TMI Blog2019 (6) TMI 1444X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions‟ falling in engineering and design services. From the reading of provisions of Section 92C(1) of the Act, we find that the Section uses the expression class of associated persons . From the background of the assessee and the AEs reflected in the TP study report, various documents available on record which are not disputed, we find that all the AEs are engaged in manufacturing of industrial automated products. We find that all the three divisions under the engineering services segment are engaged in rendering design and engineering services falling under the common administration and management control of the company and funds for the three divisions are interlaced as they are drawn from a common pool of funds maintained by the company. In these circumstances, adoption of aggregated approach for benchmarking the international transaction should be accepted. International transactions can be aggregated when the transactions pertain to the same class. Further, Section 92C and Rule 10C state that for selecting the most appropriate method to determine arm's length price (ALP) among other factors, the nature and class of transaction and functions performed in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilar with that of assessee need to be deselected from final list and there is no segmental data available for the revenue stream in respect of revenue from software development and revenue from sale of products. Hence, in the absence of segmental data for the software development segment alone, the same cannot be held to be comparable with the assessee in IT segment. Also RPT transaction are not more than 25%, the said company is a good comparable. Software Development Services - companies functionally dissimilar with that of assessee and having diversified activities need to be deselected from final list - ITA No.6098/Mum/2018 & ITA No.531/Mum/2018 - - - Dated:- 14-6-2019 - SHRI M. BALAGANESH, AM AND SHRI RAVISH SOOD, JM For the Appellant : Shri Dhanesh Bafna / Shri Pratik Shah Shri Nishant Shah For the Respondent : Shri Manjunath K ORDER PER M. BALAGANESH (A.M): These appeals in ITA Nos.6098/Mum/2018 531/Mum/2018 for A.Y.2014-15 2013-14 respectively arise out of the order by the ld. Joint Commissioner of Income Tax (TP)-2(1), Mumbai in appeal dated 27/10/2017 Joint Commissioner of Income-Tax (TP)-2(1), Mumbai (ld. CIT(A) in short) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson group 3.1. Pursuant to the directions of ld. DRP, the ld. AO passed the final assessment order by making adjustment to arm‟s length price (ALP) on account of the following items to the tune of ₹ 20,62,58,915/- as under:- S.No. Description Amount in Rs. 1 Adjustment on account of provision of engineering and related services 12,36,14,584 2 Adjustment on account of provision of ITeS 6,03,56,767 3 Adjustment on account of provision of IT services 1,86,10,485 4 Adjustment on account of provision of marketing support services 36,77,079 Total 20,62,58,915 3.2. Now let us address the transfer pricing adjustment made in respect of each of the aforesaid segments. 4. Engineering and related services-₹ 12,36,14,584/- Ground No.2 raised by the assessee:- 4.1. The brief facts of this issue are that the assessee pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28,51,93,726 3,25,90,93,366 1,48,38,23,394 5,02,81,10,486 Segment Expenses (b) Personnel cost 14,68,49,349 1,46,21,13,437 79,82,19,593 2,40,71,82,379 Depreciation and amortisation 1,43,47,517 5,75,26,620 8,78,52,188 15,97,26,325 Administrative and selling expenses 5,48,40,421 63,26,78,426 49,59,82,840 1,18,35,01,687 Administrative and selling expenses 4,63,96,705 21,60,37,287 2,15,23,18,483 1,38,20,54,621 3,79,68,07,047 Operating Profit (c)=(a)-(b) 6,91,56,439 1,10,67,74,883 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h mean margin at 16.31% as under:- Particulars OP/TC Percentage(%) Axiz IT T Limited 7.15% Certification Engineers International Ltd., 24.82% Arm s length mean margin 16.31% 4.4. Based on the above, the ld. TPO worked out the adjustment in EIC division to ALP as under:- Particulars Amount (Rs.) Operating Revenue (A) 148,38,23,394 Operating Cost (B) 138,20,54,621 Arms length mean margin (C) 16.31% ALP of international transaction (D) 16,07,37,978 Adjustment over operating income (D-A) 12,36,14,584 4.5. The ld. DRP upheld the action of the ld. AO in disregarding aggregation approach of all the three divisions under engineering segment by observing as under:- It is noted that the similar disallowances made by TPO in AY 20132014 (as discussed above) had been upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal before us. 6. We have heard rival submissions and perused the materials available on record. At the outset, we find that the following facts are undisputed:- a. Adoption of transaction net margin method (TNMM) as most appropriate method (MAM) b. Adoption of Profit