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TMI Blog2022 (3) TMI 1476X X X X Extracts X X X X X X X X Extracts X X X X ..... : Dr. Sunil M. Lala ORDER PER S. RIFAUR RAHMAN (AM) 1. This appeal is filed by the assessee against order of the Dispute Resolution Panel-I, Mumbai [hereinafter in short DRP ] dated 02.11.2013 passed u/s. 144C(5) of the Income-tax Act, 1961 (in short Act ) for the A.Y. 2009-10. 2. Assessee has raised following grounds in its appeal: - 1. On the facts and circumstances of the case, the learned AO, based on the directions of the DRP, erred in making an upward adjustment of Rs 3,34,57,335 in determining the arm s length price (ALP) of the international transaction of Information Technology Enabled Services (hereinafter referred to as ITES) rendered by the Appellant. 2. On the facts and circumstances of the case, the learned AO, based on the directions of the DRP, erred on the following grounds: 2.1. In rejecting the transfer pricing (TP) analysis undertaken by the Appellant for computing the ALP in relation to the ITES provided by the Appellant and applying the knowledge process outsourcing (hereinafter referred to as KPO) search to arrive at the ALP; 2.2. In not accepting the economic analysis undertaken by the Appellant in accordance with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered as a comparable to the appellant engaged in providing ITES Services and thus ought to be excluded from the list of comparables. It is submitted that the Hon'ble Tribunal in the case of Morgan Stanley Advantage Services Private Limited (MSAS) (having identical business model as the Appellant and with whom the Appellant has merged) for the same A.Y. 2009-10 has excluded the said company viz. Cosmic Global Limited from the list of comparables. 4. At the outset, Ld. AR of the assessee submitted that assessee has raised additional ground seeking exclusion of Cosmic Global Limited from the list of comparables. After considering both the counsels, we admit the additional ground as the said additional ground is involving factual ground, wherein, the facts are on record and do not require fresh investigation, following the decision of Hon ble Supreme Court in the case of National Thermal Power Co., Limited v. CIT [229 ITR 383 (SC)]. 5. Ld. AR of the assessee submitted that the issue in appeal has been considered by the Co-ordinate Bench of this tribunal in assessee s own case for the immediately preceding A.Y. 2008-09 and decided the issue in favour of the assessee and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consistently confirmed the same. The major part of the income is from translation charges and functions of this comparable is different to the assessee company, therefore consistent with the earlier assessment year, we also direct the Assessing Officer/TPO to exclude this company from the list of comparables. 9. At the time of hearing, Ld. AR submitted that assessee is pressing the grounds of appeal only relating to inclusion and exclusion of comparables, accordingly, Ground No. 2.5 and 2.6 are pressed and all other grounds of appeal are not pressed Accordingly, all other grounds of appeal are not adjudicated at this stage. 10. Coming to the issue of comparable to be included, Ld. AR of the assessee brought to our notice that the issue in appeal has been considered by the Co-ordinate Bench of this Tribunal in assessee s own case for the A.Y. 2008-09 in ITA No 6522/Mum/2014 dated 12.08.2021 and in the case of Morgan Stanley Advantage Services Pvt. Ltd., in ITA.No. 625/Mum/2014 for the A.Y. 2009-10 dated 10.05.2021 and it was directed to include the comparable R System International Limited and Allsec Technologies. Ld. DR has fairly accepted the submissions of the Ld.AR. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f these companies have suffered loss in the current assessment year the average of two years showed the robust positive figure. Hence, it cannot be said that these are persistently loss making company. Furthermore, we note that these comparables have been duly accepted as comparable in earlier assessment year by the officer himself. Hence, taking a contrary stand by the transfer pricing officer without giving a specific reasoning is not sustainable. Accordingly, we direct for inclusion of these comparables. 12. Even in this assessment year, the Transfer Pricing Officer has rejected the above companies holding that they are not fit to be considered in the category of KPO and treated it as ITES. Since the aforesaid issues are squarely covered by the decision of the Tribunal rendered in assessee s own case for the assessment year 2007 08 and 2008 08, as indicated above, consistent with the view taken therein, ground no.2 and additional ground are disposed off protanto and consequently, the other grounds of appeal became academic in nature, hence, left un adjudicated. Therefore, ground no.2, and additional ground raised by the assessee are accordingly allowed. 13. Respectful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the decision of the Hon ble jurisdictional High Court in case of Rampgreen Solutions Pvt Ltd vs CIT (supra), due to its different business model the company cannot be treated as comparable. Therefore, the aforesaid three companies cannot be treated as comparable to the assessee. 16. Further in the case of Morgan Stanley Advantage Services Pvt. Ltd., v. DCIT in ITA.No. 625/Mum/2014 dated 10.05.2021 for the A.Y. 2009-10, p the Coordinate Bench held as under: - - 5. Considered rival submissions and perused the material on record. In view of the detailed submissions made by the leaned Counsel for the assessee on the issue of admitting the additional ground raised by the assessee, we hereby admit the same for adjudication on merit .. 9. Considered the rival submissions and perused the material on record. Insofar as the issue arose from ground no.2 is concerned, as it transpires from the record available before us, we notice that during the relevant assessment year 2009 10, the Transfer Pricing Officer has re characterized the assessee as KPO as was done by him in the assessment year 2008 09 and consequently, the Transfer Pricing Officer rejected / excluded the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contention of the Ld. D.R and have not found favor with the contention of the assessee that as the aforesaid comparable had carried out an acquisition of a U.K based company, therefore simpliciter on the said count, without establishing that such acquisition had rendered the aforesaid comparable functionally different, could not be accepted as a factor for exclusion of the said comparable, but then we are of the considered view that the fact as averred by the Ld. A.R before us that the aforesaid comparable, viz. Eclerx Services Limited was providing high end data analytics and customized process solution and was a leading Indian provider of KPO services, which substantially varies from a low end ITES service provider, while for the assessee was engaged in providing BPO services, viz-processing of insurance claims and insurance premiums and data processing service for which it employed ordinary graduates, therefore the aforesaid comparable, viz. Eclerx Services Limited was functionally different from the assessee company, and as such could not be selected as a comparable. We find that the DRP had vide its order dated 27.11.2015 passed in the case of assessee for AY 2011-12 had acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e excluded from the list of comparables. 33. Considering the decision of Delhi High Court in Rampgreen Solution (P.) Ltd (supra) and Tribunal in Willis Processing Services (India) (P.) Ltd. (supra), we direct to exclude Eclercx Services from the comparables. Coral Hubs Ltd. 38. The ld. AR submitted as we recorded earlier that Coral Hubs Ltd. was outsourcing its significant part of its operation as evident from its low employee cost and have substantial different business model compared to assessee and prayed for exclusion. The ld. DR has supported the inclusion. The TPO while making benchmarking taking his view that this comparable company is in the business of IT enabled services to overseas markets and included in the list of comparable. The ld. CIT(A) confirmed the action of TPO holding that the TPO conducting benchmarking after calling information under section 133(6) and is benchmarking analysis are correct. We have noted that, though the ld. AR has relied upon a number of decisions of Tribunal/co-ordinate bench. We have noted that in a recent decision of Tribunal in Willis Processing Services (I) Pvt. Ltd. (supra) on comparability, the Tribunal held as u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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