IN INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I-1 : NEW DELHI) BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER and SHRI KULDIP SINGH, JUDICIAL MEMBER ITA No.937/Del./2014 (ASSESSMENT YEAR : 2009-10) Schneider Electric India Pvt. Ltd., vs. DCIT, Circle 7 (1), 9th Floor, Tower C, Building 10, New Delhi. DLF Cyber City, Phase II, Gurgaon 122 002 (Haryana). (PAN : AABCS1624G) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri K.M. Gupta, Advocate REVENUE BY : Ms. Swati Joshi, CIT DR Date of Hearing : 23.08.2016 Date of Order : 29.09.2016 ORDER PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, M/s. Schneider Electric India Pvt. Ltd. (hereinafter referred to as assessee ), by filing present appeal sought to set aside order passed by AO/TPO/DRP under section 143 (3) read with section 144C of Income-tax Act, 1961 (for short Act ) qua assessment year 2009-10 on grounds inter alia that :- 2 ITA No.937/Del./2014 TRANSFER PRICING ('TP') MATTERS On facts and circumstances of case, and in law: 1. Ld Assessing Officer ('AO') pursuant to directions of Hon'ble Dispute Resolution Panel ('DRP') erred in making transfer pricing adjustment of Rs.101,88,29,361/- to income of appellant by holding that international transaction pertaining to its manufacturing segment, distribution segment and research and development (R&D)support services segment of appellant does not satisfy arm's length principle envisaged under Income-tax Act, 1961 ('the Act'). Manufacturing Segment 2. Ld AO/Transfer Pricing Officer ('TPO') erred in enhancing income of appellant by making TP adjustment of Rs.60,14,65,390 on account of manufacturing segment while passing rectification order u/s 154 of Act and not allowing adjustment claimed by appellant in its TP study which is allowed in order passed by Ld TPO u/s section 92 CA(3) of Act dated January 30, 2013. 3. Ld. AO ID RP ITPO erred in enhancing income of appellant by making TP adjustment \ of Rs.60,14,65,390 on account of manufacturing segment of appellant by erroneously rejecting appellant's segmentation of its account for TP purpose as undertaken in TP Study. 3.1 Without prejudice to ground number 3 and as alternate, Ld AO/TPO/DRP erred in failing to consider that in any event, only proportionate TP adjustment should have been made in appellant's case under Transactional Net Margin Method ('TNMM'). 3.2 Ld AO/TPO/DRP erred in failing to appreciate that international transactions of appellant relating to its manufacturing segment would meet arm's length principle even on transaction-by-transaction basis. Distribution Segment 4. Ld. AO/DRP /TPO erred in enhancing income of appellant by making TP adjustment of Rs.37,58,66,000 on account of distribution segment of appellant and in doing so have grossly erred in not allowing adjustment on account of customs duty and adverse movement of foreign exchange claimed in TP Study. 3 ITA No.937/Del./2014 4.1 Without prejudice to ground 4 above, Ld AO/TPO/DRP erred in failing to consider that in any event, only proportionate TP adjustment should have been made in appellant's case under TNMM. R&D Support Services Segment 5. Ld AO/TPO/DRP erred in enhancing income of appellant by making TP adjustment of Rs.4,14,97,971 on account of R&D support services segment of appellant and in doing so have erred by distorting comparability analysis conducted by appellant in TP Documentation. CORPORATE TAX MATTERS 6. That on facts of case and in law, Assessment Order passed by Ld. AO under section 143(3) read with section 144C of Act is bad in law in confirming additions made in draft assessment order passed under section 144C of Act without considering submissions made by appellant. 7. That on facts of case and in law, Ld AO/Ld. DRP has erred in disallowing 3/4th of Advertisement and Sales promotion expenses amounting to Rs.6,32,85,750 by erroneously holding that such expenditure is enduring in nature and thus, in nature of deferred revenue expenditure. 8. That on facts of case and in law, Ld AO/Ld. DRP has erred in disallowing 4/5th of Recruitment expenditure amounting to Rs.1,12,88,617 by erroneously holding that such expenditure is enduring in nature and thus, in nature of deferred revenue expenditure. 9. That on facts of case and in law, Ld AO/Ld. DRP has erred in disallowing 3/4th of Licenses and Permits expenditure amounting to Rs.1,69,93,222 by erroneously holding that such expenditure is enduring in nature and thus, in nature of deferred revenue expenditure. 10. That on facts of case and in law, Ld. AO/Ld. DRP has erred in not allowing appellant eligible deduction under section 10A of Act amounting to Rs.3,53,38,348. 10.1 That on facts of case and in law, Ld. AO/Ld.DRP has gravely erred in not excluding income of section 10A unit amounting to Rs.3,53,38,348 at source itself before arriving at gross total income of appellant. 4 ITA No.937/Del./2014 11. Without prejudice to above Ground No.7, 8 and 9, Ld. AO ought to be directed to recompute deduction under section 10A of Act after considering disallowance of expenses viz. Advertisement and sales promotion expenditure, Recruitment expenditure and Licences and permits expenditure and excluding any adjustment under section 92C(4) of Act in view of proviso to section 92C(4) of Act. 12. That Ld. AO has grossly erred in law in levying interest under section 234B and 234D of Act and also withdrawing interest under section 244A of Act. 13. That Ld. AO has grossly erred in law in initiating penalty proceedings under section 271(1)(c) of Act. 2. Briefly stated facts of this case are : assessee company, Schneider Electric India Pvt. Ltd. (SEIPL), is wholly owned subsidiary of Schneider Electric Industries SA, France is into manufacturing of low voltage and medium voltage equipment, Moulded Case Circuit Breakers (MCCBs), RM6, Contractors, Push Buttons, low voltage control panel, medium voltage control panel and Ring Master Units. Assessee company is also engaged in distribution of imported electrical distribution equipments, various types of components for manufacturing of law voltage and medium voltage electrical distribution equipment and export them to its Associated Enterprises (AEs) and these equipments are manufactured by utilizing of raw materials procured from domestic unrelated parties. During year under consideration, assessee company has also rendered IT related and other services to its overseas affiliates on limited basis i.e. : 5 ITA No.937/Del./2014 (a) e-Content / e-Catalogue services; (b) R& D support services; and (c) Business support services. 3. During year under assessment, assessee company entered into following international transactions :- S.No. Nature of International Amount (in TP Transaction INR) Method (Book Value) 1. Import of components 1,723,098,003 TNMM (Manufacturing Function) 2. Export of manufactured goods 992,576,284 TNMM (Manufacturing Function) 3. Import of capital equipment 2,916,697,233 TNMM (Trading Function) 4. Import of capital equipment 101,075,273 TNMM 5. Payment of royalty 154,278,694 TNMM 6. Provision of repair & 5,664,371 TNMM maintenance services (received/receivable) 7. Receipts of repair & 125,894 TNMM maintenance services (paid/payable) 8. Receipt of IT support services 184,544,993 TNMM (paid/payable) 9. Receipt of management support 150,688,232 TNMM services (paid/payable) 10. Payment of project support fees 48,609,747 TNMM (paid/payable) 11. Provision of e-conduct/ e- 103,344,044 TNMM catalogue Services (receives/receivable) 12. Provision of business support 107,554,362 TNMM services 13. Provision of research & 682,422,512 TNMM development ( R&D ) services (received / receivable) 14. Reimbursement of expenses 98,050,206 TNMM (paid/ payable) 15. Recovery of expenses 62,624,694 Refer Para (received / receivable) 1.15 4. For benchmarking, ld. TPO has confined himself to manufacturing segment, trading segment and R&D segment. 