Chandra Poojari, Accountant Member
1. This appeal by the assessee is directed against the order of the DRP dated 24.11.2014.
2. The assessee has raised the following grounds in this appeal:
"1. Cursory, Non-speaking order of Learned DRP
1.1 The Learned DRP grossly erred in passing a cursory, non-speaking order merely upholding order of the TPO/AO without going into the merits or substance of the case.
2. Adjustments not provided by Learned DRP/TPO
2.1 Depreciation adjustment: The Learned DRP/TPO erred in not providing the adjustments sought by Appellant to the PLI for depreciation charged in excess of Schedule XIV of Companies Act 1956.
2.2 Unutilized capacity adjustment: The Learned DRP/TPO erred in not providing the adjustments sought by Appellant for its un-occupied capacity during relevant financial year.
3. Risk adjustment not provided by Learned DRP/TPO:
3.1 The Learned DRP ITPO erred in not providing for risk adjustment as sought by the Appellant.
4. Working capital adjustment not given by Learned DRP/TPO
4.1 The Learned DRP ITPO erred in not giving adjustment to PLI of applicant for differences in working capital of comparable companies.
5. Erroneous Comparability Analysis carried out by TPO
5.1 The Learned DRP/TPO grossly erred in rejecting the comparability analysis of the Appellant and ought to have accepted the comparables provided by the Appellant.
5.2 The Learned DRP ITPO erred in selecting the following companies as comparables to the Appellant:-
i. Taksheel Solutions Ltd
ii. FCS Software Solutions Ltd
iii. CTIL Ltd
iv. ICRA Techno Analytics Ltd.
v. Spry Resources
vi. KALS Information Systems
5.3 The Learned DRP ITPO erred in NOT selecting the following companies as comparables of the Appellant:
i. Quintegra Solutions Ltd
ii. Teledata Technology Solutions Ltd
iii. VJIL Consulting Ltd
iv. Silverline Technologies Ltd
v. R Systems International Ltd
vi. Avani Cimcon Technologies Ltd
vii. RS Software (India) Ltd
viii. Techvision Ventures Ltd
ix. Teledata Marine Solutions Ltd "
3. The facts of the case are that the assessee is engaged in the business of export of software to its parent company and other AEs. During the financial year 2009-10, the assessee's total turnover is Rs. 20.64,96,337/-, which includes exported software of to its AE at Rs. 20,25,67,826/-. The assessee in its Form No. 3CEB report adopted the TAMM as the most appropriate method of determining the ALP of its international transaction. The assessee in its report adopted 16 comparables to justify the ALP of its AE transactions. On verification, the TPO noticed that certain comparable are not comparable with the assessee's case, either on functional dissimilarities/continuous losses suffered by the said comparables etc. Hence, the TPO rejected 10 out of 16 comparable selected by the assessee. In addition, the TPO also selected five more comparables similar to the activities of the assessee. Thus, the TPO finally selected a total of 11 compaprables, whose arithmetic mean of PLI (OP/OC) is 24.04%, to determine the ALP of the assessee's transactions with AEs. Accordingly, the TPO determined the ALP of the assessee's international transactions at Rs. 22,37,26.360/-, as against Rs. 20,64,95,337/- declared by the assessee and proposed an upward adjustment of Rs. 2,11,58,534/-
4. The objections of the assessee before the DRP are basically three fold, i.e.
a. That the TPO rejected some of the comparables selected by the assessee
b. That the TPO selected some new comparables
c. That the TPO failed to consider some of the claims and the allowances claimed by the assessee, like
- Higher rates od depreciation claimed by the assessee in its P & L account
- Service taxes wrongly paid and debited in the P & L account, which was subsequently refunded,
- Allowances for capital utilization, working capital allowance etc.
4.1 On appeal, the DRP confirmed the order of the TPO by observing that the TPO in his order has clearly examined each of the comparables selected by the assessee, compared with the assessee's case and rejected some of the said comparables after assigning proper reasons. The DRP further observed that the TPO also selected five new comparables by assigning the reasons while selecting them, Thus the issue of rejecting some of the assessee's comparables and/or selection of five new comparables by the TPO was with exhaustive analysis and proper reasoning, Accordingly, the TPO finally selected 11 comparables and determined arithmetic mean at Rs. 24.04%. The action of the TPO in this regard is justified. Therefore, the DRP confirmed the action of the Assessing Officer, as far as the selection of 11 comparables and determination of the arithmetic mean at Rs. 24.04%.
