TMI Blog2015 (8) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... on in the findings of the DRP in excluding two companies while rejecting assessee's objections in TCS e-Serve International Ltd. DRP also did not give any finding whether there is any influence on the margins of the comparables as there is no higher turnover filter adopted by the AO while selecting the comparables. As we see from the list of final comparables even a company with ₹ 1.74 Crores was selected as comparable company [Jeevan Softech Ltd., (Seg)]. Therefore, there seems to be some merit in Revenue's grounds. Since the DRP did not give any detailed reasoning and did not consider the TPO's order in its correct prospective, we are of the opinion that as far as exclusion of these two companies are concerned, DRP should have given a detailed order. For this purpose, we remit the matter to the DRP for limited purpose of giving detailed order on the contentions raised by Revenue in ground No. 2. - Decided in favour of revenue for statistical purposes. Excluding telecommunication charges from the total turnover while excluding the same from the export turnover - Held that:- With reference to ground of amount of communication charges excluded, AO considered an amount of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of computation of allowable deduction under section 10A of the Income Tax Act, 1961 when there is no such specific provision under the Act to reduce the 'total turnover'? 6. Whether on the facts and circumstances of the case, the Hon'ble DRP is correct in law in directing the Assessing Officer to reduce ₹ 39,22,626/- only instead of the entire communication charges of ₹ 51,89,321/- . 2. Briefly stated, assessee-company is engaged in the business of providing healthcare administrative back office services to its Associated Enterprise [AE] and works on cost + 15% basis. Assessee-company filed return of income declaring total income of ₹ 3,38,503/-. As assessee's transactions are with AE, the matter was referred to Transfer Pricing Officer [TPO], who after rejecting assessee's transfer pricing study, selected some comparables and proposed adjustment for the purpose of Arm s Length Price [ALP] at ₹ 4,31,61,106/-. On the draft order proposed by the AO dt. 27-03-2014, assessee preferred objections before the DRP. DRP while considering some of the objections passed the following order on which Revenue is aggrieved on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, rejected the objections of assessee with reference to TCS e-Serve International Ltd, which is also similarly placed. As far as TPO is concerned, all the three companies are selected after due analysis and referred to the relevant findings of the TPO in this regard. 4. Coming to the observation of DRP about the extraordinary event in the case of Accentia Technologies Ltd., it was the submission of the DR that even after merger of another sister concern which is also a BPO, there is no impact on financials as the profit margin has slightly come down over the profits in earlier years. Therefore, TPO's observations should have been upheld by the DRP. With reference to the exclusion of Eclerx Services Ltd., it was submitted that the said company is held to be a KPO, but assessee's business is also in the nature of KPO services and not BPO services. Accordingly, it was submitted that DRP wrongly excluded the above four companies. It was submitted that the order of TPO may be restored. 5. Ld. Counsel, however, in reply submitted that Infosys BPO and TCS e-Serve Ltd., have more than ₹ 1,000 Crores business as observed by the DRP, whereas assessee's turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Ltd stand on the same footing. As seen from the order of the panel about Infosys BPO and TCS e-Serve Ltd., they have considered twin conditions of advantageous brand value along with high turnover of ₹ 1,000 Crores and above. Assessee has objected on the same twin conditions as far as TCS e-Serve International Ltd., also. There is contradiction in the findings of the DRP in excluding two companies while rejecting assessee's objections in TCS e-Serve International Ltd. DRP also did not give any finding whether there is any influence on the margins of the comparables as there is no higher turnover filter adopted by the AO while selecting the comparables. As we see from the list of final comparables even a company with ₹ 1.74 Crores was selected as comparable company [Jeevan Softech Ltd., (Seg)]. Therefore, there seems to be some merit in Revenue's grounds. Since the DRP did not give any detailed reasoning and did not consider the TPO's order in its correct prospective, we are of the opinion that as far as exclusion of these two companies are concerned, DRP should have given a detailed order. For this purpose, we remit the matter to the DRP for limited purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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