6 ITA No.937/Del./2014 Assessee in its Transfer Pricing Report (TP Report) used previous data to benchmark international transactions and has selected OP / Sales as PLI. Assessee worked out weighted average of OP/Sales of 7 comparables at7.44%, calculated average of raw material import of total raw material at 17.03% in comparables as against 83.68% of assessee. For international transactions of manufacturing export to AEs , assessee has taken OP/Sales as PLI with greater average of 7 comparables at 9.55% as against 27.97% of assessee. 5. TPO, however, called upon assessee to use contemporaneous data and to file audited margin of comparables by using data for financial year 2008-09 which assessee has provided. mean margin of OP/Sales of 7 comparables at 7.88% is proposed to be used as Arms Length Margin for computing Arms Length Price (ALP) in this segment in place of margin of tested party which is computed at minus 4.89% on basis of which TPO proposed adjustment of Rs.7832.55 lakhs with manufacturing segment detailed as under :- Particulars Total Sales net of excise 61,357.96 Arm s length margin @ 7.88% 4835 Margin of assessee -2997.55 Difference in margin 7832.55 7 ITA No.937/Del./2014 Adjustment proposed to be made 7832.55 6. After considering reply filed by assessee to proposed adjustment qua manufacturing segment, TPO came to conclusion that assessee has created artificial segment for purpose of transfer pricing which cannot be accepted on ground that similar issue was involved in AY 2008-09. 7. TPO taken Net Profit Margin (NPM) for this segment at 1.64% already calculated in show-cause notice. So, ultimately TPO came to conclusion that since price charged by assessee was more than 5% from value of international transaction, adjustment of Rs.7832.55 lakhs is to be made to income of assessee. 8. So far as trading segment is concerned, TPO noticed from Annexure D-5 to TP Report that operating profit to sales ratio in case of assessee is minus 4.63% and assessee carried out adjustment by claiming that it is importing 100% of finished goods being sold by it as against average 6.12% of import contents in trading functions of comparable selected by assessee company and calculated adjusted NPM at 13.97% but assessee has failed to provide any basis as to how adjustment has been made. After considering reply filed by 8 ITA No.937/Del./2014 assessee company, ld. TPO came to conclusion that assessee has only made adjustment i.r.o. AEs trading transaction and refused to entertain contention of assessee as to proportionate adjustment and thereby computed adjustment of Rs.3758.66 lakhs in trading segment. 9. So far as benchmarking of international transactions relating to contract R&D is concerned, assessee s unit is registered under Software Technology Park of India (STPI) and assessee has benchmarked aforesaid international transaction using Transactional Net Margin Method (TNMM) and PLI of NPM. So, choosing 14 comparables in TP Report and by using 3 years data calculated weighted average arithmetic mean of NCP margin at 11.50%. adjusted margin of assessee was calculated at 11.30% and assessee has suo motu carried out adjustment of Rs.411 lakhs under this segment. However, assessee was called upon to furnish updated margin of 14 comparables which assessee has furnished. Ld. TPO, after considering reply filed by assessee and contention that assessee is exempted u/s 10A, came to conclusion that adjustment of Rs.6,00,92,904/- is required to be made as price charged by assessee varies more than 5% for value of international transaction being difference between ALP and 9 ITA No.937/Del./2014 price charged by assessee from its AEs for export of services and thereby enhanced income of assessee by amount of Rs.6,00,92,904/- in respect of international transactions for provision of R&D of software services. 10. TPO also enhanced income of assessee qua manufacturing segment at Rs.78,32,55,000/- and further made adjustment of Rs.37,58,66,000/- qua tradings segment transactions. 11. Assessee company carried matter by raising objections before ld. DRP which has upheld order passed by ld. TPO. Feeling aggrieved, assessee has come up before Tribunal by challenging impugned order passed by AO/TPO/DRP by way of present appeal. 12. We have heard ld. Authorized Representatives of parties to appeal, gone through documents relied upon and orders passed by revenue authorities below in light of facts and circumstances of case. Our ground-wise findings are as under :- GROUND NO.1 13. Ground No.1 is general in nature which has been supplemented in detail in other grounds raised by assessee, 10 ITA No.937/Del./2014 hence needs no specific adjudication. So, we accordingly decide same. TRANSFER PRICING (TP) GROUNDS GROUNDS NO.2, 3, 3.1 & 3.2 14. In ground no.3, assessee raised contention that TP adjustment to tune of Rs.60,14,65,390/- has been made by Dispute Resolution Panel (DRP)/TPO/AO without considering additional evidence brought on record by assessee. Prime contention raised by ld. AR for assessee to TP adjustment to tune of Rs.60,14,65,390/- qua manufacturing segment is that transaction by transaction approach needs to be followed for benchmarking international transaction and to select its AEs as tested parties. 15. To decide issue in controversy, we would like to examine TP approach adopted by ld. TPO qua TP adjustment of manufacturing segment, which is reproduced for ready perusal as under :- 3. BENCHMARKING OF MANUFACTURING BELATED TRANSACTIONS 3.1 assessee has benchmarked above stated international transactions using Transactional Net Margin Method. tested party margin for this segment has been calculated as below :- 11 ITA No.937/Del./2014 Particulars Import of Manufacturing components, and export to manufacturin AEs g and sales to Non AEs Sales net of excise 24,982.14 9,736.05 Total expenses 24,773.04 7.012.86 Operating profit 209.10 2,723.19 OP/OC 0.84% 38.83% OP/Sales 0.72% 27.97% 3.2 In order to benchmark international transactions in Manufacturing segment, assessee in transfer pricing report has selected 7 comparables which ore reproduced hereunder: S.No. Company Name 1. Havell'S India Ltd 2. Indo Asian Fusegear Ltd 7. JSL Industries Limited 6. K. Dhandapani & Co. Ltd. 5. Kaycee Industries Ltd 3. Reed Relays & Electronics India Ltd 4. Salzer Electronics Ltd 3.3 In TP Report three year's data has been used to benchmark international transactions. For international transactions of "Manufacture using imported components and sold to Non AE's" assessee has selected OP/Sales of as PLI. weighted average OP/Sales of 7 comparables has been worked out at 7.44%. Further, average of raw material imports to total raw materials and spares was calculated at 17.03% in comparables as against 83.68% of assessee. NPM for manufacturing was adjusted for ratio of high imports in case of assessee and adjusted NPM was calculated at 12.29% (Appendix C5 of TP Report) as against net level loss of - 3.33%. 