Ciena India P. Ltd., New Delhi vs Department Of Income Tax

DCIT, Vs. Ciena India Pvt. Ltd., Circle-3(1), Plot No.14, Sector 32, New Delhi. Echelon Institutional Area, Gurgaon.

PAN: AACCC6131B

(Respondent) (Appellant) Assessee By : Shri Himanshu S. Sinha, Advocate & Shri Md. Fahad Khalid, CA Department By : Shri Judy James, Standing Counsel

Date of Hearing : 21.04.2015 Date of Pronouncement : 23.04.2015 ITA Nos.3324 & 2948/Del/2013

ORDER PER R.S. SYAL, AM:

These two cross appeals - one by the assessee and the other by the

Revenue - arise out of the order passed by the CIT(A) on 11.3.2013 in

relation to the assessment year 2008-09.

2. Ground nos. 1(a) and (b) were stated by the ld. AR to be general

not requiring any specific adjudication. These grounds, therefore, stand

dismissed as not pressed.

3. Ground No. 1(c) is against the choice of certain comparables in

respect of `Software development segment'.

4. Briefly stated, the facts of the case are that the assessee is a wholly

owned subsidiary of Ciena Corporation, USA and is engaged in the

business of provision of software development and marketing support

services to its overseas group companies. The assessee reported four

international transactions. The Assessing Officer (AO) referred the

international transactions to the Transfer Pricing Officer (TPO) for

determination of their arm's length price (ALP). Two of such 2 ITA Nos.3324 & 2948/Del/2013

transactions were accepted by the TPO as at arm's length price. The

other two international transactions in dispute are 'Provision of software

development services' with transacted value of Rs.98,42,37,491/-; and

`Provision of marketing support services' with transacted value of

Rs.4,21,25,941/-. The TPO examined the assessee's segmental results.

As regards the segment of `Software development services', the

assessee applied the Transactional Net Margin Method (TNMM) as the

most appropriate method with the Profit level indicator (PLI) of

Operating Profit/Total Cost (OP/TC). Profit margin in the software

development service segment was declared by the assessee at 19.16%.

In order to demonstrate that these services were provided at arm's length

price, the assessee chose 20 companies as comparable. The TPO

rejected the assessee's computation of arm's length price worked out on

the basis of multiple year data of the comparables and proceeded to

determine the ALP of such transactions by relying on the current year's

data alone. He rejected 14 out of 20 companies chosen by the assessee

as comparables and added new 13 companies to the list of comparables,

3 ITA Nos.3324 & 2948/Del/2013

with the final tally of 19 comparable companies giving their profit ratio

as under:-

Sl.No. Name of the Company Sales (Rs. Cr.) OP to Total Cost

1. Avani Cincom Technologies 3 21.65

2. Bodhtree Consulting Ltd. 10.42 19.14

3. Celestial Biolabs 20.21 87.94

4. e-zest Solutions Ltd. 7.66 28.95

5. Flextronics (Aricent) 958 8.07

6. iGate Global Solution Ltd. 781.51 13.9

7. Infosys 156.48 40.41

8. Kals Information Systems Ltd. (Seg.) 2.05 41.94

9. LGS Global Ltd. 136.52 26.64

10. Mindtree Ltd. (Seg.) 572.96 17.51

11. Persistent Systems Ltd. 409.88 27.23

12. Quintegra Solution Ltd. 89.88 21.74

13. R systems International (seg.) 144.56 15.3

14. RS. Software (India) Ltd. 101.11 7.79

15. Sasken Communication Technologies 389 13.44 Ltd. (seg.)

16. Tata Elxsi (Seg.) 342.05 18.97

17. Thirdware Solution Ltd. 522.76 18.01

18. Wipro Ltd. (Seg.) 11955.6 28.38

19. Softsol India Ltd. 23.65 42.15 Avg 26.20

4 ITA Nos.3324 & 2948/Del/2013

5. After considering the objections raised by the assessee, the TPO

worked out the average of the operating profit margin of the above 19

companies at 25.20% and accordingly proposed transfer pricing

adjustment of Rs.5,25,78,549/-. The addition was made by the

Assessing Officer at this level. The ld. CIT(A) held Celestial Biolabs as

incomparable; adjusted margins of profit of two companies, namely,

Kals Information Systems Ltd., and Softsol India Ltd. With the revised

list of 18 companies, the ld. CIT(A) computed average of the OP/TC of

these companies at 20.48%. Since the PLI of the assessee was at

19.15%, being within the permissible range, he ordered for the deletion

of addition of Rs.5.25 crore and odd.

