AI Drafter 
TaxTMI 
TaxTMI 
2016 (12) TMI 1585
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....e Amount (Rs) Most appropriate method Provision of ITES (received or receivable) Bank of America National Association 472,46,87,363 TNMM Bank of America Securities LLC 44,97,95,840 TNMM Payment towards professional services Bank of America N.A. (Foreign branch) 1,18,44,421 TNMM Payment towards support cost Bank of America N.A. (Foreign branch) 53,93,280 TNMM Reimbursement of IT services cost Bank of America National Association 24,77,238 TNMM Payment towards services Bank of America National Association 1,45,78,949 TNMM Payment for employee compensation and other costs Bank of America Management Corporation 16,45,53,731 TNMM Interest payment on loan Bank of America Management Corporation 28,36,293 CUP Method 4. Assessee also maintained the relevant transfer pricing (TP) documentation as required u/s 92D of the Act r/w Rule 10D of the Income-tax Rules, 1962 (Rules). In the TP documentation maintained by the Company, Transactional Net Margin Method (TNMM) was selected as the most appropriate method for determining the arm's length price (ALP) for the international transactions wi....
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....0 6 Genesys International Corporation Limited 47.19 48.15 7 Infosys BPO Limited 827.68 20.03 8 Mold-tek Solutions Limited 17.85 96.66 9 HCL Comnet Systems & Services Limited 388.73 32.97 10 Datamatrics Financial Services Limited (Seg) 6.19 34.87 11 Cosmic Global Limited 5.87 24.30 12 Crossdomain Solutions Private Limited 26.59 26.96 13 I-services India Private Limited 13.39 9.73 14 R Systems International Limited (Seg) 21.33 4.30 15 ICRA Online Limited (Seg) 8.23 11.22 16 Spanco Limited (Seg) 41.70 8.94 17 E4e (earlier known as Nitanny) 25.82 16.87 18 Aditya Birla Minacs Worldwide Limited 183.08 -0.55 19 Asit C Mehta Financial Services Limited 4.24 9.42 20 Caliber Point Business Solutions Limited 53.14 10.97 29.16 Subsequently, AO has passed the draft assessment order dated 26 December 2011 by incorporating the TP adjustment proposed by TPO. Assessee has communicated to the AO to exercise the option of filing an appeal before Ld.CIT(A). Thus the AO has passed a final as....
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....It was the submission that there was an Extraordinary situation during the year. Accentia's annual report for the financial year 2007-08 clearly shows business restructuring/peculiar economic circumstances during the year under consideration. It was further contended that the employee cost of Accentia is only 16.81 % of total operating cost. The relevant employee cost calculation of Accentia was given below to substantiate the contention: Particulars Amount (Rs) Reference Total operating cost as per TPO's order (A) 34,93,32,496 As per TPO's order Employee Cost: Salary and Allowances to Staff 5,48,44,678 AR Pg. 58 Contribution to ESI 38,507 AR pg. 58 Contribution to PF 5,76,925 AR pg. 58 Staff Welfare Expenses 17,08,901 AR pg. 58 Total employee cost (B) 5,71,69,011 Employee cost % 16.37% 10.1. The TPO did not agree to the contentions of assessee with regard to extraordinary business operations. Assessee did not raise its contentions with regard to employee cost filter before the TPO. Ld. CIT(A) has rejected the contention of assessee with regard to Accentia's extra....
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....for the A.Y. 2007-08. The TPO had considered Accentia Technologies Ltd. as a comparable. The DRP however held that the said company cannot be compared as a comparable owing to extra ordinary events that took place during the previous year. The Tribunal upheld the order of the DRP observing as follows :- "I. Accentia Technologies Ltd. 10. It is the submission of the assessee that this company cannot be treated as a comparable because of uncomparable financial results arising out of amalgamation in the company. In this regard, the assessee has relied upon the order of the DRP for the assessment year 2008-09 in assessee's own case. It is seen that the DRP while considering similar objection placed by the assessee in the case of another company, viz. Mold Tek Technologies Ltd., in the proceedings relating to the assessment year 2008-09, has observed in the following manner- "17.5. In addition to the above, the Director's Report of the company for the FY 2007-08 revealed the merger and the demerger. A company known as Techmen Tools Pvt. Ltd. had amalgamated with Mold-tek Technologies Ltd. with effect form 1st October, 2006. There was a de- merger of Pl....
