ITA Nos 384 and 453 of 2014 Conexant Systems P Ltd Hyderabad IN INCOME TAX APPELLATE TRIBUNAL Hyderabad Bench, Hyderabad Before Smt. P. Madhavi Devi, Judicial Member AND Shri S.Rifaur Rahman, Accountant Member ITA No.384/Hyd/2014 (Assessment Year: 2009-10) M/s. Conexant Systems Vs Dy. Commissioner of Income Private Limited Tax, Circle 1(2) Hyderabad Hyderabad PAN: AAACF 2723 N ITA No.453/Hyd/2014 (Assessment Year: 2009-10) Dy. Commissioner of Vs M/s. Conexant Systems Private Income Tax, Circle 1(2) Limited Hyderabad Hyderabad PAN: AAACF 2723 N For Assessee : Shri Dhanesh Bafna For Revenue : Shri T. Venkat Reddy, DR Date of Hearing: 11.08.2016 Date of Pronouncement: 19.10.2016 ORDER Per Smt. P. Madhavi Devi, J.M. Both are cross appeals for A.Y 2009-10. ITA No.384/Hyd/2014 2. In this appeal, assessee has raised as many as 11 grounds of appeal and vide letter dated 21.01.2016, further additional grounds of appeal have been raised. At time of hearing, learned Counsel for assessee has filed chart Page 1 of 14 ITA Nos 384 and 453 of 2014 Conexant Systems P Ltd Hyderabad before us, giving details of companies taken as comparable by TPO and companies which are being challenged by assessee before us as not being comparable to assessee. chart gives details of companies challenged by assessee and also decisions on which it is placed reliance upon in support of its contentions. 3. learned DR did not object to correctness of facts in chart filed by assessee and therefore, same is taken on record and decision is given on basis of said chart as well as material on record. 4. At time of hearing, learned Counsel for assessee, submitted that assessee has raised as many as 11 grounds of appeal and that ground Nos.1 to 9 are on Transfer Pricing adjustment, while grounds Nos.10 & 11 are on corporate issues. He submitted that assessee is mainly contesting Ground No.4 and other grounds may be taken as not pressed if ground of appeal No.4 is allowed. 5. Brief facts of case are that assessee company is engaged in developing software i.e. it is engaged in rendering designing, development and modification services relating to semi conductors for semi-conductor based products and also providing marketing support and financial and administrative support services to its AEs. assessee had entered into various international transactions with its AEs and AO referred determination of Arms Length Price (ALP) of international transactions to TPO. margin of assessee according to Page 2 of 14 ITA Nos 384 and 453 of 2014 Conexant Systems P Ltd Hyderabad its transfer pricing study is at 11.19% as against margin of comparables at 13.28% as regards software development, 42.4% as against 12.95% of comparables as regards marketing support services and 164% as against 11.19% of comparables as regards financial and administrative services. TPO observed that after adopting certain filters, assessee has analyzed transactions pertaining to each segment separately, but according to him, all transactions are to be aggregated for determining ALP. TPO thereafter perused TP study of assessee and observed that it suffers from defects which resulted in selection of inappropriate comparables and rejection of appropriate comparables. Therefore, he rejected assessee s TP study and conducted fresh TP analysis by aggregating all transactions under TNMM. Thereafter he conducted FAR analysis and arrived at 17 companies as comparables. 6. 17 companies taken as comparables by TPO are shown in chart filed by assessee. It is stated by learned Counsel for assessee that companies at S.Nos. 1 to 6 is accepted by assessee as comparable to assessee. As regards item No.7 i.e Zylog Systems Ltd, item No.14, i.e Thinksoft Global Services Ltd and item No.17, i.e. Sasken Communications Technologies Ltd, learned Counsel for assessee submitted that these companies were selected as comparable by assessee itself on basis of limited information available about these companies at time of its T.P. study but, however, subsequently, it has come to knowledge of assessee that these companies are not comparable to assessee on account Page 3 of 14 ITA Nos 384 and 453 of 2014 Conexant Systems P Ltd Hyderabad of functional dissimilarities. It is submitted that these functional dissimilarities have come to knowledge of assessee subsequently by virtue of decisions of Coordinate Benches of this Tribunal in various similar cases. Therefore, he prayed for admission of additional grounds of appeal and for rejection of all these companies as comparables to assessee. In support of his contention that though assessee has considered these companies as comparable in its own TP study, it is eligible to challenge comparability subsequently, he placed reliance upon following decisions: (i) CIT vs. S. Neliappan (66 ITR 722 (S.C) (ii) CIT v. Kanpur Coal Syndicate (53 ITR 225 (S.C) (iii) Jute Corporation of India Ltd (187 ITR 688 (S.C) (iv) NTPC Ltd, Vs. CIT (229 ITR 383 (S.C) (v) Ashok Vardhan Birla vs. CWT (208 ITR 958 )(Bom.) (vi) Controller of Estate Duty v. R.Brahadeeswaran (163 ITR 680)(Mad.) 7. learned DR, however, submitted that these are companies selected by assessee itself during its T.P. study and therefore, cannot be allowed to challenge them at this stage before Tribunal. 