TMI Blog2019 (10) TMI 1310X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Shruti Khimta, AR For the Respondent : Shri Kumar Pranav, Senior DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER The Appellant, Louis Dreyfus Company India Pvt. Ltd. (hereinafter referred to as the taxpayer ) by filing the present appeal sought to set aside the impugned order dated 20.10.2016 passed by the AO in consonance with the orders passed by the ld. DRP/TPO under section 143 (3) read with section 144C of the Income-tax Act, 1961 (for short the Act ) qua the assessment year 2012-13 on the grounds inter alia that :- That on the facts and circumstances of the case, and in law; 1. The Assessment Order passed by the Learned Assessing Officer ('Ld. AO') in pursuance of the directions issued by the Hon'ble Dispute Resolution Panel ('DRP') is a vitiated order as the Hon'ble DRP erred in confirming the arbitrary transfer pricing adjustment made by the Ld. AO/Learned Transfer Pricing Officer ('Ld. TPO') to the international transaction pertaining to provision of back-office support services entered into by the Appellant with its Associated Enterprises ('AEs'). 2. The Hon'ble DRP erred in confirming the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant undertakes minimal business risks, as against comparable companies that are full-fledged risk taking entrepreneurs, and by not allowing a risk adjustment to the Appellant on account of this fact; 2.9. disregarding judicial pronouncements in India in undertaking the TP adjustment. 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : Louis Dreyfus Company India Pvt. Ltd., the taxpayer being a wholly owned subsidiary of Louis Dreyfus Commodities Asia Pte. Ltd., Singapore is into the trading of agribased commodity products such as cotton, rice, corn, coffee, barley, sugar and oil seeds. The taxpayer is into trading of commodities with its Associated Enterprises (AEs) and unrelated parties in the domestic and international market. The taxpayer is also into providing back office support services (BSS) and crop research services to its AEs. 3. Ld. TPO accepted all the international transactions undertaken by the taxpayer during the year under assessment at arm s length except international transactions qua provisions of business support services. The taxpayer in its TP study qua provisions for back office support services claimed that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accentia Technologies Ltd. 11.82% 2 Acropetal Technologies Ltd (segment) 26.30% 3 e4e Healthcare Business Services Pvt. Ltd. 19.85% 4 Informed Technologies India Ltd. 6.08% 5 Jindal Intellicom Ltd. 0.25% 6 Microgenetic Systems Ltd. 6.38% 7 R System International Ltd. (Seg)(BPO) - 4.38% 8 TCS E-Serve Ltd. 63.674% Average 16.19% 8. Ld. AR for the taxpayer in order to compress the controversy at hand contended that the challenge by way of filing this appeal is qua exclusion of two comparables chosen by the TPO and confirmed by ld. DRP, namely, Acropetal Technologies Ltd. (segment) and TCS E-Serve Limited only. 9. Now, we would examine the suitability of aforesaid comparables vis- -vis the taxpayer as under. ACROPETAL TECHNOLOGIES LTD. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the universe of customers that facilitate a student to derive quality education. Hreernm (Enterprise Innovation Management) Energizing innovation excellence through Value, Intellectual and Human Capital Management U I (Universal Intentionalism) A docu-vision platform to learn, share and collaborate globally and innovate in a networked environment Extending the Moment of Truth (Consumer Experience Management) Responding to the new experience oriented consumer loyally management Cradle to Grave (Government Citizen Interaction) Creating an interactive real-time experience between the government and citizens at all levels. Green Environment (Energy Environment) Recommending optimization on consumption of energy and recommending alternate sources of energy. 13. Furthermore, when we examine page 141 of the annual report compilation, it is evident that Acropetal has completed acquisition of two US based companies, namely, Line Beyond Inc. and Optech Consulting Inc. with 100% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances, cannot be a suitable comparable to benchmark the international transactions qua business support services vis- -vis the taxpayer, hence ordered to be excluded. TCS E-SERVICE LTD. (TCS E-SERVE) 15. TCS E-Serve is also TPO s own comparable which was challenged by the taxpayer before the TPO as well as DRP. The taxpayer challenged the inclusion of TCS E-Serve as a comparable on grounds of functional dissimilarity, non-availability of segmental information, difference in risk profile, ownership of intangibles, payment for Tata brand and incomparable scale of operations and relied upon the decision rendered by Hon ble Delhi High Court in case of Avaya India Ltd. vs. ACIT in ITA 532/2019 order dated 24.07.2019. 16. However, on the other hand, ld. DR for the Revenue in order to repel the arguments addressed by the ld. AR for the taxpayer relied upon the order passed by the ld. DRP and contended that all these contentions now raised by the ld. AR for the taxpayer have been extensively dealt with by the ld. DRP and relied upon Chryscapital Investment Advisors (India) Pvt. Ltd. vs. DCIT 376 ITR 183 (Del.) and Rampgreen Solutions Pvt. Ltd. (2015) 377 ITR 533 del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 1359 crores and has no segmental revenue whereas the Assessee s entire segmental revenue is a mere24 crores. As observed by this Court in its decision dated5thAugust 2016 in ITA 417/2016 (PCIT v. Actis Global Services Private Limited) Size and Scale of TCS s operation makes it an inapposite comparable vis-a-visthe Petitioner. As already pointed out earlier there is a closer comparison of TCS E-Serve Limited with Infosys BPO Limited with each of them employing 13,342 and 17,934 employees respectively and making ₹ 37 crores and ₹ 19 crores as contribution towards brand equity. When Rule 10(B)(2) is applied i.e. the FAR analysis, namely, functions performed, assets owned and risks assumed is deployed then brand and high economic upscale would fall within the domain of assets and this also would make both these companies as unsuitable comparables. 28. The Director s report of TCS E-Serve Limited bears out the contention of the Assessee that both entities have been leveraging TCSs scale and large client base to increase their business in a significant way. The submission that the two comparables offer an illustration of an identical transaction being conducted in a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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