TaxTMI 
TaxTMI 
TaxTMI 
2022 (5) TMI 1676
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.... with its AEs. The assessee's case was thus referred to the Ld. Transfer Pricing Officer ("TPO"). Vide order dated 29.10.2010 the Ld. TPO proposed an adjustment of Rs. 22,11,60,596/- in respect of BPO services/ ITeS segment and Rs. 19,08,53,709/- in respect of software development support services segment totalling to Rs. 41,20,14,305/-. Software support services segment 3. During the A.Y 2007-08, the assessee entered into international transactions related to software support services of Rs. 2,16,32,36,787/-. The assessee used transactional net margin method ("TNMM") and Operating Profit/Total Cost or Net Cost Plus ("OP/TC or "NCP") as the profit level indicator ("PLI"). The assessee arrived at a set of 55 comparables with an average weighted average margin of 14.64% using multiple year data. The assessee's own margin worked out at 14.94%. This is how the assessee demonstrated that its international transaction with its AE under this segment is in compliance with the transfer pricing regulations. 3.1 During the transfer pricing proceeding, the Ld. TPO after analysing the data bases, annual reports, application of filters and considering objections raised by the assessee, modif....
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.... 4.2 During transfer pricing proceedings, The Ld. TPO after the detailed search process, the accept/reject matrix of companies considered for analysis and application of filters, modified the search to arrive at the following final set of 25 comparable companies with arithmetical mean of 30.07% and ALP: S. No. Comparable NCP (%) unadjusted Single year 1. Datamatics Financial Services Ltd. (Seg.) 5.07% 2. Eclerx Services Ltd 89.33% 3. Informed Technologies India Ltd. 34.32% 4. Infosys B P O Ltd. 28.78% 5. Vishal Information Technologies Ltd. 51.19% 6. Asit C Mehta Financial Services Ltd. (Nucleus Netsoft and GIS (India) Limited 24.21% 7. Flextronics Software Systems Ltd. (Seg.) 8.62% 8. HCL Comnct Systems & Services Ltd. (Seg.) 44.99% 9. Mold-Tek Technologies Ltd. 113.49% 10. R.Systems International Ltd. (Seg.) 20.18% 11. Accentia Technologies Ltd.(Seg.) 30.61% 12. IServices India Pvt. Ltd. 49.47% 13. Genesys International Corporation Ltd. 13.35% 14. Apex Knowledge Solutions Pvt. Ltd. 12.83% 15. Appollo Healthstreet Ltd. -13.55% 16. Bodhtree Consulting Ltd. (Seg.) 29.58% 17. Caliber Point Business Solutions Ltd. 21.26% 18. I.C....
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.... adjustment of Rs. 412,014,305 without due application of mind and without affording a reasonable opportunity of being heard in the matter to the Appellant on the following grounds: 1. Prima facie errors in the final assessment order issued by the Ld. AO With respect to the software development and BPO services, the Appellant wishes to submit that there are prima facie errors in the final assessment order issued by the Ld. AO. In this connection, we have reiterated below the relevant extracts from the rectification application filed before the Ld. AO on November 25, 2011: Quote ----------------------------- In your order, your goods elf has not provided the benefit of working capital adjustment as directed by the Dispute Resolution Panel ("DRP"). In this regard, we have reproduced below the relevant extract from the DRP's directions: "...Now that data is furnished, the AO/ TPO is therefore directed to verify the same and grant working capital adjustment based on the OECD formula and by taking 10.25% as the PLR. The aforesaid rate is adopted as the State Bank of India which is the leading bank in India has charged this rate in the year under reference for working c....
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....the approach followed by the Ld. TPO clearly demonstrates a biased state of mind. 2.5 By relying upon data of the comparables for financial year 2006-07 only for determination of the arm's length price, disregarding the multiple year data approach followed by the Appellant. Further, by relying upon updated data of the comparables which was not available to the Appellant at the time of maintenance of Transfer Pricing Documentation within the time-frame mentioned in Rule 10D(4) of the Income Tax Rules, 1962 ("the Rules"). 2.6 By misconstruing the risk profile of the Appellant and not allowing risk adjustments. 2.7 By using data called pursuant to issuance of notice under Section 133(6) of the Act which was not available to the Appellant at the time of maintenance of Transfer Pricing Documentation. Further, by not providing the complete information which was called pursuant to issuance of notice under Section 133(6) of the Act and by conducting the assessment based on unfair analysis. 2.8 By applying the wages-to-sales ratio based upon conjectures and surmises and further, applying an arbitrary filter of 25 percent without following a cogent economic basis and without esta....