8. Having regard to rival contentions and material on record, we find that assessee, though, had considered these companies as comparable to assessee at time of its TP study, has challenged their consideration before us. In decisions relied upon by learned Counsel for assessee (Supra), it is held that Tribunal had powers to admit additional grounds of appeal, even if same was not raised before lower authorities. Further, we also find that these Page 4 of 14 ITA Nos 384 and 453 of 2014 Conexant Systems P Ltd Hyderabad companies have been treated as not comparable to another assessee, i.e. Planet Online Pvt. Ltd for very same A.Y and that Planet Online is also in similar line of business. Therefore, we deem it fit and proper to admit additional grounds of appeal and remand issue of their comparability to assessee to file of TPO for re-consideration in accordance with law. assessee shall be given fair opportunity of hearing. Additional grounds of appeal are therefore, treated as allowed for statistical purposes. 9. companies adopted by TPO, but which are challenged before us as not comparable to assessee are : (a) Infosys Ltd (b) Kals Info Systems (c) Tata Elxsi Ltd (d) Thirdware Solutions Ltd (e) Bodhtree Consulting Ltd (f) Persistent Systems Ltd (g) Thinksoft Global Services Ltd (h) Comp U-Learn Tech India Ltd We find that comparability of these companies to company which is engaged in simple software development services as provided by assessee has been considered by Coordinate Bench of this Tribunal in case of Planet Online Pvt Ltd vs. ACIT in ITA No.464/Hyd/2014. For sake of convenience and ready reference, relevant paragraphs are reproduced hereunder: 10. We have considered submissions of parties and perused orders of departmental authorities as well as other materials on record. We have also applied our mind to case laws cited by parties. 10.1 As far as comparables at Sl. Nos. 1 to 5 are concerned, issues are more or less covered by decisions of coordinate benches for self- same AY i.e. 2009-10. In case of M/s CISCO Systems (India) Pvt. Ltd. Vs. Page 5 of 14 ITA Nos 384 and 453 of 2014 Conexant Systems P Ltd Hyderabad DCIT, IT(TP) No. 130/Bang/14 dated 14/08/14, coordinate bench after examining in detail, excluded Bodhtree consulting Ltd., Infosys Ltd., Kals Information Systems and Tata Elxsi Ltd. (Seg.) relevant observations of ITAT, Bangalore Bench in respect to each of aforesaid companies are reproduced hereunder for sake of clarity: 26.1 Bodhtree Consulting Ltd.:- As far as this company is concerned, it is not in dispute that in list of comparables chosen by assessee, this company was also included by assessee. assessee, however, submits before us that later on it came to assessee s notice that this company is not being considered as comparable company in case of companies rendering software development services. In this regard, ld. counsel for assessee has brought to our notice decision of Mumbai Bench of Tribunal in case of Nethawk Networks Pvt. Ltd. v. ITO, ITA No.7633/Mum/2012, order dated 6.11.2013. In this case, Tribunal followed decision rendered by Mumbai Bench of Tribunal in case of Wills Processing Services (I) P. Ltd., ITA No.4547/Mum/2012. In aforesaid decisions, Tribunal has taken view that Bodhtree Consulting Ltd. is in business of software products and was engaged in providing open & end to end web solutions software consultancy and design & development of software using latest technology. decision rendered by Mumbai Bench of Tribunal in case of Nethawk Networks Pvt. Ltd. (supra) is in relation to A.Y. 2008-09. It was affirmed by learned counsel for Assessee that facts and circumstances in present year also remains identical to facts and circumstances as it prevailed in AY 08-09 as far as this comparable company is concerned. Following aforesaid decision of Mumbai Bench of Tribunal, we hold that Bodhtree Consulting Ltd. cannot be regarded as comparable. In this regards, fact that assessee had itself proposed this company as comparable, in our opinion, should not be basis on which said company should be retained as comparable, when factually it is shown that said company is software product company and not software development services company. 26.2 Infosys Ltd.:- As far as this company is concerned, it is not in dispute before us that this company has been considered to be functionally different from company providing simple software development services, as this company owns significant intangibles and has huge revenues from software products. In this regard, we find that Bangalore Bench of Tribunal in case of M/s. TDPLM Software Solutions Ltd. v. DCIT, ITA No.1303/Bang/2012, by order dated 28.11.2013 with regard to this comparable has held as follows:- 11.0 Infosys Technologies Ltd. 11.1 This was comparable selected by TPO. Before TPO, assessee objected to inclusion of company in set of comparables, on grounds of turnover and brand attributable profit margin. TPO, however, rejected these objections raised by Page 6 of 14 ITA Nos 384 and 453 of 2014 Conexant Systems P Ltd Hyderabad assessee on grounds that turnover and brand aspects were not materially relevant in software development segment. 