9911796707
TMI Blog2018 (10) TMI 1816X X X X Extracts X X X X X X X X Extracts X X X X ..... differences of the comparables with the assesee company while arriving at the arm s length margins - HELD THAT:- The assessee is directed to furnish the relevant working capital adjustments and adjustments due to risk differences to be made in the final list of comparables as determined pursuant to this tribunal s order, before the ld TPO. The ld TPO is directed to verify the same and give suitable adjustments in the net margins of the final comparables while arriving at the arm s length margin. Accordingly, the Ground raised by the assessee are allowed for statistical purposes. Disallowance u/s 14A in the computation of book profits u/s 115JB - HELD THAT:- We hold that the disallowance u/s 14A of the Act should be made based on actual amounts incurred for the purpose of earning exempt income and not by placing reliance on the computation mechanism provided in Rule 8D(2) of the Rules. Therefore, the ld AO shall work out disallowance in terms of the clause (f) to Explanation 1 of Sec. 115JB of the Act independently after considering the expenses debited in the profit loss account as mandated under the provisions of law. Accordingly, the Ground raised by the assessee is allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purpose of determining the Arm s Length Price (ALP) of international transactions entered into by the assessee with its Associated Enterprise (AE). 5. The brief facts of this issue are that the assessee is engaged in the business of rendering software development services. The assessee renders services to Anshin Software Corporation , USA incorporated as a company under the laws of California, USA. Infact the assessee is a captive service provider for Anshin Software Corporation, USA. It is not in dispute that the assessee and Anshin Software Corporation , USA are Associated Enterprises (AEs) because of common shareholding in both the companies by Shri Arnab Debnath and Miss Mausumi Debnath. During the year under consideration, the total turnover of the assessee company was ₹ 16,62,87,634/- and out of which ₹ 15,88,37,635/- constitutes export turnover. The assessee received a sum of ₹ 15,88,37,635/- for rendering software development services from its AE. Thus the entire export turnover constitutes sale to AE in USA. Under the provisions of Section 92 of the Act, any income arising out of an international transaction has to be computed having regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No Utilization risk Yes No Credit and collection risk Limited No Intellectual Property right risk No Yes Foreign exchange risk Yes No 5.3. The details of assets employed as on 31.3.2011 by assessee are as under:- Tangibie Intengible Assets Amount (INR) Computer Allied Equipment 4,031,308 Computer software 1,142,753 Office equipment and others 2,134,494 Furniture and fixtures 3,307,808 Motor car 34,156 Total 10,650,518 5.4. Based on the results of the functional, risk and asset analysis, the assessee concluded that it can be characterized as Software Service Provider bearing limited risks typically borne by captive service provider in IT industries. 5.5. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y. 2008-09 Weighted average of operating profits on operating costs (%) 1 Akshay Software Technologies Limited 1.00% -3.14% 12.27% 3.39% 2 Ancent Software International Limited -16.78% NA -4.76% -11.23% 3 Aztecsoft Limited (Consolidated) NA NA 0.28% 0.28% 4 CG-VAK Software Exports Limited (Segmental) 3.48% -12.31% 1.01% -2.45% 5 Goldstone Technologies -3.15% -2.46% -4.58% -3.52% 6 Helios Matheson Limited Information Technology Limited 9.74% NA NA 9.74% 7 Larsen Toubro Infotech Limited 15.84% 18.01% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the comparable companies of 7.73% , the assessee concluded that the international transaction with its AE was at arm s length. 6. The ld AO made a reference u/s. 92CA (1) of the Act to the Learned Transfer Pricing Officer (in short the ld TPO) for determination of arm s length price (in short ALP) in respect of the international transaction between the assessee and its associated enterprises ( in short AEs). The ld TPO vide its order dated 22.1.2015 passed u/s 92CA(3) of the Act, firstly accepted the Transactional Net Margin Method (TNMM) as the Most Appropriate Method (MAM) of determining the ALP of the international transaction. He however, rejected the action of the assessee in adopting the weighted average of three financial years operating profit to operating cost to arrive at the profit margins (arithmetic mean) of the comparable companies. He held that multiple year data cannot be used for comparison purpose and it was only the data of the relevant previous year that has to be used in arriving at the arithmetic mean of profit margin of the comparable companies. The ld TPO observed that the assessee had also carried out certain working capital adjustments without expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .21% 10 E-Infochips Bangalore Ltd 26.70% 11 ASM Technologies Ltd 18.52% 12 Onward Technologies Ltd 14.70% 13 Axis IT T Ltd 26.36% 14 Thirdware