E-valueserve SEZ (Gurgaon) P.Ltd, New Delhi V. ACIT, Circle-8(2), New Delhi

ITA 5147/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2731 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 08-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Question of law; Initiation of penalty proceedings
• Section: 143(3); 10AA; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: I - 1 , NEW DELHI BEFORE SHRI N. K .SAINI , ACCOUNTANT MEMBER AND SMT. BEENA A PILLAI, JUDICIAL MEMBER ITA NO. 5147 /DEL/201 7 A.Y. 20 11 - 12 E - VALUESERVE SEZ (GURGAON) P LTD. A 47, LOWER GROUND FLOOR HAUZ KHAS NEW DELHI 110 016 PAN: AABCE8812A VS . ACIT, CIRCLE 8(2) NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY MS. ANANYA KAPOOR, ADV. RESPONDENT BY SH. KUMAR PRANAV, SR.D.R. DATE OF HEARING 21 .03.2018 DATE OF PRONOUNCEMENT 28.03. 2018 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST THE ORDER PASSED BY LD.CIT(A) - 19, DATED 17/05/17 FOR ASSESSMENT YEAR 2011 - 12 ON THE FOLLOWING GROUNDS OF APPEAL: 1. THAT ASSESSMENT ORDER PASSED U / S 143(3) R.W.S. 92CA(3) R.W.S. 144C(L3) OF THE INCOME TAX ACT, 1961('THE ACT') BY THE ASSESSING OFFICER ('AO') AND THE ORDER PASSED BY THE TRANSFER PRICING OFFICER ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 2 ('TPO') AND THE ADDITION A L DISALLOWANCES MADE BY THE AO/TPO, AS UPHELD BY THE COMMISSIONER O F INCOME TAX (APPEALS) ('CIT(A)') ARE ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION. 2. THAT ADDITION A L DISALLOWANCES MADE ARE UNSUSTAINABLE, UNJUST, HIGHLY EXCESSIVE AND ARE NOT BASED ON ANY MATERIAL ON RECORD. THE TOTAL INCOME OF THE APPELLANT HAS BEEN I NCORRECTLY AND UN - LAWFULLY ASSESSED BY THE AO AT RS. 22.46,350 / - AS AGAINST DECLARED INCOME AT RS. 63,28,954/ - . 3. THAT THE REFERENCE MADE BY THE AO TO THE TPO SUFFERS FROM JURISDICTIONAL ERROR AS THE AO HAS NOT RECORDED ANY REASONS IN THE DRAFT ASSESSMEN T ORDER / ASSESSMENT ORDER BASED ON WHICH HE REACHED TO THE CONCLUSION THAT IT WAS 'NECESSARY OR EXPEDIENT' TO REFER THE MATTER TO THE TPO FOR COMPUTATION OF THE ARM'S LENGTH PRICE (ALP), AS IS REQUIRED UNDER SECTION 92CA( 1 ) OF THE ACT. 4. THAT THE TPO/AO /CIT(A) HAVE ERRED, IN LAW AND ON FACTS AND CIRCUMSTANCES OF T H E C ASE, IN MAKING AN ADJUSTMENT OF RS. 6,59,17,396/ - TO THE TOTAL INCOME OF THE APPELLANT IN RESPECT OF INTERNATIONAL TRANSACTION PERTAINING TO PROVISION OF S ERVICES TO ITS ASSOCIATED ENTERPRIS ES ('AES') AND HAVE ERRED BY NOT ACCEPTING THE ECONOMIC ANALYSIS UNDERTAKEN BY THE APPELLANT WHICH IS IN ACCORDANCE WITH THE PROVISIONS OF THE ACT READ WITH THE INCOME TAX RULES, 1962 ('RULES'). 5. THAT, ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND I N LAW, THE AO/TPO/CIT(A) ERRED IN NOT APPRECIATING THE APPELLANT'S BUSINESS MODEL AND FUNCTIONAL AND RISK PROFILE. ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 3 6. THAT, THE TPO/ AO/CIT(A) HAVE ERRED, IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE, BY REJECTING CERTAIN FILTERS AS APPLIED BY THE A PPELLANT FOR DETERMINING THE APPLICABILITY OF THE COMPARABLE COMPANIES. 7. THAT, THE TPO/ AO/CIT(A) HAVE ERRED, IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE, BY APPLYING CERTAIN NEW FILTERS FOR DETERMINING THE APPLICABILITY OF THE COMPARABLE COMPANIE S. 8. THAT, THE TPO/ AO/CIT(A) HAVE ERRED, IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE, BY NOT APPRECIATING THAT IF A LOW TURNOVER FILTER IS APPLIED, THEN EVEN A HIGH TURNOVER FILTER SHOULD BE APPLICABLE. 