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2015 (3) TMI 262 - AT - Income TaxTransfer pricing adjustment - selection of comparable - Held that:- For Genesys International Ltd. - there is vast difference between the functions of the above company and that of assessee. This company as such, cannot be treated as comparable on FAR analysis. We therefore, direct the Assessing Officer/TPO to exclude this company. Eclerx Services Ltd. - As seen from the Annual Report, the above company is involved in diverse nature of services and there was no segmental data for diversified service port folio. Moreover this company can be considered as KPO and we are of the opinion that this company is not comparable to assessee’s services. We therefore, direct the Assessing Officer/TPO to exclude this company. Cosmic Global Ltd. - A captive unit cannot be compared with a giant case and thus excluded CG-VAK with turnover from Accounts BPO segment at ₹ 86.10 lacs. As the segmental revenue of BPO segment of Cosmic Global Limited at ₹ 27.76 lac is still on much lower side, the reasons given above would fully apply to hold Cosmic Global Limited as incomparable. This case is, therefore, directed to be excluded from the list of comparables. Acropetal Technologies Ltd. (Seg.) - As seen from the Annual Report, this company is involved in engineering design services and has products also, which makes it functionally not comparable. Even at the segmental level, it provides engineering design services, which was considered as high end. Therefore, we are of the opinion that this company cannot be selected as a comparable. Accentia Technologies Limited. - This company operates in a different business strategy of acquiring companies for inorganic growth as its strategy. In earlier years on the reason of acquisition of various companies, being an extraordinary event which had an impact on the profit, this company was excluded. As submitted by the learned counsel, this year also, the acquisition of some companies by that company may have impact on the profit. Considering the profit margins of the company and insufficient segmental data, we are of the opinion that this company cannot be selected as a comparable. Moreover, this is also not a comparable in the case of M/s. Mercer Consulting (India) P. Ltd. (supra), which indicates that the TPO therein has excluded it at the outset. Thus direct the Assessing Officer/TPO to exclude this comparable, from the list of comparables selected. Inclusion of reimbursement transactions as part of operational cost - Held that:- Respectfully following the view taken by the coordinate bench in assessee’s own case, we direct AO/TPO to exclude reimbursement cost while working out the operating cost. In view of above, we direct AO/TPO to recompute ALP afresh and if warranted, make necessary adjustment to the price charged by assessee for the international transaction. Set off of losses from the income assessed - Held that:- Merit in the contention advanced on behalf of assessee that income of section 10A unit has to be excluded at source itself before arriving at the gross total income, hence, question of setting off of loss against such profits of 10A units will not arise. Assessee’s claim of set off of losses of the STPI Unit against other income has to be allowed. The direction of the DRP in the particular circumstances of the case is correct. - Decided in favour of assessee. Exclusion of communication charges both from the export and total turnover - Held that:- Respectfully following the decision of ITO Vs. Saksoft [2009 (3) TMI 243 - ITAT MADRAS-D] and CIT Vs. Gemplus Jewellery India Ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT] we uphold the direction of DRP to exclude communication charges both from the export and total turnover - Decided in favour of assessee.
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