TaxTMI 
TaxTMI 
2016 (9) TMI 1425
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....Rs. 50,60,63,848/- made by the TPO. The grounds of appeal raised by the assessee reads as under:- "I. Ground No. 1 1.1 On the facts and circumstances of the case, the learned Assistant Commissioner of Income Tax, Range -9(2)(1) ('the AO') erred in framing the assessment under Section 143(3) read with Section 144C of the Income Tax Act, 1961 (the 'Act') by upholding the action of the Transfer Pricing Officer ("TPO") / Dispute Resolution Panel ('DRP') in making a Transfer Pricing ('TP') adjustment of Rs. 36,54,65,763/- in respect of provision of Information Technologies enabled Services ('ITeS'). 1.2 On the facts and circumstances of the case and in aw, the learned AO/ TPO / DRP erred on the following grounds: a. Rejecting the transfer pricing study which was maintained in good faith and with the diligence; b. Rejecting the methodical search process and the search criteria applied by the Appellant; c. Rejecting multiple year data and determining the arm's length price based on single year data. d. Not following a structured search process and applying inappropriate filter while selecting a different set of comparables. e. Resorting to cherry picking of compara....
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....sideration, the assessee had entered into following international transactions, which was reported in Form no. 3 CEB:- S.No. Description of the transactions Amount (Rs.) 1 Provision of IT enabled services 388,05,26,377 2 Reimbursement of salaries of expatriate Employees 2,54,42,383 4. The Functions performed for ITES were stated to include:- * data entry and validation, indexation of documents, payment/ form processing and transcription services, * HR and payroll administration, registration and administration of share plan services processing for pension administrations and administration of reinsurance and brokerage; * Review of accounting discrepancies and pending account, and to maintain accounts, so as to ensure that the best possible position of outstanding entries is maintained. *Life and pension claims processing, policy amendments, etc. and customer contract services for inquiries, customer, complaints, change of address switching between different policies, surrenders, maturities, etc; *Mutual fund and hedge fund accounting and reconciliation, claims adjudication and processing, asset valuation and reconciliation, ....
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....17.86% Assessee 2 e4e Healthcare Business Services Pvt. Ltd. 9.77% Assessee 3 Accentia Technologies Ltd. 29.18% TPO 4 Acropetal Technologies Ltd (Segmental) 23.95% TPO 5 TCS eServe Ltd 69.31% TPO Average Mean 30.01% Assessee's Margin 14.99% He also rejected the assessee's plea for working capital adjustment and finally made the adjustment of Rs. 50,60,63,848/-. 5. From the stage of the DRP, out of the three comparables selected by the TPO, two comparable companies, viz. M/s Accentia Technologies Ltd. and M/s TCS eServe as selected by the TPO were confirmed as comparables and one comparable company namely, Acropetal Technologies Ltd. (Segmental) has been rejected. For these two comparable companies, the assessee is in appeal before us and for the one comparable company, Department is in appeal. That apart, the DRP has further included two more comparables, which were selected by the assessee, that is, M/s Informed Technologies India Ltd; and M/s Jain Intelecom Pvt. Ltd. for which Department is not in dispute. Thus, after the DRP's directions, six comparable companie....
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....d vs DCIT ITA No.7014/Del/2014(Del Trib) 2 Equant Solutions India Pvt Ltd vs DCIT ITA No.1202/Del/2015(Del Trib) 3 Bechtel India Pvt Ltd vs DCIT ITA No.1478/Del/2015 (Del Trib) 4 Hyundai Motors India Engineering Pvt Ltd. vs ACIT ITA No.1743 & 1917/Hyd/2014 (Hyd. Trib.) After referring to relevant portion where it has been dealt by the Tribunal, he pointed out that, TCS e-Serve Ltd have been analyzed in detail and have been found to be incomparable with ITEs companies mainly on the ground that there is absence of availability of segregation of the total revenue. Thus, he submitted that, following the subsequent decisions of the Delhi Tribunal and also on basis of the facts and material on record, this comparable company should be rejected. ii) Accentia Technologies Ltd.: Regarding said comparable company, Ld. Counsel submitted that, this company is mainly rendering KPO services and is mainly into development of its own products and is also having huge intangibles. These factors, he pointed out from the Annual report of the company. He further pointed out that its services and focus is mainly on Medical transcription and medi....
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....essee had shown margin of 14.99% on the transaction of provision of ITES services and same has been benchmarked by various comparables by adopting TNMM as MAM. Our findings on the inclusion/ exclusion of the two comparables as argued before us are as under:- i) M/s TCS e-Serve:- From the perusal of its Annual reports, it is seen that, this company is engaged in the business of providing ITES services and BPO services primarily to 'Citi Group' entities globally. It operations comprised of transaction processing includes the broad spectrum of activities involving the processing, collections, customer care and payments in relation to the services offered by Citigroup to its corporate and retail clients. Technical services involve software testing, verification and validation of software at the time of implementation and data centre management activities. From the perusal of the profit and loss account, the revenue shown from transaction processing and other services is approximately Rs. 1442.42 crores. There are no segmental details and any other bifurcation as to what comprised of transaction processing charges and other services. That apart, it is seen that, this company is a ....
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....s render this company as unfit for comparison. Following the above reasons also taken note in the case of TCS e-Service International Limited, we order for the elimination of this company from the final set of comparables". Subsequently in the case of Equant Solutions India Pvt. Ltd also this company has been held to be un-comparable on the following reasoning: "We have also considered the rival contention for exclusion of TCS e-service td. It is mainly involved in transaction processing and technology services. It carries on business of providing technology service such as software testing, verification and validation. It is also developed a software such as transport management software therefore functionally this company is dissimilar to the assessee company. It also owns huge intangible and uses of Tata Brand, which has definitely benefited this comparable, it is directed to be excluded". This, in view of our discussion and also following the precedence in the aforesaid cases, we hold that TCS e-Serve cannot be held to be comparable company, accordingly, we direct the AO/TPO to exclude the same from comparability list. (ii) Accentia Technologies:- From the perusa....