AI Drafter 
TaxTMI 
TaxTMI 
2015 (7) TMI 1220
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.... by the appellant and embarking on a fresh search for comparables. 3. The Hon'ble DRP and the ld.AO/TPO erred in fact and in law ij determining the ALP by adopting the financial data for a single year (i.e. the financial year 2007-08) of the comparable as against multiple year data considered by the appellant. 4. The DRP and theld.AO/TPO erred in fact and in law in using selective information, which was not available in public domain, obtained u/s133(6) of the IT Act and identifying additional comparables based on the same. 5. The Hon'ble DRP and the ld.AO/TO has erred in determining the ALP based on co. which are not comparable to the appellant due to various factors such as functional comparability, product/intangible segment financials, irreconcilable differences in accounting policy extra ordinary events/business restructuring abnormal fluctuation in margins, exceptional year, lower employee cost levels, fails TPO's own filters etc. 6. The Hon'ble DRP and the ld.TPO/AO has also erred in selecting companies which have earned super profits and super growth not in line with the industry even though a filter was applied by the lea....
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....n law and in facts in concluding that the communication expenses (being lease line charges of 2,29,89,758/-) are to be excluded from the export turnover for the purpose of computation of relief under the sec.10A of the Act. 16. The Hon'ble DRP has erred in law and on facts in upholding the ld. AO's conclusion that the said expense should not be reduced from total turnover for the purpose f computation of relied under section 10A of the Act. Disallowance under section 40a(ia) of the Act. 17. The Hon'ble DRP ld.AO has erred in disallowing an amount of Rs. 7,42,22,683/- under section40(a)(i) of the Act and upholding conclusion that the appellant has failed to deduct tax at source on payments made to certain non-resident vendors which are in the nature of royalty fees for technical service (FTS) and were subject to tax deduction at source (TDS) under provisions of Chapter-XVIIB of the Act, without considering the beneficial provisions of the relevant tax treaty". 3. Ground no.1 is general in nature and does not require any specific adjudication. 3.1 At the time of hearing, learned AR of the assessee has submitted that the assessee does not p....
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....23.30 8 Crossdomain Solutions Ltd 27.03 9 Datamatics Financial Services Ltd (Seg.) 29.11 10 E4e Halthcasre Solutions Ltd( Formerly known as Nittany Outsourcing Services Pvt.Ltd) 18.54 11 Eclerx Services Ltd 58.80 12 Genesis International Corpn.Ltd 47.40 13 Infosys BPO Ltd 19.66 14 IServices India Pvt.Ltd 10.77 15 Jindal Intellicom Pvt.Ltd -10.29 16 Mold tex Technologies Ltd 96.66 17 R Systems International Ltd (Seg.) 4.30 18 Spanco Ltd (Seg.) Earlier known as Spanco Telesystems & Solutions Ltd 8.81 19 Wipro Ltd (Seg.) 30.05 20 Alilsec Tehnologies Ltd -13.29 Average 24.75 Thus, the TPO has determined the average margin of the comparable companies at 24.75%. This set of comparables considered by the TPO also includes 5 comparables companies selected by the assessee which are as under; Sl. No Name of the comparable company Op. margin to cost (FY 2007-08) 1 Caliber Point Business Solutions Ltd 10.97 2 Cosmic Global Ltd 23.30 3 Spanco Ltd (SEg.) earlier known as Spanco Telesystems & Solutions Ltd) 8.81 4 Allsec ....
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....ospitality besides, consolidating Co's position in retail and manufacturing space. Thus, the learned AR has submitted that this Co. is functionally dissimilar to that of the assessee. Further, the Co. is declaring only one segment in its operational revenue's. Therefore, the result of the said Co. cannot be compared with that of the assessee which is in a different nature of activities which is low end ITES. The learned AR has further pointed out that though, the TPO for theAY:2010-11 proposed to include Eclerx Services Ltd in the list of comparables however, while passing the final order dated 30.01.14 by the TPO Eclerx was excluded from the final set of comparables selected by the TPO. The learned AR submitted for the AY: 2010-11 the TPO itself had excluded this said Co. by treating the same as not comparable with the assessee. He has referred the show cause notice dated 1.11.2013 at page-589 of paper book no.2 and the TPO order dated 30.1.13 at page no.602 of paper book no.2 in support of his contention that this Co. was found not comparable by the TPO for the purpose of determination of ALP in respect of ITES segment. In support of his contention the learned AR relied u....
