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TMI Blog2021 (2) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... /2018 - - - Dated:- 5-2-2021 - R. S. Syal, Vice President And S.S. Viswanethra Ravi, Member (J) For the Appellant : Ajit Jain For the Respondents : Amrita Misra ORDER Per S. S. Viswanethra Ravi , JM This appeal by the assessee filed against the final assessment order dated 15-10-2018 passed by the Assessing Officer (AO) u/s. 143(3) r.w.s. 144C(13) of the Act for assessment year 2014-15. 2. The assessee raised grounds A, B and C. The Ld. AR, Shri Ajit Jain submits that the assessee is not interested to prosecute grounds A1, B3, 4, 6, 7, 8 and C9 and requested to treat the same as not pressed. Accordingly, the said grounds raised by the assessee are dismissed as not pressed. 3. Ground Nos. B2 and B5 raised by the assessee challenging the action of AO/TPO for selecting companies as comparables without considering their functions undertaken and picking the high margin companies by applying arbitrary filters. 4. The brief facts of the case are that the assessee is a company engaged in the business of design, development and manufacturing of automotive parts. The assessee undertaken international transactions with its AE amongst which the relevant transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 4 Pentamedia Graphics Ltd. 15.31 4.94 6. The assessee was show caused why the above companies cannot be considered as comparables in design engineering segment. The assessee objected to the inclusion of Eclerx Services Ltd. and submitted the said company is engaged in providing data analytics and data process solutions and contended the said company is not functionally comparable to the assessee. The assessee also placed reliance on judicial precedents in respect of picking up a company having high profit making. According to the TPO the said company qualifies the filter of selecting the companies whose turnover is 10 times lower or 10 times higher than the turnover of the assessee. Rule 10TA(g) defines data analytics and design engineering service as KPO. The TPO also relied on the Web page of the Eclerx Services Ltd. and held it is engaged in the business of the KPO and rejected the objection of the assessee for exclusion of Eclerx Services Ltd., consequently by placing reliance on the directions of DRP rendered in A.Y. 2013-14 held Eclerx Services Ltd. is functionally comparable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancials. The nature of functions undertaken by the Eclerx Services Ltd. and the assessee are very different and no where the Eclerx Services Ltd. considered as comparable. Further, he argued that the Eclerx Services Ltd. has a different revenue model as it outsources most of its services unlike the assessee. Further, he referred to Chairman's Message at page No. 168 of the paper book and Management Discussion and Analysis at page No. 185 of the paper book. He argued that the Eclerx Services Ltd. entirely different functions that of assessee as it has entered into banking and financial services, sales and marketing services and cable and telecommunication services which clearly shows the dissimilarity with the functions of assessee. Further, he submits that the assessee provides Computer Aided Design, Computer Aided Engineering services for interior systems components for the automotive industry and Product Process Validation which clearly itself shows different from the functions carried out by the Eclerx Services Ltd. 9. The Ld. AR submits that this Tribunal in assessee's own case in earlier year for A.Y. 2011-12 held the Eclerx Services Ltd. is not comparable by plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d No. 4 raised by the assessee challenging the action of AO/TPO/DRP in not rejecting the Eclerx Services Limited as comparable. 18. Heard both the parties and perused the material available on record. We note that the assessee is seeking rejection of Eclerx Services Limited. We note that the TPO in its order at pages 631 to 635 and the DRP at pages 45 to 49 of the paper book has included Eclerx Services Limited on the basis of that the assessee is a KPO as it is engaged into engineering design services and Eclerx Services Limited is also a KPO. The main contention of Ld. AR is that Eclerx Services Limited is functionally not comparable to the assessee. We note that the Eclerx Services Limited is engaged in providing data analytics and processed outsourcing services which is evident from the Director's Report and Management Discussion and Analysis sections of the Annual report at page 822 of the paper book. 19. We note that the Eclerx renders services to its clients with two market-focused units Financial Services (including trade processing support, reference data maintenance, contract risk review, marine and exposure management, expense management, accounting and fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the similarity in grouping of KPO companies, the assessee's company is good enough for identifying a good comparable. This view is not approved by the various decisions cited by the Ld. Counsel for the assessee before the Tribunal. We have already extracted the relevant portion from the judgments of the Hon'ble High Court as well as the orders of the Pune Bench of the Tribunal that for identifying a good comparable, one has to go into the characteristic of the functions rendered by the comparables. The assessee is undisputedly engaged in the business of designing and development of chip, integrated circuits and storage components and allied services for its holding company AMCC, USA, whereas (i) Eclerx Services Limited is engaged in data analytic and (ii) Genesys International Corporation Limited is engaged in geographical information system services . These functions are entirely different from that of the business of designing and development of chip, integrated circuits and storage components etc. 22. In the light of above, the Eclerx Services Limited is not comparable and the Assessing Officer/TPO is directed to exclude for the purpose of benchmarking of the ..... 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