DCIT 9(2), MUMBAI V. MORGAN STANLEY ADVANTAGE SERVICES P.LTD, MUMBAI

ITA 4406/MUM/2012

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6777 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: K
• Next Hearing Date: 19-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 29-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYANT KUMAR
• Keywords: Transfer pricing; International transaction; Set aside
• Section: 92C; 143(3); 133(6); 250

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL K BENCH MUMBAI BEFORE SHRI G.S. PANNU, VICE- PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.4406/MUM/2012 (ASSESSMENT YEAR 2007-08) DCIT-9(2) ROOM NO. 218, 2 ND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. VS. M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. ATHENA BUILDING NO.5, SECTOR-30, MINDSCAPE, GOREGAON (W), MUMBAI- 400074. P AN: AAACA3400B APPELLANT RESPONDENT ITA NO.4479/MUM/2012 (ASSESSMENT YEAR 2007-08) M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. ATHENA BUILDING NO.5, SECTOR-30, MINDSCAPE, GOREGAON (W), MUMBAI- 400074. P AN: AAACA3400B VS. DCIT, CC-3(4) AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400018. APPELLANT RESPONDENT APPELLANT BY : SHRI JAYANT KUMAR (DR) RESPONDENT BY : SHRI SUNIL M. LALA WITH SHRI TUSHAR HATHIRAMANI (AR ) DATE OF HEARING : 10.05.2019 DATE OF PRONOUNCEMEN T : 10.07.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THESE CROSS APPEAL ARE DIRECTED AGAINST THE ORDER O F LD. COMMISSIONER OF INCOME-TAX (APPEALS)-15, MUMBAI [THE LD. CIT(A)] DA TED 03.04.2012, WHICH IN TURN ARISES FROM THE ASSESSMENT ORDER PASS ED UNDER SECTION 143(3) ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 2 ON 14.01.2011. THE ASSESSING OFFICER PASSED THE ASS ESSMENT ORDER IN PURSUANCE OF ORDER OF TRANSFER PRICING OFFICER (TPO ) PASSED UNDER SECTION 92CA(3) DATED 26.10.2010. THE REVENUE IN ITS APPEAL HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN DELETING THE RELEVANT TRANSACTION OF M/S MOLD-TECH TECHNOLOGY LTD AS ONE OF THE COMPARABLE WITHOUT APPRECIATING THE FACT THAT THE T PO WHILE CALCULATING THE ALP HAS CONSIDERED THE SEGMENTAL OPERATING PROFIT O F KPO SECTOR ONLY OF MOLD- TECK TECNOLOGY LTD. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN DELETING THE RELEVANT TRANSACTION OF M/S ICRA TECHN O ANALYTICS LTD. AS ONE OF THE COMPARABLE WITHOUT APPRECIATING THE FACT THAT M /S ICRA TECHNO ANALYTICS LTD. IS ALSO IN THE BUSINESS OF ITES SERVICES. 3. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. VIDE APPLICATION DATED 11.05.2018, THE REVENUE HAS RAISED THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN NOT DIRECTING THE A.O. TO OBTAIN THE ITES SEGMENT DETAI LS U/S 133(6) OF THE ACT, IN RESPECT OF M/S ICRA TECHNO ANALYTICS LTD. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN APPLYING CERTAIN PARAMETERS SELECTIVELY TO CERTAIN COMPARABLES TO EXCLUDE THE SAME IN CONTRAVENTION OF THE PRINCIPLES LAID DOWN U NDER 10B(2) OF IT RULES, WHICH PROVIDES THAT A COMPARABILITY PARAMETERS SHOU LD BE APPLIED UNIFORMLY TO ALL THE COMPARABLES FOR THE DETERMINATION OF ALP U/ S 92C OF THE INCOME TAX ACT, 1961. 3. THE APPELLANT PRAYS THAT THE ORDER OF CIT(A) ON THE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE ASSESSEE IN ITS CROSS APPEAL HAS RAISED THE FOL LOWING GROUNDS OF APPEAL: ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 3 AGGRIEVED BY THE ORDER PASSED BY THE COMMISSIONER O F INCOME-TAX (APPEALS)- 15, MUMBAI [HEREINAFTER REFERRED TO AS THE LEARNED CIT(A)], UNDER SECTION 250 OF THE INCOME-TAX ACT, 1961 (ACT) AND BASED ON THE FAC TS AND CIRCUMSTANCES OF THE CASE, MORGAN STANLEY ADVANTAGE SERVICES PRIVATE LIM ITED [HEREINAFTER REFERRED TO AS 'THE APPELLANT'] RESPECTFULLY SUBMITS THAT TH E LEARNED CIT(A) ERRED IN PARTLY UPHOLDING THE ORDER OF THE ASSISTANT COMMISSIONER O F INCOME-TAX - RANGE 9(2), MUMBAI [HEREINAFTER REFERRED TO AS 'THE LEARNED AO' ], ON THE FOLLOWING GROUNDS: 1. IN HOLDING THAT THE TRANSFER PRICING ANALYSIS UNDER TAKEN BY THE APPELLANT FOR COMPUTING THE ARM'S LENGTH PRICE (HEREINAFTER REFER RED TO AS 'ALP') IN RELATION TO THE INFORMATION TECHNOLOGY ENABLED SERVICES (HER EINAFTER REFERRED TO AS 'ITES') PROVIDED BY THE APPELLANT IS NOT IN ACCORDA NCE WITH THE PROVISIONS OF SECTION 92C(1) AND 92C(2) OF THE ACT AND IS LIABLE TO BE REJECTED. 2. IN UPHOLDING THE LEARNED AO'S ACTION OF INCLUDING A N ADDITIONAL SET OF 19 COMPARABLE COMPANIES IDENTIFIED THROUGH A SEPARATE PROCESS. 3. WITHOUT PREJUDICE TO GROUND 3, IN PARTLY REJECT ING THE APPELLANT'S CONTENTION THAT THE ADDITIONAL SET OF 19 COMPANIES PROVIDED BY THE LEARNED AO WERE NOT COMPARABLE DUE TO ONE OR MORE OF THE FOLLOWING REAS ONS: FUNCTIONALLY INCOMPARABLE COMPANIES SUPERNORMAL PROFITS EXCEPTIONAL YEAR OF OPERATIONS FINANCIAL INFORMATION NOT AVAILABLE IN PUBLIC DOM AIN 4. IN UPHOLDING THE REJECTION OF ONE OF THE APPELLA NT'S COMPARABLE COMPANIES, VIZ. SAVEN TECHNOLOGIES LIMITED, ENGAGED IN THE PRO VISION OF ITES PROVIDED BY THE APPELLANT. 5. IN UPHOLDING THE USE OF SINGLE YEAR DATA FOR FIN ANCIAL YEAR 2006-2007 FOR THE TRANSACTION PERTAINING TO ITES AND REJECTING THE DA TA FOR FINANCIAL YEAR 2005- 2006 AND 2004-2005 USED BY THE APPELLANT FOR COMPUT ING THE ALP FOR ITES. 6. IN UPHOLDING THE IDENTIFICATION OF COM PARABLES SELECTED BY THE LEARNED AO BASED ON DATA AVAILABLE AT THE TIME OF THE ASSESSME NT, I.E. USE OF NON- ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 4 CONTEMPORANEOUS DATA WHICH WAS NOT AVAILABLE TO THE APPELLANT AT THE TIME OF COMPLYING WITH THE TRANSFER PRICING PROVISIONS, FOR COMPUTING THE ALP FOR ITES. 7. IN UPHOLDING THE APPLICATION OF CERTAIN INAPPROP RIATE FILTERS BY THE LEARNED TPO FOR IDENTIFYING COMPARABLE COMPANIES 8. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, IN NOT G RANTING WORKING CAPITAL ADJUSTMENT TO THE AVERAGE PROFIT LEVEL INDICATOR OF IDENTIFIED COMPARABLE COMPANIES. 9. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, BY NOT A LLOWING THE ADJUSTMENT FOR DIFFERENCE IN THE LEVEL OF RISK ASSUMED BY THE APPE LLANT VIS-A-VIS THE RISK OF IDENTIFIED COMPARABLE COMPANIES. 10. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, IN NOT ADOPTING THE ALP AFTER CONSIDERING AN AMOUNT VARYING BY 5 PERCENT OF THE A RITHMETIC MEAN OF THE MARGINS OF IDENTIFIED COMPARABLE COMPANIES 11. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, IN REJE CTING, OUT OF 19 ADDITIONAL COMPANIES SELECTED BY THE LEARNED AO, ONLY ONE COMP ANY AS NOT BEING COMPARABLE, RESULTING IN AN ENHANCEMENT OF THE ASSE SSMENT WITHOUT ADEQUATE OPPORTUNITY BEING PROVIDED TO THE APPELLANT AS REQU IRED UNDER THE PROVISIONS OF SECTION 251 OF THE ACT. 12. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, BY IGNO RING THE FACT THAT SINCE THE APPELLANT IS AVAILING TAX HOLIDAY UNDER SECTION 10A OF THE ACT, THERE IS NO MOTIVE OR REASON TO SHIFT PROFITS OUT OF INDIA, OR CURBING OF TAXES WHICH IS THE BASIC INTENTION OF INTRODUCING THE TRANSFER PRICING PROVI SIONS. 