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2019 (4) TMI 1517 - AT - Income TaxTP Adjustment - exclusion & inclusion of comparable company - functional comparability - FAR Analysis Capgemeni Business Services (India) Ltd - functional comparability - HELD THAT:- Capgemeni Business Services (India) Ltd during the year, provided I.T. enabled assured services in finance and accounting to many Indian and Global clients and has widened the scope of services in supply chain, programme, technology and engineering services etc.,whereas the assessee is providing services in financial processes, annual and quarterly financial reports. Therefore, we are satisfied that both the companies are not into similar type of activities as Capgemeni Business Services (India) Ltd is also into more diversified activities such as Technology & Engineering services and therefore, the activities rendered by it are functionally different. Both the companies used brands of their holding companies and therefore, are on par with each other. However, due to functional dissimilarity, we direct the AO to exclude this company from the final list of comparables. Hartron Communications Ltd - income from BPO services is ₹ 17,99,52,212 which has been booked on the basis of Indian currency realized. At note 17, the revenue from operations is reported, we find that the export income has been reported at ₹ 17,99,52,211/-. Further, from the data published by the assessee, this year is an exceptional year of operation. The financial results of Hartron Communications Ltd cannot be considered for the preceding and succeeding financial years It can be seen that this year has been an exceptional year for the said company. Therefore, we are of the opinion that Hartron Communication Ltd cannot be considered as a comparable company to the assessee. In this view of the matter, without commenting on the other objections of the assessee, against this company, we direct the AO/TPO to exclude this company from the final list of comparables only for the ground of exceptional performance during the relevant year. Though the assessee has sought inclusion of Informed Technologies India Ltd, Jindal Intelicom Ltd, we find that by exclusion of the two companies in the above paragraphs, the assessee’s margin falls within + or -3% of the average margin of the comparables. Therefore, we do not venture to adjudicate on the inclusion of these two companies at this stage, as it would only result in an academic exercise.
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