TMI Blog2022 (12) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... er care, customer retention, first-party receivables management, third-party collections and revenue recovery services to large and mid-sized companies need to be deleted as comparable. - ITA No.3713/Del./2018 - - - Dated:- 14-7-2022 - SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER and SHRI ANUBHAV SHARMA, JUDICIAL MEMBER ASSESSEE BY : Shri Rishabh Malhotra REVENUE BY : Shri Mrinal Kumar Das ORDER PER SHAMIM YAHYA, ACCOUNTANT MEMBER : The appeal by the Revenue and cross objection filed by the assessee are directed against the order of the ld. CIT (Appeals)-44, New Delhi dated 09.04.2018 for the assessment year 2012-13. 2. The grounds of appeal raised in the Revenue s appeal read as under:- 1. Whether the Ld. CIT (A) was correct in treatment of forex gain/loss as operating by applying the decisions in the cases of Pro CIT Vs Cashedge India Pvt. Ltd., Ameriprise India Pvt. Ltd. and Fiserv India Pvt. Ltd. without noting that those decisions were based on the applicability of the Safe Harbor Rules from a later date and without discussing the merits of the matter? 2. Whether the Ld. CIT(A) erred in not appreciating the fact that the TPO followed the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on services. The assessee is 100% export oriented unit. It is registered with Software Technology Parks of India. As per Form 3CEB for the Ay 2012-13, the assessee has entered into international transaction with iQor Inc USA, its Associated Enterprises (AE) by provision of IT Enabled Services (ITES) amounting to Rs.51,77,39,312/-. The Arm s Length Price (ALP) of international transaction representing ITES provided to AE during the year was determined by applying Transactional Net Margin Method (TNMM) as the Most Appropriate Method (MAM). The Operating Profit to Operating Cost (OP/OC) was Profit Level Indicator (PLI) in the TNMM analysis. The assessee was taken up as tested party. The tested party PLI was arrived at 16.85% on cost. For the benchmarking of this transaction, assessee has conducted a search on public database and arrived at a set of 7 comparables. The average PLI of the comparables were arrived at 12.94% worked out after adopting weighted averages for the current year and the immediately preceding two years. The computation was as under:- Income Export of Services 517,739,312 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is not applicable to the assessment year under consideration. For which proposition, decision from the Hon ble jurisdictional High Court and the Tribunal were also quoted. 10. Ld. CIT (A) found the issue to be covered in favour of the assessee and accordingly, he held as under :- 5.8 The contention of the appellant is supported by the judgments of the Hon'ble Delhi high court in the cases of Ameriprise India Pvt Ltd (ITA 206/2016); Cashedge India Pvt Ltd (ITA 279/2016) and Fiserv India Pvt Ltd (ITA 17/20\6). In accordance with the principle of consistency and respectfully following the order of the jurisdictional High court stated above, the AO/TPO is directed to include foreign exchange gain/Loss as non-operating while calculating the operating profit margin of both the appellant comparable companies. The ground of appeal is decided in favour of the appellant. 11. Against this order, Revenue is in appeal before us. We have heard both the parties and perused the record. 12. We find that the issue is covered in favour of the assessee by the decision of Hon ble Delhi High Court cited above. Hon ble Delhi High Court in the case of PCIT vs. BC Management Servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finance and accounting etc. it has been submitted by Ld. Counsel that this company has been excluded by this Tribunal in Exevo India (P.) Ltd. v. ITO [2016172 taxmann.com 339 {Delhi-Trib2 in assessee's own case, for assessment year 2011-12. It has been submitted by Ld. Counsel that there has been no change in the functions of this company as well as that of assessee vis-a-vis assessment year 2011-12. 6.7 Ld. DR, however, referred to the extracts made by the Id.TPO in the order to submit that Infosys BPO Ltd. is a comparable company with that of assessee. He placed reliance upon the manner in which this company derives its revenue which has been detailed at page 494 of the financial statement placed in the paper book volume 2. Ld. DR placed reliance on the observations recorded by the DRP and TPO. 6.8 After considering the rival submissions and pursuing the relevant material on record, we find that for the year under consideration, this company is primarily into providing business process management services to organisations that outsource their business processes. It is further observed that this company has acquired hundred percent voting interest in Portland grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... differ from the above. Accordingly we direct Ld. TPO to exclude this company from the list of comparables. (c) In accordance with the principle of consistency and respectfully following the order of the Hon'ble ITAT in the case of Exevo India Pvt Ltd. (supra) the AOITPO is directed to exclude Infosys BPO from the final set of com parables. The issue is decided in favour of the appellant. 15. Against this order, Revenue has filed appeal. We have heard both the parties and perused the records. 16. Ld. counsel of the assessee reiterated the submissions as above. He further submitted Infosys BPO Ltd. on similar grounds has been excluded in other decisions as under :- (i) BT e-Serv (India) (P.) Ltd. vs. ITO (2019) 101 taxmann.com 275 (Delhi-Trib); (ii) Baxter India (P.) Ltd. vs. ACIT (2017) 85 taxmann.com 285 (Delhi-Trib). 17. Upon hearing both the parties and perused the record, we find that in view of the aforesaid decision of the ITAT, the issue stands covered in favour of the assessee. No contrary decision has been cited before us. Accordingly, we uphold the order of ld. CIT (A). 18. The next issue raised in Revenue s appeal is that ld. CIT (A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contact services with high-level of foreign expenditure and abnormal profits. Further Ld. Counsel submitted that this company has been excluded by this Tribunal in ITA No. 9071del12016 vide order dated 25/07116 in assessee's own case for assessment year 2011-12. 6.11 Ld. DR, referred to observations by the ld. TPO in the order to submit that TCS E Serve Ltd., is a comparable company with that of assessee. He submitted that the functions of this company has changed which is evident from page 177 of the paper book volume wherein the principal activity of this company has been characterized as under: TCS E-serve Ltd (the company) along with its subsidiary TCS E serve international Ltd (TElL) and TCS e-Serve America Inc., (TEAl) is primarily engaged in the business of providing business process service (BPO) its customers in banking, financial services and insurance domain. 6.12 After considering the rival submissions and perusing the relevant material on record, we find that the financial results of this company shows that this company is into financial services to help its customers achieve their business objectives by providing innovative best in class serv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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