Appeal partially allowed, Maveric Systems Ltd. included as comparable for profitability and export filter.

The Tribunal partly allowed the appeal, upholding the inclusion of Maveric Systems Ltd. as a comparable due to profitability and meeting export filter requirements. India Tourism Development Corporation Ltd. was excluded as it is a government entity with different objectives. Other comparables were not addressed separately as their inclusion became unnecessary following the decision on Maveric Systems Ltd.

---

---

Issues Involved:

1. Inclusion of Maveric Systems Ltd. as a comparable.
2. Inclusion of Caliber Point Business Solutions Ltd. and BNR Udyog Ltd. as comparables.
3. Ignoring the reliance on the ITAT Bangalore decision in Kodiak Network (India) Pvt Ltd.
4. Inclusion of Caliber Point Business Solutions Ltd. despite different financial year.
5. Inclusion of Caliber Point Business Solutions Ltd. despite being a loss-making company.
6. Inclusion of KLAS Information Systems Ltd. and Mindtree Ltd. as comparables.
7. Inclusion of R System International Ltd. despite different financial year.
8. Inclusion of Silverline Technologies Pvt Ltd. despite functional differences.
9. Inclusion of India Tourism Development Corporation Ltd. as a comparable.

Detailed Analysis:

1. Inclusion of Maveric Systems Ltd. as a comparable:

The Revenue contended that Maveric Systems Ltd. should not be included as a comparable because it is a loss-making company and fails the export filter. However, the Tribunal found that Maveric Systems Ltd. made a profit of Rs. 609.53 lakhs in the financial year 2009-10, thus it cannot be considered a continuous loss-making company. Additionally, the company met the export filter as its export turnover constituted 76.78% of the total turnover. Therefore, the Tribunal dismissed the Revenue's contention and upheld the inclusion of Maveric Systems Ltd. as a comparable.

2. Inclusion of Caliber Point Business Solutions Ltd. and BNR Udyog Ltd. as comparables:

The Tribunal noted that once the inclusion of Maveric Systems Ltd. was upheld, the consideration received would still be within the arm’s length price. Consequently, the Tribunal found it unnecessary to adjudicate the inclusion of Caliber Point Business Solutions Ltd. and BNR Udyog Ltd. as comparables. These grounds were dismissed as withdrawn/not pressed.

3. Ignoring the reliance on the ITAT Bangalore decision in Kodiak Network (India) Pvt Ltd.:

This issue was not separately addressed in detail as the Tribunal found it unnecessary to adjudicate the grounds related to the inclusion of certain comparables once the inclusion of Maveric Systems Ltd. was upheld.

4. Inclusion of Caliber Point Business Solutions Ltd. despite different financial year:

Similarly, this issue was not separately addressed in detail for the same reason as above.

5. Inclusion of Caliber Point Business Solutions Ltd. despite being a loss-making company:

This issue was also not separately addressed in detail for the same reason as above.

6. Inclusion of KLAS Information Systems Ltd. and Mindtree Ltd. as comparables:

This issue was not separately addressed in detail as the Tribunal found it unnecessary to adjudicate these grounds once the inclusion of Maveric Systems Ltd. was upheld.

7. Inclusion of R System International Ltd. despite different financial year:

This issue was not separately addressed in detail for the same reason as above.

8. Inclusion of Silverline Technologies Pvt Ltd. despite functional differences:

This issue was also not separately addressed in detail for the same reason as above.

9. Inclusion of India Tourism Development Corporation Ltd. as a comparable:

The Revenue sought the exclusion of India Tourism Development Corporation Ltd. on the grounds that it is a loss-making company and fails the export filter. However, the Tribunal noted that this company is a Government of India entity, and government companies are not driven by profit motives alone but also by social obligations. As held by the Hon’ble Bombay High Court in CIT vs. Thyssen Krupp Industries India (P.) Ltd., government companies are not comparable to private companies. Therefore, the Tribunal directed the exclusion of India Tourism Development Corporation Ltd. from the list of comparables in respect of the business support services segment.

Conclusion:

The appeal filed by the Revenue was partly allowed. The Tribunal upheld the inclusion of Maveric Systems Ltd. as a comparable and directed the exclusion of India Tourism Development Corporation Ltd. from the list of comparables in the business support services segment. Other grounds were dismissed as withdrawn/not pressed.

---