Sr. DR cannot be accepted, because selection of comparables by using any search criteria is one of the process of shortlisting the companies by applying various quantitative and qualitative filters in the wide array of companies in the data. Once in the search process, certain companies are thrown in the search result, then it is incumbent that deep FAR analysis is to be done so as to carry out proper comparability analysis with the tested party so as to benchmark and arrive at a proper Arm s Length Price. If at the functional level, it is shown that functions performed by the assessee is entirely different from the functions carried out by the comparable companies, or it does found comparable either under risk analysis or assets deployed, then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon the decision of the Tribunal in the case of Capgemini India Pvt. Ltd. vs. ACIT 7861/MUM/2011 and the decision of E-valueserve.com Pvt. Ltd. vs. ITO in ITA No.4001/DEL/2013. Thus, Infosys Technologies Limited has rightly been taken as a comparable by the TPO. 7.3 We have heard the rival submissions and perused the relevant finding given in the impugned order as well as material referred to before us. First of all, Infosys Technologies Limited is a giant enterprise with turnover of more than ₹ 20,264 crores. Its expenditure on R D was ₹ 267 crores and it has huge brand value and significant intangible assets, which have been valued at approximately ₹ 1,34,478 crores. If these assets are to be compared with those of the assessee, it can be seen that it has nil expenditure on R D and no significant intangible asset. On this ground alone, various Benches of the Tribunal have held that Infosys Technologies Limited cannot be compared with small software companies, who are into contract software development services. A company like Infosys with mega operations and having significant assets and brand value and full-fledged risk taking entrepreneur developing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent case also and, therefore, respectfully following the judgment of the Hon'ble Delhi High Court (supra), we hold that Infosys Technologies Limited cannot be compared with the assessee-company, which is operating at minimal risk and is a contract software development service provider. Accordingly, we direct the TPO to exclude Infosys Technologies Limited from the comparable list. 7.5 Coming to the arguments of the Ld. Sr. DR that when assessee has chosen this comparable and was not disputed in earlier year, we find that similar contention of the revenue has been dealt by the ITAT Mumbai Bench in the case of Tata Power Solar Systems Ltd. ITA No. 6657/MUM/2012, order dated 15.01.2014, wherein Tribunal observed and held as under:- Under the transfer pricing mechanism, a comparability analysis has to be undertaken for comparing the control transactions with an uncontrolled transaction. This is achieved by identifying potential comparables having similar functions that can stand the test of FAR analysis (i.e., functions performed, assets employed and risks assumed). The assessee is required to identify the comparables after carrying out proper search and undertaking FAR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TPO is required under law to analyze every comparables and then only determine the correct ALP based on proper comparability analysis. Thus, we do not find any merit in the contention of the Revenue that simply because the assessee has included these two companies then the assessee is debarred from objecting to the same, if there are strong and cogent reasons. This ratio has now been upheld by the Hon ble Bombay High Court in CIT vs. M/s. Tata Power Solar Systems Ltd. in ITA No. 1120 of 2014, vide judgment dated 16.12.2016. Thus, respectfully following the aforesaid ratio the contention raised by the Ld. Sr. DR is not accepted. ( C) SONATA SOFTWARE LIMITED (30.98%) 8. Regarding Sonata Software Limited, the assessee s contention had been that this company is functionally dissimilar because it is into sale of products and has a very high related party transaction, which is to the extent of 50.38% of the sales. The inventory shown in Schedule 15 of its Annual Report goes to show that it has a huge product as opening and closing stock, which indicates that this company is into development of software products, which cannot be compared with the assessee s software deve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected that, if the entire segmental details are available then matter can be examined fresh. 9.1 In view of the above contentions made by the parties, we are setting aside the order of the DRP on this comparable and restore the matter to the file of the TPO to see, whether segmental information are available or not and if the same are available, then said company should be included after carrying out proper comparable analysis. The TPO shall provide due opportunity to the assessee to substantiate the inclusion of this company. II. IT back office support service (ITS) segment: 10. Now we shall take up the Transfer Pricing Adjustment on provision of IT back office support service (ITS) segment. Under this segment, the assessee again has rendered services on cost plus margin of 15%. The assessee had entered into an agreement with CDS, pursuant to which the assessee was responsible for providing CDS and other Cadence affiliated entities, IT back office support services which comprise of UNIX/Windows administration support; Internal helpdesk services; Application development support; Web development