Level Indicator (PLI) as operating profit (OP) total cost (TC). c. Margin of assessee was 32.43% 6.1. We find that the primary argument of the ld. AR was that in the case of the assessee, the segmental data of each of the divisions i.e., EIC, EEEC, and FCEC were available, whereas the very same data is not available with the comparable companies. Hence, the assessee was justified in adopting aggregated or bundled approach in respect of aforesaid three divisions in its engineering and related services segment. The ld. AR also argued that the assessee had followed a similar approach of determining ALP of international transactions pertaining to engineering and related services segment on an aggregated basis from A.Yrs. 2006-07 to 2012-13 and the same has been accepted by the ld. TPO in earlier years after due examination of the international transactions of the assessee. It was pleaded that there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duct and engineering activities required to customise the product to meet the customer's requirement is outsourced to the division The services rendered by the division includes graphical designing and related engineering services. These services are carried out based on the specifications provided by the AEs. The designs developedby the division is shared with AEs for their approvals The division carries out modifications if any based on inputs provided by the AEs The AEs then share the designs with customers for approval. Post customer approval, the AEs develops the product and conducts acceptance tests at the customer location The division provides assistance to the AEs in relation to financial analysis and buy out assistance. These services are not undertaken on standalone basis and are ancillary to the engineering design services rendered by the division. Customer approaches the AEs for supply of certain products. The engineering services in relation to the products are outsourced to the division. Based on specification received from the AEs, designs are developed for the product and shared with the AEs f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interlaced as they are drawn from a common pool of funds maintained by the assessee company. The evidences were also furnished by the ld. AR by specific reference to the bank statement of the assessee maintained with Citi Bank which are enclosed in pages 406 407 of the paper book indicating fund transfer from each of the divisions as above. 6.5. We find that in all the aforesaid three divisions, manufacturing activity were only done by the AE and assessee company merely provides engineering and related services to its AE thereon. Hence, the Indian company i.e., assessee assumes lesser risks in all the three divisions. Hence, we hold that the ld. DRP had proceeded on an incorrect assumption of fact that assessee in EIC division is engaged in manufacturing activity. From the table reproduced above, it is very clear that assessee in EIC division subsequent to AEs approval, develops proto type for testing purposes. The assessee does not manufacture the proto type. The third party divisions identified by the AEs are engaged to manufacture the proto type and the proto types are tested by the assessee in its EIC division falling under engineering and related services segment. Later t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05/2014 wherein it was held as under: The assessee was engaged in rendering software development and related services with operations in three STPI units in different locations. The assessee had aggregated the services rendered under all the three segments while determining ALP considering that the services rendered were identical and there were no significant functional differences. The TPO, while evaluating the transactions, chose to segregate and benchmark each of the units separately by assuming that the functions, assets and risks undertaken by each of the STPI units were distinct from each other. The Delhi Tribunal, observed that the TPO totally disregarded the unity of business, administrative control, and unity of funds for the three units. The Tribunal also stated that independent FAR analysis of each unit with existing comparables is practically not possible due to the common management and interlacing of funds. 6.8. We also find that when the transactions are closely linked to each other, as in the case of the assessee before us, under the engineering and related services segment, it would be relevant in this regard to go into provisions of Indian transfer prici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions is the most reliable means of determining the arm's length consideration for the controlled transactions. Generally, transactions will be aggregated only when that involve related products or services, as defined in 1.603A-3(c)(7)(vii). 