2023 (3) TMI 960

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....ppeals) [CIT (A)] under section 254/143(3) of the Income-tax Act, 1961 (for short 'the Act') qua the assessment year 2015-16 on the grounds inter alia that :- "1. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in excluding the comparable MPS Ltd. stating that it is a KPO company when it is seen that the same is a BPO company and hence functionally similar to the assessee. 2. On the facts and circumstances of the case and in law, the learned CIT(A) erred in directing the TPO to recalculate the margins of the comparable M/s Jindal Intellicom Ltd. after giving the assessee the opportunity of being heard, when it is seen that as per section 251 of the Act the CIT(A) doesn't have the power to set....

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....ions of the Act and under section 115JB of the Act and under section 143(3) read with section 144C of the Act. Feeling aggrieved the Revenue has come up before the Tribunal by way of filing present appeal. 4. Assessee by filing the present appeal challenged the impugned order passed by Ld. CIT(A) on two grounds: one exclusion of MPS Ltd. as comparable and two challenging the direction issued by Ld. CIT(A) to TPO to recalculate the margin of M/s. Jindal Intellicom Ltd. Before proceeding further for ready perusal, the final set of comparables selected by the Ld. TPO to benchmark the international transactions qua ITES and ALP adjustment made are extracted as under: "11, The final set of comparable companies considered is summarize....

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.... However, on the other hand Ld. A.R. for the assessee to repel the argument addressed by the Ld. D.R. contended that MPS Ltd. is functionally dissimilar to the assessee being a KPO Company and it is also a product company and also into carrying out online activities and relied upon the order passed by co-ordinate Bench of the Tribunal in case of M/s. Red Hat India Private Limited in ITA No.1379/M/2021 order dated 25.02.22 wherein MPS Ltd. has been found to be not a valid comparable vis-à-vis routine ITES provider. 7. In order to examine the suitability of MPS Ltd. as a comparable vis-à-vis assessee who is a routine ITES service provider we have perused the annual report available at page 159 to 211 of the paper book. Profil....

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....reas, assessee is a routine ITES service provider and enables the back office operational support services offered by Agilyst Inc., USA its Associate Enterprise (AE) to its clients. 11. Ld. CIT(A) has thrashed the functional profession of MPS Ltd. vis-à-vis assessee in para 6.5 by holding that it is a product company engaged in creating new technology and LED products. At the same time, MPS Ltd. is into providing diversified services with no segmental financials available. More so MPS Ltd. is a risk taking company having supernormal profit whereas assessee is working on a cost + mark up model in providing routine ITES services. Even otherwise it is a matter of record as mentioned in para 6.5.1 of the impugned order passed by Ld. C....