TMI Blog2019 (3) TMI 1815X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out that there is difference in the functions performed between the assessee company and M/s Excel Infoways Ltd. In view of the above, we agree with the contentions of the assessee that M/s Excel Infoways Ltd cannot be considered as a comparable company in the hands of the assessee. M/s R System International Ltd - We notice that the assessee has collated the financial results of the above said company for the financial year 01-04-2011 to 31-03- 2012. Further the details furnished by the assessee also show that this company cannot be categorised as persistent loss making company. Hence both the reasons given by the TPO to exclude this company would, in our view, fail. However the details furnished by the assessee require examination at the end of AO/TPO. Accordingly we restore this issue to the file of the AO/TPO for examining the details furnished by the company and if no fault is found with them, then the above said company should be considered as a comparable company. ALP of international transactions requires re-examination. Accordingly we restore the same to the file of AO/TPO for examining them afresh in the light of discussions. - IT(TP)A No. 2299/Mum/2017 - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccordingly he submitted that the services provided by the assessee company are totally different from the services rendered by M/s. Excel Infoways Ltd. Accordingly, he that the functions performed by the assessee and the above said company are totally different. He further submitted that there are further differences between the assessee and the above said company, viz., (a) the entity level of employee cost of M/s. Excel Infoways Ltd., is around 13%; while employee cost of the assessee-company is above 54%. (b) the assessee is a captive service provider and is risk free, whereas M/s. Excel Infoways Ltd., has been providing services to third parties, where risk element is more. (c) the profitability of M/s. Excel Infoways Ltd., is very much fluctuating and the profit levels are declining over the years substantially. The Ld A.R submitted that all these aspects have been considered by the Pune Bench of the Tribunal in the case of M/s. Ocwen Financial Solutions Private Limited Vs. ACIT in ITA No. 2669/PUN/2016, dt. 21-01-2019 and the Tribunal, by following the decision rendered by the another Bench in the case of Emerson Climate Technologies (India) Pvt. Ltd., Vs. DCIT in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 267.31% 2010-11 238 .71%. 2011-12 41.48% 2012-13 75.70% 2013-14 30% 2014-15 2% 19. We find that the Tribunal in assessee's own case in assessment years 2011-12 2012-13 vide para 16 17 of the order of Tribunal has excluded Excel infoways Ltd., because of its fluctuating margins shown by the said concern. The Tribunal held that the said concern i.e. Excel Infoways Limited which is in the process of closing down its ITES segment and also because of the factum of fluctuating margins, could not be selected as functionally comparable to the assessee. Following the same parity of the reasons, we hold that the said concern i.e. Excel Infoways Limited, because of different factors and also fluctuating to be excluded from final set of comparables. Accordingly, we h ld The Assessing Officer is directed to recompute mean margin of the comparables and determine ALP of the international transactions of provision of Oracle support services (ITes) by the assessee to its AEs aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (INR'000) Revenue 204,161.34 203,526. 39 76,096.9 5 76,098. 54 53, 792. 12 22,994. 38 Operating, cost 43986.99 50,751.2 4 55,991.5 7 47,539. 99 41,355. 78 22,895. 57 Operating Profit 160,174, 35 152,775. 14 23,105.3 8 28,558. 55 11,436. 34 98.81 OP/OC(%) 364.14% 301.30% 41.27% 60.07% 22.65% 0.43% 25. From the above, it is clear that above company does not pass the diminishing revenue filter as adopted by the TPO himself since its revenue has decreased consistently from financial years 2009-10 to 2011-12 ie. including the year under consideration. Further, the above company has super normal profits. We further find the submissions of the assessee that Excel Infoways Ltd. has super normal profits during the cur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arable. Even though the Ld D.R contended that the decision in the case of Emerson Climate Technologies (India) Pvt. Ltd, which was followed by the Pune bench of Tribunal in the case of Ocwen Financial Solutions P Ltd (supra) was related to different assessment year and further the functions of M/s Emerson Climate Technologies (India) Pvt. Ltd. were different, yet we are of the view that the principle laid down in the above said case with regard to diminishing revenue and fluctuating profit can be adopted in the instant case. Further the Ld A.R has pointed out that there is difference in the functions performed between the assessee company and M/s Excel Infoways Ltd. In view of the above, we agree with the contentions of the assessee that M/s Excel Infoways Ltd cannot be considered as a comparable company in the hands of the assessee. 8. The next grievance of the assessee is that the comparable company M/s R System International Ltd should not have been rejected by TPO Ld DRP. The Ld A.R submitted that the TPO has rejected this company only for the reason that (a) It is having different financial year and (b) It is making persistent losses The Ld DRP has also upheld th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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