TaxTMI 
TaxTMI 
2018 (7) TMI 1757
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.... u/s. 92CA(3) of the Act, proposed adjustment of Rs. 3,68,61,675/-. The Dispute Resolution Panel [DRP] has rejected assessee's objections on TP adjustment and Arm's Length Price [ALP] determined, however, directed the AO to give credit of 30 days while considering the levy of interest on outstanding receivables. AO has consequently passed a revised order, restricting the adjustments on ALP to Rs. 2,30,56,229/-. Aggrieved, assessee has raised the grounds mainly contesting certain comparables taken for determining the ALP and levy of interest on the receivables. Ground No. 5 on initiation of penalties and ground no.6 on levy of interest which is consequential, are academic in nature and need not be adjudicated. 3. Ld. Counsel referring to the AE's business activity, submitted that C3i Inc, USA is a specialized sales force automation service provider and it provides services ranging from customer management integration and ongoing support solutions. C3i Inc, USA offers wide range of outsourcing and integration services, which includes Professional Services, Managed Services, End User support Services and Hardware Services. The Professional Services include business consulting, e-bu....
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....on and ongoing support solutions with many leading life science companies as its clients. The taxpayer is the wholly owned subsidiary of C3i Inc., USA". 5.1. Whereas in para V(B), in Pg. No. 24 of the TPO order, the functional profile of the C3i Inc has been stated as under: "C3i Inc has been entrusted with the responsibility of business development including addition to the customer base. The parent company deals with the clients, which are then supported by C3i India for technical problem resolution. The nature of work involves dealing with the sales representative of different countries with different speaking accents. A team of trained people does back end job and keep tracks of volume of calls attended, time taken to resolve the problem, problems remaining unsolved etc" 5.2. DRP has relied on this profile of AE to consider assessee as a KPO. In our opinion, the DRP has mis-read itself in determining assessee as a high end service provider, whereas assessee is only providing ordinary technical support which is categorized as ITeS BPO services provider in earlier years. We are of the firm opinion that there is no change in assessee's profile and so it has to be tr....
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....sessee's own case on the reason that it was deriving benefit of huge Tata brand value resulting in extraordinary high margins. It was further submitted that scale of operations, assets and employees base results in difference in FAR profile as that company has huge turnover of Rs. 1578.44 Crores as against Rs. 34 Crores of assessee. 7.1. After considering the rival contentions, we are of the opinion that this company has to be excluded on the basis of functional profile of comparable company with that of assessee. Similar view was taken by the DRP itself in the earlier year i.e., AY. 2011-12 and in AY. 2010-11 ITAT also excluded the same. Following case law also support the view that TCS E-Serve Ltd., cannot be compared to ordinary BPO services being rendered by assessee-company: i. Pr.CIT Vs. B.C. Management Services (P) Ltd., (IT Appeal Nos. 1064 & 1083 of 2017) AY. 2011-12 - Hon'ble High Court of Delhi; ii. S&P Capital IQ (India) Pvt Ltd., (200/Hyd/2016) & (435/Hyd/2016) AY. 2011-12; iii. Infor (India) (P.) Ltd., (IT Appeal No. 113(Hyd) of 2016); iv. Baxter India Pvt. Ltd., (6158/Del/2016); v. BC Management Services Pvt. Ltd., ....
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....uded consistently the above company from AYs. 2007-08 to 2010-11 in assessee's own case. The only reason for inclusion in this year is that assessee was re-categorised as KPO by the TPO and DRP, when there is no change in the functional profile, compared to earlier years. Since we have already held that assessee is only an ordinary BPO, consistent to the decision taken in earlier years, we direct the AO/TPO to exclude the above company from the list of comparables. Accentia Technologies Ltd., 10. This company is also objected to on the reason of functional dis-similarity as in the case of Eclerx Services ltd above and DRP itself excluded in earlier assessment year i.e., AY. 2011-12. Consistent to the stand taken by the ITAT from AYs. 2007-08 to 2010-11 and by the DRP in AY. 2011-12, we direct the AO to exclude the above company from the list of comparables. 11. TPO is directed to re-workout the ALP by taking the other six companies and make necessary adjustment if any, as per the provisions of the Act. Grounds are considered allowed on this issue. Addition on account of the interest on receivables: 12. Another issue which is contested by assessee is on the levy of in....