TaxTMI 
TaxTMI 
2015 (11) TMI 1662
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....ecords are : The assessee is a wholly owned subsidiary company of Deere and Co. USA. The assessee is engaged in providing software development services, ITES and sales support services to John Deere group entities {Associated Enterprises (AEs)}. The assessee is having three divisions; (i) Software Development; (ii) Design, Engineering & Testing, and (iii) Business Support Services. For benchmarking its international transactions with its AEs, the assessee selected TNM Method as the most appropriate method. As per the assessee the margin of operating profit to total operating cost of the comparables entities was 12.72% and that of the assessee is 12%. Since, the margin of the assessee is within +/- 5% range, the transaction of providing software services to the AEs was adopted as ALP. The assessee selected 23 companies as comparable entities for software development services and 11 companies as comparable for design, engineering, testing and authoring services. For business support services the assessee selected 18 companies as comparables. 4. The assessee furnished TP study report before the Transfer Pricing Officer (TPO). In respect of software development services, the TPO rej....
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....xpenses between eligible and non-eligible units on the basis of revenue receipts of the respective units. The Assessing Officer also made disallowance u/s. 40(a)(i) and 43B of the Act in respect of unit eligible for deduction u/s.10A. The Assessing Officer disallowed deduction u/s. 10A on the disallowance made u/s. 40(a)(i) and 43B of the Act in respect of profits of STPI unit. Aggrieved by the draft assessment order, the assessee filed objections before Dispute Resolution Panel (DRP). The DRP vide directions u/s. 44C(5) dated 28-08-2012 rejected the objections of the assessee. In the light of the directions of DRP the Assessing Officer passed the impugned assessment order, against which the assessee is in appeal before the Tribunal. 6. Shri Nikhil Pathak appearing on behalf of the assessee submitted that the assessee has raised primarily 3 grounds in the grounds of appeal. As far as ground No. 1 relating to disallowance of deduction u/s. 35D is concerned, the same is not pressed. Ground No. 2 relates to restricting the claim of deduction u/s. 10A on the ground that deduction u/s. 10A is not allowable in respect of disallowance made u/s. 40(a)(i) and 43B of the Act. The autho....
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....stment, the operating margin of the comparables was computed as 25.30%. The objections raised by the Ld. Counsel for assessee in respect of comparables selected by the TPO in respect of Software Division are as under: Comparables selected by the TPO Objections raised by the assessee Bodhtree Consulting Ltd. The said company is not exclusively engaged in software development services and hence, the same cannot be considered as comparable entity. The Ld. Counsel in support of his submissions relied on the decision of Coordinate Bench of the Tribunal in the case of Barclays Technology Centre India (P) Ltd. Vs. ACIT reported as 56 taxmann.com 386 (Pune)(Trib.). E-Zest Solutions Ltd. The Ld. Counsel submitted that the said company is functionally different. Pune Bench of the Tribunal in the case of Symphony Services Pune (P) Ltd. Vs. ITO reported as 46 taxmann.com 182 (Pune)(Trib.) has held that E-Zest Solutions Ltd. is not engaged in software development. Since, the said company is engaged in a different activity, it should be excluded from the list of comparables. Similar view has been taken by the Tribunal in the case of Barclays Technology Centre India (P) Ltd. (su....
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....od relevant to assessment year 2008-09 was about Rs. 225.50 Crores. In F.Y. 2006-07, the revenue generated from software development and services was 241.43 Crores. A comparative analysis of the above figures show that there was no drastic change (fall) in the revenue of the company. Further, from the perusal of annual report of Aztec Soft Ltd. on standalone basis, it is evident that there is no exceptional item on sale of any unit. Thus, the contention of the TPO that the company is in restructuring phase is not tenable. The Ld. Counsel submitted that the related party transaction (RPT) filter applied by the authorities below considering the related party transactions in respect of both revenue and expenditure in numerator and only revenue in denominator, is not correct. The correct percentage of related party transaction in the case of Aztec Soft Ltd. is 18.69% and not 25% as has been calculated by the TPO. Thus, the rejection of Aztec Soft Ltd. as comparable entity is wrong. SIP Technologies and Exports Ltd. The Ld. Counsel submitted that the company has been rejected as comparable on the ground that it has incurred loss in the current year. SIP Technologies is not a persi....
