9911796707
TMI Blog2017 (10) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by Additional Commissioner of Income Tax, Transfer Pricing-1 (1), New Delhi ('Learned TPO'), is bad in law and void- ab-initio. 2. That on facts and in law, the Learned AO has erred in computing the total income of the Appellant at INR 66,75,13,660 as against the returned income of INR 37,65,99,859 by making an upward adjustment of Rs. 28,92,41,993 and INR 16,71,808 with respect to transfer pricing (UTP") and corporate tax matters, respectively. Part I - Transfer Pricing Grounds 3. That on facts of the case and in law, the DRPI TPO/AO have erred in rejecting the economic analysis undertaken by the Appellant by conducting a fresh economic analysis for international transactions pertaining to provision of software development services, provision of Information Technology ("IT') back office support service and pre-sales marketing and postsales technical support service (impugned transactions") 4. That on facts of the case and in law, the DRPI TPO/AO have erred in rejecting certain companies and adding certain companies to the final set of alleged comparable companies on an ad-hoc basis, thereby resorting to cherry picking of comparable companies for benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng computational errors while computing the operating margin of the Appellant. 11. That on facts of the case and in law, the TPO/AO have erred by making computational errors while computing the unadjusted and working capital adjusted operating margin of the alleged comparable companies for the benchmarking of impugned transactions. 12. That on facts of the case and in law, the DRP/TPO/AO have erred in conducting a fresh economic analysis by using arbitrary filters for identifying companies comparable to the Appellant. The arbitrary filters applied by the TPO and confirmed by the DRP/AO inter-alia include the following: For international transaction pertaining to provision of software development services, IT back office support services and presales marketing and post-sales technical support service: * Rejecting companies having turnover less than INR 5 Crores; * Rejecting companies having different accounting year than that of the Appellant; and * Rejection of companies identified by the Appellant on account of having peculiar economic circumstances which are not in line with the industry trend, - companies which showed diminishing revenue trend; For internati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case and in law, the DRP/AO has erred in confirming that Assessing Officer/TPO has discharged his statutory onus by establishing that the conditions specified in clause (a) to (d) of Section 92C (3) of the Act have been satisfied before disregarding the arm's length price determined by the Appellant and proceeding to determine the arm's length price. Part II - Corporate Tax Grounds 20. That on the facts and circumstances of the case and in law, the AO/ DRP erred in allocating director's remuneration between STP unit and non-SSTP unit by ignoring the facts placed on recrd. 21. That on the facts and circumstance of the case and in law, the AO/ DRP erred in holding that the Appellant intentionally debited director's salary to non STP unit to reduce its taxable income, without appreciating the operating model (cost plus markup) of the Appellant. 22. Without prejudice to grounds 20 and 21 above, the AO/ DRP erred in not shifting the income linked with director's remuneration cost, from non-STP unit to STP unit, based on the operating model of the Appellant. 23. That on the facts and in the circumstances of the case, the Learned AO has erred in initiating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d entity, which is compensated on a cost plus mark up basis for the services rendered to its Associated Enterprises (AE). In its transfer price study report and Form 3 CEB the assessee has reported following international transactions entered into with its AE:- S.No. Nature of Transaction Method Applied Value (in Rs.) 1 Provision of software research and development services TNMM 1,719,316,641 2 Provision of IT back office support services TNMM 470,689,564 3 Provision of pre-sales marketing and post-sales technical support services TNMM 250,438,819 4 Provision of bank guarantee TNMM 127,400 5 Payment of interest towards foreign currency loan CUP 10,481,177 6 Purchase of free of cost assets from associated enterprise - No benchmarking required 7 Employee stock purchase plan from associated enterprise - No benchmarking required I. Provision for Software Research & Development Services: - 5. We will first take up the Transfer Pricing Adjustment made by the Transfer Pricing Officer (TPO) on Provision for Software Research & Development Services. So far as software research development services are concerned, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quently integrated into the final software product by CDS and other Cadence group entities. * Project management Although the day-to-day management of the project is undertaken by Cadence India, CDS is responsible for the overall project management. Cadence India's responsibility is confined to the project management and the end deliverables with respect to the module of the software being developed by it. CDS also regularly conducts meetings to analyse the progress and monitors the project plan. However, the ultimate responsibility of the work undertaken by Cadence India rests with CDS. * Quality control, testing and integration Cadence India is responsible for ensuring that requisite quality/ performance standards are complied with while rendering services. Cadence India is responsible to ensure that services provided meet certain quality and performance requirements and adhere to established prescribed standards." 