9911796707
TMI Blog2024 (10) TMI 1210X X X X Extracts X X X X X X X X Extracts X X X X ..... al came to be admitted by us on 18 May 2018 on the following question of law:- "Did the Income Tax Appellate Tribunal (ITAT) fall into error in holding that the M/s TCS E-Serve International Ltd.; M/s TCS E-Serve Ltd. and M/s Infosys BPO Limited could be taken into account as comparables in regard to ALP determination and the assessee's international transaction reported during A.Y. 2010-11?" 2. The principal issue which arises is whether the Tribunal fell in error in upholding the inclusion of TCS E-serve International, TCS E-Serve Limited and Infosys BPO Limited as comparables in respect of the Arm's Length Price [ALP] determination pertaining to the appellant's international transactions for Assessment Year [AY] 2010-11. The Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see and the services rendered by the company, we are of the opinion that the company cannot be rejected on the ground of functional dissimilarity. 6.8 Further, the contention of Ld. counsel to exclude the company on the ground of non-availability of segment information is also not tenable as the company was functioning in one segment of ITES only." 4. Proceeding then to evaluate the challenge to the inclusion of TCS E-Serve, the Tribunal held:- "7.1 The Ld. counsel submitted that pursuant to the acquisition by 'Tata' group, there is increase in revenue of 12.17% and growth in profit before tax of 226%. The reasons for excluding a company from set of comparables on the basis of turnover or profit has already been rejected by us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the company are identical to the activities of TCS e-serve International Ltd., which are held to be in the nature of ITes and functionally similar to the assessee. Accordingly, we hold that the company cannot be excluded on the ground of functional dissimilarity. 7.3 The arguments of the Ld. counsel on the issue of non-availability of segment information, deemed related party transactions and entity having access to Tata brand are identical to the arguments taken in the case of TCS e-serve International Ltd. Thus following our finding in the case of comparable TCS e-serve International Ltd, we reject these arguments taken in respect of TCS e-serve Ltd also. 7.4 In view of the discussion, we uphold the direction of the Ld. ORP inretain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving impact of higher brand value expenses on the profitability of the company. 9.4 On the issue of large-scale operations of the company, we find that company was having turnover of Rs. 1,126.63 crores as against Revenue of Rs.42.70 crores reported by the assessee from provision of IT back office support services. The turnover of the companies 26.38 times the turnover of the assessee. In our opinion, turnover of the company cannot be a ground for rejecting a comparable until and unless, there is wide variation. Accordingly, this contention of the Ld. counsel of the assessee for excluding the company as comparable, is also rejected. xxxx xxxx xxxx 9.7 In view of the above discussion, we uphold the direction of the Ld. ORP to retain t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resulted in higher profitability. 9. We find that insofar as TCS E-Serve and Infosys BPO Limited are concerned, the Tribunal had in the appellant's own case pertaining to AY 2011-12 excluded those two entities from the list of comparables following the decision rendered by this Court in Pr. Commissioner of Income Tax v BC Management Services Pvt. Ltd. 2017:DHC:7305-DB.. In AY 2011-12, TCS E-Serve International had been excluded from consideration by the TPO itself. 10. The exclusion of the three comparables in question would clearly merit acceptance bearing in mind a subsequent decision rendered by this Court in PCIT v. Evalueserve Sez (Gurgaon) Pvt. Ltd ITA 241/2018 decided on 26 February 2018.. Dealing with the aforenoted comparables, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... positive manner. This inference too in the opinion of Court, cannot be termed as unreasonable. The rationale for exclusion is therefore upheld. The assessee was aggrieved by the inclusion of Accentia a Software Development Company. The Revenue is aggrieved by the exclusion of Accentia from the TP analysis. The DRP had directed its deletion. We observe that the ITAT has noticed the unavailability of the segmental data so far as these comparables are concerned. Furthermore, the functionality of this entity was concerned, it is different from that of the assessee; Accentia was engaged in KPO services in the healthcare sector. 14. In view of the above findings, this Court is of the opinion that no substantial question of law arises. The appe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
