TaxTMI 
TaxTMI 
2021 (8) TMI 3
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....before him and had issued directions to the Assessing 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). ....
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....rg and Reuters and high speed international networks to perform its functions. Futures First provides these services 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 employ....
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....croPetal Tech. (Segment) 21.30% 2 Coral Hub 36.93% 3 Cosmic Global 48.20% 4 eClerx Services 47.00% 5 Informed Technologies Limited 23.13% 6 Infosys BP0 Ltd. 24.42% 7 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 ....
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....ts of the Ld. AR. As this company is engaged in different types of business model that is knowledge outsourcing and hence, high end IT enabled services. Therefore, I direct, the AO/TPO to exclude this company from the final set of comparables. (vii) Infosys BPO Ltd. Ld. AR has quoted that the Infosys BPO Ltd. is a giant having turnover 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. B....
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....ving its revenue more than 12 times of the revenue of the assessee company. Apart from this it had also been argued that this company has fixed assets which are 18 times more than assets of the assessee company. The employees strength is also 44 times more than that of the assessee company. We note that now there are numerous case laws to support the view that Infosys BPO Ltd. is 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 hel....
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....seen that nowhere the TPO has analyzed how the engineering design services has been compared with low and IT enabled services carried out by the assessee company. From the perusal of the annual report as referred to by Ld. Counsel at page 619 of the paper book that it is functionally not comparable since it is engaged in software products and engineering services. Further from perusal of page 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. T....
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....made to person specified u/s 40A(2)(b) of the Act during the year. The assessee simply furnish the details of the same. On perusal of the same, it has been found that the assessee company has paid Rs. 2,07,06,300/- as salary to its Director Mr. Sunil Baijal. However, no justification has been given by the assessee as what kind of services are rendered to earn such a huge amount of remuneration. Since, the assessee 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....