support; and Customer support. The functions performed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nternational Limited 58.45 6 Crossdomain Solutions Pvt. Ltd. 29.4 7 Informed Technologies India Ltd. 23.16 8 Aditya Birla Minacs Worldwide Ltd. 1.71 AVERAGE 37.11 Accordingly, he determined the arm s length price in the following manner:- Rs . Operating cost 40,90,51,247 Arms Length Margin (%) 37.11 Arms Length Price (ALP) 56,08,50,165 Price received 47,06,89,564 Shortfall being adjustment u/s 92CA 9,01,60,601 12. After giving effect to the DRP s order, finally 7 sets of comparables were left as DRP has excluded Genesys International Limited and accordingly final set of comparables from the stage of DRP were as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the DRP relied upon CBDT Circular SO-890(E) dated 26/9/2000 wherein it has been clarified that medical transcription services have been treated as ITES only. The DRP further held that assessee s plea that it has a high margin cannot be the reason for rejection. 14.1 Before us, the ld. counsel for the assessee apart from reiterating the submissions made before the TPO and DRP submitted that not only its services are incomparable with that of the assessee but benchmarking would not be possible as it has insufficient segmental information. In support of this contention that in absence of segmental information it cannot be held to be comparable, he relied upon various decisions of this Tribunal like in the case of Macquarie Global Services Pvt. Ltd. vs. DCIT in ITA No.6803/DEL/2013; and TNS India Pvt. Ltd. vs. DCIT in ITA No.1875/HYD/2012. 14.2 On the other hand, the ld. Sr. DR, strongly relied upon the order of the DRP and also decision of the Tribunal in the case of Evalueserve.com Pvt. Ltd. vs. ITO in ITA No.4001/DEL/2013. 14.3 We have considered the rival submissions and also perused relevant finding given in the impugned order. Accentia Technologies Ltd. has two main b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the companies, which are rendering purely ITES services, therefore based on these decisions this comparable should be removed. In support of exclusion of this company, he relied upon the decision of ITAT Delhi Bench in the case of Macquarie Global Services Pvt. Ltd. (supra) and the decision in the case of Saxo India Pvt. Ltd. in ITA No.682/2016. 15.3 We have heard the rival submissions and also perused the relevant finding and material referred to before us. The assessee has sought exclusion of this comparable company mainly on the ground that it outsources most of its work which is 57.31% as compared to the assessee which is only 2.5% and employee cost of this company is lower. Though this is fairly a vital factor vitiating the comparability, however, the ld. counsel for the assessee could not give any rebuttal or any cogent reasons as to why this comparable company was selected and chosen by the assessee after carrying out FAR analysis not only in earlier years, but also in subsequent assessment years i.e. 2010-11 and 2011-12 again on carrying same FAR analysis. It is only in this year that assessee is seeking exclusion on the ground that it has a different business model. Suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... high end KPO services which is different from the functions performed by the assessee, In support for its exclusion on similar point, he relied upon the decision of Hon ble Delhi High Court in the case of Ramp Green Solutions Pvt. Ltd. in ITA No.102/205 wherein this comparable has been removed and also relied upon the Tribunal decision in the case of Macquarie Global Services (supra). 16.2 On the other hand, ld. DR, relied upon the order of the DRP that this company is both into KPO and BPO which was nothing but in the nature of ITES services and therefore, it has rightly been included in the list of comparables. 16.3 We have heard the rival submissions and perused the relevant finding given in the impugned order. From the perusal of the annual report of eClerx Services Ltd., we find that, first of all, due to its exceptional performance during the year, it has been chosen as best KPO Company and it has also outsourced its substantial work to the third party during the year. The assessee on the other hand is providing back office support services and such services are being provided by its own human resources, that is, it is not outsourcing its work. Without going into muc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. (supra) is clearly applicable and accordingly, we direct the TPO to exclude this company from the list of final comparable. CG VAK SOFTWARE AND EXPORTS LTD. (-3.38%) 18. This company has been sought to be included by the assessee-company, which has been rejected by the TPO and DRP on the ground that it does not fulfil the turnover criteria of five crores since its turnover is less than five crores, therefore, it cannot be included in the comparable analysis. 18.1 Before us, the ld. counsel for the assessee had submitted that now this issue has been dealt by the Hon ble Delhi High Court in the case of Cryscapital Investment Advisors India Pvt. Ltd. vs. DCIT in ITA No.417/2014, wherein the Hon ble High Court held that turnover filter cannot be used to exclude otherwise functional comparable companies. 18.2 The ld. DR relying upon the order of the DRP submitted that here in this case the turnover was less than ₹ 1 crore and when turnover is so small, then it cannot be compared under FAR. In support, he also relied upon the decision of the Tribunal in the case of S P Capital IQ (India) (P) Ltd. vs. DCIT, (2016) 72 taxmann.com 236. 