TMI Blog2019 (5) TMI 1849X X X X Extracts X X X X X X X X Extracts X X X X ..... and has also provided separate Safe Harbour Margin for these type of services. We follow the above order of the Tribunal in assessee s own case for the immediate preceding assessment year and direct the TPO/AO to delete Acropetal Technologies Ltd.(Seg) from the list of final comparables. ICRA Online Ltd. (Seg) - Following the decision of Tesco Hindustan Service Centre Pvt. Ltd. [ 2017 (1) TMI 1673 - ITAT BANGALORE] and the observations in the Tribunal decision in appellant s own case for AY 2010-11, we reject ICRA Online as a comparable. - ITA No. 1821/MUM/2016 - - - Dated:- 3-5-2019 - Shri Saktijit Dey (Judicial Member) And Shri N.K. Pradhan (Accountant Member) Revenue by : Mr.Manish Kumar Singh, DR Assessee by : Mr. M.P. Lohia Mr. Nikhil Tiwari, ARs ORDER N.K. Pradhan, AM This is an appeal filed by the assessee. The relevant assessment year is 2011-12. The appeal is directed against the order u/s 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (the Act ) passed by the Deputy Commissioner of Income Tax, Ward-11(2)(1), Mumbai (hereinafter AO ) in pursuance of the directions issued by the Dispute Resolution Panel (in short DRP ). 2. Br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) dated 07 July 2017 [AY 2011-12], (v) Hyundai Motor India Engineering Pvt. Ltd. v. ITO (ITA No. 128 216/Hyd/2016) dated 21 December 2016 [AY 2011-12], (vi) e4e Business Solutions India Pvt. Ltd. v. DCIT (ITA No. 1397/Bang/2016) dated 13 January 2017 [AY 2011-12], (vii) M/s Tesco Hindustan Service Centre Pvt. Ltd. v. DCIT(IT(TP)A No. 191/Bang/2015) dated 25 January 2017 [AY 2010-11] Further, it is stated that in the following High Court decisions, Accentia is rejected as a comparable to an ITeS Service Provider : (i) PCIT v. Aptara Technology (P.) Ltd. (IT Appeal No. 1209 of 2015) dated 26 March 2018 [AY 2008-09] (Bom HC), (ii) PCIT v. BNY Mellon International Operating (India) (P.) Ltd. (IT Appeal No. 1226 of 2015) dated 23 April 2018 [AY 2009-10] (Bom HC), (iii) PCIT v. PTC Software (I) (P.) Ltd. (IT Appeal No. 598 of 2016) dated 16 April 2018 [AY 2009-10] (Bom HC) 3.2 On the other hand, the Ld. DR submits that the TPO/AO has rightly included Accentia. in the final set of comparables. 3.3 We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below. In this context, we would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. e) Eclerx Services Ltd. f) Genesys International Corpn. Ltd. g) Mold Tek Technologies Ltd. We further note that the functional comparability has been examined in detail by the co-ordinate bench of this Tribunal in the case of Equant Solutions India Pvt. Ltd. Vs. DCIT in IT(TP)A No.1202/Del/2015 as well as in the case of ITO Vs. Interwoven Software Services (India) Pvt. Ltd. in ITA No.461/Bang/2015. Further in the case of Acropetal Technologies Ltd. (Seg.), the co-ordinate bench of this Tribunal in the case of Kodiak Networks (India) Pvt. Ltd. Vs. DCIT in IT(TP)A No.1540/Bang/2012 has considered the functional comparability and found that this company is not comparable with a captive service provider. Accordingly we direct the Assessing Officer/TPO to exclude these companies from set of comparables. Respectfully following the decision of the co-ordinate bench of Tribunal, we direct the AO/TPO to delete Accentia Technologies Ltd. from the list of comparables. 3.4 Facts being identical, we follow the above order of the Tribunal in assessee s own case for the immediate preceding assessment year and direct the TPO/AO to delete Accentia Technologies Ltd. from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, Acropetal operates various services such as architectural, structural, electrical engineering etc. which are functionally different from the ITeS rendered by the appellant. Regarding the reliance placed by the TPO and DRP on Notification No. 11521 issued by CBDT, we find that it is in relation to the type of information technology enabled products or services which will be eligible for deduction u/s 10A(b)(i)(2), section 10B(b)(i)(2) and section 80HHE(b). The purpose of the said Circular is entirely different viz. to state the type of services which are eligible for deduction. We find that the Safe Harbour Rules issued by CBDT clearly demarcates between BPO and KPO services and has also provided separate Safe Harbour Margin for these type of services. 4.4.1 In appellant s own case for AY 2010-11 (ITA (TP)A No. 598/Bang/2015) the ITAT A Bench, Bangalore vide order dated 25.04.2018 at para 14.4 held as under: 14.4 We heard rival submissions and perused the material on record. The issue of comparability of this company was considered by the co-ordinate bench of Tribunal in the case of M/s.Tesco Hindustan Service Centre Pvt. Ltd. in IT(TP)A No.191/Bang/2015 dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocess Outsourcing Services. The 17th ground of appeal The AO erred in computing the operating margin of ICRA Online Limited (Seg) as 33.54% on operating costs as against the correct margin of 22.32%. 5.1 The TPO included ICRA Online Ltd. (Seg) (in short ICRA )on the ground that it is engaged in data processing and data mining and accordingly it is providing similar services (ITeS). The DRP upholds the order of the TPO, which is followed by the AO. 5.2 The Ld. counsels of the assessee submit that as per the annual report, the company has following three business segments: (i) Information Services, (ii) Software Services and (iii) Outsource Services It is further stated that the TPO has considered the operations of the Outsourced Services segment as comparable to the operations of the appellant. The Ld. counsels argue that the annual report of the company does not provide any description as to the nature of the services contained in the segment. However, a reference may be drawn to the annual report of ICRA Ltd., the holding company of ICRA from where it can be seen that the outsourced segment of the company relates to KPO and online software services. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and cannot be compared to a company providing KPO services such as ICRA. Also we find that the TPO has wrongly computed the margin of the company as 33.54% instead of the correct margin 22.32%, because the TPO has excluded foreign exchange income and other receipts (allocated basis revenue in each segment), whereas, the same is to be added for information service, outsource service and software service to arrive at the correct margin. In assessee s own case for AY 2010-11, the ITAT A Bench Bangalore has followed the Tribunal discussion in the case of Tesco Hindustan Service Centre Pvt. Ltd. (supra) to reject the companies functionally not comparable to the appellant i.e. companies not engaged in providing ITeS (BPO) service. In the case of Tesco Hindustan Service Centre Pvt. Ltd. (supra), ICRA has been held to be non-comparable to an ITeS service provider. Accordingly, following the decision of Tesco Hindustan Service Centre Pvt. Ltd. (supra) and the observations in the Tribunal decision in appellant s own case for AY 2010-11, we reject ICRA Online as a comparable. Thus the 15th 17th grounds of appeal are allowed. 6. As the 13th, 14th, 15th and 17th ground ..... X X X X Extracts X X X X X X X X Extracts X X X X
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