Tribunal Excludes Companies for Incorrect Income Inclusion, Partially Allows Appeal, and Remands for Further Examination

The Tribunal directed the exclusion of Jeevan Scientific Technologies Ltd. for AY 2011-12 due to incorrect inclusion of income from the ERP segment. For AY 2012-13, the Tribunal partially allowed the appeal, excluding Universal Print Systems Ltd. and remanding the consideration of BNR Udyog Ltd. for further examination by the AO/TPO.

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Issues Involved:
1. Inclusion of Jeevan Scientific Technologies Ltd. as a comparable for determining the ALP of international transactions for AY 2011-12.
2. Inclusion of Universal Print Systems Ltd. as a comparable for determining the ALP of international transactions for AY 2012-13.
3. Inclusion of BNR Udyog Ltd. as a comparable for determining the ALP of international transactions for AY 2012-13.

Summary:

Issue 1: Inclusion of Jeevan Scientific Technologies Ltd. for AY 2011-12

The assessee contested the inclusion of Jeevan Scientific Technologies Ltd. in the list of comparables by the AO/TPO, arguing that the income from BPO operations was less than Rs.1 crore, and thus it should be excluded as per the Tribunal's earlier directions. The Tribunal found that the AO/TPO had wrongly included income from ERP segment along with BPO operations, which was inappropriate. The Tribunal directed the AO/TPO to exclude Jeevan Scientific Technologies Ltd. from the list of comparables, as the income from BPO operations was only Rs.79.21 lakhs.

Issue 2: Inclusion of Universal Print Systems Ltd. for AY 2012-13

The assessee argued against the inclusion of Universal Print Systems Ltd. due to the absence of sufficient information to determine segmental margins and functional dissimilarity. The Tribunal had previously remanded the issue to the TPO for fresh consideration. The TPO issued a notice under section 133(6) but did not receive the required information. The Tribunal held that without the necessary information, the TPO could not reasonably or accurately make adjustments. Consequently, the Tribunal directed the AO/TPO to exclude Universal Print Systems Ltd. from the list of comparables.

Issue 3: Inclusion of BNR Udyog Ltd. for AY 2012-13

The assessee challenged the inclusion of BNR Udyog Ltd., citing related party transactions exceeding 25% and functional dissimilarity. The Tribunal noted that the AO/TPO had not properly examined the issue as per the Tribunal's earlier directions. The Tribunal directed the AO/TPO to follow the earlier directions and reconsider the inclusion of BNR Udyog Ltd. The Tribunal also noted that the AO/TPO should verify the related party transactions and functional comparability properly.

Conclusion:

The Tribunal allowed the appeal for AY 2011-12, directing the exclusion of Jeevan Scientific Technologies Ltd. from the list of comparables. For AY 2012-13, the Tribunal partly allowed the appeal for statistical purposes, directing the exclusion of Universal Print Systems Ltd. and remanding the issue of BNR Udyog Ltd. for fresh consideration by the AO/TPO.

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