5.1 So far as the risk analysis is concerned, it was stated that the assessee's business risk exposure was limited, as it provides software development services only to CDS and was assured of specific return on its cost. Similarly, with regard to o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany is a global IT consulting and product engineering service provider. Its key focus areas include product engineering, analytics, and cloud and enterprise services. The array of services provided by this company includes software consultancy; data management; data warehousing and providing end-to-end web solutions. Apart from that, it was submitted that there had been abnormal growth in the revenue by 67% and operating profit had jumped to 340.98% in this year, indicating that extra ordinary business operations have been carried out by this company. It was further submitted that there is a difference in revenue recognition model, as in the case of the assessee the revenue is recognized at the time of rendering of service, whereas in the case of Bodhtree, from the stage of software development revenue is recognized based on software development and bill to the clients. Thus, it was submitted that the said company cannot be held to be comparable with the assessee. The TPO as well as the DRP had rejected assessee's contentions on the ground that high margin is not a reason for rejection of other comparable companies and also this company is engaged in software development services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to before us. As discussed earlier, the assessee under the provision of software research and development services carries out R&D services for its AE for the development of software products to its CDS utilizing R&D technology of CDS only. CDS specifies R&D services to be performed; products to be developed or used; timeline for completion and specific result to be achieved. The entire conceptualizing of the marketing strategy for sales of its products and services, securing of orders of its products are done by CDS and not by the assessee. The assessee company is purely a 'captive service provider' and does not undertake any kind of marketing or development functions. Conceptualization of services and determination of exact scope of work, which is to be performed by the assessee, is responsibility of CDS. Even the quality control, testing of the products is all done by CDS. Now, if we analyze the functions of the assessee, which is purely R&D being a captive unit vis-à-vis the functions of Bodhtree, we find that this company is into IT consulting and product engineering service and has a wide array of business activities like data warehousing and data management. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cannot be included as comparable for benchmarking the assessee's margin. (B) INFOSYS TECHNOLOGIES LIMITED (42.44%) 7. The assessee's main contention for exclusion of Infosys Technologies Limited had been that firstly, its services are incomparable with the assessee because Infosys is into technical consultancy design, development, re-engineering maintenance, system integration, package evaluation and implementation and infrastructure management services; secondly, it has huge R&D work for its products, which are more than Rs. 267 crores, whereas in the case of the assessee it is Nil; thirdly, Infosys has huge intangibles and brand value is also huge whereas in the case of the assessee it is nil; and lastly, Infosys is into large scale of operations which is evident from the fact that during the year it had turnover of Rs. 20,265 crores, whereas in the case of the assessee, it is only 248.53 crores. Thus, the company having such a huge turnover cannot be held to be comparable under FAR. The TPO and DRP, held that revenue from software products of Infosys Technologies Limited is only Rs. 848 crores out of its operating revenues of Rs. 20,297 crores and its revenue from software ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils on all the factors of FAR. The Hon'ble Delhi High Court in the case of CIT vs. Agnity India technologies Pvt. Ltd. (supra) made a comparative chart while dealing with similar comparative analysis, which for sake of ready reference is reproduced hereunder:- Basic Particular Infosys Technologies Ltd. Assessee Assessee Operate as full-fledged risk taking entrepreneurs Operate at minimal risks as the 100 percent services are provided