6. We have heard the rival submissions and perused the relevant

material on record. It can be seen from the orders of the authorities

below that neither the application of TNMM as the most appropriate

method nor the PLI has been disputed for determination of the ALP in

the `Software development services' segment. Even though the ld.

CIT(A) has ordered for the deletion of addition on account of TP

5 ITA Nos.3324 & 2948/Del/2013

adjustment in respect of this international transaction, the assessee is still

aggrieved against the inclusion of the following three companies in the

list of comparables :-

i) Infosys Technologies Ltd.;

ii) Persistent Systems Ltd.; and

iii) Wipro Ltd.

7. But for the inclusion of the above three companies in the final list

of comparables, the assessee is satisfied with all the findings given by

the TPO, as endorsed in the first appeal, in respect of other issues

connected with the determination of ALP of the international transaction

of `Provision of software development services'. We will take up the

above three companies, one by one, for the purposes of ascertaining as

to whether they are comparable or not. Before embarking upon the

exercise of making comparison of these three companies with the

assessee, it is sine qua non to consider the functional profile of the

assessee under this segment. It can be seen from the TPO's order that he

has simply stated that the assessee is engaged in the provision of

6 ITA Nos.3324 & 2948/Del/2013

software development services, but, has not spelt out the further details

of the precise nature of actual services rendered. We have gone through

the assessee's TP study report, a copy of which is available on pages 12-

127 of the paper book, from which some assistance is available on the

question of determination of the exact nature of services. The Ciena

Group is a supplier of communications networking equipment, software

and services that support the delivery and transport of voice, video and

data services. The products of Ciena Group include optical networking,

broadband networking and data networking products along with network

and services management software used in communication networks and

followed by telecommunications service providers across the globe. The

Group specializes in transitioning legacy communications networks to

be converged, next generation architecture capable of delivering a mix

of high band width services. The assessee is engaged in design,

development and maintenance of software, which essentially include the

activities, namely, Software development services; Procurement,

research and technology; Development of design; After-sales activity;

and Accounting/administration. The assessee provides contractual 7 ITA Nos.3324 & 2948/Del/2013

software development services to its group companies alone and not to

outsiders. These services include maintenance and updation activities.

The assessee entered into an agreement with its holding company,

Ciena, USA to continue to assist Ciena, USA in research and

development activities related to Ciena, USA products. A copy of this

Agreement dated 10.4.2006 is available on record. As per this

Agreement, the assessee provided software development/Engineering

Design/research related to Ciena, USA products and technology. The

assessee is compensated by its USA Associated enterprise (AE) with

aggregate of direct and indirect costs incurred by it in performing the

services to Ciena, USA plus suitable mark-up to be decided on agreed

basis from time to time. For the year under consideration, the assessee

was compensated with a mark- up of 19%. As per this Agreement, there

is a Confidentiality clause by which all information communicated to

one party by the other can be used only for the purposes of this

Agreement. Clause (9) of the Agreement is captioned as 'Intangible

Property Rights.' This clause provides that the assessee, at no time, shall

acquire or retain any right, title or interest whatsoever in the work done 8 ITA Nos.3324 & 2948/Del/2013

by it. This clause further provides that the intellectual property rights in

the format, presentation, procedures, process, computer software and

other material of whatever nature created, developed or enhanced by

Ciena India in the course of providing the services to Ciena, USA 'shall

be and remain the sole property of Ciena, USA absolutely.' From the

above clauses of the Agreement, it is manifest that the assessee is simply

a captive unit providing software development services to its AEs

without acquiring or retaining any intellectual property rights in the

work done by it for and on behalf of its foreign AE, for which it is

compensated with actual costs incurred plus 19% mark up. Total

operating revenue of the assessee from this segment stands at Rs.98.42

crore with the operating costs at Rs.86.95 crore, giving profit before

interest and tax at Rs.11.46 crore and the resultant profit ratio of

13.19%. With the above understanding of the nature of services

provided by the assessee to its AEs under this segment, we will espouse

the disputed companies for consideration as to their comparability or

otherwise.

9

ITA Nos.3324 & 2948/Del/2013

Infosys Technologies Ltd.

