TMI Blog2017 (1) TMI 1618X X X X Extracts X X X X X X X X Extracts X X X X ..... 10) TMI 483 - ITAT BANGALORE] AO is directed to exclude the above expenditure both from ETO and TTO. The assessee's appeal in this regard is allowed. Addition u/s 43B - leave encashment which remained outstanding as on the last day of the PY - Held that:- When a challenge was made before the Hon'ble Calcutta High Court in Exide Industries Ltd and another v. UOI & others [2007 (6) TMI 175 - CALCUTTA HIGH COURT ], it struck down section 43B(f) being arbitrary, unconscionable and dehors the Apex Court decision in the case of Bharath Earth Movers Ltd (2000 (8) TMI 4 - SUPREME COURT) as the amendment did not disclose the reasons which would be consistent with the provisions of the Constitution and the laws of the land and not for the sole object of nullifying the apex Court decision. On SLP the SC held that "Pending hearing and final disposal of the Civil Appeal, Department is restrained from recovering penalty and interest which has accrued till date. It is made clear that as far as the outstanding interest demand as of date is concerned, it would be open to the Department to recover that amount in case civil appeal of the Department is allowed. In the circumstances, this issue is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnover as well as from the total turnover . The AO held that it should be reduced from export turn over alone and accordingly reworked the deduction u/s10A . The assessee incurred ₹ 6,83,81,220/ towards leave encashment which remained outstanding as on the last day of the PY. The AO disallowed it u/s 43B(f). Aggrieved, the filed its objections before the DRP. The DRP upheld the additions made under TP as well as the on the Corporate Tax front . In view that the assessee filed this appeal with various grounds but argued on the following grounds alone. 04. The assessee also raised the following additional grounds of appeal : 05. Reasons for raising additional grounds of appeal the plea for their admission: The AR sought our attention to the additional grounds of appeal to reject Maple eSolutions Limited, Triton Corp Limited, Accurate Data Converters Private Limited and Infosys BPO Limited as comparable to the assessee , as these grounds have not been raised before the lower authorities and are being raised for the first time before the Tribunal. In this regard, the AR submitted that these four companies should be rejected as comparable to the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meritorious and hence admit the additional grounds. 06. On the TP matters, the AR submitted that the following comparables are to be rejected , as many of them are functionally different from it, some of them have low employee cost or have peculiar circumstances or unreliable financials etc . The gist of his arguments and the cases relied on are as under: 1. Accentia Technologies Ltd (Seg) : A. Extra-ordinary events during the year 1. The company has acquired 51 percent stake in Geosoft Technologies (Trivandrum) Ltd - leading company in health care segment an lndium Technologies (India) Pvt Ltd - emerging software products company 2. The company plans to merge the subsidiary companies to strengthen the business 3. The company has increase in profits due to the sale of investments made by the company in its group concerns B. Functionally different 1. The company is engaged in the activity of medical transcription, billing and coding, and software development and implementation 2. The company operates in the BPO, software products and services segment C. Low employee cost Employee cost less than 25 % (1 5 percent), Low employee cost represents outsource of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d [IT(TP)A.1036/Bang/2011 - A. Y. 2007-08] 5. HCL Comnet SYSTEMS Services Ltd (seg) : A. Functionally different: 1. The company is a leader in global delivery infrastructure management. The company provides remote IT infrastructure services 2. The company has two segment - Telecommunication services and ITeS 3. The ITeS services comprises of data centre management services, end user computing services, managed security services, networking services and tools and process consulting services B. Different year ending -June year ending Relied on : 1. Magma Design Automation India P. Ltd [IT(TP)A No.1214/Bang/2011 - A. Y. 2007-08] 2. AOL Online India P. Ltd [IT(TP)A.1036/Bang/2011 - A. Y. 2007-08] 6. Informed Technologies India Ltd : A. Functionally different 1. The company is engaged in collecting and analysing the data on financial fundamentals, corporate governance, director-executive compensation and capital market 2. Employee cost to sales is 21.76 percent suggesting outsource of work 3. Business promotion expenses is 15 percent of sales B. Abnormal growth The company has recorded a growth of 132.86 percent over the previous year Relied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctionally different C. Trading of IT peripherals, providing call centre services and support services D. Absence of segmental information E. Extraordinary event during the year The company acquired 100 percent equity of Maple eSolutions Limited Relied on : 1. Magma Design Automation India P. Ltd [IT(TP)A No.1214/Bang/2011 - A. Y. 2007-08] 2. AOL Online India P. Ltd [IT(TP)A.1036/Bang/2011 - A. Y. 2007-08] 13. Vishal Information Technologies Ltd : A. Low employee cost The company has employee cot to sales ratio of 2.30 percent suggesting outsource of services B. Functionally different The company is engaged in providing solutions to print production industry with services like e-publishing, e-book, print on demand, data and document management, data conversion. Relied on : 1. Magma Design Automation India P. Ltd [IT(TP)A No.1214/Bang/2011 - A. Y. 2007-08] 2. AOL Online India P. Ltd [IT(TP)A.1036/Bang/2011 - A. Y. 2007-08] 3. Rampgreen Solutions P. Ltd [ ITA.102/2015 (Del HC) - a. y. 2008-09] 14. Wipro Ltd (seg) : A. Market leader B. Extra-ordinary event during the year C. Owns intantibles D. Incurs R D expenditure Relied on : 1. Magma Design Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e export turnover for the purpose of computing deduction u/s.10A. Further, the assessee has debited ₹ 2,62,94,302/ towards foreign exchange loss and reduced it from the export turnover as well as from the total turnover . The AO held that it should be reduced from export turn over alone and accordingly reworked the deduction u/s 10A . On appeal , the DRP confirmed the additions. Before us, it was submitted that aforesaid expenditure need not be excluded from the export turnover as per the definition of set of given in sec.10A of the Act. The plea of the assessee is that if the aforesaid amount is excluded from the export turnover, the same should also be excluded from the total turnover. Similar matter came up before this Tribunal in assessee's own case for A. Y. 2008-09 in IT(TP)A.1678/Bang/2012. This Tribunal by its order dt.04.09.2015 decided as under : 33. The plea of the assessee is that the aforesaid expenditure need not be excluded from the export turnover as per the definition of set of given in sec.10A of the Act. The plea of the assessee is that if the aforesaid amount is excluded from the export turnover, the same should also be excluded from the tota ..... 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