to AEs Nature of services: Diversified-consulting, application design, development, re-engineering and maintenance system integration, package evaluation and implementation and business process management, etc. Contract software development services Turnover: 20,264 crores 209.83 crores Ownership branded/propr ietary products Develops/owns proprietary products like Finacle, Infosys Actice Desk, Infosys iProwe, Infosys mConnect. Also the company derives substantial portion of its proprietary products (including its flagship banking product suite 'Finacle') Onsite v. Offshore As much as half of the software development services rendered by Infosys are onsite (i.e. services performed at the customer's location overs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such objections. The ultimate aim of the transfer pricing provisions is to determine the appropriate ALP, which can be done only by bench marking with the proper comparables based on FAR analysis and under the prescribed methods. If in the course of the proceedings, it is found that certain comparables do not stand the test of functional analysis or for some other reasons, then Tata Power Solar Systems Ltd. the same should be excluded and we do not find any reason that they should to be included simply because the assessee had included the same initially. If the cogent reasons have been given by the assessee for excluding the same, the same should be considered. The initial onus or duty is cast upon the assessee to carry out the selection of proper comparables based on FAR analysis and by adopting suitable transfer pricing method and then analyse its transaction to show the correct arm's length result. Thereafter, it is axiomatic that the taxing authorities / TPO, should scrutinize the assessee's report on arm's length result and the entire process of arriving at the ALP, whether they are based on transfer pricing principles and statutory provisions or not. If he himse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this year is more than 25%. 8.2 The ld. D.R., submitted that the matter can be sent back to the TPO so as to examine how much is the related party transaction and if it exceeds more than 25%, then the same can be excluded. 8.3 After considering the aforesaid submissions, we are of the opinion that both the assessee as well as the authorities below, have disputed the percentage of related party transactions. In order to ascertain the exact related party transactions, we are of the opinion that this matter should be restored back to the file of TPO, who shall examine the exact RPT, because at the face of its annual accounts it is seen that Sonata Software Limited has related parties and service charges credited to the profit & loss account. The related party transactions to the sales ratio needs to be examined and if the RPT filter applied by the TPO as well as DRP fails the benchmark of 25%, then this comparable should not be included for comparative analysis. If RPT ratio is less than filter of 25%, then this comparable needs to be properly analysed under FAR analysis. The TPO will give opportunity to the assessee to substantiate its claim about ratio of RPT transactions and if r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal group standards. 11. So far as risk analysis is concerned, the assessee stated that it did not had any kind of business risk; credit and collection risk; service liability risk; utilization risk; foreign exchange risk; and very limited service liability risk. Thus, in this segment also the assessee was risk mitigated entity. Under this segment, the assessee was compensated for services rendered with a fee which is equal to operating expenses incurred plus an amount equal to 15% of operating expenses and the payment terms laid down that the assessee would invoice CDS for its services on periodic basis and CDS was required to pay invoice amount within 90 days on receipt of invoice. In its transfer pricing study report, the assessee adopted TNMM as MAM with PLI as OP/OC. After carrying out detailed analysis, the assessee shortlisted 7 comparable companies with weighted average operating profit margin arrived at 19.41% and taking cue of tolerance range of +/- 5% it was submitted that its margin met the arm's length requirement. The TPO however modified the set of comparables and finally adopted 8 comparable companies within average arithmetic mean of 71.11%. The details of these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt of this company shows that it has insufficient segmental information, because it has various streams of income like medical transcription; billing and collections; income from coding all under one head of income. In the absence of such segmental information, it would be very difficult to benchmark its operating margin with that of the assessee. However, the TPO as well as the DRP relied upon CBDT Circular SO-890(E) dated 26/9/2000 wherein it has been clarified that medical transcription services have been treated as ITES only. The DRP further held that assessee's plea that it has a high margin cannot be the reason for rejection. 