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TMI Blog2022 (3) TMI 252X X X X Extracts X X X X X X X X Extracts X X X X ..... al year 2008-09 and profit of 0.29% in financial year 2009-10 in the BPO segment. Thus, M/s CG VAK Software Exports Ltd. (segmental) does not satisfy the criteria of being a persistent loss making company, as in 2 out of 3 past consecutive financial years the company was earning profit. Accordingly, we are of the view that the DRP has rightly directed inclusion of M/s CG VAK Software Exports Ltd. (segmental) as a comparable for benchmarking the international transactions pertaining to Provision of ITeS Services and Provision of Research Support Services . As a result, ground no. 1 raised in Revenue s appeal is dismissed. M/s CG VAK Software Exports Ltd. cannot be held to be incomparable simply on the ground of low turnover, unle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring of appeal. 3. The appellant prays that the direction of the DRP, Mumbai on the above directions be set-aside and that of the assessing officer be restored. The appellant prays that the direction of the DRP, Mumbai on the above directions be set-aside and that of the assessing officer be restored. 3. In this appeal, Revenue has challenged the inclusion of M/s. CG VAK Software and Exports Ltd. as a comparable for benchmarking the international transactions entered into by the assessee with its associated enterprises. 4. The brief facts of the case pertaining to the issue as emanating from the record are: The assessee is a subsidiary of Nomura Asia Investment (India Powai) Pte Ltd. and Nomura Asia Holding N.V. The assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mparables, for benchmarking the international transaction pertaining to Provision of ITeS Services after applying certain filters and, inter-alia, excluding M/s CG VAK Software Exports Ltd.(segmental) on the basis of persistent loss making company. The average OP/OC of these comparables was computed at 26.30%. By applying this arm s length margin, the TPO proposed an upward adjustment of ₹ 4,57,98,922 in respect of international transaction of Provision of ITeS Services . Similarly, in respect of Provision of Research Support Services , the TPO arrived at set of 3 comparables, for benchmarking the international transaction after applying certain filters and, inter-alia, excluding CG VAK Software Exports Ltd. (segmental) for si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional transactions. On the other hand, Shri Farrokh Irani, learned counsel appearing for the assessee submitted that M/s CG VAK Software Exports Ltd. earned profit in financial years 2008-09 and 2009-10 in the relevant BPO segment and therefore cannot be excluded by applying filter of persistent loss making company. 10. We have considered the rival submissions and perused the relevant material on record. In the present case, the assessee conducted its transfer pricing study analysis by comparing the relevant segment, i.e. BPO, of M/s CG VAK Software Exports Ltd. with the assessee. The TPO also did not dispute the fact that BPO segment of M/s CG VAK Software Exports Ltd. is functional comparable to the assessee. The TPO excluded th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following additional grounds of appeal: 1. The Hon'ble DRP have erred in law and on facts, by failing to note that the reinstated comparable namely; M/s. C.G. VAK Software Exports Ltd. is functionally not comparable having regard to the turnover . 2. The Hon'ble DRP have erred in law and on facts, without appreciating the fact that its turnover is less than ₹ 1 Crore as against the assessee's turnover ₹ 74.83 Cr. The appellant craves leave to add, amend, very, omit or substitute any of the aforesaid grounds of appeal at any time of hearing of appeal. 3. The appellant prays that the directions of DRP on the above ground be set-aside and that of the assessing officer be restored. 13. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factor leading to a different results in function, asset and risk analysis. We find that Hon ble Delhi High Court in Chrys Capital Investment Advisors India Pvt. Ltd. Vs. DCIT: [2015] 376 ITR 183 held that if the company is functionally comparable then same cannot be rejected on the basis of turnover. Thus, respectfully following the ratio laid down by the Hon ble Delhi High Court, we hold that M/s CG VAK Software Exports Ltd. cannot be held to be incomparable simply on the ground of low turnover, unless it is demonstrated that the functions, assets and risk are completely different and are incomparable. Accordingly, the additional grounds raised by the Revenue are dismissed. 15. In the result, the appeal by the Revenue is dismissed i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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