IN INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER M.P. No. 36/Bang/2019 (in IT(TP)A No. 397/Bang/2016) Assessment Year : 2011-12 M/s. Arcot R & D Software Pvt. Ltd., C/o CA (I) Technologies Pvt. Assistant Ltd., Commissioner of RMZ Titanium Building 135, Income Tax, Vs. nd 2 & 4th Floor, Circle 1 (1) (1), Old Airport Road, Bangalore. Kodihalli, Bangalore 560 017. PAN: AADCA4367L APPELLANT RESPONDENT Assessee by : None Revenue by : Shri Vinod Sharma, JCIT (DR) Date of hearing : 20.09.2019 Date of Pronouncement : 27.09.2019 ORDER Per Shri A.K. Garodia, Accountant Member This M.P. is filed by revenue in which it is stated that there are certain apparent mistakes in impugned Tribunal order which should be rectified. This M.P. was fixed for hearing on several dates but on none of these dates, anybody from assessee made any appearance. Hence, M.P. of revenue was heard ex-parte qua assessee. 2. ld. DR of revenue submitted that Tribunal in impugned Tribunal order has decided about inclusion of three comparables i.e. M/s. Persistent Systems Ltd., M/s. Persistent Systems and Solutions Ltd. and M/s. Sasken Communication Technologies Ltd. but no such ground was raised by assessee in its appeal or in C.O. filed by assessee and therefore, there is apparent mistake in Tribunal order for deciding this issue without any ground from assessee. M.P. No. 36/Bang/2019 (in IT(TP)A No. 397/Bang/2016) Page 2 of 4 3. At time of hearing, it was pointed out by bench that although as per Tribunal, tribunal has reproduced grounds raised by assessee in its appeal i.e. IT(TP)A No. 437/Bang/2016 but by mistake, instead of reproducing grounds of appeal, Tribunal has reproduced statement of facts filed with Tribunal along with appeal memo and because of this, there is some confusion as to whether any ground was raised by assessee or not regarding exclusion of these three comparables. But in fact, as per ground no. 5 raised by assessee before us in IT(TP)A No. 437/Bang/2016, this issue was raised by assessee in respect of exclusion of 3 comparables. Hence, we rectify Tribunal order by correctly reproducing grounds raised before us. ld. DR of revenue had nothing to say. 4. We have considered submissions of revenue and gone through material available on record. We find that in para 3 of impugned Tribunal order, Tribunal says that grounds of appeal raised by assessee are reproduced but in fact, Tribunal has reproduced by mistake statement of facts filed before Tribunal. Hence, we rectify this para 3 of impugned Tribunal order which should be read as under. 3. assessee has raised following grounds of appeal: On facts and in circumstances of case and in law, Id. Assessing Officer ("AO"), ld. Transfer Pricing Officer ("TPO") and Hon'ble Dispute Resolution Panel ("DRP") have erred in: 1. Passing order which is bad on facts and in law and upholding ld. TPO's order even though it was passed in violation of principles of natural justice. 2. Using only data for current year and completely disregarding data for earlier years used by appellant in its TP study. 3. Incorrectly rejecting appellant's TP study Grounds relating to 'software development services' segment 4. Incorrectly rejecting comparables selected by appellant in its TP study. 5. Incorrectly accepting companies namely Persistent Systems Limited, Persistent Systems & Solutions Limited and Sasken Communication Technologies Limited from ld. TPO's search as being comparable to appellant. 6. Not accepting Goldstone Technologies Ltd and Cherrytec Intelisolve Ltd as additional companies proposed by appellant during assessment. 7. Incorrectly rejecting Evoke Technologies Ltd., Mindtree Ltd. and R S Software (India) Ltd from final set of comparables by Hon'ble M.P. No. 36/Bang/2019 (in IT(TP)A No. 397/Bang/2016) Page 3 of 4 DRP at time of passing directions. 8. Incorrectly computing PLI of comparable companies. Grounds relating to 'Software Distribution segment 9. Conducting new study which was not legally tenable. 10. Incorrectly rejecting comparables selected by appellant in its TP study. 11. Incorrectly accepting companies namely Adinath Bio-labs Ltd. and Silverline Technologies Limited from ld. TPO's search as being comparable to appellant. 12. Making factually incorrect observation that annual reports of comparables selected by appellant and ld. TPO had not been filed by appellant during DRP proceedings. 13. Not providing adjustment for initial start-up phase of appellant. 14. Not considering Resale Price Method to be Most Appropriate Method. Other Grounds 15. Incorrectly computing PLI of appellant relating to its 'software development services' segment by not considering forex gain/loss as non-operating. 16. Incorrectly providing working capital adjustment to 'software development services' segment. 17. Not providing working capital adjustment to 'software distribution' segment. 18. Not granting any risk adjustment and concluding that appellant is bearing single risk customer. 19. Not granting benefit of proviso to section 92C (2) of Act. 20. Incorrectly excluding lease line charges (`telecommunication charges') and expenses incurred in foreign currency towards travel from export turnover and total turnover for purposes of computing deduction under section 10A of Act. 21. Incorrect disallowance under section 10A of Act by incorrectly considering amount of relief granted by Hon'ble DRP. 22. Incorrect disallowance under section 40(a)(i) of Act for non- deduction of taxes at source under section 195 of Act, on purchase of computer software from its holding company. 23. Not granting credit for taxes deducted at source even though corresponding income was offered to tax in AY 2011-12. 24. Incorrectly computing tax liability and interest thereon under section 234B of Act. 25. Incorrect consideration of refund issued to appellant and consequential levy of interest under section 234D of Act. appellant submits that above grounds are independent and without prejudice to one another. appellant craves leave to add to or alter, by deletion, substitution or otherwise, above grounds of appeal at any time before or during hearing of appeal. M.P. No. 36/Bang/2019 (in IT(TP)A No. 397/Bang/2016) Page 4 of 4 5. From correct grounds of appeal raised before Tribunal as reproduced above, it is seen that as per ground no. 5 of appeal raised by assessee, assessee is aggrieved about inclusion of 3 comparables viz., Persistent Systems Ltd., Persistent Systems & Solutions Ltd. and Sasken Communication Technologies Ltd. Hence, this contention raised by revenue in M.P. that this issue was decided by Tribunal without there being grounds raised by assessee in its appeal or CO is not factually correct and hence, this contention is rejected. M.P. filed by revenue stands dismissed subject to reproduction of correct grounds raised by assessee in its appeal. 6. In result, M.P. filed by revenue is dismissed. Order pronounced in open court on date mentioned on caption page. Sd/- Sd/- (PAVAN KUMAR GADALE) (ARUN KUMAR GARODIA) Judicial Member Accountant Member Bangalore, Dated, 27th September, 2019. /MS/ Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order Assistant Registrar, Income Tax Appellate Tribunal, Bangalore. Assistant Commissioner of Income-tax, Circle-1(1)(1), Bangalore v. Arcot R & D Software Pvt. Ltd