TMI Blog2019 (8) TMI 1663X X X X Extracts X X X X X X X X Extracts X X X X ..... s perused the excerpts of the Annual Report of the company Informed placed before us and find that at page 8 thereof under the head Segmental Reporting the company has only one reportable segment, namely BPO Segment which is functionally comparable to the assessee. Further, it is seen that total sales / turnover reported on page 24 thereof is also entirely from BPO activities and as such the filter applied by the TPO of ITES is satisfied, as the Other Income is clearly non-operating revenue - effect of Other Income on the margin of the company has not been examined. It is also seen that while suo moto excluding this company Informed , from the set of comparables, the DRP has not put either of the parties on notice. We are of the view that it would be appropriate to restore the matter to the TPO for examination of the point raised by the assessee before the DRP and decide on the comparability of this company, Informed Technologies Ltd., afresh. Needless to add, the AO / TPO shall afford the assessee adequate opportunity of being heard and to put forth details / submissions required in the matter, which shall be duly considered by the AO / TPO before deciding the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated, the facts of the case are as under:- 2.1 The assessee, an Indian company, is a wholly owned subsidiary of Kennametal Inc. and provides ITES to its Associated Enterprises (AEs). For Assessment Year 2012-13, the assessee filed its return of income on 30.11.2012 declaring total income of ₹ 5,68,16,900/-. The case was taken up for scrutiny for this Assessment Year and subsequent thereto, the Assessing Officer (AO) made a reference under section 92CA of the Act to the Transfer Pricing Officer (TPO) for determination of the arms length price (ALP) of the international transactions reported by the assessee in the year under consideration. The TPO passed an order under section 92CA of the Act dated 14.01.2016 proposing an adjustment of ₹ 3,37,89,086/- to the international transactions entered into by the assessee in the ITES segment. Thereafter, the AO passed the draft order of assessment under section 143(3) r.w.s. 144C(1) of the Act dated 14.03.2016, wherein the assessee s income was determined at ₹ 9,06,05,986/-; which included the TP adjustment of ₹ 3,37,89,086/-. 2.2 Aggrieved by the draft order of assessment dated 14.03.2016 for Assessment Year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comparables:- Sl. No. Name of the Case OP/OC 1 Accentia Technologies Ltd. 11.75 2 Universal Print Systems Ltd. (Seg)(BPO) 52.46 3 Informed Technologies India Ltd. 6.08 4. Infosys B P O Ltd. 36.30 5 Jindal Intellicom Ltd. -0.05 6 Microgenetic Systems Ltd. 19.61 7 T C S E-Serve Ltd. 63.69 8 B N R Udyog Ltd.(Seg)(Medical Transcription) 41.58 9 Excel Infoways Ltd.(Seg)(IT/BVPO) 29.79 10 E4e Healthcare Services Pvt Limited 19.85 Average PLI 28.11% 4.5 The TPO computed the ALP of the international transactions in the assessee s ITES segme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Mobility Infotech India (P) Ltd., (supra) has considered and adjudicated on the comparability of the above list of 5 companies [i.e., in para 6.1 (supra)] with companies rendering ITES. We find that the functional profile of that company; i.e., Mobility Infotech India (P) Ltd., is similar to that of the assessee and the assessment year is also the same, viz., Assessment Year 2012-13. It is seen that the TPO has selected the same set of comparables in both; Mobility Infotech India (P) Ltd., as well as in the case on hand. Since the facts and circumstances are similar, we are of the view that the decision rendered by the Co-ordinate Bench of this Tribunal in the case of Mobility Infotech India (P) Ltd., for Assessment Year 2012-13 is applicable to the facts of the case on hand also. The relevant portion of the aforesaid decision of the Co-ordinate Bench (supra) at para 6 to 10.3.2 thereof are extracted hereunder:- 6.3.2 Respectfully following the decision of the Co-ordinate Bench of this Tribunal in the case of Mobility Infotech India (P) Ltd., (2018) 97 taxmann.com 2 (Bangalore Trib), we direct (1) the exclusion of Infosys BP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in the case of FNF India Pvt. Ltd., in its order in IT(TP)A No.459/Bang/2017 dated 03.07.2019 for Assessment Year 2012-13 dated 03.07.2019 for Assessment Year 2012-13 have held that this company i.e., Crystal , is a predominantly BPO company and should be included as a comparable to a company providing ITES services. We observe that the Assessment Year involved is the same i.e., Assessment Year 2012-13, as in the case on hand, the set of comparables chosen by the TPO in the cited case (supra) as well as in the case on hand are also the same and as such we find that the facts of both these cases are similar i.e., provision of BPO / ITES services. Therefore, in our view, the decision rendered by the Co-ordinate Bench in the case of FNF India Pvt. Ltd., for Assessment Year 2012-13 (supra) is applicable to the assessee in the case on hand also. At paras 24 and 25 of its order in the case of FNF India Pvt. Ltd., (supra), the Co-ordinate Bench has dealt with the comparability of Crystal with ITES companies and has held as under:- 24. In ground No.13, the Assessee has prayed for inclusion of Crystal Voxx Ltd. as a comparable company. This company was not regarded as compar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48% of the total income and unless the expenses related to earning of the income are identified and excluded, the profit margin from ITES activity cannot be ascertained. 8.3.1 We have considered the rival contentions and perused the material on record. We have perused the excerpts of the Annual Report of the company Informed placed before us and find that at page 8 thereof under the head Segmental Reporting the company has only one reportable segment, namely BPO Segment which is functionally comparable to the assessee. Further, it is seen that total sales / turnover reported on page 24 thereof is also entirely from BPO activities and as such the filter applied by the TPO of ITES is satisfied, as the Other Income is clearly non-operating revenue. We, however, notice that the effect of Other Income on the margin of the company has not been examined. It is also seen that while suo moto excluding this company Informed , from the set of comparables, the DRP has not put either of the parties on notice. 8.3.2 In this factual matrix of the matter, as discussed above, we are of the view that it would be appropriate to restore the matter to the TPO for examination of the poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Anjum H. Ghaswala (252 ITR 1) (SC) and we, therefore, uphold the action of the AO in charging the assessee the aforesaid interest u/s 234B and 234C of the Act. The AO is, however, directed to re-compute the interest chargeable u/s 234B and 234C of the Act, if any, while giving effect of this order. 11. Ground No.20 Short credit for Tax paid 11.1 In this ground (supra), the assessee contends that the AO has granted credit for TDS / Advance tax paid only to the extent of ₹ 1,21,46,000/- as against the actual payment of ₹ 1,24,50,000/-. It was also submitted that though a specific objection in this regard was raised before the DRP, the DRP at para 22.1 of its order declined to issue directions on this issue stating that since this issue does not relate to variation in income, it cannot be adjudicated by the panel as it is beyond their scope and powers. 11.2 We have considered the issue raised before us in this regard (supra). It is trite law that the assessee is entitled to be allowed full credit for taxes paid by it to the Government exchequer. We, therefore, direct the AO to examine and verify the assessee s claim and allow credit for taxes paid b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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