9. THAT THE TPO/AO/CIT(A) HAVE ERRED, IN LA W AND ON FACTS AND CIRCUMSTANCES OF THE CASE, BY NOT APPRECIATING THAT IF PERSISTENT LOSS MAKING COMPANIES ARE REJECTED, THEN PERSISTENT HIGH PROFIT MAKING COMPANIES SHOULD ALSO BE REJECTED. 10. THAT THE TPO/AO/CIT(A) HAVE ERRED, IN LAW AND ON FACTS AND C IRCUMSTANCES OF THE C ASE BY W RONGFULLY REJECTING CERTAIN COMPANIES WITHOUT APPRECIATING THAT THE A PPELLANT HAD SELECTED THE COMPARABLES AFTER UNDERTAKING A DETAILED E C ONOMIC ANALYSIS AND THE SAID COMPANIES ARE COMPARABLE TO THE APPELLANT. 11. THAT THE TPO/AO/CIT(A) HAVE ERRED IN REJECTING CALIBER POINT BUSINESS SO LUTION LTD ., COSMIC GLOBAL LTD., INFORMED TECHNOLOGIES INDIA LTD, JINDAL INTE LLICOM LTD, OMEGA HEALTHCARE MANAGEMENT SERVICES, R SYSTEMS INTERNATIONAL LTD., DATAMATICS FINANCIAL SERVICES LTD., APEX KNOWLEDGE S OLUTIONS P. LTD., ACE BPO SERVICES P. LTD., INTERGLOBE TECHNOLOGIES P. LTD., MICRO GENETICS SYSTEMS LTD. AND ZAVATA INDIA P. LTD WITHOUT APPRECIATING THAT THE SAID COMPARABLES ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 4 COMPANIES MEET ALL THE CRITERIA, AND HENCE SHOULD BE TAKEN INTO CONSIDERATION FOR BENCHMARKING THE SAID TRANSACTION. 12. THAT THE TPO/AO/CIT(A) HAVE ERRED, IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE, BY WRONGFULLY REJECTING CALIBER POINT BUSINESS SOLUTIONS LTD. AND R S YSTEMS INTERNATIONAL LTD., ON THE GROUND OF DIFFERENT FINANCIAL YEAR ENDING AS SUCH A REASON CANNOT BE THE BASIS FOR REJECTION. 13. THE TPO/AO / DRP HAVE ERRED, IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE, BY ADDING CERTAIN COMPANIES TO THE FINAL SET OF COMPARABLE COMPANIES FOR THE IMPUGNED TR ANSACTION ON AN ADHOC BASIS, THEREBY RESORTING TO CHERRY PICKING OF COMPARABLES. THE TPO/AO/DRP HAVE ERRED IN NOT APPRECIATING THAT THE SAID COMPANIES, DO NOT MEET THE FAR ANALYSIS, AND HENCE CANNOT BE TAKEN AS C OMPARABLE COMPANIES TO DETERMINE THE ALP FOR THE SAID TRANSACTION. THE SELECTION OF SUCH COMPARABLES IS NOT IN CONFORMITY WITH THE PRINCIPLES AS LAID DOWN RULE 1 OB OF THE RULES . 14 . THAT, THE TPO/AO/DRP ERRED IN NOT REJECTING ACCENTIA TECHNOLOGIES LTD., E C LERX LTD., INFOSYS BPO LTD. AND TCS E - SERVE LTD., WITHOUT APPRECIATING THAT THE SAID COMPANIES ARE NOT COMPARABLE TO THE APPELLANT. 15. THAT THE TPO / AO/CIT(A) HAVE ERRED IN NOT APPRECIATING THAT THERE ARE CERTAIN CO MPUTATIONAL ERRORS AS THE CALCULATION OF OP/OC OF THE APPELLANT IS NOT IN A CC ORDANCE WITH LAW. 16. THAT THE TPO/AO/CIT(A) HAVE ERRED IN NOT APPRECIATING THAT THERE ARE CERTAIN COMPUTATIONAL ERRORS AS THE CALCULATION OF OP/OC OF THE COMPARABLE COMPANIES IS NOT IN ACCORDANCE WITH LAW. ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 5 17. THAT THE TPO/AO/CIT(A) ERRED IN NOT GRANTING THE WORKING CAPITAL ADJUSTMENT TO THE APPELLANT. 18. THAT THE CIT(A) ERRED IN NOT APPRECIATING THAT THE FUNCTIONAL PROFILE OF THE APPELLANT AND THE TP STUDY STOOD ACCEPTED BY THE TPO/AO. 19. THAT, IN VIEW OF T HE FACTS AND CIRCUMSTANCE OF THE CASE, THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE APPELLANT PERFORMS KPO SERVICES. 20. THAT THE CIT( A ) AL SO ERRED IN ARBITRARILY ACCEPTING/REJECTING THE COMPARABLE COMPANIE S AND ADOPTING AN INCON SIS TENT VIEW. 21. THAT, WITHOUT PREJUDICE 2 K PO S ARE NOT AUTOMATICALLY COMPARABLE. THE MANDATE OF RULE 10B IS TO BE APPLIED AND FAR ANALYSIS IS TO BE UNDERTAKEN. 