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....-financial services and retail and manufacturing. It is claimed to be providing complete business solutions by combining people, process improvement and automation. It is claimed to have employed over 1500 domain specialists working for the clients. It is claimed that a eClerx is a different company with industry specialized services for meeting complex client needs, data analysis KPO service provider specializing in two business verticals financial services and retail and manufacturing. It is claimed to be engaged in providing solutions that do not just reduce cost but help the clients increase sales and reduce risk by enhancing efficiencies and by providing valuable insights that empower better decisions. M/s eClerx Services (P)Ltd is also claimed to have a scalable delivery model and solutions offered that include data analytics, operations management audits and reconciliation, metrics management and reporting services. It also provides tailored process outsourcing and management services alongwith multitude of data aggregation, mining and maintenance services. It is claimed that the company has a team dedicated to developing automation tools to support delivery. These software ....
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....its client we do not find any reason to take a different view that of the Special Bench in case of Maersk Global Centres India (P.) Ltd. (supra) as well as in case of Lionbridge Technologies (P.) Ltd. (supra) Accordingly, following the decision of the Special Bench in case of Maersk Global Centres India (P.) Ltd. (supra), we hold that eClerx Services Ltd is functionally dissimilar to that of the assessee in sofar as the ITES segment is concerned and therefore, the said Co. cannot be compared with the assessee Co. for the purpose of determining ALP in respect of international transactions of providing ITES to its associated enterprise. Accordingly, we direct the AO/TPO to exclude eClerx Services Ltd., (supra) from the set of comparables selected by the TPO. Mold Tex Technologies Ltd., 12. The learned AR of the assessee has referred to the director's report of M/s Mold Tex Technologies Ltd., and submitted that this Co. was not having an extra ordinary event of demerger of its subsidiary M/s Mold Tek Tech.Ltd., and amalgamated with Tekmen Tool (P)Ltd., The scheme of amalgamation was approved by the Hon'ble Andhra Pradesh High Court vide order dated 15/07/2008 therefore, ....
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....ective graphic design representation and creating dynamic and graphic rich web applications from IT specs, design prints etc. Keeping in view this information available in the annual report of M/s Mold Tek as well as on its website, we are of the view that the said company is mainly involved in providing high end services to its clients involving higher special knowledge and domain expertise in the field and the same cannot be taken as comparable to the assessee company which is mainly involved in providing low end services. It may be pertinent to note here that the financial year 2007-08 was a unique ear for Mold Tek Tech. Ltd. as the scheme of arrangement involving amalgamation between Tekmen Tool (P) Ltd and Mold Tek Tech.Ltd. and demerger between Mold Tek Technologies Ltd., simultaneously, was sanctioned by the Hon'ble Andhra Pradesh High Court by 15th July, 2008 with the appointed date for amalgamation and demerger being as October, 2007 and April 2007 respectively. It is also pertinent to note that while working out the operating margin of the said company provision for derivative loss of Rs. 6.43 Crores made by Mold Tek Tech. Ltd. was excluded by the AO treating the same....
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.... event. Furthermore, since the Mold Tek is into providing KPO engineering services, hence, cannot be functionally compared with the assessee company which is engaged in the provision of back office operations. For this purpose, reliance may be placed on the decision of Special Bench in the case of Maersk Global Centres (Ind.) Pvt.Ltd, ITA NO.7466/Mum/2012. Accordingly, we do not find any justification in the order of DRP for not excluding Mold Tek as comparable which is a Knowledge Processing Company. Thus, the DRP was not justified in the comparing the same with the assessee which is functionally different insofar as assessee is engaged in providing low end back office support services". 16. In view of the above facts and nature of the functions performed by the Mold Tek which have been examined by the Special Bench and found is not compared with the low end ITES service provider Co. we hold that this Co. is functionally not comparable with that of the assessee. Accordingly, we direct the AO/TPO to exclude Mold Tek from the list of comparables. 17. The learned AR of the assessee has submitted that the assessee would not seek further exclusion of other comparables if the TPO/....
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.... The export turnover would be a component or part of a denominator, the other component being the domestic turnover. In other words, to the extent of export turnover, there would be a commonality between the numerator and the denominator of the formula. In view of the commonality, the understanding should also be the same. In other words, if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator. The reason being the total turnover includes export turnover. The components of the export turnover in the numerator and the deno0minator cannot be different. Therefore, though there is no definition of the term 'total turnover' in section 10A, there is nothing in the said section to mandate that what is excluded from the numerator that is export turnover would nevertheless form part of the denominator. Though when a particular word is not defined y the Legislature and an ordinary meaning is to be attributed to the same, the said ordinary meaning to be attributed to such word is to be in conformity with the context in which it is ....