M/S. NTT DATA GLOBAL SERVICES PRIVATE LIMITED,BANGALORE vs. THE JOINT COMMISSIONER OF INCOME TAX, SPECIAL RANGE- 5, BANGALORE

The present appeal has been preferred by the Assessee challenging the Final Assessment Orders, dated 17/10/2019, passed by the Assessing Officer under Section 143(3) read with Section 144C(13) of the Income Tax Act, 1961[hereinafter referred to as `the Act'], as per the directions issued by Dispute Resolution Panel (2), Bengaluru [for short 'DRP'], on 09/09/2019 under Section 144C(5) of the Act.

The Assessee has raised following grounds of appeal : "Based on the facts and circumstances of the case and in law, NTT DATA Global Delivery Services Private Limited (hereinafter referred to as "NTT DATA GDS" or the "Company" or the "Appellant"), respectfully craves leave to prefer an appeal against the order passed by the Joint Commissioner of Income Tax, Special Range-5, (hereinafter referred to as "learned Assessing Officer" or the "learned AO"), dated 17 October 2019 for the Assessment Year (AY) 2015-16, under section 143(3) read with section 144C(13) of the Income-tax Act 1961 ('the Act') in pursuance of the directions issued by Dispute Resolution Panel (hereinafter referred to as the "Hon'ble DRP"), Bengaluru dated 09 September 2019 under section 144C(5) of the Act inter-alia on the following grounds which are without prejudice to each other. That on the facts and circumstances of the case and in law:

Ld. AO/TPO pursuant to the directions of the Hon'ble DRP erred, in law and facts, by incorrectly applying the following quantitative and qualitative filters: a) Rejecting certain comparable companies for having different accounting year (i.e. companies having accounting year other than March 31 or companies whose financial statements were for a period other than 12 months); b) Applying incorrect modified related party transaction ("RPT") filter to reject companies, which included application of the following filters separately: An RPT filter for the revenue transactions only (RPT revenue greater than 25% of total revenue) An RPT filter for the expense transactions only (RPT expenses greater than 25% of total expenses) c) Rejecting certain comparable companies using employee cost greater than 25% of the total operating revenues as a comparability criterion; d) Rejecting certain comparable companies using export earnings greater than 75% of the sales as a comparability criterion, and e) Applying only the lower turnover filter of less than INR 1 crore as a comparability criterion and not applying a higher threshold limit for turnover filter, and f) Rejecting certain comparable companies on the basis of insufficient financial/segmental information 5 Ld. AO/TPO pursuant to the directions of the Hon'ble DRP erred, in law and facts, by exercising his powers under section 133(6) of the Act to obtain information which was not available in public domain and relying on the same for comparability purposes;

Ld. AO/TPO pursuant to the directions of the Hon'ble DRP erred, in law and facts, by accepting/rejecting the following companies based on unreasonable comparability criteria: a) Accepting the following companies that cannot be considered as comparable to the Appellant in law and fact, on one or more grounds: i. Tata Elxsi Limited ii. Mindtree Limited iii. Persistent Systems Limited iv. Nihilent Technologies Private Limited V. Aspire Systems (India) Private Limited vi. Inteq Software Private Limited vii. Cybage Software Private Limited viii. Infosys Limited ix. Infobeans Technologies Limited *. Larsen & Toubro Infotech Limited b) Rejecting the following comparable companies selected by the Appellant in its TP documentation even though the companies are functionally comparable to the Appellant: i. Akshay Software Technologies Limited ii. R Systems International Limited iii. SaskenCommunications Technologies Limited c) Rejecting companies additionally introduced by the Appellant even though the companies are functionally comparable to the Appellant: i. Celstream Technologies Private Limited ii. 12T2 India Limited iii. Maveric Systems Limited iv. Infomile Technologies Limited V. Evoke technologies Limited vi. Mudunuru Limited vii. Harbinger Systems Private Limited

Ld. AD/TPO pursuant to the directions of the Hon'ble DRP erred, in law and facts, by not making suitable adjustment to account for differences in working capital position of the Appellant vis-à-vis the comparables.

Ld. AO/TPO pursuant to the directions of the Hon'ble DRP erred, in law and facts, by not making suitable adjustments on account of differences in the risk profile of the Appellant vis-à-vis the comparables, while conducting comparability analysis;

Ld. AO/TPO pursuant to the directions of the Hon'ble DRP erred, in law and facts, in determining separate transfer pricing adjustment on account of the interest on outstanding receivables amounting to INR 72,817,000

Without prejudice to our ground of appeal no. 9 above. Ld. AO/TPO pursuant to the directions of the Hon'ble DRP erred, in law and facts, by not appreciating that the outstanding trade receivables from its AE's arise from the provision of software development services and back office services transactions which are to be considered as closely linked to such transactions and should not be tested separately from arm's length perspective:

Without prejudice to our ground of appeal no. 9 above, Ld. AO/TPO pursuant to the directions of the Hon'ble DRP erred, in law and facts, by re-characterizing the outstanding receivables as on 31 March 2015 as a loan transaction,

Without prejudice to our ground of appeal no. 9 above, Ld. AO/TPO pursuant to the directions of the Hon'ble DRP have erred, in law and facts, by not providing the basis for arriving at the arm's length interest rate of Libor plus 400 basis point for computing notional interest to be charged on the alleged delay in collection of receivables.

1 The learned AO has erred in law and in facts in making an addition of Rs. 13,604,264 as mark-up on expenses reimbursed by group companies to the Appellant.

The learned AO has erred on facts in making the addition on the presumption that the Appellant is providing ticketing and reservation services

3 Without prejudice to grounds of appeal in sl. no. 13.1 and 13.2, the learned AO has erred in exceeding his juri iction in making the above-mentioned addition, without any power under the Act and even when such transaction was accepted by the TPO to be at arms-length. Corporate tax grounds

1 The learned AO has erred in law and on facts in making an addition of Rs. 364,064,448 towards interest income.

2 The learned AO has erred in not appreciating the facts that accounting of interest income in the books of account was in accordance with mercantile system of accounting and Accounting Standard-9 on Revenue Recognition (AS9)

The learned AO has erred in not granting appropriate credit of tax deducted at source which are appearing in the name of entities that have merged with the Appellant.

The learned AO has erred in initiating penalty proceedings under section 271(1)(c) of the Act.” Grounds Nos. 1 to 13 raised by the Assessee are directed against the transfer pricing addition. During the relevant previous year the Assessee provided software development services and back office support services to NTT DATA Group Companies which were utilized by the latter for providing services to end customers. The services provided by the Assessee included (a) Application Development and Management Services, (b) Enterprise Application Services and (d) Network Infrastructure Services forming part of the Software Development (SWD) Segment. In addition, the Assessee also provided back office support services such as the claims processing, 2.1. 2.2. claims adjudication, project administration support, reconciliation services etc. which formed part of the Information Technology Enabled Services (ITeS) Segment. The Assessee provided SWD Services to Associated Enterprises (AEs) in United States of America [for short `US AEs'] and AEs in other countries (for short `Non-US AEs') for which the Assessee was compensated on cost plus mark-up basis. A Mutual Agreement Procedure (MAP) Resolution, dated 07/05/2025, was reached between the Indian Competent Authority [i.e. Foreign Tax & Tax Research Division-I, Central Board of Direct Taxes] and the US Competent Authority Internal Revenue Services (IRS), in respect of SWD Services provided by the Assessee to US AEs during the previous year relevant to the Assessment Year 2015-2016. The resolution was been accepted by the Assessee. A copy of the MAP Resolution was placed before the Tribunal and vide Order, dated 15/09/2025, Ground No. 1 to 13.3 raised in the present appeal to the extent the same related to International Transactions with US AEs covered by the aforesaid MAP Resolution were dismissed as withdrawn. As a result the issues raised in the present appeal requiring adjudication are limited to transactions with Non-US AE's and corresponding additions made in respect of provision of SWD, interest on delayed receivables and mark-up on reimbursement during the relevant previous year. As per the break-up furnished by the Assessee vide Letter dated 11/09/2025, the Assessee had entered International Transaction aggregating to with Non-US AEs in 17 different countries. As a result, subject matter of the challenge to transfer pricing adjustment mounted by the Assessee under Ground Nos. 1 to 13.3 raised in the present appeal is limited to the transfer pricing adjustment to the extent of the aforesaid International Transaction undertaken by the Assessee with Non-US AEs. The Assessee had, by way of a preliminary submission, contended that the MAP Resolution between Indian and US Competent Authorities for transactions with US-AE's for provision of SWD, interest on delayed receivables and mark-up on reimbursement be applied in respect of similar transactions undertaken by the Assessee with Non- US AE's. However, in our view, the aforesaid contention/submission advanced by the Assessee cannot be accepted in the facts and circumstances of the present case. It is admitted position that the Assessee had entered into International Transactions with Non-US AEs in 17 different juri ictions. In our view the material on record is not sufficient for us to conclude that the scope of services, and other terms of arrangement between the Assessee and each of the Non- US AEs was at par with the arrangement with US AEs of the Assessee. Further, MAP Resolution is reached by the Competent Authority of the treaty nations. An Assessee can either accept or reject the MAP resolution. In the case the Assessee accepts, the MAP resolution is binding only to that Assessee in respect of issues covered by the MAP Resolution. Such MAP Resolution reached in case of an assessee/nation under one tax treaty is not binding upon any other assessee/nation governed by a different tax treaty. Accordingly, in the facts and circumstances of the present case, the preliminary contention/submission of the Assessee cannot be accepted and therefore, we proceed to adjudicate ground raised in the present appeal.

The relevant facts in brief are that the Assessee filed original return of income for the Assessment Year 2015-2016 on 28/11/2015 declaring total income of INR.1,79,23,74,330/-. The case of the Assessee was selected for regular scrutiny and noticed under Section 143(2) dated 28/06/2016 was served on the Assessee. Subsequently, the Assessee has filed its revised return of income on 31/03/2017 declaring total income of INR.1,67,54,25,240/-.

During the assessment proceedings, the Assessing Officer noted that the Appellant has entered into international transactions with its Associated Enterprises (AEs) and therefore, a reference was made under Section 92CA(1) to the Transfer Pricing Officer (TPO) for the determination of Arm's Length Price (ALP) of the international transactions. The TPO noted that as per the Transfer Pricing (TP) documents furnished for the Assessment Year 2015-2016, the Assessee had entered into the following International Transactions with its AEs: International Transactions as per 3CEB Particulars Received/ Receivables Payables Paid Method Provision of Software Development services 10,35,14,75,152/- TNMM Provision of back office support services 76,83,27,134/- TNMM Purchase of hardware 4,88,75,867/- TNMM Trade receivables 2,30,17,61,298/- 87,46,867/- TNMM Trade payables 2,80,381/- 10,21,54,554/- TNMM Unbilled Revenue 11,19,14,715/- TNMM Advances from customers closely linked to software development and back office support 12,17,36,818/- TNMM Reimbursement of expenses to AEs 8,52,02,301/- TNMM Recovery of Expenses from AEs 47,90,05,844/- TNMM Advances recoverable 52,71,759/- TNMM Total 14,01,80,36,283 36,67,16,407

As per the TP documentation furnished by the Assessee, in relation to SWD Segment the Assessee-company was captive service provider remunerated by its AE on a cost-plus basis. The Assessee- company neither owned any intellectual property (IP) nor undertook any research and development (R&D) and bore limited operational risks. Accordingly, the Assessee-company had claimed its international transactions with is AEs in SWD Segment were at arm's length. The Assessee-company had earned an operating margin (OP/OC) of 14.52% in respect of SWD Segment. The Assessee had adopted TNMM as the most appropriate method with Operating Profit/Total Cost (OP/TC) as the Profit Level Indicator (PLI) for benchmarking the SWD Segment. The arm's-length range determined by the Assessee-Company in its Transfer Pricing Study Report (TPSR) [after working capital adjustment], on the basis of 14 comparables selected by it, was 6.24% (35th percentile) to 20.31% (65th percentile), with a median of 14.52%. The TNMM analysis was undertaken by the Assessee in the following manner. (a) In order to identify companies which are comparable to the Assessee, search was conducted on Prowess (a database compiled and managed by The Centre for Monitoring Indian Economy), Capitaline Plus (a database compiled and managed by Capital Market Publishers) and ACE TP (a database compiled and managed by Fintech Private Limited) for obtaining publicly available financial information of companies in India engaged in similar business activity as the Assessee. (b) For the 14 companies identified as comparables for software development services, weighted average of operating profits earned on operating costs were computed using the financial data pertaining to FY 2012-13, FY 2013-14 and FY 2014-15 (wherever available) at the time of complying with the transfer pricing documentation requirements. (c) A working capital adjustment ie, adjustment resulting from the different levels of working capital accounts receivable, inventory and accounts payable between the Assessee/tested party and the comparable companies was performed. (d) Since the operating margin of 14.52% earned by the Assessee from the provision of software development services was is within the specified range of 35th percentile to 65th percentile (i.e., 6.24 percent to 20.31 percent), the transaction was considered to be at arm's length in accordance with the Indian transfer pricing regulations. (e) No adjustment was made to the margins of the comparable companies to take into consideration the difference in the risks assumed by the comparable companies vis-à-vis the Assessee given that the Assessee operated in a cost-plus risk mitigated environment, such lower risk could justify the net margins of the Assessee, as against the net margins of the comparable companies

The TPO rejected transfer pricing study of the Assessee observing, inter alia, (a) use of inappropriate filters (b) non-application of employee cost filter (c) non application of 'Income from core services >75% of sales' as a filter. Therefore, TPO concluded that due to rejection of filters, if some or all uncontrolled comparables are rejected, the same would result in consequent rejection ALP determined by the Assessee. Therefore, the TPO carried out a fresh search adopting appropriate filters. The TPO (a) used of current year data wherever available (b) Rejected companies having different financial year ending (i.e. not 31/03/2014) or data of the company which does not fall within 12 month period i.e.01/04/2013 to 31/03/2014 (c) excluded companies whose income was less than INR.1 Crore (d) excluded companies whose companies whose Software Development Service income was less than 75% of its total operating revenues (e) excluded companies which have more than 25% related party transactions (f) excluded companies which had export service income of less than 75% of the sales (g) excluded companies with employee cost less than 25% of turnover. In respect of those companies, wherein the segmental results had been considered, appropriate filters were applied to segmental results. Applying the new set of filters and on conducting Function, Asset & Risk (FAR) Analysis, the TPO rejected 10 out of 14 comparables selected for SWD Segment and accepted only 4 comparables giving following observations: SNo. Name of the Company Wt. Avg (%) Remarks

Cigniti Technologies Ltd. 9.08% The company fails the export revenue to sales filter. Hence rejected.

CG-VAK Software & Exports Ltd. 12.42% The company passes all TPOS filter. FAR similar. Hence accepted.

Helios & Matheson information technology Ltd. 16.55% The financials are reported for year ending 30th September 2015. Different year ending compared to that of the taxpayer and hence rejected.

R Systems Intl Ltd. 20.31% The financials are reported for year ending 31st December 2015. Different year ending compared to that of the taxpayer and hence rejected.

SQS India BFSI Ltd. 20.51% Related Part transactions > 25% of Sales. Fails RPT Filter. Hence rejected.

L&T Infotech 24.42% The company passes all TPOS filter. FAR similar. Hence accepted. But only SWD segment margin taken.

R S Software (India Ltd.) 26.33% Related Part transactions > 25% of Sales. Fails RPT Filter. Hence rejected.

Infobeans Technlogies Limited 42.47% The company passes all TPOS filter. FAR similar. Hence accepted.

The TPO introduced fresh comparables and finalized the list of 17 comparables for SWD Segment. The Assessee filed submission/objections contenting that (a) the comparable selected by the Assessee should be accepted based on functional comparability, (b) the comparable selected by the TPO should be rejected based on functional dissimilarity. Additionally, the Assessee proposed 8 more companies to be selected as comparables on functional comparability. After considering the submissions/objections of the Assessee, the TPO arrived at the final set of the following 16 comparables for SWD Segments: S. Company Name Financial Year Wise OP/OC (%) No. 2014-2015 2013-2014 2012-2013 Average 1 Kals Information 5.77 16.94 13.51

88 Systems Ltd.

E-Zest Solutions Ltd. 12.59

80 Fails Export Filter 14.05

CG-VAK Software & 19.87 13.81 22.07

50 Exports Ltd.

Tata Elxsi Ltd. (Seg) 23.33 22.02 11.24 19.34

Rheal Software Pvt. 2.76

64 No data in public 19.88 Domain Ltd.

Mindtree LTd. 20.55 21.18 19.75 20.55

Larsen & Toubro 24.22 23.54 25.10

21 Infotech Ltd.

RS Software (India) 32.66 24.14 17.44

82 Ltd.

Infobeans Technologies 20.70 41.95 29.22

91 Ltd.

Persistent Systems Ltd. 31.11 35.44 28.20 31.69

Nihilent Technologies 29.19

72 No data in public 32.21 Domain Ltd.

Aspire Systems (India) 30.98

04 No data in public 34.18 Domain Pvt. Ltd.

Inteq Software Pvt. 31.16

00 Fails Employee

90 Ltd. cost filter

Infosys Ltd. 40.29 36.28 39.25 38.59

Thirdware Soluiton Ltd. 43.69 44.68 32.65 41.12

Cybage Software Pvt. 68.17 68.82 60.81

27 Ltd. 35th Percentile 20.55% Median 27.37% 65th Percentile 37.90%

Taking into consideration the above final set of 16 comparables for SWD Segment, the TPO determined ALP in the following manners:

Determination of Arms Length Price Based on the detailed discussion held in various parts of this order, the arm's length price of the International transactions entered into by the taxpayer is computed as under:

Method Used: TNMM is used as the most appropriate method both by the taxpayer as well as the TPO.

2 Comparable: The comparable are as discussed above. The computation of the PLI of the comparable is as per Annexure 'A' & Annexure 'B'.

3 Data used Data pertaining to the FY 2012-13 to FY 2014-15 as mandated under Rule 10B (4).

Computation of Arm's Length Price: 22.4. 1. The median of the weighted average Profit Level indicators is taken as the arm's length margin. Please see Annexure A & B for details of computation of PLI of the comparables. Based on this, the arm's length price of the service rendered by the tax payer to its AE(s) is computed as under: Particulars SWD SEGMENT Formula Amount (in INR. Crores) Taxpayers operating revenue OR 1075,13,18,933 Taxpayers operating cost OC 938,83,67,806 Taxpayers operating cost OP 136,29,51,127 Taxpayers PLI PLI = PO/OC 14.52% 35th Percentile Margin of 20.55% comparable set Adjustment Required (if Yes PLI <35th Percentile) Median Margin of M 27.37% comparable set Arm's Length Price ALP=(1+M)*OC 1195,79,64,075 Price Received OR 1075,13,18,933 Shortfall being adjustment ALP-OR 120,66,45,142 22.4.2 The above shortfall of Rs.12066.45 Lacs is treated as transfer pricing adjustment u/s.92CA in respect of software development segment of the taxpayer's international transactions. XX XX 22.4. 3. The above shortfall of Rs.315 Lacs is treated as transfer pricing adjustment u/s.92CA in respect of ITes of the taxpayer's international transactions.”

While determining ALP as above, the TPO did not allow any working capital adjustments or risk adjustments.

Further, TPO rejected the Assessee's contention that no separate adjustments was warranted in respect of interest on overdue receivables and proposed Transfer Pricing Adjustment of INR.72,817,800/- in respect of interest calculated on receivables taking LIBOR-6 months + 400 basis points applicable for the Financial Year 2014-2015 (which works out to 4.3836%). The computation done by the TPO is as under: Description Amount (INR.) Receivables from AEs (A) 31.03.2015 31.03.2024 243,78,81,302 145,69,30,219 Payable due to AEs (B) 14,68,08,788 12,52,26,608 Net receivables (C=A-B) 229,10,72,514 133,17,03,611 Average Net Receivable Interest Rate 4.38% Period of delay (days) 335 Interest Amount 7,28,17,800 * Period of delay in 365 – allowed period of 30 days.

Thus, Vide Order, dated 26/10/2018, the TPO proposed aggregate TP Addition of INR.1,310,967,756/- to arrive at ALP of the international transactions consisting of the following: TP Addition ALP as per the learned TPΟ ALP as per the Assessee Shortfall being the adjustment

The Assessing Officer passed Draft Assessment Order, dated 04/12/2018, incorporating the proposed TP addition of INR.1.310,967,756/-. Further, the Assessing Officer also proposed following additions (a) addition of INR.364,064,448/- as interest income in respect of loan given to Keane Australia Micropayment Consortium Pty Ltd (KAMCO) [now known as NTT DATA Victorian Ticketing System Pty Ltd], and (b) addition of INR.13,604,264/- being compensation for alleged value addition computed at the rate of 5% on reimbursement aggregating to INR.272,085,280/- receivable from group companies. Thus, in the Draft Assessment Order, dated 04/12/2018 the Assessing Officer proposed as under: Particulars Amount (in INR.) Total Returned Income as per revised ITR 167,54,25,240 Add: TP adjustment 131,09,67,756 Add: Interest Income 36,40,64,448 Add: Mark-up on reimbursement of expenses 1,36,04,264 Total assessed Income of the Assessee 336,40,61,708

The Assessee filed objections with the Learned DRP. Vide Order, dated 09/09/2019, the Learned DRP disposed off the objections raised by the Assessee. The summary of directions/findings of the Learned DRP in respect of SWD Segment are as under: (a) Objection raised by the Assessee challenging the filters adopted by the TPO were rejected (b) Objections of the Assessee against the use of information obtained u/s 133(6) of the Act were rejected (c) Learned DRP concluded that the information on the website cannot be given complete credence ignoring the information in the annual report (based on audited financial statements, & signed management reports) for qualitative analysis of comparability (d) On inclusion/exclusion of comparables, the Learned DRP granted partial relief

As per the directions of DRP the TPO revised the Transfer Pricing Addition to INR.104,00,59,562/- and the Assessing Officer passed the Final Assessment Orders, dated 17/10/2019, assessing income of the Assessee at INR.309,31,53,514/- in the following manner after making following additions: Particulars Amount (in INR.) Returned Income as per Revised Return 167,54,25,240 Add: Aggregate TP Additions 104,00,59,562 Add: Interest Income 36,40,64,448 Add: Mark-up on reimbursement of expenses 1,36,04,264 Total Assessed Income 309,31,53,514

Being aggrieved the Assessee has preferred the appeal before the Tribunal on the ground reproduced at Paragraph 2 above which are taken up hereinafter in seriatim. Ground No. 1 to 13.3

Ground 1 to 13.3 raised by the Assessee pertain to the TP addition. When the appeal was taken up for hearing the Learned Authorised Representative for the Assessee filed a chart relating to TP additions and restricted submission on the issues raised therein. Since the submission were advanced to the limited extent of inclusion/exclusion of certain comparables in the final list of comparables for benchmarking the international transaction pertaining to SWD Segment of the Assessee with Non-US AEs, we shall confine our adjudication only to the that limited extent. 4.1. 4.2.

We have given thoughtful consideration to the rival submission and have perused the material on record. Before dealing with the issue of inclusion/exclusion of the comparables in question, we deem it appropriate to deal with submissions made by both the sides common to the issue of selection of comparables for determining ALP under TNMM. Section 92C of the Act contains provisions relating to computation of ALP. Section 92C(1) of the Act lists the methods of computing the ALP and Section 92C(2) of the Act mandates that the most appropriate method be applied for determination of ALP. Rule 10B of the Income Tax Rules, 1962 [for short `IT Rules'] provides for the determination of ALP using the most appropriate method. A co-joint reading of the relevant provisions shows that the exercise of determination of ALP of an International Transaction is aimed to determine the price which would have been charged for a products or service in case such international transaction was not executed between AEs. In order to impute ALP to a controlled transaction between AEs, it is essential to ensure that the instances of uncontrolled entities/transactions selected as comparables are similar in material aspects. Rule 10B(2) of the IT Rules clearly indicates that the comparability of controlled transactions would be judged with reference to the factors as indicated therein. Rule 10B(2)(a) & (b) of IT Rules expressly provides that the comparability of an International Transaction with uncontrolled transaction shall be judged with reference to the following: (a) the specific characteristics of the property transferred or services provided in either transaction; (b) the functions performed, taking into account assets employed or to be employed and the risks assumed, by the respective parties to the transactions; (c) the contractual terms (whether or not such terms are formal or in writing) of the transactions which lay down explicitly or implicitly how the responsibilities, risks and benefits are to be divided between the respective parties to the transactions; (d) conditions prevailing in the markets in which the respective parties to the transactions operate, including the geographical location and size of the markets, the laws and Government orders in force, costs of labour and capital in the markets, overall economic development and level of competition and whether the markets are wholesale or retail.

Rule 10B(2)(a) & (b) of the IT Rules are applicable for determination of ALP in terms of Rule 10(2)(1) and therefore, apply to determination of ALP using TNMM as the most appropriate method. Thus, it is clear that the specific characteristics of the services provided and the functions performed (having regard to the assets employed and risk assumed) would be relevant factors for selecting comparables for determining ALP using TNMM. Accordingly, the comparables selected and the tested party must be functionally similar for ascertaining a reliable ALP by TNMM.

As contended by Revenue, TNMM does not require identical transaction/product as required under Comparable Uncontrolled Price Method. However, as noted herein above, the selection of comparables for application of TNMM requires consideration of specific characteristic of service and functions performed (taking into account the assets employed and risk assumed).

We also find merit in the contentions advance on behalf of the Revenue that TNMM operates at the net profit level and therefore, inherently tolerates certain dissimilarities. However, the same cannot be the sole reason broadening the search for comparables even though sufficient number of comparables are available on carrying out a comparatively narrower search resulting in selection of comparables with lesser dissimilarities when examined in view of guidance provided by Rule 10B(2)(a)&(b) of the IT Rules.

We note that OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (2022) Paragraph 2.2 [Chapter II: Transfer Pricing Methods Part I: Selection of the transfer pricing method A. Selection of the most appropriate transfer pricing method to the circumstances of the case] states:

Further OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (2022) Paragraph 2.74 [Chapter II: Transfer Pricing Methods - Part III: Transactional Profit Methods Transactional Net Margin Method B3. Guidance for application] states: “B.

Guidance for application B.3. 1. The comparability standard to be applied to the transactional net margin method

A comparability analysis must be performed in all cases in order to select and apply the most appropriate transfer pricing method, and the process for selecting and applying a transactional net margin method should not be less reliable than for other methods. As a matter of good practice, the typical process for identifying comparable transactions and using data so obtained which is described in paragraph 3.4 or any equivalent process designed to ensure robustness of the analysis should be followed when applying a transactional net margin method, just as with any other method.

The above OECD Guidelines, though not binding, does provide a good guidance for the approach to be adopted while selection of comparables for determining ALP under TNMM. We note that the said approach aligns with by Rule 10B(2)(a)&(b) of the IT Rules providing for consideration of specific characteristic of service and functions performed (taking into account the assets employed and risk assumed), as well as Rule 10B(1)(e)(iii) of the IT Rules (set out herein below) which specifically provides that to the extent possible the economic impact of the functional dissimilarities having impact on the price of product/service should be eliminated. “Determination of arm's length price under section 92C. Rule 10B. (1) For the purposes of sub-section (2) of section 92C, the arm's length price in relation to an international transaction 22[or a specified domestic transaction] shall be determined by any of the following methods, being the most appropriate method, in the following manner, namely: (a) - (d) xx XX (e) Transactional Net Margin Method, by which,- (i) the net profit margin realised by the enterprise from an international transaction or a specified domestic transaction entered into with an associated enterprise is computed in relation to costs incurred or sales effected or assets employed or to be employed by the enterprise or having regard to any other relevant base; (ii) the net profit margin realised by the enterprise or by an unrelated enterprise from a comparable uncontrolled transaction or a number of such transactions is computed having regard to the same base; (iii) the net profit margin referred to in sub-clause (ii) arising in comparable uncontrolled transactions is adjusted to take into account the differences, if any, between the international transaction... and the comparable uncontrolled transactions, or between the enterprises entering into such transactions, which could materially affect the amount of net profit margin in the open market; (iv) the net profit margin realised by the enterprise and referred to in sub-clause (i) is established to be the same as the net profit margin referred to in sub-clause (iii); (v) the net profit margin thus established is then taken into account to arrive at an arm's length.” (Emphasis Supplied)

From the above, it can be concluded that the process for selecting comparables for determining ALP applying a TNMM should be as robust as any other method and should take into consideration functions performed, assets employed and risk assumed (for short 'FAR Analysis'). Depending on availability of data, effort should be made to eliminate the economic impact of the functional dissimilarities having impact on the price of product/service. Thus, while broad similarity/comparability in the starting point or the baseline for selection of comparables, functional dissimilarity may warrant either rejection of the comparable or adjustment of profit margins of comparables to account of functional differences having significant impact on profitability.

Therefore, we reject the contention that merely because a comparable was selected in the search process and passed all the filters selected by the Assessee/TPO, the same should be selected as a comparable on the ground that such comparable-company operates in the same field or broadly performs similar functions even though FAR Analysis reveals functional dissimilarities and/or need for economic adjustment.

Having concluded as above, we note that there can be a situation where the above approach/process does not result in selection of reasonable number of comparables and/or there is lack of relevant data which may impede a proper benchmarking analysis. In the aforesaid situation there would be no option but to widen the search/selection process or to select any other method which may be more appropriate for determination of ALP.

Accordingly we deem is appropriate to cull out the functional, asset, and risk (FAR) profile of the assessee company before us. The FAR

The functions performed by the Assessee in respect of SWD Services provided by the Assessee to its AEs are as under [refer to page 1372 of TPSR]: "Briefly tabulated are the functions performed by NTT DATA GDS and NTT DATA Group in relation to the software development services provided by NTT DATA GDS to NTT DATA Group. Type of Functions NTT DATA GDS NTT DATA Group Strategic management functions No Yes Administrative/ Corporate Services Yes No Marketing/Business development No Yes Software development services related functions Conceptualisation and design No Yes Functional specification and Limited# Yes requirement analysis Coding and documentation Yes Yes* Project management Yes Yes Testing and quality assurance Yes Yes* Software release/integration Yes Yes Software patches/maintenance Yes No Integration Yes Yes #NTT Data GDS provides its inputs to AEs while understanding the requirements of the customers and finalize overall requirements *For modules not developed by NTT DATA GDS”

The Assessee provides SWD services exclusively to its AEs and is compensated on cost plus mark-up basis for the W services. The corresponding service liability risk rests with the AEs since the AEs are required to compensate the end user/customers or undertake defect resolution at their own cost.

In light of the above we proceed to deal with issue of inclusion/exclusion comparables assailed by the Learned Authorised Representative for the Assessee during the appellate proceedings before in the backdrop of the observations made and directions given by the Learned DRP.

The Assessee has sought exclusion of 10 comparables [for short 'Exclusion Set'] and inclusion of 3 comparables [for short `Inclusion Set']. 7. 7. 1. Tata Elxsi Limited (Segmental) The Assessee is aggrieved by the inclusion of Tata Elxsi Limited (segmental) in the list of final comparables and has sought its exclusion, inter alia, on the ground of functional dissimilarity.

TPO selected Tata Elxsi Ltd. (Seg) as a comparable and computed PLI as under: Company Name Financial Year Wise OP/OC (%) 2014-2015 2013-2014 2012-2013 Average Tata Elxsi Ltd. (Seg) 23.33 22.02 11.24 18.87

We find that the DRP upheld the inclusion of Tata Elxsi Limited as a comparable by the TPO holding as under: “8.1.1 Panel: Having considered the submissions, and on perusal of the annual report of this comparable, we note that the software development and services segment of this company is functionally comparable to the assessee and passes the filters of the TPO. We also note that the revenue streams from this segment is on account of rendition of services and not on account of product sales. The company's business is primarily classified into two segments: (i) software development and services and (ii) systems integration and support. The software development and services segment comprise three divisions (1) Embedded product design (ii) Industrial design (ii) visual computing lab. As per information in the annual report, in the software development and services segment, this company helps its customers to create new products & experience to drive their growth. It is also seen that as per information in the annual report, the company provides consulting, product development and testing services to its customers and help customers to develop brands and products. Thus, this company essentially renders software development, system design and testing services for broadcast, consumer electronics, telecom & transportation industries and does not sell products. The VCL division renders animation services for the media and entertainment industry. Thus, this company can be characterised as a software development & design service provider and functionally, comparable to the assessee's activities. Therefore, the plea that this company is functionally different is rejected. XX XX 7.4. 8.1.5 We note that the inventory details as per page No. 53 of the annual report, relates to traded goods of the "System integration and support segment which was not taken for comparable analysis. Further, this amount of inventory is not significant. Accordingly, this plea is rejected. It was also pleaded that the 'system integration and support segment is also essentially engaged in software development activity and hence that segment may also be considered for comparable analysis and margin computation. It is noted from the Annual report, that the 'system integration and support segment includes income from sale of traded goods and was rightly excluded by the TPO for comparable analysis. Hence this plea is rejected.” (Emphasis Supplied) On perusal of above we find that there is no dispute as to the fact that the Tata Elxsi Limited had two different segments. We note that the TPO had only considered the 'Software Development and Services' Segment as a comparable. However, it is admitted position that even the 'Software Development and Services' Segment on this company provides consulting, product development & testing services to its customers and helps customers to develop brands and products. We are not in agreement with the stand taken by the Revenue that Tata Elxsi Limited 'Software Development and Services' Segment is comparable to the W Segment of the Assessee since both can be said to be engaged in providing software development services. We are of the view that the functional dissimilarities cannot be ignored in view of our observations in Paragraph 5 to 5.3 above. Therefore, we accept the contention of the Assessee that in absence of further segmental data/bifurcation, Bangalore [IT(TP)A No.2582/Bang/2019, Assessment Year 2015- 2016, dated 30/12/2022] cited on behalf of the Assessee during the course of the hearing. In that case also the Tribunal had, in appeal pertaining to the Assessment Year 2015-2016 (as in the case before us), directed exclusion of Tata Elxsi Limited 'Software Development and Services' Segment on account of functionally dissimilarity when compared with a captives software development service provider.

Accordingly, in view of the above, accepting the contentions of the Assessee we direct that Tata Elxsi Limited (segmental) be excluded from the list of comparables.

Mind Tree Limited.

The Assessee is aggrieved by the inclusion of Mind Tree Limited in the list of final comparables and has sought its exclusion, inter alia, on the ground of functional dissimilarity and lack of segmental data.

TPO selected Mind Tree Limited as a comparable and computed PLI as under: Company Name Mindtree Ltd. Financial Year Wise OP/OC (%) 2014-2015 20.55 2013-2014 2012-2013 21.18

86 Average 21.19

We find that the DRP upheld the inclusion of Mind Tree Limited as a comparable by the TPO holding as under: "8.2.1 Panel: It was contended that this company is not functionally comparable as it is engaged in providing services in diverse areas such as analytics, information management, application development, business process management, business technology consulting, infrastructure management services, product engineering and SAP services. It was also contended that this company is engaged in sale of products and also engaged in out sourcing IT services in banking and financial services and insurance sector, and also has R&D operations and patents and hence not functionally comparable. 8.2.2 Having considered the submissions, on perusal of the annual report of this company we note that this company is engaged in rendering of software development services in different verticals and not engaged in product sales as contended. As seen from the annual report of this company, it is engaged in international information technology consulting and implementation delivering business solutions through global software development. Its software development is structured into five verticals. As per Note 2.8.1 (refer page 108 of annual report), it is stated. "that the company derives its revenue primarily from software services". Again, as per Note 3.9 of the annual report (refer page 122 of annual report) 'the company is engaged in software development services. Further, as per Note 3.1.2 of the annual report, the company's earnings in foreign currency from software development services was Rs.34.45 million. As per the Note on Revenue Recognition, it has stated the principles adopted in recognizing revenue from software development services and there is no reference to product sales. 8.2.3 All this information clearly indicate that this company is engaged in software development. Besides, it is also relevant to note that the IP led revenue constituted meager 2% of the consolidated revenue of the company for the F.Y. 2014-15 & 1% for F.Y. 2013-14 (refer page 90 of the annual report). Considering these information in the annual report, we note that this company is predominantly (i.e., 98%) engaged in software development activity and is functionally comparable to the assessee. The different services activities (referred in page 90 of annual report), in the form of consulting, maintenance, testing, management support services etc. clearly fall within the gamut of software development services, though it pertains to different verticals. That is the reason, the company has recognized a single business segment i.e., software development services, and which are categorized into five verticals. Besides, page 39, Annexure 4 of the annual report, the nature of the various services activities is given as under: SI. No. Name and Description of main products/services NIC Code of the Product/ Service % total turnover of the company

7 Total 100 The above information clearly show that this company is engaged only in software development and related services. Therefore, the pleas that the company performs different and diverse activities and hence functionally different is rejected. We also reject the plea that this company is product-based company. 8.3.4 During the course of hearing it was contended on behalf of the Assessee that this company is engaged in diversified services in the areas of agile, analytics and information management, application development and maintenance, business process management, business technology consulting, cloud, digital business's, independent testing, infrastructure management services, mobility, product engineering and SAP services. Further, no segmental information is available. Therefore, the same should be excluded from the list of comparables.

We note that it is admitted position that this company is structured into five industry verticals – (i) Retail, CPG and Manufacturing [RCM], (ii) Banking, Financial Services and Insurance [BFSI], (iii) Hitech & Media Services [HTMS], (iv) Travel and Hospitality [TH] and (v) Others. The stand taken by the Revenue is that the five different verticals in which it operates form part of single segment (namely software development segment), and therefore, Mind Tree limited is engaged in software development. Even if the aforesaid contention of the Revenue is accepted for the sake of arguments, this company cannot be selected as a comparable in absence of further segmental data. The DRP has reproduced Annexure 4 of the Annual Report which gives that break-up of turnover. About 53.7% of the total turnover relates to “Other information technology and computer service activities”. Admittedly, there is no break-up or bifurcation available. In our view, the TPO could not have included this company in the list of comparables without taking into consideration “Other information technology and computer service activities” which contributes 53.7% of the total turnover. More so when the Assessee itself had an ITeS Segment ALP of which has been determined separately. Further, we note that in appeal pertaining to Assessment Year 2015-2016 (as the case before us), in the matter of M/s. 1(1)(1), Bangalore [IT(TP)A No.2582/Bang/2019, dated 30/12/2022] the Bangalore Bench of the Tribunal had directed exclusion of Mind Tree Limited on account of functional dissimilarity with a software service provider and for lack of segmental details holding as under: "H.3 We note that primarily the segmental details are not available in respect of the various services rendered by this comparable. Further the intangible asset has been valued at Rs.117 crs. thereby indicating the ownership of the software developed by the company. This also indicates the high brand value this company possess. In assessee's case being a captive service provider, there it does not own any intangibles. In our opinion this company deserved to be excluded."

In view of the above, we direct the TPO/Assessing Officer to exclude Mind Tree Limited from the list of comparables.

Persistent Systems Limited

The Assessee is aggrieved by the inclusion of Persistent Systems Limited in the list of final comparables and has sought its exclusion on the ground of functional dissimilarity (being product-based company engaged in diversified activities; and research & development) and lack of segmental information. It was also contended that this comparable failed to pass Related Party Transaction Filer (for short `RPT Filter')

TPO selected Persistent Systems Limited as a comparable and computed PLI as under: Company Name Financial Year Wise OP/OC (%) 2014-2015 2013-2014 2012-2013 Average Persistent Systems Ltd. 31.11 28.44 28.20 29.25

We find that the DRP upheld the inclusion of Persistent Systems Limited as a comparable by the TPO holding as under: “8.3.1 Panel: It was pleaded that this company is a product-based company and has revenue from software licenses; that it is also engaged in R&D activities with significant intangibles. It was pleaded that the company has diversified activities and it has no segmental information & hence cannot be considered as comparable. It was also pleaded that it has significant onsite expenses and RPT transactions. It was also argued that it has made certain acquisition and therefore, on account of such peculiar economic circumstances it has to be excluded as a comparable. 8.3.2 Having considered the submissions, and on perusal of the annual report, we note that the company's core activity was rendering product development services i.e. providing services to business enterprise to develop software products. As per the information at page 211 of the annual report, it has reported income from software services of Rs.12,353.53/- million and software licences of Rs.71.45/- million aggregating to Rs.12,424.98/- million. Thus, the income from software licences constitute a meagre 0.58% of its operating revenue. It is also noted that this company in response to the notice u//s 133(6) had given details of such licence income as under: Software product Category Revenue as per books of accounts eMee Internally developed 20,525,978 Radia Acquired for Distribution 34,21,402 activity GEMS Reselling activity 1,43,74,000 SAP Reselling activity 2,88,77,317 WCM connector Internally developed 10,46,640 (ECSC) eDocs DM Internally developed 8,76,282 connector (ESCS) AWS Reselling activity 7,90,500 Cloudsquad Acquired for Distribution 15,33,750 activity Grand Total 7,14,45,689 From the information in the above table it could be seen that only an amount of Rs.2.25 crore (i.e. 22.5 million) represent income on account of internally developed which constitute 0.18% of operating revenue, and all others licence revenue was from distribution or reselling activity. Besides, the company has also categorically clarified in its reply u/s 133(6) that it is engaged in software product development services only. The relevant extract of the reply is as under: "Persistent System Limited is predominantly engaged in the business of providing outsourced software product development services to customers across the globe from following industry verticals: Infrastructure and systems, Telecom and Wireless, Life science and Healthcare and Financial services. 8.3.3 The company reports segment information based on the above industry verticals. The nature of services provided that each of these segments differs only in terms of the industry and specific requirements of customers in each of these industries. The essential activity across all business segments can be considered to be software product development services". 8.3.4 Further, it is seen that the assessee based on certain information discussed in the consolidated annual report (which included discussion of financial results of Persistent Systems Ltd and its six subsidiaries associates) argued that this company is into product development and IP led revenue. We are of the view, it would be totally incorrect to consider the information pertaining to the entire group as such, when the comparability is to be seen with reference to the stand alone financials of Persistent Systems Ltd, which was considered for comparable analysis by the TPO. 8.3.5 In this regard it is pertinent to note as per the consolidated annual report the revenue from software licence was Rs.535.59 million for the entire group whereas, such revenue in the case of M/s Persistent Systems Ltd was only Rs.71.45 million (Ref page 168 and page 211 of the annual report). It is also seen that in the P&L account of the consolidated financial statement expenses were debited towards Royalty expenses of Rs.176.73 million (refer page 169) and such a debit is not to be noted in the P&L account of M/s. Persistent Systems Limited. 8.3.6 Further, as per information at page 88 of the annual report for FY 2012-13 it was stated in the notes to the consolidated results that the increase of intangible block of assets during the year (2012-13), of Rs.262.84 million, was mainly on account of acquisition of various IPs during the year and the same is shown in the intangible Asset Schedule of the consolidated financial statement at page 115 as under: Intangible assets of Group 2012-13)

2 Intangible assets Software Acquired contractual rights Total Gross block (At Costs) 1,287.49 281.63 261.23 1,569.12 As at April 1, 2012

26 Additions 94.03

10 Disposals -

10 Other adjustments -Exchange differences

86 (0.18)

68 As at March 31, 2013 1,289.28 542.62 1,831.96 All these clearly show that the IP related and product revenue pertain to other group entities and does not pertain to M/s Persistent Systems Ltd, which is being compared. It is also relevant to note that this company has clarified in its reply given u/s 133(6), that M/s Persistent Systems Ltd is predominantly engaged in the business of rendering software development services; the revenue reported is primarily on account of rendering of software development services only. The relevant extract is as under: "In respect of the information you have requested under 3(a) and 3(c) in respect of software products and innovations, overseas subsidiary companies of Persistent Group have acquire certain Intellectual Property (IP) products and generating some revenue from licencing and support of these products. In case of PSL India, which is predominantly engaged in the business of rendering software development services, the revenue reported is primarily on account of rendering of software development services only" The above clarification also make it clear that this company is not into diversified activities. 8.3.7 Further, it is seen that the expenditure incurred towards R&D as per page 225 of the annual report was Rs.62.24 million, which constitute meagre 0.50% of operating revenue. Further, the capital expenditure towards R&D was only Rs.0.28 million, which clearly show that the R&D activities are routine. The value of intangible assets was only Rs.162.85 million constituting 1.31% of operating revenue. There is no reference to any intangible assets or patent owned or developed by the company, in the stand alone annual report. There is also no acquisition of intangibles during the year. Further as per note in of the annual report, software product developments costs are expensed as incurred unless the technical and commercial feasibility of the project enable to use or sell the software, they are not capitalized. Such a development is not reflected in the Asset schedule. Thus, it can be inferred that the R&D and intangible assets do not have impact on the revenue and profitability of the company. We also note that, the assessee has failed to establish that such differences, if any, on account of R&D, brand and IRPs have material effect on the margin of the above company, in terms of clause (i) of sub-rule (3) of Rule 10B, which provides that an uncontrolled transaction shall be comparable to an uncontrolled transaction if none of the differences, if any, between enterprises entering into business transactions or likely to materially affect the profit arising from such transactions in the open market. The said company also clarified u/s 133(6) that its intangible assets are in the nature of software licences acquired for use in the operation of the company and are not in the nature of inbuilt software product generating revenue for the company. Hence, these pleas are rejected 8.3.8 Further, it is seen that this company was held to be engaged in software development and not a product company and hence functionally comparable to a software service provider company, by the Hon'ble ITAT Bangalore in the case of M/s. Advice America Software Development Centre Private Limited (in ITA (TP) No. 2531/Bang/2017 dated 23.05.2018 relating to A.Y. 2013-14). In view of the above, we uphold the selection of this comparable. We note that the approach of the TPO in treatment of related party transaction into two sets, are for revenue transactions and other for expense transaction is logical and correct. We also note that the RPT filter was adopted by the TPO was with the above conditions and has adopted consistently. Hence, we do not find any infirmity the approach. Hence, we reject the assessee's plea. We hold that onsite expenses do not adversely affect comparability and hence, such plea is rejected. On the plea of error in margin computation, we note that this is on account of liabilities and provisions written back which the TPO has rightly taken as non-operating. We hold these provisions as non- operating. Accordingly, we reject this plea. With reference to provision for doubtful debts and provision for warranty the TPO correctly considered them as non-operating. With reference to the claim the forex gain is reduced from unallocated cost, the same may be examined.” (Emphasis Supplied)

We have perused the orders passed by authorities below, perused the material on record and have given thoughtful consideration to the rival submission. We find that the above findings return by the Learned DRP regarding the functional profile of Persistent Systems Limited are factually correct. As noted by the Learned DRP the contentions raised by the Assessee are based upon incorrect consideration of the consolidated financial statements. The stand alone financial statements of Persistent Systems Limited [place at Page 1958 to 2209 of the Paper book] clearly support the findings returned by the Learned DRP. Accordingly, we do not find any reason to interfere with the aforesaid factual findings returned by the Learned DRP and accordingly, reject the contentions raised by the Assessee assailing the same.

However, we do find merit in the contentions advanced on behalf of the Assessee regarding the applicability/application of RPT Filter. The TPO has applied split RPT Filer taking related party transaction affecting the expenses side and revenue side separately. The DRP also approved the aforesaid approach adopted by the TPO holding that the same was logical and correct. The Assessee has now contended that aggregate RPT Filer should have been applied taking all the related party transactions. In the present case TNMM has been selected as most appropriate method. The net margins would bear the impact of related party transactions pertaining to expense side as well as the revenue side. Since the PLI for TNMM would be sensitive to all transactions with related parties, in our view in the facts and circumstances of the present case the better approach would be to adopt aggregate RPT Filter.

Out above view draws support from the following decision of Co- ordinate Benches of the Tribunal: - Toyota Kirloskar Motor (P.) Ltd. vs. ACIT, LTU [2023] 147 taxmann.com 558 (Bangalore - Trib.)[02-12-2022] - AMD India (P.) Ltd. vs. Assistant Commissioner of Income-tax [2023] 154 taxmann.com 341 (Bangalore - Trib.)[26-06-2023]

In view of the above, we direct the Assessing Officer/TPO to exclude Persistent Systems Limited from the final list of comparables in case the same fails to pass aggregate RPT Filer.

We note that while rejecting the contention of the Assessee, the DRP has observed that the RPT filer has been applied consistently to all the comparables selected. Therefore, we deem it appropriate to direct the Assessing Officer/TPO to apply the aggregate RPT Filer to all the comparables finally selected and exclude those which fail to meet the threshold of 25% determined by the TPO.

Nihilent Technologies Private Limited

The Assessee is aggrieved by the inclusion of Nihilent Technologies Private Limited (for short `NTPL') in the list of final comparables and has sought its exclusion, inter alia, on the ground of functional dissimilarity, Functionally different and research activity.

TPO selected NTPL as a comparable and computed PLI as under: Company Name Financial Year Wise OP/OC (%) 2014-2015 2013-2014 2012-2013 Average Nihilent Technologies Ltd. 29.19 35.72 32.45

We find that the DRP had upheld the inclusion of NTPL as a comparable by the TPO holding as under: “8.4.1 Panel: Having considered the submissions, and on perusal of the annual report, we note that this company is engaged in rendering software services and other related IT services. As per information at page 13 of the annual report, "The company derives its revenue primarily from rendering software service activities. Further at page 32 of the annual report, it is stated, 'the company's activities involve predominantly providing software related services, which is considered to be a single business segment, since these are subject to similar risks and returns". Thus, it is functionally comparable to the assessee which renders software development services und other allied services. Further, in response to the information gathered u/s 133(6), this company has clarified that it is engaged in software development and IT' consulting services and it is not engaged in product development. Thus, the contentions of the assessee that it is engaged in diverse activities and not functionally comparable is without merits. Besides, there is no information in the annual report to indicate that this company is engaged in product development or to indicate that it has revenue stream from product sales. The assessee also could not point to any such information in the annual report. We also note at page 6 of the annual report, the independent auditor has certified, 'the company does not have any purchase of inventories or sales of goods since it is a service company'. In view of these, we hold that this company is functionally comparable to the assessee and the pleas raised in this regard are rejected. 8.4.2 We note that the assessee has relied on certain information said to be available in the website of this company and argued that this company is engaged in product development and has diverse activities and hence not comparable to the assessee. At the outset, we are of the considered view that much credence cannot be given to the information said to be available on the website, as such information may be motivated towards advertisement and other promotional gains. Besides, it is impossible to correlate whether the information pertain to the year under scrutiny, or it relate to subsequent current period developments. Besides, as a Panel, we strictly go by the information stated in annual report for qualitative

We have perused the orders passed by authorities below, perused the material on record and have given thoughtful consideration to the rival submission. We note that TPO has recorded that the functional profile of this company is as under: “Functions of the comparable company The company is engaged in rendering software services, business consulting in the area of enterprise transformation & performance management using software solutions.”

In response to notice issued under Section 133(6) of the Act, NTPL clarified that it (a) operated in only under one segment (i.e. provision of software development and consulting services). (b) provided routine software development and consultancy services positioned to support the customer's requirements across the Software Development Lifecycle. (c) used different technology base for providing technology innovation solutions to the customers. However, in most cases, the NTPL rendered software development and consulting services to customers.

In our view, the response provided by NTPL to the notice issued under Section 133(6) of the Act shows that in addition to providing software development services, this company was also engaged in developing products which were then utilised for providing business consulting services in its clients. The Assessee had objected to the non-availability of the segmental information before the TPO. However, the TPO rejected the same observing as under [refer to page 36 of 95]: “The taxpayer has submitted that the company is engaged in development of products such as Lamat, CAS, CFS and FMS. Hence, it should be rejected. In this context, it is important to understand that the products mentioned above are all utility product developed by the company in order to make its service delivery to clients more efficient. The company is not engaged in developing off the shelf products which can be traded directly. This fact has been explicitly clarified in point no. 4 of 133(6) reply reproduced above. The revenue stream shown in P&L account also doesn't show and revenue from products. The entire revenue is from services only. A detailed note on the distinction between off the shelf software products and the routine utility products is provided in section 13.4 (below) also.” (Emphasis Supplied)

On perusal of above, we are of the view that even the TPO recognized this company was using proprietary utility for delivering services to its clients. While NTPL may not have been engaged in development and sale of products as contended by Revenue, it was delivering 'software development and consulting services' to clients using utility products developed by the company. It is admitted position that the segmental details are not available. In view of the aforesaid, we accept the contention of the Assessee that the details furnished by this company in response to notice issued under Section 133(6) of the Act are not sufficient. We find that the stand taken by the Assessee is also supported by the information available on the website of the Assessee which was placed before the Learned DRP.

In view of the above, we direct exclusion of Nihilent Technologies Private Limited/NTPL from the final list of comparables.

Aspire Systems (India) Private Limited

The Assessee is aggrieved by the inclusion of Aspire Systems (India) Private Limited (for Short 'Aspire Systems') in the list of final comparables and has sought its exclusion, inter alia, on the ground that it fails to pass the RPT Filter.

TPO selected Aspire Systems (India) Private Limited as a comparable and computed PLI as under: Company Name 2014-2015 Financial Year Wise OP/OC (%) 2013-2014 40.77 2012-2013 Aspire Systems (India) Pvt. Ltd. 30.98 35.87

We find that the DRP had upheld the inclusion of Aspire Systems (India) Private Limited as a comparable by the TPO holding as under: “8.5.1 Panel: Having considered the submissions, and on perusal of the annual report, we note that this company is engaged in provision of software development services and satisfies all the filters adopted by the TPO. We note that this company does not fail the RPT filter adopted by the TPO. 8.5.2 At the outset, we note that this company fulfils the RPT filter adopted by the TPO. The assessee has erroneous taken it appears all the related party transactions both on the revenue side as well as on the expenditure side without parity between denominator and numerator, which is not correct method. 8:5.3 As to onsite expenses, we note that the assessee has assumed that the entire expenditure incurred in foreign currency would be onsite expenses, which is incorrect, as there may be requirement to incur expenditure in foreign currency for offshore transactions also like payment of professional charges, sales commission etc. Besides, we have already discussed at para 2.6.3.4 that onsite activity, as such would not affect adversely comparability when the company is otherwise functionally comparable. Therefore, we consider it appropriate to reject these pleas. Therefore, we reject the pleas raised. The selection of this company is upheld."

From above it is clear that the TPO/DRP rejected the contention raised by the Assessee observing that this company failed RPT Filter. According to the Learned DRP the Assessee failed to appreciate that the formula used by the TPO. According to Learned DRP the Assessee had incorrectly aggregated the purchase and sale side related party transaction before dividing the same by total sales. Whereas the TPO has applied RPT filer separately to purchase side and revenue side and as per the said formula the related party transactions were within the threshold of 25%. DRP concluded that formula adopted by the TPO was more appropriate and logical.

We have already rejected the identical approach adopted by the TPO while directing exclusion of Persistent Systems Limited from the list of comparables hereinabove. In paragraph 9.5 to 9.8 above it has been concluded that in the present case since the TNMM method has been used, the RPT Filter is to be applied on aggregate basis keeping in view the impact of purchase/expense side and sale/income side related party transaction of the profit margins of the comparables. It was also directed that as a measure of consistency the aggregate RPT Filter be applied to all the comparables finally selected.

According to the Assessee the aggregate related party transactions as a percentage of sales stand at 28.64% and 26.30% for FY 2014- 15 and 2013-14, respectively. The DRP has noted that Aspire Systems fails aggregate RPT Filter. Therefore, we direct exclusion of Aspire Systems (India) Private Limited from the list of final comparables.

Inteq Software Private Limited

The Assessee is aggrieved by the inclusion of Inteq Software Private Limited in the list of final comparables and has sought its exclusion on the ground of functional dissimilarity and non-availability of information in public domain.

TPO selected Inteq Software Private Limited as a comparable and computed PLI as under: Company Name 2014-2015 Financial Year Wise OP/OC (%) 2013-2014 2012-2013 Inteq Software Pvt. Ltd. 31.16 45.00 38.08

It was contended by the Assessee that this company is involved in application services, software testing, data warehousing, EI & EDI, BPO and staffing services. It is also involved in end-to-end product development with primary focus in healthcare industry. Hence, not functionally comparable with the Assessee.

We find that the DRP rejected the objective referred by the Assessee challenging the inclusion of Inteq Software Private Limited as a comparable by the TPO holding as under: “8.6.1 Panel: Having considered the submissions, we note that as per information in the Director's report of the company, the company's principal activity is software development services, which is 100% of its total turnover (Attachment-A to the Boards Report). The independent Audit report states that the company is a service company primarily rendering software services. As per Revenue Recognition Policy, there is mention relating to revenue from software development and not to product sales. We also note that this company satisfies the various filters adopted by the TPO. Besides, as per the information furnished by this company in response to query u/s 133(6), the company is engaged in software development services only. Therefore, we have no hesitation in holding this company as functionally comparable to the assessee. We also note that there is no infirmity in the use of information u/s 133(6), as it is used only for qualitative analysis, and as the same was shared with the assessee. 8.6. 2. On the plea regarding RPT, we note that as per information in the Annexure AOC2 to the annual report of the company for F.Y. 2014-15, it has reported RPT transaction of value Rs.6,27,325/-only. Thus, it passes the filter adopted by the TPO. However, for F.Y. 2012- 13 and F.Y. 2013-14, as contended by the assessee, this company fails the RPT filter adopted by the TPO. Therefore, the PLI margin for these two years need not be taken into account while computing the PLI margin of this comparable. The plea regarding insufficient information is redundant as the information relating to all three years have been submitted by the assessee. Accordingly, the selection of this company is upheld.”

We have perused the orders passed by authorities below, perused the material on record and have given thoughtful consideration to the rival submission. It emerges that the factual findings returned by the DRP are supported by the material on record. On perusal of the financial statement of Inteq Software Private Limited placed at Page 2412 to 2452 of the Paper Book we find that this company is engaged in software development services and 100% of its revenue is derived from the same. While the revenue from operations is disclosed under the head `Software Development and Service Charges', in response to the notice issued under Section 133(6) of the Act it has been stated that the entire revenue has been earned from the business of software development. It has been specifically clarified that the Health Care BPO Services were offered by its subsidiary company (i.e. Inteq BPO Services Private Limited). It was stated that Inteq Software Private Limited did not offer any software products and entire revenue from the company was from software development services. Thus, the contentions raised by the Assessee are clearly based upon incorrect reading of the annual accounts for the relevant financial year. The functional profile of the Inteq Software Private Limited is similar to the profile of the Assessee discussed in paragraph 5 to 5.2 above. The Assessee has failed to controvert the factual findings returned by the Learned DRP in Paragraph 8.6.1 (reproduced in Paragraph 12.4 above). In view of the aforesaid factual findings, the judicial precedents on which reliance was placed by the Assessee do not advance the case of the Assessee. Therefore, we do not find any infirmity in the selection of Inteq Software Private Limited as a comparable by the TPO/DRP.

It is clarified that the DRP has concluded that for Financial Year 2012-13 and 2013-14, this company failed the RPT Filter and therefore, the PLI margin for the said two financial years should not be taken into account while computing the PLI margins of this comparable.

Cybage Software Private Limited

The Assessee is aggrieved by the inclusion of Cybage Software Private Limited (CSPL) in the list of final comparables and has sought its exclusion, inter alia, on the ground of functional dissimilarity.

TPO has selected CSPL as a comparable and computed PLI as under: Company Name Financial Year Wise OP/OC (%) 2014-2015 68.17 2013-2014 2012-2013 68.82

81 Average

93 Cybage Pvt. Ltd. Software

We find that the DRP upheld the inclusion of CSPL as a comparable by the TPO holding as under: “8.8.1 Panel: Having considered the submissions, and on perusal of the annual report, we note that as per information under Company's overview, it is stated that the company is engaged in the business of software development services. The Revenue Recognition Statement also discussed about the accounting principle adopted in recognizing revenue from software development services and not as to product sales. There is no discussion about any other revenue stream. Further, under Note 22, it is mentioned that the company had earnings from export of software development services. Under Segment Reporting, it is mentioned that the company operates in a single business segment namely software development services. The independent Audit Report specifies that the company is engaged in software services. There is no reference in the annual report to indicate that this company is engaged in ITES services. The assessee also could not point to any such information in the annual report. In view of the categorical information in the annual report that the company is engaged in software development services, we hold that this company is software service provider and functionally comparable to the assessee. 8.8.2 It was also contended that the company is engaged in functionally dissimilar activities and ITES activities with reference to certain information said to be available in the company's website. We note that the information put in website cannot be given much credence, as they are mere forward-looking statements with the motive of advertisement and other promotion. Further, the information in website are dynamic and cannot be related to a particular period. The information in the website in the year 2018-19 or 2019-20 will show the functionality for the current period which may be very much different from that existing in 2014-15, the year of scrutiny. There is no way to verify whether the said information have relevance for the year under scrutiny. Therefore, as a principle, this Panel strictly goes by the information in the annual report which is based on audited financial statements, which categorical mentions that the company is engaged in software services. Therefore, we reject the pleas raised and uphold the selection of this company. 8.8.3 Further, we note that from the information available in public database and information collected u/s 133(6), shared with the assessee, it is seen that the company is only engaged in a single segment of routine software development and consultancy and does not own any software product. Hence, we find that this is a comparable. Accordingly, we reject the assessee's plea and uphold this company as a comparable. Also the company in response to notice 133(6) has stated that it is engaged in providing software services and does not own any software product.”

We have perused the orders passed by authorities below, perused the material on record and have given thoughtful consideration to the rival submission. On perusal of the stand alone financial statement of Cybage Software Pvt. Ltd placed at Page 2453 to 2486 of the Paper Book we find that this company is a service company, primarily rendering software services. It does not hold any physical inventories. Therefore, this company is not engaged in sale of software products. On perusal of accounting policies relating to revenue recognition we find that same deals with recognition from revenue from software development services in case of fixed price contracts and/or contracts on time & material basis. The revenue recognition policy does not deal with licensing or sale of software products. Under Segmental Reporting it has been recorded that this Company operates in a single business segment, viz. software development services. Therefore, we do not find any infirmity in the selection of CSPL as a comparable by the TPO. The Assessee has failed to controvert the factual findings returned by the Learned DRP in Paragraph 8.8.1 to 8.8.3 (reproduced in Paragraph 13.3 above). In view of the aforesaid factual findings, the judicial precedents on which reliance was placed by the Assessee do not advance the case of the Assessee. Therefore, we do not find any infirmity in the selection of Cybage Software Private Limited/CSPL as a comparable by the TPO/DRP.

Infosys Limited

The Assessee is aggrieved by the inclusion of Infosys Limited in the list of final comparables and has sought its exclusion on the ground of functional dissimilarity, high brand value, significant research & development and intellectual property, lack of segmental information, difference in size & scale of operations and risk profile (being full-fledged risk bearing entity).

TPO selected Infosys Limited as a comparable and computed PLI as under: Company Name Infosys Ltd. 2014-2015

29 Financial Year Wise OP/OC (%) 2013-2014 2012-2013 Average 36.28 39.25 38.61

We find that the DRP upheld the inclusion of Infosys Limited as a comparable by the TPO holding as under: “8.9.1 Panel: Having considered the submissions, and on perusal of the annual report of the company, we note that this company is engaged in providing IT technology services comprising Application developing and maintenance, Independent validation, testing services, Business service management, consulting and systems integration services. All these activities fall within the gamut of 'software services", though performed in five different business verticals, As per the P&L account, the company has revenue from 'software services of Rs.45,658/- crores and from software products of Rs.1642/- crores (refer page 61 of the annual report), and that the product revenue constitute meagre 3.6% of total operating revenue. Therefore, taking into consideration the various information available in the annual report, and the fact that the company is predominantly having revenue from software services, we are of the considered view that this company can be considered as functionally comparable to the assessee. Accordingly, the plea that the company is engaged in diversified activities is rejected. 8.9.2 It was pleaded that this company has a huge brand which has contributed to its growth in revenue and hence not comparable. A perusal of the annual report show that the growth in revenue was on account of various business initiatives taken to accelerate growth such as internal re-organization, implementing cost effectiveness through reducing cost of operation, improving utilization percentage of employee, restricting the organization for agility by creating smaller and nimbler sales regions, redesigning supply chain functions, reducing attrition rate, increasing the offshore mix, improving delivery expertise etc., As per information in page 14 of annual report, 97.8% of revenues was from repeat business. At page 67 of the annual report, it is discussed, "clients often cite our industry expertise, comprehensive end- to-end solutions, ability to scale, superior quality and process execution, global delivery model, experienced management team, talented professionals, track record and competitive pricing as reasons for awarding contracts. Thus, the growth in revenue is not on account of its brand or any exceptional event, and hence cannot be a reason for rejecting this company, which is otherwise found to be functionally comparable. 8.9.3 The perusal of the details in the annual report show that the company has incurred R & D expenditure to the tune of Rs.605 crores, which constitute meagre 1.3% of its total operating revenue, and which is much less than the generally acceptable tolerable limit of 3% of the total revenue. It is also noted that out of this, only Rs. 15 crore was capital in nature and the remaining Rs.590 crore represented revenue expenditure, which go to show that the R&D initiative are substantially routine for immediate business purposes for developing expertise and improved process execution. It was also pleaded that the company has significant intangibles. However, on perusal of the information at page 86 of the annual report, we note that the value of intangibleconsidering its turnover of Rs.47.300 crore and Asset portfolio of Rs. 7347 crore. We also note assets as on 31.03.2015 was Nil and as on 31.0.2014 was Rs. 13 crore, which is insignificant that, the assessee has failed to establish that such differences, if any, on account of R&D, brand and intangibles have material effect on the margin of the above company, in terms of clause (1) of sub-rule (3) of Rule 10B, which provides that an uncontrolled transaction shall be comparable to an international transaction if none of the differences, if any, between enterprises entering into business transactions or likely to materially affect the profit arising from such transactions in the open market. Hence, these pleas are rejected. 8.9.4 On the plea as to difference in the scale of operations and consequent abnormal profits, we note that turnover does not influence the margins in the service sector. This issue is elaborately discussed at para 7. 3. The fixed costs in the IT industry are insignificant when compared to the manufacturing industry. The major cost in the service sector are variable cost such as salary, travelling expenses, communication expenses, etc. In the absence of any significant fixed costs, the margins in the IT are not linked to the turnover of the company. This can be seen from the fact that many smaller companies also have high profits in this sector. On this issue, the Hon'ble ITAT Delhi in the case of Calibrated Healthcare Systems India Pvt. Ltd (ITA No. 5271/Del/2012), held that 'when a company is a functionally similar to that of the assessee company, the same cannot be excluded merely because its turnover was at a higher or lower level. Here, it is important to mention that Section 92C(1) of the Income Tax Act, 1961 provide for computation of Arm's Length Price by one of the methods prescribed therein. First proviso to Section 92C(2) clearly provides that when more than one price are determined by the most appropriate method, then the Arm's Length Price shall be taken to be Arithmetic Mean of such prices. It does not talk of excluding companies with high or low turnover or high or low profit rate. Further, the Delhi Tribunal in Nokia India Pvt Ltd (ITA No.242/D/2010) has held that a potentially comparable company cannot be excluded for the reason of high or low turnover or high or low profit margin. In reaching this conclusion, the Delhi bench also considered a special bench order passed in the case of Maersk Global Centre India Pvt Ltd. Vs ACIT (2014) 147 ITD 83 (BOM)(SB)'. Similarly, the Hon'ble Mumbai Tribunal in Capgemini, took note of the ITAT, Bangalore decision in Genisys (supra), and other Tribunal decisions to conclude (in Para 5.3.5 & 5.3.6) that there was no such correlation of profit margins with the turnover of the IT companies, which is primarily based on skilled manpower and related costs, and that the classification based on turnover made in Dun and Bradstreet study was not based on prelit margins and hence not relevant. Now, this view also find support from the decision of the Hon'ble Delhi High Court in the (ITA No.417/2014), wherein the Hon'ble High Court in paragraph 33 of the decision held that 'mere circumstances of a company otherwise conforming to the stipulations in Rule 1018(2) in all details, presen.ing a peculiar feature - such as a huge profit or a huge turnover, ipso facto does not lead to its exclusion. The Hon'ble ITAT, Bangalore, in a recent IT(TP) appeal No.1188(Bang) of 2011, dated: 22.04.2016, [2016] 69 Taxman.com 336(Bangalore Trib.) has also held that turnover cannot be a criteria for selection of comparables. 8.9.5 In its latest judgement dated 12/04/2017, the Honourable Income Tax Appellate Tribunal Β' Bench, Bengaluru in IT(TP)A No.502/Bang/2015 (Assessment year: 2010-11) and Cross Objn. No. 139/Bang/2015 (In IT(TP)A No.502/Bang/2015) (Assessment year: 2010-11) in the case of M/s Scancafe Digital Solutions Pvt. Ltd. Vs. Income-tax Officer, Ward 6(1)(1), Bengaluru.... IT(TP)A No.450/Bang/2015 (Assessment year: 2010-11) held as under while dealing with the issue of Turnover Filter:

Ground Nos. 2 and 3 challenge the direction of the DRP applying turnover filter of Rs 1 to Rs.200 crores Though there are decisions to the effect that the companies with the turnover filter of of Rs.1 Rs 200 crores should alone be considered as comparables, this proposition was diluted by the Mumbai bench of IT(TP)A Nox.502 & 450/Rang/2015 Page 22 of 26 the Tribunal in the case of Willis Processing Services (1) P.Ltd. vs. DCIT [TS-49-ITAT-2013(Mum)-TP) wherein it was held that the turnover band of Rs. 1 to Rs 200 crores is bereft of any rationality as the application of this rule does not enable comparison of a company with Rs.200 crores with another company having a turnover of Rs.201 crores. It was further observed by the Hon'ble Tribunal that the turnover was also not a criteria prescribed under rule 10B for selection of comparables. We are also of the considered opinion that the turnover cannot be relevant criteria in a service sector where fixed overheads are nominal and the cost of service is in direct proportion to the services rendered. Following this reasoning we hold that the above companies cannot be excluded from the list of comparables 8.9.6 On the plea regarding high profits, this issue is elaborately discussed at para 7.5 above. It is relevant to refer to the case of Trilogy E-Business Software India Private Limited Vs. DCIT (2013) 29 in ITA No.1108/Bang/2010 and YodlonInfotech Pvt. Ltd. Vx. ITO (2013) 31 taxmann.com 2.30 (ITAT. BNG). In the case of ITO vs. Next Lino India Pvt. Ltd. TS-722-ITAT-2012-Bang-TP the Hon'ble ITAT Bangalore upheld the company with profit margin of 40% holding that in ITES sector this would not constitute extraordinary or super profits. 8.9.7 In the light of rationale laid down in the above decisions, we reject the plea raised by the assessee to exclude this company based on the size and level of operations. In this regard it is relevant to note that the Hon'ble ITAT Bangalore in the case Advice America Software Development Centre Private Limited (in ITA (TP) No. 2531/Bang/2017 dated 23.05.2018 relating to A.Y. 2013-14) rejected the plea of the assessee to exclude a company comparable on the ground of size and level of operations. In view of the above, we uphold this company as comparable to the assessee." During the course of hearing Learned Authorized Representative for the Assessee had placed reliance upon following decision of the Bangalore Bench of the Tribunal passed in appeals pertaining to Assessment Year 2015-2016 wherein Infosys Limited was excluded from the list of comparables selected by the TPO in case of tested party being captive software service provider bearing limited risk: - Synamedia India Pvt. Ltd vs The Deputy Commissioner of Income Tax, Circle 6(1)(2), Bengaluru [IT(TP)A No.2595/Bang/2019, dated 21/10/2022] - LG Soft India Pvt. Ltd. Vs. Deputy Commissioner of Income Tax Circle 4(1)(1) [IT(TP)A No.2412/Bang/2019, dated 31/05/2022]

Per contra Learned Departmental Representative had placed reliance upon the order passed by the Learned DRP reproduced in paragraph 14.3 above.

We have considered the rival contentions and have perused the material on record. The decisions of the Tribunal cited on behalf of the Assessee clearly support the stand taken by the Assessee. The aggregate impact of dissimilarities pointed out by the Assessee is that Infosys Limited cannot be regarded as comparable in view of our observations/findings in paragraph 4.2 to 4.12 above. Accordingly, respectfully following the decision of the Bangalore Bench of the Tribunal in the case of Metric Stream Infotech (India) (P.) Limited (supra) and SAP Labs India Private Limited (supra), we direct exclusion of Infosys Limited from the list of comparables on the ground of functional dissimilarity.

Infobeans Technologies Limited

The Assessee is aggrieved by the inclusion of Infobeans Technologies Limited in the list of final comparables and has sought its exclusion, inter alia, on the ground of functional different.

TPO selected Infobeans Technologies Limited as a comparable and computed PLI as under: Company Name Financial Year Wise OP/OC (%) 2014-2015 2013-2014 2012-2013 Infobeans Technologies Ltd 20.70 31.95

22 Average 27.29

We find that the DRP had upheld the inclusion of Infobeans Technologies Limited as a comparable by the TPO holding as under: “8.10.1 Panel: Having considered the submissions, we note at the outset, that the assessee had selected this company as functionally comparable in its TP study report. However, it has strangely taken a plea that this company is functionally different, without assigning any specific reason. On perusal of the annual report of the company, we find that the annual report clearly depicts that the revenue of the company was from provision of software services and it is also noted that this company has qualified all the filters applied by the TPO. The independent Auditor's report certifies that the company is a service company, primarily rendering software services. Therefore, this company is functionally comparable to the assessee. We note that the assessee referring to some information said to be contained in the website of the company's argued that the company is engaged in diversified activities, and as there is no segmental data, it cannot be taken as comparable. The information said to be contained in the website cannot be given credence. Even otherwise, these activities fall within the ambit of software services, and comparable to the assessee's functions. The TPO has made a detailed discussion in the TP order with reference to various activities of software development. We find the activities of the company fall under the gamut of software development as categorized by the company itself. We do not find any deficiency in the information provided u/s 133(6). Accordingly, we reject this plea. Thus, we find that this company is functionally comparable and accordingly the objections are rejected.” (Emphasis Supplied)

From above it is clear that the Learned DRP had concluded that all the activities carried on by the Assessee broadly fell into the ambit of software development services and therefore, this company was functionally comparable with the Assessee.

We have perused the stand alone financial statements of Infobeans Technologies Limited placed at Page 2682 to 2708 of the Paper Book. The relevant extract of notes forming financial statements reads as under: "Company Overview InfoBeans operating at CMMI level, is at CMMI level 3, is a software services company specializing in business application development for web and mobile. Our business is primarily engaged in providing custom developed services to offshore clients. InfoBeans provides software engineering services primarily in Custom Application Development (CAD), Content Management Systems (CMS), Enterprise Mobility (EM), Big data Analytics (BDA). XX XX

The company overview and revenue recognition policy do not support the stand taken by the Revenue that this company is engaged in providing routine software development services. Further, during the course of hearing Learned Authorized Representative for the Assessee had placed upon following decision of the Bangalore Bench of the Tribunal passed in appeals pertaining to Assessment Year 2015-2016 wherein Infobeans Technologies Limited was excluded from the list of comparables selected by the TPO in case of tested party being captive service provider bearing limited risk: - Metric Stream Infotech (India) (P.) Limited Vs. Assistant Commissioner of Income Tax Circle 4(1)(2) [IT(TP)A No.2347/Bang/2019, dated 24/04/2020] - SAP Labs India Private Limited Vs, JCIT Special Range-6 [IT(TP) No.2506/Bang/2019, dated 25/05/2023]

We have perused the above decisions of the Tribunal, which clearly support the stand taken by the Assessee that this company cannot be considered as comparable to a captive software development service provider on account of different functions and risk profile. Accordingly, respectively following the same we direct exclusion of Infobeans Technologies Limited from the list of comparables.

Larsen and Toubro Infotech Limited (Segmental)

The Assessee is aggrieved by the inclusion of Larsen & Toubro Infotech Limited (SWD Segment) in the list of final comparables and has sought its exclusion, inter alia, on the ground of functional dissimilarity, lack of segmental information, acquisition & amalgamation, existence on intangibles etc.

TPO selected Larsen & Toubro Infotech Limited (Segmental) as a comparable and computed PLI as under: Company Name Financial Year Wise OP/OC (%) 2014-2015 2013-2014 2012-2013 Larsen & Tourbro Infotech Ltd. 24.05 24.61

06 Average 24.91

We find that the DRP had upheld the inclusion of Larsen & Toubro Infotech Ltd. as a comparable by the TPO holding as under: “8.11.1 Panel: It was contended that this company provides wide range of services and also engaged in sale of products and in the absence of segmental information, this company is not comparable. It was contended that L&T Infotech is a brand across globe which has impacted the margins of the company. It was further stated that the acquisition of Information Systems Resources Centre Private Limited, will have an impact on the margins of this company. It was further argued that the company is engaged in trading of goods which is evident from page 1364 of the annual report for F.Y. 2014-15. It was also argued that because of investment in technology absorption and R&D, it should not be considered as comparable. 8.11.2 Having considered the submissions, we note, at the outset, that had selected this company as functionally comparable in its TP study giving the following reasons, "Larsen & Toubro Infotech Limited is an IT service company. The company is engaged in providing Application Maintenance and Development, Enterprise Resource Planning and specialized services like Data Warehousing and Business Intelligence, Testing Services and Infrastructure Management Services. The services offerings are focused mainly towards four verticals namely manufacturing, utilities, financial services and telecom. For the period ended March 31, 2015, March 31, 2014 and March 31, 2013 100 percent of the operating revenues respectively were derived from software development services". However, without giving reasons, it has raised a plea that it is functionally different, when the TPO has selected this company as comparable. Further, we note that this company has two business segments services cluster and industrials cluster operating in software development services. The information in the annual report clearly show that the entire revenue is from provision of software services. As per Note 2, regarding Accounting principle on Revenue Recognition, it is stated that revenue is recognized when services are rendered and related costs incurred; and there is no reference to sale of products. The financial statements do not mention about any product sale or inventory. As there is no revenue stream on account of product sales, we do not find any merit in the argument that the company is engaged in product sales. Accordingly, we hold it as functionally comparable being a software service provider. 8.11.3 It was also contended that the company is engaged in diversified activities with reference to certain information said to be available in the company's web site. At the outset, we note that the information put in website cannot be given much credence, as they are mere forward-looking statements with the motive of advertisement and other promotion. Further, the information in website are dynamic and cannot be related to a particular period. The information in the website in the year 2018-19 or 2019-20 will show the functionality for the current period which may be very much different from that existing in 2014-15, the year of scrutiny. There is no way to verify whether the said information have relevance for the year under scrutiny. Therefore, as a principle, this Panel strictly goes by the information in the annual report which is based on audited financial statements. Even otherwise, the information only refers to software services rendered by the company to various industries and as such this company is functionally comparable. The assessee has also not pointed out specifically as to any non- software service undertaken by this company. Therefore, we reject the pleas raised. 8.11.4 On the pleas as to presence of brand, we note that, there is no specific information in the financial statements to indicate that the brand has contributed to re mue growth of the company. On the other hand, the reference in the annual report mentions that the company's efforts to be cost-effective and agile in contributing value to clients have strengthened its brand. In other words, its operational efficiency has contributed to its revenue growth and brand name and not the other way. There is no information to indicate that the brand has impacted the revenue or profit of the company. The intangibles referred in the Asset Schedule represent the computer software, and business rights and as such does not refer to any IPR or licence owned by the said company as argued. Certain developments are under way which has not crystallized into an intangible to be a source of revenue. Thus, the assessee has failed to establish that such differences have material effect on the margin of the above company, in terms of clause (i) of sub-rule (3) of Rule 108, which provides that an uncontrolled transaction shall be comparable to an international transaction if none of the differences, if any, between enterprises entering into business transactions or likely to masterially affect the profit arising from such transactions in the open market. Hence, these pleas are rejected. 8.11.5 With regard to the acquisition of MIS Information Systems Resources Centre Private Limited, we note that this company has become wholly owned subsidiary operating in the related business of the comparable company. The scheme of amalgamation is yet to be approved by the High Court. As such there is no information in the annual report to indicate that such acquisition has affected the revenue of profit of this company. The financial results of the subsidiary Information System Resource Centre are separately given at page S-1340 of the annual report. Besides, there is no material related party transaction with this subsidiary company, as could be seen from the information at page S-1339 of the annual report. The assessee has not demonstrated, how this acquisition will have positive impact on the profitability of the comparable, if there is no material transaction between them. The TPO has considered standalone financials of this comparable. Hence, we do not find any merit in the assessee's pleas and are rejected. 8.11.6 Further, it is seen that this company was upheld to be functionally comparable to a software service provider company, by the Hon'ble ITAT Bangalore in the case of M/s. Advice America Software Development Centre Private Limited (in ITA (TP) No. 2531/Bang/2017 dated 23.05.2018 relating to A.Y. 2013-14). In view of the above, we uphold the selection of this (TP.) Α. Νο 343/ Bang/2015 & CO No 103/Bang/2015 AY 2010- 11 and DCIT vs. Oracle Solutions Services (India) Pvt. Ltd-TS- 663-ITAT-2017(bang)-TP-T(TP)A No. 880/hang/2013 dated 09.08.2017, the ITAT decided the issue of L&T against the assessee, by holding it to be proper comparable.” (Emphasis Supplied)

During the course of hearing Learned Authorized Representative for the Assessee had placed upon decision of the Bangalore Bench of the Tribunal (including M/s. LG Soft India Pvt. Ltd. Vs. Deputy Commissioner of Income Tax Circle 4(1)(1) [IT(TP)A No.2412/Bang/2019) passed in appeals pertaining to Assessment Year 2015-2016 wherein Larsen & Toubro Infotech Limited was excluded from the list of comparables selected by the TPO in case of tested party being captive service provider bearing limited risk:

Per Contra, the Learned Departmental Representative placed reliance upon the findings returned by the TPO and the Learned DRP.

We have perused the above decisions of the Co-ordinate Benches of the Tribunal cited in behalf of the Assessee and find that the same clearly support the stand taken by the Assessee that this company cannot be considered as comparable to a captive software development service provider on account of difference in functions and risk profile. The Co-ordinate Benches of the Tribunal noted that this company was engaged in trading in software and owned insignificant intangible assets. Further, the break-up of the revenue with regard to software services and software product was not available. The relevant extract of the decision of the Tribunal in the case of M/s. LG Soft India Pvt. Ltd. Vs. Deputy Commissioner of Income Tax Circle 4(1)(1) [IT(TP)A No.2412/Bang/2019, dated 31/05/2022] pertaining to Assessment Year 2015-2016 reads as under: V. L&T Infotech Ltd.:-

The Ld. A.R. submitted that this company has to be excluded from the list of comparables on the following reasons: • L&T Infotech is functionally dissimilar and ought to be rejected. • No segmental details are available in the annual report and hence the company should be rejected. • L&T Infotech has presence of intangibles. • L&T Infotech has presence of brand. • L&T Infotech has incurred brand promotion expense. • L&T Infotech fails upper turnover filter.

1 It was contended by the Ld. A.R. that this company provides wide range of services and also engaged in sale of products and in the absence of segmental information, this company is not comparable. It was contended that L&T Infotech is a brand across globe which has impacted the margins of the company. It was further argued that the company is engaged in trading of goods which is evident from page 1364 of the annual report for FY 2014-15. It was also argued by the Ld. A.R. that because of investment in technology absorption and R&D, it should not be considered as comparable.

2 Ld. DRP observed that, at the outset, the assessee had selected this company as functionally comparable in its TP study giving the following reasons, "Larsen & Toubro Infotech Limited is an IT service company. The company is engaged in providing Application Maintenance and Development, Enterprise Resource Planning and specialized services like Data Warehousing and Business Intelligence, Testing Services and Infrastructure Management Services. The services offerings are focussed mainly towards four verticals namely manufacturing, utilities, financial services and telecom. For the period ended March 31, 2015, March 31, 2014 and March 31, 2013. 100% of the operating revenues respectively were derived from software development services". However, without giving reasons, it has raised a plea that it is functionally different, when the TPO has selected this company as comparable. Further, Ld. DRP also noted that this company has two business segments services cluster and industrials cluster operating in software development services. The information in the annual report clearly shows that the entire revenue is from provision of software services. As per Note 2, regarding Accounting principle on Revenue Recognition, it is stated that revenue is recognized when services are rendered and related costs incurred; and there is no reference to sale of products. The financial statements do not mention about any product sale or inventory. As there is no revenue stream on account of product sales, Ld. DRP did not find any merit in the argument that the company is engaged in product sales. Accordingly, Ld. DRP held it as functionally comparable being a software service provider.

3 On the pleas as to presence of brand, Ld. DRP noted that, there is no specific information in the financial statements to indicate that the brand has contributed to revenue growth of the company. On the other hand, the reference in the annual report mentions that the company's efforts to be cost-effective and agile in contributing value to clients have strengthened its brand. In other words, its operational efficiency has contributed to its revenue growth and brand name and not the other way. There is no information to indicate that the brand has impacted the revenue or profit of the company. The intangibles referred in the Asset Schedule represent the computer software, and business rights and as such does not refer to any IPR or license owned by the said company. Certain developments are under way which has not crystallized into an intangible to be a source of revenue. Thus, the assessee has failed to establish that such differences have material effect on the margin of the above company, in terms of clause (i) of sub-rule (3) of Rule 10B, which provides that an uncontrolled transaction shall be comparable to an international transaction if none of the differences, if any, between enterprises entering into business transactions or likely to materially affect the profit arising from such transactions in the open market. Hence, these pleas of assessee were rejected by the Ld. DRP. 9.4 On the plea as to difference in the scale & size of operations and consequent abnormal profits, Ld. DRP observed that turnover does not influence the margins in the service sector and held that turnover cannot be a criteria for selection of comparables. Hence, these pleas of assessee were rejected by Ld. DRP. 9.5 Further, Ld. DRP observed that this company was upheld to be functionally comparable to as software service provider company, by the coordinate bench of Bangalore in the case of M/s. Advice America Software Development Centre Private Limited (in ITA (TP) No. 2531/Bang/2017 dated 23.05.2018 relating to A.Y. 2013-14). In view of the above, Ld. DRP upheld the selection of this comparable.

6 Against this assessee is in appeal before us.

7

As far as L&T Infotech Ltd. is concerned, the Id. counsel for the assessee brought to our notice the decision of ITAT Delhi Bench in the case of Saxo India Pvt. Ltd. v. ACIT, ITA No.6148/Del/2015 for AY 2011- 12, order dated 5.2.2016, wherein the Tribunal took note of the fact that this company was also trading in software and owned insignificant intangible assets. The company was excluded from the list of comparable companies with reference to SWD services provider such as the assessee. The Id. Counsel pointed out that though this decision was rendered with reference to AY 2011-12, the same reasoning would apply to AY 2015-16 also and in this regard, he drew our attention to page 696 of assessee's PB, which gives the details of the revenue generated by this company without any segmental break-up. Our attention was also drawn to page 682 of PB which shows that there is substantial onsite revenue activity as well as cost incurred on onsite software development. We notice from page 676 of assessee's PB that this company as part of its operating profit in Schedule O of profit & loss account contains expenditure for 'cost of bought out items for resale' and this is a significant part of the operating expenditure. When we see the revenue in Schedule M of the profit & loss account, there is no break-up of the revenue with regard to software services and software product. In our opinion, this distinction is enough to exclude this company from the list of comparable companies as held by the Hon'ble Delhi ITAT in the case of Saxo India Pvt. Ltd. (supra) which decision was also confirmed by the Hon'ble Delhi High Court. Similar view was taken in the case of Yahoo Software Development India Pvt. Ltd. cited (supra), wherein, L&T Infotech Ltd. has been excluded from the list of comparables. Respectfully IT(TP)A No.2412/Bang/2019 M/s. LG Soft India Pvt. Ltd., Bangalore Page 29 of 33 following the above order, we direct the AO/TPO to exclude L&T Infotech Ltd. from the list of comparables.”

In view of the above and respectfully following the above decisions of Co-ordinate Bench of the Tribunal in the case of M/s. LG Soft India Pvt. Ltd. (supra), we direct the TPO/Assessing Officer to exclude Larsen & Toubro Infotech Ltd. from the list of comparables.

Akshay Software Technologies Limited

The Assessee has selected Akshay Software Technologies Limited (for short 'AST') as a comparable and the same was rejected by TPO observing as under: “Akshay Software Technologies Limited (`the Parent') is engaged in providing professional services, procurement, installation, implementation, support and maintenance of ERP products and services, in India and overseas (Page 18 of AR). As reported in Note 25 of the annual report, the company has incurred Foreign Branch Expenditure of INR.18.04 Cr. Against total expenditure INR.21.78 Cr. During the year (85%). Hence operating model of the company is different from the taxpayer. Functionally different. Hence rejected.”

We find that the DRP had upheld the exclusion of AST as a comparable holding as under: “10.1.1 Panel: Having considered the submissions, and on perusal of the annual report we note that, as per information given at page 18 of the annual report, the company is engaged in providing professional services and procurement, implementation and support of ERP products and services in India and Dubai. It is seen from its P&L account, that it has reported revenue from operations of Rs.21,78,73,073/- which comprised revenue from Rs.21,67,50,038/- Commission income of Rs.5,91,033/- and sales of software licence of Rs.5,32,002/-. As per Note 26 at p25 of annual report the revenue from export of software service was Rs19,48,38,068/- and as per Note 25, the foreign branch expenditure was Rs. 18,03,89,196/- As per information at page 2 of the annual report revenue mainly represent income from professional services from Dubai. 10.1.2 In this regard, it is relevant to note that ERP is a multi-layered software that integrates all the different functions within an organization. The ERP implementation requires professionals who have expertise in:- 1) Functional domain (i.e. domain knowledge of the business, its operations & management). 2) Software domain (i.e. technology expertise in software development) 10.1.3 Thus, ERP implementation & support involves personnel from professional domain and technology or software domain. Therefore, such services cannot be strictly said to be software services as non- software personnel may play a dominant role in the implementation. The very fact that this company has described that it had rendered professional services in Dubai, indicate that it pertained to the non- software services; or it is also possible it may be a mix of software services and professional services. As segmental information is not available for the same, we consider it appropriate to hold that this company is not functionally comparable to the assessee. Accordingly, the exclusion of this company is upheld.”

The Assessee is aggrieved by the exclusion of AST from the list of final comparables and has sought its inclusion of the aforesaid comparable selected by the Assessee on the ground of functional comparability, and on the ground that the company passes all filters selected by the TPO.

We have perused the financial statements of AST placed at Page No.2764 to 2790 of the Paper Book. We find that in notes forming part of the financial statements it has been stated as under: "Notes forming part of the financial statements Corporate Information Akshay Software Techonologies Limited ('the Parent') is engaged in providing professional services and procurement, implementation and support of ERP products and services in India and Dubai. During the year under review, the Members approval was obtained for disinvestment of 100% equity stake in the subsidiary company in USA and the subsidiary ceased to be a subsidiary with effect from April 17, 2015 a to f xx g. Inventories Items of inventory are valued at cost or net realizable value whichever is lower. Trading goods cost is determined on FIFO basis. h to k xx XX i. Revenue Recognition Revenues from contracts priced on a time and material basis are recognized when services are rendered and related costs are incurred. Revenues from time bound fixed price contracts, are recognized over the life of the contract using the proportionate of completion method, with contract costs determining the degree of completion. Foreseeable losses on such contracts are recognized when probable. Revenues from maintenance contracts are recognized pro-rata over the period of the contract. Revenues from sale of software licenses, net of discounts are recognized upon delivery of goods to customers. Dividend income is accounted when the right to receive it is established. Interest income is accounted.”

The TPO had taken note of the above while rejecting AST as a comparable. The TPO further noted that AST was following a different operating model from the Assessee and therefore, was functionally different. On perusal of the order passed by the DRP we find that while confirming exclusion of AST the DRP has noted that the Assessee was probably providing a mix of software development services and professional services. During the course of hearing Learned Authorized Representative for the Assessee had placed reliance upon the decision of Co-ordinate Bench of the Tribunal in the case M/s.NXP India Pvt. Ltd. [Successor of NXP Semiconductors India P. Ltd.) Vs. The Deputy Commissioner of Income-tax, Circle 5(1)(1) Bangalore [ITA No.692&2861/Bang/2017, dated 27/04/2020]. In that case AST was held to be a comparable by the Tribunal observing that revenue from software services accounted for 99.45% of the total revenue of this company. The relevant extract if the aforesaid decision reads as under: "IV. AKSHAY SOFTWARE TECHNOLOGIES LIMITED

It was rejected by the TPO for the reason that the function of this company appears to be more in the nature of support services and I.T. enabled services. However, this company is engaged in providing professional services, implementation, support and maintenance of ERP products and other services. These are nothing but software development services, as is evident from Notes forming part of the financial statement, which is placed at paper book page No.1825. Further, the revenue from software services accounts for 99.45% of the total revenue of the company as evident from the financial statement placed on record at paper book page No.1831. Being so, we direct the TPO to consider this company as comparable to the assessee's case while selecting the comparables.”

