TaxTMI 
TaxTMI 
2017 (9) TMI 1757
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.... 2,77,01,926/- Recharge of expenses paid 1,22,52,278/- Reimbursement of expenses received 1,39,52,326/- Thus there are three segments in which the assessee has entered into international transactions and benchmark the same by using TNMM as MAM. The TPO selected a fresh set of comparables in each of the segments and accordingly proposed the adjustment under Section 92CA in each of the segment as under : (i) Provision for software development services : Rs. 9,71,97,173 (ii) Provision for ITES : Rs. 10,66,562 (iii) Provision of marketing support services : Rs. 1,89,10,349 The assessee challenged the action of the Assessing Officer / TPO before the CIT (Appeals). The CIT (Appeals) applied turnover filter and accordingly excluded some of the comparables and retained the balance comparables selected by the TPO. Thus the assessee as well as revenue are aggrieved by the impugned order of the CIT (Appeals) and raised the following grounds : Revenue's Grounds : 1. The order of the learned CIT (A) is opposed to law and facts of the case. 2. On the facts and in the circumstances of the case the learned CIT (A) erred in law....
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.... in applying the employee cost filter and directed to include M/s Indus Networks Ltd. which was excluded in the software development services segment by using this filter. 9. On the facts and in the circumstances of the case the learned CIT (A) has erred in rejecting the diminishing revenue filter used by the TPO to exclude companies that do not reflect the normal industry trend. 10. On the facts and in the circumstances of the case the learned CIT (A) failed to appreciate that the different year ending filter applied by the TPO is necessary to exclude companies which do not have the same or comparable financial cycle as the tested party. 11. On the facts and in the circumstances of the case the learned CIT (A) has erred in holding that M/s Avani Cimcon Technologies, cannot be taken as comparable as the segmental details are not available when the company itself has accepted that it is a pure Software Development Provider . 12. On the facts and in the circumstances of the case the learned CIT (A) has erred in excluding M/s Celestial Biolabs Ltd. from the final list of comparables of Software Segment ignoring the fact that the annual report clearl....
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.....O. Grounds : 1. " That the learned CIT (A) erred in upholding the learned TPO's approach of rejecting the economic analysis undertaken by the Respondent and conducting a fresh economic analysis for determining the arm's length price. 2. That the learned CIT (A) erred in upholding the learned TPO's approach of disregarding application of multiple year/ prior year data as used by the Respondent in the TP documentation and holding that current year (i.e. Financial Year 2007-08) data for companies should be used for comparability. 3. That the learned CIT (A) erred in upholding the learned TPO's approach of using data as at the time of assessment proceedings, instead of that available as on the date of preparing the TP documentation for comparable companies while determining the arm's length price, ignoring the fact that this data was not available to the Respondent at the time of complying with the TP documentation requirements. 4. That the learned CIT (A) erred in upholding the learned TPO's approach of collecting selective information of the companies by exercising powers granted to him under section 133(6) of the Act that ....
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....Adithya Birla Minacs IT Services Limited that were selected in the show-cause notice but were incorrectly rejected in the TP order, as comparable to the Respondent in respect of its software development services. 13. That E-zest Solutions Ltd. ought to stand rejected as a comparable as it is functionally dissimilar to the Appellant. Information Technology Enabled Services: 14. That the learned CIT (A) ought to have held that certain companies (Coral Hub Limited, Eclerx Services Ltd., Jindal Intellicom Pvt. Ltd., Mold-Tek Technologies Ltd.) fail the test of comparability, even apart from having abnormal profits or losses and thus not comparable to the Respondent in respect of its information technology enabled services. 15. That the learned CIT (A) ought to have held that certain companies (Infosys BPO Limited and Wipro Limited) fail the test of comparability, even apart from having a turnover > INR 200 crores and thus not comparable to the Respondent in respect of its information technology enabled services. 16. That the CIT (A) ought to have held that Accentia Technologies Ltd. fails the test of comparability, even apart from the fact t....