6.9. We hold that the transactions under all the three divisions pertain to same class falling under engineering and related services segment. In this regard, the relevant legal provisions are to be looked into which are as under:- Rule 10C (2) of the Rules reads as follows: (2) In selecting the most appropriate method as specified in sub-rule (i), the following factors shall be taken into account, namely: - (a) the nature and class of the international transaction; (b) the class or classes of associated enterprises entering into the transaction and the functions performed by them taking into account assets employed or to be employed and risks assumed by such enterprises; Rule 10D of the Rules inter-alia states as follows: 10D (i) Every person who has entered into an international transaction shall keep and maintain the following information and documents, namely:- (a).... (b).... (i) a description of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia Ltd., which is a Government of India Undertaking. The assessee also pleaded before the ld. TPO for excluding this comparable on the ground that the said comparable fails export earnings filter of more than 75% of total revenue (filer applied by the ld. TPO) as this company has insignificant export earnings. The assessee also pleaded before the ld. TPO to exclude this comparable on the ground that the said comparable is engaged in provision of certification, recertification, safety audit, HSE management system and third party inspection of equipment and installation services. The ld. TPO ignored all the contentions of the assessee and considered the said company as a good comparable with that of the assessee. We find that one of the filters applied by the ld. TPO was that the export earnings should be more than 75% of the total revenue to fall within the ambit of a comparable company. In this regard, from the perusal of the annual report of the said comparable, we find from page 468 of the paper book, that the total export earnings in foreign exchange towards professional fees for 31/03/2014 i.e. A.Y.2014-15 was only ₹ 50.21 lakhs whereas the total revenue of the said compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence in the impugned order of the Tribunal excluding Engineers India Ltd. from the list of comparables. (c) In the above view, question (b) as framed also does not give rise to any substantial question of law. Thus, not entertained. 6.14. In view of the aforesaid findings and respectfully following the decision of the Hon‟ble Jurisdictional High Court supra, we direct the ld. TPO to exclude the Certification Engineers International Ltd., from the list of comparables. 6.15. We also find that assessee has provided workings for working capital adjustments before the ld. TPO which is enclosed in page 402 of the paper book. Now it is well settled that working capital adjustment is to be given to the assessee while taking the margin of comparable companies for the purpose of benchmarking the international transactions of the assessee. We direct the ld. TPO accordingly. Accordingly, the grounds raised by the assessee in ground No.2 under engineering and related services segment are disposed off as per the aforesaid findings and directions. 7. Provision of IT Support and Related Services:- Ground No.3 of the assessee appeal:- 7.1. The brief facts of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding 31/03/2014, the said comparable provides end to end print and digital publishing solutions to its partners across the entire value chain from contained provision, enhancement and transformation to delivery and customer support, making it a trusted partner to the biggest publishers in the world. The Director‟s report under the heading Management Discussion and Analysis reflect that MPS Ltd., has developed end to end cloud based publishing platform, MPS Digicore, which addresses the need for an integrated work flow that publishers have started to ask for. As such, MPS Ltd., has a first mover advantage in exploiting the market and establishing it as a premier technology solutions provider for publishers. The same market forces have also created immense opportunities for MPS Digitrak, the production targeting system developed by MPS Ltd., and MPS Digicamp, automated composition. Similar other solutions are being developed at MPS Ltd., as research and development (R D) continues based on the market requirement. The assessee stated before the ld. TPO that MPS Ltd., is functionally not comparable by stating various functions performed by MPS Ltd., as under:- a) As per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said comparable had incurred outsourcing cost of ₹ 1078.76 Crores which is included under the head miscellaneous expenses which goes to prove that it has got a different business model. From the various functions performed by MPS Ltd., we find that the said comparable is predominantly in the business of digital publishing which cannot be treated at par with ITeS which is the case of the assessee in ITeS segment. In this regard, we find that the reliance