AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (4) TMI 1752
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.... the Deputy Commissioner of Income-tax - V [Learned Transfer Pricing Officer ('TPO')]/ Deputy Commissioner of Income-tax, Circle 11(4) (Learned Assessing Officer ('AO')] an in making an adjustment to the transfer price of the Appellant in respect of its software development services and customer support services provided to its associated enterprises holding that the international transactions do not satisfy the arm's length principle envisaged under the Income Tax Act, 1961 (the 'Act').[corresponding to ground 2] 3. That the Learned CIT(A)erred in upholding the Learned TPO approach of rejecting the Transfer Pricing ("TP") documentation maintained by the Appellant. [corresponding to ground 3] 4. That the Learned CIT(A) erred in upholding inclusion of companies [(a) KALS Information Systems Limited, (b) Bodhtree Consulting Limited, (c) Tata Elxsi Limited, (d) Sasken Communication Technologies Limited, (e) Persistent systems Limited, (f) Larsen & Toubro Infotech Limited in Software Development services segment) and (a) Infosys BPO Limited, (b) Accentia Technologies Limited, (c) Cosmic Global Limited, (d) Eclerx Services Limited in Customer Suppor....
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....comparable companies. [corresponding to ground 5(d)] 9. That the Learned CIT (A) erred in upholding application of different quantitative and qualitative filters byte Learned TPO in respect of the customer support services segment and in doing so grossly erred in upholding the Learned TPO's approach of rejecting certain comparable companies identified by the Appellant for having different accounting year (i.e. companies having accounting year other than March31orcompanies whose financial statements were for a period other than 12 months) .. [corresponding to ground 6(a)] 10. That the Learned CIT(A) erred in upholding application of different quantitative and qualitative filters byte Learned TPO in respect of the customer support services segment and in doing so grossly erred in Upholding the Learned TPO:s approach of applying the turnover < 1crore for rejection of comparable companies. [corresponding to ground 6(b)] 11. That the Learned CIT(A)erred in upholding application of different quantitative and qualitative filters byte Learned TPO in respect of the customer support services segment and in doing so grossly erred in upholding the Learned TPO'....
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....sponding to ground 13] 19. That the Appellant prays to compute the arm's length price by considering correct operating margins of someof the comparable companies. [corresponding to ground 14] 20. The Learned AO and consequently the Learned CIT(A) has erred in law by not considering the export receipts for the period January to March 2009 as part of the export turnover while computing deduction under Section 10A of the Act on the pretext that the Appellant was unable to produce the correspondingsoftex forms. [corresponding to ground 15] 21. The Learned AO and consequently the Learned CIT(A) has erred in facts, by not considering the softexform for March 2009 which was submitted by the Appellant during the assessment proceedings.[corresponding to ground 16] That the Appellant craves leave to add to and / or alter, amend, rescind or modify the grounds taken hereinabove before or at the time of hearing of this appeal." 3. Similarly, the grounds raised by the revenue in its appeal are as under. "1. The order of the CIT (A) is opposed to law and the facts and circumstances of the case. 2. The CIT(A) erred in holding ....
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....ding those comparables which are neither taken byte assessee or the TPO and which do not find a place in the order under Section 92CA. 8. The CIT(A) erred in directing the AO to follow the ratio laid down by theHon'ble Court in the case of Tata Elxsi Limited 349 ITR 98 and exclude the telecommunication charges / freight charges incurred in foreign currency from the total turnover also while computing the deduction u/s 10A of theI.T. Act as the decision of the High Court is binding, without appreciating thefact that there is no provision in Section 10A that such expenses should bereduced from the total turnover also, as clause (iv) of the explanation toSection10A provides that such expenses are to be reduced only from theexport turnover. 9. The CIT(A) erred in not appreciating the fact that the jurisdictional High Court's decision in the case of Tata Elxsi Limited 349 ITR 98 has not been accepted by the department and an appeal has been filed before the Hon'bleSupreme Court. 10. For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the CIT(A) be reversed and that of the Assessing Officer be....