11.2 Before us, learned Authorised Representative contended that this company is not functionally comparable to assessee in case on hand. learned Authorised Representative drew our attention to various parts of Annual Report of this company to ubmit that this company commands substantial brand value, owns intellectual property rights and is market leader in software development activities, whereas assessee is merely software service provider operating its business in India and does not possess either any brand value or own any intangible or intellectual property rights (IPRs). It was also submitted by learned Authorised Representative that :- (i) co-ordinate bench of this Tribunal in case of 24/7 Customer.Com Pvt. Ltd. in ITA No.227/Bang/2010 has held that company owning intangibles cannot be compared to low risk captive service provider who does not own any intangible and hence does not have additional advantage in market. It is submitted that this decision is applicable to assessee's case, as assessee does not own any intangibles and hence Infosys Technologies Ltd. cannot be comparable to assessee; (ii) (ii) observation of ITAT, Delhi Bench in case of Agnity India Technologies Pvt. Ltd. in ITA No.3856 (Del)/2010 at para 5.2 thereof, that Infosys Technologies Ltd. being giant company and market leader assuming all risks leading to higher profits cannot be considered as comparable to captive service providers assuming limited risk ; (iii) company has generated several inventions and filed for many patents in India and USA ; (iv) company has substantial revenues from software products and breakup of such revenues is not available ; (v) company has incurred huge expenditure for research and development; (vi) company has made arrangements towards acquisition of IPRs in AUTOLAY , commercial application product used in designing high performance structural systems. In view of above reasons, learned Authorised Representative pleaded that, this company i.e. Infosys Technologies Ltd., be excluded form list of comparable companies. 11.3 Per contra, opposing contentions of assessee, learned Departmental Representative submitted that comparability cannot be decided merely on basis of scale of operations and brand attributable profit margins of this company have not been extraordinary. In view of this, learned Departmental Representative Page 7 of 14 ITA Nos 384 and 453 of 2014 Conexant Systems P Ltd Hyderabad supported decision of TPO to include this company in list of comparable companies. 11.4 We have heard rival submissions and perused and carefully considered material on record. We find that assessee as brought on record sufficient evidence to establish that this company is functionally dis-similar and different from assessee and hence is not comparable and finding rendered in case of Trilogy E-Business Software India Pvt. Ltd. (supra) for Assessment Year 2007-08 is applicable to this year also. We are inclined to concur with argument put forth by assessee that Infosys Technologies Ltd is not functionally comparable since it owns significant intangible and has huge revenues from software products. It is also seen that break up of revenue from software services and software products is not available. In this view of matter, we hold that this company ought to be omitted from set of comparable companies. It is ordered accordingly. decision rendered as aforesaid pertains to A.Y. 2008-09. It was affirmed by learned counsel for Assessee that facts and circumstances in present year also remains identical to facts and circumstances as it prevailed in AY 08-09 as far as this comparable company is concerned. Respectfully following decision of Tribunal referred to above, we hold that Infosys Ltd. be excluded from list of comparable companies. 26.3 KALS Information Systems Ltd.:- As far as this company is concerned, it is not in dispute before us that this company has been considered as not comparable to pure software development services company by Bangalore Bench of Tribunal in case of M/s. Trilogy e-business Software India Pvt. Ltd. (supra). following were relevant observations of Tribunal:- (d) KALS Information Systems Ltd. 46. As far as this company is concerned, contention of assessee is that aforesaid company has revenues from both software development and software products. Besides above, it was also pointed out that this company is engaged in providing training. It was also submitted that as per annual report, salary cost debited under software development expenditure was Rs. 45,93,351. same was less than 25% of software services revenue and therefore salary cost filter test fails in this case. Reference was made to Pune Bench Tribunal s decision of ITAT in case of Bindview India Private Limited Vs. DCI, ITA No. ITA No 1386/PN/1O