TMI Blog2017 (3) TMI 1666X X X X Extracts X X X X X X X X Extracts X X X X ..... t for A.Y. 2009-10. 2. First, we shall take up the appeal filed by the revenue in ITA No. 2085/Mum/2014 on the following grounds:- 1. On the facts and in the circumstances of the case and in law, the Dispute Resolution Panel erred in rejecting the comparable as adopted by TPO in determining the TP adjustment as valid comparables 3. During the course of hearing, the Ld. DR appearing on behalf of the revenue clarified that revenue is aggrieved with only two comparables which have been excluded by the DRP, viz. (1) Pfizer Ltd; and (2) Celestial Labs Ltd. 4. With regard to Pfizer Ltd, it was submitted by the Ld. DR that DRP has applied RPT filter and it was found that related party transactions were more than 90%, therefore, this comparable was directed to be excluded. It was submitted that in the earlier years also, the same comparable was selected and it was not objected to by the assessee, therefore, in this year merely because related party transactions are more than 25%, the same cannot be allowed to be excluded. Further, the said comparable was excluded by the DRP also for the reason that it had a different accounting period and, therefore, cannot be included in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment of Hon'ble Bombay High Court in the case of CIT v. PTC Software (I) (P.) Ltd. [2016] 75 taxmann.com 31. It was submitted that the judgment of jurisdictional High Court is binding. It was also submitted that the view taken by the Tribunal in the case of Pangea3 Legal Database Systems (P.) Ltd. (supra) cannot be applied in generalized manner. The said view was given by the Tribunal subject to the condition of availability of data of last quarter of both years. Thus, in absence of availability of quarterly data, that too, for the relevant segment; the said company cannot be taken as part of comparables. Further, the other handicap was that Pfizer Ltd's financial year ends on 30th November and not on 31st December and thus, availability of data of last quarter will not be sufficient. Thus, keeping in view all these difficulties, the DRP has rightly directed for exclusion of the same. 8. With regard to Celestial Labs Ltd. it was submitted by the ld. Counsel that the Tribunal in assesses own case for AY 2007-08 2008-09 has already taken a view in favour of the assessee and the same view should be applied. Our attention was drawn on the annual report of the said co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the international transaction was entered into is different, M/s. Transwork Ltd. could not be treated as comparable and thus not includable. (b) We find that the provisions of Section 10B(4) of the Rules are clear in as much as it obliges that the data to be used for comparability analysis should be of the same financial year in which the international transactions were entered into by the tested party. In fact, this principle/mandate was applied by the TPO while considering M/s. Power Soft Global Services Ltd. as a comparable because it had a financial year ending in September, 2006 and not 31st March, 2007 as in the case of respondent assessee. The same yardstick ought to have comparable. The submission on behalf of the Revenue that the mandate of Rule 10B of the Rules can be ignored as the difference is only of three months is without any basis. No such liberty is granted in terms of Rule 10B (4) of the Rules. (c) The findings of the Tribunal being on the basis of the unambiguous mandate of Rule 10B(4) of the Rules, question (iii) as proposed does not give rise to any substantial question of law. Thus, not entertained. Thus from the above it is clear that Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Labs as a comparable has been cheery picked by the TPO. Celestial Labs is a diversified company operating in varied fields such as rendering IT services encompassing application development and maintenance, production support, EERP, data warehousing, SAP implementation. Celestial Labs also is into manufacturing and trading of products such as ERP package for manufacturing and has a product 'Sanjivani' which is a portal for live ayurvedic consultation. The company is also engaged in the distribution of herbal ayurvedic products. SAP Services: Celestial delivers SAP consulting, SAP implementation and post-SAP implementation services for its customers. Celestial is engaged in implementing SAP for customers from initial planning, design and implementation to maintenance and ongoing optimization. Celestial helps the company align IT Solutions with business strategies. CelSanjivani Products: CelSanjivani is a part of Celestial Labs Ltd. an ISO 9001-2000 company working in this space of Bio- informatics and Gio-Technology. The goal is to become a primary market place for the herbal products providing quality products to the customers and industrial community. This is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered as comparable. As rightly submitted by the learned counsel for the Assessee, the discovery is in relation to a software for discovery of new drugs. Moreover the company also is owner of the IPR. There is however a reference to development of a molecule to treat cancer using bio-informatics tools for which patenting process was also being pursued. As explained earlier it is a diversified company and therefore cannot be considered as comparable functionally with that of the Assessee. There has been no attempt made to identify and eliminate and make adjustment of the profit margins so that the difference in functional comparability can be eliminated. By not resorting to such a process of making adjustment, the TPO has rendered this company as not qualifying for comparability. We therefore accept the plea of the Assessee in this regard.' 13. Our attention was also drawn on the order passed by the TPO wherein it has been mentioned that functional profile of the assessee as well as comparable companies are same as was there in the earlier years. Further, our attention was drawn on the financial statements of the said company wherein it has been mentioned in its P L Account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO. No objection was raised by the DR in this regard. Therefore, we direct the AO to strictly follow the directions issued by the DRP. 16. In grounds 3 4, the assessee is aggrieved in disregarding the claim of the assessee with regard to the software licence fee claimed as revenue expenditure. In this regard it was submitted that the DRP has omitted to adjudicate this issue despite the fact that objection was raised by the assessee in this regard. During the course of hearing both the parties jointly stated that this issue should go back to the DRP for its proper adjudication. 17. It is noted by us that though objection was raised by the assessee in this regard, however, DRP has not adjudicated this issue inadvertently. Therefore, we send ground 3 4 back to the file of the DRP for its adjudication afresh. It was submitted by the Ld. Counsel that identical issue has already been decided by the Tribunal in AY 2008-09. The assessee is permitted to raise all the legal and factual issues before the DRP and may also submit the order of the Tribunal before the DRP for its consideration. The DRP shall decide this issue afresh after taking into account the entire material as ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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