8.1. The TPO noticed that this company was finding place in the

accept/reject matrix and was rejected in the TP documentation by saying

that it failed functional area comparability. The TPO found this

company to be into software development services qualifying all the

filters applied by him. The assessee raised certain objections to the

inclusion of this company, but without any success. The TPO computed

operating profit margin of this company at 40.41% and included it in the

final list of comparables. The assessee is aggrieved against the inclusion

of this company in the set of comparables.

8.2. We have considered the rival submissions and perused the relevant

material on record. It can be seen that the TPO included this company in

the list of comparables by rejecting the assessee's contention about the

brand of this company helping in earning huge profits and also the brand

related profits swelling its ultimate profit rate. We find that the assessee

is a captive unit rendering services to its AEs alone without acquiring

any intellectual property rights in the work done by it in the

10 ITA Nos.3324 & 2948/Del/2013

development of software. The Hon'ble Delhi High Court in CIT vs.

Agnity India Technologies (P) Ltd. (2013) 219 Taxmann 26 (Del)

considered the giantness of Infosys Ltd., in terms of risk profile, nature

of services, number of employees, ownership of branded products and

brand related profits, etc. in comparison with similar factors prevailing

in the case of Agnity India Technologies Pvt. Ltd., being, a captive unit

providing software development services without having any IP rights in

the work done by it. After making comparison of various factors as

enumerated above, the Hon'ble Delhi High Court held Infosys Ltd., to

be incomparable with Agnity India Technologies Pvt. Ltd. The facts of

the instant case are more or less similar inasmuch as the assessee is also

a captive service provider with a limited number of employees at its

disposal and also not owning any branded products with no expenditure

on R&D at its own etc. When we consider the cumulative effect of all

the above factors, we find that by no standard, the assessee can be

compared with Infosys Technologies Ltd. Respectfully following the

judgment of the Hon'ble jurisdictional High Court in Agnity India

(supra), we hold that Infosys Technologies Ltd. to be incomparable with 11 ITA Nos.3324 & 2948/Del/2013

the assessee company. This company is, therefore, directed to be

excluded from the list of comparables.

Persistent Systems Ltd.

9.1. The TPO observed this company to be engaged in software

development services with predominant revenues from software

development services. He called for some information u/s 133(6) of the

Act from this company regarding break up of software products and

software development services. On consideration of such information,

he observed that around 95.1% of the total revenue of this company was

from software development services and the remaining amount was from

software products. After considering the assessee's objections, the TPO

included it in the list of comparables. The assessee is aggrieved against

the consideration of this company as comparable.

9.2. We have heard the rival submissions and perused the relevant

material on record. It can be seen from the information supplied by this

company u/s 133(6) of the Act, a part of which has been reproduced in

the TPO's order, that this company 'has developed a few of its own

12 ITA Nos.3324 & 2948/Del/2013

products in the area of identity management connectors.' Revenue from

product licences stands at Rs.288.93 million as against the revenue from

software development services at Rs.4829.57 millions. Though this

company is more engaged in software development services, but, is also

a software product company, which is evident from the information

supplied by it to the TPO. Thus, the total profits of the company on

entity level also, inter alia, include revenue from product licences. As

there is no separate segmental information and it has been considered as

comparable on entity level, it implies that the total revenue considered

also consist of some part from product licences. In such circumstances, it

is not possible to ascertain the impact of such revenue on the total

revenue of this company. Further, there is no information available

from the Annual report of this company or the data collected by the TPO

u/s 133(6) of the Act to divulge the amount of revenue from software

development services alone to the exclusion of revenue from product

licences. As the assessee is not engaged in the sale of any software

products, this company on entity level, cannot be considered as

comparable. The Delhi Bench of the Tribunal in the case of Toluna 13 ITA Nos.3324 & 2948/Del/2013

India Pvt. Ltd. Vs. ACIT (ITA No.5645/Del/2011, vide its order dated

26.8.2014 has held Persistent Systems Ltd. to be incomparable with

Toluna India Pvt. Ltd., also a company engaged in providing software

development services to its related parties alone. Similar view has been

taken by the Tribunal in Lear Automotive India Pvt. Ltd. Vs. ACIT (ITA

No.5612/Del/2011) vide its order dated 22.12.2014. The ld. DR could

not point out any distinguishing feature in the factual matrix of the

assessee in question and Toluna India Pvt. Ltd., and Lear Automotive

India Pvt. Ltd. Since both these companies are also engaged in the

business of providing software development services to its AEs, similar

to the activity done by the assessee, respectfully following the

precedents, we order for the exclusion of this company from the list of

comparables.

