TaxTMI 
TaxTMI 
2019 (9) TMI 1472
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.... 2. The brief facts of the appeal in A.Y.2009-10 are that the assessee is primarily engaged in the provision of IT and ITES sector as per disclosure made in the Annual report of the assessee company. The ld. TPO observed that as per TP study report, the assessee is an ITES company. It is providing ITES services to M/s. Zenta Global Ltd. Barbados (ZGL). ZGL is a wholly owned subsidiary of M/s. Zenta Group (LLC), USA. The assessee company is owned by outsourcing Mauritius-1 Ltd., and outsourcing Mauritius-2 Ltd., in the ratio of 51:49. These two Mauritius based companies are in turn held by subsidiary Barbados Ltd. Subsidiary Barbados Ltd., is held by ZGL Barbados. 2.1. As per the TP study report, the assessee is rendering following services to its ZGL Barbados, associated enterprises (AE) in short:- i) Accounting services ii) Credit Card services iii) Mortgage Processing services iv) Bank back office services v) Accounts receivable management vi) Insurance Claims Management 2.2. The ld. TPO observed that as per TP study report the assessee gets a mark-up of 15% of cost of rendering ITES services. The TPO also....
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....ployee cost of 8.82% whereas the employee cost of assessee works out to 54.55%. Since the employee cost of the comparable is less than 25% of the total cost, the same is to be excluded from the list of comparables. ii) The said comparable M/s. Excel Infoways Ltd., as per its Director's report for the year ending 31/03/2009 has mentioned that it is in IT enabled services industry providing effective business solutions to the global and Indian companies with excellence in technology and robust processes. The said comparable had continued to win new assignments as well as achieved growth in traditional area of BPO / IT enabled services which has significant grown potential in the years to come. The said Directors report also mentioned that the said comparables is an ISO certified company and is a Customer Contact Center based in India, offering a range of customer care services including telecom fulfillment centre, providing technical services, financial services, healthcare, outbound sales and marketing, voice, email response, real time chat, knowledge management, eCRM architecture and other value added services, where each component of services delivery is critical. However....
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....e ld. TPO. The ld. DR vehemently argued that no fresh filters could be applied at the stage of appeal before ITAT. The ld. DR also argued that the activities of M/s. Excel Infoways Ltd., are functionally similar to that of the assessee and the highlighted portion in page 379 of the paper book only represents various other services that are relevant for the purpose of ISO certification only and not otherwise. The entire receipts are from BPO/ITES and hence the same are functionally comparable and no segmental data is warranted thereon. 4. We have heard rival submissions and we find that certain basic clarifications are required from the ld. TPO which would clinch the entire dispute before us. Accordingly, we deem it fit to seek a remand report from the ld. TPO to provide specific clarifications on the following issues:- i) To obtain details of break-up of the revenue from M/s. Excel Inforways Ltd., in the manner known to law. ii) To seek clarification from M/s. Excel Infoways Ltd., as to whether any revenue was earned during the year i.e., A.Y.2009-10 from services other than ITES. iii) To obtain clarification as to whether the said comparable is engage....
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....ious activities and had classified every activity under BPO/IT enabled services. The list of various activities listed out in the Director's report have already been incorporated by us in para 4 above while addressing the arguments of the ld. AR. We also find from the annual report of M/s. Excel Infoways Ltd. that 31/03/2009, under part IV "BALANCE SHEET ABSTRACT AND COMPANIES GENERAL BUSINESS PROFILE" under the column "Generic names of three principal products / services of company" , the said company i.e., M/s. Excel Infoways Ltd. had reported the following two activities as principal activities:- (i) Business Auxiliary Services (ii)Information Technology Enabled Services 4.3. Moreover, we find from page 399 of the paper book containing details of activities carried out by M/s. Excel Infoways Ltd. which is downloaded from the website on 11/11/2013, that the said company was stated to be engaged in providing collections and customer relation services to various clients since 2003, apart from various other services as listed in para 3.1. (iv) above. This goes to prove beyond doubt that M/s. Excel Infoways Ltd. was also engaged in providing financial services wh....
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.... ld. TPO during TP assessment proceedings for A.Y.2010-11 and the copy of the TPO order for A.Y.2010-11 dated 17/01/2014 wherein M/s. Excel Infoways Ltd. was excluded. 4.6. Apart from the aforesaid observations, we also find that the coordinate Bench of this Tribunal under similar circumstances had excluded M/s. Excel Infoways Ltd. on functional dissimilarities among others in the following cases:- 1.Willis Processing Services (India) Private Limited - ITA No 152/Mum/2014 [AY 2009-10] 2. Goldman Sachs Services (P.) Ltd. - ITA No. 1315(Mum.) 2014 [AY 2009-10] 3. Swiss Re-services India (P.) Ltd.-ITA No. 1465 & 1493/Mum/2014 [AY 2009-10] 4.7. The ld. AR had furnished a chart on a very conservative basis by excluding M/s. Excel Infoways Ltd.; by including Accentia Technologies Pvt. Ltd. which was actually excluded by the ld. TPO while giving effect to the order of the ld. DRP and by excluding loss making comparable [Triton Corp Ltd] which was sought to be included by the ld. DRP and stated that the assessee would be through if M/s. Excel Infoways Ltd. alone had been excluded from the list of comparables. We find lot of force in the ....
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....ces Ltd 3.14% 3.14% 3.14% Arithmetic Mean 28.45% 14.15% 19.84% ZPL's margin 14.63% 14.63% 14.63% Upper range of 5% 20.36% 20.36% 20.36% Whether at ALP Not ALP ALP ALP 4.8. In view of the above observations and by respectfully following the various judicial precedents relied upon hereinabove, we hold that M/s. Excel Infoways Ltd. is functionally not comparable with that of the assessee company. 4.9. Apart from this, we find that M/s. Excel Infoways Ltd. had earned super normal profit of 243.69% on which ground also, this comparable deserves to be excluded from the list of comparables with that of the assessee company. 4.10. In view of the aforesaid observations, the ground No.1 of revenue appeal in ITA No.1623/Mum/2014 is dismissed and Ground Nos.1-18 of Cross Objections of the assessee in CO No.222/Mum/2014 for A.Y.2009-10 are allowed. 5. We find that the assessee has also filed the additional cross objection with regard to department not complying with statutory provision of filing fees. This was stated to be not pressed at the time of hearing an....
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....under what provisions of the Act it has to be construed as penal in nature. The entire reading of the assessment order (both draft as well as the final assessment order) is silent in this regard. We find that the ld. AO merely states that such interest payment on delayed payment of TDS is inadmissible under statute and disallowed accordingly. This goes to prove that it was never the case of the ld. AO to have even remotely contemplated / categorizing the payment of interest to be penal in nature. Hence, there is no need in the instant case to look into the fact as to whether the said payment of interest of delayed payment of TDS could be penal in nature so as to be disallowed in the light of the provisions of Explanation to Section 37(1) of the Act. Accordingly, the reliance placed by the ld. DR on certain decisions viz. 88 Taxman 184 and 230 ITR 733 need not to be adjudicated at all. We find that the main crux of the argument of the ld. DR was that there is no penalty provision provided in the statement for delayed payment of TDS. In this regard, the ld. AR rightly clarified before us that the statute indeed provides for levy of penalty u/s.271C of the Act for such violation. Henc....
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....that the ld. DRP had duly considered this aspect while granting relief to the assessee, which in our considered opinion, does not call for any interference. Accordingly, the ground No.3 raised by the revenue for A.Y.2009-10 is dismissed. 8. The Ground No.4 raised by the revenue for A.Y.2009-10 is challenging the action of the ld. DRP in deleting the addition of Rs. 12,000/- being interest received from HDFC bank on the basis of information received in form 26AS. 8.1. We have heard rival submissions. We find that the ld. AO had made an addition of Rs. 12,000/- towards interest income from HDFC bank allegedly earned by the assessee on the ground that the same was reflected in form 26AS of the assessee and the same was not disclosed by the assessee in its return of income. We find that the assessee had pleaded complete ignorance of the same before the ld. AO and had also placed bank statements to demonstrate that it had never made any deposits with HDFC bank and had not earned any interest thereon. However, the ld. AO did not appreciate the contention and proceeded to make the addition. We find that the ld. DRP had granted relief to the assessee by accepting its co....
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....e and does not require any specific adjudication. CO No.164/Mum/2015 ( By assessee) - (A.Y.2010-11) 14. The Ground Nos. 1-3 raised by the assessee in its cross objections are supportive of the order of the ld. DRP. 15. The Ground No. 4 raised by the assessee in its cross objection is with regard to the action of the ld.DRP not granting deduction u/s.10A of the Act in respect of disallowance made u/s.40(a)(ia) of the Act amounting to Rs. 20,94,076/- and addition on account of advances written off amounting to Rs. 16,41,800/-. 15.1. We have heard rival submissions. It is not in dispute that the disallowance u/s.40(a)(ia) of the Act in the sum of Rs. 20,94,076/- and addition on account of advances written off in the sum of Rs. 16,41,800/- pertain to the eligible undertaking of the assessee. Once any disallowance is made in respect of eligible undertaking of the assessee, it would only go to increase the profits of such eligible undertaking, consequently it would be eligible for enhanced deduction u/s.10A of the Act thereby making the entire exercise revenue neutral. We find that the Central Board of Direct Taxes in its Circular No.37/2016 dated 02/11/2....