TMI Blog2019 (4) TMI 2125X X X X Extracts X X X X X X X X Extracts X X X X ..... r decisions of the coordinate bench including the decision of Hyundai Motor Engineering P. Ltd [ 2018 (8) TMI 658 - ITAT HYDERABAD] - Ground is allowed for statistical purpose. Exclusion of Harton Communication Ltd, Omega Healthcare Management and e4e Healthcare Business Services P. Ltd - as submitted that these companies not comparable as the assessee had submitted before us that RPT is 100%[more than 15%] and therefore this fact was required to be examined - DRP had passed a cryptic stereo type order and had not specifically dealt with all the objections raised by the assessee. In view of the above the order passed by the DRP is cryptic, stereotyped and is without any reasoning. As the order was silent on material aspects, therefore we remand the Ground to the file of to AO / TPO to decide a fresh . Comparables R Systems International Limited (seg) and Caliber Point Business Solutions and Informed Technologies India Ltd excluded on the pretext that current year data is not available and the calendar year of these three companies are different from the calendar year of the assessee company - As in Mickinsey Knowledge Center case [ 2021 (10) TMI 751 - DELHI HIGH COURT ] afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal ground no 5 is allowed for statistical purpose. Computation of deduction u/s. 10A - HELD THAT:- We find that this issue is put to rest by the judgment of HCL Technologies Ltd [ 2018 (5) TMI 357 - SUPREME COURT] wherein as decided the issue in favour of the assessee holding that the expenses be reduced both from the export turnover as well as from the total turnover. Thus we direct that the expenses incurred shall be deducted both from the export turnover as well as the total turnover for arriving at the deduction u/s. 10A. - SHRI. A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI. LALIET KUMAR, JUDICIAL MEMBER For the Assessee : Shri. S. D. Kapila, Advocate, Shri. Sushil Kumar, Advocate, Shri. Jeetam Nagpal, CA, Smt. Pallavi Sharma, CA For the Revenue : Smt. Neera Malhotra, CIT -DR ORDER PER LALIET KUMAR, JUDICIAL MEMBER: The present appeal is filed by the assessee against the order of the DCIT, Circle -2(1)(1), Bengaluru, dated. 26.09.2017, passed u/s. 143(3) r.w.s. 144C(13) of the IT Act, in pursuance to the directions of the DRP, for the assessment year 2013-14 on the following grounds : That on the facts and circumstances of the case and in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r reason to shift profits out of India. Ground of appeal qua the re-computation of the deduction u/s 10AA 13. The Ld. DRP/AO have erred in law and on facts in acting contrary to the judgment of jurisdictional 1-ugh Court by restricting the deduction claimed by the Appellant under section 1 OAA of the Act by reducing leased line charges incurred in foreign currency amounting to Rs. 55,95,413 only from export turnover without making a corresponding reduction in the total turnover. 14. That without prejudice to the other grounds of appeal the Ld. DRP/AO has erred in law and of facts by not considering that deduction under section 10AA of the Act has to be computed. after taking into account disallowance under section 30 to 43D of the Act. Accordingly the Ld. DRP/AP ought to have given effect to the above disallowance before arriving at the profit eligible for deduction under section 1OAA of the Act. Grounds of appeal qua the disallowance of software development expenses 15. The Ld. DRP/AO have erred in law and on facts in disallowing expenditure on purchase of software amounting to Rs. 47,66,421 be treating the same to be capital in nature. 16. Without prejudice, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee s contentions 6 Infosys BPO Ltd Use of 133(6) Information Functionally different Market Leader Significant selling, marketing brand building expenses Significant brand value and owns significant intangibles Exceptional year of operations (completed several mergers and acquisitions during the year) Falls exports services filter (74.06% of total turnover) It was submitted by the Ld. AR that the DRP while adjudicating grounds having considered all the objections raised by the assessee with respect to exclusion of this comparable. 