TaxTMI 
TaxTMI 
2022 (8) TMI 1524
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.... primarily engaged in the provision of data entry and analysis services to its Associated Enterprises ("AEs") through its office situated in India. Activities of the assessee include collating, standardising, storing all relevant corporate, financial, market and M&A data, news and analysis for various industries such as banking, financial services, insurance, real estate, energy and media/communications and this information is transmitted in return, electronic or any other medium through data bases, web applications and analytical models, and for this reason the operations of the assessee are classified as provision of low end ITeS like data entry, data analysis and similar support services to the AE. 3. For the assessment year 2009-10 the assessee filed the return of income on 02/09/2009 declaring a total income of Rs. 26, 252/-. In view of the international transactions entered into by the assessee with its AE's, determination of arm's-length price of such services was referred to the Learned Transfer Pricing Officer (TPO). Pursuant to the order dated 28/01/2013, passed by the Ld. TPO, draft assessment order under section 143(3) read with section 144C of the Income Tax Act, 1961....
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.....2014 though passed for the subsequent period but deals with same agreement. If the assessee is being accepted as a BPO, then, all the comparable selected by the TPO would not be relevant, and a fresh inquiry has to be conducted. Considering all these aspects, we allow the appeal of the assessee for statistical purpose. The observation made by us will neither impair the case of the AO nor will cause any prejudice to the defence/explanation of the assessee. 5. Subsequently SNL Financial (India) Private Limited was merged with S&P Capital IQ (India) Private Limited on 11/4/2018. Pursuant to the directions of the Tribunal, Ld. TPO at Hyderabad issued notice to the assessee and considering the submissions of the assessee selected a fresh set of comparables consisting of 11 Companies. And determined the arm'slength price adjustment at Rs. 15,01,17,925/- and suggested the upward adjustment to the tune of Rs. 1,92,12,650/-. In this respect, grievance of the assessee is that the Ld. TPO considered the foreign exchange gain as non-operating in nature while calculating the margin of the assessee resulting in decrease in the operating margin from 11.50% to 9.15% on cost. 6. Out of such ele....
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....the assessee in respect of comparables, at the time of arguments, the challenge is confined to four entities only, namely, Accentia technologies limited, Acropetal Technologies Limited, cosmic global limited and Infosys BPO limited. Assessee contends that all these entities are functionally dissimilar to the functions performed by the assessee and all these entities were excluded in assessee's own case for the assessment year 2007-08 and 2009-10 before merger. 10. Assessee is challenging the inclusion of Accentia technologies limited on the grounds of functional dissimilarity, because Accentia technologies limited is into the HRCM services also. Further submission of the Ld. AR is that during the year this company acquired Oak Technologies Inc, USA and has rapidly increased its customer base from New Jersey and neighbourhood areas. It is further submitted that the segmental information is insufficient to make this company a good comparable apart from this company earning super normal profits at the rate of 49.40%. Apart from this, this company is excluded in the case of the assessee before merger for this assessment year. 11. In respect of Acropetal Technologies Limited, the obje....
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....fosys and Wipro cannot be considered as comparable to smaller companies like assessee. 16.1 Even though we are not in agreement with the contentions of the comparability on turnover ratio of assessee with this company on the ground that assessee's turnover is about Rs.129.8 crores, which as against turnover of Rs.1016 crores of the Infosys, ( which is only about 5 times) we are of the view that other contentions with regard to the brand value and brand building exercise, having huge asset base, can be considered to arrive at the conclusion that Infosys is functionally not similar to that of assessee. Infosys BPO stands on its own as an exclusive BPO of the Infosys Technologies and in earlier years, generally Infosys BPO is excluded in many of the cases. Considering these aspects, we are of the opinion that even though the profits of the Infosys BPO Ltd. is reasonable and no super profits are earned, just because of its big brand value, this company has to be excluded on the grounds of functional dissimilarity on FAR Analysis. Therefore, we direct the Assessing Officer/TPO to exclude this company. ... ... ... Cosmic Global Ltd. 19.The main objection of assessee with ....
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.... accounts BPO. Thus it is held that this case cannot be excluded on the strength of outsourcing activity, which is alien to the relevant segment. 13.3. However, we find this case to incomparable on the alternative argument advanced by the ld. AR to the effect that total revenue of the Accounts BPO segment of Cosmic Global Limited is very low at Rs.27.76 lacs. We have discussed this aspect above in the context of CG-VAK's case and held that a captive unit cannot be compared with a giant case and thus excluded CG-VAK with turnover from Accounts BPO segment at Rs.86.10 lacs. As the segmental revenue of BPO segment of Cosmic Global Limited at Rs.27.76 lac is still on much lower side, the reasons given above would fully apply to hold Cosmic Global Limited as incomparable. This case is, therefore, directed to be excluded from the list of comparables." In view of the detailed analysis of the coordinate Bench of the Tribunal in the above referred case, in this case also we accept the contentions of assessee and direct the Assessing Officer/TPO to exclude this comparable for the same reasons. Acropetal Technologies Ltd. (Seg.) 20. The objection of assessee with reference to ....