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....functionally comparable. It is engaged in the business of geospatial services and hence, it cannot be compared with the assessee company. Further, the operating margin of Genesys is 46.82% which is very much on the higher side. The Ld. Counsel submitted that the Genesys has been rejected as comparable entity in the case of Symphony Marketing Solutions India Pvt. Ltd. (supra) and Hyundai Motors India Engineering Pvt. Ltd. 152 ITD 112 (Hyderabad)(Trib.) Cosmic Global Ltd. The Ld. Counsel submitted that the said company has been held to be functionally not comparable in the case of Parexel International India Pvt. Ltd. reported as 51 taxmann.com 238 (Hyderabad)(Trib.). 10. The Ld. Counsel contended that the TPO has rejected CG-VAK Software & Exports Ltd. on the ground that it is engaged in different business and it had incurred loss in the year under consideration. The DRP has pointed out that the said company is mainly engaged in development of computer software and is not providing ITES/BPO services. The said observations of the authorities below are against the facts. CG-VAK Software & Exports Ltd. is providing ITES services similar to the one provided by the ass....
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....lopment services. However, the same were later on dropped for the reason that in the case of TIBCO Software India (P.) Ltd. reported as 56 taxmann.com 91 (Pune)(Trib.), it was held that these companies are not good comparables. Thus, the same were deleted from the list of comparable entities. The Ld. Counsel prayed for excluding the companies from the list of comparables which are either functionally not compatible with the assessee company or have abnormally high profits and to include the companies which have been dropped from the list of comparables by the TPO on one pretext or the other. 13. On the other hand Shri S.K. Rastogi representing the Department vehemently supported the findings of DRP, TPO and Assessing Officer. The Ld. DR submitted that the assessee has not maintained separate books of account in respect of the two units, eligible and non-eligible to claim deduction u/s.10A of the Act. In the absence of separate books of account, the correctness/reasonableness of allocation of expenses between the two units cannot be verified. The Assessing Officer rightly allocated the operating expenses on the basis of sales. As far as restructuring of deduction u/s. 10A on the ....
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....support of his submissions the Ld. DR placed reliance on the Special Bench decision of the Tribunal in the case of Maersk Global Centres India P Ltd. reported as 43 taxmann.com 100 (Mumbai)(Trib.)(SB) and the judgment of Hon'ble Delhi High Court in the case of Chrys Capital Investment Advisors India P. Ltd. Vs. DCIT reported as 56 taxmann.com 417 (Delhi). The Ld. DR further submitted that before rejecting the company on account of high margins, the reasons for such extreme results should be examined and after conducting detailed analysis, if it is found that normal business conditions have resulted into higher profits for an enterprises, the enterprise should be selected as a comparable. The Ld. DR prayed for sustaining the order of DRP and Assessing Officer and dismissing the appeal of the assessee. 15. We have heard the submissions made by the representative of rival sides at length. Both the sides have vehemently argued on the issues raised in the appeal. We have also examined the orders of the authorities below and perused the decisions on which both the sides have placed reliance to support their submissions. 16. The first ground raised by the assessee in appeal is w....
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....the grace period. The AO added these payments to the total income of the assessee and made an addition in the amount of Rs. 71.59 lacs. However, for the deduction under s. 10A, the addition made on account of the employees' contribution was ignored in calculating the profits eligible for deduction on the ground that these receipts were not generated out of the manufacturing activity of the assessee company. By reason of the judgment of the Supreme Court in CIT vs. Alom Extrusions Ltd. (2009) 227 CTR (SC) 417 : (2009) 32 (SC) DTR 49 : (2009) 319 ITR 306 (SC) the employer's contribution was liable to be allowed, since it was deposited by the due date for the filing of the return. The peculiar position, however, as it obtains in the present case arises out of the fact that the disallowance which was effected by the AO has not, the Court is informed, been challenged by the assessee. As a matter of fact the question of law which is formulated by the Revenue proceeds on the basis that the assessed income was enhanced due to the disallowance of the employer's as well as the employees' contribution towards PF/ESIC and the only question which is canvassed on behalf ....
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....ng and Authoring Services; and (iii) Business Support Services. The assessee applied TNM method for determining ALP in respect of all the three divisions. The Revenue has not disputed the method adopted by the assessee for determination of ALP. The dispute is with regard to selection of comparable entities for determination of ALP. To decide these issues we will first take up the entities initially selected by the assessee in the case of Software Development Services and the entities substituting by the TPO for TP study. 18.1 The assessee provided Software Development Services to Deere & Co., USA. Services provided by the assessee were in nature of computer programming, Code development, integration etc. The total turnover of Software Division is Rs. 73,52,09,170/- and operating margin to operating cost ratio is 12.50%. The assessee had initially selected 23 companies as comparable entities for determining ALP. The list of companies selected by the assessee as comparables is as under: Sl. No. Name of the company Weighted average of operating profits on operating costs (%) 1 Akshay Software Technologies Limited 6.60% 2 Aztecsoft Limited 18.16% ....
