TaxTMI 
TaxTMI 
2018 (4) TMI 1791
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....f income for the year under consideration was filed by it on 30.09.2010 declaring a total income of Rs. 12,16,81,262/-. Since the assessee had entered into international transactions involving provision of I.T. enabled services to its associated enterprises of the value of more than 15 Crores during the year under consideration, a reference was made by the AO to the TPO under section 92 CA of the Act for determining the arm's length price of the said transactions. In the TP study report furnished by the assessee, TNMM was adopted as the most appropriate method to determine the arm's length price of the international transactions entered into by the assessee with its AE for providing I.T. enabled services. In the said report, the assessee company was taken as a party and operating profit / total cost (OP / TC) was taken as the profit level indicator (PLI). Eight entities were selected as comparables and since their average OP / TC as worked out at 8.36% was well below the OP / TC shown by the assessee at 16.94%, the price charged by the assessee company to its associated enterprises of providing I.T. enabled services was claimed to be as at arm's length. 3. The eight comparables ....
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....a suitable comparable in your case. 4 Igate Global Solutions Limited You have rejected this company on the ground mentioned in Accept/Reject matrix that engaged in Consulting and BPO segment and proper segmental results are not given. However, the annual report of the company has been perused and it is found that this company is dominantly an ITES company and passes all filters also. Hence, this is a suitable comparable in your case. 5 Infosys BPO Limited You have rejected this company on the ground mentioned in Accept/Reject matrix that 'Significant difference in scale of operations. Assessee in its search itself has not applied High turnover Filter'. As per the functional profile of the company this is very much on ITES company and it passes all filters also. Hence, this is a suitable comparable in your case. 6 TCS E-Serve International Ltd. You have rejected these companies on the ground mentioned in Accept/Reject matrix that 'these company are having RPT in excess of 20%. However, the annual report of the companies has been perused and it is found to be less than 25% of Sales (12.09% and 2.70% respectively). Hence, these are suitable comparables in yo....
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.... elaborate submissions and has also relied on the various decisions of this Tribunal wherein the said 5 entities have been excluded by the Tribunal from the list of final comparables. In reply, the learned DR has also made the detailed submission in support of the Revenue's case that the concerned 5 entities selected by the TPO and confirmed by the DRP are suitable comparables which cannot be excluded. 8. After considering the rival submissions and perusing relevant material on record, we find that the issue relating to the inclusion or exclusion of the concerned 5 entities in question has already been considered and decided in the various decisions of this Tribunal. In one of such decisions rendered for the same assessment year i.e. A.Y. 2010-11 in the case of M/s Rampgreen Solutions Pvt. Ltd. (ITA No. 1066/Del/2015 dated 4.11.2015), an assessee engaged primarily in providing I.T. enabled services to its parent company, like the assessee in the present case, M/s Accentia Technologies was excluded by the Tribunal from the final list of comparables for the following reasons given in paragraph no. 16 to 20 of its order. "As regards Accentia Technologies Ltd., ld. co....
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....ench of the Tribunal 'in several cases including Ciena India Pvt. Ltd. Vs. DCIT (ITA No.3324/Del/2013) vide its order dated 23.4.2015. In view of the fact that there was merger of Asscent Infoserve Pvt. Ltd. with Accentia Technologies Ltd. by way of amalgamation during the year itself, we hold that this company cannot be considered as comparable due to this extra-ordinary financial event. Accordingly, the same is directed to be excluded from the final list of comparables." 19. Having gone through the annual report and keeping in view the extraordinary event in the year under consideration, we are in agreement with ld. counsel that this comparable cannot be taken into consideration while determining the average margin earned by the comparables. Ld. counsel has submitted that in the case of Techbook International Pvt. Ltd. (supra), this company has been excluded and, accordingly, in the present case also this should be excluded, because the functional profile of Techbook International Pvt. Ltd. (supra) and that of assessee is similar. We find that Tribunal in the case of Techbook International Pvt. Ltd. (supra), in regard to the business profile of Techbook International....
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....s been held that a company loses the tag of comparability due to amalgamations, mergers, etc., taking place during the year in question. Adopting the same reasoning, we order for the exclusion of this company from the list of comparables". 33. Respectfully following the Tribunal's decision in the case of Techbook International Pvt. Ltd. (supra), this company is excluded from the list of comparables. 34. Infosys BPO: In the case of Techbook International Pvt. Ltd. (supra), the Tribunal has excluded this company from the list of comparables by observing as under: 10.5.2. After considering the rival submissions and perusing the relevant material on record, we find from the Annual report of this company, which .is available on page 449 onwards of the paper book, that there was acquisition by this company of McCamish Systems LLC. Such information is available on page 456 of the paper book. Acquisition of Mcf.amish Systems LLC during the year, being an extraordinary financial event, renders it incomparable. Following the reasons taken note of above, we order for the elimination of this company from the final set of comparables." 35. Respectfully follow....