4. FURTHER, THE ASSESSEE VIDE ITS APPLICATION DATED 1 6.01.2018 HAS RAISED THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL: MORGAN STANLEY ADVANTAGE SERVICES PVT LTD (HEREINAF TER REFERRED TO AS THE 'APPELLANT') CRAVES LEAVE TO PREFER AN APPEAL ON TH E FOLLOWING ADDITIONAL GROUND AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) -15 ['CIT(A)'] UNDER SECTION 250 OF THE INCOME-TAX ACT, 1961 (HERE INAFTER REFERRED TO AS THE ACT): ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) AND THE LD TRANSFER PRICING OFFICER ERRED IN CONSID ERING TRITON CORP LTD AS A ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 5 COMPARABLE. IT IS SUBMITTED THAT SINCE THE COMPANY / DIRECTORS OF THE COMPANY WERE INVOLVED IN FRAUD THE FINANCIAL RESULTS OF THE COMPANY WERE NOT RELIABLE AND THEREFORE THE SAME COULD NOT BE CONSIDERED AS A COMPARABLE. 5. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPA NY IS A SUBSIDIARY OF M/S. MORGAN STANLEY INTERNATIONAL HOLDINGS INC AND MORGA N STANLEY INCORPORATED USA. THE ASSESSEE-COMPANY WAS SET UP B Y THE MORGAN STANLEY IN INDIA TO SUPPORT FRONT OFFICE AND INFRAS TRUCTURE UNIT FUNCTIONS IN THEIR OPERATIONS OF VARIOUS GROUP ENTITIES GLOBALLY . THE ASSESSEE-COMPANY FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2007 -08 ON 22.10.2007 DECLARING TOTAL INCOME AT RS. 1,12,32,492/-. ALONG WITH THE RETURN OF INCOME, THE ASSESSEE FURNISHED REPORT UNDER FORM 3C EB. THE RETURN WAS SELECTED FOR SCRUTINY. DURING THE SCRUTINY ASSESSME NT THE ASSESSING OFFICER NOTED THAT THE ASSESSEE IN THE REPORT UNDER FORM 3 CEB REPORTED THE FOLLOWING INTERNATIONAL TRANSACTIONS: S.NO. NATURE OF TRANSACTIONS FY 2006-07 METHOD USED BY THE ASSESSEE FY 2005-06 1 PROVISION OF ITES (REVISED) 174,12,36,675 TNMM 123,97,44,681 2 REIMBURSEMENT OF PERSONNEL COST TO AES (PAID) 20,79,24,950 ACTUALS 16,87,00,654 TOTAL 194,91,61,625 140,84,45,335 6. THE ASSESSEE BENCH MARKED ITS ALP UNDER TRANSACTION NET MARGIN METHOD (TNMM),THE ASSESSEE SELECTED 9 COMPANIES AS COMPARA BLE AND COMPUTED ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 6 THE MARGIN ON THE BASIS OF TWO YEARS AND AVERAGE MA RGIN IN THE FOLLOWING MANNER: SR NO. NAME OF COMPARABLE MARGIN (AVG OF TWO YEARS)- PB 1/180 MARGIN (FOR THE RELEVANT YEAR)-PB 1/206 AND TPO/3 1 ACE SOFTWARE 11.29% -7.04% 2 ALLSEC TECHNOLOGIES 27.36% 27.21% 3 CS SOFTWARE ENTERPRISES LTD. 13.61% 23.73% 4 FLEXTRONICS SOFTWARE SYSTEMS LTD. 3.24% -0.89% 5 GENESYS INTERNATIONAL CORPORATION LTD. -1.46% 12.52% 6 NUCLEUS NETFSOFT & GIS INDIA LTD. 42.21% 30.52% 7 SAVEN TECHNOLOGIES LTD. [REJECTED BY TOP & CIT(A)] 61.57% -37.31% 8 SPANCO TELESYSTEMS AND SOLUTIONS LTD. 16.12% 24.82% 9 TRITON CORP LTD. 20.65% 34.49% ARITHMETIC MEAN 21.62% 12.01% 7. THE MARGIN ON COMPARABLE BASED ON AVERAGE OF TWO YE ARS WAS 21.62% AND THE ASSESSEES MARGIN FOR INTERNATIONAL TRANSACTION WAS 21.76%. 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). DURING THE PROCEEDINGS BEFORE TOP, THE TPO REJECTED ONE OF THE ASSESSEES COMPARA BLE I.E. SEVEN TECHNOLOGIES LTD., AND ACCEPTED REMAINING 8 COMPARA BLE. HOWEVER, THE TPO CARRIED OUT ITS OWN RESEARCH AND INCLUDED THE F OLLOWING 19 COMPARABLE: 1. ECLERX SERVICES LTD. ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 7 2. MOLD TEK TECHNOLOGIES, 3. ACCENTIA TECHNOLOGIES LTD. 4. I SERVICES INDIA PVT. LTD. 5. BODHTREE CONSULTING LD. 6. VISHAL INFORMATION TECHNOLOGIES LTD. 7. COSMIC GLOBAL LTD. 8. INFORMED TECHNOLOGIES LTD. 9. HCL COMNET SYSTEMS & SERVICES LTD. 10. INFOSYS BPO LTD. 11. WIPRO LTD. 12. MAPLE ESOLUTIONS LTD. 13. ICRA TECHNO ANALYTICS LTD. 14. ADITYA BIRLA MINACS WORLDWIDE (TRANSWORKS INFORMATI ON SERVICES LTD.) 15. APEX KNOWLEDGE SOLUTIONS LTD., 16. APOLLO HEALTHSTREET LTD. 17. CALIBER POINT BUSINESS SOLUTIONS LTD., 18. DATAMATICS FINANCIAL SERVICES LTD. AND 19. R SYSTEMS INTERNATIONAL LTD. 8. THE TPO AFTER INCLUDING 19 COMPARABLE WORKED OUT AR ITHMETIC MEAN OF PROFIT LEVEL INDICATOR (PLI) OF 27 COMPARABLE COMPA NY AND ARRIVED AT MARGIN OF 28.87% AGAINST PLI OF 21.76% OF THE ASSE SSEE AND WORKED OUT DIFFERENCE BETWEEN ALP OF SALES AND VALUE OF INTERN ATIONAL TRANSACTION AND MADE ADJUSTMENT OF RS. 10,L6,77,010/- IN THE FOLLOW ING MANNER: S.NO. PARTICULARS AS PER ASSESSEE (FORM 3CEB) (AMOUNT IN RS.) ALP DETERMINED BY DEPARTMENT ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 8 1 VALUE OF ITES PROVIDED TO THE AE 174,12,36,675 18 4,29,13,685 2 OPERATING COST (OC) 143,00,56,402 143,00,56,402 3 OPERATING PROFIT(OP) 31,11,80,273 41,28,57,283 4 OP/OC 21.76% 28.87% 95% OF THE VALUE OF THE ALP CAN BE ACCEPTED AS ALP UNDER SECTION 92C(2) OF THE ACT. 175,07,68,001 DIFFERENCE BETWEEN ALP OF SALES AND VALUE OF INTERNATIONAL TRANSACTION (184,29,13,685-174,12,36,675) 10,16,77,010 ACCORDINGLY, THE ALP OF THE INTERNATIONAL TRANSACTI ON IS MADE AT RS. 184,29,13,685/-, AS AGAINST RS. 174,12,36,675/- SHO WN BY THE ASSESSEE. THEREFORE, THE NECESSARY ADJUSTMENT IN THE ALP COMES TO RS. 10,16, 77,010/- - RS. 174,12,36,675/-). 9. ON RECEIPT OF REPORT OF TPO, THE ASSESSING OFFICER MADE UPWARD ADJUSTMENT/ADDITION OF RS. 10,16,77,010/- TO THE TO TAL INCOME OF ASSESSEE VIDE ASSESSMENT ORDER DATED 24.01.2011 PASSED UNDER SECTION 143(3). THE ASSESSEE INSTEAD OF FILING OBJECTIONS BEFORE DISPUT E RESOLUTION PENAL (DRP), EXERCISED ITS OPTION TO FILE APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) AFTER CONSIDERING THE MATERIAL PLACED BEFORE HIM AN D CONSIDERING THE SUBMISSIONS OF ASSESSEE DIRECTED TO EXCLUDE THE ICR A TECHNO ANALYTICS LTD. FROM SET OF COMPARABLE AND FURTHER DIRECTED TO CONSIDER ONLY IT (KPO) DIVISION OF MOLD-TEK TECHNOLOGIES LTD. FOR THE PURP OSE OF COMPARABILITY AND BENCH MARKING AND CONFIRMED THE INCLUSION OF 19 ADDITIONAL COMPARABLE INCLUDED BY TPO WHILE MAKING ALP. FURTHER, AGGRIEVE D BY THE ORDER OF LD. CIT(A), THE REVENUE HAS FILED APPEAL CHALLENGING TH E ACTION OF LD. CIT(A) FOR INCLUSION OF ICRA TECHNO ANALYTICS LTD. AND MOL D-TEK TECHNOLOGIES LTD. FROM THE SET OF COMPARABLE. SIMILARLY, THE ASS ESSEE HAS CHALLENGED THE ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 9 ORDER OF LD. CIT(A) AND IN SUSTAINING THE INCLUSION OF 19 COMPARABLES INCLUDED BY TPO. 10. WE HAVE HEARD THE SUBMISSION OF LD. DEPARTMENTAL RE PRESENTATIVE (DR) FOR THE REVENUE AND LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON THE AD MISSION OF ADDITIONAL GROUNDS OF APPEALS THE LD. DR FOR THE REVENUE SUBMI TS THAT NO NEW FACTS ARE REQUIRED TO BE BROUGHT ON RECORD, ALL FACTS ARE EMA NATING THE ORDERS OF THE AUTHORITIES BELOW. DURING THE HEARING OF APPEAL ON 24/05/2018, THE LD. AR FOR THE ASSESSEE SUBMITS THAT HE HAS NO OBJECTION I F THE ADDITIONAL GROUND OF APPEAL RAISED BY THE REVENUE IS ALLOWED. ACCORDINGL Y, ADDITIONAL GROUND OF APPEAL RAISED BY THE REVENUE IS ALLOWED. SIMILARLY, THE ASSESSEE HAS ALSO RAISED ADDITIONAL GROUND OF APPEAL; WE HAVE NOTED T HAT NO NEW FACTS ARE REQUIRED TO BE BROUGHT ON RECORD FOR DECIDING THE A DDITIONAL GROUND RAISED BY THE ASSESSEE, THEREFORE, THE ADDITIONAL GROUND O F APPEAL RAISED BY ASSESSEE IS ALSO ALLOWED. 