9911796707
TMI Blog2014 (11) TMI 1017X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The assessee is a 'company' engaged in the business of providing corporate information i.e desktop publication and captive 'BPO' in the nature of 'IT enabled' services provider. The assessee was incorporated with effect from 1.1.2004. It is a 100% subsidiary of its eponymous UK based entity. 3. The assessee had filed its return on 29.3.2011 admitting income of ` 1,20,50,020/-. The same was 'summarily' processed. The Assessing Officer took up 'scrutiny'. He noticed the assessee's related party transactions in software development field with its UK based parent and other entities based in USA, Hong Kong and Japan amounting to ` 19,45,80,134/-, ` 10,25,11,954/-, ` 43,07,122 and ` 3,70,700/- respectively totalling to ` 30,17,69,910/-. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... object Technologies Ltd. only. The 'TPO' also included four more comparables i.e M/s Accentia Technologies Ltd., Adity Birla Minacs Worldwide Ltd, Coral Hub Ltd. and Cosmic Global Ltd. having respective 'PLIs' of 49.4%, 1.85%, 35.14% and 48.10% averaging @ 27.3% and proposed to enhance the assessee's 'PLI' @ 13.47% to the aforesaid level. 5. The assessee contested the said show cause notice as under: I) M/s Accentia Technologies was primarily into Healthcare Receivables Cycle Management Services and Software development for BPO services. Per assessee, the said entity had provided medical transcription, billing collection and coding services not akin to those undertaken by itself. It sought to distinguish segment/domain involved therein. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upto `250 crores to disagree with the assessee's corresponding pleadings(supra). He adopted similar reasoning qua M/s Coral Hub Ltd. and M/s Cosmic Global Ltd. and observed that suitable working capital adjustments as pleaded would also be provided. The assessee filed a letter dated 17.122012 requesting for working capital adjustment to eliminate the differences with the comparables in case of the above stated three entities. The 'TPO' took into account the aforesaid seven comparables and revised net profit margin to 26.9%. He computed 'ALP' as ` 33.74 crores leading to differential adjustment of `3.57 crores. The Assessing Officer passed a consequential draft assessment order on 28.2.2013. 7. The assessee preferred objections before the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing and captive 'BPO' business. Its submission stating its revenue to be in the ratio of 40:60 qua the above two heads has gone unrebutted. There is no quarrel about Form CEB documentation, its veracity and selection of 'TNMM' as the most appropriate method. The assessee's 'PLI' stands at 13.47% as against 24.3% adopted in the assessment order. The domain(s) used for selecting comparables in the present case is 'IT enabled services/BPO'. The 'TPO' has added four comparables(supra) i.e one of them M/s Cosmic Global in desktop publication and the other three entities in 'BPO' category. The assessee's job qua its 'BPO' seems to be that of routine mundane accounting wherein neither intensive technical expertise is required nor it fetches very h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... But this comparable is not engaged in 'BPO' services. In other words, the Revenue's three comparables are not in both desktop publishing and captive 'BPO' fields but in either one of these two. Therefore, both parties seem to have failed in finding sufficient number of most appropriate comparables. We also notice that the assessee's comparables have a mean 'PLI' of almost 19%. The Revenue's three comparables(supra) show the same at 33.11%. It has come on record that profit margin in this field varies from 1.8% to almost 50% i.e from a miniscule percentile to extraordinary profits. The latter margins are in the Healthcare Receivables and/Medical transcription etc. We reiterate that neither of the assessee's vocations i.e desktop publishing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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