ACIT, CHENNAI V. Converteam EDC P. Ltd., CHENNAI

ITA 861/CHNY/2014

• Counselvise Citation: 86121714 RSA 2014
• Duration Of Justice: 2 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2017
• Appeal Filed By: Department
• Bench Allotted: D
• Next Hearing Date: 27-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 04-04-2014

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , . , $ % BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 973/MDS/2014 / ASSESSMENT YEAR : 2009-10 GE CONVERTEAM EDC PRIVATE LIMITED, KAMAK TOWERS, NO. 12A, (SP) EKKATTUTHANGAL, GUINDY, CHENNAI - 600 032. [PAN: AAFCA 2499F] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(3), CHENNAI- 600 034. ( / APPELLANT) ( / RESPONDENT) ./ I.T.A. NO. 861/MDS/2014 / ASSESSMENT YEAR : 2009-10 THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I(3), CHENNAI- 600 034. VS. M/S. CONVERTEAM EDC PRIVATE LIMITED, KAMAK TOWERS, NO. 12A, (SP) EKKATTUTHANGAL, GUINDY, CHENNAI - 600 032. [PAN: AAFCA 2499F] ( / APPELLANT) ( / RESPONDENT) ASSESSEE BY : SHRI S. BHARATH, CIT, DR REVENUE BY : SHRI VIKRAM VIJAYARAGHAVAN, ADVOCATE & /DATE OF HEARING : 03.11.2016 & /DATE OF PRONOUNCEMENT : 25.01.2017 :-2-: I.T.A. NOS. 973 & 861/MDS/2014 /O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THESE ARE THE CROSS APPEALS DIRECTED AGAINST THE O RDER OF ASSESSMENT U/S. 143(3) R.W.S. 92 CA R.W.S. 144(C) O F THE ACT IN PURSUANCE TO DIRECTIONS OF THE DRP DATED 18.12.2013. AT THE TIME OF HEARING THE LD. AR HAS ARGUED THE GROUNDS RELATING TO TRANSFER PRICING MAT TER ONLY IN RELATION TO SELECTION OF COMPARABLES BY THE TPO. 2. THE BRIEF FACTS OF THE CASE THAT THE ASSESSEE CO MPANY IS IN THE BUSINESS OF MANUFACTURE OF ELECTRICAL, MECHANICAL A ND PROCESS CONTROL. CONVERTEAM EDC PVT. LTD., IS OWNED BY CONVERTEAM IN TERNATIONAL SAS WITH 99% STAKE AND 1% BY CONVERTEAM SAS(FRANCE) AND THES E TWO COMPANIES ARE WHOLLY OWNED SUBSIDIARIES OF CONVERTEAM GROUP SAS. THE ASSESSEE COMPANY IS IN GLOBAL ENGINEERING AND DEVELOPMENT CENTRE REG ISTERED WITH THE SOFTWARE TECHNOLOGY PARKS OF INDIA (STP). AND THE RETURN OF INCOME WAS FILED ON 24.09.2010 WITH TOTAL INCOME OF RS. 25,20,889/- AND THE RETURN OF INCOME WAS PROCESSED U/S. 143(1) OF THE ACT ON 24.02.2011. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S. 143(2) WAS ISSUED. THE ASSESSING OFFICER ON PERUSAL OF FORM 3CEB FILED BY THE ASSESS EE FOUND THE ASSESSEE COMPANY HAS INTERNATIONAL TRANSACTIONS WITH ASSOCIA TED ENTERPRISES (AE) FOR RS. 48,42,91,234/- AND REFERENCE WAS MADE TO TPO. THE LD. TPO IN ORDER :-3-: I.T.A. NOS. 973 & 861/MDS/2014 NO. DCIT(TP)/C415/TPO-IV FOR THE ASSESSMENT YEAR 20 09-10 DETERMINED THE ARMS LENGTH PRICE (ALP) OF INTERNATIONAL TRANSACTIO NS ENTERED INTO BY THE ASSESSEE WITH ASSOCIATE ENTERPRISE. THE LD. TPO FO UND THAT THE ASSESSEE'S INTERNATIONAL TRANSACTIONS PERTAINING TO SOFTWARE S ERVICES, MANAGEMENT/TECHNICAL, ADMINISTRATIVE AND SUPPORT FE ES, TREASURY MANAGEMENT SERVICES, IMPORT OF FIXED ASSETS AND REI MBURSEMENT OF EXPENSES. THE ASSESSEE COMPANY HAS ADOPTED TRANSACTIONAL NET MARGIN METHOD (TNMM) AS THE MOST APPROPRIATE METHOD WITH PLI OF 10.15%. THE LD. TPO OBSERVED THAT THE ASSESSEE COMPANY HAS ADOPTED THREE YEARS W EIGHTED AVERAGE WHICH WAS NOT ACCEPTABLE AS PER THE PROVISIONS OF RULE 10 B(4), AND HAS TO MANDATORILY ADOPT ONLY CURRENT YEAR DATA TO DETERMI NE THE ALP OF ITS AE'S TRANSACTIONS. THE LD. TPO FOUND THE PROFIT LEVEL I NDICATOR (PLI) IS 10.15% AND THE AVERAGE MARGIN OF COMPARABLE COMPANIES IS 2 4.3% AND ENHANCED THE INTERNATIONAL TRANSACTIONS BY RS. 4.97 CRORES. ON THE OBJECTIONS OF THE ASSESSEE, THE DRP DIRECTED THAT TNMM WAS ADOPTED BY THE LD. TPO BUT WHILE MAKING TRANSFER PRICING ADJUSTMENT OF DETERMINING A LP THE ASSESSEE HAS ADOPTED 9 UN-CONTROLLABLE COMPARABLES WITH AVERAGE PLI OF (-)2.6%. THE LD. TPO FOUND THAT FIVE COMPARABLES SELECTED ARE NOT AC CEPTABLE AND THE SAME ARE REJECTED AND FURTHER INCLUDED FIVE NEW COMPARAB LES AND CALCULATED AVERAGE PLI OF 9 COMPARABLES AT 24.3% AND 5 COMPARA BLES SELECTED BY THE TPO ARE (I) AKSHAY SOFTWARE TECHNOLOGIES LIMITED, ( II) HELIOS & MATHESON INFORMATION TECHNOLOGY (BANGALORE) (III) SAGARSOFT (INDIA) LIMITED (IV) :-4-: I.T.A. NOS. 973 & 861/MDS/2014 THIRDWARE SOLUTIONS LTD. IN THE DRP PROCEEDINGS TH E PANEL HAS CONSIDERED M/S. BODHTREE LIMITED AND M/S COMP-U-LEARN TECH IND IA LIMITED AS ACCEPTABLE COMPARABLES AND IN RESPECT OF M/S. CAT T ECHNOLOGIES LTD., THE DRP DIRECTED TPO TO REWORK THE COMPARABLES CONSIDER ING THE SEGMENTAL FINANCIAL DATA RELATING TO SOFTWARE DEVELOPMENT SER VICES AND IN RESPECT OF M/S. FCS TECHNOLOGIES LIMITED, DRP OBSERVED THAT THE OVE RALL REVENUE OF THE COMPANY FROM IT CONSULTANCY SERVICES IS 48% AND THE E-LEARNING AND INFRASTRUCTURE LIMITED IS 52%. WHEREAS, LD. TPO IN ACCORDANCE WITH THE DIRECTIONS OF THE DRP REWORKED THE ALP OF INTERNATI ONAL TRANSACTIONS VIDE ORDER DATED 31.01.2014 AND EXPLAINED THAT IN RESPEC T OF M/S. CAT TECHNOLOGIES LIMITED AND M/S. FCS TECHNOLOGIES LIMI TED IT WAS POSSIBLE TO FIND THE SEGMENTAL FINANCIAL RELATING TO SOFTWARE D EVELOPMENT SERVICES AND THE SAID TWO COMPARABLES WERE REMOVED AND MADE THE CALC ULATIONS. AND FINALLY THE ASSESSING OFFICER PASSED ORDER U/S. 143(3) R.W. S. 92CA R.W.S. 144(C) ON 07.02.2014. 