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TMI Blog2023 (8) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... I HIGH COURT] and also which has dealt with on identical issues, wherein it was held that a company cannot be held to be incomparable simply on the ground of low turnover, unless it is demonstrated that asset/risks are completely different and are incomparable. From the above observation, we hold that Infosys Technology Ltd. and ACE BPO Services should be included as comparable company for determining the arms length price of the assessee s international transaction. Ground no. 3.2 raised by the assessee is allowed. Comparables Excel Infoways Ltd. - TPO's comparable of Excel Infoways Limited has been rejected for the reason that it had not bifurcated employee cost for infra activities segment, which according to the said decisions were highly impractical and contradictory in facts or data sourced from the annual report. On identical facts, we are of the considered view that Excel Infoways Limited should be rejected as a comparable company for determining the ALP of the international transaction of the assessee company. Infosys BPO Limited be excluded as a comparable company for the reason that it was functionally not comparable and the presence of brand and extraord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d transaction as per the provision of section 92CA(1) of the Act. The TPO made an upward adjustment to the ALP pertaining to the impugned international transaction and determined the ALP at Rs. 3,38,12,201/-, pursuant to the direction given by the ld.DRP after disposing of the objection raised by the assessee before the ld.DRP. The following addition has been made by the A.O. as per the provision of section 92CA(4) of the Act: Sr. No. Particulars Amount (in Rs.) 1 ITES Services 3,28,79,224/- 2 Interest Free Loan (U.K.) 4,66,400/- 3 Loan (Germany) 1,57,657/- 4 Corporate Guarantee 308,920/- Total Rs. 3,38,12,201/- 4. The assessee is in appeal before us, challenging the impugned order. 5. Ground nos. 1, 2, 2.1, 2.2 and 3 are general in nature and requires no separate adjudication. 6. The learned Authorised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Services GmbH. Technical Services Rendered 1,31,67,274 Transaction net margin method 2 Datamatics Global Services Inc. Technical Services Rendered 27,82,90,760 Transaction net margin method 3 Datamatics Global Services Pty. Ltd. Technical Services Rendered 26,61,689 Transaction net margin method 4 Datamatics Global Technologies GmbH Technical Services Rendered 8,23,156 Transaction net margin method 5 Datamatics Global Technologies Ltd. Technical Services availed 19,12,496 Transaction net margin method 6 Datamatics Infotech Ltd. Technical Services Rendered Technical Services Availed 1,26,53,208 87,91,389 Transaction net margin method ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntellicom Limited 3 Coalition Development Systems (India) Pvt. Ltd 4 ICRA Techno Anayltics Ltd. 5 ICRA Online Ltd. (segment info) 6 Caliber Point Business Solutions Ltd. (segment info) 7 Ace BPO Services Ltd. 8 E4e Healthcare Solutions Ltd. 9 Omega Healthcare Management Services Ltd. 10. The lower authorities have rejected the said comparables. The ld. AR contended that the comparability of the companies has to be made with reference to the functional analysis which according to the assessee was not disputed by the TPO nor was the functionality of the comparables distinguished by the lower authorities. The ld. AR further contended that the said comparables have performed similar functions as that of the assessee and that the rejection of these comparables by the TPO on application of lower filter at Rs. 5 crores was not justifiable. The ld. AR in addition to this state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We would like to place our reliance on the decision of the co-ordinate bench in the case of Cadence Design Systems India (Pvt.) Ltd. (supra) which has considered the decision of the Hon'ble Delhi High Court in the case of Chryscapital Investment Advisory India Ltd. (supra) and also which has dealt with on identical issues, wherein it was held that a company cannot be held to be incomparable simply on the ground of low turnover, unless it is demonstrated that asset/risks are completely different and are incomparable. 13. From the above observation, we hold that Infosys Technology Ltd. and ACE BPO Services should be included as comparable company for determining the arms length price of the assessee s international transaction. Ground no. 3.2 raised by the assessee is allowed. 14. Ground no. 3.6 pertains to the comparables Excel Infoways Ltd. and Infosys BPO Limited which were included by the TPO for determining the ALP of the international transaction of the assessee company. The assessee contended that Excel Infoways Limited was making super normal profits and has high fluctuations in profits as compared to earlier years. The assessee further stated that the company has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) for this proposition and has also relied on Goldman Sachs Services Pvt. Ltd. [2020] 117 taxmann.com 535 (Bang) and Brigade Global Services Pvt. Ltd. vs. ITO [2013] 143 ITD 59 (Hyd.) The assessee has also relied on the decision of Baxter India Pvt. Ltd. (supra) which held that as the company has not allocated employee cost to infrastructure activity segment, the same was said to be highly impractical as 49% of its total revenue was from its infrastructure activities. It was held in Motorola Solutions Pvt. Ltd. [2014] 48 taxmann.com 248 (Del), wherein a comparable was rejected on contradiction of the facts or data sourced from its annual report and also as per the information obtained u/s.133(6) of the Act. The co-ordinate bench has rejected Excel Infoways Limited as a comparable in case of Willis Processing Services Pvt. Ltd. (supra) for the reason that it had not allocated employee cost to infra activity which amounted to 49% of its total revenue. On this observation, the tribunal has rejected the said comparable as being unreliable and not to be used to compute employee cost for ITES segment. The relevant extract of the said decision is cited hereunder for ease of referenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... global sourcing and procurement capabilities which has an impact on client s business, efficiency and effectiveness which has resulted in increase in the business. It is also submitted by the assessee that the said company possess brand value which has a high influence in the market, business operation and margins earned which cannot be compared with that the assessee company. It is also stated that some directors of the company have provided managerial services at no cost which if accounted would have resulted in the reduction of the profit. The assessee further stated that the LPO business of the said comparable company had considerable traction during the impugned year. The assessee prayed that the said comparable company should be rejected on the above mentioned grounds. The lower authorities have held that the acquisition of the Australian company is not an amalgamation and that the same has not impacted the profitability of the company. Further, it was held that the free managerial services rendered by some of the directors would have negligible impact on the profitability compared to the higher turnover of the said company. Further, the DRP held that there is nothing on reco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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