Appeal details
Counselvise Citation
[2019] 112 COUNSELVISE.COM (IT) 3885 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 9 month(s) 16 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
26-11-2019
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
DB-B
Next Hearing Date
28-08-2019
Assessment Year
2012-2013
Appeal Filed On
09-02-2017
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH 'B' HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER & SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMEBR ITA NO. 212/HYD/2017 ASSESSMENT YEAR: 2012 - 13 INFOR (INDIA) PVT. LTD., (FORMERLY KNOWN AS INFOR GLOBAL SOLUTIONS (INDIA) PVT. LTD.), HY DERABAD PAN AAACB6197Q VS. DY. COMMISSIONER OF INCOME - TAX, HYDERABAD. APPELLANT RESPONDENT ASSESSEE BY: SHRI SUNIL MOTILALA REVENUE BY: SHRI YVST SAI DATE OF HEARING: 28 / 08 /2019 DATE OF PRONOUNCEMENT: 26 /11/2019 O R D E R PER P. MADHAVI DEVI, J.M.: THIS IS ASSESSEE'S APPEAL FOR THE A. Y 201 2 - 13 AGAINST THE ASSESSMENT ORDER PASSED U/S 143(3) RWS 92CA(A) RWS 144C ( 13) OF THE INCOME TAX ACT, 1961. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY, ENGAGED IN THE BUSINESS OF SALE OF SOFTWARE LICENCES AND PROVIDING SOFTWARE DEVELOPMENT SER VICES AND OTHER RELAT ED SERVICES TO ITS AE, FILED ITS RETURN OF INCOME FOR THE A.Y 2012 - 13 ON 29.11.2012 ADMITTING TOTAL INCOME OF RS.11,96,28,846/ - DURING THE ASSESSMENT PROCEEDINGS U /, S 143(3) OF THE ACT, THE A.O OBSERVED THAT THE ASSESSEE HAS ENTERED INT O INTERNATIONAL TRANSACTIONS WITH ITS AE , THE DETERMINATION OF THE ARM'S LENGTH PRIC E OF T HE INTERNATIONAL TRANSACTIONS WAS REFERRED TO THE TPO U/S 92CA OF THE ACT. THE LD. TPO , OBSERVED THAT THE ASSESSEE HAS BENCHMARKED THE TRANSACTIONS UNDER THREE SEGMEN TS, 2 ITA NO. 212/HYD/2017 M/S INFOR (INDIA) PVT. LTD., HYD. NAMELY, (I) SOFTWARE DISTRIBUTION, (II) SOFTWARE DEVELOPMENT AND RELATED IT SERVICES; AND (III) SHARED SERVICES. HE OBSERVED THAT THE FIRST TWO SEGMENTS ARE AT ALP AND THEREFORE DID NOT PROPOSE ANY ADJUSTMENT. HOWEVER, WITH REGARD TO SHARED SERVICES, H E OBSERVED THAT THE ASSESSEES PLI WAS 10.13% AND THAT THE ASSESSEE HAS SHORT LISTED SIX COMPARABLE COMPANIES WHOSE PLI WAS 13.24%. HE ANALYSED THE TRANSACTION AND FOUND THE TP DOCUMENT OF THE ASSESSEE TO BE DEFECTIVE AND THEREFORE REJECTED THE SAME AND CO NDUCTED FRESH SEARCH BY ADOPTING TNMM AS THE MOST APPROPRIATE METHOD. HE ACCEPTED ONLY TWO COMPANIES SELECTED BY THE ASSESSEE AS COMPARABLE TO THE ASSESSEE AND REJECTED THE BALANCE FOUR COMPANIES. TH EREAFTER, ARRIVED AT THE FOLLOWING SET OF COMPARABLES: - 1. ACCENTIA TECHNOLOGIES LTD. 2. DATAMATICS GLOBAL SERVICES LTD. 3. ECLERX SERVICES LTD. 4. E4E HEALTH CARE 