Income Tax Appellate Tribunal Bangalore Cisco Systems (India) Private Limited, ... vs Asst.C.I.T., Bangalore on 15 April, 2021 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES "B", BANGALORE Before Shri Chandra Poojari, AM & Shri George George K, JM IT(TP)A No.505/Bang/2015 : Asst.Year 20102011 M/s.Cisco Systems (India) Pvt.Ltd. The Asst.Commissioner of Brigade South Parade v. Incometax, Circle 2(1)(1) No.16 Mahatma Gandhi Road Bangalore Bangalore 560 001. PAN : AABCC0258Q. (Appellant) (Respondent) IT(TP)A No.508/Bang/2015 : Asst.Year 20102011 The Asst.Commissioner of Income M/s.Cisco Systems (India) tax, Circle 2(1)(1) v. Pvt.Ltd. Bangalore Brigade South Parade No.16 Mahatma Gandhi Road Bangalore 560 001. (Appellant) (Respondent) CO No.135/Bang/2015 : Asst.Year 20102011 M/s.Cisco Systems (India) Pvt.Ltd. The Asst.Commissioner of Brigade South Parade v. Incometax, Circle 2(1)(1) No.16 Mahatma Gandhi Road Bangalore Bangalore 560 001. (Cross Objector) (Respondent) Revenue by : Sri.Muzafar Hussain, CITDR Assessee by : Sri.Rajan Vora, CA Date of Date of Hearing : 24.03.2021 Pronouncement : 15.04.2021 ORDER Per Chandra Poojari, AM : These are cross appeals by the assessee and the Revenue arising out of the assessment order passed u/s 143(3) r.w.s. 144C(13) of the I.T.Act consequent to the direction of the Dispute Resolution Panel, dated 30.12.2014, passed u/s 144C(5) of the I.T.Act. The assessee has also preferred a Cross Objection in support of the order of the A.O. with reference to 2 IT(TP)A No.505508 & CO 135/Bang/2015 M/s.Cisco Systems (India) Pvt.Ltd. the issue raised by the Revenue in its appeal. The relevant assessment year is 20102011. 2. The revised grounds raised by the assessee read as follows: "Based on the facts and circumstances of the case, Cisco Systems (India) Private Limited (hereinafter referred to as the 'Appellant') craves leave to prefer an appeal against the order passed by the Assistant Commissioner of Incometax, Range 11, Bangalore [hereinafter referred to as the 'learned AO'] under section 143(3) read with section 144C of the Incometax Act, 1961 (hereinafter referred to as the 'Act'), in pursuance of the directions issued by the Hon'ble Dispute Resolution Panel I, (hereinafter referred to as the 'Hon'ble DRP') on the following grounds, each of which are without prejudice to one another. On the facts and in the circumstances of the case and in law: Original grounds: A. Grounds of appeal relating to corporate tax matters 1.The learned AO has erred in law and in fact, by not considering the plea of the Appellant that communication expenses (in the nature of internet charges) should not be reduced from export turnover for the purpose of computing deduction under Section 10A and 1OB of the Act, respectively 2.The learned AO has erred in law and in facts by disregarding the methodology adopted by Appellant in allocating the common/ indirect costs among its various business segments; 3.The learned DRP/ AO have erred in law and in fact by withdrawing the deduction claimed by the Assessee in the return of income filed amounting to INR 40,23,03,313 in respect of forex fluctuation which is capital in nature B. Grounds of appeal relating to transfer pricing matters i. Grounds of appeal specific to software development services transaction & technical support services transaction 3 IT(TP)A No.505508 & CO 135/Bang/2015 M/s.Cisco Systems (India) Pvt.Ltd. 4. The learned TPO/ learned AO have erred, in law and in facts, by rejecting certain comparable companies identified by the Appellant using the export sales less than 75% of the sales as a comparability criterion; 5. The learned TPO/learned AO have erred, in law and in facts, by rejecting certain comparable companies identified by the Appellant using the employee cost greater than 25% of the total revenues as a comparability criterion; ii. Grounds of appeal applicable to all segments (software development services segment, technical support services segment, marketing & sales supp