TaxTMI 
TaxTMI 
2011 (9) TMI 196
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....al transaction be deleted; & (c) interest charged u/s 234B and s. 234D of the Act be deleted. 2.1 Charging of interest u/s 234B of the Act is mandatory and consequential in nature and, thus, this ground is not maintainable and, accordingly, dismissed as not maintainable. The levy of interest u/s 234D is a legal ground which is chargeable for the AY 2006-07, following the finding of the Hon'ble Delhi E Special Bench in the case of ITO v. Ekta Promoters P. Ltd. reported in [2008] 113 ITD 719. It is ordered accordingly. 2.2 The assessee company's assertions that the lower authorities erred in passing the impugned orders - (i) without considering all the submissions and/or without appreciating properly the facts and circumstances of the case and the law applicable; (ii) in a mechanical manner and without application of mind; (iii) at the fag end of the limitation period; and (iv) without affording a proper opportunity of being heard to the assessee are found to be wanting as the records testify that the assessee company was provided with as many as eighteen opportunities during the course of assessment proceedings....
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.... valuation of the IPR at Rs.260.63 crores which was upheld by the DRP and, accordingly, directed the AO to make the adjustment on the basis of the revised working of the TPO at Rs. 222.13 crores (260.63 crores - ALP of Rs.38.50 crores). The AO passed the final order on 20.10.2010 in pursuance of the directions of the DRP dated 30-9-2010. 6. Agitated, the assessee has come up with the present appeal against the adjustment made by the TPO which was upheld by the DRP to the valuation of IPR sold by the assessee to its AE - Tally Dubai - and incorporated by the AO in his final order cited supra. 6.1 During the course of hearing, the submissions made by the Ld. A.R are summarized as under: (1) The assessee challenges the legality of reference to TPO the AO without forming 'a considered opinion': The assessee challenges the legality of the reference made by the AO to the TPO as according to the Ld. AR, a reference has been made by the AO to the TPO without forming "a considered opinion" on the issues under reference. The AO referred the matter to TPO, following CBDT Instruction No. 3 of 2003 dated 20/5/2003. The said inst....
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....son, being the assessee, has entered into an international transaction in any previous year, and the Assessing Officer considers it necessary or expedient so to do, he may, with the previous approval of the Commissioner, refer the computation of the arm's length price in relation to the said international transaction under section 92C to the Transfer Pricing Officer. (2) ........................... (3) ........................... (4) On receipt of the order under sub-section (3), the Assessing Officer shall proceed to compute the total income of the assessee under sub-section (4) of section 92C in conformity with the arm's length price as so determined by the Transfer Pricing Officer.] (5) ........................... (6) ........................... (7) ........................... Sub-section(4) of section 92CA has been amended by Finance Act, 2007 w.e.f. 1.6.2007 and prior to its substitution, sub-section(4) read as under : "(4) on receipt of the order under sub-section(3), the Assessing Officer shall p....
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....can make a reference to the Transfer Pricing Officer. In our view, it is not possible to read such a requirement into section 92CA (1). However, it will suffice if the Assessing Officer forms a prima facie opinion that it is necessary and expedient to make such a reference. One possible reason for the absence of such a requirement of formation of a prior considered opinion by the Assessing Officer is that the Transfer Pricing Officer is expected to perform the same exercise as envisaged under : Section 92C (1) to (3) while determining the ALP under section 92CA (3). The latter part of section 92CA(3) unambiguously states that the Assessing Officer shall "by order in writing, determine the arm's length price in relation to the international transaction in accordance with sub-section (3) of the section 92C." It will be pointless to have a duplication of this exercise at two stages one after the other. On the other hand, the scheme is that after the Transfer Pricing Officer determines the ALP the matter revives before the ALP at section 92C(4) stage where, in terms of section 92CA(4) the Assessing Officer will compute the total income "having regard to" the ALP determined by the Tr....
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....sing Officer to refer the matter of computation of ALP to the Transfer Pricing Officer is not unfettered. It is trite that any misuse of such exercise of discretion can be corrected by way of judicial review by statutory appellate authorities and ultimately the courts. (b) The words "necessary and expedient" occurring in other provisions of the Act and other statutes have been interpreted judicially to admit of a strict construction permitting the power to be used only in the manner and subject to the conditions stipulated in the provision. (c) The words "necessary and expedient" posit the formation of an opinion by the Assessing Officer of the need to make such a reference. However, a reading of section 92C and section 92CA does not indicate that the Assessing Officer is required to form a prior considered opinion after considering all the available materials even before making a reference to the Transfer Pricing Officer. A prima facie opinion would suffice at the stage of making the reference. (d) The Transfer Pricing Officer is expected to perform the same exercise as envisaged under section 92C(1) to (3) while determining the ALP under sec....