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....ages 3280 to 3298 in case law compendium. It was pointed out that for the exclusion of these six comparables in software development segment, it was held that all these six comparables should be excluded and while holding so, the Tribunal has followed another Tribunal order rendered in the case of Planet Online Pvt. Ltd. Vs. ACIT in ITA No. 464/Hyd/2014 dated 30.01.2015 and relevant Para of that Tribunal order has been reproduced by the Tribunal. In reply, the ld. DR of revenue supported the orders of authorities below. She also submitted that ld. CIT(A) has excluded Infosys Ltd. without any discussion and hence, it should be held that exclusion of Infosys Ltd. is not justified. She also drawn our attention to page no. 10 of the TPO's order and pointed out that a specific finding has been given by the TPO that during 1997 to 2010, the turnover of Infosys Ltd. has increased 150 times. But the operating margin was in the range of 35% to 40%. On this basis, the TPO has drawn to this conclusion that turnover has no linkage with the margins. She submitted that therefore, Infosys Ltd. should not be excluded from the list of comparables. 7. We have co....
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....ged in providing software development services to its AE. In the present case also, we are examining the exclusion of these six comparables in respect of software development services segment of the assessee. This is also seen that this Tribunal order is for same Assessment Year i.e. Assessment Year 2009-10 and hence, in our considered opinion, this Tribunal order is applicable in the present case particularly when no difference in facts could be pointed out by ld. DR of revenue. For ready reference, we reproduce Para nos. 14 to 16 of this Tribunal order from pages 3288 to 3298 of case law compendium. The same are as under. "14. Remaining grounds i.e. 12 to 15 are in respect of assessee's claim for exclusion of various comparables i.e. 1) Bodhtree Consulting Ltd. 2) Tata Elxsi Ltd. (segment) 3) Sasken Communication Technologies Ltd. (segment) 4) Persistent Systems Ltd. 5) Mindtree Ltd. (segment) 6) Larsen and Toubro Infotech Ltd. 7) Infosys Ltd. In course of hearing before us, it was submitted by ld. AR of assessee that exclusion of comparable Mindtree Ltd. as per ground no. 14 raised by assessee....
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....essee. The assessee, however, submits before us that later on it came to the assessee's notice that this company is not being considered as a comparable company in the case of companies rendering software development services. In this regard, the ld. counsel for the assessee has brought to our notice the decision of the Mumbai Bench of the Tribunal in the case of Nethawk Networks Pvt. Ltd. v. ITO, ITA No.7633/Mum/2012, order dated 6.11.2013. In this case, the Tribunal followed the decision rendered by the Mumbai Bench of the Tribunal in the case of Wills Processing Services (I) P. Ltd., ITA No.4547/Mum/2012. In the aforesaid decisions, the Tribunal has taken the view that Bodhtree Consulting Ltd. is in the business of software products and was engaged in providing open & end to end web solutions software consultancy and design & development of software using latest technology. The decision rendered by the Mumbai Bench of the Tribunal in the case of Nethawk Networks Pvt. Ltd. (supra) is in relation to A. Y. 2008-09. It was affirmed by the learned counsel for the Assessee that the facts and circumstances in the present year also remains identical to the facts and circumstances as it ....
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....risk captive service provider who does not own any intangible and hence does not have an additional advantage in the market. It is submitted that this decision is applicable to the assessee's case, as the assessee does not own any intangibles and hence Infosys Technologies Ltd. cannot be comparable to the assessee; (ii) the observation of the ITAT, Delhi Bench in the case of Agnity India Technologies Pvt. Ltd. in ITA No.3856 (Del)/2010 at Para 5.2 thereof, that Infosys Technologies Ltd. being a giant company and market leader assuming all risks leading to higher profits cannot be considered as comparable to captive service providers assuming limited risk ; (iii) the company has generated several inventions and filed for many patents in India and USA ; (iv) the company has substantial revenues from software products and the break up of such revenues is not available ; (v) the company has incurred huge expenditure for research and development; (vi) the company has made arrangements towards acquisition of IPRs in 'AUTOLAY', a commercial application product used in designing high performance structural systems. In view of the ab....
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..... 46. As far as this company is concerned, the contention of the assessee is that the aforesaid company has revenues from both software development and software products. Besides the above, it was also pointed out that this company is engaged in providing training. It was also submitted that as per the annual report, the salary cost debited under the software development expenditure was Rs. 45,93,351. The same was less than 25% of the software services revenue and therefore the salary cost filter test fails in this case. Reference was made to the Pune Bench Tribunal's decision of the ITAT in the case of Bindview India Private Limited Vs. DCI, ITA No. ITA No 1386/PN/1O wherein KALS as comparable was rejected for AY 2006-07 on account of it being functionally different from software companies. The relevant extract are as follows: "16. Another issue relating to selection of comparables by the TPO is regarding inclusion of Kals Information System Ltd. The assessee has objected to its inclusion on the basis that functionally the company is not comparable. With reference to pages 185-186 of the Paper Book, it is explained that the said company is engaged in development of sof....
