TMI Blog2015 (11) TMI 1662X X X X Extracts X X X X X X X X Extracts X X X X ..... the entities, selected by the assessee as comparables for determining ALP - Held that:- The assessee is engaged in providing software development services, ITES and sales support services, thus companies dissimilar with that of assessee need to be deselected from final list of comparable. - ITA No. 2236/PN/2012 - - - Dated:- 18-11-2015 - SHRI R.K. PANDA, AM, AND SHRI VIKAS AWASTHY, JM For the Assessee : Shri Nikhil Pathak For the Revenue : Shri S.K. Rastogi ORDER PER VIKAS AWASTHY, JM : The appeal has been filed by the assessee against the assessment order dated 28-09-2012 passed u/s. 143(3) r.w.s. 144C of the Income Tax Act, 1961 (hereinafter referred to as the Act ) for the assessment year 2008-09. 2. The assessee has filed elaborate grounds of appeal. However, a perusal of grounds raised would show that the assessee has impugned the assessment order primarily on the 3 issues : i. Disallowance of deduction u/s. 35D. ii. Restricting the claim of deduction u/s. 10A to ₹ 20,37,01,518/- as against the claim of ₹ 22,87,09,861/-. iii. Addition of ₹ 19,30,02,824/- u/s. 92CA by substituting some new comparables and rejecting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted by the assessee. The assessee included 2 more companies as comparables and determined average operating margin of finally selected companies at 23.37%. Accordingly, for business support services, the TPO proposed an adjustment of ₹ 45,61,355/-. 5. On the basis of proposed adjustments of ALP the Assessing Officer made draft assessment order on 17-11-2011. Apart from the additions made on account of international transactions the Assessing Officer made disallowance of ₹ 37,60,272/- u/s. 35D and ₹ 20,37,01,518/- u/s. 10A of the Act on STPI unit. The assessee claimed deduction of ₹ 22,87,09,861/- u/s. 10A of the Act. The assessee is having 2 units. Both the units are rendering IT and IT Enabled Services to their holding and other group companies. One of the unit is eligible for deduction u/s. 10A of the Act. The assessee had not maintained separate books of account for the unit eligible to claim deduction u/s. 10A. The Assessing Officer held, that in the absence of separate books of account the result shown by the assessee are not fully verifiable. The correctness/reasonableness of the expenses allocated by the assessee between the taxable and non-taxabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided on 10-10-2014. 7. In respect of third ground in the appeal, the Ld. Counsel submitted that the assessee is rendering 3 types of services it its AEs; (i) Software Development Services, (ii) Design, Engineering, Testing and Authoring services, and (iii) Business Support Services. The assessee applied TNM Method for determining ALP. The TPO accepted the method followed by assessee in determining ALP. Thus, there is no dispute about the method followed by the assessee in determining ALP. However, the TPO rejected the comparables selected by the assessee for determining ALP and substituted his own list of comparables to which the assessee had raised objections. The comparables selected by the TPO were either functionally different or had abnormally high profit margins. Some of the comparables selected by the assessee were rejected by the TPO on whimsical ground in an unjustified manner. The assessee initially selected 23 companies as comparables for software division. The turnover of software division is ₹ 73,52,09,170/-. The operating margin of software division is 12.50%. The addition made by TPO in respect of software division is ₹ 8,35,80,880/-. The DRP uphel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal. Similar view has been taken by the Coordinate Bench of the Tribunal in the case of Symphony Services Pune (P) Ltd. (supra) and Barclays Technology Centre India (P) Ltd. (supra). FCS Software Solutions Ltd. The Ld. Counsel submitted that the operating margin of the said company is 57.02% before working capital adjustment. The company is a super profit making company and cannot be considered as comparable. The DRP has itself rejected FCS Software Ltd. as comparable in some of the cases on similar grounds. In the case of Barclays Technology Centre India (P) Ltd. (supra), the Pune Bench of the Tribunal has held that the results of FCS Software Ltd. are abnormal for assessment year 2008-09 and hence, the said company has to be excluded. 8. The Ld. Counsel contended that the TPO rejected some of the comparables considered by the assessee for determining ALP. However, from the list of rejected comparables, the following two should have been included: Comparables rejected by the TPO Objections raised by the assessee Aztec Soft Ltd. The TPO has rejected t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee in the said division is ₹ 86,42,20,000/-. The operating margin of this division is 14.30%. The Assessing Officer made addition of ₹ 10,94,21,944/-. The assessee had initially selected 11 companies as comparables. While selecting the comparables, the assessee had considered the data of 3 years. The TPO held that the data of current year should only be considered and rejected some comparables selected by the assessee and introduced some new companies as comparable entities. Finally, the Assessing Officer calculated the operating margin of the comparables on the base of 6 companies at 28.77%. However, one