Solutions Pvt Ltd 15.03% 15 Acropetal Technologies Ltd (segmented) 49.88% Simple Arithmatic Mean 27.96% Thus the Arm s Length Mean Margin of comparables chosen by the ld TPO was arrived at 27.96%. Description Amount (Rs.) Software Development Service 16,62,87,634/- Operating Revenues 16,62,90,006/- Expenses debited to P L account 14,85,39,128/- Operating Expenses 14,85,39,128/- Operating Profit 1,77,50,87 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted c. Goldstone Technologies Limited d. Helios Matheson Information Technology Limited e. Larsen Toubro Infotech Limited f. Mindtree Systems Limited g. Lucid Software Limited h. Sankhya Infotech Private Limited i. Prelude Sys India Limited j. 8K Miles Software Services Limited 7.1. The assessee submitted before the ld DRP that the ld TPO erred in computing profit margins of certain comparables . The ld DRP directed the ld TPO to verify the computational error if any and adopt the correct profit margins to arrive at the Arm s length margin of comparables. The ld TPO after incorporating the directions of ld DRP arrived at the final list of comparables as under:- Sl.No. Comparable PLI= OP/TC 1 Acropetal Technologies Ltd (segmented) 49.88% 2 Aurum Soft Systems Ltd 19.35% 3 Sagarsoft (India) Ltd 26.79% 4 Spry Resources (India) Pvt Ltd 21.62% 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the revenue are in appeal before us. 9. We have heard the rival submissions. We find that the Ground No. 6 raised by the assessee is with regard to use of multiple year data for benchmarking the international transactions of the assessee with its AE to be at arm s length. We find that this issue has already been held against the assessee in its own case by this tribunal for the Asst Year 2010-11 dated 4.10.2017 reported in (2017) 87 taxmann.com 169 (Kolkata Trib.) wherein it was held as under:- 15. As far as ground no. 5 is concerned, the admitted position of law is that multiple data cannot be used in the transfer pricing analysis as per the law as it stood at the relevant point of time in A.Y.2010-11. Rule 10B(4) of the Income Tax Rules, 1962 (Rules) provides that the data to be used in analysing the comparability of an uncontrolled transaction with an international transaction shall be the data relating to the financial year in which the international transaction has been entered into. This being the admitted position, we are of the view that there is no merit in ground no. 5 raised by the assessee and we hold that for the purpose of comparability, multiple year data ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of software application package. The ld. AR vehemently laid emphasis on non-application of employee cost filter by the ld. TPO with regard to this comparable even though one of the parameters/ filters stated by the ld. TPO in his order is to reject companies having employee cost less than 20% of turnover. In the instant case, it is not in dispute that the employee cost percentage of Acropetal is 11.51% of turnover (i.e less than 20% of turnover). The ld. AR has argued that the ld. TPO applied the incorrect operating margin of this comparable. The assessee pleaded that this comparable is functionally different and hence requires to be excluded . It was submitted before the ld. TPO that for the assessment year 2010-11 i.e. immediately preceding year, this comparable, even though was sought to be included in the show cause notice to the assessee , was later dropped by the ld. TPO himself from the list of comparables by applying the employee cost filter. This point was also brought to the notice of the ld. TPO by the assessee while filing its reply to the show cause notice before the ld. TPO. Even though before the ld. TPO, the assessee had stated that the employee cost was 15.91% o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an 20% of sales. In the instant case, the said comparable is having related party transactions of 21.35% of sales. Hence the same even according to filters applied by the ld. TPO, ought to have been excluded from the final list of comparables. The ld. TPO is hereby directed to exclude the same. All other objections raised by the assessee with regard to this comparable are left open and no opinion is given herein. Accordingly, ground no. 13 raised by the assessee is allowed. 10.3. E-Infochips Bangalore Limited We find that the ld TPO had included this company in the final list of comparables for computing the arm s length margin. We find that the inclusion of the said company was the subject matter of adjudication by this tribunal in assessee s own case for Asst Year 2010-11 in ITA No. 587/Kol/2015 dated 4.10.2017 wherein it was held as under:- 16. As far as ground no. 6 raised by the assessee is concerned, the same is with regard to the action of the TPO and the DRP in accepting E-Infochips Bangalore Limited and Inteq Software Limited as comparable companies with that of the assessee. As far as the aforesaid companies are concerned the facts are that admittedly the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bilities to Fujitsu Fujitsu's associated companies. We find that these facts have also been acknowledged by the Ld. TPO at