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.... in upholding the learned TPO's approach of using the commission revenue filter for the exclusion of Empire Industries Limited which is functionally comparable to the Respondent in respect of its marketing support services. 25. That the learned CIT (A) erred in failing to appreciate that the margins of the comparables and that of the Respondent would need to be recomputed by the AO after including foreign exchange loss / gain for the relevant year, as the case may be, on the basis that such gains or losses are operating in nature. 26. That the contention of the learned AO is bad in law and on facts while stating that the order of the learned CIT (A) is prejudicial to the interest of revenue and is opposed to law and the facts and circumstances of the case. Claim of Deduction under section 10A of the Act 27. That the learned CIT (A) failed to appreciate that telecommunication expenses/ expenditure in foreign currency incurred in the previous year should not have been reduced from the 'export turnover' in the first place for the purposes of computation of deduction under Section 10A of the Act." 3. Ground No.1 of the Revenue's ap....
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....d. 19.35% 16.57% 18. Wipro Ltd. (Seg) 28.45% 29.50% 19. Softsol India Ltd. 17.89% 15.13% 20. Lucid Software Ltd. 16.50% 17.48% Mean (Average) 23.65% 22.45% 8. The CIT (Appeals) rejected 8 companies on the ground of turnover filter and abnormally high profit filter. The companies which were rejected by the CIT (Appeals) on this filter are as under : i. Flextronics Ltd. ii. iGate Global Solutions Ltd. iii. Infosys Technologies Ltd. iv. Mindtree Ltd. v. Persistent Systems Ltd. vi. Sasken Communication Technologies Ltd. vii. Tata Elxsi Limited viii. Wipro Limited (Seg) Apart from these 8 companies the CIT (Appeals) has also excluded four companies on functional dissimilarity as under : (i) Avani Cincom Technologies Ltd. (ii) Bodhtree Consulting Ltd. (iii) Celestial Biolabs Ltd. (iv) Kals Information Systems Ltd. 9. The revenue is now seeking inclusion of these 12 companies in the set of comparables whereas the assessee is seeking exclusion of total 13 companies out of the set of 20 companies selected by the TPO....
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....ited (ix) Tata Elxsi Limited (Seg.) (x) Thirdware Solution Limited (xi) Wipro Limited (Seg.) (xii) Softsol India Limited (xiii) Lucid Software Limited. The learned Authorised Representative of the assessee has submitted that an identical set of 20 comparable companies was selected by the TPO in the case of Telelogic India (P.) Ltd. v. Dy. CIT [2016] 67 taxmann.com 159 (Bang. - Trib.) and this Tribunal while considering the functional comparability of the companies selected by the TPO has held vide order dt. 8.6.2016 that 12 companies are functionally not comparable and accordingly directed to be excluded. Though one company namely Bodhtree Consulting Ltd. was retained by the Tribunal however, the learned Authorised Representative has submitted that the Tribunal did not examine the functional comparability of Bodhtree Consulting Limited while passing the said order in the case of Telelogic India (P.) Ltd. (supra). The Tribunal has dealt with the objections of the assessee only regarding fluctuating margin and not the functional comparability or dissimilarity. The learned Authorised Representative submitted that the functional compar....
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....ld in para 10 as under : 10. At the outset, we note that all the functional comparability of all these 13 comparables which are sought to be excluded by the assessee were also considered by the co-ordinate bench of this Tribunal in the case of Kodiak Network India (P.) Ltd. (supra) in paras 21 to 25 as under : '21. We have considered the rival submissions and relevant material available on record. As we have narrated the facts in the foregoing paras that the TPO has determined the ALP by taking into consideration the set of 20 comparables. The assessee has raised objection regarding 13 comparables out of 20 selected by the TPO. The companies against which the assessee raised objections are as under: S. No. Name of the Company 1 AvaniCimcon Technologies Ltd 2 Bodhtree Ltd 3 Celestial Biolabs Ltd 4 E-Zest Solutions Ltd 5 Infosys Technologies Ltd 6 KALS Information Systems Ltd (Seg.) 7 Lucid Software Ltd 8 Persistent Systems Ltd 9 Quintegra Solutions Ltd 10 Softsole India Ltd 11 Tata Elxsi Ltd (Seg.) ....