wherein KALS as comparable was rejected for AY 2006-07 on account of it being functionally different from software companies. relevant extract are as follows: 16. Another issue relating to selection of comparables by TPO is regarding inclusion of Kals Information System Ltd. assessee has Page 8 of 14 ITA Nos 384 and 453 of 2014 Conexant Systems P Ltd Hyderabad objected to its inclusion on basis that functionally company is not comparable. With reference to pages 185-186 of Paper Book, it is explained that said company is engaged in development of software products and services and is not comparable to software development services provided by assessee. appellant has submitted extract on pages 185-186 of Paper Book from website of company to establish that it is engaged in providing of I T enabled services and that said company is into development of software products, etc. All these aspects have not been factually rebutted and, in our view, said concern is liable to be excluded from final set of comparables, and thus on this aspect, assessee succeeds. Based on all above, it was submitted on behalf of assessee that KALS Information Systems Limited should be rejected as comparable. 47. We have given careful consideration to submission made on behalf of Assessee. We find that TPO has drawn conclusions on basis of information obtained by issue of notice u/s.133(6) of Act. This information which was not available in public domain could not have been used by TPO, when same is contrary to annual report of this company as highlighted by Assessee in its letter dated 21.6.2010 to TPO. We also find that in decision referred to by learned counsel for Assessee, Mumbai Bench of ITAT has held that this company was developing software products and not purely or mainly software development service provider. We therefore accept plea of Assessee that this company is not comparable. Following aforesaid decision of Tribunal, we hold that KALS Information Systems Ltd. should not be regarded as comparable. 26.4 Tata Elxsi Ltd.:- As far as this company is concerned, it is not in dispute before us that in assessee s own case for A.Y. 2007-08, this company was not regarded as comparable in its software development services segment in ITA No.1076/Bang/2011, order dated 29.3.2013. Following were relevant observations of Tribunal:- II. UNREASONABLE COMPARABILITY CRITERIA : 19. learned Chartered Accountant pleaded that out of six comparables shortlisted above as comparables based on turnover filter, following two companies, namely (i) Tata Elxsi Ltd; and (ii) M/s. Flextronics Software Systems Ltd., deserve to be eliminated for following reasons : (i) Tata Elxsi Ltd., : company operates in segments of software development services which comprises of embedded product design services, industrial design and engineering services and visual computing labs and system integration services segment. There is no sub-services break up/information provided in annual report or databases based on which margin from software services activity only could be Page 9 of 14 ITA Nos 384 and 453 of 2014 Conexant Systems P Ltd Hyderabad computed. company has also in its response to notice u/s.133(6) stated that it cannot be considered as comparable to any other software services company because of its complex nature. Hence, Tata Elxsi Ltd., is to be excluded from list of comparables. 10.2 ITAT, Hyderabad Bench following aforesaid decision of ITAT, Bangalore Bench also excluded these four companies in case of M/s Kenexa Technologies Pvt. Ltd. Vs. DCIT in ITA No. 243/Hyd/2014 dt. 14/11/2014. Respectfully following decisions of ITAT, we direct AO/TPO to exclude these four companies. As far as Comp-U Learn Global Tech India Ltd. is concerned, ITAT, Hyderabad Bench in case of M/s Kenexa Technologies Pvt. Ltd. Vs. DCIT (supra) observed as under: 39. assessee submitted before DRP that Comp-ULearn Tech India Ltd. was engaged in development of new software (product development) (page 7 of Annual Report) in ITES call centre and BPO services (page 11 of Annual Report). It was further submitted that schedule XIII of Annual Report shows software development expenditure at only 25% of total expenditure. TPO extracted 133(6) notice and held that company has nil onsite revenue and satisfied all filters applied by TPO. We are of opinion that some more analysis has to be done and we direct TPO to look into financial statement of company and also provide opportunity to assessee to submit relevant details to substantiate its claim that Comp-U-Learn Tech India Ltd. is not comparable company. Consistent with view expressed by coordinate bench, we also remit issue of comparability of this company to AO/TPO with similar directions. 