G.S. PANNU, A.M. :

1. The captioned appeal filed by the assessee is arising from order dt. 29th Oct., 2012, passed by the AO under s. 143(3) r/w s. 144C(5) of the IT Act, 1961 (in short the Act) giving effect to the directions of Dispute Resolution Panel-II, Mumbai (DRP) dt. 31st July, 2012.

2. In its appeal, the assessee has raised the following Grounds of appeal :

"Transfer pricing

1. The learned AO erred in making a reference of the appellant's case to the learned Transfer Pricing Officer ('TPO') and then making a transfer pricing adjustment of Rs. 34,185,321 under s. 92C(4) of the Act to the total income of the appellant for asst. yr. 2008-09.

2. The learned TPO/AO erred in not accepting the economic analysis undertaken by the appellant in accordance with the provisions of the Act r/w the IT Rules, 1962 (Rules) and determining the arm's length operating margin with respect to the international transaction of support and supply of content to be 22.55 per cent and for the international transaction of provision of general management support services to be 13.26 per cent .

3. The learned TPO/AO erred in rejecting the benchmarking analysis undertaken by the appellant for its international transactions, more specifically with respect to the international transactions of supply and support of content and provision of general management support services in its transfer pricing documentation, maintained under s. 92D of the Act r/w r. 10D(4) of Rules and determining the arm's length operating margin for these transactions using only the updated financial year 2007-08 operating margins of the comparable companies, as available at the time of the assessment.

4. The learned TPO/AO erred in rejecting loss making comparables while determining the arm's length operating margin for the international transaction of supply and support of content.

5. Without prejudice to the Ground No. 4, the learned TPO/AO erred in not excluding companies earning supernormal profits, where loss-making companies are excluded, while determining the arm's length operating margin for the international transaction of supply and support of content.

6. The learned TPO/AO erred in computing the operating margin of Creative Eye Ltd. (comparable company) while determining the arm's length operating margin for the international transaction of support and supply of content.

7. The learned TPO/AO erred in considering the 'media division' as the comparable segment instead of 'health care division' for In House Productions Ltd. while determining the arm's length operating margin for the international transactions of supply and support of content.

8. The learned TPO/AO erred in not allowing the appellant the benefit of the working capital adjustment with relation to the international transactions of supply and support of content and provision of general management support services which is required to be undertaken in its case to account for the difference in working capital levels between the appellant and the comparable companies.

9. The learned TPO/AO erred in not allowing the appellant the benefit of the risk adjustment with relation to the international transactions of supply and support of content and provision of general management support services, to account for the difference between the risks assumed by the appellant and those assumed by the comparable companies.

10. The learned TPO/AO erred by not considering that adjustment to the arm's length price, if any, should be limited to the lower end of the 5 per cent range as the appellant has the right to exercise this option under the proviso to s. 92C(2) of the Act.

Others

11. The learned AO has erred in making an addition of Rs. 77,13,648 on account of non-reconciliation of ITS details.

12. Without prejudice to the Ground No. 11 above, the information provided by the learned AO was insufficient for the appellant to undertake a reconciliation of the ITS details.

13. The learned AO has erred in granting short credit of TDS amounting to Rs. 2,60,19,233.

14. The learned AO has erred in levying interest under s. 234B of the Act amounting to Rs. 35,59,140.

15. The learned AO has erred in levying interest under s. 234C of the Act amounting to Rs. 3,74,452."

3. The appellant before us is a company incorporated under the provisions of the Companies Act, 1956 and is, inter alia, engaged in the business of television broadcasting and for the assessment year under consideration it filed a return of income declaring NIL income as per the normal provisions of the Act, whereas, the tax liability was determined in terms of s. 115JB of the Act. The assessment has been finalised by the AO under s. 143(3) r/w s. 144C(5) of the Act on 29th Oct., 2012 in conformity with the directions of the Dispute Resolution Panel (DRP) whereby the total income has been assessed at NIL under the normal provisions of the Act whereas the income returned under s. 115JB of the Act has been varied. Be that as it may, even the assessment made under the normal provisions of the Act has resulted in scaling down of the loss returned by the assessee on account of certain additions, primarily on account of the transfer pricing adjustment of Rs. 3,41,85,321. The appellant-company was found to have entered into certain international transactions within the meaning of s. 92B of the Act with its associated enterprises and, therefore, the AO had referred the matter to the TPO for determination of the arm's length price of the international transactions. The TPO vide order dt. 27th Oct., 2010 passed under s. 92CA(3) of the Act, after considering the material and submissions put forth by the assessee, has differed with the determination of arm's length price in relation to two segments of the international transactions entered with the associated enterprises. The transfer pricing adjustment worked out by the TPO formed the basis of the AO to pass a draft assessment order dt. 26th Dec., 2011, against which the assessee carried its objections before the DRP. The DRP vide its order dt. 31st July, 2012, has dealt with the objections of the assessee and the AO has given effect to the said directions in the final assessment order, against which assessee is in appeal before us as per the aforestated grounds of appeal.