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....in ITA No.845/Bang/2011 dt.22.2.2013. 7.3 The learned Authorised Representative further submitted that the facts pertaining to this company has not changed from the earlier year (i.e. Assessment Year 2007-08) to the period under consideration (i.e. Assessment Year 2008-09). In support of this contention, it was submitted that :- (i) The extract from the Website of the company clearly indicates that it is primarily engaged in development of software products. The extract mentions that this company offers customised solutions and services in different areas; (ii) The Website of this company evidences that this company develops and sells customizable software solutions like "DX Change, CARMA, etc." 7.4 The learned Authorised Representative submitted that a co-ordinate bench of the Tribunal in its order in Curram Software International Pvt. Ltd., in its order in ITA No.1280/Bang/2012 dt.31.7.2013 has remanded the matter back to the file of the Assessing Officer / TPO to examine the comparability of this company afresh, by making the following observations at paras 9.5.2 and 9.5.3 thereof :- "9.5.2 As regards the submission of the learned Aut....
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....mand the matter back to the file of the Assessing Officer / TPO to examine the comparability of this company afresh by considering the above observations. The TPO is directed to make available to the assessee information obtained under section 133(6) of the Act and to afford the assessee adequate opportunity of being heard and to make its submissions in the matter, which shall be duly considered before passing orders thereon. It is ordered accordingly." The learned Authorised Representative submits that this company was selected as a comparable by the TPO not by any FAR analysis or as per the search process conducted by the TPO, but only as an additional comparable for the reason that it was selected as a comparable in the earlier year i.e. Assessment Year 2007-08 on the basis of information obtained under section 133(6) of the Act. In this regard, the learned Authorised Representative took us through the relevant portions of the TP order under section 92CA of the Act and the show cause notices for both the earlier year i.e. Assessment Year 2007-08 and for this year and contended that the selection of this company as a comparable violates the principle enunciated in Curram....
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....y preceding year is applicable in this year also. Since the functional profile and other parameters by this company have not undergone any change during the year under consideration which fact has been demonstrated by the assessee, following the decisions of the co-ordinate benches of this Tribunal in the assessee's own case for Assessment Year 2007-08 in ITA No.845/Bang/2011 dt.22.2.2013, and in the case of Triology E-Business Software India Pvt. Ltd. (ITA No.1054/Bang/2011), we direct the A.O./TPO to omit this company from the list of comparables. 8.0 Bodhtree Consulting Ltd. 8.1 This company has been selected as a comparable company to the assessee by the TPO; the inclusion of which was not objected to by the assessee before both the TPO and the DRP. The assessee has not objected to the inclusion of this company in the list of comparables, as can be seen from the grounds of appeal raised in Form 36B before this Tribunal. 8.1 However in the course of proceedings before us, the learned Authorised Representative objected to the inclusion of this company as a comparable for the following reasons : (i) This company has reported abnormally fluctuating ma....
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....f the assessee are rejected and this company is held to be comparable to the assessee and its inclusion in the list of comparable companies is upheld. 9. Celestial Biolabs Ltd. 9.1 This comparable was selected by the TPO for inclusion in the final list of comparables. Before the TPO, the assessee had objected to the inclusion of this company in the list of comparables for the reasons that it is functionally different form the assessee and that it fails the employee cost filter. The TPO, however, brushed aside the objections raised by the assessee by stating that the objections of functional dissimilarity has been dealt with in detail in the T.P. order for Assessment Year 2007- 08. As regards the objection raised in respect of the employee cost filter issue, the TPO rejected the objections by observing that the employee cost filter is only a trigger to know the functionality of the company. 9.2 Before us, the learned Authorised Representative contended that this company is not functionally comparable, as the company is into bio-informatics software product /services and the segmental break up is not provided. It was submitted that :- (i) This comp....