page 77 of his order. The Ld. AR stated that it would be worthwhile to note that Infinite Date Systems Pvt. Ltd. completed its three years contract with Fujitsu, post which, the business was transferred to Fujitsu and thus the company has been merged with its Holding Company-Infinite Computer Solutions (India) Ltd. during the financial year 201112. We are inclined to agree with the submissions of the Ld. AR that this Comparable Infinite Date Systems Pvt. Ltd. was created for purpose of transfer of business. Hence, the nature of services and business model of assessee company and comparable company are entirely different. Apart from this, we also find that there exist abnormal circumstances in the said comparable. During the last 3 years, variations in margins earned show an abnormal circumstances leading to huge fluctuations and supernormal profit, the margin earned by Infinite is 88.25% which is abnormally high. It was argued that such companies which are making more than twice the arithmetical mean margin as compared by the Ld. TPO should not be conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. It was also held by the DRP that on the very same reason of acquisition of various companies, being an extraordinary event, it had an impact on the profit of the company and the said company was directed to be excluded. 18.1 For the relevant A.Y. 2010-11, the Ld. Counsel for the assessee has drawn our attention to the information available on Accentia Technologies Ltd. to demonstrate that the said company is not diversified knowledge process outsourcing activities. It is seen there from that the said company is involved in Healthcare documentation as well as receivables, management services including installation and maintenance of all software, hardware and band width infrastructure required for the same, deployment of man power and service delivery in all these areas. It is also seen that it is engaged in legal process outsourcing. From Schedule-IV showing the fixed assets of the assessee, it is also seen that the said company owns goodwill/brand/IPRS (Intellectual Property Rights). From the notes to the accounts, it is also seen that a subsidiary of the company Asscent Infoserve Pvt. Ltd., has been amalgamated with the company consequent to which, assets and liabilities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid decision of the Tribunal we are of the view that EInfochips Bangalore Ltd., should be excluded from the list of comparable companies while working out the arithmetic mean of the comparable companies. We find that this tribunal had excluded the said company from the list of comparables on the ground that the same is not functionally comparable as the said company was involved in the business of providing IT as well as IT Enabled Services and that segmental details of IT and ITES were not available. We find that the same situation continues for the year under consideration also which remains undisputed before us. Apart from this, we also find that the said comparable has related party transactions of 37.96% of operating revenue (171291331 / 451181724*100) . The evidences in this regard are enclosed in pages 1075 and 1082 of Paper Book Volume II. We find that the ld TPO had applied one of the filters for rejecting the comparables where related party transactions are more than 20% of sales. In the instant case, the said comparable is having related party transactions of 37.96% of sales. Hence the same even according to filters applied by the ld TPO ought to have been excluded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the comparables where related party transactions are more than 20% of sales. In the instant case, the said comparable is having related party transactions of 91.38% of sales. Hence the same even according to filters applied by the ld TPO ought to have been excluded from the final list of comparables. No opinion is hereby given on the other objections raised by the assessee with regard to this comparable except related party transactions filter. Hence we hold that Aurum Soft Sytems Limited should be excluded from the list of comparables for arriving at the arm s length margin. Accordingly, the Ground No. 10(c ) raised by the assessee is allowed. 10.6. ASM Technologies Limited The Ground No. 10(d) raised by the assessee is with regard to erroneous inclusion of ASM Technologies Limited as a comparable while arriving at the arm s length margin. We find that the assessee had objected to the said inclusion on the ground that the same is functionally not comparable and the said comparable failing the related party filter. We find that the said comparable has purchases with related party to the tune of ₹ 1196.06 lakhs out of total software development expenses of ₹ 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s offerings to a larger ERP Oracle client base in the US and thus broaden its revenue margins. Extracts from Directors Report to the Shareholders of the company Future Outlook With the Global Economic trend looking positive and good, after two turbulent years, there is a greater learning and changes envisaged in the way the Business / Industries plan and execute their