RSM McGladrey Financial Process Outsourcing India Pvt. Ltd., Gurgaon V. DCIT, Gurgaon

ITA 3174/DEL/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6596 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 18-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SACHIN DANIYA
• Keywords: Related party transaction; Transfer pricing; International transaction; Working capital adjustments; Avoidance of tax; Tax effect
• Section: 48; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE T RIBUNAL DELHI BENCH I-1: NEW DELHI BEFORE, SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI O.P.KANT, ACCOUNTANT MEMBER ITA NO.3174/DEL/2017 (ASSESSMENT YEAR-2007-08) QUATRRO BUSINESS SUPPORT SOLUTIONS PRIVATE LIMITED (FORMERLY KNOWN AS FPO BUSINESS SOLUTIONS INDIA PVT. LTD. PREVIOUSLY KNOWN AS RSM MC GLADREY FINANCIAL PROCESS OUTSOURCING INDIA PVT. LTD. AS PER ORIGINAL ORDER) PLOT NO.264, SECTOR-22, GURGAON, HARYANA-122015. PAN AAACA 3684P VS. DY. CIT - 8(3), MUMBAI. (APPELLANT) (RESPONDENT) ITA NO.3188/DEL/2017 (ASSESSMENT YEAR-2007-08) DY. CIT, CIRCLE-20(2), NEW DELHI VS. M/S QUAT R R O BUSINESS PRIVATE LIMITED (FORMERLY KNOWN AS FPO BUSINESS SOLUTIONS INDIA PVT. LTD. EARLIER RSM MC GLADREY FINANCIAL PROCESS OUTSOURCING INDIA PVT. LTD.) UNIT NO.1, MBC INFOTECH PARK, FIFTH FLOOR, NEAR HYPER CITY MALL, NEAR KASARVADIVILI POLICE STATION, KASARVADIVILI, GHODBUNDER ROAD, THANE (W)-400607, MUMBAI. (APPELLANT) (RESPONDENT) 2 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT APPELLANT BY MS. LALITHA KRISHNAMURTHY, ADV., MS. VIDHI AGRAWAL, CA & HIMANI JAIN, CA RESPONDENT BY SH. SACHIN DANIYA, SR. DR ORDER PER SUDHANSHU SRIVASTAVA, JM: ITA NO.3174/DEL/2017 HAS BEEN PREFERRED BY THE ASSE SSEE AGAINST THE ORDER DATED 22.11.2016 PASSED BY THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS)-44, NEW DELHI { CIT(A)} AND PERTAINS TO ASSESSMENT YEAR 2007-08. ITA NO.3188/D EL/2017 IS THE CROSS APPEAL FILED BY THE DEPARTMENT. 2.0 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS A PROCESS OUTSOURCING COMPANY. ITS 90% EQUITY IS HELD BY M/S RSM MC GLADREY FINANCIAL USA (FPO-BUSINESS). THE ASSESSEE HAS ENTERED INTO AN AGREEMENT WITH ITS ASSOCIATED ENTERPRISE (AE ) FPO-US TO PROVIDE ACCOUNTING AND FINANCIAL SERVICES FOR ITS C LIENT. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS ENTERED I NTO THE FOLLOWING INTERNATIONAL TRANSACTIONS:- 3 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT SL NO. NATURE OF SERVICE FY 2006-07 METHOD ADOPTED FY 2005-06 1. FINANCIAL PROCESS OUTSOURCING SERVICES (RECEIVED) 22,86,28,408 TNMM 9,20,80,786 TOTAL 22,86,28,408 9,20,80,786 2.1 THE ASSESSEE HAS ADOPTED TNMM METHOD AS THE MO ST APPROPRIATE METHOD WITH THE PROFIT LEVEL INDICATOR ( PLI) AS OP/OC. THE ASSESSEE HAS REMUNERATED AT COST PLUS 12% MARK UP. FURTHER, DURING THE YEAR, THE PLI OF THE ASSESSEE AS THE TES TED PARTY IS 12.84%. THE ASSESSEE HAS ARRIVED AT ARITHMETIC MEAN OF 12 COMPARABLES ON MULTIPLE YEAR DATA BASIS AND AVERAGE OF THE ARITHMETIC MEAN OF PLI WAS 11.13% AND EVEN UPDATED P LI ON CURRENT YEAR DATA BASIS, AVERAGE PLI WAS 13.5%. THER EFORE, THE ASSESSEE CONCLUDED THAT ITS INTERNATIONAL TRANSACTI ONS ARE AT ARMS LENGTH. 2.2 A REFERENCE WAS MADE TO THE TRANSFER PRICING OF FICER (TPO) IN VIEW OF THE INTERNATIONAL TRANSACTION. THE TPO ANALYZED THE COMPARABLES OF THE ASSESSEE AND HAS GIVEN A FINDING THAT OUT OF THE 12 COMPARABLES, FOR 3 COMPARABLES NAMELY B2K CORP L TD, BT TECHNET AND SAFFRON GLOBAL, CURRENT YEAR DATA IS NO T AVAILABLE. THEREFORE, ONLY 9 COMPARABLES REMAINED OUT OF THE A SSESSEES LIST. 4 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT FINALLY THE TPO PROPOSED 30 COMPARABLES IN THE FINA L LIST. THE FINAL LIST OF 30 COMPARABLES WITH ARITHMETIC MEAN OF PLI O F 27.18% IS REPRODUCED AS UNDER: SI NO. NAME OF THE COMPARABLE COMPANY PLI (%) REMARKS 1 ACCENTIA TECHNOLOSIES LTD 38.26 DEPARTMENT 2 ADITYA BIRLA MINACS WORLDWIDE LTD (EARLIER TRANSIVORKS INFORMATION SERVICES LTD) 11.98 DEPARTMENT 3 ALLSEC TECHNOLOGIES LTD 27.31 DEPARTMENT 4 APEX KNOWLEDGE SOLUTIONS PVT. LTD. 12.83 COMMON 5 APPOLLO HEALTHSTREET LTD -13.55 DEPARTMENT 6 ASIT C. MEHTA FINANCIAL SERVICES LTD. 24.21 DEPARTMENT 7 BODHTREE CONSULTING LTD (SEG.) 29.58 DEPARTMENT 8 CALIBER POINT BUSINESS SOLUTIONS LTD 21.26 COMMON 9 COSMIC GLOBAL LTD 12.40 COMMON 10 DATAMATICS FINANCIAL SERVICES LTD (SEQ.) 5.07 DEPARTMENT I 11 ECLERX SERVICES LTD 90.43 DEPARTMENT 12 FLEXTRONICS SOFTWARE SYSTEMS LTD (SEQ.) 14.54 DEPARTMENT 13 GENESYS INTERNATIONAL CORPORATION LTD 13.35 DEPARTMENT 14 H C L COMNET SYSTEMS & SERVICES LTD (SEG.) 44.99 DEPARTMENT 15 IC R A TECHNO ANALYTICS LTD (SEG.) 12.24 DEPARTMENT 16 INFORMED TECHNOLOGIES INDIA LTD 35.56 DEPARTMENT 17 INFOSYS B P 0 LTD 28.78 DEPARTMENT 18 I SERVICES INDIA PVT LTD 50.27 DEPARTMENT 19 MAPLE ESOLUTIONS LTD 34.05 DEPARTMENT 20 MOLD - TEK TECHNOLOGIES LTD 113.49 DEPARTMENT 21 R SYSTEMS INTERNATIONAL LTD (SEQ.) 20.18 DEPARTMENT 22 SPANCO LTD (SEG.) 25.81 COMMON 5 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT 23 TRITON CORP LTD 34. 93 DEPARTMENT 24 VISHAL INFORMATION TECHNOLOGIES LTD 51.19 DEPARTMENT 25 WIPRO LTD (SEQ.) 29.70 DEPARTMENT 26 ACE SOFTWARE EXPORTS LTD. 2.03 TP REPORT 27 ASK ME INFO HUBS LIMITED (SHREEJAL INFO HUBS LTD.) 0.34 TP REPORT 28 FORTUNE INFOTECH 17.49 TP REPORT 29 REV I T SYSTEMS PVT. LTD 21.70 TP REPORT 30 SPARSH BPO SERVICES LTD. 5 . 1 1 TP REPORT ARITHMETIC MEAN 27.18 ASSESSEE 12.48 2.3 THE TPO HAS COMPUTED THE ADJUSTMENT OF ARMS LE NGTH PRICE (ALP) ON THE BASIS OF AVERAGE PLI OF THE COMP ARABLES AT 27.18% AND MADE UPWARD ADJUSTMENT OF ARMS LENGTH PRICE FO R RS 2,98,81,299/ - A S U NDER:- SI. NO. PARTICULARS AS PER ASSESSEE (FORM 3CEB) ALP DETERMINED BY DEPARTMENT 1. VALUE OF SUPPORT SERVICES PROVIDED TO THE AE IN RELATION TO FINANCIAL SUPPORT 22,86,28,406 25,85,09,707 2. OPERATING COST (OC) 20,32,62,861 20,32,62,861 3. OPERATING PROFIT (OP) 2,53,65,54 7 5,52,46,846 4. OP/OC 12.48% 27.18% 5. DIFFERENCE BETWEEN ALP OF SALES AND VALUE OF INTERNATIONAL TRANSACTION 2,98,81,299 2.4 ACCORDINGLY, THE TPO HAS PASSED THE ORDER U/S 92CA{3). THE ASSESSING OFFICER AFTER ISSUING THE DRAFT ASSES SMENT ORDER 6 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT PASSED THE FINAL ASSESSMENT ORDER AND MADE ADJUSTME NT IN ALP IN ACCORDANCE WITH ORDER U/S 92CA(3). 2.5 AGGRIEVED BY THE ASSESSMENT ORDER FRAMED AFT ER INCORPORATING THE RECOMMENDATIONS OF THE TPO, THE A SSESSEE APPROACHED THE LD. FIRST APPELLATE AUTHORITY CHALLE NGING THE TRANSFER PRICING ADJUSTMENT WITH RESPECT TO THE ARMS LENGTH PRICE IN RESPECT OF THE INTERNATIONAL TRANSACTIONS. THE A SSESSEE CHALLENGED THE INCLUSION OF COMPARABLES M/S ACCENTI A TECHNOLOGIES LTD., M/S. BODHTREE CONSULTING LTD. (SEG.), M/S ECL ERX SERVICES LTD., M/S INFORMED TECHNOLOGIES INDIA LTD., M/S INF OSYS BPO LTD., M/S I SERVICES INDIA LTD., M/S MAPLE ESOLUTIONS LTD ., M/S MOLD- TEC TECHNOLOGIES LTD., M/S TRITON CORP LTD. & M/S W IPRO LTD. THE ASSESSEE ALSO APPEALED TO THE LD. FIRST APPELLATE A UTHORITY FOR ALLOWING ADJUSTMENT ON ACCOUNT OF RISK ADJUSTMENT. B EFORE THE LD. CIT (A), THE ASSESSEE ALSO SUBMITTED THAT USE OF MU LTIYEAR DATA WAS TO BE ALLOWED. APART FROM THIS, THE ASSESSEE ALSO P RAYED FOR ALLOWING BENEFIT OF (+ -) 5% AS PER THE PROVISIONS OF SEC.92 C OF THE ACT. THE ASSESSEES APPEAL WAS PARTLY ALLOWED BY THE LD. CIT ( A) AND NOW 7 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT BOTH THE ASSESSEE AS WELL AS THE DEPARTMENT IS IN A PPEAL BEFORE THIS TRIBUNAL. 2.6 THE FOLLOWING GROUNDS ARE RAISED BY THE ASSESS EE IN ITA NO. 3174/DEL/ 2017: 1. THAT THE TP ADJUSTMENTS MADE IN RESPECT OF CONS IDERATION FOR THE SERVICES RENDERED BY THE ASSESSEE TO ITS AE FPO-US TO THE EXTENT SUSTAINED BY CIT (A) IS UNJUST, UNWARRAN TED AND IN ANY CASE VERY EXCESSIVE ON VARIOUS FACTUAL AND LEGA L GROUNDS. 2. THAT THE OBJECT AND PURPOSE OF INTRODUCING CHAPTER X OF THE ACT IS NOT TO TAX ANY NOTIONAL INCOME BUT TO ENSURE THAT THE REAL INCOME IS BROUGHT TO TAX UNDER THE ACT AND TO ALSO ENSURE THAT THERE IS NO AVOIDANCE OF TAX BY TRANSFER OF IN COME FROM INDIA TO OTHER TAX JURISDICTIONS CONSEQUENTLY, THE TRANSFER PRICING ADJUSTMENT TO THE EXTENT SUSTAINED BY CIT(A ) IS UNJUST, UNWARRANTED AND NOT TENABLE ON VARIOUS FACT UAL AND LEGAL GROUNDS. 