SWISS RE SERVICES INDIA P.LTD, MUMBAI V. DCIT CIR 2(3)(2), MUMBAI

ITA 1898/MUM/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8303 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 9 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Assessment Year: 2010-2011
• Appeal Filed On: 01-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: UODHALRAJ SINGH
• Assessee Lawyers: MEHAR CHANDNI ARS
• Keywords: Transfer pricing; International transaction; Rule of consistency; Question of law; Wholly owned subsidiary; TDS
• Section: 271(1)(c); 143(3); 92D; 234B; 144C; 13

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL J BENCH MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.1898/MUM/2015 (ASSESSMENT YEAR 2010-11) SWISS RE SERVICES INDIA PRIVATE LTD., UNIT 701-702, PENINSULA CORPORATE PARK, TOWER A, GANPATRAO KADAM MARG, LOWER PAREL, MUMBAI-400013. P AN: AAHCS5626E VS. DCIT CIRCLE- 2(3)(2) ROOM NO. 552, AAYAKAR BHAVAN, M.K. MARG, MUMBAI-400020. APPELLANT RESPONDENT ITA NO.389/MUM/2016 (ASSESSMENT YEAR 2011-12) SWISS RE SERVICES INDIA PRIVATE LTD., UNIT 701-702, PENINSULA CORPORATE PARK, TOWER A, GANPATRAO KADAM MARG, LOWER PAREL, MUMBAI-400013. P AN: AAHCS5626E VS. DCIT CIRCLE- 2(3)(2) ROOM NO. 552, AAYAKAR BHAVAN, M.K. MARG, MUMBAI-400020. APPELLANT RESPONDENT APPELLANT BY : SHRI KAMAL SAHNI, SHRI ABHISHEK TILAK & MISS MEHAR CHANDNI (ARS) RESPONDENT BY : SHRI UODH ALRAJ SINGH ( SR.DR) DATE OF HEARING : 27.11.20 19 DATE OF PRONOUNCEMENT : 06.01.2020 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THESE TWO APPEAL BY ASSESSEE ARE DIRECTED AGAINST T WO SEPARATE ASSESSMENT ORDER UNDER SECTION 143(3) RWS 144C (13) DATED 21.0 1.2015 & 26.11.2016, PASSED IN PURSUANCE OF DIRECTION OF DISPUTE RESOLUT ION PANEL-II (DRP), MUMBAI & DRP-IV FOR ASSESSMENT YEAR 2010-11 & 2011- 12 RESPECTIVELY. IN ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 2 BOTH THE APPEALS, THE ASSESSEE HAS RAISED CERTAIN C OMMON GROUNDS OF APPEAL, THEREFORE, BOTH THE APPEAL WERE CLUBBED, HEARD AND ARE DECIDED BY A COMMON ORDER. FOR APPRECIATION OF FACTS, THE APPEAL FOR A.Y. 2010-11 IS TREATED AS LEAD CASE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A WHOLLY OWNED SUBSIDIARY OF SWISS REINSURANCE COMPANY LTD., ZURICH (SRZ) SWITZE RLAND AND IS ENGAGED IN PROVIDING CONSULTANCY/ INFORMATION TECHNOLOGY EN ABLED SERVICES (ITES) TO ITS FOREIGN ASSOCIATE ENTERPRISES (AE). THE ASSESSE E-COMPANY FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2010-11 ON 29. 03.2011 DECLARING TOTAL INCOME AT RS. 7,87,57,222/-. ALONG WITH THE R ETURN OF INCOME, THE ASSESSEE FURNISHED REPORT UNDER FORM 3CEB, REPORTIN G INTERNATIONAL TRANSACTION WITH ITS AE. THE ASSESSEE REPORTED FOLL OWING INTERNATIONAL TRANSACTION IN ITS FORM 3CEB: SR. NO. NATURE OF TRANSACTION AMOUNT (RS.) METHOD 1 PROVISION OF SUPPORT SERVICES. 35,51,49,879 TNMM 2 REIMBURSEMENT OF EXPENSES 1,14,11,154 TNMM 3 IMPORT OF FIXED ASSET 180,886 TNMM 3. FOR BENCH MARKING OF PROVISION OF SUPPORT SERVICES, THE ASSESSEE SELECTED TRANSACTION NET MARGIN METHOD (TNMM) AS MOST APPROP RIATE METHOD. THE PROFIT LEVEL INDICATOR (PLI) SELECTED WAS OPERATING PROFIT/ TOTAL COST (OP/TC). THE ASSESSEE HAS SHOWN ITS MARGIN AT 14.86% FOR TRA NSACTION OF PROVISION OF SUPPORT SERVICES. THE ASSESSEE SELECTED 9 COMPANY A S COMPARABLE AND ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 3 COMPUTED THE MARGIN ON THE BASIS OF SINGLE YEAR AVE RAGE MARGIN IN THE FOLLOWING MANNER: SR.NO. NAME OF THE COMPARABLE COMPANY SINGLE YEAR MARGINS (IN PERCENT) 1. ADITYA BIRLA MINACS WORLWIDE LIMITED 3.85 2. CALIBER POINT BUSINESS SOLUTIONS 21.16 3. CROSSDOMAIN SOLUTIONS PVT. LTD. NA 4. DATAMATICS FINANCIAL SERVICES LTD. -4.06 5 ICRA TECHNO ANALYTICS PVT. LTD. 24.90 6. INFORMED TECHNOLOGIES INDIA LTD. 24.20 7 INFOSYS BPO LTD. 31.63 8 NITTANY OUTSOURCING SERVICES PVT. LTD. 21.26 9. R SYSTEMS INTERNATIONAL LTD. 7.55 ARITHMETIC MEAN 16.31 4. THE MARGIN ON COMPARABLE BASED ON AVERAGE OF WAS 16 .31% AND THE ASSESSEES MARGIN FOR INTERNATIONAL TRANSACTION WAS 14.85%. THUS, THE ASSESSEE CLAIMED ITS TRANSACTION AT THE ARMS LENGTH . THE ASSESSING OFFICER MADE A REFERENCE TO TRANSFER PRICING OFFICER (TPO) UNDER SECTION 92CA FOR COMPUTATION OF ARMS LENGTH PRICE (ALP). 5. DURING THE PROCEEDING, THE TPO NOTED THAT THE ASSES SEE HAS NOT CONSIDERED OTHER INCOME AS OPERATING ITEM ALTHOUGH THEY ARE ON NON-OPERATING NATURE AS SEEN IN THE ENTRIES IN THE PROFIT & LOSS A/C, WHICH INCLUDE INTEREST ON DEPOSIT, RENTAL INCOME, PROFIT OF SALE OF ITS ASSET S, REVERSAL OF PROVISION OF ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 4 DOUBTFUL DEBT, LIABILITIES NO LONGER REQUIRED/WRITT EN BACK AND OTHERS AND ACCORDINGLY TPO COMPUTED ASSESSEES PLI AT 8.61% BY EXCLUDING OTHER INCOME. 6. ON BENCHMARKING THE TPO ACCEPTED SIX COMPARABLE AND FURTHER ADDED THREE ADDITIONAL COMPARABLE. THE TPO AFTER INCLUDING THRE E ADDITIONAL COMPARABLE WORKED OUT ARITHMETIC MEAN OF PROFIT LEVEL INDICATO R (PLI) OF 29.55% AGAINST THE MARGIN OF COMPARABLE COMPANY AND ARRIVE D AT MARGIN OF ASSESSEES PLI AT 8.61% BY EXCLUDING OTHER INCOME IN THE FOLLOWING MANNER: SR.NO. NAME OF COMPANY OP/OC 1 CALIBER POINT BUSINESS SOLUTIONS LTD. 21.16% 2 CROSSDOMAIN SOLUTIONS PVT. LTD. NA 3 I C R A TECHNO ANALYTICS LTD. * 24.90% 4 INFORMED TECHNOLOGIES INDIA LTD. 24.20% 5 INFOSYS BPO LTD. 31.63% 6 E4E HEALTHCARE (FORMERLY KNOWN AS NITTANY OUTSOURCING SERVICES PVT. LTD.) 21.26% 7 ACCENTIA TECHNOLOGIES LTD. 43.62% 8 ACROPETAL TECHNOLOGIES LTD. 27.52% 9 E-CLERX SERVICES LTD. 42.14% ARITHMETIC MEAN 29.55% 7. ON THE BASIS OF MARGIN OF FINAL SET OF COMPARABLE M ARGIN OF 29.55%, THE ASSESSEES MARGIN AT 8.6%, ACCORDINGLY, THE TPO PRO POSED THE ADJUSTMENT OF RS. 6,84,85,849/- IN THE FOLLOWING MANNER: ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 5 PARTICULARS AMOUNT TOTAL OPERATING COST IN RELATION TO PROVISION OF SUPPORT SERVICES 32,70,05,579 ARM/S LENGTH REVENUE AS PER COMPARABLES @ 29.55% 42,36,35,579 VALUE OF INTERNATIONAL TRANSACTION (B) 35,51,49,879 105% OF INTERNATIONAL TRANSACTION 37,29,07,373 95% OF INTERNATIONAL TRANSACTION 33,73,92,385 8. THE TPO NOTED THAT ALP FALLS OUTSIDE THE TOLERANCE RANGE OF +/- 5% OF TRANSACTION VALUE, ACCORDINGLY, AMOUNT OF (RS. 42,3 6,35,725/- MINUS RS. 35,51,49,879/-) AN ADJUSTMENT OF RS. 6,84,85,849/- WAS PROPOSED IN THE INTERNATIONAL TRANSACTION WITH REGARD TO PROVISIONS OF SUPPORT SERVICES. THE ASSESSING OFFICER ON RECEIPT OF REPORT OF TPO, MADE UPWARD ADJUSTMENT/ADDITION OF RS. RS. 6,84,85,849/- IN THE DRAFT ASSESSMENT ORDER PASSED UNDER SECTION 143(3) R.W.S. 144C(1) DATED 17 .02.2014. THE COPY OF THE DRAFT ASSESSMENT WAS SERVED ON THE ASSESSEE. 