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....ecord. While it is true that the decisions cited and relied on by the assessee were with respect to the immediately previous assessment year, and there cannot be an assumption that it would continue to be applicable for this year as well, the same parity of reasoning is applicable to the TPO as well who seems to have selected this company as a comparable based on the reasoning given in the TPO's order for the earlier year. It is evidently clear from this, that the TPO has not carried out any independent FAR analysis for this company for this year viz. Assessment Year 2008-09. To that extent, in our considered view, the selection process adopted by the TPO for inclusion of this company in the list of comparables is defective and suffers from serious infirmity. 9.4.2 Apart from relying on the afore cited judicial decisions in the matter (supra), the assessee has brought on record IT (TP)A 1380/Bang/2012 Page 8 of 34 substantial factual evidence to establish that this company is functionally dis- similar and different from the assessee in the case on hand and is therefore not comparable and also that the findings rendered in the cited decisions for the earlier years i.e. ....
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.... (iii) The rejection of this company as a comparable has been upheld by co-ordinate benches of the Tribunal in the case of - (a) Triology E-Business Software India (P.) Ltd. (ITA No.1054/Bang/2011). (b) LG Soft India (P.) Ltd. IT (TP)A No.112/Bang/2011) (c) CSR India (P.) Ltd. IT (TP)A No.1119/Bang/2011) and (d) Transwitch India Pvt. Ltd. ITA No.6083/Del/2010) (iv) The facts pertaining to this company has not changed from Assessment Year 2007- 08 to Assessment Year 2008-09 and therefore this company cannot be considered for the purpose of comparability in the case on hand and hence ought to be excluded from the list of comparables. In support of this contention, the learned Authorised Representative drew our attention to various parts of the Annual Report of this company. (v) This company is engaged not only in the development of software products but also in the provision of training services as can be seen from the website and the Annual Report of the company for the year ended 31.3.2008. (vi) This company has two segments; namely, (a) Application Software Segment which includes software product revenu....
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.... "11.0 Infosys Technologies Ltd. 11.1 This was a comparable selected by the TPO. Before the TPO, the assessee objected to the inclusion of the company in the set of comparables, on the grounds of turnover and brand attributable profit margin. The TPO, however, rejected these objections raised by the assessee on the grounds that turnover IT (TP) A 1380/Bang/2012 Page 24 of 34 and brand aspects were not materially relevant in the software development segment. 11.2 Before us, the learned Authorised Representative contended that this company is not functionally comparable to the assessee in the case on hand. The learned Authorised Representative drew our attention to various parts of the Annual Report of this company to submit that this company commands substantial brand value, owns intellectual property rights and is a market leader in software development activities, whereas the assessee is merely a software service provider operating its business in India and does not possess either any brand value or own any intangible or intellectual property rights (IPRs). It was also submitted by the learned Authorised Representative that :- (i) the co-ordinate be....
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.... this year also. We are inclined to concur with the argument put forth by the assessee that Infosys Technologies Ltd is not functionally comparable since it owns significant intangible and has huge revenues from software products. It is also seen that the break up of revenue from software services and software products is not available. In this view of the matter, we hold that this company ought to be omitted from the set of comparable companies. It is ordered accordingly. 12. Wipro Ltd. 12.1 This company was selected as a comparable by the TPO. Before the TPO, the assessee had objected to the inclusion of this company in the list of comparables on several grounds like functional dis-similarity, brand value, size, etc. The TPO, IT (TP) A 1380/Bang/2012 Page 26 of 34 however, brushed aside the objections of the assessee and included this company in the set of comparables. 12.2 Before us, the learned Authorised Representative of the assessee contended that this company i.e. Wipro Ltd., is not functionally comparable to the assessee for the following reasons :- (i) This company owns significant intangibles in the nature of customer related intangibl....
