TaxTMI 
TaxTMI 
2022 (8) TMI 1412
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....CIT(A) has erred, in law and in facts, in confirming the disallowance under section 80JJAA of the Act amounting to 23,20,36,444. 3. The learned CIT(A) has erred, in law and in facts, in concluding that the Appellant does not satisfy the conditions for claiming deduction under section 80JJAA of the Act. 4. The learned CIT(A) has erred, in law and in facts, in concluding that deduction under section 80JJAA of the Act is available only for those workmen who have completed 300 days during the particular previous year relevant to the assessment year for which deduction is being claimed. The learned CIT(A) ought to have appreciated that the section is a beneficial provision for advancement of employment in the industries and the same must be construed liberally, thereby the deduction must be available for the workmen who have completed 300 days in a year. 5. Notwithstanding and without prejudice to Ground No. 4, the learned CIT(A) has erred, in law and in facts, in concluding that the employees who have not completed 300 days in this particular previous year should not be considered as a regular workman in the subsequent year as well. The learned CIT(A) ought t....
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....at the payments made by the Appellant towards purchase of software is not covered within the meaning of 'royalty'! 'royalties' under the applicable Double Taxation Avoidance Agreement ("DTAA") and hence, the Appellant was not under the obligation to withhold taxes. 13. The learned CIT(A) has erred, in law and in facts, in mentioning that AMC expenses on which taxes have not been withheld needs to be disallowed under section 40(a)(i) of the Act. The learned CIT(A) ought to have appreciated that the payments made by the Appellant towards AMC expenses is not taxable under the applicable DTAA and hence, the Appellant was not under the obligation to withhold taxes. 14. Notwithstanding and without prejudice to Ground No. 12 and 13, the learned CIT(A) has erred in law in not considering that law does not compel a man to do what he cannot possibly perform. The learned CIT(A) ought to have appreciated that it was impossible for Appellant to deduct the tax on payments due to retrospective amendment in the Act and recover the same from the vendors since the payments have already been made before the amendment was introduced in the Act. 15. The learne....
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.... law and in facts, by accepting/rejecting certain companies based on unreasonable comparable criteria. 22.1 Appellant's contention for rejection of comparable companies selected by learned TRO lAO / CIT(A) The Appellant submits that the companies provided below should be rejected on following grounds: 22.2 Appellant's contention for acceptance of comparable company rejected by learned Cl T(A) The learned CIT(A) have erred, in law and in facts, by suo-moto rejecting the company "Informed Technologies Limited" based on unreasonable comparable criteria and irrelevant grounds. The Appellant craves leave to contest selection of other comparables (whether or not mentioned specifically herein above), and whether or not included by the Appellant or the learned TPO or Hon'ble CIT(A) in comparable set and upheld by Hon'ble CIT(A) at the time of hearing. 23. The learned TPO I AO have erred, in law and in facts, by incorrectly computing the working capital adjustment benefit. 24. The learned AO I TPO I CIT(A) have erred, in law and facts, by not making suitable adjustments to account for differences in the risk prof....
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....uru - 1. During the course of TP proceedings, the TPO observed that the assessee is engaged in rendering of software development services to its group companies and ITES enabled services. The financial results calculated by the assessee as well as considered by the TPO are as under respectively for the financial year 2011-12. 4. After analyzing the financial results and TP documentations submitted by the assessee the observation of the TPO is as under:- "The TP proceedings were taken up after receiving the reference. Vide letter dated 20/08/2014 the taxpayer was asked to submit the documents maintained in terms of Sec.92D along with financials, annual report and copies of agreements. The same were furnished vide letter dated 08/10/2014. The TP document contained 11 comparables in respect of IT enabled services selected by the tax payer by applying certain filters and TNMM was applied as the most appropriate method. The taxpayer has selected comparables engaged in the same industry vertical as the taxpayer. 5) The Submissions filed by the assessee being copy of Profit and loss account and balance sheet, 3CEB Report and the Transfer Pricing Study document were examined. I....