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....ide order dated 21.12.2017 with respect to the adjustment on account of transfer pricing issues relating to the US transactions which is tabulated below :- S. No. Adjustments Amount (in Rs.) 1. Transfer Pricing adjustment- US transactions 383,008,498 2. Transfer Pricing adjustment - Non-US transactions (UK) 29,005,807 Total amount of adjustment 412,014,305 9.1 The Ld. AR submitted that the assessee has consented to the MAP resolution which has been intimated to the Ld. AO vide its letter dated 27th December, 2017. In view of this, the assessee vide its letter dated 24th January, 2018 has requested the Hon'ble Tribunal to allow the assessee to continue the captioned appeal on the grounds arising out of transfer pricing adjustment relating to non-US transactions amounting to Rs. 2,90,05,807/- out of the total transfer pricing adjustment of Rs. 41,20,14,305 and filed the revised grounds of appeal omitting the US related transactions. The MAP resolutions are summarised below :- Particulars US transactions (92.96%) ALP-MAP resolution Software segment 16.01% ITeS segment 14.99% The following transfer pricing adjustments on Non-US related transactions is before the Hon....
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....nces in the situations of comparables and the taxpayer. The different benches of the ITATs have upheld such adjustment [Vedaris Technology ITAT (Del); Sony India [114ITD448(Del)J, Mentor Graphics, E Gain communication 2008-TIOL-282-ITAT-PUNE, Global Vantedge 2010-TOP;-24ITAT-DEL, TNT India P Ltd 201l-TII-39-ITAT-BANG-TP,etcj. Now that data is furnished, the AO/ TPO is therefore directed to verify the same and grant working capital adjustment based on the OECD formula and by taking 10.25% as the PLR. The aforesaid rate is adopted as the State Bank of India which is the leading bank in India has charged this rate in the year under reference for working capital loans." [Emphasis supplied] 11.2 It is clear from the above that the finding of the Hon'ble DRP is based on cogent reasons and judicial precedents. The Ld. TPO has also provided working capital adjustment in subsequent AY 2008-09. We, therefore, direct the Ld. AO/ TPO to provide working capital adjustment as per the directions of the Hon'ble DRP. Inclusion/exclusion of comparables 12. The assessee has objected to the inclusion/ exclusion of certain comparable companies by the Ld. DRP/AO/TPO in software support service segm....
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....ear VMF has financial year ending 31 March 2007 Companies whose onsite income is more than 75% of the export revenues were No onsite income excluded. 13.2 In support of the above contention, the Ld. AR relied on the decision of the Hon'ble Delhi ITAT in the case of Kaplan India Pvt. Ltd. (ITA No. 2907/Del/2014) wherein it was held as under :- "5.6 ...further rejected VMF Softech limited by citing information received under section 133(6) of the Act, which according to the TPO's order was the company was functioning on job work basis and that the employee cost of VMF Softech Limited was 53% which according to Ld. Counsel shows that the presumption of the TPO was incorrect. Ld. Counsel relied on Para 37 of the Coordinate Bench's decision in NXP Semiconductor (supra) wherein the coordinated bench had remanded VMF Infotech to the TPO for fresh consideration taking into account all available information. The Ld. Counsel prayed for similar relief and for consideration of these companies for inclusion on merits." 13.3 The Ld. DR relied upon the order of the Ld. TPO and submitted that this company be excluded on the ground that it does not meet the employee cost filter. 13.4 We hav....
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.... to sales (%) 50.88% 14.3 In support of its contention, the Ld. AR relied on the decision of the Hon'ble Bangalore Tribunal in the case of Hewlett-Packard (India) GlobalSoft P Ltd. vs. DCIT (IT(TP)A No. 1031/Bang/2011) wherein the Hon'ble Tribunal held as under :- "23....Similarly, as regards Ishir Infotech Ltd. the Tribunal has considered the decision of the Tribunal in the case of 24/7 Co. Pvt. Ltd. to hold that Ishir Infotech is also out-sourcing its work and, therefore, has not satisfied the 25% employee cost filter and thus has to be excluded from the list of comparables. As the facts of the case before us are similar, respectfully following the decision of the co-ordinate bench, we hold that these two companies are also to be excluded. 21...Respectfully following the decision of the Tribunal referred to above, we direct the AO/TPO to exclude the aforesaid companies from the final list of comparable companies for the purpose of determining ALP." [Emphasis supplied] 14.4 The Ld. DR supported the order of the Ld. AO/ TPO. According to Ld. TPO, the facts on record do not support the case of the assessee that it is simpliciter a captive service provider and not engaged into ....
