TMI Blog2020 (9) TMI 1051X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Capital Adjustment of only 0.13%. We are of the view that this issue ought to have been raised in a Rectification Application. Assessee has not contended before the DRP that the Working Capital Adjustment ought to be 1.47% instead of 0.13% granted by the TPO while computing the ALP. Therefore Ground No.8 raised is rejected. - IT(TP)A No.487/Bang/2016 - - - Dated:- 25-9-2020 - Shri A.K. Garodia, Accountant Member And Shri George George K, Judicial Member For the Assessee : Shri G.S. Prashanth, C.A. For the Revenue : Shri Harinder Kumar, CIT (D.R) ORDER PER SHRI GEORGE GEORGE K, JM : This appeal at the instance of Revenue is directed against the assessment order dt.27.01.2016, passed under Section 143(3) r.w.s. 144C of the Income Tax Act, 1961 ('the Act'), in pursuance to the directions of Dispute Resolution Panel ( DRP ). The relevant Assessment Year is 2011-12. 2. The learned Authorised Representative at the time of hearing had argued only Ground Nos.7, 8 12. The Ground Nos.7, 8 12 read as follows : 7. a) The authorities below erred in treating Accentia Technologies Ltd. as a comparable company though it is functionally differe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Ltd. originally selected by the appellant needs to be excluded as the company is functionally indifferent on the facts of the case. 4. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 5. In view of the above and other grounds that may be urged at the time of the hearing, the appellant prays that the objections be considered in the interest of equity and justice. 3.1 The learned Counsel for the assessee submitted that the above additional grounds raised are not urged specifically in the original grounds of appeal at the institution of the appeal. However, these grounds do not involve any new investigation of facts otherwise on record. Therefore, it is prayed that the additional ground may be admitted for advancement of substantial cause and justice. In this context, the learned Counsel for the assessee relied on the judgment of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs. CIT reported in 229 ITR 383 (SC) and decision of Hon'ble Mysore High Court in the case of Gundathur Thimmappa Sons Vs. CIT reported in 70 ITR 70 (Mysore). 3.2. The additional grounds raised does not require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Sl. No. Name of the case Operating Income Operating cost OP/OC 1 Accentia Technologies Ltd. 1,069,026,524 82,93,91,898 28.89% 2 Acropetal Technologies 494,399,332 389,706,574 26,86% 3 Cosmic Global Ltd. 62,499,615 5,69,15,360 9.81% 4 E4e Healthcare (capitaline) 613,160,587 54,56,25,872 12.38% 5 I C R A Online Ltd. (Seg.) 156,691,000 11,67,49,267 34.21% 6 JeevanScientific Technology Ltd. 1,721,400,000 1,00,86,52,592 70.66% 7 Infosys BPO Ltd. 11,291,147,909 9,57,73,24,546 17.89% 8 Jindal Intellic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presentative relied on the order of Bangalore Bench of Tribunal in the case of Aspect Technology Centre (India) Pvt. Ltd. Vs. ITO (ITA No.187/Bang/2016 order dt.30.07.2020) for the proposition that Accential Technologies Limited, Acropetal Technologies Limited, Jeevan Scientific Technology Limited and ICRA Online Ltd. (Seg.) need to be excluded from the list of comparables. 8. The learned Departmental Representative has relied on the order of the Delhi Bench of Tribunal in the case of E-Valueserve SEZ (Gurugaon) P. Ltd. Vs. ACIT (ITA No.5147/Del/2017 Dt.28.03.2018) for the proposition that comparables selected by the assessee in its TP Study cannot be disregarded by the assessee when there is no functional dissimilarity. 9. In the rejoinder, the learned Authorised Representative relied on the latest order of the Bangalore Bench of Tribunal in the case of Nvidia Graphics (P) Ltd. Vs. CIT (2020) 116 taxmann.com 909 (Bang Trib). It was submitted that the Bangalore Bench of Tribunal order has followed the Special Bench order of the Tribunal in the case of DCIT Vs. Quark Systems Pvt. Ltd. (2010) 38 SOT 307 (Chandigarh) (SB) wherein it was held that comparable companies chosen by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comparability or other valid reasons. In view of the aforesaid decision of the special Bench, we admit the additional ground for adjudication. 11. The order of the Delhi Bench of the Tribunal relied on by the ld.DR in the case of E-Valueserve SEZ (Gurgaon) P. Ltd. Vs. ACIT (supra) is distinguishable on facts. In the case considered by the Delhi Bench of Tribunal, the assessee in that case could not give any valid reason why it want to exclude certain comparables which itself has selected in its TP Study. In other words, the assessee in the case considered by the Delhi Bench of Tribunal could not demonstrate how the comparable chosen in its TP Study was functionally dissimilar. Whereas in the instant case, the jurisdictional Tribunal on similar set of facts and for the same assessment year has held that comparables sought to be excluded now by the assessee are functionally dissimilar and in the case of Mindtree Limited, it does not satisfy the turnover filter. Therefore, we hold that the assessee is justified on the facts and circumstances of the case to retract from its TP Study and content that M/s. Acropetal Technologies Limited (Seg.), M/s. Accentia Technologies Limited and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excluding the company as without segmental details, the comparability of the company cannot be determined. In any event, the ERP segment of the company is not comparable to the assessee, the BPO segment of the company fails the filter of service income being greater than 75% of total revenue, and the company suffers from huge fluctuations which indicate that certain peculiar circumstances influencing the profit margin of the company exist, for which appropriate adjustments cannot be made to balance the effect. It is submitted that the ERP implementation services are not in the nature of IT enabled services which were notified by CBDT vide Notification No. SO 890(E) dated 26.09.2000. If the BPO segment is considered, the company fails to satisfy the TPO s own filter of service revenue from the relevant segment having to be in excess of ₹ 1 crore as the revenue from the BPO segment of the said company is ₹ 79 lakhs only. The company is therefore not comparable to the Assessee. This Tribunal in the case of Swiss Re Shared services (India) Pvt. Ltd. v. ACIT (order dated 08.07.2016 in IT(TP)A No. 380/Bang/2016) directed the TPO to verify as to whether the TPO s filter of Sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... software services segment is clubbed with its ITES segment and there is no breakup between the revenues generated from the two segments. During the year under consideration, the company has acquired majority equity interest in Patni Computer Systems Ltd. rendering it incomparable due to it failing the TPO s own filter of having peculiar economic circumstances. In addition, the company owns significant intangibles in its name, which is evident from the balance sheet of the company for the Financial Year 2010-11. For the reasons above, the company is not comparable to the Assessee and the DRP s findings on exclusion of iGate is right in law. As far as the company ICRA Online Ltd., is concerned, the DRP excluded this company for the reason that the details regarding its diverse functions are reported under one segment without segmental details regarding the same being made available. Therefore, the comparability of the company cannot be determined. In any event, this company is functionally dissimilar for the reason that the outsourced services segment of the company is engaged in the provision of high end consultancy services which cannot be compared to the assessee who is int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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