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TMI Blog2022 (11) TMI 1480X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.06% 3 Cameo Corporate Services Ltd. Prowess 9.77% 4 Cosmic Global Ltd. Prowess 34814% 5 Delta Services (1) Pvt. Ltd. Prowess 6.67% 6 Informed Technologies India Ltd. Prowess 12.01% 7 Infosys B P O Ltd. Prowess 24.29% 8 K N M Services Pvt. Ltd. Prowess 13.69% 9 Optimus Global Services Ltd. Prowess -1.85% 10 Sparsh B P O Services Ltd. Prowess 5.97% 11 Crossdomain Solutions Pvt Ltd Capitaline 28.32% 12 Omega Healthcare Management Services Pvt Ltd Capitaline 9.34% 13 B N R Udyog Ltd. (Medical Transcription) Prowess (Segmental) 38.33% 14 In House Productions Ltd. (Healthcare Division) Prowess (Segmental) 4.32% 15 Timex Group India Ltd. (Timex Global Services) Prowess (Segmental) 8.38% Mean 14.27% 3. A reference u/s. 92CA(2) of the Act was made to TPO-II(8), Mumbai and accordingly, TPO called for the relevant information and the basis of selection of comparables. After considering the submissions of the assessee TPO has rejected the same and proceeded to adopt the entity level PLI of the assessee for the purpose of determination of arm's length price of the international transaction of providing IT support, applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icroland Ltd., -3.79 (xiii). Professional Management Consultants Pvt. Ltd. -12.07 8. TPO determined the PLI of the tested party at 9.22% which is lesser than the requisite mean of the comparables 33.38%. Accordingly, he determined the arm's length price at Rs..9,57,97,111/- and determined arm's length price adjustment of Rs..1,73,52,363/-. 9. Aggrieved assessee preferred objection before DRP-II, Mumbai and DRP after considering the objections of the assessee excluded eight (8) comparables from the comparable selected by the TPO. Against this direction of the DRP, assessee filed an appeal before us. 10. Before us, Assessee has raised following grounds in its appeal: - "1. On the facts and circumstances of the case and in law, the learned Transfer Pricing Officer ("TPO') and Assistant Commissioner of Income-tax- 13(3)(2) (AO), under the directions of Hon'ble Dispute Resolution Panel 11 CDRP) erred in determining the arm's length price of the international transaction for provision of Information Technology enabled Services ('ITeS') at Rs. 8,28,54,661 instead of Rs 7.84.44.748 and thereby making an adjustment of Rs. 44,09,913. The Appellant prays that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R pressed only Ground No. 2(d) and 2(g) and rest of the sub-grounds in Ground No. 2 are not pressed, accordingly grounds are dismissed as not pressed. 13. Before us, with regard to Ground No. 2(d), Ld. AR submitted that it seeks the deletion of three (3) comparables which was retained by the DRP from the comparables selected by the TPO. Ld. AR submitted that it is seeking relief and exclusion of following three comparables i.e., (i) Cosmic Global Ltd., (ii) Informed Technologies India Ltd., and (iii) Infosys BPO Ltd., 14. In this regard, Ld. AR submitted that Cosmic Global Ltd., is selected by the assessee originally and he brought to our notice Page No. 13 of the TPO order and submitted that majority of the services undertaken by this company are out sourced. He brought to our notice findings of the TPO at Page No. 13 of the TPO order and Page No. 5 of the DRP order wherein the assessee has submitted before DRP that Cosmic Global Ltd., is following different business model and majority of the activities are sub contracted. He brought to our notice translation charges have been paid to the vendors (2.18 crores) to the extent of 37.73% on sales (43.38% of total operating cost). Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Page No. 50 of the Paper Book to submit that while selecting the comparables even assessee has not selected the upper and lower limit for turnover filter. Therefore, this comparable has to be excluded considering the huge turnover and brand value of the Infosys BPO Ltd., when compared to the turnover of the assessee i.e., only 7,84,41,868/- in this segment. In this regard he relied on the decision of the Coordinate Bench in the case of Swiss Re Services India Private Ltd v. DCIT in ITA.No. 1898/Mum/2015 dated 06.01.2020. Further, he submitted that there are extraordinary events recorded in Infosys BPO Ltd., in this regard he brought to our notice Page No. 183 and 184 of the Paper Book. 17. Ld. DR objected to the submissions made by the Ld. AR and submitted that with regard to Cosmic Global Ltd., he submitted that assessee has accepted in previous three Assessment Years and assessee itself selected this comparable in previous two Assessment Years and further he submitted that assessee itself not contested before the TPO/DRP for selection of these comparable. With regard to the case laws relied by the assessee of Pune Bench in the case of Aptara Technologies Pvt Ltd., v. ACIT (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility trend. In this regard, we find that Pune Bench of Tribunal in case of Cummins Turbo Technologies Ltd., UK Vs. DDIT (Int. Tax,) (supra) had also held that Informed Technologies Ltd., because of its abnormal profitability trend, is to be excluded from the final list of comparables. Accordingly, we hold so." 20. Similarly, in the case of Eaton Technologies Private Limited v. ACIT in ITA.No. 519/PUN/2015 dated 16.08.2021 Pune bench of the Tribunal held as under: - "(ii) Informed Technologies Ltd. : 28 The TPO has discussed this company at page 51 of his order wherein the assessee has objected to the selection of this comparable in ITES segment. The assessee has contended this company should not be selected as comparable because in this case the AMD/sales ratio exceeds 3%. This was however selected as comparable by the TPO. That before the DRP also similar argument were taken by the assessee. The DRP at para 5.7.1 of its order observed that while deciding the comparability of Acropetal Technologies it had been held that filter AMD/sales is not appropriate for the captive companies engaged in the IT/ITES. Therefore, Informed Technologies was treated as functionally comparab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court of Delhi in Rampgreen Solutions (P.) Ltd. (supra) that the concerns which are engaged in providing KPO services are not functionally comparable to the concerns which are providing BPO services and have directed the TPO to exclude the same. Applying the said ratio, we hold that the TPO has correctly excluded Aditya Birla Minacs Worldwide Ltd. and Informed Technologies India Ltd. from the final list of comparables. In view thereof, the grounds of appeal No.12, 14 to 16 are partly allowed." The ld. DR also though relying on the DRP findings principally agreed on the exclusion of this company as decided by the Pune Tribunal (supra). Having heard the parties herein and considering the decision of Pune Tribunal (supra), we direct the Assessing Officer/TPO to exclude Informed Technologies India Ltd. from the final list of comparables in ITES segment in respect of the assessee." 21. Further, in the case of Brintons Carpets Asia Pvt Ltd., v. DCIT in ITA.No. 1312/PUN/2015 dated 29.03.2019 the Pune Bench of the Tribunal held as under: "20. The year under appeal before us is assessment year 2010- 11 and the assessee has been showing different profitability from year to year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT (ITA No. 7539/Mum/2014 held that the turnover of Infosys BPO is very high comparative to tested party and excluded and excluded this comparable. Considering the consistent view of Hon'ble Delhi High Court, Hon'ble Bombay High Court and co-ordinate bench of Tribunal, we are of the view that Infosys BPO is a market leader and a giant company with a different risk profile and nature of service, has brand value and hence not comparable to the assessee due to huge difference in the size and scale of the company. Therefore, we direct the AO to exclude Infosys BPO from final set of comparable as the same is not comparable with assessee, which is proving captive services." 23. Respectfully following the above decisions, we find merit in the submissions of the Ld. AR. We observe from the submissions of the Ld.DR that the assessee itself has selected the above said three comparables. As a prudent way and accepted principal that each year the comparable has to be analysed and compared. Therefore, the selection or rejection in the earlier or subsequent year cannot be a basis to consider in the present assessment year. Therefore we direct the Assessing Officer to exclude the three compara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any cash deposits in its bank account and further, it was submitted that assessee maintains current account. Further, he submitted that the Assessing Officer not only rejected the submissions of the assessee in draft assessment and further Assessing Officer sustained the addition with the observation that HDFC bank has not responded to the notices u/s. 133(6) of the Act notices even though DRP has categorically gave direction to verify and reconcile the cash deposits made by the assessee with the HDFC bank. He prayed that suitable direction may be given in this regard. 28. On the other hand, Ld. DR relied on the order passed by the Assessing Officer. 29. Considered the rival submissions and material placed on record, we observe that Assessing Officer has come across cash deposits in AIR Portal and asked the assessee to file the bank reconciliation to substantiate the claim of the assessee that assessee has not made any cash deposits. We observed from the record that DRP has accepted the submissions of the assessee and gave a clear direction that assessee has furnished statement of concerned bank account for the relevant period and Assessing Officer was asked to obtain the clarif ..... X X X X Extracts X X X X X X X X Extracts X X X X
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