TaxTMI 
TaxTMI 
2015 (6) TMI 35
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....sment, the TPO noted that the assessee during the impugned assessment year has entered into international transaction as under : Sr.No. Name & Address of the AE Description of transaction with AE Amount received/paid as per books (Rs.) 1 Occeans Connect (UK) Limited Outbound/Inbound telemarketing/Call centre service 8,32,10,579/- The TPO further noted that the assessee has charged its Associate Enterprise at cost + 12% basis. The assessee has considered TNM method to be the most appropriate method for benchmarking its transaction with AE with return on capital employed/operating profits as the appropriate PLI. However, while carrying out the comparative working, the assessee has mentioned that none of the companies for whom the data is available on the public domain can be compared with that of the assessee company as the nature of services offered, size and industry verticals of all the companies are different from that of the assessee company. The assessee also justified the working for the margin of 12% over costs by submitting as under which has been reproduced by the TPO and which reads as under: "....... III) ....
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....to be taken for benchmarking the international transaction pertaining outbound/inbound telemarketing/call centre services following TNM method, the details of which are as under : Sr.No. Name of the company PLI (OP/OE) 1 Maple Esolutions Ltd 34.86% 2 Saffron Global Ltd. 24.72% Average 29.79% 5. The assessee objected to the adoption of the above 2 companies for benchmarking the international transaction stating that assessee is not aware whether the selected comparable companies operate under similar contracts and similar circumstances. It was argued that Ocean Connect (I) Pvt. Ltd., is wholly owned by OCUK. All technology, hardware and software specifications have been decided by OCUK. The finance for this has also been provided exhaustively by OCUK. The assessee further stated that all the risks other than the pure risks are borne by OCUK which is also responsible for marketing, customer services, legal and financial aspects OCIPL is only executing the contract as per the instruction of OCUK. It was further argued that no such adjustment was made in the preceding years. It was argued that OCUK has incurred loss during 2004-05....
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....g the other 8 comparables which he has initially selected from the prowess process. However, the Ld.CIT(A) was also not satisfied with the arguments advanced by the assessee and upheld the addition made by the AO/TPO. While doing so, he held that the TPO after examining the issue in detail issued the show cause notice wherein he had given the details about the 9 comparables found during the T.P. study and why 2 are proposed to be adopted. If the assessee had any objection on that issue, the right forum and the opportunity was to have objected to before the TPO. Since the assessee has not done so he cannot be permitted to raise an issue which was specifically putforth before him by the TPO and was not objected to and therefore by implication it has to be taken to have been accepted. According to the Ld.CIT(A) the objections being raised now on the exclusion of the 7 comparables will require de novo examination of the TP issue which cannot be permitted unless it is established that proper opportunity was not granted. According to him the transaction between the assessee and the AE are between the parent company and the subsidiary and therefore the agreement is undisputedly between 2 ....
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....ench of the Tribunal in the case of Stream International Services Pvt. Ltd. Vs. ACIT vide ITA No.8290/Mum/2011 order dated 10-10-2014 for A.Y. 2007-08 (copy of which was filed during the course of hearing) he submitted that the Tribunal in the said decision at para 13 of order has held that Mapple ESolutions was under serious indictment in fraud cases. Accordingly, following order of the Tribunal for A.Y. 2006- 07 in ITA No.8997/Mum/2010 the Tribunal had directed to exclude this company from the list of comparables for A.Y. 2007- 08 also. Referring to the said decision he submitted that the company Triton Corporation Ltd. was also involved in fraud for which it was held that the financial results of the company are not reliable. The Tribunal further held that whenever a company or its directors are found to be involved in a fraud, the Coordinate Benches have taken the consistent view of excluding the said company from the final list of comparables as the financial results are not reliable. 11. Referring to the reply given to the TPO vide letter dated 24- 10-2008 (copy of which is placed at paper book page 7) he drew the attention of the Bench to the submissions made where it was....
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....considered the various decisions cited before us. The assessee in the instant case has entered into international transaction with its AE amounting to Rs. 8,32,10,579/-. It has charged its AE at cost + 12% basis. Further, the assessee has considered TNM method to be most appropriate method for benchmarking its transaction with AE with return on capital employed by operating profits as the appropriate PLI. Further, although in the TP study report the assessee had identified 6 companies, however, it is mentioned that none of the companies for whom the data is available on the public domain can be compared with that of the assessee company as the nature of services offered shows that the industry verticals of the companies are different from that of the assessee company. We find the TPO after rejecting the various submissions made by the assessee during TP assessment proceedings considered Maple Esolutions Ltd. with PLI of 34.86% and Saffron Global Ltd. with PLI of 24.72% as the final set of comparables for determining the ALP of the international transactions carried on by the assessee and accordingly made upward adjustment of Rs. 1,48,03,162/- to the International Transaction. 15....