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.... amendment to sec 92CA (4), the AO has to pass the order in conformity with the order passed by the TPO and, hence, the AO has to have considered opinion before making reference to the TPO. It is, therefore, submitted that the Hon'ble Bench shall ascertain whether the AO has formed a considered opinion before making reference to the TPO u/s.92CA(1) of the Income-tax Act, 1961 and the Commissioner has accorded his approval for the reference after due consideration as the mechanical approval can not be considered to be valid approval under the Act. (2) The TPO followed excess earning method which is not a prescribed method under the Act or Rules: - that the TPO has followed excess earning method and not Comparable Uncontrolled Price Method (CUP) as there was no comparables available with reference to the IPR sold by the Assessee. The Excess Earning Method is part of the Draft guidance not issued by the International Valuation Standard Council in April, 2009, that the TPO determined the ALP following the Excess Earning Method and made adjustment to the sale value of the IPR. However, as per section 92C of the Act the ALP in relation to an intern....
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....e in both the years". - that in the absence of appropriate method for determination of ALP of IPR, the provision cannot be applied and value of IPR declared by the assessee shall be accepted as ALP. The CUP presupposes an existence of comparable transaction and in the absence of any such comparable the CUP method cannot be applied for determination of ALP, that there is no other method which can be applied for determination of ALP, the provision relating to determination of ALP can not be applied to the transaction of the assessee. - relies on the ruling of the Supreme Court in the case of CIT v. Official Liquidator, Palai Central Bank Ltd. [150 ITR 544] wherein it was held that if the provision of a particular Act are incapable of its application, the charge of such section fails and the same can not be applied. The Hon'ble Court was dealing with application of provisions contained in Super Profits Tax Act, 1963 in respect of the company in liquidation subsequent to the date of its winding up. The court following its earlier judgment has held as under : "In CIT v. B. C. Srinivasa ....
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....termining the value of the IPRs (iii) The TPO has erred in ignoring sales returns of AY 2005-06 amounting to Rs. 111.,03 crores. Since the basis of the TPO's estimation of future revenues is sales of AY 2005-06, non-consideration of such sales returns grossly inflates the future earnings potential derived from the model adopted by the TPO (iv) Compounded Annual Growth Rate (CAGR) is a function of two variables in a given range, i.e the first and last variable. Values within the given range, i.e. other than the first and last value, do not have a bearing on the CAGR. This being the case, CAGR is not a good metric to measure growth, especially so in the case of the Appellant where growth has been uneven, erratic and also negative in a few years; (v) The choice of CAGR adopted by the learned TPO is whimsical, illogical and wholly unfounded (vi) Useful life of the IPR, which is inextricably linked with technology, has been wrongly estimated by the TPO to be six years whereas in reality, useful life is inarguably less than three years. Inherent flaws in the IPR, which could potentially cripple and further reduce the useful life of the IPR, have ....
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....; - The learned TPO has considered the sales of the appellant from A.Y 2000-01 to 2005-06. Based on this data, the TPO has computed CAGR and then estimated the future revenue, that the methodology adopted by the TPO gives absurd results. To demonstrate this, the figures of actual sales are tabulated below. Table -3 COMPARISON OF ACTUAL REVENUES WITH TPO'S ESTIMATED REVENUES Assessment year Indian License Revenue Global Revenue TPO's Estimates No. of Times Overvalued 2007-08 18,63,30,924 27,73,70,160 287,19,63,050 10 2008-09 86,98,16,178 99,65,09,130 345,75,56,316 3 2009-10 94,66,53,438 102,48,61,182 416,25,52,049 4 2010-11 91,70,80,310 91,70,80,310 501,12,96,411 5 As can be seen from the above, as per the TPO, the assessee would have cumulative turnover of around Rs. 2,880 crores. As per the TPO in AY 10-11, the appellant would have had Rs. 501 crores of turnovers. In reality the turnover is Rs. 91.70 crores. There is no product company in India which has turnover of 500 crores to 700 crores.....
