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TMI Blog2013 (3) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of computing ALP. In Maersk Global Service Centre (India) (P.) Ltd. (2011 (11) TMI 465 - ITAT MUMBAI)it has held that Vishal Information Technologies Ltd. has to be excluded from the list of comparables of ITES company as it has outsourced its services. Thus the AO directed to exclude this company also from the list of comparables. For Apex Knowledge Solutions Pvt. Ltd. the assessee submitted it is functionally different as it is provides services such as E-publishing knowledge based services etc. - TPO has rejected the objection on the ground the assessee has not considered the verticals or functional lines during the search process conducted by it therefore, it is not proper to make any objection on this basis now - Held that:- Merely because, the assessee itself has not considered the said filter while making its TP study it cannot be said that it cannot raise such an objection before the TPO. It is the TPO who has adopted this company as comparable. On such adoption, the assessee has every right to raise the objections as regards the functional differences between the assessee and comparable. As brought out by the assessee, the assessee is in the TT enabled services, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same, the DRP confirmed the proposal of the assessing authority and assessment order was accordingly passed. Aggrieved, the assessee is in appeal before us. The DRP confirmed the order of the assessing authority as far as the adjustment to the ALP towards IT enabled services is concerned but recommended that no adjustments are required to be done in respect of the international transactions relating to software development services segment. 4. Aggrieved by the adjustment made under the ITES segment, the assessee is in appeal before us. Though the assessee has raised as many as 19 grounds of appeal, the main grievance is against the transfer pricing adjustment and the comparables adopted by the TPO. 5. At the outset, the learned counsel for the assessee has drawn our attention to the order of the DRP dated 20.9.2010 relating to adjustment to be given for the under utilization of the capacity. He submitted that the DRP has clearly noted that the comparables have a average of 80% utilization levels as compared to the assessee which is at 58%. However, while computing the adjustment, at page 7 para 7, the DRP has taken the capacity under utilization of the comparable companie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 156 (3) Teva India (P.) Ltd. v. Dy. CIT [2011] 44 SOT 105 (Mum.) (URO) (4) ITO v. Saunay Jewels (P.) Ltd. [2010] 42 SOT 4 (Mum.) (URO) (5) Sapient Corporation (P.) Ltd. v. Dy. CIT [2011] 46 SOT 56 (Delhi) (URO) (6) Genisys Integrating Systems (I) (P.) Ltd. [IT Appeal No.5263 (Delhi) of 2010] 9. The next comparable, the assessee has objected to is (3) Vishal Information Technology Ltd. The objection of the assessee is that the employee cost of this company is less than 25%. The learned counsel for the assessee submitted that the IT enabled services are basically dependent upon the human resources and, therefore, any company with employee cost less than 25% can not be compared with an IT enabled services company. He submitted that in the case of Asstt. CIT v. Maersk Global Service Centre (India) (P.) Ltd. [2011] 133 ITD 543 case of Vishal Information Technology has been considered and was directed to be excluded. He submitted that the TPO has himself held that employee cost filter is very much applicable and through Vishal Information Technologies Ltd. having outsourced some of its services and having employee cost of 25% cannot be considered as a comparable. He has al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee seeks to be excluded is (6) Allsec Technologies Ltd. According to the learned counsel for the assessee, Allec Technologies Ltd., has been experiencing extra ordinary events. During the financial year 2005-06, Allsec had gone for a IPO during the relevant previous year and also the company had entered into a share purchase agreement with shareholder of B2K Corporation Pvt. Ltd., which is engaged in the business of inbound and outbound voice, email chat services and information technology services. Therefore, due to these extra ordinary events, the profits of the said company are not ascertainable and, therefore, the company has to be excluded. 13. The leaned DR on the other hand supported the orders of the authorities below and submitted that the assessee had been given ample opportunity of raising the objections before the TPO and the DRP and the authorities have considered the objections of the assessee before passing the order. Thus, according to him, the assessment order is to be confirmed. 14. Having heard both the parties and having considered the rival contentions, we find that the only dispute before us is with regard to the comparables adopted by the TPO. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as it has outsourced its services. In view of the same, we direct the AO to exclude this company also from the list of comparables. 16. As far as (4) Apex Knowledge Solutions Pvt. Ltd., is concerned, we find that the assessee had taken objections before the TPO that it is functionally different, as it is provides services such as E-publishing knowledge based services etc. But TPO has rejected the objection on the ground the assessee has not considered the verticals or functional lines during the search process conducted by it and, therefore, it is not proper to make any objection on this basis now. We are not able to agree with the finding of the TPO as confirmed by the DRP on this issue. Merely because, the assessee itself has not considered the said filter while making its TP study; it cannot be said that it cannot raise such an objection before the TPO. It is the TPO who has adopted this company as comparable. On such adoption, the assessee has every right to raise the objections as regards the functional differences between the assessee and comparable. It is the bounden duty of the TPO to consider the said objections in accordance with law. As brought out by the assessee, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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