placed by the ld. AR on the Co-ordinate Bench decision of Bangalore Tribunal in the case of M/s. Google (India) Pvt. Ltd., vs. DCIT in ITA No.1368/Bang/2010 for A.Y.2006-07 dated 19/10/2012 is well founded wherein it was held as under:- 16. As far as (4) Apex Knowledge Solutions Pvt. Ltd., is concerned, we find that the assessee had taken objections before the TPO that it is functionally different, as it is provides services such as E-publishing knowledge based services etc. But TPO has rejected the objection on the ground the assessee has not considered the verticals or functional lines during the search process conducted by it and, therefore, it is not proper to make any objection on this basis now. We are not able to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase of properties. It was also stated that the said company had changed its name in the F.Y.2014-15 from Excel Infoways Ltd., to Excel Real Infra Ltd., clearly indicating its intention of diversifying its activities into real estate and infrastructural development business and getting out from ITeS segment. The assessee also drew attention to the ld. TPO to the Explanatory Statement given in this regard for postal ballot notice for F.Y.2014-15 u/s.102 of the Companies Act, 2013. Apart from this, the assessee also furnished the following table to drive home its point that the said comparable had practically decided to close down its ITeS / BPO segment due to its diminishing revenue and profitability thereon as under: (all amounts are in Rs, crores) Particulars FY 15-16 FY 14-15 FY 13-14 FYU-13 FY 11-12 FY 10-11 Segment Revenue (A) 1.18 2.30 5.28 7.61 7.91 20.35 Segment expenses (C) Segment Result (B) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... working capital is to be given to the assessee and there is no dispute in this regard. We find that the assessee had infact given the workings for working capital assessment of all the comparables before the ld. TPO which are enclosed in page 570 of the paper book. The ld. TPO is directed to give working capital adjustment in respect of Jindal Intellicom Ltd., and recompute the margin thereon and then decide as to whether any adjustment to ALP is to be made when compared with assessee‟s margin. Accordingly, the ground No.3 raised by the assessee is allowed for statistical purposes. 11. Provision for Software Development Servies (IT Segment) Ground No.4 raised by the assessee:- The assessee provides software development and related services to its AEs. The assessee has adopted TNMM as the most appropriate method to determine the ALP of international transactions on software development services. The margin of the assessee under IT segment is determined as under:- Particulars Amount (Rs.) Operating Revenue 9,41,15,178 Operating Cost 8,94,79,015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Softweb Solutions Pvt. Ltd. Accordingly, the final set of comparables pursuant to directions of the ld. DRP are as under:- S. No Name of the company OP/TC% 1 CG-VAK Software and Exports Limited 5.96 2 Cyber Infrastructure Pvt. Ltd. 53.52 3 Infobeans Technologies Ltd. 48.97 4 Ingenuity Gaming Pvt. Ltd. 24.42 5 Evoke Technologies Pvt. Ltd. 6.56 6 Daffodil Software Ltd. 11.74 7 I2T2 India Ltd. 4.04 8 Nihilent Analytics Ltd. 43.79 9 Cybercom Datamatics Information Solutions Ltd. 76.21 10 Pure Software Pvt Ltd. 15.12 11 Kireeti Soft Technologies Ltd. 4.08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and has developed projects namely Free AS AIR which offers complete solutions for preparing, signing, sending and managing documents online. 13.1.1. We find that the ld. DRP had held that this company is only in the activity of software development and consultancy receipts for exports and in domestic tariff. 13.1.2. The ld. DRP observed that there is no mention of BPO services in the website of the said company and that the reference made by the Statutory Auditor is a mistake since the company is into business process management through software development and it is not a BPO. We find from page 1043 of the paper book containing the corporate information in the annual report for the year ending 31/03/2014 wherein it is categorically mentioned that this company is engaged in development of software and providing BPO services to customers based outside India. We also find from page 1044 of the paper book containing the accounting policy in respect of revenue recognition wherein it is mentioned as under:- Amount receivable from sale/development of software/Business Process Outsourcing services is recognised as income on time basis or work completion basis, as the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the paper book which is notes forming part of the financial statements for the year ending 31/03/2014, the said company under the caption earnings in foreign exchange had reflected export of goods / services calculated on FOB basis to the tune of ₹ 32,96,59,883/-. We find that there is no