TaxTMI 
TaxTMI 
2015 (9) TMI 954
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....AO/TPO, for verification and disposal. 3. First, we shall take up the issue relating to admission of additional grounds. Such additional grounds are reproduced hereunder: "29. The transfer pricing adjustment calculated by the Learned Transfer Pricing Officer ("TPO") was based on factually incorrect profit and loss account segmentation of the of the Appellant, which was discovered during the assessment proceedings for Assessment Year 2008-09 and also accepted by the Ld. TPO for the relevant previous year. The error was on account of non-allocation of Head Office expenses such as bank charges, Professional Charges, Audit Fees, Rent, Electricity, Telephone, Internet, Conveyance; and Shared Service costs like HR & Admin, IT, Finance & Management to the packaging segment earlier. The mark-up on total cost for Software and Information Technology enabled services segments, based on corrected profit and loss account segmentation is 22.62% each for the financial year 2006-07. 30. The learned A.O be directed to recomputed the allowance of claim u/s. 10A of the appellant having regard to the revised and correct segmental margins of the appellant." ....
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....id order is reproduced here under; "I have carefully gone through the petition of the taxpayer and the information available on record. Vide letter dated 14.08.2013, the case was also fixed for hearing on 26.8.2013. The taxpayers AR Sri Supratim Mukherjee, appeared on behalf of the taxpayer on 26.8.2013 and was heard. In this case, the TPO had in the TP order dated 18.01.2013, considered the segmental results furnished in the TP documentation, and not the revised segmental results furnished by the taxpayer later, as it was seen that no basis/evidences in support of the allocation of expenses the revised segmental financials, were furnished by the taxpayer". 11. We are therefore, of the opinion that the directions of the DRP has not been properly considered by the lower authorities. If the assessee's claim for revised segmental results are found to be acceptable, there is every possibility that pricing of its international transactions would come within +/- 5% of the PLI worked out by the TPO himself. Then the issue regarding exclusion and/or inclusion of comparables may not arise at all. We therefore, set aside the orders of the authorities below and remit the issue back ....
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....93,312,222 187,425,079 Total Operating Cost (TC) 35,115,527 41,636,572 83,908,598 160,660,697 Operating Profit (OP) 7,942,873 9,417,885 9,403,624 26,764,382 OP/TC of the assessee. 22.62% 22.62% 11.21% 10. As already noted by us at para 04 above, the coordinate bench in assessee's own case for A.Y. 2009-10, had directed the TPO to consider the revised segmental results, after verification. Accordingly, for impugned year also, we direct the AO/TPO to redo the analysis considering the segments, including the allocated HO expenditure between various segments, and proceed in accordance with law. 11. Vis-à-vis the ITES segment, Ld. AR submitted that though allocation of HO expenditure would have a bearing on the PLI of the assessee, the comparables considered by the TPO. were inappropriate. According to him, out of the 28 comparables considered by the TPO M/s. Eclerx Services Ltd, Mold-Tek Technologies Ltd. (Seg), and Vishal Information Technologies Ltd, were required to be excluded by virtue of the decision of Hyderabad Bench of this Tribunal in the case of Capital IQ Information Systems (India) (P.) Lt....
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....eld by the Special Bench in the case of Dy. CIT v. Quark Systems (P.) Ltd.( ITA No. 100/CHD/2009, Dated:- 22-10-2009), we are of the opinion that the taxpayer is not stopped from pointing out a mistake, though such result is a mistake of the evidence adduced by the taxpayer itself. In other words, adjustment that could be made on ALP being an evolving one, to oust an assessee from raising a claim just because it had included a comparable by error of understanding of facts, would in our opinion be unfair. 15. For seeking exclusion of these three companies mentioned above, assessee has placed reliance on the decision of Hyderabad Bench of this Tribunal in Capital IQ Information Systems India (P.) Ltd's case (supra ), which was also for the very same assessment year. The said company was also providing ITES service and while considering the said segment, this Tribunal had held as under at paras 14 and 15 of its order dt 23.11.2012 : "Eclerx Services Ltd: 14. The assessee has objected for this company being taken as comparable mainly on the ground that it was having a supernormal profit of 89%, and as such it cannot be taken as a comparable in view of the decision of the M....
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....supernormal profit at 113%. Therefore, it cannot be taken as a comparable. In support of his contentions, learned Authorised Representative ITA No.l961/Hyd/2011 M/s. Capital IQ Information Systems (India) Pvt. Ltd., Hyderabad 18 for the assessee has relied upon the orders of the DRP for the assessment year 2008-09 and the orders of the ITAT Mumbai Bench in the case of M/s Teva India P. Ltd. v. DCIT - 2011-TII-28-ITAT-MUM-TP. 13. On careful consideration of the submissions of the assessee we find that the DRP, as already stated earlier, in the proceedings for the assessment year 2008-09 has accepted the assessee's contention that this company cannot be treated as comparable because of exceptional financial result due to merger/de-merger. In view of the aforesaid, we accept the assessee's contention that this company cannot be treated as comparable. That apart, it is also a fact that this company has shown super normal profit working out to 113%. The Income-tax Appellate Tribunal, Mumbai Bench in the case of Teva India Pvt. Ltd. (supra ) has observed that companies showing supernormal profit cannot be treated as comparable. The relevant observations of the Tribunal in that....
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....ribunal Mumbai Bench in the case of ACTT v. M/s. Maersk Global Service Centre(India) Pvt. Ltd. (supra ), a copy of which is submitted before us, has also directed for the exclusion of the aforesaid company since it has outsourced a considerable portion of its business. 17. After considering the submissions of the learned Authorised Representative for the assessee, we find that the DRP, in the proceedings for the assessment year 2008- 09 in assessee's own case, after taking note of the composition of the vendor payments of Coral Hub for the last three years, and the fact that it has also commenced a new line of business of Printing on Demand(POD), wherein it prints upon clients request, concluded as follows- "18.4. In view of this major difference in functionality and the business model, this Panel is of the view that 'Coral Hub' is not a suitable comparable to the taxpayer and hence needs to be dropped form the final list of comparables." In case of ACIT v. M/s. Maersk Global Service Centre (supra ), the ITAT Mumbai Bench has also directed for exclusion of the aforesaid company, by observing in the following manner- "Insofar as the cases of Tulsyan Technolog....