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....velopment services which comprises of embedded product design services, industrial design and engineering services and visual computing labs and system integration services segment. There is no sub-services break up/information provided in the annual report or the databases based on which the margin from software services activity only could be computed. The company has also in its response to the notice u/s. 133(6) stated that it cannot be considered as comparable to any other software services company because of its complex nature. Hence, Tata Elxsi Ltd., is to be excluded from the list of comparables. (ii) Flextronics Software Systems Ltd. : The learned TPO has considered this company as a comparable based on 133(6) reply wherein this company reflected its software development services revenues to be more than 75% of the "software products and services" segment revenues. Flextronics has a hybrid revenue model and hence should be rejected as functionally different. Based on the information provided under "Revenue recognition" in its annual report, it can be inferred that the software services revenues are earned on a hybrid revenue model, and the same is not ....
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.... the taxpayer is objecting to it. How the company is functionally similar in the earlier FY 2005-06 but the same is not functionally similar for the subsequent FY 2006-07 even when no facts have been changed from the preceding year. Thus the taxpayer is arguing against this comparable as the company was not considered as a comparable by the taxpayer for the present FY 2006-07." 21. We have heard the rival submissions and considered the facts and materials on record. After considering the submissions, we find that Tata Elxsi and Flextronics are functionally different from that of the assessee and hence they deserve to be deleted from the list of six comparables and hence there remains only four companies as comparables, as listed below:" 26.5. Following the aforesaid decision of the Tribunal, we hold that M/S.TataElxsi Ltd. should not be regarded as a comparable." 10.2 ITAT, Hyderabad Bench following the aforesaid decision of the ITAT, Bangalore Bench also excluded these four companies in case of M/s Kenexa Technologies Pvt. Ltd. Vs. DCIT in ITA No. 243/Hyd/2014 dt. 14/11/2014. Respectfully following the decisions of the ITAT, we direct AO/TPO to exclude....
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....egmental details are not given separately. Therefore, following the principle enunciated in the decision of the Mumbai Tribunal in the case of Telecordia Technologies India Pvt. Ltd. (supra) that in the absence of segmental details / information a company cannot be taken into account for comparability analysis, we hold that this company i.e. Persistent Systems Ltd. ought to be omitted from the set of comparables for the year under consideration. It is ordered accordingly." Though, the aforesaid finding of the coordinate bench relates to the AY 2008-09, but, in our view, it will also equally apply to AY under consideration as facts are identical. Therefore, respectfully following the view expressed by the coordinate bench, we exclude this company as comparable." 16. We find that this Tribunal order is for the same Assessment Year i.e. Assessment Year 2009-10 and in that case also, this company was engaged in providing software development services to its AE and hence, it is seen that the business profile of assessee is similar and Assessment Year is same and therefore, we hold that this Tribunal order is relevant in the present case. As per Para nos. 10.1 and....
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....al list of comparables. 9. Now we discuss and decide about the assessee's request for exclusion of four comparables in ITES segment. As per the chart filed by the assessee in respect of this request for exclusion of four comparables in ITES segment, reliance has been placed on Tribunal order rendered in the case of Target Corporation India Pvt. Ltd. Vs. ACIT in IT(TP)A Nos. 184 & 228/Bang/2014 dated 31.08.2017, copy available on pages 3181 to 3201 of case law compendium and in particular, our attention was drawn to Para nos. 12 and 13 of this Tribunal order available on pages 3192 to 3201 of case law compendium. The ld. DR of revenue supported the orders of authorities below. 10. We have considered the rival submissions. For ready reference, we reproduce paras 12 and 13 of this Tribunal order which read as under. "12.Regarding exclusion of four comparables in ITES segment 1) Accentia Technologies Ltd., 2) Infosys BPO Ltd., 3) Cosmic Global Ltd. and 4) Eclerx Services Ltd., we reproduce paras 11.1 to 11.4 of the tribunal order rendered in the case of e4e Business Solutions India Pvt. Ltd. vs. DCIT in IT (TP) A No. 1845/ban....
