TMI Blog2019 (1) TMI 1866X X X X Extracts X X X X X X X X Extracts X X X X ..... then it cannot be held as not passing the test of sub-rule(4) of rule 10B and the same is the view taken by Hon ble Punjab Haryana High Court in the case of CIT Vs. Mercer Consulting (India) Pvt. Ltd.[ 2016 (8) TMI 1163 - PUNJAB AND HARYANA HIGH COURT] . Being so, in our opinion data relating to the assessee financial year to be interpolated and thereafter if required, it should be considered as a comparable to the assessee s case. With this observation we remit this issue to the file of TPO for his fresh consideration. Exclusion of Accentia Technologies Limited as comparable - main contention of ld. AR is this Accentia Technologies Ltd. is functionally not comparable to assessee, which is a BPO - The segmental data relevant to software services and product ITES are not available in the annual report. That company own intangibles. These facts were considered in the case of the coordinate bench in the case of Outsource Partners International Pvt. Ltd. [ 2017 (2) TMI 1410 - ITAT BENGALURU] and held that it cannot be a comparable case as in the case of assessee. Being so, we uphold the argument of ld. AR and direct the TPO to exclude the above comparable. Exclude Fortune ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Appellant by invoking provisions of sub-section (3) of 92C of the Act contending that the information or data used in the computation of the ALP is not reliable or correct. The learned AO/ learned TPO has grossly erred therefore in : 3. a rejecting comparability analysis carried in the TP documentation and in conducting a fresh comparability analysis by introducing various filters in determining the ALP. 3. b rejecting companies that are functionally comparable to the Appellant while performing the comparability analysis. Specifically, the following companies ought to have been included as comparable: Nittany Outsourcing Services Private Limited Datamatics Financial Services Limited R Systems International Limited Caliber Point Business Solutions Limited Ultramarine Pigments Limited Jindal Intellicom Private Limited 3.c including companies that do not satisfy the test of comparability. Specifically, the following companies selected as functionally comparable by the learned AO / learned TPO ought to have been rejected: Accentia Technologies Limited Fortune Infotech Limited Jeevan Scientific Technolog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6, 7, 8, 9, 10,11 12. The ld. AR pressed only ground related to the comparables in 3(b) with reference to R Systems International Limited. Other five comparables viz., Nittany Outsourcing Services Pvt. Ltd., Datamatics Financial Services Ltd., Caliber Point Business Solutions Ltd., Ultramarine Pigments Ltd. and Jindal Intellicom Pvt. Ltd. are not pressed. 4. The first ground for consideration in this appeal is with regard to considering R Systems International Ltd. as comparable. 5. The assessee has selected in the transfer pricing documentation R Systems International Ltd. as a comparable company since it is functionally comparable and passing all the filters applied by the assessee in the TP documentation. However the lower authorities rejected that company on the basis that it has different year ending. Against this assessee is in appeal before us. The ld. AR submitted that R Systems International Ltd. accounting period is January to December and assessee s accounting period is April to March, therefore that the assessee and R Systems International Ltd. were operating for a period of 12 months accounting cycle. Since they were facing similar business cycles, market and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year data as contemporaneous data to be used for benchmarking the arm's length price of international transactions of assessee. The assessee had prepared its financial statements for the financial year starting from 1st April, 2009 to 31st March, 2010. The case of assessee before us is that Jindal Intellicom Pvt. Ltd. has prepared its financial statements for period of 15 months and the same is not to be selected in the final set of comparables. 22. We find that the Pune Bench of Tribunal in the case of BMC Software India Pvt. Ltd. Vs. DCIT in ITA No.1425/PN/2010, relating to assessment year 2006-07, order dated 16.03.2016 had rejected the concern having 15 months financials. 23. The Hon'ble Bombay High Court in the case of CIT Vs. PTC Software (I) Pvt. Ltd. in Income Tax Appeal No.732 of 2014 had also held that the comparable data should pertain to the same financial year. Accordingly, we hold that the margins of concern having different accounting period cannot be selected for benchmarking international transactions and the same is to be excluded from the final set of comparables. Accordingly, we direct the Assessing Officer to exclude Jindal Intellicom Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies of United Kingdom consisting of three companies, Tactiq Ltd., Centric Ltd. and Neologiq Ltd and also amalgamated Ascent Infoserve. Owing to these extra ordinary events, Accentia should not be considered comparable to the assessee. Further, the IQ Group of companies are engaged in Full Product Development Lifecycle involving Electronic Design and development, Software Design and Development and separate validation service, and User Interface Design and Implementation and Product Development Consultancy and Troubleshooting involving Systematic Technology Consultation software product design and development services. The assessee also provided the workings highlighting the abnormal fluctuations in revenues and profits of Accentia for a 5 year period. 9. He submitted that the assessee does not agree to the acceptance of Accentia as a comparable company since it not only provides ITES but it is also into software products development and provides software as service. Also, the learned TPO in order to suit his own requirements and needs has accepted Accentia as a comparable. 9.1 The ld. DR submitted that as per its Annual Report the assessee s operation includes me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T (supra) and it was held that it cannot be a comparable. Accordingly, we direct the AO/TPO to exclude the same. 13. The next ground is with regard to exclusion of Jeevan Scientific Technology Limited in ground no. 3(c). This ground does not require any adjudication in view of our findings with regard to issue raised in additional ground. 14. The assessee has raised additional ground and submitted the reason for raising an additional ground as follows. Ground No. 4A: Jeevan Scientific Technology Ltd. (hereinafter referred to as Jeevan Scientific ) should be rejected as it fails service income filter of 75% as applied by the Ld. TPO. The Appellant submits that income form ITES activities for Jeevan Scientific is less than 75% of the total operating income and therefore Jeevan Scientific does not qualify the service income filter as applied by the TPO and therefore is not comparable to the Appellant. Reason for filing Additional Ground of Appeal The Appellant in the Form 36B has taken a generic ground for rejection of Jeevan Scientific on comparability and employee cost filter. However, in order to bring out a more specific argument for exclusion of Jeev ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