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....mediately preceding the sale of IP and therefore reflects the true earning potential of the IP at the time of sale. - that the TPO in the remand report (page 11 of the remand report) has stated that current year data was not taken since the same involved the related party transactions and the transaction involving IPR took place in this year. In this regard, the appellant submits that the sale of Tally licenses is to third parties and not to related parties as contended by the TPO. What is sold by the appellant is IPR. IPR generates license revenues. Therefore to value IPR what needs to be considered is revenue from Tally licensees which are sold to third parties. The other related party transactions have no relevance for this purpose. The situation in AY 2006-07 is similar to situation in all the years considered by the TPO. Therefore this reason of the TPO is baseless. With respect to TPO's contention that the transaction involving IPR took place in this year and therefore current year data is excluded, the appellant submits that since the sale is in current year, it is more so important to consider current year sales. This is also in accordance with p....
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....bsp; With respect to this contention of the appellant, the TPO on page 10 of the remand report has contended that sales figures have been taken from annual report of the appellant and therefore sales return have been taken care of. The TPO has further contended that he has been very conservative and taken CAGR at 20.39% instead of 90.80%. The TPO has contended that lower CAGR takes care of all possible adverse effects on future cash flows. - With respect to TPO's contention that sales return have been taken care of, the appellant submits that sales returns have not been reduced from the year to which they pertain.. Therefore the question of same being considered does not arise. Going by TPO's own admission that sales return and that sale of A. Y. 2005-06 should be accordingly adjusted. - With respect to TPO's contention on CAGR, the appellant submits that if CAGR of 90.80% is adopted, the total sales projection as per TPO's method would be Rs. 37,535.55 crores. This reflects the absurdity of the TPO's calculation. CAGR of 90.80% is not possible in real life. This ought to have put the TPO on guard to make further analysis and ....
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....eding a year. For example Tally version 3 or version 4 released in 1990's does not have any market today. Tabulated below are the release dates of newer versions: Table 4 Version Release Date 7.2 01.03.2005 8.1 07.07.2006 9.0 01.12.2006 As evident from the above Table, newer versions need to be released at regular intervals to suit the market requirements. In case newer versions are not released, the demand for the products will fall. What was transferred is IP of the existing products, i.e Tally 7.2. The market for the existing product is not six years. Its life is much shorter. The base product without upgrades and newer versions would not sell in the market. The accounting packages have to continuously evolve. Continuous development is the key to ensure suitability of the package to adapt to changing requirements of the user. Their shelf life is very short. Competition in the field is intense. Obsolescence is fast paced. Client loyalty is fickle. Under the circumstances the IPR of an accounting package has hardly any value....
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....amenable to copying as the security system in the product was weak. Many pirated versions came into the market which was available at a far lesser price. (ii) To correct the above flaws intense development inputs of very high magnitude were required on a continuous basis on the product design, technology and security features and other value added modules. The continuous development would necessitate deep study and greater insight into customer and geographical requirements from the market standpoint. The assessee's products targets small and medium businesses. Most of them are run by individuals or small firm. Understanding their individual and multitude requirements and preferences and translating that into product requires deep study. (iii) In the initial years, the Tally product was just an accounting package. To expand the market, various others features were required to be integrated. Medium sized businesses require features like inventory, payroll, e-TDS, service tax returns, cost centres, FBT etc. The customers want one-stop solution for all the requirements. When assessee sold the IP, version 7.2 was in vogue. In the latter versions, the product con....
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....t submits without prejudice that Beta should be computed after considering all the three companies. The average Beta of three companies would be 1 (computation of Beta on pages 408 to 414 of the paper book). Risk Premium While computing the discount rate, the learned TPO (page 166 of the TP Order) has taken the risk premium at 8.80%. It is stated that risk premium of Bench Mark BSE Index has been considered. In this regard, the appellant submits that it is engaged in the business of software development and comparing return of BSE Index which is composition of companies from various industries is not appropriate. The Risk Premium should be based on return of companies engaged in software industry. Therefore the appellant submits that "Market Return on Capital Employed" from Capitaline Database of software industry (Medium and Small Companies) being 11.61% should be adopted. Rate of Inflation The TPO has considered the average inflation rate at 4%. It is stated that the inflation rate is on the basis o....