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....aid down by the Hyderabad Bench of the ITAT is squarely applicable to the present case also. Similar View was also taken in the case of Symphony Marketing Solutions India(p) Ltd (supra) by the Bangalore Bench. It is clear that during the previous year there were extra ordinary events that took place in this company which warrants exclusion of this company as a comparable. We therefore hold that this company cannot be considered as a comparable". 10.4. Respectfully following the decision of the Co-ordinate Bench, we direct the AO/TPO to exclude Accentia Technologies Limited from the list of comparables. II. Coral Hub Limited ('Coral') Formerly known as Vishal Information Technologies Limited: 11. It was submitted that Coral Hub Limited (formerly known as Vishal Information Technologies Limited) is functionally different and operates on a different business model. It primarily outsources its work to the vendor's vis-a-vis the Assessee which carries out the entire work on its own. The relevant details are tabulated below: Computation of outsourcing cost to total cost of Coral: Particulars Amount (Rs) Reference Salary Cost 21,68,01,923 AR pg....
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....e AO/TPO to exclude Coral Hub Limited (Formerly known as Vishal Information Technologies Limited) from the list of comparables. III. Eclerx Services Limited ('Eclerx'): 12. It was submitted that this company is functionally different as it is engaged in providing high end services in the nature of KPO activities like Data Analytics, and customized process solutions. These include data analytics, operations management, audits and reconciliation, metrics management and reporting services. Further there was an extraordinary situation of merger during the year. Eclerx acquired UK-based Igentica Travel Solutions Limited on July 27,2007. The integration process was on track as of March 2008. This fact was evident as per Page Nos. 14, 18 & 19 of annual report of Eclerx. The TPO did not agree to the contention of assessee that Eclerx is functionally different and involved in high end KPO services. However, assessee has not raised contention on extraordinary situation before TPO. Ld. CIT(A) rejected the contentions of assessee on functional difference, however has not commented on contention of assessee with regard to extraordinary situation of Eclerx. 12.1. Assessee placed....
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....rvices. 15. On considering the objections of the assessee in relation to this company, we accept the contention of the assessee that this company cannot be taken as a comparable both for the reasons that it was having supernormal profit and it is engaged in providing KPO services, which is distinct from the nature of services provided by the assessee." We are of the view that in the light of the decision of the Hyderabad Bench referred to above, this company cannot be regarded as a comparable for the reason that it was having extraordinary event and super normal profits. Similar view was also taken in the case of Symphony Marketing Solutions India(p) Ltd (supra) by the Bangalore Bench. 12.3. Respectfully following the decision of the Co-ordinate Bench, we direct the AO/TPO to exclude Eclerx Services Limited from the list of comparables. IV. Mold-tek Technologies Limited ('Moldtek'): 13. It was submitted that this company is functionally different as it is engaged in providing engineering design services for construction of buildings by using design tools like CADI CAM, Stadd Pro by employing highly skilled software engineers for the purpose. These....
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....in two business segments: Plastic division: The plastic division is engaged in the manufacture of tube & oils, paints, pet products, consumer products, etc. The company demerged the said segment effective 1 April, 2007 and transferred the business unit to the Company Plastics Lt. The extract from the annual report confirms the fact that the Company had restructured its operations resulting in demerging the plastic segment business. Information Technology (IT) division: The IT division (also referred to as the KPO division by the company) of the company specializes in providing structural design and detailing services which can be categorized as structural engineering services. The structural engineering services provided by the IT division of the company cannot be classified as falling with the scope and ambit of ITES services. On the contrary, the said services would fall under the category of engineering services. Excerpts from the Annual Report of the company Page 10 of the Annual Report for the FY 2007-08 contains the following observation regarding the KPO division of the Company: 'The Company has achieved about 56.49% growth in....
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....bmissions, assessee prays to exclude Genesys International Corporation Ltd., from the list of comparable companies. 14.2. We have considered the rival contentions and perused the orders relied on. As far as this comparable is concerned, the same has been decided by the Co-ordinate Bench in the case of Hyundai Motors India Engineering P. Ltd., Vs. ITO in ITA No. 1850/Hyd/2012 (AY. 2008-09) dt. 21-02-2014, wherein the Coordinate Bench held 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 technologies. From the notes to accounts of this company, it is seen that this company is engaged in providing geographical information services comprising of photogrammetry, remote sensing cartography, data conversion related computed based services and other related ser....