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TMI Blog2017 (10) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... ability. T.P. Adjustment on account of interest on outstanding receivables - Held that:- We direct the TPO to first of all examine the working capital adjustment worked out by the assessee vis-à-vis the comparables and then to see whether the assessee has factored the impact of the receivables on the working capital and thereby pricing/profitability vis-à-vis that of the comparables and see the impact of capital adjustment on outstanding receivables. Foreign exchange fluctuation cost - whether is operating or not? - Held that:- 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 take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hnical 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 benchmarking the impugned transactions. 5. That on facts of the case and in law, the DRP ITPO/AO have erred by identifying companies which are engaged in providing Knowledge Process Outsourcing services as compared to the Appellant for the benchmarking of the international transaction pertaining to IT back office support services. 6. That on facts of the case and in law, the DRP/ TPO/AO have erred in selecting companies in the final set of alleged comparables which have different business/operating models as compared to the Appellant for the impugned transactions. 7. That on facts of the case and in law, the DRP ignored the principle of natural justice by not a giving a finding on the additional evidence filed by the Appellant with respect to comparable companies namely Fortune Infotech Limited, Microland Limited and Microgenetics Systems Limited considered for the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss 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 international transaction pertaining to provision of software development services, IT back office support services: • Rejecting companies having export revenue less than 75 percent of the operating revenue. For international transaction pertaining to provision of software development services: • Rejecting companies having employee cost less than 25 percent of the total sales. 13. That on facts of the case and in law, the DRP/TPO/AO have erred by selecting certain companies which are earning super normal profits as comparable to the Appellant for the impugned transactions. 14. That on facts of the case and in law, the DRP/TPO/AO have erred by allocating the depreciation amounting to INR 1,21,22,486 on an unutilized palladium machine to the operating cost of the Appellant and re-determine the operating margin of the Appellant for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 penalty under section 271 (1 )(c) of the Act, as consequences of the additions made in the assessment order passed under section 143(3) read with section 144C of the Act. 24. That on the facts and in the circumstances of the case, the Learned AO has erred in charging interest under section 2348, 234C and 234D of the Act, as consequences of the additions made in the assessment order passed under section 143(3) read with section 144C of the Act. 1. At the outset, ground nos. 8, 11, 13, 17, 18 & 19 have not been pressed by the Ld. Counsel, therefore, these grounds are dismissed as not pressed. Ground nos. 1 & 2 have stated to be general, therefore, they would get cover while adjudicating the other issues raised in various grounds of appeal. 2. In various grounds of appeal, the assessee has mainly challenged the transfer pricing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee was compensated with cost plus mark up of 15% and actual PLI was arrived at 15.07%. The assessee-company had entered into an agreement with CDS for providing research and development services (for the development of software products) to CDS utilizing groups' R&D technology and other appropriate technology. The CDS specifies R&D services to be performed; products to be developed or used; timeline for completion and specific result to be achieved. The functions performed by the assessee-company under the provision of software research and development services were highlighted in the TPSR in the following manner:- * Marketing and business development CDS conceptualizes the marketing strategy for the sale of its products and services and undertakes functions such as customer lead identification, marketing and securing the orders for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 other risks like, service liability risk; credit and collection risk; foreign exchange risk, etc., it was mainly with CDS and the assessee company had a very low/limited risk. Based on FAR analysis, the assessee carried comparability analysis by adopting TNMM as most appropriate method with PLI (OP/OC) arrived at 15.07%, considering depreciation on palladium machine as non-operating and foreign exchange fluctuation as operating expenditure. In its TPSR the assessee had shortlisted 21 companies' with weighted average OP/OC at 14.35%. Hence it was reported that its margin was at ALP. However, the TPO after detailed analysis, modified the set of comparables and arrived at set of 14 comparable companies, the details of which along with profit margin were as under:- Sl. No. Name OP/OC (%) 1 Akshay Software Technologies Ltd. 12.41 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opment 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. 6.2 Before us, the ld. Counsel for the assessee, Shri Nageshwar Rao, besides reiterating the above objections submitted that, exclusion of Bodhtree's case on similar set of facts has been dealt by this Tribunal in the case of Fiserv India (P.) Ltd. in ITA No.1822/DEL/2014, which has been confirmed by the Hon'ble High Court also. He further relied upon the decision of the ITAT Delhi Bench in the case of Ciena India Pvt. Ltd. in ITA No.1453/DEL/2014. Thus, he submitted that following these decisions of the Tribunal, this comparable case should be excluded from the final list of comparables. 