TaxTMI 
TaxTMI 
2021 (7) TMI 53
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.... 7 is accepted, all other grounds relating to transfer pricing issue would become infructuous. Narrowing down the issue further, he submitted, in case, two of the comparables selected by the Transfer Pricing Officer (TPO) are excluded, assessee's margin would be within the tolerance band of rest of the comparables selected by TPO. Keeping in view the aforesaid submission of learned senior counsel appearing for the assessee, we proceed to deal with the issue raised in ground no. 7. 4. Briefly the facts are, the assessee is a resident company. As stated, the assessee provides information technology enabled services (ITES) to its overseas associated enterprises (AE). The services rendered by the assessee are mainly in relation to handling service related queries, billing related queries, mobile number portability related queries, hand-set related queries, network related queries and handset plan related queries. It is relevant to observe, earlier these services were rendered to the AE by Vodafone India Services Pvt Ltd upto 04-12- 2017. Thereafter, the entire ITES segment of Vodafone India Services Ltd was transferred to the present assessee as a going concern and assessee continue....
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.... and eClerx Services Ltd are not comparable to the assessee. Clarifying further, he submitted, while doing so, the Tribunal also took note of the fact that the nature of business carried on by the assessee is ITES. In this context, he drew our attention to the relevant observations of the Tribunal in corrigendum order dated 30-04-2019 placed in the paper book. Thus, he submitted, facts being identical, the earlier decision of the Tribunal would squarely apply to the present appeal. 8. The learned departmental representative strongly relying upon the observations of the TPO and learned DRP submitted, the TPO has provided valid reasons for selecting these two comparables. He submitted, in the impugned assessment year, the TPO had taken a fresh look at the functions carried out by the assessee and found that the assessee comes in the category of KPO service provider. Therefore, the decision of the Tribunal in Assessment Year 2008-09 having not considered these facts discussed by the TPO, would be inapplicable. 9. We have considered rival submissions and perused materials on record. The facts emanating from record clearly indicate that the assessee in December,2007 had taken over....
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.... Ltd 30.05% 10. Now, pertinent question that remains to be answered is as to whether orders passed by learned DRP and by this Tribunal in the case of Vodafone India Services Pvt Ltd. could be used in the hands of the assessee herein. 11. We find that the very same business carried out by the assessee up to 4.12.2007 was carried out by Vodafone India Services Pvt Ltd. for the remaining part of the financial year. We also find that the very same seventeen comparable companies (supra) were selected by learned TPO while framing transfer pricing assessment in the hands of Vodafone India Services Pvt Ltd for A.Y. 2008-09. Hence, we hold that there is no harm in following learned DRP's order and order of this Tribunal for the assessee herein." 10. Some inadvertent factual mistakes in the aforesaid order of the Tribunal regarding the taking over of the business of Vodafone India services Ltd. has subsequently been rectified by the Tribunal in a corrigendum. Therefore, considering the fact that there is no change in the nature of business being earlier carried on by Vodafone India Services Pvt Ltd and the present assessee and keeping in view the aforesaid observation....
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.... the export activity and does not have any direct nexus with the export transaction, disallowed assessee's claim of deduction under section 10A of the Act. Though, the assessee contested the aforesaid decision of the assessing officer before learned DRP; however, assessee was unsuccessful. 13. The learned senior counsel appearing for the assessee submitted, the assessee has earned the interest income from the deposit made towards bank guarantee and temporarily parking of surplus funds in fixed deposit. He submitted, since the assessee has earned such interest income in course of business, it is eligible for deduction under section 10A of the Act. In this regard, he relied upon the following decisions:- 1. CIT vs Hewlett Packard Global Soft Ltd (2017) 403 ITR 453 (Karn -FB) 2. Cybertech Systems & Software vs. DCIT (2018) 91 taxmann.com 407(Bom) 14. As regards deduction claimed in respect of foreign exchange gain, the learned counsel submitted, since the assessee derives income only from its 10A unit which is engaged in export activity, it has outstanding overseas creditors as on the last day of the financial year. He submitted, the assessee operates an EEFC a....
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....in is not accepted, the assessing officer may be directed to compute deduction under section 10A of the Act without considering foreign exchange loss on account of EEFC revaluation and dollar sale. 15. The learned departmental representative strongly relied upon the observations of the assessing officer and learned DRP. 16. We have considered rival submissions in the light of the decisions relied upon and perused materials on record. Undisputedly, the assessee has earned the interest income from the deposit made towards bank guarantee and temporary parking of surplus funds. It is evident, the assessee has no other activity of earning income except export of ITES through its 10A unit. Thus, it can be safely concluded that the deposits on which the assessee had earned interest income were on account of its business activity. There cannot be any doubt that deposits made towards bank guarantee is purely in connection with its business activity. As far as the interest on fixed deposit is concerned, it is an accepted factual position that the surplus fund available with the assessee and not immediately required for business was temporarily invested in fixed deposit. Thus, this acti....