5. INFORMED TECHNOLOGIES INDIA LTD. 6. INFOSYS BPO LTD. 7. JINDAL INTELLICOM LTD. 8. MICROGENETIC SYSTEMS LTD. 9. TCS E - SERVE LTD. [MERGED] 10. CROSS DOMAIN SOLUTIONS PVT. LTD. THE ASSESSEE SUBMITTED ITS OBJECTIONS TO THE COMPANIES SELECTED BY THE TPO. BUT, THE TPO REJECTED THE ASSESSEES OBJECTIONS AND PASSED AN ORDER ON 29.01.2016 RECOMMENDING CERTAIN ADJUSTMENTS. IN CONFORMITY THEREWI TH, THE DRAFT ASSESSMENT ORDER WAS PASSED BY THE AO, AGAINST WHIC H, T HE ASSESSEE PREFERRED ITS OBJECTIONS BEFORE THE DRP. 2.1 THE DRP , VIDE ITS ORDER DATED 31.10.2016 , D IRECTED THE A.O TO RECOMPUTE THE WORKING CAPITAL ADJUSTMENT BY APPLYING PLR OF SBI OF 13.8 5% A ND ALSO TO REWORK THE MARGIN OF THE COMPARABLE COMPANIES, (A) DATAMATICS GLOBAL SOLUTION LIMITED , BY C ONS IDERING SUBSCRIPTION CHARGES AS OPERATING IN NATUR E; (B) TH E CROSS DOMAINE SOLUTIONS PVT. LTD., BY CONSIDERING MEMBERSHIP SUBSCRIPTION FEE AND INTERNET SUBSCRIPTION FEE AS OFFERED IN OPERATING COST AND TO EX CLUD E DIVIDEND DISTRIBUTION COST FROM THE OPERATION COS T; 9C) JINDAL INTELLICOM LTD., BY CONSIDERING SUB SCRIPTION MEMBERSHIP FEE 3 ITA NO. 212/HYD/2017 M/S INFOR (INDIA) PVT. LTD., HYD. AS PART OF THE OPERATING EXPENSES. IN ACCORDANCE WITH DRP DIRECTIONS , THE FINAL ASSESSMENT ORDER DATED 08.12.2016 WAS PASSED BY MAKING THE ADJUSTMENT OF RS. 1,75,29,619 / - . IN ADDITION TO THE TP ADJUSTMENT, AO ALSO DISALLOWED THE B ELATED PAYMENT OF EMPLOYEES CONTRIBUTION TOWARDS PF AND ESIC U/S 36(1)(VA) RWS 2(24)(X) OF THE ACT AND ALSO DISALLOW ED BAD DEBTS WRITTEN OFF OF RS. 1,01,74,788/ - . AGAINST THIS FINAL ASSESSMENT ORDER , THE ASSESSEE IS IN APPEAL BEFORE US BY RAISING THE FOLLO WING GROUNDS OF APPEAL: '1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED TRANSFER PRICING OFFICER I. E. THE JOINT COMMISSIONER OF INCOME - TAX (TRANSFER PRICING) (HEREINAFTER REFERRED TO AS 'THE LD. TPO') AND THE LD. AO UNDER TH E DIRECTIONS ISSUED BY HON'BLE DRP, ERRED IN MAKING AN ADDITION TO THE APPELLANT'S TOTAL INCOME OF RS. 1,96,16,808/ - (I.E. I,75,29,619 / - BASED ON THE PROVISIONS OF CHAPTER X OF THE INCOME - TAX ACT, ('THE ACT') AND RS. 20,87,189 BASED ON THE OTHER PROVISIONS OF THE ACT) AND THE SAID ADDITIONS BEING WHOLLY UNJUSTIFIED ARE LIABLE TO BE DELETED. TRANSFER PRICING INCORRECT SELECTION OF COMPARAB LES 2. ACCENTIA TECHNOLOGIES LIMITED 2.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. TPO ERRED IN AND THE HON'BLE DRP FURTHER ERRED IN UPHOLDING / CONFIRMING THE ACTION OF THE LD. TPO IN SELECTING ACCENTIA TECHNOLOGIES LIMITED AS A COMPARABLE. 