TaxTMI 
TaxTMI 
2018 (1) TMI 388
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....he case and in law, the Ld. DRP, without giving any cogent reasons, erred in characterizing the provision of engineering design services ('EDS') by the Appellant as that of information technology enabled services ('ITeS') without appreciating the fact that the Appellant is a service provider involved in the provision of EDS. 4. Without prejudice to the above, the Ld. AO/Ld. TPO based on directions from the Hon'ble DRP erred in enhancing the income of the Appellant by INR 22,983,602 holding that the international transaction of the Appellant pertaining to provision of EDS does not satisfy the arm's length principle envisaged under the Act and in doing so have grossly erred in: 4.1. not appreciating that none of the conditions set out in section 92C(3) of the Act are satisfied in the present case; 4.2. disregarding the 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 Incometax Rules, 1962 ('the Rules'); 4.3. disregarding multiple year/ prior years' data as used by the Appellant in the TP documentat....
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....and for furnishing inaccurate particulars thereof. 6. The Ld. DRP has grossly erred on facts and in law by proposing to compute interest under sections 234A, 234B, and 234C of the Act mechanically and without recording any satisfactory reasons for the same. Further, the return of income has been filed duly on 29/11/2012; hence the interest under section 234A is not valid in law. The Appellant prays that appropriate relief be granted. The above grounds are mutually exclusive and are without prejudice to each other. The appellant craves leave to add, amend, alter, vary, omit, substitute, withdraw, modify or delete all or any of the Grounds of Appeal herein or submit such further objections as may be considered necessary at any time either before or during the course of hearing before the Bench of Appellate Tribunal, so as to enable the learned members of the Bench to decide this application and on the objections raised by the appellant, in accordance with the law." 3. From the above grounds, it is gathered that only grievance of the assessee relates to the enhancement of income by Rs. 2,29,83,602/- by holding that the international transaction of the ass....
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....ices Ltd. 58.40% 7 Geometric Ltd. -0.02% 8 Informed Technologies India Ltd. 19.11% 9 Infosys BPO Ltd. 36.75% 10 Jindal Intellicom Ltd. 0.25% 11 Microgenetic Systems Ltd 6.38% 12 R Systems International Ltd -0.46% 13 T C S E- Serve Ltd. 63.69% 14 Tata Elxsi Limited 9.15% Average 20.39% 6. The TPO in determining the adjustment to the transfer price of the assessee denied necessity of appropriate working capital adjustment to the margins of the comparables on the ground that the assessee did not demonstrate any need for working capital adjustment when the interest part was considered as non-operative. He also denied the benefit of risk adjustment. Finally, the TPO considered the average mark-up on cost of 20.39% as compared to 11.37% of the assessee and accordingly proposed an adjustment of Rs. 4,32,63,688/-. The AO passed the draft assessment order dated 18.03.2016 by making the adjustment of Rs. 4,32,63,688/-. Thereafter, the assessee filed the objection before the ld. DRP who observed that the TPO had given valid reason in his order and characterized the assessee company as ITES company and ha....
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....ices as IT enabled services. Once the TPO has treated the nature of services rendered by the assessee as 'I.T. enabled' and the assessee has not objected to the same in the appeal before the Tribunal, the ld. DR cannot be allowed to set up a new case contrary to what was done by the TPO by claiming that the nature of services should be altered at this stage for evaluation of comparable companies in dispute. We will, therefore, confine ourselves in considering the comparability or otherwise of the companies in challenge before us by treating the assessee as rendering 'I.T. enabled services', as was done by the TPO. 10. Now, we will take up four companies, one by one, to see whether or not these are comparable. At this juncture, it is relevant to mention that the nature of activity carried out by the assessee during the year is admittedly similar to that carried on in the preceding year. The assessee has rendered services emanating from an Agreement entered into with SHI Korea dated 1st February, 2009. Thus, it is ostensible that the nature of services rendered by the assessee during the year are similar to those rendered in the preceding assessment year i.e. 2010-11. The TP....
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....After discussion, the Tribunal has come to hold that this company is functionally different. 13. We have gone through the Annual report of this company, a copy of which has been placed on record. Profit & Loss Account of this company shows 'Income from operations' at Rs. 3419.11 million. The Director's report indicates that this company is rendering Financial as well as Sales & Marketing services. Income from both these services has been clubbed. Such services include Trade processing support, Reference data maintenance, Contract risk review, Reconciliation and controls, Margin and exposure management, Metrics and reporting, Expenses management, Accounting and finance, Consulting services, Online operations & Web analytics, CRM & business intelligence, Data management & Reporting, Competitor benchmarking & Pricing, Quality & compliance and Business process consulting. This company has a single primary segment i.e., 'Data analytics and process outsourcing services.' A plain reading of the nature of services carried on by this company abundantly shows that there is a vast difference with the activity carried on by the assessee. Relying on the view taken by the co-ordinate Be....