TMI Blog2014 (12) TMI 921X X X X Extracts X X X X X X X X Extracts X X X X ..... functionality of the comparable has also changed as that would be the relevant criteria to consider the prayer for excluding the comparable – in M/s HSBC Electronic Data Processing (I) (P.) Ltd. Versus Assistant Commissioner of Income-tax [2013 (6) TMI 708 - ITAT HYDERABAD] - for this specific year i.e 2006-07 assessment year has given a categorical finding that it has changed the business model of the company – there is no merit in the arguments of the Revenue to still restore the issue for verification when a Co-ordinate bench on facts pertaining to the very same AY has held that the business model for Neclues Netsoft & GIS (India) Ltd. has changed as a result of the amalgamation – thus, this company cannot be selected as a comparable no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above services, the taxpayer is compensated on a cost plus mark up basis for the services rendered to its associated enterprise (hereinafter referred to as AE ). The IT enabled services rendered by the taxpayer are elaborated at page 3 which read as under:- Vendor co-ordination services-Ameriprise US has outsourced its call centre and back-office operations to certain companies (hereinafter referred as India Service Providers or ISPs ). The nature of activities undertaken by the Appellant include accessing the data from the server of the ISPs through IT Network, scrambling the data, and converting it into a presentable form to enable Ameriprise US to evaluate the performance of the ISP; and Data analytics services-Involves scr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confining themselves to the data which was available at the time of TP study however none of these issues are argued before us. The Ld. AR instead placed reliance upon the order of the Co-ordinate Bench dated 28.06.2013 in ITA No.-1624/Hyd./2010 in Ms. HSBC Electronic Data vs ACIT, Hyderabad for the proposition that the said comparable has been directed to be excluded as a comparable considering the facts for the same specific assessment year namely 2006-07 assessment year. The reasons for so holding it was submitted is not only on the ground that it did not fulfill the cost filters but also on the ground that the fact of amalgamation in the year under consideration changed the business model of the company. The relevant finding and the ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue was restored to the TPO to verify whether as a result of the amalgamation the company becomes functionally different. In similar line it was submitted the Tribunal in its order dated 26.04.2013 in ITA No.-7410/Mum/2012 in the case of Vodafone India Services vs DCIT, Mumbai the issue was restored for verification whether it can still be considered to be a good comparable. Accordingly it was his submission that in principle he opposed the prayer of the assessee for exclusion of the said comparable on the ground that amalgamation/merger or demerger would necessarily have already impacted the profits as the cost thereof is embedded in the financials. It was his argument that for the TNMM purpose operating cost anyway stands excluded an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er that the assessee be required to demonstrate that as a result of the merger/demerger the functionality of the said comparable was impacted. Principally we are inclined to agree with the submissions of the Ld. CIT DR that amalgamation merger/demerger per se need not make a comparable an incomparable and the factum of amalgamation in a specific year would have impacted the profits of the said comparable logically speaking. Moreover since operating cost are anyway excluded while considering the PLI in TNMM situation we agree the factum of amalgamation by itself need not make a comparable an incomparable. We have taken into consideration the decisions of the Co-ordinate Bench wherein following the view taken in M/s Willis Processing Services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ials have changed and the business model also changed. Referring to the annual report placed on record, it was submitted that as against ₹ 24.02 lakhs of employee costs for the year ending 31st March, 2005, the employee cost has increased to ₹ 132.59 lakhs. Further, the data processing charges is also to the extent of ₹ 1.04 crores, which indicates that the assessee is outsourcing the work. Accordingly, it cannot be selected as a comparable. Due the amalgamation during the year, the assessee s business model has changed and because of employee cost filter also, this comparable has to be excluded. 13.1. After considering the rival submissions, we are of the opinion that this company cannot be selected as a comparable not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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