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TMI Blog2018 (8) TMI 2021X X X X Extracts X X X X X X X X Extracts X X X X ..... g four major segments:- a) Business Information EVS India renders research services primarily to its AEs. EVS India analysts cover a range of industries including - banking, insurance, telecommunications, pharmaceuticals and bio-technology, chemicals, energy and consumer goods, EVS India utilizes primary and secondary sources to conduct its research and analysis in this segment. Essentially, the research capabilities include: industry and value chain analysis, in-depth analysis of customer segments, products, channels, technologies, competitive benchmarking, monitoring and customized newsletters, forecasting, modeling, financial analysis, database content creation, management, up-gradation of existing research, commercialization analysis and business plans. The delivery is made on demand as well as on a continuous basis. b) Intellectual Property The services under this category include the following areas: * Patents drafting and prior art search * Intellectual property asset management EVS India is involved in carrying out patent assessment, intellectual property research and analysis, patent consulting and preparing draft of patent applications to be filed overseas. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 comparables (2 from assessee's set and 10 from new companies) whose average margin was 33.14% as against that of assessee's at 20.17%. Vide order dated 09.01.2014 the TPO proposed an addition of Rs. 18,66,87,657 and the Assessing Officer vide draft assessment order after considering the said addition, proposed to assess the assessee at an income of Rs. 19,57,81,350. 5. Aggrieved by the draft assessment order, the assessee filed objections before the Dispute Resolution Panel (DRP). The DRP passed directions vide order dated 23.09.2014. The Assessing Officer passed an Assessment Order dated 14.11.2014, thereby making addition of Rs. 19,57,81,350 to the income of the assessee. 6. Being aggrieved by the Assessment Order, the assessee has filed present appeal before us. The grounds of appeal are as follows: 1. That on the facts and in the circumstances of the case and in law, the order passed by the Ld. Assessing Officer ("AO") is bad in law and void abinitio. 2. That on facts and circumstances of the case and in law, the Ld. AO/Ld. Transfer Pricing Officer ("TPO")/ Ld. Dispute Resolution Panel ("DRP") erred in making an addition of Rs. 186,687,657/-to the returned income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also erred by rejecting certain companies which were comparable by way of functions and assets in order to determine the arm's length margin applicable to the Appellant 4.4. The Ld. AO/ Ld. TPO/ Ld. DRP has erred in incorrectly computing margins of several comparable companies selected in the final comparable set 5. The Ld. AO/Ld. TPO/ Ld. DRP erred in treating provision for doubtful debts and donation expenses as an operating item instead of treating them as non-operating while computing the operating margin of the Appellant 6. The Ld.AO/Ld. TPO/ Ld. DRP erred in reclassifying expenses related to the non- unit of the Appellant which had been taken as non-operating by the Appellant to be operating expenses. Further, the Ld. AO/Ld. TPO/ Ld. DRP also erred in not considering the documentary evidence submitted to substantiate the non-operations in the said unit of the Appellant. 7. The Ld.AO/ Ld. TPO/ Ld. DRP erred in disregarding the multiple year data selected by the Appellant in the TP Documentation and in selecting the current year (i.e. financial year 2009-10) data for comparability despite the fact that at the time of comparison done by the Appellant, the complete data f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided all the submissions and relevant back up documents in support of the arm's length nature of the international transactions. However, the TPO issued a show cause notice dated 25.11.2013 indicating therein to make a transfer pricing adjustment to the international transactions related to provisions of ITES. The TPO modified the comparability analysis conducted by the assessee for determining the arm's length price for the ITES and concluded that the filters used in TP Documentation are inappropriate and suffer from various lacuna and defects and that the economic analysis conducted is inadequate and hence cannot be accepted. The TPO applied certain additional/modified quantitative filters (reject companies with different financial year ending, export revenues as a percentage of sales less than 75%, reject companies with sales turnover INR 5 crores etc.) selected by the TPO which lacked valid and sufficient reasoning and selected companies which in terms of their functions, assets and risks were not comparable to the Assessee. While applying these quantitative filters, the TPO used the updated financial information of the comparable companies pertaining to F.Y. 2009-10 which wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso, the companies finally selected by the TPO were engaged in a different set of functions as