4. As a perusal of the grounds of appeal reveals, the substantive dispute is with regard to the adjustment made to the total income in the process of determining the arm's length price of the international transactions. In this background, we will now briefly touch upon the relevant facts in this regard. The appellant company belongs to the Disney Group. The principal activity of assessee is to provide support to Buena Vista International, Inc. (in short 'BVI') for production and acquisition of television content/programme. It is also producing promos in respect of programmes/content to be aired on Disney channels. Apart therefrom, it is also engaged in sale of advertising and sponsorship air-time on the Disney channels in the Indian territory to advertising agencies, advertisers and sponsors. It also undertakes distribution of the Disney channel and the Toon Disney channel in the territories of India, Sri Lanka, Nepal and Bhutan. The assessee also acquires non-exclusive right to use Disney characters/logos for the aforesaid territories from Disney Enterprises Inc. (in short DEI) and sub-licenses them to various third party manufacturers. The TPO, in para 6 of his order, has enumerated the various international transactions entered by the assessee with its associated enterprises in carrying out the aforesaid activities. Since the dispute before us relates to the transactions entered in two segments, namely, Content supply and support segment, and provision of general management services segment, our further discussion is confined to the facts relating to the aforesaid segments only.

5. Insofar, as the Content supply and Support segment is concerned, the services rendered by the assessee, inter alia, include support for production of TV programme content for BVI, which is aired on various Disney channels. The specific services rendered by the assessee in this segment have been noted by the TPO, which are to provide services for programme acquisition, programme scheduling and quality control with respect to content aired on the channels. The assessee is compensated at cost + mark-up basis for these services and the mark-up over cost is stated at 10 per cent. In its Transfer Pricing Study, assessee had selected the Transactional Net Margin (TNM) method as the most appropriate method to benchmark the said international transactions and the Profit Level indicator (PLI) was characterised as Operating profit/Operating cost. Though, in the Transfer Pricing Study, assessee had used the average of the multiple year's data of the comparables to calculate the average margins, but in the course of the proceedings before the TPO, assessee had furnished the revised margins based on the single years' data corresponding to the financial year under consideration, and on this aspect there is no dispute. The average margin of the comparable concerns selected by the assessee came to 10.92 per cent, which compared favourably with the stated margin of assessee at 11.75 per cent, and on that basis, it was asserted by the assessee that the stated value of the international transactions in the Content supply and Support segment was at an arm's length price and, therefore, it did not require any further adjustment. The TPO has accepted the stand of the assessee for benchmarking the international transactions of Content supply and Support segment as per the TNM method as also the formula for determination of the PLI. However, the TPO has differed with the assessee on selection of comparables and since the dispute before us primarily revolves around the exclusion or inclusion of certain concerns in the final set of comparables, we may tabulate hereinafter the final set of comparables selected by the TPO which have formed the basis for the impugned addition. The DRP has retained the same set of comparables but has revised the margins in respect of two comparables. Be that as it may, the following tabulation shows the final set of comparables, which has resulted in the addition of Rs. 2,77,08,038 :

6. On the aforesaid basis, the AO noted the arithmetic mean of the comparables at 22.55 per cent and after comparing it with the stated margin of assessee of 11.75 per cent , he has worked out an adjustment of Rs. 2,77,08,038, which according to him was required to be made to the stated value of transactions in order to bring them to the level of ALP. We find that in the final assessment order passed after considering the directions of the DRP, the adjustment has been worked out at Rs. 2,77,08,038, whereas the TPO had worked out the adjustment of Rs. 2,07,08,038. The difference in the two figures is on account of revised margin of two of the ten comparables and, in any case, the same is not the subject-matter of dispute before us, therefore, we proceed further on the premise that the adjustment of Rs. 2,77,08,038 has been made on this count.

