TMI Blog2015 (4) TMI 590X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial services, retails and manufacturing. Accentia Technologies Ltd the TPO after collecting information u/s.133(6) of the Act had included it as a comparable. The plea of the ld. AR is that it has software development activity also, therefore, non comparable with the functional activity of the assessee. In the interest of justice, we restore this matter back to the file of the TPO for examining afresh. The information collected by him u/s.133(5) is to be supplied to assessee. Mold Tek Technologies Ltd. be rejected on the plea that the Financial Year 2007-028 relevant Assessment Year 2008-09 was a unique year for Mold Tek Technologies Ltd. as the scheme of arrangement involving amalgamation between Tekmen Tool Pvt. Ltd. and Mold. Tek Technologies Ltd. and de-merger between Mold-Tek Technologies Ltd. simultaneously was sanctioned by the Hon’ble AP High Court by 15th July, 2008 with the appointed date for amalgamation and de-merger being 1st October, 2007 and 1st April, 2007, respectively. Infosys BPO Ltd., being a subsidiary of Infosys, has an element of brand value associated with it. This is also clear from the presence of brand related expenses incurred by this compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6) of the Act) which is not in accordance with the contemporaneous documentation requirement of the Indian TP regulations; 3. requiring financial data of only the current year (FY 2007-08) of the comparable companies to be used for benchmarking the Appellant?s international transactions; 4. holding that the amounts paid to Castrol India Limited by the Appellant are not pass-through expenses, and that the Appellant ought to have charged a mark-up to the associated enterprises in relation to such costs; 5. not granting a risk adjustment to the Appellant to account for the differences in the risk profile of the comparables vis- -vis the Appellant; 6. the learned AO be directed to grant (+/-) 5% benefit as available under proviso to Section 92C(2) of the Act. It is prayed that the learned AO be directed to consider the international transaction of the assessee as arm?s length and accordingly the transfer pricing adjustment of ₹ 12,95,24,470/- should be deleted The appellant craves leave to add, amend or withdraw all or any of the Grounds of Appeal herein and to submit such statements, documents and papers as may be considered necessary either at or before the appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o end payroll, retrials, reimbursement, tax proof verifications up to issue of Form 16 for employees of our clients across different industry verticals. As per ld. AR, these processes are highly scalable and provide end to end payroll solutions to clients with headcount ranging from 5 to 65,000. Crossdomain s IT knowledge and domain competence has provided the edge to develop information systems to implement process innovation and continuously increase efficiency and turn-around-time for business critical processes. For this purpose Ld AR placed his reliance in the case of Symphony Marketing Solution India P Ltd vs ITO (in ITA No. 1316/Bang/2012) for AY 2008-09, wherein Bangalore Bench of the Tribunal held the business of Cross Domain ranges from high end KP services, development of product suites and routine low and ITES service. However, there is no bifurcation available for such verticals of services. Therefore the assessee contends that Cross Domain cannot be compared to a routine ITES service provider. 7. Further reliance was placed on the decision on the Hyundai Motors India Engineering P Ltd vs ITO (ITA No. 1850/Hyd/2012) 8. Reliance was further placed on the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany is held to be functionally different. 1. Symphony Marketing Solution India P Ltd vs ITO (ITA No. 1316/Bang/2012)(Bang) (AY 2008-09) (Page 17-19, Para 22-23) (sr. No. 4 of COJ) (6) Genesis International Corporation Ltd. 22. This company is listed at Sl. No. 12 in the list of comparable companies chosen by TPO. As far as this company is concerned, the stand of the assessee has been that this company is functionally not comparable and that it has a different employee skill set and that this company performs R D services and also owns intangibles. This company is a geospatial services content provider specializing in land based technologies. From the notes to accounts of this company, it is seen that this company is engaged in providing geographical information services comprising of photogrammentry, remote sensing cartography, data conversion related computed based services and other related services. 23. It is thus clear from the aforesaid decision of the Tribunal that among the ITES companies there is a hierarchy in terms of skill required to provide services. It ranges from providing routine services where no skills and required and providing services where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the year i.e. amalgamation with Tech Men Tools Private Limited. Ld. AR also relied on the following decisions of the Tribunal, wherein Mold Tek Technologies Ltd has been excluded from the comparables :- i) Maersk Global Centres (India) Private Ltd. Vs. ACIT, ITA No.7466/Mum/2012(SB)(2008-09); and ii) Lionbridge Technologies Ltd. Vs. ITO, ITA No.7498/Mum/2012(AY 2008-09). 18. We have considered rival contentions and found that the ITAT Special Bench in the case of Maersk Global Centres (India) Private Ltd., has directed for exclusion of Mold Tek Technologies Ltd. on the plea that the Financial Year 2007-028 relevant Assessment Year 2008-09 was a unique year for Mold Tek Technologies Ltd. as the scheme of arrangement involving amalgamation between Tekmen Tool Pvt. Ltd. and Mold. Tek Technologies Ltd. and de-merger between Mold-Tek Technologies Ltd. simultaneously was sanctioned by the Hon ble AP High Court by 15th July, 2008 with the appointed date for amalgamation and de-merger being 1st October, 2007 and 1st April, 2007, respectively. In view of the above, respectfully following the decision of Special Bench, we direct the TPO to exclude Mold Tek Technologies Ltd. f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Services India Private Ltd. Vs. ACIT, ITA No.8290/Mum/2011(AY:2007-08). The Ld. AR also placed reliance on the decision of Hyderabad Bench of the Tribunal in the case of Brigade Global Services Private Limited, ITA No.1494/Hyd/2010, 988/Hyd/2011. 24. We have considered rival contentions and carefully perused the record. We found that employees cost to sales in case of Maple e-Solution Ltd. works out to 15.62% as against assessee s ratio of 48.85%. Furthermore, in view of the judicial pronouncements, we accept the contention of the assessee that this company cannot be treated as comparable. Accordingly, we direct the TPO to exclude Maple e-Solution Ltd. from the list of comparables. 25. Ld. AR has also contended for exclusion of Acropetal Technologies Ltd. on the plea that the low employee s cost to sales is 8.20% as against assessee s employees cost to sales is 48.54%, therefore, this company cannot be treated as comparable. Ld. AR placed reliance on the decision of Tribunal in the case of Stream International Services India Private Ltd. Vs. ACIT, ITA No.8290/Mum/2011(AY:2007-08) and Brigade Global Services Private Limited, ITA No.1494/Hyd/2010, 988/Hyd/2011. 26. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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