22. THE AO/TPO/CIT(A) ERRED IN NOT FOLLOWING THE DETAILED PROCEDURE AS LAID DOWN IN CHAPTER X OF THE AC T R E AD WITH THE RUL E FOR DETERMINING THE MECHANISM FOR COMPUTING THE ARM' S LENGTH PRICE AND HA S NOT ALLOWED THE APPELLANT THE BENEFIT OF VARIOUS PROVI SIONS AS STATED IN THE A CT AND THE RULES. 23. THAT THE AO/TPO ERRED IN NOT GIVING EFFECT TO THE FI NDING OF THE CIT(A). 24. THE ADDITIONS/OBSERVATIONS MADE ARE UNJUST , UNLAWFUL AND ARE BASED ON MERE SURMISES AND CONJUNCTURES. THE ADDITIONS MADE CANNOT BE JUSTIFIED BY ANY MATERIAL ON RECORD AND ALSO HIGHLY EXCESSIVE. 2 5. THE EXPLANATION GIVEN AND THE EVIDENCE PRODUCED, MATERIAL PLACED AND AVAILABLE ON RECORD HAS NOT BEEN PROPERLY CONSIDERED AND ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 6 JUDICIOUSLY INTERPRETED AND THE SAME DOES NOT JUSTIFY THE ADDITIONAL ALLOWANCES MADE. 26. T HE AO HAS ERRED IN CHARGING OF INTEREST U / S 234B, 234C, 234D AND 244 A. THE SAME HAS BEEN UNJUSTLY AND ILLEGALLY CHARGED. IT IS ALSO WRONGLY WORKED OUT. 27 . THE AO / TPO HAS ERRED IN INITIATION OF PENALTY PROCEEDINGS U / S 271 (1 )( C) OF THE ACT. THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. THE APPELLANT COMPANY RESERVES THE RIGHT TO ADD, ALTER, AMEND OR MODIFY ANY OF THE GROUNDS APPEALED AGAINST DURING THE COURSE OF HEARING. 2 . BRIEF FACTS OF THE CASE ARE AS UNDER : ASSESSEE FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS.63,28,954/ - ON 29/11/ 20 1 1. THE RETURN WAS PROCESSED UNDER SECTION 143 (1) OF THE INCOME TAX ACT, 1961 (THE ACT) AND THE CASE WAS SELECTED FOR SCRUTINY. STATUTORY NOTICES WERE ISSUED TO ASSESSEE IN RESPONSE TO WHICH REPRESENTATIVES OF ASSESSEE APPEARED BEFORE LD. AO AND SUBMITTED VARIOUS DETAILS. 2.1. LD. AO OBSERVED THAT ASSESSEE IS CARRYING ON BUSINESS OF IT ENABLED SERVICES AND WAS SET UP IN SEZ. ASSESSEE WAS CLAIMING DEDUCTION UNDER SECTION 10AA OF THE ACT AMOUNTING TO RS.100,407,633/ - . HE OBSERVED THAT ASSESSEE DURING THE YEAR HAD ENTERED INTO INTERNATIONAL TRANSACTION AND ACCORDINGLY REFERENCE WAS MADE TO T RANSFER P RICING O FFICER ( TPO) FOR DETERMINATION OF ARM S LENGTH PRICE. 2.2. LD. TPO ACCORDINGLY ISSUED NOTICE TO ASSESSEE AND CALLED FOR VARIOUS DETAILS. ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 7 2.3. LD.TPO OBSERVED THAT ASSESSEE WAS ENGAGED IN PROVISION OF IT E NABLED S ERVICES (ITES) TO ITS A SSOCIATED E NTERPRISES (AES) . IT WAS OBSERVED THAT ASSESSEE WAS INCORPORATED IN INDIA ON 17/12/07 AND WAS 100% EXPORT ORIENTED UNIT SET UP UNDER SEZ GUIDELINES. I T WAS OBSERVED THAT ASSESSEE CARRIED OUT RESEARCH DRIVEN BY BUSINESS INFORMATION, MARKET RESEARCH AND INTELLECTUAL PROPERTY RESEARCH. LD.TPO RECORDED THAT THE CLIENT EXECUTIVES (BASED IN BERMUDA, US, EUROPE AND ASIA - PACIFIC) WA S OPERATING FROM OVERSEAS , FORMED INTERFACE BETWEEN CLIENT AND ASSESSEE AND THE DELIVERABLE WAS TYPICALLY IN THE FORM OF RESEARCH REPORT THAT IS FORWARDED DIRECTLY TO THE CLIENT UNDER THE SUPERVISION AND POST A QUALITY ASSURANCE BY THE AE S. IT IS ALSO OBSERVED BY LD. TPO THAT TH E REPORTS AND RESEARCH STUDIES PREPARED BY ASSESSEE ARE OWNED BY THE CLIENTS ONLY AND THE OPERATIONS OF EVS SEZ INDIA COMPRISES OF THE FOLLOWING SEGMENTS: MARKETING AND AFTER SALES ; STRATEGIC POLICIES; FINANCE, ACCOUNTING AND IT; HUMAN RESOURCE MANAGEME NT. ASSESSEE HAD CATEGORISED INTERNATIONAL TRANSACTION AS UNDER: SL. NO. INTERNATIONAL TRANSACTION AMOUNT IN RS. 1. PROVISION OF SERVICES - BACK OFFICE OPERATIONS (RESEARCH SERVICES) 56,61,90,975 2. COST REIMBURSEMENTRECEIVED/RECEIVABLE 1,13,82,904 ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 