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TMI Blog2018 (4) TMI 637X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y 2011-12 on 28.11.2011 admitting total income of ₹ 2,77,32,647. During the assessment proceedings, the AO observed that the assessee has entered into international transactions of providing technical support services to its AEs. Therefore, a reference was made to the TPO for determination of the ALP of the said international transaction. The TPO, after going into the profile of the assessee, observed that the assessee is engaged in providing back office data creation, content development and support services in relation to analysis, content search and projection for all types of businesses. Thus, he observed that the assessee is providing ITES services to its group companies and that the assessee has adopted TNMM as the most appropriate method and has arrived at its margin at 15.09% as against the margin of the comparables at 14.38% and stated that the international transaction is at Arms Length. The TPO was however, held that the method of search process adopted by the assessee suffers from defects resulting in selection of inappropriate comparables and rejection of companies that are appropriate comparables. He therefore, rejected the TP document of the assessee and ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Systems Ltd as a comparable, which is not objected by the Respondent before DRP. 4. That on the facts and circumstances of the case, the learned AO/DRP has erred in rejecting the following companies outright, when only margin rectification was sought by the Respondent before DRP, viz, ( i) e4e Healthcare Business Services Pvt. Ltd.; and ( ii) Mastiff Tech Pvt. Ltd. 5. That on the facts and circumstances of the case, the learned AO/DRP has erred in excluding the above companies without providing any show cause notice or a reasonable opportunity of being heard to the Respondent, completely disregarding the provisions of the Act and in utter disregard to the principles of natural justice. 6. That on the facts and circumstances of the case, the learned AO/DRP has erred in excluding the companies not objected, when the Transfer Pricing Officer [ TPO ] had already examined and decided the issues based on the facts and material available on record. 7. That on the facts and the circumstances of the case and in law, the AOIDRP erred in confirming the TPO's stand of treating the provision for bad and doubtful debts and bad debts written off as non-o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh the material on record, we find that the following are the final comparables taken by the TPO: i) Accentia Technologies Ltd ii) Acropetal Technologies Ltd (Seg.) iii) Cosmic Global Ltd iv) Crossdomain Solutions P Ltd v) e4e Healthcare vi) eClerx Services Ltd vii) Informed Technologies Ltd viii) Infosys BPO ix) Jeevan Scientific Technologies Ltd x) Jindal Intellicome Ltd xi) Mastiff Tech P Ltd xii) Microgenetic Systems Ltd xiii) TCS E-serve Ltd 7. From these companies, we find that both the TPO and the assessee has accepted the following companies as comparable to the assessee: i) Cosmic Global Ltd ii) Informed Technologies Ltd iii) Jeevan Scientific Technologies Ltd 8. As regards the following companies, both the assessee as well as the Revenue agree that they are comparable to the assessee: i) e4e Health Care ii) Mastiff Tech P Ltd iii) Microgenetic Systems Ltd 9. The assessee s only objection was that the correct margin of the two companies i.e. e4e Healthcare and Mastiff Tech Ltd is to be adopted for comparative analysis. 10. Since both the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gth and the Tribunal has held that they are not comparable to the assessee therein. Therefore, according to him, on the basis of the said decision, exclusion of these companies is to be upheld. We have gone through the order of the Tribunal, to which the learned A.M. is a signatory. The Tribunal at Paras 12,16, 18 and 23 had held as under: ii. Acropetal Techologies Ltd (Seg): 12. This company is included by TPO but excluded by DRP for the following reasons: Having considered the submissions, on perusal of the annual report, it is noticed by us that the assessing officer has considered the revenue from the engineering design segment. Hon'ble ITAT, Bangalore in IT(TP)/A/1678/Bang/2012 in the case of Global E Business Operations, directed to exclude the above :- 18 -: S P Capital IQ (India) Pvt Ltd., company by observing that 'we have considered the submission of the learned counsel for the assessee, on perusal of note no.15 of notes to accounts, which gives segmental revenue of this company, it is clear that the major source of the income for this company is from providing engineering design services and information technology services. The function perf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r: Having considered the submissions, on perusal of annual report, it is noticed by us from the schedule to the financial statement that the company is engaged in the business of providing information technology - enabled services/business processing outsourcing service, primary to the Citi group companies introduced globally the transaction processing include the broad spectrum of :- 24 -: S P Capital IQ (India) Pvt Ltd., activities involving the processing, collections, customer care and payments in relation to the services offered by Citi group to its corporate and retail clients. As per the annual report, the company also provide technical services involving software testing, verification and validation of software at the time of implementation and data centre management activities, which makes the company functionally incomparable with the assessee, accordingly, we direct the assessing officer to exclude the above company from comparables . Even though, Ld. DR has argued vehemently for inclusion, we do not see any reason to include as this company is functionally different and being excluded in many cases in earlier years as well being unique in the functionalit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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