TaxTMI 
TaxTMI 
2016 (9) TMI 1282
X X X X Extracts X X X X
X X X X Extracts X X X X
....Ltd. and M/s. Helios & Matherson Information Technology Ltd. from the list of cmoparables on the basis of previous years documentations of the assessee without verifying the functions performed by the comparables in the year under consideration ? (iii) Whether on the facts and circumstances of the case, the Tribunal erred in excluding Transworld Infotech Ltd. from the list of comparables only on the basis that the said concern had prepared financials for the year ending on June, 2007 against the financials prepared by the assessee as on March, 2007? (iv) Whether on the facts and circumstances of the case, the Tribunal erred in excluding Vishal Information Technology Ltd. from the list of comparables without appreciating the fact that the said company operates only in ITEs segment and functionally comparable to the assessee's ITEs segment? (v) Whether on the facts and circumstances of the case, the Tribunal erred in excluding Vishal Information Technology on the basis of RPT filter without appreciating the fact that the data given in the notes to accounts was incomplete? (vi) Whether on the facts and circumstances of the case, the Tribunal err....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Act determining the upward adjustment of International Transaction at Rs. 10.38 crores. 5. Consequent to the TPO's order dated 29th October, 2010, the Assessing Officer passed a draft assessment order u/s 143(3) r.w.s. 144C(13) of the Act determining the respondent assessee's income at Rs. 21.63 crores in view of the transfer pricing enhancement of Rs. 10.38 crores. 6. Being aggrieved, the respondent assessee preferred objections to the Dispute Resolution Panel (DRP) from the draft assessment order. By directions dated 20th May, 2011, the DRP did not disturb the proposed adjustment in the draft assessment order. This resulted in the Assessing Officer passing a final order dated 5th October, 2011 under Section 143(3) r/w Section 144C(13) of the Act. This resulted in the total income of the respondent assessee being determined at Rs. 21.63 crores as against the income declared in the Return of income at Rs. 11.25 crores. 7. Being aggrieved, the respondent assessee challenged the order dated 5th October, 2011 before the Tribunal. By the impugned order dated 30th April, 2013, the Tribunal set aside the order dated 5th October, 2011 to the extent it related to inter....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tware Ltd. (d) We find that this is a purely factual determination and the RPTs have to be considered in the context of total transactions and not by a conversion formula as adopted by the Assessing Officer. In fact, as recorded in the impugned order of the Tribunal, the determination of percentage of RPT as adopted by it is similar to the method adopted by the TPO in the earlier assessment years. It may be noted that an identical method as directed in the case of M/s. FCS Software Ltd. was also done in case of M/s. Compucom Ltd. by the Tribunal. However, the Revenue has made no grievance in case of the impugned order to the extent of M/s. Compucom Ltd. No reason for the same is also forthcoming. (e) In the above view, question (i) as proposed being a factual, it does not give rise to any substantial question of law. Thus, not entertained. 10. Re. Question (ii) : (a) M/s. KALS Information Solutions Ltd. (KALS Ltd.) and Helios & Matheson Information Technology Ltd. (Helios & Matheson Ltd.) were included by the TPO in his comparability analysis. The grievance of the respondent assessee before the Tribunal was that both are functionally different from the respondent assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he data relating to the financial year in which the international transaction has been entered into. In the above view, the Tribunal held that as the financial period during which the international transaction was entered into is different, M/s. Transwork Ltd. could not be treated as comparable and thus not includable. (b) We find that the provisions of Section 10B(4) of the Rules are clear in as much as it obliges that the data to be used for comparability analysis should be of the same financial year in which the international transactions were entered into by the tested party. In fact, this principle / mandate was applied by the TPO while considering M/s. Power Soft Global Services Ltd. as a comparable because it had a financial year ending in September, 2006 and not 31st March, 2007 as in the case of respondent assessee. The same yardstick ought to have been applied by the TPO while considering whether Transwork Ltd. was comparable. The submission on behalf of the Revenue that the mandate of Rule 10B of the Rules can be ignored as the difference is only of three months is without any basis. No such liberty is granted in terms of Rule 10B(4) of the Rules. (c) The findings ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....back office services to its holding company. (b) The impugned order of the Tribunal while accepting the grievance of the respondent assessee records as a fact that M/s. Vishesh was concerned with providing high end knowledge services. This would require a superior level of man power and human resources than that required by the respondent assessee in providing back office services to its holding company. The aforesaid difference further evidenced from the fact that the profit margin of M/s. Vishesh is not comparable with that of the respondent assessee as recorded by the Tribunal. This was essentially due to qualitative difference in the nature of services provided. In the above view, the impugned order of the Tribunal excluded M/s. Vishesh from comparability analysis. (c) We find that the impugned order of the Tribunal renderes a finding of fact that the services rendered by M/s. Vishal Ltd. of KPO and LPO are inherently different from the nature of services being rendered by the BPO i.e. by the respondent assessee. (d) We find that the impugned order of the Tribunal rendered a finding of fact and the same is not been shown to be perverse in any manner. Thus, the question....