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TMI Blog2018 (7) TMI 1757X X X X Extracts X X X X X X X X Extracts X X X X ..... edit period, whereas subsequently, the credit period varied and it has arbitrarily determined, the rationale of which is not forthcoming from the order. Moreover, as relied upon by the Ld. Counsel, the impact of receivables is already been factored in the working capital adjustment by the TPO and as there are no borrowed funds or actual interest liability charging of interest does not arise. We are of the opinion that the six months period granted by assessee is reasonable and so no interest can be levied just because the amounts are shown as outstanding in the balance sheet at the end of the year. The various case law stated above will support assessee contentions. Consequently, we cancel the interest levied and allow assessee’s contentions. Grounds are considered allowed. - I.T.A. No. 503/HYD/2017 - - - Dated:- 25-7-2018 - SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER For The Assessee : Mrs. Vandana Bhandari And Mr. Prashant Khandelwal, ARs For The Revenue : Smt. Pallavi Agarwal, CIT-DR ORDER PER B. RAMAKOTAIAH, A.M. : This is an appeal by assessee against the order of the Assessing Officer (AO) u/s. 143(3) r.w.s.144C o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of certain comparables and rejecting objections TPO has selected 10 companies, whose average ALP has come to 24.96% and after making working capital adjustment of (-) 1.69%, the adjusted margin was determined as 26.65%, as against assessee s PLI of 20.49%. Ld. Counsel made a detailed submissions on the comparables objected to and also on the issue of interest levied on receivables. These contentions are dealt with at the relevant point of time, however, the objection with reference to treating assessee as KPO, whereas it was treated as ordinary BPO in earlier years, has been dealt with before dealing with other issues. 4. Ld. Counsel referred to the order of DRP to submit that the DRP has wrongly considered the activities of the C3i Inc, USA which were extracted in para V(B) by the AO, to state that assessee is involved in a mixed activity of high end and low end BPO services, whereas assessee is only rendering low end BPO services as in earlier years. It was submitted that classification taken by the TPO and DRP are basically not correct and submitted that assessee should be treated as ordinary BPO in analyzing the comparables. 5. We have considered the above. Before ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gies Ltd., 11.16 2 Datamatics Global Services Ltd., 16.84 3 Eclerx Services Ltd., 61.37 4 e4e Health Care 13.73 5 Informed Technologies India Ltd., 7.10 6 Infosys BPO Ltd., 34.68 7 Jindal Intellicom Ltd., 1.98 8 Microgenetic Systems Ltd., 7.01 9 TCS E-Serve Ltd., (Merged) 65.82 10 Cross Domain Solutions Pvt. Ltd., 29.88 Total 249.59 Average 2 4.96 Out of these comparables, assessee has objected to TCS EServe Ltd., Infosys BPO Ltd., Eclerx Services Ltd., and Accentia Technologies Ltd. These are considered as under: TCS E-Serve Ltd: 7. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO/TPO is directed to exclude the above company from the list of comparables. Infosys BPO Ltd., 8. The objections on inclusion of this company is that the said company is providing diversified services including high end KPO and LPO, product based solutions and BPO services and therefore, functionally not comparable to assessee. It also had extraordinary scale of operations running to ₹ 1129.11 Crores and it has acquired another company during the year which makes it to peculiar economic circumstances. Presence of Infosys brand value and significant expenditure on selling and marketing provides for a different FAR analysis and therefore, the company is not comparable to assessee. 8.1. After considering the rival contentions and also on noticing that the DRP itself had excluded the above company in AY. 2010-11 and ITAT also excluded in the AYs. 2008-09 and 2009-10, we are of the opinion that Infosys BPO Ltd., cannot be compared to the assessee-company on functional profile as well as on extraordinary circumstances. Similar view was also taken in the following cases: i. Agnity India Technologies (ITA No. 1204/2011) Hon'ble High Court of Delhi; ii. Agni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3/- on the reason that receivables are separate international transaction and the closing balance of receivables was to the tune of ₹ 14.44 Crores there by providing capital financing. TPO applied the rate of 14.75% on closing balance of receivables and proposed addition of ₹ 1,95,25,119/-. When assessee objected to the same, the DRP allowed part relief directing the AO to apply specified interest rates as confirmed in earlier years after allowing credit period of thirty days. 12.1. It was the objection of assessee that credit period of 180 (One Hundred and Eighty) days is laid for collection of receivables as per work orders between assessee and its AE and further when working capital adjustment has been made, wherein impact of receivables was already been factored in, separate addition on account of receivables does not arise. Ld. Counsel relied on the following case law in support: i. Pr. CIT Vs. Kusum Healthcare Pvt Ltd., (ITA No. 765/2016, dt. 25-04-2017) Hon'ble High Court of Delhi; ii. Kusum Healthcare (Delhi ITAT); iii. Xchanging Solutions Ltd (Bangalore ITAT ITA No. 1294 (Bang) of 2012 166 (Bang) of 2014); iv. Dell International Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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