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TMI Blog2021 (8) TMI 1272X X X X Extracts X X X X X X X X Extracts X X X X ..... ned senior counsel appearing for the assessee submitted, if some of the comparables selected by the TPO are excluded, in any case, which are not comparables to the assessee, as held in assessee's own case in other assessment years and even in case of various other assesses, the profit margin shown by the assessee would be within the acceptable range of the average profit margin of the rest of the comparables. However, before we proceed to deal with the substantive issue relating to selection/rejection of comparables, it is necessary to briefly deal with the relevant facts. 4. The assessee, a resident company, is a wholly owned subsidiary of Deutsche Asia Pacific Holdings Pte Ltd, Singapore. As stated by the transfer pricing officer (TPO), the assessee is basically engaged in providing data processing and back office support services, including, payment processing, data processing, documentation processing, investigation related services and trade central processing services to its overseas associated enterprises (AE). During the year under consideration, the assessee had entered into various international transactions with its AE. However, insofar as provision of data processing a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as subsequent years either by the Tribunal or by the Dispute Resolution Panel (DRP) or even by the TPO himself. Thus, he submitted, these comparables have to be excluded. As regards eClerx Services Ltd, Mold-tek Technologies Ltd, Informed Technologies India Ltd are concerned, they are not comparable to a ITES/BPO service provider, as held in case of various other assessees involved in similar line of business. In this context, he drew our attention to the relevant judicial precedents. Insofar as Caliber Point Business Solutions Ltd and HCL Comnet Systems Ltd (Seg) are concerned, learned senior counsel submitted, they cannot be treated as comparable, as they do not qualify the related party transaction (RPT) filter. Finally, he submitted, I services India Pvt Ltd cannot be considered as comparable as it is functionally dissimilar and financial data relating to this comparable are not available in public domain. Further, he submitted, this comparable has shown super normal profit in the year under consideration which makes it incomparable. In support of his contention, the learned counsel relied upon the following decisions:- 1. DBOI Global Services Pvt Ltd (2018) 98 taxmann.com 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee for excluding this company is, the company is having more than one segment. Whereas, separate segmental data is not available in the public domain. Further, he submitted, the employee cost of the company works out to 22.78% of the total cost as compared to assessee's employee cost of 48.27%. Further, the turnover of the assessee is more than eighty times of the turnover of the company. It is observed, in assessee's own case for assessment year 2006-07, the Tribunal, while considering the acceptability of the aforesaid company as a comparable, has rejected this company as a comparable due to low employee cost. It is further observed, due to non availability of segmental data and low employee cost, this company was rejected. 7.2 In case of DBOI Global Services Pvt Ltd (supra), Stream International Services Pvt Ltd (supra), Zavata India Private Limited (supra), there being no material difference in the factual position in the impugned assessment year, following the decision of the co-ordinate bench in assessee's own case as well as in case of other assesses, as referred to above, we exclude this company from the list of comparables. Infosys BPO Ltd 7.3 This company is so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eptionally high turnover compared to assessee's turnover. On perusal of facts on record, we find, as against the turnover of the assessee at 114.12 crores, the turnover of Wipro Limited (Seg) for the year under consideration is Rs. 13,684 crores, almost 120 times of assessee's turnover. Notably, in assessee's own case in assessment year 2005-06, the Tribunal, while deciding the comparability of this company with the assessee in ITA No.812/Mum/2012 dated 24-08-2016, taking note of the excessively high turnover of the comparable in comparison to assessee has excluded it. Further in a number of decisions of the co-ordinate benches rendered in case of other assesses, this company has been excluded not only because of high turnover but also because of its brand value, size, etc. In this context, we may refer to the following decisions:- 1. DBOI Global Services Pvt Ltd (supra) 2. Capgemini India Private Ltd vs ITO (supra) 3. CIT vs Pentair Water India Pvt Ltd (supra) 4. Stream International Services Pvt Ltd (supra) 5. Pole to Win India Pvt Ltd vs Dy.CIT, Cir.11(3), Bangalore (supra) 6. Calibrated Healthcare Systems India Pvt Ltd vs ACIT(OSD), cit-1, New Delhi (supra) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the total cost works out to meager 8.41% as compared to assessee's employee cost of 48.27%. Thus, these factors, in our view, do not make the company comparable to the assessee. In this regard, we find support from the following decisions of the Tribunal:- 1. Tech Book Electronics Services P Ltd (supra) 2. Maersk Global Centres (India) Private Limited vs ACIT (supra)) 3. Stream International Services Pvt Ltd vs The ADIT (International Taxation)-7(2), Mumbai (supra) 4. Pole to Win India Pvt Ltd vs Dy.CIT, Cir.11(3), Bangalore (supra)) 5. Capgemini Business Services (India) Ltd vs ACIT (supra) 6. Capital IQ Information Systems (India) Pvt Ltd vs Dy.CIT(Int.Taxation), Hyderabad (supra) 7. M/s Avineon India Pvt Ltd vs Dy.CIT,Cir.1(1), Hyderabad (supra) 8. Zavata India Private Limited vs The DCIT, Cir.3(3), Hyderabad (supra) 9. Cognizant Technology Services Pvt Ltd vs ACIT,Cir.1(2), Hyderabad (supra) 7.10 Accordingly, we direct the assessing officer to exclude this company from the list of comparables. Informed Technologies India Ltd 7.11 The assessee has sought removal of this company on the ground of its functional dissimilarity, scale of operation a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ought removal of this company due to functional dissimilarity, super normal profit and non availability of contemporaneous data in public domain. On a perusal of facts on record, we find that this company is engaged in providing remote data entry services to its clients in USA. Further, it has reported a profit margin of 50.27% for the year under consideration, which is exceptionally high in terms of industry norms. Due to the super normal profit earned by the company for the year under consideration, the Tribunal excluded it from being considered as a comparable in case of Pentair Water India P Ltd vs Addl CIT (supra), which is for the very same assessment year. Further, in case of Willis Processing Service India Pvt Ltd (supra), which is also for the very same assessment year, this company has been excluded due to non availability of contemporaneous data in public domain. Keeping in view the aforesaid decisions of the Tribunal, we exclude this company from the list of comparables. 8. Learned Senior Counsel for the assessee has submitted before us that with exclusion of these eleven companies, assessee's margin would be within (+)/(-) 5% of the arithmetic mean of the rest of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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