TMI Blog2016 (5) TMI 1333X X X X Extracts X X X X X X X X Extracts X X X X ..... CIAL MEMBER Appellant by : Shri Kanchan Kaushal, CA Shri Rohit Tiwari, CA Ms. Shruti Knimta, Adv. Respondent by : Shri Amrendra Kumar, CIT DR ORDER PER BEENA A. PILLAI, JM: The present appeal has been filed by the assessee against the final order of DCIT Circle 3, Gurgaon for the Assessment Year 2011-12 on the following grounds of appeal: That on the facts and circumstances of the case, and in law; 1. The Learned Assessing Officer ('Ld. AO)/ Learned Transfer Pricing Officer ('Ld. TPO') (following the directions of the Learned Dispute Resolution Panel ('Ld. DRP')) erred on facts and in law in enhancing the income of the Appellant by ₹ 13,34,87,027 without appreciating the factual positions/ submissions of the Appellant. 2. The Ld. AO/ Ld. TPO (following the directions of the Ld. DRP) erred in enhancing the income of the Appellant by ₹ 13,34,87,027 holding that the international transactions of the Appellant pertaining to provision of information technology ('IT /CSD') and information technology enabled services ('ITeS') do not satisfy the arm's length principle envisaged under the Act and in do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D RP / assessment proceedings while passing its direction under section 144C of the Act; 4. The Ld. AO has grossly erred by proposing to compute interest under section 234B of the Act; 5. The Ld. AO has grossly erred in initiating penalty under section 271(1)( c) of the Act mechanically and without recording any satisfaction for its initiation. The above grounds are without prejudice to each other. 3. The main issue raised by the assessee is against selection of comparables by the TPO and upheld b y the DRP. At the time of hearing, Ld. A.R. submitted that the issue stands covered by the decision of this Tribunal in assessee s own case for the Assessment Year 2010-11 in I.T.A.No. 1202/Del/2015. 3.1 Facts apropos are that, the assessee, erstwhile known as Equant Solutions India Private Limited, is a subsidiary of EGN BV, Netherlands. The assessee is engaged in providing information technology enables network management and other back office support services to its group companies. It also undertakes software development services for developing software applications, which are used within the Group companies. The IT enabled network management and other back office sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Acropetal Technologies Ltd. (segment) 14.36% 3 e4e Healthcare Business Services P. Ltd. 9.77% 4 eClerx Services Ltd. 56.82% 5 ICRA Techno Analytics Ltd. (Segment) 25.24% 6 Infosys BPO Ltd. 17.86% 7 Jindal Intellicom Ltd. 13.70% 8 Microland Ltd. (ITES segment) 8.5% 9 TSCS E-serve Limited 69/31% 27.19% B. Software Development Services: S.No. Company Long name OP/OC 1 Acropetal Technologies Ltd. (Segment) 36.69% 2 Akshay Software Technologies Ltd. 0.16% 3 E-infochips Limited 56.44% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mited argument for excluding the following comparables in bench-marking PLI of ITeS which are as under: i. Accentia Technology Ltd. ii) Infosys BPO Ltd. iii) TCS E-Serve Ltd. i. Accentia Technology Ltd:- Ld. A.R. submitted that the Tribunal in assessee s own case for the Assessment Year 2010-11 (supra), rejected the inclusion of this company as comparable on the ground that it is a KPO. The coordinate bench of this Tribunal has rejected this comparable by holding as under: As pointed out by the learned counsel for the assessee, there was amalgamation of a company during the relevant year, and the said company, therefore, cannot be considered as comparable due to this extraordinary event which occurred in the relevant year as rightly held by the Tribunal inter alia in the case of Excellence Data Research P. Ltd. (supra). We, therefore, follow the decision of the coordinate bench of this Tribunal in the case of Excellence Data Research Services Pvt. Ltd. (supra) and direct the AO/TPO to exclude the Accentia Technologies Limited from the list of comparables on this ground. Further, this company also provides KPO services, LPO and OPO besides offering software services. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered the rival contention regarding exclusion of Infosys BPO Ltd. It is engaged in high end integrated services and therefore it is functionally dissimilar. The Infosys brand is indisputably is a huge brand and definitely, result of that brand goes to this comparable. Therefore, the brand of Infosys definitely results in opening higher profits to this company. In view of the following decisions, the same is required to be excluded and hence it is ordered accordingly. 