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....services income on the ground that the contribution of segment to the total revenue was minimal ie 5% only. 10) Secondly as per AS 17 and provisions of Companies Act 1956 on issue of segment reporting the threshold limit for separate segment reporting is at 10% of total revenue. Hence no separate benchmarking was done for Information Technology Enabled Services Income. The justifications of the taxpayer are not acceptable for the following reasons: * As per sec 92(1) of income tax act 1961 any income arising from an international transaction shall be computed having regard to the arm's length price. * The arm's length price of international transaction is to be computed by the most appropriate method having regard to the nature of transaction or class of transactions or class of associated persons or functions performed by such persons. * In the given case the taxpayer has adopted the Transactional Net Margin method for benchmarking the revenue earned from provision of services to its associated enterprises. * The taxpayer in the profit & loss account and audited balance sheet has reported income from two segments: ....
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....ed by the taxpayer, filters applied by the TPO, the search process adopted by the TPO, the accept/reject matrix of companies considered by the TPO. The tax payer was also furnished the computation of operating margins in respect of final proposed comparable by the Department. The taxpayer was also informed of the reasons for rejection of companies in each case. The final list of comparable considered by the TPO was also furnished to the taxpayer. 15) The taxpayer furnished its response to the show cause notice vide its letter dated 14/01/2016. The submissions and the objections of the taxpayer are dealt with in the following paras. 16. DETERMINATION OF ARM'S LENGTH PRICE BY THE TAXPAYER IN ITS TP STUDY: The arm's length price of the international transactions in ITES segment provided to the associated enterprises (AE) is determined by applying transactional net margin method (TNMM), stating to be the most appropriate method in the facts and circumstances of the case. The operating profit to total cost ratio is taken as the profit level indicator (PLI) in TNMM analysis. 17. REJECTION OF THE TAXPAYER'S TP STUDY In the case of t....
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....industry is manpower intensive. Therefore, it is appropriate to have employee cost filter to eliminate those companies which are not directly providing ITES services but are outsourcing the same. 5. Accordingly the TPO computed the arm's length price ITES as under after making adjustment of Rs. 59,786,356/- vide order 29/01/2016:- 6. Accordingly the AO passed draft assessment order dated 29/01/2016 which was served to the assessee company on 22/03/2016. The assessee vide its letter dated 7th April, 2016 has intimated in accordance with the draft order and has requested to pass the final order thereafter the AO passed his final order on 16/05/2016 as under by making the following additions/disallowances :- TP adjustment u/s 92CA Rs. 5,97,86,356/- Capitalization of software expenses after allowing depreciation on capitali- zed expenses Rs. 6,51,10,329/- Disallowance of software expenses u/s 40a/40a(ia) Rs. 11,28,69,584/- Disallowance of legal professional fees paid to the partnership firms outside India Rs. 46,05,273/- Disallowance of deduction u/s 80JJAA Rs. 23,20,36,444/- 7. Accordingly, he computed taxable income of Rs. 260,94,26,098/- and co....
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....more. 16.10 We would disagree with the said contention. What is required is for a person to be employed for a period of 300 days continuously. There is no such criteria made out for a person to be employed in any particular year or otherwise. If such a restrictive interpretation is given, then any person employed post 5th June of a particular year would not entitle the Assessee to claim any deduction. Thus in order to claim the benefit under section 80JJ-AA, an employer would have to hire the workmen before 5th June of that year As a corollary, since the Assessee would not get any benefit if the workmen were engaged post 5th June, the employer/ Assessee may not even employ anyone post 5th June, which would militate against the purpose and intent of section 80JJ-AA, which is the encourage creation of new employment opportunities. 16.12. It is sought to be contended by Sri. K VAravind, learned Senior Panel counsel that the fact that such an interpretation could not be given is established by the curative amendment carried out in the year 2018 wherein it is clarified that an assesses whose employee completes 300 days in a second year would also be entitled to a deduc....
