M/s. Keystroke Pro India Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 1446/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2475 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 17-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAWETA NAKRA
• Keywords: Related party transaction; Transfer pricing; Rectification of order; International transaction
• Section: 115JB; 2

Judgement Text

ITA NO. 1446/DEL/2016 ASSESSMENT YEAR 2011-12 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-2 NEW DELHI BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBE R AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBE R ITA NO. 1446/DEL/2016 ASSESSMENT YEAR: 2011-12 KEYSTROKE PRO INDIA PVT. LTD., F-3/4, 1 ST & 2 ND FLOORS, OKHLA INDUSTRIAL AREA, PHASE-I, NEW DELHI. VS INCOME TAX OFFICER, WARD 14(3), ROOM NO. 305, C.R. BUILDING, NEW DELHI. APPELLANT RESPONDENT ASSESSEE BY : SHRI SANDEEP SAPRA, ADV. DEPARTMENT BY: MS SAWETA NAKRA, SR. DR DATE OF HEARING : 14.06.2019 DATE OF PRONOUNCEMENT : 20.06.2019 O R D E R PER SUDHANSHU SRIVASTAVA, JM: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST TH E FINAL ASSESSMENT ORDER DATED 29.01.2016 PASSED SUBS EQUENT TO THE DIRECTIONS OF THE LD. DISPUTE RESOLUTION PANEL- 1, NEW DELHI (DRP) FOR ASSESSMENT YEAR 2011-12. 2.0 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY WAS INCORPORATED IN THE YEAR 2000 AND HAS BEEN ENGA GED IN THE BUSINESS OF PROVIDING INFORMATION TECHNOLOGY (IT) E NABLED SERVICES. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE ITA NO. 1446/DEL/2016 ASSESSMENT YEAR 2011-12 2 COMPANY HAD PROVIDED SERVICES TO ITS ASSOCIATED ENT ERPRISE (AE) M/S KEYSTROKE PRO INDIA PVT. LTD. WHICH INCLUDED SO URCING, PROVIDING AND PROCESSING VARIOUS TYPES OF DATA AS W ELL AS PROVIDING INFORMATION TECHNOLOGY ENABLED SERVICES I NCLUDING ELECTRONIC PROCESSING OF DATA. THE SERVICES PROVID ED BY THE ASSESSEE COMPANY FALL WITHIN THE MEANING OF COMPUT ER SOFTWARE AS PER CLAUSE (B) OF ITEM (I) OF EXPLANATION TO SEC TION 10A OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED 'THE ACT') . THE UNDERTAKINGS OF THE COMPANY AT VADODARA, GUJARAT AN D NOIDA ARE ALSO REGISTERED IN THE SOFTWARE TECHNOLOGY PARK OF INDIA (STPI) AT STPI, GANDHI NAGAR AND NOIDA RESPECTIVELY. THE UND ERTAKING AT NOIDA HAD COMMENCED PRODUCTION/MANUFACTURE ON 1.9.2 001 AND THE ASSESSMENT YEAR UNDER CONSIDERATION IS THE NINT H YEAR OF OPERATION OF THE UNDERTAKING WHILE THE UNDERTAKING AT VADODARA HAD COMMENCED OPERATIONS ON 1.5.2009 AND THE ASSESS MENT YEAR UNDER CONSIDERATION IS THE SECOND YEAR OF OPERATION . 