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....aised by the assessee against this company. Therefore, this company is a good comparable for determination of the ALP in respect of international transactions of the assessee. (ii) We have considered the rival submissions as well as relevant material on record. The first objection has been raised by the learned AR of the assessee on account of extraordinary event of acquisition/purchase of business by Accentia Technologies Ltd., whereby M/s. Oak Technologies Inc, USA has been acquired by this company during the year under consideration. Though the extraordinary event of merger or acquisition, if influenced the business as well as the revenue of a company then said company is not considered as a good comparable for the purpose of determination of the ALP however, in this case, it is not clear from the Annual Report whether the business of M/s. Oak Technologies Inc has been acquired and merged with the said company during the year under consideration. It appears that Accentia Technologies Ltd., has purchased up to 96% of the share holding of M/s. Oak Technologies. If it is only a transaction of purchase of shares of the said company then it may be a case of purchase of ongoing bus....
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.... of process re- engineering and automation apart from middle office and back office support to capital market. Therefore, keeping in the diversified high-end services, this company cannot be considered as functionally comparable with the assessee. In support of his contention, he has relied upon the decision of the Special Bench of the Mumbai Tribunal in the case of Maersk Global Centres (India) (P.) Ltd. v. Asstt. CIT [2014] 43 taxmann.com 100/147 ITD 83. (i)On the other hand, learned Departmental Representative has submitted that this company is undisputedly in the business of ITeS and therefore, the nomenclature that of KPO will not make it functionally different from the assessee. He has relied upon the orders of the authorities below. (ii) We have considered the rival submissions as well as relevant material on record. We find that the company Eclerx Services Ltd. is engaged in diversified activity of providing services including analytic services and data process solutions to its global clients. The service provided by Eclerx Services Ltd., is in various areas including capital market and therefore, the services are in the nature of consultancy and end to end support th....
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....eping in view the nature of services rendered by M/s eClerx Services Pvt. Ltd. and its functional profile, we are of the view that this company is also mainly engaged in providing high-end services involving specialized knowledge and domain expertise in the field and the same cannot be compared with the assessee company which is mainly engaged in providing low-end services to the group concerns. 83. For the reasons given above, we are of the view that if the functions actually performed by the assessee company for its AEs are compared with the functional profile of M/s eClerx Services Pvt. Ltd. and Mold-Tec Technologies Ltd., it is difficult to find out any relatively equal degree of comparability and the said entities cannot be taken as comparables for the purpose of determining ALP of the transactions of the assessee company with its AEs. We, therefore, direct that these two entities be excluded from the list of 10 comparables finally taken by the AO/TPO as per the direction of the DRP. Thus it is clear that the Special Bench found that this company is not comparable with BPO company which are engaged only in low end services of data processing. Accordingly, we direct the A....
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....he Annual Report of this company, it has been reported that there was amalgamation w.e.f. 1/4/2008. The relevant part of the information provided in the Annual Report reads as under: "Amalgamation of PAN Financial Services India Private Limited The Board of Directors in their meeting held on October 6. 2008. approved, subject to the approval of the Honorable High Courts of Karnataka and Chennai, a Scheme of amalgamation ("the Scheme") to amalgamate PAN Financial Services India Private Limited ("PAN Financial"), a wholly owned subsidiary of the Company engaged in providing business process management of services, with the Company with effect from April 1. 2008 ("effective date"). The approval of the High Court was received on April 6, 2009 and filed with the respective Registrar of Companies of Karnataka and Tamilnadu on April 6, 2009 and March 10, 2009 respectively. Accordingly on the scheme becoming effective, the financial statement of PAN Financial has been merged with the company." It is clear that there was extraordinary event of amalgamation during the year under consideration. Therefore, in view of the extraordinary development of amalgamation of anoth....
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....this company that an amount of Rs. 3,00,25,326/- has been paid on account of translation charges. Thus, learned AR of the assessee has submitted that this company cannot be considered as functionally comparable with the assessee for the purpose of determining the ALP. In support of his contention, he has relied upon the decision of the co-ordinate bench of this Tribunal in the case of Lam Research (India) (P.) Ltd. v. Dy. CIT in ITA No. 1437/Bang/2014 dated 30/4/2015. (i) On the other hand, learned Departmental Representative has submitted that the comparability of this company has been examined by the TPO as well as by the DRP. The TPO has rejected the objections raised by the assessee in respect of this company by holding that the translation service are in the nature of ITeS and therefore, it qualifies all the filters applied by the TPO. He has relied upon the orders of the authorities below. (ii) We have considered the rival submissions as well as the relevant material on record. There is no dispute that this company is in the business of providing service of medical transcription and consultancy services, translations services and accounts BPO. The segmental revenu....
