D.C.I.T., BANGALORE vs. M/S SAP LABS INDIA PVT. LTD.,, BANGALORE

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SHRI. CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER IT(TP)A No. 561/Bang/2015 Assessment Year : 2010-11 M/s. SAP Labs India Pvt. Ltd., The Deputy No. 138, Export Promotion Commissioner of Industrial Park, Income Tax, Whitefield, Circle – 6 (1)(1), Bangalore – 560 066. Bangalore. Vs. PAN: AAFCS3649P APPELLANT RESPONDENT & IT(TP)A No. 437/Bang/2015 (By Revenue) : Shri Aliasgar Rampurawala, Assessee by CA Revenue by : Shri Arun Kumar, CIT DR Date of Hearing : 20-06-2022 Date of Pronouncement : 28-07-2022 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal is filed by assessee as well as revenue against final assessment order dated 29.01.2015 passed by the Ld.DCIT, Circle – 6(1)(2), Bangalore for Assessment Year 2010-11 on following consolidated grounds of appeal. Assessee’s appeal: “The grounds mentioned herein by the Appellant are without prejudice to one another.

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Revised grounds of appeal filed on 26.03.2018 Transfer pricing matters 1. On the facts and in the circumstances of the case and in law, the learned Dispute Resolution Panel ("learned DRP") erred in confirming the action of the learned Deputy Commissioner of Income-tax, Circle 6(1)(1), Bangalore ("learned AO")/ learned Additional Commissioner of Income-tax (Transfer Pricing) — III, Bangalore ("learned TPO") in making an adjustment of INR 49,18,48,634 to the provision of contract software development and related services provided to its associated enterprises. (corresponding to revised ground no. 1 & original ground no. 1) 2. On the facts and in the circumstances of the case and in law, the learned DRP / AO / TPO erred in: 2.1 Rejecting the Transfer Pricing ("TP") documentation maintained by the Appellant under Section 92D of the Act in good faith and with due diligence; (corresponding to revised ground no. 2.1 & original ground no. 2.1) 2.2 Disregarding the application of multiple-year data while computing the profit level indicators ("PLI") of the comparable companies; (corresponding to revised ground no. 2.2 & original ground no. 2.2) 2.3 Using data, which was not contemporaneous and which was not available in the public domain at the time of preparing the TP documentation; (corresponding to revised ground no. 2.3 & original ground no. 2.3) 2.4 Rejecting the comparability analysis undertaken by the Appellant in its TP documentation in accordance with the provisions of the Act read with the Income-tax Rules, 1962 ("the Rules") and confirming the comparability analysis as adopted by the learned TPO in the TP Order. Hence, the TPO erred in retaining `ICRA Techno Analytics Ltd. (Seg.)' in its comparability analysis which is functionally dissimilar to the Appellant. (corresponding to revised ground no. 2.4 & original ground no. 2.4) 2.5 Rejecting the comparability analysis undertaken by the Appellant in its TP documentation in accordance with the provisions of the Act read with the Rules and confirming

Page 3 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 the comparability analysis as adopted by the learned TPO in the TP Order. Hence, the TPO erred in retaining Infosys Ltd' in its comparability analysis which is functionally dissimilar to the Appellant. (corresponding to revise ground no. 2.5 & original ground no. 2.4) 2.6 Rejecting the comparability analysis undertaken by the Appellant in its TP documentation in accordance with the provisions of the Act read with the Rules and confirming the comparability analysis as adopted by the learned TPO in the TP Order. Hence, the TPO erred in retaining `Kals Information Systems Limited (Seg.)' in its comparability analysis which is functionally dissimilar to the Appellant. (corresponding to revised ground no. 2.6 & original ground no. 2.4) 2.7 Rejecting the comparability analysis undertaken by the Appellant in its TP documentation in accordance with the provisions of the Act read with the Rules and confirming the comparability analysis as adopted by the learned TPO in the TP Order. Hence, erred in retaining 'Persistent Systems Limited' in its comparability analysis which is functionally dissimilar to the Appellant. (corresponding to revised ground no. 2.7 & original ground no. 2.4) 2.8 Rejecting the comparability analysis undertaken by the Appellant in its TP documentation in accordance with the provisions of the Act read with the Rules and confirming the comparability analysis as adopted by the learned TPO in the TP Order. Hence, the TPO erred in not excluding companies which had related party transactions exceeding the tolerance limit of 15% during the year under consideration. (corresponding to revised ground no. 2.8 & original ground no. 2.4) 3. On the facts and in the circumstances of the case and in law, the learned DRP / AO / TPO erred in not considering the foreign exchange fluctuation incurred by the Appellant as part of operations for the purpose of computing the Appellant's operating mark-up on total cost as well as to arrive at the arm's length price. (corresponding to revised ground no. 3 & original ground no. 3) 4. On the facts and in the circumstances of the case and in law, the learned DRP / AO / TPO erred in including the reimbursement of expenses received, as a part of cost base in determining the arm's length price even though the same has been accepted to be at arm's length by the learned

Page 4 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 TPO in his transfer pricing order. (corresponding to revised ground no. 4 & original ground no. 4) 5. On the facts and in the circumstances of the case and in law, the learned DRP / AO / TPO erred in making an adjustment even to the value of domestic transaction instead to the value of international transaction as per section 92C of the Act. (corresponding to revised ground no. 5 & original ground no. 5) 6. On the facts and in the circumstances of the case and in law, the learned DRP /AO /TPO , erred in not providing the risk adjustment based on the actual differences in the risk profile between the Appellant and the comparable companies for the purpose of determining the arm's length price of the international transactions entered into by the Appellant instead limiting the risk adjustment to 1% without any reasons. (corresponding to revised ground no. 6 & original ground no. 6) Other than Transfer Pricing Related 7. On the facts and in the circumstances of the case and in law, the learned DRP erred in confirming the action of the learned AO in not allowing deduction under section 8oJJAA of the Act amounting to INR 13,07,42,470/-. (corresponding to revised ground no. 7 & original ground no. 7) 8. On the facts and in the circumstances of the case and in law, the learned AO /DRP erred in disallowing deduction under section 8oJJAA of the Act amounting to INR 13,07,42,470/-. The learned AO and the learned Panel failed to appreciate the fact that deduction under section 8oJJAA of the Act is assessee specific and not undertaking / unit specific. (corresponding to revised ground no. 8 & original ground no. 8) 9. On the facts and in the circumstances of the case and in law, the learned AO /DRP erred in invoking the provisions of section 8oA(4) in context of deduction claimed under section 8oJJAA for ioA units. (corresponding to revised ground no. 9 & original ground no. 9) 10. On the facts and in the circumstances of the case and in law, the learned AO /DRP erred in ignoring the fact that the amendment made in the Finance Act 2013, restricting the deduction to an Indian Company deriving profits from the manufacture of goods in a factory, is applicable with

Page 5 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 effect from April 1, 2014 and is prospective in nature. (corresponding to revised ground no. 10 & original ground no. io) 11. On the facts and in the circumstances of the case and in law, the learned AO /DRP erred in levying interest under section 234B amounting to INR 7,41,09,878/- and 234D of the Act amounting to INR 33,19,969/-. (corresponding to revised ground no. 11 & original ground no. 11) Additional grounds of appeal filed on 13.03.2017 12. On the facts and in the circumstances of the case and in law, the learned TPO /DRP erred in not excluding Sasken Communication Technologies Ltd.' in its comparability analysis even though it is functionally dissimilar to the Appellant. (corresponding to additional ground no. 12) 13. On the facts and in the circumstances of the case and in law, the learned AO /TPO /DRP erred in invoking provisions of section 92C of the Act despite the fact that the income of the Appellant was eligible for tax holiday u/s. loA of the Act. (corresponding to additional ground no. 13) Additional grounds of appeal filed on 16.01.2018 14. On the facts and in the circumstances of the case and in law, the learned TPO erred in not excluding 'Larsen & Toubro Infotech Ltd.' in its comparability analysis even though it is functionally dissimilar to the Appellant. (corresponding to additional ground no. 14) 15. On the facts and in the circumstances of the case and in law, the learned TPO erred in not excluding 'Persistent Systems & Solutions Limited' in its comparability analysis which is functionally dissimilar to the Appellant. (corresponding to additional ground no. 15) Additional grounds of appeal filed on 06.09.2021 16.1 On the facts and in the circumstances of the case and in law, the order dated 3o January, 2014 passed by the Learned Addl. Commissioner of Income-tax (Transfer Pricing) — III (learned TPO') under section 92CA of the Act is beyond the time limit prescribed under section 92CA(3A) r.w.s 153 of the Income-tax Act, 1961 (`Ace) thus making the transfer pricing order illegal, bad in law, null and void

Page 6 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 and liable to be quashed. (corresponding to additional ground no. 16.1) 16.2 On the facts and in the circumstances of the case and in law, the transfer pricing order being illegal and void on account of being barred by limitation in terms of section 92CA(3A) r.w.s 153 of the Act, the action of the Assessing Officer in passing the draft assessment order dated 24 March, 2014 by invoking section 144C of the Act is without jurisdiction and thus all proceedings consequent to the draft assessment order are also illegal and bad in law and liable to be quashed. (corresponding to additional ground no. 16.2) 16.3 On the facts and in the circumstances of the case and in law, the transfer pricing order being illegal and void on account of being barred by limitation in terms of section 92CA(3A) r.w.s 153 of the Act, consequently, the final assessment order dated 29 January, 2015 is also barred by limitation as prescribed under section 153 of the Act, thus making the final assessment order illegal, bad in law, null and void and liable to be quashed. (corresponding to additional ground no. 16.3) 17. On the facts and in the circumstances of the case and in law, the learned AO /DRP ought to grant deduction under section 37(1) of the Income Tax Act, 1961 for Education Cess and Secondary and Higher Education Cess (collectively referred to as `Cess') paid by the Appellant along with income-tax and surcharge for the year under appeal. (corresponding to additional ground no. 17) 18. On the facts and in the circumstances of the case and in law, the Ld. TPO and Ld. DRP erred in not including `LGS Global Ltd.' in its comparability analysis even though it is functionally similar to the Appellant. (corresponding to additional ground no. i8) 19. On the facts and in the circumstances of the case and in law, the Ld. TPO and Ld. DRP erred in not including TAT Technologies Ltd.' in its comparability analysis even though it is functionally similar to the Appellant. (corresponding to additional ground no. 19) That the Appellant craves leave to add to and/or to alter, amend, rescind, modify the grounds herein below or

Page 7 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 produce further documents before or at the time of hearing of this Appeal.” 2. The revenue has raised the following grounds of appeal: “1. The directions of the Dispute Resolution Panel are opposed to law and facts of the case. 2. On the facts and in the circumstances of the case the Dispute Resolution Panel erred in law in holding that the size, turnover and brand of the company are the deciding factors for treating a company as a comparable and accordingly erred in excluding M/s. Infosys Technologies Ltd. as comparable. 3. On the facts and in the circumstances of the case, the Disputes Resolution Panel erred in excluding uncontrolled comparables having turnover more than Rs. 200 crores in the absence of Turnover criterion prescribed in Rule 1013 of Income Tax Rules and also there being no correlation between turnover and profit margin. 4. On the facts and in the circumstances of the case, the Disputes Resolution Panel erred in fixing the RPT filter at 0% of total revenue by ignoring the TPO's observation that the basis for determining the threshold limit for eliminating companies having RPT transactions more than 25% on sales was quite legitimate within the definition of Sec.10A(a) which was through the determination of Indian Companies with foreign shareholding greater than 26% and therefore had its basis in the provisions of the IT Act and the AS 18. 5. On the facts and in the circumstances of the case, the Disputes Resolution Panel erred in law in fixing the RPT filter at 0% of total revenue, by superimposing the decisions of FIAT in other cases, including those of other benches of ITAT, without going into specific facts in the case of the assessee and without adducing the basis for arriving at the 0% cut off for RPT filter, in the case of the assessee. 6. On the facts and in the circumstances of the case the Disputes Resolution Panel erred in directing the AO to grant percentage of risk adjustment at .1°/0 to the average margin on account of risk level assumed by the assessee relying upon the decision of ITAT, Hyderabad bench in the case of DCIT Vs. Hello Soft Pvt. Ltd. (2013) without appreciating the fact that

Page 8 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 assessee is captive service provider with no risk at all since the services are rendered to the AEs only. 7. On the facts and in the circumstances of the case, the Dispute Resolution Panel erred in law in directing the AO to allow depreciation at the rate of 60% as against 15% allowed by AO on servers, switches, routers etc. without appreciating the fact that the servers, workstations equipments etc. cannot be classified under the head of asset "Computer" since there is no definition for "computer system" as explained in Explanation (a) to Clause (xi) of Sec.36(1) of the Act to be eligible for depreciation other than the one prescribed for "Plant and machinery". 8. On the facts and in the circumstances of the case the Dispute Resolution Panel erred in deleting the disallowance made under section 40(a)(ia) on depreciation on computer software without appreciating that the same is contrary to the provisions of Sec. 40(a)(ia) and Sec. 195J since the claim of depreciation is in the nature of business expenditure. 9. On the facts and in the circumstances of the case the Dispute Resolution Panel erred in directing the AO to reduce expenses on communication, travel and other expenses incurred in foreign currency both from export turnover and as well as from total turnover for the purpose of computation of deduction u/s 10A of the Income tax Act without appreciating the fact that the statute allows exclusion of such expenditure only from the Export turnover by way of specific definition of export turnover defined in the Act and there is no specific provision in section 10A warranting exclusion of above expenses from the total turnover also. 10. On the facts and in the circumstances of the case the Dispute Resolution Panel erred in placing reliance on the decision of the Hon'ble High Court of Karnataka in the case of M/s. Tata Elxsi Ltd. which has not become final since the same has been not accepted by the Department and SLPs are pending before the Hon'ble Supreme Court. 11. For these and other grounds that may be urged at the time of hearing, it is prayed that the directions of the Dispute Resolution Panel in so far as it relates to the above grounds may be reversed.

Page 9 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 12. The appellant craves leave to add, alter, amend and / or delete any of the grounds mentioned above.” 3. The assessee has raised the following additional grounds vide application dated 06.09.2021 wherein the legal issue has been raised. “16.1 On the facts and in the circumstances of the case and in law, the order dated 3o January, 2014 passed by the Learned Addl. Commissioner of Income-tax (Transfer Pricing) — III (`Ld. TPO') under section 92CA of the Act is beyond the time limit prescribed under section 92CA(3A) r.w.s 153 of the Income-tax Act, 1961 (`Act') thus making the transfer pricing order illegal, bad in law, null and void and liable to be quashed. 16.2. On the facts and in the circumstances of the case and in law, the transfer pricing order being illegal and void on account of being barred by limitation in terms of section 92CA(3A) r.w.s 153 of the Act, the action of the Assessing Officer in passing the draft assessment order dated 24 March, 2014 by invoking section 144C of the Act is without jurisdiction and thus all proceedings consequent to the draft assessment order are also illegal and bad in law and liable to be quashed. 16.3. On the facts and in the circumstances of the case and in law, the transfer pricing order being illegal and void on account of being barred by limitation in terms of section 92CA(3A) r.w.s 153 of the Act, consequently, the final assessment order dated 29 January, 2015 is also barred by limitation as prescribed under section 153 of the Act, thus making the final assessment order illegal, bad in law, null and void and liable to be quashed. It is humble prayer of the Appellant that the transfer pricing order, draft assessment order and the final assessment order are bad in law, null and void and liable to be quashed.” 4. It has been submitted that no new facts needs to be considered in order to dispose of the additional grounds raised by the assessee vide application dated 06.09.2021. It is submitted that the additional grounds are legal issue that goes to the root

Page 10 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 cause of the proceedings. The Ld.AR, thus prayed for the admission of additional grounds so raised by assessee. 5. On the contrary, the Ld.CIT.DR though opposed admission of the additional ground, could not bring anything on record which would challenge such a right available to assessee under the Act. 6. We have perused the submissions advanced by both sides in light of records placed before us. The Ld.DR did not object for the additional grounds being admitted. 7. We note that one of the additional grounds is directly connected with the main issue of disallowance and no new facts needs to be investigated for adjudicating the same. Another issues alleged by the assessee is a legal issue that does not require investigation of any facts. 8. Considering the submissions and respectfully following the decisions of Hon’ble Supreme Court in case of National Thermal Power Co. Ltd. Vs. CIT reported in (1998) 229 ITR 383 and Jute Corporation of India Ltd. Vs. CIT reported in 187 ITR 688, we are admitting the additional ground raised by the assessee. Accordingly, the application dated 06/06/2021 raising additional grounds 16.1 to 16.3 stands allowed. As the above additional grounds raised by assessee goes to the root cause, it is necessary to adjudicate this issue first. 9. Before us the Ld.AR contended that the order passed by the Ld.TPO is time barred under the provisions of section 153 rws 92CA(3) of the Act and hence it is liable to be quashed. He referred to the provisions of section 153(1) and submitted that reference u/s 92CA (3) of the Act was received by the Ld.TPO on

Page 11 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 23/07/2012 and therefore date of limitation for passing of the order by ld. TPO expired on 30/01/2014. Whereas the Ld.TPO passed order u/s 92CA(3) on 31/01/2014 therefore, the order passed by the Ld.TPO is barred by the limitation. Ld. AR thus submitted that since the order of the Ld.TPO is barred by limitation, subsequent proceedings made pursuant to order u/s.92CA(3) does not survive. 10. He submitted that on identical facts, this issue has been decided in following case:  Decision of Hon’ble Delhi Tribunal in case of Honda Trading Corporation vs. DCIT reported in (2015) 61 taxmann.com 223  M/s. Asian Honda Motor Co. Ltd. vs. DCIT in ITA No. 6143/Del/2015, order dated 18.07.2016  M/s. Pfizer Healthcare India Pvt. Ltd. vs. JCIT in W.P. No. 32699 of 2019, judgment dated 07.09.2020, High Court of Madras  Decision of Coordinate Bench of this Tribunal in case of Swiss Re Global Business Solution India Pvt. Ltd. vs. DCIT in IT(TP)A Nos. 290 & 438/Bang/2015 vide order dated 30.12.2021 11. The Ld.CIT.DR submitted that the order passed by the TPO is not barred by the limitation and submitted that such illegality is capable of being cured and it is merely a case of irregularity in assessment proceedings by the Ld.TPO. 12. The Ld.CIT.DR submitted that assuming there is a delay in passing order u/s. 92CA(3), at best, it would be a curable defect. We have perused submissions advanced by both sides in the light of records placed before us. Firstly we look at the various provisions which are cited before us. 13. Section 92CA (3A) of the act reads as under: "[(3A) Where a reference was made under sub-section (1) before the 1st day of June, 2007 but the order under sub- section (3) has not been made by the Transfer Pricing Officer before the said date, or a reference under sub- section (1) is made on or after the 1st day of June, 2007,

Page 12 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 an order under sub-section (3) may be made at any time before sixty days prior to the date on which the period of limitation referred to in section 153, or as the case may be, in section 153B for making the order of assessment or reassessment or recomputation or fresh assessment, as the case may be, expires" 14. Admittedly the reference to Ld.TPO was made after 1-6-2007 Therefore the provisions of this section are applicable to the facts of the case. Accordingly Ld.TPO may make order under this section at any time before 60 days prior to the date of expiry of limitation as per section 153 (1) of the act. According to section 153 (1) of the act the time limit for passing an order u/s 143 (3) was as under :- Time limit for completion of assessments and reassessments. 153. 39[(1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of-- (a) two years from the end of the assessment year in which the income was first assessable ; or (b) one year from the end of the financial year in which a return or a revised return relating to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, is filed under sub-section (4) or sub- section (5) of section 139, whichever is later :] Provided that in case the assessment year in which the income was first assessable is the assessment year commencing [on or after the 1st day of April, 2004 but before the 1st day of April, 2010], the provisions of clause (a) shall have effect as if for the words "two years", the words "twenty-one months" had been substituted :] [Provided further that in case the assessment year in which the income was first assessable is the assessment year commencing [on or after the 1st day of April, 2005 but before the 1st day of April, 2009] and during the course of the proceeding for the assessment of total income, a reference under sub-section (1) of section 92CA-- was made before the 1st day of June, 2007 but (i) an order under sub-section (3) of that section has not been made before such date; or (ii) is made on or after the 1st day of June, 2007,

Page 13 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 the provisions of clause (a) shall, notwithstanding anything contained in the first proviso, have effect as if for the words "two years", the words "thirty-three months" had been substituted:] 42b[Provided also that in case the assessment year in which the income was first assessable is the assessment year commencing on the 1st day of April, 2009 or any subsequent assessment year and during the course of the proceeding for the assessment of total income, a reference under sub-section (1) of section 92CA-- (i) is made before the 1st day of July, 2012, but an order under sub-section (3) of that section has not been made before such date; or (ii) is made on or after the 1st day of July, 2012, the provisions of clause (a) shall, notwithstanding anything contained in the first proviso, have effect as if for the words "two years", the words "three years" had been substituted.] [Extracted from taxmann.com as amended by the Finance Act 2012] 15. Therefore accordingly the order u/s 143(3) for AY 2010-11 should have been passed by 31.3.2014. 16. Based on the facts narrated above we hereby tabulate the relevant dates pertaining to the proceedings before the various authorities for the impugned AY. 1. Date of filing of return of income - 04.10.2010 2. 143(2) issued on - 26.08.2011 3. Reference by the Ld.AO made on - 23.07.2012 4. Time period within which 143(3) is to be passed as per sec. 153(1) – 31.03.2014 5. Date by which order u/s. 92CA(3) was to be passed – 28.01.2014 6. Date of passing the order u/s. 92CA(3) – 31.01.2014 17. We note that on identical facts for assessment year 2010-11, Coordinate Bench of this Tribunal in case of Swiss Re Global

Page 14 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 Business Solution India Pvt. Ltd. vs. DCIT (supra), considered and decided the issue by observing as under. “Before us the Ld. Counsel relied on decision of Hon’ble Delhi Tribunal in case of Honda Trading Corporation Vs. DCIT (supra) wherein, it was held that the time limit specified u/s 92CA(3A) is mandatory and not directory and therefore the Ld.TPO is bound by the time limit for passing of the order u/s 92CA (3) of the Act. Accordingly, in that case time limit as per section 153(1) of the Act was up to 7.06.2014 and the Ld.TPO passed his order on 31.05.2014 instead of on or before 08.04.2014, hence order passed by the Ld.TPO therein was held to be time barred. Hon’ble Delhi Tribunal further held that in such circumstances the final assessment order would be same but the addition on account of transfer pricing adjustment arising from the determination of the ALP of the international transaction by the TPO emanating from his time barred order passed u/s. 92CA(3) is unsustainable. Hon’ble Delhi Bench thus directed for deletion of addition of on account of transfer pricing adjustment made in the final assessment order. Hon’ble Delhi Tribunal held as under:- " B. Time limit for passing of order by the TPO 6.1. The ld. AR also challenged the passing of the order by the TPO. It was submitted that the TPO passed order on 31.5.2014, which was time barred and, hence, the same should be annulled leading to the quashing of the final assessment order. In the opposition, the ld. DR supported the Revenues stand. 6.2. We have heard the rival submissions and perused the relevant material on record. It has been noticed above that the provisions of section 92CA requiring the passing of the order by the TPO determining the ALP of the international transactions, came into being by the Finance Act, 2002. As per sub-section (3) of section 92C, the TPO is required to pass the order determining the ALP of the international transactions. No time limit was initially given for the passing of order by the TPO. It is only by the Finance Act, 2007, that sub-section (3A) was inserted providing time limit for the passing an order by the TPO. No amendment has been carried out in this provision thereafter. Sub- section (3A) of section 92CA containing the relevant time limit for the passing of the order by the TPO, reads as under : - ‘(3A) Where a reference was made under sub- section (1) before the 1st day of June, 2007 but the order under sub- section (3) has not been made by the Transfer Pricing

Page 15 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 Officer before the said date, or a reference under sub- section (1) is made on or after the 1st day of June, 2007, an order under sub-section (3) may be made at any time before sixty days prior to the date on which the period of limitation referred to in section 153, or as the case may be, in section 153B for making the order of assessment or reassessment or recomputation or fresh assessment, as the case may be, expires.. 6.3. It transpires from a reading of the above provision that where a reference is made to the TPO after 1.6.2007, an order under sub-section (3) may be made at any time before 60 days prior to the date on which the period of limitation referred to in section 153, or, as the case may be, in section 153B, for making the order of assessment or re-assessment, etc., expires. 6.4. The ld. DR vehemently contended that the use of the word `may in this provision for the passing of the order by the TPO within a period of 60 days of the limitation set out in section 153 indicates that the adherence to this time limit is not mandatory. He contended that even if the order is passed after the period of 60 days from the period of limitation as given u/s 153, still it would be treated as having been passed within time. This argument was countered by the ld. AR. 6.5. There is no doubt that the legislature has used the word `may in sub-section (3A) of section 92CA. There is further no doubt that the ambit of the word `may is different from the word `shall. Whereas, ordinarily the use of the word `shall signifies mandatory compliance, the word may signifies directory compliance. But at times, the word `may can also be read as `shall and vice versa. In fact, all depends upon the context and the background of the provision in which such a word is used. 6.6. Section 127 deals with the power to transfer cases. Sub-section (1) of this provision provides that : `The Director General or Chief Commissioner or Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him. Dispute arose in Sahara Hospitality Ltd. vs. CIT (2013) 352 ITR 38 (Bom) as to whether or not giving the assessee a reasonable opportunity of being heard before the transfer of case by the Chief Commissioner, in the backdrop of the use of the word `may in the provision, be

Page 16 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 considered as mandatory. The Hon’ble Bombay High Court has held that the word `may in section 127 should be read as `shall and hence the granting opportunity to the assessee is mandatory. 6.7. Section 16 of the Wealth-tax Act, 1957 deals with the assessment of wealth. Section 16A having marginal note of `Reference to Valuation Officer provides through sub- section (1) that : `For the purpose of making an assessment (including an assessment in respect of any assessment year commencing before the date of coming into force of this section) under this Act, where under the provisions of section 7 read with the rules made under this Act or, as the case may be, the rules in Schedule III, the market value of any asset is to be taken into account in such assessment, the Assessing Officer may refer the valuation of any asset to a Valuation Officer- (a) in a case where the value of the asset as returned is in accordance with the estimate made by a registered valuer if the Assessing Officer is of opinion that the value so returned is less than its fair market value; (b) in any other case, if the Assessing Officer is of opinion- (i) that the fair market value or the asset exceeds the value of the asset as returned by more than such percentage of the value of the asset as returned or by more than such amount as may be prescribed in this behalf; or (ii) that having regard to the nature of the asset and other relevant circumstances, it is necessary so to do. In Raj Paul Oswal vs. CWT (1988) 171 ITR 489 (P&H), there arose a quarrel as to the meaning of the word `may used in section 16A in the context of making reference to the Valuation Officer. Settling the controversy, the Honble High Court held that the word `may' used in section 16A(1)(b), should be read as `shall'. It held that if the legislative intent had been to accord total discretion to the WTO to make a reference to the Valuation Officer or not in cases which were covered by cls. (a) & (b) of sub-s. (1) of s. 16A of the WT Act, then there was no necessity of providing the guidelines in cl. (a) or in sub-cls. (i) and (ii) of cl. (b) of sub-s. (1) of s. 16A. It was, therefore, held that the legislature by prescribing the contingencies, in which, by implication, it would not be necessary to make a reference, also again by necessary implication be taken to have intended that the reference to Valuation Officer was must if the given contingencies did not exist. In this regard, the Honble High Court observed that : `There is no doubt about the fact that the use of expression "may" and "shall" to some extent serves an indicia to the intention of the legislature and helps in deciding as to whether the given requirement is directory or mandatory in character,

Page 17 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 but the use of expression "may" or "shall" is never considered decisive in that regard. It was thus held that the moment the estimated value exceeded the returned value of the asset by more than what is envisaged by r. 3B, then the WTO had no option, but to make a reference and he is not to wait for a request from the assessee to make a reference. Similar view has been expressed by the Honble Delhi High Court in Sharbati Devi Jhalani vs. CWT & Ors. (1986) 159 ITR 549 (Del). It is vivid from the above discussion that the use of word `may or `shall in a provision is not conclusive of its mandatory or directory nature. One needs to go through the text of the provision and the context in which such a word has been used. 6.8. Reverting to section 92CA, we find that the Finance Act, 2007 inserted sub-section (3A) carrying the time limit of sixty days for passing of the order by the TPO before the expiry of time limit for completion of assessment by the AO u/s 153. Despite the use of the word `may, the time limit for passing the order by the TPO is mandatory, as in the otherwise situation of the TPO having been allowed more time by implication, say of three months or more, could at that time have frustrated the provisions of section 153 for the passing of the assessment order by the AO. Thus we have no hesitation in holding that the use of the word `may in sub-section (3A) of section 92CA is to be construed as `shall, thereby making this time limit as mandatory and not directory. As such, it is held that the TPO is bound by the given time limit for passing of his order. 6.9. Having held that the word `may in section 92CA(3A) should be read as `shall, we once again note that prior to the insertion of section 144C by the Finance Act, 2009, the time limit for completion of assessment was contained in section 153 and accordingly the time limit for the passing of the order by the TPO was also set out accordingly in section 92CA w.r.t. the time limit for the completion of assessment as per section 153. However, with the insertion of section 144C, the time limit for the completion of assessment, or in other words, for passing of the final assessment order, stood shifted to sub- sections (4) or (13) of section 144C and got detached from section 153. Along with this, passing of draft order also became mandatory, for which we have held above that the same is required to be passed within a reasonable time and it has got no relation with the time limit given in section 153. When the position is such that the draft order has to be passed independent of the time limit given in section 153, there appears some logic in not continuing with the time limit for the passing of the order by the TPO tagged with the time

Page 18 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 limit given in section 153. It has led to incoherence in the provisions. This position can be set right only with a suitable legislative amendment. 6.10. Having held that the time limit given in sub-section (3A) of section 92CA is mandatory for the passing of the order by the TPO, let us find out the time available with the TPO for the passing of his order. It has been noticed above that the time limit as per section 153(1) read with the third proviso and clause (viii) of the Explanation to the section, comes at 7th June, 2014. Period of 60 days prior to such time limit coming as per section 153, available with the TPO for passing his order, comes to an end on 8th April, 2014. As against this, the order was actually passed by the TPO on 31st May, 2014. Thus, the order passed by the TPO is patently time barred. C. Consequences of valid draft order and TPO's time barred order 7. The ld. AR argued that since the draft order as well as the order of the TPO were time barred, the final assessment order passed by the AO was liable to be set aside. We have held above that the draft order was passed within time and only the order of the TPO is time- barred. When an order is passed without jurisdiction or beyond the permissible time, it is considered as null and void. The effect of passing a null and void order is that it is considered as non est, meaning thereby, that it entails all the consequences of not having been passed at all and is ignored for all practical purposes. The Honble Madras High Court in Vijay Television (P.) Ltd. vs. DRP (2014) 369 ITR 113 (Mad) considered a case in which the assessment order was directly passed without routing through draft order or DRP. The Honble Court held it to be a noncurable defect and resultantly the assessment was quashed. It was held that when there is an omission on the part of the AO to follow the mandatory procedure prescribed under the Act, such an omission cannot be termed as a mere procedural irregularity and it cannot be cured. Extantly, we are confronted with a situation in which the draft order has been passed in time but the lapse has come in the passing of the order by the TPO. The consequence of the above scenario is that the passing of a valid and properly timed draft order cannot lead to the setting aside of the final assessment order. However the passing of the time barred order by the TPO, which is again a mandatory procedure prescribed under the Act, would be a non- curable defect, having the consequence as if it was not passed. In such circumstances, though the final assessment order would be saved but the addition on

Page 19 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 account of transfer pricing adjustment arising from the determination of the ALP of the international transactions by the TPO as emanating from his time barred order, would be unsustainable. We hold accordingly and direct the deletion of addition on account of transfer pricing adjustment made in the final assessment order. 8. In view of our decision on the above legal ground, there remains no need to deal with the contentions raised before us on the merits of the addition on account of transfer pricing adjustment." In the present facts, the Ld.CIT.DR has in the written submission mentioned that the order of the Ld.TPO is passed on 29.01.2014 or 30.01.2014 but dated 31.01.2014. Then, the order of the Ld.TPO is not only irregular, wrong or illegal but is also null and void. Such action cannot be considered to be of any irregularity in the procedure, so as to get any kind of protection u/s. 292BB of the Act. In view of above and following judicial precedent cited before us by the ld AR being decision of the coordinate bench we hold that the order of the ld TPO passed on 31.01.2014 is barred by limitation and liable to be quashed. Therefore, consequently, the proposed addition on account of transfer pricing adjustment amounting to does not survive.” 18. As the order passed by the Ld.TPO u/s. 92CA(3A) is beyond the period of limitation, the adjustment proposed by way of transfer pricing order u/s. 92CA(3), therefore needs to be quashed. Accordingly, the issues alleged by the assessee based on such transfer pricing adjustment in Ground nos. 1 to 6 in assessee’s and revenue’s appeal need not be adjudicated and becomes academic at this stage. Also the additional grounds raised by the assessee vide application dated 13.03.2017 and 16.01.2018 are also in respect of the adjustment proposed by the transfer pricing officer which also becomes academic at this juncture. Accordingly, the application raised by assessee on the legal issue on the additional grounds 16.1 to 16.3 stands allowed.

Page 20 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 19. The Ld.AR argued that as the order passed u/s. 92CA(3) is passed beyond the period of limitation, all consequential orders are also passed beyond the period of limitation. Referring to the draft assessment order passed by the Ld.AO, the Ld.AR prayed that the addition made therein can’t be considered for purpose of making addition in the hands of the assessee. 20. On the contrary, the Ld.CIT.DR referred to following observations of Hon’ble Delhi Tribunal in case of Honda Trading Corporation vs. DCIT reported in (2015) 61 taxmann.com 233. “6.9 Having held that the word 'may' in section 92CA(3A) should be read as 'shall', we once again note that prior to the insertion of section 144C by the Finance Act, 2009, the time limit for completion of assessment was contained in section 153 and accordingly the time limit for the passing of the order by the TPO was also set out accordingly in section 92CA w.r.t. the time limit for the completion of assessment as per section 153. However, with the insertion of section 144C, the time limit for the completion of assessment, or in other words, for passing of the final assessment order, stood shifted to sub-section (4) or (13) of section 144C and got detached from section 153. Along with this, passing of draft order also became mandatory, for which we have held above that the same is required to be passed within a reasonable time and it has got no relation with the time limit given in section 153. When the position is such that the draft order has to be passed independent of the time limit given in section 153, there appears some logic in not continuing with the time limit for the passing of the order by the TPO tagged with the time limit given in section 153. It has led to incoherence in the provisions. This position can be set right only with a suitable legislative amendment. 6.10 Having held that the time limit given in sub-section (3A) of section 92CA is mandatory for the passing of the order by the TPO, let us find out the time available with the TPO for the passing of his order. It has been noticed above that the time limit as per section 153(1) read with the third proviso and clause (viii) of the Explanation to the section, comes at 7th June, 2014. Period of 60 days prior to such time limit coming as per section 153, available with the TPO for passing his order, comes to an end on 8th April, 2014. As against this, the order was actually passed by the TPO on 31st May, 2014. Thus, the order passed by the TPO is patently time barred. C. Consequences of valid draft order and TPO's time barred order 7. The ld. AR argued that since the draft order as well as the order of the TPO were time barred, the final assessment order passed by the AO was liable to be set aside. We have held above that the draft order was

Page 21 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 passed within time and only the order of the TPO is time-barred. When an order is passed without jurisdiction or beyond the permissible time, it is considered as null and void. The effect of passing a null and void order is that it is considered as non est, meaning thereby, that it entails all the consequences of not having been passed at all and is ignored for all practical purposes. The Hon'ble Madras High Court in Vijay Television (P.) Ltd. v. DRP [2014] 369 ITR 113/225 Taxman 35/46 taxmann.com 100 considered a case in which the assessment order was directly passed without routing through draft order or DRP. The Hon'ble Court held it to be a non-curable defect and resultantly the assessment was quashed. It was held that when there is an omission on the part of the AO to follow the mandatory procedure prescribed under the Act, such an omission cannot be termed as a mere procedural irregularity and it cannot be cured. Extantly, we are confronted with a situation in which the draft order has been passed in time but the lapse has come in the passing of the order by the TPO. The consequence of the above scenario is that the passing of a valid and properly timed draft order cannot lead to the setting aside of the final assessment order. However the passing of the time barred order by the TPO, which is again a mandatory procedure prescribed under the Act, would be a non-curable defect, having the consequence as if it was not passed. In such circumstances, though the final assessment order would be saved but the addition on account of transfer pricing adjustment arising from the determination of the ALP of the international transactions by the TPO as emanating from his time barred order, would be unsustainable. We hold accordingly and direct the deletion of addition on account of transfer pricing adjustment made in the final assessment order.” 21. Respectfully following the above view, we hold that the adjustment proposed by the Ld.TPO in the order passed under section 92CA on account of adjustment on account of transfer pricing adjustment arising from the determination of the ALP of the international transactions to be time barred order, cannot be sustained. All issues raised by assessee on the grounds of appeal as well as the additional grounds vide applications dated 13/03/2017 & 16/01/2018, and Additional Grounds 18-19 raised in application dated 06/09/2021 stands academic at this stage. Accordingly the additional grounds nos. 16.1 to 16.3 raised by the assessee vide application dated 06/09/2021 stands

Page 22 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 allowed. Consequentially appeal filed by the revenue stands dismissed as the issues alleged therein are against the relief granted to the assessee on the transfer pricing adjustment, 22. Addition made by the Ld.AO in respect of Corporate tax issues are alleged by the assessee in Ground no.7-10 and are adjudicated as under. 23. Ground no.7-8 is in respect of disallowance of deduction under section 80 JJAA of the Act, amounting to Rs.13,07,42,470/-. 24. Ground Nos.9-10 is in respect of disallowance under section 80JJAA in respect of additional wages paid to the employees working in 10 A units read with section 80A(4). 25. It is submitted that identical issue has been considered by the coordinate bench of this Tribunal in assessee’s own case in IT(TP)A No.623, 566/Bang/2016 for assessment year 2011-12 by order dated 29/11/2021 by observing as under: “13. As far as corporate tax grounds are concerned, Grd.No.6 to 6.4 is with regard to deduction u/s.80JJA of the Act and these grounds read thus: 6. While doing so, the learned DRP/ AO erred in: 6.1. Not appreciating the fact that deduction under section 8oJJAA of the Act is Assessee specific and not undertaking / unit specific. [corresponding to ground no. 6.1] 6.2. Invoking the provisions of section 8oA(4) in the context of deduction under section 8oJJAA for 10A units [corresponding to ground no. 6.2] 6.3. Not appreciating the fact that the amendment made in the Finance Act 2013, restricting the deduction to an Indian Company deriving profits from the manufacture of goods in a factory, is applicable with effect from April 1, 2014 and is prospective in nature. [corresponding to ground no. 6.3] 6.4. Considering the orders for earlier years while disallowing the deduction u/s 80JJAA of the Act without considering the fact that each year should be considered separately. [corresponding to ground no. 6.4]

Page 23 of 29 IT(TP)A Nos. 561 & 437/Bang/2015

Page 24 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 considering 100 employees for inclusion in each and every unit. 7.6 In view of the above, I am of the opinion that in the absence of furnishing unit wise certificate in respect of fulfillment of conditions stipulated u/s 80JJAA, the assessee is rot eligible to claim deduction u/s 80JJAA. On this specific ground itself, I have no hesitation to deny the deduction u/s 80JJAA for the current year also.” 15. The learned Counsel for the assessee has accepted the decision of the DRP in so far as ground No.6.1 is concerned and is willing to give the details as per each unit. The deduction can therefore be considered for each 10A unit separately. The assessee is directed to furnish the necessary details in this regard and the AO may examine the same in accordance with law. As far as ground 6.2 is concerned, it was agreed by the parties that in assessee’s own case for Assessment Year 2007-08 in IT(TP)A No.1006/Bang/2011 by order dated 30.06.2016, this Tribunal rejected the claim of the assessee by observing as follows: “25. However coming to the second limb of the reasoning given by the lower authorities, which is section 80A(4), the said section is reproduced hereunder : “(4) Notwithstanding anything to the contrary contained in Section 10A of section 10AA or section 10B or section 10BA or in any provisions of this Chapter under the heading ‘C.-Deductions in respect of certain incomes”, where, in the case of an assessee, any amount of profits and gains of an undertaking or unit of enterprise or eligible business is claimed and allowed as a deduction under any of those provisions for any assessment year, deduction in respect of, and to the extent of, such profits and gains shall not be allowed under any other provisions of this Act for such assessment year and shall in no case exceed the profits and gains of such undertaking or unit or enterprise or eligible business, as the case may be.” However coming to the second limb of the reasoning given by the lower authorities, which is section 80A(4), the said section is reproduced hereunder : As per the assessee even if deduction under section 10A of the Act is allowed for these units, a further deduction u/s.80JJA of the Act, is also allowable. Argument of the assessee's counsel is that the limitation put in by Section 80A(4) of the Act, would apply only to profit linked deductions. There can be no dispute that deduction under Section 10A of the Act, is profit linked. In so far as

Page 25 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 deduction u/s.80JJA is concerned, a look at sub-section (1) of the said section is required, which is reproduced below : 80JJAA(1) : Where the gross total income of an assessee, being an Indian company, includes any profits and gains derived from any industrial undertaking engaged in the manufacture of production of article or thing, there shall, subject to the conditions specified in sub-section (2)m be allowed a deduction of an amount equal to thirty per cent of additional wages paid to the new regular workmen employed by the assessee in the previous year for three assessment years including the assessment year relevant to the previous year in which such employment is provided. A reading of the above sub-section would clearly show that the deduction is given on profits and gains derived from industrial undertaking engaged in manufacture of production of article or thing. It is only for quantification of the amount that 30% is applied. In our opinion the deduction is very much linked to the profits of the undertaking. We are therefore unable to accept this line of argument taken by the counsel. In the result, we hold that assessee is not eligible for deduction u/s.80JJAA of the Act, in respect of its units 2 , 3 and 4. However, denial of such claim in respect of unit-1, where it was not claiming any deduction, in our opinion is incorrect. We, therefore set aside the orders of authorities below for the limited purpose of quantifying the eligible deduction u/s.80JJA in respect of Unit-1. In the result, ground no.6 is treated as partly allowed for statistical purpose.” 16. As far as ground No.6.3 is concerned, the issue has been decided in Assessment Year 2007-08 in the order referred to above and this Tribunal held that the employees engaged in software industry cannot be regarded as workmen for the purpose of section 80JJAA of the Act. The following were the relevant observations of the Tribunal: “24. We have perused the orders and considered the rival contentions. The claim of assessee with regard to additional wages paid to new workman was denied for a reason that engineers who were newly employed by the assessee were not considered as workers by the lower authorities. However, in a similar situation in the case of Texas Instruments India P. Ltd, (supra), it was held by the coordinate bench at para 6 and 7 of its order, as under : 6. We have heard the rival submissions and carefully perused the records. Considering the factual position after

Page 26 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 referring to the various documents filed by the assessee, the learned CIT(A) held as under : "According to the AO if an employee or workman is getting a salary of more than Rs. 1,600 per month he is not covered by the definition of workman. However as per cl. (iv) of s. 2(s) of the Industrial. Disputes Act a worker, employed in supervisory capacity and getting a salary of more than Rs. 1,600 per month only be excluded from the definition of workman. In appellant's case the software engineers in respect of whom deduction under s. 80JJAA has been claimed have not been employed in a supervisory capacity even though they may be getting a salary of more than Rs. 1,600 per month. As the software engineers were not employed in supervisory capacity they cannot be excluded from the definition of workman. Further as per the notification of the Karnataka Government, the appellant company engaged in the development of software is covered by the Industrial Disputes Act. As such, I am of the considered opinion that the appellant has satisfied all the conditions for claiming relief under s. 80JJAA. However, I find that the appellant has claimed deduction of Rs. 2,55,81,220 with reference to the additional wages of Rs. 8,52,70,736 which included the wages of Rs. 4,87,64,029 in respect of the new workmen employed during the year ended 31st March, 2000 relevant to the asst. yr. 2000-01. As there was no claim for relief under s. 80JJAA for the asst. yr. 2000-01, the relief in respect of the workers employed in asst. yr. 2000-01 cannot be considered for relief under s. 80JJAA in the asst. yr. 2001-02. As such the appellant will be entitled for relief under s. 80JJAA of Rs. 1,09,52,012 being 30 per cent of the additional wages of Rs. 3,65,06,707 (Rs. 8,52,70,736 Rs. 4,87,64,029) in respect of the new workmen employed during the previous year relevant to the asst. yr. 2001-02. Similarly, for asst. yr. 2002-03 the appellant has claimed deduction of Rs. 4,78,05,176 being 30 per cent of the wages of Rs. 1,59,30,588 which also included the wages of Rs. 4,38,68,182 pertaining to the new workers employed in the previous year 1999- 2000. For the reasons mentioned above the appellant is not entitled for relief under s. 80JJAA in respect of the wages pertaining to the workers employed in the previous year 1999-2000. As such the appellant would be eligible for relief of Rs. 3,46,44,722 being 30 per cent of the additional wages of Rs. 11,54,82,406 (Rs. 15,93,50,588 Rs.4,38,68,182) in respect of the workmen employed in previous years 2000-01 and 2001-02. The learned Authorised Representatives of the appellant vide order-

Page 27 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 sheet noting dt. 24th Aug., 2004 agreed that the relief under s. 80JJAA in respect of the employees who joined in the previous year relevant to the asst. yr. 2001-02 onwards only may be considered and in respect of the employees who joined in earlier years the appellant is not pressing for relief under s. 80JJAA. In the circumstances, the AO is directed to allow the relief under s. 80JJAA of Rs. 1,09,52,012 and Rs. 3,46,44,722 for asst. yrs. 2001- 02 and 2002-03 respectively." 7. As stated earlier the assessee had filed the details of the software engineers employed during the years under consideration containing the names of the employees, designation and date of joining. Further, in the same list the details of total number of employees joined during both the assessment years, number of employees without supervisory roles, workmen joined, number of supervisors joined and workmen joined and relieved during the years under consideration. A cursory perusal of this list shows that the assessee had claimed deduction in respect of employees, who had joined as engineers in their respective field such as systems engineer, test engineer, software design engineer, IC design engineer, lead engineer etc. A cursory perusal of those lists establishes that the assessee had claimed deduction in respect of the engineers employed not in the category of supervisory control. All these details were filed before the AO during assessment proceedings. These facts were not properly considered by the AO. Further, from the order of the CIT(A), it is seen that he had taken note of the notification issued by the Government of Karnataka and concluded that as per the notification issued, the assessee company engaged in the development of software is covered by the Industrial Disputes Act, 1947. Further it is not the case of the Revenue that the assessee did not fulfil the conditions extracted elsewhere in this order. Considering all those factual matters we do not find any infirmity in the order of CIT(A) according relief to the assessee. In fact he had clarified the relevant portions related to Industrial Disputes Act, 1947 and IT Act while granting relief to the asssessee which are extracted at pp. 5 and 6 of this order. After carefully considering the same, we are inclined to accept the reasons shown by the learned CIT(A). The learned CIT- Departmental Representative could not assail the finding reached by the learned CIT(A) by bringing in any valid materials. The order of the CIT(A) is confirmed. It is ordered accordingly. There is no case for the Revenue that assessee had failed to file details of software engineers employed by it. In our

Page 28 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 opinion software engineers newly employed by it fell within the meaning of the word 'workmen'.” 17. We are of the view that ground Nos.6 and 6.4 should be decided in the light of the directions given above by the AO afresh after affording opportunity of being heard to the assessee.” 26. The facts and circumstances under which the disallowance in made in the present year is similar with the assessment year 2100-12. Respectfully following the above view, we direct the Ld.AO to consider the claims in accordance with the observations of this Tribunal in assessee’s own case in the preceding assessment years. Accordingly these grounds stands partly allowed. 27. Ground No.11 is consequential in nature and therefore do not require adjudication. In the result appeal filed by the assessee stands partly allowed and appeal filed by the revenue stands dismissed. Order pronounced in open court on 28th July, 2022.

Sd/- Sd/- (CHANDRA POOJARI) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 28th July, 2022. /MS /

Page 29 of 29 IT(TP)A Nos. 561 & 437/Bang/2015 Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order

Assistant Registrar, ITAT, Bangalore