2.1 THE RETURN OF INCOME WAS FILED DECLARING AN IN COME OF RS. 82,010/- AFTER CLAIMING DEDUCTION U/S 10A OF TH E ACT AT RS. 45,78,637/- FOR THE UNDERTAKING AT NOIDA AND AT RS. 5,14,486/- FOR THE UNDERTAKING AT VADODARA. THE ASSESSEE DECL ARED BOOK PROFIT OF RS. 43,75,175/- U/S 115JB OF THE ACT AND ALSO PAID TAX ITA NO. 1446/DEL/2016 ASSESSMENT YEAR 2011-12 3 AS PER THE PROVISIONS OF SECTION 115JB. THE CASE W AS SELECTED FOR SCRUTINY THROUGH CASS TO EXAMINE THE CLAIM OF EXEMP TION U/S 10A OF THE ACT. 2.2 DURING THE YEAR UNDER CONSIDERATION, THE COMPA NY HAD ALSO ENTERED INTO INTERNATIONAL TRANSACTION OF PROV IDING IT ENABLED SERVICES TO ITS UK BASED AE AND THE VALUE OF TRANSA CTION WAS RS. 5,33,73,181/-. THE ASSESSEE HAD USED TRANSACTIONAL NET MARGIN METHOD (TNMM) TO DETERMINE THE ARMS LENGTH PRICE ( ALP) OF THE SAID TRANSACTION. AS PER THE ASSESSEE, THIS TRANSAC TION WAS AT ARMS LENGTH. SINCE THE VALUE OF INTERNATIONAL TRA NSACTION EXCEEDED RS. 5 CRORE, REFERENCE TO THE TPO WAS MADE U/S 92CA OF THE ACT. 2.3 THE ASSESSEE HAD SELECTED 16 COMPANIES AS COMPARABLES BY USING OP/TC TO DETERMINE THE PROFIT LEVEL INDICATOR (PLI). THE AVERAGE MARGIN OF THE COMPARA BLES AS WORKED OUT BY THE ASSESSEE WAS 12.91% WHEREAS THE ASSESSEE HAD WORKED OUT ITS OWN MARGIN AT 10.94%. BASED ON THIS ANALYSIS, THE ASSESSEE HAD CONCLUDED THAT ITS INTERNATIONAL T RANSACTIONS WERE AT ARMS LENGTH. THE TPO ACCEPTED THE METHODO LOGY ADOPTED BY THE ASSESSEE AND ACCEPTED TNMM AS THE MOST APPRO PRIATE METHOD BUT REJECTED NINE COMPARABLES OUT OF THE 16 AS SELECTED ITA NO. 1446/DEL/2016 ASSESSMENT YEAR 2011-12 4 BY THE ASSESSEE AND INTRODUCED TWO ADDITIONAL COMPA RABLES AND WORKED OUT THE MEAN OPERATING MARGIN AT 25.77%. B ASED ON THIS, THE TPO PROPOSED AN UPWARD ADJUSTMENT OF RS. 71,54,140/-. 2.4 THE ASSESSEE FILED OBJECTIONS BEFORE THE LD. D RP CHALLENGING THE UPWARD REVISION OF THE ALP BY THE T PO AND THE LD. DRP GAVE PARTIAL RELIEF TO THE ASSESSEE BY DIRE CTING ECLERX SERVICES LTD. TO BE EXCLUDED FROM THE LIST OF COMPA RABLES, TCS E- SERVE LTD. TO BE RETAINED IN THE LIST OF COMPARABLE S, ISERVICES INDIA PVT. LTD. TO BE CONSIDERED AS A COMPARABLE IF THE C OMPANY PASSED THE FILTERS AND WAS FUNCTIONALLY COMPARABLE. SAVI INFOSERVICES INDIA PVT. LTD. WAS ALSO DIRECTED TO BE CONSIDERED AS A COMPARABLE IF THIS COMPANY PASSED THE FILTERS AND WAS FUNCTION ALLY COMPARABLE. THE REMAINING COMPARABLES SELECTED BY THE ASSESSEE BUT NOT ACCEPTED BY THE TPO WERE DIRECTED TO REMAIN EXCLUDED FROM THE LIST OF COMPARABLES. DIRECTION WAS GIVEN TO GIVE WORKING CAPITAL