TMI Blog2016 (8) TMI 1466X X X X Extracts X X X X X X X X Extracts X X X X ..... re search, graphic design and submissions to journals and congresses. AR submitted that as the assessee is an IT company, Jeevan Scientific Technologies Ltd. cannot be considered as comparable to the assessee s case. There is force in the argument of the ld. AR. There is no dispute that Jeevan Scientific Technologies Ltd. is being ITES, it cannot be compared to the medical prescription company. Accordingly, we are inclined to direct the TPO to exclude Jeevan as comparable to the assessee s case. The assessee pleaded before us that Microgenetics Systems Ltd. to be considered as comparable to the assessee s case and should be included as comparable. We considered the argument of the ld. AR. The turnover of Microgenetics Systems Ltd. is very low i.e. ₹ 62.5 crores, whereas the assessee s turnover is ₹ 600 crores and not proper to compare. On this basis, we are inclined to hold that Microgenetics Systems Ltd. is not comparable to the assessee s case. This argument is rejected. Disallowance u/s.14A - HELD THAT:- Admittedly, the assessee filed documents before the DRP regarding the computation of disallowance u/s.14A r.w.r 8D However, there is no discussion by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ables in the ITeS segment. 5. Adoption of functionally dis-similar comparables : The Learned TPO/AO and the Hon ble DRP have erred in inclusion of functionally dis-similar companies for the purpose of determination of ALP under section 92C of the Act. 6. Non-inclusion of valid comparables: The Learned TPO/AO and the Hon ble DRP have erred in facts by not including appropriate comparable companies selected by the Appellant without providing appropriate reasons for doing the same. 7. Use of single year data (which was not available at the time of maintaining TP documentation). The Learned TPO/AO and the Hon ble DRP have erred in law and in facts, by determining the arm s length margin/price using only for the financial year (FY) 2009-10 data, as against multiple year data covering the subject year and two prior years for the purpose of analysis adopted by the Appellant. 3. At the time of hearing, the ld. AR submitted that ground Nos. 5 6 are to be adjudicated and it would meet the ends of justice and other grounds are not to be adjudicated. 3.1 We accept the prayer of the ld. AR and we consider only ground Nos.5 6 out of ground Nos. 2 to 7. 3.2 Groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total operating cost of ₹ 164,31,12,638/-) under SDS segment; and ₹ 2,82,84,751/- (being the additional profit margin computed at additional 7.95% of the total operating cost of ₹ 35,57,83,034/-) under ITES segment, totaling to total upwards adjustments of ₹ 17,66,57,822/-. 4.1 The TPO considered the following comparables : Particulars under SDS segment under ITES segment 1.Total comparables selected by assessee 24 8 2. Comparables rejected by The TPO (out of 1 above) 12 5 3. Comparables accepted By the TPO (out of 1 above) 12 3 4. Further comparables Selected by the TPO 6 1.Accelya Kale Solutions Ltd. 2.Aftex Ltd. 3.Kals Information System Ltd. 4.Kirteel Soft TechnologiesLtd. 5.Spry Resources India P. Ltd. 6. Taksheel Solutions Ltd. 1. Coral Hub Ltd. 2. Nittany Outsourcing Services Pvt. Ltd. 3. Jeevan Scientific Technologies Ltd. 4.Fortune Infotech Ltd. 5. Total number o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... national transaction for determining an ALP. The methodology necessitates that the comparables must be in material aspects. The comparability must be judged on factors such as product/service characteristics, functions undertaken, assets used, risks assumed. This is essential to ensure the efficacy of the exercise. There is sufficient flexibility available within the statutory framework to ensure a fair ALP. 37. Applying the aforesaid principles to facts of the present case, it is once again clear that both Vishal and eClerx could not be taken as comparables for determining the ALP. Vishal and eClerx, both are into KPO Services. In Maersk Global Centers (India) Pvt. Ltd. (supra), the Special Bench of the Tribunal had noted that eClerx is engaged in data analytics, data processing services, pricing analytics, bundling optimization, content operation, sales and marketing support, product data management, revenue management. In addition, eClerx also offered financial services such as real-time capital markets, middle and back-office support, portfolio risk management services and various critical data management services. Clearly, the aforesaid services are not comparable with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bles to provide integrated solution for the management of clinical research data right from inception to completion. The assessee s world-class team of highly-qualified and experienced scientists, clinicians and multidisciplinary staff are committed to providing quality solutions across a wide range of therapeutic areas. The assessee s commitment to quality and customer-focused approach, bundled with outstanding expertise distinguishes us from others. The assessee manages the projects based on the clients requirements and provide customized solutions. The assessee is having immense talent pool to reliably meet the needs of clients and deliver well within timelines. The services at Jeevan Scientific Technologies Ltd. include Medical Writing, Clinical Data Management, Biostatistics and other services including copy editing, proofreading, formatting, quality assurance, literature search, graphic design and submissions to journals and congresses. Further, the ld. AR submitted that as the assessee is an IT company, Jeevan Scientific Technologies Ltd. cannot be considered as comparable to the assessee s case. In our opinion, there is force in the argument of the ld. AR. There is no disp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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