charter. This is good news for the IT industry in particular lending itself to provide solutions for the Growth Phase. ASM will leverage this phase in consolidating and growing the organization by offering more services to the existing clients across other geographies and new client acquisitions. This growth phase will also set a platform to have more long term strategic partnerships with the customers moving up the value chain from project mode and center of excellence. The existing clients will be offered cross solutions across various technologies thus moving from a Technology Competency to Industry Vertical Specialisation relationship thus aligning more deeply with the Client s business. This model will be extended to the new Clients as the relationship progresses. New client acqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia Ltd., in the final set of comparables chosen by the TPO is concerned, the plea of the Assessee is that these companies are not functionally comparable with that of the Assessee. It is the plea of the Assessee that this company is in software consultancy, application development services, application management support services, enterprise application space. Our attention was drawn to this companies website extract copies of which are at page 612 of Vol-II paper book filed by the Assessee. Our attention was also drawn to the extract of this companies financials at page 607 paper book-II wherein the fact that it is developing software products from July, 2009 and that the products will be available for sale to the customers during the financial year 2010-11 is clearly spelt out. Our attention was also drawn to the fact that in the profit and loss account there is reference to income from sale of licenses which is not the case normally in the case of companies providing software development services. Finally it was submitted that the segmental information of these companies is not available as the primary segment is based on geographical area. Our attention was also drawn to seve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urred expenses towards imports of software services, evidencing outsourcing of software services unlike the appellant company. Hence, it is functionally not comparable and cannot be treated as a comparable to assessee. We order accordingly. We further observe that the Co-ordinate Bench, Delhi in the case of Sun Life India Service Centre Pvt. Ltd. v. DCIT (ITA NO. 5799/Del/2012 for AY 2008-09 has held as under :- 21. We hove perused the Annual report of this company which is available on pages 100 onwards of the paper book. The Profit Loss Account of this company is at page 107, which shows 'Sales Other income'. Bifurcation of 'Sales ' is available as per Schedule 12, which comprises of 'Sale of licence' amounting to RS. 39.16 lac, 'Software services' amounting to ₹ 7.67 crore, 'Export from SEZ unit' amounting to ₹ 26,39 crore, 'Export from STPI unit' amounting to ₹ 16.88 crore and 'Revenue from subscription' amounting to RS. 92.93 lac. These tiqures indicate that apart from the revenue from 'Software services' which is only to the tune of ₹ 7.67 crore, this company earned total gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fit comparable in the case of assessee for the purpose of making T.P. adjustment. We allow this ground of assessee.' 23. Respectfully following the aforesaid decision, we direct exclusion of Thirdware Solution as a comparable by the TPO for arriving at arithmetic mean of comparable companies. The ld AR argued that there is no change in functions performed by the assessee company during the year under consideration when compared to that of in the immediately preceding assessment year. This point was not disputed by the revenue before us. Hence we hold that the decision rendered by this tribunal in assessee s own case for Asst Year 2010-11 supra on the ground of functionally not comparable would hold good for this year also. Accordingly, we direct the ld TPO to exclude Thirdware Solutions Limited from the list of comparables while arriving at the arm s length margin. We would like to make it clear that this comparable has been directed to be excluded only on the ground of functionally not comparable and no opinion is given on other arguments advanced by the ld AR before us. Accordingly, the Ground No. 10(e) raised by the assessee is allowed. 10.8. Axis IT T Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omparable for arriving at the arm s length margin eventhough the same is not functionally comparable. The ld AR submitted that the said company is engaged in software consultancy services and sale of software products. He argued that company engaged in provison of software consultancy services is different from company engaged in software development services. We find that the ld TPO had obtained information u/s 133(6) of the Act during the course of transfer pricing assessment proceedings from the said company wherein the said company had replied that it provides software development services. The ld TPO by placing reliance on the same held the said company to be a valid comparable with the assessee for computing the arm s length