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.... Global Limited, a copy of which has been placed on record, we find that its total revenue from operations are at Rs. 7.37 crore divided into three segments, namely, Medical transcription and consultancy services at Rs. 9.90 lacs, Translation charges at Rs. 6.99 crore and Accounts BPO at Rs. 27.76 lac. The Id. AR has made out a case that outsourcing activity carried out by this company constitutes 57% of total expenses. The reason for which we are not agreeable with the Id. AR is that we have to examine the revenue of this case only from Accounts BPO segment and not on the entity level, being also from Medical transcription and Translation charges. When we are examining the results of this company from the Accounts BPO segment alone, there is no need to examine the position under other segments. The entire outsourcing is confined to Translation charges paid at Rs. 3.00 crore, which is strictly in the realm of the Translation segment, revenues from which are to the tune of Rs. 6.99 crore. If this segment of Translation is not under consideration for deciding as to whether this case is comparable or not, we cannot take recourse to the figures which are relevant for segments other tha....
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....t out any difference in facts in the present case and in the case of Target Corporation India Pvt. Ltd. Vs. ACIT (supra) or in the case of e4e Business Solutions India Pvt. Ltd. Vs. DCIT (supra). Hence we hold that this Tribunal order is applicable in the present case. As per this Tribunal order, it was held that these four comparables 1) Accentia Technologies Limited, 2) Infosys BPO Limited, 3) Cosmic Global Limited and 4) Eclerx Services Limited are to be excluded from the final list of comparables. Respectfully following this Tribunal order, we hold that in present case also, these four comparables should be excluded from the final list of comparables in ITES segment. Ground no. 4 is allowed. 12. Now we discuss and decide ground no. 15. As per this ground, the assessee's grievance is this that two comparable companies in respect of software development services segment i.e. Thinksoft Global Services Limited and F C S Software Solutions Limited should not be excluded and the same should be included. Regarding this ground, reliance has been placed on the Tribunal order rendered in the case of M/s. TE Connectivity Global Share....
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....nterest bearing funds to manage their workingcapital requirement. Therefore, with the purpose to identify only thoseuncontrolled comparables who are having profit margin from coreoperating activities and not from financial activities, the following twocompanies having working capital impact of more than 4% on profit havebeen excluded. 1. Thinksoft Global Services Limited. 2. FCS Software Solutions Limited." 13.3 Before us, the learned Authorised Representative submitted thatin similar factual circumstances, as those prevailing in the case on handwith respect to the aforesaid companies, for the same assessment year2009-10, a co-ordinate bench of this Tribunal in its order in the case ofARM Embedded Technologies P. Ltd. in IT(TP)A No.1659/Bang/2014dt.31.8.2015; where the assessee was engaged in, inter alia, provisions ofsoftware development and maintenance services to its AEs; just as in thecase on hand, the Tribunal directed inclusion of the aforesaid twocompanies in the final set of comparables and set aside to the file of theTPO the computation of working capital adjustment on actual basis forworking out the correct PLI of the final comparables. 13.4 ....
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....impact of more than4% on profit have been excluded. 21. TPO has accepted that these companies were functionally similar to that of theassessee. However, according to her, the margins of these companies had not come from itscore operating activities but from financial activities. Profit and Loss account of M/s.Thinksoft Global Solutions for the relevant previous year is placed at paper book page.247.Software service revenues of the said company came to Rs. 920921452/-. Other income ofthe said company came to Rs. 35,738,801/-. Break-up of the other income as given atschedule 10 placed at paper book page.256 show that out of such amount Rs. 26,536,978/-was exchange gain. Interest received from deposits with banks and others came toRs. 29,15,080/- only. For better clarity this break-up is given hereunder : Other income Interest received on deposits with banks .. 2,371,740 Interest received from others .. 543,310 Profit on sale of fixed assets .. 6,276,773 Exchange gain (Net) .. 26,536,978 Miscellaneous income .. 10,000 35,738,801 We cannot say that the 'other income' ar....
