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2023 (10) TMI 1193 - AT - Income TaxTP Adjustment - comparable selection - HELD THAT - Accentia Technologies Ltd. As provided KPO services and, therefore, it is not comparable with the assessee company, which is carrying on BPO activities. TCS E-Serve International Ltd' s annual report of the company does not provide any segmental information related to ITES as well as software development services. The company also owns intangible of substantial amount and is benefitted usually by the Tata Brand. The company is also making appellant for use of such brand. Therefore this aspect also makes this comparable is inappropriate and therefore we order to exclude this comparable. TCS E Serve Limited.nvolved in transaction processing and technology services. It carries on business of providing technology service such as software testing, verification and validation. It is also developed a software such as transport management software therefore functionally this company is dissimilar to the assessee company. It also owns huge intangible and use of 'Tata Brand, which has definitely benefited this comparable, it is directed to be excluded. No valid reason to interfere with the findings of the ld. CIT (Appeals) in excluding the above comparables from the final list of comparable - Appeal of the Revenue is dismissed.
Issues:
The appeal filed by the Revenue against the order of the ld. Commissioner of Income Tax (Appeals)-38 for assessment year 2010-11. Issue 1: Adjustment under Section 92C(2) of IT Act and comparables exclusion The Revenue challenged the deletion of adjustment under Section 92C(2) of IT Act and the direction to remove certain companies from the final list of comparables. The Tribunal noted that Accentia Technologies Ltd. was previously excluded for providing KPO services not comparable with the BPO activities of the assessee. The Tribunal also agreed with the exclusion of TCS E-Serve Ltd. and TCS E-Serve International Ltd. as comparables due to functional dissimilarity and economic benefits from Tata brand equity. The ld. CIT (Appeals) reasoning was upheld, and the Revenue's appeal on this issue was dismissed. Issue 2: Reliance on Delhi High Court decision The Revenue contended that the ld. CIT (A) erred by relying on the decision of Delhi High Court in the case of M/s. Rampgreen Solutions(P) Ltd. v CIT [2015] 377 ITR 533 (Delhi) without appreciating the facts and circumstances of the case under consideration. However, the Tribunal found no valid reason to interfere with the detailed reasoning of the ld. CIT (Appeals) in excluding the comparables, including TCS E-Serve Ltd. and TCS E-Serve International Ltd., based on functional dissimilarity and economic benefits. The appeal on this issue was rejected. Issue 3: Profit or loss as a criterion for comparables The Revenue argued that the ld. CIT (A) was not justified in holding that profit or loss can be a criterion for acceptance/rejection of a comparable. The Tribunal, after considering submissions and findings, upheld the exclusion of comparables based on functional dissimilarity, economic benefits, and lack of segmental information. The appeal on this ground was dismissed, and the Revenue's appeal overall was rejected. Separate Judgment: The order was pronounced by Shri Challa Nagendra Prasad, Judicial Member, on 16/10/2023.
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