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.... the form of registered patents and several pending applications for grant of patents. In this regard, the coordinate bench of this Tribunal in the case of 24/7 Customer.Com Pvt. Ltd. (ITA No.227/Bang/2010) has held that a company owning intangibles cannot be compared to a low risk captive service provider who does not own any such intangible and hence does not have an additional advantage in the market. As the assessee in the case on hand does not own any intangibles, following the aforesaid decision of the co-ordinate bench of the Tribunal i.e. 24/7 Customer.Com Pvt. Ltd. (supra), we hold that this company cannot be considered as a comparable to the assessee. We, therefore, direct the Assessing Officer/TPO to omit this company from the set of comparable companies in the case on hand for the year under consideration." 13. Tata Elxsi Ltd. 13.1 This company was a comparable selected by the TPO. Before the TPO, the assessee had objected to the inclusion of this company in the set of comparables on several counts like, functional dis-similarity, significant R&D activity, brand value, size, etc. The TPO, however, rejected the contention put forth by the assessee and i....
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....oftware development services performed by the assessee. 13.5 The Hon'ble Mumbai Tribunal in the case of Telcordia Technologies India (P.) Ltd. (supra) has held that Tata Elxsi Ltd. is not a software development service provider and therefore it is not functionally comparable. In this context the relevant portion of this order is extracted and reproduced below :- " .... Tata Elxsi is engaged in development of niche product and development services which is entirely different from the assessee company. We agree with the contention of the learned Authorised Representative that the nature of product developed and services provided by this company are different from the assessee as have been narrated in para 6.6 above. Even the segmental details for revenue sales have not been provided by the TPO so as to consider it as a comparable party for comparing the profit ratio from product and services. Thus, on these facts, we are unable to treat this company as fit for comparability analysis for determining the arm's length price for the assessee, hence, should be excluded from the list of comparable portion." As can be seen from the extracts of the Annual R....
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....e. e- Zest software Ltd., ought to be omitted from the list of comparables. 14.3 Per contra, the learned Departmental Representative supported the inclusion of this company in the list of comparables by the TPO. 14.4 We have heard the rival submissions and perused and carefully considered the material on record. It is seen from the record that the TPO has included this company in the list of comparbales only on the basis of the statement made by the company in its reply to the notice under section 133(6) of the Act. It appears that the TPO has not examined the services rendered by the company to give a finding whether the services performed by this company are similar to the software development services performed by the assessee. From the details on record, we find that while the assessee is into software development services, this company i.e. e-Zest software Ltd., is rendering product development services and high end technical services which come under the category of KPO services. It has been held by the co-ordinate bench of this Tribunal in the case of Capital I-Q Information Systems (India) (P.) Ltd. (supra) that KPO services are not comparable to software ....
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....ed Representative, the Pune Bench of the Tribunal in the case of E-Gain Communications (P.) Ltd. (supra) has directed that since the income of this company includes income from sale of licenses, it ought to be rejected as a comparable for software development services. In the case on hand, the assessee is rendering software development services. In this factual view of the matter and following the afore cited decision of the Pune Tribunal (supra), we direct that this company be omitted from the list of comparables for the period under consideration in the case on hand. 16. Lucid Software Ltd. 16.1 This company was selected as a comparable by the TPO. Before us, the assessee has objected to the inclusion of this company as a comparable on the grounds that it is into software product development and therefore functionally different from the assessee. In this regard, the learned Authorised Representative submitted that - (i) This company is engaged in the development of software products. (ii) This company has been held to be functionally different and therefore not comparable to software service providers by the order of a coordinate bench of the T....