3.5 For international transactions of "Manufacture and exports to AEs" assessee has selected OP/sales as PLI. weighted average OP/sales of 7 comparables has been worked out at 9.55% as against 27.97% of assessee. 3.6 It was noticed from submission dated 16.04.2012 that six segments have been created for benchmarking purposes. 12 ITA No.937/Del./2014 Besides there are four segments in which there are stated to be no international transaction. It is noticed from this chart furnished by assessee that there is one segment by name of Manufacturing (TP) and there is another segment Manufacturing (Local]. Vide order sheet dated 12.06.2012, assessee was asked to explain as to how segments have been drawn and to explain key to allocation. assessee, vide submissions dated 08.10.2012, submitted reply. However it is seen that: there are no cogent reasons for creating artificial segmentation for purposes of transfer pricing. From examination a/segmentation carried out for TP purposes it is noted that this inter-se segmentation artificially created by bifurcating manufacturing function is not supported by audited financials. segmentation for TP purposes is also not supported by audited AS-17 segmented financials. 3.7 In view of above discussion, it is proposed to aggregate all manufacturing segments. results are computed as under: (Amount in Rs.Lacs) Particulars Import of Manufacturing Manufacturing Total components and export to Local manufacturing AEs and sales to Non AEs Sales net of 24,982.14 9,736.05 26639.77 61357.96 excise Total 24,773.06 7,012.86 32569.61 64355.51 expenses Operating 209.10 2,723.19 -5929.84 -2997.55 profit OP/OC -4.66% OP/Sales -4.89% On basis of above analysis and it is proposed to aggregate all artificially created segments under manufacturing functions and calculate tested party margin of this segment using aggregated financials. It is proposed to adopt tested party margin using OP/Sales as PLI for this segment at (4.29)%. 3.8 In view of fact that Rule 10D(4) requires only contemporaneous data to be used, updated margins of above com parables using data for FY 2008-09 were called for which have been submitted vide submission dated 22nd October, 2012 and are reproduced as under. S.No. Company Name OP/Sales (%) 1. Havell'S lndia Ltd 8.68 13 ITA No.937/Del./2014 2. Indo Asian Fuseqear Ltd 13.48 3. JSL Industries Limited 5.42 4. K. Dhandapani & Co. Ltd. 2.36 5. Kaycee Industries Ltd 5.22 6. Reed Relays & Electronics India 10.69 Ltd 7. Salzer Electronics Ltd 9.34 Mean 7.88% 3.9 comparables selected by assessee are thus proposed to be used for purpose of benchmarking. Single year's data is proposed to be used. mean margin OP /Sales of 7 Comparables 7.88% is proposed to be used as arm's length margin for computing arm's length price in this segment, in place of margin of tested party which is computed at 4.89%. Thus amount of adjustment proposed is computed as under: Particulars Total Sales net of excise 61,357.96 Arm s length margin @ 7.88% 4835 Margin of assessee -2997.55 Difference in margin 7832.55 Adjustment proposed to be made 7832.55 As computed above, adjustment of Rs: 7832.55 Lakhs is proposed to be made in manufacturing segment 5.6 REPLY OF ASSESSEE assessee in reply to show-cause notice issued, has furnished reply dated 24.01.2013, in which assessee has taken following arguments: assessee has stated that 'Manufacturing Local segment' was created because this segment contains majority of domestic transactions and does not involve significant international transactions. imported raw material components constitute only 15% of total cost for manufacture of final products, whereas in 'Manufacturing imported segment', these account for more than 80% of total cost. Assessee has relied upon Rule 10B(l)(e) wherein definition of TNMM has been given to state that NPM margin pertaining to 'Manufacturing Local Segment' involves negligible international transactions and 'Manufacturing Exports Segment' was not comparable. 14 ITA No.937/Del./2014 Assessee has slated that ambit of segmentation under transfer pricing is much wider than objective of segmentation as mandated under AS-17. assessee has stated that basis of allocation of expenses has been broadly explained. Based on above arguments, assessee has stated that bifurcation of manufacturing into sub-segments was justified from TP perspective. Consideration of reply of assessee with respect to bifurcation of 'Manufacturing Function Segment': 5.7 above stated reply of assessee has been examined and considered. various contentions made by assessee have also been considered. It is observed that assessee has in fact artificially segregated its manufacturing function segment for TP purposes so as to arrive at inflated tested party margin to bring it within arm's length range. This conclusion is based on following irrefutable facts: i) reasons given for excluding 'Manufacturing Local Segment' are not convincing. assessee has stated that imported raw material components constitute only 15% of total cost for manufacture of final products. Thus, assessee has itself admitted that this 'Manufacturing Local Segment' does include international transactions relating to import of raw material components. assessee in its later part of its reply has also admitted that this segment also includes allocated costs. assessee has been again unable to explain or justify as to how these international transactions under 'Manufacturing Local Segment' are getting benchmarked under TNMM by excluding this segment altogether from its benchmarking analysis. Therefore, contentions with regard to non inclusion of this segment are rejected. However, contentions regarding segregation of this segment at all are considered separately. ii) assessee has stated that they have now got their accounts audited and for above segmental accounts, assessee has furnished certificate from Pankaj Billa & Co., Chartered Accountants dated 21.01.2013. In above stated certificate, Firm of CA has only certified what assessee had carried out in its TP report. No basis for above certification has been given by auditors except for reiterating what assessee had itself carried out in its TP report. This post-facto certificate is not valid because of following reasons: segmentation carried out for TP purposes is not supported by audited AS-17 financials. original auditors of company, S R Batliboi & Associates have carried out segmentation on basis of 15 ITA No.937/Del./2014 Accounting Standard AS-l1 issued by Chartered Accountants of India. segmental reporting is with respect to primary business segments, i.e. industrial, electrical and electronics items. other segment is segment relating to services segment which includes research and other services provided to group companies. segment accounting policies have been specifically laid out in Note B of Schedule 19 to accounts. No such sub segmenting has been carried out by original auditors of company. Certain expenses have been allocated on basis of certain keys such as 'hours spent', 'net sales', 'fixed assets' and 'usage'. These allocation keys are not defined so as to arrive at accurate allocation. It may be mentioned that in Audited Report which was prepared on basis of actual audit and physical verification, no such differentiation has been reported by Auditor. claim made by assessee in certificate is based on artificial assumption, which is not substantiated by audited accounts. iii) contentions of assessee as per definition under Rule 10B (l)(e) for TNMM and reliance on judgments in cases of E-gains and Mentor Graphics also does not help case of assessee, wherein assessee has argued that to make one of segments comparable, results of other comparable segments need to be artificially segregated and then completely excluded from benchmarking analysis. 