7. In this background, the learned representative for the assessee had made two points with regard to the concerns included in the final set of comparables. The first grievance is against the stand of the TPO in excluding Twenty Twenty Television Company Ltd. from the final set of comparables. The learned representative had referred to point (x) of part A of para 7 of the order of TPO, to point out that the said concern has been excluded by the TPO on the ground that it had incurred an operating loss. It has been canvassed that the action of the TPO to exclude the said concern is not well-founded inasmuch as incurrence of loss is a normal business incidence and, in any case, the concern could have been excluded only if it was a persistent loss-maker. It has been asserted before us that the said concern is not a persistent loss-maker and for that matter, reference was invited to Annex. A of the written submissions wherein the margins of the said concern have been tabulated for three years ending on 31st March, 2006, 31st March, 2007 and 31st March, 2008. On that basis, it is sought to be pointed out that the said concern had a positive operating margin of 10.17 per cent for year ending 31st March, 2006, and loss of 30.28 per cent and 30.83 per cent for the year ending 31st March, 2007 and 31st March, 2008, respectively. It was, therefore, contended that the said concern had made profit in one of the last three years and, therefore, it could not be said to be a persistent loss maker. In support of the said proposition, reliance has been placed on the following decisions :

(i) Bobst India (P) Ltd. vs. Dy. CIT (2015) 63 Taxmann.com 339 (Pune)(Trib)

(ii) Goldman Sachs (India) Securities (P) Ltd. (ITA No. 7724/Mum/2011, dt. 23rd Jan., 2013)

8. On the other hand, the learned CIT-Departmental Representative appearing for the Revenue has primarily reiterated the discussion by the TPO in the order to support the case of Revenue, which we have already noted in the earlier paras and is not being repeated for the sake of brevity.

9. Having considered the rival stands on this issue, we find that the TPO sought to exclude Twenty Twenty Television Company from the final set of comparables noticing that it has made a loss in this year; of course, the functional comparability of the said concern is not in dispute. The point put across by the appellant is that a concern can be excluded from the comparability analysis on account of loss only if the concern incurs loss persistently over an extended period of time. In our considered opinion, the proposition sought to be canvassed by the appellant is quite acceptable and, in fact, the DRP in para 8.1.1 of its order has also noted that "it is an acceptable practice to exclude persistent loss-making companies while benchmarking a transaction". Therefore, what is required to be established is as to whether Twenty Twenty Television Company is a persistent loss-making concern or not. In this context, the Pune Bench of the Tribunal in the case of Bobst India (P) Ltd. (supra) decided this aspect by examining the financial position of the particular concern over the last three years. The Bench noted that in one of the last three years, the concern was in profits and, therefore, in this background it inferred that such a concern could not be considered as a persistent loss-maker. At the time of hearing, the learned representative for the assessee had drawn our attention to a tabulation prepared for three years ending 31st March, 2006, 31st March, 2007 and 31st March, 2008, which shows that in the year ending 31st March, 2006, the said concern had made a profit while there was loss in the other two years. In this background, therefore, it could not be said that as on the year ending 31st March, 2008, which corresponds to the assessment year before us, such a concern was a persistent loss-maker so as to exclude it from the final set of comparables. Thus, following the ratio of the decision of the Pune Bench of the Tribunal in the case of Bobst India (P) Ltd. (supra), we deem it fit and proper to direct the TPO/AO to include the said concern in the final set of comparables.

11. The only other point raised before us is with regard to correction of margin of one of the concerns included in the final set of comparables, i.e., Creative Eye Ltd. As the tabulation enumerated in the earlier part of the order would show, the margin of the said concern has been adopted at 7.33 per cent , whereas the stand of the appellant is that the correct margin of the said concern is 0.47 per cent and that the lower authorities have erred in calculating the margin at 7.33 per cent .

12. In this background, the learned representative for the assessee referred to p. 493 of the paper book to point out that there was an error on the part of the TPO in determining the margin at 7.33 per cent inasmuch as certain items of the P&L a/c, namely, depreciation–Rs. 1,96,73,699 and Provision of FBT–Rs. 3,18,168 have been excluded for the purpose of computing the total operating expenses. It is emphasised, with reference to a tabulation placed at p. 493 of the paper book that the calculation of margin in the case of other concerns selected as comparables has been done by considering the aforesaid two items as a part of total operating expenses. It was, therefore, contended that if the aforesaid two items are considered as a part of total operating expenses, as done in the case of other concerns appearing in the final set of comparables, the correct margin would come to 0.47 per cent .

13. On the other hand, the learned CIT-Departmental Representative appearing for the Revenue referred to the discussion made by the TPO in point (viii) of part A of para 7 of the order whereby it is specifically noted that the margin of Creative Eye Ltd. comes to 7.33 per cent , as against 0.47 per cent canvassed by the assessee. On this basis, the DRP also rejected the claim of assessee that the correct margin of the said concern is 0.47 per cent .

