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TMI Blog2019 (9) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... lection of four comparables. On the very same issue, the assessee has also raised some additional grounds. The comparables disputed by the assessee are as under:- i) Vishal Information Technologies Ltd; ii) Datamatics Financial Services Ltd; iii) Maple E-Solutions Ltd; iv) Asit C. Mehta. 4. Brief facts are, the assessee Company is a wholly owned subsidiary of Willis Europe B.V., a company incorporated in Netherlands. The assessee basically provides services to its Associated Enterprises (AE) relating to processing of insurance claims, premium and data processing which are in the nature of information technology enabled services (ITeS). During the year under consideration, the assessee provided ITeS services to its AE, which the assessee benchmarked in the transfer pricing study report by using Transactional Net Margin Method (TNMM) as the most appropriate method. For comparability analysis, the assessee selected ten companies as comparables with arithmetic mean of 8.40% as against the margin shown by the assessee @ 10.60%. Thus, it was claimed by the assessee that the transaction with the AE is at arm's length. After perusing the transfer pricing study report as well a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst 59.79% of the assessee. He submitted, the aforesaid facts clearly indicate that this company does not provide service itself but outsources its work to third parties. The learned Counsel submitted, for the aforesaid reason, in case of various other assesses the Tribunal as well as the Hon'ble High Court has held that this company cannot be a comparable. In support of such contention, he relied upon the following decisions:- i) ACIT v/s Trinity Computer Processing India Pvt. Ltd., ITA no.1832/Mum./2011, dated 29.07.2016; ii) Willis Processing Services India Pvt. Ltd. v/s ACIT, ITA no.6877/Mum./2012, dated 22.03.1017; iii) Rampgreen Solutions Pvt. Ltd. v/s CIT, ITA no.102/2015, dated 10.08.2015 (Del.HC); iv) PCIT v/s v/s IHG IT Services India Pvt. Ltd., ITA no.264/ 2016 (O&M), dated 05.12.2016 (P&H); v) CIT v/s PTC Software India Pvt. Ltd., ITA no.732/2014, dated 26.09.2016; vi) Tata Consultancy Services Ltd. v/s ACIT, ITA no.6648/ Mum./2012, etc., dated 18.10.2017; vii) Maersk Global India Pvt. Ltd., ITA no.2594/Mum./2014, dated 16.01.2015 viii) HSBC Electronic Data Processing India Ltd. v/s ACIT, ITA no.1624/Hyd./2010, dated 28.06.2013; ix) Cognizant Techno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Counsel. In fact, different High Courts, including the Hon'ble Jurisdictional High Court, have excluded this company as a comparable due to its distinct and different business model. It is relevant to observe, in assessee's own case in assessment year 2005-06 and 2008-09, this company has been rejected as a comparable due to its different business model. As regards the contention of the Revenue that the company was selected as comparable in assessment year 2007-08, on careful analysis it is found that in assessment year 2007-08, the difference in the business model of the assessee and this company was not brought to the notice of the Tribunal. Thus, in view of the relevant facts and the ratio laid down in the decisions cited before us, we hold that Vishal Information Technologies Ltd., cannot be treated as a comparable to the assessee. 11. The next comparable disputed by the assessee is Datamatics Financial Services Ltd. 12. Objecting to the selection of this company, the learned Counsel for the assessee submitted, the only reason the Transfer Pricing Officer selected this company as a comparable is, it was accepted as a comparable in assessment year 2007-08. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Pricing Officer can be re-examined. 14. We have considered rival submissions and perused the material on record. We have also applied our mind to the decisions relied upon. As could be seen from the impugned order of the Transfer Pricing Officer, while selecting comparables he had applied certain filters which included more than 75% service income filter and less than 25% related party transaction filter. It is the specific contention of the learned Counsel for the assessee that total revenue from ITeS works out to 22% only. Further, it is the contention of the learned Counsel for the assessee that the related party transaction as a percentage of the sales of the company works out to 49%. Thus, according to the assessee, the company fails the aforesaid two filters applied by the Transfer Pricing Officer himself. It is relevant to observe, due to substantial related party transaction this company has been excluded as a comparable in case of various other assessees concerning the very same assessment year. In this context, we may refer to the following decision of the Tribunal, Mumbai Bench:- i) M/s. Stream International Services Pvt. Ltd. v/s ADIT, ITA no. 8997/Mum./2010, date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Inc., ITA no.767/2017, dated 25.09.2017; iii) Tata Consultancy Services Ltd. v/s ACIT, ITA no.6648/ Mum./2012, etc., dated 18.10.2017; iv) M/s. Stream International Services Pvt. Ltd. v/s ADIT, ITA no. 8997/Mum./2010, dated 11.01.2013; v) CRM Services India Pvt. Ltd. v/s CIT, ITA no.618/2012, dated 29.08.2014; vi) Franklin Templeton International Services India Pvt. Ltd. v/s DCIT, ITA no.7472/Mum./2010; dated 10.01.2018; vii) Cummins Turbo Technologies Ltd. v/s DCIT, ITA no.269/Pn./ 2013, dated 29.09.2014; viii) Deutsche Networking Services Pvt. Ltd. v/s DCIT, ITA no. 8972/Mum./2010, dated 14.09.2018; ix) Flextronics Technologics India Pvt. Ltd. v/s DCIT, ITA no.1219/Bang./2011, dated 23.11.2015; x) U.T. Starcom Inc., ITA no.5848/Del./2011; and xi) Capital IQ India Pvt. Ltd. v/s DCIT ITA no.1961/Hyd./2011. 18. The learned Counsel for the assessee submitted, for the purpose of specifically bringing this issue before the Tribunal, the assessee has raised the additional ground. 19. The learned Departmental Representative relied upon the observations of the Transfer Pricing Officer and learned DRP. 20. We have considered rival submissions and perused the material o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the year under consideration, the company has also acquired another company i.e., Nucleus Netsoft and GIS India Ltd. Therefore, due to such extra ordinary event happening during the year, the company cannot be treated as comparable. The learned Counsel submitted, learned DRP was not justified in upholding selection of this company as a comparable simply relying upon the decision of the Tribunal in assessment year 2007-08. In support of his contention, he relied upon the following decisions:- i) M/s. Pentair Water India Pvt. Ltd. v/s ACIT, ITA no.2/ Pnj./2013; ii) M/s. Akamai Technologies India Pvt. Ltd. v/s DCIT, IT(TP)A no.1227/Bang./2010, dated 11.08.2016; iii) HSBC Electronics Data Processing India Ltd. v/s ACIT, ITA no.1624/Hyd./2010; iv) Stream International Services, ITA no.1624/Hyd./2010; v) Goldman Sachs Services Pvt. Ltd. v/s DCIT, ITA no.1423/ Bang./2010, dated 07.09.2015; and vi) M/s. Deutsche Networking Services Pvt. Ltd. v/sDCIT, ITA no.8972/Mum./2010, dated 14.09.2018. 23. We have considered rival submissions and perused material on record. On examining the annual report of the company as well as other materials placed on record, we find that the comp ..... 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