TaxTMI 
TaxTMI 
2016 (4) TMI 1279
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....eld of healthcare administration to it's A.E. It is registered under the Software Technology Park of India Scheme. For the year under consideration, it declared 'NIL' income under the normal provisions of the Act and admitted Rs. 1,74,90,433 under section 115JB of the Act. Though the return of income was processed originally under section 143(1) of the Act it was later on taken-up for scrutiny wherein it was noticed that the assessee entered into international transactions and therefore, it was referred to the TPO, after obtaining the approval of the Commissioner of Income Tax. The TPO determined the arms length price of transaction, under section 92CA of the Act, at Rs. 25,33,73,111 and determined the short fall of Rs. 3,92,59,897 for the ....
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.... turnover of Rs. 1405 crores). They however did not accept the contention of the assessee that Accentia Technologies and Eclerx Services Ltd., are not comparable as held by the ITAT in assessee's own case for the A.Ys. 2007-08 and 2008-09. In this regard, it observed that the Tribunal had noted that there are extraordinary events like merger and demerger during the relevant financial year which might have affected the financial results of the company whereas, in this year, the assessee did not bring out any fact to show that there are extraordinary events in those companies. Hence, the said companies were not excluded. In short, with regard to three companies i.e., Accentia Technologies Ltd., Eclerx Services Ltd., and TCS eServe Internation....
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....Eclerx Services Ltd., and TCS e-International Ltd. He adverted our attention to the order passed by the ITAT in assessee's own case for the earlier years. It was submitted that these comparables were already considered and having regard to the circumstances of the case, they were held to be not comparable. He adverted our attention to pages 150 of the paper book (para-12.5 of ITA.No.2183/Hyd/2011) to highlight that for the A.Y. 2007-08, the assessee submitted that besides being functionally different from the assessee, Eclerx Services Ltd., has shown extraordinarily high profit and hence cannot be treated as comparable. It was also contended that the assessee was a BPO whereas Eclerx Services Ltd., was engaged in providing Knowledge Process....
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.... there are certain extraordinary events and peculiar circumstances prevailing in the case of that company since that company acquired UK based company which has significantly contributed to the increase of the customer revenue base of the company. Thus, the Bench concluded that the company cannot be regarded as comparable for the reason that it was having extraordinary and abnormal profits. At the same time, it had also taken into consideration the fact that the said company was engaged in the KPO services. 5.3. In addition thereto, the Ld. Counsel for the assessee placed before us a copy of the order of the DRP for the A.Y. 2011-2012 to submit that in the subsequent year the DRP excluded Accentia Technologies Ltd., Eclerx Services Ltd.,....
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....or the company and first full year as a step down subsidiary of TCS. It also observed that operating income is higher by 173% over previous year because it became part of TCS which has large client base. Ld. Counsel for the assessee also adverted our attention to pages 260 of the paper book to submit that TATA brand makes a significant difference and therefore, any company working with that banner has to pay equity contribution and in this case, assessee made payment of Rs. 3738 towards TATA brand equity contribution. 6.1. It was thus contended that in respect of the companies which are taken as comparables, they were either functionally different or higher profit margin was on account of its brand value and hence they should be taken ou....
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....o support its claim that the profits of Accentia Technologies Ltd., cannot be taken as comparable. In particular, he has referred to the order passed by the DRP in the subsequent year to highlight that on the same set of facts the DRP has excluded the above two companies while making the adjustments. 9. We have carefully considered the rival contentions and perused the record. As rightly pointed out by the Ld. Counsel for the assessee, regarding Accentia Technologies Ltd., and Eclerx Services Ltd., the activity of those companies are functionally different since they are into KPO and in fact the DRP, while considering the nature of activities of those two companies, had excluded those two companies in the A.Y. 2011-2012. In fact the Trib....