TMI Blog2014 (12) TMI 1276X X X X Extracts X X X X X X X X Extracts X X X X ..... ploading the generic judgements on the given Website. 3.1. The assessee entered into services agreement with its parent company vide agreement dt. 1.4.2006. It was agreed that in consideration of the services provided by the assessee to its parent company, the parent company shall pay to the assessee an amount equivalent to the operating cost incurred by the assessee in providing such services including related costs and expenses of its personnel, parent company shall in addition pay 12.50% mark up on the Operating costs till agreement is in force. 3.2. Mindcrest Inc (Parent company) entered into a services agreement on 12.9.2006 with Bloomberg LP. It was agreed that Mindcrest shall be responsible for researching key words and phrases provided by Bloomberg using cases regulations, legislative, administrative materials. It was further agreed that Mindcrest Inc. shall create a list of extracted information from the sources that best explain and define the keywords and phrases. Service provider (Mindcrest Inc) shall edit and rewrite extracted text so that copy is clear, concise, well formed and grammatically correct. It was also agreed that there will be a total of 20 Assigned E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Alisec Technologies Ltd. 20.08.03 99.02 12.25% 9. Optimus Global Services Ltd 20.08.03 55.85 1.32% 10. ICRA Online Ltd. 20.08.03 10.75 8.46% Average PLI 10.98% Mindcrest India 13.00% Accordingly, since the operating margin over cost ratio of the assessee at 13% is higher than the average of the comparable companies at 10.98%, the international transaction undertaken by the assessee was considered to be at arm s length. 3.4. On receiving a reference u/s. 92CA(1) of the Act, the Transfer Pricing Officer issued a notice alongwith a questionnaire to the assessee whereby the assessee was required to submit details/explanation to support the arm s length price computed by it in the audit report. The assessee filed a detailed explanation alongwit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were proposed by the TPO. S.No. Name of the Comparable Functional Lines 1. Acropetal Technologies (Seg.) The engineering designing services segment of the company is engaged in engineering design services. 2. Coral Hub Ltd. (Formerly Vishal Information Technologies Ltd. The company is mainly engaged in data processing services. 3. Crossdomain Solutions Ltd. The company is mainly engaged in data processing, insurance claims processing and payroll processing services. 4. Eclerx Services Ltd. The company is mainly engaged in data analytics, bundling optimization, content operation, sales and marketing support, product data management, revenue management and data analytics are some of the offerings to Retail and Manufacturing clients. To its Financial Services clients, it offers real-time capital markets, middle and back office support, portfolio risk management services and various critical data management services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the DR submitted that the assessee has not clarified which of the services it has rendered. It is the claim of the DR that the comparables used by the assessee are also not in line with the services provided by the assessee and therefore the comparables of the assessee have rightly been rejected by the Revenue authorities. 7. Having heard the rival submissions, we have carefully perused the orders of the lower authorities and the relevant documentary evidences brought on record before us. The main dispute is whether the services provided by the assessee are high end services or whether they are low end services. If the scope of the work of the assessee vis- -vis its AE is considered, then definitely it appears that the assessee is providing highend services. But the fact of the matter is that we have to consider only those services which were actually provided by the assessee during the year under consideration to its AE. The AE entered into an agreement with Bloomberg. The scope of the services have already been mentioned by us elsewhere. The consideration is pegged at 12 US Dollar per hour. It cannot be denied that looking into the consideration, the nature of services appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice. This decision of the Tribunal was followed by the Hyderabad Bench in the case of Hyundai Motors India Engineering Pvt. Ltd. in ITA No. 1850/Hyd/2012 and also by Mumbai Bench in the case of M/s. Willis Processing Services (India) Pvt. Ltd. in ITA No. 2152/M/2014. Considering all these facts in totality, we direct for the exclusion of this company from the list of comparable. 3. M/s. Eclerx Services Ltd. A perusal of the business view of this company shows that this company is a leading Indian provider of Knowledge Process Outsourcing using a mix of custom designed processes and delivery teams. This company is providing services to the banking, finance, manufacturing, retail, travel and hospitality verticals. This company has dedicated knowledge management team which is responsible for overseeing training and process documentation systems, structures and policies. The Chairman in his message to the shareholders has observed that this company is a very different company with industries specialized services for meeting complex client needs. The Chairman admitted that sometimes this company is compared to a BPO or a IT offshoring company which infact this company is not. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be excluded from the final list of comparables. 8. Having said all that and after rejecting the comparables used by the TPO/DRP, we find that the only comparable surviving is that of M/s. Allsec Technology Ltd. with OP/OC - 12.25%. Here we would like to mention that looking to the nature of the services provided by the assessee, no direct comparables are available. In such a situation, in our considered view, the undisputed comparables adopted by the TPO and accepted by the assessee in subsequent years should also be considered during the under consideration including M/s. Allsec Technology Ltd. only for the limited purpose of determining ALP for the year under consideration, 8.1. We accordingly direct the TPO to determine the arm s length price adopting the comparables used by him in the subsequent assessment years for the determination of the arm s length price of the international transaction entered into by the assessee. Accordingly, we set aside the matter to the file of the AO/TPO with the above direction. 9. In the result, the appeal filed by the assessee is treated as allowed for statistical purpose. Order pronounced in the open court on 12th December, 2014. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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