Income Tax Appellate Tribunal Hyderabad Dcit, Circle2(1), Hyderabad, ... vs Ivy Comptech Private Limited, Hyd, ... on 29 November, 2018 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH "B", HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No. 222/Hyd/2015 Assessment Year: 201011 Dy. Commissioner of Income vs. Ivy Comptech Pvt. Ltd., tax, Circle 2(1), Hyderabad. Hyderabad. PAN AAACI8884K (Appellant) (Respondent) ITA No. 334/Hyd/2015 Assessment Year: 201011 Ivy Comptech Pvt. Ltd., vs. Dy. Commissioner of Income Hyderabad. tax, Circle 2(1), Hyderabad. PAN AAACI8884K (Appellant) (Respondent) Revenue by : Smt. Alka Rajvanshi Jain Assessee by : Shri Ravi Bhardwaj Date of hearing : 27/09/2018 Date of pronouncement : 29/11/2018 O RDE R PER S. RIFAUR RAHMAN, A.M.: These two appeals are cross appeals by the revenue as well as assessee against the order passed u/s 143(3) r.w.s. 92CA( 4) r.w.s 144C(13) of the Income Tax Act, 1961 (in short 'Act') relating to AY 201011. 2. Brief facts of the case are, the assessee engaged in the business of providing software and ITES services to its AE which includes software development, research, modification, reuse, reengineering, maintenance, coding etc., filed its return of income for 2 ITA Nos. 222 & 334/Hyd/15 IVY Comptech Pvt. Ltd. the AY 201011 on 13/10/2010 admitting total income of Rs. 1,48,62,828/ under normal provisions and book profits u/s 115JB amounting to Rs. 10,02,18,410/, which was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny under CASS. 2.1 In the year under consideration, the international transactions and services rendered to AE falls within the ambit of Arm's length price transactions. The assessee filed an audit report in form 3CEGB containing the details of transactions with the AE. As t he value of international transactions with AE exceeded Rs 15 cores, the cases were referred to the TPO for the purpose of determining Arm's Length Price. 2.2 The TPO passed an order u/s 92CA(3) of the Act on 30/12/2013 in which, he arrived ALP of the assessee at Rs. 24,28,49,732/ and the short fall of Rs. 14,27,31,508/ was held as adjustment u/s 92CA of the act. 2.3 In conformity with the order of the TP O, the AO passed the draft assessment order adding the shortfall adjustment of Rs. 14,27,312,508/ to the taxable income of the assessee. 3. Aggrieved with the above order, the assessee filed objections before the DRP, who directed the TPO vide its order dated 28/11/2014 to recompute the adjustment u/s 92CA at Rs. 11,23,43,569 as against the original TP adjustment of Rs. 14,27,31,508/. The TPO passed the order accordingly. 4. The AO passed the final assessment order determining the total income of the assessee at Rs. 12,72,06,397 by adding the adjustment of Rs. 11,23,43,569/ u/s 92CA as per the directions of the DRP. 3 ITA Nos. 222 & 334/Hyd/15 IVY Comptech Pvt. Ltd. 5. Aggrieved with the order of DRP, both the revenue and assessee are in appeals before us. 6. First we will take up the appeal of t he revenue wherein the it has raised the following grounds of appeal: "1. The DRP erred on facts and in law in granting relief to the assessee. 2. The DRP erred in law directing the AO /TPO to exclude the comparable companies on the basis of huge turn ov er. 3. Whether on facts and circumstances of the case of the DRP is correct in directing the TPO when the assesse e failed to provide comparables either before the TPO /DRP in support of its claim on working capital. 4. In the facts and circumstances of the case the DRP failed to appreciate the fact that working capital adjustment is an attempt to adjust for the differences in time value of money between the tested party and potential comparable with an assumption that th