9911796707
TMI Blog2016 (1) TMI 1259X X X X Extracts X X X X X X X X Extracts X X X X ..... and post-acquisition period ; 2. On the facts and in the circumstances of the case and in law, the Ld. TPO and the Ld. Panel erred in: i. Aggregating the Appellant's international transactions pertaining to pre-acquisition and post-acquisition ii. Disregarding the segmented financials adopted by the Appellant in respect of pre and post-acquisition period; iii. Rejecting the economic analysis conducted by the Appellant pertaining to the preacquisition and post-acquisition period. iv. In rejecting the selection of the Associated Enterprise(s) as the 'tested party' as selected by the Appellant in the TP documentation in respect of the post-acquisition period; v. Rejecting multiple year data; vi. Rejecting the search process followed by the Appellant in respect of pre-acquisition and post-acquisition period; vii. Including certain companies even though they are not comparable to the appellant in terms of functions performed, assets employed and risks assumed; viii. Excluding certain companies on arbitrary/ frivolous grounds even though they are comparable to the appellant in terms of functions performed, assets employed and risks assumed; ix. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he grounds herein above or produce further documents before or at the time of hearing of this Appeal." 2. At the time of hearing, the Ld. Counsel for the assessee, submitted that assessee is not pressing Ground No.3 in view of alternate ground raised by the assessee in ground No.4. We find that the alternate ground of the assessee is covered in favour of the assessee by the decision of Hon'ble Karnataka High Court in the case of CIT & Another vs. Tata Elxsi Ltd., and others reported in (2012) 349 ITR 98 wherein it has been held that if any expenditure or the income is to be excluded from the export turnover, then the same has to be reduced from the total turnover as well. Therefore, ground No.4 of the assessee is allowed and ground No.3 of the assessee is rejected as not pressed. 3. As regards ground No.5, it was submitted by the Ld. Counsel for the assessee that the quantum taken by the A.O. towards travel and conveyance expenses is incorrect as stated in the ground of appeal. He has submitted that the A.O. has erred in taking the correct figure from the P & L A/c. As it is an apparent mistake, we deem it fit and proper to remit this issue to the file of the A.O. with a directi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is placing reliance upon for exclusion of these companies from the final list of comparables. 8. The Ld. D.R., on the other hand, argued on the basis of the written submissions filed by her and taking both the assessee's chart as well as Revenue's written submissions, we decide the ground as under. 9. The assessee company is in the business of providing I.T. Enabled Services ("ITES") to its Associated Enterprise ("AE"). The assessee had entered into international transactions with it's A.Es and therefore, the A.O. referred the determination of the ALP of the international transactions to the TPO under section 92CA of the Act. During the T.P. proceedings. The TPO observed that the erstwhile company UBS Service Centre India P. Ltd., was acquired by M/s. Cognizant Technology Solutions India P. Ltd., on 30th December, 2009, and that subsequent thereto, the company was renamed as Cognizant Technology Services P. Limited. He observed that due to this reason, the assessee had described the company profile in two parts i.e., one in pre-acquisition period and the other in post-acquisition period. The TPO however observed that the activities of the assessee pre- acquisition and post-a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onance with the same, the A.O. passed the draft assessment order, against which, assessee preferred its objections before the DRP. After considering assessee's contentions, the DRP directed exclusion of Infosys BPO Ltd., and TCS E-Serve Limited. The Revenue is not in appeal against the exclusion of these two companies. The Assessee is in appeal against the inclusion of (1) Accentia Technologies Limited (2) TCS E-Serve International Limited (3) Eclerx Services Limited and (4) Cosmic Global Limited. 10. As regards the Accentia Technologies Ltd., is concerned, the Ld. Counsel for the assessee, submitted that this company is to be rejected as there is an extraordinary event i.e., amalgamation of Asscent Infoserve Pvt. Ltd., with the company and further that the company is into a diversified knowledge process outsourcing. He has submitted that for very same A.Y. 2010-2011, this Tribunal in the case of ACIT, Circle-2(2), Hyderabad vs. Hyundai Motors India Engineering P. Ltd., in ITA.Nos.1743 & 1917/Hyd/2014 dated 13.11.2015 has considered the nature of the activity carried on by it as well as the extraordinary event so as to exclude it from the list of final comparables therein which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this appeal before us. We find that Hyundai Motors India Engineering P. Ltd., (supra) was also engaged in the business of rendering ITES services and had adopted TNMM as the most appropriate method. The Tribunal at para-10.3 of its order has considered the comparability of Cosmic Global Limited and has held as under : "10.3. Having regard to the rival contentions and the material on record, we find that the assessee had raised objections against this company in the earlier A.Y. 2009-10 on a similar ground i.e., the income from translation services which is outsourced is much higher and therefore, should not be considered as a comparable. The Tribunal, by relying on the decision of the Tribunal at Delhi in the case of Mercer Consulting (India) P. Ltd., ITA.No.966/Del/2014 dated 06.07.2014 has held as under : "(4) Cosmic Global Ltd. 14. The main objection of assessee with reference to the inclusion of this company is with reference to outsourcing of its main activity. Even though this company was selected as comparable in assessee's TP study, it has raised objection before the TPO that this company's employee cost is less than 21.30% and most of the cost is with reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 27.76 lacs. We have discussed this aspect above in the context of CG-VAK's case and held that a captive unit cannot be compared with a giant case and thus excluded CG-VAK with turnover from Accounts BPO segment at Rs. 86.10 lacs. As the segmental revenue of BPO segment of Cosmic Global Limited at Rs. 27.76 lac is still on much lower side, the reasons given above would fully apply to hold Cosmic Global Limited as incomparable. This case is, therefore, directed to be excluded from the list of comparables." In view of the detailed analysis of the coordinate Bench of the Tribunal in the above referred case, in this case also we accept the contentions of assessee and direct the Assessing Officer/TPO to exclude this comparable for the same reasons." 12.1. As regards the TCS E-Serve Limited, the Tribunal at para 11.2 to 11.2.2 has held as under : "11.2. Having regard to the rival contentions and the material on record, we find that during the relevant financial year, the TCS e-Serve International Ltd., had acquired the Citi group India based Captive business processing outsourcing (BPO) arm for an allcash consideration and in return, had acquired the business of an aggregate am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t cannot be excluded. Such claim has to be supported by evidence on record. As regards the functional dissimilarity and huge turnover and brand value is concerned, we find that this Tribunal in assessee's own case for A.Y. 2009-10 while considering the comparability of the assessee with Infosys BPO Ltd., has taken note of the possession of the brand value and intangibles which influenced the financial results of this company. The Hon'ble Delhi High Court in the case of CIT vs. Agnity India Technologies P. Ltd., (2013) 219 Taxman 26 (Del.), held that huge turnover companies like Infosys and Wipro cannot be considered as comparable to smaller companies like assessee therein. In the case before the Hon'ble High Court (supra), the turnover of the assessee was about Rs. 15.79 crores as against the turnover of Rs. 1016 crores of the Infosys. Considering these facts, the Hon'ble High Court had directed for exclusion of Infosys BPO because of its brand value and also on the grounds of functional dissimilarity and huge turnover. Though, the company before us is TCS e-Service Ltd., and not Infosys BPO, we find that the turnover of the assessee company for this assessment year is around Rs. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there is an extraordinary event in the case of Accentia Technologies Ltd., during the relevant financial year particularly since the approval for amalgamation has been given by the Hon'ble High Court of Mumbai vide orders dated 21st August, 2009 and by the Hon'ble Karnataka High Court vide orders dated 6th February, 2010. This event would definitely have an effect on the profit margins of the said company and therefore, has to be excluded from the list of comparables as rightly done by the DRP. Therefore, we do not see any reason to interfere with the order of the DRP on this company also. Accordingly, ground No.3 of the Revenue is dismissed." 12.3. As regards the Eclerx Services Limited is concerned, the Hon'ble Delhi High Court in the case of Rampgreen Solutions P. Ltd., vs. CIT in ITA.No.102 of 2015 dated 10.08.2015 has held as under : "31. In the present case, the Tribunal noted that Vishal and eClerx were both engaged in rendering ITeS. The Tribunal held that, "once a service falls under the category of ITeS, then there is no sub-classification of segment". Thus, according to the Tribunal, no differentiation could be made between the entities rendering ITeS. We find ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