of the companies included by the TPO i.e. M/s. KLG Systel Ltd. was excluded by the DRP from the list of comparables. The assessee raised objection to the selection of the new comparables selected by the authorities below on the following grounds : Comparables selected by the TPO Objections raised by the assessee Coral Hubs (earlier known as Vishal Information Technologies Limited) The operating margin of the said company is 51.79% which is abnormally high. Moreover, the said comparable is functi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Support Services. The Ld. Counsel contended that the assessee had initially selected 18 companies as comparables. The assessee considered the data of 3 years while selecting the comparables for Business Support Services. The TPO rejected various comparables selected by the assessee on the ground that only current year comparables should be considered. The TPO introduced few new companies as comparables and finally made analyze by selecting 9 companies as comparable entities. After allowing the working capital adjustment, the operating margin of the comparables was determined at 20.32%. The Ld. AR objected to the selection of new comparables on the following grounds : Comparables selected by the TPO Objections raised by the assessee TSR Darashaw Ltd. The Ld. Counsel submitted that the said company should not have been selected as comparable, as the operating margin of the said company is 44.77% which is abnormal in this line of business. Apitco Ltd. The said company is engaged in specialized business of providing support to SME through Project Consultancy hence, it is fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional transactions the Ld. DR submitted that the TPO after detailed study has rejected the comparables adopted by the assessee and has included the comparable entities commensurate to the business size and function of the assessee company. In respect of inclusion of comparables, i.e. Bodhtree Consulting Ltd., E-Zest Solutions Ltd., Helios Matheson Information Ltd., Infosys Ltd., Kals Information System and FCS Software Solutions Ltd. etc. the Ld. DR placed reliance on the order of TPO. Similarly for rejecting some of the comparables which were initially included by the assessee in TP study, the Ld. DR submitted that the findings of TPO are upheld by DRP. In respect of Design, Engineering Division, the Ld. DR controverting the submissions of Ld. AR in respect of Genesys International Corporation Ltd. and CGVAK Software Exports Ltd. contended that the comparable are functionally similar. The Ld. AR has not been able to controvert the findings of the Ld. DRP. The DRP after analyzing the income of the said comparable entities from different sources concluded that the said companies were mainly engaged in the development of computer software. Revenue from design services or ITES/BP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that similar issue has been adjudicated in favour of the assessee by the Co-ordinate Bench of Tribunal in assessee s own case in assessment year 2007-08. A copy of the order of Tribunal in ITA No. 1319/PN/2011 for assessment year 2007-08 decided on 10-10-2014 has been placed on record. We find that the issue raised in the present appeal is identical to the one raised in assessment year 2007-08. The Co-ordinate Bench of the Tribunal decided the issue in favour of the assessee by following the judgment of Hon'ble Bombay High Court in the case of CIT Vs. Gem Plus Jewellery India Pvt. Ltd. reported as 330 ITR 175 (Bom). The relevant extract of the findings of the Tribunal are as under: 14. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the DRP and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. The only question to be decided in the impugned grounds is the allowability of deduction u/s/10A on the income due to disallowance u/s.40(a)(ia) and 43B. It is the case of the Assessing Officer that no deduction u/s.10A is allowable on the income incre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee have been derived from manufacturing activity. The salaries paid by the assessee, it has not been disputed, relate to the manufacturing activity. The disallowance of the PF/ESIC payments has been made because of the statutory provisions-s. 43B in the case of the employer's contribution and s. 36(v) r/w s. 2(24)(x) in the case of the employees contribution which has been deemed to be the income of the assessee. The plain consequence of the disallowance and the add back that has been made by the AO is an increase in the business profits of the assessee. The contention of the Revenue that in computing the deduction under s. 10A the addition made on account of the disallowance of the PF/ESIC payments ought to be ignored cannot be accepted. No statutory provision to that effect having been made, the plain consequence of the disallowance made by the AO must follow. The second question shall accordingly stand answered against the Revenue and in favour of the assessee. 14.2 Respectfully following the decision of the jurisdictional High Court cited (Supra) we hold that the Assessing Officer is not justified in restricting the deduction u/s.10A on account of disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 Infosys Technologies Limited 39.96% 7 K P 1 T Cummins Infosystems Limited 13.20% 8 Lanco Global Systems Limited 13.28% 9 Larsen Toubro Infotech Limited 11.35% 10 Maars Software International Limited 15.58% 11 Melstar information Technologies Limited 3.46% 12 Mindtree Limited 16.98% 13 Persistent Systems Private Limited 24.34% 14 Quintegra Solutions Limited 15.18% 15 R S Software (India) Limited 14.11% 16 S 1 P Technologies and Exports Limited 18.37% 17 Sasken Communication Technologies Limited 17.88% 18 Satyam Computers Services Limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15.98 10 Mind Tree 17.51 13.36 11 R S Software 6.71 7.55 12 FCS Software Solutions Ltd. 57.02 52.29 13 Persistent systems 27.59 26.73 14 Sasken Communication Technology 17.75 15.59 Arithmetic Mean 261.42/9 27.28 24.63 20. The TPO during TP study objected to the assessee s selection of comparables on the basis of 3 years data. The TPO confined to the data of comparable entities relating to assessment year 2008-09 only. The operating margin determined by the TPO from the set of comparables selected worked out to 27.28% after allowing the working capital adjustment, operating margin of comparables is 24.63%. However, the assessee raised objection to the selection of some of comparables adopted by the TPO. The list of comparables selected b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of comparables in a similar situation by following the decision of the Bangalore Bench of the Tribunal in the case of M/s. Mindteck (India) Ltd., vide I.T.(TP).A.No.70/Bang/2014 dated 21-08-2014. The decision of the Mumbai Bench of the Tribunal in the case of NetHawk Networks India Pvt. Ltd. vide ITA No.7633/M/2012 dated 06-11- 2013 for assessment year 2008-09 has also been relied upon for excluding the said concern from the final set of comparables. 21. On the other hand the Ld. CIT-DR appearing for the Revenue has defended the inclusion of Bodhtree Consulting Ltd., by referring to the discussion in para 14.1 of the order of TPO. As per the TPO, the material on record does not justify the assertions of the assessee that the said concern was engaged in development and sale of software products. The Ld. CIT-DR has opposed the plea of the assessee by referring to the stand of the TPO as contained in his order. 22. We have carefully considered the rival submissions with respect to Bodhtree Consulting Limited. The plea of the assessee is that the said concern is engaged in the sale of software products, apart from considering software services, and that no segmental data i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the assessee brought this fact that this company is engaged in providing open and end to end web solutions, software consultancy, design and development of software, using the latest technologies. Further, the company has identified only one segment i.e software development. Therefore, the Id AR has submitted that this company is functionally not comparable with the assessee and consequently should be excluded from the comparables. 29.2 On the other hand, the Id DR has filed the information collected u/s 133(6) of the I T Act and submitted that as per this information, this company has revenue from ITES activity to the extent of ₹ 2,94,85,528/-. Therefore, this company is a good comparable having functional similarity. 29.3......... 30. We have considered the rival submissions as well as the relevant material on record. The details filed by the Id DR before us has been obtained by the TPO at Hyderabad and not by the TPO of the assessee in the present case. It is stated in the letter dated 5.2.2010 written by the Chartered Accountant of Bodhtree Consulting Ltd to the TPO Hyderabad that the company is providing data cleaning services to clients for wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid p1ro3position, reliance has been placed on the decision of the Bangalore Bench of the Tribunal in the case of 3DPLM Software Solutions Ltd. (supra) which has indeed been rendered in the context of the same comparable, which is the subject-matter of consideration before us, i.e. E-Zest Solutions Limited. 24. We find that the factual assertions made by the assessee before the TPO as well as before us with regard to the functions being performed by EZest Solutions Limited have not been controverted by the Revenue. Ostensibly, E-Zest Solutions Limited is rendering product development services and technology services, and the latter falls in the category of KPO services and the same have not been held by the Bangalore Bench of the Tribunal to be similar to a concern engaged in rendering of software development services, as is the assessee before us. Following the ratio of the decision of the Bangalore Bench of the Tribunal in the case of 3DPLM Software Solutions Ltd. (supra) we hold that E-Zest Solutions Limited is liable to be excluded from the list of comparables for the period under consideration. We hold so. Thus, on this aspect assessee succeeds. Thus, in view of af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same from the list of comparables. In view of the fact that the Co-ordinate Bench of the Tribunal in assessee s own case for A.Y. 2007-08 has held that Helios Matheson Information Tech. is functionally different and there is no material change in the activities of the assessee and the functions of the comparable entity during the impugned assessment year, therefore, we do not find any reason to take a different view. Accordingly, we direct the TPO/Assessing Officer to exclude the same from the list of comparables. 