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....28 Income from sales & services 1,835,095,054 Employee cost to sales (%) 1.02% Whereas, in the case of the assessee the employee cost to sales ratio is more than 50% as demonstrated in para 14.2 above. 15.3 The Ld. AR placed reliance on the decision of the Delhi Tribunal in the case of Kaplan India Pvt. Ltd. (ITA No. 2907/Del/2014) wherein it has been held as under :- "5.2 Helios...the employee cost filter of 25% as Helios Mathesan's employee cost is only 1.07% of sales. We notice that employee cost filter is one of the filters adopted by the TPO himself at Para 8 of his order. The totality of above facts and circumstances as noticed in the above facts and circumstances as noticed in the above paragraphs clearly shows that FAR and, therefore, the margin earned by Helios Mathesan is totally different in comparison to the FAR of the assessee. It is, therefore, directed that Helios Mathesan be excluded from final list of comparable companies." [Emphasis supplied] 15.4 The Ld. DR supported the order of the Ld. AO/ TPO and reiterated his submissions stated in para 14.4 for this comparable as well. 15.5 In our considered view, though there seems to be a functional similarity b....
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.... record shows that this company filed the copyright/patent for its drug design tool 'CELSUITE' which is used to provide research services for drug discovery, prediction modelling, design and development of drug molecules etc. It also developed a biomolecule to treat Vitiligo and multi cancer. This company has incurred research and development (R&D) expenditure of 8.28%, product development expenditure of 46.16% and business promotion expenses 6.69% of sales. Its intangibles account for of 57% of total assets (pages 8-18 of the Annual Report Compendium). In contrast, the assessee is neither involved in development of drugs nor provides any drug discovery related services nor does not it use any proprietary tool for providing software support services to its AEs. The assessee has not incurred any R&D expenses, product development expenses, sales promotion expenses during the relevant AY. Further, the intangibles of the assessee account for only 0.38% of its total assets. (page 578 of Paper Book) 16.3 The Ld. AR submitted that in the case of Hewlett-Packard (India) Globalsoft P. Ltd. vs. CIT (ITA No. 1031/Bang/2011), the Hon'ble Bangalore Tribunal excluded this company by recording t....
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....ny deals in both product and services with focus to invent and mange products and applications for other product companies. However, the assessee is only engaged in provision of services and does not sell any software products. 17.3 The Ld. AR submitted that this company is directed to be excluded from the final set of comparable companies by the Hon'ble Delhi Tribunal in the case of Kaplan India Pvt. Ltd. (ITA No. 2907/Del/2014). The relevant extract of the Hon'ble Tribunal's order is reproduced below :- "We are inclined to agree with the submission of the Ld. Counsel for the Assessee as this company is clearly engaged in multifarious activities including sale of software products. Further, the impact of extraordinary event of amalgamation is also not possible to be quantified and adjusted...We direct exclusion of this company from the final set of comparable companies." [Emphasis supplied] 17.4 The Ld. DR relied upon the order of the Ld. AO/ TPO. 17.5 We find force in the contention of the assessee that this company is functionally dissimilar to that of the assessee and also there is an extraordinary event of amalgamation which renders this company as a non- comparable. Thi....
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....llowing the decision of the Hon'ble Bangalore Tribunal in HCL EAI Services Ltd. (supra) and in consideration of the functional dissimilarity of this company to that of the assessee, which is evident from the material on record, we hold that this company be excluded from the list of comparable companies. The Ld. AO/ TPO is directed accordingly. E-Zest Solutions Limited 19. The Ld. TPO included this company for the reasons recorded in his order which is reproduced below :- "12.6.... The Annual Report is available for FY 2006-07. But, the functionality is not clear from the AR and also RPT information was not available in the AR. 133(6) notice was issued to the company. As per the reply received the company, it is engaged in software development services and qualifies all the filters applied by the TPO including RPT filter. Thus, the company is proposed as a comparable to the tax payer vide this office show cause notice." 19.1 The Hon'ble DRP has not made any specific observation in respect of this comparable company. 19.2 The assessee has contested the inclusion of this company on the ground that this company is into provision of software development services as well as sale o....