18.3 We have heard the rival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parable then same cannot be rejected on the basis of turnover. Thus, following the ratio laid down by the Hon ble Delhi High Court, we hold that the company cannot be held to be incomparable simply on the ground of low turnover, unless it is demonstrated that the assets and risk are completely different and are incomparable. Thus, we direct the TPO to include CG Vak Software And Exports Ltd. as a comparable company. R SYSTEMS INTERNATIONAL LIMITED (-17.18%) 19. The assessee has selected this company as comparable in TP study report which has been rejected by the TPO and DRP on the ground that it follows calendar year for its accounting, that is, 1st January to 31st December. The case of the Ld. Sr. DR before us has been that a comparable cannot be accepted when the entire data relating to the relevant financial year is not available. 19.1 On the other hand, the ld. counsel for the assessee, relied upon the decision of the Hon ble Delhi High Court in the case of McKinsey Knowledge Centre India PVT. LTD. in ITA No.217/2014 and CIT Vs. M/s. Mercer Consulting India Pvt. Ltd., ITA No. 101 of 2015 dated 24.08.2016. 19.2 We have heard rival submissions and also perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ATMUM-TP in which it had been held that a company with a different financial year ending cannot be compared. 28. We are unable to agree with the decision of the Transfer Pricing Officer and of the DRP that affirmed it. The view taken by the Tribunal commends itself to us. It is not the financial year per se that is relevant. Even if the financial years of the assessee and of another enterprise are different it would make no difference. If it is possible to determine the value of the transactions during the corresponding period, the purpose of comparables would be served. The question in each case is whether despite the financial years of the assessee and of the other enterprise being different, the financials of the corresponding period of each of them are available. If they are, the Transfer Pricing Officer must refer to the corresponding period of both the entities in determining whether the two are comparable or not for the purpose of determining the ALP. 29. As noted by the Tribunal, the audit accounts of R System International Ltd. for the year ending 31.12.2008 had been given under one column and the data for the quarter ending 31.03.2009 and 31.03.2008 (both audi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year 2009-10, wherein on similar ground the matter was remanded to the TPO for fresh consideration. The ld. D.R. too admitted that this matter can be restored back to the file of TPO. 20.1 Accordingly, we set aside the order of the DRP and restore this comparable to the file of the TPO to carry out comparability analysis and if this company is found to be comparable, then same can be included for benchmarking assessee s margin. Needless to say that TPO will give opportunity to the assessee to the assessee to substantiate its case. MICROGENETICS SYSTEMS LTD. (1.84%) 21. Regarding this comparable also, it has been submitted that this comparable was requested for inclusion before the DRP by way of submission. However, the DRP has not given its comment. Since on similar issue we have set aside the order of the DRP and restored the comparable to the file of TPO, accordingly, for this comparable also, we are remitting back the same to the file of the TPO for carrying out comparability analysis for benchmarking assessee s margin. 22. In view of our aforesaid finding and directions, we direct the TPO to benchmark assessee s margin vis- -vis the comparables as decided ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its TP study report and the same has been accepted by the TPO vide order dated 29/1/2016 and no fault has been found with such approach and no adjustment has been made. Thus, he submitted that looking to the fact that both these activities are entirely different, benchmarking should be done separately, so that proper ALP can be determined. 23.3 On the other hand, the ld. D.R. objected that once the assessee itself has treated both the services under one segment, then it cannot take a different stand that both should be separately benchmarked. 23.4 After considering the rival submissions, we find that though in assessment years 2008-09 and 2009-10, assessee has treated pre and post sales services under one segment, i.e. it has taken consolidated figure to arrive at the margin of 12.92%. However from assessment year 2011-12, assessee has separately benchmarked the same after carrying out detailed FAR analysis, which has been stated to have been accepted by the TPO. Under these facts that the transaction of pre-sales and post sales have been recognised as two separate transaction having different functions, then, for this year also, we are setting this issue to the file of the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons referred to before us. In the case of McKinsey Knowledge Centre Pvt. Ltd. vs. DCIT (supra) as relied upon by the Ld. Sr. DR, the Tribunal has discussed this issue in detail and observed that granting of working capital adjustment is confined to the international transactions of rendering of services, whose ALP is separately determinable, whereas the international transaction of interest receivables from AE for late realization is a separate transaction. Allowing working capital adjustment in the international transaction