TaxTMI 
TaxTMI 
2025 (4) TMI 2116
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ('the Act') dated 31st January, 2023 on the following grounds: 1. The Ld. AO/ Learned Transfer Pricing Officer ('Ld. TPO') and the Hon'ble Dispute Resolution Panel ('Ld. DRP') erred in not undertaking an objective comparative analysis and inter alia rejecting the following comparable companies as not comparable to the IT Enabled Services rendered by the assessee, which are functionally comparable and / or qualify all the filters and hence, should not be rejected: (i) Informed Technologies Private Limited (ii) ACE BPO Services Private Limited 2. The Ld. AO/ Ld. TPO/ Hon'ble DRP erred in not undertaking an objective comparative analysis and inter alia selecting the following companies as comparable to the IT Enables Services rendered by the assessee, which are functionally different and / or do not qualify all the filters and hence, should be rejected. (i) MPS Limited 3. The Ld. AO/ Ld. TPO/ Hon'ble DRP erred in computing operating margin of certain comparable companies used in the determination of the Arm's Length Price ('ALP') resulting in incorrect margins of the comparable companies and other computational errors to arrive at....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hen remanded the issue to Ld.AO/TPO for fresh examination. In the second round of litigation, the Ld. DRP had accepted the inclusion of ACE BPO as comparable by passing a Corrigendum Order dated 30/01/2023. On the basis of the Corrigendum Order of Ld. DRP, the assessee filed a rectification application before the Ld. AO. However, despite the loss of time, the Ld. AO has not yet passed the rectification order. The Ld. AR, therefore, prayed before the Bench for a suitable direction to be issued to the Ld. AO/TPO to give effect to the findings of the Ld. DRP. The Learned Departmental Representative ("Ld. DRP") fairly accepted the assessee's contention. As the Ld. DR has also accepted the contention of the Ld. AR, we direct the Ld. AO/TPO to pass the rectification order in accordance with the Corrigendum Order of Ld. DRP, dated 30/01/2023 with regard to inclusion of ACE BPO in the list of comparable. 6. As far as the inclusion of Informed Technologies is concerned, the Ld. AR submitted that, the Ld. TPO has excluded the same from the list of comparable on the ground that 29% of its total revenue was derived from other income. Consequently, as per Ld. TPO the company failed to pass t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... service income filter applied by the TPO. 10.2 Before us, the learned AR for the assessee contended that this company 'Informed' is functionally comparable to the assessee as it is an ITES provider and qualifies the service income filter of 75% applied by the TPO. It was submitted that the entire service income of 'Informed' at Rs. 2,58,53,362/- is from rendering of ITES only and the TPO/DRP have wrongly considered "other income" of Rs. 1,22,85,303/- as "Service Income". In support of this contention, the learned AR drew the attention of the Bench to the relevant portion of the Annual Report of 'Informed' (placed at pages 391 to 443 of Paper Book). In this regard, reliance was placed on the decision of the Co-ordinate Bench of this Tribunal in the case of CGI Information Systems and Management Consultants (P) Ltd., (2018) 94 taxmann.com 97 (Bang - Trib) wherein this company 'Informed' was held to be comparable to companies rendering ITES. It was prayed that, in the light of the above, this company 'Informed Technologies Ltd.,' be included in the final set of comparables in the case on hand. 10.3 Per contra, the learned DR for Revenue supported the orders of the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d exclude expenses directly related to rental income i.e., depreciation, building repairs, rates and taxes from the operative expenses. 10. Accordingly, Ground No.1 of the assessee is partly allowed. 11. Ground No.2 of the assessee is related to exclusion of MPS Limited ("MPS") from the list of comparable. The Ld. AR submitted that MPS is engaged in Data Utilization and Content Development, thereby making it a high-end service provider. In support of their claim, the Ld. AR filed before us prospectus of MPS running from Page No. 838 to 994 of the Paper Book as additional evidence, which was admitted by us. Further, the Ld. AR invited our attention to Pages No. 895, 917, 918, 920, 922, 923 and 925 of the Paper Book containing the details of company's functional profile. Accordingly, the Ld. AR argued that these documents demonstrate that MPS provided high-end development services and therefore, should be excluded from the list of comparable. In support of their contention, the Ld. AR relied on the following decisions viz., (i) Primera Medical Technologies Private Limited for AY 2018-19, ITA No. 381/Hyd/2022 dated 28/06/2024; (ii) E-Clinical Works India Pvt Ltd for AY 2014-15, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Tribunal has held as under: "16. Coming to the request of the assessee to exclude MPS Ltd in the ITeS segment, according to the assessee this company is engaged in providing publishing solutions, namely, typesetting and data digitization services; that the company serves international publishers through author to reader publishing process; that the company has developed an end-to-end publishing platform DIGI core; that it developed automated solutions such as Digi track, MPS Digi comp, automated solutions and the company is a full-fledged and Revenue bearing substantial risks and concerns. Learned AR drew our attention to the view taken by a coordinate Bench in the case of Symantec software India private Ltd (supra) and submitted that this company is engaged in carrying out content development activity which is in the nature of KPO service and therefore it is functionally not comparable to the technical support service segment of the assessee. Learned AR drew our attention to the Balance Sheet as on 31/3/2014 wherein under the current assets certain inventory is shown. 17. Learned DR submits that the assessee himself did not wait before the learned TPO or lear....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o exclude the same. We do not find any material to come to a different conclusion. MPS Ltd. is not a publisher on its own. MPS Ltd. only provides outsourced publishing services by providing typesetting and digitization services. For these reasons, we do not find anything contrary to the finding of the authorities. We accordingly uphold the same." 14. On a perusal of above, we found that the Tribunal has held MPS to be a suitable comparable to a company engaged in ITES. As far as reliance of the assessee on the decision of various Tribunal in the case of (i) Primera Medical Technologies Private Limited for AY 2018-19, ITA No. 381/Hyd/2022 dated 28/06/2024; (ii) E-Clinical Works India Pvt Ltd for AY 2014-15, ITA No.4106/Mum/2019 dated 31/03/2023; (iii) Schlumberger India Technology Centre Pvt Ltd for AY 2014-15, ITA No.09/PUN/2020 dated 17/06/2022; (iv) FIS Solutions Software (India) Private Limited for AY 2014-15, ITA No.1756/PUN/2018 dated 22/06/2021; (v) Symantec Software India Private Limited for AY 2014-15, ITA No. 1824/PUN/2018 dated 17/02/2020; (vi) Emerson Electric Company (India) Private Limited for AY 2013-14 & 2014-15, ITA No. 6098/Mum/2018 & ITA No. 531/Mum/2018 dated ....