TaxTMI 
TaxTMI 
2015 (1) TMI 917
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.... is, exclusion and inclusion of certain comparables. 3. The brief facts of the case are that, the assessee company is wholly own subsidiary of Maersk GSC Holdings A/S, which in term is a downstream subsidiary of APMM Group [called as Maersk Group] which is world's largest shipping company/group. The assessee company is mainly engaged in providing back office support to its AEs, which relates to processing, data entry, reconciliation of statements, audit of shipping documents such as bills of lading and other is technical support services. It also provides IT enabled services such as process support, process optimization and technical support. The functional profile of the assessee company whether it is a low end services or high end services has been dealt by the Hon'ble Special Bench in the case of the assessee in para 80, which reads as under:- 80. A perusal of the functional profile of the assessee company shows that although the services claimed to be provided by it to the AEs as - services such as process support, process optimization and technical support are not in the nature of low end services such as voice or processing as they require some degree of special knowledge a....
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....71/- IT Service Centre activity-IT Services 22,92,64,214/- The assessee had shown its operating profit upon total cost at 13.29%. In the transfer pricing study report, the assessee had chosen 13 comparable which were as under:- 1. Allsec Technologies Ltd. 2. Cosmic Global Ltd. 3. Systems International (Segmental) 4. Spanco Telesystems and Solutions Ltd. (Segmental) 5. Informed Technologies India Ltd. 6. ICRA Online Ltd. 7. ICRA Techno Analytics Ltd. 8. Datamatics Financial Services Ltd. 9. Caliber Point Business Solutions Ltd. 10. Inhouse Productions Limited 11. KPIT Cummins Global Business Solutions Ltd. 12. e4e Healthcare Business Services Pvt. Ltd. (formerly, Nittany Outsourcing Pvt. Ltd. 13. Shreejal Info Hubs Ltd. The average OP/TC of such comparables worked out at 10.93% and hence it was reported that assessee's margin are at arm's length. However, the TPO rejected all the comparables selected by the assessee, except for one comparable namely, Cosmic Global Ltd. The assessee's comparables were rejected on the ground that they were not engaged into KPO kind of activities or did not fulfilled the selection criteria adopted by him. The TPO's reasoning fo....
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....Regarding Eclerx Services Ltd. He submitted that, it too has been rejected by the Special Bench in the earlier years. Regarding, Accentia Technologies Ltd. he made his detail submissions, as to why, same cannot be included. The same shall be dealt in later part of this order. 8. On the other hand Ld. DR strongly relied upon order of the TPO as well as the DRP and submitted that earlier years precedence cannot be followed in such cases as the financials of the current year has to be seen for the comparability analysis. 9. We have heard the rival submissions and also perused the relevant material placed before us. The only dispute before us, as contended by the learned senior counsel, is restricted to exclusion of 3 comparables adopted by the TPO, that is, M/s. Coral Hubs Ltd. (erstwhile Vishal Information Technologies Ltd.); M/s. Eclerx Services Ltd.; and Accentia Technologies Ltd.; and inclusion of 2 comparables selected by the assessee, that is, Allsec Technologies Ltd. and R. System International Ltd. (Segmental), 10. First of all, we shall discuss Vishal Information Technologies Ltd. now known as Coral Hubs Ltd. This company has been subject matter of dispute in assessee's ca....
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....lytics, operations management, audits and reconciliation, metrics management and reporting services. It also provides tailored process outsourcing and management services along with a multitude of data aggregation, mining and maintenance services. It is claimed that the company has a team dedicated t development automation tools to support service delivery. These software automation tools increase productivity, allowing customers to benefit from further cost saving and output gains with better control over quality. Keeping in view the nature of services rendered by M/s. eClerx Services Pvt. Ltd. and its functional profile, we are of the view that this company is also mainly engaged in providing high end services involving specialized knowledge and domain expertise in the field and the same cannot be compared with the assessee company which is mainly engaged in providing low end services to the group concerns. 83. For the reasons given above, we are of the view that if the functions actually performed by the assessee company for its AEs are compared with the functional profile of M/s. eClerx Services Pvt. Ltd. and Mold-Tec Technologies Ltd., it is difficult to find out any relative....
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....lowing calendar year accounting it cannot be rejected. In A.Y. 2008-09, the DRP in the light of functions performed by the assessee as well as BPO segment of R. System International, has accepted the same to be comparable company. This fact has also been noted by the Special Bench in para 12 of the order. 14. Thus, consistent with the fact that in A.Y. 2007-08, TPO himself has accepted R. System as a good comparable and DRP in A.Y. 2008-09 has also accepted the same to be comparable, which has been upheld by the Special Bench, therefore, we do not find any reasons to deviate from such a precedence of the earlier years, so as to come to a different conclusion without any material difference on record for this year. Thus, we direct the TPO/AO to include R. System International Ltd. in the list of final comparables for bench marking the assessee's margin. 15. Lastly, with regard to Allsec Technologies Ltd. it is seen that TPO has rejected the said comparables on the ground that it is a consistent loss making company and moreover this company does not qualify 75% export filter. The additional ground for rejecting the said comparable is that, it is not engaged in KPO services. On the ....
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....comparables falls within +/- 5 range, then needless to say that, no adjustment should be made. Thus the grounds relating to TPO adjustment (ground no. 1 to 12) is treated as partly allowed for the statistical purpose. 18. In ground No. 13, the assessee has challenged the disallowance of Rs. 1,47,48,864/- on account of software license expenses. The assessing officer noted that assessee has incurred following expenses for obtaining software licenses:- i License cost of software paid to Hewlett Packard India Sales P. Ltd. 1,25,91,473/- ii Clementine License Software to South Asia Pvt. Ltd. 12,14,131/- Iii CISCO Call Manager License to JQ Network Pvt. Ltd. 8,07,046/- iv Dame ware Remote Control license to Income Systems P. Ltd. 1,36,214/- 1,47,48,864/- The Assessing Officer treated the said expenditure as capital in nature and allowed depreciation @ 25%. The DRP on the other hand upheld the AO's finding that it is a capital expenditure, however directed the AO to allow depreciation @ 60%. 19. Before us, learned counsel submitted that the issue of allowability of software expenses is now covered by the decision of the CIT Vs. Asahi India Safety Glass Ltd. reported in (2012) 346 ....
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.... already been offered for tax on accrued basis in the earlier years and therefore same cannot be doubly taxed in this year on the ground that the bank has considered the income in this year as per their TDS certificate. Therefore, no addition is called for. The Ld. CIT/DR on the other hand submitted that this matter should be remitted back to the file of the AO to see that, there is no double taxation and if some interest income has been taxed in the earlier years then it should be excluded in this year, provided the assessee is able to demonstrate and reconcile the same. 23. After considering the rival submissions and on perusal of the assessee's submissions filed before the TPO as well as the DRP, we find that the assessee had shown accrued interest for Rs. 39,64,386/- in its P&L Account in the A.Y. 2008-09. As per the TDS certificate for the year ending 31st March, 2008, interest of Rs. 26,92,977/- has been shown to be earned in A.Y. 2008-09. Thus the assessee seems to have offered excess interest income on accrual basis. There is thus apparent mismatch in the interest income as per the books and TDS certificate. Therefore, in the interest of justice, we restore this matter bac....