ADJUSTMENT TO THE ASSESSEE AS PER THE GUIDE LINES AND THE ASSESSEES PRAYER FOR RISK ADJUSTMENT WAS NOT ACCEP TED. 2.5 BASED ON THE DIRECTIONS OF THE LD. DRP, IN THE FINAL ASSESSMENT ORDER, THE MARGINS OF THE COMPARABLE COM PANIES WERE RE-CALCULATED BY THE TPO AND THE MEAN WAS WORKED OU T TO ITA NO. 1446/DEL/2016 ASSESSMENT YEAR 2011-12 5 21.07% AND THE REVISED TP ADJUSTMENT WAS PROPOSED A T RS. 48,92,246/-. 2.6 NOW THE ASSESSEE IS BEFORE THIS TRIBUNAL (ITAT ) AND HAS CHALLENGED THE FINAL ASSESSMENT ORDER BY RAISING TH E FOLLOWING GROUNDS:- 1. THAT THE LD. ASSESSING OFFICER (AO), LD. TRANSFER PRICING OFFICER (TPO) AND HONBLE DISPUTE RESOLUTIO N PANEL (DRP) HAVE ERRED ON FACTS AND UNDER THE LAW I N: (I) PASSING THE IMPUGNED ORDER WHICH IS BAD IN LAW; (II) PASSING THE ORDER WITHOUT DEMONSTRATING THAT THE APPELLANT CO. HAD MOTIVE OF TAX EVASION; (III) REJECTING/NOT CONSIDERING THREE (3) COMPARABLE COMPANIES (VIZ. ISERVICES INDIA PVT LTD, SAVI INFOS ERVICES INDIA PVT LTD AND MICROGENETICS SYSTEMS LTD) AS SELECTED BY THE APPELLANT CO WHILE CARRYING OUT FRE SH TP STUDY FOR AY 2011-12; (IV) NOT CONSIDERING THE FACTS/SUBMISSIONS/OBJECTIONS MADE BEFORE THEM THAT OUT OF THE REMAINING EIGHT (8 ) COMPARABLE COMPANIES AS SELECTED BY TPO, TCS E SERV E LTD. OUGHT TO BE EXCLUDED ON VARIOUS GROUNDS FROM T HE LIST OF SUCH COMPARABLE COMPANIES; (V) WITHOUT PREJUDICE TO 1 (I) TO 1 (IV) ABOVE, IF HIG H TURNOVER COMPANIES HAVING TURNOVER OF MORE THAN RS. 200 CRORES ARE ALSO TO BE CONSIDERED/TAKEN INTO ACCOUNT , THEN THERE WAS NO JUSTIFICATION FOR EXCLUDING INFOSYS BP O AS COMPARABLE COMPANY. (VI) WITHOUT PREJUDICE TO 1 (I) TO 1 (IV) ABOVE, THERE WAS NO JUSTIFICATION FOR NOT ALLOWING ECONOMIC ADJUSTME NTS FOR DIFFERENCES ON ACCOUNT OF RISKS ASSUMED BY THE APPE LLANT CO. VIS-A-VIS THE COMPARABLE COS ITA NO. 1446/DEL/2016 ASSESSMENT YEAR 2011-12 6 (VII) INAPPROPRIATELY COMPUTING THE OPERATING MARGINS OF COMPARABLES AND THE APPELLANT AND NOT CONSIDERIN G THE FACTS/SUBMISSIONS/ MADE BEFORE THEM TO PROVIDE DETAILED LINE BY LINE MARGIN COMPUTATION/WORKING OF THE ADJUSTED AVERAGE OP/OC PERCENTAGE OF 21.07% OF THE 8 COMPARABLE COMPANIES AS FINALLY RETAINED BY TPO/AO PURSUANT TO DIRECTIONS OF DRP; (VIII) NOT GIVING EFFECT TO THE RECTIFICATION ORDER DATED 13.03.2015 AS PASSED BY DCIT, TPO- 2(1)(1) 2. THAT THE ADDITION ON ACCOUNT OF UPWARD TRANSFER PRICING ADJUSTMENT OF RS.48,92,246/- AS MADE BY THE AUTHORITIES BELOW ARE ARBITRARY, UNJUST, ILLEGAL AN D AT ANY RATE, WITHOUT PREJUDICE, VERY EXCESSIVE. THAT THE PENALTY PROCEEDINGS U/S 271 (1)(C) OF I.T. ACT AS INITIATED ON THE BASIS OF TP ADJUSTMENT ARE ILLEGAL . 