TaxTMI 
TaxTMI 
2014 (12) TMI 921
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....ssee has raised as much as 9 grounds before us, the sole issue agitated at the time of hearing was Ground no.- 5 which reads as under:- 5. "The TPO/AO/CIT(A) has erred in selecting Nucleus Netsoft and GIS (India) Limited for FY 2005-06 as the company is functionally noncomparable to the Appellant." 2. The relevant facts of the case are that the assessee as per the transfer pricing study which has been accepted by the Revenue has described itself as a wholly owned subsidiary of Ameriprise Financial Inc., USA ('Ameriprise USA'). The taxpayer is a captive contract service provider engaged in providing IT enabled back office services (impugned transaction) to Ameriprise US. For providing the above services, the taxpayer is compensated on a co....
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....reof adjustment of Rs. 38,60,675/- was arrived at. 4. The taxpayer before the CIT(A) succeeded in its without prejudice alternate prayer that the OP/OC margin of Nucleus Netsoft & GIS (India) Ltd. was wrongly taken as 89.67% and the correct margin ought to have been 48.64%. However on the arguments that it was wrongly taken as a comparable the taxpayer failed to convince the CIT(A). It is seen that before us although the assessee has raised other grounds agitating the used of single year instead of multiple year data and has also assailed the TPO's & CIT(A)'s action in resorting to use the data available in the public domain at the time of TP/Audit and have been faulted for not confining themselves to the data which was available at the ti....
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....l following the order dated 01.03.2013 in ITA No.-4547/Del/2012 in the case of M/s Willis Processing Services (I) Pvt. Ltd. vs DCIT which on considering the identical prayer in the case of some other comparable has held that merger and demerger should not by itself make a comparable an incomparable unless by merger or demerger the company become functionally different. For the said purpose, out attention was invited to para 18.3 of the said order. Reference was also made to the order dated 14.06.2013 in Agilent Technologies International Pvt. Ltd. vs ACIT, copy filed in the Court wherein following the order of the Mumbai Bench in M/s Willis Processing Services (I) Pvt. Ltd., the issue was restored to the TPO to verify whether as a result of....
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....ld that the said company cannot be held as a comparable because of the exceptional financial results due to mergers/demerger following the view taken in, the order of the Mumbai Bench of the Tribunal in Petro Araldite (P.) ltd. vs DCIT [2013] 154 TTJ (Mum) 176. 7. We have heard the rival submissions and perused the material available on record. On a careful consideration of the above decision it is seen that whereas the Ld. AR has relied upon judicial precedent for exclusion of the specific comparable on the ground that the factum of amalgamation makes the comparable an incomparable. The Ld. CIT DR on the other hand has referred to various decisions in support of the prayer that the assessee be required to demonstrate that as a result of t....
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....sment year has held that the business model for Neclues Netsoft & GIS (India) Ltd. has changed as a result of the amalgamation. For ready-reference, we reproduce para 13 & 13.1 as under:- Nuclues Netsoft & GIS (India) Ltd. 13. "The last objection was with reference to the above company, which is on similar facts as that of Vishal Information Technologies, discussed above. It was submitted that this company is functionally different and fails under the employee cost filter. It was further submitted that there is a scheme of amalgamation of earlier company by the orders of the Hon'ble High Court of Judicature of Bombay, on 22.2.2006 and in view of amalgamation, the financials have changed and the business model also changed. Referring to the....