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TMI Blog2019 (3) TMI 1815X X X X Extracts X X X X X X X X Extracts X X X X ..... ue and fluctuating profit can be adopted in the instant case. Further the Ld A.R has pointed out that there is difference in the functions performed between the assessee company and M/s Excel Infoways Ltd. In view of the above, we agree with the contentions of the assessee that M/s Excel Infoways Ltd cannot be considered as a comparable company in the hands of the assessee. M/s R System International Ltd - We notice that the assessee has collated the financial results of the above said company for the financial year 01-04-2011 to 31-03- 2012. Further the details furnished by the assessee also show that this company cannot be categorised as persistent loss making company. Hence both the reasons given by the TPO to exclude this company would, in our view, fail. However the details furnished by the assessee require examination at the end of AO/TPO. Accordingly we restore this issue to the file of the AO/TPO for examining the details furnished by the company and if no fault is found with them, then the above said company should be considered as a comparable company. ALP of international transactions requires re-examination. Accordingly we restore the same to the file of AO/TPO for exam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly he submitted that the services provided by the assessee company are totally different from the services rendered by M/s. Excel Infoways Ltd. Accordingly, he that the functions performed by the assessee and the above said company are totally different. He further submitted that there are further differences between the assessee and the above said company, viz., (a) the entity level of employee cost of M/s. Excel Infoways Ltd., is around 13%; while employee cost of the assessee-company is above 54%. (b) the assessee is a captive service provider and is risk free, whereas M/s. Excel Infoways Ltd., has been providing services to third parties, where risk element is more. (c) the profitability of M/s. Excel Infoways Ltd., is very much fluctuating and the profit levels are declining over the years substantially. The Ld A.R submitted that all these aspects have been considered by the Pune Bench of the Tribunal in the case of M/s. Ocwen Financial Solutions Private Limited Vs. ACIT in ITA No. 2669/PUN/2016, dt. 21-01-2019 and the Tribunal, by following the decision rendered by the another Bench in the case of Emerson Climate Technologies (India) Pvt. Ltd., Vs. DCIT in ITA No. 359 2847/P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment years 2011-12 2012-13 vide para 16 17 of the order of Tribunal has excluded Excel infoways Ltd., because of its fluctuating margins shown by the said concern. The Tribunal held that the said concern i.e. Excel Infoways Limited which is in the process of closing down its ITES segment and also because of the factum of fluctuating margins, could not be selected as functionally comparable to the assessee. Following the same parity of the reasons, we hold that the said concern i.e. Excel Infoways Limited, because of different factors and also fluctuating to be excluded from final set of comparables. Accordingly, we h ld The Assessing Officer is directed to recompute mean margin of the comparables and determine ALP of the international transactions of provision of Oracle support services (ITes) by the assessee to its AEs after affording reasonable opportunity of hearing to the assessee. Thus, ground No. 3 raised in appeal by assessee is allowed. In the case of Excel Infoways Limited, a chart provided before us wherein we have seen that there is fluctuating profit margins and following the same parity of reasoning, Excel Infoways Limited because of fluctuating profit margin, is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as super normal profits. We further find the submissions of the assessee that Excel Infoways Ltd. has super normal profits during the current year has not been controverted by the Revenue. We find the Mumbai Bench of the Tribunal the case of DCIT vs. Willis Processing Services (India) Pvt. Ltd. vide ITA No.2152/Mum/2014 has upheld the order of the DRP rejecting Excel Infoways Ltd. as comparable company on the ground that the company has a super normal profit of 203.80% and low employee cost 10.02%. We, therefore, find merit in the submissions of the Id. counsel for the assessee that Excel Infoways Ltd. should be excluded from the list of comparable on account of super normal profit of the said company in the preceding year. 25.1 Further, from the order of the TPO we find he has obtained the employee cost and the sale for the 1TES segment by exercise of his powers u/s. 133(6), wherein the said company has allocated entire employee cost to IT - BPO segment with no allocation to Infra Activity segment which accounts to 49% of Excels total revenue. In our opinion, it is highly impractical that no employee has been hired by Excel for Infra Activity segment. We, therefore, find merit in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at (a) It is having different financial year and (b) It is making persistent losses The Ld DRP has also upheld the same. The Ld A.R submitted that the financial results of the above said company are published on quarterly basis and the assessee has collated the financial results for the financial year 01-04-2011 to 31-03- 2012 on the basis of the published results. As per the same, the above said company was making a profit of 2.17% on sales. He submitted that this company was making profits in earlier years also. Accordingly, the Ld A.R submitted that this company should be considered as a comparable company. 9. On the contrary, the Ld D.R submitted that the assessee is furnishing new information and the same requires examination. 10. From the submissions made by Ld A.R, we notice that the assessee has collated the financial results of the above said company for the financial year 01-04-2011 to 31-03- 2012. Further the details furnished by the assessee also show that this company cannot be categorised as persistent loss making company. Hence both the reasons given by the TPO to exclude this company would, in our view, fail. However the details furnished by the assessee require exa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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