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TMI Blog2022 (8) TMI 1524X X X X Extracts X X X X X X X X Extracts X X X X ..... the Learned Dy. Commissioner of Income Tax, Circle-3(1), Hyderabad ( Ld. AO ) in the case of M/s. SNL Financial (India) P.Ltd., (now merged with S P Capital IQ (India) P. Ltd) ( the assessee ) for the AY.2009-10, under section 143(3) r.w.s. 144C(13) r.w.s. 254 of the Income Tax Act, 1961 (for short the Act ), consequent to the directions of Hon'ble Dispute Resolution Panel, Bengaluru ( DRP ), assessee filed this appeal. 2. Brief facts of the case are that SNL India, a wholly owned subsidiary of SNL financial LC is engaged in providing information technology enabled services (ITeS) to SNL US, and is primarily engaged in the provision of data entry and analysis services to its Associated Enterprises ( AEs ) through its office situated in India. Activities of the assessee include collating, standardising, storing all relevant corporate, financial, market and M A data, news and analysis for various industries such as banking, financial services, insurance, real estate, energy and media/communications and this information is transmitted in return, electronic or any other medium through data bases, web applications and analytical models, and for this reason the operations of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2/Ahd/2014 proceedings for the purpose of Safe Harbour Rules paid a visit in the office of the assessee, and himself collected information regarding nature of services. Thus, there is a conflict in the stand of the Revenue in different assessment years on one agreement. Considering this aspect, we are of the view that impugned orders are not sustainable on this issue, therefore, we set aside the assessment order including that of DRP and restore this issue to the file of the AO for fresh adjudication. The ld.AO shall take into account, the TPO's order passed in subsequent period i.e. dated 26.2.2014 though passed for the subsequent period but deals with same agreement. If the assessee is being accepted as a BPO, then, all the comparable selected by the TPO would not be relevant, and a fresh inquiry has to be conducted. Considering all these aspects, we allow the appeal of the assessee for statistical purpose. The observation made by us will neither impair the case of the AO nor will cause any prejudice to the defence/explanation of the assessee. 5. Subsequently SNL Financial (India) Private Limited was merged with S P Capital IQ (India) Private Limited on 11/4/2018. Pursuant to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the export business carried out by the assessee and therefore it has to be treated as income derived by an undertaking. Further we are in agreement with the submission of the Ld. AR that in the case of SAP LABS India (P) Ltd vs. ACIT (2011) 44 SOT 156 the Bangalore Bench of the Tribunal held that the foreign exchange gain is operating in nature. We therefore, while accepting the contention of the assessee, direct the learned Assessing Officer/Ld. TPO to consider the foreign exchange gain as operating in nature for calculating the margin of the assessee. 9. Coming to the grievance of the assessee in respect of comparables, at the time of arguments, the challenge is confined to four entities only, namely, Accentia technologies limited, Acropetal Technologies Limited, cosmic global limited and Infosys BPO limited. Assessee contends that all these entities are functionally dissimilar to the functions performed by the assessee and all these entities were excluded in assessee s own case for the assessment year 2007-08 and 2009-10 before merger. 10. Assessee is challenging the inclusion of Accentia technologies limited on the grounds of functional dissimilarity, because Accentia tec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was also contended that the Infosys BPO has done brand building exercise by incurring large amounts of brand building and advertisement expenditure and undertaking brand campaigning outside India. Further, it also has huge asset base and therefore, this company is not functionally comparable to assessee. Assessee relied on the M/s. Capital IQ Information systems (India ) Pvt. Ltd., Hyderabad decision of the Hon'ble Delhi High Court in the case of CIT V/s. Agnity India Technologies Pvt. Ltd. (2013) 219 Taxman 26 (Del), wherein it was held that huge turnover companies like Infosys and Wipro cannot be considered as comparable to smaller companies like assessee. 16.1 Even though we are not in agreement with the contentions of the comparability on turnover ratio of assessee with this company on the ground that assessee's turnover is about Rs.129.8 crores, which as against turnover of Rs.1016 crores of the Infosys, ( which is only about 5 times) we are of the view that other contentions with regard to the brand value and brand building exercise, having huge asset base, can be considered to arrive at the conclusion that Infosys is functionally not similar to that of assessee. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slation charges. When we are examining the results of this company from the Accounts BPO segment alone, there is no need to examine the position under other segments. The entire outsourcing is confined to Translation charges paid at Rs.3.00 crore, which is strictly inthe realm of the Translation segment, revenues from which are to the tune of Rs.6.99 crore. If this segment of Translation is not under consideration for deciding as to whether this case is comparable or not, we cannot take recourse to the figures which are relevant for segments other than accounts BPO. Thus it is held that this case cannot be excluded on the strength of outsourcing activity, which is alien to the relevant segment. 13.3. However, we find this case to incomparable on the alternative argument advanced by the ld. AR to the effect that total revenue of the Accounts BPO segment of Cosmic Global Limited is very low at Rs.27.76 lacs. We have discussed this aspect above in the context of CG-VAK's case and held that a captive unit cannot be compared with a giant case and thus excluded CG-VAK with turnover from Accounts BPO segment at Rs.86.10 lacs. As the segmental revenue of BPO segment of Cosmic Global Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the peculiar economic circumstances and brand value. The same in these circumstances cannot be selected. It was submitted that assessee was in medical transcription services. 21.1. The Departmental Representative however, objected to the pleas of assessee stating that the extraordinary events occurred in earlier year and therefore, the same cannot be considered as having any impact in the year under consideration. 21.2 We have considered the rival contentions and noticed that this company operates in a different business strategy of acquiring companies for inorganic growth as its strategy. In earlier years on the reason of acquisition of various companies, being an extraordinary event which had an impact on the profit, this company was excluded. As submitted by the learned counsel, this year also, the acquisition of some companies by that company may have impact on the profit. Considering the profit margins of the company and insufficient segmental data, we are of the opinion that this company cannot be selected as a comparable. Moreover, this is also not a comparable in the case of M/s. Mercer Consulting (India) P. Ltd. (supra), which indicates that the TPO therein has exclud ..... X X X X Extracts X X X X X X X X Extracts X X X X
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