20.4 Infosys Technologies Ltd. : The assessee has sought exclusion of the said company from the list of comparables on account of disparity in scale of work and turnover. The Ld. Counsel pointed out that the said company was excluded from the list of comparable by the Tribunal in assessee s own case for the assessment year 2007-08. The Coordinate Bench had excluded the aforesaid comparable on account of huge disparity between the turnover of Infosys Technologies Ltd. and the assessee. The relevant extract of the order of Tribunal is as under: 34. Now coming to the merit of each case, we find the assessee in its TP study report has included Infosys Techn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has objected to its inclusion on the basis that functionally the company is not comparable. With reference to pages 185-186 of the Paper Book, it is explained that the said company is engaged in development of software products and services and is not comparable to software development services provided by the assessee. The appellant has submitted an extract on pages 185-186 of the Paper Book from the website of the company to establish that it is engaged in providing of I T enabled services and that the said company is into development of software products, etc. All these aspects have not been factually rebutted and, in our view, the said concern is liable to be excluded from the final set of comparables, and thus on this aspect, assessee suc ceeds. 37.1 Similarly, we find the Pune Bench of the Tribunal in the case of PTC Software Ltd., (Supra) has observed as under : 16. The next point made out by the assessee is with regard to the inclusion of items at (9) and (11) namely Helios Matheson Information Technology Ltd., and KALS Information Solutions Ltd. (Seg). The primary plea raised by the assessee to assail the inclusion of the aforesaid two companies from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preceeding assessment year of 2006-07, the said concern was evaluated by the assessee and was found functionally incomparable. For the said purpose, our reference has been invited to pages 421 to 542 of the Paper book, which is the copy of the Transfer Pricing study undertaken by the assessee for the A.Y. 2006-07, and in particular, attention was invited to page 454 where the accept reject matrix undertaken by the assessee reflected KALS Information Solutions Ltd. (Seg) as functionally incomparable. The Ld. Counsel pointed out that the aforesaid position has been accepted by the TPO in the earlier A.Y. 2006-07 and therefore, there was no justification for the TPO to consider the said concern as functionally comparable in the instant assessment year. 19. In our considered opinion, the point raised by the assessee is potent in as much as it is quite evident that the said concern has not been found to be functionally comparable with the assessee in the immediately preceding assessment year and in the present year also, on the basis of the Annual Report, referred to in the written submissions addressed to the lower authorities, the assessee has correctly asserted out that the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a comparable entity. (ii) The second reason for excluding the said company is, it is a super profit making company with operating margin of 57.02% (Before making adjustment for working capital). It has been pointed out that in case of Barclays Technology Centre India (P) Ltd. Vs. ACIT (supra), FCS Software Solutions Ltd. was rejected as comparable on the ground of abnormal profits in assessment year 2008-09. The relevant extract of the order in the case of Barclays Technology Centre India (P) Ltd. Vs. ACIT (supra) is as under: 25. The last point made by the Ld. Representative was for exclusion of M/s. FCS Software Solutions Ltd. from the final set of comparables. The Ld. Representative for the assessee pointed out that the said concern is functionally dissimilar to the activities being carried out by the assessee because the said concern is engaged in the sale of software products as well as ITES activities and further that no segmental details are available. Apart therefrom, it has also been pointed out that during the year under consideration the said concern has earned abnormally high profit margin of 57.02% and for this reason also, it should be excluded from the final set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestigation should be to ascertain as to whether earning of high profit reflects a normal business condition or whether it is the result of some abnormal conditions prevailing in the relevant year. The profit margin earned by such entity in the immediately preceding year/s may also be taken into consideration to find out whether the high profit margin represents the normal business trend. The FAR analysis in such case may be reviewed to ensure that the potential comparable earning high profit satisfies the comparability conditions. If it is found on such investigation that the high margin profit making company does not satisfy the comparability analysis and or the high profit margin earned by it does not reflect the normal business condition, we are of the view that the high profit margin making entity should not be included in the list of comparable for the purpose of determining the arm's length price of an international transaction. Otherwise, the entity satisfying the comparability analysis with its high profit margin reflecting normal business condition should not be rejected solely on the basis of such abnormal high profit margin. 29. The aforesaid discussion of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should not be removed from the list of comparables solely on the ground of super profits. In support of his submissions, the Ld. DR placed reliance on the decision in the case of Maersk Global Centres India Pvt. Ltd. (Supra). In the case of Barclays Technology Centre (P) Ltd., the Co-ordinate Bench before rejecting M/s. FCS Software Solutions Ltd. as comparable had analysed the factors resulting in abnormally high profits of the said company in the assessment year 2008-09. The Tribunal after considering the ratio laid down by the Special Bench in the case of Maersk Global Centres India (P) Ltd. has rejected M/s. FCS Software Solutions Ltd. as comparable entity. Accordingly, we are of the view that since, the company is earning abnormally high profits in the assessment year under consideration as compared to the profits earned in earlier financial year, the said company should not be considered as comparable entity. We direct the TPO/Assessing Officer to exclude the same from the list of comparables, accordingly. 21. Now, we will take up the companies that have been rejected by the TPO as comparable and the assessee has objected to the exclusion of the said comparable entities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 SIP Technologies and Exports Ltd . : The said company has been excluded from the list of comparable by the TPO on the ground that it is a loss making company. The assessee has brought on record the operating margin of the three preceding assessment year of the said company. The same are as under: F.Y. 2005-06 21.09% F.Y. 2006-07 10.12% F.Y. 2007-08 -33.20% The contention of the assessee is that the said company is not a persistent loss making company. Only for the reason that the comparable has suffered loss in one year the same should not be rejected. We find merit in the submission of the Ld. A.R. In the case of Bobst India Pvt. Ltd. Vs. DCIT in ITA No.1380/PN/2010 for A.Y. 2006- 07 the Tribunal has observed that only persistent loss making companies should be held as not good comparable. The Tribunal held that the persistent loss means, continuous loss for more than 3 years. Thus, where the comparable entity is not under persistent loss, the same should not be rejected as comparable. Similar view has been taken in the case of Goldman Sachs (In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.62% Assessee s margin 13.79% 24. The assessee objected to some of the companies selected by the TPO as comparables which are as under: 24.1 Coral Hubs Ltd. (earlier known as Vishal Information Technologies Limited) : The objection of the assessee is that the said company is engaged in E-publishing which is quite different in function from the activities carried out by the assessee. The another objection raised by the assessee is that the operating margin of the said comparables is abnormally high i.e. 51.79%. The Ld. Counsel pointed that in the case of Symphony Marketing Solutions India Pvt. Ltd. Vs. ITO in IT(TP) A.No.1316/Bang/2012, A.Y. 2008-09 decided on 14-08- 2013 it has been held that Coral Hubs is not a good comparable on account of functional disparity as well as on account of abnormally high profits. The relevant extract of the order of Tribunal in the case of Symphony Marketing Solutions Pvt. Ltd. (Supra) is as under: 14. This company is listed at Sl.No.6 of the list of comparable companies chosen by the TPO. As far as this company is concerned, it is seen that this company was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IV. Coral Hub Limited (Earlier known as Vishal Information Technologies Ltd.): 16. The assessee has objected for this company being taken as comparable mainly on the ground that the activities of the company is not only functionally different, but the business model of the company is also different as it sub-contracts majority of its ITES works to third party vendors and has also made significant payments to those vendors. The payments made to vendors towards the data entry charges also supports the fact that the company outsources its works. In the circumstances, it cannot be taken as a comparable to the ITES functions performed by the assessee. Since this company is acting as agent only by outsourcing its works to the third party vendors. In this context, the assessee relied upon the order of the DRP in assessee's own case for the assessment year 2008-09, wherein the DRP, after taking into consideration, the aforesaid aspect, has accepted the claim of the assessee. The assessee further submitted that the Income-tax Appellate Tribunal Mumbai Bench in the case of Asstt. CIT v. Maersk Global Service Centre (India) (P.) Ltd. [2011] 133 ITD 543/16 taxmann.com 47 (Mum.), a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent segment and not to ITES segment is not acceptable. Though it is without any dispute that the software development would require skilled employees and, therefore, the employee cost would definitely be more than 25% of the total expenses, it cannot be said that the said filter is not applicable to ITES segment, where comparably less skilled employees are employed. In the ITES segment, the entire work is to be done by the employees and, therefore, even though they may be less skilled compared to software development segment, the number of employees would definitely be more and thus the employee cost would be high and thus application of employee cost filter to the ITES sector is also justified. In view of the same, we direct the TPO to apply the employee cost filter to exclude companies with employee cost of less than 25% from the list of comparables for the computation of ALP. 17. Applying the aforesaid decisions, we are of the view that Coral Hubs Ltd. cannot be considered as a comparable. We are of the considered view that the assessee company is functionally different from Coral Hub Limited. Both the companies have different operating models, thus there cannot be any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tedly not engaged in geospatial services. The activities of the assessee are at variance from that of Genesys International Corporation Ltd. Thus, the said company is functionally different from the assessee, hence is liable to be excluded from the list of comparables. 24.3 Cosmic Global Ltd. : Initially the assessee had included the said company in the list of comparable. Subsequently, the assessee objected to the inclusion of same. The Ld. Counsel for the assessee pointed that in the case of Parexel International India Pvt. Ltd. (supra) the Tribunal has held that the company is not functionally comparable. The relevant extract of the order of Tribunal is as under: 14. As regards the selection of Cosmic Global Ltd. as comparable, it is observed that this company was also excluded by the Tribunal from the list of comparables in the case of Excellence Data Research Services P. Limited (supra), following the decision of the Delhi Bench of the Tribunal in the case of Mercer Consulting (India) Ltd. V/s DCIT (vide order dated 6th June, 2014 in ITA No.966/Del/2014), wherein M/s. Cosmic Global Limited was not accepted as comparable by the Tribunal for the following reasons given i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is, therefore, directed to be excluded from the list of comparables. 15. As pointed out by the learned counsel for the assessee from the relevant details placed at page No.391 of his paper-book, substantial work was outsourced by M/s. Cosmic Global Limited in the relevant year, which is evident from the fact that the outsourcing cost was 57% of the total Operating Cost of the said company. Keeping in view this position clearly evident from the relevant details furnished on record, which is not disputed even by the Learned Departmental Representative, we respectfully follow the decision of the coordinate Bench of the Tribunal in the case of Mercer Consulting India P. Ltd. (supra) and Excellence Data Research P. Ltd. (supra) to hold that M/s. Cosmic Global Limited cannot be considered as comparable with the assessee-company. Accordingly, the Assessing Officer is directed to exclude the same from the list of comparables. We may clarify here for the sake of completeness that the Learned Departmental Representative has pointed out at the time of hearing before us that M/s. Cosmic Global Limited was initially selected by the assessee company itself as a comparable in the TP study ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgin of the assessee from Business Support Services is 14.22%. The assessee had initially selected 18 companies as comparables by considering the financial results of 3 years. The list of the companies selected by the assessee is as under: 26. The TPO rejected the three yeas criteria and selected the comparable on the basis of financial results of the entity relating to assessment year 2008-09 alone. The TPO rejected some of the companies considered by assessee as comparable entities and introduced some new companies in the list of comparable entity. The final list of 9 companies considered by the TPO is as under: Sr. No. Name of the comparable OP/OC (%) as per show cause notice OP/OC (%) as per assessee s reply after working capital adjustment 1 In-House Production Ltd. 18.97 0.80% 2 ICRA Management Consulting Services Ltd. 6.22 - 1.34% 3 ICRA Online Ltd 6.84 5.77% 4 IDC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SMEs in project identification, project counseling, prefeasibility reports, detailed project feasibility studies, infrastructure planning, market assessment, expansion, diversification and turnaround .strategies, energy audits, waste minimization, environment impact assessment, valuation of fixed assets, skill development etc. Extending handholding to micro entrepreneurs through its 'escort services' is APITCO's USP. APITCO's services to institutions engaged in industrial and entrepreneur ship development relate to undertaking area development studies, preparation of perspective plans, carrying out evaluation studies, industry specific studies, project appraisals, project management, asset valuation, HRD interventions, capacity building, livelihood support strategies and micro enterprise development. APITCO s core clientele comprises of SMEs, private corporate, industry promotion agencies, infrastructure development agencies, commercial banks, financial institutions, multilateral funding agencies, Government Departments and NGOs. 27.2 The Co-ordinate Bench of the Tribunal in the case of Ciena India Pvt. Ltd. vs. DCIT (Supra) had occasion to decide, whether Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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