AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (8) TMI 3
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....ing Officer which are confusing and instead, he ought to have appreciated the facts and records fairly and objectively to arrive at the decision for allowing deduction thereof and failure to do so had vitiated the impugned order." 2. The ground no.1 has not been pressed and ground no.3 as per the synopsis submitted by the assessee has also not been pressed, therefore, the same is dismissed as not pressed. 3. The grounds raised by the Revenue are as under: "1. The Ld.CIT(A) erred in directing the AO/TPO to exclude Acropetal & Infosys BPO Ltd. from the final set of comparables as these comparables have the similar FAR as that of assessee for the year under consideration." The Ld.CIT(A) also erred in directing the AO/TPO to recomputed average PLI of the final set of comparables and make the adjustment in arm's length price accordingly after excluding eClerx Services Ltd. from the final set of comparables as on similar issue, the Revenue's appeal is pending in Hon'ble Supreme Court in the case of against the decision of Hon'ble High Court of Delhi in the case of M/s Rampgreen Solution Pvt. Ltd. Vs. CIT(ITA No.102/2015). 2. The Ld. CIT(Appeal) erred in law and on facts in deleting....
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....rvices to a group entity Linus which in turn provides services to Indus Derivatives. Futures First activities are detailed below for the Trading Support Function. * Research to facilitate trading support activities: Futures First has a support team involved in provision of financial and economic research. These research services facilitate employees to enter buy-sell details. These analysts perform company and industry analysis, secondary data analysis, capital market analysis, commodity demand and supply research etc. The functions of this team are similar to research services provided by Knowledge Process Outsourcing ("KPO') companies in India. * Trading support functions: AFs have provided Futures First with adequate online trading tools and knowledge of trading strategies so that these support activities and buysell details can be entered by employees without prior experience of trading or financial markets. This can be judged from the fact that over 90% of Futures first employees are either fresh graduates or have no trading experience. The employees analyze data on various online tools and use their knowledge skills to enter buy-sell details. The employees are trained....
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....Jeevan Softech 44.32% 8 Microqenetic Systems Ltd .: 23.25% 9 Microland Ltd. (Segment) -21.63% AVERAGE 27.72% 6. Accordingly, TPO proposed adjustment of Rs. 3,42,98,762/-. Since, the only dispute is with regard to the aforesaid three comparables, viz., M/s. Acropetal Technologies Ltd., eClerx Services Ltd. and Infosys BPO Ltd., therefore, the other comparables are not the subject matter of dispute either which has been rejected by the TPO or which has been finally selected by him. 7. The relevant finding of the ld. CIT (A) for excluding three comparables are as under: "M/s Acropetal Technologies Ltd. Ld. AR has argued that this company is engaged in the development of software and has given the extracts from the annual report reproduced as under:- "The Company is engaged in the development of computer software. The production and sale of such items cannot be expressed on any generic term. Hence it is not possible to give the quantitative details of sales and information as required under paragraph 3, 4 C & 4 D of Part II of the Schedule VI to the Companies Act." Ld. AR has further argued that Acropetal has huge on site development expenses whereas the ....
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....nover of Rs. 1081.53 crs which is 12.71 of turnover of the appellant. Similarly net worth of Infosys BPO Ltd. is Rs. 661.94 crs which is 99.39 times of the appellant. Ld. AR relied on the decision of Delhi High Court in the case of CIT vs. Agnity India Technologies Pvt. Ltd. which held this company as a lager and bigger company in the area of development of software etc. hence non comparable. Considering the scale of operations and substantial intangible assets of this company amounting to Rs. 19.03 crs as goodwill, 1 direct, the AO/TPO to exclude this company from the final set of comparables. On the basis of my above findings, the AO/TPO has to recompute average PLI of the final set of comparables and make the adjustment in arm's length price accordingly. As a result, these grounds of appeal are partly allowed. 7. Before us, ld. counsel for the assessee submitted that in so far as exclusion of Infosys BPO Ltd. is concerned, the Tribunal in assessee's own case for the subsequent assessment year, i.e., Assessment Year 2010-11 in ITA No.3382/Del/2016 have excluded this comparables, on the grounds that, firstly, Infosys BPO is a giant company having revenue of more than 12 times o....
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.... not to be taken as a comparable on the ground of being a giant company. The Hon'ble Delhi High Court in the case of CIT vs. Sanvih Info Group Pvt. Ltd. in ITA 420/2019, for the same assessment year as the captioned assessment year, upheld the order of the ITAT in rejecting Infosys BPO Ltd. as a comparable on the ground of being a 'giant' company. In this case, the Tribunal, while ordering exclusion of this company, had relied on decision of the Hon'ble Delhi High Court in Agnity India Technologies Pvt. Ltd. The Hon'ble Delhi High Court noted that Infosys BPO Ltd. was a giant corporation. Similar observations were made by the Hon'ble Delhi High Court in the case of Avaya India Pvt. Ltd. (ITA No.532/2019 for Asst. Year 2010-11) wherein M/s TCS EServe Limited and M/s TCS E-Serve International Limited were held to be having high brand value and operating on a huge economic upscale and were, therefore, able to command and generate better profits making them functionally dissimilar to the assesee. The Hon'ble Delhi High Court noted that Infosys BPO Ltd. had been excluded by the ITAT for the very same reason. Similarly, ITAT Delhi Bench in the case of Cengage Learing India Pvt. Ltd. vs. ....
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....e 639 of the paper book, it is seen that company has a segment by the name of engineering design and inventories show that there are product development. Even the segmental detail of the said company has not been discussed by the TPO, to buttress his claim. Accordingly, we do not find any reason to infer with the finding of the ld. CIT (A) and the same is confirmed. 10. Lastly, with regard to the Eclerx Service Ltd., the Revenue in its ground has not disputed with the exclusion of the said company because the same being a KPO company and is covered by the decision of Hon'ble Delhi High Court in the case of Rampgreen (supra), albeit it has raised the issue on the ground that against the judgment of Hon'ble Delhi High Court appeal has been filed before the Hon'ble Supreme Court. The ld. TPO also in his order has noted that the only segment of Eclerx is data analytics and process outsourcing services which is nothing but ITe services. From the bare perusal of the functions carried out by the assessee company and the nature of services rendered by the Eclerx Service, as incorporated in the appellate order and also noted by us above, it is an undisputed fact that Eclerx service is a l....
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....essee failed to bring on record to show that the remuneration so paid is not in excess of the limits. The assessee has also failed to justify the nature of services rendered by the directors so as to command such a huge remuneration. Therefore, an amount of Rs. 1,03,53,150/- being 50% of the total remunerations paid to Mr. Sunil Baijal, Director of the assessee company is hereby disallowed and added back to the income of the assessee. Since. 1 am satisfied that assessee has concealed the income by furnishing inaccurate particulars of its income, penalty proceedings u/s 271(1 )(c) is initiated separately." 13. Before ld. CIT(A) the assessee had submitted as under: "(i) The Managing Director Shri Sunil Baijal is associated with the assessee company right from the beginning. Due to its association turnover and profit before tax has increased many times. He is involved in financial market since 1994 in trading in Forex, Interest Rates and Credit Markets in Delhi, Mumbai. and Singapore. He holds a degree in (Mechanical) Engineering from Delhi Collage of Engineering and MBA from university of Delhi. Therefore his remuneration commensurate to his qualification and working of the compan....