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TMI Blog2018 (11) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... ce with the international transaction undertaken by the assessee company during the year under assessment on the basis of its comparability vis-à-vis comparable companies, by providing working capital adjustment to the assessee in view of the provisions contained under Rule 10B(1)(e) also. Matter is required to be restored to the TPO to provide the assessee company the benefit of working capital adjustment for transfer pricing adjustment. Therefore, we remand back this issue to the file of the TPO/AO for proper adjudication. - I.T.A .No. 84/DEL/2016 - - - Dated:- 29-10-2018 - SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER For The Appellant : Sh. Manoneet Dalal Vishu Goel, Advs and Sh. Arvinder Singh, CA For The Respondent : Sh. A. Sreenivasa Rao, Sr. DR ORDER PER SUCHITRA KAMBLE, JM This appeal is filed against the order dated 29/10/2015 passed by DCIT, TPO-2(2), New Delhi u/s 143(3) read with Section 144C (3) of the Income Tax Act, 1961, for Assessment Year 2011-12. 2. The grounds of appeal are as under:- Appeal against the appellate order under Section 143 (3) read with section 144C of the Income &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound of appeal either before or at the time of hearing of this appeal as they may be advised. That, the above grounds are independent and without prejudice to each other. 3. The assessee Company is incorporated under the Companies Act, 1956 in March 2009 and is a wholly-owned subsidiary of Markit NV, the Netherlands. The assessee Company is engaged in the business of financial data processing and analysis including assimilation to the overseas client. Return of income declaring ₹ 4,09,11,339/- was e-filed by the assessee Company on 19/11/2011. The case was processed u/s 143(1) of the Income Tax Act, 1961. Subsequently, notice u/s 143(2) of the Act dated 11/9/2012 was issued to the assessee Company and duly certified. Thereafter, detailed questionnaire u/s 142(1) calling for furnishing details/information on 22/4/2013. Again notice u/s 143(2) and 142(1) was issued on 17/11/2014 and duly served upon the assessee. In compliance to the aforesaid notices, the Chartered Accountant and Authorized Representative of the assessee Company appeared from time to time for representing the case of the assessee and furnished the details/information requested from the assessee which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 29/10/2015, the assessee filed appeal before us. 6. The Ld. AR submitted that the assessee is challenging one comparable to be excluded and three comparables to be included. As regards exclusion of Eclerx Services Ltd., the Ld. AR submitted that this comparable is functionally dissimilar. The Ld. AR submitted that it provides services through two business units i.e. Financial Services and Sales and Marketing Services. Under the Financial Service Segment, Eclerx Services Ltd. provides professional services including consulting, business analysis and solution testing. It provides a broad suite of services that allow its clients to operate on a day-today basis including trade processing, reference data, accounting and finance, and expense management activities. Further, under Sales and Marketing Services, Eclerx Services Ltd. provides web content management and merchandising execution, web analytics, social media moderation and analytics, search engine analytics support, CRM platform support, lead generation, customer data management, supply chain and channel analytics, price catalogue competitive intelligence and broader data collection, cleansing, enriching and re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nagement activities. Further, under Sales Marketing Services, Eclerx Services Ltd. provides web content management and merchandising execution, web analytics, social media moderation and analytics, search engine analytics support, CRM platform support, lead generation, customer data management, supply chain and channel analytics, price catalogue competitive intelligence and broader data collection, cleansing, enriching and reporting. While the assessee company is engaged in the business of financial data processing and analysis including assimilation to the overseas client. In fact, the assessee company is providing services to this comparable company. Thus, this comparable company is functionally dissimilar to the assessee company and has to be excluded. Therefore, we direct the TPO/AO to exclude this comparable. 7. As regards inclusion of 3 comparables, the Ld. AR submitted as under:- 1) Omega Healthcare Management Services Pvt. Ltd.: The Ld. AR submitted that annual report of the company is not available in the public domain; however, the financial data of the company is available in the databases. The Ld. AR submitted that when, the TPO is relying financial data ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the final list of the comparables. Needless to say, the assessee be given the opportunity of the hearing by following principles of natural justice. 10. As regards ground relating to working capital adjustment, the Ld. AR relied on the decision of Demag Cranes Components [2013] 30 Taxmann.com 364 (Pune-Trib.) 11. The Ld. DR relied upon the assessment order as well as the order of the Tribunal. 12. We have heard both the parties and perused the material available on record. As regards the issue of working capital adjustment the same needs to be verified properly by the TPO/AO. The appropriate transfer pricing adjustment can only to be made in consonance with the international transaction undertaken by the assessee company during the year under assessment on the basis of its comparability vis- -vis comparable companies, by providing working capital adjustment to the assessee in view of the provisions contained under Rule 10B(1)(e) also. So, we are of the considered view that the matter is required to be restored to the TPO to provide the assessee company the benefit of working capital adjustment for transfer pricing adjustment. Therefore, we remand back this issue to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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