TaxTMI 
TaxTMI 
2023 (5) TMI 1063
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....passed under section 143(3) r.w.s. 144C of the Income Tax Act, 1961 ("the Act") by the Ld.AO is erroneous and bad in law; 2. The Ld. AO/TPO/ Hon'ble DRP has erred in upholding transfer pricing addition of INR 82,92,925 on account of an adjustment to Arm's Length Price ("ALP") of the international transaction pertaining to ITeS by the Appellant to its associated enterprise CAE"); 3. The Ld. AO/TPO/Hon'ble DRP has erred in disregarding the economic analysis carried out by the Appellant in the Transfer Pricing documentation ("TP documentation'); 4. The Ld. AO/TPO/Hon'ble DRP has erred in disregarding certain quantitative filters applied by the Appellant in the TP documentation and applying certain additional quantitative filters. 5. The Ld. AO/TPO/Hon'ble DRP has erred in law by conducting a fresh search process and adding new set of comparable companies; 6. The Ld. AO / TPO/ Hon'ble DRP has erred in law by including the following companies in the final list of comparables: a. Maa Business Solutions Pvt. Ltd.; b. Manipal Digital Systems Pvt. Ltd.; c. CES Ltd.; d. Vitae Internat....
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.... are outsourced to the assessee before us. The assessee completes the work assigned to it by the AE, i.e. the drawings etc. for architectural and interior designing and sends it back to the AE i.e. the US entity and for this ITeS services, the assessee raises bills from AE which is the service income derived by the assessee, and for this year, it was at Rs. 8,35,21,641/-. Therefore, this is the entire boundary of functions in the ITeS segment done by the assessee. Ld. counsel further submitted that out of the comparables selected by the TPO, they want exclusion of only one comparable i.e., Domex e-Data Pvt. Ltd. since, the said company is functional dissimilar as it is engaged in diversified services including software development, knowledge process outsource (KPO), business process outsource (BPO) and further that the segmental details were not available in the annual report. Therefore, the assessee prays in this case for exclusion of Domex e-Data Pvt. Ltd. and on such exclusion of the said company, the margin earned by the comparable companies will work out to be 6.10% as 35th percentile and 23.74% as 65th percentile with a median of 19.46%, accordingly, the margin of the assesse....
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.... comparable range and there would be no transfer pricing adjustment and the other grounds would therefore become academic. We observe from the annual report of Katerra India which is the Katerra Technology Services LLP that it is engaged in the business of ITeS in the field of architectural and interior designing. We have also observed from the functional analysis of Katerra India, the detailed functions performed by Katerra India vis-à-vis the AE i.e. Katerra Inc, the US entity. The services rendered by Katerra India in the ITeS segment comprises of the outsources work provided to it by the US entity and Katerra India performs such drawings etc. regarding interior designs and sends the same work done to the AE and the service income is charged by the assessee in lieu of services rendered to the AE. It is therefore, predominantly ITeS functions. We observe from the annual report of Domex e-Data Pvt. Ltd. that in the column of "technology absorption" it is mentioned that this company has made efforts towards technology absorption meaning thereby, the software development activity is carried out with the usage of very high end software, hardware and the company always uses lat....
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....] AY 2016-17 Credence Resource Management (P.) Ltd. v. ACIT [2022] 138 taxmann.com 543 (Pune - Trib.) for AY 2016-17 35. In the light of the aforesaid decisions, we are of the view that Domex E-Data Pvt. Ltd., should be excluded from the list of comparable companies. In the aforesaid decision, the Tribunal has relied on another decision of Pune Bench in the case of Schlumberger India Technology Centre (P) Ltd. v. DCIT [2022] 142 taxmann.com 243 (Pune - Trib.) wherein again while benchmarking international transaction in the ITeS segment, Domex e-Data Pvt. Ltd. was excluded from the final set of comparables. In this decision, the Pune Tribunal relied on logical principle following from the decision in the case of M/s. Tasty Bite Eatables Ltd. v. ACIT in ITA No.1823/PUN/2018, dated 03/06/2021 of the Hon'ble Delhi High Court, wherein it has been held that if two companies performing ITeS, ought to be considered as comparable, then the specific business of the said two companies has to be analyzed and then decided upon whether they are at all comparable or not. Reverting to the facts of the present case, both the TPO and the ld. DRP have held that since Domex e....