2.2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. TPO, ERRED IN AND THE HON'BLE ORP FURTHER ERRED IN UPHOLDING/ CONFIRMING THE ACTION OF THE LD. TPO IN SELECTING ACCENTIA TECHNOLOGIES LIMITED AS A COMPARABLE, WITHOU T APPRECIATING THE SAID COMPANY PROVIDED HIGH END KPO SERVICES, EMPLOYED SIGNIFICANT INTANGIBLE ASSETS, POSSESSED BRAND VALUE, HAD HIGH ONSITE EXPENDITURE AND ABNORMAL GROWTH PATTERNS AND HAD UNDERGONE A CHANGE IN BUSINESS MODEL AND THEREFORE THE SAME WAS NOT FUNCTIONALLY COMPARABLE TO THE APPELLANT. 2.3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. TPO ERRED IN AND THE HON'BLE ORP FURTHER ERRED IN UPHOLDING/ CONFIRMING THE ACTION OF THE LD. TPO IN SELECTING ACCENTIA TECHNOLOGIES LI MITED AS A COMPARABLE WITHOUT APPRECIATING THAT IT CARRIED OUT MEDICAL TRANSCRIPTION, BILLINGS AND COLLECTIONS AS WELL AS CODING SERVICES WITHOUT ANY SEGMENTAL BREAK - UP AND THEREFORE THE SAME WAS NOT FUNCTIONALLY COMPARABLE TO THE APPELLANT. 4 ITA NO. 212/HYD/2017 M/S INFOR (INDIA) PVT. LTD., HYD. 2.4 ON THE FA CTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. TPO ERRED IN AND THE HON'BLE ORP FURTHER ERRED IN UPHOLDING/ CONFIRMING THE ACTION OF THE LD. TPO IN SELECTING ACCENTIA TECHNOLOGIES LIMITED AS A COMPARABLE WITHOUT APPRECIATING THAT ON THE SAME FACTS THE SAID COMPANY HAD BEEN REJECTED AS COMPARABLE BY THE HON'BLE ORP IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. 3. DATAMATICS GLOBAL SERVICES LIMITED 3.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. TPO ERRED IN AND THE H O N 'BLE D RP FURTHER ERRED IN UPHOLDING/ CONFIRMING THE ACTION OF THE LD. TPO IN SELECTING DATAMATICS GLOBAL SERVICES LIMITED AS A COMPARABLE. 3.2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. TPO ERRED IN AND THE HON'BLE D RP FURTHER ERRED IN UPHOLDING/ CONFIRMING THE ACTION OF THE LD. TPO IN SELECTING DATAMATICS GLOBAL SERVICES LIMITED AS A COMPARABLE, WITHOUT APPRECIATING THAT THE SAID COMPANY RENDERED BOTH IT AND KPO SERVICES, UNDERTOOK RESEARCH AND DEVELOPMENT ACTIVITIE S, HAD UNDERTAKEN EXTRA - ORDINARY EVENTS DURING THE YEAR (ACQUISITION OF CIGNEX AND VISTA) AND HELD IPR, AND THEREFORE THE SAME WAS NOT FUNCTIONALLY COMPARABLE TO THE APPELLANT. 3.3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. TPO ERRED IN AND THE HON'BLE DRP FURTHER ERRED IN UPHOLDING/ CONFIRMING THE ACTION OF THE LD. TPO IN NOT CONSIDERING THE CORRECT MARGIN OF DATAMATICS GLOBAL SERVICES LIMITED. 4. ECLERX SERVICES LIMITED 4.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. TPO ERRED IN AND THE HON'BLE D RP FURTHER ERRED IN UPHOLDING / CONFIRMING THE ACTION OF THE LD. TPO IN SELECTING ECLERX SERVICES LIMITED AS A COMPARABLE. 