14. We have considered the rival stands and find that there is an apparent inconsistency on the part of the TPO in calculating the margin of Creative Eye Ltd. vis-a-vis the other concerns selected as comparables. As per the tabulation furnished by the assessee as Annex. B to the written submissions it is clear that in the case of other comparable concerns, the total operating expenses have been calculated after taking into account the Depreciation and Provision of FBT; and, that it is only in the case of Creative Eye Ltd. the same have been excluded. Quite clearly, the determination of margin in the case of all the comparable concerns needs to be uniformly done, so as to impart rationality to the comparability analysis. Having regard to the material on record, we are satisfied that the correct margin of Creative Eye Ltd. is to be taken as 0.47 per cent and that the DRP has unjustifiably rejected the plea of the assessee. As a consequence, we direct the TPO/AO to consider the margin of Creative Eye Ltd. at 0.47 per cent , and thereafter rework the determination of ALP.

15. At the time of hearing, the learned representative for the assessee submitted that if the plea for inclusion of Twenty Twenty Television Company Ltd. and the corrected margin of Creative Eye Ltd. is accepted, then the margin of the resultant comparables would fall within the + 5 per cent of the stated margin of the assessee and the necessity of making any adjustment would be obviated in terms of s. 92C(2) of the Act. Since we have accepted the aforesaid two pleas of the assessee, therefore, the other issues raised in the grounds of appeal with regard to the Content and Support segment are rendered academic and are not being adjudicated for the present.

16. In the result, insofar as the Content and Support segment is concerned, the TPO/AO is directed to rework the ALP of the international transactions in accordance with the aforesaid directions.

17. Now, we may take up the dispute arising from benchmarking of international transactions in the general management support services segment.

18. In this segment, assessee has rendered general management and support services in the nature of secretarial assistance, handling documents, etc. to BVI, Walt Disney Internet group, Disney Worldwide Services and The Walt Disney Company, i.e., to the associated concerns of the Walt Disney group. For the services so rendered in this segment, assessee is being compensated at cost + mark-up basis, such mark-up being 5 per cent. During the year under consideration, assessee received a consideration of Rs. 8,23,38,337 on account of provision of general management and support services to its associated enterprises. In its transfer pricing study, assessee used multiple years' data of the comparable concerns whereas in the course of proceedings before the TPO, it redetermined the margin of the comparables based on single year's data of the financial year relevant to the year under consideration; and, this aspect is not in dispute. The TPO has noted that out of 13 concerns selected by the assessee as comparables, in some of the cases the data for the relevant financial year was not available and, therefore, he excluded the same. Additionally, the TPO also excluded Educational Consultants (India) Ltd. (Seg) from the final set of comparables on the ground that the said concern is functionally distinguishable from the assessee. As a consequence, the TPO selected 6 concerns in the final set of comparables which were otherwise part of the 13 concerns considered as comparables by the assessee. The arithmetic mean of the 6 concerns was determined by the TPO at 16.74 per cent and after comparing with the assessee's stated margin of 5 per cent , adjustment of Rs. 92,06,210 was worked out in order to calculate the ALP of the international transactions. After the directions of the DRP, the same set of 6 comparables have been retained excepting that the margin in the case of two of the comparables have been revised, which has resulted in average margin of 13.26 per cent of the comparables. Following tabulation shows the final set of comparables taken by the AO based on the directions of the DRP, and which has formed the basis for the addition of Rs. 64,77,283, which is in dispute before us. Notably, the difference in the figure of adjustment worked out by the TPO and that by the AO (post the directions of the DRP) is on account of revision of the margins in the case of two of the concerns out of the six comparables. Therefore, we proceed further on the basis that the adjustment on account of determination of ALP of international transactions for provision of general management and support services has been determined at Rs. 64,77,283.

19. In this background, the first plea of the assessee is by way of an additional ground of appeal in terms of which it is canvassed that Access India Advisors Ltd. be excluded from the final set of comparables. The learned representative for the assessee explained that the said concern deserves to be excluded on the ground that its margins have wide fluctuations over the years and in this context, he referred to p. 492 of the paper book wherein the margin of the said concern from the years 2005 to 2010 have been tabulated. The learned representative for the assessee justified the admission of the said plea, which was hitherto not raised before the lower authorities on the ground that the necessary information showing fluctuation in margins was available in public domain only subsequently.