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....ven if the employee were not to complete This aspect has now been clarified in the Finance Act, 2018 by adding a second proviso to the definition of additional employee in Explanation (ii) to Sec.80JJAA of the Act. Even prior to such curative or clarificatory amendment, we are of the view that the claim for deduction u1s.80JJAA of the Act cannot be and ought not to have been disallowed on this ground. We therefore direct that the deduction claimed by the Assessee should be allowed." (emphasis supplied). We also enclose herewith the order giving effect to the Honourable ITAT order passed by the AO for AY 2010-11. In the said order, the AO has once again denied the claim of the Appellant solely on the ground that the department has moved to Supreme Court against the decision of High Court in Texas Instruments India (P.) Ltd (supra). In view of the above, we humbly request your Honours to specifically adjudicate Ground No. 4, 5, and 6 and oblige." 13. On the other hand the ld.DR relied on the order of the lower authorities and submitted that the assessee has not provided details as required by the lower authorities, and the CIT(A) has examined the issue i....
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....7,57,22,069 made under section 80JJAA of the Act by holding that the employees in software industry are covered by definition of 'Workman' in Explanation 3 (iii) to section 80JJAA of the Act read with section 2(s) of the Industrial Dispute Act and employees who have worked for 300 days in a previous are eligible for the purpose of deduction under section 80JJAA in the succeeding year if he completes 300 days in such succeeding year without appreciating that person working in software industry cannot be said to be 'Workman' for the purpose of section 80JJAA of the Act and conditions prescribed for claiming said deduction are not satisfied by Assessee? 16.1. The Assessee had claimed deduction under Section 80JJ-AA of the Act on account of the payments made to the employees hired by the Assessee in the previous year even though they had not completed 300 days of service in that year since they continued on the rolls of the Assessee in the next year totalling up to more than 300 days as required under section 80JJ-AA of the Act. The issue raised by the Revenue is that the employees of the Assessee would not come within the purview of the definition of workman u....
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.... is very wide inasmuch as the said definition would cover any person who has the technical knowledge, self skilled in an industry. It cannot be disputed that the Assessee's business is an industry. It also cannot be disputed that the employees of the Assessee are technical persons skilled in software development and, as such, engaged by the Assessee to render services in the industry being run by the Assessee. Thus the software engineer would also come within the purview and ambit of workman under Section 2(s) of the ID Act so long as such a person does not take a supervisory role. The software engineer per se would be a workman; a software engineer rendering supervisory work would not be a workman. In the present case, it is not the case of the Revenue that the persons employed by the Assessee are rendering any supervisory work or assistance. Admittedly, the said persons have been engaged for the purpose of software development, and as such, they are to be regarded as a workman in terms of Section2 (s) of the ID Act. 16.5. The Apex Court has in the case of Devinder Singh's (supra) categorically held that when a person is employed in an industry for hire or reward ....
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.... or interpretation now sought to be given by Sri. Aravind, learned Senior Panel counsel is that only if the employee were employed for a period of 300 days in a particular financial year, only then deductions could be claimed, if not the deductions could not be claimed even though such employee has been employed for 300 continuous days or more. 16.10. We would disagree with the said contention. What is required is for a person to be employed for a period of 300 days continuously. There is no such criteria made out for a person to be employed in any particular year or otherwise. If such a restrictive interpretation is given, then any person employed post 5th June of a particular year would not entitle the Assessee to claim any deduction. Thus in order to claim the benefit under Section 80JJ-AA, an employer would have to hire the workmen before 5th June of that year. As a corollary, since the Assessee would not get any benefit if the workmen were engaged post 5th June, the employer/Assessee may not even employ anyone post 5th June, which would militate against the purpose and intent of Section ITA No. 2890/Bang/2018 M/s Honeywell Technolgoy Solutions Pvt. Ltd. 6 80JJ-AA, whi....
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....lly and reasonably and if there is an ambiguity in favour of the Assessee. 16.14. The Apex Court in the case Vatika Township (P.) Ltd. (supra) has also held similarly, in that if there is a benefit conferred by legislation, the said benefit being legislative's object, there would be a presumption that such a legislation would operate with retrospective effect by giving a purposive construction. Thus the clarificatory amendment of the year 2018 can also be said to apply retrospectively for the benefit of the Assessee even though the Revenue contends that there was no provision in the year 2007 permitting the Assessee to avail the benefit of deduction when the employee works for a period of 300 days in consecutive years. 16.15. In view thereof, the substantial question No.1 is answered by holding that the software professional/engineer is a workman within the meaning of Section 2(s) of ID Act, so long as such a software professional does not discharge supervisory functions, the benefit of Section 80JJ-AA can be claimed by an employer/assessee even if the employee were not to complete 300 days in a particular assessment year but in the subsequent year so long as ....
