2023 (7) TMI 866

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....owing broad facts, which have led to the institution of the instant appeal: 3. On 30.09.2010, the respondent/assessee filed its Return of Income (ROI), wherein it declared its taxable income as Rs. 12,16,81,262/-. 3.1 Initially, the ROI was processed under Section 143(1) of the Income Tax Act, 1961 [in short, "Act"]. However, the respondent/assessee's case was picked up for scrutiny, and accordingly, notice under Section 143(2) of the Act was served upon it. 4. It is during scrutiny that it came to light that the respondent/assessee had entered into international transactions, which involved providing Information Technology Enabled Services (ITES) to its AEs. 5. Since the value of the transactions during the relevant period was more than Rs. 15 crores, the AO referred the matter to the TPO, in terms of the provisions of Section 92CA of the Act, for determination of the Arm's Length Price (ALP) concerning the transactions in issue. 5.1 As required, the respondent/assessee had submitted a Transfer Pricing Study Report ("TP Study Report"), which adopted the Transactional Net Margin Method ("TNMM method") to arrive at the ALP concerning international transactions ent....

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....ll filters also. Hence, this is a suitable comparable in your case. 5. Infosys BPO Limited You have rejected this company on the ground mentioned in Accept/Reject matrix that 'Significant difference in scale of operations. Assessee in its search itself has not applied High turnover Filter'. As per the functional profile of the company this is very much on ITES company and it passes all filters also. Hence, this is a suitable comparable in your case. 6. TCS E-Serve International Ltd. Y You have rejected these companies on the ground mentioned in Accept/Reject matrix that these company are having RPT in excess of 20%. However, the annual report of the companies has been perused and it is found to be less than 25% of Sales (12.09% and 2.70% respectively). Hence, these are suitable comparables in your case. 7. TCS E-Serve Ltd. 5.5 After noting the OP/TC of each of the seven comparables, the TPO worked out and pegged the average profit margin at 36.80% via his order dated 09.01.2014. The TPO treated the services rendered by the respondent/assessee as ITES/Business Processing Outsourcing (BPO) services, and applying the TNMM Method concluded, that an up....

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....tions Pvt. Ltd., the following observations have been made : "4.1 The Assessee is a wholly owned subsidiary of vCustomer, USA, (an Associated Enterprise - hereafter 'AE'). The Assessee is engaged in providing voice-based customer care to the AE's clients. The Assessee renders Call Center services, which fall within the broad description of Information Technology Enables Services (hereafter 'ITeS'). The Assessee has two units registered under the Software Technology Park Scheme of the Government of India, which are located at [in] New Delhi and Pune. The Assessee is remunerated for the voice call services on [a] cost plus basis. The Assessee explained that the AE undertakes all activities such as marketing and enters into contracts with its customers seeking voice call services." [See judgment dated 10.08.2015 passed in ITA No. 102/2015 titled Rampgreen Solutions Pvt. Ltd. Vs. Commissioner of Income Tax]. As would be evident from the aforesaid observations, the functional profile of the respondent/assessee is not similar to Rampgreen. The respondent/assessee is a BPO, and has been set up as a captive service provider for provisioning outsourcing services t....

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....he Tribunal on this ground. 13.4 The decision of the Tribunal in Rampgreen Solutions Pvt. Ltd. concerning AY 2010-11 dated 04.11.2015, on which reliance was placed by the Tribunal while deciding the respondent/assessee's appeal before it, was sustained by a coordinate bench of this Court via judgment dated 27.05.2016 passed in ITA No. 340/2016 titled, Principal Commissioner of Income Tax-07 v. M/s Rampgreen Solutions Pvt. Ltd. Although a Special Leave Petition (SLP) has been filed against the said judgment of the coordinate bench, no final judgment has been rendered in the matter. What is noticeable though, by its absence, is that in the instant appeal, the appellant/revenue has not made an averment, that the facts and circumstances obtaining in Rampgreen Solutions Pvt. Ltd. do not apply to the present case. 13.5 None of the questions of law, as proposed, give rise to a substantial question of law, requiring this Court's intercession. ANALYSIS AND REASONS: 14. Having heard the learned counsel for the parties and perused the record, what has come to the fore is the following: (i) The respondent/assessee, in the TP Study Report had referred to eight compa....