TaxTMI 
TaxTMI 
2019 (6) TMI 1054
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The services provided by the assessee company fall within the meaning of 'computer software' as per clause (b) of item (i) of Explanation to section 10A of the Income Tax Act, 1961 (hereinafter called 'the Act'). The undertakings of the company at Vadodara, Gujarat and Noida are also registered in the Software Technology Park of India (STPI) at STPI, Gandhi Nagar and Noida respectively. The undertaking at Noida had commenced production/manufacture on 1.9.2001 and the assessment year under consideration is the ninth year of operation of the undertaking while the undertaking at Vadodara had commenced operations on 1.5.2009 and the assessment year under consideration is the second year of operation. 2.1 The return of income was filed declaring an income of Rs. 82,010/- after claiming deduction u/s 10A of the Act at Rs. 45,78,637/- for the undertaking at Noida and at Rs. 5,14,486/- for the undertaking at Vadodara. The assessee declared book profit of Rs. 43,75,175/- u/s 115JB of the Act and also paid tax as per the provisions of section 115JB. The case was selected for scrutiny through CASS to examine the claim of exemption u/s 10A of the Act. 2.2 During the year under c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the final assessment order by raising the following grounds:- "1. That the Ld. Assessing Officer (AO), Ld. Transfer Pricing Officer (TPO) and Hon'ble Dispute Resolution Panel (DRP) have erred on facts and under the law in: (i) passing the impugned order which is bad in law; (ii) passing the order without demonstrating that the Appellant Co. had motive of tax evasion; (iii) rejecting/not considering three (3) comparable companies (viz. IServices India Pvt Ltd, Savi Infoservices India Pvt Ltd and Microgenetics Systems Ltd) as selected by the Appellant Co while carrying out fresh TP study for AY 2011-12; (iv) not considering the facts/submissions/objections made before them that out of the remaining eight (8) comparable companies as selected by TPO, TCS e serve Ltd. ought to be excluded on various grounds from the list of such comparable companies; (v) Without prejudice to 1 (i) to 1 (iv) above, if high turnover companies having turnover of more than Rs. 200 crores are also to be considered/taken into account, then there was no justification for excluding Infosys BPO as comparable company. (vi) Without prejudice to 1 (i)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tions broadly comprise of transaction processing and technical processing and technical services, collections, customer care and payments in relation to the services offered by Citigroup to its corporate and retail clients. It was further submitted that technical services involve software testing, verification and validation of software at the time of implementation and data centre management activities. Our attention was drawn to page 450 of the paper book (Director's report and annual accounts) wherein these activities were mentioned. It was submitted that this company is functionally dissimilar to the assessee company which is a low-end BPO providing transaction and data centre management services only to its UK based AE and, thus, is a captive service provider. It was further submitted that this company had a huge brand value because of its close connection with the Tata Group and further that this company had a huge turnover and goodwill being one of the giants of the industry and, therefore, it could not be considered as a comparable to the assessee company. It was submitted that another giant company Infosys Pvt. Ltd. was excluded on a similar reasoning in assessee'....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat the assessee had not been able to meet the observations of the TPO in this regard and further that the Ld. DRP had also reached the same conclusion after considering the observations of the TPO and no interference was called for. The Ld. Sr. DR placed extensive reliance on the observations of the TPO in respect of all the four comparables and vehemently argued that the TPO and the Ld. DRP had given a finding of fact which need not be disturbed. 5.0 We have heard the rival submissions and perused the material available on record. We now take the comparables one by one. i) TCS E-serve Ltd. It is the assessee's contention that this company deserves to be excluded as a comparable company for the reason that it is functionally dissimilar to this company. It is undisputed that the assessee company provides IT enabled services to its UK based AE only and, thus, it is a captive service provider whereas TCS E-serve Ltd. provides transaction processing as well as technical services. It is further seen that TCS E-serve Ltd. provides a broad spectrum of activities involving the processing, collections, customer care and payments in relation to the services offered by C....