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TMI Blog2016 (4) TMI 1279X X X X Extracts X X X X X X X X Extracts X X X X ..... MAN, ACCOUNTANT MEMBER For The Assessee : Mr. Tarun Chaturvedi For The Revenue : Smt. Pallavi Agarwal ORDER PER D. MANMOHAN, V.P. This appeal by the assessee company is directed against the order passed by the DCIT based on the DRP proceedings and the adjustments proposed by the TPO. 2. The assessee company is a wholly owned subsidiary of C3i Inc., USA and engaged in providing business process outsourcing services (BPO) in the field of healthcare administration to it s A.E. It is registered under the Software Technology Park of India Scheme. For the year under consideration, it declared NIL income under the normal provisions of the Act and admitted ₹ 1,74,90,433 under section 115JB of the Act. Though the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the assessee and conducted a new search for comparables and selected 11 companies as comparables after analysing the data base, annual reports etc., The TPO chose TNMM as the most appropriate method and arrived at arms length price. 3.2. The DRP observed that some of the companies are not comparable in terms of Functions performed, Assets employed and Risks assumed (FAR). It is also the contention of the assessee that the assessee operates in a risk mitigated environment and hence the profit margin would be less. 4. Having regard to the objections against inclusion of companies having abnormal turnover and profits, the DRP excluded Infosys BPO, (having high turnover of ₹ 1130 crores) and also TCS eServe Ltd., (which has tu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y i.e., functions performed, assets employed and risk analysis (FAR analysis), following the methodical benchmarking process and accordingly excluded certain companies having diminishing revenues/persistent loss and also those companies which are having abnormal margins, much volume, peculiar economic circumstances etc., It was mainly contended that the assessee is engaged in providing ITES to its overseas AE and it had no untoward motive of deriving any tax advantage by manipulating its price. 5.1. During the course of hearing, the Ld. Counsel for the assessee submitted that though several grounds were urged before the Tribunal, the arguments are limited to taking into consideration of three comparables i.e., Accentia Technologies Ltd., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said company shows that it provides healthcare receivables, management services, medical coding, billing and collections, data migration services and also engaged in development of software products and software services and some innovative products like GSR and medical transcription automation system which streamlines work flow for hospitals. However, the assessee i.e., C3i Support Services is engaged in providing BPO services. Similarly, the nature of business of Eclerx Services Ltd., was also highlighted and the Bench observed that the company offers solutions that include data analytics, operations management, audits and reconciliation which need to be classified as high end KPO whereas the assessee is a BPO. It was further observed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h it. Presence of brand commands premium price and the customers would be willing to pay for the services of the company. This plea was accepted by the Tribunal by observing that the presence of the aforesaid factors will take Infosys BPO Ltd., out of the list of comparables. Drawing support from the ratio laid down therein, Ld. Counsel for the assessee submitted that even in the case of TCS eServe International Ltd., the brand value plays a key role in earning extraordinary profits and hence, it should not be taken into consideration. In this regard, he adverted our attention to pages 237 and 238 of paper book i.e., Director s Report of TCS eServe International Ltd., wherein it was stated that F.Y. 2009-10 is the second year of operations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and thus, he supported the order passed by the TPO/DRP. 8. Joining the issue, Ld. Counsel for the assessee referred to pages 150 and 173 of the paper book to submit that the Tribunal has excluded Eclerx Services Ltd., mainly on the ground that it is functionally different being KPO whereas the assessee is a BPO. Similarly, he referred to page 223 of the paper book to submit that in the case of Accentia Technologies Ltd., also the assessee persistently contended that the assessee is an end to end BPO whereas Accentia Technologies Ltd., is into KPO and the cost profit matrix of BPO is totally distinct from the other comparables. In addition thereto, it was submitted that there were unusual economical activities which was an additional rea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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