TMI Blog2019 (8) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... for Infosys BPO for AY 2009-10 was INR 70.26 lacs and for 2010-11 INR 69.16 lacs. The corresponding figures for the Assessee are Nil. BPO Infosys incurred significant selling and marketing expenses for the two AYs in question whereas there is no such expense for the Assessee. Mainly the Assessee provides IT services only to its US based AEs whereas Infosys is among top 10 third party BPO companies in India. Even the risk profile is different while Infosys BPO is a full-fledged risk taking enterprise, the Assessee undertakes minimal risks of 100% services provided to its AEs. This Court has in several decisions held in similar circumstances as the present one that Infosys BPO Ltd. cannot be a suitable comparable. - Decided in favour of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mphony Marketing Solutions, Mauritius and Symphony Marketing Solutions, USA. 4. Since it provided captive service to its foreign principal which was its Associated Enterprise (AE), the Assessee furnished a transfer pricing study including a set of 8 comparables with an average profit margin of 14.34% on costs. Thus the margin earned by the Assessee at 15.95% on total costs was treated as being at arm‟s length. The comparables engaged in IT Enabled Services ( ITES‟) were treated as comparables irrespective of the verticals i.e. industries to which it caters by horizontals (functional lines like back office operations, medical transcription etc). 5. For both AYs, the Assessee‟s returns wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irected the exclusion of the comparables agreeing with the Assessee that they were not functionally similar to the Assessee. 9. Mr. Raghvendra K. Singh, learned Senior Standing Counsel for the Revenue, sought to support the view of the DRP that although the turnover of Infosys may have grown 150 times between 1997 and 2010 its profit margins remained more or less the same and, therefore, the mere size of the company did not make it an unsuitable comparable. 10. This Court is unable to accept the above plea. Learned Counsel for the Assessee has placed before the Court a detailed chart which shows dissimilarities between the Infosys BPO and the Assessee on several counts. Infosys provides business process m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of its earlier order for AY 2009-2010 since in that earlier order the ITAT had wrongly proceeded on the basis that the said comparable had to be excluded on the ground of high turnover. It is pointed out that the ITAT in arriving at the said conclusion relied on the decision of this Court in CIT v. Agnity India Technologies Pvt. Ltd. (2013) ITA 1204/2011 . 6. Mr. Zoheb Hossain, learned senior standing counsel appearing for the Revenue refers to the subsequent decision of this Court in Chrys Capital Investment Advisors India (P.) Ltd. v. Deputy Commissioner of Incometax, 2015 376 ITR 183 (Del) to urge that a comparable ought not to be excluded only on the basis of high turnover‟. In particular he refers to the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on the differences. This is partly correct as the Tribunal has stated that Infosys Technologies Ltd. should be excluded from the list of comparables for the reason latter was a giant company in the area of development of software and it assumed all risks leading to higher profits, whereas the respondent-assessee was a captive unit of the parent company and assumed only a limited risk. It has also stated that Infosys Technologies Ltd. cannot be compared with the respondent assessee as seen from the financial data etc. to the two companies mentioned earlier in the order i.e. the chart. In the grounds of appeal the Revenue has not been able to controvert or deny the data and differences mentioned in the tabulated form. The chart has not bee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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