Income Tax Appellate Tribunal Bangalore HewlettPackard (India) Software ... vs Dcit, Bangalore on 7 August, 2019 IT(TP)A No.668/B/2016 & IT(TP)A No.583/B/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES : "B", BANGALORE BEFORE SHRI B.R.BASKARAN ACCOUNTANT MEMBER AND SMT.BEENA PILLAI, JUDICAL MEMBER Sl. ITA/IT(TP)A No. Assessm Appellant Respondent No. ent. Year 1 IT(TP)A 201112 M/s Hewlett Packard DCIT, Circle No.668(B)/2016 India Software 3(1)(2), Bangalore Operation Pvt.Ltd., Bangalore 2 IT(TP)A 201112 DCIT, Circle3(1)(2), M/s Hewlett No.583(B)/2016 Bangalore Packard India Software Operation Pvt.Ltd., Bangalore Revenue by : Miss. Neera Malhotra, CIT Appellant by Shri Sharath Rao, CA Date of hearing : 25072019 Date of pronouncement : 02082019 ORDER PER BEENA PILLAI, JUDICIAL MEMBER : Present appeals has been filed by assessee as well as revenue against final assessment order passed by Ld.DCIT Circle 3 (1) (2) under section143(3) read with section144C of the Act on following grounds of appeal: ITA No.583/Bang/2016(AY: 201112) i) The directions of the Dispute Resolution Panel are opposed to law and facts of the case In the facts and circumstances of the case whether the Hon'ble DRP is correct in holding that the, M/s RS Software Pvt. Ltd., Ms.Acropetal IT(TP)A No.668/B/2016 & IT(TP)A No.583/B/2016 2 Technologies Ltd and M/.12clinfotecliltsj. cannot be taken as comparable, when it satisfies all the qualitative and quantitative filters adopted by the TPO. ii) Whether the Hon'ble DRP is right in applying "onsite revenue filter" without appreciating the fact that the function carried out is "Software Development" irrespective of whether onsite or offshore. iii) Whether the Hon'ble DRP in correct in excluding M/s RS Software Pvt. Ltd. and M/s Acropetal Technologies and M/s L&T Infotech ltd on the ground that they have significant onsite revenue without appreciating the fact that onsite development of software entails more cost and thereby results in lower profit margins. iv) Whether the Hon'ble DRP was right in seeking exact comparability while searching for & comparable companies of the assessee under TNMM method whereas requirement of law and international jurisprudence require seeking similar comparable companies. v) Whether the Hon'ble DRP has erred on fact in deleting M/s Einfochips as a comparable on the ground that it fails the filter of service income less than 75% of the sales, when the said company has service income being 100% of the sales. vi) Whether Hon'ble DRP erred in fact in rejecting the company/s Infosys Technologies Ltd., as a comparable on the ground that it is functionally different when the primary source of income of the comparable is from provision of software development services. vii) Whether while seeking the exact comparability as mentioned above the DRP was right in fact and in law in imposing condition beyond law whereas the requirement of law is to acknowledge only those differences that are likely to materially affect the margin. vii) Whether the Hon'ble DRP is correct in fact and law in disregarding the position of law that there could be differences between the enterprises compared under the TNMM method that are not likely to materially affect the price or cost charged or the profits accruing to such enterprises? viii) Whether the Hon'ble DRP was right in following the ratio laid down by the Hon'ble Supreme Court in the case of CIT Vs M/s Exide Industries Ltd. IT(TP)A No.668/B/2016 & IT(TP)A No.583/B/2016 3 ix) Whether the Hon'ble DRP was correct on holding that the liability towards leave encashment was a business liability. x) Whether the Hon'ble DRP was right in following the ratio laid down by the Apex Court in the case of CIT Vs M/s