TaxTMI 
TaxTMI 
TaxTMI 
2016 (8) TMI 1424
X X X X Extracts X X X X
X X X X Extracts X X X X
....acts of the case are, the assessee company, which is engaged in the business process outsourcing, filed its return of income electronically on 23/09/2010 declaring income of Rs. 9,84,900/- after claiming deduction u/s 10A of Rs. 1,82,16,263/-. The AO has referred the case under section 92CA(1) of the IT Act for determination of arm's length price in respect of the international transactions reported by the taxpayer company for the FY relevant to the AY 2010-11. The AO passed a draft order dated 10/03/2014 u/s 143(3) read with section 92CA(3) of the IT Act for arriving at a total income of Rs. 3,61,30,302/-. The AO made adjustment as proposed by the TPO of Rs. 3,35,03,147/- towards adjustment of arm's length price. The AO also held that as p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erent being KPO company. ii) The objections of the assessee are that the this company is a knowledge process outsourcing (KPO) entity providing consulting and outsourcing services for financial institutions. The assessee company rendering low end BPO services known as KPO services. The size of the comparable company is high with a turnover of Rs. 257 crores and cannot be compared with the assessee company which has only Rs. 20.40 crores. Moreover the skill sets of the employees engaged, the intangibles and the assets employed etc. in the comparable company are different from the assessee company. 5.2 Infosys BPO Ltd., and TCS Eservice Ltd., i) The TPO added these companies as comparable which are functionally different besides being supe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or exclusion of TCS Eserve international Ltd. is rejected and direct the TPO/AO to exclude the following comparables from the final set of comparables and recompute the Arm's length price. (i) eclerx Services Ltd. (ii) TCS Eserve Ltd. (iii) Infosys BPO Ltd. Accordingly the TPO/AO is directed to rework the ALP by excluding the above three companies from the ALP Adjustment. 7. Considered the submissions of both the parties and perused the material facts on record. The issue in dispute is squarely covered by the decisions of the ITAT including the decision in assessee's own case for AY 2007-08 vide order dated 25/04/2014 in ITA No. 1407/Hyd/2013 and for AY 2009-10 vide order dated 31/10/2014 in ITA No. 392/Hyd/2014 wherein the coo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of 2 comparable companies proposed by the assessee and further by adding one company which is not functionally comparable. 2. The learned Assessing Officer/TPO/DRP ought to have included Interglobe Technologies Pvt Ltd and Mastiff Tech Pvt. Ltd in the list of comparable companies since both the companies are fully and functionally comparable and further the assessee has provided the Data including annual reports of the above two companies. 3. The learned Assessing Officer/TPO/DRP ought not to have added one company i.e., TCS E-serve International Ltd, since the said company is not comparable functionally and is also a giant company with its Own brand image and huge turn over and hence not comparable." 11. The assessee has not pressed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....els and perused the material facts on record. We find that the issue in dispute is covered in favour of the assessee by various decisions of ITAT including the decisions of coordinate benches of Hyderabad. In the case of C3i Support Services (P) Ltd. Vs. DCIT (supra) has directed the AO/TPO to exclude the said company as comparable by observing as under: "10. In so far as TCS eServe International Ltd., as rightly pointed out by the Ld. Counsel for the assessee, the sudden turn around of the said company, by earning high profit margin, was mainly on account of the brand value that TATA group carries. Under identical circumstances, while considering comparable case of Infosys BPO, the ITAT 'A' Bench, Hyderabad in the assessee's own case for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....alue and intangibles which influenced the financial results of this company. The Hon'ble Delhi High Court in the case of CIT vs. Agnity India Technologies P. Ltd., (2013) 219 Taxman 26 (Del.), held that huge turnover companies like Infosys and Wipro cannot be considered as comparable to smaller companies like assessee therein. In the case before the Hon'ble High 16 Court (supra), the turnover of the assessee was about Rs. 15.79 crores as against the turnover of Rs. 1016 crores of the Infosys. Considering these facts, the Hon'ble High Court had directed for exclusion of Infosys BPO because of its brand value and also on the grounds of functional dissimilarity and huge turnover. Though, the company before us is TCS e-Service Ltd., and not Inf....