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2021 (8) TMI 1272 - AT - Income TaxTP Adjustment - comparable selection - HELD THAT:- Asit C Mehta be excluded from the list of comparables as this company is, the company is having more than one segment. Whereas, separate segmental data is not available in the public domain - the employee cost of the company works out to 22.78% of the total cost as compared to assessee’s employee cost of 48.27%. Further, the turnover of the assessee is more than eighty times of the turnover of the company. See DBOI GLOBAL SERVICES PVT. LTD. [2016 (8) TMI 1292 - ITAT MUMBAI], ZAVATA INDIA PRIVATE LIMITED [2013 (6) TMI 405 - ITAT HYDERABAD] and STREAM INTERNATIONAL SERVICES PRIVATE LIMITED [2014 (10) TMI 393 - ITAT MUMBAI] Infosys BPO Ltd is to be excluded for the reason that it is engaged in rendering software development and related technical activities. We have also found from record that the facts based on which the company was rejected in assessment year 2006-07 are no different in the impugned assessment year. In view of the aforesaid, we exclude this company from the list of comparables. Vishal Information Technologies Ltd be excluded for the reason that instead of performing the work itself, it outsources the work to third party vendors. Wipro Limited (Seg) be excluded on the ground that it has exceptionally high turnover compared to assessee’s turnover. eClerx Services Ltd incurred a major part of its expenses towards outsourcing of services, whereas, the assessee is a routine BPO service provider without outsourcing any of its activities. Thus, in our view, this company cannot be comparable to the assessee. Moldtek Technologies Ltd be excluded as this company is providing structural engineering and design services of construction of building. Further, the company has undertaken expansion vigorously. Thus, there is extraordinary growth which could have resulted in abnormal profit margin of 113.49%. Further, the employee cost of the company as a percentage of the total cost works out to meager 8.41% as compared to assessee’s employee cost of 48.27%. Thus, these factors, in our view, do not make the company comparable to the assessee. Informed Technologies India Ltd company serves the needs of the financial content sector in the USA. It collects and analyses data on financial fundamentals, corporate governance, structures/executes compensation and capital market. The company caters to the niche market segment of financial content and its targeted clientele include well known and respected American Corporate. Thus, as it appears, the company is functionally dissimilar to the assessee. Caliber Point Business Solutions Ltd and HCL Comnet Systems Pvt Ltd (Seg) be excluded on the ground that their related party transaction (RPT) is substantially high compared to assessee - we find, HCL Comnet Systems India Ltd (Seg) has been rejected by different benches of the Tribunal in case of other assesses for the reason of having a different financial year ending, different business model and super normal profit. Thus we exclude these two companies from the list of comparables. I Services India Pvt Ltd company is engaged in providing remote data entry services to its clients in USA. Further, it has reported a profit margin of 50.27% for the year under consideration, which is exceptionally high in terms of industry norms. Due to the super normal profit earned by the company for the year under consideration, the Tribunal excluded it from being considered as a comparable in case of Pentair Water India P Ltd [2016 (5) TMI 137 - BOMBAY HIGH COURT], which is for the very same assessment year - thus we exclude this company from the list of comparables. Deduction on account of Education Cess paid by the appellants - HELD THAT:- We find that the issue raised in the additional ground stands decided in favour of the assessee by the decision of Hon’ble jurisdictional High Court in case of Sesa Goa Ltd . [2020 (3) TMI 347 - BOMBAY HIGH COURT]. Respectfully following the aforesaid decision of the Hon’ble jurisdictional High Court, we direct the assessing officer to verify the facts and allow deduction of education cess paid by the assessee. Benefit of -5% relief to the assessee - HELD THAT:- As per settled legal principle, the benefit of (+)/(-) 5% under section 92C(2) cannot be allowed as standard deduction. With the aforesaid observations, these grounds are dismissed.
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