AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (2) TMI 1473
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....d many grounds, at the time of hearing, the learned AR restricted his arguments to grounds No.5, 8.4 and 9. The learned AR also made a necessary endorsement in the grounds of appeal in support of his submission that he is pressing the above said three grounds only. The three grounds read as under:- "5. Without prejudice to the above, the Learned TPO has erred in failing to apply the upper limit Turnover filter, absence of which has resulted in selection of improper comparables leading to the determination of a highly distorted and excessive Operating Margin under the TNMM. 8.4 Without prejudice to the above, the Ld.Panel has erred on facts and in law by retaining BNR Udyog Limited (seg) (Medical Transcription) and holding that the same i....
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....profit by operating cost (OP/OC) as profit level indicator (PLI). The assessee declared a margin of 22.57%. The TPO rejected the transfer pricing study conducted by the assessee and selected following 10 comparables:- Sl. No. Name of the case Operating income Operating cost OP/OC 1. Accentia Technologies Ltd. 126,38,02,000 112,89,16,000 11.75 2. Universal Print Systems Ltd. (seg)/ (BPO) 6,17,67,000 3,87,49,000 52.46 3. Informed Technologies India Ltd. 1,96,36,431 1,82,45,770 6.08 4. Infosys BPO Ltd. 1316,75,11,974 962,91,06,964 36.30 5. Jindal Intellicom Ltd. 30,27,51,875 30,29,02,990 -0.05 6. Microgenetic Systems Ltd. 1,29,93,217 1,08,63,390 19.61 7. TCS E-Service Ltd. 15,78,44,000 9,64,28,000 63.69 ....
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....) TCS E-Service Limited (iii) Excel Infoways Ltd. 5. We have heard the learned Departmental Representative and perused the record. Admittedly, the assessee-company falls in the bracket of companies having turnover exceeding 1 crore but not exceeding 200 crores. It has been held in the case of Autodesk India (P) Ltd. v. DCIT [(2018) 96 taxmann.com 263 (Bang. - Trib.)] that the companies having turnover exceeding Rs. 200 crores cannot be considered as comparable companies in respect of those companies having turnover of less than Rs. 200 crores. The above said decision was followed in the case of Micro Focus Software India (P) Ltd. (supra). Accordingly, by following the decision rendered by the coordinate Bench in the case of Autodesk India....
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....issue of comparability of 'BNR' was remanded to the file for the TPO for fresh consideration on ground that in the year under consideration, there were 3 segments. How much of the RPT expenses pertain to each of the segments required examination and this aspect had not been analyzed by either the TPO or the assessee. While it is clear from the TPO's order that if the benchmarking is done only for the medical transcription segment, then the RPT pertaining to that segment only should be considered. However, since how much of the RPT pertain to the medical transcription segment has not been determined by either the TPO or the assessee, the Bench thought it appropriate and proper to remand the matter of comparability of this company....
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....ndisputed that the Hyderabad Bench of the for Assessment Year 2009-2010 in the case of Adaptec (India) P. Ltd. Vs. The ACIT, Circle 1(1), order dated 25.3.2015 held that no such addition can be made for the following reasons:- "Ground No.8 pertains to the issue of negative working capital. As briefly stated above, after arriving at the arithmetic mean of all comparables at 22.03%, the A.O. worked out negative working capital adjustment of 3.22% thereby, making arms length price at 25.25%. Even though, DRP refused to interfere with the objections of the assessee in its order, we were informed that DRP has directed the TPO/A.O. not to make any negative working capital adjustment in some of the cases in the next assessment year, in the cases....
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.... is not an entrepreneur but a captive service provider. Its entire funding needs are provided by the A.E. This being so, the applicant does not stand to lose anything as it is compensated on a total cost plus basis. The TPO probably was carried away by the large amount of receivables appearing in the books of the applicant. But the applicant is running its business without any working capital risk while comparable companies have such a risk for them. If at all any working capital adjustment is to be made to this situation, only a positive adjustment has to be made to the comparables so that they are brought on par with the applicant. In view of the same, the Panel directs that negative working capital adjustment to the arithmetic mean margi....