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.... 4,73,18,208 The AO noticed that the assessee has not deducted tax at source from the above said payments. The assessee submitted that the above said payments were made to foreign legal firms, which are firm of individuals in connection with services rendered by them in USA in connection with preparation of tax return, tax reconciliation calculation, application for tax identification numbers, submission of documents etc. It was submitted that the services were provided outside India and they have been consumed outside India. Hence the services rendered by them do not have any nexus in India. Accordingly, it was submitted that the payments are not taxable in the hands of recipients in terms of Article 15 of the IndiaUSA DTAA. Accordingly it was submitted that the assessee is not liable to deduct tax at source from these payments. The AO did not accept the explanations given by the assessee. He also observed that the assessee company could not furnish any agreement or any type of proof in support of its claim. He also took the view that the assessee is taking contradictory stands, i.e., initially, the assessee claimed that the payments were given for providing in....
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.... Ltd (288 ITR 408) and Jindal Thermal Power Company Ltd (321 ITR 31)(Kar). Accordingly, the Ld CIT(A) held that (a) the non-residents have provided technical services to the assessee company and therefore, the payments are "fee for technical services" liable for deduction of tax at source. (b) With regard to Article 15 of India-USA DTAA, the Ld CIT(A) held that the assessee has not brought anything on record to show that the payments were made to individual or firm of individuals except for one document related to M/s Deloitte. However, it was selfcertified document and hence cannot be considered as sufficient. (c) the Article 15 covers payments for performance of services in "Other contracting state" (here India). However, in the instant case, the assessee himself has admitted that the services were performed in USA. Hence Article 15 is not applicable here. Accordingly, the Ld CIT(A) confirmed the disallowance made by the AO. 7.4 We heard rival contentions on this issue and perused the record. The facts relating to this issue, as submitted by the assessee, are that the employees of the assessee have been sent to USA for undertaking projects online. The assessee is require....
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....ayment would be hit by sec. 9(1)(vii) of the Act, it is required to be examined as to whether the impugned payments would fall under the category of "Fee for technical services" in terms of sec. 9(1)(vii) of the Act or not. Section 9 of the Act lists out income which are "deemed to accrue or rise in India". Section 9(1)(vii) of the Act reads as under:- "9(1)(vii) income by way of fees for technical services payable by- (a) the Government ; or (b) a person who is a resident, except where the fees are payable in respect of services utilised in a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India ; or (c) a person who is a non-resident, where the fees are payable in respect of services utilised in a business or profession carried on by such person in India or for the purposes of making or earning any income from any source in India Provided that nothing contained in this clause shall apply in relation to any income by way of fees for technical services payable in pursuance of an agreement made before the 1st day of April, 1976, and approved by the Central Government. Explanation 1.-F....
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....e India...." 10.6 In the case under consideration the non-residents have provided technical services to the appellant company. Therefore, the payment made towards these technical services is undisputedly fee for technical services as stipulated in Section 9(1)(vii) of the Income tax Act, liable for deduction of tax at source." 7.8 The contention of the Ld A.R is that the assessee has availed only "legal and professional services" from some professional firms and it will not fall under the category of "Fee for technical services" defined in sec. 9(1)(vii) of the Act, since the professional service will not fall under the category of "managerial or technical or consultancy service" mentioned in the definition of the expression "Fee for Technical services" given in Explanation 2 to sec. 9(1)(vii). In this regard, the Ld A.R placed her reliance on the decision rendered by Delhi bench of Tribunal in the case of Sh. Chander Mohal Lall vs. ACIT (ITA No.1869/Del/2019 dated 09-12- 2021). 7.9 We heard Ld D.R on this issue and perused the record. The Delhi bench of Tribunal in the case of Sh. Chander Mohan Lall (supra) has that the professional fee paid to non-resid....
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.... income from a source outside India. Therefore, such income cannot be deemed to accrue or arise in India. 13. Without prejudice, he submitted, in terms of DTAAs entered with certain countries, payments received by the nonresidents are in the nature of business income, hence, not liable to tax in India under the respective DTAAs in absence of a fixed place of business or PE in India. Thus, he submitted, there being no obligation on the assessee to deduct tax at source under section 195 of the Act, no disallowance under section 40(a)(i) can be made. Further, he submitted, only because the assessee was unable to furnish the TRC in respect of some of the payees, the Assessing Officer has disallowed part of expenditure. He submitted, non-furnishing of TRCs cannot be the sole reason for disallowing assessee's claim when the genuineness of the expenditure is not doubted. He submitted, since, the assessee has no control over issuance of TRC by foreign jurisdiction, the disallowance should not have been made, when all other evidences including Outward Telegraphic Transfer Application Form, invoices, etc. were furnished. He submitted, at no stage, the departmental authorities have examined t....
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....services rendered by them in the respective foreign jurisdictions. Therefore, the foremost crucial issue requiring examination is, whether the payment made to the nonresidents is "chargeable under the provisions of the Act" so as to attract the provisions of section 195 of the Act. On a reading of section 5 of the Act, which defines the scope of total income, it would be very much clear that the following categories of income shall be included in the total income:- (i) income received in India; (ii) income deemed to be received in India; (iii) income which accrues or arises in India; or (iv) income which is deemed to accrue or arise in India. 18. In the facts of the present appeal, undisputedly, the non-resident attorneys have rendered their professional services outside India in relation to following: (i) Filing of application for grant/registration of IPR; (ii) Filing of Form/responses/petitions in relation to activity leading to or in the process of grant/registration; (iii) Maintenance of such grant/registration or services in relation thereto, as required under law, such as, towards annuity payment, renewal fee, restoration of patent, etc. (iv) Undertaking compliances for effe....
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....is could be for the reason that payment of legal/professional fee to a non-resident does not accrue or arise in India or is not deemed to accrue or arise in India as per section 5 and section 9 of the Act. It is relevant to observe, in the case of NQA Quality Systems Registrar Ltd. Vs. DCIT (supra), the coordinate Bench has held that professional services are a category distinct from technical services. Similar view has been expressed in the following decisions as well: (i) ONGC Vs. DCIT (supra) (ii) Deloitte Haskins & Sells Vs. ACIT (supra) No contrary decision has been brought to our notice by learned Departmental Representative. In view of the aforesaid, we hold that the payments made to non-resident attorneys being not in the nature of FTS, there was no obligation on the assessee to deduct tax at source. 21. At this stage, we must observe, learned Departmental Representative has submitted before us that the payments made by the assessee being in the nature of FTS are taxable by applying the source rule. In our view, even assuming that payments made by the assessee come within the ambit of section 9(1)(vii) of the Act, nonetheless, the exception provided under clause (b....
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....ed to accrue in India u/s 9(1)(vii) of the Act. Hence this income is not taxable in India in the hands of non-residents and hence the question of deducting tax at source u/s 195 of the Act does not arise here. Accordingly, the disallowance made u/s 40(a)(i) is liable to be deleted. Under Sec. 90(2) of the Act, the provisions of the Income tax Act are required to be applied only if they are more beneficial to the assessee. We noticed that under the Income tax Act, this receipt is not taxable in India in the hands of non-residents. Hence, the provisions of Income tax Act are more beneficial to the non-residents. In this view of the matter, there is no necessity to refer to the provisions of India-USA DTAA. In any case, we notice that, in order to bring the impugned payments within the Article 12 of India- USA DTAA, the services should have been "made available" technical knowledge etc to the assessee herein. In the instant case, the assessee has only availed professional services of non-residents in connection with tax compliances and the technical knowledge has not been "made available". Since the make available clause fails, the impugned payments cannot be taxed as Fee for Included....
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....data management, payroll processing) (Low end BPO services). The main issue in case of AY 2012-13 is selection of comparable companies. The final list of comparable companies, post the order of Commissioner of Income-tax (Appeals) [CIT(A)")], is provided below: Appellants Contention: 1. Exclusion of companies accepted by the TPO/ CIT(A): The Appellant wishes to rely on the decision rendered by the Hon'ble Bench members in case of M/s Micro focus Software India Private Limited (ITA No. 3681/Bang/2017) in relation to selection of comparables. The Honble ITAT's observations with respect to certain comparable companies which the Appellant wishes to exclude have been provided below: .. 1.1 lnfosys BPO Ltd, Excel Infoway Ltd and TCS E-Serve Ltd: The Hon'ble ITAT relied on the decision rendered in case of CGI Information Systems & Management Consultants P Ltd (supra) which in turn relied on the Hon'ble Delhi ITAT's decision in case of Baxter (I) (P) Ltd vs. A CIT (2017) (85 taxmann.com 285 (Delhi-Trib.) for exclusion of the following three comparable companies. a) Infosys BPO Ltd: Accordin....
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....e reject on the basis of unreasonable comparable criteria. The relevant extract of the ITAT order is provided below: 4 "We are of the view that this company should be included in the list of comparable companies because it is not disputed by the DRP that this company is functionally comparable and that in the past A Ys this company was regarded as a comparable company and generally regarded as comparable company providing ITES." 5 Accordingly, Informed Technologies Private Limited should also be included in the final list of comparable companies. 6 3. Additional comparable company: 3.1. Crystal Voxx Private Limited 7 The company is engaged in provision of BPO services and during the FY 2011-12, 100% revenue has been earned from provision of BPO services. In this regard, the Appellant wishes to rely on the decision rendered by the Hon'ble Bench member in case of FNF India Private Limited [lT(TP)A No. 195/Bang/2016 & 459/Bang/2017]. The relevant extract of the ITAT order is provided below: 8 "In ground No. 13, the Assessee has prayed for inclusion of Crystal Voxx Ltd. as a comparable company. This company was not regarded as comparable....
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.... regard to extraordinary event occurred during the year. The financial statement at page no.371 reads as under: "This year on January 4, 2012 we acquired an Australian Based Company, M/s Portland Group Pvt. Ltd. This acquisition has enhanced our delivery presence in high end S&P space in Asia Pacific region. Our company also added a delivery center in Atlanta, Unites States in addition to the existing delivery centre of M/s McCamish Systems, LLC which was acquired in the year 2009." 29. Considering the above financial report that there was extraordinary events occurred during the financial year 2011-12 and also relying on the case laws cited supra, the Infosys BPO Ltd., we direct AO/TPO exclude this company as comparable. Since we have decided this issue in favour of the assessee, therefore, we do not think it fit to take decision on other points. Excel Infoways Ltd (Seg) (IT/BVPO) 30. In the case of Excel Infoways Ltd (Seg) (IT/BVPO) as per submission of the ld.AR of the assessee there is abnormal volatility of revenue on this company from 2009-10 to 2014-15 and, therefore, this company cannot be considered as comparable. It fails in employee cost filter - it doe....
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....e because of consistent diminishing revenue. The figures of diminution revenue are given in paragraph 24 of its order. * (iii) In paragraphs 21 & 22 of its order the Tribunal held that Excel Infoway Ltd., was liable to be excluded because it was also engaged in the business of software testing, Verification and validation of software at the time of implementation and data centre management activities. 46.. Respectfully, following the decision of the Tribunal we hold that the aforesaid 3 companies be excluded from the final list of comparable companies for the purpose of arriving at the arithmetic mean of comparable companies for the purpose of comparison with the profit margins. 30.3. Respectfully following the above judgment of the coordinate bench of the Tribunal, we hold that this company should be excluded from the final list of comparable companies. For the calculation of profit margin. TCS E-serve Ltd., 31. Considering the rival submissions and perusing the entire documents available on record, the co-ordinate bench of this Tribunal in the case of M/s Societe Generale Global Solution VS. DCIT cited Supra for the assessment year 2012-13, the company ....
