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2018 (4) TMI 637

dissimilar with that of assessee and also fails the ITES revenue being more than 75% filter need to be deselected from final list. - ITA No.426/Hyd/2016 And C.O. No.30/Hyd/2016 - Dated:- 11-4-2018 - Smt. P. Madhavi Devi, Judicial Member And Shri B. Ramakotaiah, Accountant Member For The Revenue : Shri K. Srinivas Reddy, DR For The Assessee : Shri S.P. Chidambaram ORDER Per Smt. P. Madhavi Devi, J.M. Both are cross appeals filed by both the assessee as well as the Revenue against the final assessment order dated 21.08.2016 passed u/s 143(3) r.w.s. 92CA(3) r.w.s. 144C(5) of the I.T. Act, 1961. 2. Brief facts of the case are that the assessee company, engaged in providing Data creation, content development and back office data processing services, filed its return of income for the A.Y 2011-12 on 28.11.2011 admitting total income of ₹ 2,77,32,647. During the assessment proceedings, the AO observed that the assessee has entered into international transactions of providing technical support services to its AEs. Therefore, a reference was made to the TPO for determination of the ALP of the said international transaction. The TPO, after going into the profile of the assessee, observ .....

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ces of the case, the learned Assessing Officer [ AO ]I Dispute Resolution Panel [ DRP ] has erred in rejecting the Transfer Pricing Documentation maintained by the Respondent and making an adjustment on the international transactions pertaining to provision of IT enabled Services [ ITeS ]. Selection of uncomparable companies 2. That on the facts and circumstances of the case and in law, the AO/DRP erred in accepting following as comparable companies as selected by the TPO: (i) Accentia Technologies Ltd; and (ii) Crossdomain Solutions Pvt. Ltd. Exclusion of comparable companies not objected by the Respondent 3. That on the facts and circumstances of the case, the learned AO/DRP has erred in excluding Microgenetic Systems Ltd as a comparable, which is not objected by the Respondent before DRP. 4. That on the facts and circumstances of the case, the learned AO/DRP has erred in rejecting the following companies outright, when only margin rectification was sought by the Respondent before DRP, viz, (i) e4e Healthcare Business Services Pvt. Ltd.; and (ii) Mastiff Tech Pvt. Ltd. 5. That on the facts and circumstances of the case, the learned AO/DRP has erred in excluding the above companie .....

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ces to its AEs and therefore, the DRP ought not to have held the assessee to be only a back office service provider to exclude the companies which are otherwise comparable to the assessee. 5. The learned Counsel for the assessee, on the other hand, reiterated the submissions made by the assessee before the authorities below and drew our attention to the document filed in support of the findings of the DRP for exclusion of the companies objected to by the assessee and also for inclusion of some of the comparable companies. 6. Having heard the parties at length and having gone through the material on record, we find that the following are the final comparables taken by the TPO: i) Accentia Technologies Ltd ii) Acropetal Technologies Ltd (Seg.) iii) Cosmic Global Ltd iv) Crossdomain Solutions P Ltd v) e4e Healthcare vi) eClerx Services Ltd vii) Informed Technologies Ltd viii) Infosys BPO ix) Jeevan Scientific Technologies Ltd x) Jindal Intellicome Ltd xi) Mastiff Tech P Ltd xii) Microgenetic Systems Ltd xiii) TCS E-serve Ltd 7. From these companies, we find that both the TPO and the assessee has accepted the following companies as comparable to the assessee: i) Cosmic Global Ltd ii) I .....

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Limited vs. DCIT in ITA Nos. 200 and 435/Hyd/2016 for the A.Y 2011-12, wherein S&P Capital IQ was also providing I.T enabled services like the assessee before us and the TPO therein also had taken the very same 13 companies as comparable to the assessee therein. He has also drawn our attention to the relevant paragraphs of the order of the Tribunal, wherein, these companies have been considered at length and the Tribunal has held that they are not comparable to the assessee therein. Therefore, according to him, on the basis of the said decision, exclusion of these companies is to be upheld. We have gone through the order of the Tribunal, to which the learned A.M. is a signatory. The Tribunal at Paras 12,16, 18 and 23 had held as under: ii. Acropetal Techologies Ltd (Seg): 12. This company is included by TPO but excluded by DRP for the following reasons: Having considered the submissions, on perusal of the annual report, it is noticed by us that the assessing officer has considered the revenue from the engineering design segment. Hon'ble ITAT, Bangalore in IT(TP)/A/1678/Bang/2012 in the case of Global E Business Operations, directed to exclude the above :- 18 -: S&P Capi .....

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son to include as Infosys BPO is functionally different and being excluded in many cases in earlier years as well being unique in its functionality. xiii. TCS E-serve Ltd: 23. TPO included the same in the list of comparables on the reason that the turnover does not have any effect on profitability. DRP excluded the same by stating as under: Having considered the submissions, on perusal of annual report, it is noticed by us from the schedule to the financial statement that the company is engaged in the business of providing information technology - enabled services/business processing outsourcing service, primary to the Citi group companies introduced globally the transaction processing include the broad spectrum of :- 24 -: S&P Capital IQ (India) Pvt Ltd., activities involving the processing, collections, customer care and payments in relation to the services offered by Citi group to its corporate and retail clients. As per the annual report, the company also provide technical services involving software testing, verification and validation of software at the time of implementation and data centre management activities, which makes the company functionally incomparable with the .....

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