2017 (8) TMI 1557 - ITAT DELHI

TP Adjustment - arm's length price adjustment to provision for ITES - Comparable selection - HELD THAT:- Asessee is engaged in providing human resource related services, payroll processing services, training and performance system data entry, etc. to its AE. As a compensation for these services, the AE remunerated Baxter India at a cost plus 10% basis , thus companies functionally dissimilar with that of assessee need to be deselected from final list.

TCS-e-Serve Ltd. functions included rendering of technical services like software testing etc., which required skilled persons. As far as the objection regarding related party transaction is concerned, we are in agreement with the reasoning given by ORP that since this company was taken over by TCS group, therefore, there was no question of any separate details being given about related party transaction. However, keeping in view the various factors, pointed out by Id. counsel for the assessee, which we have noted earlier, this company cannot be taken as a comparable to the tested party.

Infosys BPO Ltd is predominantly into areas like Insurance, Banking, Financial Services, Manufacturing and Telecom which are in the niche areas, unlike the assessee. Functionally not comparable, presence of brand and extraordinary event that has taken place during the year on account of acquisition of Australian based company, we are of the considered opinion that Infosys BPO Ltd. should not be included in the list of comparables

Excel Infoways Ltd. fails TPO's own filter of diminishing revenue and abnormal volatility in revenue and margins.The department has excluded such companies with consistent losses/diminishing revenue in an environment where Indian economy is growing at consistent rate. Having held so, the Assessing Officer included Excel Infoways Ltd. as a comparable without considering the fact that the said company does not pass the diminishing revenue filter - above company has super normal profits.

R System International Limited - Since the assessee in the instant case has provided the audited quarterly results of the comparable company and the margin of the relevant financial year has been calculated, therefore, following the decisions MCKINSEY KNOWLEDGE CENTRE INDIA PVT. LTD. [2015 (3) TMI 1226 - DELHI HIGH COURT] , the company cannot be excluded from the list of comparables

Addition on account of purchase of fixed assets - DRP directed the TPO to restrict the addition to the amount of depreciation claimed during the year without the mark-up which resulted into adjustment - HELD THAT:- Since the facts of the impugned assessment year are identical to the facts of the case in the immediately preceding assessment year, therefore, following the order of the Tribunal in assessee's own case we restore this issue to the file of the Assessing Officer/TPO with direction to re-compute the addition, if any, in the light of the direction of the Tribunal. The grounds raised by the assessee are accordingly allowed for statistical purposes.