TMI Blog2019 (2) TMI 1707X X X X Extracts X X X X X X X X Extracts X X X X ..... e excluded on the basis of high turnover, the tolerance range of turnover of 10 times on both the sides of assessee's turnover has to be seen. Even the Tribunal in the order against which the appeal was filed, did not proceed on application of turnover filter with any such condition. Therefore, it is not correct to say that for application of turnover filter, tolerance range of turnover of 10 times on both the sides of assessee's turnover has been laid down by the Hon'ble High Court. The Hon'ble High Court held that the order of Tribunal is correct and calls for no interference and further held that no question of law arose for consideration. The decision rendered in the case of Autodesk (I) P. Ltd. [ 2018 (7) TMI 1862 - ITAT BANGALORE] of the Tribunal after analysing every conflicting views has ultimately concluded that the law laid down in the case of Genesis Integrated Systems (I) P. Ltd. [ 2011 (8) TMI 952 - ITAT BANGALORE] has to be followed. - IT(TP)A No.101/Bang/2016, CO No.08/Bang/2017 - - - Dated:- 15-2-2019 - Shri N.V. Vasudevan, Vice President And Shri B.R. Baskaran, Accountant Member Revenue by: Shri Pradeep Kumar, CIT(DR)(ITAT), Beng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also there being no correlation between turnover and profit margin. 7. The assessee is a wholly owned subsidiary of Northern Trust Corporation (NTC). The assessee provides Information Technology enabled Services (ITeS) such as back office services in respect of Northern Trust Group Global Business. It is not in dispute that in respect of ITeS rendered by the assessee to Northern Trust Group Global Business, it was international transaction with an Associate Enterprise (AE) and the arm's length consideration received by the assessee for rendering ITeS to its AE had to satisfy the arm's length price (ALP) as laid down in section 92 of the Act. The assessee received a sum of ₹ 328,47,56,647 as consideration received from its AE for rendering ITeS. To justify the price received in the international transaction as at arm's length, the assessee filed Transfer Pricing analysis adopting TNMM as the Most Appropriate Method (MAM) of determining the ALP. The Profit Level Indicator (PLI) chosen for the purpose of comparison was Operating Profits to Operating Costs. The OP to OC of the assessee was as follows:- Particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action should be considered as at arm's length. 10. The TPO, to whom reference was made by the AO u/s. 92CA of the Act, accepted only one comparable company chosen by the assessee viz., Cosmic Global Ltd., as a comparable company. The TPO on his own selected 9 other companies and after allowing the working capital adjustment, determined the shortfall in the price received by the assessee compared to ALP at ₹ 23,70,73,748 and added the said sum to the total income of the assessee as follows:- Sl.No. Company Name Unadjusted Margins FY 2010-11 1. Accentia Technologies Ltd. 28.89% 2. Acropetal Technologies 26.86% 3. Cosmic Global Ltd. 9.81% 4. e43 Healthcare 12.38% 5. ICRA Online 34.21% 6. Jeevan Scien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as small companies, (ii) companies with more than 200 crores, but less than 2000 crores being categorised as medium companies; and (iii) companies with above ₹ 2000 crores being categorised as large size companies. The assessee pleaded that companies with less than ₹ 200 crores turnover should be excluded as assessee's turnover was in the range of ₹ 328 crores being a medium size company. 13. On the above objection, the DRP accepted the stand of the assessee observing as follows:- 3.1 One of the objections of the assessee is that the TPO has not considered the turnover and size of the comparables selected by it. Similar objection was raised by the assessee for AY 2010-11 before DRP and in its order DRP had followed the decision of Hon'ble Bangalore ITAT in the case of Genisys Integrating Systems (ITA No. 1231(Bang)/2010) where a guideline in the matter of turnover filter was suggested and that the categorization of software companies in the Dun Brad Street Study be adopted as a method of classification of companies by size. According to this study, 3 categories of firms were identified i.e. small with turnover less than ₹ 200 cro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 12.38% 5 I C R A Online Ltd.(seg) 156,691,000 11,67,49,267 34.21% 6 Jeevan scientific technology Ltd 1,721,400,000 1,00,86,52,592 70.66% 7 Infosys B P 0 Ltd. 11,291,147,909 9,57,73,24,546 17.89% 8 Jindal Intellicom (capitaline) 390,358,799 35,12,69,641 11.13% 9 Mindtree Ltd (seg) 5,653,000,000 5,10,39,05,999 10.76% 10 iGate Global solutions Ltd 11,845,540,000 9,47,11,65,000 25.07% Average Margin 24.77% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessee-company whose turnover is more than ₹ 27 Crores. 16. The decision of the learned Tribunal in the other cases referred to by the learned counsel for the Appellant-Assessee would not render the findings of the learned Tribunal in the present case nugatory or perverse for the reason that analyzing of the comparables may be in a different context and the same need not be blindly or generally adopted in all cases, irrespective of the context or the circumstances calling upon for the inclusion/exclusion of the comparables which absolutely is a decision to be taken by the learned Tribunal as last fact finding authority. This view is supported by our judgment dated 25.08.2018 on Softbrands case (supra), which we find it appropriate to quote hereunder to its relevant extent:- 17. He submitted that the question of law which the assessee sought to raise before the Hon'ble High Court was justification for excluding Mercury Outsourcing Management Ltd. as a comparable company. It is in that context that the aforesaid decision was rendered by the Hon'ble High Court. He pointed out that the Tribunal in excluding Mercury Outsourcing Management Ltd., had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce range of turnover of 10 times on both the sides of assessee's turnover has been laid down by the Hon'ble High Court. The Hon'ble High Court held that the order of Tribunal is correct and calls for no interference and further held that no question of law arose for consideration. The decision rendered in the case of Autodesk (I) P. Ltd. (supra) of the Tribunal after analysing every conflicting views has ultimately concluded that the law laid down in the case of Genesis Integrated Systems (I) P. Ltd. (supra) has to be followed. The following were the relevant observations of the Tribunal:- 17.8. In view of the above conclusion, there may not be any necessity to examine as to whether the decision rendered in the case of Genisys Integrating (supra) by the ITAT Bangalore Bench should continue to be followed. Since arguments were advanced on the correctness of the decisions rendered by the ITAT Mumbai and Bangalore Benches taking a view contrary to that taken in the case of Genisys Integrating (supra), we proceed to examine the said issue also. On this issue, the first aspect which we notice is that the decision rendered in the case of Genisys Integrating (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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