11. ON THE VARIOUS GROUNDS OF APPEAL RAISED BY THE ASSE SSEE. THE LD. AR OF THE ASSESSEE SUBMITS THAT THE ASSESSEE IS ENGAGED IN PR OVIDING IT SUPPORT (ITES), ACCOUNT RECONCILIATION SERVICES ETC TO MORG AN STANLEY GROUP ENTITIES/ITS AES. IN THE INTERNATIONAL TRANSACTION OF ASSESSEE WAS ACCEPTED AT THE ALP IN EARLIER YEARS. DURING THE YEAR UNDER CON SIDERATION, THE ASSESSEE PROVIDED ITES/SUPPORT SERVICES TO ITS AE AND RECEIV ED A FEES OF RS. 174,12,36,675/-. THE ASSESSEE BENCH MARKED ITS ALP UNDER TRANSACTION NET ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 10 MARGIN METHOD (TNMM), THE ASSESSEE SELECTED 9 COMPA NIES AS COMPARABLE AND COMPUTED THE MARGIN ON THE BASIS OF TWO YEARS D ATA AND AVERAGE MARGIN. DURING THE PROCEEDINGS BEFORE TOP, THE TPO REJECTED ONE OF THE ASSESSEES COMPARABLE I.E. SEVEN TECHNOLOGIES LTD., AND ACCEPT ED REMAINING 8 COMPARABLE. THE TPO CARRIED OUT ITS OWN RESEARCH AN D SELECTED ADDITIONAL 19 COMPARABLE. THE TPO SUGGESTED THE ALP ON THE BAS IS OF 27 COMPARABLES. 12. THE TPO WORKED OUT ARITHMETIC MEAN OF PLI OF 27 COM PARABLE COMPANY AND COMES TO PLI OF 28.87% AGAINST PLI OF 21.76% OF THE ASSESSEE AND WORKED OUT ADJUSTMENT OF RS. 10,L6,77,010/-. THE LD . CIT(A) EXCLUDED THE ICRA TECHNO ANALYTICS LTD. AS COMPARABLE AS THE SAI D COMPANY IS ENGAGED IN THE SOFTWARE AND DEVELOPMENT AND SALE OF SOFTWAR E PRODUCT AS WELL AS ITES SERVICES. THE LD. CIT(A) ALSO DIRECTED TO CONS IDER ONLY THE KPO DIVISION OF MOLD-TEK TECHNOLOGIES LTD. FOR THE PURP OSE OF BENCH MARKING. THE LD. CIT(A) ACCEPTED THE REMAINING 17 COMPARABLE SELECTED BY TPO. 13. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT HE IS NOT PRESSING FOR INCLUSION OF 6 COMPARABLE CONSISTING OF (I) ADITYA BIRLA MINACS WORLDWIDE (TRANSWORKS INFORMATION SERVICES LTD.),(II) APEX KN OWLEDGE SOLUTIONS LTD.,(III) APOLLO HEALTH STREET LTD.,(IV) CALIBER P OINT BUSINESS SOLUTIONS LTD., (V) DATAMATICS FINANCIAL SERVICES LTD. & (VI) R. SYSTEMS INTERNATIONAL LTD. FROM THE COMPARABLE SELECTED BY TPO AND CONFIR MED BY LD. CIT(A). ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 11 14. THE LD. AR OF THE ASSESSEE FURTHER SUBMITS THAT HE IS DISPUTING THE INCLUSION OF 14 COMPARABLES WHICH ARE (I) ECLERX SERVICES LTD .,(II)MOLD TEK TECHNOLOGIES, (III) ACCENTIA TECHNOLOGIES LTD., (IV ) I SERVICES INDIA PVT. LTD., (V) BODHTREE CONSULTING LTD., (VI) VISHAL INF ORMATION TECHNOLOGIES LTD. (NOW KNOWN AS CORAL HUBS LTD.), (VII) COSMIC G LOBAL LTD.,(VIII) INFORMED TECHNOLOGIES LTD.,(IX) HCL COMNET SYSTEMS & SERVICES LTD., (X) INFOSYS BPO LTD.,(XI) WIPRO LTD., (XII) MAPLE ESOLU TIONS LTD.,(XIII) TRITON CORP LTD (IN ADDITIONAL GROUNDS OF APPEALS) AND ICR A TECHNOLOGY ANALYTICS LTD ( IN REVENUES APPEAL). 15. FOR EXCLUSION, EACH OF THE COMPARABLE, THE LD. AR O F THE ASSESSEE FURNISHED THE CHART SHOWING THE CASE LAWS/ DECISIONS OF TRIBU NAL OR HIGH COURTS, WHEREIN THE COMPARABLE WERE NOT CONSIDERED AS GOOD COMPARABLE WITH THE COMPANIES ENGAGED IN PROVIDING ITES SERVICES, WHICH ARE REFERRED IN SUBSEQUENT PARAS. 16. FOR ECLERX SERVICES LTD ., THE LD. AR OF THE ASSESSEE SUBMITS THAT ECLERX SERVICES LTD. HAS NOT CONSIDERED AS A COMPARABLE IN EARLIER YEARS. ECLERX SERVICES LTD. IS A KNOWLEDGE PROCESS OUTSOURCING (K PO) SERVICE PROVIDER WHICH IS NOT COMPARABLE TO ASSESSEE; ASSESSEE IS EN GAGED IN PROVIDING BACK OFFICE SUPPORT SERVICES. IN SUPPORT OF HIS SUBMISSI ON, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF DELHI HIGH COU RT IN RAMPGREEN SOLUTION P LTD VS CIT (2015) ITR 533 (DELHI), DECIS IONS OF TRIBUNAL IN WILLS PROCESSING SERVICES (INDIA) P. LTD. VS. ACIT [2017] 83 TAXMANN.COM ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 12 198 (MUM. TRIB.), HINDUJA GLOBAL SOLUTIONS LTD. VS. DCIT [2017] 78 TAXMANN.COM 199 (MUM TRIB.), STREAM INTERNATIONAL S ERVICES (P.) LTD. VS. ACIT [2015] 152 ITD 664 (MUM), DCIT VS. EVEREST BUS INESS ADVISORY INDIA (P) LTD. (ITA NO. 41/DEL/2013 & 1191/DEL/2013 , H&S SOFTWARE DEVELOPMENT & KNOWLEDGE MANAGEMENT CENTRE (P.) LTD. VS. ACIT [2017] 78 TAXMANN.COM 159 (DEL. TRIB.) & BNY MELLON INTERN ATIONAL OPERATIONS (INDIA) (P.) LTD. VS. DY CIT [2015] 173 TTJ 354 (PU NE). 17. FOR MOLD TEK TECHNOLOGIES LTD ., THE LD. AR OF THE ASSESSEE SUBMITS THAT MOLD TEK TECHNOLOGIES LTD. HAS BEEN EXCLUDED BY LD. CIT(A) FOR ASSESSMENT YEAR 2008-09 AND DEPARTMENT IS NOT IN AP PEAL AGAINST SUCH EXCLUSION. THE MOLD TEK TECHNOLOGIES LTD. PROVIDES ENGINEERING DESIGN, DETAILING SERVICES, WEBSITE DESIGN SERVICES ETC. IT PROVIDES HIGHLY TECHNICAL AND SPECIALIZED ENGINEERING SERVICE WHICH COMES IN THE CATEGORY OF KPO AND CANNOT BE COMPARED TO THE ASSESSEE ENGAGED IN P ROVIDING BACK OFFICE SUPPORT SERVICES. THE LD AR FOR THE ASSESSEE RELIED ON THE DECISION OF DELHI HIGH COURT IN PCIT VS EVALUESERVE.COM PVT LTD (ITA NO. 921/2017), WILLS PROCESSING SERVICES(INDIA) P LTD VS ACIT (2017) 38 TAXMANN.COM 198 (MUMBAI-TRIB), HINDUJA GLOBAL SOLUTION LTD VS DCIT [2017] 78 TAXMANN.COM 199(MUMBAI-TRIB). 18. FOR ACCENTIA TECHNOLOGIES LTD . THE LD. AR OF THE ASSESSEE SUBMITS THAT THIS COMPARABLE HAS NEITHER BEEN SELECTED AS COMPAR ABLE IN EARLIER YEARS NOR IN SUBSEQUENT ASSESSMENT YEAR IN 2008-09. THE ACCEN TIA TECHNOLOGIES LTD. ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 13 IS ENGAGED IN DEVELOPING ITS OWN SOFTWARE PRODUCTS AND RENDERING MEDICAL TRANSCRIPTION SERVICES AND CANNOT BE COMPARED TO TH E ASSESSEE ENGAGED IN PROVIDING BACK OFFICE SUPPORT SERVICES. FURTHER, IT HAS UNDERTAKEN EXTRA- ORDINARY EVENTS DURING THE YEAR UNDER REVIEW WHICH HAVE AN IMPACT ON ITS FINANCIALS. IN SUPPORT OF HIS CONTENTION, THE LD. A R OF THE ASSESSEE RELIED UPON THE DECISIONS OF (1) WILLS PROCESSING SERVICES (INDIA) P LTD. VS. ACIT [2017] 83 TAXMANN.COM 198 (MUM. TRIB.) (2) STREAM I NTERNATIONAL SERVICES (P.) LTD. VS. ACIT [2015] 152 ITD 664(MUM) (3) H&S SOFTWARE DEVELOPMENT & KNOWLEDGE MANAGEMENT CENTRE (P.) LTD. VS. ACIT [2017] 78 TAXMANN.COM 159 (DEL. TRIB.) (4) VISHAY COMPONEN TS (P.) LTD. VS. ACIT [2017] 83 TAXMANN.COM 319 (PUNE TRIB.) (5) GLOBAL E :BUSINESS OPERATIONS (P.) LTD. VS. DY.CIT [2015] 63 TAXMANN.COM 282 (BAN GALORE TRIBN.) (6) SYMPHONY MARKETING SOLUTIONS INDIA (P.) LTD. VS. IT O [2013] 38 TAXMANN.COM 55 (BANGALORE TRIB.) (7) BNY MELLON INT ERNATIONAL OPERATIONS (INDIA) (P.) LTD. VS. DY.CIT [2015] 173 TTJ 354 (PUNE) AND RAMPGREEN SOLUTAION P LTD VS CIT (2015) 377 ITR 533 (DELHI). 19. FOR I SERVICES , THE LD. AR OF THE ASSESSEE SUBMITS THAT THIS COMP ANY IS IN DIVERGENT HIGH END SERVICES LIKE WEB HOSTING, EMAIL SERVICES, SPAM FILTERING, DOMAIN NAMES AND DNS HOSTING, WEB HOSTING, EMAIL SE RVICES, SPAM FILTERING, DOMAIN NAMES AND DNS HOSTING IS ALSO PRO VIDING WEB DESIGN SERVICES, DOMAIN MANAGEMENT SERVICES AND EMAIL MANA GEMENT SERVICES WHICH CANNOT BE COMPARED TO THE ASSESSEE ENGAGED IN PROVIDING BACK OFFICE ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 14 SUPPORT SERVICES. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF DELHI TRIBUNAL IN DCIT VS. EVEREST BUSINESS ADVISORY INDIA (P.) LTD. (ITA NO. 41/DEL/2013 & 119 1/DEL/2013. 20. FOR BODHTREE CONSULTING LTD ., THE LD. AR OF THE ASSESSEE SUBMITS THAT BODHTREE CONSULTING LTD. IS A SOFTWARE SOLUTION COM PANY, IS ENGAGED IN PROVIDING OPEN-END TO END WEB SOLUTION, SOFTWARE CO NSULTANCY, DESIGN AND DEVELOPMENT OF SOLUTIONS, USING THE LATEST TECHNOLO GY, WITHOUT ADEQUATE SEGMENTAL INFORMATION AND THEREFORE CANNOT BE COMPA RED WITH THE ASSESSEE ENGAGED IN PROVIDING BACK OFFICE SUPPORT SERVICES. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF H&S SOFTWARE DEVELOPMENT & KNOWLEDGE MANAGEMENT CENTRE (P.) LTD. VS. ACIT [2017] 78 TAXMANN.COM 159 (DEL.TRIB.) & SOCIET E GENERALE GLOBAL SOLUTION CENTRE (P.) LTD. VS. DY.CIT [2016] 69 TAXM ANN.COM 336 (BANGALORE TRIB.). 21. FOR CORAL HUBS LTD. (VISHAL INFORMATION ), THE LD. AR OF THE ASSESSEE SUBMITS THAT CORAL HUBS LTD. (VISHAL INFORMATION) W AS OUTSOURCING A SIGNIFICANT PART OF ITS OPERATIONS WHICH IS EVIDENT FROM ITS LOW EMPLOYEE COST AND THUS HAD A SUBSTANTIALLY DIFFERENT BUSINESS MOD EL AS COMPARED TO THE ASSESSEE AND THEREFORE COULD NOT BE CONSIDERED AS C OMPARABLE. THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF TRIBUNA L IN WILLS PROCESSING SERVICES (INDIA) PVT LTD ACIT (2017) 83 TAXMANN.COM 198 (MUMBAI-TRIB). ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 15 22. FOR COSMING GLOBAL LTD THE LD AR FOR THE ASSESSEE SUBMITS THAT THE SAID COMPARABLE WAS NOT CONSIDERED AS COMPARABLE IN THE EARLIER YEARS AND HAS BEEN EXCLUDED AS COMPARABLE BY TPO ITSELF IN ASSESS MENT YEAR 2008-09. THE BUSINESS MODEL OF COSMIC GLOBAL IS NOT SIMILAR TO THE BUSINESS MODEL OF THE ASSESSEE. THE EMPLOYEE COST OF COSMIC GLOBAL IS MERELY 15.15% OF ITS TOTAL COST AND IN ASSESSEES CASE IS 58.49%. TH EREFORE, THE SAID COMPANY IS NOT COMPARABLE. THE LD AR HAS TAKEN SUPPORT OF C ASE LAWS IN UNITED HEALTH GROUP INFORMATION SERVICES (P) LTD VS ACIT A ND BNY MELLON INTERNATIONAL OPERATIONS (INDIA) (P) LTD VS DCIT (2 015) 173 TTJ 354 (PUNE). 23. FOR INFORMED TECHNOLOGIES LTD ., THE LD. AR FOR THE ASSESSEE SUBMITS THAT THE SAID COMPARABLE HAS NEITHER BEEN SELECTED AS CO MPARABLE IN THE EARLIER YEARS NOR IN AY 2008-09. INFORMED TECHNOLOGIES LTD. HAVING LOW EMPLOYEE COST TO SALES (21.77%) AS COMPARED TO THE ASSESSEE (I.E. 48.85%) CANNOT BE CONSIDERED AS COMPARABLE. THE LD. AR HAS TAKEN SUPP ORT OF CASE LAWS IN STREAM INTERNATIONAL SERVICES (P.) LTD. VS. ACIT [2 015] 152 ITD 664 (MUM). 24. FOR HCL COMNET LTD. THE LD. AR FOR THE ASSESSEE SUBMITS THAT THE SAID COMPARABLE HAS NEITHER BEEN SELECTED AS COMPARABLE IN THE EARLIER YEARS NOR IN AY 2008-09. HCL COMNET LTD HAVING DIFFERENT FINA NCIAL YEAR ENDING I.E. JUNE ENDED AND THEREFORE CANNOT BE CONSIDERED AS CO MPARABLE N LIGHT OF RULE 10B(2). THE LD AR HAS TAKEN SUPPORT OF CASE LA WS IN H&S SOFTWARE ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 16 DEVELOPMENT & KNOWLEDGE MANAGEMENT CENTRE (P.) LTD. VS ACIT-[2017] 78 TAXMANN.COM 159 (DEL. TRIB.) AND DCIT VS EVEREST BUSINESS ADVISORY INDIA (P.) LTD. (ITA NO. 41/DEL/2013 & 1191/DEL/201 3. 25. FOR INFOSYS BPO LTD. THE LD. AR FOR THE ASSESSEE SUBMITS THAT THE SAID COMPARABLE HAS NEITHER BEEN SELECTED AS COMPARABLE IN THE EARLIER YEARS NOR IN AY 2008-09. INFOSYS PBO LTD WILL NOT QUALIFY ON FAR ANALYSIS OWNING TO VARIOUS FACTORS INCLUDING ITS BRAND VALUE, SIZE, OWING OF INTANGIBLES, ETC. THE COMPANY HAS ALSO INCURRED SELLING AND MARKETING EXPENSES. ACCORDINGLY, IT CANNOT BE CONSIDERED AS COMPARABLE TO THE ASSESSEE, A CAPTIVE SERVICE PROVIDER. THE LD. AR HAS TAKEN SUPP ORT OF CASE LAWS IN HINDUJA GLOBAL SOLUTION LTD. VS DCIT [2017] 78 TAXM ANN.COM 199 (MUMBAI TRIB.). 26. FOR WIPRO LTD. THE LD. AR FOR THE ASSESSEE SUBMITS THAT THE SAID C OMPARABLE HAS NEITHER BEEN SELECTED AS COMPARABLE IN THE EARL IER YEARS NOR IN AY 2008- 09. WIPRO LTD WILL NOT QUALIFY ON FAR ANALYSIS OWIN G TO VARIOUS FACTORS INCLUDING ITS BRAND VALUE, SIZE, OWNING OF INTANGIB LES, EXPENDITURE ON R&D, ETC AND CANNOT BE CONSIDERED AS COMPARABLE AS THE A SSESSEE A CAPTIVE SERVICE PROVIDER. THE LD AR HAS TAKEN SUPPORT OF CASE LAWS IN HINDUJA GLOBAL SOLUTION LTD. VS DY.CIT [2017] 78 TAXMANN.COM 199 ( MUMBAI TRIB.). 27. FOR MAPLE ESOLUTIONS LTD. THE LD. AR OF THE ASSESSEE SUBMITS THAT THE SAID COMPARABLE HAS NEITHER BEEN SELECTED AS COMPARABLE IN THE EARLIER YEARS NOR IN AY 2008-09. MAPLE ESOLUTIONS IS A PART AND PARCE L OF RASTOGI GROUP ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 17 WHICH IS UNDER SERIOUS INDICTMENT AND THEREFORE THE FINANCIAL RESULTS OF THE COMPANY WAS DISTORTED AND, ACCORDINGLY, CANNOT BE R ELIED UPON. THE LD. AR HAS TAKEN SUPPORT OF CASE LAWS IN STREAM INTERNATIO NAL SERVICES (P.) LTD. VS. ACIT [2015] 152 ITD 664 (MUM), DCIT VS EVEREST BUSS INESS ADVISORY INDIA (P) LTD. (ITA NO. 41/DEL/ 2013& 1191/DEL/2013 AND IQUOR INDIA SERVICES (P) LTD VS ITO (2015) 69 SOT 37 (DELHI). 28. FOR TRITON CORP LTD. ( IN ADDITIONAL GROUND OF APPEAL) , THE LD. AR FOR THE ASSESSEE SUBMITS THAT THE SAID COMPARABLE HAS BEEN REJECTED BY THE TPO ITSELF IN AY 2008-09. TRITON CORP LTD IS A PART AND PARCEL OF RASTOGI GROUP WHICH IS UNDER SERIOUS INDICTMENT AND THEREFORE THE FINANCIAL RESULTS OF THE COMPANY WAS DISTORTED AND, ACCORDINGLY, CANNOT BE R ELIED UPON. FURTHER, THE COMPANY ALSO ACQUIRED MAPLE ESOLUTIONS. THE LD AR H AS TAKEN SUPPORT OF CASE LAWS IN STREAM INTERNATIONAL SERVICES (P.) LTD . VS. ACIT [2015] 152 ITD 664 (MUM). 29. FOR ICRA TECHNO ANALYTICS LTD. (DEPARTMENTS GROUND OF APPEAL), THE LD. AR FOR THE ASSESSEE SUBMITS THAT THE SAID COMPA RABLE HAS BEEN REJECTED BY THE TPO ITSELF IN AY 2008-09. ICRA WAS ENGAGED I N PROCESSING AND PROVIDING SOFTWARE DEVELOPMENT AND CONSULTANCY AND ENGINEERING SERVICES/WEB DEVELOPMENT SERVICES AND NO SEGMENTAL DATA WAS AVAILABLE AND THEREFORE THE SAME CANNOT BE COMPARED TO THE ASSESS EE ENGAGED IN PROVIDING BACK OFFICE SUPPORT SERVICES. THE LD. AR HAS TAKEN SUPPORT OF CASE LAWS IN ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 18 PR CIT VS BC MANAGEMENT SERVICES P LTD. [2018] 89 T AXMANN.COM 68 (DELHI.). 30. ON THE OTHER HAND THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF THE TPO/ AO. THE LD. DR FOR THE REVENUE OPPOSED THE EXC LUSION ALL THE COMPARABLE AS ARGUED BY LD. AR FOR THE ASSESSEE. TH E LD DR FURTHER SUBMITS THAT WHILE EXCLUDING ICRA TECHNO ANALYTICS LTD THE LD CIT(A) HAS NOT FOLLOWED THE PRINCIPLES PROVIDED UNDER RULE 10B(2) OF INCOME TAX RULES. THE LD DR FURTHER SUBMITS THAT AS PER RULE 10B(2) T HERE SHOULD BE UNIFORMITY TO ALL COMPARABLES WHILE DETERMINING THE ALP UNDER SECTION 92C OF THE ACT. THE LD DR FOR THE REVENUE FURTHER SUBMI TS THAT LD CIT(A) ALSO ERRED IN EXCLUDING THE RELEVANT TRANSACTION OF MOLD - TECH TECHNOLOGY LTD, WITHOUT APPRECIATING THE FACTS THAT TPO HAS CONSIDE RED THE SEGMENTAL OPERATING PROFIT OF KPO SECTOR ONLY WHILE DETERMINI NG ALP. IN SUPPORT OF HIS SUBMISSIONS THE LD DR FOR THE REVENUE ALSO RELI ED ON THE DECISION OF DELHI HIGH COURT IN PCIT VS BC MANAGEMENT SERVICES (P) LTD [2018] 98 TAXMANN.COM 68(DELHI). HOWEVER, FOR BODHTREE CONSUL TING LTD., INFOSYS BPO LTD AND WIPRO LTD. THE LD. DR FOR THE REVENUE T HAT THESE THREE COMPANIES ARE NOT COMPARABLE WITH THE ASSESSEE. 31. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE PA RTIES HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND PERUSED THE RECORD CAREFULLY. WE HAVE ALSO DELIBERATED ON VARIOUS CASE LAWS RELIED B Y THE LD. AR/DR FOR THE PARTIES AND THE CASE LAWS RELIED BY THEM. CONSIDERI NG THE SUBMISSIONS OF ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 19 BOTH THE REPRESENTATIVES OF THE PARTIES, NOW WE ARE REQUIRE ONLY TO CONSIDER THE EXCLUSION OR INCLUSION OF 11 COMPARABLE. (1) ECLERX SERVICES LTD . 32. AS NOTED EARLIER THE LD AR FOR THE ASSESSEE SUBMIT TED THAT THE ASSESSEE SUBMITS THAT ECLERX SERVICES LTD. HAS NOT CONSIDERE D AS A COMPARABLE IN EARLIER YEARS. ECLERX SERVICES LTD. IS A KNOWLEDGE PROCESS OUTSOURCING (KPO) SERVICE PROVIDER WHICH IS NOT COMPARABLE TO A SSESSEE; ASSESSEE IS ENGAGED IN PROVIDING BACK OFFICE SUPPORT SERVICES. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED UPON THE DECISION OF DELHI HIGH COURT IN RAMPGREEN SOLUTION P LTD VS CIT (2015 ) ITR 533 (DELHI). THE TPO INCLUDED THIS COMPARABLE BY TAKING HIS VIEW THAT THIS COMPANY IS IN DATE PROCESS AND ANALYTICAL SERVICES. THE LD CIT(A) CONFIRMED THE ACTION OF THE TPO BY TAKING HIS VIEW THAT THIS COMPARABLE COMPANY IS INTO THE HEALTH CARE RECEIVAB LE MANAGEMENT AND THEREFORE RENDERS ITES SERVICES. THE HONBLE DELHI COURT IN RAMPGREEN SOLUTION (P) LTD (SUPRA) HELD ENTITIES RENDERING VO ICE CALL CENTER SERVICES FOR CUSTOMER SUPPORT AND A KPO SERVICE PROVIDER EMP LOY IT-BASED DELIVERY SYSTEMS, BUT CHARACTERISTICS OF SERVICES, FUNCTIONAL ASPECTS, BUSINESS ENVIRONMENT, RISKS AND QUALITY OF HUMAN RE SOURCE EMPLOYED ARE MATERIALLY DIFFERENT; AND THEREFORE, BENCHMARKI NG INTERNATIONAL TRANSACTIONS ON BASIS OF COMPARISON OF PLI OF HIGH- END KPO SERVICE PROVIDERS WITH PLI OF VOICE CALL CENTERS, WOULD BE UNRELIABLE. FURTHER, ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 20 MUMBAI TRIBUNAL IN WILLS PROCESSING SERVICES (INDIA ) LTD VS. ACIT (SUPRA) ON CONSIDERING SIMILAR CONTENTIONS EXCLUDED THIS COMPARABLE HOLDING AS UNDER: (5) WE HAVE HEARD THE LD. REPRESENTATIVES OF BOTH THE P ARTIES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE RECORDS MAD E A VAILABLE BEFORE US. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE FAC TS OF THE CASE AND ARE OF THE CONSIDERED VIEW THAT THOUGH WE FIND OURSELVE S TO BE IN AGREEMENT WITH THE CONTENTION OF THE LD. D.R AND HAVE NOT FOU ND FAVOR WITH THE CONTENTION OF THE ASS ESSEE THAT AS THE AFORESAID COMPARABLE HAD CARRIED OUT AN ACQUISITION OF A U.K BASED COMPANY, THEREFORE SI MPLICITER ON THE SAID COUNT, WITHOUT ESTABLISHING THAT SUCH ACQUISITION H AD RENDERED THE AFORESAID COMPARABLE FUNCTIONALLY DIFFERENT, COULD NOT BE ACC EPTED AS A FACTOR FOR EXCLUSION OF THE SAID COMPARABLE, BUT TH EN WE ARE OF THE CONSIDERED VIEW THAT THE FACT AS AVERRED BY THE LD. A.R BEFORE US THAT THE AFORESAID COMPARABLE, VIZ. ECLERX SERVICES LIMITED WAS PROVIDING HIGH END DATA ANALYTICS AND CUSTOMIZE D PROCESS SOLUTION AND WAS A LEADING INDIAN PROVIDER OF KPO SERVICES, WHICH SUBSTANTIALL Y VARIES FROM A LOW END ITES SERVICE PROVIDER, WHILE FOR THE ASSESSEE W AS ENGAGED IN PROVIDING BPO SERVICES, VIZ- PROCESSING OF INSURANCE CLAIMS AND INSURANCE PREMIUMS A ND DATA PROCESSING SERVICE FOR WHICH IT EMPLOYED OR DINARY GRADUATES, THEREFORE THE AFORESAID COMPARABLE, VIZ. ECLERX SERVICES LIMITED WAS FUNCTIONALLY DIFFERENT FROM THE ASSESSE E COMPANY, AND AS SUCH COULD NOT BE SELECTED AS A COMPARABLE. WE FIND THAT THE DRP HAD VIDE ITS ORDER DATED 27.11.2015 PASSED IN THE CASE OF ASSESS EE FOR AY 2011- 12 HAD ACCEPTED THE CONTENTION OF THE ASSESSEE AND REJECTE D THE AFORESAID COMPARABLE COMPANY, VIZ. ECLERX SERVICES LIMITED ON THE BASIS THAT IT WAS ENGAGED IN KPO SERVICE, A ND THE DEPARTMENT BY ACCEPTING THE SAID ORDER OF THE 'DRP' FOR A.Y. 2011- 12 BY NOT CARRYING THE MATTER IN FURTHER APPEAL BEFORE THE TRIBUNAL, HAD THUS ALLOWED IT TO ATTAIN FINALITY. WE FURTHER FIND THAT IN THE ASSESSEE'S OWN CASE FOR THE IMMEDIATELY SUCCEE DING YEAR, I.E A.Y 2009- 10, THE DRP AS WELL AS THE TRIBUNAL HAD HELD THAT C OMPANIES ENGAGED IN KPO SERVICES CANNOT BE COMPARED TO THE R OUTINE BPO SERVICES PROVIDED BY THE ASSESSEE. THAT STILL FURTHER THE TR IBUNAL WHILE DISPOSING OF THE APPEAL OF THE ASSESSES FOR AY 2010- 11 HAD HELD THAT AS THE ASSESSEE WAS A ROUTINE BPO SERVICE PROVIDER, THEREFORE IT CA NNOT BE COMPARED TO HIGH END KPO SERVICE PROVIDERS SUCH AS ECLERX SERVI CE LIMITED. WE FURTHER FIND THAT THE 'SPECIAL BENCH' OF THE TRIBUN AL IN THE CASE OF MA ERSK GLOBAL CENTRES (INDIA) (P.) LTD. ( SUPRA ), HAD SPECIFICALLY REJECTED THE AFORESAID COMPARABLE, VIZ. ECLERX SERVICES LIMITED, ON THE BASIS THAT COMPANIES PREDOMINANTLY ENGAGED IN KPO SERVICES CAN NOT BE CONSIDERED AS A COMPARABLE TO A COMPANY PREDOMINANT LY ENGAGED IN BPO ACTIVITIES. WE ARE THUS OF THE CONSIDERED VIEW THAT IN THE BACK DROP OF THE VIEW TAKEN BY THE TRIBUNAL WHILE DISPOSING OF THE APPEALS OF T HE ASSESSEE FOR A.Y(S): 2009-10 & 2010- 11, THEREIN CONCLUDING THAT THE AFORESAID COMPARABL E, VIZ. ECL ERX SERVICES LIMITED WHICH WAS A KPO COULD NOT BE T AKEN AS A ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 21 COMPARABLE AS AGAINST THE ASSESSEE COMPANY WHICH IS PROVIDING BPO SERVICES, COUPLED WITH THE FACT THAT IN THE ASSESSE S OWN CASE FOR A.Y 2011- 12 THE EXCLUSION BY THE DRP OF THE AFORESAID COMPAR ABL E, VIZ. ECLERX SERVICES LIMITED FROM THE LIST OF COMPARABLES HAD B EEN ACCEPTED BY THE DEPARTMENT, AND LAST BUT NOT THE LEAST THE 'SPECIAL BENCH' OF THE TRIBUNAL IN THE CASE OF MAERSK GLOBAL CENTRES (INDIA) (P.) LTD. ( SUPRA ) HAD THEREIN HELD THAT THE AFORES AID COMPARABLE, VIZ. ECLERX SERVICES LIMITED WHICH IS A KPO CANNOT BE COMPARED AS AGAINST THE ASSESSEE WHIC H IS PROVIDING BPO SERVICES, WE THUS FINDING NO REASON TO TAKE A DIFFE RENT VIEW AND BEING OF THE CONSIDERED VIEW THAT THE AFORESAID COMPARABLE, VIZ. ECLERX SERVICES LIMITED WAS FUNCTIONALLY DIFFERENT FROM THE ASSESSE E COMPANY, THEREFORE HOLD THAT IT CANNOT BE ACCEPTED AS A COMPARABLE AND HENCE IS DIRECTED TO BE EXCLUDED FROM THE LIST OF COMPARABLES. 33. CONSIDERING THE DECISION OF DELHI HIGH COURT IN RA MPGREEN SOLUTION P LTD (SUPRA) AND TRIBUNAL IN WILLS PROCESSING SERVICES ( SUPRA), WE DIRECT TO EXCLUDE ECLERCX SERVICES FROM THE COMPARABLES. (2) MOLD TEK TECHNOLOGIES LTD 34. THE LD. AR OF THE ASSESSEE SUBMITTED THAT MOLD TEK TECHNOLOGIES LTD. HAS BEEN EXCLUDED BY LD. CIT(A) FOR ASSESSMENT YEAR 200 8-09 AND DEPARTMENT IS NOT IN APPEAL AGAINST SUCH EXCLUSION. IT WAS FUR THER SUBMITTED THAT THE MOLD TEK TECHNOLOGIES LTD. PROVIDES ENGINEERING DES IGN, DETAILING SERVICES, WEBSITE DESIGN SERVICES ETC. IT PROVIDES HIGHLY TECHNICAL AND SPECIALIZED ENGINEERING SERVICE WHICH COMES IN THE CATEGORY OF KPO AND CANNOT BE COMPARED TO THE ASSESSEE ENGAGED IN PROVI DING BACK OFFICE SUPPORT SERVICES. THE LD. DR FOR REVENUE OPPOSED TO EXCLUDED THIS COMPANY. THE TPO INCLUDED THIS COMPARABLE BY TAKING VIEW THA T THIS COMPANY IS IN ITES (ENGINEERING SOLUTION). THE LD CIT(A) DIRECTED TO CONSIDER THE IT (KPO) DIVISION OF THE COMPANY FOR THE PURPOSE OF BE NCHMARKING. BEFORE US THE REVENUE HAS CHALLENGED ACTION FOR CONSIDERING T HE IT (KPO) DIVISION AND ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 22 THE ASSESSEE IS AGAINST THE INCLUSION OF THE COMPAR ABLE. THE CO-ORDINATE BENCH OF TRIBUNAL IN WILLS PROCESSING SERVICES (IND IA) P. LTD. (SUPRA) WHILE CONSIDERING FOR EXCLUSION OF MOLD-TEK TECHNOLOGY ON SIMILAR ARGUMENTS EXCLUDED MOLD-TEK TECHNOLOGY HOLDING AS UNDER: WE HAVE HEARD BOTH THE LD. REPRESENTATIVES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE RECORDS MADE AVAILABLE BEFORE U S. WE FIND THAT THE AFORESAID COMPARABLE, VIZ. MOLD-TEK TECHNOLOGIES LIMITED WAS ENGAGED IN HIGH END KNOWLEDGE PROCESS OUTSOURCING (KPO) SERVICES, AND T HEREIN PROVIDING HIGH END STRUCTURAL ENGINEERING CONSULTING SERVICES, WHICH I S A HIGH END SEGMENT SERVICE, AS IN COMPARISON TO THE ASSESSEE COMPANY WHICH WAS ENGAGED IN PROVIDING ROUTINE IT ENABLED SERVICES. WE FIND THAT THAT THE SAID COMPARABLE, VIZ. MOLD- TEK TECHNOLOGIES LIMITED WAS REJECTED BY THE TPO HI MSELF IN THE ASSESSES OWN CASE FOR AY 2006-07 FOR THE REASON THAT THE SAI D COMPANY WAS AN EXTREME OUTLIER, AND HENCE COULD NOT BE COMPARED WITH THE A SSESSEE COMPANY. THAT STILL FURTHER THE TRIBUNAL IN ASSESSES OWN CASE FOR AY 20 10-11, HAS HELD THAT AS THE ASSESSEE COMPANY IS A ROUTINE BPO SERVICE PROVIDER, THEREFORE IT CANNOT BE COMPARED TO HIGH END KPO SERVICE PROVIDERS. WE FURT HER FIND THAT THE 'SPECIAL BENCH' OF THE TRIBUNAL IN THE CASE OF MAERSK GLOBAL CENTRES (INDIA) (P.) LTD. ( SUPRA ), HAD SPECIFICALLY REJECTED THE AFORESAID COMPARAB LE, VIZ. MOLD-TEK TECHNOLOGIES LIMITED, ON THE BASIS THAT COMPANIES P REDOMINANTLY ENGAGED IN KPO SERVICES CANNOT BE CONSIDERED AS A COMPARABLE T O A COMPANY PREDOMINANTLY ENGAGED IN BPO ACTIVITIES. WE ARE OF THE CONSIDERED VIEW THAT AS THE AFORESAID COMPARABLE, VIZ. MOLD-TEK TECHNOLO GIES LIMITED IS A LEADING KPO IN ENGINEERING AND DESIGN SERVICES, SPECIALIZIN G IN CIVIL, STRUCTURAL AND MECHANICAL ENGINEERING SERVICES, WITH A STRONG TEAM OF SKILLED RESOURCES WITH WORLD CLASS RESOURCES AND SKILL SETS COMPLEMENTED B Y TWO SUBSIDIARIES IN USA - CROSSROADS DETAILING, INC. INDIANAPOLIS, IN & RMM GLOBAL LLC AKRON, OH, THEREFORE THE SAME BEING SUBSTANTIALLY F UNCTIONALLY DIFFERENT FROM THE ASSESSEE COMPANY WHICH IS A ROUTINE BPO SERVICE PROVIDER, THEREFORE CANNOT BE TAKEN AS A COMPARABLE. WE FIND THAT THE ' SPECIAL BENCH' OF THE TRIBUNAL IN THE CASE OF : MAERSK GLOBAL CENTRES (INDIA) (P.) LTD. ( SUPRA ) REJECTED THE AFORESAID COMPARABLE ON THE BASIS THAT IT WAS ENGAGED IN KPO ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 23 SERVICES, AND AS SUCH COULD NOT BE COMPARED TO A CO MPANY PREDOMINANTLY ENGAGED IN BPO SERVICES. WE THUS ARE OF THE CONSIDE RED VIEW THAT THE AFORESAID COMPARABLE, VIZ. MOLD-TEK TECHNOLOGIES LIMITED WHIC H IS A KPO CANNOT BE COMPARED AS AGAINST THE ASSESSEE WHICH IS PROVIDING BPO SERVICES, AND AS SUCH BEING FUNCTIONALLY DIFFERENT FROM THE ASSESSEE COMP ANY, THEREFORE CANNOT BE ACCEPTED AS A COMPARABLE AND IS THUS DIRECTED TO BE EXCLUDED FROM THE LIST OF COMPARABLES. THAT AS THE AFORESAID COMPARABLE, VIZ. MOLD-TEK TECHNOLOGIES LIMITED BEING FOUND TO BE FUNCTIONALLY DIFFERENT, H AS BEEN DIRECTED TO BE EXCLUDED FROM THE LIST OF THE COMPARABLES, THEREFOR E THE REMAINING ISSUES ON THE BASIS OF WHICH THE INCLUSION OF THE SAID COMPARABLE HAD BEEN ASSAILED BEFORE US ARE RENDERED AS INFRUCTUOUS AND ARE THUS NOT BEING ADJUDICATED UPON. 35. THE HONBLE DELHI HIGH COURT IN PCIT VS. EVALUESERV E.COM PVT. LTD. (SUPRA) ALSO UPHELD THE EXCLUSION OF MOLD-TEK TECHN OLOGY HOLDING THAT IT PROVIDES ENGINEERING DESIGN, DETAILING SERVICES, WE BSITE DESIGN SERVICES ETC. CANNOT BE COMPARED WITH THE ASSESSEE WHICH PROVIDES BACK OFFICE RESEARCH SERVICES IN IT SECTOR. CONSIDERING THE DECISION OF MUMBAI TRIBUNAL AND THE HONBLE DELHI HIGH COURT IN PCIT VS. EVALUESERVE.CO M PVT. LTD. (SUPRA), WE DIRECT THE EXCLUSION OF MOLD-TEK TECHNOLOGY FROM THE COMPARABLE. (3) ACCENTIA TECHNOLOGY LTD. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THIS COMP ARABLE HAS NEITHER BEEN SELECTED AS COMPARABLE IN EARLIER YEARS NOR IN SUBS EQUENT ASSESSMENT YEAR IN 2008-09. THE ACCENTIA TECHNOLOGIES LTD. IS ENGAG ED IN DEVELOPING ITS OWN SOFTWARE PRODUCTS AND RENDERING MEDICAL TRANSCR IPTION SERVICES AND CANNOT BE COMPARED TO THE ASSESSEE ENGAGED IN PROVI DING BACK OFFICE SUPPORT SERVICES. FURTHER, IT HAS UNDERTAKEN EXTRA- ORDINARY EVENTS DURING THE YEAR UNDER REVIEW WHICH HAVE AN IMPACT ON ITS FINAN CIALS. THE TPO INCLUDED ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 24 ACCENTIA TECHNOLOGY LTD. BY TAKING HIS VIEW THAT THIS COMPARABLE COMPANY IS IN HEALTHCARE RECEIVABLE MANAGEMENT AND RENDERED ITES SERVICES IN RESPECT OF SUCH HEALTHCARE RECEIVABLE MANAGEMENT TO ITS CLIENT. THE TPO FURTHER TOOK HIS VIEW THAT THIS COMPANY IS MAINLY I NTO ITES AND ACCORDINGLY FUNCTIONABLE COMPARABLE. THE LD. CIT(A) CONFIRMED T HE ACTION OF TPO. THE CO-ORDINATE BENCH IN WILLS PROCESSING SERVICING (IN DIA) LTD. (SUPRA) WHILE CONSIDERING THE SIMILAR CONTENTION HELD AS UNDER: WE HAVE HEARD BOTH THE LD. REPRESENTATIVES, PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE RECORDS MADE AVAILABLE BEFORE U S. WE FIND THAT THE AFORESAID COMPARABLE, VIZ. ACCENTIA TECHNOLOGIES LTD. WAS ENG AGED IN SOFTWARE DEVELOPMENT SERVICES AND WAS THUS FUNCTIONALLY DIFF ERENT FROM THE ASSESSEE COMPANY. WE FIND THAT THE FACT THAT THE AFORESAID C OMPARABLE WAS FUNCTIONALLY DIFFERENT FROM THE ASSESSEE COMPANY HAD DULY BEEN A CKNOWLEDGED BY THE TPO HIMSELF WHO FOR THE SAID REASON HAD REJECTED THE SA ID COMPARABLE, VIZ. ACCENTIA TECHNOLOGIES LTD. IN THE CASE OF THE ASSESSEE FOR A .Y 2010-11 AND A.Y 2011- 12. WE FURTHER FIND THAT THAT THE AFORESAID COMPARA BLE, VIZ. ACCENTIA TECHNOLOGIES LTD. WAS REJECTED BY THE DRP IN ASSESS ES OWN CASE FOR A.Y 2009- 10, FOR THE REASON THAT UNLIKE THE ASSESSEE COMPANY THE SAID COMPARABLE EARNED REVENUE FROM SALE OF SOFTWARE SERVICES AND WAS THUS FUNCTIONALLY DIFFERENT, AND THERE WAS NO SEPARATE SEGMENTAL INFORMATION AVAILAB LE IN THIS REGARD, AND THE SAID ORDER OF THE DRP HAVING NOT BEEN FURTHER ASSAI LED BY THE DEPARTMENT BEFORE THE TRIBUNAL HAD THUS ATTAINED FINALITY. WE FURTHER FIND THAT AS STANDS GATHERED FROM A PERUSAL OF THE 'ANNUAL REPORT' AND 'PROFIT & LOSS A/C' OF THE AFORESAID COMPARABLE, THE LATTER WAS GENERATING INC OME FROM THREE SOURCES, I.E. MEDICAL TRANSCRIPTION, BILLING & CODING AND SOFTWAR E DEVELOPMENT & IMPLEMENTATION, BUT HOWEVER NO SEGMENTAL INFORMATIO N WAS AVAILABLE IN THE ANNUAL REPORT. WE ARE FURTHER PERSUADED TO BE IN AG REEMENT WITH THE ASSESSEE THAT THE TPO HAD CONSIDERED THE PROFITABILITY OF TH E AFORESAID COMPARABLE, VIZ. ACCENTIA TECHNOLOGIES LTD. AT AN OVERALL ENTITY LEV EL, WHICH INCLUDES INCOME FROM SOFTWARE DEVELOPMENT, WHICH HAD LED TO AN INFE ASIBLE COMPARISON IN THE ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 25 HANDS OF THE ASSESSEE COMPANY. WE ARE OF THE CONSID ERED VIEW THAT ON THE BASIS OF SUCH INCOMPLETE INFORMATION, THE AFORESAID COMPA NY COULD NOT HAVE BEEN CONSIDERED AS A COMPARABLE. WE HAVE GIVEN A THOUGHT FUL CONSIDERATION TO THE FACTS OF THE CASE AND ARE OF THE CONSIDERATE VIEW T HAT IN THE BACKDROP OF THE AFORESAID FACTS, IT CAN SAFELY BE CONCLUDED THAT TH E COMPARABLE, VIZ. ACCENTIA TECHNOLOGIES LTD., BEING FUNCTIONALLY DIFFERENT ON AN ENTITY LEVEL, THUS IN THE ABSENCE OF COMPLETE SEGMENTAL INFORMATION COULD NOT BE TAKEN AS A COMPARABLE. THAT AS OBSERVED BY US HEREINABOVE, OUR VIEW STANDS FORTIFIED BY THE VERY FACT THAT THE TPO HIMSELF IN THE CASE OF T HE ASSESSEE COMPANY FOR THE A.Y.2010-11 AND 2011-12, FOR THE AFORESAID REASONS HAD REJECTED THE SAID COMPANY, VIZ. ACCENTIA TECHNOLOGIES LTD. AS A COMPA RABLE. STILL FURTHER THE ORDER PASSED BY THE DRP IN THE CASE OF THE ASSESSEE COMPANY, THEREIN REJECTING THE SAID COMPARABLE VIZ. ACCENTIA TECHNOLOGIES LTD. , HAVING BEEN ACCEPTED BY THE DEPARTMENT BY NOT ASSAILING THE SAME BEFORE THE TRIBUNAL, FURTHER STRENGTHENS AND SUPPORTS OUR AFORESAID VIEW. THUS I N LIGHT OF OUTR AFORESAID OBSERVATIONS, WE HEREIN BEING OF THE VIEW THAT THE COMPARABLE, VIZ. ACCENTIA TECHNOLOGIES LTD. BEING FUNCTIONALLY DIFFERENT, THU S CANNOT BE TAKEN AS A COMPARABLE, AND THEREFORE DIRECT THE EXCLUSION OF T HE SAME FROM THE LIST OF THE COMPARABLES. THAT AS THE AFORESAID COMPARABLE, VIZ. ACCENTIA TECHNOLOGIES LTD., BEING FOUND TO BE FUNCTIONALLY DIFFERENT, HAS BEEN DIRECTED TO BE EXCLUDED FROM THE LIST OF THE COMPARABLES. 36. CONSIDERING THE DECISION OF TRIBUNAL WHEREIN IT WAS HELD THAT THIS COMPARABLE COMPANY IS ENGAGED IN DEVELOPING SOFTWAR E PRODUCT AND RENDERING MEDICAL TRANSCRIPTION SERVICES CANNOT BE COMPARED WITH THE ASSESSEE ENGAGED IN PROVIDING BACK OFFICE SUPPORT S ERVICES. FURTHER, EXTRAORDINARY EVENTS TOOK PLACE DURING THE YEAR WHI CH HAS IMPACT ON ITS FINANCIAL. THEREFORE, WE DIRECT TO EXCLUDE THIS COM PARABLE. (4) I SERVICES ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 26 37. THE LD. AR SUBMITTED THAT THIS COMPARABLE IS INTO D IVERGENT HIGH END SERVICES LIKE WEB HOSTING, EMAIL SERVICES SPAM FILT ERING DOMAIN NAMES AND DNS HOSTING, WEB HOSTING, EMAIL SERVICES AND ARE MA INLY IN A PRODUCT SERVICES AND CANNOT BE COMPARED. THE TPO INCLUDED T HIS COMPARABLE BY TAKING VIEW THAT THIS COMPARABLE COMPANY IS IN SOFT WARE SERVICES AND PRODUCT. THE LD. CIT(A) CONFIRMED THE INCLUSION HOL DING THAT TPO CONDUCTED BENCH MARKING AFTER CALLING INFORMATION U NDER SECTION 133(6). THE TPO EXERCISE HAS HELPED IN AUTHENTICATING AND V ALIDATING THE DATE. WE HAVE NOTED THAT THE DELHI TRIBUNAL IN DCIT VS. EVER EST BUSINESS ADVISORY INDIA (P.) LTD. (SUPRA) FOR SAME ASSESSMENT YEAR EX CLUDED THIS COMPARABLE COMPANY HOLDING THAT BUSINESS PROFILE OF I SERVICES SHOWS THAT IT IS INTO HIGH END DIVERSIFYING SERVICES VIS A VIS THE TAX PAYER W HO IS INTO DIVERGENT HIGH END SERVICES LIKE WEB HOSTING, EMAIL SERVICES, SPAM FILTERING , DOMAIN NAMES AND DNS HOSTING, WEB HOSTING, EMAIL SERVICES AND DI RECTED TO EXCLUDE FROM COMPARING WITH ITES ENABLED SERVICES. THEREFORE, CO NSIDERING THE DECISION OF DELHI TRIBUNAL, WE DIRECT THE EXCLUSION OF I SER VICES. (5) CORAL HUBS LTD. (VISHAL INFORMATION) 38. THE LD. AR SUBMITTED AS WE RECORDED EARLIER THAT CO RAL HUBS LTD. WAS OUTSOURCING ITS SIGNIFICANT PART OF ITS OPERATION A S EVIDENT FROM ITS LOW EMPLOYEE COST AND HAVE SUBSTANTIAL DIFFERENT BUSINE SS MODEL COMPARED TO ASSESSEE AND PRAYED FOR EXCLUSION. THE LD. DR HAS S UPPORTED THE INCLUSION. THE TPO WHILE MAKING BENCHMARKING TAKING HIS VIEW T HAT THIS COMPARABLE ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 27 COMPANY IS IN THE BUSINESS OF IT ENABLED SERVICES T O OVERSEAS MARKETS AND INCLUDED IN THE LIST OF COMPARABLE. THE LD. CIT(A) CONFIRMED THE ACTION OF TPO HOLDING THAT THE TPO CONDUCTING BENCHMARKING AF TER CALLING INFORMATION UNDER SECTION 133(6) AND IS BENCHMARKIN G ANALYSIS ARE CORRECT. WE HAVE NOTED THAT, THOUGH THE LD. AR HAS RELIED UP ON A NUMBER OF DECISIONS OF TRIBUNAL/CO-ORDINATE BENCH. WE HAVE NO TED THAT IN A RECENT DECISION OF TRIBUNAL IN WILLS PROCESSING SERVICES ( I) PVT. LTD. (SUPRA) ON COMPARABILITY, THE TRIBUNAL HELD AS UNDER: WE THOUGH IN LIGHT OF OUR AFORESAID OBSERVATIONS HA D PARTLY DISAGREED WITH CERTAIN GROUNDS AS HAD BEEN AVERRED BY THE LD. A.R TO FACILITATE EXCLUSION OF THE AFORESAID COMPARABLE, HOWEVER AS OBSERVED BY US HER EINABOVE THAT THE AFORESAID COMPARABLE VIZ. CORAL HUB LIMITED (EARLIER KNOWN AS VISHAL INFORMATION TECHNOLOGY LIMITED) HAD A BUSINESS MODEL WHERE SERV ICES ARE OUTSOURCED, AS AGAINST THE BUSINESS MODEL OF THE ASSESSEE WHERE SE RVICES ARE RENDERED BY EMPLOYING OWN EMPLOYEES AND USING ONE'S OWN INFRAST RUCTURE, ON THE BASIS OF WHICH WE ARE OF THE CONSIDERED VIEW THAT IT CAN SAF ELY BE CONCLUDED THAT THE SAID COMPARABLE WAS FUNCTIONALLY DIFFERENT, AND AS SUCH WAS LIABLE TO BE EXCLUDED FROM THE FINAL LIST OF COMPARABLES. THAT OUR AFORES AID VIEW STANDS FORTIFIED BY THE AFORESAID ORDER PASSED BY THE TRIBUNAL WHILE DISPOS ING OF THE APPEAL OF THE ASSESSES OWN APPEAL FOR A.Y. 2005-06, AS WELL AS TH E JUDGMENT OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF : RAMPGREEN SOLUTIONS (P.) LTD . ( SUPRA ). THUS AS THERE HAS BEEN NO MATERIAL SHIFT IN THE FACTS IN VOLVED IN THE CASE OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, AS OBSER VED BY US HEREINABOVE, WE ARE THUS OF THE CONSIDERED VIEW THAT AS THE BUSINESS MO DEL OF THE AFORESAID COMPARABLE, VIZ. CORAL HUB LTD. ( SUPRA ) IS SUBSTANTIALLY DIFFERENT FROM THAT OF THE ASSESSEE, THEREFORE THE SAME CANNOT BE ACCEPTED AS A COMPARABLE AND HENCE IS DIRECTED TO BE EXCLUDED FROM THE LIST OF COMPARABLE S. ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 28 39. CONSIDERING THE DECISION OF CO-ORDINATE BENCH ON SI MILAR SUBMISSION, WE DIRECT FOR EXCLUSION OF CORAL HUBS (VISHAL INFORMAT ION) FROM THE COMPARABLE. (6) COSMIC GLOBAL LTD. 40. THE LD. AR OF ASSESSEE PRAYED FOR EXCLUSION OF COMP ARABLE ON THE GROUND THAT IN EARLIER YEARS AND IN A.Y. 2008-09, THE TPO HAS EXCLUDED THIS COMPANY FROM COMPARABLE. THE FUNCTION OF THIS COMPA NY IS DISSIMILAR TO THE BUSINESS MODEL OF ASSESSEE. ASSESSEES CAPITAL COST IS MERELY 15.15% AS AGAINST 58.49% AND MOST OF THE COST IS WITH REFEREN CE TO OUTSOURCING OR TRANSLATION CHARGES. ON THE OTHER HAND, THE LD. DR SUPPORTED THE INCLUSION. THE LD. TPO WHILE MAKING BENCH MARKING TOOK HIS VIE W THAT THIS COMPARABLE IS ENGAGED IN IT ENABLED TRANSLATION SER VICES. THE LD. CIT(A) CONFIRMED THE ACTION OF TPO HOLDING THAT BENCHMARKI NG WAS CONDUCTED AFTER SEEKING INFORMATION UNDER SECTION 133(6). WE HAVE NOTED THAT DELHI TRIBUNAL IN UNITED HEALTH GROUP INFORMATION (P.) LT D. VS. ACIT (SUPRA) WHILE CONSIDERING THIS COMPARABLE HELD THAT REVENUE OF THIS COMPANY FROM MEDICAL TRANSCRIPTION SERVICES IS HARDLY 1% OF TOTA L REVENUE. THE MAJOR PART IS THE INCOME FROM TRANSLATION CHARGES AT RS. 5.59 CRORE OUT OF THE TOTAL REVENUE OF RS. 5.89 CRORE, WHICH IS TOTALLY DISSIMI LAR TO THAT ASSESSEE. FURTHER, PUNE TRIBUNAL IN BNY MELLON INTERNATIONAL OPERATION (INDIA) (P.) LTD VS DCIT (SUPRA) HELD THAT A COMPANY INDULGED IN HIGH SKILL IT SERVICES IS NON-COMPARABLE TO A ROUTINE IT ENABLED SERVICE P ROVIDER. ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 29 41. CONSIDERING THE FACT THAT MAJOR PART OF INCOME OF T HIS COMPARABLE IS FROM TRANSLATION CHARGES AND FUNCTION OF THIS COMPARABLE IS DIFFERENT TO THE ASSESSEE-COMPANY, THEREFORE, WE DIRECT THE EXCLUSIO N OF COSMIC GLOBAL FROM THE LIST OF COMPARABLE. SIMILAR VIEW WAS TAKEN BY PUNE TRIBUNAL IN BNY MELLON INTERNATIONAL OPERATIONS (INDIA) PVT. LT D. VS. DCIT (SUPRA) HOLDING THAT THIS COMPARABLE COMPANY HAD OUTSOURCED ITS VENDOR AND WAS MAKING HIGH VENDOR PAYMENTS AS COMPARED TO SALES AN D HENCE WAS NOT COMPARABLE. 42. CONSIDERING THE DECISION OF TRIBUNAL, WHEREIN THIS COMPARABLE WAS HELD AS NOT COMPARABLE AND PARTICULARLY THE TPO HIMSELF EXC LUDED IT FROM THE LIST OF COMPARABLE IN A.Y. 2008-09. THEREFORE, WE DIRECT FO R EXCLUSION OF THIS COMPARABLE. (7) INFORMED TECHNOLOGIES LTD. 43. THE LD. AR FOR ASSESSEE ARGUED THAT THIS COMPARABLE WAS NOT SELECTED IN EARLIER YEARS NOR IN A.Y. 2008-09. THIS COMPANY HAV ING LOW EMPLOYEE COST HAS COMPARED TO ASSESSEE CANNOT BE CONSIDERED AS CO MPARABLE. THE LD. DR SUPPORTED THE INCLUSION OF THIS COMPARABLE. THE TPO WHILE INCLUDING THIS COMPARABLE TOOK THE VIEW THAT THIS COMPANY IS IN BU SINESS PROCESS OUTSOURCING (BPO). THE LD. CIT(A) UPHELD THE ACTION OF TPO HOLDING THAT THE TPO BENCHMARKED THE ANALYSIS AFTER CALLING INFO RMATION UNDER SECTION 133(6) AND THAT THE HIGHER OR LOWER PROFIT RATE ARE NOT DETERMINATIVE FACTOR FOR A COMPARABLE. THE CO-ORDINATE BENCH IN STREAM I NTERNATIONAL SERVICES ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 30 (SUPRA) WHILE CONSIDERING THE SIMILAR GROUND FOR EX CLUSION ON THE GROUND OF LOW COST EMPLOYEE COMPARED TO ASSESSEE HELD THAT WH ERE EMPLOYEE COST TO SALE IS 27.77% AS COMPARED TO THAT OF OTHER ASSESSE E WHICH IS 49.34% , THIS COMPARABLE WAS DIRECTED TO BE EXCLUDED. THEREFORE, CONSIDERING THE DECISION OF TRIBUNAL, THIS COMPARABLE IS ALSO DIREC TED TO BE EXCLUDED. (8) HCL CONNECT LTD. 44. THE CONTENTION OF LD. AR OF THE ASSESSEE IS THAT TH IS COMPARABLE WAS NOT SELECTED IN EARLIER YEARS NOR IN A.Y. 2008-09 AND H AVING DIFFERENT FINANCIAL YEAR ENDING I.E. JUNE ENDED AND THEREFORE, CANNOT B E CONSIDERED AS COMPARABLE IN THE LIGHT OF RULE 10B(2). THE TPO WHI LE INCLUDING TOOK THE VIEW THAT THIS COMPARABLE IS IN THE BUSINESS OF IT & ITES. THE LD. CIT(A) CONFIRMED THE ACTION OF TPO BY TAKING VIEW THAT BEN CHMARKING WAS CONDUCTED BY CALLING INFORMATION UNDER SECTION 133( 6). WE HAVE NOTED THAT THE CO-ORDINATE BENCH OF TRIBUNAL IN H&S SOFTWARE D EVELOPMENT & KNOWLEDGE MANAGEMENT CENTRE VS. ACIT (SUPRA) WHILE REFERRING THE DECISION OF MOTOROLA SOLUTION PVT. LTD. DIRECTED TH E EXCLUSION OF THIS COMPARABLE. (9) MAPLE SOLUTIONS LTD. 45. THE CONTENTION OF LD. AR FOR THE ASSESSEE IS THAT T HIS COMPARABLE WAS NOT SELECTED IN AY 2008-09. FURTHER, MAPLE SOLUTION S LTD IS PART AND PARCEL OF RASTOGI GROUP WHICH WAS UNDER SERIOUS IND ICTMENT AND ITS FINANCIALS WERE DISTORTED AND CANNOT BE RELIED. HOW EVER, THE LD. DR FOR ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 31 THE REVENUE SUPPORTED THE INCLUSION OF THIS COMPARA BLE. THE LD. TPO INCLUDED THIS COMPARABLE BY TAKING HIS VIEW THAT TH IS COMPANY IS IN THE CALL CENTRE SERVICES. THE LD CIT(A) UPHELD THE ACTI ON OF LD TPO BY TAKING VIEW THAT BENCHMARKING WAS CONDUCTED BY CALL ING INFORMATION UNDER SECTION 133(6). WE HAVE SEEN THAT MUMBAI TRI BUNAL IN STREAM INTERNATIONAL (P) LTD (SUPRA) HELD THAT , A COMPANY UNDER SERIOUS INDICTMENT IN FRAUD CASES IS TO BE EXCLUDED FROM LI ST OF COMPARABLES ON GROUND OF UNRELIABILITY OF DATA. THUS, FOLLOWING TH E ORDER OF THE TRIBUNAL WE DIRECT TO EXCLUDE THIS COMPANY FROM THE COMPARAB LE. (10) TRITON CORP LTD .(IN ADDITIONAL GROUND OF APPEAL BY ASSESSEE ) 46. THE CONTENTION OF LD AR FOR THE ASSESSEE IS THIS C OMPANY WAS REJECTED BY LD TPO HIMSELF IN AY 2008-09. TRITON CORP IS ALS O A PART OF IS PART AND PARCEL OF RASTOGI GROUP WHICH WAS UNDER SERIOUS INDICTMENT AND ITS FINANCIALS WERE DISTORTED AND CANNOT BE RELIED. HOW EVER, THE LD. DR FOR THE REVENUE SUPPORTED THE INCLUSION OF THIS COMPARA BLE. THE LD. TPO INCLUDED THIS COMPARABLE BY TAKING HIS VIEW THAT TH IS COMPANY IS IN THE CALL CENTRE SERVICES. THE LD CIT(A) UPHELD THE ACTI ON OF LD TPO BY TAKING VIEW THAT BENCHMARKING WAS CONDUCTED BY CALL ING INFORMATION UNDER SECTION 133(6). WE HAVE SEEN THAT MUMBAI TRI BUNAL IN STREAM INTERNATIONAL (P) LTD (SUPRA) HELD THAT , A COMPANY UNDER SERIOUS INDICTMENT IN FRAUD CASES IS TO BE EXCLUDED FROM LI ST OF COMPARABLES ON ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 32 GROUND OF UNRELIABILITY OF DATA. THUS, FOLLOWING TH E ORDER OF THE TRIBUNAL WE DIRECT TO EXCLUDE THIS COMPANY FROM THE COMPARAB LE. (11) ICRA TECHNO ANALYTICS LTD . (OBJECTED IN THE GROUND OF APPEAL BY REVENUE) 47. THE LD. AR FOR THE ASSESSEE HAD ARGUED THAT THIS C OMPANY WAS NO SELECTED AS COMPARABLE IN EARLIER YEAR NOR IN AY 2008-09. IC RA IS ENGAGED IN PROCESSING AND PROVIDING SOFTWARE DEVELOPMENT AND C ONSULTANCY IN ENGINEERING SERVICES, WEB DEVELOPMENT AND SEGMENTAL DATA IS NOT AVAILABLE AND CANNOT BE COMPARED WITH THE ASSESSEE WHO IS ENG AGED IN BACK OFFICE SUPPORT SERVICES. THE LD AR FOR ASSESSEE STRONGLY R ELIED ON THE DECISION OF DELHI HIGH COURT IN PCIT VS BC MANAGEMENT SERVICES (2018) 89 TAXMANN.COM 68 (DELHI). ON THE CONTRARY THE LD DR I NSISTED THAT ICRA TECHO ANALYTICS WAS EXCLUDED BY LD. CIT(A) FROM THE SET IF COMPARABLE. THE LD DR FURTHER SUBMITS THAT LD CIT(A) SELECTIVEL Y APPLIED PARAMETERS IN EXCLUDING THE COMPARABLES IN CONTRAVENTION OF THE P RINCIPLES LAID DOWN IN RULE 10B(2), WHICH PROVIDES THAT COMPARABILITY PARA METER SHOULD BE APPLIED UNIFORMLY TO ALL COMPARABLE. WE HAVE SEEN T HAT THE LD. TPO INCLUDED THIS COMPARABLE BY TAKING HIS VIEW THAT TH IS COMPANY IS ENGAGED IN COMPUTER SOFTWARE, SOFTWARE DEVELOPMENT SUB-LICENSI NG AND WEB HOSTING. THE LD CIT(A) EXCLUDED IT HOLDING THAT THIS COMPANY IS PROVIDING BOTH SOFTWARE DEVELOPMENT AND ITES. IT IS ALSO IN SALES OF SOFTWARE PRODUCTS AND THUS NOT COMPARABLE. THE HONBLE DELHI COURT IN PCI T VS BC MANAGEMENT ITA NO. 4406 & 4479 MUM 2012-M/S. MORGAN STANLEY ADVANTAGE SERVICES PVT. LTD. 33 SERVICES (P) LTD (SUPRA), WHILE CONSIDERING THE COM PARABILITY OF ICRA TECHO ANALYTICS HELD THAT COMPANY PROVIDING CONSULT ANCY BUSINESS SOLUTION AND TESTING, AND HIGH END BPO SERVICES, IN ABSENCE OF SEGMENTAL DATA NOT COMPARABLE WITH ITES. 48. IN VIEW OF THE ABOVE DISCUSSIONS, WE DIRECT THE AO /TPO TO RECOMPUTE THE APL AS PER DIRECTION/ OBSERVATION HEREINABOVE. 49. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED A S ALLOWED IN VIEW OF OUR OBSERVATION ON VARIOUS SET OF COMPARABLE AND THE AP PEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10/ 07/2019. SD/ SD/- G.S. PANNU PAWAN SINGH VICE-PRESIDENT JUDIC IAL MEMBER MUMBAI, DATE: 10.07.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR K BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI