TaxTMI 
TaxTMI 
TaxTMI 
2016 (5) TMI 1333
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....he international transactions of the Appellant pertaining to provision of information technology ('IT /CSD') and information technology enabled services ('ITeS') do not satisfy the arm's length principle envisaged under the Act and in doing so, have grossly erred in: 2.1. not appreciating that none of the conditions set out in section 92C(3) of the Act are satisfied in the present case; 2.2. disregarding the Arm's Length Price (,ALP') as determined by the Appellant in the Transfer Pricing (,TP') documentation maintained by it in terms of section 92D of the Act read with Rule 10D of the Income-tax Rules, 1962 ('Rules') as well as fresh search; and in particular modifying/ rejecting the filters applied by the Appellant; 2.3. rejecting comparability analysis undertaken by the Appellant in the TP documentation/ fresh search and conducting a fresh comparability analysis based on application of additional revised filters, or disregarding Appellant's filters in determining the ALP for the international transactions; 2.4. disregarding multiple year/ prior years' data as used by the Appellant in the TP documentation and holding that curren....
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....pport services to its group companies. It also undertakes software development services for developing software applications, which are used within the Group companies. The IT enabled network management and other back office support services performed by assessee, primarily include remote monitoring and maintenance of Equant global network platforms and services, coordination, remote configuration, and implementation of quality customer networking solutions. Further under the category of software development services assessee is engaged in the providing routine contract software development services relating to the development and maintenance of application companies like HR and accounting. 3.2 Reference u/s 92CA was made for determination of arms length pricing in case of following international transaction entered into by assessee: S. No Transaction Value of Transaction Amount Of Adjustment Tax Demand on the adjustment Interest u/s 234B Total Tax demand 1 ITeS Segment 1,75,65,56,73 111,34,42,279 2 Contract software development services Segment 25,14,75,552 2,00,44,748 88,72,802 51,46,224 1,40,19,030 3 Purchase of networking equip....
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....0,673 3.5 Aggrieved by the order of Assessing Officer, assessee is now in appeal before us. 4. Ld. A.R. has submitted that assessee has selected TNMM for its TP study, which is not disputed. The only issue for our consideration is in respect of certain comparables which the assessee claims to be covered by the order of this Tribunal in assessee's own case for the Assessment Year 2010-11 in I.T.A.No. 1202/Del/2015 vide order dated 21.01.2016. We shall first take up ITeS Segment of comparbles: 4.1 Before us, Ld. A.R. addressed a limited argument for excluding the following comparables in bench-marking PLI of ITeS which are as under: i. Accentia Technology Ltd. ii) Infosys BPO Ltd. iii) TCS E-Serve Ltd. i. Accentia Technology Ltd:- Ld. A.R. submitted that the Tribunal in assessee's own case for the Assessment Year 2010-11 (supra), rejected the inclusion of this company as comparable on the ground that it is a KPO. The coordinate bench of this Tribunal has rejected this comparable by holding as under: "As pointed out by the learned counsel for the assessee, there was amalgamation of a company during the relevant year, and the said company, therefore, cannot be considere....
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....owing the decision of this Tribunal in assessee's own case, for the Assessment Year 2010-11(supra), we are inclined to exclude this company from the final list of comparable. ii. Infosys BPO Ltd:- 4.4 Ld. A.R. submitted that the Tribunal in assessee's own case for the Assessment Year 2010-11 (supra) has rejected the inclusion of this company as comparable on the ground that it is engaged in high-end integrated services. The coordinate bench of this Tribunal has rejected this comparable by holding as under: "We have considered the rival contention regarding exclusion of Infosys BPO Ltd. It is engaged in high end integrated services and therefore it is functionally dissimilar. The Infosys brand is indisputably is a huge brand and definitely, result of that brand goes to this comparable. Therefore, the brand of Infosys definitely results in opening higher profits to this company. In view of the following decisions, the same is required to be excluded and hence it is ordered accordingly." 4.5 On the contrary, the Ld. D.R. supported the order of DRP and Ld. TPO. He thus prayed for inclusion of this company as a comparable. 4.6 We have perused the orders of the authorities below and....
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.... Tribunal in assessee's own case, for the Assessment Year 2010-11 (supra), we are inclined to exclude this company from the final list of comparable. 5. Now, we shall take up the next segment of computer software, being IT (CSD) segment: Before us, Ld. A.R. submitted that the following comparables have been excluded by this Tribunal in assessee's own case for the Assessment Year 2010-11 which are as under: a. Infosys Ltd., b. Persistent Systems Ltd., c. Wipro Technology Services Ltd., d. Zylog Systems Ltd. a. Infosys Ltd.:- The ld.AR submitted that the DRP has rejected this comparable in assessment year 2010-11 and therefore this company was not contended to be excluded before this tribunal by the assessee for assessment year 2010-11(supra). He submitted that following the rule of consistency this comparable may be excluded for the year under consideration. On the contrary, the Ld. D.R. supported the order of the authorities below and prayed for inclusion of this company as a comparable. 5.1 We have perused the order of the authorities below, and the DRP's order for assessment year 2010-11. 5.2 We are of the considered opinion that a consistent approach must be followed....
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.... by both the parties. We have perused the order of this Tribunal for assessment year 2010-11(supra) in assessee's own case. It is observed that there is no difference in the functional profile of the assessee for the year under consideration with that of the assessee for assessment year 2010-11. As rightly contended by the Ld.AR, this company has been excluded from the list of comparables by this tribunal for assessment year 2010-11 for the reasons reproduced hereinabove. Respectfully following the decision of this Tribunal in assessee's own case, for the Assessment Year 2010-11(supra), we are inclined to exclude this company from the final list of comparable. c. Wipro Technology Services Ltd:- 5.6 Ld. A.R. submitted that the Tribunal in assessee's own case for the Assessment Year 2010-11(supra), rejected the inclusion of this company as comparable on the ground that this company is a subsidiary of Wipro Ltd, which has a considerable brand name, and further that the entire revenue during the year in this company is covered by a master service agreement entered into by breakthrough with CITI group services. The coordinate bench of this Tribunal has rejected this comparable by hol....
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....s its products and has operation in Wifi place and broadband connectivity. It is apparently an onsite service company. This is evident from the various comparables of only reports and related documents produced before us. Zylog system Ltd also undergone into the business of restructuring where it is clear Dugout fair flex matrix. Therefore, it is apparent that the company, which have undergone the business restructuring process during the year, cannot be held to be a comparable in view of the extraordinary circumstances. The company is also owning significant intangibles and carrying on research and development activities ownership significant intangibles cannot be held to be a comparable with the assessee and therefore on this ground too this comparable is ordered accordingly to be excluded. 5.10 On the contrary, the Ld. DR supported the order of DRP and Ld. TPO. He thus prayed for inclusion of this company as a comparable. 5.11 We have perused the orders of the authorities below and the submissions made by both the parties. We have also perused the order of this Tribunal for assessment year 2010-11 (supra) in assessee's own case. It is observed that there is no difference in th....