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TMI Blog2019 (6) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... this company without recording any finding. Therefore, we deem it appropriate to restore this comparable to the file of the TPO with the direction to implement the direction of the DRP and pass a speaking order on this comparable. Savi Inforservice (India) Pvt. Ltd. - The assessee is praying for inclusion of this company on the ground that it is functionally similar and the DRP has directed that the same be included if it passes all the filters as applied by the TPO but again this company has not been included without any reason being assigned by the TPO. We direct that the TPO/AO should give effect to the directions of the DRP in respect of this comparable also and decide on its inclusion/exclusion by passing a speaking order. Microgenetics Systems Ltd. - TPO has excluded this company on the ground that the related party transaction filter was not met. On the other hand, it is the contention of the assessee that data with respect to the related party transaction was duly filed before the TPO. In view of the contradictory stand by the assessee and the department, we deem it appropriate to restore this comparable also to the file of the TPO with the direction to re-examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2 During the year under consideration, the company had also entered into international transaction of providing IT enabled services to its UK based AE and the value of transaction was ₹ 5,33,73,181/-. The assessee had used Transactional Net Margin Method (TNMM) to determine the Arm s Length Price (ALP) of the said transaction. As per the assessee, this transaction was at arm s length. Since the value of international transaction exceeded ₹ 5 crore, reference to the TPO was made u/s 92CA of the Act. 2.3 The assessee had selected 16 companies as comparables by using OP/TC to determine the Profit Level Indicator (PLI). The average margin of the comparables as worked out by the assessee was 12.91% whereas the assessee had worked out its own margin at 10.94%. Based on this analysis, the assessee had concluded that its international transactions were at arm s length. The TPO accepted the methodology adopted by the assessee and accepted TNMM as the Most Appropriate Method but rejected nine comparables out of the 16 as selected by the assessee and introduced two additional comparables and worked out the mean operating margin at 25.77%. Based on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered/taken into account, then there was no justification for excluding Infosys BPO as comparable company. (vi) Without prejudice to 1 (i) to 1 (iv) above, there was no justification for not allowing economic adjustments for differences on account of risks assumed by the Appellant Co. vis-a-vis the comparable Cos (vii) inappropriately computing the operating margins of comparables and the Appellant and not considering the facts/submissions/ made before them to provide detailed line by line margin computation/working of the adjusted average OP/OC percentage of 21.07% of the 8 comparable companies as finally retained by TPO/AO pursuant to directions of DRP; (viii) not giving effect to the rectification order dated 13.03.2015 as passed by DCIT, TPO- 2(1)(1) 2. That the addition on account of upward transfer pricing adjustment of ₹ 48,92,246/- as made by the authorities below are arbitrary, unjust, illegal and at any rate, without prejudice, very excessive. That the penalty proceedings u/s 271 (1)(c) of I.T. Act as initiated on the basis of TP Adjustment are illegal. 3.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and payments in relation to the services offered by Citigroup to its corporate and retail clients. It was further submitted that technical services involve software testing, verification and validation of software at the time of implementation and data centre management activities. Our attention was drawn to page 450 of the paper book (Director s report and annual accounts) wherein these activities were mentioned. It was submitted that this company is functionally dissimilar to the assessee company which is a low-end BPO providing transaction and data centre management services only to its UK based AE and, thus, is a captive service provider. It was further submitted that this company had a huge brand value because of its close connection with the Tata Group and further that this company had a huge turnover and goodwill being one of the giants of the industry and, therefore, it could not be considered as a comparable to the assessee company. It was submitted that another giant company Infosys Pvt. Ltd. was excluded on a similar reasoning in assessee s own case for assessment year 2010-11. Reliance was also placed on another order of ITAT Delhi Bench in the case of K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he TPO in this regard and further that the Ld. DRP had also reached the same conclusion after considering the observations of the TPO and no interference was called for. The Ld. Sr. DR placed extensive reliance on the observations of the TPO in respect of all the four comparables and vehemently argued that the TPO and the Ld. DRP had given a finding of fact which need not be disturbed. 5.0 We have heard the rival submissions and perused the material available on record. We now take the comparables one by one. i) TCS E-serve Ltd. It is the assessee s contention that this company deserves to be excluded as a comparable company for the reason that it is functionally dissimilar to this company. It is undisputed that the assessee company provides IT enabled services to its UK based AE only and, thus, it is a captive service provider whereas TCS E-serve Ltd. provides transaction processing as well as technical services. It is further seen that TCS E-serve Ltd. provides a broad spectrum of activities involving the processing, collections, customer care and payments in relation to the services offered by Citigroup to its corporate and retail c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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