9. THE ASSESSEE FILED ITS OBJECTIONS BEFORE DRP-IV, MU MBAI. THE DRP AFTER CONSIDERING THE OBJECTION OF ASSESSEE DIRECTED TO I NCLUDE CERTAIN ITEM EXCLUDED BY TPO ON THE GROUND THAT SUCH ITEM OF OT HER INCOME ARE OPERATING IN NATURE. HOWEVER, IN CASE THERE ARE SIM ILAR ITEM IN ANY OF THESE COMPARABLE FINALLY CONSIDERED, THE TPO WAS DIRECTED TO EXCLUDE SUCH INCOME FROM OPERATING INCOME OF THE COMPARABLE TO M AINTAIN THE CONSISTENCY. ON RECEIPT OF DIRECTION OF DRP, THE A SSESSING OFFICER PASSED THE FINAL ASSESSMENT ORDER BY MAKING ADJUSTMENT OF ALP OF RS. 6,84,85,849/-. FURTHER, AGGRIEVED BY THE ADDITIONS MADE IN PURSUANCE OF ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 6 DIRECTION OF DRP, IN FINAL ASSESSMENT ORDER UNDER S ECTION 143(3) RWS 144C (13) DATED 21.01.2015, THE ASSESSEE HAS FILED PRESE NT APPEAL BEFORE THE TRIBUNAL. 10. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : GROUND 1 - TRANSFER PRICING ADJUSTMENT OF RS. 6,84, 85,849 RELATING TO PROVISION OF SUPPORT SERVICES 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED TRANSFER PRICING OFFICER ('TPO') AND THE LEARNED ASSESSING O FFICER ('AO') UNDER THE DIRECTIONS OF THE HON'BLE DISPUTE RESOLUTION PANEL ('DRP') ERRED ON FACTS AND IN LAW IN MAKING AN ADDITION OF RS. 6,84,85,849 TO THE INTERNATIONAL TRANSACTION OF THE APPELLANT BASED ON THE PROVISIONS OF CHAPTER X OF THE INCOME-TAX ACT, 1961 ('THE ACT'). 1.2 THE LEARNED AOITPO UNDER THE DIRECTIONS OF THE HON'BLE DRP ERRED ON FACTS AND IN LAW IN DISREGARDING THE VARIOUS SUBMISSIONS MADE BY THE APPELLANT WITHOUT PROVIDING ANY COGENT REASONS THEREOF AND RE JECTED COMPARABLE COMPANIES SELECTED BY THE APPELLANT WITHOUT APPRECI ATING THE FACT THAT SUCH SELECTION WAS BASED ON CONTEMPORANEOUS DATA AND THE TRANSFER PRICING STUDY REPORT PREPARED AND MAINTAINED AS PER SECTION 92D O F THE ACT READ WITH RULE 10D OF THE INCOME-TAX RULES, 1962 ('THE RULES'). 1.3 THE LEARNED AO / TPO UNDER THE DIRECTIONS OF TH E HON'BLE DRP ERRED ON FACTS AND IN LAW IN CONSIDERING ADDITIONAL COMPANIE S FOR DETERMINING THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS, WIT HOUT TAKING INTO CONSIDERATION THE DIFFERENCES IN THE FUNCTIONS PERFORMED, ASSETS EMPLOYED AND RISKS UNDERTAKEN BETWEEN THE APPELLANT AND THE COMPANIES CONSIDERED BY THE TPO AS COMPARABLE AND WITHOUT FINDING ANY MATERIAL DEFICIE NCIES IN THE BENCHMARKING ANALYSIS UNDERTAKEN BY THE APPELLANT. THE LD. TPO/A O/DRP HAVE ERRED IN ERRONEOUSLY SELECTING COMPARABLE COMPANY AND ADDING CERTAIN COMPANIES TO THE FINAL SET OF COMPARABLE COMPANIES ON THE FOLLOWING BASIS. 1.3.1 THE LEARNED TPO/AO/DRP HAS ERRED IN INCLUDING ACCEN TIA TECHNOLOGIES LTD (ACCENTIA) ON THE GROUND THAT AC CENTIA IS ENGAGED IN ITES, EVEN THOUGH ACCENTIA IS NOT FUNCTIONALLY COMPARABLE OF THE APPELLANT AND HAS ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 7 UNDERGONE EXTRAORDINARY EVENT DURING THE YEAR UNDER CONSIDERATION AND HENCE SHOULD BE REJECTED. 1.3.2 THE LEARNED TPO/AO/DRP HAS ERRED IN INCLUDING ACROP ETAL TECHNOLOGIES LTD. ON THE FACTUALLY INCORRECT GROUND THAT IT OPERATES IN TWO SEGMENTS NAMELY ENGINEERING DESIGN AND ITES AND THE ITES SEGMENTAL RESULTS WERE CONSIDERED TO BE COMPARABLE TO THE ASSESSEE. H OWEVER, IT IS EVIDENT FROM THE ANNUAL REPORT OF THE COMPANY THAT ITS SEGMENTS ARE ENGINEERING DESIGN., IT (& NOT ITES) AND HEALTH CARE SERVICES. MOREOVER, TH E TPO AND DRP ERRED IN NOT CONSIDERING THAT ACROPETAL IS ENGAGED IN DEVELO PMENT OF SOFTWARE PRODUCTS AND HENCE NOT COMPARABLE TO THE APPELLANT. 1.3.3 THE LEARNED TPO/AO/DRP ERRED IN UPHOLDING THE SELEC TION OF ECLERX SERVICES LTD. (ECLERX), ON THE GROUND THAT ECLERX OPERATES IN THE DOMAIN OF ITES EVEN THOUGH ECLERX IS NOT FUNCTIONALLY COMPARA BLE AND SUBCONTRACTS/OUTSOURCES ITS WORK, THEREBY OPERATING IN A DIFFERENT BUSINESS MODEL AND HENCE IS NOT COMPARABLE TO THE APPELLANT. 1.4 THE LEARNED AO I TPO UNDER THE DIRECTIONS OF TH E HON'BLE DRP ERRED ON FACTS AND IN LAW IN INCORRECTLY COMPUTING THE MARGI N OF THE APPELLANT BY EXCLUDING INCOME IN THE NATURE OF OPERATING INCOME FROM MARGIN COMPUTATION. 1.5 THE LEARNED AO I TPO UNDER THE DIRECTIONS OF TH E HON'BLE DRP ERRED ON FACTS AND IN LAW IN ERRONEOUSLY STATING THAT THE AP PELLANT HAS CONSIDERED INTEREST ON DEPOSITS, RENTAL INCOME AND PROFIT ON SALE OF FI XED ASSETS AS OPERATING INCOME INSPITE OF THE FACT THAT THESE EXPENSES WERE NEVER CONSIDERED BY THE APPELLANT IN ITS MARGIN COMPUTATION. 1.6 THE LEARNED AO I TPO UNDER THE DIRECTIONS OF TH E HON'BLE DRP ERRED ON FACTS AND IN LAW IN ADOPTING AN INCONSISTENT APPROA CH FOR COMPUTATION OF MARGINS OF THE APPELLANT AND COMPARABLE CONSIDERING OTHER INCOME AS NON- OPERATING INCOME IN CASE OF THE APPELLANT AND SAME AS OPERATING INCOME IN CASE OF COMPARABLE COMPANIES. 1.7 THE LEARNED AO I TPO UNDER THE DIRECTIONS OF TH E HON'BLE DRP ERRED ON FACTS AND IN LAW IN NOT PROVIDING ADEQUATE OPPORTUN ITY TO THE APPELLANT TO VERIFY ITS MARGIN COMPUTED BY THE LEARNED TPO. 1.8 THE LEARNED AO/TPO UNDER THE DIRECTIONS OF THE HON'BLE DRP ERRED ON FACTS AND IN LAW IN REQUIRING FINANCIAL DATA OF ONLY THE CURRENT YEAR (I.E. FY 2009-10) ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 8 OF THE COMPARABLE COMPANIES TO BE USED FOR BENCHMAR KING THE APPELLANT'S INTERNATIONAL TRANSACTION OF PROVISION OF SUPPORT S ERVICES. 1.9 THE LEARNED AO/TPO UNDER THE DIRECTIONS OF THE HON'BLE DRP ERRED ON FACTS AND IN LAW IN NOT ALLOWING APPROPRIATE ADJUSTMENTS TO THE COMPARABLE COMPANIES AS WAS COMPULSORILY REQUIRED TO BE DONE IN ACCORDAN CE WITH THE PROVISIONS OF RULE 10B(L)(E)(III) OF THE RULES, TO ACCOUNT FOR DI FFERENCE BETWEEN INTERNATIONAL TRANSACTIONS AND THE ALLEGED COMPARABLE UNCONTROLLE D TRANSACTIONS SELECTED BY THE LEARNED AO/TPO. THE APPELLANT PRAYS THAT THE LEARNED AO/TPO BE DIRE CTED TO CONSIDER THE INTERNATIONAL TRANSACTION OF THE APPELLANT AS ARM'S LENGTH AND ACCORDINGLY THE TRANSFER PRICING ADJUSTMENT OF RS. 68,485,849 S HOULD BE DELETED. GROUND 2 - PENALTY PROCEEDINGS UNDER SECTION 271(1) (C) OF THE ACT 2.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED AO HAS ERRED IN LAW IN PROPOSING TO INITIATE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. THE APPELLANT PRAYS THAT THE PENALTY PROCEEDINGS BE DROPPED IN THE MATTER. GROUND 3 - SHORT CREDIT FOR ADVANCE TAXES PAID AND TAXES DEDUCTED AT SOURCE 3.1 THE LEARNED AO ERRED ON FACTS AND IN LAW IN GRA NTING SHORT CREDIT FOR ADVANCE TAXES OF RS. 19,950,000 AS AGAINST RS. 25,3 36,000 CLAIMED BY THE APPELLANT IN THE RETURN OF INCOME. 