3.0 AT THE OUTSET, THE LD. AUTHORISED REPRESENTATI VE (AR) DREW OUR ATTENTION TO THE FINAL LIST OF COMPARABLES WHICH REMAINED AFTER THE TPO HAD GIVEN EFFECT TO THE DIRECTIONS OF THE LD. DRP. THE COMPARABLES ARE AS UNDER:- S.NO. COMPANY NAME ADJUSTED OP/OC (I) INFORMED TECHNOLOGIES INDIA 9.59 (II) ACCENTIA TECHNOLOGIES LTD. 25.21 (III) DATAMATICS CLOBAL SERVICES LTD. 4.65 (IV) E4E HEALTHCARE BUSINESS SERVICES PVT. LTD. 9.77 (V) JINDAL INTELLICOM LTD. 13.69 (VI) TCS E - SERVE LTD. 69.31 (VII) STRYKER GLOBAL SERVICES PVT. LTD. 17.00 (VIII) SITEL INDIA LTD. 19.30 AVERAGE 21.07 ITA NO. 1446/DEL/2016 ASSESSMENT YEAR 2011-12 7 3.1 THE LD. AR SUBMITTED THAT THE ASSESSEE WAS NOT PRESSING GROUND NOS. 1(I), (II), (III), (V), (VI), (VII), (VIII) AND 3 AND 4. THE LD. AR SUBMITTED THAT AS PER GROUND NO. 1(IV), THE ASSESSEE WAS PRAYING FOR EXCLUSION FOR TCS E-SERVE LTD. AND INCLUSION OF ISERVICES INDIA PVT. LTD., SAVI INFOSERVICES INDIA PVT. LTD. AND MICROGENETIC SYSTEMS LTD. THE ARGUMENTS OF THE LD. AR VIS-A-VIS THE EXCLUSION OF TCS E-SERVE LTD. AND INCLUSION OF THE THREE COMPARABLES WERE AS UNDER:- I) TCS E-SERVE LTD. THE LD. AR SUBMITTED THAT THE ASSESSEE WAS PRAYING FOR EXCLUSION OF THIS COMPANY AS A COMPARABLE BECAUSE T HIS COMPANY IS ENGAGED IN THE BUSINESS OF PROVIDING ITES/BUSINESS PROCESS OUTSOURCING (BPO) SERVICES AN D ITS OPERATIONS BROADLY COMPRISE OF TRANSACTION PROCESSI NG AND TECHNICAL PROCESSING AND TECHNICAL SERVICES, COLLECTIONS, CUSTOMER CARE AND PAYMENTS IN RELATION TO THE SERVICES OFFERED BY CITIGROUP TO ITS CORPORATE AND RETAIL CLIENTS. IT WAS FURTHER SUBMITTED THAT TECHNICAL S ERVICES INVOLVE SOFTWARE TESTING, VERIFICATION AND VALIDATI ON OF SOFTWARE AT THE TIME OF IMPLEMENTATION AND DATA CEN TRE MANAGEMENT ACTIVITIES. OUR ATTENTION WAS DRAWN TO PAGE ITA NO. 1446/DEL/2016 ASSESSMENT YEAR 2011-12 8 450 OF THE PAPER BOOK (DIRECTORS REPORT AND ANNUAL ACCOUNTS) WHEREIN THESE ACTIVITIES WERE MENTIONED. IT WAS SUBMITTED THAT THIS COMPANY IS FUNCTIONALLY DISSIMI LAR TO THE ASSESSEE COMPANY WHICH IS A LOW-END BPO PROVIDI NG TRANSACTION AND DATA CENTRE MANAGEMENT SERVICES ONL Y TO ITS UK BASED AE AND, THUS, IS A CAPTIVE SERVICE PRO VIDER. IT WAS FURTHER SUBMITTED THAT THIS COMPANY HAD A HU GE BRAND VALUE BECAUSE OF ITS CLOSE CONNECTION WITH TH E TATA GROUP AND FURTHER THAT THIS COMPANY HAD A HUGE TURNOVER AND GOODWILL BEING ONE OF THE GIANTS OF TH E INDUSTRY AND, THEREFORE, IT COULD NOT BE CONSIDERED AS A COMPARABLE TO THE ASSESSEE COMPANY. IT WAS SUBMITT ED