5.8 On basis of above analysis and discussions it is clear that assessee has created artificial segments for purpose of transfer pricing which cannot be accepted. Similar issue was involved in AY 2008-09, where tile assessee had preferred filing of objections before DRP. DRP-II, New Delhi vide its directions, bas declined to interfere in order passed by TPO and has confirmed action of taking manufacturing segment has whole. In view of this tested party margin with respect to 'Manufacturing Function Segment' is held to be total income and expense in this segment. net profit margin (NPM) for this segment shall be taken at 1.64% as calculated in show- cause notice. 5.9 There is no dispute over selection of comparables. margins of com parables are to be considered for FY 2008- 09 as discussed in preceding paragraphs w.r.t use of current year data. other issue involved is computation of adjustment. assessee is essentially computing quantum of adjustment taking benefit of +/-5%. assessee has contended that benefit of plus minus S% as stipulated in section 92C(2) of Act should have been given to it. taxpayer's above objection is not 16 ITA No.937/Del./2014 acceptable in view of amendments made in income tax act and various case laws. 5.10 In view of detailed discussions in foregoing paragraph quantum of adjustment to be made is computed as under: Particulars Total Sales net of excise 61,357.96 Arm s length margin @ 7.88% 4835 Margin of assessee -2997.55 Difference in margin 7832.55 Adjustment proposed to be made 7832.55 5.11 Since price charged by assessee varies by more than 5% from value of international transactions, adjustment of Rs.78,32,55,000/- is to be made to income of assessee in Contract R&D Segment, being difference between arm's length price and price charged by assessee from its AEs for export of services. Assessing Officer shall enhance income of assessee by amount of Rs.78,32,55,000/- while computing its total income. 16. ld. TPO declined to entertain contentions raised by assessee to adopt transaction by transaction approach on ground that assessee has artificially segregated its manufacturing segment function for TP purposes in order to determine inflated tested party margin to bring its transaction in arms length range. TPO also declined to entertain reason given by assessee for excluding manufacturing local segments being not convincing as assessee has itself admitted that manufacturing local segment includes international transaction relating to import of raw material component. TPO also observed that assessee has failed to explain / adjustment as to how this international transaction under manufacturing local segment are getting 17 ITA No.937/Del./2014 benchmark under TNMM by excluding this segment form its benchmarking analysis. TPO has also not admitted certificate for audited segmental accounts given by Pankaj Billa & Co., CA dated 21.01.2013 on grounds inter alia that this is post facto certificate not supported by AS-17 financials; that certain expenses have been allocated on basis of certain keys, such as, hours spent , net sales , fixed assets and usage which are not defined in order to arrive at accurate allocation. TPO also relied upon order passed by ld. DRP in assessee s own case qua AY 2008-09 wherein manufacturing functions segment is held to be total income and expenses in this segment and as such, has preferred to benchmark transaction by aggregating all segments. 17. Undisputedly, comparables selected by assessee for benchmarking have been adopted by ld. TPO with rider that margin of comparables are to be taken for FY 2008-09 by using current year data only. 18. ld. AR for assessee contended that ld. TPO has erred in not considering additional evidences brought on record by assessee before ld. DRP to substantiate transaction by transaction approach adopted by assessee for benchmarking international transaction regarding manufacturing segment and 18 ITA No.937/Del./2014 to select its AEs as tested party. Undisputedly, additional evidences brought before ld. TPO are available at pages 375 to 450 of Paper Book-1, which are comprehensive enough to determine if benchmarking of international transactions qua manufacturing sector is required to be made by adopting transaction by transaction approach. 19. Bare perusal of TP order goes to prove that additional evidences brought on record by assessee in order to support its contention to adopt transaction by transaction approach for benchmarking international transaction and to select its AEs as tested party has neither been discussed nor answered by ld. TPO. 20. Likewise, additional evidences brought before ld. DRP available at pages 550 to 597 of Paper Book-1 have also neither been discussed nor replied with by ld. DRP. 21. Identical issued was come up before Tribunal in assessee s own case qua AY 2007-08 and AY 2008-09 wherein matter has been set aside to AO for fresh adjudication, operative part of order passed by coordinate Bench of Tribunal in assessee s own case for AY 2008-09 in ITA No.6281/Del/2012 is reproduced for ready perusal :- 19 ITA No.937/Del./2014 5. We have heard both sides on issue. We have also gone through written submissions made. ITAT in assessee s own case Assessment Year 2007-08 in ITA No.5728/Del/2011 dated 22.11.2012 has restored issue to file of Assessing Officer. relevant portion of order of ITAT is as under :- 5. Considering above submissions we find that in case Kyungshin Industrial Motherson Ltd. (Supra) primary contentions of assessee involved was regarding analysis of suppliers' profitability for imports and limiting variation on account of transfer pricing only to proportion of related party transactions. authorities below did not address issues for want of data. Tribunal acceded to assessee's plea for accepting these additional evidences and remanding matter to authorities below for fresh adjudication. Again in case of Quark Systems India Pvt. Ltd. (Supra) Special Bench of Tribunal has held that appellant can not be estopped from highlighting mistakes in assessment even though such mistake is result of evidence adduced by tax payer. We find that in present case assessee has also collated supplementary evidence to corroborate arm's length nature of its international transactions in adherence to principles and contentions made before authorities below. We thus in interest of justice set aside matter to file of A.O. to first ascertain to his satisfaction that instances furnished by assessee by way of supplementary evidence are indeed comparable to case of assessee to corroborate arm's length nature of its international transaction in adherence to principles of arm's length and then analyse pricing policy of assessee in light of said evidence which was not in possession of assessee earlier. It is needless to mention over here that while deciding issue afresh A.O. will afford opportunity of being heard to assessee. In view of decision of ITAT in assessee s own case and also in view of decision of ITAT relied upon by assessee, cited supra, in case of Kyungshin Industrial Motherson Ltd. in ITA No.1396 (Del.)