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....Software Solutions Ltd. 57.02 52.29 13 Persistent systems 27.59 26.73 14 Sasken Communication Technology 17.75 15.59 Arithmetic Mean 261.42/9 27.28 24.63 20. The TPO during TP study objected to the assessee's selection of comparables on the basis of 3 years data. The TPO confined to the data of comparable entities relating to assessment year 2008-09 only. The operating margin determined by the TPO from the set of comparables selected worked out to 27.28% after allowing the working capital adjustment, operating margin of comparables is 24.63%. However, the assessee raised objection to the selection of some of comparables adopted by the TPO. The list of comparables selected by the TPO and upheld by the DRP on which the assessee has raised objection is as under: 20.1 Bodhtree Consulting Ltd. : The assessee had initially selected Bodhtree Consulting Ltd. in its list of comparable. Subsequently, the same was taken out from the list of comparable as the said company is not exclusively engaged in software development services. The TPO again included the company in the list of comparable entity. The Ld. Counsel ....
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....t of comparables. 21. On the other hand the Ld. CIT-DR appearing for the Revenue has defended the inclusion of Bodhtree Consulting Ltd., by referring to the discussion in para 14.1 of the order of TPO. As per the TPO, the material on record does not justify the assertions of the assessee that the said concern was engaged in development and sale of software products. The Ld. CIT-DR has opposed the plea of the assessee by referring to the stand of the TPO as contained in his order. 22. We have carefully considered the rival submissions with respect to Bodhtree Consulting Limited. The plea of the assessee is that the said concern is engaged in the sale of software products, apart from considering software services, and that no segmental data is available in this context; thus, it is functionally not comparable with the assessee's activities. In this regard, we have perused the discussion made by our Coordinate Bench in the case of NetHawk Networks India Pvt. Ltd. (supra) wherein the said concern has been found to be not exclusively engaged in rendering software development services. The relevant discussion in the case of NetHawk Networks India Pvt. Ltd. (supra) is as under : ....
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....from the comparables. 29.2 On the other hand, the Id DR has filed the information collected u/s 133(6) of the I T Act and submitted that as per this information, this company has revenue from ITES activity to the extent of Rs. 2,94,85,528/-. Therefore, this company is a good comparable having functional similarity. 29.3......... 30. We have considered the rival submissions as well as the relevant material on record. The details filed by the Id DR before us has been obtained by the TPO at Hyderabad and not by the TPO of the assessee in the present case. It is stated in the letter dated 5.2.2010 written by the Chartered Accountant of Bodhtree Consulting Ltd to the TPO Hyderabad that the company is providing data cleaning services to clients for whom it had developed the software application........." 23. Considering the above, we are of the opinion that Bodhtree Consulting Limited is not engaged in the software development services and there is no segmental data comparable. Therefore, the FAR analysis goes against the TPO/AO." 23. There is no material placed before us which would require us to deviate from the conclusion drawn by the Mumbai Bench o....
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....the functions being performed by EZest Solutions Limited have not been controverted by the Revenue. Ostensibly, E-Zest Solutions Limited is rendering product development services and technology services, and the latter falls in the category of KPO services and the same have not been held by the Bangalore Bench of the Tribunal to be similar to a concern engaged in rendering of software development services, as is the assessee before us. Following the ratio of the decision of the Bangalore Bench of the Tribunal in the case of 3DPLM Software Solutions Ltd. (supra) we hold that E-Zest Solutions Limited is liable to be excluded from the list of comparables for the period under consideration. We hold so. Thus, on this aspect assessee succeeds." Thus, in view of aforesaid findings of the Co-ordinate Bench in respect of functional difference between the activities of E-Zest Solutions Ltd. and the companies engaged in software development activities (assessee being one of such software development companies), we are of the considered view that the said company has to be excluded from the list of comparables in the present case. 20.3 Helios & Matheson Information Tech.: The company was se....
