TaxTMI 
TaxTMI 
2021 (1) TMI 25
X X X X Extracts X X X X
X X X X Extracts X X X X
.... international transactions with its Associated Enterprises (AEs). Therefore, the matter was referred to the TPO for determination of the Arms' Length Price (ALP) of the international transactions. The TPO rejected the TP study of the assessee and conducted his own search for the comparables for both SDS and ITeS and proposed adjustments to the ALP. Further, he also proposed adjustment towards interest on receivables. Thus, the total of the adjustment proposed was Rs. 122,56,40,217/- u/s 92CA of the Act. Accordingly, the draft assessment order was proposed by the AO. The assessee raised its objections to the said proposal before the DRP and the DRP vide directions dated 11.9.2018 gave certain directions to the TPO which resulted in enhancement of the adjustment u/s 92CA of the Act from Rs. 122,56,40,217/- to Rs. 128,64,17,966/-. In compliance thereof, the final assessment order has been passed, against which, the assessee is in appeal before us by raising the following grounds: "CONCISE GROUNDS OF APPEAL 1. On the facts and in the circumstances of the case and in law, the Learned Transfer Pricing Officer i.e. the Deputy Commissioner of Income-tax (Transfe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the said companies were functionally comparable to the Appellant: * Evoke Technologies Private Limited * E-Zest Solutions Limited * Mavenc Systems Ltd * SagarSoft (India) Limited * iSummation Technologies Private Limited * Akshay Software Technologies Limited * Goldstone Technologies Limited * Sankhya Infotech Limited 5. On the facts and in the circumstances of the case and in law, the Ld. TPO erred in and the Hon'ble DRP further erred in upholding/confirming the action of the Ld. TPO in rejecting the following companies engaged in Information Technology Enabled services as a comparables, without appreciating that the said companies were functionally comparable to the Appellant: * Allsec Technologies Limited * Informed Technologies Limited * Jindal Intellicom Limited * Caliber Point Business Solutions Limited * Ace BPO Services Private Limited 6. Without prejudice to the above grounds on rejection of functionally dissimilar comparable companies, on the facts and in the circumstances of the case and in law, the Ld. TPO erred by incorrectly compu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsaction for providing Software Development Services (SDS in short) while Grounds 3 & 5 relates to ALP adjustment of the international transaction for providing ITeS services and Ground No.6 relates to both software development services and ITeS, wherein the assessee is seeking correct computation of the margins of the comparable companies mentioned thereunder. As regards Ground Nos.7 & 8, it is submitted that the assessee does not wish to press the same and they are accordingly rejected. 4. As regards the transaction of software development services of Rs. 8,87,48,15,645/- is concerned, brief facts are that the assessee provided software development services relating to employer services to its group companies. In its TP study, the assessee selected 22 companies as comparable to the assessee and arrived at the arithmetic mean of such comparables at 9.73% and since the margin of the assessee was higher at 18%, it reported its transactions to be at ALP. The TPO, however, did not accept the assessee's contention and rejected all the comparables selected by the assessee except for four companies i.e. (i) L&T Infotech; (ii) Mindtree Ltd., (iii) Persistent Systems Ltd and (iv) R.S. S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ogies Ltd from the final list of comparables. It also confirmed the denying of the working capital adjustment and risk adjustment. (ii) In so far as the ITeS is concerned, the DRP directed exclusion of only one company i.e. BNR Udyog Ltd. It also confirmed the denial of working capital adjustment and risk adjustments. (iii) As regards interest on outstanding receivables, the DRP confirmed the credit period of 30 days granted by the TPO and directed the TPO to adopt a reasonable rate that could be available to the assessee on short term deposits. 7. Thus, the TPO proposed the adjustment of Rs. 75,36,53,673/-. 8. On receipt of the TP order, the draft assessment order was proposed by the AO to bring this amount to tax. Aggrieved, the assessee preferred its objections to the DRP. The DRP directed exclusion of 3 Companies i.e. SQS India BFSI Ltd, Tech Mahindra Ltd, Cigniti Technologies Ltd from the final list of comparables. As regards the additional companies proposed by the assessee as comparable to the assessee, the DRP accepted only one company i.e. CG-VAK Software & Software Exports Ltd as comparable to the assessee. It however, directed the TPO to examine whether Sa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ils of Raw materials, spare parts and components consumed Unless otherwise specified all monetary values are in INR Details of raw materials, spares and components consumed Raw materials consumed (Member) Subclassification of raw materials, spare parts and components consumed (Axis) Imported Members Indigenous Member 1/4/2013 to 31/03/2014 1/4/2012 to 31/03/2013 1/4/2013 to 31/3/2014 1/4/2-12 to 31/03/2013 Additional information on profit and loss A/c Details of raw materials, spare parts and components consumed (Abstract) Details of raw materials, spare parts and components consumed (Line Items) Value consumed 1,78,21,068 5,06,44,253 15,99,348 8,65,362 Percentage of consumption 91.76% 98.32% 8.24% 1.68% Value of imports of raw materials 3,35,87,489 4,31,64,414 d) This company has revenue from information consultancy INR 29.70 crores and the relevant extract from page 123 of Paper Book Volume 2 is given below: Revenue inform....