compared to that of the assessee and had related party transactions. Further the TPO wrongly computed the margins of comparable companies. The TPO wrongly computed the PLI of the assessee at 16.17% instead of 20.17% by considering provision for doubtful debts, donations and expenses relating to Noida unit as operating. Working capital adjustment to account for differences in the working capital policies of the assessee and comparables is also required. The TPO used the updated financial information of the comparables to determine their comparability and arrived at an arm's length margin. Such information was not available with the assessee at the time transfer pricing study was conducted. It was explained that the assessee is a company incorporated under the provisions of the Companies Act, 1956 and enjoyed tax holiday benefits conferred under Section 10A of the Act as per the Software Technology Park of India Scheme. Thus, there is no motive on the part of the assessee to shift the profits to any other jurisdiction. 10. The Ld. DR submitted regarding Grounds pertaining to the TP Adjustm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified as High end ITES or Low End ITES service provider. Even assessee has also not submitted its search criteria ( Para No (iv) at page no 15 of TPO order) and it is also mentioned that assessee has conducted fresh search process without assigning any reason for conducting fresh search and also not provided details of search process employed and its distinction with earlier search process for the same year. This has lead to an ambiguity in selection of comparables qua the functional profile of the assessee. On the basis of facts pointed out by the Id DR and examining the submission of the assessee before us coupled with the documents relied upon, we cannot close our eyes to this startling facts staring at us. In view of the above categorical finding of the coordinate bench for AY 2005-06 based on the T P Study report of the assessee itself now it is not possible to assume the functional profile of the assessee as low End ITES provider. Further it is also not possible to ignore the findings of the coordinate bench for AY 2007-08 further the appeal before us is AY 2006-07 which is in between year of both the above years decided by the coordinate bench. The two comparables objected b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that Ld. DR cannot be permitted to go beyond the TPOs order. Once the TPO expressly accepts the functional profile of the Appellant, then Revenue cannot be allowed to argue beyond it. In our case at para 3 internal page 3, the TPO has given a categorical finding that he has pursued the TP Study and has found everything in order. The Ld. AR submitted that the Revenue cannot improve the assessment order. It is the prerogative of the TPO to accept or reject the functional profile after considering all the relevant aspects. Once the TPO accepts it, then that becomes final qua the Revenue. The Revenue cannot step into the shoes of the TPO to undo what was not done by him. If this is accepted and given a logical conclusion, then invariably all the cases pending before the Tribunal/ High Court will require restoration to the TPO, and fresh opportunity will be given to the TPO. The Ld. AR submitted that the role of the Ld. DR, in an appeal by the assessee is limited to defending the order of the TPO. He cannot do or argue what the TPO could have done but failed to do. For the above preposition, the Ld. AR relied upon the following decision: i) CIT vs. Ms. Aishwariya K.Rai [2010] 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow * Assessee could not explain how these 2 comparables were initially taken as comparable in its own TP Study- the reason for retracting its own comparables, and initial search process of assesse is not known * There is no common comparable in AY 2006-07 and AY 2010-11, which is subject-matter of dispute. * AY 2006-07 was remanded back because the Ld. DR was against the admission of additional ground. * The Ld. DR made a statement that Dept, is in the process of filing an MA in AY 2007-08 order. However, till date no such MA has been filed and the even the time limitation has expired. It was incorrect on behalf of the Dept, to make such a statement, which has not subsequently been honoured. 12. The Ld. AR submitted that the Ld. DR submitted website print and stated that in that it is written that assesse is KPO. This is factually incorrect. The website print is of the Parent Company of the assesse and not of the assesse. In any case assesse has not accepted the order of Tribunal for AY 2006-07 and has filed appeal in High Court and MA in ITAT. The Ld. AR submitted that the case of sister concern is having identical facts. The Ld. AR submitted that the Tribunal has now rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of AY 2007-08. 