TMI Blog2019 (1) TMI 1795X X X X Extracts X X X X X X X X Extracts X X X X ..... gineering design service segment and compared the same with the assessee company. As noticed earlier the assessee company is providing routine ITE services to its AEs as a captive service provider. Identical scenario was considered in the case of Symphony Marketing Solution India P. Ltd. [2014 (2) TMI 83 - ITAT BANGALORE] and this comparable has been excluded. Since all the above said four companies have been directed to be excluded, arithmetic mean margin of comparable requires to be redetermined and it also requires to be seen as to whether any addition, if any, is called for or not. Accordingly, we restore the issue of determining mean margin of comparables to the file of the Assessing Officer for examining it afresh by excluding four comparable companies. Disallowance u/s 14A - A.R submitted that the disallowances made while computing the profits and gains of business shall also be eligible for deduction u/s 10A - prayed that the AO may be directed to allow deduction u/s 10A of the Act in respect of disallowance made u/s 14A - HELD THAT:- This claim of the assessee requires examination in terms of the circular issued by CBDT. Accordingly, we restore this issue to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Asit C. Mehta Financial Services Ltd. (Seg.) 5. Crossdomain Solutions Ltd. 6. Datamatics Financial Services Ltd (Seg.) 7. e4e Healthcare Solutions Ltd. 8. Infosys BPO Ltd. 9. Iservices India Pvt Ltd. 10. Maple eSolutions Ltd. 11. R Systems International Ltd (Seg.) 12. Wipro Ltd (Seg.) 13. HCL Comnet System Services Ltd. (Seg.) 14. Accentia Technologies Limited (Seg) 15. E-clerx Services Ltd. 16. Mold-Tex Technologies Ltd. 17. Acropetal Technologies Ltd. (Seg) The Ld A.R submitted that there is no dispute in respect of comparables listed listed in serial No. 1 to 13, i.e., the assessee has also accepted them as valid comparables. He submitted that the assessee is challenging selection of following four comparables:- 1. Accentia Technologies Limited (Seg) 2. E-clerx Services Ltd. 3. Mold-Tex Technologies Ltd. 4. Acropetal Technologies Ltd. (Seg) 5. We shall now deal the above said four comparables. The first comparable in dispute is M/s. Accentia Technologies Limited. The assessee s case is that this company is providing high end services like medical transcription, medical coding, medical billing etc., while the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilable. The absence of the same would make this company incomparable as held by Hon'ble Bombay High Court in the case of Aptara Technology (P) Limited. 8. We noticed that the Coordinate Bench of the ITAT has excluded this comparable in rgw assessee s own case for A.Y. 2011-12 with following observations :- (ii) Accentia Technologies:- From the perusal of the Annual report of this company, it is seen that it is mainly in to rendering of Knowledge processing, outsourcing (KPO) services in the field of Medical. Following services are being provided by this company:- Medical Transcription Discrete Medical Transcription Medial Coding Billing Receivable Practice Management Consultancy Software as a Service (SaaS) The products developed by this company are mainly Instakare- EMR Software, which is into healthcare management systems for Doctors and web based application for the Doctors. Thus, this company is mainly into Medical Transcription and its revenue is from medical transcription, billing and collection and income from coding etc. This company has been found to be un-comparable from c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d it does have any segmental information for its services segment and software products segment. Though the Ld D.R sought time to find out availability of segmental details, yet no such information was provided before us. Accordingly, the absence of segmental information would make this company incomparable as per the decision rendered by Hon'ble Bombay High Court and the Coordinate Bench referred (supra). Accordingly, we direct the Assessing Officer to exclude this company. 11. The next comparable being disputed is E-clerx Services Ltd . The Learned AR submitted that this company is engaged in the provision of high end services in the nature of KPO services like data analytics, data management and process improvement solutions to global enterprise clients. The company has also been named as Leading KPO by Nelson Hall. The Learned AR submitted that, in the Chairman s message, it is stated that the company is a data analytics KPO service provider and cannot be compared to a BPO or an IT offshore company. The Ld A.R submitted that certain extra ordinary events have also taken place in this company during the relevant year. From the management discussion and analysis repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining 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 the services rendered by the Assessee. Further, the functions undertaken (i.e. the activities performed) are also not comparable with the Assessee. In our view, the Tribunal erred in holding that the functions performed by the Assessee were broadly similar to that of eClerx or Vishal. The operating margin of eClerx, thus, could not be included to arrive at an ALP of controlled transactions, which were materially different in its content and value. In Maersk Global Centers (India) Pvt. Ltd. (supra), the Special Bench of the Tribunal had noted the same and had, thus, excluded e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company providing structural engineering services. Further during the year under consideration, extra ordinary events like amalgamation and demerger have taken place. Hence, there is merit in the contentions of the assessee that this company cannot be taken as a comparable. Further this company has been excluded in the case of Dialogic Networks (India) Pvt. Ltd. with following observations :- 52. The tenth comparable under dispute is Mold-Tek Technologies Ltd. Before us, the learned Counsel for the assessee stated that Mold-tek has undergone restructuring in the AY 2008 09 details of the same are provided on Page 307 of Paper book. The scheme of arrangement involving amalgamation between Teck-men Tools private limited (TTPL), the transfer company and Mold-tek, the transferee company and the demerger between Mold-tek, the demerged company and Mold-Tek Plastics Limited (MPL), the resulting company was sanctioned by Hon'ble High Court of Andhra Pradesh vide its order dated 25 July 2008. The appointed date for amalgamation and the demerger were 1 October 2006 and 1 April 2007 respectively. The effective date of the scheme is 26 August 2008, the date on which form 21 was filed w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee while considering this comparable. The Learned AR submitted that this company has two segments namely engineering design service segment and information technology service. However, learned TPO has considered engineering design service segment and accordingly took the view that this company as a comparable one. The Learned AR submitted that the Bangalore Bench of the Tribunal in the case of Symphony Marketing Solution India P. Ltd. (ITA No. 1316/Bang/2012), has held that the company providing engineering design service segment cannot be considered as a comparable to the ITES/BPO functions. Accordingly, learned AR submitted that this comparable should also be excluded. 21. On the contrary, learned DR supported the order passed by learned TPO. 22. We have heard the parties on this issue and perused the record. There is no dispute that this comparable has two segments namely engineering design service segment and Information technology service segment. The Learned TPO has considered engineering design service segment and compared the same with the assessee company. As noticed earlier the assessee company is providing routine ITE services to its AEs as a captive service p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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