TaxTMI 
TaxTMI 
TaxTMI 
2017 (9) TMI 1800
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....ed into by the Appellant with its associated enterprise ("AE") with respect to export of transaction processing services. 2. Erroneous selection of comparable companies The learned DCIT, pursuant to the directions of the Hon'ble DRP has erred in law and on the facts and circumstances of the case in confirming the following companies as the comparable companies: 2.1 Infosys BPO Ltd 2.2 Accentia Technologies Ltd 2.3 Jeevan Softech Ltd (Segmental) 3. Erroneous rejection of comparable companies The learned DCIT, pursuant to the directions of the Hon'ble DRP has erred in law and on the facts and in circumstances of the case in rejecting Allsec Technologies Ltd. as the comparable company. 4. Erroneous calculation of the operating margins of certain comparable companies The learned DCIT, pursuant to the directions of the Hon'ble DRP has erred on the facts and in circumstances of the case in not complying with the binding directions of the Hon'ble DRP (para 3.3 to 3.6 on page nos. 5 and 6) in computing the operating margin of certain comparable companies. 5. Erroneous calculation of working capital adjustment The learned DCIT, pursuant to the direction....
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....on to provident fund amounting to Rs. 3,668,560 paid during the year. 13. Non-granting of credit of Minimum Alternate Tax The learned DCIT has erred in not granting credit of Minimum Alternate Tax to the tune of Rs. 8,176,909 in accordance with the provisions of section 115JAA of the Act, without any reasons whatsoever. 14. Intimation of penalty proceedings The learned DCIT, erred on the facts and in law in proposing to initiate penalty proceedings section 271(1) (c) of the Act, without considering the facts of the case. 15. Levying of interest 15.1 The learned DCIT, has erred on the facts and in law by levying interest under sections 234B and 234C of the Act. 15.2 The Appellant pleads that the shortfall in advance tax and excess refund has resulted in view of the transfer pricing adjustment which have been objected in the ground above. 16. Each of the above grounds of appeal is without prejudice to the other. 17. The appellant reserved the right to amend, alter or add to the grounds of appeal. 4. The Revenue in 303/PUN/2015 has raised the following grounds of appeal:- 1. On the facts and in the circumstances of the case, the Ld. Dispute Resolution Panel erred ....
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.... was that once the above concerns are excluded from the list of comparables and the margins of Jeevan Scientific Technology Ltd. are correctly applied, then average mean of margins of comparables worked out to 19.22% and after applying the second proviso to section 92C(2) of the Act, the margins shown by the assessee would be within range of +/- 5% of operating revenue and no adjustment is warranted in the hands of assessee. By way of ground of appeal No. 5, the assessee has raised the issue of allowing working capital adjustment. In respect of grounds of appeal No. 6 to 10, the learned Authorized Representative for the assessee fairly admitted that the said issue would become academic in nature, since no adjustment is to be made in the hands of assessee. The issue in ground of appeal No. 11 raised by the assessee was claimed to be against the assessee. Further, corporate issue raised by way of ground of appeal No. 12 was against contribution to Provident Fund amounting to Rs. 36,68,560/- paid during the year. The said amount was paid consequent to the demand raised by the Regional Provident Fund Commissioner in respect of dues of both employees contribution and employer's cont....
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....A and the Bank of New York Mellon, SA/NV, Brussels. The assessee claimed that the services rendered to its associated enterprises were priced on cost plus basis. The assessee had used TNMM method in its transfer pricing report, as most appropriate method to benchmark international transactions relating to provision of BPO services. The operating profits earned by the comparables were computed on operating cost. The assessee had identified certain comparable companies on the basis of FAR analysis. The TPO applied modified filters and out of the concerns rejected by the assessee, made further selection and 11 concerns, which were found to be functionally comparable to the assessee. The said concerns are as under:- Sr. No. Name of company PLI (after working capital adjustment) 1 BNR Udyog Ltd (segmental)23.77% 2 Infosys BPO Ltd. 35.13% 3 Accentia Technologies Ltd. 39.33% 4 Jeevan Scientific Technology Ltd. (segmental) (earlier known as Jeeven Softech Ltd.) 43.00% 5 Fortune Infotech Ltd. 22.46% 6 Cosmic Global Ltd. 18.33% 7 Caliber Business Point Solutions Ltd. 19.30% 8 Jindal Intellicom (P) Ltd. 14.08% 9 Informed Technologies India Ltd. 28.54% 10 C....
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....ribunal relating to assessment year 2010-11 has held so. Following the same parity of reasoning, we hold that because of brand value and high turnover associated with Infosys BPO Ltd. and the extraordinary financial events during the year, Infosys BPO Ltd. is to be excluded from final list of comparables. Accordingly, we hold so and direct the Assessing Officer/TPO to exclude Infosys BPO Ltd. 12. The next concern against which the assessee has raised objections is Accentia Technologies Ltd. on the ground of extraordinary events during the year under consideration. The said concern had acquired IQ group of companies in the United Kingdom and there was amalgamation of Asscent Infoserve Pvt. Ltd. with the said concern and because of these extraordinary events, the margins of said companies should not be included in the final set of comparables. The Pune Bench of Tribunal in Aptara Technologies (P.) Ltd. v. Asstt. CIT [2016] 72 taxmann.com 352 (Pune - Trib.) and Cummins Turbo Technologies Ltd. v. Dy. CIT [2017] 79 taxmann.com 260 (Pune - Trib.) has held that the said concern cannot be accepted as comparable. The Tribunal in Aptara Technologies (P.) Ltd. (supra) held as under:- '....
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....Private Limited v. DCIT, (2013) 32 taxmann.com 21 (Hyd.). 15. We have considered the submissions of the Ld. Representative for the assessee and also the stand of the Revenue as emerging from the order of the TPO. In our view, the ratio laid down by the Hyderabad Bench of the Tribunal in the case of Capital IQ Information Systems (India) Private Limited (supra) and by the Bangalore Bench of the Tribunal in the case of Symphony Marketing Solutions India Pvt. Ltd. (supra) is squarely applicable to the present case also. The aforesaid Benches of the Tribunal found that during the year under consideration there were extraordinary events that took place in the said concern which warranted exclusion of this company as a comparable. We therefore hold that the said concern cannot be considered as a comparable." 15. Further, similar proposition has been laid down by different Benches of Tribunal while deciding the appeals relating to assessment year 2010-11 and it has been held that because of extraordinary events during the year, the concern Accentia Technologies Ltd. was not comparable to the entities engaged in ITES. Following the same parity of reasoning, we hold that Accentia Techno....
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....ed to page 406 of the Paper Book. 27. The learned Departmental Representative for the Revenue fairly pointed out that the correction of margins is to be given in the hands of assessee while benchmarking its international transaction and by including Jeevan Softech Ltd. in the final list of comparables. 28. In the totality of the above said facts and circumstances of the case, we find merit in the claim of assessee and direct the Assessing Officer/TPO to work out the correct margins of said concern Jeevan Softech Ltd. and thereafter, determine the average margins of comparables. Accordingly, we direct the Assessing Officer/TPO to exclude three concerns i.e. (1) Accentia Technologies Ltd., (2) Cosmic Global Ltd. and (3) Informed Technologies Ltd. from the final list of comparables and to correct the margins of Jeevan Softech Ltd. and work out the average margins of comparables. It was the case of learned Authorized Representative for the assessee before us that the same would be within +/- 5% and hence no addition on account of arm's length price of international transaction with the associate enterprises is to be made in the hands of assessee." 16. Following the same parity....
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....erx Services Ltd. is to be excluded from the final set of comparables." 35. Following the ratio laid down by the Hon'ble Delhi High Court in Rampgreen Solutions Pvt. Ltd. v. CIT (supra) as applied by Pune Bench of Tribunal in Cummins Turbo Technologies Ltd., UK v. DDIT (Int. Tax) (supra), we uphold the order of CIT (A) in excluding Eclerx Services Ltd. The grounds of appeal raised by the Revenue are thus, dismissed.' 19. Accordingly, we direct the Assessing Officer/TPO to re-work mean margins of said comparables by first excluding the margins of E-clerx Services Ltd., Infosys BPO Ltd. and Accentia Technologies Ltd. and reworking margins of Jeevan Softech Ltd. The learned Authorized Representative for the assessee in the written note has furnished PLI after working capital adjustment of said concerns at 19.22% and has pointed out that no adjustment is to be made on account of arm's length price of international transactions, in view of proviso to section 92C(2) of the Act, under which range of +/- 5% of operating revenue be applied. So, we direct the Assessing Officer to verify the computation in this regard and delete the addition in the hands of assessee. 20. Befor....