Revenue appeal under Income Tax Act dismissed for excluding TCS as comparable in international transactions.

The Court dismissed the Revenue's appeal under Section 260A of the Income Tax Act against the ITAT's order for the Assessment Year 2011-12. The appeal focused on the exclusion of TCS as a comparable in determining the arms length price of international transactions involving the Assessee. The Court upheld the ITAT's decision, noting the unavailability of turnover data for TCS and considering the nature of the Assessee's activities, ultimately finding TCS unsuitable as a comparable. As no substantial question of law arose, the appeal was dismissed.

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Issues:
1. Appeal by Revenue under Section 260A of the Income Tax Act against ITAT order.
2. Exclusion of comparables in determining arms length price.
3. Exclusion of TCS as a comparable.
4. Availability of turnover data for TCS.
5. Profile of the Assessee and suitability of TCS as a comparable.

Analysis:
1. The judgment pertains to an appeal by the Revenue under Section 260A of the Income Tax Act against an order passed by the Income Tax Appellate Tribunal (ITAT) for the Assessment Year 2011-12. The appeal specifically concerns the exclusion of certain comparables in determining the arms length price of international transactions involving the Respondent/Assessee.

2. While the Revenue challenged the exclusion of three comparables by the ITAT, the focus of the challenge was narrowed down to the exclusion of TCS E-Serve Ltd. The counsel for the Revenue, Ms. Lakshmi Gurung, emphasized that the exclusion of Infosys BPO Ltd. and E-Clerx Services Pvt. Ltd. had been previously upheld by the Court, and hence, the challenge was limited to TCS.

3. The ITAT had excluded TCS as a comparable based on the unavailability of segmental turnover data, which was considered crucial for determining the arms length price. However, Ms. Gurung argued that the turnover data was indeed available in the impugned order, with a specific breakdown of income attributed to 'transfer processing' and 'technical service'.

4. The Court, in its analysis, acknowledged the argument put forth by the Respondent's counsel regarding the nature of the Assessee's activities, highlighting that the Assessee was primarily engaged in BPO activities and not software development. Additionally, the Court considered the scale and operations of TCS, deeming it unsuitable as a comparable vis-a-vis the Assessee.

5. Ultimately, the Court found no error in the ITAT's decision to exclude TCS as a comparable for determining the arms length price of international transactions involving the Assessee. It was concluded that no substantial question of law arose on this issue, leading to the dismissal of the appeal by the Revenue.

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