TaxTMI 
TaxTMI 
TaxTMI 
2019 (1) TMI 1795
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....stments made by the AO. In its TP Study, the assessee benchmarked its international transaction using TNMM as the most appropriate method. The assessee considered 14 comparables and arrived at an average arm's length margin of 12.99%, while the assessee's own margin was 16.77%. Accordingly the assessee claimed that its international transactions are at arm's length. 3. However, learned TPO selected 19 comparables and arrived at arm's length margin at 30.49%. Accordingly, he made adjustment of Rs. 1167.96 lakhs. In the proceedings before Learned DRP, it excluded two comparables. It resulted in mean margin of 27.45% and accordingly the addition was reduced to Rs. 799.87 lakhs. Accordingly, the AO added the above said amount to the total income of the assessee. The assessee is aggrieved by the decision so rendered by learned DRP. 4. We have heard the parties on this issue and perused the record. The final list of comparables considered by Ld DRP is given below :- 1. Spanco Ltd. (Seg.) 2. Cosmic Global Ltd. 3. Aditya Birla Minacs Worldwide Ltd. 4. Asit C. Mehta Financial Services Ltd. (Seg.) 5. Crossdomain Solutions Ltd. 6. Datamatics Financial Services Ltd (Seg.) 7. e4....
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....ingly, the learned AR submitted that this comparable should be excluded for the purpose of transfer pricing study in this year also. 6. On the contrary, learned DR submitted that the assessee is seeking exclusion of M/s Accentia Technologies Ltd., on the ground that it is providing medical services and He submitted that the assessee has accepted another comparable named "e4e Healthcare Solutions Limited" as a good comparable, which is also providing medical transcription services. He submitted that the assessee is demanding exclusion of Accentia Technologies Ltd. only for the reason that its margin is very high. Accordingly, the learned DR submitted that this comparable should be included. 7. In the rejoinder, the learned AR submitted that Accentia Technologies Limited has also developed software products like iMTAS, iRTS, iAMS, iIMS, iPMS, iHMS. He submitted that the software development activity is not there in the assessee's case. Further no segmental information for Services segment and software products division is available. The absence of the same would make this company incomparable as held by Hon'ble Bombay High Court in the case of Aptara Technology (P) Limited. 8.....
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....show either before the Tribunal or even before us that the merger/amalgamation which took place in the previous year relevant to subject assessment year did not have an impact on the profitability of the Accentia Technologies Ltd. Merely because both the tested and the comparable provide ITES services they do not become comparable. This is so as the nature of services provided by use of Information-Technology is different. In any event, no challenge has been made to the finding of the Tribunal that the activities carried out by Accentia Technologies Ltd. and the Respondent- Assessee are functionally different arid, therefore, not comparable. (e) Therefore, the view taken by the Tribunal in excluding Accentia Technologies Ltd. is a possible view more particularly in the absence of the same being shown to be perverse. Thus, no interference is warranted." 10. Another important feature highlighted before us was that Accentia Technologies Ltd. is also engaged in the business of developing software products and it does have any segmental information for its services segment and software products segment. Though the Ld D.R sought time to find out availability of segmental details, yet ....
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....f the assessee company is a complex high ended activity. He has also discussed about the profile of the company, which is not at all relevant to the assessee-company. He submitted that the TPO has discussed profile of some other assessee. Hence the order passed by the TPO in respect of this comparable would get vitiated. 14. We have heard the rival contentions and perused the record. We noticed that this comparable, viz., M/s E-Clerx Services Ltd has been excluded in the case of Rampgreen Solutions Pvt. Ltd. (377 ITR 533)(Del). The assessee before the Hon'ble Delhi High Court was also a company rendering voice call services. The High Court held that the same cannot be compared with a KPO company. For the sake of convenience, we extract below the relevant observation made by Hon'ble Delhi High Court in the above said case:- 37. Applying the aforesaid principles to the facts of the present case, it is once again clear that both Vishal and eClerx could not be taken as comparables for determining the ALP. Vishal and eClerx, both are into KPO Services. In Maersk Global Centers (India) Pvt. Ltd. (supra), the Special Bench of the Tribunal had noted that eClerx is engaged in data an....
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....pany's forex earnings are generated from KPO division only. Further, an extraordinary event has also been taken place in this company during the year under consideration, i.e., during the current year, a scheme of arrangement involving amalgamation between Tek-men Tools Pvt. Ltd. and the assessee-company and further demerger in Mold-Teck Technologies was simultaneously sanctioned by Hon'ble Andhra Pradesh High Court vide order dated 15.7.2008 with the appointed date for amalgamation and de-merger being 1.10.2006 and 1.4.2007 respectively. Accordingly, the learned AR submitted that this company cannot be considered as comparable. He further submitted that in the following case this company has been excluded:- (a) Dialogic Networks (India)(P) Ltd. (b) Maerks Global Centres (India) Pvt. Ltd. 17. On the contrary, the learned DR placed reliance on the order passed by learned TPO and learned DRP. 18. We have heard the parties on this issue. It is noticed that this company is a KPO company providing structural engineering services. Further during the year under consideration, extra ordinary events like amalgamation and demerger have taken place. Hence, there is merit in the cont....
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....f this Tribunal in the case of Flextronics Technologies (India) Pvt Ltd ITA(TP) No. 1559/Bang/2012 (Para 19) & Symphony Marketing Solutions India Pvt. Ltd. Vs ITO ITA No. 1316/Bang/2012 (Para 25). No contrary decision is brought before us by the leaned Sr. DR, and we therefore respectfully following the decision of co-ordinate Bench of this tribunal hold that this company cannot be regarded as comparable and direct the AO to exclude the same from comparables as selected by the TPO. 19. This company has also been excluded Maersk Global Centres (India) Pvt. Ltd. (supra). In view of this, we direct the Assessing Officer to exclude this company. 20. The next comparable disputed by the assessee is M/s. Acropetal Technologies Limited. The Learned AR submitted that learned TPO, in respect of this comparable also, has considered the assessee as company providing complex ended activities, i.e., as stated earlier, the Learned TPO has adopted profile of some other company as that of the assessee while considering this comparable. The Learned AR submitted that this company has two segments namely engineering design service segment and information technology service. However, learned TPO has ....