9911796707
TMI Blog2015 (6) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned assessment year has entered into international transaction as under : Sr.No. Name & Address of the AE Description of transaction with AE Amount received/paid as per books (Rs.) 1 Occeans Connect (UK) Limited Outbound/Inbound telemarketing/Call centre service 8,32,10,579/- The TPO further noted that the assessee has charged its Associate Enterprise at cost + 12% basis. The assessee has considered TNM method to be the most appropriate method for benchmarking its transaction with AE with return on capital employed/operating profits as the appropriate PLI. However, while carrying out the comparative working, the assessee has mentioned that none of the companies for whom the data is available on the public domain can be compared with that of the assessee company as the nature of services offered, size and industry verticals of all the companies are different from that of the assessee company. The assessee also justified the working for the margin of 12% over costs by submitting as under which has been reproduced by the TPO and which reads as under: "....... III) We have studied the call center industry in india to locate a comparable case, i.e., on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sr.No. Name of the company PLI (OP/OE) 1 Maple Esolutions Ltd 34.86% 2 Saffron Global Ltd. 24.72% Average 29.79% 5. The assessee objected to the adoption of the above 2 companies for benchmarking the international transaction stating that assessee is not aware whether the selected comparable companies operate under similar contracts and similar circumstances. It was argued that Ocean Connect (I) Pvt. Ltd., is wholly owned by OCUK. All technology, hardware and software specifications have been decided by OCUK. The finance for this has also been provided exhaustively by OCUK. The assessee further stated that all the risks other than the pure risks are borne by OCUK which is also responsible for marketing, customer services, legal and financial aspects OCIPL is only executing the contract as per the instruction of OCUK. It was further argued that no such adjustment was made in the preceding years. It was argued that OCUK has incurred loss during 2004-05. 6. However, the TPO rejected the explanation of the assessee on the ground that assessee has not commented a single word about the process of finding out the comparable companies and the final 2 comparable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PO. While doing so, he held that the TPO after examining the issue in detail issued the show cause notice wherein he had given the details about the 9 comparables found during the T.P. study and why 2 are proposed to be adopted. If the assessee had any objection on that issue, the right forum and the opportunity was to have objected to before the TPO. Since the assessee has not done so he cannot be permitted to raise an issue which was specifically putforth before him by the TPO and was not objected to and therefore by implication it has to be taken to have been accepted. According to the Ld.CIT(A) the objections being raised now on the exclusion of the 7 comparables will require de novo examination of the TP issue which cannot be permitted unless it is established that proper opportunity was not granted. According to him the transaction between the assessee and the AE are between the parent company and the subsidiary and therefore the agreement is undisputedly between 2 interested parties and therefore the same cannot be given weightage as is being claimed. There is nothing on record which can show why 12% of marking is correct. He accordingly upheld the T.P. adjustment made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 13 of order has held that Mapple ESolutions was under serious indictment in fraud cases. Accordingly, following order of the Tribunal for A.Y. 2006- 07 in ITA No.8997/Mum/2010 the Tribunal had directed to exclude this company from the list of comparables for A.Y. 2007- 08 also. Referring to the said decision he submitted that the company Triton Corporation Ltd. was also involved in fraud for which it was held that the financial results of the company are not reliable. The Tribunal further held that whenever a company or its directors are found to be involved in a fraud, the Coordinate Benches have taken the consistent view of excluding the said company from the final list of comparables as the financial results are not reliable. 11. Referring to the reply given to the TPO vide letter dated 24- 10-2008 (copy of which is placed at paper book page 7) he drew the attention of the Bench to the submissions made where it was stated that Saffron Global Ltd., and Maple Esolutions are both part of Triton Corporation Ltd. He submitted that this letter was addressed to the TPO on 24-10-2008. However, the TPO has passed the order on 16-10-2008, which is prior to the reply. He submitted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost appropriate method for benchmarking its transaction with AE with return on capital employed by operating profits as the appropriate PLI. Further, although in the TP study report the assessee had identified 6 companies, however, it is mentioned that none of the companies for whom the data is available on the public domain can be compared with that of the assessee company as the nature of services offered shows that the industry verticals of the companies are different from that of the assessee company. We find the TPO after rejecting the various submissions made by the assessee during TP assessment proceedings considered Maple Esolutions Ltd. with PLI of 34.86% and Saffron Global Ltd. with PLI of 24.72% as the final set of comparables for determining the ALP of the international transactions carried on by the assessee and accordingly made upward adjustment of Rs. 1,48,03,162/- to the International Transaction. 15. It is the submission of the Ld. Counsel for the assessee that Maple Esolutions and Saffron Global Ltd. belong to Triton Corporation Ltd. which are found to be involved in fraud for which the book results of the companies are not reliable. Various Benches of the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