THAT ANOTHER GIANT COMPANY INFOSYS PVT. LTD. WAS EXCLUDED ON A SIMILAR REASONING IN ASSESSEES OWN C ASE FOR ASSESSMENT YEAR 2010-11. RELIANCE WAS ALSO PLA CED ON ANOTHER ORDER OF ITAT DELHI BENCH IN THE CASE OF KRONOS SOLUTIONS INDIA (P) LTD. VS. ACIT REPORTED 8 8 TAXMANN.COM 310 (DELHI TRIBUNAL) WHEREIN THIS COMPA NY WAS DIRECTED TO BE EXCLUDED ON A SIMILAR REASONING. ITA NO. 1446/DEL/2016 ASSESSMENT YEAR 2011-12 9 (II) I-SERVICES INDIA PVT. LTD. THE LD. AR SUBMITTED THAT THE ASSESSEE WAS PRAYING FOR INCLUSION OF THIS COMPANY AS A COMPARABLE AS IT WAS FUNCTIONALLY SIMILAR AND THE LD.DRP HAD DIRECTED TH AT THE SAME BE INCLUDED IF IT PASSED THE NECESSARY FILTERS AS APPLIED BY THE TPO BUT THE TPO HAD NOT GIVEN ANY RE ASON FOR EXCLUDING THE SAME SUBSEQUENT TO THE DIRECTIONS OF THE LD. DRP. OUR ATTENTION WAS DRAWN TO PARA 3.4 O F THE DIRECTIONS OF THE LD. DRP WHEREIN THIS DIRECTION HA D BEEN GIVEN BY THE LD. DRP. (III) SAVI INFOSERVICE (INDIA) PVT. LTD. IT WAS SUBMITTED THAT THE ASSESSEE WAS PRAYING FOR INCLUSION OF THIS COMPANY ALSO IN THE FINAL SET OF COMPARABLES AND THAT THE LD. DRP HAD DIRECTED THE INCLUSION OF THIS COMPANY IF IT PASSED ALL THE FILT ERS AS APPLIED BY THE TPO BUT THE TPO/ASSESSING OFFICER HA D KEPT THIS COMPANY OUT OF THE FINAL SET OF COMPARABL ES WITHOUT ASSIGNING ANY REASON. ATTENTION WAS AGAIN DRAWN TO PARA 3.4 OF THE DIRECTIONS OF THE LD. DRP WHEREIN THIS COMPANY WAS DIRECTED TO BE INCLUDED. ITA NO. 1446/DEL/2016 ASSESSMENT YEAR 2011-12 10 (IV) MICROGENETICS SYSTEMS LTD. THE LD. AR SUBMITTED THAT THE ASSESSEE WAS PRAYING FOR INCLUSION OF THIS COMPANY ALSO AS THIS COMPANY WAS ENGAGED IN MEDICAL TRANSCRIPTION SERVICES AND ACCORDINGLY IT WAS FUNCTIONALLY SIMILAR AND IT HAD PASSED ALL THE FILTERS AS APPLIED BY THE TPO. IT WAS ALSO SUBMITTED BY THE LD. AR THAT THE TPO HAS EXCLUDED T HIS COMPANY ON THE GROUND THAT THE RELATED PARTY TRANSACTION FILTER WAS NOT MET ALTHOUGH THE RELEVAN T DATA WITH RESPECT TO THE RELATED PARTY TRANSACTION WAS D ULY FILED BEFORE THE TPO. IT WAS SUBMITTED THAT THIS COMPANY WAS PRAYED TO BE INCLUDED BEFORE THE LD. DR P ALSO AND THE PRAYER FOR ITS INCLUSION FORMED PART O F THE OBJECTIONS FILED BEFORE THE LD. DRP BUT THE LD. DRP HAS NOT DISCUSSED THE ISSUE. 