AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 1873
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....ts and circumstances of the case the CIT(A) was right to delete Acropetal Technologies Ltd as a comparable to the assessee on the basis of assessee's contention that Acropetal has during F.Y. 2010-11 acquired Line Beyond Inc USA and Optic Consulting Inc USA and the occurrence of this extraordinary event has effected the margin of this comparable, when infact this contention is not factually correct as the annual report of Acropetal on Page 13 clearly mentioned that the said acquisitions were effective from 01.04.2011 and hence are not part of financial statements as on 31.03.2011. 3. Whether the CIT(A) was right in the facts and circumstances of the case to include ICRA Management Consulting Services Ltd as a comparable to the assessee in contradiction to his rejection of all companies sought to be included by the assessee as being functionally dissimilar, as held by him in Para (h) on page 53 of his order. 4. Whether the CIT(A) was right in the facts and circumstances of the case to include ICRA Management Consulting Services Ltd as a comparable to the assessee even though ICRA Management Consulting Services Ltd owns considerable intangibles and the CIT(A) ha....
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....61990 8 Reimbursement of business promotion expenses 2125583 9 Reimbursement of leased line expenses 2765113 10 Recovery of research expenses 209411837 11 Recovery of employees cost, travelling and other expenses 1618114 4. The Assessing Officer made a reference to Transfer Pricing officer (TPO) vide reference dated 26.08.2013 under section 92CA for computation of Arms Length Price (ALP). The TPO identified recovery of research cost of Rs. 20,94,11,837/- as erroneous and examined its ALP. 5. The assessee bench marked its ALP under Transaction Net Margin Method (TNMM),the assessee selected 9 companies as comparable in the following manner: Sr no. Companies name FY 2010-11-NCP% 1 Coalition Development system India private limited -- 9.45 2 Cyber media Research Limited -- 10.33 3 Datamatics Global services Ltd -- 5.32 4 e4e healthcare business services private limited -- 9.69 5 ICRA Management Consulting Services Ltd -- 15.79 6 Informed technologies India Ltd -- 9.65 7 Jindal Intellicom private limited -- 11.15 8 People research analytical and information services In....
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....d. CIT(A) for directing to exclude Acropetal Technology Ltd. from the set of comparable. On service of notice of appeal, the assessee has filed its cross objection for excluding Infosys BPO as a comparable from final set of comparable. We have noted that ICRA Management Consulting Services was not considered by TPO in final set of comparable. 10. We have heard the submission of ld. AR of the assessee and ld. DR for the revenue and perused the order of lower authorities. The ld. DR for the revenue supported the order of TPO in selecting the Acropetal Technology Ltd. in the final set of comparable. The ld. DR submits that Acropetal Technology Ltd. is functionally comparable with the assessee company. This company satisfied quantitative filter adopted by TPO. No extra event was reported by this comparable company during this year. Merely reason that foreign expenditure of this comparable is high cannot be a ground for excluding this comparable. 11.On the other hand, the ld. AR of the assessee supported the order of ld. CIT(A) in excluding this comparable. The ld. AR further submits that this company is engaged in providing engineering design services, information technology serv....
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....f the IT(TP)A No. 581/Bang/16 C.O 21/B/2017 Goldman Sachs Services Pvt Ltd., Bangalore authorities below. The Revenue has challenged exclusion of Acropetal Technologies Ltd, L&T Infotech Ltd., and E-infochips Ltd, on the ground that the DRP has suo-moto excluded above three companies by applying fresh filter in respect of onsite revenue filter, without applying such filter to all comparable selected by the TPO. We find that although the DRP has taken one of the reasons for excluding these companies on the basis onsite revenue filter but given other reasons to exclude these companies by holding that these companies are functionally not comparable to the profile of the assessee company. Let us examine each company and reasons given by the DRP to direct A.O to exclude from the list of comparables. 12. Acropetal Technologies Ltd. The DRP has directed the TPO to exclude Acropetal Technologies Ltd on the ground that on examination of annual report of the company the following facts are noticed. (i) Acropetal Technologies Ltd. Having considered the submissions, we examined the Annual Report from which the following facts are noticed :- * The fo....
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....he grounds that: (i) IT(TP)A No.502/B/16 CO No.01/B/17 the segmental information containing the break-up of its export sales and employee costs, was not available and it was not possible to ascertain if it passed the export earnings and / or employee costs filters; and (ii) a substantial portion of its software development activities have been outsourced on sub-contract and it could, therefore, not be retained as a comparable. The DRP in directing exclusion of this company followed decision of Hyderabad Bench of ITAT in the case of Capital IQ Information Systems (India) Pvt. Ltd. (ITA No.1961/Hyd/2011). The DRP also observed that this company was predominantly doing on-site development of software and therefore cannot be compared with a company which develops software off-shore. One of the filters applied by the TPO was that companies where employee costs are less than 25% of turnover cannot be regarded as comparable. In the absence of segmental information, it was not possible to ascertain as to whether this company passes the test adopted by the TPO himself for comparison. The learned DR submitted that the required data can be culled out from the information available in the publ....
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....forming almost similar function, though on large scale and are functionally similar. This comparable company is also providing ITeS services. 17. We have considered the submission of both the parties and perused the orders of lower authorities. We have noted that the assessee objected the inclusion of this company before TPO as well as before the ld. CIT(A). Before the ld. CIT(A), the assessee specifically contended that Infosys BPO is having brand value of its holding company, which influence pricing policy, thereby directly impacting the margin earned by that comparable. Further, the turnover this comparable is 53 times. The ld. CIT(A) affirmed the action of TPO by holding that the contention of assessee is not acceptable as Infosys BPO is performing almost similar function but on large scale. We have noted that the Hon'ble jurisdictional in CIT vs. M/s. Pentair Water India Pvt. Ltd. (supra) while considering the exclusion of Infosys BPO on the ground of turnover filter of the assessee company whose turnover was Rs. 11 crore and the Infosys BPO of Rs. 649.56 crore, being more than 65 times of that assessee and upheld the exclusion of Infosys BPO. Further, co-ordinate bench....