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....ordingly, we direct the TPO/Assessing Officer to exclude the same from the list of comparables. 20.4 Infosys Technologies Ltd. : The assessee has sought exclusion of the said company from the list of comparables on account of disparity in scale of work and turnover. The Ld. Counsel pointed out that the said company was excluded from the list of comparable by the Tribunal in assessee's own case for the assessment year 2007-08. The Coordinate Bench had excluded the aforesaid comparable on account of huge disparity between the turnover of Infosys Technologies Ltd. and the assessee. The relevant extract of the order of Tribunal is as under: "34. Now coming to the merit of each case, we find the assessee in its TP study report has included Infosys Technologies Ltd., as comparable. From the various details furnished by the assessee, we find the TPO in its order for A.Y. 2006-07 in assessee's own case has held that Infosys is not a comparable company with that of the assessee company because of huge disparity between the turnover of Infosys Technologies Ltd. with that of the assessee company. 34.1 We find the Hon'ble Delhi High Court in the case of CIT Vs. Agnity India Technologi....
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....sh that it is engaged in providing of I T enabled services and that the said company is into development of software products, etc. All these aspects have not been factually rebutted and, in our view, the said concern is liable to be excluded from the final set of comparables, and thus on this aspect, assessee succeeds." 37.1 Similarly, we find the Pune Bench of the Tribunal in the case of PTC Software Ltd., (Supra) has observed as under : "16. The next point made out by the assessee is with regard to the inclusion of items at (9) and (11) namely Helios & Matheson Information Technology Ltd., and KALS Information Solutions Ltd. (Seg). The primary plea raised by the assessee to assail the inclusion of the aforesaid two companies from the list of comparables is to be effect that they are functionally incomparable and therefore, are liable to be excluded. In sum and substance, the plea set up by the assessee is that both the aforesaid concerns are engaged in development and sale of software products which is functionally different from the services undertaken by the assessee in its IT-services segment. 17. As per the discussion in para 6.3.2. of the order of the T....
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.... KALS Information Solutions Ltd. (Seg) as functionally incomparable. The Ld. Counsel pointed out that the aforesaid position has been accepted by the TPO in the earlier A.Y. 2006-07 and therefore, there was no justification for the TPO to consider the said concern as functionally comparable in the instant assessment year. 19. In our considered opinion, the point raised by the assessee is potent in as much as it is quite evident that the said concern has not been found to be functionally comparable with the assessee in the immediately preceding assessment year and in the present year also, on the basis of the Annual Report, referred to in the written submissions addressed to the lower authorities, the assessee has correctly asserted out that the said concern was inter alia engaged in sale of software products, which was quite distinct from the activity undertaken by the assessee in the IT Services segment. At the time of hearing, neither is there any argument put forth by the Revenue and nor is there any discussion emerging from the orders of the lower authorities as to in what manner the functional profile of the said concern has undergone a change from that in the immedia....
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....in the case of Barclays Technology Centre India (P) Ltd. Vs. ACIT (supra) is as under: "25. The last point made by the Ld. Representative was for exclusion of M/s. FCS Software Solutions Ltd. from the final set of comparables. The Ld. Representative for the assessee pointed out that the said concern is functionally dissimilar to the activities being carried out by the assessee because the said concern is engaged in the sale of software products as well as ITES activities and further that no segmental details are available. Apart therefrom, it has also been pointed out that during the year under consideration the said concern has earned abnormally high profit margin of 57.02% and for this reason also, it should be excluded from the final set of comparables. It has also been submitted that after perusing profit margins for various years, it is evidenced that the margins have widely fluctuated over the years. The following Tabulation has been placed before us :- Year Unadjusted Operating margin (OP/OC) F.Y. 2005-06 14.75 F.Y. 2006-07 19.94% F.Y. 2007-08 57.02% F.Y. 2008-09 37.07% 26. The Ld. Counsel pointed out that the operating margin of....
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....parability analysis and or the high profit margin earned by it does not reflect the normal business condition, we are of the view that the high profit margin making entity should not be included in the list of comparable for the purpose of determining the arm's length price of an international transaction. Otherwise, the entity satisfying the comparability analysis with its high profit margin reflecting normal business condition should not be rejected solely on the basis of such abnormal high profit margin." 29. The aforesaid discussion of the Special Bench reveals that a concern which has earned abnormally high profit margin cannot be excluded from the list of comparables straightaway without making appropriate investigations. As per the Special Bench, it would be appropriate to ascertain as to whether the high profit margin declared by the concern reflects a normal business phenomenon or it has resulted because of certain abnormal conditions prevailing in a particular year. As per the Special Bench, in order to carry out the aforesaid analysis, the profit margins earned by such concern in the proximate preceding and succeeding years should also be taken into consideration ....