14.1 Before us, the ld. counsel for the assessee apart from reiterating the submissions made before the TPO and DRP submitted that not only its services are incomparable with that of the assessee but benchmarking would not be possible as it has insufficient segmental information. In support of this contention that in absence of segmental information it cannot be held to be comparable, he relied upon various decisions of this Tribunal like in the case of Macquarie Global Services Pvt. Ltd. vs. DCIT in ITA No.6803/DEL/2013; and TNS India Pvt. Ltd. vs. DCI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re. Therefore, there cannot be exclusion only in this year without change in material facts this year. 15.2 On the other hand, the ld. counsel for the assessee, submitted that functional comparability has to be seen for inclusion or exclusion and, therefore, looking to the fact that in several cases this comparable company has been excluded from the companies, which are rendering purely ITES services, therefore based on these decisions this comparable should be removed. In support of exclusion of this company, he relied upon the decision of ITAT Delhi Bench in the case of Macquarie Global Services Pvt. Ltd. (supra) and the decision in the case of Saxo India Pvt. Ltd. in ITA No.682/2016. 15.3 We have heard the rival submissions and also perused the relevant finding and material referred to before us. The assessee has sought exclusion of this comparable company mainly on the ground that it outsources most of its work which is 57.31% as compared to the assessee which is only 2.5% and employee cost of this company is lower. Though this is fairly a vital factor vitiating the comparability, however, the ld. counsel for the assessee could not give any rebuttal or any cogent reasons as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng high level KPO services and provides data analytics operation management and audit reconciliation services. The TPO and DRP have included this company on the ground that the services provided by this company are basically in the nature of ITES. 16.1 Before us, the ld. counsel for the assessee reiterated that this company is providing high end KPO services which is different from the functions performed by the assessee, In support for its exclusion on similar point, he relied upon the decision of Hon'ble Delhi High Court in the case of Ramp Green Solutions Pvt. Ltd. in ITA No.102/205 wherein this comparable has been removed and also relied upon the Tribunal decision in the case of Macquarie Global Services (supra). 16.2 On the other hand, ld. DR, relied upon the order of the DRP that this company is both into KPO and BPO which was nothing but in the nature of ITES services and therefore, it has rightly been included in the list of comparables. 16.3 We have heard the rival submissions and perused the relevant finding given in the impugned order. From the perusal of the annual report of eClerx Services Ltd., we find that, first of all, due to its exceptional performance during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... huge difference in employees cost ratio to turnover. Thus, in the outsourcing model, the assets deployed (in the form of human resources) and other intangible differs from an entity which operates mostly on its own resources. The ratio laid down by the Hon'ble Delhi High Court in the case of Ramp Green Solutions Pvt. Ltd. (supra) is clearly applicable and accordingly, we direct the TPO to exclude this company from the list of final comparable. CG VAK SOFTWARE AND EXPORTS LTD. (-3.38%) 18. This company has been sought to be included by the assessee-company, which has been rejected by the TPO and DRP on the ground that it does not fulfil the turnover criteria of five crores since its turnover is less than five crores, therefore, it cannot be included in the comparable analysis. 18.1 Before us, the ld. counsel for the assessee had submitted that now this issue has been dealt by the Hon'ble Delhi High Court in the case of Cryscapital Investment Advisors India Pvt. Ltd. vs. DCIT in ITA No.417/2014, wherein the Hon'ble High Court held that turnover filter cannot be used to exclude otherwise functional comparable companies. 18.2 The ld. DR relying upon the order of the DRP submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s very detailed judgment wherein it was required to answer, whether the comparable can be rejected on the ground that they have high profit margin as compared to the assessee in TP analysis, has also dealt upon the turnover factor in detail and reiterated that if the company is functionally comparable then same cannot be rejected on the basis of turnover. Thus, following the ratio laid down by the Hon'ble Delhi High Court, we hold that the company cannot be held to be incomparable simply on the ground of low turnover, unless it is demonstrated that the assets and risk are completely different and are incomparable. Thus, we direct the TPO to include CG Vak Software And Exports Ltd. as a comparable company. R SYSTEMS INTERNATIONAL LIMITED (-17.18%) 19. The assessee has selected this company as comparable in TP study report which has been rejected by the TPO and DRP on the ground that it follows calendar year for its accounting, that is, 1st January to 31st December. The case of the Ld. Sr. DR before us has been that a comparable cannot be accepted when the entire data relating to the relevant financial year is not available. 