/2009 and in view of decision of Special Bench in case of Quark Systems India Pvt. Ltd. reported in 38 SOT 307 (B), we find it appropriate to set aside matter to file of Assessing Officer to first ascertain to his satisfaction that instances furnished by assessee by way of supplementary evidences are indeed comparable to case of assessee to corroborate arms length nature of its international transaction in adherence to principles of arms length and then analyse pricing policy of assessee in light of those evidences. Thus, 20 ITA No.937/Del./2014 grounds no.1 to 3 are restored back to file of Assessing Officer. 22. So, keeping in view fact that additional evidences brought on record by assessee before ld. TPO / ld. DRP have not been considered and fact that identical issue in assessee s own case has already been restored back for fresh adjudication by AO qua AY 2007-08 and AY 2008-09, we deem it expedient to restore this issue as to manufacturing segment to file of AO who shall adjudicate after providing opportunity of being heard to assessee. Consequently, grounds no.3, 3.1 and 3.2 are determined in favour of assessee. However, in light of findings returned by Bench on grounds no.3, 3.1 and 3.2, ground no.2 has since become infructuous and needs no adjudication. GROUND NO.5 : 23. Assessee has benchmarked international transaction relating to contract and R&D and made suo motu adjustment to tune of Rs.411 lakhs. However, ld. TPO in order to benchmark international transaction to contract R&D support services segment adopted following filters :- i. Use of current year data : It has already been argued earlier that transfer pricing provisions lay down that primarily current year data should be use. You have objected to use of this filter. However, you have ignored the/act that proviso to Rule 10D(4) allows 21 ITA No.937/Del./2014 use of multiple year data only if assessee is able to demonstrate through relevant data that certain factors of earlier years has affected transfer prices for current year. You have not been able to do so in any of your submissions. There are sufficient judicial pronouncements that support use of current year data. ii. Different financial year : If company is having accounting year different from financial year for which financials of your company are being considered, same has been excluded as profits and revenue pertain to different period other than current year which is FY 2008-09. This filter is being applied because even after application of this filter, there are several comparable companies available in software development. iii. Reject companies where turnover is less than Rs.5 Crore: This filter is applied because where turnover and cost base is very small, it is more than likely that margins will be erratic. That apart, company that is very small in size does not have sufficient economic significance that it be used as benchmark. Furthermore, under Rule 10B (2) & (3) of IT Rules, as also both under UN and OECD TP guidelines, "turnover" per se is not comparability factor. However, "economies of scale" may at times be comparability factor. Turnover may be comparability factor in circumstances where it is proved that turnover Significantly influence price, cost or profit arising from international transaction. However, no such attempt has been made by assessee in its TP study. iv. Select companies where ratio of service income to total income is at least 75% : use of this filter is to ensure that vie choose companies that are primarily in service sector. This filter ensures that companies that have significant incomes from manufacturing and trading activities are rejected. In your case your entire income is from provision of services. It would not be appropriate to benchmark your Case against company that has significant income from manufacturing or trading activities. This filter will thus ensure integrity of all comparable data. v. Select companies where income from exports is at least 75% of total income: This filter is required to be applied since you are primarily earning income from exports. Even in cases where assessee is having income from domestic operations, transfer pricing audit will benchmark transactions with AE which will be export transactions. There are Judicial pronouncements that support case that exporters should not be compared with domestic companies. Hence, this filter is required to be applied with threshold 75%. 22 ITA No.937/Del./2014 vi. Reject companies where related party transactions exceed 25% of sales: There is no doubt that companies with significant related party transactions need to be excluded from benchmarking process. On issue of threshold of related party transactions, it can be stated that when RPT exceeds 25% of sales, it can be said to be stage when it will start affecting price paid/received. rationale given for use of If in it of 25% is sound and this threshold limit has been approved explicitly implicitly in quite few judicial pronouncements. However, companies which are having consolidated sales not exceeding 125% of sales of standalone entity and not having large variation in profit margins between standalone entity and consolidated entity have been considered at consolidate level irrespective of related party transactions as 'related party transactions cancel out at consolidated level and significant portion of business (>80%) considers operations in Indian conditions in which you operate. in case of companies which are not having significant difference between margins of standalone entity and consolidated entity, it is clear that RPT have not significantly influenced margins of such companies and hence they have been considered. Further, as per disclosure norms, related party transactions are mandatorily required to be reported by company having turnover above Rs.50 crores. Hence, companies where turnover is less than 50 crores and no disclosure in respect of related party transactions has been made have not been considered as there is possibility that company may be having related party transactions but same have not been reported. Companies having turnover less than 50 crores where related party transactions' disclosure has been made and related party transactions do not exceed 25% of sales have been considered. vii. Companies that have employee cost that is less than 25% of total cost: rationale for this filter is that companies that are engaged in software development will require minimum level