TaxTMI 
TaxTMI 
2018 (6) TMI 1844
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....Assessing Officer be restored. 3. The assessee is an Indian Company incorporated in the year 2004 and is a part of the Everest group of companies (Everest Group). The assessee is engaged in the business of providing IT-enabled Services(ITES) and business support services, such as financial reports/related documents, technical service for development of software and other similar services to its AE on a 'cost plus mark up' basis. The Assessee filed its return of income on 30.09.2008 declaring loss of Rs.2,04,28,438/-. During the relevant financial year, the assessee had the following international transactions with its AE: S. No. Nature of transaction Amount (in Rs.) 1 Provision of IT enabled services 54,251,329 2 Provision of business support services 23,686,335 3 Payment of Royalty 828,920 4 Database access charge 1,128,000 5 Reimbursement of expenses 248,218 6 Recovery of expenses 4,310,648 The Assessee had two segments, namely, ITES and advisory support services. In both the segments the Assessee had taken OP/OC as the PLI under TNMM as the most appropriate method. A reference was made to the Transfer Pricing Officer (TPO) for determining arm's length pric....
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....the Ld. DR relied upon the Assessment Order. 6. The Ld. AR submitted that as relates to Ground No 1 regarding the exclusion of the comparables, the Tribunal in assessee's own case for A.Y. 2007-08 rejected the three comparables i.e. Vishal Information Technologies Ltd., Wipro Ltd., Mold-tek Technological Ltd. (DCIT vs. M/s Everest Business Advisory India (P) Ltd. being ITA Nos. 41 & 1191/Del/2013 for AY 2007-08 order dated 15.12.2017. The Ld. AR further submitted that as relates to exclusion of Genesys International Ltd., the said comparable is functionally different. But this year it is affecting the +/_ ratio and not in earlier year, so the assessee has not argued the exclusion of this comparable in the earlier year for +/- percentage coming within 5%. As relates to Ground No. 2, the Ld. AR relied upon the order of the CIT(A). 7. We have heard both the parties and perused the material available on record. It is pertinent to note that the Tribunal in assessee's own case for A.Y. 2007-08 rejected the three comparables i.e. Vishal Information Technologies Ltd., Wipro Ltd., Mold-tek Technological Ltd. ( DCIT vs. M/s Everest Business Advisory India (P) Ltd. being ITA Nos. 41 & 1191/....
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.....5% of the total revenue; having employee base of 17464; that Wipro is a giant in its area of business having huge brand value and goodwill and owns significant intangibles; that Wipro is having inorganic method of growth which it acquires from goodwill, brand value and presence in the global market. 59. Ld. DR for the Revenue contended that before TPO and CIT(A) the taxpayer have only argued high turnover and abnormal margin as the reason for its exclusion which cannot be a reason for exclusion as has been held by Hon'ble High Court in Chryscapital Investment Advisors (India) (P) Ltd. vs. DCIT - (2015) 56 taxmann.com 417 (Delhi). Ld. DR further contended that since the TPO did not have the opportunity to examine the argument now addressed before the Tribunal, it should be restored back for fresh decision. However, we are of the considered view that when the entire annual reports relied upon by the taxpayer to examine the business profile to Wipro was there and comparability issue is to be decided in view of the settled principle of law though not argued specifically, the matter is not liable to be restored. 60. Comparability of the Wipro has been examined by the Hon'ble Delhi ....
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....payer being engaged in Engineering Consulting Services, being specialist in Structural Design & Detailing services, Industrial, Commercial, structures with attachments for Canada, USA, Europe, Dubai & Australia. Moldtek Technologies Ltd. also used software tools to provide structural engineering outputs. So, on ground of functional dissimilarity, Moldtek Technologies Ltd. has been rightly excluded by the Ld. CIT (A). 81. The Ld. CIT (A) has rightly taken the view that extra ordinary profit in ITES segment reaching up to 113% for the year under assessment shows that the company has diverted its profit to evade taxes of its plastic division by showing losses to the ITES segment which is 100% exempted unit. So, the Ld. CIT (A) has rightly excluded Moldtek Technologies Ltd. on ground of extra ordinary profit of 113% which needs no interference. 82. So far as the question of merger of Tech-men Tools Pvt. Ltd. and acquisition of Crossroads Inc. USA w.e.f. 01.10.2006 and 28.04.2007 respectively by the taxpayer is concerned, its financial results, available at page 245 of the paper book (Annual Report), shows that Moldtek Technologies Ltd.'s segmental sale have gone up by 35.17% from R....
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....re being recognized by our customers as well as other peers in the industry segments that your Company operates in. The TPO has stated in the notice that unusual economic activity is one of the reasons for rejecting a company. Corporate restructuring within a comparable is surely an unusual economic activity. A scheme of arrangement has been approved by the Mumbai High Court in Spetember 2007 and this is evidenced from the Note no. 3 as given in the Notes to Accounts. The same is being reproduced below for your reference: 3. Pursuant to the scheme of arrangement (as per Section 391 to 394 of the Companies Act, 1956) sanctioned in the High Court of judicature at Mumbai vide order dated 7th September, 2007, with effect from 01st April, 2006 the business of Engineering and Information Technology Division has been transferred and demerged into M/s G I Engineering Solutions Ltd., the Resulting Company. Effects of the order passed by the High Court of Judicature, Mumbai have already been given in the annual accounts for the previous financial year 2006-07. Further, during the year, it had acquired ladya systech private ltd. Reasons for acceptance given by TPO: The TPO has consi....
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....indings of the CIT(A). Therefore, Ground No. 1 of the Revenue's appeal is dismissed. 8. As relates to Ground No. 2, the CIT(A) held as under: 12.2 The issue is settled due to the judgment of the Hon'ble Jurisdictional High Court in CIT vs. BSES Yamuna Powers Ltd. (I.T. Appeal No. 1267/Del/2010 dated 31.08.2010). "We are in agreement with the view of the Tribunal that computer accessories and peripherals such as, printers, scanners and server etc. form an integral part of the computer system. In fact, the computer accessories and peripherals cannot be used without the computer. Consequently, as they are the part of the computer system, they are entitled to depreciate at the higher rate of 60%." The assessee's case is squarely covered by the above judgment of Jurisdictional High Court. Further, reliance has also been placed on the following judgments: * DCIT vs. Datacraft India Ltd. (Mumbai Special Bench ITAT in ITA No. 7462 and 754) * ACIT vs. Container Corporation of India Limited (2009-TIOL-195- ITAT-DEL) Delhi ITAT * Expeditors International India (P) Ltd. vs. Addl. CIT (118 TTJ 652) (Delhi Tribunal) * ACIT, Circle 3(1), New Delhi vs. Cincom System India Pvt. Ltd. ....