6.3 On the other hand, the ld. Sr. D.R., submitted that the assessee is also providing high end R&D services to its AE which is enabling AE in development of software products. In other words, it is developing products for its AE, therefore, it can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. It has only one segment namely, software development and being a software solution company, it is engaged in providing open and end-to-end web solutions, off shores data management and data consultancy design and development solution. Such functions, though may be said to be carried out by the AE i.e. Cadence, but it cannot be said that similar functions have been performed by the assessee. Even on the risk analysis, the comparability fails as assessee is purely risk mitigated company as discussed above. We find that there are catena of decisions of various Benches of the Tribunal like in case of Cisco Systems India Pvt. Ltd. vs. DCIT (2014) 66 SOT 82, wherein it was held that this company is rendering software business of developing software products and is providing open and end-to-end web solution, software consultancy and design and deve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 848 crores out of its operating revenues of ₹ 20,297 crores and its revenue from software services is ₹ 19,416 crores. Thus, software development services of Infosys Technologies Limited can very well be compared with that of the assessee. Regarding expenditure on R&D expenses, the DRP observed that it is merely 1.3% of the revenue of Infosys, which cannot be said to be substantial. 7.1 Before us, the ld. Counsel for the assessee, Shri Nageshwar Rao, beside aforesaid contention strongly relied upon the decision of the Tribunal in the case of Fiserv India (P.) Ltd. (supra); and the judgment of Hon'ble Delhi High Court in the case of CIT vs. Agnity India technologies Pvt. Ltd. in ITA No.1204/2011 (Del). 7.2 On the other hand, the ld. Sr. D.R., submitted that Infosys Technologies Limited has been assessee's own comparable in this year as well as in the earlier year also and the same was not challenged in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke 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 overseas) and offshore (50,20 per cent) than half of its service, income from onsite services The appellant provides only offshore services (i.e. remotely from India) Expenditure on advertising/sal es promotion and brand building: Rs.80 crores. Rs. Nil (as the 1 percent services are provided to AEs) Expenditure on Research and development Rs.236 crores Rs.Nil Other 100 percent offshore (from India) 7.4 If we apply the aforesaid comparative criteria as laid down by Jurisdictional High Court, we find that the same would be applicable on the facts of the present case also and, therefore, respectfully following the judgment of the Hon'ble Delhi High Court (supra), we hold that Infosys Technologies Limited cannot be compared with the assessee-company, which is operating at minimal risk and is a contract software d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ethod 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 himself founds some irregularity or mistake in any of the process or the steps undertaken, then he is bound to correct in accordance with the settled principles and law. If the assessee points out some mistake or any irregularity in the arm's length result, then it is incumbent upon the TPO to examine and consider the same and if the assessee's contentions are found to be correct or tenable, then he has to accept the same. There cannot be estoppel against correct procedure of law and principles solely on account of acquiescence or mistake of the assessee. The TPO is required under law to analyze every comparables and then only determine the correct ALP based on proper comparability analysis. Thus, we do not find any merit in the contention of the Revenue that simply because the assessee has included these two companies the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 required then in FAR comparability. (D) GOLD STONE TECHNOLOGIES (-38.27%) [For inclusion] 9. Before us, the ld. Counsel for the assessee submitted that TPO has rejected this comparable on the ground that it has insufficient segmental information. There is no dispute by the lower authorities that this company is engaged in similar software development activities. The ld. Counsel submitted that now the entire segmental details are available and, therefore, this matter can be restored back to the file of the TPO. Ld. DR also did not objected that, if the entire segmental details are available then matter can be examined fresh. 9.1 In view of the above contentions made by the parties, we are setting aside the order of the DRP on this comparable and restore the matter to the file of the TPO to see, whether segmental information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 comparables are as under:- S.No. Comparable OP/OC in % 1 Accentia Technologies Ltd. 52.00 2 Coral Hub 36.93 3 Cosmic Global 48.20 4 e-Clerx Services 47.00 5 Genesys International Limited 58.45 6 Crossdomain Solutions Pvt. Ltd. 29.4 7 Informed Technologies India Ltd. 23.16 8 Aditya Birla Minacs Worldwide Ltd. 1.71 AVERAGE 37.11 Accordingly, he determined the arm's length price in the following manner:- Rs. Operating cost 40,90,51,247 Arms Length Margin (%) 37.11 Arms Length Price (ALP) 56,08,50,165 Price received 47,06,89,564 Shortfall being adjustment u/s 92CA 9,01,60,601 12. After giving effect to the DRP's order, finally 7 sets of comparables were left as DRP has excluded Genesys International Limited and accordingly final set of comparables from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. DCIT in ITA No.1875/HYD/2012. 14.2 On the other hand, the ld. Sr. DR, strongly relied upon the order of the DRP and also decision of the Tribunal in the case of Evalueserve.com Pvt. Ltd. vs. ITO in ITA No.4001/DEL/2013. 