of expenditure on personnel expense. There are judicial pronouncements that support contention that expense on personnel that is extremely low may lead to conclusion that company is not engaged in software development assessee is engaged in providing software development services (SWD). Services are rendered through employees. expenditure incurred on purchase of raw material/trading goods, etc. is negligible in such cases. Employees cost constitutes major component of cost in any service sector. Very low employee cost, viz; less than 25% of total cost, indicates that company is either engaged in some other business or it has outsourced service 23 ITA No.937/Del./2014 functions to third party, i.e., it is not rendering services on its own. Such companies cannot be treated as functionally comparable to assessee. viii. Companies that are affected by some peculiar economic circumstance : Companies that are affected by factors like persistent: losses, declining sales, extraordinary income or expense, mergers and acquisitions or other such factors which affect operations of company substantially should not be used as comparables as they will not prove to be good benchmarks. 24. After applying aforesaid filters, TPO rejected following comparables companies as selected by assessee for benchmarking :- S.No. Name of company Remark s of this office 1. Aditya Birla Minacs Technologies Reject Ltd. / Birla Technologies Ltd. 2. Akshay Software Technolgies Ltd. Accept 3. Computech International Ltd. Reject 4. Halios & Matheson Information Reject Technology Ltd. 5. L G S Global Ltd. Accept 6. Powersoft Global Solutions Ltd. Reject 7. R Systems International Ltd. Reject 8. Sasken Communication Accept 9. Sonata Software Ltd. Reject 10. Quintegra Solutions Ltd. Reject 25. Ld. TPO selected following final set of comparables for benchmarking international transaction relating to contract R&D:- 24 ITA No.937/Del./2014 S.No. Comparables OP/OC (w/o fx) (%) 1. Akshay Software Technolgies Ltd. 7.99 2. Aztecsoft Ltd. (Consolidated) 27.37 3. Bodhtree Consulting Ltd. 69.80 4. Cat Technolgoies Ltd. 34.43 5. Goldstone Technologies (Seg) 10.28 6. Infosys Technologies Limited 40.74 7. Larsen & Turbo Infotech Limited 21.56 8. LGS Global Ltd. 17.55 9. Mindtree Limited 27.36 10. Persistent Systems Limited 37.77 11. R S Software (I) Limited 10.15 12. Sasken Communication Tech. Ltd. 22.67 13. Tata Consultancy Services Ltd. 31.44 14. Tata Elxsi Ltd. 16.89 15. Think Soft Global 16.56 16. Thirdware Solutions 37.27 Average OP/TC 26.86 26. On basis of TP study, ld. TPO determined arms length price as under :- 18. DETERMINATION OF ARM S LENGTH PRICE: On basis of above discussion, average mean margin of comparable companies in Provision of software development services segment comes to 26.86%. This margin shall be adopted for purpose of benchmarking international transaction in provision of software development services segment. arm s length price of international transaction is computed as under :- Particulars Amount INR Operating Cost 650,172,467 Arm s length margin (%) 26.86% Arm s length margin (Rs.) 174,636,325 Arm s length Price 824,808,792 Price charged by assessee 723,615,888 105% of Price charged in international 759,796,682 transaction Difference for which adjustment is required to 101,192,904 be made Adjustment offered in TP study 41,100,000 Adjustment now proposed to be made 60,092,904 25 ITA No.937/Del./2014 19. Since price charged by assessee varies by more than 5% from value of international transactions, adjustment of Rs.60,092,904/- is to be made to income of assessee, being difference between arm s length price and price charged by assessee from its AEs for export of services. Assessing Officer shall enhance income of assessee by amount of Rs.60,092,904/- while computing its total income. 27. Ld. AR for assessee challenging adjustment of Rs.6,00,92,904/- by TPO in respect of international transaction of promotion of R&D/software services contended that coordinate Bench in assessee s own case qua AY 2008-09, order available at pages 18 to 37 of supplementary paper book, dealt with identical issues and restored case to TPO to decide afresh. In light of directions given by coordinate Bench in order dated 09.09.2003 qua AY 2008-09 (supra), operative part of which is reproduced in preceding para no.25 of this order. Moreover, TPO has dealt with all segments differently showing average OP/TC of comparables at 26.86% vis- -vis assessee s OP/TC at 11.14% . Ld. AR further contended that TPO has not adopted transaction by transaction approach for making TP adjustment. 28. However, on other hand, ld. DR contended that this issue has already been determined by both TPO and DRP. Assessee company while making submissions before TPO dated 24.01.2013 in response to show-cause notice took specific 26 ITA No.937/Del./2014 stand that benchmarking of international transactions needs to be made on transaction by transaction basis for which complete documents have been submitted as referred at page 291 of paper book in form of Annexure D-1 to D-42 and Annexure D- 43 to D-44. TPO has examined separate segmental account in respect of transaction by transaction segment. However, by following rule of consistency, TPO is required to decide issue de novo after providing opportunity of being heard to assessee. So, ground no.5 is determined in favour of assessee and matter is restored to TPO. GROUNDS No.4 & 4.1 29. ld. AR for assessee challenging impugned TP adjustment regarding trading segment to tune of Rs.37,58,66,000/- contended that there is no dispute with revenue as to distribution segment in earlier years as there was healthy margin and no adjustment was made. But, during year under assessment, healthy margin could not come on record only due to foreign currency loss. 30. Undisputedly, as per financials given in annexure D-5 to TP report, operating profit to sales ratio in case of assessee is minus 4.63%. Assessee has carried out adjustment on ground that it is importing 100% finished goods being sold by it as 27 ITA No.937/Del./2014 against average 6.12% of import contents in trading functions of comparables selected by assessee company. Assessee has computed adjusted Net Profit Margin (NPM) at 13.97%. 