TaxTMI 
TaxTMI 
2021 (12) TMI 1474
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....galore's directions in F.No.175/DRP-BNG/2015-16 involving proceedings under Section 144C(5) of Income Tax Act, 1961 ('the Act'). Heard both the parties. Case files perused. 2. Coming to the Revenue's sole substantive grievance that the learned DRP has erred in law and on facts inter alia in directing the Transfer Pricing Officer (TPO)/A.O. to exclude eight out of thirteen comparable entities whereby reducing arm's length price (ALP) adjustment of Rs.4,64,59,132; we note that the corresponding directions under challenge to this effect read as under: 3. Learned department representative vehemently contended during the course of hearing the DRP's directions have erred in law and on facts in rejecting the foregoing eight entities namel....
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.... the very turnover filter as well as in light of huge fluctuating margin pinpointing abnormal trend. Same factual position prevails regarding M/s. Mastiff Tech P. Ltd. having bad debts influencing its profit margin thereby reducing them from 21.78% to 2.28% only. We lastly note that M/s. TCS E-Serve Ltd. fails to satisfy the turnover filter which is also found to be catering mainly to M/s. Citi Group having diversified portfolio than assessee's IT Enabled Services segment. Suffice to say, the learned panel has taken due note of all applicable judicial precedents (supra) as well. We thus decline the Revenue's instant sole substantive grievance as well as the main appeal ITA 423/Hyd/2016. 7. Learned authorized representative invited ou....
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....en Solutions Pvt Ltd ( ITA102/2015) in paragraph 38 of the decision wherein it is held that "plainly, a business model where services are rendered by own employees and using one's own infrastructure would have a different cost structure as compared to a business model where services are outsourced. There was no material for the Tribunal to conclude that the outsourcing services by ......would have no bearing on the profitability of the said entity.', Accordingly, we direct the A.O. to exclude the above company from the comparables. Cosmic Global Limited Having considered the submission, it is noticed by us that the expenses to the extent of 41% on sub contracting suggest a different working model which may have....
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....Pvt. Ltd., Hyderabad vs Dy. Commissioner of Income-tax (Int. Taxation), Hyderabad Document 3 (ITA No.1961/Hyd/2011) wherein Eclerx has to be rejected as it engaged in providing. KPO services and other judicial pronouncements of the Hon'ble ITAT, Hyderbad and the decisions of the Bengaluru ITAT in the case of Cognizant Technology Services for the Assessment Years AY 2007-08 and AY 2008-09 [ITA No. 2106 & 1864/Hyd/2011] and Symphony Marketing Solutions India Pvt. Ltd. vs. ITO (IT (TP) A No. 1316/Bang/2012), wherein Hon'ble Bengaluru ITAT has based on the similar facts has rejected Eclerx. The company was also directed to be excluded by the Hon Delhi High Court in the case of Rampgreen Solutions Pvt Ltd (ITA102/2015). It....
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....ity Products (I) Pvt Ltd in ITA No.218/Hyd/2014 for A.Y. 2009-10 has excluded the company by observing that 'we are of the view that it cannot at all be considered as comparable to the assessee not only because of its size but also due समाधान Document 4 to its brand value, diversified activities and other functional disabilities. Different branches of this Tribunal are consistent in their view that the company cannot be treated as a comparable to a captive service provider like the assessee 'Similar view was taken by Hon'ble Hyderabad ITAT in the case of Excellence Data Research Pvt Ltd in ITA No.159/Hyd/2014, respectfully following the above decisions, we direct the assessing officer ....
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.... in nature. Having considered the submission, it is noticed by us that provision for doubtful debts has been made on year to year basis, such provision in F.Y. 2009-10 was 59,65,702/- and in the current year it is 22,89,927/- which indicates that the company is facing extraordinary situations. Further, due to this provision, if the margin comes down from 21.78% to 2.28% indicates that there is a huge influence in the margin due to uncertainty of the receivables. In such circumstances, in our view, it is appropriate to exclude the above company from the comparables, accordingly, we direct the A.O,. to exclude the above company from comparables. TCS E-serve Limited - Having considered the submissions, we are o....