TaxTMI 
TaxTMI 
2019 (1) TMI 202
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....appeal before us, Shri Porus Kaka, learned Sr. Counsel, appearing for the assessee restricted his arguments only to selection / rejection of certain comparables. In view of the aforesaid, we are only required to decide the acceptability or otherwise of certain comparables as disputed before us. 4. Brief facts relating to this issue are, the assessee an Indian Company is a wholly owned subsidiary of Maersk GSC Holdings A/S (Denmark), which in turn, is a downstream subsidiary of A.P. Moller-Maersk A/S (APMM), a company incorporated in Denmark. As stated by the Transfer Pricing Officer, the assessee is a captive service provider and is engaged in providing back office support services and information technology (I.T) support services to its overseas Associated Enterprise (A.E). For the assessment year under dispute the assessee filed its return of income on 28th November 2012, declaring total income of Rs. 41,45,16,600. During the assessment proceedings, the Assessing Officer noticing that the assessee in the relevant previous year has entered into international transactions with its A.E. made a reference to the Transfer Pricing Officer for determining the arm's length price (ALP....
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....ansfer Pricing Officer short listed three companies as the final set of comparables for bench marking the arm's length price of the international transactions with the A.E. The final set of comparables with their arithmetic mean as selected by the Transfer Pricing Officer are as under:- Sr. no. Name of Comparable NCP Margin (%) 1. E4e Healthcare Business Services Pvt. Ltd. 14.59 2. Infosys BPO Ltd. 33.92 3. Acropetal Technologies Ltd. (Healthcare segment) 29.78 Arithmetic Mean 26.10 5. Applying the arithmetic mean of 26.10% of the comparables the Transfer Pricing Officer determined the arm's length price of the international transaction at Rs. 421,43,70,711. Accordingly, the Transfer Pricing Officer proposed an upward adjustment of Rs. 47,14,84,235 to the price of international transaction shown by the assessee. Thus, the Assessing Officer passed the draft assessment order adding the transfer pricing adjustment proposed by the Transfer Pricing Officer. Being aggrieved of such addition, the assessee filed objections before the DRP. However, the learned DRP did not find merit in the objections of the assessee and, accordingly, upheld the selectio....
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.... selection. He submitted, only because of the size or turnover of the company, it cannot be said that it is not a comparable if otherwise it is functionally similar to the assessee. 10. We have considered rival submissions and perused materials on record. From the material on record, it is evident that the assessee is not only a captive service provider, but the nature of service provided by the assessee can be categorized as simple BPO services. Even, the DRP has also accepted that the nature of service provided by the assessee will not come within the purview of High End BPO or KPO services. It is relevant to observe, the Transfer Pricing Officer while examining the functional profile as well as skill set employed by the assessee has observed that 97% of the employees are simple graduates. Whereas, only three per cent are professionals. Thus, from the aforesaid fact, it appears that the assessee is providing simple voice and data services to its A.Es. Whereas, the same cannot be said about Infosys BPO Ltd. which apart from its brand value being part of Infosys Group, is not comparable to the assessee in various other aspects also. Notably, while considering the issue relating to....
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....selection of this company as a comparable by submitting that the Transfer Pricing Officer has considered only the BPO segment for comparability analysis. 14. We have considered rival submissions and perused materials on record. As could be seen from the facts on record, the assessee has challenged the selection of this company as a comparable primarily on the ground that the company is into diversified activities including development of products, hence, cannot be treated as a comparable. It is relevant to observe, upon considering similar argument of the assessee in assessment year 2011-12 the Tribunal has restored the issue to the Assessing Officer / Transfer Pricing Officer for fresh adjudication. There being no material difference in facts, following the decision of the Tribunal in assessment year 2011-12 (supra) we restore the issue relating to the comparability of the aforesaid company to the Assessing Officer / Transfer Pricing Officer for fresh adjudication after due opportunity of being heard to the assessee. We may also observe, the Assessing Officer / Transfer Pricing Officer must decide the issue duly considering the submissions of the assessee and in the light of the ....
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....epartmental Representative justifying exclusion of this company submitted, since the comparable has a different accounting period than the assessee, it cannot be treated as a comparable. He submitted, at no stage it has been examined whether nine months' data available of the company can be extrapolated to the subsequent three months for deriving the margin of the company. As regards the issue whether the company can be treated as a consistent loss making company, the learned Departmental Representative submitted, assessee's contention that it has made profit in December 2009 needs to be examined keeping in view the fact, whether the provision for expenditure is operative or non-operative. 18. In rejoinder, learned Sr. Counsel for the assessee submitted that in spite of the fact that this company is having December ending accounting period, still, taking note of that fact the Tribunal has accepted it as a comparable in assessee's own case in assessment year 2009-10. He also submitted that the same view was reiterated by the Tribunal in assessment year 2010-11 and 2011-12. In reply to the learned Departmental Representative's contention that it needs to be examined whether the prov....