3.2 THE LEARNED AO ERRED ON FACTS AND IN LAW IN GRA NTING SHORT CREDIT FOR TAX DEDUCTED AT SOURCE ('TDS') OF RS. 104,760 AGAINST R S. 821,509 CLAIMED BY THE APPELLANT IN THE RETURN OF INCOME. THE APPELLANT PRAYS THAT THE LEARNED AO BE DIRECTED TO GRANT THE CREDIT OF RS. 25,336,000 FOR ADVANCE TAXES AND RS. 821,509 FOR TD S AS CLAIMED BY THE APPELLANT IN THE RETURN OF INCOME. GROUND 4 - CONSEQUENTIAL RELIEFS 4.1 THE LEARNED AO UNDER THE DIRECTIONS OF THE HON 'BLE DRP ERRED IN ARRIVING AT VARIOUS UNWARRANTED AND ERRONEOUS CONCLUSIONS UNSUP PORTED BY ANY RELEVANT MATERIAL IN DECIDING THE CASE. FURTHER, THEY ALSO F AILED TO CONSIDER THE CONTRARY MATERIAL AND EVIDENCE ADDUCED BY THE APPELLANT. ACC ORDINGLY, THE APPELLANT PRAYS THAT THE AO BE DIRECTED TO GRANT ALL CONSEQUE NTIAL RELIEFS ARISING OUT OF RELIEFS FROM THIS APPEAL. ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 9 4.2 THE LEARNED AO HAS ERRED IN LEVYING INTEREST UN DER SECTION 234B OF THE ACT OF RS. 17,462,176. ACCORDINGLY, THE APPELLANT PRAYS THAT THE AO BE DIRECTED TO GRANT CONSEQUENTIAL RELIEF IN COMPUTING INTEREST UN DER SECTION 234B OF THE ACT IN ACCORDANCE WITH THE LAW. 4.3 THE LEARNED AO HAS ERRED IN LEVYING INTEREST UN DER SECTION 234C OF THE ACT OF RS. 806,573 ON THE ASSESSED INCOME. ACCORDINGLY, THE APPELLANT PRAYS THAT THE AO BE DIRECTED TO GRANT CONSEQUENTIAL RELIEF IN COMPUTING INTEREST UNDER SECTION 234C OF THE ACT IN ACCORDANCE WITH THE LAW. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND OR WITHDRAW ALL OR ANY OF THE GROUNDS OF APPEAL HEREIN ABOVE AND TO SUBMIT SUCH S TATEMENTS, DOCUMENTS AND PAPERS AS MAY BE CONSIDERED NECESSARY EITHER AT OR BEFORE THE HEARING OF THIS APPEAL AS PER LAW. GROUND NO.5: ADDITIONAL GROUNDS OF APPEAL FILED WIT H THE ITAT BY THE APPELLANT VIDE SUBMISSION DATED 5 NOVEMBER 2015. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, INFOSYS BPO LTD. OUGHT NOT TO BE RETAINED IN THE SET OF COMPARABLE T O DETERMINE THE ARMS LENGTH PRICE OF INTERNATIONAL TRANSACTION ENTERED INTO BY THE ASSESSEE. 11. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) F OR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE N OTED THAT THE ASSESSEE HAS RAISED ADDITIONAL GROUND OF APPEAL VIDE APPLICA TION DATED 05.11.2015. IN THE ADDITIONAL GROUND OF APPEAL, THE ASSESSEE HAS R AISED GROUND FOR EXCLUSION OF INFOSYS BPO LTD. FROM FINAL SET OF COMPARABLE IN DETERMINING ARMS LENGTH PRICE OF INTERNATIONAL TRANSACTION ENTERED B Y ASSESSEE. IN THE APPLICATION FOR ADMISSION OF ADDITIONAL GROUND, THE ASSESSEE HAS PLEADED THAT NO ADDITIONAL FACTS ARE REQUIRED TO BE BROUGHT ON R ECORD FOR ADJUDICATION. FACTS RELATING TO ADJUDICATION OF ADDITIONAL GROUND OF APPEAL ARE EMANATING FROM THE ORDER OF LOWER AUTHORITIES. TO SUPPORT THE APPLICATION, THE ASSESSEE ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 10 HAS RELIED UPON THE DECISION OF HONBLE SUPREME COU RT IN NATIONAL THERMAL POWER CORPORATION LTD. VS. CIT [229 ITR 383 (SC)] A ND HONBLE BOMBAY HIGH COURT IN CIT VS. PRUTHVI BROKERS & SHAREHOLDER S [349 ITR 336(BOM)]. THE LD. AR MADE HIS SUBMISSION AS PER TH E AVERMENTS IN THE APPLICATION FOR ADMISSION OF ADDITIONAL GROUND. 12. THE LD. DR FOR THE REVENUE, ON THE OTHER HAND NOT S ERIOUSLY OPPOSED THE ADDITIONAL GROUND OF APPEAL RAISED BY ASSESSEE. CON SIDERING THE FACTS OF THE CASE, WE FIND THAT NO ADDITIONAL FACTS ARE REQUIRED TO BE BROUGHT ON RECORD FOR ADJUDICATION OF ADDITIONAL GROUND OF APPEAL, AL L FACTS RELATING TO ADJUDICATION OF ADDITIONAL GROUNDS ARE EMANATING FR OM THE ORDERS OF LOWER AUTHORITIES. ACCORDINGLY, THE ADDITIONAL GROUNDS OF APPEAL RAISED BY ASSESSEE ARE ADMITTED FOR ADJUDICATION. 13. NOW, TURNING TO THE MERITS OF VARIOUS GROUNDS OF A PPEAL. THE LD. AR OF THE ASSESSEE SUBMITS THAT IN CASE FROM FINAL SET OF COM PARABLE, THE COMPARABLE NO. 5, 7, 8 & 9 I.E. INFOSYS BPO, ACCENTIA TECHNOLO GIES, ACROPETAL TECHNOLOGIES AND E-CLERX SERVICES LTD. ARE EXCLUDED AND DATAMATICS FINANCIAL SERVICES LTD. ARE INCLUDED, THE ASSESSEE S MARGIN WOULD BE WITHIN PERMISSIBLE RANGE. THE LD. AR FURTHER SUBMITS THAT E-CLERX AND ACCENTIA TECHNOLOGIES WAS EXCLUDED IN THE ASSESSEES OWN CASE FOR A.Y. 2 009-10 IN ITA NO. 1465/MUM/2014 DATED 31.08.2018 ON THE TEST OF FUNCTIONALITY. FURTHER, ACROPETAL TECHNOLOGY AND INFOSYS BPO ARE A LSO NOT FUNCTIONALLY COMPARABLE WITH THE ASSESSEE. ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 11 14. FOR EXCLUSION OF INFOSYS BPO, THE LD. AR OF THE ASSESSEE SUBMITS THAT THE RETENTION OF INFOSYS BPO AS A COMPARABLE WHICH WAS INADVERTENTLY INCLUDED AS A COMPARABLE BY THE ASSESSEE ITSELF IN ITS TRANS FER PRICING STUDY. THERE IS NO ESTOPPEL IN THE LAW TO EXCLUDE THE COMPARABLE, I F THE SAME IS NOT COMPARABLE WITH THE ASSESSEE ON FUNCTIONAL COMPARAB ILITY. IT IS SUBMITTED THAT INFOSYS BPO IS A GIANT COMPANY WITH DIFFERENT RISK PROFILE AND NATURE OF SERVICES, HAS BRAND VALUE AND OWNS IPS UNLIKE THE A SSESSEE WHO BROADLY PROVIDES BACK OFFICE SUPPORT SERVICE AND HENCE NOT COMPARABLE TO THE ASSESSEE. THE LD. AR OF THE ASSESSEE SUBMITS THAT T RIBUNAL IN CASE OF STREAM INTERNATIONAL SERVICES (P.) LTD. VS. ADIT (141 ITD 492 BOM-TRIB), EXCLUDED THIS COMPARABLE BY TAKING VIEW THAT INFOSY S BPO IS A MARKET LEADER AND A GIANT COMPANY WITH A DIFFERENT RISK PR OFILE AND NATURE OF SERVICE, HAS BRAND VALUE AND HENCE NOT COMPARABLE T O THE ASSESSEE DUE TO HUGE DIFFERENCE IN THE SIZE AND SCALE OF THE COMPAN Y. THE TPO IN A.Y. 2009-10 HIMSELF REJECTED THIS COMPARABLE ON ACCOUNT OF MULTIPLE FUNCTIONAL SEGMENTS WITH HUGE ALLOCATED ITEMS. IN SUPPORT OF H IS SUBMISSION, THE LD. AR RELIED UPON THE DECISION OF TRIBUNAL IN STREAM I NTERNATIONAL SERVICES (P.) LTD. VS. ADIT, HONBLE BOMBAY HIGH COURT IN CI T VS. PENTAIR WATER INDIA (P.) LTD. (381 ITR 216) AND HONBLE DELHI HIG H COURT IN PCIT VS. SANVIH INFO GROUP PVT. LTD. (ITA NO. 420 OF 2019 DA TED 16.05.2019). 15. FOR EXCLUSION OF ACROPETAL TECHNOLOGIES LIMITED , THE LD. AR OF THE ASSESSEE SUBMITS THAT THE LD. TPO HAS CONSIDERED AC ROPETAL AS A COMPARABLE ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 12 CONSIDERING ALL OF ITS THREE SEGMENTS INCLUDING THE IT SEGMENT. MOREOVER, THE PERVERSITY IN THE TPO ORDER IS SUCH THAT THE TP O HAS REFERRED TO PAGE NO.24 OF THE ANNUAL REPORT OF THE COMPARABLE AND HA S MENTIONED THAT ACROPETAL HAS ONLY TWO SEGMENTS, NAMELY, ENGINEERIN G DESIGN AND ITES SEGMENT. THE LD. AR FURTHER SUBMITS THAT THE SEGMEN TS GIVEN AT PAGE 24 OF THIS COMPARABLE COMPANY ARE THE SEGMENTS FOR AY 200 9-10. MOREOVER, THE TPO HAS WRONGLY MENTIONED THE IT SEGMENT OF ACROPET AL AS ITES SEGMENT WHICH IS FACTUALLY INCORRECT. THE LD. AR FURTHER SU BMITS THAT THERE ARE THREE SEGMENTS REPORTED BY THIS COMPARABLE, NAMELY, ENGIN EERING DESIGN SERVICE, INFORMATION TECHNOLOGY SERVICES (IT SEGMENT) AND HEALTHCARE IN ACROPETAL TECHNOLOGIES FOR THE CONCERNED YEAR- AY 2 009-10. FOR THE CONCERNED YEAR THREE SEGMENTS ARE PROVIDED AT PAGE 23 OF THE ANNUAL REPORT OF THIS COMPARABLE. THE LD. AR OF THE ASSESS EE SUBMITS THAT IT SEGMENT OF ACROPETAL CANNOT BE COMPARED TO THE ASSE SSEE COMPANY, WHICH IS UNDISPUTEDLY AN ITES COMPANY. THE ACTIVITIES UND ERTAKEN BY ACROPETAL ARE NOT COMPARABLE TO THE FUNCTIONS OF THE ASSESSEE AND THIS COMPARABLE IS LIABLE TO BE EXCLUDED. THE RELIABLE SEGMENTAL DATA IS NOT AVAILABLE. THE LD. AR OF THE ASSESSEE SUBMITS THAT HONBLE DELHI HIGH COURT IN PCIT VS. SEXO INDIA PRIVATE LTD. (ITA NO. 682 OF 2016 DATED 28.09 .2016) HELD THAT IN CASE OF TNMM, RELIABLE SEGMENTAL DETAILS OF ALL THREE EL EMENTS, I.E. COST, SALES AND ASSETS EMPLOYED ARE REQUIRED. MERE ALLOWABILITY OF SEGMENTAL SALE IS NOT SUFFICIENT. ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 13 16. THE FOR INCLUSION OF DATAMATICS FINANCIAL SERVICES LIMITED., THE LD. AR OF THE ASSESSEE SUBMITS THAT THE TPO HAS REJECTED D ATAMATICS ON THE GROUND THAT IT IS A PERSISTENT LOSS MAKING COMPANY. THE LD. AR OF THE ASSESSEE SUBMIT THAT IT IS A WELL SETTLED LAW THAT A COMPANY CANNOT BE CONSIDERED AS A PERSISTENT LOSS MAKING COMPANY IF IT HAS INCURRED A LOSS IN ONE OR TWO FINANCIAL YEARS CONSECUTIVELY. THIS FILTER WAS ALSO APPLIED BY THE ASSESSEE WHILE ELIMINATING COMPANIES TO ARRIVE AT A SET OF C OMPARABLE IN THE TP STUDY. IT WAS SUBMITTED THAT DATAMATICS HAS ENJOYED NET PROFITS (PROFITS BEFORE TAX) IN FY 2007-08 TO FY 2010-11. MOREOVER, IF NCP MARGINS OF DATAMATICS IS CONSIDERED, IT CAN BE OBSERVED THAT T HE NCP MARGIN LOSS IS ONLY IN THE PRESENT YEARS. IN SUPPORT OF HIS SUBMIS SION, THE LD. AR SUBMITS THAT HONBLE BOMBAY HIGH COURT IN GOLDMAN SACHS (IN DIA) SECURITIES PVT. LTD. VS. CIT IN ITA NO. 2222/2013, WHEREIN IT WAS H ELD THAT A COMPANY WHICH HAD LOSSES IN TWO CONSECUTIVE YEAR WAS HELD N OT TO BE A PERSISTENT LOSS MAKING COMPANY AND WAS ACCEPTED AS A COMPARABLE. TH E LD. AR FURTHER SUBMITS THAT TPO HIMSELF ACCEPTED DATAMATICS AS A C OMPARABLE IN A.Y. 2009-10, ACCORDINGLY BY FOLLOWING THE AFORESAID DEC ISION OF JURISDICTIONAL HIGH COURT, IN THE LIGHT OF THE FACT THAT DATAMATIC S TO BE INCLUDED AS A COMPARABLE AND CANNOT BE REJECTED, MERELY BECAUSE I T HAS INCURRED LOSSES. THE LD. AR ALSO RELIED UPON THE DECISION OF TRIBUNA L TPG CAPITAL INDIA (P.) LTD. VS. DCIT (ITA NO. 7594/MUM/2014). ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 14 17. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF ASSESSING OFFICER/TPO/DRP. THE LD. DR FURTHER SUBMI TS THAT TPO WHILE DETERMINING THE ALP OF THE INTERNATIONAL TRANSACTIO N REFERRED FOR COMPUTATION OF ALP HAS GIVEN DETAILED ANALYSIS ON I NCLUSION OF INFOSYS BPO LTD., ACCENTIA TECHNOLOGY, ACROPETAL & ECLERX B EING FUNCTIONALLY COMPARABLE WITH THE ASSESSEE. FURTHER, DATAMATICS F INANCIAL SERVICES WAS EXCLUDED ON FUNCTIONAL DISSIMILARITIES. THE DRP ALS O EXAMINED THE EXCLUSION AND INCLUSION OF VARIOUS COMPARABLE. THE LD. DR FURTHER SUBMITS THAT IN THE EVENT OF EXCLUSION OR INCLUSION OF ANY COMPARABLE, THE MATTER MAY BE RESTORED TO THE FILE OF AO/TPO FOR COMPUTATI ON OF ALP AFRESH. 18. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF LOWER AUTHORITIES. WE HAVE AL SO DELIBERATED ON VARIOUS CASE LAW RELIED BY LD. AR OF THE ASSESSEE. WE HAVE NOTED THAT THE ASSESSEE WHILE BENCHMARKING THE ALP WITH REGARD TO INTERNATI ONAL TRANSACTION OF ASSESSEE, THE ASSESSEE SELECTED 9 COMPARABLES, THE TPO ACCEPTED ONLY 4 COMPARABLE, THE TPO INCLUDED 5 ADDITIONAL COMPARABL E IN THE FINAL SET OF COMPARABLE. 19. BEFORE US, THE LD. AR OF THE ASSESSEE DISPUTED THE INCLUSION OF 4 COMPARABLE ONLY, I.E. INFOSYS BPO LTD., ACCENTIA TECHNOLOGY LT D., ACROPETAL TECHNOLOGY LTD. AND ECLERX. SIMILARLY, THE LD. AR A LSO ARGUED ON INCLUSION OF DATAMATICS FINANCIAL SERVICES LTD. IN FINAL SET OF COMPARABLE. WE HAVE NOTED IN AY 200910 TPO INCLUDED ACCENTIA TECHNOLOG Y AND ECLERX IN ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 15 FINAL SET OF COMPARABLE, THE INCLUSION WAS AFFIRMED BY DRP, HOWEVER, ON APPEAL BEFORE THE TRIBUNAL BOTH THE COMPARABLE WERE EXCLUDED ORDER DATED 31.08.2018, VIDE ITA NO. 1465/MUM/2014 AND 1493/MUM /2014 WITH THE FOLLOWING DIRECTION: 7. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE DISPUTES T HE FOLLOWING SELECTION OF COMPARABLES IN THIS CASE: A) CORAL HUBS LTD. ALSO KNOWN AS VISHAL INFORMATION TE CHNOLOGIES LTD. B) ECLERX SERVICES LTD. C) ACCENTIA TECHNOLOGIES LTD. D) COSMIC GLOBAL LTD. 8. .. .. ACCORDINGLY, WE PROCEED TO ADJUDICATE THE ISSUE AS UNDER: A) . B) ECLERX SERVICES LTD.: IN RESPECT OF THIS COMPARABLE, THE ASSESSEE HAS SUB MITTED THAT THIS IS ENGAGED IN DATA ANALYTIC KPO SERVICE SPECIALIZING I N THE FIELD OF FINANCIAL SERVICES AND RETAIL AND MANUFACTURING. THE ASSESSEE HAS SUBMITTED THAT AS ECLERX IS A KPO WHEREAS THE ASSESSEE HAS BEEN CLASS IFIED AS AN IT ENABLED SERVICE PROVIDER BY THE TPO, ECLERX CANNOT BE TAKEN AS A COMPARABLE CASE. THE ASSESSES IN THIS REGARD EXPLAINED THAT WHILE UNDER BPO SERVICES, THE MAIN ACTIVITIES INVOLVE DATA ENTRY, DATA PROCESSING AND OTHER ROUTINE SERVICES, IN THE CASE OF KPO THE SERVICES ARE MORE RESEARCH ORIENTED INVOLVING HIGHER SKILL SET LEVELS. THOUGH EVEN UNDER KPO SERVICES THERE MAY BE SOME AMOUNT OF BPO ACTIVITY, KPO SERVICES ARE ESSENTIALLY CHARACTERIZE D BY PERFORMANCE OF RESEARCH, DOMAIN BASED ANALYSIS AND DOMAIN BASED EX PERTISE. IN A KPO SERVICE, DEPTH OF KNOWLEDGE AND EXPERIENCE AND JUDGEMENT FAC TOR PLAYS AN IMPORTANT ROLE WHILE IN THE CASE OF BPO, IT IS CONCERNED MORE WITH SIZE, VOLUME AND EFFICIENCY. HIGHLIGHTING THESE ASPECTS THE ASSESSEE HAS SUBMITTED ECLERX SHOULD NOT BE CONSIDERED AS COMPARABLE TO THE ASSESSEE. ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 16 THE DRP IN THIS REGARD HAS REJECTED THE ASSESSEES CONTENTION BY OBSERVING AS UNDER: WHILE EXAMINING THE FUNCTIONAL ANALYSIS PERFORMED B Y THE ASSESSEE IN ITS STUDY REPORT, IT HAS ALREADY BEEN POINTED OUT THAT THE ASSESSEE'S ACTIVITY IS MORE IN THE NATURE OF ANALYTICS AND NOT IN THE NATU RE OF ROUTINE BPO ACTIVITY. AS A MATTER OF FACT, IT IS EXPLAINED AT P ARA 4.1.1.3 OF THE TP STUDY REPORT THAT THE ASSESSEE HELPS THE AE IN EVALUATING THE PROBABLE MAXIMUM LOSS INCLUDING INSPECTION OF THE LOCATION, CONSTRUCTION, FIRE FIGHTING ABILITY ETC OF THE PROPERTY WHICH IS SUBJE CT MATTER OF INSURANCE. THE INFORMATION THAT IS PROVIDED BY THE ASSESSEE AL SO ASSIST THE AE IN SUGGESTING SUITABLE MODIFICATION / IMPROVEMENT IN T HE PROCESS THAT COULD REDUCE POTENTIAL HAZARDS AND CONSEQUENTIALLY THE PR EMIUM. SIMILARLY UNDER THE CLAIMS SUPPORT THE ASSESSEE FACILITIES TH E CLAIM SURVEY PROCESS BY SUPPORTING THE INTERNATIONAL LOSS ADJUSTERS SENT BY THE AE TO ASSESS THE CLAIM. SIMILARLY 'LOSS OF PROFIT CLAIM' INVOLVES A CONSIDERABLE AMOUNT OF ESTIMATION AND IS SUBJECTIVE. THE