20. On the other hand, the learned CIT-Departmental Representative appearing for the Revenue opposed the plea of the assessee by pointing out that the assessee was not justified in seeking exclusion of the said concern from the final set of comparables because the said concern has been included by the assessee itself as a good comparable in its transfer pricing study. In support of his stand, the learned CIT-Departmental Representative has relied on the decision of the Hyderabad Bench of the Tribunal in the case of App Labs Technologies (P) Ltd. vs. Dy. CIT (2014) 149 ITD 99 (Hyd) to contend that where the assessee had not raised any objection with regard to selection of a concern as a comparable before the DRP, it could not be allowed to raise the objection for the first time before the Tribunal.

21. In reply, the learned representative for the assessee pointed out that the exclusion is sought by the assessee on the ground that the margin of the said concern fluctuates over a period of time and, therefore, such a concern is liable to be excluded. In support, the learned representative has relied upon the following decisions :

(i) Actis Advisers (P) Ltd. vs. Dy. CIT (ITA Nos. 5277/Del/2011 & 958/Del/2012).

(ii) PTC Software (India) (P) Ltd. vs. Dy. CIT (ITA No. 336/Pun/2014, dt. 31st Oct., 2014).

22. At the time of hearing, the learned representative also made a submission to the effect that the assessee would be satisfied if the matter is remitted back for verification of the workings and to examine as to whether the margin of the said concern is volatile over the years and if it is so found, then the same should be directed to be excluded. The learned representative also submitted that there are justifiable reasons for seeking the exclusion of the said concern before the Tribunal, which hitherto could not be raised before the lower authorities.

23. We have carefully considered the rival submissions. At the outset, we may refer to the tabulation placed at p. 492 of the paper book regarding the margins of Access India Advisors Ltd., which is as under :

The above tabulation enumerates the Operating margin of Access India Advisors Ltd., and the trend clearly suggests that the margins fluctuate quite widely over the years. For instance, in the assessment year under consideration, the margin of the said concern is reported at 45.97 per cent, which is significantly in variance with the margin in the succeeding and preceding assessment years. In fact, in the year 2010, it has reported a negative margin. Ostensibly, the significant variation in the margins does not render the said concern to be a reliable comparable unless it can be made out that the variation is on account of a normal business condition.

24. We may now take up the argument raised by the learned CIT-Departmental Representative to the effect that the said concern has been included by the assessee itself as comparable. Ostensibly, in the transfer pricing study, the assessee had carried out the comparability analysis by adopting multiple years' data of the comparables which would have offset the wide fluctuations. It is only in the course of proceedings before the TPO, the adoption of multiple year's data of the comparables was negated and assessee carried out a comparability analysis after adopting single years' data of the comparables relating to the period under consideration. It has also been pointed out before us that in order to establish volatility in the margins over the years, the data of the subsequent years is also relevant, which became available to the assessee only subsequently. In our considered opinion, the plea of assessee for exclusion of Access India Advisors Ltd. from the final set of comparables cannot be disregarded merely because initially the said concern has been accepted as a comparable by the assessee in its transfer pricing study. A similar situation has been dealt with by the Pune Bench of the Tribunal in the case of Q Logic (India) (P) Ltd. (2014) 52 Taxmann.com 225 (Pune)(Trib) and the following discussion is relevant :

"17. In our considered opinion, the plea of the assessee for exclusion of Bodhtree Consulting Ltd. from the final list of comparables cannot be shut out merely because the said comparable has been adopted by the assessee in its transfer pricing study. So however, the aforesaid proposition is not an absolute proposition. In other words, it would be imperative for the assessee to justify exclusion of a concern from the list of comparables if in the initial transfer pricing study undertaken by it, such a concern has been adopted as a comparable. In the present situation, case has been set up by the assessee for exclusion of Bodhtree Consulting Ltd. on the ground that the profit margins of the said concern are fluctuating widely and are abnormally high for the period under consideration. Ostensibly, the financial data of the succeeding years which has been pressed into service by the assessee to demonstrate abnormal profit trends of the said concern was not available with the assessee at the time of carrying out its transfer pricing study. Therefore, having regard to the facts and circumstances of the present case, in our view, assessee has justifiably demonstrated that the concern M/s Bodhtree Consulting Ltd. is liable to be excluded from the final set of comparables, even though the said concern was considered as a comparable initially in its transfer pricing study. Therefore, on this aspect, we conclude by holding that the concern, M/s Bodhtree Consulting Ltd. be excluded from the final list of comparables for carrying out the comparability analysis. We hold so."

