TaxTMI 
TaxTMI 
2016 (8) TMI 1439
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.... taxpayer provides business support services, data creation, content development in relation to content search and analysis to the various business units within the group. It also assists in building and developing software tools and systems to facilitate delivery of group companies report and database subscription services and to provide data processing and automatic support to populate the group's subscription databases. The taxpayer is wholly owned subsidiary of Global Data Ltd., U.K. 2.1 During the relevant PY, as per the 3CEB report/TP document, the international transactions of the assessee reflected as under: A.E. Nature of transaction Amount (Rs.) Global Data Ltd. Provision of ITES 42,86,13,172 42,86,13,172 2.2 The taxpayer has carried out the economic analysis and has summarized it as under: Nature of international transaction Amount MAM PLI Margin of taxpayer Margin of comparables Provision of ITES 42,86,13,172 TNMM OP/ OC 16.4 14.27 2.3 The taxpayer has carried out the economic analysis for comparables at pages 21 to 26 of the TP documentation. T....
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....2.9 After comparing the average margins of the comparables to the financials of the assessee, the TPO computed the adjusted arm's length margin as under: Description Amount Arm's Length Margin 27.90% Less: WCA 1.20% Adjusted Arm's Length Margin 26.70% Operation Cost (OC) 37,40,19,725 Adjusted Arm's Length Margin (%) (AALM) 26.70% Arm's Length Price = (100+AALM)*OC 47,38,82,992 Price Received (OR) 42,86,13,172 Adjustment u/s 92CA 4,52,69,820 2.10 Accordingly, the TPO who passed an order u/s 92CA(3) of the Act on 31/10/2013, recommended adjustment of Rs. 4,52,69,820/-. The same was incorporated by the AO in the draft assessment order. Assessee preferred a petition before the Dispute Resolution Panel (DR) raising various objections. 3. DRP has given partial relief to the assessee as under: 3.1 The DRP has eliminated the companies M/s Infosys BPO Ltd. and M/s TCS e-Service Ltd. as comparables, after considering the submissions of the assessee that these two companies should not be included in view of their brand value and high turnover as well as relying on the decision of the ITAT to exclude t....
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.... as non- operating expenses for the purpose of margin computation of comparable companies as selected by TPO. Rejection of comparable companies 7. That on the facts and circumstances of the case and in law, the AO IDRP erred in confirming the rejection of the following comparable companies, as rejected by the TPO: (i) Ace SPO Services Limited; (ii) R Systems International Limited; (iii) ICRA Techno Analytics Limited; (iv) AOK In House SPO Services Ltd; (v) Cameo Corporate Services Ltd; (vi) Delta Services India Pvt. Ltd; (vii) Informed Technologies India Ltd; (viii) Optimus Global Services Ltd; (ix) Sparsh SPO Services Ltd; (x) In-House Production Ltd; and (xi) Timex Group India Ltd. Use of filters 8. That on the facts and circumstances of the case and in law, the AO IDRP erred in upholding the use of the following additional filters in undertaking the comparative analysis: (i) Related party transactions filter (should be restricted to 10% _ 15%); (ii) Export Sales filter; (iii) Different financial year-end filter; (iv) Persistent loss filter; (v) Diminishing revenue....
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....t source of Rs. 11,000 as claimed in the return of income. 17. 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." 5. Ground Nos. 1, 2, 3, and 17 are general in nature, hence, need no adjudication. 5.1 Ground Nos. 6, 7, 8, 9, and 11 have not been pressed by the ld. AR of the assessee at the time of hearing before us, therefore, the same are dismissed as not pressed. 6. As regards ground No. 4 pertaining to error in computation of net margin of the assessee, the ld. AR submitted that the foreign exchange loss should be treated as non-operating in nature. Without prejudice to the above, he submitted that foreign exchange loss to the extent of reinstatement should be considered as non-operating in nature. The revised operating margin of the assessee, after excluding the foreign exchange losses, works out to be 15.09%. 7. Considered the submissions of both the counsels and perused the material facts on record. We observe that various decisions of this Bench as well as other benches of the Tribunal have treated the foreign ex....
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....Infoserve Pvt. Ltd., has been amalgamated with the company consequent to which, assets and liabilities of the erstwhile company were transferred and vested in the company w.e.f. 1st April, 2008 and the scheme has been given effect to in the accounts of the year. Therefore, it is clear that there is an extraordinary event in the case of Accentia Technologies Ltd., during the relevant financial year particularly since the approval for amalgamation has been given by the Hon'ble High Court of Mumbai vide orders dated 21st August, 2009 and by the Hon'ble Karnataka High Court vide orders dated 6th February, 2010. This event would definitely have an effect on the profit margins of the said company and therefore, has to 22 be excluded from the list of comparables as rightly done by the DRP. Therefore, we do not see any reason to interfere with the order of the DRP on this company also. Accordingly, ground No.3 of the Revenue is dismissed." ii) The ld. DR on the other hand relied on the orders of revenue authorities. iii) Considered the submissions of both the parties and perused the relevant material on record. Following the said decision of the coordinate bench, we direct the AO/TPO....
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....ards the extraordinary event or exceptional circumstance there is no material placed before us by the Ld. Counsel for the assessee. Therefore, merely because the TPO in another case has held that there is an extraordinary event for which this company has to be excluded from the list of comparables, it cannot be excluded. Such claim has to be supported by evidence on record. As regards the functional dissimilarity and huge turnover and brand value is concerned, we find that this Tribunal in assessee's own case for A.Y. 2009-10 while considering the comparability of the assessee with Infosys BPO Ltd., has taken note of the possession of the brand value 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 ....