PROCESS INVOLVED IS INHERENTLY COMPLICATED AND IT IS AGAIN EXPLAINED AT PARA 4.1.1 .5 OF THE TPSR THAT THE ASSESSEE SUPPORTS AND HELPS AE IN PROCESSING SUCH B USINESS INSURANCE CLAIMS BY GATHERING AND PROCESSING ALL THE RELEVANT DATA IN A SUITABLE MANNER. ALL THIS CLEARLY SHOWS THAT THE SERVICES PE RFORMED BY THE ASSESSEE ARE NOT PURELY IN THE NATURE OF BPO SERVIC ES AS CONTENDED BY IT OR EVEN AS CONSIDERED BY THE TPO. A REFERENCE TO TH E ANNUAL REPORT OF ECLERX ALSO INDICATED THAT THE E-CLERK IS ENGAGED I N SIMILAR SERVICES OF PROVIDING MARKET RESEARCH, MARKET SUPPORT, ANALYSIS OF DATA ETC. HENCE, FUNCTIONALLY THERE APPEARS TO BE NO REASON WHY ECLE RX SHOULD NOT BE COMPARED WITH THE ASSESSEE. HENCE, THIS COMPARABLE IS RETAINED. IN THIS REGARD, THE LD. COUNSEL OF THE ASSESSEE SUB MITTED THAT UNLIKE THIS COMPARABLE, ECLERX SERVICES LTD. IS NOT INVOLVED IN HIGH-END SERVICES AND IT IS NOT A KPO. IT HAS BEEN SUBMITTED THAT THE ASSESSEE IS ENGAGED INTO VARIOUS SERVICES LIKE DATA ANALYTICAL, DATA PROCESSING SERV ICES, PRICING ANALYTICS, BUNDLING OPTIMIZATION, CONTENT OPERATION, SALES AND MARKETING SUPPORT, PRODUCT DATA MANAGEMENT, REVENUE MANAGEMENT. FOR THIS, THE LD. COUNSEL OF THE ASSESSEE HAS REFER RED TO EXTRACTS FROM THE ANNUAL REPORT. ON THE OTHER HAND, IT HAS BEEN SUBMI TTED THAT THE ASSESSEE IS MERELY ENGAGED IN RENDERING OF SUPPORT SERVICES TO ITS FOREIGN AE. HENCE, IT HAS BEEN CLAIMED THAT ECLERX SERVICES LTD. IS ENGAG ED INTO THE VARIOUS SERVICES WHICH ARE FUNCTIONALLY DISSIMILAR TO THE ASSESSEE. IT HAS BEEN FURTHER SUBMITTED THAT NO SEGMENTAL FINANCIAL DATA IS AVAILABLE AND, HENCE, IN THE ABSENCE OF SAID ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 17 DATA, IT CANNOT BE SAID TO BE COMPARABLE TO THE ASS ESSEE. IN THIS REGARD, THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT WITHOUT PREJ UDICE TO THE SUBMISSION OF THE ASSESSEE THAT IT IS NOT INVOLVED IN HIGH AND SE RVICES AND THAT IT IS NOT A KPO, IT IS SUBMITTED THAT TWO COMPANIES CANNOT BE HELD T O BE COMPARABLE TO EACH OTHER MERELY BECAUSE BOTH THE COMPANIES ARE ENGAGED INTO KPO SERVICES. PER CONTRA, THE LD. DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. UPON CAREFUL CONSIDERATION, WE FIND THAT THE ITAT H AS CONSIDERED THIS ISSUE IN THE CASE OF M/S. FRACTAL ANALYTICS PRIVATE LIMITED (SUPRA), WHEREIN THE TRIBUNAL HAS HELD AS UNDER: '72, UPON CAREFUL CONSIDERATION, WE NOTE THAT ASSES SEE IS ENGAGED IN PROVIDING ANALYTICAL SOLUTIONS TO ITS AES TO LOWER THE COST OF CUSTOMER ACQUISITION, TO IMPROVE BRAND PERFORMANCES, IMPROVE MULTI-DIMENSIONAL REPORTING, UNDERSTAND CONSUMER BEHAVIOR, AND MANY O THER ANALYTICAL SERVICES. AS AGAINST THE ABOVE, WE FIND THAT ECLERX SERVICES IS ENGAGED INTO DIVERSE RANGE OF ACTIVITIES WHICH INCLUDES FIN ANCIAL SERVICES AND SALES AND MARKETING SUPPORT SERVICES. ITS FUNCTIONS PRIMA RILY ARE CONSULTANCY, BUSINESS ANALYSIS AND SOLUTION TESTING. THUS, M/S.E CLERX SERVICES IS ENGAGED INTO VARIOUS FUNCTIONS AND SEGMENTS. ITS SE GMENTAL DATA ARE NOT AVAILABLE. IN FOLLOWING CASE LAWS IT HAS BEEN HELD THAT THE COMPANY SHOULD HE REJECTED AS COMPARABLE AS ITS SEGMENTAL D ATA ARE NOT AVAILABLE:- (I) M/S.CAPITAL IQ INFORMATION SYSTEMS (I NDIA) PVT. LTD. V. ACIT [ITA NO.L24/HYD/2014] (II) M/S. EXCELLENCE DATA RESEARCH PVT. LTD V. ITO [ITA NO. 159/HYD/2014] 13. FURTHERMORE WE NOTE THAT IN THE CASE OF RAMPGR EEN SOLUTIONS PRIVATE LIMITED (SUPRA) HAS HELD THAT ALTHOUGH SUPE R PROFITS COULD NOT BE THE ONLY REASON TO EXCLUDE THE COMPARABLE, HOWEVER, HON 'BLE HIGH COURT HAD EXPOUNDED THAT IN SUCH CIRCUMSTANCES IT MAY BE NECESSARY TO BEAR IN MIND THE SUPER NORMAL PROFITS IN A CERTAIN CASES IN DICATED FUNCTIONAL DISSIMILARITY. THAT A WIDE DEVIATION IN THE PLI AMO NGST SELECTED COMPARABLES COULD BE INDICATIVE THAT THE COMPARABLE S SELECTED ARE EITHER MATERIALLY DISSIMILAR OR THE DATA USED IS NOT RELIA BLE. THE HON 'BLE HIGH COURT IN (HE DECISION NOTED THE FINDINGS OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MAERSK GLOBAL CENTRES (INDIA) PVT. L TD. WHEREIN IT WAS NOTED THAT ECLERX SERVICES IS ENGAGED IN DATA ANALY TICAL, DATA PROCESSING SERVICES, PRICING ANALYTICS, BUNDLING OPTIMIZATION, CONTENT OPERATION, SALES AND MARKETING SUPPORT, PRODUCT DATA MANAGEMEN T, REVENUE MANAGEMENT. FURTHERMORE IT IS NOTED THAT ECLERX SER VICES ALSO OFFERED ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 18 FINANCIAL SERVICES SUCH AS REAL-TIME CAPITAL MARKET S, MIDDLE AND BACK- OFFICE SUPPORT, PORTFOLIO RISK MANAGEMENT SERVICES AND VARIOUS CRITICAL DATA MANAGEMENT SERVICES. 14. THE OBSERVATION OF THE LEARNED DRP THAT ASSESS EE AND ECLERX SERVICES ARE KPOS AND HENCE COMPARABLE IS ALSO NOT SUSTAINABLE. THE HON 'BLE DELHI HIGH COURT IN THE CASE OF ACTIS GLOB AL SERVICES PRIVATE LIMITED (SUPRA) HAD HELD THAT EVEN THOUGH BOTH BEIN G KPOS TWO ENTITIES ARE NOT COMPARABLE IF THEY WERE CATERING TO DIFFERE NT TYPES OF BUSINESS. 15. FROM THIS IT IS AMPLY CLEAR THAT THE SAID DIVE RSE ACTIVITIES ARE NOT COMPARABLE WITH THE SERVICE OF PROVIDING ANALYTICAL SOLUTION RENDERED BY THE ASSESSEE. MOREOVER THOUGH SOME FUNCTIONS ARE SI MILAR, THERE ARE LOT OF OTHER FUNCTIONS BY M/S.ECIERX SERVICES WHICH ARE NO T DONE BY THE ASSESSEE. HENCE, ABSENCE OF SEGMENTAL DATA MAKE COM PARABILITY NOT FEASIBLE. IN THESE CIRCUMSTANCES AND IN THE FACTS A ND CIRCUMSTANCES DISCUSSED ABOVE CONSIDERING THE PRECEDENTS AS ABOVE , WE ARE OF THE CONSIDERED OPINION THAT ECLERX SERVICES IS NOT COMP ARABLE IN THIS CASE TO THAT OF THE ASSESSEE BECAUSE OF DIVERSE NATURE OF I TS FUNCTIONS. A LARGE NUMBER OF THEM ARE DISSIMILAR TO THAT OF THE ASSESS EE AND THE FACT THAT PROPER SEGMENTAL DATA ARE NOT AVAILABLE. HENCE, HOL DING THAT ECLERX SERVICES CANNOT BE TAKEN AS A COMPARABLE IN THIS RE GARD, WE REMIT THE ISSUE TO THE TPO TO MAKE THE COMPUTATION AFRESH AFT ER EXCLUDING ECLERX SERVICES AS A COMPARABLE, AND MAKING FURTHER-COMPUT ATION AS PER LAW. IN VIEW OF THE ABOVE PRECEDENT, WE ALLOW THE GRIEVA NCE OF THE ASSESSEE AND HOLD THAT THIS COMPARABLE IS FUNCTIONALLY DIFFE RENT. C) ACCENTIA TECHNOLOGIES LTD .: IN THIS REGARD, THE ASSESSEE'S OBJECTION AGAINST TH IS COMPARABLE SELECTION IS THAT IT IS ENGAGED IN PROVIDING SOFTWARE SERVICE S AND SINCE THE TPO HIMSELF HAS REJECTED OTHER CASES THAT ARE ENGAGED IN SOFTWA RE BUSINESS, THIS CASE ALSO SHOULD BE EXCLUDED ON THE PRINCIPLE OF CONSISTENCY. THE ASSESSEE HAS ALSO REFERRED TO THE FACT THAT THIS COMPANY IS CONCENTRA TING ON HEALTH CARE, RECEIVABLE CYCLE MANAGEMENT, WHICH ARE NOT SIMILAR TO THE ASSE SSEE'S ACTIVITIES. THE DRP IN THIS REGARD REJECTED THE ASSESSEES CONT ENTION AND GAVE THE FOLLOWING DIRECTIONS: THE ASSESSEE CONTESTS ON THE GROUND THAT SEGMENTAL DATA ARE NOT AVAILABLE. THE