TaxTMI 
TaxTMI 
2015 (8) TMI 43
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Infosys BPO Ltd and M/s. TCS e-Serve Limited on the ground of exceptionally large scale of operations and thereby ignoring the fact that high or low turnover do not influence the margins of the comparables? 3. Whether on the facts and circumstances of the case, the Hon'ble DRP is justified in deleting M/s e-Clerx Services Ltd regarded as KPO by ITAT ignoring the fact that such a minute comparison reduces transfer pricing study to comparison between replicas of companies? 4. Whether on the fact and circumstances of the case, the Hon'ble DRP is justified in deleting comparable M/s Accentia Technologies Ltd for extraordinary even on the grounds of extraordinary events like mergers, acquisitions ignoring the fact that turnover is n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sion: We have gone through the order of the TPO. The objections raised by the assessee have been verified with the TPO order. the TPO has not applied any upper turnover filter and has not gone into verticals/horizontals and high end or low end distinction of the comparable companies. The Panel is of the opinion that M/s. Infosys BPO and TCS E Serve Ltd. should not be included as comparable in view of the advantageous brand value along with high turnover of Rs. 1000 crores and above. Similarly, M/s. Accentia Technologies Ltd., should be excluded from extraordinary event, after verification of the fact and extraordinary event and infact on finacials. E Clerix Services Ltd. should be excluded as in assessee's own case, the Hon'ble ITAT....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he BPO business. It was further submitted that DRP while rejecting Infosys BPO and TCS e-Serve Ltd., however, rejected the objections of assessee with reference to TCS e-Serve International Ltd, which is also similarly placed. As far as TPO is concerned, all the three companies are selected after due analysis and referred to the relevant findings of the TPO in this regard. 4. Coming to the observation of DRP about the extraordinary event in the case of Accentia Technologies Ltd., it was the submission of the DR that even after merger of another sister concern which is also a BPO, there is no impact on financials as the profit margin has slightly come down over the profits in earlier years. Therefore, TPO's observations should have been....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed the company, as it was providing KPO services whereas assessee is providing simple BPO services, being back office services. He also referred to the TPO's order to submit that assessee's services are not KPO services as contended by the DR. 6. We have considered the rival contentions and perused the orders of the TPO and DRP on the issue. As far as Accentia Technologies Ltd., is concerned, the DRP did not direct to exclude the comparable but directed the AO to verify whether there is any extraordinary event which had an effect on financials. Since it is AO who on verification excluded the comparable, we do not see any reason to interfere with the direction of the DRP. As far as Eclerx Services Ltd., is concerned, DRP has given a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....)]. Therefore, there seems to be some merit in Revenue's grounds. Since the DRP did not give any detailed reasoning and did not consider the TPO's order in its correct prospective, we are of the opinion that as far as exclusion of these two companies are concerned, DRP should have given a detailed order. For this purpose, we remit the matter to the DRP for limited purpose of giving detailed order on the contentions raised by Revenue in ground No. 2. This ground is considered allowed for statistical purposes. As stated above, ground No. 3 and 4 are rejected. 7. Coming to the issue raised in ground No. 5 & 6, the issue of excluding telecommunication charges from the total turnover while excluding the same from the export turnover is ....