25. As per the Pune Bench of the Tribunal, the onus is on the assessee to justify exclusion of a concern from the final set of comparables, if initially the same concern has been adopted as a comparable by the assessee. In the present case, assessee has sought exclusion of Access India Advisors Ltd. on the ground that the profit margins of the said concern fluctuate widely and in the instant assessment year itself it is quite high at 45.97 per cent , which goes down to 6.62 per cent in the next year and thereafter there is a negative margin of 74.60 per cent . Similarly, with regard to the earlier three years, the margin levels are quite in variance not only in comparison with the level of margin in the instant assessment year but also in relation to the subsequent two years. Be that as it may, the financial data of the succeeding years, which is essential to examine any abnormal profit trends, was not available to the assessee at the time of carrying out its transfer pricing study and, therefore, once such an information is available in public domain, it is only thereafter that the assessee can feasibly raise such a ground based on the abnormal fluctuations in the margins. Notably, insofar as the instant case is concerned, there is ostensibly a justifiable reason for the assessee to raise such a plea before us, which was hitherto not raised before the lower authorities. Therefore, on this aspect, we admit for consideration the plea of assessee for exclusion of Access India Advisors Ltd. from the final set of comparables.

26. Insofar as the plea of learned CIT-Departmental Representative based on the decision of Hyderabad Bench of the Tribunal in the case of App Labs Technologies (P) Ltd. (supra) is concerned, we have carefully perused the said decision. The Tribunal in the case of App Labs Technologies (P) Ltd. (supra) denied the assessee to raise a plea for exclusion of a concern which had been considered by the assessee itself as a comparable at an earlier stage. The said negation by the Tribunal was founded on the ground that assessee could not show "any reasonable cause" as to why the assessee had not objected to the inclusion of the particular concern before the lower authorities. Quite clearly, the fact-situation in the case before us stands on a different footing inasmuch as on the basis of our aforesaid discussion it is quite clear that there is a justifiable reason prevailing with the assessee, which prevented it from raising the plea for exclusion of Access India Advisors Ltd. before the lower authorities. Therefore, the ratio of the decision of Hyderabad Bench of the Tribunal in the case of App Labs Technologies (P) Ltd. (supra) does not help the Revenue in the present case.

27. Having admitted the plea of assessee seeking exclusion of Access India Advisors Ltd. from the final set of comparables, and for the reason that such a plea was hitherto not before the lower authorities, we deem it fit and proper to remand the matter back to the file of AO/TPO for an appropriate verification. The AO/TPO shall verify the working of the operating margins of Access India Advisors Ltd. furnished by the assessee for the various years and if it is found to be volatile without reflecting any normal business condition, then the AO/TPO shall exclude the same from the final set of comparables. Needless to say, in carrying out such verification exercise the AO/TPO shall allow the assessee a reasonable opportunity of being heard and only thereafter the AO/TPO shall pass an appropriate order afresh on this limited aspect.

28. Another plea of the assessee with regard to the segment of provision of general management and support services is to seek inclusion of Educational Consultants (India) Ltd. in the final set of comparables. The exclusion of the said concern has been sought to be justified by the learned CIT-Departmental Representative based on the discussion of TPO in points (viii) and (ix) of part A of para 7. Notably, the TPO has observed that Educational Consultants (India) Ltd. is functionally dissimilar and, therefore, the same is liable to be excluded. The learned CIT- Departmental Representative has emphasised the aforesaid discussion in the order of TPO to justify the stand of the Revenue.

29. The plea of the appellant is that the said concern has been found to be a comparable in the preceding three assessment years of 2005-06 to 2007-08. The learned representative for the assessee also pointed out that between asst. yrs. 2009-10 to 2013-14, the said concern has also been accepted as a comparable and in asst. yrs. 2010-11 and 2013-14, the assessments were completed under s. 143(3) of the Act. In sum and substance, the learned representative has justified the inclusion of the said concern on the basis of principle of consistency. In this context, the learned representative has referred to the decision of the Delhi Bench of the Tribunal in the case of Eli Lilly & Co. (India) (P) Ltd. Asstt. CIT, ITA No. 788/Del/2015, dt. 24th Nov., 2015 [reported at (2016) 144 DTR (Del)(Trib) 278 : (2016) 182 TTJ (Del) 351—Ed.] to point out that the functions of the said concern, namely, Educational Consultants (India) Ltd. have been found to be same over the years, including for the assessment year under consideration. The learned representative explained that the assessment year before the Delhi Bench of the Tribunal was 2010-11 and it was considering the plea of assessee for including Educational Consultants (India) Ltd. as a comparable; it was noted by the Bench that in the asst. yr. 2009-10, the said concern was directed to be included as a comparable by the Tribunal after noticing that in the asst. yr. 2008-09, the said concern was accepted as a comparable by the TPO himself. It was, therefore, pointed out that the activities of the said concern were similar over the years and, therefore, if it has been accepted by the TPO to be a comparable in other assessment years, in the instant assessment year also the said concern deserves to be accepted as a comparable.