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.... made any specific observation in respect of this comparable company. 20.2 The Ld. AR submitted that Infosys Technologies Limited is a huge giant company as compared to the assessee; that it has a huge brand value viz-a-viz 'nil' brand value of the assessee; that it has significant intangibles as opposed to intangibles (off the shelf software applications to total assets) of the assessee which merely accounts for 0.38%; and that there is a huge difference in scale of operations of this company and the assessee which is evident from the fact that for the year under consideration this company earned 13,149 crores viz-a-viz 216 crores earned by the assessee i.e. 61 times of the revenue earned by the assessee. He further demonstrated the functional dissimilarity of this company by submitting that this company acts as a full-fledged entrepreneur engaged in consulting, application services, system integration, product engineering, re-engineering and IT infrastructure services. It has incurred brand building, sales and marketing expenses and R&D expenses whereas no such expenditure has been incurred by the assessee (pages 36 to 42 of Annual Report Compendium). 20.3 In support thereof, t....
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.... the assessee company acts as rather simpler software support service provider to its AEs; does not perform any R&D and marketing functions and does not hold any significant intangibles as well. 21.3 The Ld. AR further submitted that in the case of Hewlett-Packard (India) Globalsoft P. Ltd. (IT(TP)A No. 1031/Bang/2011), the Hon'ble Bangalore Tribunal after duly considering this company as a comparable directed the AO/TPO to omit this company from the set of comparable companies holding as under :- "13.4.1 .......It is seen that this company is engaged both in software development and product development services. There is no information on the segmental bifurcation of revenue from sale of product and software services. 13.4.2 We also find that this company owns intellectual property in the form of registered patents and several pending applications for grant of patents. In this regard, the coordinate bench of this Tribunal in the case of 24/7 Customer. Com Pvt. Ltd. (ITA No.227/Bang/2010) has held that a company owning intangibles cannot be compared to a low risk captive service provider who does not own any such intangible and hence does not have an additional advantage in th....
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.... company is engaged in sale of software products namely Virtual Insure and La Vision and related inventory constitutes 52.47% of the total current assets and 48.42% of total revenue of this company which is evident from records placed on pages 51 to 53 of the Annual Report Compendium. In contrast, the assessee neither sells any software products nor does it hold any inventory. 22.3 The Ld. AR relied on the case of Hawlett-Packard (India) Globalsoft P. Ltd. (IT(TP)A No. 1031/Bang/2011) wherein the Hon'ble Bangalore Tribunal in respect of this comparable held as under :- "47. We have given a careful consideration to the submission made on behalf of the Assessee. We find that the TPO has drawn conclusions on the basis of information obtained by issue of notice u/s. 133(6) of the Act. This information which was not available in public domain could not have been used by the TPO, when the same is contrary to the annual report of this company as highlighted by the Assessee in its letter dated 21.6.2010 to the TPO. We also find that in the decision referred to by the learned counsel for the Assessee, the Mumbai Bench of ITAT has held that this company was developing software products an....
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.... of software yielding higher margins. It was rightly concluded in such decisions that the segment of software development services in Tata Elxsi includes Design services including hardware design and hence is not comparable to simple software development services...we direct exclusion of this company from the final set of comparable companies." [Emphasis supplied] 23.4 The Ld. DR relies upon the order of the Ld. AO/TPO. 23.5 From the above submissions and perusal of the material on records the factual differences between the assessee and this company are evident. Thus, relying on the decision of the Hon'ble ITAT in the case of Kaplan India Private Limited (supra) we direct the Ld. AO/TPO to exclude this company from the final set of comparable companies. B. ITeS SEGMENT (BPO SERVICES) Comparables selected by the Ld. TPO 24. In the ITeS segment, the assessee has disputed the inclusion of 11 comparable companies selected by the Ld. TPO. The Hon'ble DRP's order has no specific adjudication on any of the 11 comparables selected by the Ld. TPO. 24.1 In respect of all the 11 comparable companies, the Ld. DR relied upon the findings of the Ld. TPO in his order for inclusion of th....
