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TMI Blog2022 (3) TMI 1476X X X X Extracts X X X X X X X X Extracts X X X X ..... of the DRP, erred on the following grounds: 2.1. In rejecting the transfer pricing (TP) analysis undertaken by the Appellant for computing the ALP in relation to the ITES provided by the Appellant and applying the knowledge process outsourcing (hereinafter referred to as KPO) search to arrive at the ALP; 2.2. In not accepting the economic analysis undertaken by the Appellant in accordance with the provisions of the Act read with the Income-tax Rules, 1962 (hereinafter referred to as the Rules) and holding that the Appellant's international transaction is not at arm's length; 2.3. Further, in conducting a fresh economic analysis for the determination of the ALP in connection with the impugned international transaction without providing the selection criteria adopted by him; 2.4. In determining the ALP by using only single year data for Financial Year (FY) 2008-2009 which was not available to the Appellant at the time of complying with the TP documentation requirements Le. using non-contemporaneous data for calculating the ALP of the international transaction; 2.5. In rejecting the comparable companies selected by the Appellant in the TP report, without providing any a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing the decision of Hon'ble Supreme Court in the case of National Thermal Power Co., Limited v. CIT [229 ITR 383 (SC)]. 5. Ld. AR of the assessee submitted that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal in assessee's own case for the immediately preceding A.Y. 2008-09 and decided the issue in favour of the assessee and against the department, which is reported in [2020] 118 taxmann.com 112 (Mumbai - Trib.). On the other hand, Ld.DR has fairly accepted the submissions of the Ld.AR. 6. It is submitted that Cosmic Global Limited is in the business of Medical Transcription and Translation services and thus not comparable to the assessee is evident from the extract of its annual report [at Sr. No 12 (Annexure 3) in Paper-book I at Pg No 873] as well as the order of the ITAT in ITA no 625/Mum/2014 dated 10.05.2021 for A.Y.2009-10 in the case of Morgan Stanley Advantage Services Private Limited (having identical business model as the assessee and with whom the assessee company has merged). The Tribunal in its aforesaid order has relied upon the order of the co-ordinate bench in BNY Melon International Operations (India) (P.) Ltd Vs DyCIT [2015] 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the A.Y. 2008-09 in ITA No 6522/Mum/2014 dated 12.08.2021 and in the case of Morgan Stanley Advantage Services Pvt. Ltd., in ITA.No. 625/Mum/2014 for the A.Y. 2009-10 dated 10.05.2021 and it was directed to include the comparable R System International Limited and Allsec Technologies. Ld. DR has fairly accepted the submissions of the Ld.AR. 11. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2008-09. While deciding the issue in favour of the assessee the Coordinate Bench of the Tribunal in ITA.No. 6522/Mum/2014 dated 12.08.2021 held as under: - "14. Thus, as could be seen, in parallel proceedings undertaken in case of the successor company having identical business model, the Tribunal has already decided issues relating to selection/rejection of comparables as are disputed in the present appeal. Thus, facts being identical, the aforesaid decision of the coordinate bench would squarely apply. 15. In view of the aforesaid, we direct the assessing officer to include R System International Ltd, Allsec Technologies and CG Vak Software & Exports Ltd as comparables. Where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above, consistent with the view taken therein, ground no.2 and additional ground are disposed off protanto and consequently, the other grounds of appeal became academic in nature, hence, left un-adjudicated. Therefore, ground no.2, and additional ground raised by the assessee are accordingly allowed." 13. Respectfully following the above decision and following the principle of consistency, the view taken by the Tribunal is respectfully followed, we order accordingly. 14. Coming to the issue of comparables to be excluded, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this Tribunal in assessee's own case for the A.Y. 2008-09 in ITA No 6522/Mum/2014 dated 12.08.2021 and in the case of Morgan Stanley Advantage Services Pvt. Ltd., in ITA.No. 625/Mum/2014 for the A.Y: 2009-10 dated 10.05.2021 and directed to exclude these companies. Ld. DR has fairly accepted the submissions of the Ld.AR. 15. Considered the submissions and material placed on record, we observe from the record that identical issue is decided in favour of the assessee for the A.Y. 2008-09. While deciding the issue in favour of the assessee the Coord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it transpires from the record available before us, we notice that during the relevant assessment year 2009-10, the Transfer Pricing Officer has re-characterized the assessee as KPO as was done by him in the assessment year 2008-09 and consequently, the Transfer Pricing Officer rejected / excluded the comparables selected by the assessee (being non KPO) and further wrongly selected / included KPO companies as comparable to the assessee. Exclusion of four comparables namely E-clerx Services Ltd., Coral Hubs Ltd. (earlier known as Vishal Information Technologies Ltd.), Crossdomain Solution Ltd. and Cosmic Global Ltd. has been decided by the Tribunal in assessee's own case in DCIT v/s Morgan Stanley Advantage Services P. Ltd. reported in [2019] 109 taxmann.com 101 (Mum.) (Trib.), for the assessment year 2007-08 the relevant portion of the finding of the Tribunal is reproduced below for ready reference:- E-clerx Services Ltd. 32. As noted earlier the ld AR for the assessee submitted that the assessee submits that Eclerx Services Ltd. has not considered as a comparable in earlier years. Eclerx Services Ltd. is a Knowledge Process Outsourcing (KPO) Service provider which is not compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... graduates, therefore the aforesaid comparable, viz. Eclerx Services Limited was functionally different from the assessee company, and as such could not be selected as a comparable. We find that the DRP had vide its order dated 27.11.2015 passed in the case of assessee for AY 2011-12 had accepted the contention of the assessee and rejected the aforesaid comparable company, viz. Eclerx Services Limited on the basis that it was engaged in KPO service, and the department by accepting the said order of the 'DRP' for A.Y. 2011-12 by not carrying the matter in further appeal before the Tribunal, had thus allowed it to attain finality. We further find that in the assessee's own case for the immediately succeeding year, i.e A.Y 2009-10, the DRP as well as the Tribunal had held that companies engaged in KPO services cannot be compared to the routine BPO services provided by the assessee. That still further the Tribunal while disposing of the appeal of the assesses for AY 2010-11 had held that as the assessee was a routine BPO service provider, therefore it cannot be compared to high end KPO service providers such as Eclerx Service Limited. We further find that the 'Special be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rking analysis are correct. We have noted that, though the ld. AR has relied upon a number of decisions of Tribunal/co-ordinate bench. We have noted that in a recent decision of Tribunal in Willis Processing Services (I) Pvt. Ltd. (supra) on comparability, the Tribunal held as under: We though in light of our aforesaid observations had partly disagreed with certain grounds as had been averred by the Ld. A.R to facilitate exclusion of the aforesaid comparable, however as observed by us hereinabove that the aforesaid comparable viz. Coral Hub Limited (earlier known as Vishal Information Technology Limited) had a business model where services are outsourced, as against the business model of the assessee where services are rendered by employing own employees and using one's own infrastructure, on the basis of which we are of the considered view that it can safely be concluded that the said comparable was functionally different, and as such was liable to be excluded from the final list of comparables. That our aforesaid view stands fortified by the aforesaid order passed by the Tribunal while disposing of the appeal of the assesses own appeal for A.Y. 2005-06, as well as the judgm ..... 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