margin. We also find from the profit and loss account of the said company under the head Revenue from Operations , it is clearly mentioned that it had derived income from software development to the tune of ₹ 4,30,01,280/- out of total revenue of ₹ 4,30,07,534/-. In view of this, we are inclined to dismiss the preliminary argument advanced by the ld AR that this company is not engaged in software development. Accordingly, we hold that the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both on financial parameters and functional compatibility. The ld AR argued that the company is engaged in the business of software services and more than 90% revenue is derived only from IT Services. He argued that as per annual report for the year under consideration, the company has made operating profits of ₹ 1,31,24,482/-. It was also pointed out that in the financial years 2008-09 and 200910, it had earned operating profits of ₹ 1,25,70,603/- and ₹ 69,10,523/- respectively. It was also submitted that the break up of revenue from IT and ITES was duly provided to the ld TPO. However segmental margins were not provided for want of segmental data. The ld AR fairly agreed that though this company was treated as functionally comparable by the order of this tribunal in assessee s own case for Asst Year 2010-11, in that year also, there was no availability of segmental data before the ld TPO and that this tribunal did not give any finding on the same. We have been consistently holding that in the absence of segmental data , the segmental margins related to software services segment could not be identified thereby making it comparable with the related margins of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Technologies Pvt. Ltd. Therefore it appears that the plea of the Assessee that the basis assumption of the TPO and DRP on the comparability of this company that it is a consistent loss making company is erroneous and therefore their orders are set aside. However, the question still remains as to whether the allocation of expenses and the attribution of the foreign exchange gain to the software development services segment of the comparable company CG-VAK software and Exports Ltd., has not been considered by the TPO or DRP. Further it has also to be seen as to what were the reasons for the losses in the case of this comparable company. If all these factors are considered and due adjustment can be given to the operating margins of this company, than the same should be considered as comparable company and added to the list of comparables for determining Arithmetic mean of profits of comparable companies. The TPO is directed to consider the comparability of this company afresh in the light of the aforesaid observations and also taking note of decision rendered on this aspect by Tribunals and Hon'ble High Courts if any. Both the parties before us fairly agreed that let similar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omparable on facts. Accordingly, the Ground No. 17 raised by the assessee for Maveric Systems Limited and Thinksoft Global Services Limited is allowed. 11.4. R Systems International Limited We find that the assessee vide Ground No. 17 had sought to include this company R Systems International Limited in the list of comparables. But at the time of hearing, no arguments were advanced by the ld AR before us. Hence we do not deem it fit to interfere with the action of the ld TPO in rejecting the said comparable. Accordingly, the Ground No. 17 raised by the assessee in respect of R Systems International Limited is dismissed. 11.5. Helios and Mathesan Information Technology Limited We find that this company has been rejected by the ld TPO in the list of comparables while computing the arm s length margin for having different financial year with that of the assessee. We find that this issue has been the subject matter of adjudication by this tribunal in assessee s own case for the Asst Year 2010-11 in ITA No. 587/Kol/2015 dated 4.10.2017 wherein it was set aside to the file of ld TPO with some directions. But during the course of hearing, the ld AR stated that the reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22 raised by the assessee are with regard to nonadjustment of net margins by considering the working capital differences and functional and risk differences of the comparables with the assesee company while arriving at the arm s length margins. We find that this issue has already been the subject matter of adjudication by this tribunal in assessee s own case for the Asst Year 2010-11 in ITA No. 587/Kol/2015 dated 4.10.2017 wherein it was held as under:- 41. As far as Gr. No. 15 and 16 are concerned, they project the grievance of the Assessee in the action of the TPO and DRP in not allowing adjustments to the arithmetic mean of profits of the final comparable companies towards working capital and other risks which according to the Assessee are required to be given under the provisions of Rule 10B(1)( e) of the Income Tax Rules, 1962 (Rules). 42. The DRP dealt with this issue as follows: Decision: 10.2 The issue has been considered. The Assessee has objected to TPO not allowing working 'capital adjustment to the margins of the comparables as well as in its own case the-claim of working capital adjustment is not automatic the issue of working capital is relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e may be used if it reflects the better level of working capital over the year. In our view, working capital adjustments are required to be made because these do imp ac t the profitability of the comp any. Rule 10B (2)( d) al so provides that the comparability has to be Judged with respect to various factors including the market conditions, geographical conditions, cost of labour and capital in the market. Accounts receivable/payable effect the cost of working capital. A company which has a substantial amount blocked with the debtors for a long period cannot be fully comparable to the case which is able to recover the debt promptly. In our view, the average of opening and closing balance in the account receivable/payable for the relevant year may be adopted which may broadly give the representative level of working capital over the year. Even if there is some difference with respect to the representative level, it will not effect the comparability as the same method will be applied to all cases. Working capital adjustment cannot be denied to the assessee only on the ground that the assessee had not made any claim in the TP study if it is possible to make such adjustment. 44. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arate line item under Assets till it is fully written off. We also find from the annual report of the said company that it has work in progress in respect of its projects to the tune of ₹ 46,31,175/- as on 31.3.2011 and Net Block of Software (in-house) developed under its Fixed Asssets of ₹ 22,35,666/- as on 31.3.2011 . We find that the ld AR argued that the software products developed by the assessee in the earlier year were encashed during the year in the form of receipt of revenues thereon which is evident from the annual report. Hence it could be safely concluded that the said company s main stream of revenue is out of sale of software products and not only software development thereby making it functionally not comparable with the assessee. Hence we hold that the same has been rightly rejected by the ld DRP which in our considered opinion, requires no interference. Accordingly, the Ground No. 2 raised by the revenue in respect of Lucid Software Limited is dismissed. 14.1. Prelude Systems India Limited The assessee rejected this company in the list of comparables while benchmarking its international transactions. The ld TPO included this company in the lis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 8K Miles Software Services Ltd should be excluded from the list of comparables for arriving at the arm s length margin. Accordingly, the Ground No. 2 raised by the revenue in respect of 8K Miles Software Services Ltd is dismissed. 14.3. Ybrant Digital Pvt Ltd (previously LGS Global Ltd and before that Lycos Internet Ltd) The assessee included this company in the list of comparables while benchmarking its international transactions. The ld TPO rejected this company in the list of comparables while computing the arm s length margin without any discussion in his order. The ld DRP vide para 8.1 of its order directed inclusion of the said company in the list of comparables on the ground that the functions performed, assets employed and risks assumed by the said company are similar to that of the assessee. Against this, the revenue is in appeal before us. We find from the annual report for the financial year ended 31.3.2011 of the said company, that it is engaged in providing software services and even the income from software development is accounted for on the basis of software developed and billed to clients on acceptance and / or on the basis of man days / man hours as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecial Bench supra. We hold that the disallowance u/s 14A of the Act should be made based on actual amounts incurred for the purpose of earning exempt income and not by placing reliance on the computation mechanism provided in Rule 8D(2) of the Rules. Therefore, the ld AO shall work out disallowance in terms of the clause (f) to Explanation 1 of Sec. 115JB of the Act independently after considering the expenses debited in the profit loss account as mandated under the provisions of law. Accordingly, the Ground No. 25 raised by the assessee is allowed for statistical purposes. 18. The Ground No. 26 raised by the assessee is with regard to the action of the ld AO in adding back the disallowance conceived by the ld TPO in the sum of ₹ 1,42,89,924/- towards adjustment to ALP in the computation of book profits u/s 115JB of the Act. This issue is now settled in favour of the assessee by the decision of the co-ordinate bench of Delhi Tribunal in the case of M/s Cash Edge India (Pvt) Ltd vs ITO in ITA No. 64/Del/2015 for Asst Year 2010-11 dated 23.9.2015 wherein it was held that :- 36. We have considered the rival submissions and perused the material on record. It is se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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