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.... shows that it is a leading provider of engineering and design services with specialization in civil, structural and mechanical engineering services. It is stated to have a strong team of skilled resources with world class resources and skill sets. It is also stated to have consistently helped the clients to cut down design and development costs of civil, structural, mechanical and plant design by 30-40% and delivered technologically superior outputs to match and exceed expectations. It is claimed to have inhouse software development team, quality control training and troubleshooting facilities. M/s. Mold-Tek is also rendering web design and development services with experience in turning them into an effective graphic design representation and creating dynamic and graphic rich web applications from IT specs, design prints etc. Keeping in view this information available in the annual report of Mold-Tek as well on its website, we are of the view that the said company is mainly involved in providing high-end services to its clients involving higher special knowledge and domain expertise in the field and the same cannot be taken as comparable to the assessee company which is mainly in....
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....ssessee carried out entire operations by itself, in our considered opinion, these two cases were rightly excluded." [Emphasis supplied] 26.3 We find force in the contention raised by the assessee. Relying on decision of the Hon'ble Mumbai Tribunal (supra), we direct the Ld. AO/ TPO to exclude this company from the list of final comparables. Accentia Technologies Ltd. 27. The Ld. TPO selected this company for the reason that it qualifies all filters applied by him. The Ld. TPO's finding is reproduced below:- "The annual report is not available for FY 2006-07. 133(6) notice was issued. As per the reply received from the company, it has ITeS segment which is into medical transcription services and qualifies all the filters applied by the TPO." 27.1 The assessee has prayed for exclusion of this company on account of extraordinary events in the form of acquisition/ merger that took place during the relevant AY. The Ld. AR submitted that this company acquired 51% stake in Geosoft Technologies (Trivandrum) Ltd. and plans to merge its subsidiary companies to strengthen its business (page 80 of the Annual Report Compendium). Further, this company has incurred considerable marketing ....
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....tions services, digital service and financial services (page 81-82 of the Annual Report Compendium). On the other hand, the assessee is a simplicitor captive BPO service provider, does not outsource any activities and renders services such as accounts reconciliation, payroll, maintenance of employee database etc. as and when requested by its AE, under the ITeS segment. 28.2 The Ld. DR relied upon the decision of the Special Bench of the Hon'ble Tribunal in the case of Maersk Global Centre (India) Private Limited (ITA No. 7466/Mum/2012) wherein it has been held as under:- "....Keeping 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." 28.3 Based on the above submissions, we are of the considered view that this company is functionally dissimilar to the assessee. Hence, respectfully following the finding of the Hon'ble Tribunal in the case of M....
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....), we direct the Ld. AO/ TPO to exclude this company from the list of comparables. Informed Technologies India Ltd. 30. The Ld. TPO selected this company by recording the following finding in para 14.16 of his order reproduced below :- "14.16 Annual Report is available for FY 2006-07. The company qualifies all the filters applied by the TPO. Thus, the company is considered as a comparable." 30.1 The main argument of the assessee for exclusion of this company is that this company has fluctuating/ abnormal financial results over the years which is evident from the fact that it earned a loss of (23.4%) in FY 2005-06, high profit of 35.65% in FY 2006-07 and a marginal profit of 3.9% in FY 2007-08 The Ld. AR further submitted that this company has incurred marketing and business promotion expense constituting 14.94% of total revenue (page 90-92 of the Annual Report Compendium). However, the assessee company's margins are consistent over years as it is being remunerated on cost plus basis and also the assessee does not perform any sales and marketing functions. 30.2 Placing reliance on AOL Online India Private Limited (IT(TP)A No. 1036/Bang/2011), the Ld. AR submitted that in this....
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....e functionally profile of this company in detail and arrived at the following conclusion :- "72. The taxpayer sought to exclude Iservice on ground of functional dissimilarity as it is into internet service and consulting services. When we examine the functional profile of Iservice from website provided by the taxpayer, the Iservice is into web hosting, email services, spam filtering, domain names and DNS hosting. 74. When we examine the arguments addressed by the Id. AR for the taxpayer in the light of the Rampgreen Solutions (P.) Ltd. (supra) only functional comparability is the hallmark for benchmarking the international transaction. Business profile of Iservice shows that the same is into high end diversifying services vis- a-vis the taxpayer who is into divergent high end services like web hosting, email services, spam filtering, domain names and DNS hosting, web hosting, email services, spam filtering> domain names and DNS hosting is also providing web design services, domain management services and email management services which makes it functionally dissimilar to the taxpayer. The contention of the Id. DR that this argument has not been addressed before the TPO is not s....
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....e that the company runs a highly capital-intensive industry, it operates 24/7 in 3 shifts, it has a significant brand value and a huge assets base. It is also the assessee's plea that the company is a full risk bearing entrepreneur whereas the assessee is a Captive Service Provider to its AE. Having considered all the aspects, it is our considered opinion that the assessee's contention about being functionally dissimilar is correct... Accordingly, we direct for the exclusion of the company from the final list of comparables." [Emphasis supplied] 32.3 In view of the functional dissimilarity brought out between the assessee and this comparable company in the above submissions and relying on decision of the coordinate bench in ICC India Pvt. Ltd. (supra), we direct the Ld. AO/ TPO to exclude this company from the list of comparables. Bodhtree Consulting Limited 33. Ld. TPO selected this company as it qualifies all filters applied by him. The Ld. TPO's finding in para 14.7 of his order is reproduced below:- "14.7 Annual report is available for FY 2006-07 133(6) notice was issued to the company regarding functionality i.e. whether its e-paper solutions related to SWD or....
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....xpenses transferred by Bodhtree to other companies which related to the entity as a whole and which resulted in the improved profitability for the company including the ITes Segment) (Pg 1162-1163 of PB... 5). Thus, the TPO ought to have rejected Bodhtree as a comparable for AY. 2007-08 for the ITeS segment as well." [Emphasis supplied] 33.2 Based on the above submissions of the assessee, perusal of records and relying on the decision of the Bangalore Tribunal in AOL Online India Private Limited (supra), we are of the considered view that this company ought to have been rejected by the Ld. TPO. Accordingly, we direct the Ld. AO/ TPO to exclude this company from the list of the comparable companies. Maple Esolutions Ltd. & Triton Corp Ltd. 34. The Ld. TPO selected this comparable by recording the following finding reproduced below :- "14.19 Maple E Solutions Limited. Annual Report is available for FY 2006-07. The company qualifies all the filters applied by the TPO. Thus, the company is accepted as a comparable. 14.23 Triton Corp Ltd....The company satisfies all the filters applied by the TPO, the same is considered as a comparable." 34.1 The Ld. AR submitted that this c....
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....lected this company on the ground that it qualifies all filters applied by him. The Ld. TPO's finding in para 14.25 of his order is reproduced below :- "14.25 Annual report is available for FY 2006-07. It has IT service segment consisting of both Software development services and ITES. But, the annual report did not contain segmental information on standalone basis. Thus, the company was asked information u/s 133(6) to submit segmental details. The company submitted segmental information on standalone basis. The BPO segment qualifies all the filters applied by the TPO. Thus, it is considered as a comparable." 35.1 The main contention of the assessee is that this comparable is a giant company as compared to that of the assessee. It has earned revenue of Rs. 939 crore vis-a-vis Rs. 139.1 crore earned by the assessee (i.e. 7 times the revenue earned by the assessee) (page 111 of the Annual Report Compendium and page 724 of the Paper Book). The Ld. AR further submitted that this company has invested 8.5% of revenue towards R&D expenses but the assessee does not incur any R & D expenses (page 114 of the Annual Report Compendium). This company owns intangibles in the nature of marketi....
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....s. 97,27,864/- as per the provisions of section 32(2) of the Act read with section 72 of the Act. The Ld. AO has thus restricted the set off of brought forward losses and unabsorbed depreciation under section 72 of the Act to the extent of profits and gains from business. 36.1 The Ld. AR submitted before us that while allowing the brought forward loss and unabsorbed depreciation the Ld. AO did not consider the provisions of section 32(2) which carve out the exception that unabsorbed depreciation from business can be set off against any other source of income in the absence of business income and can be carried forward indefinitely. 36.2 The Ld. AR in support of its above contention relied on the following judgments :- (i) Commissioner of Income Tax Chennai vs. SPEL Semi Conductor [Tax case (appeal) No. 2490 of 2006] wherein the Hon'ble High Court held as under :- "6....However, what is contended by the Revenue is that Section 72(2) controls the operation of Section 32(2) to have the set off of unabsorbed depreciation against the income from other sources. We do not agree with this line of reasoning. What is spoken to under Section 72(2) is as regards set off of business loss ....