13. The Ld. AR submitted the background of all cases as follows: * AY 2005-06- ITAT ruled in assessee's favour for this AY on 30.09.2016, on merits. No appeal filed by Department in High Court. * AY 2006-07- ITAT has remanded it back primarily because assesse wanted to change its own stand after 11.05.2017 and retract its own comparables. * AY 2007-08- ITAT ruled in assessee's favour for this AY on 13.12.2016, on merits. Appeal filed by Department in which both issues were raised and challenged- functional profile of assesse and comparables on merits. However, Delhi High Court vide order dated 31.10.2017, dismissed Department's appeal. * The Tribunal vide order dated 30.06.2017 has also ruled in case of sister concern, whereby case has not been remanded back (ITA No. 1467/D/2015- Group entity (Evalueserve (SEZ)). It is pertinent to note that functional profile of sister concern and of assesse are identical. In this year TP Study, TPO order and DRP order of both entities is identical. 14. The Ld. AR submitted that if all facts and evidence are on record before the Hon'ble Tribunal, a mere remand will only prolong the proceedings and lead to multiplicity o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofile and FAR analysis of both the companies are identical. 17.2 The Ld. AR submitted that the ITAT erred in inadvertently not excluding igate global Solutions Ltd., from the list of comparables, by stating that igate global Solutions Ltd. is functionally comparable to the Assessee. The Ld. AR submitted that this is factually incorrect and igate global Solutions Ltd should be excluded. The Ld. AR submitted that Tribunal in the case of EVALUESEZ (GURGAON) PVT. LTD. for AY 2010-11- ITA No. 1467/D/15 in para 15 noted that igate global Solutions Ltd. is engaged in contract centre services and IT enabled services. This is factually incorrect. In the Annual Report, just before the use of words "contract centre services and IT enabled services", it is written that igate global Solutions Ltd. is engaged in "software development services also" and all 3 are taken as one segment and thus there is no segmental reporting. Hence, the ITAT inadvertently overlooked the words "software development services" mentioned at Page 56 of Annual Report of igate global Solutions Ltd. The ITAT in its order at para 18, 24, 27 has excluded 3 comparables, ICRA Techno Analytics Ltd., TCS E-Serve International ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the TPO/AO and directions of the DRP. 19. We have heard both the parties and perused all the relevant material available on records. It is pertinent to note that the Assessee for A.Y. 2010-11 has not argued the comparables before us but only submitted the chart to that extent and submitted that the same should be considered according to the directions given by the Tribunal for A.Y. 2010-11- ITA No. 1467/D/15 in case of E-Valueserve SEZ (Gurgaon) P. Ltd. vs. ACIT order dated 30.06.2017. From the records or from the arguments, the Ld. AR has not made out clear similarities between the E-Valueserve SEZ (Gurgaon) P. Ltd. and the assessee company i.e. Evaluserve.com Pvt. Ltd. The same was not done by the TPO about the similarities between the sister concern and the assessee company. Therefore, if there is similarity between the two entities then these comparables has to be considered by the TPO/AO as per the written chart submitted before us. Otherwise, the same should be looked into afresh by the TPO and if all comparables are qualifying all the filters set out by the TPO/AO, then same should be included in the final list. Therefore, this issue is remanded back entirely to the fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions operate, including the geographical location and size of the markets, the laws and Government orders in force, costs of labour and capital in the markets, overall economic development and level of competition and whether the markets are wholesale or retail". 22. The Ld. DR further submitted that exclusion of Companies having turnover less than Rs. 5 cr is not actually a turnover filter but a filter to exclude the companies with low capital base (vis-a-vis the turnover of Rs. 127 crore of assessee). These extremely low turnover (vis-a-vis the turnover of the assessee) companies lack competitive strength, operational efficiencies and human resources. In most of such companies the distinction between the shareholders and key employees is quite vague as the key employees are mostly the shareholders thereby obliterating the economic distinction between profit and salaries. The Ld. DR submitted that exclusion of diminishing revenue companies is a reasonable filter. The ITAT Delhi in case of Navisite India (P.) Ltd. [2015] 53 taxmann.com 73 (Delhi - Trib.) held that diminishing revenue/persistent losses are not in conformity with normal operational results and, thus, the compani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stical purpose. 