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TMI Blog2020 (12) TMI 766X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income Tax Act 1961, (hereinafter referred to as the Act ), pursuant to the directions of the Learned Dispute Resolution Panel (ld. DRP in short) u/s.144C(5) of the Act dated 30/10/2013 for the A.Y.2009-10. 2. At the outset, we find that the ld. AR submitted that the ld. DRP had excluded one of the comparables i.e. M/s. Excel Infoways Ltd., from the list of comparables while benchmarking the international transactions carried out by the assessee. He submitted that against this direction of ld. DRP for exclusion, the revenue is in appeal before this Tribunal vide Ground No.iv. Ld. AR further submitted that if this ground is decided in favour of the assessee by accepting to the order of the ld. DRP in respect of exclusion of Excel Infoways Ltd., the margins of the assessee would be at arm s length warranting no adjustment thereon. He has also filed a chart in this regard in e-mail before this Tribunal. Hence, with the consent of both the parties, we proceed to adjudicate the issue as to whether the ld. DRP was justified in excluding M/s. Excel Infoways Ltd., from the list of comparables in the facts and circumstances of the instant case. 3. We have heard the rival sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjustment to the international transaction carried out by the assessee. 3.2. From the above, it could be seen that assessee on a conservative basis had sought to argue the exclusion of Excel Infoways Ltd alone from the list of comparables. We find that the margin of Excel Infoways Ltd considered by the ld. TPO was 243.69%. We find that this Tribunal in the case of Zenta Pvt. Ltd., in ITA No.1623/Mum/2014 dated 04/09/2019 for A.Y.200910 under similar facts and circumstances held that Excel Infoways Ltd is to be excluded from the list of comparables. The relevant operative portion of the said order is reproduced herein for the sake of convenience:- 3.1. At the time of hearing, both the parties before us mutually agreed and stated that if one of the comparables namely Excel Infoways Ltd., which has been directed to be excluded by the ld. DRP from the list of total comparables chosen by the ld. TPO is held in assessee s favour, then the adjudication of the other comparables would become academic in nature as the assessee would fall within +/-5% range. Accordingly, as decided by both the parties before us the bench decided to adjudicate the exclusion of comparable i.e. M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taining details of activities carried out by M/s. Excel Infoways Ltd., downloaded from the website on 11/11/2013 wherein it is engaged in rendering following services:- Funds Management Overseas Property Collections Business, Financial e-media Transcription Inbound sales Outbound sales Enquiries Application Credit Inspection of underwriting Funding Out Collections Inbound Sales Outbound Sales Exhibition Enquiries Inspections Trips After Sales Customer Support Third Party Collection Early Out Collection Primary Collection Secondary and Later Stage Collection Prelegal Collection Skip Tracing Financial Brief News Recording Transcripted in literature in TAT Q A Sessions Excel Infoways is a leading company in providing collections customer relations service to various clients since 2003. v) Based on this, the ld. AR argued that the afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur company with respect to BPO/ITES Reply of EIL: In reference to details of breakup of services rendered, kindly note that we provided BPO/ITES enabled services to our client outside India only. ii. Please provide the details whether any revenue has been obtained from the services other than BPO/ITES by your company. Reply of EIL: Kindly note that our revenue was from BPO/1TES enabled services only, did not have any other income. iii. Please provide detailed break-up of all the activities included under BPO/1TES of your company. Reply of E1L: Kindly note that we were providing Telecom fulfillment solution services as well as financial services to our clients. iv. Please provide the details whether your company is engaged in activities which require outsourcing. Reply of EIL: Kindly note we had our own employees, we were providing BPO/ITES enabled services to our clients outside India only. 4.2. We find that the ld. TPO in his final remarks in the remand report had stated that M/s. Excel Infoways Ltd. and the assessee company are engaged in the business of providing BPO/IT enabled services and hence are functionally compara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious activities carried out by M/s. Excel Infoways Ltd. 4.4. The ld. DR on the contrary argued that all the services rendered by M/s. Excel Infoways Ltd. are only support services to the main activity of IT enabled serves and hence, are to be construed on a bundled manner and 100% functional similarity with that of the assessee company cannot be expected for the purpose of comparability. We are not inclined to accept to these arguments of the ld. DR for the simple reason that business auxiliary services are completely different form IT enabled services. From the various services rendered by M/s. Excel Infoways Ltd. since 2003 onwards as detailed hereinabove, it could be safely concluded that the said company was also predominantly rendering financial services which had been categorized by them as IT enabled services, whereas in the assessee s case, it is rendering routine IT enabled services which are listed in paragraph 2.1 of our order hereinabove. 4.5. We also find lot of force in the argument made by the ld. AR wherein he submitted that in the transfer pricing assessment proceedings for A.Y.2010-11, the very same comparable i.e. M/s. Excel Infoways Ltd. was soug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 BNR Udyog Ltd (Seg) 40.10% 40.10% 40.10% 2 Cameo Corporate Services Ltd 14.42% 14.42% 14.42% 3 Cosmic Global Ltd 40.68% 40.61% 40.61% 4 Optimus Global Services -3.52% -3.85% -3.52% 5 Proximus Knowledge Technology Services Pvt Ltd 28.80% 28.80% 6 Sparsh BPO Services Ltd 3.98% 3.98% 3.98% 7 Triton Corp Ltd -22.17% Additional comparables introduced by the TPO 8 AOK In House BPO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nucleus CIS and ITES Ltd 18.78% 18.78% 1 8.78% 25 One Two Three Greetings India Pvt Ltd 1 .77% 1 .77% 1 .77% 26 Sundaram Business Services Ltd 2.45% 2.45% 2.45% 27 Surevin Internet Services Ltd., 3.14% 3.14% 3.14% Arithmetic Mean 28.45% 14.15% 19.84% ZPL's margin 14.63% 14.63% 14.63% Upper range of 5% 20.36% 20.36% 20.36% Whether at ALP Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .07 ----do---- 7 . Firstsource Solutions Ltd. 6.58 6.58 6.58 ----do---- 8. Karvy Data Management Services Ltd. 4.97 4.97 4.97 ----do---- 9. Mphasis Finsource Ltd. 20.56 20.56 20.56 ----do---- 10. Nucleus GIS ITES Ltd. 18.7 8 18.7 8 18.7 8 ----do---- 11. Sundaram Business Services Ltd. 2.45 2.45 2.45 ----do---- 12. Surevin Internet Services Ltd. 3.14 3.14 3.14 ----do---- 13. Accentia Technologies Ltd. 43.44 - - ----do---- 14. Maple Esolutions Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary services as well as ITeS. The Director's Report shows that the company has a variety of offerings such as customer care services including telecom fulfillment centre, providing technical services, financial services, healthcare, outbound sale: and marketing, knowledge management, etc. Hence, it is functionally not comparable to the Respondent. (Refer Pg. 176-177 204 of PR) The profit margin of this company is 243.69% (abnormal profit). It has an emplovee cost of 8.82% as against Respondent: employee cost of 60.22%. In view of the above, the company deserves to be excluded from the final set of companies as has been rightly held by the Ld. DR? on Pg. 12 of the DRP Directions. In support of the above contentions, the Respondent wishes to rely upon the following decisions - i) M/s. Zenta Pvt. Ltd. (ITA NO. 1623/Mum/2014 ors.) (Mum. Trib.) (AY 2009-10) (Para 3.1-4-9, internal Pgs. 5-16) [Pgs. 5-16 of case law compilation (CLC)] 2) Goldman Sachs Services (P.P Ltd. vs. ITO [2015](56 taxmann.com 130) (Mum. Trib.) (AY 2009-10) (Para 7, Pgs. 4-5) [Pgs. 32-33 of CLC] 3) DCIT vs. Willis processing Services (India) P. Ltd. [20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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