Income Tax Appellate Tribunal Kolkata Data Core (India) Private Limited, ... vs Ito, Ward 2(2), Kolkata, Kolkata on 6 December, 2017 IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH : KOLKATA [Before Hon'ble Shri Aby. T. Varkey, JM & Shri M.Balaganesh, AM ] I.T.A No. 387/Kol/2015 Assessment Year : 201011 M/s Data Core (India) Pvt. Ltd. vs I.T.O., Ward2(2), Kolkata [PAN: AABCD 1188 Q] (Appellant) (Respondent) I.T.A No. 40/Kol/2016 Assessment Year : 201112 I.T.O., Ward2(2), Kolkata vs M/s Data Core (India) Pvt. Ltd. [PAN: AABCD 1188 Q] (Appellant) (Respondent) C.O. No. 10/Kol/2016 (Arising out of I.T.A No. 387/Kol/2015) Assessment Year : 201112 M/s Data Core (India) Pvt. Ltd. vs I.T.O., Ward2(2), Kolkata [PAN: AABCD 1188 Q] (Cross Objector) (Respondent) For the Department : Shri G. Mallikarjune, CIT DR For the Assessee : Shri Kamal Sawhney, AR Date of Hearing : 0.11.2017 Date of Pronouncement : 06 .12.2017 ORDER Per M.Balaganesh, AM 1. This appeal is directed against the final order passed by the Learned Income Tax Officer, Ward 2(2), Kolkata [ in short the ld AO] under section 143(3) /144C of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') dated 20.2.2015, pursuant to the directions of the 2 ITA Nos.387/Kol/2015, I.T.A. No.40/Kol/2016 C.O.10/Kol/2016 Data Core India Pvt. Ltd. A.Yrs.201011 & 201112 Learned Dispute Resolution Panel [ in short the ld DRP] under section 144C(5) of the Act dated 31.12.2014 for the Asst Year 201011. 2. The assessee had raised the following grounds of appeal before us : 1. That on the facts and circumstances of the case, the order of the Transfer Pricing OfficerIII (hereinafter referred to as "Ld. TPO") passed u/s 92CA(3) of the Income Tax Act, 1961 (hereinafter referred to as the "Act"), subsequently confirmed in part by the Dispute Resolution Panel (hereinafter referred to as "Ld. Panel") and consequently incorporated by the I.T.O, Ward2(2), (hereinafter referred to as "Ld. AO") in the assessment order u/s 143(3) r/w.s. 144C(5) of the Act, is erroneous on facts and bad in law. 2. That on the facts and circumstances of the case the Ld. Panel and consequently the Ld. AO have erred in rejecting the economic analysis undertaken by the assessee, with respect to international transaction pertaining to rendering of services, in accordance with provisions of the Act read with the Income Tax Rules, 1962 ('the Rules') for the determination of arm's length price (ALP), thereby confirming the adjustment of Rs. 17,388,973/. 3. That on the facts and circumstances of the case the Ld. Panel and consequently the Ld. AO have erred in appreciating the following facts: (a) That the assessee has entered into a composite contract vis a single 'Service Agreement' with its AE for rendering bundled set of information technology based services (including but not limited to software development (SD) services, business process outsourcing (BPO) services etc.); (b) That the compensation received for SD services (of 72% margin) and BPO services (of 8% margin) are part of single composite contract entered into by assessee with its AE and not for a piecemealservice basis; ( c) That the certified copy of segmental financials results as submitted by the assessee should be considered for determining the level of operating profits earned by the assessee from rendering of services to AE under the composite contract. 4. Without prejudice to Ground 2 & 3 and on the facts and circumstances of the case the Ld. Panel have erred in application of quantitative filter in an inconsistent manner as under: 2 3 ITA Nos.387/Kol/2015, I.T.A. No.40/Kol/2016