25. As regards Ground No. 5, relating to provisions of doubtful debts and donation expenses as an operating expenses item instead of treating them as non-operating while computing the operating margin of the assessee, the Ld. AR submitted that the TPO has taken donation and provision for doubtful debt to be an operating expense when calculating assessee's PLI. The Ld. AR submitted that donation has nothing to do with day to day operations of the Assessee and hence should be taken to be a non-operating expense. The Ld. AR relied upon the decision of Thyssenkrupp Industries India (P.) Ltd. vs. ACIT - [2013] 33 taxmann.com 107 (Mumbai - Trib.). Furthermore, TPO himself when calculating PLI of comparables has taken donation and provision for doubtful debt to be non operating in nature at page 31 (e4e healthcare), page 32 (Fortune), page 35 (Infosys BPO). Hence, the Ld. AR prayed that when TPO himself accepts that donation and provision for doubtful debt is non-operating, then same should be applied when calculating PLI of assesse and it should be taken as non-operating in nature. 26. As relates to Ground No. 5 relating to the provision for doubtful debt, the Ld. DR su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... curring and extraordinary in nature, these expenses have been excluded from the operating profit computation. This was mentioned in TP Study at page 499, 485. Also detailed submissions in this regard have been filed before TPO and DRP. The Ld. AR submitted that the comparables did not incur such extraordinary / non recurring expenses and hence for a like to like comparison, it is necessary to adjust such abnormal expenses from the computation of operating profit. The Ld. AR submitted that the very basis of Transfer Pricing Regulations is to undertake an exercise of comparability to eliminate differences, if any, by a suitable adjustment. The Ld. AR relied upon Rule 10B(3) and Rule 10B(1)(e)(ii) of the Income Tax Rules, 1962 as well as relied upon Safe Harour Rules notified by CBDT, which is now incorporated as Rule 10TA of the Income Tax Rules, 1962. The said Rules state that "operating expense" means the cost incurred in relation to international transaction. This fixed cost of NOIDA unit is not in relation to international transaction as this year business and operations of the Assessee were carried out only in the GURGAON unit and there were no operations in the NOIDA Unit and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there is a material difference on this account. He has denied only on the ground that Assessee should have been compensated by the AE without realizing that the assesse is not charging on cost plus basis. The expense have been allowed u/s 37 of the Act and the limited reason for denying a higher PLI by the TPO is that the expenses should have been compensated by the AE, which is not correct. The DRP at para 11 has stated that evidence was not made available. This is factually incorrect. All evidences/bills/details/correspondence was made available to them and is also being filed in Court today. This argument of the Revenue that AE should have shared this cost, is again rejected by Hon'ble Delhi High Court in the case of CIT vs. Transwitch India P. Ltd. ITA No. 678/2012. 30. The Ld. DR relied upon the orders of the TPO/AO and directions of the DRP. 31. We have heard both the parties and perused all the relevant records. It is pertinent to note that the DRP observed that the evidence was not produced. But according to the Ld. AR, all evidences/bills/details/correspondence were produced. Since the evidences have not been verified by the revenue authorities, therefore, it will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained in Chapter III. The introduction of the word 'deduction' inSection 10A by the amendment, in the absence of any contrary material, and in view of the scope of the deductions contemplated by Section 10A as already discussed, it has to be understood that the Section embodies a clear enunciation of the legislative decision to alter its nature from one providing for exemption to one providing for deductions. 14. The difference between the two expressions 'exemption' and 'deduction', though broadly may appear to be the same i.e. immunity from taxation, the practical effect of it in the light of the specific provisions contained in different parts of the Act would be wholly different. The above implications cannot be more obvious than from the case of Civil Appeal Nos. 8563/2013, 8564/2013 and civil appeal arising out of SLP(C) No. 18157/2015, which have been filed by loss making eligible units and/or by non-eligible assessees seeking the benefit of adjustment of losses against profits made by eligible units. 15. Sub-section 4 of Section 10A which provides for pro rata exemption, necessarily involving deduction of the profits arising out of domestic sales, is one instance of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relationship with the other business of the assessee outside these zones or units for the purposes of this provision." 17. If the specific provisions of the Act provide [first proviso to Sections 10A(1); 10A (1A) and 10A (4)] that the unit that is contemplated for grant of benefit of deduction is the eligible undertaking and that is also how the contemporaneous Circular of the department (No.794 dated 09.08.2000) understood the situation, it is only logical and natural that the stage of deduction of the profits and gains of the business of an eligible undertaking has to be made independently and, therefore, immediately after the stage of determination of its profits and gains. At that stage the aggregate of the incomes under other heads and the provisions for set off and carry forward contained in Sections 70, 72and 74 of the Act would be premature for application. The deductions under Section 10A therefore would be prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income. The somewhat discordant use of the expression "total income of the assessee" in Section 10A has alread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior period items' amounting to Rs. 9,33,39,128/- as per the audited profit and loss account. The assessee had shown "prior period items" amounting to Rs. 37,40,361/- below the line in the profit and loss account. The Ld. AR further submitted that without prejudice to the above, the prior period income of Rs. 13,90,576 was in fact the reversal of the prior period expense for A.Y. 2009-10. The benefit of the said prior period expenses amounting to Rs. 32,055,199 was not claimed in the tax computation for A.Y. 2009-10. Since the benefit of expense was not taken in the earlier year tax computation, the same should not be considered as income. 36. The Ld. DR relied upon the orders of the TPO and Assessing Officer. 37. We have heard both the parties and perused all the relevant records available. As regards Ground Nos. 10.1 and 10.2, the DRP while giving directions vide order dated 23.09.2014 at page 41 has given relief on disallowance of prior period expense of Rs. 13,90,576/-. However, this addition has not been deleted by the Assessing Officer. Therefore, we direct the Assessing Officer to delete this addition as per the directions given by the DRP. Ground No. 10.1 and 10.2 are p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h search. Further, the Ld. AO/ Ld. TPO/ Ld. DRP erred in modifying the comparable companies set adopted by the Appellant on the basis of additional/ modified quantitative filters selected by him and arbitrary statements which lacked valid and sufficient reasoning 4.1.1. Rejecting companies whose export revenues are less than 75 percent of the total revenues without taking cognizance of the Appellant's submissions 4.1.2. Rejecting companies whose sales turnover is less than INR 5 crores. 4.1.3. Rejecting companies with diminishing revenue for the period under consideration instead of being guided by functional comparability. 4.1.4. Rejecting companies with different financial year ending without taking cognizance of the Appellant's submissions. 4.1.5 Rejecting companies whose service income is less than 75 percent of the total revenues without taking cognizance of the Appellant's submissions. 4.2. The Ld. AO/ Ld. TPO/ Ld. DRP has erred by selecting certain companies which are not comparable in view of their significantly high turnover as compared to the Appellant 4.3 The Ld. AO/ Ld. TPO/ Ld. DRP has erred by selecting certain companies which were not compar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finalizing the order section 143(3) read with section 144C of the Act on the disallowances made by the Ld. AO of Rs. 13,90,576/- as prior period expense. 10.2. Without prejudice to Ground 10 and 11, the Ld. AO failed to understand that the appellant has computed the taxable income before giving any effect to prior period item in the profit and loss statement. The Ld. AO erred in appreciating the fact that the disallowance of Rs. 13,90,576/- as prior period expense would result in double taxation, which is bad in law. 11. That the Ld. AO erred in facts and in law in charging interest under section 234B, 234C and 234D of the Act. 12. That on the facts and circumstances of the case and in law, the Ld. AO has erred in initiating penalty proceedings u/s 271(l)(c) of the Act mechanically and without recording any adequate satisfaction for such initiation 43. Brief facts of the case are as under: The assessee company, during the year under consideration was carrying on the business of IT enabled service provider and was registered with the STPI as a 100% Export Oriented Unit and also claimed deduction u/s 10A of the IT Act amounting to Rs. 19,51,11,412/-. The Assessee filed retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance profits under the head. However, the Assessing Officer observed that this treatment adopted by the assessee was contrary to the provisions of the Act. The Assessing Officer observed that the assessment of the assessee for the assessment year 2007-08 was completed u/s 144C / 143(3) wherein all the brought forward losses '/ depreciation was already adjusted in that year and for the current year, the assessee company was left with no brought forward losses / depreciation. 