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....tity. Accordingly, we are of the view that since, the company is earning abnormally high profits in the assessment year under consideration as compared to the profits earned in earlier financial year, the said company should not be considered as comparable entity. We direct the TPO/Assessing Officer to exclude the same from the list of comparables, accordingly. 21. Now, we will take up the companies that have been rejected by the TPO as comparable and the assessee has objected to the exclusion of the said comparable entities. 21.1 Aztec Soft Ltd. : The said company has been rejected as comparable entity by the TPO on the filter of Related Party Transaction (RPT). According to the TPO, the RPT of the said comparable was more than 25%. The TPO further observed that the said company is in restructuring phase, therefore, cannot be considered as comparable. The Ld. Counsel has placed on record the financial results of Aztec Soft Ltd. for the F.Ys. 2006-07 and 2007-08. A perusal of the profit and loss account for the said financial years shows that as on 31-03-2007 the income of Aztec Soft Ltd. from software development and services was to the tune of Rs. 241.43 Crores and for t....
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....cted as comparable. Similar view has been taken in the case of Goldman Sachs (India) Securities Pvt. Ltd. Vs. ACIT, ITA No.7724/Mum/2011, and Brigade Global Vs. ITO, ITA No.1494/Hyd/2010. In the present case, the comparable entity SIP Technologies & Exports Ltd. has suffered loss in F.Y. 2007-08 only. Therefore, it cannot be said to be a persistent loss making company. The authorities below have thus erred in excluding the same from the list of comparable entities. We direct the TPO/AO to include the aforesaid company as comparable entity. 22. Now, we proceed on to deal with the objection raised by the assessee in respect of comparables included/excluded by the TPO while benchmarking ALP of Design, Engineering Division. During the period relevant to the assessment year 2008-09 the assessee provided Designing & Engineering related services to the tune of Rs. 86,42,20,000/- to its AE. To benchmark international transaction in respect of Design & Engineering division the assessee adopted TNMM as the most appropriate method. The operating margin of the assessee company under this division is 14.30%. The assessee initially selected 11 companies as comparables. The list of the comp....
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.... ITES for the following reason:- "17.3 Vishal Information Technologies Ltd. (VIT) - In the case of this comparable, we find that the Mumbai Tribunal in the case of Mearsk Global Services (I) Pvt Ltd in ITA No.3774/Mum/2011 by order dt.9.11.2011 has held that since Vishal Information Technologies Ltd is outsourcing most of its work it has to be excluded from the list whereas the assessee in the cited case was carrying out the work by itself. In the instant case of the assessee also the assessee was carrying out its work by itself whereas in the case of VITL, it is outsourcing most of its work. We are therefore of the considered opinion that the decision of the ITAT, Mumbai in the cited case on the issue of excluding VITL as a comparable squarely applies. This decision was followed by the decision of the co-ordinate bench of this Tribunal in the case of Netlinx India(P) Ltd in ITA No.454/Bang/2011 dt.19.10.2012 wherein it was held that Vishal Information Technologies Ltd cannot be considered as a comparable. We, therefore, respectfully following the decision of the Mumbai Tribunal in the case of Mearsk Global Services (I) Pvt Ltd, direct the Assessing Officer / TPO to exclud....
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.... 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 Maersk Global service Centre India (P.) Ltd. (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 Technologies Limited and Vishal Information Technologies Limited are concerned, it is noticed from their annual accounts that these companies outsourced a considerable portion of their business. As the assessee carried out entire operations by itself, in our considered opinion, these two cases were rightly excluded." In view of the observations made by the DRP as well as the decision of the ITAT Mumbai in the case of Maersk Globa....
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....und that it is functionally different. The said company is allegedly engaged in the business of geospatial services and hence, it cannot be compared with the activities carried on by the assessee. The Ld. Counsel pointed out that the operating margin of the said company is 46.82% which is very much on the higher side. The Ld. Counsel has further pointed out that in the case of Hyundai Motors India Engineering Pvt. Ltd. (supra) and Symphony Marketing Solutions India Pvt. Ltd. (supra), Genesys International Corporation Ltd. have been rejected on the ground of functional disparity. The relevant extract of the order of Hyderabad Bench of the Tribunal in the case of Hyundai Motors India Engineering Pvt. Ltd. (supra) is as under: "V. GENESYS INTERNATIONAL CORPORATION LTD. : This company is listed at Sl. No.11 in the list of comparable companies chosen by the TPO. As far as this company is concerned, the stand of the assessee has been that this company is functionally not comparable and that it has a different employee skill set and that this company performs R&D services and also owns intangibles. This company is a geospatial services content provider specialising in land based techno....