4.2 The other objections before the DRP were relating to the higher rates of depreciation and the assessee in its P&L account, service taxes wrongly paid and debited in the P & L account (which was subsequently refunded), allowances for capital utilization, working capital allowance etc. Even these issues were examined by the TPO in his order. According to the DRP, the TPO in his order has observed that even some of the comparables have claimed higher rates of deprecation in the P&L accounts, as per the Companies Act. After noticing these facts, the TPO rejected the assessee's claim of 'higher rates of depreciation debited by the assessee in its P&L account'. The DRP also observed that even the issues of debiting the service charges, capital utilization, working capital allowance etc have also been examined in detail by the TPO in his order and rejected the same. According to the DRP, the TPO dealt with these issues exhaustively in his order and therefore, confirmed the action of the Assessing Officer, in this regard.
4.3 After considering the discussions made in the TPO's order, the DRP confirmed the action of the TPO in determining the ALP of the international transactions at Rs. 22,37,26,360/-, as against Rs. 20,64,96,337/- declared by the assessee, and its proposed upward adjustment of Rs. 2,11,58,534/-. Against this, the assessee filed appeal before us.
5. We have heard both the parties and perused the material on record. The primary objection of the ld. AR is that the order of the DRP is not in consonance with the provisions of sec. 144C of the Act. We have gone through the provisions of sec. 144C, which reads as under:
"(5) The DRP shall, in case where any objection is received under sub-s.(2), issue such directions, as it thinks fit, for the guidance of the AO to enable him to complete the assessment.
(6) The DRP shall issue the directions referred to in sub-s. (5), after considering the following, namely-
(a) draft order;
(b) objections filed by the assessee;
(c) evidence furnished by the assessee;
(d) report, if any, of the AO, Valuation Officer or TPO or any other authority;
(e) records relating to the draft order;
(f) evidence collected by, or caused to be collected by, it; and
(g) result of any enquiry made by, or caused to be made by, it.
(7) The DRP may, before issuing any directions referred to in sub-s. (5),-
(a) make such further enquiry, as it thinks fit; or
(b) cause any further enquiry to be made by any IT authority and report the result of the same to it.
(8) The DRP may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-s.(5) for further enquiry and passing of the assessment order.
(9) If the members of the DRP differ in opinion on any point, the point shall be decided according to the opinion of the majority of the members.
(10) Every direction issued by the DRP shall be binding on the AO.
(11) No direction under sub-s. (5) shall be issued unless an opportunity of being heard is given to the assessee and the AO on such directions which are prejudicial to the interest of the assessee or the interest of the Revenue, respectively.
(12) No direction under sub-s. (5) shall be issued after nine months from the end of the rnonth in which the draft order is forwarded to the eligible assessee.
(13) Upon receipt of the directions issued under sub- s. (5), the AO shall, in conformity with the directions, complete, notwithstanding anything to the contrary contained in s. 153, the assessment without providing any further opportunity of being heard to the assessee, within one month from the end of the month in which such direction is received."
6. We find that the DRP in this case, against the above provisions of the Act, passed a very non-speaking order, though the assessee's counsel made a voluminous submissions before the DRP against the assessment order dated 18.12.2014. It is accepted by the DRP that it has to be considered every point of dispute and passe a speaking order. Contrary to this, the order passed by the DRP very critic and there is no addressing any issued raised by the assessee and it was not properly adjudicated. Being of, we are not in a position to uphold the order of the DRP as it is
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not consistent with the provisions of sec. 194 C of the Act. We find that the Supreme Court in the case of Sahara India (Firm) v. CIT  300 ITR 403/169 Taxman 328 has held that even "an administrative order has to be consistent with the rules of natural justice". The same view has been taken by the Delhi Bench of the Tribunal in the case of GAP International Sourcing India (P.) Ltd. v. Dy. CIT  44 SOT 56/ 8 taxmann.com 294. Further, in the case of Adobe Systems India (P.) Ltd. v. Addl. CIT  44 SOT 49 (URO) (Delhi), the Delhi Bench of the Tribunal held that when the DRP passed the order in cursory and laconic order without going into the details of the submissions, it should be decided afresh. Considering all these facts and circumstances, we are inclined to the remit the issues back to the DRP to pass a speaking order on the disputed issues. Since, we have adjudicated the primary ground, we refrain from going to other issues raised by the assessee. 7. In the result, the appeal of the assessee is allowed for statistical purposes.