4.5 On the contrary, the Ld. D.R. supported the order of DRP and Ld. TPO. He thus prayed for inclusion of this company as a comparable. 4.6 We have perused the orders of the authorities below and the submissions made by both the parties. We have perused the order of this Tribunal for assessment year 2010-11(supra) in assessee s own case. It is observed that there is no difference in the functional profile of the assessee for the year under consideration with that of the assessee for assessment year 2010-11. As rightly contended by the Ld.AR, this company has been excluded from the list of comparables by this tribunal for assessment year 2010-11 for the reasons reproduced hereinabove. Respectfully following t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... og Systems Ltd. a. Infosys Ltd.:- The ld.AR submitted that the DRP has rejected this comparable in assessment year 2010-11 and therefore this company was not contended to be excluded before this tribunal by the assessee for assessment year 2010-11(supra). He submitted that following the rule of consistency this comparable may be excluded for the year under consideration. On the contrary, the Ld. D.R. supported the order of the authorities below and prayed for inclusion of this company as a comparable. 5.1 We have perused the order of the authorities below, and the DRP s order for assessment year 2010-11. 5.2 We are of the considered opinion that a consistent approach must be followed while selecting/rejecting the set of comparables when facts are identical. It is an admitted position that the DRP had excluded this company as a comparable as it has high turnover and has a huge brand value. It is observed by us that the DRP for the year under consideration on one hand notes that this company has diversified operations and that this company is primarily engaged in the development of software and software services. Whereas on the oher hand, admits to that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pectfully following the decision of this Tribunal in assessee s own case, for the Assessment Year 2010-11(supra), we are inclined to exclude this company from the final list of comparable. c. Wipro Technology Services Ltd:- 5.6 Ld. A.R. submitted that the Tribunal in assessee s own case for the Assessment Year 2010-11(supra), rejected the inclusion of this company as comparable on the ground that this company is a subsidiary of Wipro Ltd, which has a considerable brand name, and further that the entire revenue during the year in this company is covered by a master service agreement entered into by breakthrough with CITI group services. The coordinate bench of this Tribunal has rejected this comparable by holding as under: We carefully considered the rival contention regarding exclusion of this comparable. This company had agreed an agreement with CITI Technology Services Ltd, which is 100% subsidiary of Wipro Technology Ltd. The entire revenue during the year is covered by a master service agreement entered into by Wipro with CITI Group Services. Further, this company is also a subsidiary of Wipro Ltd., which company has a considerable brand name, therefore benefit accr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld to be a comparable in view of the extraordinary circumstances. The company is also owning significant intangibles and carrying on research and development activities ownership significant intangibles cannot be held to be a comparable with the assessee and therefore on this ground too this comparable is ordered accordingly to be excluded. 5.10 On the contrary, the Ld. DR supported the order of DRP and Ld. TPO. He thus prayed for inclusion of this company as a comparable. 5.11 We have perused the orders of the authorities below and the submissions made by both the parties. We have also perused the order of this Tribunal for assessment year 2010-11 (supra) in assessee s own case. It is observed that there is no difference in the functional profile of the assessee for the year under consideration with that of the assessee for assessment year 2010-11. As rightly contended by the Ld.AR, this company has been excluded from the list of comparables by this Tribunal for assessment year 2010-11(supra) for the reasons mentioned hereinabove. Respectfully following the decision of this Tribunal in assessee s own case, for the Assessment Year 2010-11(supra), we are inclined to exclude t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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