31. However, TPO rejected adjustment made by assessee on ground that it has not disclosed basis as to how adjustment has been made nor assessee has put any filter of minimum level of imports of finished goods of its search for comparables. calculation of adjusted NPM at 13.97% made by assessee is as under :- (Amount in Lacs) Particulars Actual Adusted Sales 42,084.56 42,141.20 Cost of Sale 35,763.61 27,943.75 Excise Stores Consumed Wages Industrial Cost Depreciation Industrial Specific Personnel Cost Specific Costs 27.23 Other Expenses (Comm/ Admn) 8,269.97 8,281.10 Total Expenses 44,033.58 36,252.08 Operating Profit (1,949.02) 5,889.12 Operating Profit (%) -4.63% 13.97% 32. Assessee company has chosen 5 comparables and computed updated margin (OP/Sales) of comparable company as under :- 28 ITA No.937/Del./2014 S.No. Name of comparable OP/Sales (%) (i) Adtech Systems Limited 16.94 (ii) K. Dhandapani & CO. Ltd. 0.32 (iii) Karuna Cables Limited 3.64 (iv) Remi Sales & Engineering Limited 1.98 (v) Chloride International Limited -1.37 4.30 33. TPO computed proposed amount of adjustment as under :- Particulars Total Sales net of excise 42,084.56 Arm s length margin @ 4.30% 1809.64 Margin of assessee -1949.02 Difference in margin 3758.66 Adjustment proposed to be made 3758.66 34. Assessee company s contention for adjusting its margin because of its high import content in comparison to comparables has not been accepted by TPO. TPO categorically observed that even during TP proceedings, assessee has not come up with suitable comparables and made adjustment in distribution segment by taking updated margin of comparables taken by assessee in its report and computed amount of adjustment as under :- Particulars Total Sales net of excise 42,084.56 Arm s length margin @ 4.30% 1809.64 Margin of assessee -1949.02 Difference in margin 3758.66 29 ITA No.937/Del./2014 35. Perusal of order passed by TPO as well as DRP goes to prove that both ld. TPO as well as ld. DRP have not taken into account foreign currency loss suffered by assessee company leading to unhealthy margin. Ld. DRP rather toed line of TPO to decide this issue. 36. Assessee categorically submitted before ld. DRP that loss in distribution segment is due to adverse foreign exchange movement and has duly demonstrated effect of loss of foreign currency at page 979 and 980 of paper book. Relevant para are reproduced for ready perusal as under :- 50. assessee would further emphasize that loss in this segment was primarily on account of adverse foreign exchange movement. assessee, in its distribution segment, imported 100% of finished goods from its AEs and hence INR value purchases [invoiced in foreign currency by AEs i.e. EURO C'EUR') in this case] depended highly on prevailing exchange rates. Thus, assessee was exposed to high economic foreign exchange risk. This typically occurs when business generates sales in one currency and incurs costs in another. 51. During FY 2007-08, movement of EUR against INR was range bound between INR 54/EUR 112 to INR 59/EUR 1 levels. However, during FY 2008-09, there was sharp depreciation of INR against EUR and Indian currency fell around 16% (from INR 58/EUR 1 to INR 67/EUR 1) against Euro currency in short span of 6 months, i.e., from February 2008 to July 2008. 52. assessee highlights that as per global Transfer Pricing policy of Schneider Group, purchase price for imported goods are fixed based on foreign exchange forecast rate and this exercise of forecasting foreign exchange rate for every calendar year is carried out in month of December of previous year. Thus, for calendar year 2008-09, price was fixed in December 2007, when foreign exchange rate was INR 57- 46/EUR 1 (estimated rate for calendar year FY 2008-09). However, due to grim global economic conditions, Indian 30 ITA No.937/Del./2014 rupee depreciated sharply. This adversely affected margins of assessee as cost of imported goods increased due to foreign exchange movements. same is represented below :- Average-Monthly.Bid-rates-of-EUR-to-INR 37. Assessee contended that in view of Rule 10B(3) of Income-tax Rules, 1962, adjustment is required to be carried out to eliminate any material differences between assessee and comparable companies and assessee relied upon order passed by ITAT, Delhi Bench in case cited as Honda Trading Corporation India Pvt. Ltd. vs. ACIT - (ITA No.5297/Del/2011 order dated 08.03.2013). 38. In identical situation arisen in Honda Trading Corporation India Pvt. Ltd. (supra), benefit has been extended to assessee on account of foreign exchange fluctuation, operative part of order is reproduced for ready perusal as under :- 19. On issue of adjustment of exchange fluctuation, loss incurred by assessee, we observe that it is well accepted principle of Transfer Pricing regulations to compare like with like and eliminate differences if any, by suitable adjustment. 31 ITA No.937/Del./2014 said principle clearly provides for adjustments in margins of enterprise entering into international transactions for any differences between such international transactions and transaction of comparables or between enterprise entering into internationals transactions and comparable companies. foreign exchange element also needs consideration. Rule 10B(3) of Income Tax Rules, 1962 provides that appropriate adjustment is required to be made on account of differences between controlled and uncontrolled transactions. This rule clearly stipulates that uncontrolled transaction shall be comparable to international transaction, if none of differences between transactions being compared, or between enterprises entering into such transactions are likely to materially affect price or cost charged or paid in, or profit arising from, such transactions in open market. This rule clearly stipulates that reasonably accurate adjustments can be made to eliminate material effects of such differences. 39. By following rule of consistency and facts and circumstances of case, foreign currency fluctuation needs to be taken into account for TP adjustment both for comparable companies as well as tested party. So, this ground is also required to be restored to TPO to make fresh adjustment regarding distribution segment by taking into account foreign currency fluctuation duly demonstrated by assessee in view of observations made herein before. CORPORATE GROUNDS GROUND NO.6 40. Ground No.6 is general in nature which would be decided in remaining corporate grounds and as such, needs no specific findings. 32 ITA No.937/Del./2014 GROUNDS NO.7 & 8 41. Ld. AO/ld. DRP have disallowed 3/4th of advertisement and sales promotion expenses to tune of Rs.6,32,85,750/- and 4/5th of recruitment expenditure amounting to Rs.1,12,88,617/- by treating same being enduring in nature and in nature of deferred revenue expenditure. Ld. DRP also disallowed advertisement and sales promotion expenditure and recruitment expenditure on ground that same have long lasting value having spread over effect. 42. However, ld. AR for assessee contended that advertisement and sales promotion expenses and recruitment expenditure were allowed in assessee s own case for AY 2002-03 and AY 2003-04 vide order passed in ITA No.4525/Del/2005 and 3984/Del/2006 respectively and further appeals filed by revenue have also been dismissed by Hon ble High Court. 43. Undisputedly, identical issue was dealt with by coordinate Bench in assessee s own case qua AY 2002-03 and AY 2003-04, orders of which are available at pages 64 to 81 of paper book. Disallowance on account of advertisement and sales promotion expenses to tune of Rs.6,32,85,750/- and recruitment expenditure to tune of Rs.1,12,88,617/- made by AO and confirmed by ld. DRP are allowable on ground that these 33 ITA No.937/Del./2014 expenditure have not resulted into acquisition of any asset by assessee company nor any enduring additions have been accrued to assessee. So, by following order passed by coordinate Bench in assessee s own case qua AY 2002-03 and AY 2003-04, grounds no.7 & 8 are determined in favour of assessee as AO/DRP have erred in disallowing 3/4th of advertisement and sales promotion expenses amounting to Rs.6,32,85,750/- and 4/5th of expenditure of recruitment expenditure to tune of Rs.1,12,88,617/-. However, AO to verify exact period of contract to compute expenses incurred by assessee and disallow expenses if same are found to be not attributable to year under assessment. GROUND NO.9 44. AO disallowed 3/4th of licences and permits expenditure amounting to Rs.1,69,93,222/- out of licences and permits expenses of Rs.2,26,57,629/- on ground that same lead to enduring benefit to assessee company as its benefits do not restrict to only one year and only allowed 1/4th of expenditure amounting to Rs.56,64,407/- and apportioned balance amount of Rs.1,69,63,222/- in next five years and thereby made addition of Rs.1,69,93,222/-. Ld. DRP also affirmed order passed by AO. 34 ITA No.937/Del./2014 45. Ld. AR for assessee, relying upon Special Bench decision of ITAT in case of Peerless Securities Limited vs. JCIT (2005) 94 ITRD 89 (Kol.)(SB) and decision rendered by Hon ble High Court of Madras in case of CIT vs. Southern Roadways Ltd. (2006) 155 Taxman 493 (Mad). 46. Operative part of decision rendered by Special Bench of Tribunal in case of Peerless Securities Limited (supra) is reproduced as under for kind perusal :- Section 37(1) of Income-tax Act, 1961 - Business expenditure - Allowability of - Assessment year 1996-97 - Whether payment made to remove possibility of recurring disadvantage cannot be considered as payment made to secure enduring advantage - Held, yes - Whether where advantage consists of merely in facilitating assessee's trading operations or enabling management or conduct of assessee's business to be carried on more efficiently or more profitably, while leaving fixed capital untouched, expenditure would be on revenue account, even though advantage may endure for indefinite future - Held, yes - Whether if expenditure is for initial outlay or for acquiring or bringing into existence asset or advantage of enduring benefit to business that is being carried on, or for extension of business that is going on, or for substantial replacement of existing business asset, it would be capital expenditure - Held, yes - Whether where, expenditure, although for purpose of acquiring asset or advantage, is for running of business or for working out that asset with view to produce profit, it would be revenue expenditure - Held, yes - Whether if amount paid for acquisition of asset of enduring nature is settled, mere fact that amount so settled is chalked out into various small amounts or periodic instalments, capital nature of expenditure would not cease to be so or altered into nature of revenue expenditure - Held, yes - Whether expenditure incurred after business is set up may be allowed even if it is incurred before business has actually commenced - Held, yes - Assessee was engaged in business of share trading and stock braking - Since year under consideration was first year of business, revenue authorities rejected various claims of expenditure made by assessee on ground that expenditure had been incurred for initial outlay or for acquiring or bringing in existence assets or advantage of enduring benefit and hence they were capital in nature and did 35 ITA No.937/Del./2014 not fall within purview of section 37(1) - Whether development fee paid to Calcutta Stock Exchange Association to become member thereof, was capital expenditure - Held, yes - Whether expenditure towards fees for operating on floor paid to Calcutta Stock Exchange Association was of revenue in nature - Held, yes - Whether payment of admission fee to OTC Exchange of India (OTCEI) in order to become dealer on OTCEI and to operate counter for conducting assessee's business as share dealer and payment of Technology cost for imparting training to assessee's employees so as to make them qualified as per guidelines laid down by OTCEI was for purpose of carrying or running assessee's business of share trading in profitable manner and was revenue expenditure - Held, yes - Whether expenditure towards non- adjustable deposit for admission as trading member of wholesale debt market of National Stock Exchange of India (NSEI) so as to enable assessee to use and utilize network of NSEI for its trading operations at nationwide level so as to facilitate it to carryon business smoothly, extensively, effectively and profitably was of revenue in nature - Held, yes - Whether deposit for Very Small Aperture Terminals (VSATs) on account of providing by NSEI on- line Screen Based Trading Facilities on Equal Access basis to all Trading Members, directly related to business operation and trading activities carried on by assessee and was, therefore, allowable as Revenue Expenditure - Held, yes. 47. Keeping in view settled principle and facts and circumstances of case, expenditure of Rs.2,26,57,629/- incurred by assessee on licences and permits being necessary to run business without which assessee s unit would have stopped, which are revenue in nature and cannot be deferred to another 5 years. Even otherwise, licence fee for one year has been claimed by assessee in year under assessment itself. So, ground no.9 is determined in favour of assessee and AO is to recompute deductions in light of section 10A of Act. 36 ITA No.937/Del./2014 GROUNDS NO.10 & 10.1 48. Ld. AR for assessee contended that AO/DRP have erred on facts and in law in not recomputing deduction u/s 10A after making disallowance of expenses in relation to section 10A unit and further contended that during AY 2007-08, this issue was restored to TPO to decide afresh. 49. Undisputedly, assessee company is STPI unit getting cost plus 5% markup. Perusal of computation of total income, available at page 1186 of paper book, shows that on aggregation basis, there is loss but, in R&D segment, profit is there. Since assessee is into multiple business in which it has loss only question to be determined is :- as to whether in such circumstances assessee is entitled for section 10A exemption in TP adjustment? 50. Ld. AR relied upon decision of ITAT in case of CIT vs. TEI Technologies (P.) Ltd. - (2012) 25 taxman.com 5 (Delhi). ratio of judgment in case of TEI Technologies (P.) Ltd. (supra) is that implication of exemption provisions contained u/s 10A is that particular income which is exempt from tax does not enter in field of taxation and is not subject to any computation. So, business loss of non-eligible units could not be set off against profits of undertaking eligible for exemption 37 ITA No.937/Del./2014 u/s 10A as section 10A unit is not taxable at all. However, section 10A deduction will not affect for TP adjustment nor this profit is to be deducted. So, in these circumstances, grounds no.10, 10.1 and 11 are required fresh consideration by AO who shall verify correctness of claim of assessee regarding expenses and deduction u/s 10A of Act. So, grounds no.10, 10.1 & 11 are determined in favour of assessee. 52. In view of our findings on above grounds, present appeal is allowed for statistical purposes. Order pronounced in open court on this day 29th of September, 2016. Sd/- sd/- (S.V. MEHROTRA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 29th day of September, 2016 TS Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT (A) 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI. Schneider Electric India Pvt. Ltd. v. DCIT, Circle-7(1), New Delhi