14.3 We have considered the rival submissions and also perused relevant finding given in the impugned order. Accentia Technologies Ltd. has two main business areas namely, health care receivable cycle management services and software products for BPOs. It earns substantial part of its income from coding activities which is primarily related to e-software development. Various streams of income shown in the annual report reflects that it has income from medical transcription, billing and collections, income from coding, etc. It is not in dispute that segmental information for each streams of income are not available, therefore, it would be very diffi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainly 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 to why this comparable company was selected and chosen by the assessee after carrying out FAR analysis not only in earlier years, but also in subsequent assessment years i.e. 2010-11 and 2011-12 again on carrying same FAR analysis. It is only in this year that assessee is seeking exclusion on the ground that it has a different business model. Such pick and choose of comparables every year according to the suitability of the margin definitely amounts to cherry picking. The assessee has not demonstrated before us that in earlier years and subsequent years the business model of Cosmic Global Ltd. is different, i.e., it does not outsource its substantial work. No doubt assessee can object to inclusion or exclusion of a comparable company contrary to its TP Study Report by citing cogent grounds and pointing out the factors vitiating the comparability and TPO has to exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the year, it has been chosen as best KPO Company and it has also outsourced its substantial work to the third party during the year. The assessee on the other hand is providing back office support services and such services are being provided by its own human resources, that is, it is not outsourcing its work. Without going into much analysis, we find that the Hon'ble Delhi High Court in the case of Ramp Green Solutions Pvt. Ltd. (supra) has directed the TPO to exclude this company on the ground that it is providing KPO services and most of its work was outsourced to other service providers which affects the profitability. Thus, respectfully following the judgment of the Hon'ble Delhi High Court (supra), we direct the TPO to exclude this comparable from the comparability list. VISHAL INFO TECH. (Now CORAL HUB LTD.) (27.77%) 17. This company has been sought to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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 that here in this case the turnover was less than ₹ 1 crore and when turnover is so small, then it cannot be compared under FAR. In support, he also relied upon the decision of the Tribunal in the case of S&P Capital IQ (India) (P) Ltd. vs. DCIT, (2016) 72 taxmann.com 236. 18.3 We have heard the rival submissions and perused the relevant finding given in the impugned order. The main reason for not including this company is that its turnover is less than ₹ 1 crore. So far as exclusion of this comparable on basis of turnover filter criteria of less than ₹ 1 crore, we find that, first of all, it was a comparable chosen by the assessee and at the time of selection process the assessee as stated had not applied any turnover filter for accepting or rejecting the comparables. Once the turnover filter has not been applied at the quantitative level then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee, relied upon the decision of the Hon'ble Delhi High Court in the case of McKinsey Knowledge Centre India PVT. LTD. in ITA No.217/2014 and CIT Vs. M/s. Mercer Consulting India Pvt. Ltd., ITA No. 101 of 2015 dated 24.08.2016. 19.2 We have heard rival submissions and also perused the relevant finding given in the impugned order. This comparable company has been rejected not on the ground of functionality albeit on the ground that it is following the financial year accounting from January to December (i.e., calendar year). Though a comparable company following a different financial year may not be generally taken for comparability analysis, however, if financial data is available for all the quarters including January to March and it is otherwise possible to determine the value of the transaction as well as the profitability during the corresponding pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion 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 comparable or not for the purpose of determining the ALP. 29. As noted by the Tribunal, the audit accounts of R System International Ltd. for the year ending 31.12.2008 had been given under one column and the data for the quarter ending 31.03.2009 and 31.03.2008 (both audited) had been given in two other columns. Thus, as rightly held by the Tribunal, if from the yearly data ending 31.12.2008, the results of the quarter ending 31.03.2008 are excluded and if the results for the quarter ending 31.03.2009 are included, it is possible to obtain the data for the financial year 01.04.2008 to 31.03.2009. 30. This view is not contrary to Rule 10(B)(4) which reads as under:- "10B(4) The data to be used in analysing the comparability of an international transaction shall be the data relating to the financial year in which the international transaction has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as 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 file of the TPO for carrying out comparability analysis for benchmarking assessee's margin. 