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2019 (5) TMI 622 - AT - Income TaxTPA - comparable selection - functional dissimilarity - captive Data processing services - HELD THAT:- Eclerx services Ltd is not a comparable company with the ITeS segment of the assessee. Therefore, we direct the learned transfer pricing officer/AO to exclude this company. Infosys BPO Ltd - Exclude the same from the comparability analysis for the reasons of having huge brand value. TCS E serve international Ltd is a subsidiary of Tata consultancy services Ltd. - it belongs to a Tata group and has paid contribution for Tata brand. We have also perused the annual report of the comparable company which is placed on careful analysis of the annual report it is found that in schedule ‘N’, Tata brand equity contribution of this comparable companies is ₹ 46065 thousands. Therefore we direct the learned transfer pricing officer to exclude the above comparable from the comparability analysis. Mphasis Fincources Ltd - is not a suitable comparable as it has been selected by the assessee on the basis of the data for a financial year 2008 – 09 despite the fact that assessee has used companies with financial year for FY 2009 – 10 as a filter. Further according to the TPO the functional profile is also different and employee compensation is a percentage to total expenses is less than 25%. The learned dispute resolution panel also accepted the reasons recorded by the learned transfer pricing officer for its rejection. We have carefully considered the contention of the assessee on this aspect. In the transfer pricing study report submitted before the learned transfer pricing officer the assessee did not submit the financial for Year 2009 – 10 of this comparable company. Risk adjustment - the appellant undertakes minimum business risk as against comparable companies that are full-fledged risk entrepreneurs - TPO & DRP has rejected the argument of the assessee for the reason that assessee failed to demonstrate before them that the risk profile of the assessee is making a difference in the margins earned by the assessee and the comparables - HELD THAT:- Before us also assessee could not demonstrate that how the risk profile is making a difference in the margin of the comparable companies as well as the assessee. Therefore we do not find any reason to interfere in the decision of the learned transfer pricing officer and approved by the learned dispute resolution panel. Accordingly we direct the learned transfer pricing officer to exclude Accentia technology Ltd, E Clerx services Ltd, Infosys BPO Ltd, TCS E serve international Ltd and TCS E serve limited.
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