On perusal of financial statements for the relevant financial year we find that the AST had disclosed revenues and expenditure from sale of software licenses/products separately. A perusal of Note 18 Revenue from operations forming part of the financial statement shows that Assessee had disclosed following revenues. Note 18-Revenue From Operations Income from Services (Refer Note 26) Commissioner Received Sale of software licenses For the year ended March 31, 2015 (INR) 21,67,50,038 5,91,033 5,32,002 21,78,73,073 For the year ended March 31, 2015 (INR) 22,42,87,917 5,62,522 27,28,760 22,75,79,199 Further, in note 21 other expenses cost of services and cost of software licenses was disclosed as under: For the year ended March 31, 2015 (INR) Note 21- Other Expenses Cost of services Cost of Software licenses 37,96,942 1,43,327 For the year ended March 31, 2015 (INR) 1,23,64,843 1,84,356 Particulars Note 25- Expenditure in foreign currency For the year ended March 31, 2015 (INR) For the year ended March 31, 2015 (INR) Foreign Branch Expenditure incurred on accrual basis (net of recovery) Others Total 18,03,89,196 21,264 18,04,10,460 19,31,86,280 12,680 19,31,98,960

It is not disputed that AST had also passed all the filters applied by the TPO. At the same time we note that the 'income from services' and 'cost of services' does not provide break-up between `professional services' and `procurement, implementation and support of ERP products and services'. We note that the DRP has also not returned a clear finding and has concluded that the revenue disclosed 'may be' a mix of software services and professional services. We note that order passed by TPO does not make any reference to notice issued under Section 133(6) of the Act. A perusal of financial statements also makes it clear that the Assessee has been maintaining a foreign branch. While the TPO has observed that the Assessee has been following a different operating model, the Assessee has not placed any material on record to show that the operating model followed by AST would not have any impact on the profit margins. Accordingly, keeping in view the totality of facts and circumstances, we restore the issue of inclusion/exclusion of AST in the list of final comparables that to the file of Assessing Officer/TPO with the direction to adjudicate the same after carrying out proper FAR analysis and making suitable risk adjustments to the extent possible depending upon availability of data. It is clarified that for the aforesaid, the Assessing Officer/TPO shall be free to call for clarification/information under Section 133(6) of the Act provided the Assessee has been confronted with the same and shall be at liberty to utilize after confronting the Assessee with the same. R. Systems International Limited – Segmental 18. 18. 1. The Assessee selected R. Systems International Limited as a comparable and the same was rejected by TPO observing that this company has different financial year ending as compared to the Assessee. TPO noted that the financials were reported for the year ending 31/03/2015.

DRP confirmed the exclusion of this comparables.

The Assessee is aggrieved by the exclusion of R Systems-Seg. From the list of final comparables and has now sought its inclusion.

We note that the DRP has rejected this comparable solely on the ground that this company follows different financial years. The approach adopted by the DRP cannot be accepted as a comparable cannot be rejected solely on the ground of different accounting/financial years provided the results of the relevant financial year can reasonably be extrapolated. [CIT-II Vs. McKinsey Knowledge Centre India Pvt. Ltd: ITA No. 217/2014, Dated 27/03/2015]. Accordingly, we restore the issue of inclusion/exclusion of R. Systems International Limited Segmental in the list of final comparable back to the file of Assessing Officer/TPO for adjudication afresh. It is clarified that in case the Assessee fails to furnish extrapolated financial results for the relevant previous year, the Assessing Officer/TPO shall be at liberty to exclude R. Systems International Limited Segmental from the list of final comparables.

Sasken Communications Technologies Limited (Saksen)

The Assessee has selected this company as a comparable and however, the TPO rejected the same observing as under: “The company is into Embedded design and programming Sasken Communication Technologies Limited ("Saxken" or "the Company") is a leader in providing Engineering R&D and Productized IT services to customers in the Communications & Devices, Retail, Insurance and Independent Software space." (Page 67 of AR). The company offers IC Design, multi-layer analog/RF/high speed digital, mixed signal and high power PCBs boards, post- diagnostics, boot code, board support packages, device drivers, and verification and pre/posg for semiconductor industry validation services Functionally different. Hence rejected.”

We find that DRP confirmed exclusion observing as under: “10.4. 1. Panel: The TPO observed that the company is into embedded design and programming. As per the annual report it is seen that the company offers engineering R&D and productized IT services to customers in Communications and design, retail, insurance and independent software space. The company offers IC design software and similar embedded software for semiconductor industry. Hence it is functionally very dissimilar to the assessee. Accordingly, we hold that the rejection of this company is on right footing.”

Having considered the rival submissions and on perusal of record we are of the considered view that the Assessee has failed to controvert the factual findings returned by the TPO/DRP during the appellate proceedings before this Tribunal regarding functional dissimilarities between Saskan and the Assessee pointed out by the TPO/DRP. There is nothing on record to persuade us to take a different view of the matter. Accordingly, we do not find any reason to interfere with the orders passed by the authorities below rejecting inclusion of Saskan as a comparable.

Working Capital Adjustment

As regards working capital adjustment it has been contented by the Assessee that the TPO/DRP did not provide any working capital adjustment to account for differences in the working capital position of the Assessee vis-à-vis the comparables on the ground that the average working capital would not show the actual working capital employed the comparable companies with the relevant previous year. Further, the details of segmental working capital were, in any case, not available.

We note that TPO/DRP did not grant working capital adjustment

As discussed hereinabove, the process of determining ALP using TNMM requires selection of comparables and adjustment of profit margins to account of economic differences. Working Capital Adjustment is required in case there is difference in working capital requirement of the tested party and the comparable. The determination of ALP using TNMM involves does involve estimation. In our view, the working capital adjustment cannot be denied merely on the ground that average working capital computed on the basis of the annual account may differ from the actual working capital employed by the comparable-company during the relevant financial year. We are of the view that in case the TPO harbored any doubts regarding working capital requirement of the comparables- companies, attempt could have been made to gather the information by issuance of notice under Section 133(6) of the Act.

Rule 10B(1)(e)(iii) of IT Rules specifically provides that net profit margins arising on comparable uncontrolled transactions be adjusted to take into account difference between the enterprise entering into such transactions which could materially affect the amount of net profit margins in the open market. Where data is available in public domain, we are of the view that the primary onus to demonstrate the requirement of working capital adjustment and its quantification in on the Assessee claiming the same. Where the TPO denies such working capital adjustment (say on the ground that the actual working capital during the year differed from the estimated working capital computed as per annual accounts), the onus shifts on the TPO to quantify the working capital adjustment and confront the Assessee with the same along with the relevant data set before rejecting claim working capital adjustment made by the Assessee.

Our above view finds support in OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2017 on which reliance was placed on behalf of the Assessee. Section A.6 of Guidelines on Comparability Adjustments and Paragraph 1 of Annexure to Chapter III provide that (a) working capital adjustment is designed to reflect differing levels of accounts receivable, accounts payable and inventory. Such adjustments should not be performed on a routine or mandatory basis. Rather, the improvement to comparability should be shown when proposing these types of adjustments, and (b) working capital adjustments should only be considered when the reliability of the comparables will be improved and reasonably accurate adjustments can be made. They should not be automatically made and would not be automatically accepted by tax administrations.

Taking into consideration the aggregate facts and our observation/findings hereinabove, we rejected the approach and reasoning of TPO while denying the claim for working capital adjustment made by the Assessee and restore the issue of grant of working capital adjustment back to the file of the Assessing Officer for adjudication afresh in view of observations/findings hereinabove, and with the directions to the Assessee to place before the Assessing Officer/TPO the quantification of working capital adjustment in case of comparables where a reasonable accurate adjustment can be made on the basis of material forming part of the record and available data.

Risk Adjustment

We note that the DRP had declined to grant any direction in relation of non-grant of risk adjustment by the TPO observing that the risk adjustment required two pre-conditions, first existence of difference in the risk level between the assessee/tested party and the comparable-company; and second that such risk was quantifiable. Since both the pre-conditions were not satisfied in case of the Assessee, risk adjustment could not be granted. There is nothing on record to persuade us to take a different view of the matter and therefore, contentions/submission of the assessee on this issue are rejected.

Interest on delayed realization of receivables

We reject the broad contention of the Assessee that the impact of receivables would get factored in working capital adjustment and a separate addition is not required to be made in respect of interest on delay in realisation of outstanding receivables. Firstly, the working capital adjustment is required in case there is difference in working capital requirement of the tested party and the comparable. Generally the working capital adjustment would require adjustment of profits of comparables and the same may not be possible in respect of all comparables (on account of non-availability of relevant data or otherwise). The working capital adjustment takes into account the difference in working capital at entity level, and the same does not require examination of agreed credit terms with specific AEs and the ultimate realisation of outstanding receivables from such AE as per the terms of such arrangement from the perspective of the aforesaid terms/agreement being at arm's length. Further, the delayed realisation of receivables from AE is regarded as a separate international transaction in the nature of financing which is generally required to be benchmarked separately.

However, the case before us pertains to a captive service provider. In a case of where Assessee/tested party is a captive service provider the working capital adjustment would certainly overlap/subsume the impact of transfer pricing adjustment made on delayed realisation of receivables. In our view, when the price charged by the Assessee to its AE for a service is found to be at arm's length after performing working capital adjustment, no further transfer pricing adjustment is required on the issue of delayed receipt of the corresponding receivables. In case it is otherwise and transfer pricing adjustment is warranted, the AO/TPO would be required to re-compute the transfer pricing addition on account of interest on receivables after taking into account the conclusion reached on the issue of working capital adjustment and the impact thereof on the computation of transfer pricing adjustment on delayed realisation of receivables from AEs.

Since in the present case the Assessee/tested party is a captive service provider, our observations in paragraph 22.2 above shall apply. Therefore, the Assessing Officer/TPO is directed to re-computed the transfer pricing addition in respect of interest on delayed realisation of receivables accordingly. For the same, the Assessee is directed to place before the Assessing Officer/TPO working showing the extent to which the working capital adjustment, if any, finally granted to the Assessee would subsume/overlap the transfer pricing additions in respect of interest on delayed realisation of receivables from AEs. In terms of aforesaid, the transfer pricing addition made by the TPO in respect of delayed realisation of receivables from Non-US AEs (since the issue of delayed realisation of receivables from US AEs has been resolved under MAP).

Ground No. 13.1 to 13.3 Mark-up of 5% computed on reimbursement of expenses received by the Assessee from its group companies

The Assessing Officer had made addition of INR.1,36,04,234/- in relation to reimbursements received by the Assessee from its AEs. Out of the aforesaid amount mark-up of INR.1,10,12,508/- pertained to reimbursements received from US AEs and in respect of the same the Assessee was granted relief by way of MAP Resolution passed by the Indian and US Competent Authority. Therefore, the issue before us pertains to the balance addition of INR.25,91,726/- [INR.1,36,04,234/- Less INR.1,10,12,508/-] made by the Assessing Officer in relation to reimbursements received by the Assessee from its Non-US AES.

In this regard we note that the Assessee had recorded that amounts aggregating to INR.272,085,280/- were receivable from group companies towards reimbursements of expenditure. It is the case of the Assessee that the said expenses were incurred by the Assessee on behalf of group companies in relation to the business of the group companies or were the contractual obligation of the group companies which included: Microsoft license fees Self-assessment tax paid on behalf of Indian subsidiary Advance paid to employees whose employment were transferred to group companies outside India Stamp duty on share transfer

Before the Assessing Officer/TPO the Assessee contended that the above reimbursement payments did not have any element of profit. However, the Assessing Officer was not convinced. The Assessing Officer treated the entire amount of reimbursement as expenses incurred by Assessee towards providing ticketing and reservation services to group companies. According to the Assessing Officer the aforesaid ticketing and reservation services were low value-added services in respect of which the Assessee should have earned a mark-up of 5%.

The DRP dismissed the objections raised by the Assessee challenging the above addition.

During the appellate proceedings, the addition on mark up was assailed by the Assessee, inter alia, on the ground that (a) no services were rendered by the Assessee to group companies; and (b) no transfer pricing addition was proposed by the TPO in relation to the same.

We note that in paragraph 17.4 the DRP had recorded in its order as under: “17.4 With reference to the issue of juri iction of AO in raising TP issue post TPO's order, it is explained by the AO in Draft assessment order that the transactions are not correctly, reported by the assessee. Hence, there is a failure on the part of assessee to disclose the true nature of services provided to the group entities. Hence, the issues were not before the TPO while the TP study was conducted. However, once the AO, lifted the corporate veil and verified the transactions, it came to light that these, payments were not mere reimbursements but received in lieu of ...and services rendered. Further the AO has referred the matter back to the TPO u/s 131 and TPO's expert opinion is obtained on the arm's length value of the identified services. In the circumstances, there is no infirmity in the action of the TPO with reference to his juri iction.”

Thus, clearly, no reference was made to TPO on this issue and therefore, no transfer pricing addition could have been proposed by the TPO. It is not the case of the Revenue that the Assessee had not made disclosure in respect of reimbursement of expenses. We find that the Assessee had made following disclosure in relation to reimbursement of expenses: International Transactions as per 3СЕВ Particulars Received/ Receivables Payables Paid Method Reimbursement of expenses to AEs 8,52,02,301/- TNMM Recovery of Expenses from AEs 47,90,05,844/- TNMM

Having perused the material on record we are of the view there is nothing on record to suggest that the Assessee was providing ticketing and reservation services to group companies as alleged by the TPO. While rejecting the contention of the Assessee that the reimbursement of expenses were benchmarked as part of ITeS, the DRP has observed that the Assessee was not under obligation to provide services alleged to have been provided by the TPO and for that reason the same needed to be marked-up. The conclusion drawn by the Assessing Officer that the Assessee was providing ticketing and reservation services to group companies is founded upon the high quantum of reimbursements rather than nature of reimbursement. We note that the contention of the Assessee that the expenses included expenses for (a) Microsoft license fees; (b) Self-assessment tax paid on behalf of Indian subsidiary; (c) Advance paid to employees whose employment were transferred to group companies outside India, and (d) Stamp duty on share transfer was taken note of by the AO/DRP. However, instead of bifurcating the reimbursements payments after examining the underlying facts, the Assessing Officer factored the same while arriving at the ad-hoc rate of mark-up of 5%. In view of the aforesaid, we hold that the approach adopted by the Assessing Officer has no factual or legal basis. In absence of any transfer pricing addition proposed by the TPO in order passed under Section 92CA(3) of the Act, the Assessing Officer could not have made the addition under consideration by merely calling for opinion/report from the TPO under Section 131 of the Act. Therefore, the addition of INR.25,91,726/- made by the Assessing Officer (as mark-up on reimbursement of expenses) cannot be sustained and is hereby deleted.

Conclusion In view of paragraph 4 to 23.8 above: (a) Ground No.1 to 3 raised by the Assessee are dismissed as being general in nature. (b) Ground No. 4, 5 and 6 raised by the Assessee are partly allowed. (c) Ground No. 7 raised by the Assessee is allowed for statistical purposes. (d) Ground No.8 raised by the Assessee is dismissed. (e) Ground No.9 raised by the Assessee are partly allowed. (f) Ground No.10, 11 and 12 raised by the Assessee are dismissed. (g) Ground No. 13.1 to 13.3 raised by the Assessee are partly allowed. Ground No. 14.1 & 14.2

By way of Ground No. 14.1 & 14.2 the Assessee has challenged the addition of interest income of INR.36,40,64,448/-.

The relevant facts in brief are that during the assessment proceedings, the Assessing Officer noticed that the Assessee had given loan to M/s. NTT Data Victorian Ticketing System Pty Ltd (an Australia-based sister concern, earlier called M/s. Keane Australia Micropayment Consortium Pty Ltd, [for short 'KAMCO'] at an interest rate varying from 8% to 12% per annum. However, no interest income from KAMCO had been declared in the books of Assessee for the relevant previous year. In response to a query raised by the Assessing Officer in this regard, the Assessee filed Reply Letter, dated 23.10.2018, stating as under: "The Company has given loan to Keane Australia Micropayment Consortium Pty Ltd ('KAMCO') (now known as NTT DATA Victorian Ticketing System Pty Ltd). During FY 2013-14, the company recorded an interest income of INR 322,064,448 on cash basis. As submitted vide submission dated 28 September 2018, the Company has created provision toward such loan. Given the uncertainties around the collection of the loan and ability of KAMCO to pay interest on loan to the Company, the Company has not accrued any interest income during FY 2014-15 and it will record any interest received from KAMCO on a cash basis."

The Assessing Officer noted that the Assessee had recognized interest income on loan to KAMCO for the immediately succeeding previous year (FY 2015-16). Note 40 of the Annual Report for the Financial Year 2015-2016 recorded as under: "...given the significant uncertainties around collection, the Company account for interest income on cash basis in the year of receipt. During the year ended 31 March 2016, the Company has received interest income of Rs. 39,369,828/-."

Not being convinced with the explanation offered by the Assessee, the Assessing Officer finally made addition of INR.36,40,64,448/- concluding as under: "3.4 Whatever view the assessee takes is immaterial from the perspective of revenue. The law expects assessee to follow a consistent method of accounting. It has to follow either mercantile method or cash method of accounting. It is now a settled issue of law that assessee cannot change its method of accounting to suit itself. If assessee allowed to choose its method of accounting, it will choose the method best suited for it minimise its taxable income.

5 In the case of Sarubhai Chemicals, the issue of whether interest income is to be calculated on accrual basis or on actual receipt basis had come. The Hon'ble Gujarat High Court had stated that interest income should be computed on accrual basis. The Hon'ble Supreme Court had affirmed the order. Assessee has not raised the issue of real income. Even if we apply this test, income has accrued to assessee. Assessee has been paid interest by KAMCO in FY 2013-14 as well as in FY 2015-16. Income is accruing to assessee at 8% (in some cases 12%) of loan given to KAMCO. It is a liability on KАМСО. KAMCO is paying it. Hence, income is real. In this context, the judgment of Hon'ble Supreme Court in the case of State Bank of Travancore Vs. Commissioner of Income Tax [1986] Taxman 337 (SC), dated January 8, 1986 becomes important. The Apex court made the following remark: “The question of how far the concept of real income entered into the question of taxability in the facts and circumstances of this case and how far and to what extent the concept of real income should intermingle with the accrual of income will have to be judged in the light of the provisions of the Act, the principles of accountancy recognised and followed the feasibility. The earlier circulars, being executive in character, could not alter the provisions of the Act. An acceptable formula of correlating the notion of real income in conjunction with the method of accounting for the purpose of computation of income for the purpose of taxation is difficult to evolve. Besides, any strait- jacket formula is bound to create problems in its application to every situation. It must depend on the facts and circumstances of each case when and how income accrues and what consequently follow from the accrual of income. Whether an accrual has taken place or not must, in appropriate cases, be judged on the principles of real income theory. After accrual, non charging of tax on the same because of certain conduct based on the ipse dixit of a particular assessee cannot be accepted. In determining the question whether it is hypothetical income or whether real income has materialised or not, various factors will have to be taken into account. It would be difficult and improper to extend the concept of real income to all cases depending upon the ipse dixit of the assessee which would then become a value judgment only. What has really accrued to the assessee has to be found out, and what has accrued must be considered from the point of view of real income, taking the probability or improbability of realisation in a realistic manner and dovetailing these factors together, but once the accrual takes place, on the conduct of the parties subsequent to the year of closing, an income which has accrued cannot be made no income."

The above addition made by the Assessing Officer in respect of interest income on loan given the KAMCO was confirmed by the DRP holding as under: "18.1 Panel: The AO discussed this issue at Para 3. It is seen that the assessee has taken inconsistent stand on the interest income from KAMCO, an Australia based sister concern. It is seen that the assessee lent to KAMCO for variable interest rate between 8% to 12%. However, the assessee has not admitted the interest income on accrual basis for the reason that the receipt of interest is unpredictable in the light of Governmental review of contracts undertaken by KAMCO. However, the AO examined the issue in detail and observed that the unpredictability is only a perception and not based on facts. It is noted that subsequent to review the Government continued the contracts and KAMCO also the company won the litigation for cost escalation. The AO also observed that in all democratic governmental contracts certain element of calculated risks exist and they are taken into account while entering into contractual terms. The assessee selectively admitted the interest income on cash basis for FY 2013-14 and FY 2015-16 but no interest is admitted for current financial year. Sec 145 of the IT Act provides that the assessee can follow either mercantile system or cash system consistently and not an inconsistent hybrid system. The reliance on accounting standard AS-9 has correctly brought the interest income to tax for this year. Ground rejected.”

Being aggrieved the Assessee has carried the issue in appeal before the Tribunal.

During the course of hearing, the Learned Authorized Representative for the Assessee had placed reliance upon the following extract of written submissions, dated 11/09/2025: “The Appellant humbly submits before Hon'ble Tribunal that the learned AO has erred in making an addition of INR 364,064,448/- towards notional interest income without appreciating the fact that such interest income had not been accrued in the books in accordance with Accounting Standard -9 on Revenue Recognition ('AS9) The Appellant wishes to submit that it had extended total loans amounting to INR 4,115,805,603 (net of repayment of INR 358,440,647) at rates varying from 8% to 12% per annum to NTT DATA Victorian Ticketing System Pty Ltd (formerly known as Keane Australia Micropayment Consortium Pty Ltd or KAMCO) (hereinafter referred to as "NTT DATA VTS'), wherein it had 34.64% equity stake. During the period of November 2010 to May 2012, there were several events which led to the deterioration of the business of NTT DATA VTS. In view thereof, in the financial statements of FY 2011-12 and FY 2012-13, the Appellant had impaired the entire equity investment and created a provision for the entire outstanding loan amount of INR 4,115,805,603 The financial statements pertaining to FY 2011-12 and FY 2012-13 stating the reason for impairment is enclosed as Annexure 4 and Annexure 5 for your reference Further, with effect from January 2012, given the uncertainties around collection of loan and ability of NTT DATA VTS to pay for interest on the loan, the Appellant had not accrued any interest on such loan. The Appellant wishes to submit that the said treatment is in accordance with AS 9. AS 9 is enclosed as Annexure 6 for reference. The relevant paragraph is reproduced below: "Where the ability to assess the ultimate collection with reasonable certainty is lacking at the time of raising any claim, e.g., for escalation of price, export incentives, interest etc, revenue recognition is postponed to the extent of uncertainty involved. In such cases, it may be appropriate to recognise revenue only when it is reasonably certain that the ultimate collection will be made Additionally, we wish to submit before the Hon'ble Tribunal that the books of accounts have been duly audited and the auditor has not qualified the accounts, thereby confirming that the preparation of accounts is correct free from any technical infirmities and also compliant with Accounting Standards. Furthermore, it may be noted that in the assessments of AY 2013-14 and AY 2014-15, the learned AO did not raise this concern. Additionally, the Appellant wishes to submit before your Hon'ble bench that it had received a portion of interest amounting to INR 322,064,488 in FY 2013-14 and INR 39,369,863 in FY 2015-16 which has been offered to tax in the respective years.”

Per Contra, the Learned Departmental Representative placed reliance upon the findings returned by the Assessing Officer and the DRP.

We have taken into consideration the above written submissions as well as the oral submissions advanced by both the sides during the course of hearing.

Before the Assessing Officer and the DRP the Assessee had explained that the interest income in respect of loan granted to KAMCO was not recognised since the realisation of interest was uncertain. Reliance on this regard was placed on Accounting Standards 9 and the Revenue Recognition Policy followed by the Assessee. The aforesaid contentions were rejected by the Assessing Officer. DRP also concurred with the Assessing Officer and confirmed the addition. In the written submissions, dated 11/09/2025, filed by the Assessee it has now been stated as under: "During the period of November 2010 to May 2012, there were several events which led to the deterioration of the business of NTT DATA VTS. In view thereof, in the financial statements of FY 2011-12 and FY 2012-13, the Appellant had impaired the entire equity investment and created a provision for the entire outstanding loan amount of INR 4,115,805,603 The financial statements pertaining to FY 2011-12 and FY 2012-13 stating the reason for impairment is enclosed as Annexure 4 and Annexure 5 for your reference”

We note that the Assessing Officer has recorded that the Assessee had received interest income from KAMCO and had offered the same to tax during the Assessment Year 2014-2015 and 2016-2017. The Assessing Officer took the aforesaid into consideration while concluding that the perception of the Assessee about uncertainty of realisation of interest income receivable from KAMCO after it's accrual could not delay recognition of such income during the relevant previous year. The fact that interest income was offered to tax by the Assessee on receipt basis during the Assessment Year 2014-2015 and 2016-2017 weighed heavily with the DRP as a DRP observed that the Assessee was following a hybrid system of accounting. However, we note that the authorities below failed to take into consideration the fact that during the Financial Year 2011- 12 and 2012-13 the Assessee had impaired the entire equity investment in KAMCO and had created a provision for the entire outstanding loan amount of INR.4,115,805,603/-. It has also been contended by the Assessee that the corresponding Assessment Years 2013-2014 and 2014-2015 no concerns were raised by the Assessing Officer. A perusal of record shows that the aforesaid facts were not properly disclosed by the Assessee before the authorities below. Therefore, neither the Assessing Officer nor the DRP could appreciate the correct facts under which the Assessee had opted to recognize interest income from KAMCO on receipt basis. We note while making the addition the Assessing Officer had placed reliance upon the judgment of the Hon'ble Supreme Court in the case of State Bank of Travancore Vs. Commissioner of Income Tax [1986] Taxman 337 (SC). In that case the Hon'ble Supreme Court has observed that in determining the question whether it is hypothetical income or whether real income has materialised or not, various factors will have to be taken into account. What has really accrued to the assessee has to be found out, and what has accrued must be considered from the point of view of real income, taking the probability or improbability of realisation in a realistic manner and dovetailing these factors together, but once the accrual takes place, on the conduct of the parties subsequent to the year of closing, an income which has accrued cannot be made no income. However, we find the Assessment Order does not contain any reference or discussion on the terms of arrangement/agreement relating to accrual of interest income. We have already noted herein above that the fact that the Assessee had impaired entire amount of equity investment in KAMCO and had created a provision for entire outstanding loan from KAMCO during the Financial Year 2011-2012 and 2012- 2013 did not came up for consideration before the authorities below.

We note that in written submissions, dated 11/09/2025, reproduced in paragraph 25.6 above, it has been stated that `with effect from January 2012, given the uncertainties around collection of loan and ability of NTT DATA VTS to pay for interest on the loan, the Appellant had not accrued any interest on such loan'. Whereas in the Letter, dated 10/10/2025, filed with The Branch Manager, Citi Bank N.A. [furnished during the course of hearing], the Assessee has stated that accrual of interest was stopped from July 1, 2013. The relevant extract of the said letter reads as under: “We wish to highlight that, owing to financial difficulties and inability to repay the outstanding amounts NTT DATA VTS stopped accruing interest in its books of accounts with effect from 1 July 2013. This is also in accordance with prudent accounting principles followed by NTT DATA VTS. ........ (Emphasis Supplied)

Keeping in view the totality facts and circumstances of the present case, we set aside the addition of INR.36,40,64,448/- made by the Assessing Officer in respect of interest on loan given to KAMCO with the directions to adjudicate the same afresh after granting the Assessee a reasonable opportunity of being heard. The Assessee is directed to placed before the Assessing Officer the complete set of facts and supporting documents relating to the loan transaction with KAMCO, impairment of entire amount of equity investment in KAMCO and creation of provision for entire outstanding loan from KAMCO. The Assessee is also directed to place before the Assessing Officer the financial statements and other supporting evidence to establish the uncertainty in realisation of interest. In terms of aforesaid, Ground No.14.1 & 14.2 raised by the Assessee is allowed for statistical purposes. Ground No. 15

Ground No.15 raised by the Assessee is directed against the denial of credit for prepaid tax claimed by the Assessee in the revised return of income.

We have heard both the sides and have perused the material on record.

It has been contended by the Assessee that three entities i.e. NTT Data India Enterprise Application Services Private Limted, Keane International (India) Private Limited and Optimal India Delivery Services Private Limited had merged into the Assessee Company. Pursuant thereto, the Assessee filed revised return of income on 31st March, 2017 offering to tax the income of the aforesaid three companies and claiming corresponding credit for prepaid taxation as reflected in Form 26A of the said companies. The Assessing Officer accepted the income offered to tax but denied credit of corresponding credit for prepaid tax claimed by the Assessee. The Assessee placed on record following details regarding the merger and the prepaid taxes (as reflected in Form 26AS): (a) Details of merged companies and the orders passed by the Hon'ble High Courts Merger - Entity First Order Second Order NTT DATA India 10 July 2013 in the High Enterprise Application court of Andhra Pradesh Services Private Limited 3 September 2013 in the High court of Delhi Keane International 6 July 2009 in the High 17 July 2009 in the High (India) Private Limited Court of Deihi court of Karnataka Optimal India Delivery Private 8 September 2015 in the Services Limited High court of Karnataka 3 February 2016 in the High Court of Delhi (b) The break-up of credit of prepaid taxes claimed by the Assessee in its ROI filed for AY 2015-16 is captured below: Entity TDS credit available as Form 26AS TDS credit claimed in ITR TDS credit allowed in the AO order TDS credit to be granted NTT DATA GDS 9,42,90,029 11,30,95,373 9,42,90,029 (AABCK777J) Keane International 600 600 (AAAC14796E) NTT DATA EAS (AAACI7064D) NTT DATA Optimal (AAACO8615N) Total 55,72,804 1,32,31,940 55,72,804 1,32,31,940 11,30,95,373 11,30,95,373 9,42,90,029 188,05,344

In the case of Marshall Sons & Co (India) Ltd. v. Income-tax Officer [1997] 223 ITR 809 (SC), the Hon'ble Supreme Court has held that merger becomes effective from the appointed date of merger. The Assessee had filed revised return offering to tax income of the merged companies. It is claim of the Assessee that the aforesaid income offered to tax has been accepted but credit of corresponding prepaid taxed has not been granted. Therefore, we deem it appropriate to direct the Assessing Officer to verify the records and grant credit of prepaid taxed as reflected in form 26AS of the merged companies provided the Assessee has offered the corresponding income to tax in the revised return of income filed on 31/03/2017.

In terms of above, Ground No. 15 is allowed for statistical purposes. Ground No.16

Ground No.16 raised by the Assessee pertains to initiation of penalty proceedings under Section 271(1)(c) of the Act which are separate and distinct from the assessment proceedings. Therefore, Ground No. 16 is dismissed as being premature in nature.

In terms of above, the present appeal preferred by the Assessee is partly allowed Order pronounced on 26.02.2026. (Padmavathy S) Accountant Member मुंबई Mumbai; दिनांकDated : 26.02.2026 Milan, LDC (Rahul Chaudhary) Judicial Member IT(TP)A No.2533/Bang/2019