TMI Blog2016 (10) TMI 1144X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee by : Shri Chavali Narayan, CA Revenue by : Ms. Neera Malhotra, CIT ORDER Per Shri A. K. Garodia, AM This is an assessee s appeal directed against the assessment order dated 30-09-2011 passed by the AO u/s 143(3) r.w.s. 144C of the IT Act, 1961 as per the directions of DRP for assessment year 2007-08. 2. The grounds raised by the assessee are as under; Based on the facts and circumstances of the case and in law, Acusis Software India Private Limited (hereinafter referred to as 'Appellant') respectfully craves leave to prefer an appeal against the order passed by Income Tax Officer - Ward 11(1) ('AO') dated 30 September 2011 in pursuance of the directions issued by Dispute Resolution Panel ('DRP'), Bangalore dated 05 September 201 I, under section 253 of the Income-tax Act, 1961 (' Act') on the following grounds: That on the facts and circumstances of the case and in law, 1. the order of the learned AO, based on directions of the Hon'ble DRP, erred in assessing the total income at ₹ 2,86,60,019 as against returned income of NIL computed by the Appellant; Grounds of appeal relating to corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comparability analysis by applying different quantitative and qualitative filters; a) the learned AOITPO has erred by rejecting certain comparable companies identified by the Appellant using turnover ₹ 1 Crore as a comparability criterion; b) the learned AOITPO has erred by rejecting certain comparable companies identified by the Appellant as having economic performance contrary to the industry behavior (e.g. companies which showed a diminishing revenue trend); and c) the learned AOITPO erred in rejecting certain comparables considered by the Appellant in the comparability analysis on the ground that the comparables were having different accounting year (other than March 31 or companies whose financial statements were for a period other than 12 months). d) the learned AOITPO erred in rejecting certain comparable companies identified by the Appellant where consolidated results had been used for analysis. The Appellant had considered the consolidated results in only those cases where the medical transcription services related income of the Indian operations constituted more than 75 percent of the consolidated company-widel segmental revenues; 10. the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in it was held that the total turnover is sum total of domestic turnover and export turnover and therefore, if an amount is reduced from the export turnover then, the total turnover also gets reduced by the same amount. Respectfully following this judgment of the Hon ble Karnataka High Court, we direct the AO to re-calculate the deduction allowable to the assessee u/s 10A of the Act by reducing the total turnover also by the same amount by which export turnover was reduced by the AO in respect of foreign currency expenses incurred towards technical services rendered outside India. Accordingly, ground no.2 to 4 are allowed for statistical purposes. 7. Thereafter, the ld. AR of the assessee submitted that the remaining ground are in respect of TP issues and in this regard, he submitted a chart before us and pointed out that the TPO had considered total 28 comparables out of which, the assessee is requesting for exclusion of 13 comparables which are divided in to four separate groups. First such group is of 3 comparables i.e. 1)M/s Bodhtree consulting Ltd.,(Seg.), 2)M/s Eclerx Services Ltd., and 3) Mold Tek Technologies Ltd., (Seg.). Regarding exclusion of this group, he submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... list of comparables because of exceptional financial result due to merger/demerger and also on account of super normal profit of 113%. He placed reliance upon the decision of this Tribunal in the case of Mercedes Benz Research Development India Pvt. Ltd., wherein it has been held that the companies showing abnormal profits cannot be treated as comparable. 8. He further submitted that the second group for which exclusion is being requested by the assessee is also group of three companies including M/s Infosys BPO Ltd.,, M/s Wipro Ltd., (Seg.) and M/s HCL Comnet Systems Services Ltd. and exclusion of this group is requested by the assessee on account of turnover filter. He submitted that the turnover of the assessee company for ITES is ₹ 22.64 Crores whereas the turnover of each of these three companies is more than 10 times of the assessee s turnover and therefore, these companies should be excluded from the list of final comparables, even as per the latest Tribunal orders wherein instead of applying turnover filter of 1- 200 Crores, the turnover filter of 1/10th or 10 times of the turnover of the assessee company is being applied. Thereafter, he submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held by the Tribunal that these three companies are providing KPO services and therefore, cannot be considered as a comparable in a case where the assessee is providing BPO services. Respectfully following this Tribunal order, we direct the AO/TPO to exclude these three companies from the list of final comparables. 11. Regarding the second group of three companies i.e. 1) M/s Infosys BPO Ltd., 2) M/s Wipro Ltd., (Seg.) and 3)HCL Comnet Systems Services Ltd., (Seg.), we find that in the same Tribunal order rendered in the case of First Advantage Offshore Services Pvt. Ltd., (Supra) in para-29 of this Tribunal order, the Tribunal considered these three companies and held that these three companies should be excluded because the turnover of these three companies is more than ₹ 200 Crores. Now, the Tribunal is adopting a different turnover filter i.e. those companies are excluded which have turnover less than 1/10th or more than 10 times of the assessee company s turnover. In the present case, these three companies are having turnover in excess of 10 times of the turnover of the assessee company and hence, we direct the AO/TPO to exclude these three companies also from the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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