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TMI Blog2018 (10) TMI 1601X X X X Extracts X X X X X X X X Extracts X X X X ..... rting only one ITES segment. DR has argued vehemently against the directions of the DRP for exclusion of Accentia Technology Limited, he was unable to point out any infirmity in the directions of the Ld. DRP. He could also not point out any judicial precedent wherein Accentia Technology Limited was retained as a comparable in case of a service company. - Decided against revenue. - ITA No. 6710/Del/2015 - - - Dated:- 30-10-2018 - SHRI N.K. SAINI, VICE PRESIDENT ANDSHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For The Appellant : Shri Kumar Pranav, Sr. DR For The Respondent : Shri Nagesh Behl, CA ORDER PER SUDHANSHU SRIVASTAVA, J.M. This appeal is preferred by the Revenue against the final assessment order passed subsequent to the directions of the Ld. Dispute Resolution Panel (DRP) -1, New Delhi for assessment year 2011-12. 2.0 Brief facts of the case are that as per the information culled out from the orders of the lower authorities, the assessee is engaged in providing Information Technology Enables Services (ITeS) such as back office, financial and fund accounting services to its AE. The assessee further leverages on IPR and other commercia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting to ₹ 18,61,066/- totaling to ₹ 2,90,95,332/-. Based on this, the Assessing Officer passed the draft assessment order on 02.02.2015 wherein in the normal computation of income, addition of ₹ 2,90,95,332/- was proposed and the taxable income was determined at ₹ 3,15,68,262/- and further, on the book profit declared by the assessee u/s 115JB of the Act, computed by the assessee at ₹ 2,05,21,759/-, an adjustment on account of transfer pricing adjustment of ₹ 2,90,95,332/- was made and the taxable book profit u/s. 115JB of the Act of was determined at ₹ 4,96,17,091/-. Subsequently, the income was assessed at ₹ 3,15,68,262/-. 2.3 The assessee filed its objections against the transfer pricing adjustment proposed in the draft assessment order before the Ld. DRP and the Ld. DRP, vide its directions dated 31.08.2015, disposed of the objections of the assessee. After objections before the Ld. DRP, eight comparables remained. The comparable excluded by the Ld. DRP was Accentia Technology Ltd. The arithmetic mean of PLI taking OP/TC was calculated at 25.51% and the final adjustment of ₹ 2,33,48,693/- was approved. 2.4 Consequentl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fosvs Limited Excluded as per the directions of ITAT 8 TCS e-Serve Limited Excluded as per the directions of ITAT 9 R Systems Internatinal Ltd (4.10) 10 Techprocess Solutions Limited 4.80 Arithmetic Mean 8.69 2.8 The proposed adjustment as per the order u/s 154 of the Act was as under:- Operational Cost ₹ 167,143,557/- ALP at a margin of 8.69% ₹ 181,663,557/- Price received ₹ 187,210,918/- Proposed adjustment NIL 2.9 This appeal of the department is against the direction of the Ld. DRP in directing the TPO to re-compute the addition on account of transfer pricing adjustment by excluding M/s Accentia Technology Limited from the final list of comparables. The grounds raised by the department are as under:- 1. On the facts and in the circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f medical transcription services, medical billing, practice management consulting services, medical coding, claims processing and software development including SAAS and implementation services. Accentia it is evident has a large portfolio of products such as instaKare a EMR software developed by Accentia that enables providers using it receive EMR incentives from federal and state agencies, Insta PMS a web based practice management solution, Insta EMR, Insta WEB, instaBill, InstaDRT, InstaScribe InstaView,- making it a product company more than a services company even though it is reporting only one segment ie ITes. Though TPO has stated that more than 84.76% receipt is from healthcare receivables and only 15.24% Sale of software, the offering of software as a service (SaaS) makes it functionally different from the taxpayer. Segmental information is also not available since taxpayer is reporting only one ITES segment. The following extract from its Annual Report is explanatory: Even though the management realised that these drastic changes in Accentia's core area of operation would affect the normal operations and would have an impact on the revenue and profitability ..... X X X X Extracts X X X X X X X X Extracts X X X X
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