TaxTMI 
TaxTMI 
2019 (1) TMI 1904
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....les while benchmarking the international transaction. The ld.AR before us stated that one comparable in the name of Eclerx Services Limited would be argued first and sought for the exclusion of the same from the final list of comparables. He argued that if the Bench is satisfied with regard to the exclusion of this comparable alone, then assessee's margin would be at ALP and accordingly adjudication of other grounds would become academic in nature. The ld.AR also prayed that no finding need to be given in respect of other comparables in such scenario by this Tribunal and the adjudication of the same may kindly be left open by the Tribunal. 3. In the aforesaid background, we would like to address the issue as to whether the comparable Eclerx Services Limited could be excluded for the purpose of benchmarking the international transaction of the assessee in the facts and circumstances of the case. 4. The assessee is a wholly owned subsidiary of Integreon Managed Solutions Inc. USA (hereinafter referred to as `IMS US'), was incorporated as a private limited company on 6th September, 2000. The assessee is engaged in providing low end back office support services to its associated ente....
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.... a KPO, stated that even if the comparables included by the ld. TPO is to be considered as correct, even then except Eclerx Services Limited, the assessee would be through for the year under consideration with its margin. In other words, the ld.AR argued that even assuming that the comparables chosen by the ld. TPO from the KPO industry is to be considered except Eclerx Services Limited, then the assessee's margin would be at Arm's length. For this purpose, we find that the ld.AR argued that Eclerx Services Limited is engaged in outsourcing activity predominantly, whereas the assessee is having its own infrastructure for the purpose of execution of the transactions and accordingly pleaded that the said comparable should be excluded from the list of comparables chosen by the ld. TPO. In this regard, we find from page 498 of the paper book Volume I, Part-2, which is the submission made by the assessee before the ld. TPO dated 09.01.2015 in response to the show cause notice issued by the ld. TPO, wherein the assessee had specifically stated the following:- Eclerx provides a broad suite of services that allow clients to operate on a day to day basis including trade processing, referen....
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.... of eclerx further reiterates the services offered by the company. Core2Clients Financial services firms are being asked to perform more with less due to an increasingly stringent operating environment and a focus on minimizing costs. While optimizing current infrastructure firms are also investing considerably in strategic change programmes to meet regulatory requirements, streamline operations and provide better client service eClerx enables financial institutions to balance these priorities by partnering with them to increase control, execute ongoing functions with a significant reduction in cost and accelerate change initiatives by providing domain specific reengineering expertize. We provide a broad suit of services that allow our clients to operate on a day to day basis including trade processing reference data accounting and finance and expense management activities. Our professional service practice include consulting business analysis and solution testing. Our Key Differentiators As a leading offshore provider of end to end services to the sales and marketing universe eClerx has deep knowledge and process expertize that enable it to serve and adopt to the fast growin....
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.... meeting complex client needs, data analytics KPO service provider specializing in two business verticals - financial services and retail and manufacturing. It is claimed to be engaged in providing solutions that do not just reduce cost, but help the clients increase sales and reduce risk by enhancing efficiencies and by providing valuable insights that empower better decisions. MIs eClerx Services Pvt. Ltd. is also claimed to have a scalable delivery model and solutions offered that include data analytics, operations management, audits and reconciliation, metrics management and reporting services. It also provides tailored process outsourcing and management services along with a multitude of data aggregation, mining and maintenance services. It is claimed that the company has a team dedicated to developing automation tools to support service delivery. These software automation tools increase productivity, allowing customers to benefit from further cost saving and output gains with better control over quality. Keeping in view the nature of services rendered by MIs eClerx Services Pvt. Ltd. and its functional profile, we are of the view that this company is also mainly engaged in pr....
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....that eclerx is a company engaged in KPO activities and cannot be compared to that of the assessee. A comparison of the employee cost is provided herein below: Name of the company Percentage of employees with qualification of post graduates and above. Percentage of salary costs to the total salary costs of the firm. Average salary of the employee. Eclerx Services Limited 20% 84% 28 lacs IMSIPL 16% 35% 3-9 lacs On perusal of the above, it is quite evident that there is a difference between the work force structure of eclerx and that of the assessee and therefore could not be compared. Considering the above evidences, the assessee wishes to submit that Eclerx cannot be considered as a comparable company. 14. We find that these objections were also raised by the assessee before the ld. DRP. The Revenue had not met any of these objections in its orders. The learned AR placed reliance on various judgments of the co-ordinate Bench and the Hon'ble jurisdictional High Court on the ground that the company which is predominantly engaged in outsourcing activities could not be considered as a proper comparable while benchmarking the international transaction. 15. The learne....
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....usion of one of the comparables, M/s.Coral Hubs Ltd. had observed as under:- "(a) The impugned order of the Tribunal has excluded M/s. Coral Hub Ltd. from the list of comparable after rendering a finding of fact that activities undertaken by Coral Hub Ltd. are not comparable to that engaged by the Respondent-Assessee. It was found as a fact by the Tribunal that M/s. Coral Hub Ltd. is engaged in ITES particularly selling and purchasing of products and goods whereas the Respondent-Assessee is engaged in e-learning and content development activity. Besides, the Tribunal has recorded finding of fact that business model adopted by M/s . Coral Hub Ltd. was different in-as-much as it outsources its work to sub-vendors as against the Respondent-Assessee carrying out its activities in-house. (Underlining provided by us ) (b) The grievance of the Revenue is that both the Coral Hub Ltd. as well as the Respondent-Assessee are in the field of Information Technology Enabled Services. Therefore, by virtue of above fact, they become comparable. (c) It is obvious that merely because the tested party and the comparable provide ITES, they do not become comparable. The content of the services r....