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....ive in and of itself. The influence of minority shareholders depends on a number of factors, including whether the minority shareholder has a participation in the capital of the parent company or in the capital of a subsidiary, and whether it has and actually exercises some influence on the pricing of intra-group transactions" The TPO has not appreciated the business, commercial and economic realities. In the facts and circumstances of the case, the IPR being transferred at WDV is to be considered as at arm's length. To support its contention, the appellant relies on the Bangalore ITAT decision in the case of Intel Asia Electronic Inc v ADIT 2011-TII-14-ITAT-BANG-TP. In this case, the assessee had sold its PE as a going concern to its AE. The Hon'ble ITAT held that the only reasonable approach would be value the assets by applying the depreciation rates as provided by the Income Tax Act. The relevant extracts are as follows: "12. To break the ice in such a situation, the only reasonable approach would be to value the assets by applying the deprec....
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....nsidered. Sales for AY 2011-12 and AY 2012-13 are estimated based on CAGR computed based on AY 2000-01 to AY 2010-11. Changes in working capital as detailed above made Discount rate considered at 23.14% after considering changes in Beta, Risk Premium and Inflation rate as detailed above. Working capital changes as detailed above Based on the above changes, the ALP comes to Rs. 14.70 crores Method VI - Following changes made to TPO's computation: Implicit period changed 01.04.99 to 31.01.06 (upto date of sale of IPR). Actual sales (of Tally Dubai) figures for AY 2007-08 to 2010-11 considered. Sales for AY 2011-12 and AY 2012-13 are estimated based on CAGR computed based on AY 2000-01 to AY 2010-11. Changes in working capital as detailed above made. Discount rate considered at 23.14% after considering changes in Beta, Risk Premium and Inflation rate as detailed abo....
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.... Court clearly held that - 'A discretion is given to the assessing officer to refer the question of computation of the arm's length price to the Transfer Pricing Officer, if he considers that it is suitable, appropriate, profitable or convenient to the Revenue. The two words necessary or expedient' are separated by the word 'or' and not by the word 'and' and, therefore, should not be read as 'necessary and expedient'. There is nothing in s.92CA itself that requires the AO to first form a considered opinion in the manner indicated in s. 92C (3) before he can make a reference to the TPO. In our view, it is not possible to read such a requirement into s. 92CA(1). However, it will suffice, if the AO forms a prima facie opinion that it is necessary and expedient to make such a reference. One possible reason for the absence of such a requirement of formation of as prior considered opinion by the AO is that the TPO is expected to perform the same exercise as envisaged under s. 92C(1) to (3) while determining the ALP under s.92CA(3). The latter part of s.92CA (3) unambiguously states that the AO sha....
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....ly, the Hon'ble Tribunal held thus - "71. We are astonished at the submission of Shri Vohra to the effect that it is still open to the assessing officer even in cases where value of international transaction exceeded Rs. 5 crore to refer or not to refer the matter to the TPO as the instructions did not affect discretion vested in the assessing officer. If it was so, then what was the need to challenge the instructions and its classifications before the Hon'ble High Court? Shri Vohra stated that perhaps the petitioner in that case did not correctly interpret the relevant statutory provision and instructions and, therefore, rushed to the Court. We are unable to agree with above submission of Shri Vohra. It is not possible for us to hold that instructions issued by CBDT u/s 119 of the Act to regulate assessment proceeding can be treated as a waste paper by officers functioning under the Board (CBDT). If such a view is taken, it would lead to chaos in the country. If various guidelines issued by CBDT for administration of Income-tax Department and for regulation of assessment etc., are not adhered to or made optional, then all schemes of assessment may fail and jeopardize the workin....
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....ndatory for the AO to refer all the cases wherever the aggregate value of international transactions is more than Rs.5 crores. These instructions are binding on all the AOs. In these cases, there is no need for the AO to make a prima facie opinion, except that he/she needs to examine the 3CEB report to see the aggregate value of international transactions. In the instant case, as the aggregate value of international transactions, based on 3CEB report filed by the taxpayer before the AO, exceeded Rs.5 crores, he referred the case to the TPO. Therefore, we see no infirmity in referring the matter to TPO without forming "a considered opinion". In the light of the above reasoning, the first legal point raised by the assessee, namely, the reference to the TPO by the AO without forming "a considered opinion" does not stand the test of law and cannot be sustained, and, therefore, this plea of the assessee is rejected. It is ordered accordingly. II. The TPO adopted a non-statutory method for valuating IPR, which is a method not known to law. 8.4 The other legal grievance of the assessee being that the TPO has followed Excess Earning Method and not Comparable Uncontrolled Price Method....