of rendering services will have no impact on the determination of ALP of the international transaction of interest on receivables from AE beyond the stipulated period allowed in the agreement. The Tribunal held that working capital adjustment will not have any effect or bearing on the interest on delayed realization of invoice value, because it depends upon the period of realization on transaction to transaction basis and it has nothing to do with opening and closing values of inventories, receivables and payables. First of all, for calculating the working capital adjustments, generally trade receivables, inventory and trade payables are considered to identify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under para 3.49 that a significantly different level of relative working capital between the controlled and uncontrolled parties may result in further investigation of the comparability characteristics of the potential comparable. Mr. Singh submitted that the ITAT erred in disagreeing with the TPO, who had characterised the outstanding receivables as an international transaction by itself which required benchmarking. 10. The Court is unable to agree with the above submissions. The inclusion in the Explanation to Section 92B of the Act of the expression 'receivables' does not mean that de hors the context every item of 'receivables' appearing in the accounts of an entity, which may have dealings with foreign AEs would automatically be characterised as an international transaction. There may be a delay in collection of monies for supplies made, even beyond the agreed limit, due to a variety of factors which will have to be investigated on a case to case basis. Importantly, the impact this would have on the working capital of the Assessee will have to be studied. In other words, there has to be a proper inquiry by the TPO by analysing the statistics over a peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. DR relied upon the order of the TPO as well as DRP. 25.1 We have heard the parties and gone through the impugned orders. As regard the issue whether forex loss is to be regarded as operating cost or not, is no longer debatable issue as foreign exchange gain or loss relatable to an international transaction is always part and parcel of such underlined transaction. When an international transactions are entered into with the AE, one of whom is resident of other contracting state and the transactions are in foreign currency, then any gain or loss on account of forex is inherent item of cost or profit. For the purpose of determining the profit realized on the international transaction, all operating costs incurred for the purpose of providing the services to the AE have to be taken into account. Therefore, no question arises whether the foreign exchange gain or loss is non-operating in nature or not. Thus, we hold that forex loss or gain is operating costs or gain and accordingly, we allow this ground raised by the assessee. 26. As regard the corporate issue as raised in grounds Nos. 20, 21 and 22, we find that the impugned issue relates to Director s remuneration between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point out typographical and arithmetical errors in the working of the disallowance under sec. 10A of the Act by the Assessing Officer at page Nos. 6 to 8 of the assessment order. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 19. Considering the above submissions, we find that in the case of CIT vs. Western Outdoor Interactive (P) Ltd. (supra), the Hon'ble High Court has been pleased to hold that benefit of deduction under sec, 10A is available for a particular number of years on satisfaction of certain conditions under provisions of the Act and unless relief granted for first assessment year in which claim is made and accepted, the Assessing Officer cannot withdraw relief for subsequent years, Undisputedly, it is 8th year of the claim of deduction under sec. 10A of the Act made by the assessee and it has been allowed in earlier years and in subsequent remaining two assessment years, i.e. 2009-10 and 2010-11. Before the ITAT, as discussed above, the Learned AR has tried to meet out the objections raised by the Assessing Officer in making the disallowance of the claimed deduction. In brief, the submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per SAP details after correcting above mistakes made by the Assessing Officer is ₹ 32,05,095 which matches with fixed assets scheduled submitted to the Assessing Officer during assessment proceedings. Against the objection of Assessing Officer that invoices raised in US dollars are not verifiable with amounts recorded in books as some amounts is in INR, the submission of the assessee remained that all the details on account of service income was furnished before the Assessing Officer; invoices are usually raised in USD, however, if there is. an adjustment entry to be passed, same is passed in INR in the ledger account; and audit adjustment entry was passed by auditor for financial year 2007-08; bonus expenses pertaining to financial year 2008-09 inadvertently considered by Cadence India as cost for financial year 2007-08 and as the assessee operates on a cost plus model invoice on such cost was raised already in financial year 2007-08; etc. The grievance of the assessee in this regard also remained that the Assessing Officer has not followed DRP's directions. It was submitted that as per directions issued by the DRP, the Assessing Officer was directed to rectify the detai ..... 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