8 2.4. LD.TPO OBSERVED THAT THE TP REPORT SUBMITTED BY ASSESSEE DESCRIBED THE FUNCTIONS OF ASSESSEE AND ITS AE AND THE FUNCTIONS AS IT ENABLED SERVICES. ASSESSEE HAD USED TNMM AS THE MOST APPROPRIATE METHOD AND OP/TC AS A PLI. IN THE TP REPORT ASSESSEE ARRIV ED AT A SET OF 8 COMPARABLES WITH AN AVERAGE MARGIN OF 14.38% AGAINST THE ASSESSEE S OWN MARGIN WORKED OUT TO BE AT 16.57%. THE LIST OF COMPARABLES ARE AS UNDER: - SL.NO. NAME OF THE COMPANY 1. ADITYA BIRLA MINACS WORLDWIDE LTD. 2. CALIBER POINT BUSINESS SOLUTIONS LTD. 3. COSMIC GLOBAL LTD. 4. FORTUNE INFOTECH LTD. 5. INFORMED TECHNOLOGIES LTD. 6. JINDAL INTELLICOM PVT.LTD. 7. OMEGA HEALTHCARE MANAGEMENT SERVICES 8. R SYSTEMS INTERNATIONAL LTD. BASED ON THE COMPARABLES ASSESSEE CONCLUDED ITS INTERNATIONAL TRANSACTION AT ARM S LENGTH. 2.5. DURING TRANSFER PRICING PROCEEDINGS, ASSESSEE AGAIN CONDUCTED FRESH RESEARCH AND INSISTED ON INTRODUCTION OF FOLLOWING COMPARABLES: ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 9 SL. NO. NAME OF THE COMPARABLE 1. DATAMATICS FINANCIAL SERVICES LTD. 2. INTERGLOBE TECHNOLOGIES PVT LTD. 3. MICROGENETICS SYSTEMS LTD. 4. APEX KNOWLEDGE SOLUTIONS P LTD. 5. ACE BPO SERVICES P LTD. 6. ZAVATA INDIA P LTD. 2.6. LD.TPO REJECTED THE OTHER COMPARABLES SELECTED BY ASSESSEE FOR THE FOLLOWING REASONS: SL.NO. NAME OF THE COMPANY REMARKS 1. ADITYA BIRLA MINACS WORLDWIDE LTD. THIS COMPANY FAILS EXPORT FILTER (60.51%). HENCE, NOT A SUITABLE COMPARABLE. 2. CALIBER POINT BUSI NESS SOLUTIONS LTD. THIS COMPANY IS HAVING DIFFERENT FINANCIAL YEAR ENDING I.E. DECEMBER. HENCE, CAN T BE CONSIDERED AS SUITABLE COMPARABLE. 3. COSMIC GLOBAL LTD. THIS COMPANY FAILS EXPORT FILTER (52.96%). HENCE, NOT A SUITABLE ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 10 COMPARABLE. 4. FORTUNE INFOTECH LTD. THIS COMPANY IS HAVING SIGNIFICANT RPT (98.70%). HENCE, NOT A SUITABLE COMPARABLE. 5. INFORMED TECHNOLOGIES LTD. THE TURNOVER IS LESS THAN RS.5 CRORES, HENCE REJECTED. 6. JINDAL INTELLICOM PVT.LTD. THIS IS A SUITABLE COMPARABLE. 7. OMEGA HEALTHCARE MANAGEMENT SERVICES COMPLETE FINANCIAL INFORMATION IS NOT AVAILABLE. HENCE, CAN T BE CONSIDERED AS A SUITABLE COMPARABLE. 8. R SYSTEMS INTERNATIONAL LTD. THIS COMPANY IS HAVING DIFFERENT FINANCIAL YEAR ENDING I.E. DECEMBER. HENCE, CAN T BE CONSIDERED AS SUITABLE COMPARABLE. ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 11 2.7. LD.TPO REJECTED ALL COMPARABLES EXCEPT FOR JINDAL INTELLICOM PVT.LTD., AND CAME TO DIFFERENT SET OF COMPARABLES, WHICH ARE AS UNDER: SL.NO. NAME OF THE COMPANY OP/OC 1. ACCENTIA TECHNOLOGIES LTD. 29.18% 2. AEROPETAL TECHNOLOGIES LTD. (SEGMENT) 14.36% 3. E4E HEALTHCARE BUSINESS SERVICES P LTD. 9.77% 4. ECLERX SERVICES LTD. 56.82% 5. ICRA TECHNO ANALYTICS LTD. (SEGMENT) 25.54% 6. INFOSYS BPO LTD. 17.86% 7. JINDAL INTELLICOM LTD. 13.70% 8. TCS E - SERVE LTD. 69.31% AVERAGE 29.57% LD.TPO THUS MADE AN ADJUSTMENT OF RS.6,59,17,396/ - 3. A GGRIEVED BY ADJUSTMENT MADE, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A). DURING THE FIRST APPELLATE PROCEEDINGS LD. CIT (A) REJECTED THE COMPARABLE , ICRA TECHNO ANALYTICS LTD., BUT ACCEPTED OTHER COMPARABLES THAT WAS FINALLY SELECTED BY LD. TPO. 4. AGGRIEVED BY THE ORDER OF LD. CIT (A) ASSESSEE IS IN APPEAL BEFORE US NOW. ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 12 4.1. THE ONLY ISSUE THAT HAS BEEN AGITATED BY ASSESSEE IS IN RESPECT OF WRONG SELECTION OF COMPARABLES BY L D. TPO AND REJECTION OF TWO COMPARABLES BEING R SYSTEMS AND OMEGA HEALTHCARE. 