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....price. What is important is the arm's length standard. The methods are only tools to see the arm's length standard. The methods should not bind the TPO while arriving at the arm's length price. The main issue to be seen here is whether the TPO applied arm's length principle correctly. The decisions quoted by the taxpayer are not relevant as in those cases, the TPO did not apply any method in this case, and the TPO applied CUP method. With regard to the assessee's accusation that the arm's length price was determined without considering any comparable cases, for which, the Revenue came up with an answer that - (i) In the absence of uncontrolled independent comparable companies, the TPO tried to apply internal CUP method, wherein it is seen what is the price for which the same product would have been sold by the taxpayer to an independent entity. All the data considered by the TPO from FY 1999-2000 to 2004-05 is based on uncontrolled transactions between the taxpayer and independent entities. For the same reason, the TPO did not consider the data for the FY 2005-06, as there are substantial related party transactions during FY 2005-06 with its associated enterprise....
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....data is available up-to March, 2010 and these figures are much lower than the figures adopted by the TPO. When this was placed before the Revenue, the Revenue came up with a claim that - Firstly, when an intangible is sold, the risk of future income potential lies with the buyer i.e., the AE. Secondly, when the Tally software Product was sold in 2006, there was no forecast, not even any iota doubt about global economic recession. That the subsequent dip in sales due to global economic slow down does not have relevance at the time of sale as this was not contemplated or comprehended at the time of sale. For example, if a mango orchard is sold to a buyer and there is a crop failure for the next two to three years due to heavy rains at the time of flowering, this risk is that of the buyer and in no way determines the price on the date of sale, as these events are not comprehended at the time of sale; Further, even if the Hon'ble Tribunal considers actual revenues, the revenues of assessee company along cannot be considered as subsequent to the sale of Tally Software, the taxpayer is responsible for selling in Asia alone. As the taxpayer has distributors all over the world and....
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....e years from FY 2006-07 to FY 2011-12 B = Return of fixed assets: the discounted return on capital is computed based on average depreciation charge on sales for the period from FY 1999-2000 to 2004-05 and applying the same for the future years and discounted to the net present value of return on fixed assets; C = Return on working capital: To consider the return on working capital, the average Working Capita levels as a percentage of sales have been computed for the years from FY 1999-00 to 2004-05. based on the past history, the same ratio is applied for the future years and discounted at the above discount rate [WACC] to arrive at the present value of working capital requirements. The SBI's PLR rate for short term working capital loans for the FY 2005-06 at 10.25% per annum is considered as return on working capital. Based on the above rate, the return on net present value on working capital value has been arrived at. D = Return on human capital: The average employee cost as percentage of sales for the FY 1999-2000 to FY2004-05 has been considered and applied for future years to arrive at the estimated cost of human capital. Such exercise is done for the future years fro....
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....d at Rs.64.05 crores with a fervent submission to adopt Rs.52.23 crores being average of the first and second methods which was, however, not found favour with the Revenue. Strangely, the DRP upheld the revised valuation report of the Ld. TPO by terming the valuation reports furnished by the assessee as 'extremely perfunctory' with no illustration as to how the report of the assessee had become as such. The adjustment to be made on the basis of the revised working of the TPO was opted at Rs. 222.13 crores as against Rs.466.47 crores adopted in the draft assessment order. To demonstrate further the genuineness in the transaction, the assessee, during the course of hearing, came up with alternative computation as detailed in its submission cited supra . According to various method adopted, the arm's length price was less than what was the price received as admitted by the assessee at Rs. 38.50 crores. It is true that it is difficult to value business more particularly to value a closely-held concern because each company has its own unique characteristics. Often, consideration has to be given to the future profits the company will be able to earn. The valuation may be influenced by th....
