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TMI Blog2019 (8) TMI 1725X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.3.2014. Excel Infoways Ltd - We find ourselves in agreement with the submission of learned Counsel of the assessee. As evident from the submissions, the said comparable has hugely fluctuating margin also. Its revenue is declining in to a great extent. Furthermore, assessee s plea is that the comparable has unreliable employees cost. That there is no separate segment for ITeS. That the company has diversified into new areas such as construction and development of property. These distinguishing features show that this entity is not a good comparable in the present case. This proposition is also supported by the case laws referred by learned counsel as above. As regards the issue of corporate support services, we accede to the request of the learned Counsel of the assessee and direct that R. Systems International Ltd. be included as comparable in terms of our direction as above and Excel Infoways Ltd. should be rejected. Transfer pricing adjustment in respect of research and development of the assessee has confined the argument that the assessee s grievance will be addressed by excluding selection of Syngene International Ltd. as comparable. It is the claim of the assessee that Syng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 4 Datamatics Financial Services Ltd. 20.84% Fails export filter 5 First source solutions Ltd. 17.55% Fails turnover filter 6 IKF Technologies Ltd. 2.92% Fails export filter 7 R systems International Ltd. 19.98% Fails year end filter 9.32% The TPO show-cause the assessee for six other comparables. Finally the TPO considered four comparables and summarized conclusion as under :- "The final set of comparable companies considered is summarized hereunder: Sr. No. Name of the Company OP/OC 1 Excel Infoways Ltd. 42.25% 2 Jindal Intellicom 15.91% 3 BNR Udyog Ltd. 24.99% 4 Microgenetics Systems Ltd. 19.24% Average 25.59% As assessee has earned OP/OC% of 15% during FY 2013-14 as against the margins of the comparables being 25.59%, the adjustment is made to this transaction as follows:- Total operating cost (in Crores) 9,56,18,773 Operating revenue of the assessee @ 15% 10,99,61,589 ALP margin @ 25.59% 12,00,87,617 Difference 1,01,26,028 In view of the above, the adjustment of ₹ 1,01,26,028/- is made to this transaction. 6. Against the above, the assessee submitted its objection before learned DRP and finally post DRP direction, followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gin of the said company comes to 14.64%. Accordingly, learned counsel prayed that the issue may be remanded back to the TPO with direction to include the said R Systems International Ltd. in final list of comparables and consider in light of the now available quarterly result from 1st April 2013 to 31.4.2014. 11. As regards plea rejection of Excel Infoways Ltd., learned counsel submitted that this comparable has highly fluctuated margin. He submitted that it has shown drastic fluctuations ranging from 232.08% in F.Y. 2010-11 to 27.17% in A.Y. 2014-15. In this regard learned counsel submitted following chart :- Particulars AY 2014-15 AY 2013-14 AY 2012-13 AY 2011-12 AY 2010-11 Operating Margin (OP/OC) 27.17% 75.90% 41.27% 251.18% 232.08% 12. Learned Counsel of the assessee further submitted that from the financial statement of this company it is seen that its revenue from the ITeS segments has been diminishing over the years, and thus the company fails the TPO's own filter of peculiar economic circumstances. Learned counsel submitted the following revenue trend of Excel Infoways Ltd. :- Particulars AY 2014-15 AY 2013-14 AY 2012-13 AY 2011-12 AY 2010-11 Operating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Furthermore, assessee's plea is that the comparable has unreliable employees cost. That there is no separate segment for ITeS. That the company has diversified into new areas such as construction and development of property. These distinguishing features show that this entity is not a good comparable in the present case. This proposition is also supported by the case laws referred by learned counsel as above. 17. Accordingly, as regards the issue of corporate support services, we accede to the request of the learned Counsel of the assessee and direct that R. Systems International Ltd. be included as comparable in terms of our direction as above and Excel Infoways Ltd. should be rejected. 18. Learned TPO shall accordingly make computation afresh after giving the assessee proper opportunity of being heard. Apropos - Transfer pricing adjustment in respect of research and development. 19. In this regard, assessee has submitted following details :- Name of the Company OP/OC Choksi Laboratories Ltd. 15.06% Saamya Biotech (India) Ltd. 1.63% Syngene International Ltd. 36.05% TCG Lifesciences Ltd. 13.47% Trijal Industries Ltd. 7.45% Vimta Labs Ltd. 15.97% Vivo Biotech ..... X X X X Extracts X X X X X X X X Extracts X X X X
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