TMI Blog2018 (1) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... g grounds have been raised in this appeal: 1. On the facts and in the circumstances of the case and in law, the assessment order passed by the Learned Assessing Officer ( Ld. AO ) is bad in law. 2. On the facts and in the circumstances of the case and in law, the learned Transfer Pricing Officer ('Ld. TPO') erred in giving effect to the directions of the Hon'ble DRP ('Ld. DRP') on findings which are erroneous in law, contrary to the facts and based on mere conjectures and surmises. 3. On the facts and in the circumstances of the case and in law, the Ld. DRP, without giving any cogent reasons, erred in characterizing the provision of engineering design services ('EDS') by the Appellant as that of information technology enabled services ('ITeS') without appreciating the fact that the Appellant is a service provider involved in the provision of EDS. 4. Without prejudice to the above, the Ld. AO/Ld. TPO based on directions from the Hon'ble DRP erred in enhancing the income of the Appellant by INR 22,983,602 holding that the international transaction of the Appellant pertaining to provision of EDS does not satisf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 4.11. ignoring the business/ commercial reality by not allowing a risk adjustment to the Appellant; 4.12. The Id. AO/ Id. TPO erred in rejecting the additional comparables provided by the Appellant even though they are comparable to the Appellant in terms of functions performed, assets employed and risks assumed. 5. On the facts and in the circumstances of the case and in law, the Ld. DRP erred in proposing to initiate penalty proceedings under section 271(l)(c) of the Act for concealment of particulars of income and for furnishing inaccurate particulars thereof. 6. The Ld. DRP has grossly erred on facts and in law by proposing to compute interest under sections 234A, 234B, and 234C of the Act mechanically and without recording any satisfactory reasons for the same. Further, the return of income has been filed duly on 29/11/2012; hence the interest under section 234A is not valid in law. The Appellant prays that appropriate relief be granted. The above grounds are mutually exclusive and are without prejudice to each other. The appellant craves leave to add, amend, alter, vary, omit, substitute, withdraw, modify or delete all or any of the Groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee selected 7 comparables having average OP/TC at 11.89% in comparison to the assessee s margin at 11.27%. However, the TPO during the course of proceedings revisited the economic analysis of the international transaction and proposed the adjustment by changing the set of comparables and computing their margin. The TPO rejected 3 comparables selected by the assessee and retained 4 in the final set of following 14 comparables: S. No. Company's Name Average OP/TC 1 Accentia Technologies Ltd. 11.95% 2 Acropetal Technologies Limited (Engineering Design Service) 18.30% 3 B N R Udyog Ltd. 40.62% 4 Cades Digitech Private Limited 1.52% 5 e4e Healthcare Services Private Limited 19.85% 6 Eclerx Services Ltd. 58.40% 7 Geometric Ltd. -0. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revised the earlier adjustment of ₹ 4,32,63,688/- to ₹ 2,29,83,602/-. Accordingly, the AO made the said adjustment in the income declared by the assessee and worked out the total income of the assessee at ₹ 7,12,88,722/-. 7. Being aggrieved the assessee is in appeal. During the course of hearing, the ld. Counsel for the assessee at the very outset stated that this issue is squarely covered vide order dated 22.08.2017 in ITA No. 436/Del/2016 for the assessment year 2011-12 (copy of the said order was furnished which is placed on record). 8. In his rival submissions, the ld. CIT Dr although supported the impugned order passed by the AO but could not controvert the aforesaid contention of the ld. Counsel for the assessee. 9. After considering the submissions of both the parties and perusing the material available on the record, it is noticed that the facts for the year under consideration are similar to the facts involved in ITA No. 436/Del/2016 for the assessment year 2011-12 wherein the identical issue has been set aside to the AO/TPO for fresh determination of the ALP of the international transactions of provisions of engineering and design and related ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nual report of this company for the year under consideration, whose copy has been placed on pages 500 onwards of the paper book. The Profit Loss Account of this company is available at page 542 from which it can be seen that there is income from Sales and services to the tune of ₹ 108.31 crore. Schedule 8 gives a brief description of such Income as including Medical transcription, Billing and collections, Income from coding, Interest on FD and Income from exchange fluctuation. Thus, income has arisen in India not only from Services , but from sales as well. Page 552 of the paper book indicates that: this company has only one segment of activity, namely, healthcare management. Page 530 discloses that apart from services, this company is earning income from Products as well. Since this company is engaged in sale of products apart from rendering IT enabled services and both these components of income lie in one segment, it is not possible to bifurcate income from IT enabled services from the common pool of Products and services, so as to make comparison with the assessee s income. Respectfully following the Tribunal order passed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise of transaction processing and technical services. Transaction processing includes the broad spectrum of activities involving the processing, collections, customer care and payments in relation to the services offered by Citigroup to its corporate and retail clients. Technical services involve software testing, verification and validation of software at the time of implementation and data centre management activities. 16. The assessee has also made available Annual report of this company for the immediately preceding assessment year. The principal activities of the company have been set out at page 105 of the Annual report for the preceding year, which are identical to those for the instant year. Since the Tribunal, for the immediately preceding year, has held this company to be functionally different from that of the assessee, respectfully following the precedent, we direct the exclusion of this company on account of functional dissimilarity as the nature of activity carried on by the assessee during the year also remains similar to that done for the preceding year. ( iv) TCS E-serve International Ltd. 17. The TPO included this company in the final roll of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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