TaxTMI 
TaxTMI 
2022 (11) TMI 1480
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 12.58% 2 Aditya Birla Minacs Worldwide Ltd. Prowess 8.06% 3 Cameo Corporate Services Ltd. Prowess 9.77% 4 Cosmic Global Ltd. Prowess 34814% 5 Delta Services (1) Pvt. Ltd. Prowess 6.67% 6 Informed Technologies India Ltd. Prowess 12.01% 7 Infosys B P O Ltd. Prowess 24.29% 8 K N M Services Pvt. Ltd. Prowess 13.69% 9 Optimus Global Services Ltd. Prowess -1.85% 10 Sparsh B P O Services Ltd. Prowess 5.97% 11 Crossdomain Solutions Pvt Ltd Capitaline 28.32% 12 Omega Healthcare Management Services Pvt Ltd Capitaline 9.34% 13 B N R Udyog Ltd. (Medical Transcription) Prowess (Segmental) 38.33% 14 In House Productions Ltd. (Healthcare Division) Prowess (Segmental) 4.32% 15 Timex Group India Ltd. (Timex Global Services) Prowess (Segmental) 8.38% Mean 14.27% 3. A reference u/s. 92CA(2) of the Act was made to TPO-II(8), Mumbai and accordingly, TPO called for the relevant information and the basis of selection of comparables. After considering the submissions of the assessee TPO has rejected the same a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rvices Ltd. 0.11 (vi). Infosys BPO Ltd 31.2 (vii) Timex segment group India Ltd-Timex Global services 7.49 (viii) In House Productions Ltd.( healthcare segment) 17.3 (ix). Sparsh BPO Services Ltd 2.57 (x). Excel Infoways Ltd. 326.22 (xi). Fortune Infotech Ltd. 22.8 (xii). Microland Ltd., -3.79 (xiii). Professional Management Consultants Pvt. Ltd. -12.07 8. TPO determined the PLI of the tested party at 9.22% which is lesser than the requisite mean of the comparables 33.38%. Accordingly, he determined the arm's length price at Rs..9,57,97,111/- and determined arm's length price adjustment of Rs..1,73,52,363/-. 9. Aggrieved assessee preferred objection before DRP-II, Mumbai and DRP after considering the objections of the assessee excluded eight (8) comparables from the comparable selected by the TPO. Against this direction of the DRP, assessee filed an appeal before us. 10. Before us, Assessee has raised following grounds in its appeal: - "1. On the facts and circumstances of the case and in law, the learned Transfer Pricing Officer ("TPO') and Assistant Commissioner of Income-tax- 13(3)(2....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 234B and 234C of the Act. The Appellant prays that the Learned AO be directed to recompute interest under section 234B and 234C of the Act. 7. On the facts and circumstances of the case and in law, the Learned AO and Hon'ble DRP have erred in initiating penalty proceedings under section 274 read with section 271(1)(c) of the Act." 11. Ground No. 1 is general in nature, accordingly, the same is not adjudicated. 12. With regard to Ground No. 2, Ld. AR pressed only Ground No. 2(d) and 2(g) and rest of the sub-grounds in Ground No. 2 are not pressed, accordingly grounds are dismissed as not pressed. 13. Before us, with regard to Ground No. 2(d), Ld. AR submitted that it seeks the deletion of three (3) comparables which was retained by the DRP from the comparables selected by the TPO. Ld. AR submitted that it is seeking relief and exclusion of following three comparables i.e., (i) Cosmic Global Ltd., (ii) Informed Technologies India Ltd., and (iii) Infosys BPO Ltd., 14. In this regard, Ld. AR submitted that Cosmic Global Ltd., is selected by the assessee originally and he brought to our notice Page No. 13 of the TPO order and submitted that majority of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... BPO Ltd., this is also originally selected by the assessee. He submitted that the Infosys BPO Ltd., has huge turnover and brought to our notice that TPO has not applied any turnover filter. Hence he brought to our notice Page No. 14 of the TPO order to highlight the huge revenue declared by them and he also brought to our notice Page No. 6 of the DRP order and submitted that the turnover declared by the Infosys BPO Ltd., is 143 times that of the assessee. He also brought to our notice Page No. 50 of the Paper Book to submit that while selecting the comparables even assessee has not selected the upper and lower limit for turnover filter. Therefore, this comparable has to be excluded considering the huge turnover and brand value of the Infosys BPO Ltd., when compared to the turnover of the assessee i.e., only 7,84,41,868/- in this segment. In this regard he relied on the decision of the Coordinate Bench in the case of Swiss Re Services India Private Ltd v. DCIT in ITA.No. 1898/Mum/2015 dated 06.01.2020. Further, he submitted that there are extraordinary events recorded in Infosys BPO Ltd., in this regard he brought to our notice Page No. 183 and 184 of the Paper Book. 17. Ld. DR ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rmed Technologies Ltd. which is as under:- Particulars FY 2005-06 FY 2006-07 FY 2007-08 FY 2008-09 FY 2009-10 FY 2010-11 FY 2011-12 OP/OC -44.21% 34.71% 3.67% 22.61% 26.73% 6.97% 5.12% 25. Where comparable picked up by the TPO for the purpose of benchmarking the international transaction in the hands of assessee is showing such differential profitability earned from year to year, then such a concern cannot be picked up as being functionally similar because of abnormal profitability trend. In this regard, we find that Pune Bench of Tribunal in case of Cummins Turbo Technologies Ltd., UK Vs. DDIT (Int. Tax,) (supra) had also held that Informed Technologies Ltd., because of its abnormal profitability trend, is to be excluded from the final list of comparables. Accordingly, we hold so." 20. Similarly, in the case of Eaton Technologies Private Limited v. ACIT in ITA.No. 519/PUN/2015 dated 16.08.2021 Pune bench of the Tribunal held as under: - "(ii) Informed Technologies Ltd. : 28 The TPO has discussed this company at page 51 of his order wherein the assessee has objected to the selection of this comparable in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... objected by the learned Authorized Representative for the assessee. The learned Authorized Representative for the assessee further pointed out that the said concern was accepted as comparable in assessment year 2009-10 in Mercer Consulting (India) Pvt. Ltd. (supra). Further, the learned Authorized Representative for the assessee fairly pointed out that the financial data for assessment year 2009-10 in respect of Aditya Birla Minacs Worldwide Ltd. are not available. We have already held in the paras hereinabove and following the ratio laid down by the Hon'ble High Court of Delhi in Rampgreen Solutions (P.) Ltd. (supra) that the concerns which are engaged in providing KPO services are not functionally comparable to the concerns which are providing BPO services and have directed the TPO to exclude the same. Applying the said ratio, we hold that the TPO has correctly excluded Aditya Birla Minacs Worldwide Ltd. and Informed Technologies India Ltd. from the final list of comparables. In view thereof, the grounds of appeal No.12, 14 to 16 are partly allowed." The ld. DR also though relying on the DRP findings principally agreed on the exclusion of this company as de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ount of Multiple Functional Segments with huge allocated items. The Hon'ble Bombay High Court in CIT vs. Pentair Water India (P.) Ltd. (supra) while considering the question of law relating to the exclusion of this comparable on size and turnover filter affirmed the exclusion. The Hon'ble Delhi High Court in Sanvih Info Group (supra) also confirmed the exclusion of Infosys BPO being a giant company. We have further noted that by following the decision of Hon'ble Bombay High Court in CIT vs. Pentair Water India (P.)Ltd. (supra), the co-ordinate bench of Tribunal in Hapag Lloyd Global Services Ltd. vs. DCIT (ITA No. 7539/Mum/2014 held that the turnover of Infosys BPO is very high comparative to tested party and excluded and excluded this comparable. Considering the consistent view of Hon'ble Delhi High Court, Hon'ble Bombay High Court and co-ordinate bench of Tribunal, we are of the view that Infosys BPO is a market leader and a giant company with a different risk profile and nature of service, has brand value and hence not comparable to the assessee due to huge difference in the size and scale of the company. Therefore, we direct the AO to exclude Infosys BPO from final set of compa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ame. Since assessee has preferred to accept the comparability study made by the TPO and finalized by the DRP and submitted objections only relating to three comparable which we have considered and adjudicated in our above discussion in this order. Therefore, we do not find any reason to adjudicate this ground at this stage. 27. With regard to Ground No. 3, Ld. AR submitted that the Assessing Officer relying on the AIR report and reconciliation made an addition of unexplained cash deposits u/s. 69 of the Act to the extent of Rs..65,85,700/- Even though assessee has made a submission that assessee has not made any cash deposits in its bank account and further, it was submitted that assessee maintains current account. Further, he submitted that the Assessing Officer not only rejected the submissions of the assessee in draft assessment and further Assessing Officer sustained the addition with the observation that HDFC bank has not responded to the notices u/s. 133(6) of the Act notices even though DRP has categorically gave direction to verify and reconcile the cash deposits made by the assessee with the HDFC bank. He prayed that suitable direction may be given in this regard. 28....