TMI Blog2019 (8) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal, we uphold the decision of the learned Commissioner (Appeals) in excluding this company as a comparable, though, on the basis of our own reasoning. Cepha Imaging Pvt. ltd. - From the facts and materials placed on record including the annual report of this comparable, it is evident, the company is in the business of development and sale of software. That being the case, it is functionally different from the assessee as the assessee is admittedly an ITeS provider. The Co ordinate Bench in DBOI Global Services Pvt. Ltd. [ 2016 (8) TMI 1292 - ITAT MUMBAI] having found that the company is engaged in software development service, excluded it as a comparable. Similar view was expressed by the Tribunal in other decisions cited by the learned Authorised Representative. Since, the aforesaid decisions are for the very same assessment year and the facts on the basis of which the company was excluded as a comparable are more or less common, respectfully following the aforesaid decisions of the Tribunal, we uphold the decision of the learned Commissioner (Appeals) on the issue. Assessee has furnished a chart before us computing the margin of the rest of the comparables after exclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. The services rendered by the assessee are of Call Centre and other back office services. During the year under consideration, the assessee received an amount of ₹ 78,14,49,071, from the provision of ITeS to the AE. In the transfer pricing study report, the assessee benchmarked the aforesaid transaction by applying Transactional Net Margin Method (TNMM) as the most appropriate method with Operating Profit/Total Cost (OP/TC) as the Profit Level Indicator (PLI). By undertaking a search process, the assessee selected 22 companies as comparables. Since, the PLI of the comparables selected was within 5% of the margin shown by the assessee @ 13.09%, the transaction with the AE was claimed to be at arm's length. The Transfer Pricing Officer, however, did not accept the benchmarking of the assessee, though, he agreed that TNMM is the most appropriate method. He rejected 16 out of 22 comparables selected by the assessee. Having done so, the Transfer Pricing Officer proceeded to select fresh comparables and ultimately short listed 11 companies as comparables with average PLI of 26.88%. Accordingly, he made an adjustment of ₹ 9,52,82,885, to the arm's length price of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her, he submitted, the reasoning of learned Commissioner (Appeals) while rejecting this company is unacceptable, as, the Box Plot method is based on the Inter Quartile range which is not recognized in the statute. Thus, she submitted, the decision of learned Commissioner (Appeals) is not correct. 9. The learned Counsel for the assessee submitted, though, on the basis of insufficient data available in the public domain, assessee has selected this company as comparable in the transfer pricing study report, however, the company is not functionally similar to the assessee. He submitted, the annual report of the company clearly reveals that a major portion of the work is outsourced to third parties which is evident from the low employee cost of the company. Whereas, the assessee does the work itself. Therefore, the business model of the assessee and the aforesaid comparable are totally different, hence, cannot be treated as comparable. In support of such contention, he relied upon the following decisions: i) DBOI Global Services Pvt. Ltd. v/s ACIT, [2016] 74 taxmann.com 83 (Mum.) (Trib.); ii) ACIT v/s Hapag Lloyd Global Services Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn reasoning. CEPHA IMAGING PVT. LTD. 12. Objecting to the exclusion of this company, the learned Departmental Representative relied upon the observations of the Transfer Pricing Officer. 13. The learned Counsel for the assessee submitted, this company cannot be treated as comparable, as it is engaged in the development in sale of computer software. Thus, he submitted, learned Commissioner (Appeals) was correct in rejecting this company as a comparable. In support, he relied upon the following decisions: i) DBOI Global Services Pvt. Ltd. v/s ACIT, [2016] 74 taxmann.com 83 (Mum.) (Trib.); ii) ACIT v/s Hapag Lloyd Global Services Pvt. Ltd., [2013] 34 taxmann.com 241 (Mum.) (Trib.) and iii) ACIT v/s Maersk Global Services Centre India Pvt. Ltd., [2011] 16 taxmann.com 47 (Mum.) (Trib.). 14. We have considered rival submissions and perused material on record. From the facts and materials placed on record including the annual report of this comparable, it is evident, the company is in the business of development and sale of software. That being the case, it is functionally ..... X X X X Extracts X X X X X X X X Extracts X X X X
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