4.2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. TPO ERRED IN AND THE HON'BLE DRP FURTHER ERRED IN UPHOLDING/ CONFIRMING THE ACTION OF THE LD. TPO IN SELECTING ECLERX SERVICES LIMITED AS A COMPARABLE, WITHOUT APPRECIATING THAT THE SAID COMPANY WAS FUNCTIONALLY DIFFERENT SINCE IT WAS A KPO COMPANY WHICH PROVIDED HI GH END SERVICES, OUTSOURCED SUBSTANTIAL PORTION OF ITS WORK TO THIRD PARTIES AND HAD UNDERTAKEN EXTRA - ORDINARY EVENTS (ACQUISITION OF AGILYST INC) AND THEREFORE, THE SAME WAS NOT FUNCTIONALLY COMPARABLE TO THE APPELLANT. 4.3 ON THE FACTS AND IN THE CIRCUM STANCES OF THE CASE AND IN LAW, THE LD. TPO ERRED IN AND THE HON'BLE DRP FURTHER ERRED IN UPHOLDING / CONFIRMING THE ACTION OF THE LD. TPO IN SELECTING ECLERX SERVICES LIMITED AS A COMPARABLE WITHOUT APPRECIATING THAT ON THE SAME FACTS THE SAID COMPANY HAD BEEN REJECTED AS COMPARABLE BY THE HON'BLE DRP IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR IN THE APPELLANT'S OWN CASE. 5 ITA NO. 212/HYD/2017 M/S INFOR (INDIA) PVT. LTD., HYD. 5. E4E HEALTHCARE BUSINESS SERVICES PRIVATE LIMITED 5.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. TPO ERRED IN AND THE HON'BLE DRP FURTHER ERRED IN UPHOLDING/ CONFIRMING THE ACTION OF THE LD. TPO IN NOT CONSIDERING THE CORRECT MARGIN OFE4E HEALTHCARE BUSINESS SERVICES PRIVATE LI MITED. 6. INFOS Y S BPO LIMITED 6.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. TPO ERRED IN AND THE HON'BLE DRP FURTHER ERRED IN UPHOLDING/ CONFIRMING THE ACTION OF THE LD. TPO IN SELECTING INFOSYS BPO LIMITED AS A COMPARABLE. 6.2. ON THE FACTS AND IN THE CIR CUMSTANCES OF THE CASE AND IN LAW, THE LD. TPO ERRED IN AND THE HO N 'BLE DRP FURTHER ERRED IN UPHOLDING/ CONFIRMING THE ACTION OF THE LD. TPO IN SELECTING LNFOSYS BPO LIMITED AS A COMPARABLE, WITHOUT APPRECIATING THAT THE SAID COMPANY PROVIDED HIGH END INTE GRATED SERVICES, HAD A HIGH BRAND VALUE AND TURNOVER IN EXCESS OF 60 TIMES THAT OF THE APPELLANT, UNDERTOOK A - EXTRA - ORDINARY EVENT (ACQUISITION OF PORTLAND PTY LIMITED) AND POSSESSED A SUBSTANTIAL PORTION OF INTANGIBLE ASSETS, AND THEREFORE, THE SAME WAS NOT FUNCTIONALLY COMPARABLE TO THE APPELLANT. 6.3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. TPO ERRED IN AND THE HON'BLE DRP FURTHER ERRED IN UPHOLDING / CONFIRMING THE ACTION OF THE LD. TPO IN SELECTING INFOSYS BPO LIMITED AS A COMPARABLE WITHOUT APPRECIATING THAT ON THE SAME FACTS THE SAID COMPANY HAD BEEN REJECTED AS COMPARABLE BY THE HON'BLE ORP IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR 6.4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. TPO ERRED IN AND THE HON'BLE DRP FURTHER ERRED IN UPHOLDING / CONFIRMING THE ACTION OF THE LD. TPO IN NOT CONSIDERI NG THE CORRECT MARGIN OF INFOSYS BPO LIMITED. 7. JINDAL INTELLICOM LIMITED 7.