9911796707
TMI Blog2022 (7) TMI 1294X X X X Extracts X X X X X X X X Extracts X X X X ..... are not adjudicated by this Tribunal and they are left open. Accordingly, ground No. 1 2 raised by the assessee are allowed. Addition on account of un-reconciled receipts with Form 26AS in respect of unit eligible for deduction u/s.10A - HELD THAT:- It is not in dispute that assessee is eligible for deduction u/s.10A of the Act. It is not in dispute that the said un-reconciled receipts from sister concern also pertains to 10A unit of the assessee. The deduction u/s.10A of the Act as directed by the ld. DRP was not granted to the assessee on the ground that the said un-reconciled receipt of Rs.10,33,974/- was not included in Form No.56F issued by the Chartered Accountant for claiming deduction u/s.10A of the Act. We hold that once the receipt whether reconciled with AIR data or not reconciled with AIR data, pertains to 10A Unit, then the whole of the profits of the said undertaking / eligible unit would be eligible for deduction u/s.10A of the Act. This is the mandate provided in the provisions of Section 10A of the Act itself. Accordingly, any addition made which goes to increase the profits of the 10A Unit would only result in consequential increase in grant of deduction u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hman Brothers Services India Pvt. Ltd., a 100% owned captive business process outsourcing unit of Nomura Group in India. The assessee is engaged in provision of software development services and Information Technology Enabled Services (ITES) for business and technology process outsourcing to its group companies i.e. Associated Enterprises (AEs) outside India. During the year ended 31/03/2009, the assessee provided ITES to its AEs to the tune of Rs.425.22 Crores. The assessee benchmarked the said international transaction using Transactional Net Margin Method (TNMM) as the Most Appropriate Method (MAM). The assessee charged a net margin of 18% on operating cost to its AEs which is worked out as under:- Total Income (ITES) - Rs.425,22,43,612/- Total Cost - Rs.360,35,96,282/- Net Operating Profit - Rs. 64,86,47,330/- Net Operating Profit on Total Cost (OP/TC) - 18% 3.1. The ld. TPO included the following comparable companies in the final list of comparables wherein average mean margin of the comparable companies was arrived at 29.415% as under:- sl. No. Name of the Company Margin as per TP report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of CG-VAK Software and Exports Ltd., with that of the assessee company in the transfer pricing order. The action of the ld. TPO was upheld by the ld. DRP. 3.4. We find from the materials available on record, the ld. TPO himself had included CG-VAK Software and Exports Ltd., as a good comparable in A.Y.2007-08 as it was making profit during that year. This is evident from the order passed by the ld. TPO u/s.92CA(3) of the Act dated 20/09/2010 for A.Y.2007-08. We find that in the case of sister concern of the assessee i.e. Nomura Structured Finance Services Pvt. Ltd., vs. DCIT in ITA No.2009 and 2130/Mum/2014 for A.Y.2009-10 dated 31/03/2016 (which is the same assessment year under consideration before us), this tribunal had an occasion to consider inclusion of CG-VAK Software and Exports Ltd., as a good comparable. In that order, the Revenue had raised a ground in its appeal before this Tribunal in ITA No.2130/Mum/2014 wherein the Revenue had categorically stated that CG-VAK Software and Exports Ltd., had made marginal operating profit in F.Y.2008-09 i.e. A.Y.2009-10, being the year under consideration before us. It is pertinent to note that the sister concern of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AK Software and Exports Ltd., is a profit making company during the year under consideration and in view of the concurrent finding of the fact recorded by the ld. DRP and the Tribunal which had not shown to be perverse by the Revenue, accordingly, held that the question framed does not give raise to any substantial question of law. Hence, the decision of this Tribunal in the case of sister concern on the inclusion of very same comparable company with that of ITES rendered to its AEs which is also similar to the assessee for the very same A.Y.2009-10 has attained finality. We further find that even in A.Y.2010-11 in the case of aforesaid sister concern, the Co-ordinate Bench decision of this Tribunal in ITA No.1711/Mum/2015 for A.Y.2010-11 dated 03/02/2022 had also held that CG-VAK Software and Exports Ltd., is functionally comparable with that of Nomura Structured Finance Services Pvt. Ltd., and they had also categorically recorded that the said CG-VAK Software and Exports Ltd., earned profit of 3.81% in F.Y.2008-09 (A.Y.2009-10) and profit of 0.29% in F.Y.2009-10 (A.Y.2010-11) in the BPO segment. The Tribunal further held thus CG-VAK Software and Exports Ltd., have satisfied the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot granted to the assessee on the ground that the said un-reconciled receipt of Rs.10,33,974/- was not included in Form No.56F issued by the Chartered Accountant for claiming deduction u/s.10A of the Act. We hold that once the receipt of Rs.10,33,974/-, whether reconciled with AIR data or not reconciled with AIR data, pertains to 10A Unit, then the whole of the profits of the said undertaking / eligible unit would be eligible for deduction u/s.10A of the Act. This is the mandate provided in the provisions of Section 10A of the Act itself. Accordingly, any addition made which goes to increase the profits of the 10A Unit would only result in consequential increase in grant of deduction u/s.10A of the Act. Reliance in this regard is placed on the decision of the Hon ble Jurisdictional High Court in the case of CIT vs. Gem Plus Financial India Ltd., reported in 330 ITR 175 (Bom). Accordingly, we direct the ld. AO to grant deduction u/s.10A of the Act for unreconciled receipt of Rs.10,33,974/-. Accordingly, the ground No.3 raised by the assessee is allowed. 5. The ground No.4 raised by the assessee is challenging the computation of interest u/s.234D of the Act which was stated to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly on the ground that it is persistent loss making company as stated supra. It was not rejected by the ld. TPO on functional dissimilarity. Hence, we hold that the additional grounds raised by the Revenue do not emanate from the orders of the lower authorities and hence, does not deserve to get even admitted in the facts and circumstances of the instant case. 9. Pursuant to dismissal of the Revenue appeal for A.Y.2010-11, the adjudication of various grounds of inclusion and exclusion of other comparable companies in addition to grant of working capital adjustment etc., raised by the assessee in its cross objections, need not be gone into as it would be academic in nature, in view of the fact that assessee s pricing after inclusion of CG-VAK Software and Exports Ltd., in the final list of comparables would be at arm s length. Hence, the adjudication of grounds in cross objections of the assessee are left open and no opinion is given hereunder. 10. In the result, appeal of the revenue for A.Y.2010-11 in ITA No.1710/Mum/2015 is dismissed and Cross objection of the assessee in CO No.70/Mum/2015 is dismissed as infructuous. TO SUM UP: ITA NO. AY ..... X X X X Extracts X X X X X X X X Extracts X X X X
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