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TMI Blog2024 (9) TMI 1105X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., Domex E Data Pvt. Ltd., and MPS Ltd.- Vitae International Accounting Services Pvt. Ltd., is engaged in providing accounting, auditing and tax services apart from providing services in the knowledge specific domains to their clients, which require application of knowledge and advanced analytical and technical skills; whereas Domex E Data Pvt. Ltd., is engaged in providing e-commerce operations, involving high end KPO services, which involves business analyticals, financial analytics and market research. MPS Ltd., is engaged in content solutions for the digital world like content authorizing and development, content production, content transformation and fulfilment and customer support. In the case of Maersk Global Centres (India) (P.) Ltd., [ 2014 (3) TMI 891 - ITAT MUMBAI] and in the case of Rampgreen Solutions (P.) Ltd. [ 2015 (8) TMI 931 - DELHI HIGH COURT] we find that the functions performed by Vitae International Accounting Services Pvt. Ltd., Domex E Data Pvt. Ltd., and MPS Ltd., fall broadly in the class of ITeS, but those are akin to the functions enumerated in clause (iv) to (vii) of Rule 10TA(g) of the Rules, thereby rendering themselves to be non-comparables to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same on merits. 3. Brief facts of the case are that the assessee is a company, engaged in the business of providing ITeS in the area of health information services, health information management, medical coding, Revenue cycle management, data quality services, core measures, electronic medical record implementation and support services to its Associated Enterprise (AE), namely, Prime HealthCare Services Inc. 4. Assessee filed the return of income for the assessment year 2018-19 on 29/11/2018, declaring an income of Rs. 15,44,42,240/-. In view of the international transactions with its AE, determination of Arm s Length Price (ALP) was referred to the learned Transfer Pricing Officer (learned TPO). Assessee adopted Transactional Net Margin Method (TNMM) with OP/OC as Profit Level Indicator (PLI). Assessee s margin was at 15.21%. By selecting 27 companies as comparables for provision of ITeS, assessee arrived at the average margin of such comparables at 10.71% and concluded that the transaction with its AE was at ALP. 5. Learned TPO, however, rejected certain comparables, conducted study and prepared the final list of comparables with 17 entities, to reach the margin at 24.84%, basin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal that the application of tolerance range of turnover of ten times on both sides of assessee s turnover was proper. Same was the view taken by the Hon ble Karnataka High Court in the case of PCIT vs. Swiss Re Global Business Solutions India (P) Ltd., (2018) 96 taxmann.com 643 (Karnataka). Consistent with the said view, the Hyderabad Bench of the Tribunal also in the case of iMedx Information Services (P) Ltd., vs. DCIT (2023) 150 taxmann.com 217 (Hyderabad Trib.) held that the application of tolerance range of turnover of ten times on both ends to fix the turnover filter would meet the ends of justice. 10. Per contra, learned DR vehemently disputed the objection of the assessee basing on the turnover. She placed reliance on the decision of the Hon ble Delhi High Court in the case of Chryscapital Investment Advisors (India) (P.) Ltd. vs. DCIT [2015] 56 taxmann.com 417 (Delhi), for the principle that huge profit or a huge turnover, ipso facto does not lead to its exclusion. 11. We have considered these contentions in the light of the decided case law. Insofar as the turnover filter is concerned, Hon ble Delhi High Court in the case of Chryscapital Investment Advisors (India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding e-commerce operations, involving high end KPO services, which involves business analyticals, financial analytics and market research. MPS Ltd., is engaged in content solutions for the digital world like content authorizing and development, content production, content transformation and fulfilment and customer support. 15. In Maersk Global Centres (India) (P.) Ltd., vs. ACIT [2014] 43 taxmann.com 100 (Mumbai Trib.) (SB) the question as to whether for the purpose of determining the arm s length price of international transactions of the assessee company providing back office support services to their overseas associated enterprises, companies performing KPO functions should be considered as comparable was referred to the Special Bench. In this context, the Special Bench observed that the answer to this question will depend on the facts and circumstances of each case inasmuch as if the assessee company, on the basis of its own functional profile, is found to have provided to its AE the low end back office support services like voice or data processing services as a whole or substantially the whole, the company is providing mainly high end services by using their specialized knowl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the learned Assessing Officer/learned TPO to exclude these entities from the list of comparables. 18. Coming to Motiff India Infotech Pvt. Ltd., only reason urged before us to exclude this entity is its huge advertising and promotional expense. On this aspect, learned TPO observed that any independent entity in an uncontrolled market structure would be spending routine marking or sales promotion expenses and per se that does not amount to any extraordinary expense, since it would be impossible to find out any comparable without marketing or sales promotions expense in an uncontrolled market. Learned DRP observed that no material is available to conclude that the brand or the expenses impacted the revenues of this entity. Since there is no dispute on the functional profile of this entity, we find it difficult to exclude this entity from the list of comparables. We direct the learned Assessing Officer/learned TPO to conduct fresh study in the light of the above observations and determine the ALP of the international transaction. 19. In the result, appeal of the assessee is treated as allowed for statistical purposes. Order pronounced in the open court on this the 28th day of June, ..... 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