44. As regards the comparables, the following 10 comparables are to be excluded as per the Ld. AR for A. Y. 2008-09: 44.1 Coral Hub (Vishal Information Technologies Ltd.): The Ld. AR submitted that this company is having heavy outsourcing activities as well as having different business model and this very position for this very comparable has been accepted by the Hon'ble Delhi High Court in case of Rampgreen Solutions (2015) 377 ITR 533 for this very Assessment Year. It has significant outsourcing cost and vendor payment are almost 87% and employee cost is about only 4.39%. The assessee company, on the other hand, has significant employee cost whereby cost of assessee is Rs. 85,34,53,827/-. Recently in cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he TPO/AO and the directions of the DRP. 44.6 We have heard both the parties and perused all the relevant material available on record. The assessee company is engaged in the business of providing IT enabled services to its AEs and mainly having segment relating to Business Information, Intellectual Property, Investment Research and Financial Analytics and Market Research. But Acropetal Technologies Ltd. is rendering software development and engineering design services. Though the TPO has compared "engineering design services" segment with the assessee, however, such services are different from the services provided by the assessee. Assessee is not in software development. Therefore, it will be appropriate to exclude this comparable. Therefore, we direct the TPO/AP to exclude this comparable from the final list of the comparables. 44.7 Wipro Ltd.: The Ld. AR submitted that the turnover of the assessee is Rs. 143 crores whereas turnover of Wipro is Rs. 176,581 million. The Ld. AR relied upon the decision of the ITAT in case of Samsung Heavy Industries India P. Ltd. vs. DCIT (2017) 84 taxmann.com 154 wherein it is held that turnover is a important factor to determine comparabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... management. There was extraordinary events during A.Y. 2008-09 i.e. amalgamation and acquisition. There is no segmental details available. Therefore, it will be appropriate to exclude this comparable. Therefore, we direct the TPO/AP to exclude this comparable from the final list of the comparables. 44.13 Eclerx Services Ltd.: The Ld. AR submitted that this comparable is functionally dissimilar. It is engaged in data analysis and financial services and this position for this comparable has been accepted by the Hon'ble Delhi High Court in Rampgreen Solutions for A.Y. 2008-09. Eclerx Services Ltd. is engaged in providing data analysis and data process solutions. Pricing analytics, bundling optimization, content operations, sales and marketing support, product data management, revenue management are some of its functions. This company provides tailored process outsourcing and management services in addition to multitude of the data aggregation and mining and maintenance services. There is extraordinary events during A.Y. 2008-09 that of acquisition. Eclerx Services Ltd. has been acquired UK based Igentica Travel Solutions Ltd. which gave it a new customer base. The Ld. AR relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l governments. This comparable also covers more than half a million kilo meters of all major Indian Highways. This company is engaged in providing geographical information services comprising photogrammetric, remote sensing cartonogrpahy, data conversion, related computer based services and other related services. There is an extraordinary event in this year i.e. company has acquired 100% stake in Ladya Systech Ltd. thus profit has increased from Rs. 2,18,87,251/- to Rs. 15,19,86,605/-. 44.20 The Ld. DR relied upon the order of the TPO/AO and the directions of the DRP. 44.21 We have heard both the parties and perused all the relevant material available on record. This company is engaged in providing geographical information services comprising photogrammetric, remote sensing cartonogrpahy, data conversion, related computer based services and other related services. Thus the function of this comparable company is different from the function of the assessee company. There is an extraordinary event in this year. Therefore, it will be appropriate to exclude this comparable. Therefore, we direct the TPO/AP to exclude this comparable from the final list of the comparables. 44.22 Da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that it develops information systems. Thus, it is into product development. Further, no segmental data is available. Therefore, we direct the TPO/AO to exclude this comparable from the final list of the comparables. 44.28 HCL Comnet Systems & Services Ltd.: The Ld. AR submitted that this company is functionally dissimilar. The company has two segments i.e. ITES activities and telecommunication services. The ITES activities in HCL Comnet includes data centre management services, end user computing services, managed security services which is not functionally similar to that of assessee company. This comparable also fails TPO's RPT filter. Besides there is different financial year ending as this comparable company follows year ending in June. 44.29 The Ld. DR relied upon the order of the TPO/AO and the directions of the DRP. 44.30 We have heard both the parties and perused all the relevant material available on record. The ITES activities, in HCL Comnet includes data centre management services, end user computing services, managed security services which is not functionally similar to that of assessee company. Therefore, it will be appropriate to exclude this comparable. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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