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD . TPO ERRED IN AND THE HON'BLE DRP FURTHER ERRED IN UPHOLDING / CONFIRMING THE ACTION OF THE LD. TPO IN NOT CONSIDERING THE CORRECT MARGIN OF JINDAL INTELLICOM LIMITED. 8. TCS E - SERVE LIMITED 8.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. TPO ERRED IN AND THE HO N 'BLE DRP FURTHER ERRED IN UPHOLDING/ CONFIRMING THE ACTION OF THE LD. TPO IN SELECTING TCS E - SERVE LIMITED AS A COMPARABLE. 8.2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. TPO ERRED IN AND TH E HON'BLE DRP FURTHER ERRED IN UPHOLDING/ CONFIRMING THE ACTION OF THE LD. TPO IN SELECTING TCS E - SERVE LIMITED 6 ITA NO. 212/HYD/2017 M/S INFOR (INDIA) PVT. LTD., HYD. AS A COMPARABLE, WITHOUT APPRECIATING THAT THE SAID COMPANY HAD A HIGH BRAND VALUE AND TURNOVER IN EXCESS OF74 TIMES THAT OF THE APPELLANT, PROV IDED A WIDE RANGE O F SERVICES NOT COMPARABLE TO T HE APPELLANT AND ALSO HAD FLUCTUATING PROFIT MARGINS YEAR ON YEAR, AND THEREFORE, THE SAME WAS NOT FUNCTIONALLY COMPARABLE TO THE APPELLANT. 8.3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. TPO ERRED IN AND THE HON'BLE DRP FURTHE R ERRED IN UPHOLDING / CONFIRMING THE ACTION OF THE LD . TPO IN SELECTING TCS E - SERVE LIMITED AS A COMPARABLE WITHOUT APPRECIATING THAT ON THE SAME FACTS THE SAID COMPANY HAD BEEN REJECTED AS COMPARABLE BY THE HON'BLE DRP IN THE IMMEDIATELY PRECEDING ASSESS MENT YEAR . 9. CROSS DOMAIN SOLUTIONS PRIVATE LIMITED 9.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, 'HE LD . TPO ERRED IN AND THE HON'BLE DRP FURTHER ERRED IN UPHOLDING / CONFIRMING THE ACTION OF THE LD . TPO IN SELECTING CROSS DOMAIN S OLUTIONS PRIVATE LIMITED AS A COMPARABLE. 9.2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. TPO ERRED IN AND THE HON'BLE DRP FURTHER ERRED IN UPHOLDING / CONFIRMING THE ACTION OF THE LD . TPO IN SELECTING CROSS DOMAIN SOLUTIONS PRI VATE LIMITED AS A COMPARABLE, WITHOUT APPRECIATING THAT THE SAID COMPANY PROVIDED BUSINESS EXCELLENCE SERVICES, MARKET RESEARCH AND DATA ANALYTICS, AND THEREFORE, THE SAME WAS NOT FUNCTIONALLY COMPARABLE TO THE APPELLANT. 9.3. ON THE FACTS AND IN THE CIRC UMSTANCES OF THE CASE AND IN LAW, THE LD. TPO ERRED IN AND THE HON'BLE DRP FURTHER ERRED IN UPHOLDING / CONFIRMING THE ACTION OF THE LD . TPO IN NOT CONSIDERING THE CORRECT MARGIN OF CROSS DOMAIN SOLUTIONS LIMITED. INCORRECT REJECTION OF COM - PARABLES 10. JEEVAN SCIENTIFIC TECHNOLOGIES LIMITED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD . TPO ERRED IN AND THE HON'BLE D RP FURTHER ERRED IN UPHOLDING/ CONFIRMING THE ACTION OF THE LD . TPO IN REJECTING JEEVAN SCIENTIFIC TECHNOLOGIES LIMITED AS A COMPARABLE, WITHOUT APPRECIATING THAT THE SAID COMPANY WAS FUNCTIONALLY COMPARABLE TO THE APPELLANT AND THAT ON THE SAME FACTS THE SAID COMPANY HAD BEEN ACCEPTED AS COMPARABLE BY THE HON'BLE ORP IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. 