TaxTMI 
TaxTMI 
2026 (4) TMI 1315
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....f Section 92CA(1), without satisfying any of the conditions laid down in clauses (a) to (d) of Section 92C(3) of the Act based on the information/documents available with him; thereby making a transfer pricing (TP) adjustment of Rs 18,80,10,883 in respect of the international transaction of provision of Information Technology enabled Services (ITES'), which is bad in law 3. Erred in determining the arm's length operating margin for the provision of ITES transaction to be 25.29% on operating costs, 4. Erred in law and facts in rejecting the economic analysis undertaken by the Appellant for determination of arm's length price for the provision of ITES in accordance with the provisions of the Act read with the Rules and imputing a TP adjustment by making modifications to this analysis in a subjective, arbitrary and inconsistent manner. 5. Erred in applying accept / reject criteria/ filters in an arbitrary, subjective, inconsistent and erroneous manner for selection of comparable companies, 6. Erred in applying a quantitative threshold of 75% for the export earnings filter for selection of comparables for the provision of ITES transaction....
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....tion services, operates as an entrepreneur bearing significant business risks and undertakes research and development activities, 16. Erred in not allowing Appellant the benefit of working capital adjustment which is required to be undertaken to account for the difference in working capital levels between the comparable companies and the Appellant; 17. Erred in not allowing Appellant the benefit of the risk adjustment to account for the difference between the risks assumed by the Appellant and the risks assumed by the comparable companies; 18. Erred both on facts and in law in not granting credit of Tax deducted at source (TDS') to the Appellant as claimed by the Appellant in the income tax return 19. Erred in initiating penalty proceedings under Section 270A of the Act; 3. Assessee has raised additional ground on the jurisdictional issue challenging that the impugned final assessment order giving effect to the direction of ld. DRP is barred by limitation as provided u/s. 153 and therefore is without jurisdiction and bad in law. There was no objection from the other side for its admission. However, since the matter was heard and reserved f....
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....ly consist of data aggregation and review, article and citation indexing, and selection for inclusion in the IP&S databases. The AEs coordinate, supervise, provide strategic guidance, and bear all costs and risks associated with ownership of these activities. As the IP owner, the group is ultimately responsible for all content development and editing, and it remunerates assessee on a cost-plus mark-up basis. 5.1. Based on the functional analysis, assessee is characterized as a limited risk bearing service provider. The group owns all the valuable intellectual property rights and other commercial or marketing intangibles and is involved in complex operations of developing proprietary technologies and marketing of the same. Assessee uses the process, technical data software, quality standards etc. owned by the group for provision of services. Thus, it has least complex operations and bears lesser share of risks and was accordingly assessee itself selected it as the tested party for the economic analysis. Assessee selected TNMM as the most appropriate method (MAM) to benchmark this transaction. 5.2. Assessee arrived at 16 comparable companies based on which margins of weighted a....
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....egment, and it is broadly functionally comparable with the assessee. 7. Aggrieved, assessee is in appeal before the Tribunal whereby it has strongly submitted that once this comparable company is excluded, it meets the arm's length margin requirement by furnishing the following computation: Sr. No. Name of the company As per DRP order Set after exclusion of MPS Ltd 1. Microland Ltd 7.86% 7.86% 2. Crystal Voxx Ltd 6.23% 6.23% 3. MPS Ltd 63.11% Reject 4. CES Ltd. 23.96% 23.96% No of comparables 4 3 ALP - Arithmetic Mean 25.29% 12.68% Appellant's margin 14.75% 14.75% Result Not at ALP At ALP 7.1. For this exclusion and to demonstrate that it is functionally different, assessee submitted from the Annual Report of the comparable company placed on record that it is engaged in a business of content solutions, publishing solutions, accessibility solutions and platforms. The platform segment is the fastest growing part of the business of MPS Ltd. which has grown by 20%. MPS has developed numerous platforms in-house such as DigiCore, MPSInsight, Sc....
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....enta Services (P) Ltd. (supra) from para-4 and para-11. "For exclusion of MPS Ltd., the Id. AR of the assessee submits that this comparable is not functionally comparable with the assessee. It is in diversified business and lack of segmental data. MPS is a leading global provider of platforms and content solutions for the digital world. It is India's only listed pure-play publishing services company. The company provides platforms and publishing services for global publishing industries. MPS is engaged in end to end print and digital solutions to its customers which include services e.g. content production, enhancement, transformation, delivery and customer support making it a trusted partner to the biggest publishers in the world. MPS has successfully positioned itself as a leading product developer for educational, academic and medical publishers and leaning companies. MPS is engaged in developing software projects for end-to-end cloud based publishing namely 'MPS Digicore' 'Digitrack', 'Contentstore' etc. About 82% of total tumover of the company is from providing content solutions in the form of production, transformation, customer support a....