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TMI Blog2025 (5) TMI 864X X X X Extracts X X X X X X X X Extracts X X X X ..... Act in pursuance of the directions dated 27 June 2022 issued by the Hon'ble Dispute Resolution Panel (hereinafter referred to as Hon'ble DRP), on the following grounds, which are independent of and without prejudice to each other, On the facts and in the circumstances of the case and in law, NFAC based on the directions of Hon'ble DRP, has Ground challenging the non-applicability of APA to international transactions of the Appellant with its AE in UK. 1. erred on the facts, in circumstances of the case and in law by not applying the arm's length rate as agreed in the APA with Arthur J. Gallagher & Co. USA to similar international transactions not covered in the APA and proposing an upward adjustment amounting to INR 2,06,94,009 to the value of international transaction pertaining to provision of business support services to Arthur J. Gallagher Services (UK) Limited, United Kingdom Without prejudice to the above; General ground challenging the transfer pricing adjustment of Rs. 2,06,94,009 2. erred in proposing an upward adjustment amounting to INR 2,06,94,009 to the value of international transaction pertaining to provision of business support services t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia Limited Overseas Manpower Corporation Limited Aristotle Consultancy Private Limited PR Pundit Public Relations Private Limited Inappropriate acceptance of certain additional companies as comparable to the business support services of the Appellant for AY 2018-19 6. erred by concluding that the following companies are comparable to the business support services provided by the Appellant and hence, should be considered while computing the operating margins of comparable companies for arriving at arm's length price Tech Mahindra Business Services Limited Manipal Digital Systems Private Limited CES Limited MPS Limited Integra Software Services Private Limited Access Healthcare Services Private Limited Erroneous comparison of full-fledged risk bearing entities with the Appellant's captive operations without making any risk adjustment 7. erred in comparing full-fledged risk bearing entities with the Appellant's captive operations without making any risk adjustment on account of differences between the functional and risk profile of comparable companies vis-à-vis the risk profile of the Appellant. Erroneous levy of penalty under section 270A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erating cost. The TPO in the order has mentioned that the profit level indicator of the Assessee [OP/OC] was 13.3%. The Transfer Pricing Officer rejected the Transfer Pricing Study Report of the Assessee for the reasons discussed in the order. The Transfer Pricing Officer, then arrived at following set of comparables : S.No ITES Comparables Turnover Cr Weighted WCA (OP/OC for Comp Cos) 1 Datamatics Business Solutions Ltd. 71.47 5.65% 2 Integra Software Services Pvt. Ltd. 103.24 13.94% 3 Tech Mahindra Business Services ltd. 703.6 18.04% 4 Manipal Digital Systems Pvt. Ltd. [Merged] 25.01 23.19% 5 C E S Ltd. 74.42 23.29% 6 Access Healthcare Services Pvt. Ltd. 436.58 23.88% 7 M P S Ltd. 18.01 58.48% Place 3 35th Percentile 18.04% 4 Median 23.19% 5 65th Percentile 23.29% Assessee's PLI 13.30% 2.2 Thus, the Transfer Pricing Officer held that the transaction of providing business support services was not at Arms' Length Price as the profit level indicator OP/OC of the Assessee was 13.3%, whereas as per the TPO it should have been 23.19%based on the comparables selected by TPO. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (PUN)-TP) (AY 2017-18) Schlumberger India Technology Centre Pvt Ltd v/s DCIT, Pune [ITA No 640/PUN/2021] (AY 2016-17) Credence Resource Management Private Limited v/s ACIT Circle 1 (1), [ITA No. 133/PUN/2021] (AY 2016-17) Veritas Software Technologies India Private Limited vis DCIT TP-2, Pune [ITA No 207/PUN/2021] (AY 2016-17) CES Limited FIS Solutions Software (India) Private Limited [TS-623-ITAT- 2023(PUN)-TP] (AY 2018-19) Vodafone Global Services Private Limited vis ACIT Circle 1(1), Pune [TS-221-ITAT-2023(PUN)-TP] (AY 2017-18) Transperfect Solutions India Pvt Ltd v/s ACIT (Circle 7), [ΓΓΑ Νο 331/PUN/2021] (AY 2016-17) Schlumberger India Technology Centre Pvt Ltd vis DCIT, Pune [ITA No 640/PLJN/2021] (AY 2016-17) Credence Resource Management Private Limited v/s ACIT Circle 1 (1), [ITA No. 133/PUN/2021] (AY 2016-17) Veritas Software Technologies India Private Limited v/s DCIT TP-2, Pune [ITA No 207/PUN/2021] (AY 2016-17) MPS Limited Rage Frameworks India Private Limited v/s ACIT (Circle 5), Pune [ITA No.674/PUN./2022] (AY 2018-19) BNY Mellon International Operations (India) Pvt Ltd [TS-497-ITAT- 2023(PUN)-TP) (AY 2016-17) V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the paper book which is the annual report of Manipal Digital Systems Private Limited. It is observed that as per the Note-22.01 of the Annual Report, Manipal Digital Systems Private Limited's sale consist of ITES, Pre-media Work and e-Book/Other Books Distribution. We have studied the Annual Report and we could not get separate figures for ITES, Pre- media work and e-book/other books distribution. Thus, the sales appearing in the Annual Report of Manipal Digital Systems Private Limited consist of ITES and Distribution Activities. Assessee is exclusively in ITES. Therefore, the functions performed by Manipal Digital Systems Private Limited are not comparable to assessee. Hence, we are of the opinion that Manipal Digital Systems Private Limited is not comparable to the assessee, accordingly, we direct AO/TPO to delete it. 6.1 We find support from the order of the ITAT Pune in RAGE Frame Works India Private Limited Vs. ACIT in ITA No.674/PUN/2022. CES Limited : 6.2 Ld.AR relied on the order of ITAT Pune in the case of Vodafone Global Services Private Limited Vs. ACIT, ACIT Circle-1(1), Pune [ITA No.198/PUN/2023], Transperfect Solutions India Pvt. Ltd., Vs. ACIT [ITA No.331/PUN/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect from December 21, 2017 by transfer of Software and Intellectual Properties registered in its name to MPS Limited. 6.3.2 These are extraordinary events.Forthese two reasons, the FAR of the MPS Ltd, is not comparable with FAR of the assessee. The TPO has erred in not considering the two important events. The Ld.DR has not made any submission regarding these two important events. We find support from the order of ITAT Mumbai in the case of Syngenta Services P. Ltd,Vs.ACIT in ITA No.1905/Mum/2022 order dated 07/12/2023 for A.Y.2018- 19.Hence, we are of the opinion that MPS Limited is not comparable to the assessee, hence we direct the AO/TPO to exclude it. Access Healthcare Services Private Limited : 6.4 The Ld.TPO has observed that it is in the business of ITES services, hence comparable to the assessee. Ld.TPO has also noted that as per the Annual report there is only one segment-ITES. Ld.AR submitted that Access Health Care Services P Ltd is in the business of specialized services i.e. Revenue Cycle Management, hence it is a KPO and not comparable to the Assessee. 6.4.1 We have perused the Annual Report of the Access Health Care Services P. Ltd, which has been filed by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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