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2015 (6) TMI 527 - AT - Income TaxTransfer pricing adjustment - Information Technology enabled services (ITES) segment - selection of comparable - Held that:- Coral Hub Ltd. is not a suitable comparable were ITES segment of the assessee company. outsourcing charges of this company constitute 90% of the total operative cost, therefore, the same is functionally different from the present assessee. In the present case, neither the TPO nor the DRP has brought out any fact or evidence to establish that the present assessee is also earning income from outsourcing charges, hence, we are inclined to hold that the present assessee undertook ITES segmental activities, during the period under consideration, at its own without any outsourcing. Therefore, we are of the considered opinion that the outsourcing charges, which constitutes more than 90% of the total operating cost of the Coral Hub Ltd., is a very important factor and the same having greater bearing on the profitability of the comparable. In this situation, the Coral Hub Ltd. cannot be considered as a suitable comparable for benchmarking of International transactions of the assessee in ITES segmental activities, because the factum of heavy outsourcing activity carried out by this company looses the tag of suitable comparability. Eclerx Services Ltd. deserve to be deleted from the final set of comparables. Apparently, this company provides tailored process outsourcing and management services in addition to multitude of the data aggregation, and mining and maintenance services from vigilant reading of annual report available at Page 659 to 738 of the assessee paper book Volume-II, it can be easily seen that it is not closed to the assessee ITES segmental services transaction which are impressed by the manual process ITES services. It is not a suitable comparable to the assessee company for AY 2008-09 due to high pitched financial result and the same deserve to be deleted from the final set of comparables. Cosmic Global Ltd. is functionally dissimilar to the present assessee and Cosmic Global Ltd. is not a suitable comparable to the present assessee for benchmarking and determining the arm’s length price (ALP) of present assessee ITES segmental International transactions for AY 2008- 09. Accordingly, we hold that Cosmic Global Ltd. was wrongly included in the final set of comparables which deserves to be deleted.
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