4.2. BEFORE DEALING WITH COMPARABLES IT IS SINE QUA NON TO DEA L WITH THE FUNCTIONS PERFORMED BY ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 4.3. FR OM TP REPORT PLACED AT PAGE 696 OF THE PAPER BOOK , IT IS OBSERVED THAT ASSESSEE IS 100% WHOLLY OWNED S UBSIDIARY OF EVALUESERVE LTD, LOCATED AT BERMUDA PROVIDING K NOWLEDGE P ROCESS O UTSOURCING (KPO) SERVICES (INTELLECTUAL PROPERTY, MARKET RESEARCH, BUSINESS RESEARCH, FINANCIAL AND INVESTMENT RESEARCH AND DATA ANALYTICS SERVICES) TO ITS CLIENTS. IT HAS BEEN STATED IN THE TP REPORT THAT ASSESSEE WAS INCORPORATED ON 17/12/07 AND BEGAN I TS OPERATIONS FROM AUGUST 2008. 4.4. AT PAGE 697 OF PAPER BOOK IT IS BEING SUBMITTED THAT ASSESSEE RENDERS RESEARCH SERVICES PRIMARILY TO ITS AE S. BUSINESS INFORMATION ASSESSE S ANALYSTS COVERS A RANGE OF INDUSTRIES INCLUDING BANKING , INSURANCE, TELECO MMUNICATIONS, PHARMACEUTICALS, BIOTECHNOLOGY, CHEMICALS, ENERGY AND CONSUMER GOODS. IT HAS ALSO BEEN STATED THAT ASSESSEE UTILISES PRIMARY AND SECONDARY SOURCES TO CONDUCT ITS RESEARCH AND ANALYS I S IN THE SEGMENT. INTELLECTUAL PROPERTY A SSESSEE IS INVOLV ED IN CARRYING OUT THE PATENT ASSESSMENTS, INTELLECTUAL PROPERTY RESEARCH AND ANALYSIS, PATENTS CONSULTING AND PREPARING DRAFT OF PATENT APPLICATION TO BE FILED OVERSEAS. THIS ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 13 RESEARCH IS DELIVERED TO ITS AE S WHICH HAVE AN ARRANGEMENT WITH THE TEAM OF LAW YERS FOR FILING PATENT APPLICATIONS IN THE APPROPRIATE JURISDICTIONS. ASSESSEE ALSO OFFERS INTELLECTUAL PROPERTY , ASSET MANAGEMENT AND HELPS IN ANALYSING PORTFOLIO OF PATENTS. INVESTMENT RESEARCH AND FINANCIAL ANALYTIC THESE SERVICE S INCLUDE FINANCIAL ANA LYSIS AND RESEARCH FOCUSSED ON GLOBAL FUNDS AND EQUITIES. E SSENTIALLY IT INVOLVES TRACKING PERFORMANCE OF SPECIFIC STOCKS AND MUTUAL FUNDS AND ANALYSING IT. THE BACKGROUND DATA IS COMPILED AND PROVIDED TO THE CLIENTS THAT INCLUDE MAINLY INVESTMENT BANKS. T HE WORK IS CUSTOMISED ACCORDING TO THE REQUIREMENTS OF THE CLIENTS AND THE SPECIFIC REQUEST RECEIVED FROM THEM. MARKET R ESEARCH (PRIMARY RESEARCH) THE SERVICES INVOLVE VOICE - BASED SUPPORT FOR CONDUCTING TELEPHONIC CUSTOMER S URVEYS IN DIFFERENT PARTS OF THE WORLD AND FORMULATION OF PRELIMINARY HYPOTHESIS BASED ON THE SURVEYS . ASSESSEE HAS EXTENSIVE PRIMARY RESEARCH CAPABILITIES, INCLUDING THE ABILITY TO CONDUCT RESEARCH IN MULTIPLE LANGUAGES. 4.5. THUS IN THE TP REPORT ASSESSEE HAS CHARACTERISED ITS ELF TO BE PROVIDING ITES - BPO SERVICES THERE AND IT PROVIDES RESEARCH - BASED SPECIALIZED REPORTS AND SERVICES TO ITS CLIENTS IN EUROPE AND NORTH AMERICA. IT UNDERTAKES PROJECTS SPANNING MULTIPLE DIMENSIONS INCLUDING PROJECT SCOPE, SCHEDULE, LANGUAGE, FORMAT OF DELIVERABLES ETC. ASSESSEE MAKES USE OF A RIGHT OF RESEARCH TOOLS INCLUDING THE WEB DATABASES AND PUBLICATIONS APART FROM ANALYTICS AND FORECASTING. THE INDUSTRY COVERED INCLUDE FINANCIAL SERVICES ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 14 (BANKING AND INSURANCE), HIGH - TECH, SOFTWARE, ELECTRONICS, ENGINEERING, NANOTECHNOLOGY, NETWORKING, BIOMEDICAL ENGINEERING), TELECOM EQUIPMENT AND OPERATORS, PHARMACEUTICAL AND BIOTECH CHEMICALS, ENERGY AND CONSUMER PRODU CTS. 4.6. IN TERMS OF ASSETS IT DOES NOT OWN ANY NON - ROUTINE INTANGIBLES AND DOES NOT OWN TRADE SECRETS OR UNDERTAKE RESEARCH AND DEVELOPMENT ACTIVITIES ON ITS ACCOUNT THAT WOULD LEAD TO THE DEVELOPMENT OF NON - ROUTINE TANGIBLES. 4.7. IN TERMS OF RIS K ASSESSEE HAS BEEN CHARACTERISED AS A HIGH - LEVEL RISK EXPOSED IN INDIA WHICH INCLUDES FOREIGN EXCHANGE RISK, ENTREPRENEURS RISK, PRICE RISK, MANPOWER RISK. 5. AFTER THE ABOVE FAR ANALYSIS, WE SHALL NOW PROCEED WITH THE COMPARABILITY IN RESPECT OF TH E COMPARABLES DISPUTED BY ASSESSEE AS WELL AS THE COMPARABLES THAT HAS BEEN PROPOSED TO BE INCLUDED BY ASSESSEE IN THE FINAL LIST. THE COMPARABLES THAT HAS BEEN SUBMITTED BY ASSESSEE TO BE EXCLUDED ARE AS UNDER: ACCENTIA TECHNOLOGIES LTD; INFOSYS BPO LTD T CS E - SERVE LTD ECLERX SERVICES LTD THE COMPARABLES THAT HAVE BEEN SUBMITTED BY ASSESSEE TO BE INCLUDED ARE AS UNDER: R SYSTEMS OMEGA HEALTHCARE LTD ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 15 6. GROUND NO. 1 - 5 ARE GENERAL IN NATURE AND THEREFORE DO NOT REQUIRE ANY ADJUDICATION. 7. GROUND NO 6 - 16 AND GROUND NO. 18 - 25 , DEALS WITH THE COMPARABLES AND THE FUNCTIONAL PROFILE OF ASSESSEE. WE SHALL FIRST TAKE UP THE COMPARABLES THAT HAVE BEEN DISPUTED BY ASSESSEE TO BE EXCLUDED FROM THE LIST OF COMPARABLES. LD.COUNSEL DURING THE HEARING SUBMITTED A CH ART CONSISTING OF COMPARABLES AND THE REASONS CONTENDED FOR THEIR EXCLUSIONS AS UNDER: S NO COMPARABLE REASONS OF REJECTION (OUR CONTENTIONS) CASE LAWS RELIED UPON BY THE APPELLANT (DELHI ITAT AND DELHI HIGH COURT) FOR SAME REASONS AND FOR SAME ASSESSM ENT YEAR 1. ACCENTIA TECHNOLOGIES LTD.(PG. 1145 - 1184 - VOL. 4 - ANNUAL REPORT) 1 ) EXTRAORDINARY EVENTS DURING AY 2010 - 11(ACQUISITIONS/ AMALGAMATION) (PG. 1172) - HENCE FAILS TPO'S OWN FILTER OF PECULIAR ECONOMIC CIRCUMSTANCES 2 ) FUNCTIONAL DISSIMILARITY - DIVERSIFIED BUSINESS OPERATIONS (PG. 1171 - ALSO NTA KINDLY REFER TPO ORDER PG. 27) 3 ) DIFFERENT REVENUE RECOGNITION MODEL (PG. 1171) - ASSESSEE'S MODEL AT PG. 695 4 ) SIGNIFICANT INTANGIBLE ASSETS (PG. 1167) - ASSESSE HAS NO INTANGIBLES (PG. 692) 5 ) ABNORMALLY HIGH PROFIT MARGINS 1 ) 1.DELHI HIGH COURT - PCIT VS. AMERIPRIST INDIA P. LTD. - ITA NO. 461/16 - PG. 79A - 79 B CLC 2 ) UNITED HEALTHGROUP INFORMATION SERVICES P. LTD. (ITA NO. 1038/D/15) (P 201 - 204 OF CLC) 3 ) EQUANT SOLUTIONS INDIA P. LTD.(ITA NO. 1202/D/2015)(PG.176 - 180 CLC) 4 ) AMERIPRISE INDIA PVT LTD. (ITA NO. 7014/DEL/2014) (PG. 60 - 62 OF CLC) 5 ) BECHTEL INDIA PVT. LTD. (ITA NO. 1478/DEL/2015) (PG. 95 - 96 OF CLC) 6 ) TECHBOOKS INTERNATIONAL PVT. LTD. (IT/ NO. 240/DEL/2015 FOR AY 2010 - 11) (PQ. 1 19 OF CLC) 7 ) SUN LIFE INDIA SERVICE CEN TRE P. LTD. (ITA NO. 750/2015) (PG. 2. ECLERX SERVICES TD.(PG. 734 - 37 - VOL. 3 - ANNUAL 1 ) FUNCTIONALLY DISSIMILAR (PG. 739, 740, 757, 758) - IT IS A KPO 1 ) AMERIPRISE INDIA PVT LTD. (ITA NO. 7014/DEL/2014)(PG. 69 - 70 OF CLC) ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 16 REPORT) 2 ) UNRELIABLE DATA - THE STANDALONE FINANCIALS INCLUDE THE TURNOVER OF THE SUBSIDIARIES ALSO (PG. 784, 808, 827) 3 ) SIGNIFICANT INTANGIBLE ASSETS. - (COMPUTER SOFTWARE - PG. 787) ' 4 ) INSUFFICIENT SEGMENTAL DETAILS 2 ) RAMPGREEN SOLUTIONS VS. CIT (ITA NO. 102/2015) - 377 ITR 533 (DEL) 3 IGATE GLOBAL SOLUTIONS TD.(PG. 838 - 42 - VOL. 3 - MNUAL VEPORT) 1. EXCEPTIONAL YEAR OF OPERATIONS (AMALGAMATION) (PG. 888K HENCE FAILS TPO'S OWN FILTER OF PECULIAR ECONOMIC CIRCUMSTANCES 2 ) FUNCTIONALLY DIFFERENT AND INSUFFICIENT SEGMENTAL INFORMATION (IT AND ITES SE RVICES) (PG. 888 AND 893, 904, 910) 3 ) HIG H TURNOVER (RS. 932.18 CRORES) (PG. 879) (ASSESSEE'S TURNOVER IS ABOUT 50 CRORES - TURNOVER IS ABOUT 18 TIMES MORE THAN THAT OF THE ASSESSE). 1 ) DELHI HIGH COURT - PCIT VS. AMERIPRISE INDIA P. LTD. - ITA NO. 461/16 - PG. 79A - 79B CLC 2 ) UNITED HEALTHGROUP INFORMATION SERVICES P. LTD. (ITA NO. 1038/D/15) (PG. 204 - 205 OF CLC) 3 ) TECHBOOKS INTERNATIONAL PVT. LTD. (ITA NO. 240/DEL/2015 FOR AY 2010 - 11) (PG. 28 - 29 OF CLC). 4 ) AMERIPRISE INDIA PVT LTD. (ITA NO. 7014/DEL/2014)(PG. 62 - 63 O F CLC). 5 ) SUN LIFE INDIA SERVICE CENTRE P. LTD. (ITA NO. 750/2015) 4. ICRA TECHNO ANALYTICS LTD. (PG. 1209 - 1234 - VOL. 4 - ANNUAL REPORT) 1 . FUNCTIONALLY DISSIMILAR - IT IS ENGAGED IN BUSINESS INTELLIGENCE AND ANALYTICS (PG. 1210, 1226, 1232). 2 . NO SEGMENTAL DETAILS 1 ) DCIT VS. IKANOS COMMUNICATION INDIA (P.) LTD (BANG - ITAT - FOR A Y2010 - 11)[2015] 64 TAXMC 436 (BANGALORE - TRIB.) 2 ) IDCIT VS. APPLIED MATERIALS INDIA (P.) LTD20 TAXMANN.COM 160 (BANGALORE - TRIB. FOR AY 2 11) - 5. INFOSYS BPO LTD.(PG. 943 - 1026 - VOL 4 - 1 ) HIGH BRAND VALUE AND INTANGIBLES (GOODWILL) (PG. 981) - ASSESSE HAS NO GOODWILL - PG. 692 2 ) BENEFITS FROM BEING PART OF 'INFOSYS' GROUP (PG. 952, 950) 01 . DELHI HIGH COURT - PCIT VS. AMEN) INDIA P. LTD. - ITA NO. 461/16 - PG. 7 79B CLC 02 . EQUANT SOLUTIONS INDIA P. LTD.(IT/ 1202/D/2015) (PG. 183 - 184 OF CLC) ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 17 ANNUAL REPORT) 3 ) SUBSTANTIAL SELLING AND MARKETING EXPENSES - SUBSTANTIAL EMPLOYEE SALARY UNDER THIS HEAD AND ALSO BRAND BUILDING AND ADVERTISEMENT EXPENSE (ABOUT RS. 78 CRORES - APPROX. 6.96 PERCENT) (PG. 977, 978) - ASSESSE HAS NO 'OCH EXPENDITURE - IN THE TP STUDY AT PG. 599 AND 603, IT IS CLEARLY MENTIONED THAT MARKET RISK LI ES WITH AE AND HENCE ASSESSE IS NOT LIABLE FOR MARKETING, SALES PROMOTION AND BUSINESS DEVELOPMENT. 4 ) SIGNIFICANTLY LARGE SCALE OF OPERATIONS (TURNOVER IS 22 TIMES MORE THAN THAT OF THE ASSESSE) 5 ) EXCEPTIONAL YEAR OF OPERATIONS (ACQUISITIONS) (PG. 950, 956) - H ENCE FAILS TPO'S OWN FILTER OF PECULIAR ECONOMIC CIRCUMSTANCES 03 . TECHBOOKS INTERNATIONAL PVT. LTD. NO. 240/DEL/2015)(PG. 29 - 30 OF CLC 04 . AMERIPRISE INDIA PVT LTD. (ITA NO. 7014/DEL/2014)(PG. 63 OF CLC) 05 . SUN LIFE INDIA SERVICE CENTRE P. L (ITA NO. 750/2015) 6 TCS E - SERVE LATIONAL '9 - 1102 - - ANNUAL T) 01 . FUNCTIONAL DISSIMILARITY (PG. 1058) 02 . NO SEGMENTAL DATA (PG. 1066) 03 . OWNS SIGNIFICANT INTANGIBLES 04 . USES THE 'TATA' BRAND - ROYALTY IS PAID (PG. 1064) 05 . PART OF TATA GROUP AND BENEFITS THEREOF (PG. 1035) V. 06 . PRIMARY CLIENT IS CITIGROUP (PG. 108) 07 . FIRST FULL - YEAR AS STEP DOWN SUBSIDIARY OF TCS - WHICH HAS LED TO SUBSTANTIAL G ROWTH - TOTAL INCOME IS 3 TIMES HIGHER AS COMPARED TO LAST YEAR (FROM 54 CRORES TO 150 CRORES). OPERATING INCOME HIGHER BY 173% AS COMPARED TO LAST YEAR. FROM LOSS OF 24 CRORES TO PROFIT OF 44 CRORES THIS YEAR, DUE TO IMPROVED OPERATIONAL 1 ) UNITED HEALTHGROUP INFORMATION SERVICES P. LTD. (ITA NO. 1038/D/15)(PG. 208 - 210 OF CLC) 2 ) EQUANT SOLUTIONS INDIA P. LTD.(ITA NO. 1202/D/2015) (PG. 184 - 187 OF CLC) 3 ) AMERIPRISE INDIA PVT LTD. (ITA NO. 7014/DEL/2014) (PG. 63 - 66 OF CLC) 4 ) BECHTEL INDIA PVT. LTD. (ITA NO. 1478/DEL/2015) (PG. 95 OF CLC) 5 ) TECHBOOKS INTERNATIONAL PVT. LTD. (ITA NO. 240/DEL/2015 FOR AY 2010 - 11) (PG. 19 - 24 OF CLC) 6 ) SUN LIFE INDIA SERVICE ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 18 PERFORMANCE AND INC REASED UTILIZATION OF INFRASTRUCTURE CAPACITIES, (PG. 1034) CENTRE P. LTD. (ITA NO. 750/2015) 7. TCS E - SERVE 1103 - 1144 - VOL - 4 ANNUAL REPORT 01 . FUNCTIONAL