19.1 On the other hand, the ld. counsel for the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uary to 31st December for maintaining its annual account whereas the accounting year of the assessee is 1st April to 31st March. The Transfer Pricing Officer followed an order passed by the Mumbai Bench of the Tribunal in ACIT v. Hapag Lloyd Global Services Ltd. 2013- TH-68-ITATMUM-TP in which it had been held that a company with a different financial year ending cannot be compared. 28. We are unable to agree with the decision of the Transfer Pricing Officer and of the DRP that affirmed it. The view taken by the Tribunal commends itself to us. It is not the financial year per se that is relevant. Even if the financial years of the assessee and of another enterprise are different it would make no difference. If it is possible to determine the value of the transactions during the corresponding period, the purpose of comparables would be served. The question in each case is whether despite the financial years of the assessee and of the other enterprise being different, the financials of the corresponding period of each of them are available. If they are, the Transfer Pricing Officer must refer to the corresponding period of both the entities in determining whether the two are compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, he requested that this comparable should be sent back to the file of the TPO. He also relied upon the decision of the Tribunal in the case of Xchanging Technology Services India Pvt. Ltd. vs. DCIT in ITA No.1897/DEL/2014 for assessment year 2009-10, wherein on similar ground the matter was remanded to the TPO for fresh consideration. The ld. D.R. too admitted that this matter can be restored back to the file of TPO. 20.1 Accordingly, we set aside the order of the DRP and restore this comparable to the file of the TPO to carry out comparability analysis and if this company is found to be comparable, then same can be included for benchmarking assessee's margin. Needless to say that TPO will give opportunity to the assessee to the assessee to substantiate its case. MICROGENETICS SYSTEMS LTD. (1.84%) 21. Regarding this comparable also, it has been submitted that this comparable was requested for inclusion before the DRP by way of submission. However, the DRP has not given its comment. Since on similar issue we have set aside the order of the DRP and restored the comparable to the file of TPO, accordingly, for this comparable also, we are remitting back the same to the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee itself has consolidated the figures of both the segments under one single head. However, he pointed out that in assessment years 2011-12 and 2012-13, the assessee had benchmarked both these services separately in its TP study report and the same has been accepted by the TPO vide order dated 29/1/2016 and no fault has been found with such approach and no adjustment has been made. Thus, he submitted that looking to the fact that both these activities are entirely different, benchmarking should be done separately, so that proper ALP can be determined. 23.3 On the other hand, the ld. D.R. objected that once the assessee itself has treated both the services under one segment, then it cannot take a different stand that both should be separately benchmarked. 23.4 After considering the rival submissions, we find that though in assessment years 2008-09 and 2009-10, assessee has treated pre and post sales services under one segment, i.e. it has taken consolidated figure to arrive at the margin of 12.92%. However from assessment year 2011-12, assessee has separately benchmarked the same after carrying out detailed FAR analysis, which has been stated to have been accepted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o verify, whether the working capital adjustment has any impact on receivables. 24.3 We have heard the rival submissions and perused the relevant findings given in the impugned order as well as the decisions referred to before us. In the case of McKinsey Knowledge Centre Pvt. Ltd. vs. DCIT (supra) as relied upon by the Ld. Sr. DR, the Tribunal has discussed this issue in detail and observed that granting of working capital adjustment is confined to the international transactions of rendering of services, whose ALP is separately determinable, whereas the international transaction of interest receivables from AE for late realization is a separate transaction. Allowing working capital adjustment in the international transaction of rendering services will have no impact on the determination of ALP of the international transaction of interest on receivables from AE beyond the stipulated period allowed in the agreement. The Tribunal held that working capital adjustment will not have any effect or bearing on the interest