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TMI Blog2021 (9) TMI 1546X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. DRP while adjudicating this issue. Accordingly, we direct the ld. TPO to include the forex gain as part of operating revenue. If the said forex gain is treated as operating revenue and the aforesaid six comparable companies are excluded, the assessee would be well within the +/-5% tolerance range as per proviso 2 to Section 92C(2) of the Act - we hold that there is no need to make any transfer pricing adjustment in respect of provision of IT enabled services by the assessee to its AEs. Denial of deduction u/s. 10A - interest income earned by the assessee - AO held that these fixed deposits were placed by the assessee out of surplus funds lying with it and hence, the interest earned thereon would be liable to be separately taxed under the head income from other sources and consequently not eligible for deduction u/s. 10A - HELD THAT:- We find that similar issue had cropped up in assessee s own case before this Tribunal in A.Y. 2011-12 [ 2021 (7) TMI 53 - ITAT MUMBAI] wherein this Tribunal treated the said interest income as part of business receipts earned by the assessee by placing reliance on the decision of Hewlett Packard Global Soft Ltd [ 2017 (11) TMI 205 - KARNATAKA H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Vatsalya Saxena. ORDER PER M. BALAGANESH (A.M) : This appeal in ITA No. 1326/Mum/2014 for A.Y .2009-10 preferred by the order against the final assessment order passed by the Assessing Officer dated 30/01/2014 u/s. 143(3) r.w.s. 144C(13) of the Income Tax Act, hereinafter referred to as Act, pursuant to the directions of the ld. Dispute Resolution Panel (DRP in short) u/s. 144C(5) of the Act dated 19/12/2013 for the A.Y. 2009-10. 2. The ground No.1 raised by the assessee is general in nature and does not require any specific adjudication. 3. The ground Nos. 2-12 raised by the assessee are with regard to transfer pricing adjustment made in the case of the assessee. 3.1. We have heard rival submissions and perused the materials available on record. We find that assessee company is engaged in the business of providing Information Technology Enabled Services (ITES) call centre operations. The assessee is a 100% subsidiary of HWP Investment Holding (India) Ltd., and provides voice based customer contact centre services (ITES) to Hutchison 3G Australia Pty Ltd., and Hutchison 3G UK Ltd., (Associated Enterprises-AEs). The ITES services rendered by assessee are mainly in relation to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., 58.45% 6. Infosys BPO Ltd., 24.50% 7. Accentia Technologies Ltd., 48.93% 8. Acropetal Technologies (seg) 21.30% Arithmetic Mean 39.95% 3.5. Accordingly, the ld. AO made an adjustment of Rs.105,74,53,035/- to arm s length price in respect of provision of ITES services as under:- Sr. No. Particulars Amount in Crores 1 Operating Cost 428.66 2 Arm s Mean Margin 39.951 3 ALP at 39.95% on operating cost 599.91 4 Price Received 484.17 5 Shortfall being adjustment u/s. 92CA 105.74 3.6. Pursuant to the directions of the ld. DRP, the ld. AO in the final assessment order determined the transfer pricing adjustment figure at Rs.105,74,53,035/- which is nothing but the addition made in the draft assessment order. 4. Aggrieved by this, the assessee is in appeal before us. 5. The ld. AR before us stated that though the assessee has raised several grounds, it would be sufficient if inclusion or exclusion of comparables alone are adjudicated. He specifically drew our attention that out of eight comparables finally chosen by the ld. TPO, the following six comparables were directed to be excluded by this Tribunal in assessee s own case for A.Y. 2008-09 in ITA No. 7520/Mum/212 dated 23/01/2019 : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s provided by the assessee. iii) Coral Hubs Ltd.,- This comparable company is mainly engaged in data processing services which is functionally different from the services provided by the assessee company. iv) Cosmic Global Ltd.,- This comparable company had derived major revenue from translation business which is functionally not comparable with the services provided by the assessee company. v) Eclerx Services Ltd.,- This company is data analytics knowledge process outsourcing service provider which is different from BPO services provided by the assessee company. vi) Genesys International Corporation Ltd., - This company is a specialised geospatial service provider which is different from regular BPO services provided by the assessee company. 6.1. Hence, respectfully following the Tribunal order in assessee s own case for A.Y. 2008-09, wherein the aforesaid six comparables were held to be functionally not comparable, we direct the ld. TPO to exclude these six comparables from the final list of comparables while benchmarking the international transaction of the assessee. 6.2. We find that the assessee had derived foreign exchange fluctuation gains of Rs.13,31,38,000/- only on re-sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fixed deposits was kept as a margin with the bank for issuing bank guarantee in favour of the Commissioner of Customs on behalf of the assessee for a sum of Rs.56,63,000/-. The assessee pleaded that the fixed deposits were placed with the bank as part of business purposes of the undertaking of the assessee and out of business receipts and consequently, eligible for deduction u/s. 10A of the Act. The ld. AO however, held that these fixed deposits were placed by the assessee out of surplus funds lying with it and hence, the interest earned thereon would be liable to be separately taxed under the head income from other sources and consequently not eligible for deduction u/s. 10A of the Act. This action was upheld by the ld. DRP. 7.2. We find that similar issue had cropped up in assessee s own case before this Tribunal in A.Y. 2011-12 in ITA No.766/Mum/2016 dated 30/06/2021 wherein this Tribunal treated the said interest income as part of business receipts earned by the assessee by placing reliance on the decision of Full Bench of the Hon ble Karnataka High Court in the case of CIT vs. Hewlett Packard Global Soft Ltd., reported in 403 ITR 453; decision of the Hon ble Jurisdictional Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for deduction u/s. 10A of the Act for the same. This action of the ld. AO was upheld by the ld. DRP. 8.2. We find that this issue is also no longer res-integra in view of the decision of this Tribunal in assessee s own case for A.Y. 2011-12 in ITA No.766/Mum/2016 dated 30/06/2021 wherein it was held that the action of the lower authorities in placing reliance on the decision of the Hon ble Jurisdictional High Court in the case of CIT vs. Shah Originals reported in 327 ITR 19 (Bom) was totally misconceived as the said decision was rendered in the context of deduction claimed u/s. 80HHC of the Act whereas in the present case, the assessee has claimed deduction u/s. 10A of the Act, wherein deduction is available on the profits derived by the assessee on the entire profits and gains derived by the undertaking engaged in the business of export of articles or things. This Tribunal had also placed reliance on the decision of the Hon ble Karnataka High Court in the case of CIT vs, Motorola India Electronics Pvt. Ltd., reported in 46 Taxmann.com 167 wherein it was held that what is exempted is not merely the profits and gains of the export of articles but also the income from the business ..... X X X X Extracts X X X X X X X X Extracts X X X X
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