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 7. With regard to arm's length computation of software services, we find that the assessee had sought exclusion of E- 1nfochips Ltd from the list of final camparables for which Ground No. 3 A. is raised by the assessee. We find that during the Asst Year 2012- I 3, the company amalgamated one of its wholly owned subsidiary, namely E-lnfochips Bangalore Ltd w.e.f. 1.4.2011 which is evident from the fact reported in their annual report for the financial year 20 I I _ I 2 enclosed in page 1 054 of the paper book. Pursuant to the said amalgamation, E-lnfochips Bangalore Ltd's functions, assets as well as risks too got merged with that of E-lnfochips Ltd w.e.f. 1.4.2011. We find from the nature of business mentioned in the business profile of the said cam parable enclosed in page 1118 of the paper book, that the said comparable 's engaged in IT, 1TES and sale of products for which segmental information is not available. The assessee herein does not have ITES. Hence no comparison could be made for want of segmental data. We also find [hat the co-ordinate bench decision of Delhi Tribunal in the case of Alcatel Lucent India Ltd. v. Dy. CIT .2016] 74 taxmann.com 105 (Delhi-Tri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n view of the fact about non-availability of segmental data with respect to the various activities undertaken by it, we are of the view that margins of E-Infochips Limited cannot be applied to benchmark the international transactions undertaken by the assessee with it's A.Es. We further fmd that in case of DCIT Vs. M/s. Philips India Limited (supra) and Ness Technologies (India) Private Linited (supra), which were also engaged in the activities similar to assessee (i.e., providing software services to its group concerns based on the specifications provided) in A.Y. 2011-12, the Coordinate Bench of the Tribunal, while deciding those appeals directed the exclusion of E-Infochips Limited as a comparable company. In view of the aforesaid facts, we are of the view that EInfochips Limited cannot be considered as comparable to arrive at Arms Length Price and therefore we direct its exclusion from comparables. Before us, it is assessee's contention that if EInfochips Limited is excluded from the final set of corn parables, the margin of the assessee would fall within 2: 5% range vis-a-vis margin of the residual comparables and thus in view of proviso to Sec.92C(2) of the Act, no ad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....any from Products was only 15% of total revenue and at the same qualified to be eligible for comparison. The DRP did not allow any relief. 10.2 After considering the rival submissions and perusing the relevant material on record, we find that the Annual report of this company is available in the paper book with its Profit and loss account at page 1025. Schedule of Income indicates its operating revenue from software development, hardware maintenance, information technology, consultancy etc. Revenue from hardware maintenance stands at Rs. 3.92 crore, which has been considered by the Transfer Pricing Officer himself as sale of products. Such sale of products constitutes 15% of total revenue. There is no segmental information available as regards the revenue from sale of products and revenue from software development segment. As the assessee is simply engaged in rendering software development services and there is no sale of any software products, this company, in our considered opinion, ceases to be comparable. It is obvious that from the common pool of income from both the streams of software products and software services, one cannot deduce the revenue from software servic....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... This exercise does not compare with other income assessments where the methodology adopted in their domestic jurisdiction will differ". The TNMM method depends on accurate data with respect to all the three elements - wherever they apply. In the Comparable Uncontrolled Price (CUP) method - which is premised upon the elements in Rule 10B(1)(a), the methodology adopted is the price charged or paid for property transfer or services provided in the Comparable Uncontrolled transaction. Therefore, the nature of the transaction and the appropriate filter determines the elements that are to be considered in TNMM. Therefore, the costs, sales and assets employed wherever relevant are to be applied. From this perspective, the revenue's contention that segmental data was available, cannot be accepted. The mere availability of proportion of the turnover allocable for software product sales per se cannot lead to an assumption that segmental data for relevant facts was available to determine the profitability of the concerned comparable". (6) ITAT Delhi Bench in the case of Cadence Design Systems (I) (P) Ltd vs. Asstt.,CIT (2018) 93 Taxmann.com 227 (Delhi). Para 38. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t is engaged in sale of products for INR 206.75 Cr and the relevant extract from Page 400 of Paper Book Volume 2 is given below: (Revenue from sale of products: 20,675.74 13,225.84) b) Thirdware Solution is engaged in software development services, consultancy and software products, whereas the assessee renders only software development services. The relevant extract from Page 320 of Paper Book Volume 2 is given below: "Details of material changes occurred during period affecting company's business operations. 1. Corporate Information Thirdware Solutions Ltd (the Company) is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956. This company is engaged in the business of Software Development and Consultancy Services. The company caters to both domestic and international markets". c) In the annual report, there are no segmental details between software services and software products and the relevant extract from page 382 of Paper Book Volume 2 is given below: "The company's operation comprises of software development, implementation and support services. Primary segmental reporting i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the earlier years order of the Tribunal in own case of ADP. ITA No.471/Hyd/2011 - Page 10 and 17 of the ITAT order: "9. After considering the submissions on either side and examining the materials on record, we find that the issue relating to comparability of aforesaid companies objected by assessee are covered by various decisions of different benches of the Tribunal for the very same AY. In case of Ness Innovative Business Pvt. Ltd. Vs. Dy.CIT In ITA No. 472 to 553 and 1175/Hydl2011, dated 18/06/14"... "Coordinate Bench rejected Bodh Tree Consulting Ltd. Exensys Software Solutions Ltd., Sankhya Infotech Ltd., Foursoft Ltd.. Thirdware solutions Ltd. Tata Elxsi Ltd. and Infosys Technologies Ltd. by observing as under: "In view of the aforesaid, accepting the submissions of learned AR, we direct AO/TPO to exclude aforesaid companies from the list of comparables. This ground of assessee is allowed". Further, the learned Counsel for the Assessee relied on the following decisions in support of his contentions that this company has to be excluded: (i) Infor Global Solutions (India) Pvt. Ltd. (ii) CIT vs Intoto Software India (P....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xmann.com 400 37. The learned Departmental Representative submitted, before the Transfer Pricing Officer the assessee has not objected to the selection of this company as a comparable. He submitted, only in subsequent stages, the assessee has objected to selection of the aforesaid company by raising new grounds. He submitted, since the issue of development of product by this company and unavailability of segmental details, were not raised before the Transfer Pricing Officer, it requires verification. 38. We have considered rival submissions and perused materials on record. Though, it may be a fact that the assessee may not have objected to selection of this company before the Transfer Pricing Officer, however, the assessee raised objections against selection of Infor Global Solutions India Pvt. Ltd. this company before the DRP as well as before us. The grievance of the assessee is, the company being involved in development of products and since no segmental details are available in the annual report, it cannot be treated as comparable. The Co-ordinate Bench in Tech Mahindra Ltd. (supra) having found this company to be involved in development of software product an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Having heard both the parties and having gone through the material on record, we find that the TPO at page 37 of his order has brought out the differences between a product company and a software development services provider. Thus, it is clear that he is aware of the functional dissimilarity between a product company and a software development service provider. Having taken note of the difference between the two functions, the Assessing Officer ought not to have taken the companies which are into both the product development as well as software development service provider as comparables unless the segmental details are available. Even if he has adopted the filter of more than 75% of the revenue from the software services for selecting a comparable company, he ought to have taken the segmental results of the software services only. The percentage of expenditure towards the development of software products may differ from company to company and also it may not be proportionate to the sales from the sale of software products. Under section 133(6) of the I.T. Act, the TPO has the power to call for the necessary details from the comparable companies. It is seen that the Asses....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pment has directed excluding these companies tor comparability analysis. Respectfully following the decision of the Coordinate Bench of this Tribunal in case of Intoto Software India (P) Ltd. (supra) we also direct the Assessing Officer/TPO to exclude both these companies". (4) ITAT Delhi Bench (2017) 79 Taxmann.com 207 - St.Ericsson India (P) Ltd vs. Addl. CIT "THIRD WARE SOLUTIONS LIMITED 47. This is again TPO's own comparable and assessee sought to exclude this company from the list of comparables on the ground of non-comparable services i.e application implementation, management and development services. TPO rejected objections raised by the assessee by observing that software development, implementation and support services are various subsegments of software development services only and require employment of software engineers and retained this company as a comparable for benchmarking international transactions. 48. However, perusal of the annual report of this company, available at page 1735 to 1782 of the Paper Book Vol.IV, goes to prove that the substantial revenue of this company is from sales and operating sales of licence; softwa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y as on 31 st March, 2009, the contention of assessee appears to be correct. Further, ITAT Bangalore Bench in case of 3DPLM Software Solutions Ltd. Vs. DCIT (supra), has held as under: "15.3 We have heard the rival submissions and perused and carefully considered the material on record. It is seen from the Planet Online Pvt. Ltd. material on record that the company is engaged in product development and earns revenue from sale of licenses and subscription. However, the segmental profit and loss accounts for software development services and product development are not given separately. Further, as pointed out by the learned Authorised Representative, the Pune Bench of the Tribunal in the case of E-Gain Communications Pvt. Ltd. (supra) has directed that since the income of this company includes income from sale of licenses, it ought to be rejected as a comparable for software development services. In the case on hand, the assessee is rendering software development services. In this factual view of the matter and following the afore cited decision of the Pune Tribunal (supra), we direct that this company be omitted from the list of comparables for the period under co....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... account for software development services and product develop ment services. In the case of E -Gain communications Pvt Ltd. (2008 - TII- 04-I TA T-PUNE- TP), the Tribunal has directed that this company be omitted as a comparable for software service providers, as its income includes income from sale of licences which has increased the margins of the company The Learned A.R prayed that in the light of the above facts and in view of the afore cited decision of the Tribunal (supra). this company ought to be omitted from the list of comparables. 15 2 Per contra, the learned Departmental Representative supported the action of the TPO in including this company in the list of comparables. 15.3 We have heard the rival submissions and perused and carefully considered the material on record. It is seen from the material on record that the company is engaged in product development and earns revenue from sale of licenses and IT(TP)A.1550/Bang/2012 Page-29 subscription. However,the segmental profit and loss accounts for software development services and product development are not given separately. Further, as pointed out by the learned Authorised Representative, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntention was raised that Thirdware Solution Ltd. was super profit earning company and was also engaged in the business of software licences and trading of implementation activities. The Tribunal taking note of the Special Bench decision in the case of Maersk Global Centres (India) Pvt. Ltd. Vs. ACIT vide ITA No.7466/M/2012 in respect of super profits and inclusion of concern Thirdware Solution Ltd., held that the said concern was not comparable and observed as under:- "29. We have considered the rival arguments made by both the sides. We find the Special Bench of the Tribunal in the case of Maersk Global Centres (India) Pvt. Ltd. Vs. ACIT vide ITA No.7466/Mum/2012 has observed as under : Schedule: Sales As on 31.3.2019 As on 31.3.2018 Sale of Licence 22,237,588 3,916,427 Software Licence 89,177,023 76,724,371 Export from SEZ 478,572,420 263,971,033 Export from STPI 162,900,630 168,863,049 Revenue from sub. 16,433,714 9,293,874 770,321,376 522,768,754 "99. The question No. 2 referred to this Special Bench is as to whether, in the facts and circumstances of the case, companies earning abn....
X X X X Extracts X X X X
X X X X Extracts X X X X
....603/- which is as per Schedule-13 "other sources". From the various decisions relied on by the Ld. Counsel for the assessee we find Thirdware Solutions Ltd. has been rejected on the ground that it is functionally dissimilar. The Hyderabad Bench of the Tribunal in the case of Intoto Software India Pvt. Ltd. Vs. ACIT and Viceversa in consolidated order dated 24-05-2013 for A.Y. 2005-06 and 2007-08 at para 26 of the order has observed as under : "26. As far as Thirdware Software Solution Limited is concerned, we find from the information furnished by the said company that though the said company is also into product development, there are no softrware products that the company invoiced during the relevant financial 52 year and the financial results are in respect of services only. Thus, it is clear that there is no sale of software products during the year but the said company might have incurred expenditure towards the development of the software products." 29.2 In various other decisions also Thirdware Solutions Ltd. has been rejected as a comparable on the ground that it is functionally dissimilar. We therefore find force in the submission of the Ld. Coun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....company from the list of comparables. 35. We have considered rival submissions and perused materials on record. On a perusal of the documents placed in the paper book it appears that this company is engaged in various activities including development of niche product and development services. Thus, the company is functionally different from the assessee. Considering the aforesaid aspect, the Co-ordinate Bench in case of Telcordia Technologies India (P.) Ltd. (supra), which is for the very same assessment year, has excluded this company as a comparable. Similar view has also been expressed in the other decisions cited by the learned Authorised Representative. Thus, keeping in view the decisions of the Tribunal referred to above, we hold that this company cannot be a comparable to the assessee. 38. We have considered rival submissions and perused materials on record. Though, it may be a fact that the assessee may not have objected to selection of this company before the Transfer Pricing Officer, however, the assessee raised objections against selection of this company before the DRP as well as before us. The grievance of the assessee is, the company being i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....decisions in support of his contentions for the exclusion of Infobeans Technologies Ltd from the final list of comparables. i) Pubmatic India (P) Ltd, Pune, ITAT ITANo.655/PUN/207 ii)Kony India (P) Ltd ITA No.2305/Hyd/2018 20. The learned DR, however, submitted that the services rendered by Infobeans are also similar to the services rendered by the assessee and there is no separate income from sale of goods. According to him, the income from sale of services only is being depicted as "income from sale of goods". Therefore, according to him, this company has to be retained as comparable to the assessee. As far as computation of the correct margin of Infobeans is concerned, he submitted that the issue may be remitted to the file of the TPO for adopting the correct margin of the Company. 21. Having regard to the rival contentions and the material on record, we find that the Coordinate Bench of the Tribunal in the following case has considered similar objections of the assessee therein to direct exclusion of this company from the final list of comparables. For the purpose of ready reference, the relevant paragraph is reproduced below: "ITA No.655/PUN....
X X X X Extracts X X X X
X X X X Extracts X X X X
....NR 44341 Cr whereas the assessee's turnover is INR 543.04 cr.only. d) Infosys has revenue from sale of products for a sum of INR 1810 Cr. e) Infosys develops Intellectual Property Rights and spends a sum of INR 30 Cr f) Infosys incurs huge selling and marketing expenditure of INR2390 Cr whereas the assessee has no such expenditure. g) Infosys's business model is different and onsite revenue constitutes 51.1% whereas the entire revenue of the assessee is offshore . h) Infosys has incurred INR 77 Cr on brand building and no such expenditure incurred by the assessee. i) Infosys incurred a sum of INR 873 Cr on R&D which is more than assessee's turnover. j) In assessee's own case the ITAT has not considered Infosys Ltd as a comparable from A.Y 2005-06 to A.Y 2007-08 along with Tata Elxsi. 24. The learned DR, on the other hand, supported the orders of the authorities below. 25. Having regard to the rival contentions and the material on record, we find that in a number of decisions including the assessee's own case, Infosys Ltd has been held to be not comparable with any other software development company such as the ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h of the Tribunal has considered similar objections of the assessee therein and has held that these two companies along with Thirdware Solutions Ltd is not comparable to the software development company like the assessee before us. The relevant portions has been reproduced by us in the above paras. Respectfully following the same, these two companies are also directed to be excluded from the final list of comparables. Thus, assessee's ground of appeal No.2 is partly allowed. 