TaxTMI 
TaxTMI 
2020 (8) TMI 170
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....puted the margin on the basis of 2 years average margin. As per the assessee's computation the margin of comparables came to 23.93%. This was less than the assessee's margin from international transactions, i.e., 26.81%. Hence, the assessee claimed the value of transaction, i.e., the international transaction to be at arm's-length price. The transfer pricing officer disregarded the computation of margins based on 2 year data. Consequent upon this, the assessee submitted single year data of 7 comparables with the mean of 16.91%. The Transfer Pricing Officer characterized the assessee as Knowledge Process Outsourcing (KPO) services and rejected the assessee's transfer pricing study. He accepted/included Vishal Information Technologies Ltd as comparable and rejected the remaining 6 of assessee's comparables. The Transfer Pricing Officer carried out his own search and included 5 additional comparables. The margin as per the Transfer Pricing Officer came to 51.73%. Accordingly, the transfer pricing officer made the transfer pricing adjustment. 4. Upon the assessee appeals, the ld. CIT(A) held that the Transfer Pricing Officer was not correct in treating the assessee....
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....f the assessee for assessment year 2005-06, 2006-07 was accepted by the revenue and for A.Y. 2007-08 it was duly upheld by the ITAT. The learned counsel of the assessee pleaded that following need to be excluded, being K.P.O's.: * Eclerx Services Ltd. * Vishal Information Technologies Ltd * Crossdomain Solutions * Datamatics Financial Services. The learned counsel of the assessee further submitted that following are to be included, as they have been wrongly excluded by the TPO: * Allsec Technologies * R Systems International Ltd * CG Vak Software & Exports Ltd. 8. As regards the rejection and comparables, it is the contention of the learned counsel of the assessee that assessee is engaged in back office support functions which has been accepted in the earlier assessment years. The entities dealing with the knowledge and processing outsourcing are not comparable to the assessee and hence need to be excluded. The learned counsel of the assessee submits that the ld. CIT(A) has rejected the Transfer Pricing Officer's characterization of the assessee as KPO. Hence, KPO selected by the Transfer Pricing Officer cannot be considered as comparables. The learned counsel f....
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....appeal, the ld. CIT(A) has accepted that the characterization by the transfer pricing officer of the assessee's functions as knowledge process outsourcing was not correct. Thereafter, the ld. CIT(A) contradicted himself by stating that the functions of the assessee are in alignment with the knowledge process outsourcing comparable dealt with by the transfer pricing officer. In this regard, the learned CIT appeals relied upon the ITAT decision in the case of Maersk Global Centers (India )(P) Ltd . Thereafter, the learned CIT (A) upheld the assessing officer's action of selection of four of the comparables and accepted the assessee's contention in rejection of two the comparables. 12. Now in appeal before us, the submission of the learned counsel of the assessee is that assessee's functions are that of ITES which has been duly accepted by the revenue as well as by the ITAT in earlier years. Hence, the re-characterisation of the assessee's functions as knowledge process outsourcing is not sustainable. We are in full agreement with this contention. Furthermore, we find that the ld. CIT(A) has clearly contradicted himself by stating both that assessee is not a KPO and at th....
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....d services to overseas markets and included in the list of comparable. The Id. CIT(A) confirmed the action of TPO holding that the TPO conducting benchmarking after calling information under section 133(6) and is benchmarking analysis are correct. We have noted that, though the Id. AR has relied upon a number of decisions of Tribunal/co-ordinate bench. We have noted that in a recent decision of Tribunal in Wills Processing Services (I) Pvt. Ltd. (supra) on comparability, the Tribunal held as under: We though in light of our aforesaid observations had partly disagreed with certain grounds as had been averred by the Ld. A.R to facilitate exclusion of the aforesaid comparable, however as observed by us hereinabove that the aforesaid comparable viz. Coral Hub Limited (earlier known as Vishal Information Technology Limited) had a business model where services are outsourced, as ' against the business model of the assessee where services are rendered by employing own employees and using one's own infrastructure, on the basis of which we are of the considered view that it can safely be concluded that the said comparable was functionally different, and as such was liable to be ex....