SUPPORT SERVICES PROVIDED BY THE COMPANY ARE CL ASSIFIED UNDER BPO/ITES. IT IS ALSO SEEN FROM THE ANNUAL REPORT OF THE COMPANY THAT ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 19 INCOME FROM ITES IS 78.72% OF TOTAL OPERATIONAL REV ENUE, FURTHER, IN CASE OF M/S WILLIS PROCESSING SERVICES (INDIA) PVT LTD I N ITA NO.4547/MUM/2012 IN PARA 18, AS WELL AS DELHI BENCH ES OF THE TRIBUNAL IN THE CASE OF ACTIS ADVISORS PVT LTD IN ITA NO. 52 77/DEL/2011 HAVE ACCEPTED THIS AS A COMPARABLE. HENCE, THE CLAIM OF THE ASSESSEE IS REJECTED AND THE ACTION OF TPO IS UPHELD IN THIS CA SE. THE LD. COUNSEL OF THE ASSESSEE IN THIS REGARD SUBM ITTED THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PTC SOFTWARE (I) PVT. LTD (SUPRA) HAS UPHELD THE EXCLUSION OF ACCENTIA TECHNOLOGIES LTD. ON THE GROUND OF IT BEING FUNCTIONALLY DIFFERENT INASMUCH AS IT DEVELOPS ITS OWN SOFTWARE AND RENDER MEDICAL TRANSCRIPTION SERVICES AND THAT PROFIT OF A CCENTIA TECHNOLOGIES LTD INCLUDED EXTERNAL EVENT OF MERGER AND AMALGAMATION. THE HONBLE HIGH COURT HAS HELD AS UNDER: (I) THE IMPUGNED ORDER OF THE TRIBUNAL HAS EXCLUDED M/S. ACCENTIA TECHNOLOGIES LTD., FROM THE LIST OF COMPARABLES TO DETERMINE THE ALP OF THE RESPONDENT'S TRANSACTIONS. (II) THE IMPUGNED ORDER RENDERS A FINDING OF FACT T HAT THE NATURE OF ACTIVITIES CARRIED OUT BY M/S. ACCENTIA TECHNOLOGIE S LTD., ARE DIFFERENT FROM THAT CARRIED OUT BY RESPONDENT. M/S. ACCENTIA TECHNOLOGIES LTD., DEVELOPES ITS OWN SOFTWARE AND RENDERED MEDICAL TRA NSCRIPTION SERVICES WHILE THE RESPONDENT IS PROVIDING BPO SERVICES. BES IDES, THE IMPUGNED ORDER OF THE TRIBUNAL HELD THAT HIGH PROFIT MARGINS OF M/S. ACCENTIA TECHNOLOGIES LTD., WAS ATTRIBUTABLE TO AMALGAMATION WHICH TOOK PLACE IN THE PREVIOUS YEARS RELEVANT TO SUBJECT ASSESS MENT YEAR. THEREFORE, NOT COMPARABLE. (III) IN FACT, THIS COURT IN GIT V/S. APTARA TEC HNOLOGY LTD., (INCOME TAX APPEAL NO. 1209 OF 2015) HAS UPHELD THE VIEW OF THE TRIBUNAL IN NOT ACCEPTING THE ACCENTIA TECHNOLOGIES LTD., AS COMPAR ABLE, INTER ALIA, ON ACCOUNT OF FACT THAT EXTRA ORDINARY EVENT SUCH AS M ERGER/ AMALGAMATION WOULD AFFECT THE PROFITABILITY OF M/S. ACCENTIA TEC HNOLOGIES LTD., THUS, MAKING IT INCOMPARABLE. (IV) FURTHER, IN THAT CASE, AS IN THIS CASE, THE TRIBUNAL HAS ALSO RECORDED A FINDING OF FACT THAT THE / ACTIVITIES OF M/S. ACC ENTIA TECHNOLOGIES LTD., AND THE RESPONDENT ARE DIFFERENT. THUS, NOT COMPARA BLE. THE ABOVE FINDING OF FACT IS NOT SHOWN TO BE PERVERSE. (V) IN THE ABOVE VIEW, THE QUESTION AS PROPOSED DOE S NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS, NOT ENTERTAINED. ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 20 IN VIEW OF THE ABOVE DECISION OF THE HONBLE HIGH C OURT, WE ALLOW THE GRIEVANCE OF THE ASSESSEE AND HOLD THAT THIS COMPAR ABLE IS NOT VALID IN THE PRESENT COMPARABILITY ANALYSIS. 20. CONSIDERING THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2009- 10, WHEREIN THE TRIBUNAL EXCLUDED THE ECLERX AND AC CENTIA FROM FINAL SET OF COMPARABLE FOR DETERMINING THE ALP OF SIMILAR INTER NATIONAL TRANSACTION OF ASSESSEE WITH ITS AE. NO CONTRARY FACTS OR LAW IS BROUGHT TO OUR NOTICE TO TAKE OTHER VIEW. THUS, RESPECTFULLY FOLLOWING THE D ECISION OF CO-ORDINATE BENCH FOR AY 2009-10, WE DIRECT THE AO/TPO TO EXCLU DE ACCENTIA TECHNOLOGY AND ECLERX FROM FINAL SET OF COMPARABLE. 21. SO FAR AS EXCLUSION OF INFOSYS BPO IS CONCERNED, WE HAVE SEEN THAT THE ASSESSEE ITSELF INCLUDED INFOSYS BPO LTD. IN ITS TP STUDY AND FURNISHED RELATED DATA ABOUT THIS COMPARABLE. FOR EXCLUSION O F THIS COMPARABLE, THE ASSESSEE RAISED ADDITIONAL GROUND OF APPEAL, WHICH WE HAVE ADMITTED FOR ADJUDICATION. BEFORE US, THE LD. AR OF THE ASSESSEE VEHEMENTLY SUBMITTED THAT THE ASSESSEE INADVERTENTLY INCLUDED AS A COMPA RABLE BY THE ASSESSEE ITSELF IN ITS TRANSFER PRICING STUDY, AND THERE IS NO ESTOPPEL IN LAW TO EXCLUDE THE COMPARABLE, IF THE SAME IS NOT COMPARABLE WITH THE ASSESSEE ON FUNCTIONAL COMPARABILITY. INFOSYS BPO IS A GIANT C OMPANY WITH DIFFERENT RISK PROFILE AND NATURE OF SERVICES, HAS BRAND VALU E AND OWNS IPS UNLIKE THE ASSESSEE WHO BROADLY PROVIDES BACK OFFICE SUPPORT S ERVICE AND HENCE NOT COMPARABLE TO THE ASSESSEE. WE HAVE SEEN THAT THE T RIBUNAL IN CASE OF STREAM INTERNATIONAL SERVICES (P.) LTD. VS. ADIT (1 41 ITD 492 MUM-TRIB), ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 21 WHILE CONSIDERING THE FUNCTIONAL SIMILARITY/DISSIMI LARITY EXCLUDED THIS COMPARABLE BY TAKING VIEW THAT INFOSYS BPO IS A MAR KET 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 HUG E DIFFERENCE IN THE SIZE AND SCALE OF THE COMPANY. FURTHER, WE HAVE NOTED TH AT THE TPO HIMSELF IN A.Y. 2009-10 HIMSELF REJECTED THIS COMPARABLE ON AC COUNT OF MULTIPLE FUNCTIONAL SEGMENTS WITH HUGE ALLOCATED ITEMS. THE HONBLE BOMBAY HIGH COURT IN CIT VS. PENTAIR WATER INDIA (P.) LTD. (SUP RA) WHILE CONSIDERING THE QUESTION OF LAW RELATING TO THE EXCLUSION OF THIS C OMPARABLE ON SIZE AND TURNOVER FILTER AFFIRMED THE EXCLUSION. THE HONBLE DELHI HIGH COURT IN SANVIH INFO GROUP (SUPRA) ALSO CONFIRMED THE EXCLUS ION OF INFOSYS BPO BEING A GIANT COMPANY. WE HAVE FURTHER NOTED THAT B Y FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT VS. PE NTAIR WATER INDIA (P.)LTD. (SUPRA), THE CO-ORDINATE BENCH OF TRIBUNAL IN HAPAG LLOYD GLOBAL SERVICES LTD. VS. DCIT (ITA NO. 7539/MUM/2014 HELD THAT THE TURNOVER OF INFOSYS BPO IS VERY HIGH COMPARATIVE TO TESTED PART Y AND EXCLUDED AND EXCLUDED THIS COMPARABLE. CONSIDERING THE CONSISTEN T VIEW OF HONBLE DELHI HIGH COURT, HONBLE BOMBAY HIGH COURT AND CO-ORDINA TE 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 HUG E DIFFERENCE IN THE SIZE AND SCALE OF THE COMPANY. THEREFORE, WE DIRECT THE AO TO EXCLUDE INFOSYS ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 22 BPO FROM FINAL SET OF COMPARABLE AS THE SAME IS NOT COMPARABLE WITH ASSESSEE, WHICH IS PROVING CAPTIVE SERVICES. 