30. We have carefully considered the rival submissions. The plea of assessee to include Educational Consultants (India) Ltd. (Seg.) in the final set of comparables is primarily based on the need to adopt a uniform approach in different years so long as the fact-situation continues to remain the same. On the basis of the discussion in the order of Tribunal in the case of Eli Lilly & Co. (India) (P) Ltd. (supra), it is sought to be established that insofar as the activities of Educational Consultants (India) Ltd. (Seg.) over the years is concerned, the same are similar. It is also factually emerging that in the other assessment years referred to by the appellant, the said concern has been accepted as a comparable even in the assessments finalised under s. 143(3) of the Act. Be that as it may, it is also clearly emerging from the order of TPO that the said concern has been excluded by merely making a bald assertion about the dissimilarity of functions. Notably, such an observation of the TPO is devoid of any factual support and, in our view, it was imperative for the TPO to bring out the distinguishing features considering that the said concern was taken as a comparable in the past years. Such a burden has clearly not been discharged by the TPO as is evident from the discussion in the order and, therefore, we find no reason to uphold his stand for excluding the said concern from the final set of comparables. Therefore, on this aspect also, assessee succeeds.

31. Apart from the aforesaid, the only other ground argued by the assessee in relation to the general management and support services segment is relating to allowing of suitable adjustment for risks. The aforesaid plea of the assessee was raised before the DRP, but it was declined on the ground that where the comparability analysis is being carried out by applying TNM method, there was no requirement for allowing adjustment for risks.

32. Before us, the learned representative for the assessee has relied upon the following decisions for allowability of risk adjustment :

(i) Intellinet Technologies India (P) Ltd. vs. ITO (ITA No. 1237/Bang/2010)

(ii) Schlumberger Global Support Centre Ltd. vs. Dy. Director of IT (2016) 131 DTR (Pune)(Trib) 58 : (2016) 176 TTJ (Pune) 30 : (2015) 64 Taxmann.com 322 (Pune) .

33. The learned representative also referred to p. 560 of the paper book to point out the basis for working out the risk adjustment and contended that the matter may be set aside to the file of TPO/AO for appropriate verification.

34. On this aspect, the learned CIT-Departmental Representative appearing for the Revenue has opposed the plea of assessee for allowing risk adjustment by reiterating the stand of the DRP, which we have already noted earlier, and is not being repeated for the sake of brevity.

35. On this aspect of the matter, we find that the plea of assessee has been declined by the DRP in a rather casual manner. Notably, the appellant had canvassed before the lower authorities that adjustment for the difference between the risk assumed by the assessee and those assumed by the comparable concerns was required to be made. Notably, the assessee had also sought the benefit of working capital adjustment to account for the difference in the level of working capital deployed by the assessee vis-a-vis the comparable concerns. The DRP in para 9.1 of his order has denied both the claims primarily on the ground that the comparables have been "chosen with due regard to their functions, assets and risks". As per the DRP, in the TNM method the concerns are taken as comparables based on broad similarities and that taking of the mean of the margins of the comparable concerns would even out the minor differences in the risk profile of the concerns. For the said reasons, the DRP declined the claim and also noted that the claim was "without any working or any definite outlining of the differences in the risk profiles of the comparables and that of the tested party and is devoid of any numerical details as to how such adjustments can be considered."

36. We have considered the aforesaid stand of the DRP and find that the case of assessee for adjustment on account of difference in working capital and risks assumed has been shut out even before examining the same in some detail. Before us, the learned representative has furnished the workings of working capital adjustment and risk adjusted margin of the comparable concerns to point out that on facts also, such adjustments are justified. Even otherwise, we find that our Co-ordinate Benches in the case of Intellinet Technologies India (P) Ltd. (supra) and Schlumberger Global Support Centre Ltd (supra) have found that even in the course of comparability analysis carried out by applying the TNM method, suitable risk adjustments are permissible if the facts of the case so warrant. Ostensibly, the workings referred by the assessee before us culling out justification for allowing working capital and risk adjustments have not been verified by the lower authorities. Therefore, while we uphold the stand of the assessee in-principle, so however, it would be imperative for the assessee to factually demonstrate the justifiability of the adjustments on account of difference in working capital and risks assumed vis-a-vis the comparables before the lower authorities. Therefore, the matter is set aside to the file of TPO/AO with directions to consider the plea of the assessee in accordance with law. Thus, on this aspect, assessee succeeds for statistical purposes.

