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2015 (4) TMI 8 - AT - Income TaxTransfer pricing adjustment - selection of comparables - Held that:- Mold-Tek Technologies Ltd.during the year had shown super normal profit of 113 per cent. The co-ordinate bench of this Tribunal in the case of Capital IQ Information Systems (India) P. Ltd. v. Deputy CIT [2014 (3) TMI 626 - ITAT HYDERABAD] held that companies having extraordinarily high profit cannot be treated as comparable. That besides the activities of M/ s Mold-Tek is also found to be functionally different as it is involved in providing engineering services in the nature of producing design, drawings, detailed structural engineering drawings using 3D and 2D software, thus cannot be treated as a comparable Eclerx Services Ltd. company cannot be treated as a comparable as it was earning super normal profit and is also functionally dissimilar as it is engaged in providing KPO services. These facts have not been controverted by the learned Departmental representative Hence this company cannot be treated as a comparable. Accurate Data Converters P. Ltd.was initially not selected as a comparable by the Transfer Pricing Officer. Subsequently, the Transfer Pricing Officer conducted search in the data base for finding additional comparables on applying 25 per cent. employee cost filter. After examining the information obtained from the company the Transfer Pricing Officer treated it as a comparable by observing that the said company is engaged in data processing which is in the nature of information technology enabled services similar to the assessee. It is very much clear from the order of the Transfer Pricing Officer that the aforesaid company was selected as a comparable without inviting objections of the assessee. - remit this issue to the file of the Assessing Officer who shall decide the acceptability or otherwise of the company as comparable after considering the assessee's objection. Vishal Information Technologies Ltd. (now known as Coral Hub Ltd) cannot be taken as a comparable and direct for excluding the same for determining the arm's length price as relying on Capital IQ Information Systems (India) P. Ltd. v. Deputy CIT [2014 (3) TMI 626 - ITAT HYDERABAD] HCL Comnet Systems & Services Ltd.o far as the other contention of the assessee with regard to not providing details to the assessee it is seen from the record that the Transfer Pricing Officer himself has admitted the fact relevant information was not provided to the assessee. It is further revealed from the observations made by the Transfer Pricing Officer in his order during the financial year relevant to the assessment year under dispute HCL Comnet had related party transactions of 21.52 per cent. of the revenue. Thus remit this issue to the file of the Assessing Officer who shall consider the acceptability or otherwise of the aforesaid company after considering all the contentions and arguments of the assessee. Maple e Solution Ltd. & Triton Corp Ltd.cannot be treated as comparable, hence, we direct the Assessing Officer to exclude the same for determining the arm's length price. Infosys BPO Ltd. and Wipro Ltd. (Seg.)find force in the contention of the learned Departmental representative that the upper limit of ₹ 200 crores will not apply uniformly while applying the turnover filter. The upper limit has to be fixed keeping in view the turnover of the assessee. It is seen from the record that during the assessment year under dispute the assessee was having a turnover of more than ₹ 151 crores. Therefore, the upper limit of ₹ 200 crores for excluding companies as comparables will not apply so far as the present assessment year is concerned. It is further found from record while the turnover of Infosys BPO Ltd. is ₹ 649.56 crores that of Wipro Ltd. (Seg.) is ₹ 939.78 crores. Hence, the turnover of the aforesaid two companies are within accepted limit, hence, they cannot be excluded on account of extraordinarily high turnover. Geneysis International Corporation Ltd. is having diversified activities. Many of the activities carried on by Geneysis are functionally dissimilar to the assessee, which is engaged in providing information technology enabled back office support services to its associated enterprise and other group companies. That besides, the assessee's contention with regard to provision for bad debts to be made part of operating expenses has certainly some force and deserves to be considered in proper perspective. Therefore, on considering the totality of the facts and circumstances of the case, we remit this issue to the file of the Assessing Officer who shall consider afresh the assessee's contention with regard to acceptability or otherwise of Geneysis as a comparable and take a decision on the same after considering all the facts and materials before him in the light of the decisions which may be relied upon by the assessee. Accentia Technologies Ltd. remit the matter to the Assessing Officer to verify the fact of amalgamation and acquisition and take a decision in the matter after considering the submissions of the assessee. The Assessing Officer while deciding the acceptability of the aforesaid company shall also consider the contentions of the assessee with regard to functional difference between the two. Reduction of communication charges from export turnover while computing deduction under section 10A - Held that:- communication charges though has to be excluded from the export turnover for the purpose of computing deduction under section 10A of the Act, the same has also to be reduced from the total turnover. We, therefore, direct the Assessing Officer to compute the deduction under section 10A after reducing the communication expenses both from the export turnover as well as total turnover. See CIT v. Gem Plus Jewellery India Ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT ] and ITO v. Sak Soft Ltd. [2009 (3) TMI 243 - ITAT MADRAS-D] - Decided in favour of assessee.
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