22. NOW TURNING TO THE COMPARABILITY OF ACROPETAL TECH NOLOGY LTD. WE HAVE SEEN THAT THE LD. TPO WHILE CONSIDERING THE FUNCTIO NAL COMPARABILITY HAS CONSIDERED ALL OF ITS THREE SEGMENTS INCLUDING THE IT SEGMENT. THE LD. AR VEHEMENTLY SUBMITTED THAT THE SEGMENTS OF THIS COMP ARABLE ARE PROVIDED AT PAGE 24 OF THIS COMPARABLE COMPANY ARE THE SEGMENTS FOR AY 2009-10. AND THAT LD. TPO HAS WRONGLY MENTIONED THE IT SEGMENT O F ACROPETAL AS ITES SEGMENT WHICH IS FACTUALLY INCORRECT. IT WAS ALSO A RGUED THAT THERE ARE THREE SEGMENTS OF THIS COMPARABLES; NAMELY, (I) ENGINEERI NG DESIGN SERVICE, (II) INFORMATION TECHNOLOGY SERVICES (IT SEGMENT) AND (III) HEALTHCARE. FOR THE CONCERNED YEAR THREE SEGMENTS OF ACROPETAL ARE PROVIDED AT PAGE 23 OF ITS ANNUAL REPORT AND THAT IT SEGMENT OF ACROPETAL CANNOT BE COMPARED TO THE ASSESSEE COMPANY, WHICH IS UNDISPUTEDLY AN ITES COMPANY. THE TPO WHILE INCLUDING ACROPETAL TECHNOLOGY PERUSED THE PA GE NO.24 OF ITS ANNUAL REPORT AND CONCLUDED THAT THIS COMPANY OPERATES IN TWO SEGMENTS NAMELY ENGINEERING DESIGN SEGMENT AND ITES. THE ITES SEGME NTAL RESULTS WERE CONSIDERED. THE OBJECTION OF ASSESSEE ABOUT THE HIG H TURNOVER, THE LD. TOP CONCLUDED THAT ASSESSEE FAILED TO DEMONSTRATE AS TO IN WHAT WAY TURNOVER IMPACT THE PROFITABILITY OF THE COMPARABLE COMPANY. BEFORE THE LD. DRP, THE ASSESSEE OBJECTED FOR INCLUSION OF THIS COMPARABLE. THE DRP CONCLUDED THAT THE TPO HAS CONSIDERED ONLY ITES SEGMENT AS COMPARA BLE. THERE IS NOTHING ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 23 IN THE ANNUAL REPORT TO SUGGEST THAT ITES SEGMENT O F THIS COMPARABLE HAS EXPORTED ANY SOFTWARE PRODUCT. THERE IS NOTHING TO INDICATE THAT THERE IS EXPENDITURE OF RS. 4.23 CRORE ON SITE DEVELOPMENT E XPENSES IN ITES SEGMENT. 23. ON PERUSAL OF PAGE NO. 23 & 24 (PAGE NO.387 & 388 OF PB) OF ANNUAL REPORT OF ACROPETAL, WE FIND THAT THESE REPORTS PER TAINING TO AY 2009-10 AND RELATES TO ENGINEERING DESIGN SERVICES AND INFO RMATION TECHNOLOGY SERVICES (IT SERVICES) AND HEALTHCARE. THUS. WE FIN D FORCE IN THE SUBMISSION OF LD. AR OF THE ASSESSEE THAT TPO WRONGLY MENTIONE D IT SEGMENT OF ACROPETAL AS ITES SEGMENT. ACCORDINGLY THE ACTIVITI ES UNDERTAKEN BY ACROPETAL AS REPORTED AT PAGE NO. 23 OF ANNUAL REPO RT (PB 387) ARE NOT COMPARABLE WITH THE FUNCTION OF ASSESSEE, WHICH IS PRIMARILY IN ITES SERVICES. WE HAVE NOTED THAT THIS FACT WAS DEMONSTR ATED BEFORE LD. DRP. HOWEVER, THE LD DRP CONCLUDED THE ITES SEGMENTAL RE SULTS WERE CONSIDERED, WHICH IS FACTUALLY INCORRECT. IN OUR VI EW IN ABSENCE OF RELIABLE SEGMENTAL DATA WITH REGARD TO ITES SERVICES, THE AC ROPETAL CANNOT BE CONSIDERED AS VALID COMPARABLE. THUS, WE DIRECT THE AO/TPO TO EXCLUDE THIS COMPARABLE FROM FINAL LIST OF COMPARABLE. 24. NOW TURNING TO THE INCLUSION OF DATAMATICS FINANCI AL SERVICES LTD (DATAMATICS). AS NOTED ABOVE THE LD AR FOR THE ASSE SSEE VEHEMENTLY ARGUED THAT THE TPO HAS REJECTED DATAMATICS ON THE GROUND THAT IT IS A PERSISTENT LOSS MAKING COMPANY, THOUGH DATAMATICS HAS EARNED NET PROFITS (PROFITS ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 24 BEFORE TAX) IN FY 2007-08 TO FY 2010-11. AND RELIED ON THE DECISIONS OF HONBLE BOMBAY HIGH COURT IN GOLDMAN SACHS (INDIA) SECURITIES PVT. LTD. VS. CIT (SUPRA), WHEREIN IT WAS HELD THAT A COMPANY WHICH HAD LOSSES IN TWO CONSECUTIVE YEARS WERE HELD NOT TO BE A PERSISTENT LOSS MAKING COMPANY AND WAS ACCEPTED AS A COMPARABLE. THE TPO REJECTED DATA MATICS BY TAKING VIEW THAT IT IS A LOSS MAKING COMPANY. THOUGH, THE ASSES SEE BROUGHT THE FACTS ON RECORD THAT IN FY 2007-08 THIS COMPANY EARNED PROFI T OF R. 3.77 CRORE BEFORE TAX. THE LD. DRP AFFIRMED THE ACTION OF AO BY TAKING VIEW THAT THE SEGMENTAL INFORMATION OF THIS COMPARABLE FOR ITES I S NOT AVAILABLE AND HAS NOT BEEN CONSIDERED BY THE ASSESSEE. AND THE REVEN UE EARNED BY THIS COMPARABLE INCLUDES PROCESSING, PRINTING AS WELL AS EXPORT OF ITES THUS FINANCIAL COMPARED BY THE ASSESSEE ARE NOT COMPARAB LE. 25. WE HAVE SEEN THAT DATAMATICS WAS ACCEPTED BY TPO A S A COMPARABLE IN A.Y. 2009-10. THE HONBLE BOMBAY HIGH COURT IN GOLD MAN SACHS (INDIA) SECURITIES PVT LTD VS CIT (SUPRA) HELD THAT ONLY PE RSISTENT LOSS MAKING UNIT CANNOT BE SAID AS COMPARABLE. THUS, CONSIDERING THE FACT THAT THIS COMPANY WAS ACCEPTED AS COMPARABLE BY TPO HIMSELF IN AY 200 9-10, THUS, WE DIRECT THE AO/TPO TO INCLUDE THIS COMPARABLE IN FINAL SET OF COMPARABLE. HOWEVER, THE ASSESSEE IS DIRECTED TO PROVIDE SEGMEN TAL DATA FOR ITES SERVICES OF DATAMATICS. 26. IN VIEW OF THE AFORESAID DISCUSSION AND FOLLOWING T HE DECISIONS, WE DIRECT THE AO/TPO TO EXCLUDE INFOSYS BPO LTD., ACCENTIA TE CHNOLOGY LTD., ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 25 ACROPETAL TECHNOLOGY LTD. AND ECLERX SERVICES LTD. AND INCLUDE DATAMATICS FINANCIAL SERVICES LTD. IN THE FINAL SET OF COMPARA BLE AND RECOMPUTE THE ALP OF ITES SUPPORT SERVICES WITH ITS AE. THE AO/TP O IS FURTHER DIRECTED TO FOLLOW THE DIRECTION OF DRP ON OBJECTION NO.1.6 & 1.7 WHILE RE-COMPUTING THE ALP. IN THE RESULT, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 27. GROUND NO.2 RELATES TO INITIATION OF PENALTY UNDER SECTION 271(1)(C). THIS GROUND OF APPEAL IS PREMATURE, THEREFORE, NEEDS NO ADJUDICATION. 28. GROUND NO.3 RELATES TO SHORT CREDIT OF TDS. CONSIDE RING THE NATURE OF GROUNDS OF APPEAL, WE DIRECT THE AO TO VERIFY THE F ACTS AND GRANT APPROPRIATE RELIEF TO THE ASSESSEE. 29. GROUND NO.4 RELATES TO CONSEQUENTIAL RELIEF, THIS G ROUND OF APPEAL BEING CONSEQUENTIAL, THEREFORE, NEEDS NO SPECIFIC ADJUDIC ATION. 30. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ITA NO. 389/MUM/2016 (AY 2011-12) 31. IN APPEAL FOR THIS ASSESSMENT YEAR THE ASSESSEE HA S RAISED FOLLOWING GROUNDS OF APPEAL: GROUND 1 - TRANSFER PRICING ADJUSTMENT OF RS. 36,59 3,538 RELATING TO PROVISION OF SUPPORT SERVICES 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED TRANSFER PRICING OFFICER ('TPO') AND THE LEARNED ASSESSING O FFICER ('AO') UNDER THE DIRECTIONS OF THE HON'BLE DISPUTE RESOLUTION PANEL (DRP') ERRED ON FACTS AND IN LAW IN MAKING AN ADDITION OF RS. 36,593,538 TO THE INTERNATIONAL TRANSACTION OF THE APPELLANT BASED ON THE PROVISIONS OF CHAPTER X OF THE INCOME-TAX ACT, 1961 ('THE ACT'). ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 26 1.2 THE LEARNED AO / TPO UNDER THE DIRECTIONS OF TH E HON'BLE DRP ERRED ON FACTS AND IN LAW IN DISREGARDING THE VARIOUS SUBMIS SIONS MADE BY THE APPELLANT WITHOUT PROVIDING ANY COGENT REASONS THEREOF AND RE JECTED COMPARABLE COMPANIES SELECTED BY THE APPELLANT WITHOUT APPRECI ATING THE FACT THAT SUCH SELECTION WAS BASED ON CONTEMPORANEOUS DATA AND THE TRANSFER PRICING STUDY REPORT PREPARED AND MAINTAINED AS PER SECTION 92D O F THE ACT READ WITH RULE 10D OF THE INCOME-TAX RULES, 1962 ('THE RULES'). 1.3 THE LEARNED A.O / TPO UNDER THE DIRECTIONS OF T HE HON'BLE DRP ERRED ON FACTS AND IN LAW IN CONSIDERING ADDITIONAL COMPANIE S FOR DETERMINING THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS, WIT HOUT TAKING INTO CONSIDERATION THE DIFFERENCES IN THE FUNCTIONS PERFORMED, ASSETS EMPLOYED AND RISKS UNDERTAKEN BETWEEN THE APPELLANT AND THE COMPANIES CONSIDERED BY THE TPO AS COMPARABLE AND WITHOUT FINDING ANY MATERIAL DEFICIE NCIES IN THE BENCHMARKING ANALYSIS UNDERTAKEN BY THE APPELLANT. THE LD. TPO/AO/DRP HAVE ERRED IN ERRONEOUSLY SELECT ING COMPARABLE COMPANY AND ADDING CERTAIN COMPANIES TO THE FINAL SET OF CO MPARABLE COMPANIES ON THE FOLLOWING BASIS. 31.3.1 THE LEARNED TPO/AO/DRP ERRED IN UPHOLDING THE SELEC TION OF ECLERX SERVICES LTD. (ECLERX), ON THE GROUND THAT ECLERX OPERATES IN THE DOMAIN OF ITES EVEN THOUGH ECLERX IS NOT FUNCTIONALLY COMPARA BLE AND SUBCONTRACTS/OUTSOURCES ITS WORK, THEREBY OPERATING IN A DIFFERENT BUSINESS MODEL AND HENCE IS NOT COMPARABLE TO THE APPELLANT. 31.3.2 THE LEARNED TPO/AO/DRP HAS ERRED IN INCLUDING ACCEN TIA TECHNOLOGIES LTD (ACCENTIA) ON THE GROUND THAT AC CENTIA IS ENGAGED IN ITES, EVEN THOUGH ACCENTIA IS NOT FUNCTIONALLY COMPARABLE OF THE APPELLANT AND HAS UNDERGONE EXTRAORDINARY EVENT DURING THE YEAR UNDER CONSIDERATION AND HENCE SHOULD BE REJECTED. 31.3.3 THE LEARNED TPO/AO/DRP HAS ERRED IN INCLUDING ACROP ETAL TECHNOLOGIES LTD. ON THE FACTUALLY INCORRECT GROUND THAT IT OPERATES IN TWO SEGMENTS NAMELY ENGINEERING DESIGN AND ITES AND THE ITES SEGMENTAL RESULTS WERE CONSIDERED TO BE COMPARABLE TO THE ASSESSEE. H OWEVER, IT IS EVIDENT FROM THE ANNUAL REPORT OF THE COMPANY THAT ITS SEGMENTS ARE ENGINEERING DESIGN., IT (& NOT ITES) AND HEALTH CARE SERVICES. MOREOVER, TH E TPO AND DRP ERRED IN ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 27 NOT CONSIDERING THAT ACROPETAL IS ENGAGED IN DEVELO PMENT OF SOFTWARE PRODUCTS AND HENCE NOT COMPARABLE TO THE APPELLANT. 1.4 THE LEARNED AO / TPO UNDER THE DIRECTIONS OF TH E HON'BLE DRP HAS DETERMINED THE ARM'S LENGTH PRICE OF THE COMPARABLE S IN VIOLATION OF SECTIONS 92C(1) AND 92C(2) BY RESORTING TO CHERRY PICKING OF COMPARABLES WITHOUT APPRECIATING THE FACTS OF THE ASSESSEE'S CASE AND W ITHOUT UNDERSTANDING THE FUNCTIONS PERFORMED, ASSETS EMPLOYED AND RISKS ASSU MED ('FAR') BY THE ASSESSEE VIS-A-VIS THE COMPARABLES SELECTED BY THE TPO. 1.5 THE LEARNED AO / TPO UNDER THE DIRECTIONS OF TH E HON'BLE DRP ERRED ON FACTS AND IN LAW IN ERRONEOUSLY COMPUTING THE MARGI N OF CALIBER POINT BUSINESS SOLUTIONS LIMITED AT 17.74% INSTEAD OF CORRECT MARG IN OF 15.25% COMPUTED BY THE APPELLANT. 1.6 THE LEARNED AO / TPO UNDER THE DIRECTIONS OF TH E HON'BLE DRP HAVE WRONGLY REJECTED THE MULTIPLE YEAR ANALYSIS UNDERTA KEN BY THE APPELLANT FOR COMPUTING MARGINS OF COMPARABLE COMPANIES. 1. 7 THE LEARNED AO/TPO UNDER THE DIRECTIONS OF THE HON'BLE DRP ERRED ON FACTS AND IN LAW IN NOT ALLOWING APPROPRIATE ADJUST MENTS TO THE COMPARABLE COMPANIES AS WAS COMPULSORILY REQUIRED TO BE DONE I N ACCORDANCE WITH THE PROVISIONS OF RULE 10B(1)(E)(III) OF THE RULES, TO ACCOUNT FOR DIFFERENCE BETWEEN INTERNATIONAL TRANSACTIONS AND THE ALLEGED COMPARAB LE UNCONTROLLED TRANSACTIONS SELECTED BY THE LEARNED AO/TPO. THE APPELLANT PRAYS THAT THE LEARNED AO/TPO BE DIRE CTED TO CONSIDER THE INTERNATIONAL TRANSACTION OF THE APPELLANT AS ARM'S LENGTH AND ACCORDINGLY THE TRANSFER PRICING ADJUSTMENT OF RS. 36,593,538 SHOUL D BE DELETED. GROUND 2 - PENALTY PROCEEDINGS UNDER SECTION 271 (1 )(C) OF THE ACT 2.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED AO HAS ERRED IN LAW IN PROPOSING TO INITIATE PENALTY PROCEEDINGS UNDER SECTION 271 (1)(C) OF THE ACT. THE APPELLANT PRAYS THAT THE PENALTY PROCEEDINGS BE DROPPED IN THE MATTER. GROUND 3 - SHORT CREDIT FOR TAXES DEDUCTED AT SOURC E 3.1 THE LEARNED AO ERRED ON FACTS AND IN LAW IN GRA NTING SHORT CREDIT FOR TAXES DEDUCTED AT SOURCE ('TDS') OF RS. 857,776 AS AGAINS T RS. 1,145,750 CLAIMED BY THE APPELLANT IN THE RETURN OF INCOME. ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 28 THE APPELLANT PRAYS THAT THE LEARNED AO BE DIRECTED TO GRANT FURTHER CREDIT OF RS. 287,974 FOR TDS AS CLAIMED BY THE APP ELLANT IN THE RETURN OF INCOME. GROUND 4 - CONSEQUENTIAL RELIEFS 4.1 THE LEARNED AO UNDER THE DIRECTIONS OF THE HON' BLE DRP ERRED IN ARRIVING AT VARIOUS UNWARRANTED AND ERRONEOUS CONCLUSIONS UNSUP PORTED BY ANY RELEVANT MATERIAL IN DECIDING THE CASE. FURTHER, THEY ALSO F AILED TO CONSIDER THE CONTRARY MATERIAL AND EVIDENCE ADDUCED BY THE APPELLANT. ACC ORDINGLY, THE APPELLANT PRAYS THAT THE AO BE DIRECTED TO GRANT ALL CONSEQUE NTIAL RELIEFS ARISING OUT OF RELIEFS FROM THIS APPEAL. 4.2 THE LEARNED AO HAS ERRED IN LEVYING INTEREST UN DER SECTION 2348 OF THE ACT OF RS. 8,475,488. ACCORDINGLY, THE APPELLANT PRAYS THAT THE AO BE DIRECTED TO GRANT CONSEQUENTIAL RELIEF IN COMPUTING INTEREST UN DER SECTION 234B OF THE ACT IN ACCORDANCE WITH THE LAW. 4.3 THE LEARNED AO HAS ERRED IN LEVYING INTEREST UN DER SECTION 234C OF THE ACT OF RS. 1,008,431 ON THE ASSESSED INCOME. ACCORDINGL Y, THE APPELLANT PRAYS THAT THE AO BE DIRECTED TO GRANT CONSEQUENTIAL RELIEF IN COMPUTING INTEREST UNDER SECTION 234C OF THE ACT IN ACCORDANCE WITH THE LAW. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER, AMEND OR WITHDRAW ALL OR ANY OF THE GROUNDS OF APPEAL HEREIN ABOVE AND TO SUBMIT SUCH S TATEMENTS, DOCUMENTS AND PAPERS AS MAY BE CONSIDERED NECESSARY EITHER AT OR BEFORE THE HEARING OF THIS APPEAL AS PER LAW. 32. GROUND NO.1 RELATES TO TP ADJUSTMENT ON ACCOUNT OF PROVISION OF SUPPORT SERVICES TO ITS AE. WE HAVE NOTED THAT THIS GROUND OF APPEAL IS IDENTICAL TO THE GROUND NO.1 IN ASSESSEES APPEAL FOR AY 2010-11 . 33. THE LD. AR OF THE ASSESSEE WHILE MAKING SUBMISSION CONFINED HIS SUBMISSIONS ONLY FOR EXCLUSION OF ECLERX FROM FINAL SET OF COMPARABLE AND WOULD SUBMITS THAT IN CASE ECLERX IS EXCLUDED, THE TRANSACTION OF ASSESSEE WITH ITS AE WOULD BE WITHIN TOLERANCE RANGE AS PER THE ACT. CONSIDERING THE FACT THAT ON SIMILAR SET OF FACT ON SIMILAR TRANSAC TION FOR AY 2010-11, WE ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 29 HAVE DIRECTED THE AO/TPO TO EXCLUDE ECLERX FINAL SE T OF COMPARABLE ON FUNCTIONAL DISSIMILARITY. THEREFORE, FOLLOWING THE PRINCIPLE OF CONSISTENCY, THE AO/TPO IS DIRECTED TO EXCLUDE ECLERX FROM FINAL SET OF COMPARABLE AND RECOMPUTE THE ALP OF ITS INTERNATIONAL TRANSACTION WITH AE. SINCE, WE HAVE ACCEPTED THE LIMITED SUBMISSION MADE BY LD. AR OF T HE ASSESSEE AND ALLOWED THE EXCLUSION OF ECLERX, THEREFORE, DISCUSSION ON O THER GROUNDS/SUB GROUNDS RAISED BY ASSESSEE HAVE BECOME ACADEMIC. 34. GROUND NO.2 RELATES TO INITIATION OF PENALTY. THIS GROUND OF APPEAL IS PREMATURE AND NEEDS NO ADJUDICATION AT THIS STAGE. 35. GROUND NO.3 RELATES TO SHORT DEDUCTION OF TDS. CON SIDERING THE FACT THAT SIMILAR GROUND OF APPEAL WAS RAISED BY ASSESSEE IN APPEAL FOR AY 2010-11. WE HAVE DIRECT THE AO TO VERIFY THE FACTS AND GRANT APPROPRIATE RELIEF TO THE ASSESSEE IN ACCORDANCE WITH LAWS. 36. GROUND NO.4 RELATES TO CONSEQUENTIAL RELIEF, WHICH NEEDS NO SPECIFIC ADJUDICATION. 37. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/01/2020. SD/- SD /- SHAMIM YAHYA PAWAN SINGH ACCOUNTANT MEMBER JUDICIA L MEMBER MUMBAI, DATE: 06.01.2020 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT ITA NO. 1898 MUM 2015 & 389 MUM 2016-SWISS RE SERVICES INDI A PRIVATE LTD. 30 5. DR J BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI