TaxTMI 
TaxTMI 
2019 (4) TMI 869
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....essee be enhanced by Rs. 1,87,40,795/-, the details of which are as under: 2.2 Assessee has entered into following international transactions, as per 3CEB report/TP document: AE Nature of transaction Amount (Rs. Harsco Corporation Provision of IT enables services Reimbursement of expenses (paid/payable) Receivables Payables 9,49,67,497 24,65,130 28,00,440 40,53,487 Harsco Metals Group Ltd. Provision of IT enables services Receivables 9,26,20,628 1,77,53,730 Harsco Infrastructure Services Ltd. Provision of IT enables services Receivables 3,06,81,490 76,22,147 Harsco Infrastructure Services GmbH Provision of IT enables services Payables 68,52,592 4,73,775 Harsco Metals Luxequip Provision of IT enables services Receivables 36,07,748 11,25,865 Harsco Metals LTDA Provision of IT enables services Receivables 4,17,380 4,17,380 Harsco Metals South Provision of IT enables services Receivables 4,52,619 4,52,619 2.2 The TPO noted that assessee has aggregated the transactions and used Prowess and Capitaline data base in search for comparable companies. For the IT enabled services, after applying certain filters, the ....
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....143(3) read with section 92CA read with section 144C of the Income-tax Act, 1961 ('Act'), pursuant to the directions dated 31 October 2016 by Dispute Resolution Panel, Bangalore ('DRP') u/s 144C(5) of the Act and read with order dated 29 January 2016 issued by Transfer Pricing Officer ('TPO') u/s 92CA(3) of the Act, is bad in law and void ab-initio. Transfer Pricing General 2. That on the facts and circumstances of the case and in law, the AO/DRP erred in confirming transfer pricing adjustment of Rs. 1,69,15,395 on account of provision of Information Technology enabled Services ('ITES') by the Appellant to its Associated Enterprises ('AEs'). 3. That on the facts and circumstances of the case and in law, the AO/DRP erred in rejecting transfer pricing documentation maintained by the Appellant in accordance with the provisions of the Act read with the Income-tax Rules, 1962 ('Rules') and undertaking a fresh economic analysis during the course of assessment proceedings and thereby making an adjustment of Rs. 1,69,15,395 to the international transactions. Selection of uncomparable companies 4. T....
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....amounting to Rs. 1,76,969 in the final assessment order as against Rs. 15,456 considered in the return of income. 14. The Appellant craves, to consider each of the above grounds of appeal without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of appeal." 3.2 Out of the said grounds, the assessee pressed only ground Nos. 4, 6, 9 and 11 of the grounds of appeal. 4. In ground No. 4, the assessee prays to exclude four companies as comparables, however, at the time of hearing, he pressed only the following two companies to be excluded from the list of comparables: i) Infosys BPO ltd. ii) TCS e-Serve Ltd. 4.1 As regards Infosys BPO Ltd., Ld. AR submitted that this company cannot be a comparable to the assessee company as it has functional dissimilarity as well as extraordinary events took place during the year and, further, it has high turnover of Rs. 1,312 crores. He relied on various cases including the case of Hyundai Motor India Engg. Pvt. Ltd. Vs. DCIT, Hyderabad in ITA No. 87/Hyd/2017 for AY 2012-13. 4.2 The ld. DR, on the other hand, filed written submissions, wherein, it is stated as ....
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.... the list of comparables by observing as under: "11.1 We are in agreement with the contentions of the comparability on turnover ratio of assessee with this company on the ground that assessee's turnover is about Rs. 15.79 crores, as against turnover of Rs. 1016 crores of the Infosys. We are also of the view that other contentions with regard to the brand value and brand building exercise, having huge asset base, can be considered to arrive at the conclusion that Infosys BPO is functionally not similar to that of assessee. Infosys BPO stands on its own as an exclusive BPO of the Infosys Technologies and in earlier years, generally Infosys BPO is excluded in many of the cases. Considering these aspects, we are of the opinion that even though the profits of the Infosys BPO Ltd. is reasonable and no super profits are earned, because of its big brand value this company has to be excluded on the grounds of functional dissimilarity on FAR Analysis. Therefore, we direct the Assessing Officer/TPO to exclude this company." Respectfully, following the same, we direct the AO to exclude the said company as comparable. 4.4 As regards TCS eServe Ltd., Ld. AR submitted that this....
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....st the turnover of TCS e-Serve Limited of Rs. 1405.10 crores. Therefore, following the turnover filter as well as taking note of the fact that it owns and possesses brand value and intangibles as compared to the assessee which does not own such assets, we direct that this company be excluded from the list of final comparables. Accordingly, assessee's grounds of appeal No.6 is partly allowed." Respectfully, following the said decision, we direct the AO/TPO to exclude the said company as comparable. 5. As regards ground No. 6 regarding rejection of comparable companies, the TPO observed that the company Crystal Voxx Ltd., failed the service income filter at entity level and has persistent losses at segment level and hence not considered. The DRP also upheld the action of the TPO. 5.1 Before us, the ld. AR submitted that the said company is functionally similar and satisfies all the filters applied by the TPO. He relied on the following cases: 1. M/s Harsco India Services Pvt. Vs. DCIT, ITA No. 2176/Hyd/2017 for AY 2013-14 2.M/s Hyundia Motor India Engg. Pvt. Ltd. Vs. DcIT, ITA No. 87/Hyd/2017. 5.2 On the other hand, ld. DR in his written submission s....