22. In view of our aforesaid finding and directions, we direct the TPO to benchmark assessee's margin vis-à-vis the comparables as decided above and arrive at appropriate Arm's Length Price for both the segments as decided above. III. T.P. adjustment on Provision of pre-sales marketing and post-sales technical support services 23. Now coming to the adjustment of arm's length price relating to provision of pre-sales marketing and post-sales technical support services, the brief facts qua the issue are that, the assessee provides pre-sales marketing to Cadence, Ireland and post-sales technical services to third party customers in India on behalf of Cadence. The services are provided by the assessee from its unit located in Bangalore primarily with a view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs 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 TPO. Under these facts that the transaction of pre-sales and post sales have been recognised as two separate transaction having different functions, then, for this year also, we are setting this issue to the file of the TPO, who shall consider assessee's submission for separately benchmarking these activities/ functions and whether these two transactions have been accepted by the Department in subsequent years. The assessee will substantiate and benchmark both the transactions after carrying out detailed comparability analysis in fresh search process, so as to justify its arm's length margin. Accordingly, this issue is remanded back to the file of the TPO, who shall decide this issue afresh after giving due opportunity of hearing to the assessee. IV. T.P. Adjustment on account of interest on outstanding receivables:- 24. So far as adjustment on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceivables 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 closing values of inventories, receivables and payables. First of all, for calculating the working capital adjustments, generally trade receivables, inventory and trade payables are considered to identify the differences in the levels of working capital. If TNMM is applied relative to an appropriate base, like costs, sales or assets, then any differences in working capital levels to that base is measured vis-à-vis the comparables. Firstly, the value for differences in the levels of working capital between the tested party and the comparables relative to the appropriate base (i.e., costs, sales or assets) and reflecting the time value of money by using an appropriate interest rate is calculated; and then only adjustments of the results is made to reflect the differences in levels of working capital. Now post the Tribunal order the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les' 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. Importantly, the impact this would have on the working capital of the Assessee will have to be studied. In other words, there has to be a proper inquiry by the TPO by analysing the statistics over a period of time to discern a pattern which would indicate that vis-a-vis the receivables for the supplies made to an AE, the arrangement reflects an international transaction intended to benefit the AE in some way. 11. The Court finds that the entire focus of the AO was on just one AY and the figure of receivables in relation to that AY can hardly reflect a pattern that would justify a TPO concluding that the figure of receivables beyond 180 days constitutes an international transaction by itself. With the Assessee having already factored in the impact of the receivables on the working capital and thereby on its pricing/profitability vis-a-vis that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit 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 accordingly, we allow this ground raised by the assessee. 26. As regard the corporate issue as raised in grounds Nos. 20, 21 and 22, we find that the impugned issue relates to Director's remuneration between STP unit and non-STP unit. It has been admitted by both the parties that this matter had come for consideration before the Tribunal in the assessee's own case in assessment year 2008-09, in ITA No. 39/DEL/2013, order dated 20.05.2016, this matter has been remanded back to the file of the AO for fresh examination. 26.1 After going through the decision of the Tribunal and the relevant finding given in the impugned order, we find that this precise issue has been dealt by the Tribunal in the assessee's own case. The relevant observation of the Tribunal is reproduced hereunder:- "14. In support of the grounds i.e. Ground Nos. 6 to 8, the Learned AR s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment 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 ITAT, as discussed above, the Learned AR has tried to meet out the objections raised by the Assessing Officer in making the disallowance of the claimed deduction. In brief, the submission of the assessee against the objection of the Assessing Officer that the assessee has intentionally debited directors' salary to non-STP units to reduce its taxable income, the submission of the assessee remained that the assessee maintains its account in a manner that costs relating to STP and non-STP units are booked in the respective units; MD responsible for establishing/leading strategic R&D partnership and R&D central operations functions for NOIDA site where major portion of R & D work was carried out; director financed responsible for finance and accounting, legal, tax and company secretarial compliance functions at Noida; STP unit at Bangalore sinc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Assessing Officer has not followed DRP's directions. It was submitted that as per directions issued by the DRP, the Assessing Officer was directed to rectify the details of accounts submitted by the assessee with regard to additions in the computer account and differed Revenue. Keeping in view these material submissions of the assessee, we set aside the matter to the file of the Assessing Officer to verify the above submissions and decide the issue afresh in view of the decision of Hon'ble Bombay High Court in the case of CIT vs. Western Outdoor Interactive Pvt. Ltd. (supra). The ground Nos. 6 to 8 are thus allowed for statistical purposes." 26.2 Thus, respectfully following the earlier year's precedence, we also remand back this issue to the file of the Assessing Officer with similar directions and to be decided in the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X
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