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....scounted to the present value. 3. Return on the work force is determined as a return changed on the fair value of the work force asset. Work force asset is usually valued using the work cost approach. 4. A fair return on the other Intangible assets by the way of hypothetical royalty rate that would be changed to lease the asset. For discussing the net present value (NPV), a uniform discount rate is used to arrive at the discounted cash flow. Often the weighted average cost of the capital (WACC) is used as the discounting factor. The WACC is the weighted average of the cost of the debt and the cost of the equity. In the case of the taxpayer, there is no active market in identical or near similar intangible asset. Therefore, the IPR sold by the taxpayer is to be valued primarily using an income capitalization method. In the Income Capitalization method, the TPO used the Excess Earnings Method (EEM) as described above. This is because qualitative and subjective adjustments are required to apply the transaction data from the non-identical assets, which adversely affect reliability. To sum up, the intangibles i.e. the sale of the T....
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....t. Step 5 : (A) The above future cash flows as reduced by the cost of improvement are discounted using WACC as discounting factor to arrive at total net present value of the cash flows of the business for the years from FY 2006-07 to FY 2011-12. Step 6 : (B) RETURN ON FIXED ASSETS The discounted return on capital is computed based on average depreciation charge on sales for the period from FY 1999-2000 to FY 2004-05 and applying the same for the future years and discounted to the net present value of return on fixed assets. Step 7 : (C) RETURN ON WORKING CAPITAL To consider the return on working capital, the average working capital levels as a percentage of sales have been computed for the years from FY 1999-2000 to FY 2004-05. Based on the past history, the same ratio is applied for the future years and discounted at the above discount rate (WACC) to arrive at the present value of working capital requirements. The State Bank of India's PLR rate for short term working capital loans for the FY 2005-06 at 10.25% per annum is considered as return on working capital. Based on the above rate, the return on net present value on working capital value has been arriv....
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....will keep growing. The IPR was sold only on 31.1.2006, therefore, the sales for ten months i.e., from 1.4.2005 to the date of sale should have been included for computing the future revenues. This has been ignored by the TPO. The TPO in his remand report had stated that the current year [AY 2006-07] data was not taken since the same involved the related party transactions and the transaction involving IPR took place this year. This stand of the TPO was hotly contested by the assessee that the sales of tally licenses were to third parties and not to related parties as portrayed by the TPO. It was, further, claimed by the assessee that what was sold by assessee was IPR which generates license revenues and, thus, to value IPR what needs to be considered was revenue from Tally licenses which were sold to third parties. The other related party transactions have no relevance factors. The situation in the AY 2006-07 was similar to situation in all the years considered by the TPO. Therefore, it was claimed by the assessee that the reasoning of the TPO was baseless. Refuting the TPO's reasoning that the transaction involving IPR took place in this year and, therefore, current year data was ....
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....in AY 2005-06. It was claimed that the turnover as reported did not materialize. These facts have not been taken care of by the TPO while assuming the future turnover projection. It was, further, contended that the TPO's contention that he was very conservative and taken CAGR at 20.39% instead of 90.80% that the lower CAGR takes care of all possible effects on future cash flows was termed by the assessee a mere assumption and presumption on the part of the TPO and nothing else. As stated earlier, we are of the view that sale return, as arrived above, has to be reduced while calculating CAGR. Further, we add that the actual CAGR is to be considered for projection without any discount. 10.5 We also find prima facie flaw in the calculation of discount factor given by the TPO. The TPO has considered 3 companies as comparable to the assessee's segment of distribution of products. These companies are Lifetree Convergence Limited, Exensys Software Solutions Limited and Sankhya Infotech Limited (page 139 of the TP order). Out of these three, only Sankhya Infotech's Beta has been considered. Why the other two companies are not considered is not clear. We are of the view that Beta should ....
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....seen from the records, the revenue for the AY 2005-06 looks abnormal compared to other AYs and there was also revenue to the extent of Rs. 111.04 crores which did not materialize due to distributors being not able to sell the stocks which was forced on them in a greater quantity with an anticipation of good revenues due to introduction of VAT. In the same calculation, the revenue for the year 2006-07 has to be adopted. As the date of valuation of IPR was on 31.1.2006, the actual revenues upto January, 2006 has to be taken and the next two months will have to be projected based on the performance of the previous ten months. As the assessee had sold only IPR and the calculation of revenues are from Tally Licenses which were sold to third parties, the sale of IPR to a related party transaction has no relevance for this sale of Tally license. Hence, the current year data i.e., AY 2006-07 has to be included as they relate to third party transactions and the projections have to be made for the future years based on the revenues of AY 2006-07 which is also in accordance with the provisions of rule 10B(iv) which mandate the use of current year data. The projection has to be made for next s....