Wipro Ltd. (Seg.)

10.1. The assessee rejected this company in its TP document by

treating it as functionally different. The TPO observed that the IT

services segment of this company on standalone basis was comparable

14 ITA Nos.3324 & 2948/Del/2013

with the assessee company. He sought some information from this

company u/s 133(6) of the Act and, thereafter, came to the conclusion

that its IT services segment was comparable with the assessee. In doing

so, he rejected the assessee's contention about branding and turnover,

which was also taken by the assessee against the inclusion of Infosys

Technologies Ltd. The ld. CIT(A) upheld the finding of the AO/TPO in

treating it as a correct comparable. The assessee is aggrieved.

10.2. We have heard the rival submissions the perused the relevant

material on record. It can be observed from the TPO's order itself that

the facts and circumstances of Wipro Ltd., are somewhat similar to

Infosys Technologies Ltd., inasmuch as he has proceeded to reject the

assessee's objections by relying on the reasoning given by him for the

inclusion of Infosys Ltd. It is further observed that Wipro Limited

(Seg.) was considered as comparable by the TPO in the case of Toluna

India (supra) and Lear Automotive (supra). The Tribunal, in both the

cases, has held Wipro Ltd. (Seg.) as not comparable. This company is

also operating as a full-fledged risk taking entity; engaged in providing

15 ITA Nos.3324 & 2948/Del/2013

technology infrastructure services, testing services, package

implementation having more than 82,000 employees. It has its own

R&D centre. It incurred around 11% of net sales as expenditure on

research and development. None of the above factors match with the

assessee company. Respectfully following the above precedents, we

hold that this company is not comparable.

10.3. There is another reason for holding this company as

incomparable. It can be seen that there was a merger of Wipro

Infrastructure Engineering Ltd., Wipro Healthcare IT Ltd., Quantech

Global Services Ltd., with this company during the year in question.

This merger was approved by the Hon'ble Karnataka High Court and the

Hon'ble AP High Court during the financial year 2007-08. The Mumbai

Bench of the Tribunal in Petro Arandite (P) Ltd. Vs. DCIT (2013) 154

TTJ (Mum) 176 has held that a company cannot be considered as

comparable because of financial results distorted due to mergers and

demergers, etc. Similar view has been taken by the Delhi Bench of the

Tribunal in the case of Toluna India Pvt. Ltd. (supra). As there were

16 ITA Nos.3324 & 2948/Del/2013

amalgamations in Wipro Ltd. during the financial year in question, this

fact also makes it incomparable with the assessee company. In view of

the foregoing reasons, we direct to exclude Wipro Limited (Seg.) from

the list of comparables.

11. No other aspect of the computation of ALP of the international

transaction of `Provision of software development services' has been

challenged by the assessee in the present appeal. The impugned order is

ergo set aside on the question of determination of the ALP of the

`Software development services' segment and the matter is remitted to

the file of AO/TPO for computing ALP of the international transaction

of this segment afresh in consonance with our above directions.

Needless to say, the assessee will be allowed a reasonable opportunity of

being heard.

12. Ground no. 1(d) is against the exclusion of certain companies from

the list of comparables in the 'Marketing support services' segment.

Briefly stated, the facts of this ground are that the assessee reported

international transaction of 'Provision of marketing support services'

17 ITA Nos.3324 & 2948/Del/2013

with the transacted value of Rs.4,21,25,941/-. The assessee employed

TNMM as the most appropriate method with the PLI of Operating profit

to Total cost (OP/TC). The assessee's profit margin under this segment

was declared at 13.58%. The assessee chose 11 companies as

comparables whose average profit margin was within the permissible

range of the assessee's profit margin under this segment. For the

reasons given in his order, the TPO completely rejected the assessee's

list of comparables and chose 10 new companies as comparable. The

average operating profit margin of these companies was computed at

22.5% and, accordingly, transfer pricing adjustment of Rs.33,13,077/-

was proposed by the TPO, which was eventually made by the AO. The

ld. CIT(A) excluded Apitco Ltd., Rites Ltd., and Vapi Waste and

Affluent Management Company Ltd. from the final list of comparables

drawn by the TPO. This resulted into the deletion of addition on

account of transfer pricing adjustment under this segment. Both the

sides are in appeal against the impugned order to the extent it is

prejudicial to them. Whereas the assessee has challenged the inclusion

of Choksi Laboratories Ltd., and WAPCOS Ltd. (Seg.) in the list of 18 ITA Nos.3324 & 2948/Del/2013

comparables, the Revenue is aggrieved only against the exclusion of

Apitco Ltd.

