TMI Blog2020 (9) TMI 1096X X X X Extracts X X X X X X X X Extracts X X X X ..... intangible held by this company and has large scale of operation and huge brand value. As in the case Avaya India Ltd. vs. ACIT [ 2019 (7) TMI 1279 - DELHI HIGH COURT] has upheld the exclusion of TCS-e-Serve on account of large scale of operations, huge brand value, lack of segmental information with the comparables who are simply involved ITeS/BPO services which are captive services provider. Accordingly, we direct the TPO to exclude the TCS-e- Serve Ltd. from the comparability list and determine the Arms Length Price. Accordingly, the appeal of the assessee is treated as allowed. - I.T.A. No.1555/DEL/2016, I.T.A. No.1571/DEL/2016 - - - Dated:- 27-8-2020 - Shri Amit Shukla, Judicial Member And Shri O.P. Kant, Accountant Member For the Appellant : Shri Ravi Sharma Anubhav Rastogi, Adv. For the Respondent : Shri M. Barnwal, Sr.D.R. ORDER PER AMIT SHUKLA, JUDICIAL MEMBER: The aforesaid appeals have been filed by the assessee as well as by the Revenue against final assessment order dated 29.01.2016, passed in pursuance of direction given by the Dispute Resolution Panel vide order dated 10.12.2015 for the Assessment Year 2011-12. 2. In the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany is into trading of commodities with AEs and unrelated parties in domestic and international market. In addition to the trading activities, the assessee is also engaged in providing back office business support services to LD commodities Asia Pvt. Ltd. During the relevant Financial Year the assessee has undertaken international transaction of back office support services of ₹ 7,49,33,645/-. The assessee has rendered back office support services for various agribased commodities to its AEs which include provision of logistic support execution along with man power services. These services primarily include related services, logistic support, trade support, travel support, international aid services and inspection services. In consideration thereof, the assessee company was remunerated on a cost plus basis with a markup of 10%. In TP study report, the assessee claimed that it is providing IT enabled services to its AE and adopted TNNM as a most appropriate method and PLI was taken as OP/OC. The operating revenue were at ₹ 7,44,33,645/- and operating expenses at ₹ 6,81,21,495/- and accordingly, the PLI worked out to 10%. The assessee had chosen 12 comparables a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies for which it is remunerated at cost plus basis and is not exposed to any kind of risk. Whereas, the TCS-e-serve Ltd. bears significant risk such a macro economic risk, regulatory risk, financial risk and risks from operations etc. which clearly indicates that the TCS-e-serve Ltd is a full risk bearing company. On risk analysis also it cannot compared with the assessee. Besides this, TCS-e-serve Ltd is not comparable on account of intangible held by this company and has large scale of operation and huge brand value. Hon ble Delhi High Court in the case Avaya India Ltd. vs. ACIT in ITA No.532/2019 has upheld the exclusion of TCS-e-Serve on account of large scale of operations, huge brand value, lack of segmental information with the comparables who are simply involved ITeS/BPO services which are captive services provider. 8. Apart from the above, this Tribunal in assessee s own case for the Assessment Year 2012-13 has excluded this comparable after detailed discussion, which for the sake of ready reference is reproduced hereunder:- 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 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , available at page 81 of the annual report compilation. Furthermore, when we examine the scale of operation of TCS E-Serve at page 66 of the annual report compilation, its total revenue is ₹ 1733.34 crores as against revenue of the taxpayer at ₹ 8,90,95,280/-. 18. Exclusion of TCS E-Serve has been upheld by the Hon ble Delhi High Court in Avaya India Ltd. (supra) on ground of large scale operation, huge brand value and lack of segmental by distinguishing Chryscapital Investment Advisors (India) Pvt. Ltd. and Rampgreen Solutions Pvt. Ltd. (supra) relied upon by the Id. DR for the Revenue by returning following findings:- 27. There is merit in the contention of the Assessee that the scale of operations of the comparables with the tested entity is a factor that requires to be kept in view. TCS E-Serve has a turnover of ₹ 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- -vis the Petitioner. As alread ..... X X X X Extracts X X X X X X X X Extracts X X X X
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