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2015 (1) TMI 300 - AT - Income TaxTransfer pricing adjustment - Information Technology Enabled Services - Rejection of comparables - Genpact India ltd. - Held that - The TPO has included this comparable on the ground that the company is engaged in similar activity - the ratio of related party transaction to operating income for the year is 98.96% and does not satisfy the TPO s own filter of rejecting companies having more than 25% RPT - the turnover of Genpact India is Rs. 2683.82 crores as against assessee s turnover of Rs. 80.4 crores - the services rendered by Genpact india are high end services and even the turnover filter do not match with that of the assessee there was no error in the directions of the DRP to reject the company from the final list of comparables. Excel Infoways ltd. Super normal profit - Held that - This company has a super normal profit and showing margin of 203.80% - the TPO in its order u/s. 92CA(3) has himself removed this company from the final list of comparables giving reasons extreme outlier - Considering the super normal profit and also the rejection by the TPO in A.Y. 2010-11 there was no error in rejection of this company - the ratio of employee cost to turnover is only 10.02% as against assessee s employee cost of 62.83%. M/s. Crossdomain Solutions Ltd. Held that - This company has been rejected by the DRP on the ground that it is indulged in high skill IT services which are not comparable to the routine I.T. Enabled services in M/s. Market Tools Research Pvt. Ltd. Versus Dy. Commissioner of Income-tax 2014 (9) TMI 43 - ITAT HYDERABAD it has been held that this company is providing services which are in the nature of KPO - the company is engaged in providing Niche services as well as developed its own brand Exdion to target the insurance industry in US - the directions made by the DRP is upheld for the rejection of this company from the final list of comparable - Decided against revenue. Nature of foreign exchange gain/loss Operating revenue or not Held that - While computing the operating margin of the assessee the TPO included the foreign exchange loss of Rs. 2.48 crores as part of operating cost but has not considered the foreign exchange gain of Rs. 1.09 crores as part of the operating revenue - This amounts to inconsistent approach of the TPO thus the TPO is directed to consider foreign exchange gain as part of the operating revenue while determining the operating margin of the assessee Decided partly in favour of revenue.
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