13. We have heard the rival submissions and perused the relevant

material on record. Before examining the comparability or otherwise of

the companies challenged before us, it is of utmost importance to

consider the nature of activity carried out by the assessee in the

provision of marketing support services. There is no elaboration of the

nature of services in the Agreement between the assessee and Ciena

Corporation, USA, except for mentioning in Schedule 2: 'Provision of

other such services to Ciena, USA as Ciena, USA may reasonably

request from time to time.' The TPO has also not discussed the nature

of services under this segment except for recording the description of

transactions with its nomenclature being 'Provision of marketing support

services.' When we advert to the TP study report, it can be found that

the functions performed by the assessee in the provision of marketing

support services are indicated at page 29 of the paper book, as under:-

19

ITA Nos.3324 & 2948/Del/2013

• "Marketing: Marketing activities undertaken by Ciena India

includes identifying potential customer, collecting market related

information, attending trade exhibitions and industry shows, etc.

• Sales support: Sales support activities comprise gathering

information and analyzing industry information, making

presentations on Ciena products and services and providing

relevant support to Ciena, US.

• Technical Support: Ciena India also provides technical support

services to the customers. During FY 2007-08, the Company

rendered training and installation support to the end customers of

Ciena US. Also, Ciena India received training on technical matters

from Ciena Group."

14. From the above description of Marketing support services

performed by the assessee for its foreign AE, it is patent that the

assessee's nature of work basically includes identifying potential

customers and providing technical support services to the customers of

its AE. The work of identifying customers is carried out by collecting

20 ITA Nos.3324 & 2948/Del/2013

market related information, attending trade exhibitions, etc. With this

background in mind about the nature of services provided by the

assessee under this segment, we now proceed to examine whether or not

the companies under challenge are comparable.

Choksi Laboratories Ltd.

15. The TPO visited the website of this company and noticed that it

was engaged in providing 'analysis, calibrations, pollution control and

consultancy services' to a broad spectrum of industries. By considering

such nature of services provided by this company, the TPO held that

these were similar to the services provided by the assessee to its AE.

We have gone through the Annual report of this company, which is

available on pages 2370 onwards of the paper book. Note no. 8 to Part

B - 'Notes forming part of the accounts' - provides that this company is

a commercial testing house engaged in testing of various products and

also offers services in the field of pollution control as allied activity.

Para 2 of the Annexure to the auditor's report also clarifies that this is a

company engaged in rendering services 'for testing purposes.' From the

21 ITA Nos.3324 & 2948/Del/2013

above description of the nature of services carried on by this company, it

is evident that it is basically engaged in providing testing services for

various products and also offers services in the field of pollution control.

As against this, the services provided by the assessee are purely in the

nature of identifying customers for its AEs and providing technical

support services to their customers. We fail to appreciate as to how

marketing support services can be equated with testing services. When

we peruse Schedule of fixed assets of this company, it can be seen that

the major asset is 'Instruments.' It is with the help of these instruments

that the company is providing services in the nature of testing of various

products. By no standard, this company can be considered as

comparable with the assessee company. We, therefore, direct the

exclusion of this company from the list of comparables.

WAPCOS Ltd. (Seg.)

16.1. The TPO considered this company as comparable by

observing that it was providing support services in terms of technical

support, technical know-how valuation and assistance in

22 ITA Nos.3324 & 2948/Del/2013

development/upgradation of potential suppliers, etc. The assessee's

objections about the functional dissimilarity of this company, were

rejected.

16.2. After considering the rival submissions and perusing the

relevant material on record, we find from the Annual report of this

company that it has two segments, namely, 'Consultancy and

engineering projects' and 'Lumpsum turnkey projects.' The TPO has

taken 'Consultancy and engineering project segment' for the purposes of

comparison with the assessee company. This company is engaged in

infrastructure development projects. This company is also working as

independent review and monitoring agency for projects in some States.