3. BEFORE US, THE LD. AR OF THE ASSESSEE ARGUED TH AT THE ASSESSEE COMPANY WANTS TO EXCLUDE THE BODHTREE CONSULTANCY L IMITED AS COMPARABLES AS IT IS FUNCTIONALLY DIFFERENT BECAUSE IT IS IN SO FTWARE DEVELOPMENT SERVICES AND SOFTWARE PRODUCTS AND PROVIDES ITES DATA ACTIVI TIES, DATA MANAGEMENT AND DATA WAREHOUSING ACTIVITIES AND THE MARGINS ARE FLUCTUATING OVER A PERIOD OF 3 YEARS DUE TO REVENUE RECOGNITION POLICY AND AL SO HAVE LOW EMPLOYEE :-5-: I.T.A. NOS. 973 & 861/MDS/2014 COST TO THE SALE AND RELIED ON THE JUDICIAL DECISIO NS OF CISCO SYSTEMS (INDIA) PRIVATE LTD VS. DCIT IT(TP)A NO. 271(1)(C)/BANG/201 4 DATED 14.08.2014 AND Q LOGIC (INDIA) PRIVATE LIMITED VS DCIT, ITA NO. 22 7/PN/2014 DATED 21.10.2014 AND PRAYED FOR EXCLUDING THE SAME. ON T HE OTHER HAND, THE LD. DR SUBMITTED THAT THE DRP AND TPO HAS CONSIDERED TH ESE FACTS AND HAS TO BE TREATED AS COMPARABLE IN DETERMINING THE ALP AND OP POSED TO THE GROUNDS 4. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATE RIAL ON RECORD AND JUDICIAL DECISIONS. THE LD. AR SUBMITTED THE FACTS OF THE BODHTREE CONSULTANCY LIMITED AND EMPHASIZED THAT IT IS NOT COMPARABLE TO THE ASSESSEE COMPANY DUE TO FLUCTUATING MARGIN AND ABNORMAL PROFITS IN E ARLIER YEARS. WHEREAS LD. DR'S CONTENTION BEING THE COMPARABLE IS ENGAGED IN GLOBAL IT CONSULTING PRODUCT AGENCY SERVICES AND OTHER TECHNOLOGY SOLUTI ONS AND HAS TO BE CONSIDERED AS COMPARABLE. WE FOUND THE SIMILAR ISS UE WAS CONSIDERED BY THIS CO-ORDINATE BENCH OF TRIBUNAL IN THE CASE OF M/S. K UMARA SYSTEMS P. LTD., VS DCIT IN ITA NO. 906/MDS/2015 DATED 06.01.2016 FOR T HE ASSESSMENT YEAR 2009-10, WHERE THE BODHTREE CONSULTANCY LIMITED WAS NOT CONSIDERED AS THE COMPARABLE REFERRED AT PAGE 3, PARA 8 WHICH READ AS UNDER: ' WE HAVE HEARD BOTH THE PARTIED AND PERUSED THE M ATERIAL ON RECORD. SIMILAR ISSUE WAS CONSIDERED BY THE TRIBUN AL, BANGALORE BENCH IN THE CASE OF M/S. CISCO SYSTEMS (INDIA) PVT. LTD. , IN IT(TP)A NO. 271(1)(C)/BANG/2014 DATED 14.08.2014 WHEREIN BODHTR EE IS NOT :-6-: I.T.A. NOS. 973 & 861/MDS/2014 CONSIDERED AS A COMPARABLE ONE AND THE TRIBUNAL HEL D IN PARAGRAPH 26.1 AS FOLLOWS: 26.1 BODHTREE CONSULTING LTD.:- AS FAR AS THIS COM PANY IS CONCERNED, IT IS NOT IN DISPUTE THAT IN THE LIST OF COMPARABLES CHOSEN BY THE ASSESSEE, THIS COMPANY