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....ingplaced on working capital adjustment was an issue which had come up before this Tribunal inthe case of M/s. Rambus Chip Technologies (India) P. Ltd v. DCIT [IT(TP)A.23/Ban/2015,dt.22.07.2015. Coordinate bench had held as under at para 13 and 14 of its order : 13. As regards ground No.3(f), learned counsel for theassessee submitted that the AO/TPO while considering theworking capital adjustment, has arrived at the working capitaladjustment in the case of the assessee at 5.97%, but while givingeffect to the working capital adjustment, has restricted the saidadjustment to 1.71% in case of uncontrolled comparablesselected by the TPO. The learned counsel for the assesseesubmitted that the TPO has not given any basis for suchrestriction of the working capital adjustment. He submitted thatthe CIT(A) also has not applied his mind to this issue but hassummarily confirmed the order of the AO and therefore it has tobe set aside. 14. On going through the TPO s order as well as annexure Dreferred to in the transfer pricing order on working capitaladjustment, we find that the AO has not given any basis forrestricting the adjustment to 1.71%. In all the cases relating totrans....
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.... not. But the issue raised by assessee in ground no. 6 raised before CIT(A) was not decided by him. Hence the matter should be restored back to his file for deciding this issue. The ld. DR of revenue supported the orders of authorities below. 16. We have considered the rival submissions. First of all, we reproduce ground no. 6 raised by assessee before CIT(A). "6. The learned AO has erred in law, by not considering export receipts for the months of January, February and March 2009 as part of export turnover and accordingly reducing the same from export turnover for computing the deduction under section 10A of the Act on the ground that the Appellant was unable to produce the softex forms for the said months during the assessment proceedings. * The learned AO has erred in facts, by not considering the softex form for March 2009which was submitted by the Appellant during the assessment proceedings." 17. Now we reproduce Para nos. 3 and 4 of the order of CIT(A) because only these two paras contain the decision of CIT(A) in respect of corporate tax issue. "CORPORATE TAX: 3. In the grounds taken, the....
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....ain / loss. At this juncture, it was pointed out by the bench that if the exchange fluctuation gain / loss is in relation to turnover of the present year then only the same can be considered for TP analysis of the present year because for TP analysis, we are not comparing the operating profit of the tested party and of the comparables and we are comparing the profit percentage of tested party and that of comparable companies and for that purpose, only those gain / loss should be considered in the numerator if the corresponding turnover is forming part of denominator. The bench pointed out that this issue was decided by CIT(A) as per paras 12.5 to 12.5.3 and in these paras, there is no discussion about this aspect as to whether exchange fluctuation gain / loss is in respect of current year's turnover or of earlier year's turnover. The bench put out a proposition that this matter may be restored back to the file of CIT(A) for fresh decision after examining this aspect as to whether such foreign exchange gain / loss is in connection with the turnover of the present year of or an earlier year and if it is found that the gain / loss is in respect of present year then t....
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....n to Para nos. 15.1.8 to 15.1.9 of the order of CIT(A) and submitted that the ld. CIT(A) has suo moto decided the issue and directed the TPO that in ITES sector also, the export sales filter of 75% should be applied as has been applied in software development sector and therefore, this is not proper. The ld. AR of assessee supported the order of CIT (A). He also accepted that this was not the grievance raised by assessee before CIT(A). 24. We have considered the rival submissions. First of all, we reproduce Para nos. 15.1.8 to 16 of the order of CIT(A) for ready reference. These are as under. "15.1.8. I find this action of the TPO arbitrary in the sense that different criteria cannot be applied under the same set of circumstances. The export earning filter has been applied to exclude predominantly domestic companies or comparables catering to the domestic market. The reasons provided by the TPO are the same while applying this filter without providing the basis for alteration from 75% to 25% in the two sectors. 15.1.9. As per the TPO, both sectors are deriving income from the US market exclusively, But the distinction as....
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.... ruling with respect to application of export earning filter which may include some of the assessee's comparables. It is ordered accordingly. 16. In the result, it is ordered that the TPO shall apply export earning filter at 75% in the ITES sector & include comparables of the assessee and shall include forex gain/loss in operating margins as directed in the software sector, accordingly. The assessee's appeal stands allowed in part." 25. We find that there is no finding of CIT(A) as to which comparables are affected by change in the export earnings filter in ITES segment. Hence it amounts to setting aside of the matter to the AO and as per the provisions of section 251(1A) of IT Act, the CIT(A) can confirm, reduce or enhance the assessment but he cannot remand the matter to the file of AO. Hence on this issue, the order of CIT(A) is not sustainable and therefore, we reverse the same and restore to the order of AO on this issue. Accordingly ground nos. 6 and 7 of revenue's appeal are allowed. 26. Regarding ground nos. 8 and 9 of revenue's appeal, it was agreed by both sides that this issue is covered in favour of the assessee by the ....