TaxTMI 
TaxTMI 
2025 (4) TMI 276
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....ing the financial year 2017-18, the assessee entered into several international transactions which were considered to be at arm's length by the ld. Transfer Pricing Officer (ld. TPO) except the international transactions mentioned below:- S. No. Nature of international transactions Value in INR Adjustment proposed Method applied 1. Provision of support services 307,582,804 40,327,453 Transactional Net Margin Method (TNMM) 2. Provision of IT enabled support services 1,024,075,535 39,510,408 3. The assessee approached DRP challenging the proposed enhancement in the income of the assessee by rejecting the economic analysis adopted by the assessee in its TP documentation relating to the afore-referred two international transactions. The assessee had also alleged that TPO had erred in modifying/adoption of filters and rejecting functionally comparable companies selected by the assessee. It was alleged that new comparable companies are either not comparable to the assessee in terms of the functions performed, assets employed and risk assumed was based on quantitative filters proposed by the ld. TPO himself. Pursuant to the DRP directions, the following adjustments were inc....
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.... Rules'). 5. On facts and in law, the Ld. TPO has erred in continuing to include companies which clearly fail the related party transaction to revenue filter as applied by the Ld. TPO himself-The action of the TPO is in contravention of Rule 10B(1)(e) read with Rule 10A of the Rules as various companies have related party transactions higher than 90% of value of their revenue. Marketing support services (INR 3,95,10,408) 6. On facts and in law, the Hon'ble DRP/Ld. TPO erred in rejecting the economic analysis adopted by the Assessee in its TP Documentation, by selecting non-comparable companies as well as rejecting comparable companies selected by the Assessee, thereby contravening the provisions of Rule 10B(2) of the Rules. 7. On facts and in law, the Ld. TPO has erred in excluding Cyber Media Research & Services Ltd. on the ground that the company is making persistent losses not appreciating that- * The company has actually earned operating profits in the AY 2017- 18 and AY 2018-19 * Loss/ profit cannot be the barometer of comparability under Rule 10B(2). 8. On facts and in law, the Ld. TPO has erred in excluding ICRA Management Consulting Services Ltd. on th....
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....y of the Grounds of Appeal herein or add any further grounds as may be considered necessary and to submit such statements, documents and papers as may be considered necessary either before or during the appeal hearing. The Appellant prays for appropriate relief based on the said grounds of appeal and the facts and circumstances of the case." 6. Heard and perused the record. The ground No.1 to 3 are general in nature and 14-15 are consequential so require no separate discussion. Further, we find that ground No.5 arises out of the error allegedly committed by the AO in not giving benefit to the assessee out of the revised TP order dated 24th February, 2023. In this regard, we find that the TPO had passed rectification order rejecting the companies having related party transactions and, accordingly, revised adjustments. However, admittedly, the AO has not given effect to the same. Thus, we find substance in the contention of the ld. AR and restore the issue to the AO for giving effect to the rectification order passed by the TPO dated 24th February, 2023. Accordingly, this ground No.5 is sustained. 7. The grounds No.4, 6, 7 and 8 primarily arise out of the claim of inclusion and e....
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....and proposed to introduce 5 new companies, thereby resulting in a range of NCP of 17.28% to 26.60% with a median of 24.13%. 11. The contentions of ld. AR and ld. DR are considered and they have primarily relied on the respective case as casted below. We thus proceed to examine the disputed comparables individually. (i) Wipro Limited. Assessee is seeking exclusion of this comparable. Admittedly there is extra ordinary events during the year, as Wipro acquired two companies, ie., InfoSERVER and Cooper. InfoSERVER is a Brazilian company engaged in IT services and Cooper is engaged in designing and business strategy consultancy. Considering the merger and acquisition would lead to synergies into the business of the Wipro Limited as well, the profit and loss account of the company cannot be considered be reliable. We thus accept the contention of ld. AR that since it is not apparent how these synergies/goodwill affected the profitability of the company, it makes the company to be incomparable to the Appellant. Then functionally Wipro is not comparable as it is engaged in diversified activities, like it provides advanced and digital IT services and is a global leader in consulting inf....
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....ring FY 2017-18. This all leads us to hold that it deserves to be excluded. (iv) DigiCall Global Ltd. The assessee is seeking inclusion of this comparable. We find that this company is functionally comparable as the company is engaged in the business of providing business process outsourcing services. TPO has rejected the said comparable stating that it is engaged in diversified activities. However, the TPO has failed to appreciate that the 'principal business activities of the company' is Call Centre Operations i.e., ITeS Business. The company is deriving 100% of the revenue from the same activity. It passes all filters proposed by the TPO. This all leads us to hold that it deserves to be included. (v) Crystal Voxx Ltd. The assessee is seeking inclusion of this comparable. We find that if its functionally similar as the company is engaged in IT and IT enabled services and BPO services. Ld. AR has pointed from the Annual Report of the company that the company is engaged in the provision of IT and IT enabled services and BPO services. Then it passes all filters applied by Ld. TPO. This all leads us to hold that it deserves to be included. (vi) Bhilwara Infotechnology L....