Income Tax Appellate Tribunal Bangalore Novell Software Development (India) ... vs Dcit, Bangalore on 4 September, 2019 IT(TP)A No.1491(B)/2014 & CO No.69(B)/2015 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES : "B", BANGALORE BEFORE SHRI J. SUDHAKAR REDDY, AM AND SMT.BEENA PILLAI, JM IT(TP)A No.1491(Bang)/2014 (Assessment Year : 200910) The Deputy Commissioner of Income tax, Circle5(1)(2), Bangalore Appellant Vs M/s Novell Software Development India Pvt.Ltd., Laurel, BlockD, 65/2, Bagmane Tech Park, C V Raman Ngar, Byrasandra, Bangalore560 093 Pan No.AAACN6992K Respondent And C.O.No.69(Bang)/2015 (in IT(TP)A No.1491(B)/2014 (Assessment year : 200910) (By Assessee) Revenue by : Ms. Neera Malhotra, CIT Appellant by : Smt. Tanmayee Rajkumar, Advocate Date of hearing : 18072019 Date of pronouncement : 04092019 ORDER PER BEENA PILLAI, JUDICIAL MEMBER : Present cross appeals has been filed by revenue as well as assessee against order dated 31/05/13 passed by Ld. CIT (A)4, Bangalore for assessment year 200910 on following revised grounds of appeal: IT(TP)A No.1491(B)/2014 & CO No.69(B)/2015 2 ITA No.1491/B/2014(Assessment year : 200910) 1.The order of the learned CIT(A) is opposed to law and facts of the case. 2.On the facts and in the circumstances of the case the learned CIT(A) erred in holding that size and turnover of the company are deciding factors for treating a company as a comparable and accordingly erred in excluding the comparables Persistent Systems Ltd., Zylog Systems Ltd., Mindtree Ltd, L & T Infotech, Infosys Ltd., in software development segment without appreciating that economies of scale is not relevant in the software industry and turnover criterion is not prescribed in Rule 10B of IT Rules. 3. On the facts and in the circumstances of the case the learned CIT(A) erred in law in directing the AO to provide for depreciation adjustment without appreciating the fact that such criterion is not prescribed in Rule 10B of IT Rules. 4.On the facts and in the circumstances of the case the learned CIT(A) erred in law in deleting the disallowance u/s 40(a)(ia) without appreciating the fact that the assessee had purchased software which is in nature of a license paid for usage of the software and the consideration for such licenses would fall within the definition of the royalty defined in Explanation 9(1)(iv) and hence deduction of tax at source under Section 194J should have been done by the assessee. 5. On the facts and in the circumstances of the case the learned CIT(A) erred in law in deleting the disallowance u/s 14A r.w.r. 8D without appreciating the fact that as per provisions of Section 14A there is no differentiation to be made on the basis of the source of investment earning exempt income and in light of Board Circular No.5/2014 dated 11.020.2014, the action of AO is fully justified. For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT(A) in so far as it CI I IT(TP)A No.1491(B)/2014 & CO No.69(B)/2015 3 relates to the above grounds may be reversed and that of the AO may be restored. The appellant craves leave to add, alter, amend and or delete any of the grounds mentioned above". CO No.69/B/2015(Assessment year : 200910) Assessment and reference to Transfer Pricing Officer are bad in law a) The Commissioner of Income Tax (Appeals) Ld. CIT(A)'] erred in confirming the order of the Deputy Commissioner of Income tax Circle 12(2) [presently, the Deputy Commissioner of IncomeTax, Circle 5(1)(2)] rA01, in so far as the fact that the AO did no