WAS ALSO INCLU DED BY THE ASSESSEE. THE ASSESSEE, HOWEVER, SUBMITS BEFORE US THAT LATER ON IT CAME TO THE SSESSEES NOTICE THAT THIS COMPANY IS NOT BEING CONSIDERED AS A COMPARABLE COMPANY IN THE CASE OF C OMPANIES RENDERING SOFTWARE DEVELOPMENT SERVICES. IN THIS RE GARD, THE LD.COUNSEL FOR THE ASSESSEE HAS BROUGHT TO OUR NOTI CE THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF NETHAWK NETWORKS PVT. LTD. V. ITO, NO. 7633/MUM/2012, ORDER DATED 6.11.2013. IN THIS CASE, THE TRIBUNAL FOLLOWED THE DECISION RENDERED BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF WILLS PROCESSING SERVICES (I) P. LTD., ITA NO.4547/ MUM/2012. IN THE AFORESAID DECISIONS, THE TRIBUNAL HAS TAKEN THE VIEW THAT BODHTREE CONSULTING LTD. IS IN THE BUSINESS OF SOFT WARE PRODUCTS AND WAS ENGAGED IN PROVIDING OPEN & END TO END WEB SOLUTIONS SOFTWARE CONSULTANCY AND DESIGN & DEVELOPMENT OF SO FTWARE USING LATEST TECHNOLOGY. THE DECISION RENDERED BY T HE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF NETHAWK NETWOR KS PVT. LTD. (SUPRA) IS IN RELATION TO A.Y. 2008-09. IT WAS AFFI RMED BY THE LEARNED COUNSEL FOR THEASSESSEE THAT THE FACTS AND CIRCUMSTANCES IN THE PRESENT YEAR ALSO REMAINS IDENTICAL TO THE F ACTS AND CIRCUMSTANCES AS IT PREVAILED IN AY 08-09 AS FAR AS THIS COMPARABLE COMPANY IS CONCERNED. FOLLOWING THE AFOR ESAID DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL, WE HO LD THAT BODHTREE CONSULTING LTD. CANNOT BE REGARDED AS A CO MPARABLE. IN THIS REGARDS, THE FACT THAT THE ASSESSEE HAD ITSELF PROPOSED THIS :-7-: I.T.A. NOS. 973 & 861/MDS/2014 COMPANY AS COMPARABLE, IN OUR OPINION, SHOULD NOT B E THE BASIS ON WHICH THE SAID COMPANY SHOULD BE RETAINED AS A C OMPARABLE, WHEN FACTUALLY IT IS SHOWN THAT THE SAID COMPANY IS A SOFTWARE PRODUCT COMPANY AND NOT A SOFTWARE DEVELOPMENT SERV ICES COMPANY. 9. THE SAME VIEW WAS TAKEN BY THE TRIBUNAL, DELHI B ENCH IN THE CASE OF CIENA INDIA PVT. LTD. IN ITA NO.1453/DEL./14 DATED 24.4.2015, WHEREIN IT WAS HELD AS UNDER: 9.6. COMING BACK TO THE FACTS OF THE INSTANT CASE , WE FIND FROM SCHEDULE 12 THAT THERE IS A MENTION OF SIGNIFI CANT ACCOUNTING POLICY AT SL. NO.3, WHICH PROVIDES THAT : REVENUE FROM SOFTWARE DEVELOPMENT IS RECOGNIZED BASED ON SO FTWARE DEVELOPMENT AND BILLED TO CLIENTS. IF SOME SOFTWAR E DEVELOPMENT PROJECT IS INCOMPLETE AT THE END OF THE YEAR, THIS NOTE MAY ENTAIL TWO SITUATIONS , VIZ., THE FIRST, IN WHICH THE EXPE NSES INCURRED IN RESPECT OF SUCH SOFTWARE DEVELOPMENT MAY BE CAPITAL IZED, WHICH APPEARS