TaxTMI 
TaxTMI 
2021 (9) TMI 1546
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....e business of providing Information Technology Enabled Services (ITES) call centre operations. The assessee is a 100% subsidiary of HWP Investment Holding (India) Ltd., and provides voice based customer contact centre services (ITES) to Hutchison 3G Australia Pty Ltd., and Hutchison 3G UK Ltd., (Associated Enterprises-AEs). The ITES services rendered by assessee are mainly in relation to handling services related queries, dealer related queries, mobile number portability related queries, handset related queries, network related queries and price plan related services. The assessee characterized the transaction in respect of provision of ITES services to its AE as a low risk service provider. The international transactions reported by the assessee are as under:- Provision of IT enabled services to AEs - Rs.494,17,50,027/- Reimbursement of cost - Rs. 1,73,50,898/- Total Rs.495,91,00,925/- =============== 3.2. The assessee benchmarked its international transactions by adopting Transaction Net Margin Method (TNMM); by adopting Profit Level Indicator (PLI) as Operating Profit / Total Cost (OP/TC); taking assessee as a tested party and having the following 8 comparables:- Sr. ....
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....ing but the addition made in the draft assessment order. 4. Aggrieved by this, the assessee is in appeal before us. 5. The ld. AR before us stated that though the assessee has raised several grounds, it would be sufficient if inclusion or exclusion of comparables alone are adjudicated. He specifically drew our attention that out of eight comparables finally chosen by the ld. TPO, the following six comparables were directed to be excluded by this Tribunal in assessee's own case for A.Y. 2008-09 in ITA No. 7520/Mum/212 dated 23/01/2019 :- Sr. No. Name of the comparable company 1. Aditya Birla Minacs Worldwide Ltd., 2. Acropetal TechnologoesLtd., 3. Coral Hubs Ltd., 4. Cosmic Global Ltd., 5. Eclerx Services Ltd., 6. Genesys International Corporation Ltd., 5.1. If these six comparables are excluded by following the Tribunal order in assessee's own case for A.Y. 2008-09 wherein it was categorically held that these comparable companies are not functionally comparable with that of the assessee company, the arithmetic mean of the comparables would be 24.21%. 5.2. The ld. AR also argued that the foreign exchange fluctuation gain earned by the assessee during the year under....
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....y is a specialised geospatial service provider which is different from regular BPO services provided by the assessee company. 6.1. Hence, respectfully following the Tribunal order in assessee's own case for A.Y. 2008-09, wherein the aforesaid six comparables were held to be functionally not comparable, we direct the ld. TPO to exclude these six comparables from the final list of comparables while benchmarking the international transaction of the assessee. 6.2. We find that the assessee had derived foreign exchange fluctuation gains of Rs.13,31,38,000/- only on re-statement of outstanding debtors as on the balance sheet date. This, in our considered opinion, would certainly form part of only operating revenue of the company. Reliance in this regard has been rightly placed by the ld. AR on the Co-ordinate bench decision of this Tribunal in the case of Medtronics Pvt. Ltd., vs. DCIT in ITA No.7263/Mum/2018 dated 13/09/2019. On perusal of the financial statements, we also find that the assessee company had not resorted to any hedging transactions as wrongly reported by the ld. DRP while adjudicating this issue. Accordingly, we direct the ld. TPO to include the forex gain of Rs.13,31,....
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....iable to be separately taxed under the head "income from other sources" and consequently not eligible for deduction u/s. 10A of the Act. This action was upheld by the ld. DRP. 7.2. We find that similar issue had cropped up in assessee's own case before this Tribunal in A.Y. 2011-12 in ITA No.766/Mum/2016 dated 30/06/2021 wherein this Tribunal treated the said interest income as part of business receipts earned by the assessee by placing reliance on the decision of Full Bench of the Hon'ble Karnataka High Court in the case of CIT vs. Hewlett Packard Global Soft Ltd., reported in 403 ITR 453; decision of the Hon'ble Jurisdictional High Court in the case of Cybertech Systems & Software vs. DCIT reported in 91 Taxmann.com 407(Bom), wherein it was held that all profits and gains including incidental income of an Export Oriented Unit (EOU) even in the nature of interest on bank deposits or soft loans would be entitled for deduction u/s. 10A or 10B of the Act. Respectfully following the said decision in assessee's own case for A.Y. 2011-12, we direct the ld. AO to grant deduction u/s. 10A of the Act in respect of interest income earned on fixed deposits. Accordingly, the ground No.13 rai....