on delayed realization of invoice value, because it depends upon the period of realization on transaction to transaction basis and it has nothing to do with opening and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of comparability adjustments" spoke of the need to eliminate differences that may arise from different accounting practices between controlled and uncontrolled transactions. In particular, it was noted under para 3.49 that "a significantly different level of relative working capital between the controlled and uncontrolled parties may result in further investigation of the comparability characteristics of the potential comparable." Mr. Singh submitted that the ITAT erred in disagreeing with the TPO, who had characterised the outstanding receivables as an international transaction by itself which required benchmarking. 10. The Court is unable to agree with the above submissions. The inclusion in the Explanation to Section 92B of the Act of the expression 'receivables' does not mean that de hors the context every item of 'receivables' appearing in the accounts of an entity, which may have dealings with foreign AEs would automatically be characterised as an international transaction. There may be a delay in collection of monies for supplies made, even beyond the agreed limit, due to a variety of factors which will have to be investigated on a case to case basis. Imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to para 10 thereof. He submitted that the DRP has directed TPO to apply "safe harbour rules". However, the same will not apply in this year because, it can be applied prospectively. On the other hand the Ld. DR relied upon the order of the TPO as well as DRP. 25.1 We have heard the parties and gone through the impugned orders. As regard the issue whether forex loss is to be regarded as operating cost or not, is no longer debatable issue as foreign exchange gain or loss relatable to an international transaction is always part and parcel of such underlined transaction. When an international transactions are entered into with the AE, one of whom is resident of other contracting state and the transactions are in foreign currency, then any gain or loss on account of forex is inherent item of cost or profit. For the purpose of determining the profit realized on the international transaction, all operating costs incurred for the purpose of providing the services to the AE have to be taken into account. Therefore, no question arises whether the foreign exchange gain or loss is non-operating in nature or not. Thus, we hold that forex loss or gain is operating costs or gain and accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of assessee. The Learned AR submitted that in the subsequent years 2009-10 and 2010-11, the claimed deduction under sec. 10A was allowed. He referred page Nos. The Learned AR also tried to point out typographical and arithmetical errors in the working of the disallowance under sec. 10A of the Act by the Assessing Officer at page Nos. 6 to 8 of the assessment order. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx 19. Considering the above submissions, we find that in the case of CIT vs. Western Outdoor Interactive (P) Ltd. (supra), the Hon'ble High Court has been pleased to hold that benefit of deduction under sec, 10A is available for a particular number of years on satisfaction of certain conditions under provisions of the Act and unless relief granted for first assessment year in which claim is made and accepted, the Assessing Officer cannot withdraw relief for subsequent years, Undisputedly, it is 8th year of the claim of deduction under sec. 10A of the Act made by the assessee and it has been allowed in earlier years and in subsequent remaining two assessment years, i.e. 2009-10 and 2010-11. Before the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer has committed mistake in coming to the conclusion that amounts do not match. The Learned AR submitted that total addition made to block of computers as per SAP details after correcting above mistakes made by the Assessing Officer is Rs. 32,05,095 which matches with fixed assets scheduled submitted to the Assessing Officer during assessment proceedings. Against the objection of Assessing Officer that invoices raised in US dollars are not verifiable with amounts recorded in books as some amounts is in INR, the submission of the assessee remained that all the details on account of service income was furnished before the Assessing Officer; invoices are usually raised in USD, however, if there is. an adjustment entry to be passed, same is passed in INR in the ledger account; and audit adjustment entry was passed by auditor for financial year 2007-08; bonus expenses pertaining to financial year 2008-09 inadvertently considered by Cadence India as cost for financial year 2007-08 and as the assessee operates on a cost plus model invoice on such cost was raised already in financial year 2007-08; etc. The grievance of the assessee in this regard also remained that the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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