TO BE A MORE RATIONAL MANNER OF DEPICTING T HE TRUE AND FAIR VIEW OF THE PROFITABILITY OF THE ENTERPRISE; A ND THE SECOND, IN WHICH SUCH EXPENSES MAY BE STRAIGHTWAY TAKEN AS REV ENUE COST FOR THE YEAR OF ITS INCURRING ITSELF, WHICH MAY NOT REFLECT A TRUE AND FAIR VIEW OF THE PROFITS ON YEAR TO YEAR BASIS. THE CONTENTION OF THE LD. AR IS THAT WHEREAS BODHTREE FELL INTO TH E SECOND SITUATION, THE ASSESSEE WAS IN THE FIRST SITUATION. THOUGH THIS CONTENTION ABOUT BODHTREE ACCOUNTING FOR EXPENSES I N THE YEAR OF INCURRING BUT CONSIDERING INCOME ONLY ON THE CONCLU SION OF THE PROJECT IN THE SUBSEQUENT YEAR SOUNDED A LITTLE AWK WARD, WE ATTEMPTED TO FIND OUT THE AMOUNT OF CAPITALIZED EXP ENSES IN RESPECT OF INCOMPLETE PROJECTS AT THE END OF THE YE AR. APPARENTLY, :-8-: I.T.A. NOS. 973 & 861/MDS/2014 WE COULD NOT FIND OUT ANY SUCH CAPITALIZED VALUE OF WORK-IN- PROGRESS IN THE BALANCE SHEET OF THE COMPANY ON STA NDALONE BASIS. WE DIRECTED THE LD. DR TO EXAMINE THE ANNUAL REPORT OF THIS COMPANY AND POINT OUT THE AMOUNT OF EXPENSES CAPITA LIZED IN RESPECT OF INCOMPLETE WORK AT THE END OF THE YEAR. ON THE NEXT DATE OF HEARING, THE LD. DR FAILED TO SPECIFICALLY POINT OUT ANY AMOUNT OF SUCH CAPITALIZED EXPENSES WITH THE OPENIN G OR CLOSING BALANCE. THIS PRIMA FACIE SHOWS THAT THE EXPENSES I NCURRED IN RESPECT OF INCOMPLETE PROJECTS OF SOFTWARE DEVELOPM ENT AT THE END OF THE YEAR, BUT BILLED IN THE SUBSEQUENT YEAR, WERE, IN FACT, TREATED AS EXPENSES FOR THE CURRENT YEAR ALONE. IN THE SAME MANNER, EXPENSES INCURRED IN THE PRECEDING YEAR FOR THE CONTRACTS OF SOFTWARE DEVELOPMENT REMAINING INCOMPL ETE AT THE END OF THE YEAR, ALSO MUST HAVE BEEN INCLUDED IN TH E EXPENSES OF THE LAST YEAR ALONE, BUT, THE INCOME GETTING RECOGN IZED ON THE RAISING OF BILLS IN THE CURRENT YEAR. THIS ALBEIT, PATENTLY DEFORMS THE CORRECT PROFITABILITY ON YEAR TO YEAR BASIS, YE T, BUT WE CANNOT HELP THE SITUATION. WHEN THE POSITION OF ACCOUNTS O F BODHTREE IS SUCH THAT IT DOES NOT PROPERLY MATCH EXPENSES WITH REVENUE, IT LOSES ITS CREDIBILITY FOR MAKING A LOGICAL COMPARIS ON WITH A COMPANY THAT ACCOUNTS FOR EXPENSES MATCHING WITH TH E REVENUE. ONCE IT IS HELD THAT THE PROFITS OF BODHTREE CONSUL TING LTD. DO NOT REPRESENT FAIR PROFITABILITY ON YEAR TO YEAR BASIS, THIS COMPANY LOSES ITS TAG OF AN EFFECTIVE COMPARABLE. WE, THERE FORE, ORDER FOR THE EXCLUSION OF THIS COMPANY FROM THE FINAL LIST O F COMPARABLES. IN VIEW OF THE ABOVE POSITION, WE ARE INCLINED TO H OLD THAT BODHTREE IS NOT CONSIDERED AS COMPARABLE