2019 (7) TMI 1905 - HC - Income Tax

TP Adjustment - exclusion of comparables which the ITAT held to be functionally different from the Assessee - HELD THAT - Three of the comparables involved are Infosys BPO Ltd. TCS E-serve International Ltd. and TCS E-serve Ltd. This Court has very recently in M/S. AVAYA INDIA PVT. LTD. VERSUS ACIT 2019 (7) TMI 1279 - DELHI HIGH COURT giving detailed reasons why on the facts of that case which are more or less similar to the facts on hand such comparables ought to have been excluded. The said judgment therefore covers the said issue against the Revenue. As far as the comparables Accentia Techonologies Ltd. and E4e Healthcare are concerned the Tribunal has in the impugned order explained in detail why these also should be excluded. The principles explained by this Court in the aforementioned judgment would be equally applicable to these comparables as well.There are several other orders of this Court upholding the exclusion of the aforementioned comparables.See EVALUESERVE SEZ (GURGAON) PVT. LTD. 2018 (2) TMI 1750 - DELHI HIGH COURT B.C. MANAGEMENT SERVICES PVT. LTD. 2017 (12) TMI 255 - DELHI HIGH COURT and M/S. SANVIH INFO GROUP PVT. LTD (EARLIER KNOWN AS OKS SPAN TECH PVT. LTD.) 2019 (5) TMI 1211 - DELHI HIGH COURT .

Summary

Issues:
Exclusion of comparables in transfer pricing assessment for Assessment Year 2010-11.

Analysis:
The High Court heard an appeal by the Revenue challenging the ITAT's order regarding the exclusion of certain comparables in a transfer pricing assessment for the Assessment Year 2010-11. The main issue raised by the Revenue was the exclusion of comparables deemed functionally different from the Assessee.

The Court referred to a recent judgment in a similar case (M/s.Avaya India Pvt. Ltd. v. ACIT) where it was detailed why certain comparables, including Infosys BPO Ltd., TCS E-serve International Ltd., and TCS E-serve Ltd., should be excluded. The judgment provided reasons supporting the exclusion of these comparables, which favored the Assessee over the Revenue.

Regarding other comparables like Accentia Techonologies Ltd. and E4e Healthcare, the Tribunal had already explained in the impugned order why these should also be excluded. The Court stated that the principles established in the aforementioned judgment were equally applicable to these comparables, reinforcing the decision to exclude them.

Additionally, the Court noted several other orders supporting the exclusion of comparables, such as Pr.CIT v. Evalueserve SEZ (Gurgaon) Pvt. Ltd., Pr. CIT v. B.C.Management Services (P.) Ltd., and Pr. CIT v. M/s. Sanvih Info Group Pvt. Ltd. These orders further strengthened the case for excluding the comparables in question.

In conclusion, the Court found no substantial question of law to consider and dismissed the appeal, upholding the decision to exclude the comparables in the transfer pricing assessment for the Assessment Year 2010-11.