VINEET KOTHARI,J. - (1.) This Appeal is filed by the Revenue purportedly raising substantial questions of law arising from the Order of the Income Tax Appellate Tribunal, Bangalore Bench 'A', Bangalore, in IT[TP]A No.1560/Bang/2012 dated 05.03.2015, relating to the Assessment Year 2008-09.
(2.) The appeal has been admitted on 12.02.2016 to consider the following substantial questions of law: "1. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in directing the assessing authority/TPO to omit the companies such as Celestial Biolabs Ltd., KALS Information Systems Ltd, Infosys Technologies Ltd., Wipro Ltd., Tata Elxsi Ltd., EZest Solutions Ltd., Thirdware Solutions Ltd., Lucid Software Ltd., Persistent Systems Ltd., Quintegra Solutions Ltd., Softsol India Ltd., from final list of comparables as it is functionally different form the assessee, by relying on the decision of the co-ordinate bench of the Tribunal in the case of 3DLPM Software Solutions/Curram Software International Pvt. Ltd/Yodlee Infotech Pvt. Ltd., even when the TPO in the order has rightly selected a set of comparable companies to arrive at the average mean margin of the software development segment and thereby arriving at the TP adjustment to the ALP international transactions entered into by the assessee? 2. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in remanding the matter to assessing authority to reconsider the comparables i.e., Indium Software, VMF Softech Ltd and KPIT Cummins Infosystems Ltd., even when the same was required?"
(3.) The learned Tribunal, after discussing the rival contentions of both the Appellants-Revenue and Respondent-Assessee, has returned the findings as under: Regarding Substantial Question of Law No.1: "10. Celestial Biolabs Ltd. 10.4.1. We have heard both parties and perused and carefully considered the material on record; including the judicial decisions cited and placed reliance upon. We find that a co-ordinate bench of the Tribunal in the case of M/s. 3DPLM software Solutions Ltd. (supra), for Assessment Year 2008-09 has held that this company be excluded from the list of comparables; holding as under at paras 9.4.1 and 9.4.2 of its order:- xxxxx 10.4.2. Following the above decision of the co-ordinate bench of this Tribunal in the case of 3DPLM Software Solutions Ltd. (supra), we direct the Assessing Officer / TPO to omit this company from the final set of comparables as it is functionally different from the assessee in the case on hand, who is purely a provider of software development services. 11. KALS Information Systems Ltd. 11.4.1. We have heard both parties and perused and carefully considered the material on record; including the judicial decisions cited and placed reliance upon. We find that a co-ordinate bench of the Tribunal in the case of M/s. 3DPLM Software Solutions Ltd. (supra), for Assessment Year 2008-09 has excluded this company as a comparable, observing that it was developing software products and was purely a software service provider and at para 10.4 thereof it was held as under:- xxxxx 11.4.2. Following the above decision of the co-ordinate bench of this Tribunal in the case of 3DPLM Software Solutions Ltd. (supra), we direct the Assessing Officer / TPO to omit this company from the final set of comparables as it is functionally different from the assessee in the case on hand, who is purely a software service provider." Regarding Substantial Question of Law No.2: "22.3 We have heard both the learned Authorised Representative and the learned Departmental Representative in the matter. From the material on record, we find that the TPO in his order under Section 92CA of the Act has explained how these companies fail the filters adopted by him. In view of this being the position, the co-ordinate bench of this Tribunal in assessee's own case for Assessment Year 2007- 08 in IT(TP)A No.1174/Bang/2011 dated 14.11.2014 has remanded the issue to the file of the TPO for fresh examination in the cases of (i) Indium Software (India) Ltd. and (ii) VMF Software Ltd. The same reasoning applies for this year under consideration i.e. for Assessment Year 2008-09 also for these two companies (supra) and also for KPIT Cummins Info-systems Ltd. In this view of the matter, we deem it fit to restore the issue of the comparability of the above three companies back to the file of the TPO to examine the computation given by the assessee in this regard and to decide the issue afresh after affording the assessee adequate opportunity of being heard and to make submissions in the matter, which shall be duly considered before a decision is taken. It is ordered accordingly.";