11. WISE GLOBAL LIMITED AND SAVI INFO SERVICES INDIA PVT LTD. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD . TPO ERRED IN AND THE HON'BLE ORP FURTHER ERRED IN UPHOLDING/ CONFIRMING THE ACTION OF THE LD . TPO IN REJECTING WISEC GLOBAL LIMITED AND SAVI INFO SERVICES INDIA PRIVATE LIMITED AS COMPARABLES, WITHOUT 7 ITA NO. 212/HYD/2017 M/S INFOR (INDIA) PVT. LTD., HYD. APPRECIATING THAT THE SAID COMPANIES WERE FUNCTIONALLY COMPARABLE TO THE APPELLANT. 12. VIRINICHI TECHNOLOGIES LIMITED AND OMEGA HEALTHCARE PRIVATE LIMITED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW} THE LD. TPO ERRED IN AND THE HO N BLE ORP FURTHER ERRED IN UPHOLDING/ CONFIRMING THE ACTION OF THE LD. TPO IN REJECTING VIRINICHI TECHNOLOGIES LIMITED AND OMEGA HEALT HCARE PRIVATE LIMITED AS CORNPARABLES, WITHOUT APPRECIATING THAT THE SAID COMPANIES WERE FUNCTIONALLY COMPARABLE TO THE APPELLANT. INCORRECT REJECTION OF APPELLANT'S TRANSFER PRICING STUDY / INCORRECT BENCHMARKING ANALYSIS BY TPO 13. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. TPO ERRED IN AND THE HON'BLE D RP FURTHER ERRED IN UPHOLDING/ CONFIRMING THE ACTION OF THE LD. TPO IN REJECTING THE TRANSFER PRICING ANALYSIS / STUDY PREPARED BY THE APPELLANT, WITHOU T APPRECIATING THAT NONE OF THE CONDITIONS MENTIONED IN CLAUSES (A) TO (D) OF SECTION 92C(3) OF THE ACT WERE SATISFIED. 14. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. AO, LD. TPO ERRED IN AND THE HON'BLE DRP FURTHER ERRED IN UPH OLDING / CONFIRMING THE ACTION OF THE LD. TPO IN R CLASSIFYING THE APPELLANT AS BEING ENGAGED IN PROVIDING A MIX OF HIGH END AND LOW END SERVICES WITHOUT APPRECIATING THAT THE APPELLANT WAS A CAPTIVE SERVICE PROVIDER, PROVIDING SHARED SERVICES (I. E. LOW E ND SERVICES) TO ITS ASSOCIATED ENTERPRISES AND CONSEQUENTLY ALL KPO COMPANIES / COMPANIES PROVIDING HIGH END SERVICES (WHETHER SELECTED BY THE APPELLANT OR THE TPO) OUGHT TO HAVE BEEN REJECTED. 15. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, LD. TPO ERRED IN AND THE' 75% EXPORT R EVENUE FILTER 3 DATAMATICS GLOBAL SERVICES REJECTED - FUNCTIONALLY LTD DIFFERENT 4 INFORMED TECHNOLOGIES LTD REJECTED AS INSUFFICIENT FINANCIAL INFORMATION 5 ACE BPO SERVICES (P) LTD REJECTED AS INSUFFICIENT FINANCIAL INFORMATION 6 JINDAL INTELLICOM LTD REJECTED AS INSUFFICIENT FINANCIAL INFORMATION 7 OMEGA HEALTHCARE FAILS EMPLOYEE COST FILTER MANAGEMENT SERVICES P LTD . SINCE TPO/DRP HAVE NOT BROUGHT ON RECORD ANY CHANGE IN THE CASE OF DATAMATICS GLOBAL SERVICES PVT. LTD. DURING THE RELEVANT AY FROM THE SUBSEQUENT AYS, WE DO NOT FIND ANY REASON TO TAKE ANY OTHER VIEW THAN THE VIEW TAKEN BY THE TPO IN AYS 2013 - 14 AND 2014 - 15 AND THEREFORE, THE SAID COMPANY IS DIRECTED TO BE EXCLUDED FROM THE FINAL LIST OF COMPARABLE S. 7.4 AS REGARDS E4E HEALTHCARE BUSINESS SERVICES PVT. LTD., THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS NO OBJE CTION FOR CONSIDERING THE SAID COMPANY AS COMPARABLE , PROVIDED THE CORRECT MARGIN OF THE COMPANY IS TAKEN INTO CONSIDERATION. IN VIEW OF THE ABOVE STATEMENT OF THE LD. COUNSEL FOR THE ASSESSEE, WE DIRECT THE AO/TPO TO CONSIDER THIS COMPANY AS COMPARABLE TO THE ASSESSEE BY ADOPTING CORRECT MARGIN OF THE SAID COMPANY. THEREFORE, THE GROUND OF ASSESSEE AGAINST ADOPTION OF THIS COMPANY IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . 7.5 AS REGARDS JINDAL INTELLICOM LTD. ALSO, LD. COUNSEL FOR THE ASSESSEE IS SEEKIN G ADOPTION OF CORRECTION MARGIN OF THE SAID COMPANY, THEREFORE, THE 14 ITA NO. 212/HYD/2017 M/S INFOR (INDIA) PVT. LTD., HYD. AO/TPO IS DIRECTED TO ADOPT THE CORRECT MARGIN OF THIS COMPANY BEFORE ARRIVING AT THE ALP OF THE TRANSACTION. TH US, THE GROUND OF APPEAL AGAINST ADOPTION OF THIS COMPANY IS ALSO PARTLY AL LOWED FOR STATISTICAL PURPOSES. 7.6 AS REGARDS CROSS DOMAIN SOLUTIONS PVT. LTD., THE ITAT IN ASSESSEES OWN CASE FOR THE SUBSEQUENT AYS 2013 - 14 AND 2014 - 15 AT PARAS 57 & 58 OF ITS ORDER HAS HELD THIS COMPANY TO BE A KPO. THE RELEVANT PARAS ARE REPRODUCED HEREUNDER: 57. AS REGARDS CROSS DOMAIN SOLUTIONS LTD IS CONCERNED, THE CASE OF THE ASSESSEE IS THAT IT IS FUNCTIONALLY DISSIMILAR AS IT RENDERS KPO SERVICES. THE LEARNED DR, HOWEVER, SUPPORTED THE ORDERS OF THE TPO & DRP. 58. AS REGARDS THE SERVICES RENDERED BY THIS COMPANY, WE FIND THAT AT PAGE 172 OF THE PAPER BOOK WHICH IS THE WEBSITE PRINTOUT, IT IS SHOWN AS A 'KNOWLEDGE CENTER'. THE LEARNED DR HAD SUBMITTED THAT IF THE CONTENTS OF A WEBSITE GIVEN BY A COMPANY IS TAKEN INTO CONSIDERATION, THEN EVEN THE ASSESSEE WOULD BE FALLING IN THE SAME CATEGORY I.E. KNOWLEDGE PROCESS OUTSOURCING. THE LEARNED DR, EXCEPT FOR RELYING UPON HIS ARGUMENT THAT THE ASSESSEE IS ALSO INTO HIGH - END BPO SERVICES, HAS NOT BEEN ABLE TO POINT OUT THAT CROSS DOMAIN SOLUTIONS LTD IS NOT A BPO. THEREFORE, WE DIRECT EXCLUSION OF THIS CO MPANY ALSO FROM THE FINAL LIST OF COMPARABLES. AS THE LD. DR HAS NOT BEEN ABLE TO BRING ANY DECISION CONTRARY TO THE ABOVE DECISION OF THE TRIBUNAL, WE ARE INCLINED TO FOLLOW THE DECISION OF THE COORDINATE BENCH AND WE DIRECT THE AO/TPO TO EXCLUDE THIS COMPANY FROM THE FINAL LIST OF THE COMPARABLES. ACCORDINGLY, GROUND NOS. 2 , 3, 4, 6, 8 AND 9 ARE ALLOWED AND GROUND NOS. 5 & 7 ARE PARTLY ALLOWED. THUS, THE FINAL COMPARABLES TO BE CONSIDERED ARE: (1) INFORMED TECHNOLOGIES LTD.; (2) E4E HEATHCARE; (3) JINDAL INTELLICOM LTD.; AND (4) MICRO GENETIC SYSTEMS. 8. AS REGARDS GROUND NO. 19 REGARDING DISALLOWANCE OF EMPLOYEES CONT RIBUTION TO PF , WE FIND THAT THE ISSUE RAISED IN THIS GROUND IS COVERED IN FAVOUR OF THE ASSESSEE BY VARIOUS DECISIONS, SOME OF WHICH ARE REPRODUCED HEREUNDER: 1. THE HONBLE MADRAS HIGH COURT IN CIT VS. SHRI GANAPATHY MILLS COMPANY LIMITED [(2000) 243 IT R 879 (MAD.)] HAS HELD THAT NO DISALLOWANCE CAN BE MADE WHERE THE CONTRIBUTION IS DEPOSITED 15 ITA NO. 212/HYD/2017 M/S INFOR (INDIA) PVT. LTD., HYD. LATE BUT WITHIN THE GRACE PERIOD. IN MOST OF THE CASES THE DEPOSIT HAS BEEN MADE WITH IN THE GRACE PERIOD. 2. THE HONBLE DELHI HIGH COURT IN CIT VS. AIMIL LTD. & ORS. [(2010) 321 ITR 508 (DEL)] HAS HELD THAT IF THE EMPLOYEES SHARE OF CONTRIBUTION IS PAID BEFORE THE DUE DATE OF FILING THE RETURN U/S 139(1) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER CALLED THE ACT), THEN NO DISALLOWANCE CAN BE MADE. IN VIEW OF THE FOREGOING FACTS IT IS CLEAR THAT THE ASSESSEE DESERVES AND IS HEREBY ALLOWED RELIEF ON THIS ISSUE IN THE LIGHT OF THE ABOVE PRECEDENTS. RESPECTFULLY FOLLOWING THE SAME, WE DIRECT THE AO TO ALLOW THE DEDUCTION OF EMPLOYEES CONTRIBUTION TO PF PROVIDED ASSES SEE HAS REMITTED THE SAME INTO GOVT. A/C BEFORE THE DUE DATE OF FURNISHING THE RETURN OF INCOME U/S 139(1) OF THE ACT. THIS GROUND IS ALLOWED. 9. AS REGARDS GROUND NO. 20 REGARDING INADEQUATE OPPORTUNITY BY THE LOWER AUTHORITIES, THE LD. COUNSEL FOR THE ASSESSEE HAS NOT PRESSED THIS GROUND, THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 10. AS REGARDS GROUND NO. 21 REGARDING LEVY OF INTEREST U/S 234A, 234B AND 234C, CHARGING OF INTEREST UNDER THESE SECTIONS ARE CONSEQUENTIAL IN NATURE, THEREFORE, THE AO/TPO IS DIRECTED TO COMPUTE THE CONSEQUENTIAL RELIEF, IF ANY, TO THE ASSESSEE. THIS GROUND IS PARTLY ALLOWED. 11. IN THE RESULT, APPEAL OF THE ASS ESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 26 TH NOVEMBER, 201 9 . SD/ - SD/ - (S. RIFAUR RAHMAN) ( P. MADHAVI DEVI ) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 26 TH NOVEMBER, 201 9 K. RAVI/ KV 16 ITA NO. 212/HYD/2017 M/S INFOR (INDIA) PVT. LTD., HYD. COPY TO: - 1) M/S INFOR (INDIA) PVT. LTD., 4 TH FLOOR, B - BLOCK, Q CITY, 109, 110, 111/2, N ANAKRAMGUDA, SERILINGAMPALLY MANDAL, RR DIST. , HYDERABAD 500 03 2 . 2 ) DC IT, CIRCLE 2(1), ROOM NO. 514, 5 TH FLOOR, SIGNATURE TOWERS, OPP. BOTANICAL GARDENS, KONDAPUR, HYDERABAD 3) DRP 1, BENGALURU . 4 ) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 5 ) GUARD FILE
