9911796707
TMI Blog2023 (8) TMI 1420X X X X Extracts X X X X X X X X Extracts X X X X ..... under: - Nature of services Amount (Rs.) Margins OP/TC as per segmental given assessee [%] Receipts from Software Development Services and Information Technology enabled services 11,75,21,88,443 17.50 Receipts from Marketing Support services 61,84,66,224 11.00 Purchase of fixed assets/ Stores and consumables 89,91,09,292 At cost Interest paid on ECB Loan 1,71,51,363 At cost Reimbursement of expenses 1,47,67,917 At cost Contribution to employee stock option and purchase plan (ESPOP) 14,33,95,470 At cost Recovery for stock option taxes for employees 30,61,78,439 At cost ECB loan Borrowed 65,90,00,000 3. At the time of hearing, Ld. AR of the assessee brought to the notice of the bench, letter dated 17.03.2023 in which assessee has submitted before the bench that the appeal is preferred by the assessee against the adjustments made by the Assessing Officer in the final Assessment Order. The transfer pricing adjustments have been made in connection with provision of Software Development Services (SDS), Information Technology Enabled Services (ITeS), mark-up on ESPP costs and Marketing Support Servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time objecting to exclusion of Spectrum Business Solutions Limited. 8. With regard to comparable Axis Integrated System Limited, Ld. AR submitted that TPO has included this comparable based on the directions of Ld. DRP in A.Y. 2013-14. Similarly, he brought to our notice Page No.57 of the Ld. DRP order in which assessee has submitted the objections before Ld. DRP and Ld. AR brought to our notice nature of the business and "FAR" analysis and reasons for rejection of the same to be considered as comparable, for the sake of clarity we are reproducing chart as under:- Sr.No. Name of the Company Brief Nature of business conclusion 1. Axis Integrated System Limited Failing the export to sales filter of 75% As per the note 25 in the financial statements the company does not have any export earnings and thus the said company fails the export turnover filter applied by the learned TPO. * Failing turnover filter One of the filters proposed to be applied by the TPO is Reject companies which having turnover of 10 times lower and 10 times higher of the turnover of the company. * Functions/ Business: The has earned substantial income/revenue from liasoning activities. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets. Further, he brought to our notice this company has earned income from commission on installation and commissioning at the customers designated places. Therefore, the revenue includes commission income also, therefore this company is employing different business module and in this regard he brought to our notice following cases in which this company is rejected as comparable by the different benches of the Tribunal. i. Salesforce.com India Private Limited v. DCIT [TS-140-ITAT- 2021 (Bang)-TP] (24- 03-2022). ii. Sabre Travel Technologies Private Limited vs. DCIT (2021) 130 Taxmann.com 217 (Mumbai - tribunal) (14-07-2021). iii. Mavenir India Pvt. Ltd (earlier known as Comverse Network System India Pvt. Ltd.), vs. DCIT 141 taxmann.com 160 (Delhi - Trib.) [17-05-2022] iv. Arm Embedded Technologies Pvt. Ltd., vs DCIT 143 taxmann.com 403 (Bangalore - Trib.) [30-08-2022] v. Citrix Systems India (P.) Ltd. vs. DCIT 118 taxmann.com 588 (Bangalore - Trib.) [20- 03-2020] vi. Hyundai Rotem Company vs. ACIT (International Taxation) 120 taxmann.com 466 (Delhi - Trib.) [02-03-2020] vii. Electronics for Imaging India Pvt Ltd vs. DCIT 70 taxmann.com 299 (Bangalore Trib.) [24-02-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 dated 14.10.2020 wherein the bench has directed to include this comparable by observing that similar functions being performed by both the companies. 15. Further, he brought to our notice Page No. 93 of the Paper Book which is the segmental profit and loss statement of the assessee company in which the segment financials are reported for MSS in which assessee has declared revenue of ` .61,84,66,224/- and recorded employee cost expenses of ` .37,78,61,725/- (61%). Therefore, he prayed that the cost structures are same to the Spectrum Business Solutions Limited hence this has to be included as comparable of the assessee company. 16. On the other hand, Ld. DR agreed that most of the grounds are covered by the MAP proceedings. With regard to submissions of the Ld.AR to exclude Axis Integrated System Limited as comparable he relied on the findings of the lower authorities which is a covered issue. With regard to Killick Agencies and Marketing Limited he brought to our notice Page No. 108 of the Paper Book wherein the functions of the company are reported by the assessee itself has considered for inclusion which are similar to the functions performed by the assessee. Therefore, now a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of the aforesaid and the submission made by the Learned Authorised Representative for the Appellant during the course of the hearing (recorded in paragraph 4 above), all the other grounds raised by the Appellant are disposed as being academic." 20. With regard to Killick Agencies and Marketing Limited, we observe that this company is acting as agent for various foreign principals for sale of Dredgers, dredging equipment, Steerable Rudder Propellers, Maritime and aviation lighting, Acoustic communication equipment etc., and it also offers after sales services. Further, this company is involved in exports of micro switches, engineering items, acoustics items & head-sets. It has declared income which consist of commission and services income and it has not bifurcated the commission and other services income. Therefore, there is no segmental reporting of agency and other services. We also observe that it has recorded the royalty expenditure which is almost 30% of the income earned by them. We observe that Coordinate Bench in the case of Sabre Travel Technologies private limited v. DCIT (supra) in ITA.No. 7306/Mum/2017 dated 14.07.2021 has excluded this comparable with the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imited and Killick Agencies and Marketing Limited as comparable. 22. Coming to inclusion of Spectrum Business Solutions Limited as comparable, we observe that Spectrum Business Solutions Limited is an Internet marketing company inter-alia engaged in admin support services like Virtual Assistant and research and management etc. Whereas the assessee services are as under: - * "During the year under consideration, the assessee had rendered certain marketing support services to its AEs i.e. Juniper Hong Kong and Juniper Netherlands. As per the agreement entered into between Juniper India and its AEs, for undertaking the said services Juniper India had earned a mark-up of 11 percent on its cost. * Under this segment the assessee is involved in gathering market data, providing analysis of the competitive positions and identifying potential markets and customers where Juniper Hong Kong and Juniper Netherlands could make entry with its range of products. The assessee also identifies potential business opportunities and events to disseminate information regarding the AE's products and services. The significant portion of AES sales in India is carried out through distributors and ch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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