06. Similarly, the Ld. AR had also drawn our attention to the Harltron Communications Ltd. Our attention was also drawn to the order of the DRP at page 14 where in para 4.1.2.5, the DRP had recorded this and our attention was also drawn to the objection raised by the assessee before the DRP at page 97 which is as under: Sl No. Comparable companies Assessee s contentions 7 Harltron Communications Ltd (segmental) Functi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Ground no. 7 and additional Grounds 2 and 3 of the additional grounds is with respect to exclusion of Harton Communication Ltd, Omega Healthcare Management and e4e Healthcare Business Services P. Ltd, It was the submission of the Ld. AR that these three comparables were required to be excluded being functionally dissimilar to the assessee. In respect of e4e Healthcare Business Services P. Ltd, it was mentioned that this is comparable qualify all the filters of the TPO. However the TPO has considered the current year data and applied the PLI as 17.26%. With respect to Omega Healthcare Management, it was submitted that the data was not available in public domain. Before the DRP the Ld. AR had drawn our attention to para 2.4.1.5 at page 69, wherein it was mentioned as under : 2.4.1.5. Omega Healthcare Management Services Having considered the submissions, we note that the TPO has rejected stating that no data is available in public domain. However the assessee has stated that the data is available in public domain and that the company is engaged in medical coding, billing, accounts receivable management and claims process. The assessee submitted the annual report of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat current year data is not available and the calendar year of these three companies are different from the calendar year of the assessee company. It was submitted that in terms of the decision of the Honourable Delhi High Court in the following matters : i) Mickinsey Knowledge Center (pg. 2222 at 1121 / Vol-IV) ii) Mercer Consulting [390 ITR 615] iii) Indecomm (Bang) The issue is no more res integra. It was fairly settled by the coordinate bench as well as the High Court with fair certainty that if the data of the current financial year can be interpolated by adding the first and last quarter, then even these companies are required to be considered as good comparables if otherwise functionally comparable with the company. 17. The Ld. DR had relied on the orders passed by the lower authorities. 18. We have heard rival contentions and perused the material on record. The Honourable Delhi High Court in Mickinsey Knowledge Center after elaborate discussion had recorded a finding that if the current year data can be derived / deduced by including the first and last quarter of the calendar year and the company is an otherwise functionally comparable with the assessee t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being pressed. 7.3.1 We have heard both parties, perused and carefully considered the material on record. We find that the DRP, at para 14 of its order, had relied on its decision in the earlier Assessment Year 2010-11 and directed the TPO to allow risk adjustment and decide the percentage of risk adjustment to be allowed. As a matter of guidance, the DRP referred to a decision of the ITAT, Hyderabad in the case of Dy. CIT v. Hellosoft (P.) Ltd.[2013] 32 taxmann.com 101/57 SOT 4 wherein 1% risk adjustment was allowed. From the above, it is seen that the DRP has merely referred to a decision in which 1% risk adjustment was granted and it is not correct to say that DRP directed that 1% risk adjustment is to be granted in this case. 7.3.2 The Bangalore Benches of the Tribunal, while allowing risk adjustment to captive service providers, as a matter of principle has held in many cases, including the one cited (supra), that risk adjustment cannot be granted unless the assessee has submitted computation of the same before the authorities below. In the case on hand, we find that though the assessee in Form 35A submitted before the DRP, at Annexure/Objection 13 thereof, mentioned ris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore rate as applicable in US should be considered for working out working capital adjustment . HE relied upon various judgment including Cotton Natural 276 CTR 445, Rampgreen Solutions etc The Ld. DR had submitted that this ground may also be sent back to the TPO to recompute the working capital adjustment, after taking into various judgment relied upon by the Assessee. 25. We have heard the rival contentions and perused the material on record. In terms of the submission made by the Ld. DR, we remand this issue also to the file of the TPO for recalculating the working capital adjustment, if any, in accordance with Cotton Natural 276 CTR 445, Rampgreen Solutions etc and any other decisions as found applicable. TPO shall consider all the binding decisions of the High Court / coordinate bench. This additional ground no 5 is allowed for statistical purpose. 26. Ground no. 13 of the main grounds pertain to deduction u/s. 10A of the Act. We have heard the rival contentions and perused the material on record. We find that this issue is put to rest by the judgment of the Hon ble Supreme Court in the matter of CIT v. HCL Technologies Ltd [(2018) 93 taxmann.com 33], wherein the H ..... 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