TaxTMI 
TaxTMI 
TaxTMI 
2014 (11) TMI 129
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.... by Parexel International Corporation, USA. The assessee company mainly provides routine services such as operationalising the 'casereport form' in computer system and undertaking certain control tests of the images sent by the Associate Enterprises (AE). The return of income for the year under consideration was filed by it on 30.9.2009 declaring total income of Rs. 3,66,153 after claiming deduction of Rs. 4,86,25,156 under S.10AA of the Act. During the course of assessment proceedings, it was noticed by the Assessing Officer that the assessee company has provided IT enabled processing services to its AEs and a total amount of Rs. 28,90,32,391 is charged for such services as under- A.E. Nature of transaction Amount (Rs.) Perceptive Informatics Inc. USA Provision of ITES 28,26,28,797 Parexel international Ltd., UK Payment for professional services 56,20,434 Parexel International Holding BV, The Netherlands Reimbursement of expenses 7,83,160 28,90,32,391 In order to determine the Arm's Length Price(ALP) of these international transactions of the assessee company with its Associated Enterprises(AE), a reference was made by the Assessing Officer to the Transfer Pricing Officer....
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....ansactions of the assessee company with its AE was worked out by him at Rs. 31,54,74,618, as against the price of Rs. 29,13,84,003 charged by the assessee. The difference of Rs. 2,40,85,665 accordingly was worked out by the TPO, as TP adjustment that is required to be made in respect of international transactions of the assessee with its AEs. 5. When the addition on account of TP adjustment worked out by the TPO was proposed to be made by the Assessing Officer to the total income of the assessee in the draft assessment, objections were filed by the assessee before the Dispute Resolution Panel, which inter alia included the objections of the assessee in respect of comparability analysis carried out by the TPO and the application of additional filters by the TPO, which according to the assessee, resulted in inclusion of certain companies in the comparability analysis which did not satisfy the test of comparability. The Dispute Resolution Panel did not find merit in the submissions made by the assessee on this issue and holding the action of the TPO to be proper, they declined to interfere with the same. The DRP also overruled substantially the other objections raised by the assessee....
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....he Learned Assessing Officer/Learned TPO in rejecting the transfer pricing ("TP") documentation. 3. That the Learned. Assessing Officer/Learned TPO erred in rejecting the comparability analysis carried out by the Appellant in the TP documentation and should not have carried out a fresh comparability analysis for determining the arm's length price. 4. That the Learned. Assessing Officer/Learned. TPO erred in rejecting the companies similar to the Appellant in functions, asset base and risk profile while performing comparability analysis. 5. That the Learned Assessing Officer/Learned TPO erred in rejecting companies similar to the Appellant in functions, asset base and risk profile while performing comparability analysis 6. That the Learned Assessing Officer/Learned TPO erred in erred in selecting fresh companies which are larger in size as compared to the Appellant and companies that are earning super normal profits. 7. That the Learned Assessing Officer/Learned TPO erred in : Using the data available at the time of assessment proceedings instead of those available as on the date of preparing the TP documentation, Not applying multiple year data for comparable companies and u....
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.... para 19.2 of the order passed in the case of Excellence Data Research Pvt. Ltd., Hyderabad (supra), being relevant in this case, are reproduced below- "19.2 We have considered the rival contentions and noticed that this company operates in a different business strategy of acquiring companies for inorganic growth as its strategy. In earlier years on the reason of acquisition of various companies, being an extraordinary event which had an impact on the profit, this company was excluded. As submitted by the learned counsel, this year also, the acquisition of some companies by that company may have impact on the profit. Considering the profit margins of the company and insufficient segmental data, we are of the opinion that this company cannot be selected as a comparable. Moreover, this is also not a comparable in the case of M/s. Mercer Consulting (India) P. Ltd. (supra), which indicates that the TPO therein has excluded it at the outset. In view of this, we direct the Assessing Officer/TPO to exclude this comparable, from the list of comparables selected." 13. As pointed out by the learned counsel for the assessee, there was acquisition of a company by M/s. Accentia Technologies L....
