TaxTMI 
TaxTMI 
2024 (11) TMI 1381
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....al impugning the final assessment order dated 16.10.2017, passed by the learned Assessing Officer (AO) under Section 143 (3) of the Act read with Section 144C of the Act. 2. The controversy in the present appeal relates to inclusion of an entity named E4e Healthcare Business Services Private Limited (hereafter E4e Healthcare), as a comparable entity for benchmarking the international transaction of provision of IT-enabled services. The Assessee's objections in regard to the use of the said entity as a comparable, were rejected on the ground that the same were based on a factually erroneous premise. The learned ITAT as well as the learned Dispute Resolution Panel (DRP) had noticed the Assessee's objections as those relating to the use of an employee filter, which the authorities found to be unsustainable. However, it is the Assessee's case that he had never raised any objection regarding the said entity (E4e Healthcare) not satisfying the employee filter as used by the learned Transfer Pricing Officer (TPO). The Assessee's objections related to non-provision of the audited accounts for examining the comparability of the said entity. QUESTIONS OF LAW 3. In the aforesaid cont....
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....vant extract of the order dated 13.10.2016, passed by the learned TPO which seeks to address the objections raised by the assessee, is reproduced below: "iii. Igate Solutions, Capgemini Business Services (India) Pvt. Ltd., New V C Services Pvt. Ltd., Tech Mahindra, E4e Healthcare - The assessee has objected about inclusion of these comparables on various general grounds such as data not available, functionally not comparable, extra ordinary events etc. However, from going through the submission of the assessee carefully and the material available on record, the assessee's contention is found incorrect. Accordingly, these are included in the final set of comparables." 8. It is apparent from the above that the assessee's contention that the financial data of E4e Healthcare was not available in the public domain was not specifically addressed, but was summarily disposed of. It is material to note that the order passed by the learned TPO also reproduces the Show Cause Notice (SCN), proposing to reject the objection raised by the Assessee. The objections as noted in the said SCN and the learned TPO's response to the same as noted in the order passed by the learned TPO is rep....
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....der passed by the learned DRP in regard to the assessee's objection regarding the inclusion of E4e Healthcare as a comparable is set out below: . Comparable Assessee TPO DRP 5 e4e Healthcare The annual report of the company for financial year 2012-13 is not available in public domain. Vide submission dated 23.09.2016, the assessee requested to provide the audited financial statement of the company for the financial year 2012-13. However, no such financial statement was provided to the assessee. The comment of the assessee is factually incorrect. As per annual report of the company, it is primarily engaged in the business of providing healthcare outsourcing services for the healthcare industry in United States of America. Since the company is engaged in providing ITES services which are the same as being provided by the assessee, this company is being considered as comparable Issue of non-availability of annual report was not raised by the assessee before the TPO. The assessee claimed that the company failed employee cost filter. This clearly means that the assessee was in possession of the annual accounts of the company. Since no other objection has be....
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....tal data not available As per page 54 (227 of the paper book), besides providing IT enabled services, the company is also engaged in the business of rendering software development services. However, segmental data with respect to IT enabled services segment is not available in the audited financial statement of the company. Further, as per page 56 (page 229 of the paper book), the company derives its revenue primarily from Revenue Cycle management of U.S. Based the Healthcare client. Revenue is derived from billing, coding and claim process services. A further scrutiny of the nature of services provided by the company from the website of the company revealed that the company is providing host of services and end-to-end solutions to the healthcare industry. A few snapshot of the website of company is as under; Healthcare Business Solutions Enhance your margins Our 23 - year experience has taught us that there is no magic potion are silver bullet for improving financial performance. It can only be achieved by leveraging best practices, tested process, and innovative technology. Our approach historically addresses Revenue Cycle Manage....
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.... Ltd vs. CIT (377 ITR 533)]. The company has itself been rejected as comparable is to a ITES enabled services provider in the following cases: HOV Services Ltd. Vs. JCIT (2016) 73 Taxmann.com 311 - CL 787 - 818 Schlumberger India Technology Centre Pvt. Ltd. Vs. DCIT (ITA No. 640/Pn/2014) - CL 741- 758" 17. It is not disputed that at the stage of an appeal before the learned ITAT, the Assessee was in the possession of the final accounts of E4e Healthcare. It is contended by the learned counsel for the Assessee that the same was provided to the assessee pursuant to the directions issued by the learned DRP. However, the said directions are not on record. 18. The learned ITAT did not examine the Assesee's contention that the functional profile of E4e Healthcare was materially different from the functional profile of the assessee. The learned ITAT proceeded on the basis that the Assessee had confined his objections to the use of the said comparable on the ground that it failed the employee cost filter - an objection that was never raised by the Assessee. The Assessee's objection was also rejected on the ground that the Assessee had not raised any objecti....
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....parable in the instant case." 19. It is apparent from the above that the fundamental flaw that permeated the decisions of the learned TPO, the learned DRP and the decision of the learned ITAT as well. The assumption that the Assessee had raised objections regarding the inclusion of E4e Healthcare as a comparable on the ground that it failed the employee cost filter, is erroneous. And, the learned DRP as well as the learned ITAT drawn their inferences on the said basis. As noted above, the Assessee had not raised any such ground and therefore, the decisions rendered by the learned DRP and learned TPO in this regard are fundamentally flawed. The impugned order also suffers from the same flaw. 20. It is also important to note that the learned ITAT had referred to the case of the Assessee for the AY 2012-13, to support the inclusion of E4e Healthcare as a comparable on the basis that the same was accepted as a comparable in the earlier AY 2012-13. The Assessee has filed additional documents which indicate that the learned ITAT had, in an appeal preferred in respect of the AY 2012-13, remanded the matter to the learned TPO for considering afresh, inter-alia, on the basis of the ch....