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....nce this company, is engaged in the software product development and not software development services, it is functionally different and dis-similar and is therefore to be omitted from the list of comparables for software development service providers. The assessee has also brought on record details to demonstrate that the factual and other circumstances pertaining to this company have not changed materially from the earlier year i.e. Assessment Year 2007-08 to the period under consideration i.e. Assessment Year 2008-09. In this factual matrix and following the afore cited decisions of the coordinate benches of this Tribunal and of the ITAT, Mumbai and Delhi Benches (supra), we direct that this company be omitted from the list of comparables for the period under consideration in the case on hand. 17. Persistent Systems Ltd. 17.1 This company was selected by the TPO as a comparable. The assessee objected to the inclusion of this company as a comparable for the reasons that this company being engaged in software product designing and analytic services, it is functionally different and further that segmental results are not available. The TPO rejected the assessee....
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....sign services while the assessee is a software development services provider. We find that, as submitted by the assessee, the segmental details are not given separately. Therefore, following the principle enunciated in the decision of the Mumbai Tribunal in the case of Telcordia Technologies India (P.) Ltd. (supra) that in the absence of segmental details/information a company cannot be taken into account for comparability analysis, we hold that this company i.e. Persistent Systems Ltd. ought to be omitted from the set of comparables for the year under consideration. It is ordered accordingly. 18. Quintegra Solutions Ltd. 18.1 This case was selected by the TPO as a comparable. Before the TPO, the assessee objected to the inclusion of this company in the set of comparables on the ground that this company is functionally different and also that there were peculiar economic circumstances in the form of acquisitions made during the year. The TPO rejected the assessee's objections holding that this company qualifies all the filters applied by the TPO. On the issue of acquisitions, the TPO rejected the assessee's objections observing that the assessee has not ad....
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....e on hand and therefore ought to be excluded from the list of comparables for the period under consideration. 18.3 Per contra, the learned Departmental Representative supported the action of the TPO in including this company in the set of comparables to the assessee for the period under consideration. 18.4 We have heard the rival submissions and perused and carefully considered the material on record. It is seen from the details brought on record that this company i.e. Quintegra Solutions Ltd. is engaged in product engineering services and is not purely a software development service provider as is the assessee in the case on hand. It is also seen that this company is also engaged in proprietary software products and has substantial R&D activity which has resulted in creation of its IPRs. Having applied for trade mark registration of its products, it evidences the fact that this company owns intangible assets. The co-ordinate bench of this Tribunal in the case of 24/7 Customer.Com (P.) Ltd. (supra) has held that if a company possesses or owns intangibles or IPRs, then it cannot be considered as a comparable company to one that does not own intangibles and requires....
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.... in the assessee's own case for Assessment Year 2007-08 in ITA No.845/Bang/2011 has excluded this company from the set of comparables for the reason that RPT is in excess of 15% following the decision of another bench of this Tribunal in the case of 24/7 Customer.Com (P.) Ltd. (supra). As the facts for this year are similar and material on record also indicates that RPT is 18.3%, following the afore cited decisions of the co-ordinate benches (supra), we hold that this company is to be omitted from the list of comparables to the assessee in the case on hand. 23. Thus, it is clear from the findings of the Co-ordinate Bench of the Tribunal in the case of M/s 3DPLM Software Solutions Ltd (supra) that except Bodhtree Ltd all other 12 companies were found to be not good comparables of the software development services as provided by assessee. 24. As regard the objection of the ld. DR that Quintegra Solution Ltd. has been selected by the assessee itself, we notice that the functional comparability of this company has been examined by the Tribunal in the case of M/s 3DPLM Software Solutions Ltd (supra) and it was found that the said company is engaged in the different....
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....the assessee. In view of the findings of the co- ordinate bench of the Tribunal in the case of Kodiak Network India Pvt. Ltd. (supra), we hold that 12 companies out of 13 sought by the assessee are required to be excluded from the list of comparables where as the company Bodhtree Consulting Ltd. is accepted as a good comparable of software development services provided by the assessee. Accordingly, we direct the TPO/A.O to exclude 12 companies as mentioned in para 25 of the order of the co-ordinate bench (supra) from the set of comparables and recomputed the ALP after considering the claim of risk adjustment as well as the benefit of tolerance range of + / - 5% as per the proviso to section 92C(2).' " In view of the findings and decision of the co-ordinate Bench of this Tribunal on the functional comparability of these companies, we direct the TPO/A.O. to exclude 12 companies from the set of comparables. As regards the functional comparability of Bodhtree Consulting Ltd., it is clear from the order of the Tribunal in the case of Telelogic India (P.) Ltd. (supra), the Tribunal has considered the objections of he assessee only on account of fluctuating profit margin of the sai....