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....al transcription and Translation charges. When we are examining the results of this company from the Accounts BPO segment alone, there is no need to examine the position under other segments. The entire outsourcing is confined to Translation charges paid at Rs. 3.00 crore, which is strictly in the realm of the Translation segment, revenues from which are to the tune of Rs. 6.99 crore. If this segment of Translation is not under consideration for deciding as to whether this case is comparable or not, we cannot take recourse to the figures which are relevant for segments other than accounts BPO. Thus it is held that this case cannot be excluded on the strength of outsourcing activity, which is alien to the relevant segment. 13.3. However, we find this case to incomparable on the alternative argument advanced by the ld. AR to the effect that total revenue of the Accounts BPO segment of Cosmic Global Limited is very low at Rs. 27.76 lacs. We have discussed this aspect above in the context of CGVAK's case and held that a captive unit cannot be compared with a giant case and thus excluded CG-VAK with turnover from Accounts BPO segment at Rs. 86.10 lacs. As the segmental revenue of BPO s....
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....gmental data for diversified service port folio. Moreover this company can be considered as KPO and we are of the opinion that this company is not comparable to assessee's services. We therefore, direct the Assessing Officer/TPO to exclude this company." 17. At the time of hearing before us, the Learned Departmental Representative has raised a contention that M/s.Excellence Data Research P. Ltd. is not functionally similar with that of the assessee company, and therefore, the decision of the Tribunal rendered in the case of M/s. Excellence Data Research Ltd. (supra) to exclude Eclerx Services Ltd. from the list of comparables on the ground of functional difference, cannot be straight away applied in the case of the assessee, to exclude this comparable. As noted by the Tribunal in its order, Excellence Data Research P. Ltd. was rendering back office/ data segregation, content development and support services in relation to analysis, content research and projections for all types of business information, while the assessee company in the present case, as pointed by the TPO in his order, is engaged in the business of providing IT enabled services to its group concerns, such as operat....
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.... Circular SO 890 (E) dated 26.9.2000 which provides a detailed list of products or services that can be covered under the ITES for the purposes of Section 10A and 10B of the Act. In this Circular, Information Technology Enabled Products/Services have been divided into fifteen categories, starting with Bank Office operations, Call centres etc. and ending with Website services. From the very description of such services, it is palpable that even though these fall under the overall ITES category, but some of them are quite different from each other. To cite, service at Sl.No. (vi) of this Circular is 'Geographic Information System services and at Sl. No. (vii) is 'Human Resources Services.' No doubt, all these fifteen categories of products/services have been included under the major head of 'Information Technology Enabled Services' (ITES), but most of them are quite distinguishable from others. In our considered opinion, the fifteen broad categories set out in this Circular cannot per se be claimed as similar to each other. A cursory look at these products/services transpires that some of them are functionally quite different from each other. Further the level of investment required ....
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....es which are in the nature of low end services, and the same therefore, cannot be considered as functionally different for the purpose of comparability analysis. We, therefore, reject the contention raised by the Learned Departmental Representative, and direct the Assessing Officer to exclude Genesys International Ltd. from the list of comparables, it being a functionally different company. Infosys BPO 20 As regards selection of Infosys BPO as a comparable company, the learned counsel for the assessee has contended that the said company cannot be taken as comparable because of its uncomparable size of operations. He has contended that the turnover of the said company was many times higher than that of the assessee during the year under consideration. Although the Learned Departmental Representative has contended that the size of operations does not matter as far as selection of comparables is concerned especially in the sector of IT Enabled services, it is observed that similar issue has been decided by the Hon'ble Delhi High Court in the case of CIT V/s. Agnity Technologies Pvt. Ltd. (219 Taxman 26) holding that huge turnover companies like Infosys and Wipro cannot be considered ....