10.3 As far as Persistent Systems Pvt. Ltd. is concerned, it is contention of learned AR that this company cannot be comparable as it is engaged in development of software product and product designing. On perusal of extracts of annual report of this company for FY 2008-09 submitted by ld. AR, it is noticed that company has claimed that it was formed mainly to provide software development services. However, P&L account for year ended 31/03/2009, copy of which has been submitted before us, indicates that it has shown income from sale of software services as well as products. Therefore, unless segmental details are available, company cannot be treated as comparable. Moreover, in case of M/s 3DPLM Software Solutions Ltd. Vs. DCIT, IT(TP) No. 1303/Bang/2012, ITAT Bangalore Bench held as under: We have heard rival submissions and perused and carefully considered material on record. It is seen from details on record that this company i.e. Persistent Systems Ltd., is engaged in product development and product design services while assessee is software development services provider. We find that, as submitted by assessee, segmental details are not given separately. Therefore, following principle enunciated in decision of Mumbai Tribunal in case of Telecordia Technologies India Pvt. Ltd. (supra) that in absence of segmental details / information company cannot be taken into account for comparability analysis, we hold that Page 10 of 14 ITA Nos 384 and 453 of 2014 Conexant Systems P Ltd Hyderabad this company i.e. Persistent Systems Ltd. ought to be omitted from set of comparables for year under consideration. It is ordered accordingly. Though, aforesaid finding of coordinate bench relates to AY 2008-09, but, in our view, it will also equally apply to AY under consideration as facts are identical. Therefore, respectfully following view expressed by coordinate bench, we exclude this company as comparable. 10.5 As far as Think Soft Global Services Ltd. is concerned, assessee has objected to inclusion of aforesaid company on reasoning that it is functionally different as it is product based company and provides testing services. On perusal of annual report of this company, extract of which was submitted before us, it is seen that company is predominantly into software testing. In case of Triology E Business Vs. DCIT, ITA No. 1054/Bang/11, dtd. 23/11/12 it has been held by coordinate bench that software testing services cannot be equated with software development services. Therefore, we find merit in contention of ld. AR. Accordingly, we hold that this company cannot be treated as comparable to assessee. 10.6 As far as Thirdware Solutions is concerned, assessee has sought exclusion of aforesaid company because it is into product development and purchase and sale of licences. It is further contention of assessee that though segmental details for sales is available but no expenditure bifurcation is available, which makes it impossible to correctly determine operating margin of software services. On perusal of break-up of sales of this company as on 31st March, 2009, contention of assessee appears to be correct. Further, ITAT Bangalore Bench in case of 3DPLM Software Solutions Ltd. Vs. DCIT (supra), has held as under: 15.3 We have heard rival submissions and perused and carefully considered material on record. It is seen from material on record that company is engaged in product development and earns revenue from sale of licenses and subscription. However, segmental profit and loss accounts for software development services and product development are not given separately. Further, as pointed out by learned Authorised Representative, Pune Bench of Tribunal in case of E-Gain Communications Pvt. Ltd. (supra) has directed that since income of this company includes income from sale of licenses, it ought to be rejected as comparable for software development services. In case on hand, assessee is rendering software development services. In this factual view of matter and following afore cited decision of Pune Tribunal (supra), we direct that this company be omitted from list of comparables for period under consideration in case on hand. 10.7 ld. DR has not brought any material to our notice to demonstrate that aforesaid finding of coordinate bench will not be applicable to AY under consideration. Therefore, following view Page 11 of 14 ITA Nos 384 and 453 of 2014 Conexant Systems P Ltd Hyderabad expressed by ITAT Bangalore Bench, we exclude this company from list of comparables. 10.8 As far as I-Gate Global Solutions Ltd. is concerned, it is contention of ld. AR that company is having huge turnover of more than Rs. 900 crores, and is relatively big company having presence in various countries and enjoys premium pricing. He has further submitted that company owns various intangibles in its name and is having closing stock of raw materials which signify that it is into development of product. We have considered submissions of parties. On perusal of P&L account of this company for year ended March 2009, copy of which is submitted by ld. AR, it is seen that company has claimed expenses towards raw materials, stores and spares. Therefore, it needs to be examined in detail whether assessee s claim that company is into product development is correct. As relevant informations required for coming to definite conclusion are not before us, we are inclined to remit issue of comparability of this company to AO/TPO for considering afresh. Further, we may observe that in case of Triology E Business (supra) this company has been excluded on basis of high turnover. Therefore, this aspect is also required to be examined by AO/TPO while deciding comparability of this company. 10.9 As far as Zylog Systems Ltd. is concerned, it is contention of ld. AR that during year company has made acquisitions which could be having impact over financials of company as revenue has substantially increased compared to preceding year. On perusal of extract of annual report for FY 2008-09 of this company, which were placed before us by learned AR, it is seen that during FY 2008-09, company has acquired Fair Fax Consulting Inc. and Ducont FZ LLC through its wholly owned subsidiary ZylogBV Ltd.. company itself has admitted in annual report that benefits from such acquisition include access to new clients, new geographical areas and new service offerings as well as increase in per capita revenue. From extracts of annual report, it is seen that there is substantial increase in revenue in impugned AY compared to preceding AY. Therefore, considering fact that acquisitions made by company during relevant FY could have impacted revenue earning and profitability of company, it will not be safe to treat aforesaid company as comparable. Accordingly, we direct AO/TPO to exclude this company from list of comparables. 10.10 As far as Sasken Communication Technologies Ltd is concerned, main thrust of learned AR s contention is company is also developing products and segmental details are not available relating to costs. On perusal of extracts of annual report of aforesaid company submitted before us by ld. AR it is seen that company is involved in providing software development services as well as development of software products also. From breakup of revenue earned during relevant FY, it is seen that as against revenue of Rs. Page 12 of 14 ITA Nos 384 and 453 of 2014 Conexant Systems P Ltd Hyderabad 40531.20 lakhs earned from software development services, Rs. 6146.43 lakhs were from software products. Though, it appears that substantial revenue is earned from software development services, however, cost relating to earning of such revenue has to be taken into account. It is contention of assessee that segmental details of cost is not available from annual report. Since entire annual report has not been placed before us, we are not in position to give conclusive finding in this regard. We, therefore, remit issue relating to comparability of this company for fresh adjudication by AO/TPO. However, we make it clear that unless segmental details of cost are available, it will be better to ignore this company . Respectfully following decision of Coordinate Bench, we direct TPO/AO to exclude these companies from final list of comparables. 10. As regards Ground No.10, it is case of assessee that though assessee has raised objections before DRP on these issues, DRP has failed to adjudicate same. He has drawn our attention to objections raised before DRP. issue raised before us is objection No.10 before DRP and also in ground of appeal No.2 to 3 in Annexure-1. We find that DRP, has neither reproduced nor adjudicated these grounds of objections. In view of same, we deem it fit and proper to remand issues to file of DRP for adjudication in accordance with law. 11. Ground No.11 is for correct credit of prepaid taxes by assessee, i.e. advance tax & MAT credit. This ground is also remanded to file of DRP for granting relief to assessee, if any, after verification of assessee s claim. This ground of appeal is also treated as allowed for statistical purposes. 12. In view of same assessee s appeal is partly allowed. Page 13 of 14 ITA Nos 384 and 453 of 2014 Conexant Systems P Ltd Hyderabad ITA No.453/Hyd/2014 13. As regards Revenue s appeal, only ground raised is against direction given by DRP to AO to exclude telecommunication charges both from export turnover as well as total turnover for computation of deduction u/s 10A of Act. We find that this issue is covered in favour of assessee by decision of Hon'ble Karnataka High Court in case of Tata Elxsi Ltd, reported in 349 ITR 98 (Karn.) . Respectfully following same, this ground of appeal of Revenue is rejected and Revenue s appeal is dismissed. 14. In result, Revenue s appeal is dismissed. 15. To sum up, assessee s appeal is partly allowed and Revenue s appeal is dismissed. Order pronounced in Open Court on 19th October, 2016. Sd/- Sd/- (S.Rifaur Rahman) (P. Madhavi Devi) Accountant Member Judicial Member Hyderabad, dated 19th October, 2016. Vinodan/sps Copy to: 1 M/s. Conexant Systems (P) Ltd, 5th Floor, Pioneer Towers, Plot No.16, Survey No.64/2 Software Units Layout, Madhapur, Hyderabad 500081 2 Dy. Commissioner of Income Tax, Circle 1(2) Aayakar Bhavan, Basheerbagh Hyderabad 3 Asstt. CIT (Transfer Pricing)-Hyderabad 4 CIT 1 Hyderabad 500004 5 DR, ITAT Hyderabad 6 Guard File By Order Page 14 of 14 M/s. Conexant Systems Private Limited v. Dy. Commissioner of Income Tax, Circle 1(2), Hyderabad