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.... development, being a software solutions company, it is engaged in providing open and end-to-end web solutions, software consultancy, design and development of solutions, using the latest technology. Outlook Given the steady growth in the niche areas like data cleansing and software development, and the new initiatives in the areas of e-publication and e-learning, the management has reason to be optimistic about the future growth." Revenue Recognition Revenue from software development is recognized based on software developed and billed to clients." Thus it is clear that this company is having one segment namely software development under which this company is providing software solutions including open and end-to-end web solution, software consultancy, design and development of solution. Further, the company is also providing data cleansing and software development. The activity in which this company engaged includes consultancy design, products like data cleansing. Therefore this company develop the products and own the products. Further this company is following a different revenue recognition policy which does not match with the acco....
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....ent view that the employee cost to the total cost is a relevant factor to decide the business model and functional profile of the comparable. Therefore, when the TPO has applied a filter for all the comparable companies then the same cannot be rejected for the purpose of including one company in the set of comparables. We note that the co-ordinate Bench of this Tribunal vide order dt.26.08.2016 in the case of Dy. CIT v. PMC Sierra India (P.) Ltd. [2016] 74 taxmann.com 110 (Bang. - Trib.) has considered the issue of inclusion and exclusion of this company on the employee cost filter in para 12 as under : " 12. As regards the inclusion of Indus Network Ltd., we find that employees cost is a relevant factor for selecting the comparables. We note that the TPO applied 25% of employees cost filter while selection of the comparables which shows that the companies which are engaged in providing software development services must be doing its business through their own employees and therefore if the employees cost is less than 25% of the sale then the business model of such company may not be matching with the business mode of the assessee. Even otherwise the software development s....
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.... this company is functionally not comparable and that it has a different employee skill set and that this company performs R&D services and also owns intangibles. This company is a geospatial services content provider specialising in land based technologies. From the notes to accounts of this company, it is seen that this company is engaged in providing geographical information services comprising of photogrammetry, remote sensing cartography, data conversion related computed based services and other related services. Further the business of this company requires skilled manpower and scientists, civil engineers, etc. The assessee is a routine ITES provider who does not require such highly skilled employees. Besides the above, this company also carries out R&D services and own intangibles. The aforesaid facts, in our view, will take this company out of the list of comparables. We may also point out that the objection of the assessee in this regard has been disregarded by the TPO by mere observation that it cannot be rejected on the basis that it is into different functional line within ITES. In this regard, we may refer to the decision of the ITAT Bangalore Bench in the case of Firs....
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....ear from the aforesaid decision of the Tribunal that among the ITES companies there is a hierarchy in terms of skill required to provide services. It ranges from providing routine services where no skills and required and providing services where highly professionalized skills are required. Depending on the skills required to perform ITES the comparability has to be done. In view of the above, we are of the view that this company cannot be regarded as a comparable and deserves to be excluded from the list of comparables.' Following the earlier orders of this Tribunal, we do not find any error or illegality in the order of CIT (Appeals) directing the TPO/A.O. to exclude this company from the set of comparables. The assessee has not raised any ground in respect of the comparables selected by the TPO in ITES segment except supporting the order of CIT (Appeals) rejecting some of the companies. MARKETING SUPPORT SERVICE SEGMENT 18. In marketing support service segment, the revenue in its Ground No.7 is seeking inclusion of two companies namely ICC International Ltd. (Seg.) and M/s. Priya International Limited (Seg.) which were excluded by the CIT (Appeals) from the set of c....