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.... inasmuch as 7 out of the 10 companies chosen by the TPO in the case of the Assessee were chosen as comparable in the case of Baxter (I) (P.) Ltd. (supra). The Tribunal held on the comparability of the three companies Infosys BPO Ltd., TCS E-service Ltd. and Excel Infoway Ltd., as follows: (i) In paragraph 23 of its order the Tribunal held that Infosys BPO Ltd., is not comparable with a company providing ITES because of brand value and extraordinary events in the previous year relevant to AY 2012-13 viz., acquisition of an Australia based company which had effect on its profits. (ii) In paragraphs 24 & 25 of its order the Tribunal held Excel Infoway Ltd., as not comparable because of consistent diminishing revenue. The figures of diminution revenue are given in paragraph 24 of its order. (iii) In paragraphs 21 & 22 of its order the Tribunal held that Excel Infoway Ltd., was liable to be excluded because it was also engaged in the business of software testing, Verification and validation of software at the time of implementation and data centre management activities. 46. Respectfully, following the decision of the Tribunal we hold that the aforesa....
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....s to Infosys Group thereby carries the goodwill and brand value of the group and it has got high turnover, apart from being functionally different from that company. He accordingly requested that Infosys BPO Ltd. should be rejected." We found the submissions of the assessee are supported with the judicial decisions and are applicable to the assessee- company for excluding Infosys BPO Ltd., from the list of comparables selected. Accordingly, we direct the TPO/AO to exclude company Infosys BPO Ltd., for determination of ALP. 15. The third comparable being TCS e Service Ltd., learned AR submitted that the turnover being Rs.1578.44 crores and functionally not comparable as brand profits and also diversified activities of BPO and KPO and no segmentation information available. Further, TCS e Serve Ltd., is functionally not comparable as it enjoys more brand value and referred to pages 933 to 936 of IT(TP)A No.308/Bang/2017 the paper book and also engaged in KPO activities including delivery of core business processing IT(TP)A No.2297/Bang/2016 services, analytics and insights. The turnover being Rs.1578.44 crores which is outside the range being 10 times and ld. AR supp....
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....d are of the view that exclusion of Infosys BPO was on the basis that the said company has huge brand value and had extraordinary events of acquisition during the previous year relevant to Assessment Year 2013-14 which had an effect on this profits. Therefore, the exclusion of this company has nothing to do with the company rendering high end services. As far as the comparability of the company being TCS e-Serve is concerned, this company was also excluded on the basis that it was engaged in software testing, verification and validation of software and also on the basis that it had huge turnover and was engaged in providing KPO services. We are, therefore, of the view that based on the precedents cited, these two companies are to be excluded from the list of comparable companies. We hold and direct accordingly. 31.1. Respectfully following the judgment, we direct the TPO/AO to exclude this company as comparable. BNR Udyog Ltd., (Seg) (Medical Transcription) 32. The RPT filters applied by the TPO is a 25% but the RPT turnover ratio works out to 49.60%, therefore, on the basis of RPT filter, the assessee cannot be considered as good comparable for the relevant assessment yea....
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.... Fails related party transaction ("RPT") filter of 25% on operating revenue Document 2 SI. No. Name of the company E Reason for rejection Error in margin computation Excel Infoways Limited Fails employee cost filter of 25% on (Segmental) operating revenue applied by the learned ΤΡΟ ⚫ Peculiar economic circumstances impacting the earnings of the year under consideration and consequent abnormal volatility in profits Document 3Traceback (most recent call last): File "C:\inetpub\vhosts\taxmanagementindia.com\httpdocs\python_image_text_project\google\direct_extract_text.py", line 19, in from google_doc_api import process_single_document File "C:\inetpub\vhosts\taxmanagementindia.com\httpdocs\python_image_text_project\google\google_doc_api.py", line 345 elif mime_type in ["image/gif"]: IndentationError: expected an indented block after 'if' statement on line 341 Document 4 3.2. INTERNATIONAL TRANSACTIONS (AS MENTIONED IN THE 3CEB REPORT) Particulars Amount Software Development Services 14,12,53,69,934 ITES Total 76,78,04,892 14,89,31,74,826 Document 5 Particulars Total Operating Inco....