30. As regards Ground No.4 seeking inclusion of the companies, the learned Counsel for the assessee submitted that he is not pressing for inclusion of E-Zest Solutions Ltd, Marveric Systems Ltd, I Summation Techologies (P) Ltd, Akshay Software Technologies Ltd, Goldstone Technologies Ltd and Sankhya Infotech Ltd. Thus, in effect, the assessee is seeking inclusion of only Evoke Technoloies (P) Ltd and Sagarsoft India Ltd., 31. As far as Evoke Technologies Ltd is concerned, the TPO has rejected the said company as a comparable on the ground that from the annual report of the said company, it is noticed that the stand alone financials reported from 2013-14 include revenue and net profit figures of one Branch....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ppeal No.4 are not pressed by the assessee. 34. As regards Ground No.3, at the time of hearing, the learned Counsel for the assessee submitted that the assessee is not challenging the comparabilities of three companies i.e. Cross Domain Solutions (P) Ltd, Microland and Micro Genetic Systems Ltd. Therefore, in effect, the assessee is challenging the comparability of only Infosys BPO Ltd, E-Clerex Services Ltd and NPS Ltd. 35. As regards Infosys BPO Ltd is concerned, the assessee's objections are as under: a) The assessee is a captive service provider to its AEs and it uses its brand for its business purposes and Infosys is a top global brand . b) This company is not functionally similar and is engaged in different activities which are not comparable to the assessee. c) This company incurred huge marketing and selling expenses of INR 103 crores which constitutes about 5% of the revenue. d) This comparable also incurred INR 5 crores on brand building exercise. e) He further submitted that in the assessee's own case for the A.Y 200-11, this Tribunal has held this company to be a non-comparable to the assessee. 36. The Objections of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent benches of the Tribunal in respect of the aforesaid company, we direct the AO/TPO to exclude the aforesaid company from the list of comparables". 37. The learned DR, on the other hand, supported the orders of the authorities below. 38. Having regard to the rival contentions and the material on record, we find we find that the Coordinate Bench of this Tribunal in the assessee's own case not only for the A.Ys 2009-10 for the A.Y 2010-11 has also considered this issue at Paras 6 to 9 in ITA No.221/Hyd/2015 which reads as under: "6. The TPO has selected many comparables and among them M/s. Infosys BPO Ltd., TCS e-serve Ltd., and Eclerx Services Ltd., were objected to on the reason of high turnover and functionally different. With reference to Infosys BPO, the objection was that the said company renders vide array of services and has high brand value and turnover is also very high. With reference to TCS E-serve Ltd., there was exceptional event as the company was taken over by Tata Consultancy Services in the year 2008-09 and heavy turnover is due to its takeover. Further, it was submitted that the company was functionally different as it has three different ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he evidence on record. However, as regards the extraordinary event or exceptional circumstance there is no material placed before us by the Ld. Counsel for the assessee. Therefore, merely because the TPO in another case has held that there is an extraordinary event for which this company has to be excluded from the list of comparables, it cannot be excluded. Such claim has to be supported by evidence on record. As regards the functional dissimilarity and huge turnover and brand value is concerned, we find that this Tribunal in assessee's own case for A.Y.2009-10 while considering the comparability of the assessee with Infosys BPO Ltd., has taken note of the possession of the brand value and intangibles which influenced the financial results of this company. The Hon'ble Delhi High Court in the case of CIT vs. Agnity India Technologies P. Ltd., (2013) 219 Taxman 26 (Del.), held that huge turnover companies like Infosys and Wipro cannot be considered as comparable to smaller companies like assessee therein. In the case before the Hon'ble High Court (supra), the turnover of the assessee was about Rs. 15.79 crores as against the turnover of Rs. 1016 crores of the Infosys. Co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee's own case, do not see any reason to interfere with the order of the DRP. Ground No.2 is accordingly rejected". 9.1. Respectfully following the above decision of the Co- ordinate Bench, we confirm the order of DRP excluding the above company from the list of comparables". 39. Respectfully following the same, we direct the exclusion of Infosys BPO Ltd as well as E-Clerx Services from the final list of comparables in respect of ITeS. 40. As regards Ground No.5, the assessee is seeking inclusion of only two companies i.e. Informed Technologies Ltd and Ace BPO Services (P) Ltd. As regards Informed Technologies Ltd, the TPO did not accept this company as a comparable on the ground that this company has high non-current investment of Rs. 6.05 crores and further that it is a KPO. According to the assessee, it is also not a KPO but is an ITeS company and that its total Revenue is from the Call Centre Services only. He therefore, prayed that this company may be included in the list of comparables. 41. Similarly, as regards Ace BPO Services Ltd, the contentions of the assessee are that this company is functionally comparable and that it satisfies all the filters o....