TO THE ASSESSSEES CAS E TO DETERMINE THE ALP BY TPO. THIS GROUND IS ALLOWED. :-9-: I.T.A. NOS. 973 & 861/MDS/2014 5. CONSIDERING THE JURISDICTIONAL DECISION AND TRI BUNAL DECISION, WE ARE OF THE OPINION THAT M/S. BODHTREE CONSULTING LT D., CANNOT BE A COMPARABLE TO THE ASSESSEE COMPANY IN DETERMINING THE ALP BY T HE TPO AND HELD THE SAME TO BE EXCLUDED FROM THE LIST OF COMPARABLES AN D THE GROUND OF THE ASSESSEE IS ALLOWED 6. THE ASSESSEE SUBMITTED THAT THE FOLLOWING TWO CO MPARABLES (I) CIP TECHNOLOGIES AND EXPORT LIMITED AND (II) VMS SOFTWA RE TECHNOLOGY LTD., ARE TO BE INCLUDED. THE LD. TPO REJECTED THE CIP TECHN OLOGIES AND EXPORT LTD., COMPARABLE BECAUSE COMPANY INCURRED LOSSES FOR THE CONSEQUENT TWO YEARS AND WHEREAS, THE DRP HAS CONFIRMED THESE FACTS AT P AGE 5 OF THE ORDER. THE LD. AR ARGUED THAT IT IS NOT A LOSS MAKING COMPANY AND WHEREAS IN THE EARLIER FINANCIAL YEAR 2006-07 THE COMPANY HAS A PROFIT AND SUPPORTED WITH THE DECISIONS OF AFFINITY EXPRESS INDIA PVT. LTD. VS. D CIT, ITA NO. 106/PN/2012 DATED 09.03.2016 AND CHRYSCAPITAL INVESTMENT ADVISO RS (INDIA) PVT. LTD., VS. DCIT, 376 ITR 0183 (DELHI). WE FOUND THAT THERE IS ABNORMALITY OF PROFITS AND LOSSES AS THE THREE YEARS AVERAGE INCLUDE TWO Y EAR LOSSES OF THE COMPARABLE. THEREFORE, WE ARE OF THE OPINION THAT THE ABOVE COMPARABLE CANNOT BE INCLUDED FOR DETERMINING ALP BY THE TPO A ND WE ARE NOT INCLINED TO DIRECT TPO. IN THE CASE OF COMPARABLE VMS SOFTWARE TECHNOLOGY LIMITED, THE LD. AR SUBMITTED THAT THE FINANCIAL STATEMENTS AND EXPLAINED THAT THE LD. TPO HAS REJECTED COMPARABLE ON THE BASIS OF LOWER TURNO VER OF RS. 85 LAKHS AND :-10-: I.T.A. NOS. 973 & 861/MDS/2014 HAS NOT OBJECTED TO THE FINANCIAL COMPARABILITY. T HE TURNOVER ALONE CANNOT BE A REASON FOR THE REJECTION ON COMPARABLE FUNCTIONAL ITY. CONTRA, THE LD. DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. WE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. THE COMPANY IS NOT FINANCIALLY COMPARABLE TO THE ASSESSEE COMPANY AS THE TURNOVER IS BELOW ONE C RORE AND FILTERS APPLIED ARE ONE CRORE AND LESS THAN 100 CRORES. THEREFORE, WE ARE NOT INCLINED TO ACCEPT THE CONTENTION OF THE LD. AR THAT THE COMPAN Y SHOULD BE INCLUDED IN THE LIST OF COMPARABLE AND DISMISS THE GROUND OF TH E ASSESSEE. 7. WE MAKE IT CLEAR THAT THE LD. AR HAS NOT ARGUED ANY OTHER GROUND RELATING TO TPO ISSUES BEFORE US AND ALL OTH ER GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL IN RESPECT OF TPO ISSUES AR E DISMISSED AS INFRUCTOUS AND IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSE. 8. WE TAKE UP THE REVENUE APPEAL ITA NO. 867/MDS/20 14. REVENUE HAS RAISED GROUNDS TO INCLUDE TWO COMPARABLES WHICH ARE REJECTED BY THE TPO (I) M/S. FCS SOFTWARE SOLUTIONS LTD., AND (II) M/S. CAT TECHNOLOGIES LIMITED. THE LD. DR HAS ARGUED THAT THE TPO HAS EXCLUDED M/S. CA T TECHNOLOGIES LTD., FROM THE LISTED COMPARABLES AS SEGMENTAL DATA IS NO T AVAILABLE, AND THE LD. TPO FOUND THAT MORE THAN 90% OF REVENUE EARNED BY T HE COMPARABLE :-11-: I.T.A. NOS. 973 & 861/MDS/2014 COMPANY IS FROM SOFTWARE DEVELOPMENT AND CONSULTANC Y SERVICES AND THE SEGMENTAL FINANCIAL DATE OF SOFTWARE DEVELOPMENT SE RVICES ARE NOT AVAILABLE. WHEREAS, THE LD. AR SUBMITTED THAT THE COMPANY WAS ADDED AS A COMPARABLE AND THE DRP HAS DIRECTED THE TPO TO CHECK THE SEGME NTAL DATA. THE COMPARABLE COMPANY IS NOT ENGAGED IN SOFTWARE INFOR MATION TECHNOLOGY SERVICES AND TPO EXCLUDED FROM THE LISTED COMPARABL ES. THE LD. AR SUBSTANTIATED THAT THE COMPARABLE COMPANY OPERATION S ARE FINANCIALLY DIFFERENT AND EARN PROFITS FROM INTEGRATED IT CONSU LTANCY ON HR AND BPO. FURTHER, ENGAGED IN SOFTWARE DEVELOPMENT SERVICES A ND RUN JOBS PORTALS AND THE MARGINS ARE FLUCTUATING WITH NO SEGMENTAL DATA AND SUPPORTED WITH DECISION ON EXCLUDING THE COMPARABLE COMPANY SUN LI FE INDIA SERVICE CENTRE PVT. LTD., VS. DCIT ITA NO. 1489/DEL/2014 DATED 28. 09.2014. 9. WE HEARD THE PARTIES, PERUSED THE MATERIAL ON R ECORD AND JUDICIAL DECISIONS. CONSIDERING THE FACTUAL ASPECTS AND THE INFORMATION SUBMITTED BY THE LD. AR THAT THERE IS NO SEGMENTAL DATA COMPARAB LE COMPANY AVAILABLE. WE ARE OF THE OPINION THAT THE COMPANY CANNOT BE IN CLUDED AS IT IS FUNCTIONALLY DIFFERENT AND SEGMENTAL DETAILS ARE NO T AVAILABLE FURTHER HAVE FLUCTUATING MARGINS. ACCORDINGLY, WE ARE NOT INCLI NED TO INTERFERE AND UPHELD THE ORDER OF EXCLUDING THE COMPARABLE CAT TECHNOLOG IES LIMITED AND DISMISS THE REVENUE GROUND. WHEREAS, THE REVENUE HAS NOT P RODUCED ANY :-12-: I.T.A. NOS. 973 & 861/MDS/2014 INFORMATION IN RESPECT OF OTHER COMPARABLE. THEREF ORE, WE ARE OF THE OPINION THAT THE REVENUE DOES NOT HAVE A CASE AND WE DISMIS S THE REVENUE APPEAL. IN THE RESULT, THE REVENUE APPEAL IS DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 25TH DAY OF JANU ARY, 2017 AT CHENNAI. SD/ - ( ) (SHRI PRAMOD KUMAR) / ACCOUNTANT MEMBER SD/ - ( . ) (G. PAVAN KUMAR) $ /JUDICIAL MEMBER /CHENNAI, + /DATED: 25TH JANUARY, 2017 JPV & $-. /. /COPY TO: 1. ASSESSEE 2. REVENUE 3. 0 ( )/CIT(A) 4. 0 /CIT 5. . $$ /DR 6. 3 /GF