TaxTMI 
TaxTMI 
2021 (5) TMI 1049
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....tances of the case, the learned AO, based on the directions of the DRP, erred on the following grounds: 2.1 In rejecting the transfer pricing (TP) analysis undertaken by the Appellant for computing the ALP in relation to the ITES provided by the Appellant and applying the knowledge process outsourcing (hereinafter referred to as KPO) search to arrive at the ALP; 2.2. In not accepting the economic analysis undertaken by the Appellant in accordance with the provisions of the Act read with the Income-tax Rules, 1962 (hereinafter referred to as the Rules) and holding that the Appellant's international transaction is not at arm's length; 2.3. Further erred in conducting a fresh economic analysis for the determination of the ALP in connection with the impugned international transaction without providing the selection criteria adopted by him; 2.4. In ignoring the fact that since the Appellant is availing tax holiday under section 10A of the Act, there is no motive or reason to shift profits out of India, or curbing of taxes which is the basic intention of introducing the transfer pricing provisions. 2.5. By determining the ALP by using only single year data for Financial....
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....in providing ITES Services and thus ought to excluded from the list of comparables. It is submitted that the Hon'ble Tribunal in appellant‟s own case for A.Y. 2007-08 has held that the said company is not comparable to the Appellant." 3. Before us, the leaned Counsel for the assessee submitted that Cosmic Global Ltd., is earning revenue from Medical Transcription and Translation charges has wrongly been considered as comparable to the assessee which is engaged in ITES services. The fact that Cosmic Global Ltd. is in the business of Medical Transcription and Translation and thus not comparable to the assessee which is evident from the extract of its annual report placed as Annexure-4 in paper book-1 at Page-847 as well as the order of the Tribunal dated 10th July 2019 decided in assessee's own case for the assessment year 2007-08 reported as [2019] 109 taxmann.com 101 (Mum.)(Trib.), wherein the Tribunal has relied upon the order of the Co-ordinate Bench in BNY Mellon International Operations (I) Pvt. Ltd. v/s DCIT, [2015] 55 taxmann.com 386 (Pune) (Trib.) which is upheld by the Hon'ble Jurisdictional High Court in PCIT v/s BNY Mellon International Operations (I) Pvt. ....
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....sessee, we hereby admit the same for adjudication on merit. 6. Insofar as the regular grounds of appeal raised by the assessee are concerned, during the course of hearing before us, the leaned Counsel for the assessee, at the outset, submitted that out of the aforesaid grounds of appeal, he wishes to press only ground no.2, as well the additional ground of appeal. The learned Counsel for the assessee submitted that the assessee is a captive service provider providing Information Technology Enabled Service (ITES) to its Associated Enterprises (A.E) globally and the assessee's margin from the said international transaction for the assessment year 2009-10 is 23.07%. The assessee is providing only ITES services to its A.Es and is not a KPO consequent to which classified as KPO companies cannot be considered as comparable to the assessee, which is evident from the order passed by the Tribunal in assessee's own case in assessment year 2007-08 and 2008-09 respectively. The learned Counsel for the assessee had filed a chart pressing only exclusion of comparables viz Cosmic Global Ltd., Coral Hubs Ltd. Cross-domain Solution Ltd. and E-clerx Services Ltd. and further prayed that following c....
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....ted in [2019] 109 taxmann.com 101 (Mum.) (Trib.), for the assessment year 2007-08 the relevant portion of the finding of the Tribunal is reproduced below for ready reference:- E-clerx Services Ltd. 32. As noted earlier the ld AR for the assessee submitted that the assessee submits that Eclerx Services Ltd. has not considered as a comparable in earlier years. Eclerx Services Ltd. is a Knowledge Process Outsourcing (KPO) Service provider which is not comparable to assessee; assessee is engaged in providing back office support services. In support of his submission, the ld. AR of the assessee relied upon the decision of Delhi High Court in Rampgreen Solution (P.) Ltd. (supra). The TPO included this comparable by taking his view that this company is in date process and analytical services. The ld CIT(A) confirmed the action of the TPO by taking his view that this comparable company is into the health care receivable management and therefore renders ITeS services. The Hon'ble Delhi Court in Rampgreen Solution (P) Ltd (supra) held entities rendering voice call center services for customer support and a KPO service provider employ IT-based delivery systems, but characteristics of....
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....A.Y 2009-10, the DRP as well as the Tribunal had held that companies engaged in KPO services cannot be compared to the routine BPO services provided by the assessee. That still further the Tribunal while disposing of the appeal of the assesses for AY 2010-11 had held that as the assessee was a routine BPO service provider, therefore it cannot be compared to high end KPO service providers such as Eclerx Service Limited. We further find that the 'Special bench' of the Tribunal in the case of Maersk Global Centres (India) (P.) Ltd. (supra), had specifically rejected the aforesaid comparable, viz. Eclerx Services Limited, on the basis that companies predominantly engaged in KPO services cannot be considered as a comparable to a company predominantly engaged in BPO activities. We are thus of the considered view that in the backdrop of the view taken by the Tribunal while disposing of the appeals of the assessee for A.Y(s): 2009-10 & 2010-11, therein concluding that the aforesaid comparable, viz. Eclerx Services Limited which was a KPO could not be taken as a comparable as against the assessee company which is providing BPO services, coupled with the fact that in the assesses own....
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....d by employing own employees and using one's own infrastructure, on the basis of which we are of the considered view that it can safely be concluded that the said comparable was functionally different, and as such was liable to be excluded from the final list of comparables. That our aforesaid view stands fortified by the aforesaid order passed by the Tribunal while disposing of the appeal of the assesses own appeal for A.Y. 2005-06, as well as the judgment of the Hon'ble High Court of Delhi in the case of : Rampgreen Solutions (P.) Ltd. (supra). Thus as there has been no material shift in the facts involved in the case of the assessee for the year under consideration, as observed by us hereinabove, we are thus of the considered view that as the business model of the aforesaid comparable, viz. Coral Hub Ltd. (supra) is substantially different from that of the assessee, therefore the same cannot be accepted as a comparable and hence is directed to be excluded from the list of comparables. 39. Considering the decision of co-ordinate bench on similar submission, we direct for exclusion of Coral Hubs (Vishal Information) from the comparable. Cosmic Global Ltd. 40. The ld.....
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.... Services Ltd., Coral Hubs Ltd. and Crossdomain Solution Ltd. "13. As regards the rejection of four companies, it is the submission of learned counsel of the assessee that the functions of Eclerx Services Ltd. and Vishal Information Technologies Ltd. (earlier Coral Hub Ltd.) has been held to be not comparable to the assessee by the ITAT for the assessment year 2007-08. In this regard, we find that ITAT in the aforesaid order has observed as under: "32. As noted earlier the ld. AR for the assessee submitted that the assessee submits that Eclerx Services Ltd. has not considered as a comparable in earlier years. Eclerx Services Ltd. is a Knowledge Process Outsourcing (KPO) Service provider which is not comparable to assessee; assessee is engaged in providing back office support services. In support of his submission, the Id. AR of the assessee relied upon the decision of Delhi High Court in Rampgreen Solution (P.) Ltd. v. CIT (2015) 377 ITR 533 (Delhi). The TPO included this comparable by taking his view that this company is in date process and analytical services. The ld. CIT(A) confirmed the action of the TPO by taking his view that this comparable company is into the health car....
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....tified by the aforesaid order passed by the Tribunal while disposing of the appeal of the assessees own appeal for A.Y. 2005-06, as well as the judgment of the Hon'ble High Court of Delhi in the case of Rampgreen Solutions (P.) Ltd. (supra). Thus as there has been no material shift in the facts involved in the case of the assessee for the year under consideration, as observed by us hereinabove, we are thus of the considered view that as the business model of the aforesaid comparable, viz. Coral Hub Ltd. (supra) is substantially different from that of the assessee, therefore the same cannot be accepted as a comparable and hence is directed to be excluded from the list of comparables." 14. Accordingly, following the aforesaid decision of the tribunal, we hold that the Eclerx Services Ltd. and Vishal Information Technologies Ltd. (earlier Coral Hub Ltd.) are liable to be rejected as invalid comparable. As regards the other comparables namely Crossdomain Solutions and Datamatics Financial Services, we find that the Transfer Pricing officer and the ld. CIT(A) have found their functions to be similar to that of KPO and that of Eclerx and Vishal technologies. Since, the ITAT has d....