2015 (8) TMI 263

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....ivities primarily comprise of processing of insurance claims, data entry and other support services in the healthcare sector. An international transactions of export of I.T enabled services amounting to Rs. 2,42,55,000/- was reported. The assessee chose ten companies as comparable to demonstrate that the international transaction was at Arm's Length Prices (ALP). The Transfer Pricing Officer (TPO) discarded the choice of comparables made by the assessee with reasons. He chose twenty five fresh comparable companies and applied Transactional Net Margin Method (TNMM) to benchmark this international transaction. That is how, he determined Arm's Length Margin of the comparables at 26.11% of operating cost. Applying the same to the assessee's int....

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....Infosys Ltd., as the latter is a full-fledged risk taking entrepreneur with diversified business including software product, consulting application, design development, re-engineering and maintenance etc. Infosys Ltd. has developed/owns proprietary products like Finacle, whereas the assessee, being a captive unit, does not own any such proprietary product. Unlike Infosys, the assessee does not have any substantial intangible assets. Similarly, Infosys has spent a lot on Research and development, whereas the assessee has not undertaken any such activity in rendering services to its AE. Apart from the above, there are several other factors which make Infosys as incomparable with the assessee. The Hon'ble Delhi High Court in CIT Vs Agnity Indi....

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....d. AR in this regard. When a company is functionally similar to that of the assessee company, the same cannot be excluded merely because of its turnover at a higher or lower level. Here it is important to mention that sec. 92C(1) of the Income-tax Act, 1961 provides for the computation of Arm's Length Prices by one of the methods prescribed therein. First proviso to sec. 92C(2) clearly provides that when more than one price are determined by the most appropriate method, then the Arm's Length Prices shall be taken to be the arithmetic mean of such prices. It does not talk of excluding the companies with high or low turnover or high or low profit rate. Recently the Delhi Tribunal in Nokia India Pvt. Ltd. Vs DCIT (ITA No. 242/D/2010 etc.), vid....

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....cord by the ld. DR to show that the functions performed by this company in the relevant year were any different. When we consider the nature of assessee's business, which is primarily that of processing insurance claim and data entry, it becomes vivid that Eclerx Service Ltd. cannot be considered as functionally comparable with the assessee company. The same is therefore, directed to be excluded from the list of comparables. v) & vi) Maple Esolutions Ltd. and Triton Corp. Ltd. 9. We have heard both the sides and perused the relevant material on record. Both these companies are inter-related entities. During the year under consideration, there was acquisition of 100% shares of Maple Esolutions Ltd. by Triton Corp. Ltd. and thus, Maple Esol....