segmental break-up available with regard to sale of software and revenue derived from the software development services in order to make it comparable with the assessee herein in IT segment. We find that reliance in this regard had been rightly placed by the ld. AR on the co-ordinate bench decision of Pune Tribunal in the case of Pubmatic India Pvt. Ltd., in ITA No.655/Pun/2017 for A.Y.2012-13 order dated 09/03/2018 wherein it was held as under:- 18. We have heard the rival contentions and perused the record. The first aspect is the functional comparability of concern which has been finally selected to be comparable. In respect of Infobeans Systems Pvt. Ltd., the financials of said concern clearly reflect that in addition to providing software development services to its associated enterprises, it had also earned foreign exchange from export of goods on FOB basis. The event of export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit and loss account that the sum of ₹ 3,28,274/- has been reflected as income towards changes in inventories of finished goods, work in progress and stock in trade. All these points collectively go to prove that the said company is also engaged in the sale of products apart from software development. From the perusal of the entire annual report of the said company, we find that there is no segmental data available for the revenue stream in respect of revenue from software development and revenue from sale of products. Hence, in the absence of segmental data for the software development segment alone, the same cannot be held to be comparable with the assessee in IT segment. Accordingly, we direct the ld. TPO to exclude the same from the list of comparables. 13.4. Exclusion of Nihilent Analytics Ltd., (Formerly know as ICRA Techno Analytics Ltd.) Margin of 43.79% We find that assessee had argued that this comparable has got related party transactions more than 25% and range of services includes software development and consultancy, engineering design services, web development and hosting, business analytics and BPO services. It was also pleaded that there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chmarking the international transactions, one such filter applied thereon is with companies with related party transactions less than 25% of the revenues are selected. Under this caption, the ld.TPO had also observed that related party transactions on revenue and expenditure side were considered for applying this criterion. This is the filter and credential applied by the ld. TPO, then it is incumbent on the part of the ld. TPO to consider all the aforesaid three transactions together while arriving at the RPT ratio i.e., a) Services rendered related parties is -₹ 6.22 Crores b) Reimbursement of expenses by related parties - ₹ 0.6 Crores c) Reimbursement of expenses to related services - ₹ 0.4 Crores 13.4.2. If all the aforesaid three transactions are considered then the RPT to sales ratio works out to 25.88% which fails the RPT filter applied by the ld. TPO. Hence, the same deserves to be excluded on this count itself. In view of this, no opinion herein is given with regard to functional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of CIT vs. Intoto Software India Pvt. Ltd., in IT(TP)A No.233 of 2014 dated 24/03/2014 is well founded wherein it was held as under:- We have heard learned Counsel for the appellant, and have gone through the judgment and order of the learned Tribunal. The learned Tribunal on fact found in the manner as follows: Having heard both the parties and having gone through the material on record, we find that the TPO at page 37 of his order has brought out the differences between a product company and a software development services provider. Thus, it is clear that he s aware of the functional dissimilarity between a product company and a software development service provider. Having taken note of the difference between the two functions, the Assessing Officer ought not to have taken the companies which are into both the product development as well as software development service provider as comparables unless the segmental details are available. In view of the aforesaid fact-finding of the learned ^burial, this Court cannot re-appreciate the same. Accordingly, the appeal is dismissed. Miscellaneous petitions pending, if any, shall stand closed. No order as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the final assessment order to the tune of ₹ 36,77,080/- as under:- Particulars Amount (Rs.) Operating Revenue (A) 13,07,21,842 Operating Cost (B) 11,24,48,897 Arms length mean margin (C) 19.52% ALP of international transaction (D) 13,43,98,922 Adjustment over operating income (D-A) 36,77,080 15. Aggrieved, the assessee is in appeal before us. 16. We have heard rival submissions. Out of the four comparables finally selected by the ld. TPO pursuant to the order of the ld. DRP, the ld. AR before us contested for exclusion of only one comparable i.e., Axis Integrated Systems Ltd., The ld. AR argued that the said comparable fails the export filter applied by the ld. TPO in as much as there was no export revenue derived by the said comparable. We find that one of the filters adopted by the ld. TPO for benchmarking international transactions was that companies who have export service income less that 75% of the sales were excluded . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cel Infoways Ltd., and MPS Ltd., for ITeS segment of the assessee and recompute the ALP and decide as to whether any adjustment, if any, is warranted thereon. The ground No.3.1 raised by the assessee for A.Y.2013-14 is disposed off accordingly. 21. The ground No. 2.2 in respect of IT segment, Ground No.3.2 in respect of ITeS segment and ground No.4.2 in respect of MSS segment are common in nature, wherein the assessee had contested that suo moto addition made by the assessee during its benchmarking , in respect of each of those segments were not considered by the ld. TPO in the final order passed for the A.Y.2013-14 whereas the same was duly considered by the ld. TPO for the A.Y.2014-15. We direct the ld. TPO to consider the suo moto disallowances made by the assessee in respect of aforesaid three segments and re-compute the ALP of those segments accordingly. Hence, ground Nos. 2.2, 3.2 and 4.2 raised by the assessee are allowed for statistical purposes. 22. Ground No.5 raised by the assessee in respect of engineering and related services is similar to ground No.2 raised by the assessee for A.Y.2014-15 and the decision rendered by us supra thereon would apply with equal force ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Infobeans Systems India Pvt. Ltd., and rejected the inclusion of new comparable companies. The ld. DRP also changed working capital adjustment claim made by the assessee. The ld. DRP however, directed the ld. TPO to give effect to the following adjustments made by the assessee after due verification of records. The ld. TPO in the final assessment order passed pursuant to directions of ld. DRP adopted the final set of comparables as under:- s. No Name of the company OP/TC% 1 Spry Resources India Pvt. Ltd. 9.60 2 Aspire Systems India Pvt. Ltd. 50.21 3 CG-VAK Software and Exports Limited 12.29 4 Cyber Infrastructure Pvt. Ltd. 43.79 5 Harbinder Software Pvt. Ltd. 21.98 6 Ingenuity Gaming Pvt. Ltd. 40.94 7 Thirdware Solution Ltd., 37.15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and other diversified services as above, the ld. AR pleaded that this company cannot be included in the list of comparables due to functional dissimilarities. We find that from the list of activities carried out listed hereinabove, we find that the said comparable company is primarily a software services company focused in helping software companies create innovative projects. We also find that the entire revenue is derived only from software services. Hence, there is no question of rejecting this comparable on the ground that segmental data is not available. We also find from page 1585 of the paper book that segmental data in respect of software segment is also available in the annual report of the said comparable. Hence we hold that this comparable is functionally comparable with that of assessee. Hence, we direct the ld. AO to include the same in the list of comparables. 27.2. Exclusion of Cyber Infrastructure Pvt. Ltd., and Ingenuity Gaming Pvt. Ltd., The decision rendered by for A.Y.2014-15 in respect of these two comparables will hold good for A.Y.2013-14 also and would apply accordingly in the absence of change in facts which has been agreed by both the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of Delhi High Court in the case of ST Ericson India Pvt. Ltd., vs. ACIT in ITA No.4434/Del/2018 dated 26/09/2018 wherein it was observed as under:- Thirdware Solutions Limited 24. The Annual Report of this company is exhibited at pages 811 to 916 of the paper book Volume II. The Company is engaged in the business of Information Technology and Information Technology enabled services. The company caters to both domestic and international markets. A perusal of the Annual Report shows that segmental information of the revenue from information technology and information technology enabled services is not available. From page 882 of the paper book, we find that the revenue recognition policy is that Revenue from Subscription contract is recognised on acceptance or renewal of the contract and is accrued over the period of the contract. Revenue from sale of user licenses for software applications is recognised on e-delivery of Software Licence Key to end user. This company has intangibles worth ₹ 108.22 crores. 25. We further find that this comparable has been rejected by the Tribunal in assessee s own case in assessment year 2010-11 in ITA No. 609/DEL/2015 and the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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