TMI Blog2020 (8) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... e - We find the DRP reproduced the Circular issued by the CBDT which clearly shows that the CBDT explained 15 categories which fall under the IT enabled services products or services amongst which medical transcription is treated as IT enabled services. Therefore, we find no infirmity in the order of AO/DRP in inclusion of Cosmic Global Limited in the final set of comparables. Thus, ground raised by the Revenue are dismissed. Include Microgentics Systems Limited in the final set of comparables - For medical transcription, training will be given by the Doctors and they are not at all engaged in medical transcription activity and the services of assessee are requires highly skilled personnel because it is engaged in designing. We note that the DRP having found the medical transcription services which represents IT enabled services treated the activities of Microgentics Systems Limited is functionally similar to the assessee and directed the TPO to include Microgentics Systems Limited as comparable in the final list of comparables. Thus, we find no infirmity in the order of DRP/AO. Accordingly, ground raised by the Revenue are dismissed. Rejection of Eclerx Services Limited - Ec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... final set of comparables. 6. Before us, the ld. DR drew our attention to the Seventeenth Annual Report of Coral Hub Limited particularly at page 1822 of paper book and submitted the Coral Hub Limited digitization activity took a dip due to very unstable condition in Europe where most of the clients are based. The financial crisis over the past couple of years which is affecting Europe has weakened the financial strength of the publishers and cut in the budget by European Government especially for digitization of records has really put into a quagmire and look for alternative business models in the digitization field. At the same time converting and shifting from print media to digital media also going slow as publishers are very cautious about the digital readable hardware development in terms of technology and easy availability at affordable prices. The publishers are quiet happy with slow development and are doing nothing to speed it up. The trend to digitize back titles is going slower than expected last year. The Coral Hub Limited finds this as another opportunity to develop alternative business model especially in the space for content development for companies which desir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of Vodafone India Services Vs. DCIT [TS 95 ITAT 2013 (Mum) TP] which held that Cosmic Global Limited was mainly engaged in translation business in addition to medical transcription, accounts BPO and consultancy and it is not in the nature of IT enabled services and thereby rejected Cosmic Global Limited as not functionally comparable to the assessee. Before the TPO, the assessee contended that by taking reference to CTBT Circular No. 890(E) dated 26-09-2000 and submitted that the CBDT explained the medical transcription is IT enabled services. The DRP considering the same in its order at page 23 vide para 7.34 held Cosmic Global Limited is functionally comparable with the assessee and directed the AO/TPO to include the same in the final set of comparables. We find the DRP reproduced the Circular issued by the CBDT which clearly shows that the CBDT explained 15 categories which fall under the IT enabled services products or services amongst which medical transcription is treated as IT enabled services. Therefore, we find no infirmity in the order of AO/DRP in inclusion of Cosmic Global Limited in the final set of comparables. Thus, ground Nos. 3 and 4 raised by the Revenue ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of comparables. Thus, we find no infirmity in the order of DRP/AO. Accordingly, ground Nos. 5 and 6 raised by the Revenue are dismissed. 13. Ground No. 7 is general in nature, hence, requires no adjudication. 14. In the result, the appeal of Revenue is dismissed. CO No. 21/PUN/2018 15. Ground Nos. 1 and 2 raised by the assessee are general in nature, hence, require no adjudication. 16. In respect of Ground Nos. 3, 5, 8, 9, 10 and 11, the ld. AR submits that the assessee is not interested to prosecute the same and prayed to dismiss the same as not pressed. Accordingly, the Ground Nos. 3, 5, 8, 9, 10 and 11 raised by the assessee are dismissed as not pressed. 17. Ground No. 4 raised by the assessee challenging the action of AO/TPO/DRP in not rejecting the Eclerx Services Limited as comparable. 18. Heard both the parties and perused the material available on record. We note that the assessee is seeking rejection of Eclerx Services Limited. We note that the TPO in its order at pages 631 to 635 and the DRP at pages 45 to 49 of the paper book has included Eclerx Services Limited on the basis of that the assessee is a KPO as it is engaged into engineering de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this issue and perused the orders of the revenue authorities and the Paper Book filed before us. We also considered the judgemental laws placed before us. On hearing both the sides, we find the core issue for adjudication is that if company becomes a good comparable merely because the same is engaged in KPO activity like the assessee. We find, now it is decided at the level of the Hon ble Delhi High Court that the similarity of functions/characteristic of services rendered by the assessee/comparables for identifying the good comparables assessee s importance. It is an undisputed fact, in the present case, that the DRP/TPO/Assessing Officer are categorically explained that with the similarity in grouping of KPO companies, the assessee s company is good enough for identifying a good comparable. This view is not approved by the various decisions cited by the ld. Counsel for the assessee before the Tribunal. We have already extracted the relevant portion from the judgements of the Hon ble High Court as well as the orders of the Pune Bench of the Tribunal that for identifying a good comparable, one has to go into the characteristic of the functions rendered by the comparables. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The DRP held the income in the nature of foreign exchange gains as it is not derived directly from the normal business operations which arises due to the fluctuations in the foreign exchange and is to be treated as nonoperating income. If the foreign exchange gain is treated as non operating income that there is a loss for the BPO services segment for all A.Ys. 2009-10, 2010-11 and 2011-12. For definition of operating revenue is provided in clause (k) of Rule 10A of Income Tax Rules, 1962 which is reproduced here-in-below : The revenue earned by the assessee in the previous year in relation to the international transaction during the course of its normal operations is operating revenue. Under sub-clause (ii) of clause (k) of Rule 10A provides exclusion of income arising on account of foreign currency fluctuations in operating revenue. 26. In view of the above, there is no dispute that foreign exchange gain is treated as non operating revenue. The assessee is persistent loss making company. Therefore, we find no infirmity in the order of AO in excluding R Systems International Limited on account of persistent loss making company as comparable to the assessee and thus, grou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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