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TMI Blog2023 (9) TMI 389X X X X Extracts X X X X X X X X Extracts X X X X ..... hort, "BNR"]. (iii) Informed Technologies India Ltd. [in short, "Informed Technologies"] 5. Before we proceed further, the following broad facts are required to be noted. 6. The respondent/assessee is a 100% subsidiary of a company going by the name, Omniglobe Information Technologies (India) LLC, which is incorporated in USA. 7. The respondent/assessee had filed its return qua the aforementioned AY on 27.11.2012, whereby, it had declared its total income as Rs. 2,01,87,160/-. 8. The respondent/assessee was issued a notice under Section 143(2) of the Income Tax Act, 1961 [in short, "The Act"] on 23.09.2013. 9. On a reference being made by the Assessing Officer (AO), under Section 92CA(3) of the Act, the Transfer Pricing Officer [in short, "TPO"], passed an order dated 29.01.2016 recommending upward transfer pricing adjustment, amounting to Rs. 6,11,78,279/-. Accordingly, the TPO recomputed the income of the respondent/assessee at Rs. 8,13,65,439/-. 11. In its order, the TPO concluded that the comparables offered by the respondent/assessee could not be accepted. 12. In place of the nine (9) comparables offered by the respondent/assessee, the TPO, inter alia, took into accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondent/assessee, without having regard to the TPO's analysis, wherein, it was noted that BNR's profit margin in the given year was 40.62%, and the segmental margin for two years preceding and succeeding the year under consideration was 33.04%. 25. Counsel for the respondent/assessee on the other hand, submitted that what the Tribunal looked at, apart from the margin of operating profit, was the specific characteristics of the services offered by the respondent/assessee and the comparables. 26. In this behalf, counsel for the respondent/assessee draws our attention to Rule 10(B)(2)(a) of the Income Tax Rules, 1962 [in short, "the Rules"]. 26.1 Furthermore, counsel for the respondent/assessee draws our attention to those parts of the Tribunal's order which dealt with, and analysed the aforementioned comparables referred to by the TPO. 27 . Counsel for the respondent/assessee also said that the enunciation of the principle as to how the comparables in such situations have to be analysed has being dealt with by a coordinate bench of this Court in Rampgreen Solutions Pvt. Ltd. v. CIT, 2015:DHC:6421-DB. 28. We have heard the learned counsel for the parties and have perused th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that in the case of assessee itself for assessment year 2011-12 this company was excluded by DRP itself vide direction dated 1.12.2015. The findings of DRP relating to this company are reproduced below: "As regards Eclerx Services Ltd. the Panel upon a consideration of the profile of Eclerx Services Ltd. arrived at the conclusion that it is a KPO. Hence, not comparable with a BPO. Therefore, this company should be excluded as a comparable. For the same reason, Acropetala technologies Ltd. being a KPO is also not held as a good comparable." In view of the above facts and circumstances the AO is directed to exclude this comparable." BNR Udyoq Ltd. We find that this company is engaged in providing medical transcription services which cannot be compared with IT enabled services. The Hon'ble Tribunal in the case of appellant for the assessment year 2011-12 in ITA No. 103 excluded Accentia Technologies Limited from the final set of comparable companies inter alia on the basis that the company provided services in the healthcare division and also engaged in the business providing of KPO services. Similarly the Hon'ble Tribunal in the case of Avaya India (P) Ltd. vs. ACIT in ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has developed relationship with the customers. From these facts and circumstances we find that this company is also not a suitable comparable therefore we direct AO to exclude this service provider also." [Emphasis is ours] 31. It may also be relevant to note that the TPO has accepted the fact that the respondent/assessee is into providing ITES and so-called BPO services, which are related to phone activation and local number portability, both to its clients and its parent company, which we have referenced hereinabove. 32. The moot question therefore, which arose for the consideration for the statutory authorities, including the Tribunal, was whether the services offered by the three (3) entities were comparable to those of the respondent/assessee. 33. The extract from the impugned order would demonstrate that, insofar as the three (3) comparables are concerned, they were providing services which were different from the respondent/assessee. 34. Acropetal was rendering Knowledge Process Outsourcing (KPO) services. The Tribunal has said that it was engaged in medical transcription services, which compendiously has been given the name Electronic Medical Record. 35. Likewise, in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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