3. THAT CIT (A) HAD ERRED IN UPHOLDING THE INCLUSION O F THREE COMPARABLES VIZ. ECLERX SERVICES LIMITED, INFORMED TECHNOLOGIES INDIA PRIVATE LIMITED AND I SERVICE IN DIA PRIVATE LIMITED FOR THE PURPOSE OF BENCHMARKING THE APPELLA NTS INTERNATIONAL TRANSACTIONS WITH THE AE AND IN THUS CONFIRMING THE TRANSFER PRICING ADJUSTMENT MADE BY THE TPO TO THIS EXTENT. 4. THAT THE CIT(APPEALS) HAD ERRED IN UPHOLDING THE SE LECTION OF COMPANY EARNING SUPER NORMAL PROFITS AS BEING COMPA RABLE FOR BENCH MARKING THE INTERNATIONAL TRANSACTION ENT ERED INTO BY THE APPELLANT WITH ITS AE. 5. THAT THE CIT (APPEALS) HAD ERRED IN UPHOLDING THE S ELECTION OF COMPANY RENDERING KPO SERVICES AS BEING COMPARABLE FOR 8 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT BENCH MARKING THE INTERNATIONAL TRANSACTION ENTERED INTO BY THE APPELLANT, RENDERING ACCOUNTING SERVICES, WITH ITS AE. 6. THAT THE CIT (APPEALS) HAD ERRED IN UPHOLDING THE S ELECTION OF COMPANY HAVING VERY HIGH PROFIT MARGIN IN THE RELEV ANT YEAR AS AGAINST EARLIER AND SUBSEQUENT YEARS, AS BEING COMPARABLE FOR BENCH MARKING THE INTERNATIONAL TRAN SACTION ENTERED IN TO BY THE APPELLANT WITH ITS AE. 7. THAT THE INCLUSION OF ECLERX SERVICES LIMITED AS A COMPARABLE FOR BENCHMARKING THE INTERNATIONAL TRANSACTION ENTE RED INTO BY THE APPELLANT WITH ITS AE AND UPHELD BY CIT(A) I S UNSUSTAINABLE AS THE SAID COMPANY WAS ENGAGED IN TH E BUSINESS OF KNOWLEDGE PROCESS OUTSOURCING SERVICES (KPO SERVICES) AND THUS, THE FUNCTIONS PERFORMED AND THE SERVICES RENDERED BY IT WERE MATERIALLY DIFFERENT FROM THOSE PERFORMED BY THE APPELLANT. 8. THAT AS THE PROFIT MARGIN OF INFORMED TECHNOLOGIES INDIA PRIVATE LIMITED IN THE RELEVANT YEAR IS VERY HIGH A S AGAINST EARLIER AND SUBSEQUENT YEARS, CIT (A) OUGHT TO HAVE EXCLUDED THIS COMPANY FOR THE PURPOSE OF BENCHMARKING THE INTERNATIONAL TRANSACTION. 9. THAT AS I SERVICE INDIA PRIVATE LIMITED WAS HAVING SUPER NORMAL PROFITS IN THE RELEVANT YEAR CIT (A) OUGHT T O HAVE EXCLUDED THIS COMPANY FOR THE PURPOSE OF BENCHMARKI NG THE INTERNATIONAL TRANSACTION. 10. THAT THE AO/TPO OUGHT TO HAVE EXCLUDED HCL COMNET SYSTEMS AND SERVICES LIMITED (SEGMENT) AS A COMPARA BLE AS IT IS AN INDUSTRIAL GIANT WITH VERY HIGH TURNOVER, SIGNIFICANT RELATED PARTY TRANSACTIONS AND ASSUMING ALL RISKS. 11. THAT THE CIT (A) HAD ERRED IN NOT CONSIDERING THE E FFECT OF DIFFERENCE IN THE FUNCTIONS PERFORMED AND RISK ASSE SSMENT OF THE APPELLANT AND THE THREE COMPARABLE COMPANIES SU STAINED 9 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT BY CIT (A) AND IN THUS NOT GRANTING ANY ADJUSTMENT TO THE APPELLANT ON THIS ACCOUNT TO ARRIVE AT A RELIABLE A LP. 12. THAT THE CIT(A) HAD ERRED IN NOT ALLOWING SUITABLE ECONOMIC ADJUSTMENTS ON ACCOUNT OF: I WORKING CAPITAL ADJUSTMENTS TO ACCOUNT FOR DIFFE RENCES IN WORKING CAPITAL EMPLOYED BY THE APPELLANT AND THE COMPARABLE SUSTAINED BY CIT(A); II RISK ADJUSTMENT TO ACCOUNT FOR DIFFERENCES IN R ISK PROFILE OF THE APPELLANT (A RISK FREE CAPTIVE SERVICE PROVIDER ) AND THE COMPARABLE (FULL-FLEDGED ENTREPRENEURIAL SERVICE PR OVIDER) SUSTAINED BY CIT(A); III. FUNCTIONAL PROFILE OF APPELLANT AND THE COMPAR ABLE SUSTAINED BY CIT (A); FOR THE PURPOSE OF BENCHMARKI NG THE INTERNATIONAL TRANSACTION. 13. THAT THE APPELLANT DENIES ITS LIABILITY TO BE CHARG ED INTEREST UNDER SECTION 234B/C OF THE ACT. 14. THAT THE LD. CIT (A) OUGHT TO HAVE GIVEN THE BENEFI T OF +/- 5% ADJUSTMENT AS CONTEMPLATED IN LAW. THE ABOVE GROUNDS OF APPEAL ARE MUTUALLY EXCLUSIVE AND WITHOUT PREJUDICE TO EACH OTHER. THE APPELLANT CRAV ES LEAVE TO ADD, ALTER, AMEND AND / OR MODIFY ANY OF THE GROUND S OF APPEAL AT OR BEFORE THE HEARING OF THE APPEAL. 2.7 THE FOLLOWING GROUNDS ARE RAISED BY THE DEPARTMENT I N ITA NO. 3188/DEL/2017: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS OF THE CASE IN DECIDING THE EXCLUSION OF COMPANIES DECIDED BY THE TPO WITHOUT APPRECIATING THE FACTS OF THE CASE I.E. M/S. ACCENTIA TECHNOLOGY PVT. LTD., M/S. BODHTREE CONSULTING LIMITED, M/S. INFOSYS BPO LTD., M/S. MOL D TEK TECHNOLOGIES SOLUTIONS, M/S. VISHAL INFORMATION 10 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT TECHNOLOGIES PVT. LTD., M/S. WIPRO LTD. AND M/S. MA PLE ESOLUTION LTD. & M/S TRITON CORP LTD ARE SUITABLE COMPARABLE . THE LD. CIT (A) HAS BEEN ALSO NOT ABLE TO EXAMINE IN DETAIL AND BROUGHT OUT THE FINDING ON RE CORD AND THE TPO HAS MENTIONED IN DETAIL AND PASSED A SPEAKING ORDER. 2. THE APPELLANT CRAVES TO BE ALLOWED TO ADD ANY FR ESH GROUND(S) OF APPEAL AND/OR DELETED OR AMEND ANY OF THE GROUND(S) OF APPEAL. 3.0 AT THE OUTSET, THE LD. AUTHORIZED REPRESENTA TIVE SUBMITTED THAT DEPARTMENTS APPEAL I.E. ITA NO.3188 /DEL/2017 WAS LIABLE TO BE DISMISSED AT THE THRESHOLD ITSELF A S THE SAME WAS BELOW THE PRESCRIBED MONETARY LIMIT FOR PREFERRING A PPEALS BEFORE THE INCOME TAX APPELLATE TRIBUNAL. THE LD. AUTHORIZ ED REPRESENTATIVE SUBMITTED A CHART DEPICTING THE CALC ULATION OF THE TAX EFFECT WHICH HAS BEEN PLACED ON RECORD. AS PER T HE CALCULATION, THE DISPUTED TAX IN THE DEPARTMENTS APPEAL IS RS.4 4,26,663/-. 3.1 THE LD. SR. DR FAIRLY ACCEPTED THAT THE APP EAL OF THE DEPARTMENT WAS BELOW THE PRESCRIBED MONETARY LIMIT. 3.2 WE NOTE THAT THE CBDT, VIDE CIRCULAR NO.17/201 9 DATED 08.08.2019, HAS REVISED THE MONETARY LIMIT FOR FILI NG THE APPEALS BEFORE THE TRIBUNAL TO RS.50 LACS. FURTHER, THE CB DT, VIDE LETTER 11 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT DATED 20.08.2019, HAS ALSO CLARIFIED THAT CIRCULAR NO.17/2019 WOULD BE APPLICABLE TO ALL PENDING APPEALS. IN SUCH CIRCUMSTANCES, THE PRESENT APPEAL FILED BY THE REVENUE DUE TO THE TAX EFFECT BEING BELOW THE PRESCRIBED MONETARY LIMIT IS NOT MAINTAINA BLE. BEFORE PARTING, WE CLARIFY HERE THAT THE REVENUE SHALL BE AT LIBERTY TO APPROACH THE TRIBUNAL FOR RE-INSTITUTION OF APPEAL, IF THE REQUISITE MATERIAL IS BROUGHT TO SHOW THAT THE APPEAL IS PROTE CTED BY THE EXCEPTIONS PRESCRIBED IN PARA 10 OF THE CIRCULAR DA TED 11.07.2018. IN CONCLUSION, BY APPLYING THE CBDT CIRCULAR DATED 08.08.2019 AND LETTER DATED 20.08.2019 (SUPRA), THE CAPTIONED APPEAL OF THE REVENUE IS DISMISSED AS WITHDRAWN/NOT PRESSED. ACCORD INGLY, ITA NO.3188/DEL/2017 STANDS DISMISSED. 4.0 THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED T HAT SO FAR AS THE ASSESSEES APPEAL WAS CONCERNED, THE ASSESSEE WAS CONTESTING ONLY THREE COMPARABLES VIZ. INFORMED TEC HNOLOGIES INDIA LTD., ECLERX SERVICES PVT. LTD. & I SERVICE INDIA P VT. LTD. THE LD. AR ALSO DREW OUR ATTENTION TO THE ADDITIONAL GROUND PR EFERRED BY THE ASSESSEE. SHE DREW OUR ATTENTION TO THE APPLICATION DATED 12 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT 06.02.2020 WHEREIN THE ASSESSEE HAS MOVED PRAYER FOR ADMISSION OF ADDITIONAL GROUND WHICH READS AS UNDER: THAT THE ASSESSING OFFICER/TPO OUGHT TO HAVE EXCLU DED HCL COMMENT SYSTEMS AND SERVICES LIMITED (SEGMENT) AS A COMPARABLE AS IT IS AN INDUSTRIAL GIANT WITH VERY H IGH TURNOVER, SIGNIFICANT RELATED PARTY TRANSACTIONS AN D ASSUMING ALL RISKS. 4.1 THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED TH AT ALTHOUGH THIS COMPARABLE WAS NOT AGITATED BEFORE TH E LD. CIT (A), ITS INCLUSION WAS OBJECTED BY THE ASSESSEE BEFORE THE TR ANSFER PRICING OFFICER (TPO) ON THE GROUND THAT THE ANNUAL REPORT OF THIS COMPANY WAS NOT AVAILABLE IN PUBLIC DOMAIN. THE LD. AUTHORIZ ED REPRESENTATIVE SUBMITTED THAT THE ITAT HAS POWER TO ADMIT ADDITIONAL GROUND, ALTHOUGH THE SAME HAD NOT BEEN T HE SUBJECT MATTER OF DISPUTE BEFORE THE LD. CIT (A). 4.2 THE LD. SR. DR, HOWEVER, OPPOSED THE ASSESSEE S PRAYER FOR ADMISSION OF ADDITIONAL GROUND. 4.3 HAVING HEARD BOTH THE PARTIES, WE ARE OF THE C ONSIDERED OPINION THAT THE ASSESSEE CAN INDEED RAISE AN ADDIT IONAL GROUND BEFORE THE INCOME TAX APPELLATE TRIBUNAL AND INCOME TAX APPELLATE 13 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT TRIBUNAL HAS POWER TO ADMIT SUCH ADDITIONAL GROUND. THEREFORE, IN VIEW OF THE JUDGMENT OF THE HONBLE APEX COURT IN TH E CASE OF NATIONAL THERMAL POWER CO. LTD VS. CIT (1998) 229 I TR 383 (SC) WE ADMIT THIS ADDITIONAL GROUND. 5.0 THE ARGUMENTS MADE BY THE LD. AR IN RESPECT OF THE COMPARABLES BEING CHALLENGED BY THE ASSESSEE ARE AS UNDER: (I) INFORMED TECHNOLOGY INDIA PVT. LTD:- IT WAS SUBMITTED THAT THE ASSESSEES SEEKS EXCLUSION OF THIS COMPARABLE ON TH E GROUND THAT THERE WERE WIDE FLUCTUATIONS IN THE MARGIN AND REVEN UE OF THIS COMPANY. IT WAS SUBMITTED THAT IN MARCH, 2007 THIS C OMPANY HAD RETURNED PROFIT @ 39.06% WHEREAS IN THE IMMEDIATELY PRECEDING YEAR THERE WAS A NEGATIVE PROFIT OF 26.35%. TO SUBS TANTIATE THESE FIGURES, THE LD. AR DREW OUR ATTENTION TO PAGE-396 O F THE ANNUAL REPORT. IT WAS FURTHER SUBMITTED THAT APART FROM THE WIDE FLUCTUATIONS IN THE MARGINS AND REVENUES, THIS COMP ANY HAD VERY LOW EMPLOYEE COST (21.77%) AS COMPARED TO THE ASSESS EE COMPANY 52.08%. IT WAS FURTHER SUBMITTED THAT THIS COMPANY WA S OPERATING AS AN IT ENABLED KNOWLEDGE BASED BACK OFFICE PROCESS ING CENTER I.E. IT WAS A KPO WHEREAS THE ASSESSEE WAS A LOW-END ITES C OMPANY 14 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT PROVIDING ACCOUNTING AND FINANCIAL SUPPORT SERVICES AND WAS, THUS, A CAPTIVE SERVICE PROVIDER. IT WAS FURTHER SUBMITTED THAT, THEREFORE, THE FUNCTIONALITY OF THIS COMPANY WAS ENTIRELY DIFFE RENT FROM THE ASSESSEE COMPANY AND, THEREFORE, THE SAME SHOULD BE EXCLUDED. THE LD. AUTHORIZED REPRESENTATIVE ALSO PLACED RELIA NCE ON NUMEROUS ORDERS PASSED BY THE CO-ORDINATE BENCHES O F THE TRIBUNAL WHEREIN THIS COMPANY HAD BEEN EXCLUDED AS A COMPARABLE. (II) ECLERX SERVICE PVT. LTD.- THE LD. AUTHORIZED REPRESENTATIVE ARGUED THAT THIS COMPANY ALSO WAS A NON COMPARABLE C OMPANY BECAUSE IT PROVIDED THE SERVICES BEING PROVIDED BY A KPO WHEREAS THE ASSESSEE FUNCTIONED AS A LOW-END ITES CAPTIVE S ERVICE PROVIDER. IT WAS ALSO SUBMITTED THAT THIS COMPANY WAS EARNING S UPER NORMAL PROFITS IN AS MUCH AS THE OPERATING MARGIN OF THIS COMPANY, AS PER THE ORDER OF THE TPO, WAS 19.43% AS AGAINST THE MARG IN OF 12.48% IN THE CASE OF THE ASSESSEE. AGAINST THE INCLUSION OF THIS COMPARABLE ALSO, THE LD. AUTHORIZED REPRESENTATIVE PLACED RELI ANCE ON NUMEROUS ORDERS OF THE ITAT WHEREIN THIS COMPANY HAD BEEN 15 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT EXCLUDED AS A COMPARABLE AND PRAYED THAT THIS COMPA NY BE EXCLUDED. (III) I SERVICES INDIA PVT. LTD. - ARGUING AGAINST THE INCLUSION OF THIS COMPARABLE, THE LD. AUTHORIZED REPRESENTATIVE SUBMI TTED THAT THIS COMPANY WAS ALSO NOT COMPARABLE TO THE ASSESSEE COMP ANY IN AS MUCH AS THIS COMPANY ALSO WAS PROVIDING HIGH END DIV ERSIFIED SERVICES LIKE WEB HOSTING EMAIL SERVICES, SPAM FILT ERING, DOMAIN NAMES, DNS HOSTING ETC. WHEREAS THE ASSESSEE FUNCTIO NED AS A LOW END CAPTIVE SERVICE PROVIDER PROVIDING ITES SERVICE S. THE LD. AR ALSO SUBMITTED THAT OTHER INFORMATION RELATING TO T HIS COMPANY WAS NOT AVAILABLE IN THE PUBLIC DOMAIN IN AS MUCH AS TH E PROFIT AND LOSS ACCOUNT AND ITS SCHEDULES WERE NOT AVAILABLE EVEN O N THE SITE OF THE MINISTRY OF CORPORATE AFFAIRS WHICH WAS CONTRARY TO T HE FINDING OF THE LD. CIT (A) AT PAGE-11 OF THE IMPUGNED ORDER. S HE ALSO PLACED ON RECORD A COPY OF FORM-23AC IN RESPECT OF THIS CO MPANY WHICH HAD BEEN DOWNLOADED FROM THE SITE OF THE MINISTRY OF CORPORATE AFFAIRS AND SUBMITTED THAT ONLY THIS INFORMATION WAS AVAILABLE WHICH INCLUDED THE DIRECTORS REPORT, FORM NO.23AC A ND THE REPORT 16 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT OF THE AUDITORS ETC. THE LD. AR ALSO RELIED ON NUME ROUS CASE LAWS FOR EXCLUSION OF THIS COMPARABLE (IV) HCL COMNET SOFTWARE SYSTEM SERVICES LTD.- THE LD. AR SUBMITTED THAT THE TURNOVER OF THIS COMPANY WAS APPR OXIMATELY 260 CRORES WHEREAS THE ASSESSEES TURNOVER WAS ONLY 2 2.86% AND, THEREFORE, THIS COMPANY WAS AN INDUSTRIAL GIANT AS C OMPARED TO THE ASSESSEE COMPANY. IT WAS ALSO SUBMITTED THAT THIS CO MPANY WAS A FULL-FLEDGED RISK TAKING ENTREPRENEUR AS COMPARED T O THE ASSESSEE COMPANY WHICH WAS ONLY A CAPTIVE SERVICE PROVIDER. IT WAS ALSO SUBMITTED THAT THIS COMPANY PROVIDED MULTI-LAYER SE RVICES LIKE ADVISORY SERVICES ITES, ITES RESEARCH AND ANALYSIS, ADVISORY SERVICES TO SUPPORT CLIENT ENGAGEMENT, ETC. IT WAS A LSO SUBMITTED THAT THIS COMPANY WAS OPERATING 24/7 WHEREAS THE ASSE SSEE WAS OPERATING ONLY 5 DAYS A WEEK. THE LD. AR ALSO POINT ED OUT THAT THE ASSESSEES ASSET BASE WAS A MERE 16.54 CRORES AS COM PARED TO THE ASSETS BASE OF THIS COMPANY WHICH WAS 188.90 CRORES. WHILE PRAYING FOR EXCLUSION OF THIS COMPANY, THE LD. AR P LACED RELIANCE OF NUMEROUS JUDICIAL PRECEDENT/ORDERS PASSED BY THE CO -ORDINATE BENCHES OF THE TRIBUNAL WHEREIN THIS COMPANY HAS BEE N EXCLUDED. 17 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT 6.0 IN RESPONSE, THE LD. SR. DR SUBMITTED THAT TH E ASSESSEE WAS PROVIDING FINANCIAL PROCESS OUTSOURCING (FPO) SERVICES AS WELL AS BUSINESS VALUATION SERVICES AND HAD CLUBBED THESE TWO TRANSACTIONS FOR THE BASIS OF BENCH MARKIN G. IT WAS ARGUED BY THE LD. SR. DR THAT FPO SERVICES THEMSELV ES WOULD COME UNDER HIGH-END ITES SERVICES AS COMPARED TO BPO SER VICES LIKE CALL CENTER ETC. IT WAS SUBMITTED THAT THE BUSINESS VALUA TION SERVICES HAVE TO BE CATEGORIZED UNDER THE KPO SERVICES AND, THEREFORE, THE OBJECTION OF THE ASSESSEE AGAINST INCLUSION OF CERT AIN COMPARABLES ON THE GROUND THAT THEY WERE KPO WAS MISPLACED. IT WA S FURTHER SUBMITTED THAT SO FAR AS THE ISSUE OF FUNCTIONAL CO MPARABILITY WITH THE COMPARABLES WAS CONCERNED, IT WAS EVIDENT FROM TH E TRANSFER PRICING STUDY REPORT THAT THE ENTIRE VERTICALS OF I TES WAS PICKED UP FOR SELECTION OF COMPARABLES AND THE COMPARABLES SE LECTED WERE OF A BROAD FUNCTIONAL COMPARABILITY UNDER TRANSACTIONAL NET MARGIN METHOD (TNMM). IT WAS SUBMITTED THAT AT THAT POINT O F TIME THE ASSESSEE HAD NOT OBJECTED TO THE APPROACH OF THE TR ANSFER PRICING OFFICER AND, THEREFORE, THE ASSESSEE CANNOT BE PERM ITTED AT THIS STAGE TO CHANGE ITS STAND BY PRAYING FOR STRICT FUN CTIONAL 18 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT COMPARABILITY. WITH RESPECT TO THE ASSESSEES PRAYE R FOR EXCLUSION OF COMPANIES HAVING HUGE TURN OVER, IT WAS SUBMITTED TH AT EARLIER THE ASSESSEE ITSELF HAD ADOPTED THE TURN-OVER FILTER OF LESS THAN ONE CRORES. WITH RESPECT TO ASSESSEES PRAYER FOR EXCLU SION OF COMPARABLES ON THE GROUND OF EXTRAORDINARY EVENTS, IT WAS SUBMITTED THAT COMPARABLES CANNOT BE EXCLUDED MEREL Y ON THE GROUND THAT SOME EXTRAORDINARY EVENT HAS TAKEN PLAC E UNLESS THE ASSESSEE IS ABLE TO DEMONSTRATE AS TO HOW THEY HAVE AFFECTED THE PROFITABILITY. IT WAS FURTHER SUBMITTED THAT, THEREF ORE, THE COMPARABLES BEING OBJECTED TO BY THE ASSESSEE SHOUL D BE RETAINED AT THIS STAGE. 7.0 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO CAREFU LLY CONSIDERED THE ASSESSEES PLEA FOR EXCLUSION OF FOUR COMPARABL ES. AFTER GIVING A CONSIDERABLE THOUGHT TO THE ARGUMENTS OF BOTH THE P ARTIES, OUR ADJUDICATION ON EACH OF THE COMPARABLES IS AS UNDER : (I) INFORMED TECHNOLOGIES INDIA PVT. LTD.- WITH RESPECT TO THIS COMPARABLE, IT IS THE ASSESSEES PLEA THAT THERE HA S BEEN WIDE FLUCTUATIONS IN THE MARGINS AND THE REVENUE OF THIS COMPANY. WE 19 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT HAVE GONE THROUGH PAGE -396 OF THE ANNUAL REPORT OF THIS COMPANY WHEREIN THE COMPARATIVE FIGURES FOR MARCH, 2006 AND MARCH, 2007 HAVE BEEN GIVEN. IT IS SEEN THAT THE CONTENTION OF THE LD. AR IS CORRECT IN MUCH AS IT HAS BEEN CONTENDED THAT THERE HAS BEEN A WIDE FLUCTUATION IN PROFITS. IT IS SEEN THAT FOR THE YEAR ENDED 31 ST MARCH, 2006, THE COMPANY RETURNED A NEGATIVE PROFIT OF 26.35% AND FOR THE YEAR ENDING 31 ST MARCH, 2007 I.E., YEAR UNDER CONSIDERATION, THERE WAS A POSITIVE PROFIT OF 39.06%. THUS, THIS WID E FLUCTUATION OF 65.41% IS APPARENT FROM THE RECORDS OF THE COMPANY. THE PUNE BENCH OF ITAT IN THE CASE OF CUMMINS TURBO TECHNOLOGY LTD. REPORTED IN [2015] 53 TAXMANN.COM 492 (PUNE TRIBUNA L) HAD TAKEN A VIEW THAT WHERE THERE IS A VIDE FLUCTUATION IN THE MA RGINS EARNED, THE INCLUSION OF SUCH A COMPANY IN THE FINAL SET OF COMPARABLES WOULD NOT LEND CREDITABILITY TO THE COMPARABILITY AN ALYSIS AND THEREFORE, SUCH A COMPANY DESERVES TO BE EXCLUDED. THIS ORDER OF ITAT PUNE BENCH EXCLUDING INFORMED TECHNOLOGIES IND IA LTD. WAS UPHELD BY THE HONBLE BOMBAY HIGH COURT AND IS REPO RTED IN [2018] 91 TAXMANN.COM 307 (BOMBAY HIGH COURT). ANOTHER ARG UMENT OF THE LD. AUTHORIZED REPRESENTATIVE HAS BEEN REGARDIN G THE LOW 20 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT EMPLOYEE COST OF THIS COMPANY THAT IS BEING 21.77% AS COMPARED TO 52.08% OF THE ASSESSEE COMPANY. WE HAVE PERUSED THE ANNUAL REPORT OF THIS COMPANY AND HAVE STUDIED THE FIGURES IN THIS REGARD AS APPEARING IN PAGE 10 OF THE PAPER BOOK FILED BY THE ASSESSEE AND WE NOTE THAT THIS CONTENTION OF THE LD. AR IS ALSO C ORRECT. WE NOTE THAT FOR THIS REASON THE ITAT DELHI BENCH IN THE CA SE OF H & S SOFTWARE DEVELOPMENT AND MANAGEMENT CENTER PVT. LTD . VS. ACIT REPORTED IN [2017], 78 TAXMANN.COM 159 (DELHI TRIB. ) HAD HELD THAT ITES SECTOR COMPANY HAVING LESS THAN 25% OF SALES A S EMPLOYEE COST SHOULD NOT BE CHOSEN AS A COMPARABLE FOR BENCH MARKING INTERNATIONAL TRANSACTION. FOR THIS REASON ALSO, TH IS COMPANY DESERVES TO BE EXCLUDED. FURTHER ITAT MUMBAI BENCH IN THE CASE OF DCIT VS. MORGAN STANLEY ADVANTAGE SERVICES (PVT.) L TD. REPORTED IN [2019] 109 TAXMANN.COM 101 (MUMBAI TRIB.) HAD DIRECTED EXCLUSION OF THIS COMPANY BY OBSERVING THAT THE COMPANY HAVIN G THE LOW EMPLOYEE COST AS COMPARED TO THE ASSESSEE CANNOT BE CONSIDERED AS A COMPARABLE. ACCORDINGLY, WE DIRECT THE EXCLUSION OF THIS COMPARABLE FROM THE FINAL SET OF COMPARABLES. 21 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT (II) ECLERX SERVICES PVT. LTD.- IT HAS BEEN ARGUED OF THE LD. AR THAT THIS COMPANY WAS PROVIDING KPO RELATED SERVICES WHER EAS THE ASSESSEE WAS A LOW END CAPTIVE SERVICE PROVIDER IN T HE FIELD OF ITES. WE NOTE THAT THIS COMPANY HAS BEEN ORDERED TO BE EX CLUDED BY THE HONBLE HIGH COURT OF DELHI IN RAMPGREEN SOLUTIONS (PVT.) LTD. (SUPRA) ON THE GROUND THAT THIS COMPANY WAS ENGAGED IN DATA ANALYTICS, DATA PROCESSING SERVICES, PRICING ANALYT ICS, BUNDLING OPTIMIZATION, CONTENT OPERATION, SALES AND MARKETIN G SUPPORT, PRODUCT DATA MANAGEMENT, REVENUE MANAGEMENT, ETC. I T HAS BEEN ALSO NOTED THAT IN ADDITION TO THIS SERVICE ECLERX ALSO OFFERED FINANCIAL SERVICES SUCH AS REAL TIME CAPITAL MARKET S, MIDDLE AND BACK-OFFICE SUPPORT, PORTFOLIO RISK MANAGEMENT SERV ICES AND VARIOUS CRITICAL DATA MANAGEMENT SERVICES. THUS, CLEARLY TH ESE SERVICES ARE NOT COMPARABLE WITH THE SERVICES RENDERED BY THE ASS ESSEE COMPANY. FOLLOWING THE HONBLE DELHI HIGH COURT, THI S COMPANY WAS ALSO EXCLUDED BY THE ITAT DELHI BENCH IN THE CAS E OF DCIT VS. EVEREST BUSINESS ADVISORY INDIA (PVT.) LTD. REPORTE D IN [2018] 89 TAXMANN.COM 323, H & S SOFTWARE DEVELOPMENT AND KNO WLEDGE MANAGEMENT CENTER PVT. LTD. VS. ACIT REPORTED IN [2 017], 78 22 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT TAXMANN.COM 159 (DELHI TRIBUNAL). WE ALSO NOTE THA T THIS COMPANY WAS DIRECTED TO BE EXCLUDED BY THE CHENNAI BENCH OF TRIBUNAL IN THE CASE OF ACIT, CHENNAI VS. BRIGAE CORPORATION OF INDIA REPORTED IN [2014] 48 TAXAMANN.COM 176 (CHENNAI-TRIB.) FOR T HE REASON OF SUPER NORMAL PROFIT. WE HAVE GONE THROUGH THE ANNUA L REPORT OF THIS COMPANY PLACED AT PAGE-439 OF THE PAPER BOOK. WE HA VE STUDIED THE FIGURES OF SERVICE INCOME, OPERATING REVENUE AN D OPERATING EXPENSES AND WE NOTE THAT FOR THE YEAR ENDING 31 ST MARCH, 2007, OP/OC WAS 50.20% WHEREAS FOR THE YEAR ENDING 31 ST MARCH, 2008, THE OP/OC WAS MERELY 9.73%. THUS, APPARENTLY, THERE WERE SUPER NORMAL PROFITS EARNED BY THIS COMPANY. WE ALSO NOTE THAT ITAT MUMBAI BENCH, AFTER CONSIDERING THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN RAMPGREEN SOLUTION PVT. LTD. (SUPRA) AND ALSO IN THE CASE OF DCIT VS. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. (SUPRA) HAD DIRECTED THE EXCLUSION OF THIS COMPANY AS IT WAS PROVIDING HIGH END DATA ANALYTICS AND CUSTOMIZED PR OCESS SOLUTION AND WAS LEADING PROVIDER OF KPO SERVICES WITH SUBSTAN TIAL VALIDITY FOR LAW AND ITES SERVICES WHICH THE ASSESSEE WAS NOT P ROVIDING. ACCORDINGLY, IN VIEW OF THE ABOVE STATED JUDICIAL PR ECEDENTS, WE 23 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT DIRECT THE EXCLUSION OF THIS COMPANY FROM THE FINAL SET OF COMPARABLES. (III) I SERVICE INDIA PVT. LTD. - IT HAS BEEN ARGUED BY THE LD. AR THAT THIS COMPANY DESERVES TO BE EXCLUDED BECAUSE I T WAS PROVIDING HIGH END DIVERSIFIED SERVICES LIKE WEB HOSTING EMAIL SERVICE, SPAM FILTERING, DOMAIN NAMES, DNS HOSTING ETC. WE NOTE T HAT THE HONBLE ITAT DELHI BENCH IN THE CASE OF DCIT VS. EVEREST BUSINESS ADVISORY INDIA PVT. LTD. REPORTED IN [2018] 89 TAXMANN.COM 3 23 (DELHI TRIB.) HAD ORDERED THE EXCLUSION OF THIS COMPANY IN LIGHT OF THE JUDGMENT OF THE HONBE DELHI HIGH COURT IN THE CASE OF RAMPGREEN SOLUTION PVT. LTD.(SUPRA) BY NOTING THAT THE BUSINESS PROFILE OF THIS COMPAN Y SHOWED THAT THE SAME WAS INTO HIGH END SERVICES LIKE WEB HOSTING EMAIL SERVICES, SPAM FILTERING, DOMAIN NAMES, DNS H OSTING, ETC. WHICH MADE IT FUNCTIONALLY DISSIMILAR TO THE TAX PAY ER. WE ALSO NOTE THAT THE LD. CIT (A) HAS NOTED THAT THE INFORMATION REGARDING FINANCIALS OF THIS COMPANY WAS AVAILABLE IN THE PUB LIC DOMAIN, WHICH IS CONTRARY TO THE FACTS. IN SUCH A SITUATION, THE LD. TPO SHOULD NOT HAVE INCLUDED THIS COMPARABLE AS THE REL EVANT DETAILS WERE NOT AVAILABLE. ACCORDINGLY, FOR THE REASONS CIT ED ABOVE AND IN 24 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT VIEW OF THE JUDICIAL PRECEDENTS AS ABOVE CITED, WE DI RECT EXCLUSION OF THIS COMPANY FROM THE FINAL SET OF COMPARABLES. (IV) HCL COMNET SOFTWARE SYSTEM SERVICES LTD. - IT IS THE CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE THA T THIS COMPANY SHOULD BE EXCLUDED FOR THE REASON OF HAVING A VERY DIFFERENT BUSINESS PROFILE ALL TOGETHER AS IT IS HAVING ACTIV ITIES LIKE ADVISORY SERVICES, ITES, ITES RESEARCH AND ANALYSIS, ADVISOR Y SERVICES TO CERTAIN SUPPORT OF CLIENT ENGAGEMENT ETC. WE NOTE T HAT ITAT DELHI BENCH IN THE CASE OF DCIT VS. EVEREST BUSINESS ADVISORY INDIA PVT. LTD. REPORTED IN [2018] 89 TAXAMNN.COM 323 (DELHI T RIB.) HAD ORDERED THE EXCLUSION OF THIS COMPANY ON ACCOUNT OF FUNCTIO NAL DISSIMILARITY BY FOLLOWING RAMPGREEN SOLUTION PVT. LTD. (SUPRA). I T HAD BEEN NOTED THAT THIS COMPANY IS OPERATING 24/7 IN THREE SHIFTS WHEREAS THE TAX PAYER WAS OPERATING WITH A SINGLE SHIFT ONLY . IT HAD ALSO BEEN NOTED BY THE CO-ORDINATE BENCH THAT THIS COMPANY WA S A RISK-BEARER COMPANY WHEREAS THE TAXPAYER WAS A CAPTIVE SERVICE P ROVIDER TO ITS AE AND, THUS, THERE WAS A STARK FUNCTIONAL DISSIMIL ARITY. SIMILARLY, THIS COMPANY WAS DIRECTED TO BE EXCLUDED BY ITAT HY DERABAD BENCH IN CAPITAL IQ INFORMATION SYSTEMS (INDIA) (P.) LTD. V. DCIT 25 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT (2013) 57 SOT 14 (URO)/25 ITR 185 (HYD.) (TRIB.) ON THE GROUND THAT THIS COMPANY ALONG WITH INFOSYS B P O LTD. AND W IPRO LTD . CANNOT BE TREATED AS A COMPARABLE CONSIDERING THEIR SUBSTANTI AL HIGH TURNOVER AS COMPARED TO THE ASSESSEE. ACCORDINGLY, IN VIEW OF THE ABOVE STATED JUDICIAL PROPOSITION, WE DIRECT THE EXCLUSION OF THIS COMPANY ALSO FROM THE FINAL SET OF COMPARABLES. 7.1 AS IT HAS BEEN SUBMITTED BY THE LD. AR TH AT IF THESE FOUR COMPARABLES ARE EXCLUDED, THE ASSESSEES OTHER GROUNDS WILL BECAME ACADEMIC IN NATURE AS THE ASSESSEES AVERAGE WOULD THEN FALL WITHIN THE ACCEPTED RANGE OF DEVIATION. SINCE W E HAVE ORDERED THE EXCLUSION OF THE FOUR COMPARABLES BEING CONTEST ED BY THE LD. AR, IN VIEW OF THE SUBMISSIONS OF THE LD. AR, THE OT HER GROUNDS ARE BEING TREATED AS HAVING BECOME ACADEMIC AND THEY AR E NOT BEING ADJUDICATED UPON. 8.0 IN THE FINAL RESULT, THE APPEAL OF THE ASSESS EES STANDS PARTLY ALLOWED WHEREAS THE DEPARTMENTS APPEA L STANDS DISMISSED IN VIEW OF THE LAW TAX EFFECT. 26 ITA NOS.3174 & 3188 /DEL/2017 QUATRRO BUSINESS SUPPO RT SOLUTION PVT. LTD. VS. DCIT ORDER PRONOUNCED ON 26/05/2020. SD/- SD/- (O.P.KANT) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 26/05/2020 PK/PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI