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TMI Blog2014 (10) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... al has considered this issue at para 4 of its order and after considering the facts and the submissions, the Tribunal finally concluded by holding that "in such a situation, it is directed that the same should be included under the head "income from other sources". With this direction, the Tribunal restored the matter to the file of the A.O. for computing the income after allowing the eligible deductions and allowances as per the relevant provisions under Chapter IV-F. The Tribunal has further directed that while allowing such deductions, the A.O. will also ensure that no deduction is doubly claimed/allowed, firstly, in computing of income under the head "profits and gains of business or profession" and then under the head "income from other sources". As no distinguishing facts/decisions has been brought before us, respectfully following the findings of the co-ordinate Bench of this Tribunal in ITA No. 8997/Mum/2010, the matter is restored to the file of the A.O. for doing the needful in the light of the findings given by the Tribunal in A.Y. 2006-07. Ground No. 1 is treated as allowed for statistical purpose. 5. Ground No. 2 has not been pressed by the ld. Counsel for the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has reported the following international transactions in its Form 3CEB:- Sr No. Nature of International transactions Amount (Rs) Method 1 Rendering eCRM services 54,16,75,364/- TNMM 2 Reimbursement of expenses received 36,22 ,707/- CUP 10. In so far as rendering eCRM services, the assessee has selected the following companies as its comparables and their updated margins are as follows:- Sr No. Name of the company Margins 1 Ace Software Exports Ltd. -6.79% 2 Ask Me Info Hubs Ltd. 5.6% 3 C S Software enterprise Ltd. N.A 4 Cosmic Global Ltd. 11.75% 5 Maple E Solutions Ltd. 34.32% 6 Transworks Information Services Ltd. (Aditya Birla Manics Worldwide Ltd.) 12.44% 7 Triton Corpn. Ltd. 32.36% 8 Galaxy Commercial Ltd. 14.36% 9 CMC Ltd. (seg) 31.92% 10 Datamatics Software Pvt. Ltd. (Seg) 3.14% 11 Gold Stones Teleservices Ltd. (seg) (Formerly Gold Stone Teleservices Ltd.) -68.25% 12 National securities depository Ltd. (seg) 29.17% During the course of the proceedings before the TPO, the assessee was given a set of 25 companies involved in ITES service activity which were selected by the Department. The assessee accepted 13 companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Let us take the comparable companies one by one:- (i) Maple Esolutions Ltd.:- The OP/TC of this company is 34.32%. It is the say of the ld. Counsel for the assessee that this company was under serious indictment in fraud cases. A perusal of the order of the Tribunal for A.Y. 2006-07 in ITA No. 8997/Mum/2010 show that this company was excluded from the list of comparables. Respectfully following the precedent, we direct the exclusion of this company from the final list of comparables. (ii) Triton Corp. Ltd.:- The OP/TC of this company is 32.36%. It is the say of the ld. Counsel for the assessee that this company also deserves to be excluded as the Directors of this company were involved in fraud, therefore, financial results of the company are not reliable. In support, reliance was placed on the decision of the Tribunal in the case of Capital IQ Information Systems (India) Pvt. Ltd. in ITA No. 1961/Hyd/2011, CRM Services India (P) Ltd. in ITA No. 4068/(Del)/2009, Avincon India Pvt. Ltd. in ITA No. 1989/Mum/2011 and Market Tools Research Pvt. Ltd. on ITA No. 2066/Hyd/2011. We have perused the decisions relied upon by the ld. Counsel for the assessee. We find that whenever a compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany from the final list of comparables. (v) Asit C. Mehta Financial Services Ltd. (seg):- The OP/TC of this company is 24.21%. The ld. Counsel for the assessee stated that this company has low employee cost to sales as compared to that of the assessee. Reliance was placed on the decision of the Hyderabad Bench of this Tribunal in the case of Zavata India Private Limited in ITA No. 1781/Hyd/2011. We find force in the contention of the ld. Counsel for the assessee. This company's employee cost to sales is at 24.78% as compared to that of the assessee which is 49.34%. As the employee cost to sales is found to be much lower than that of the assessee, we direct for the exclusion of this company from the final list of comparables. (vi) Infosys BPO Ltd.:- The ld. Counsel for the assessee stated that the turnover of this company is extremely high as compared to that of the assessee. Moreover, Infosys is a brand and commands premium in the market, therefore, this company should be excluded from the list of comparables. It is an undisputed fact that Infosys is a brand and commands premium in the market. It is also a fact that the turnover for the year of this company was Rs. 649.56 cror ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd whether segmental data are available or not and decide afresh whether this company needs to be considered in the final list of comparables. (x) Caliber Point Business Solutions Ltd.:- At the outset, the ld. Counsel for the assessee stated that this company deserves to be rejected as the related party transaction is more than 25% which is a filter adopted by the TPO himself. We find that the DRP has not considered this objection because it was of the opinion that related party transaction is mainly for reimbursements and recoveries and therefore would not affect the company. We find that an identical issue came up before the Tribunal in assessee's own case in A.Y. 2006-07 in ITA No. 8997/Mum/2010 wherein the Tribunal has rejected this contention of the Department. The Tribunal at para 13 of its order has observed that "A pure reimbursement of expenses by one AE to another AE is very much a 'transaction' as per section 92F(v) and consequently is equally an international transaction as per section 92B requiring consideration as per section 92 of the Act". These observations were in relation to a company namely Datamatics Financial Services Limited. We therefore do not find any for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee's own case in A.Y. 2006-07, we direct for the exclusion of this company from the final list of comparables. (xiv) Wipro Ltd. (seg):- The facts of this company are similar to the facts of Infosys BPO Ltd. considered by us at Sl No. (vi). For the similar reason, this company is also directed to be excluded from the final list of comparables. 14. To complete the adjudication, we direct the A.O./TPO to recompute/redetermine the Arm's Length Price as per our directions given hereinabove. Before closing, we find that the assessee has also taken certain additional grounds. 15. Ground No. 1.2 & 1.3 relates to the taxability of rental income. These grounds are treated as allowed qua our decision to ground No. 1 of this appeal. 16. Ground No. 3.3 relates to the determination of Arm's Length Price. This issue will be considered by the A.O. while re-determining the ALP as per our directions given hereinabove. 17. Ground No. 5 relates the grant of short credit of TDS. We direct the A.O. to allow the credit of TDS as per the provisions of law after due verification. 18. Ground No. 6 relates to the levy of interest u/s 234B of the Act. The levy of interest is mandatory though consequen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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