It is also providing supervision and quality control consultancy for

construction/upgradation of rural roads under PMGSY. It also secured

projects for development and hygiene education, development of dry pit

latrines, designs for local conditions for household and schools and solid

waste management. It also secured projects for transmission line Kirti

Irti to Sta, Treng, Camhodia. A review of the above services provided

23 ITA Nos.3324 & 2948/Del/2013

by this company, it can be easily ascertained that it is nowhere close to

the rendering of marketing support services, which is being done by the

assessee under this segment. The nature of activity done by the assessee

is quite distinct from this company. We, therefore, direct to exclude

WAPCOS Ltd. (Seg.) from the list of comparables.

17.1. The Revenue is aggrieved against the exclusion by the ld.

CIT(A) of Apitco Ltd. This company was considered as comparable by

the TPO. The ld. CIT(A) noticed that this company to be engaged in

providing technical and engineering services and also executing projects

on turnover basis. He, therefore, held this company to be not

comparable.

17.2. Having heard the rival submissions and perused the relevant

material on record, we find from the Annual report of this company that

it is engaged in providing several services, viz., Micro Enterprises

Development, Skill Development, Entrepreneurship Development,

Research Studies, Project related Services, Infrastructure Planning &

Development, Environment Management, Energy related Services,

24 ITA Nos.3324 & 2948/Del/2013

Cluster Development, Technology Facilitation, Asset Reconstruction &

Management Services, Emerging Areas. It can be seen from the

nature of operations carried out by this company that the same is

towards Micro enterprises development, Skill development and Project

related services, etc., also including Infrastructure planning and

development along with Energy related service and Cluster

development. A part of its activities has got some resemblance with the

nature of service provided by the assessee under this segment. The ld.

CIT(A) has recorded that 'only 12% of total income of this company is

from research studies which is akin to the nature of services provided by

the assessee company.' This contention has not been controverted by the

ld. DR with any clinching evidence. When we consider the operations

of this company as enumerated above and the fact that this company has

maintained accounts on entity level and there is no bifurcation available

in respect of the services similar to those provided by the assessee under

this segment, this company on entity level cannot be considered as

comparable. We, therefore, hold that the ld. CIT(A) was justified in

considering this company as not comparable.

25

ITA Nos.3324 & 2948/Del/2013

18. Ground nos. 2 and 3 of the assessee's appeal were not pressed.

The same, therefore, stands dismissed.

19.1. Ground no. 2 of the Revenue's appeal is against the deletion

of addition made by the AO on account of training and recruitment

expenses. The assessee claimed deduction for a sum of Rs.

2,24,62,589/- towards recruitment and training expenses. The AO

allowed 20% deduction for such expenses in the current year and

treated the remaining 80% as capital expenditure, for which

disallowance was made for a sum of Rs.1,79,70,072/-. The ld. CIT(A)

deleted this addition.

19.2. After considering the rival submissions and perusing the

relevant material on record, we find that the view taken by the ld.

CIT(A) accords with the judgment dated 27.4.2010 of the Hon'ble

jurisdictional High Court in the case of CIT vs. Solus Pharmaceuticals

Ltd., in which it has been held that the training expenses are to be

allowed as revenue expenses. We, therefore, uphold the view taken by

the ld. CIT(A). This ground fails.

26

ITA Nos.3324 & 2948/Del/2013

20. The last ground is against the deletion of addition on account of

Sundry balances written off without giving any opportunity to the AO

examine the evidence filed by the assessee before the ld. first appellate

authority. The ld. AR fairly admitted that the ld. CIT(A) partly deleted

the addition by considering additional evidence which was not there

before the AO. Under such circumstances, we do not propose to

examine the merits of the addition, which has been deleted in violation

of rule 46A of the Income-tax Rules, 1962. Accordingly, the impugned

order on this issue is set aside and the matter is sent to the file of AO for

deciding it afresh as per law, after allowing a reasonable opportunity of

being heard to the assessee. Needless to say, the assessee will be at

liberty to lead any fresh evidence before the AO in this regard.

21. In the result, both the appeals are allowed for statistical purposes.

The order pronounced in the open court on 23.04.2015.

Sd/- Sd/-

[C.M. GARG] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated, 23rd April, 2015. 27 ITA Nos.3324 & 2948/Del/2013

dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT (A) 5. DR, ITAT

AR, ITAT, NEW DELHI.

28