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....ugh the Annual accounts of Cosmic Global Limited, a copy of which has been placed on record, we find that its total revenue from operations are at Rs. 7.37 crore divided into three segments, namely, Medical transcription and consultancy services at Rs. 9.90 lacs, Translation charges at Rs. 6.99 crore and Accounts BPO at Rs. 27.76 lac. The Ld. AR has made out a case that outsourcing activity carried out by this company constitutes 57% of total expenses. The reason for which we are not agreeable with the Ld. AR is that we have to examine the revenue of this case only from Accounts BPO segment and not on the entity level, being also from Medical transcription and Translation charges. When we are examining the results of this company from the Accounts BPO segment alone, there is no need to examine the position under other segments. The entire outsourcing is confined to Translation charges paid at Rs. 3.00 crore, which is strictly in the realm of the Translation segment, revenues from which are to the tune of Rs. 6.99 crore. If this segment of Translation is not under consideration for deciding as to whether this case is comparable or not, we cannot take recourse to the figures which ar....
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....sidered on merits." The Ld. DR has not been able to controvert the findings of the Tribunal. A perusal of the above order shows that Cosmic Global Ltd. is primarily engaged in providing BPO Services. Outsourcing activity carried out by the said company constitutes 57% of the total operating cost. Hence, the assessee and Cosmic Global Ltd. are functionally different. Accordingly, we hold that Cosmic Global Ltd. has to be excluded from the list of comparable. 24.4 CG-VAK Software & Exports Ltd. : The assessee include this company in the list of comparable. However, the TPO rejected the same on the ground that the said comparable is engaged in different business and has incurred loss in the year under consideration. The DRP has observed that CG-VAK Software & Exports Ltd. is primarily engaged in development of computer software and is not providing ITES/BPO services. On the other hand the contention of the assessee is that CGVAK Software & Exports Ltd. is providing ITES services. The assessee has placed on record Annual Report of CG-VAK Software & Exports Ltd. for the period relevant to the assessment year 2008-09 at pages 460 to 474 of the paper book. From the perusal of the sa....
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....rashaw Ltd., the contention of the assessee is that the said company is having abnormally high operating margin of 44.77%, therefore, the same should not be considered. Similar objection has been raised in respect of Apitco Ltd., wherein the operating margin of the company is 52.10%. Another objection raised by the assessee in respect of Apitco Ltd. is that the said company is engaged in specialized business of providing support to SME through Project Consultancy. In support of his submissions the Ld. Counsel placed reliance on the decision of Ciena India (P.) Ltd. (supra). A perusal of order of TPO shows that the assessee has raised objection with regard to Apitco Ltd. on the ground of functional disparity wherein it has been specifically stated that Apitco Ltd. is providing specialized services to SMEs in project identification, project counseling, prefeasibility reports, detailed project feasibility studies, skill development etc. The relevant extract of the services provided by Apitco Ltd. are as under: "APITCO, incorporated in 1976, is a premier Technical Consultancy Organization (TCO) promoted jointly by all-India financial institutions (IDBI, IFCI, ICICI), industry develo....
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.... Nos.3324 & 2948/Del/2013 Cluster Development, Technology Facilitation, Asset Reconstruction & Management Services, Emerging Areas. It can be seen from the nature of operations carried out by this company that the same is towards Micro enterprises development, Skill development and Project related services, etc., also including Infrastructure planning and development along with Energy related service and Cluster development. A part of its activities has got some resemblance with the nature of service provided by the assessee under this segment. The ld. CIT(A) has recorded that 'only 12% of total income of this company is from research studies which is akin to the nature of services provided by the assessee company.' This contention has not been controverted by the ld. DR with any clinching evidence. When we consider the operations of this company as enumerated above and the fact that this company has maintained accounts on entity level and there is no bifurcation available in respect of the services similar to those provided by the assessee under this segment, this company on entity level cannot be considered as comparable. We, therefore, hold that the ld. CIT(A) was justif....