TaxTMI 
TaxTMI 
2023 (12) TMI 636
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.... entity and is a subsidiary of Everest, USA. As stated by the Transfer Pricing Officer (TPO), the group is established as a management consultancy firm and is into the business of advising clients on strategic outsourcing issues. He has further stated that insofar as the assessee is concerned, the business can be divided into following two segments: 1. Consultancy and advisory support services. 2. Back office research support services. 5. He has also classified the assessee in the category of Information Technology Enables Services (ITES). To further explain the actual activity carried out by the assessee, the parent company develops off the shelf published reports and custom research reports on topics, such as, Human Resource Outsourcing, Procurement Outsourcing, Information Technology Outsourcing and Global Sourcing. The research reports are part of database of Everest, USA and are its intellectual property. So far as the assessee is concerned, Everest, USA provides the assessee, the theme on which research is to be performed, concept and overall content of the report, primary and secondary sources from which data is to be gathered, examples, models, samples,....
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....ial relief to the assessee by directing the TPO to consider fee income segment in case of Infinity.com and to consider ITES segment in case of M/s. Acropetal Technology Ltd. Thus, in terms with the directions of learned first appellate authority, the adjustment was partially reduced. 8. Before us, learned counsel for the assessee sought exclusion of following five comparables: i. Acropetal Technology Ltd. (Information Technology Segment) ii. Infinity.com Financial Securities Ltd. iii. Eclerx Services Pvt. Ltd. iv. Genesys International Corporation Ltd. v. ICRA Techno Analytics Ltd. 9. Further, she sought inclusion of the following comparable: i. R. Systems International Ltd. (BPO Segment) 10. Hereinafter, we will deal with the issues relating to each of the comparables as indicated above. (I) Acropetal Technology Ltd. 11. Objecting to selection of this company, learned counsel submitted that as per the annual report of the company, the functional profile shows that it is engaged in engineering design service, information technology service, and healthcare software. She submitted, from the functional profile of the company ....
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....ear 2007-08, the Tribunal in ITA Nos. 41 & 1191/Del/2013, order dated 15.12.2017, having examined the functional profile of the assess, has treated it as a low end Business Process Outsourcing (BPO) service provider. The factual position remains identical in the impugned assessment year insofar as functional profile of the assessee is concerned. Therefore, the assessee has to be treated as low end BPO service provider. 15. Insofar as Acropetal Technology Ltd. is concerned, it is observed, the TPO has considered the engineering design services segment to be falling under the category of ITES, hence, comparable to the assessee. However, when the issue came up before learned first appellate authority, he has held that the engineering design service segment cannot be treated as comparable to the assessee but Information Technology service segment can be compared to ITES, hence, comparable to the assessee. Accordingly, he has directed the TPO to consider the Information Technology service segment and compute the operating margins. 16. On perusal of the annual report of this comparable, a copy of which is at page 86 of the paper-book, it is observed that as per the information avai....
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.... 1. Open Solutions Software Services (P.) Ltd. [2020] 116 taxmann.com 708 (Delhi -HC) 2. Rampgreen Solutions (P.) Ltd. Vs. CIT [2015] 279 CTR 441 (Delhi - HC) 19. Learned Departmental Representative strongly relied upon the observations of the Assessing Officer and learned first appellate authority. 20. We have considered rival submissions and perused the materials on record. We have also applied our mind to the decisions relied upon. On perusal of the annual report of the company, placed in the paper-book, it is observed that it has reported income from three segments, income from securities, broking income and fee income. It is a fact that while considering the issue of comparability of this company, learned first appellate authority has directed the TPO to consider the fee income segment as comparable to the assessee. 21. Undisputedly, in the fee income segment, the company has earned revenue from research services in relation to financial markets. Thus, in our view, the company is similar to the assessee, as the assessee is also involved in research services. As regards the other contentions of the assessee that forex filter of 75% should be applied an....
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....e Tribunal in assessee's own case in assessment year 2007-08 in ITA Nos. 41 & 1191/Del/2013, dated 15.12.2017, has held that it cannot be a comparable to the assessee. The same view has been expressed by the first appellate authority in assessment year 2009-10. In fact, the TPO himself has not considered this company as comparable in assessment years 2011-12 and 2012-13. There being no difference in the factual position involved in the current assessment year, we hold that this company cannot be treated as comparable to the assessee. Accordingly, we direct the Assessing Office to exclude it. IV Genesys International Corporation Ltd. 25. Objecting to the selection of this company, learned counsel submitted that it is functionally different from the assessee as it provides Geospatial Consulting services, Navigational Maps services, Photogrammetry/Remote Sensing services, 3D Mapping services, Surveying, Utility services, Cadastral Mapping, Image Processing, Mobile VAS Development, Business Geographic & Logistics in Telecom and Infrastructure verticals. She submitted, the company offers technical solutions like TeleSCAPE, InfraSCAPE, MARS (Market Analysis and Route Planning Syste....
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..... Rampgreen Solutions (P) Ltd. Vs. CIT [2015] 279 CTR 441 (Delhi HC) 3. ACIT Vs. Smart Analyst India Pvt. Ltd., 123 taxmann.com 223 (Delhi - Trib.) 4. Evalueserve SEZ (Gurgaon) P. Ltd. Vs. ACIT [2017] 83 taxmann.com 371 (Delhi - Trib.) 5. Steria India (P.) Ltd. Vs. JCIT [2021] 123 taxmann.com 264 (Delhi - Trib.) 6. MD Everywhere India (P) Ltd. Vs. DCIT [2022] 139 taxmann.com 577 (Delhi - Trib.) 7. Timex Group India Ltd. Vs. DCIT [2019] 102 taxmann.com 459 (Delhi - Trib.) 29. Learned Departmental Representative strongly relied upon the observations of the Assessing Officer and learned Commissioner (Appeals). 30. We have considered rival submissions and perused the materials on record. On going through the annual report of the company placed in the paper-book, we have observed that it provides wide spectrum of services including software development services and engineering design services. However, revenue has been reported without providing any segmental break-up. Thus, in our view, complete information relating to the service segment of the company is not available. That being the factual position on record, the company cannot be ....
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....stment. She submitted, since, assessee's business model remains unchanged, there is no justifiable reason, why working capital adjustment should not be allowed in the impugned assessment year. 37. Having considered the submissions of the parties, we direct the Assessing Officer to examine assessee's claim, and in case, it is found that similar adjustment was allowed in assessment years 2007-08, 2008-09, 2009-10 and 2012-13, the same may be allowed to the assessee after examining the relevant facts. Needless to say, the assessee must be provided an opportunity of being heard before deciding the issue. 38. In ground nos. 4 and 5, the assessee has challenged the disallowance of Rs. 70,59,836/- under section 40(a)(i) of the Act. 39. Briefly the facts are, in the year under consideration the assessee has paid the aforesaid amount to its AE, M/s. Everest Global Inc. towards management fee. The Assessing Officer was of the view that the payments made, being in the nature of Fees for Technical Services (FTS), the assessee should have withheld tax under section 195 of the Act. Since, the assessee had not done so, the Assessing Officer disallowed the payments by invoking the provisi....
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....ng on IT resources l. Licenses and compliance m. Computer and phone networks 6. Training a. Global training conference b. Monthly training sessions c. Ad hoc training as required 7. Legal a. Contract review b. Litigation management c. Other legal services as required. 10. Undisputedly, assessee is availing such services from the AE from assessment year 2010-11 onwards. 11. It is the case of the Revenue that the services rendered by the AE to the assessee are in the nature of managerial/technical/consultancy services, hence, will fall within the scope and ambit of FTS/FIS as per the provisions of domestic law as well as under the India-USA DTAA. Notably, while considering the taxability of the corresponding receipts made at the hands of the AE viz. Everest Global Inc. in assessment years 2010-11 to 2012-13, the Tribunal in ITA Nos.2469, 6137 & 2355/Del/2017 dated 30.03.2022 has held that they are not in the nature of FTS/FIS under Article 12(4) of the India-USA DTAA. As could be culled out from the observations of the Co-ordinate Bench in the aforesaid decision, the services r....