4.0 IN RESPONSE, THE LD. SENIOR DEPARTMENTAL REPRESENTATIVE (SR. DR) SUBMITTED THAT WITH RESPECT TO ALL THE COMPANIES UNDER CHALLENGE BY THE ASSESSEE EITHER FO R INCLUSION OR FOR EXCLUSION HAD BEEN DULY CONSIDERED AND EXAMINED BY THE TPO AS WELL AS THE LD. DRP. WITH RESPECT TO TCS E-SERV E LTD., IT WAS ITA NO. 1446/DEL/2016 ASSESSMENT YEAR 2011-12 11 SUBMITTED THAT THE ASSESSEE HAD NOT BEEN ABLE TO ME ET THE OBSERVATIONS OF THE TPO IN THIS REGARD AND FURTHER THAT THE LD. DRP HAD ALSO REACHED THE SAME CONCLUSION AFTER CONS IDERING THE OBSERVATIONS OF THE TPO AND NO INTERFERENCE WAS CAL LED FOR. THE LD. SR. DR PLACED EXTENSIVE RELIANCE ON THE OBSERVA TIONS OF THE TPO IN RESPECT OF ALL THE FOUR COMPARABLES AND VEHE MENTLY ARGUED THAT THE TPO AND THE LD. DRP HAD GIVEN A FINDING OF FACT WHICH NEED NOT BE DISTURBED. 5.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. WE NOW TAKE THE COMPA RABLES ONE BY ONE. I) TCS E-SERVE LTD. IT IS THE ASSESSEES CONTENTION THAT THIS COMPANY D ESERVES TO BE EXCLUDED AS A COMPARABLE COMPANY FOR THE REAS ON THAT IT IS FUNCTIONALLY DISSIMILAR TO THIS COMPANY. IT IS UNDISPUTED THAT THE ASSESSEE COMPANY PROVIDES IT ENABLED SERVICES TO ITS UK BASED AE ONLY AND, THUS, IT IS A CAPTIVE SERVICE PROVIDER WHEREAS TCS E-SERVE LTD. PROVIDES TRANSACTION PROCESSING AS WELL AS TECHNICA L SERVICES. IT IS FURTHER SEEN THAT TCS E-SERVE LTD. PROVIDES A BROAD SPECTRUM OF ACTIVITIES INVOLVING THE PROCES SING, ITA NO. 1446/DEL/2016 ASSESSMENT YEAR 2011-12 12 COLLECTIONS, CUSTOMER CARE AND PAYMENTS IN RELATION TO THE SERVICES OFFERED BY CITIGROUP TO ITS CORPORATE AND RETAIL CLIENTS. TECHNICAL SERVICES INVOLVE SOFTWARE TESTI NG, VERIFICATION AND VALIDATION OF SOFTWARE AT THE TIME OF IMPLEMENTATION AND DATA CENTRE MANAGEMENT ACTIVITIE S. THIS IS EVIDENT FROM A READING FROM THE NOTES TO AC COUNTS CONTAINED IN THE ANNUAL REPORT OF TCS E-SERVE LTD. FOR ASSESSMENT YEAR 2010-11. THUS, THERE IS STRENGTH I N THE CONTENTION OF THE ASSESSEE THAT TCS E-SERVE LTD. HA S ENTERED IN ACTIVITIES WHICH ARE BEYOND TRANSACTION AND DATA PROCESSING SERVICES AS BEING PROVIDED BY THE ASSESSEE TO ITS AE AND, THUS, IT CAN BE SAFELY CONC LUDED THAT THIS COMPANY IS FUNCTIONALLY DISSIMILAR TO THE ASSESSEE COMPANY. WE ALSO FIND SUPPORT FROM THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF ACTIS GLOBAL SERVICES PVT. LTD. IN ITA 94/2017 WHER EIN VIDE JUDGMENT DATED 15.5.2017, THE HONBLE DELHI HI GH COURT HAD UPHELD THE ORDER OF ITAT DELHI BENCH IN DIRECTING THE EXCLUSION OF THIS COMPARABLE ON THE G ROUND THAT TCS E-SERVE LTD. WAS INVOLVED BOTH IN THE TRANSACTION PROCESSING AND TECHNICAL SERVICES AND W AS NOT ITA NO. 1446/DEL/2016 ASSESSMENT YEAR 2011-12 13 THEREFORE A COMPARABLE WITH RESPECT TO A COMPANY ENGAGED ONLY IN BPO ACTIVITIES. ADMITTEDLY, THE AS SESSEE IS ALSO A BPO COMPANY AND THE FINDING TO THIS EFFEC T HAS BEEN RECORDED BY THE ITAT IN ASSESSEES OWN CASE FO R ASSESSMENT YEAR 2009-10 WHEREIN IT HAS BEEN MENTION ED THAT THIS COMPANY IS INTO PROVIDING LOW-END BPO SER VICES. THEREFORE, WE DEEM IT APPROPRIATE TO EXCLUDE THIS COMPANY FROM THE FINAL SET OF COMPARABLES. II) ISERVICES INDIA PVT. LTD. THE ASSESSEE IS PRAYING FOR INCLUSION OF THIS COMPA NY ON THE GROUND THAT IT IS FUNCTIONALLY SIMILAR. WE NOTE THAT THE LD. DRP HAS ALSO DIRECTED THIS COMPANY TO BE INCLUDED IN THE LIST OF COMPARABLES IF IT PASSES AL L THE FILTERS AS APPLIED BY THE TPO. WE ALSO NOTE THAT T HIS DIRECTION OF THE LD. DRP HAS NOT BEEN IMPLEMENTED I N SO FAR AS THE TPO HAS EXCLUDED THIS COMPANY WITHOUT RECORDING ANY FINDING. THEREFORE, WE DEEM IT APPROPRIATE TO RESTORE THIS COMPARABLE TO THE FILE OF THE TPO WITH THE DIRECTION TO IMPLEMENT THE DIRECTION O F THE LD. DRP AND PASS A SPEAKING ORDER ON THIS COMPARABLE. ITA NO. 1446/DEL/2016 ASSESSMENT YEAR 2011-12 14 III) SAVI INFORSERVICE (INDIA) PVT. LTD. THE ASSESSEE IS PRAYING FOR INCLUSION OF THIS COMPA NY ON THE GROUND THAT IT IS FUNCTIONALLY SIMILAR AND T HE LD. DRP HAS DIRECTED THAT THE SAME BE INCLUDED IF IT PA SSES ALL THE FILTERS AS APPLIED BY THE TPO BUT AGAIN THI S COMPANY HAS NOT BEEN INCLUDED WITHOUT ANY REASON BEING ASSIGNED BY THE TPO. THEREFORE, WE DIRECT TH AT THE TPO/ASSESSING OFFICER SHOULD GIVE EFFECT TO THE DIRECTIONS OF THE LD. DRP IN RESPECT OF THIS COMPAR ABLE ALSO AND DECIDE ON ITS INCLUSION/EXCLUSION BY PASSI NG A SPEAKING ORDER. IV) MICROGENETICS SYSTEMS LTD. WE NOTE THAT THE TPO HAS EXCLUDED THIS COMPANY ON THE GROUND THAT THE RELATED PARTY TRANSACTION FILTE R WAS NOT MET. ON THE OTHER HAND, IT IS THE CONTENTION O F THE ASSESSEE THAT DATA WITH RESPECT TO THE RELATED PART Y TRANSACTION WAS DULY FILED BEFORE THE TPO. IN VIEW OF THE CONTRADICTORY STAND BY THE ASSESSEE AND THE DEPARTMENT, WE DEEM IT APPROPRIATE TO RESTORE THIS COMPARABLE ALSO TO THE FILE OF THE TPO WITH THE DIR ECTION TO RE-EXAMINE THE INCLUSION OF THIS COMPARABLE AFTE R ITA NO. 1446/DEL/2016 ASSESSMENT YEAR 2011-12 15 DULY CONSIDERING THE DATA WITH RESPECT TO RELATED P ARTY TRANSACTIONS. 5.1 THE OTHER GROUNDS OF APPEAL ARE DISMISSED AS NOT PRESSED. 6.0 IN THE FINAL RESULT, THE APPEAL OF THE ASSESS EE STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JUNE, 2019. SD/- SD/- (N.S. SAINI) (SUDH ANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20 TH JUNE, 2019 GS COPY FORWARDED TO: - 1) APPELLANT 2) RESPONDENT 3) CIT(A) 4) CIT 5) DR BY ORDER ASSTT. REGISTRAR ITA NO. 1446/DEL/2016 ASSESSMENT YEAR 2011-12 16 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER