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TMI Blog2020 (9) TMI 1051X X X X Extracts X X X X X X X X Extracts X X X X ..... lly provided for 1.47 % as per the TPO order however while computing the ALP, the TPO adopted Working Capital Adjustment of only 0.13%. We are of the view that this issue ought to have been raised in a Rectification Application. Assessee has not contended before the DRP that the Working Capital Adjustment ought to be 1.47% instead of 0.13% granted by the TPO while computing the ALP. Therefore Ground No.8 raised is rejected. X X X X Extracts X X X X X X X X Extracts X X X X ..... lly selected by the appellant needs to be excluded as the company is functionally indifferent on the facts of the case. 4. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 5. In view of the above and other grounds that may be urged at the time of the hearing, the appellant prays that the objections be considered in the interest of equity and justice." 3.1 The learned Counsel for the assessee submitted that the above additional grounds raised are not urged specifically in the original grounds of appeal at the institution of the appeal. However, these grounds do not involve any new investigation of facts otherwise on record. Therefore, it is prayed that the additional ground may be admitted for advancement of substantial cause and justice. In this context, the learned Counsel for the assessee relied on the judgment of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. Vs. CIT reported in 229 ITR 383 (SC) and decision of Hon'ble Mysore High Court in the case of Gundathur Thimmappa & Sons Vs. CIT reported in 70 ITR 70 (Mysore). 3.2. The additional grounds raised does not require investigation of any new f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rating Income Operating cost OP/OC 1 Accentia Technologies Ltd. 1,069,026,524 82,93,91,898 28.89% 2 Acropetal Technologies 494,399,332 389,706,574 26,86% 3 Cosmic Global Ltd. 62,499,615 5,69,15,360 9.81% 4 E4e Healthcare (capitaline) 613,160,587 54,56,25,872 12.38% 5 I C R A Online Ltd. (Seg.) 156,691,000 11,67,49,267 34.21% 6 JeevanScientific Technology Ltd. 1,721,400,000 1,00,86,52,592 70.66% 7 Infosys BPO Ltd. 11,291,147,909 9,57,73,24,546 17.89% 8 Jindal Intellicom (capitaline) 390,358,799 35,12,69,641 11.13% 9 Mindtree Ltd. (Seg.) 65,653,000,000 5,10,39,05,999 10.76% 10 iGate Global Solutions Ltd. 11,845,540,000 9,47,11,65,000 25.07% Average Margin 24.77% 6. The assessee filed objections to the assessment order before the DRP. The DRP directed the TPO to exclude the comparables which do not pass the turnover filter of ₹ 1 to 200 Crores. The DRP also directed the AO / TPO to check discrepancies in the figure of comparables. However the final assessment order under Section 143(3) r.w.s. 144C of the Act was passed on 27.01.2016, adopting the ALP adjustment proposed by the TPO at ₹ 1,83,99,556. 7. Aggrieved by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal order has followed the Special Bench order of the Tribunal in the case of DCIT Vs. Quark Systems Pvt. Ltd. (2010) 38 SOT 307 (Chandigarh) (SB) wherein it was held that comparable companies chosen by the assessee in the TP Study can be sought to be excluded before the Tribunal on account of functional dissimilarity or other valid point. 10. We have heard both the parties and perused the material on record. In the TP Study, the assessee has selected 3 comparables i.e. M/s. Acropetal Technologies Limited (Seg.), M/s. Accentia Technologies Limited and M/s. Mindtree Limited (Seg.). In appeal before us, assessee contents (through additional grounds) that the above comparables are to be excluded, because these comparables were included on inappropriate appreciation of facts during the TP Study. The co-ordinate Bench of Bangalore Tribunal in case of Aspect Technology Centre (India) Pvt. Ltd. (supra) and in the case of M/s. Swiss Re Shared Services India Pvt. Ltd. Vs. ACIT reported in 76 taxmann.com 22 had directed to exclude M/s. Acropetal Technologies Ltd. and Accentia Technologies Limited from the list of comparables as these companies were functionally different from ITES segment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee is justified on the facts and circumstances of the case to retract from its TP Study and content that M/s. Acropetal Technologies Limited (Seg.), M/s. Accentia Technologies Limited and M/s. Mindtree Limited (Seg.) are to be excluded from the list of comparables. 12. The assessee is contending to exclude from the list of comparables M/s. Acropetal Technologies Limited (Seg.), M/s. Accentia Technologies Limited, ICRA Online Ltd. and Jeevan Scientific Technology Limited. In similar circumstances and for the same assessment year, the jurisdictional Tribunal in the case of Aspect Technology Centre (India) Pvt. Ltd. Vs. ITO (supra) has held that the above companies are functionally dissimilar and cannot be taken as a comparable. The relevant finding of the Tribunal in the case of Aspect Technology Centre (India) Pvt. Ltd. Vs. ;ITO (supra) reads as follows : "41. We have heard the rival submissions of the parties. As far as Gr.No.14 of the revenue's appeal is concerned, the Revenue is seeking the inclusion of Acropetal Technologies Ltd., Jeevan Scientific Technology Ltd., Accentia Technologies Ltd., iGate Global Solutions Ltd. and ICRA Online Ltd. We find that the above com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal in the case of Swiss Re Shared services (India) Pvt. Ltd. v. ACIT (order dated 08.07.2016 in IT(TP)A No. 380/Bang/2016) directed the TPO to verify as to whether the TPO's filter of Sales > 1 Crore is satisfied by this company. In the present case, as can be seen from the annual report of the company the sale of the company in respect of the BPO segment amounts to only 79 lakhs, and therefore it fails the TPO's filter. As far as exclusion of Accentia Technologies Ltd., is concerned, we find that this company was excluded by the DRP for the reason that the details regarding its diverse functions were reported under one segment, without segmental details regarding the same being made available. In the absence of segmental details being made available, the comparability of the company with that of the assessee cannot be determined. In any event, Accentia is engaged in providing high end services in the nature of Knowledge Process Outsourcing ('KPO') which is evident from its annual report, whereas, the assessee is engaged in rendering routine low end information technology enabled services. Further, the said company not only does medical transcriptions, but has also ventured in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilar for the reason that the outsourced services segment of the company is engaged in the provision of high end consultancy services which cannot be compared to the assessee who is into provision of low end IT enabled services which are routine in nature. Further, the company fails the TPO's own filter of export turnover in excess of 75% of total sales as the export turnover of the company amount to only 61.88% of its sales. Therefore, the company cannot be held as a comparable to the assessee." 13. Since the profile of the assessee and that of the Aspect Technology Centre (India) Pvt. Ltd. Vs. ITO (supra) being similar and the assessment year being the same (i.e. A.Y. 2011-12), we follow the co-ordinate Bench of the Tribunal in the case of Aspect Technology Centre (India) Pvt. LTd. Vs. ITO (supra) and direct the AO / TPO to exclude M/s. Acropetal Technologies Limited (Seg.), M/s. Accentia Technologies Limited, ICRA Online Ltd. and Jeevan Scientific Technology Limited from the list of comparables. 14. The DRP in its direction dt.28.12.2015 has held that the companies with turnover of lower than ₹ 1 Crore and higher than ₹ 200 Crores should be excluded from the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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