37. Insofar as the issue relating to the transfer pricing adjustment is concerned, no further arguments have been raised by the assessee and accordingly, we direct the AO to redetermine the ALP of international transactions on the basis of our aforesaid directions.

38. The next ground is with regard to addition of Rs. 77,13,648 made by the AO on account of non-reconciliation of ITS data. In this context, the relevant facts are that the AO provided assessee with ITS data in terms of which there was a difference vis-a-vis entries made in the account books of the assessee-company. Before the lower authorities, assessee pointed out that it had duly reported its incomes in the financial statements and that the ITS details were obtained on the basis of the TDS returns filed by the deductors and that assessee had no control on such filings. One of the points made out by the assessee was that the ITS details provided by the AO were insufficient to carry out exact reconciliation inasmuch as it does not indicate the PAN of the other party, invoice number or date. However, the AO as well as the DRP held that the transactions appearing in the ITS details are mapped only with the transactions which take place on the PAN of assessee and, therefore, the onus was on the assessee to reconcile the data. In the absence of the reconciliation, the difference of Rs. 77,13,648 has been sustained as addition in the final assessment order.

39. On this aspect, the learned representative for the assessee pointed out that the total revenues as per the financial statements of the assessee were Rs. 14,80,54,062 , whereas the total revenues from the parties mentioned in the AIR information was only Rs. 9,09,81,844. It was, therefore, pointed out that the revenues appearing in the ITS details were much lower than the revenues already declared by the assessee in its audited financial statements and that the unreconciled amount of Rs. 77,13,648 was primarily on account of insufficiency of ITS details and not for any reason for erroneous accounting by the assessee. The learned representative emphasised that the assessee has not received any monies in cash and that the unreconciled amount as a percentage of the total revenues is very negligible, i.e., 0.64 per cent. It was pointed out that in a similar situation, the Tribunal vide its order in ITA No. 527/Mum/2010, dt. 8th Dec., 2010, has held that no addition is permissible, merely based on the information obtained from the ITS data.

40. On the other hand, the learned CIT-Departmental Representative has reiterated the stand of the lower authorities by pointing out that the onus was on the assessee to reconcile the ITS details and, therefore, the addition is sustainable.

41. We have carefully considered the rival submissions. No doubt, the onus is on the assessee to reconcile the details, so however, the reconciliation is to be based on availability of appropriate details. At the time of hearing, the assessee-company had referred to a communication dt. 12th Dec., 2011, addressed to the AO which succinctly details the reasons for the difference and the reason for which proper reconciliation could not be made. In the said communication, assessee had explained that the ITS details were founded on the basis of name and address of the parties and the amount and date entered by the other party in its books of accounts. It has been pointed out that in the absence of PAN of other party, the relevant invoice number and date, it is difficult to exactly match the entries appearing in the assessee's books of accounts. The relevance of the aforesaid has also been brought out in some detail by the assessee in its communication to the AO. For instance, it is pointed out that in some cases names of certain individuals are mentioned in the ITS details whereas assessee would have recorded the transactions in the name of the proprietary concern and not in the name of the individual and that such a situation makes it extremely difficult to reconcile the amounts on the basis of limited information available. In any case, it is quite obvious that the revenues credited by the assessee in its financial statements are much more than the details obtained by the AO in the ITS data. One pertinent point which stands out is the assertion of the assessee before the AO that wherever in case of a party the amount of revenue recorded in the P&L a/c of the assessee was found lower than the ITS details, assessee explained that same is merely on account of timing difference inasmuch as assessee would have credited such sum to the P&L a/c of the other year. Assessee also asserted before the AO in its communication dt. 12th Dec., 2011, that in respect of the parties mentioned in the ITS details, on an overall basis, the revenues reflected by the assessee in its financial statements were higher than the revenues noted in the ITS details. There is no repudiation to any of the aforesaid assertions and, therefore, we find that no addition is warranted on this count. Therefore, on this aspect, assessee succeeds.

42. The only other issue in this appeal is with regard to the grant of credit for TDS amounting to Rs. 2,60,19,233. At the time of hearing, the learned representative for the assessee submitted that assessee had already moved an application to the AO seeking credit for the TDS. Considering the aforesaid, we direct the AO to consider the application of the assessee in accordance with law. Thus, on this aspect, assessee succeeds for statistical purposes.

43. Insofar as the levy of interest under ss. 234B & 234C of the Act is concerned, no specific arguments have been raised and they being consequential in nature are accordingly dismissed.

44. Resultantly, appeal of the assessee is partly allowed, as above.