DISSIMILARITY (PG. 1122) 02 . NO SEGMENTAL DETAILS ARE AVAILABLE (PG. 1134) 03 . OWNS SIGNIFICANT INTANGIBLES 04 . USES THE TATA BRAND ROYALTY IS PAID (PG 1131) 05 . HIGH TURNOVER - 27 TIMES MORE THAN THAT OF THE ASSESSEE 1 . UNITED HEALTHGROUP INFORMATION SERVICES P. LTD. (ITA NO. 1038/D/15) (PG. 208 - 210 OF CLC) 2 . EQUANT SOLUTIONS INDIA PVT LTD (ITA NO. 1202/DEL/2015 (PG 184 - 187 OF CLC) 3 . AMERIPRISE INDIA PVT LTD (ITA NO. 7014/DEL/2014 (PG 66 - 69 OF CLC 4 . BECHTEL INDIA PVT LTD (ITA N O. 1478/DEL/2015) PG 95 OF CLC 5 . SUN LIFE INDIA SERVICE CENTRE P LTD (ITA NO. 750/2015 S NO.L NAME OF THE COMPARABLE REASONS FOR ACCEPTANCE CASE LAWS RELIED UPON BY THE APPELLANT 1 R SYSTEMS (PAGE 1285 - 1374 VO4 OF ANNUAL REPORT 1. DIFFERENT FINANCIAL YEAR ENDING CANNOT BE THE SOLE BASIS FOR EXCLUDING A COMPARABLE 1 . TECHBOOKS INTERNATIONAL PVT. LTD (ITA NO. 240/DEL/2015) PG 30 - 33 OF CLC) 2 . UNITED HEALTHCARE GROUP INFORMATION SERVICES P LTD (ITA NO. 103.8/DEL/2015 PAGE 210 - 211 OF CLC 3 . AMERIPRISE INDIA PVT LTD (ITA NO. 7014/DEL/2014 (PG 66 - 69 OF ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 19 CLC 4 . SUN LIFE INDIA SERVICE CENTRE P LTD (ITA NO. 750/2015 RECENTLY, THE DELHI HIGH COURT (ITA NO. 217/2014) IN THE CASE OF CIT VS. MCKINSEY KNOWLEDGE CENTRE INDIA LTD. HAS HELD THAT DIFFEREN T FINANCIAL YEAR ENDING CANNOT BE THE SOLE BASIS OF REJECTION OF A COMPARABLE, (PG. 145 - 158 OFCLC) EVEN OTHERWISE, THE FOLLOWING CASES HAVE HELD FOR THE SAME COMPARABLE, THAT DIFFERENT FINANCIAL YEAR ENDING CANNOT BE THE SOLE BASIS OF EXCLUDING A COMP ARABLE, WHICH OTHERWISE PASSES ALL THE FILTERS AND IS FUNCTIONALLY COMPARABLE - 5 ) MACQUARIE GLOBAL SERVICES PRIVATE LIMITED - ITA NO. 6803/DEL/2013 6 ) AMERIPRISE INDIA PVT. LTD. VS. ACIT - ITA NO. 2010/DEL/2014 MERCER CONSULTING INDIA P. LTD. ITA 966/DEL - 2. OMEGA HEALTHCARE LTD (PG 1269 - 1284) VOL 4 ANNUAL REPORT 1) THE TPO/DRP REJECTED THE COMPARABLE ONLY ON THE GROUND THAT THE ANNUAL REPORT IS NOT AVAILABLE IN THE PUBLIC DOMAIN. HOWEVER, THIS IS NOT TRUE. 1) BECHTEL INDIA PVT. LTD. (ITA NO. 1478/DEL/2015) (PG. 96 - 97 OFCLC) ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 20 7.1. IT HAS ALSO BEEN CITED BY LD. COUNSEL THAT HON BLE DELHI HIGH COURT VIDE ORDER DATED 26/02/2008 IN ITA NO. 241/2008 UPHELD THE EXCLUSION OF THE 4 COMPARABLES DISPUTED BY ASSESSEE HEREIN, AND HAS APPROVED DECISION OF THIS TRIBUNAL IN ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 2010 - 11. 7.2. THE LD.COUNSEL PLACED RELIANCE UPON THE FOLLOWING PARAS OF HON BLE HIGH COURT WHICH READS AS UNDER: 5. THIS COURT NOTICES THAT AS FAR AS THE EXCLUSION OF THREE COMPARABLES - M / S. TCS E - SERVE LIMITED; M/S. TCS E - SERVE INTERNATIONAL LIMITED AND M / S. INFOSYS BPO LTD. IS CONCERNED, THE ITAT WAS COGNIZANT OF AND TOOK NOTE OF THE CIRCUMSTANCES THAT THESE ENTITIES HAD A HIGH BRAND VALUE AND, THEREFORE, WERE ABLE TO COMMAND GREATER PROFITS; BESIDES, T HEY OPERATED ON ECONOMIC UPSCALE. THIS APPROACH CANNOT BE FAULTED HAVING REGARD TO THE DECISION OF THIS COURT IN PR. COMMISSIONER OF INCOME TAX V. B. C. MANAGEMENT SERVICES PVT. LTD. 2018 (89) TAXMAN.COM 68 (DEL), WHICH READS AS FOLLOWS: '13. THE EXCLUS ION OF SECOND COMPARABLE ICRA TECHNO ANALYTICS LTD. WAS ON THE BASIS THAT IT HAD ENGAGED ITSELF IN PROCESSING AND PROVIDING SOFTWARE DEVELOPMENT AND CONSULTANCY AND ENGINEERING SERVICES/WEB DEVELOPMENT SERVICES. THE REASONS FOR EXECUTION WERE FUNCTIONAL DI SSIMILARITIES AND THAT SEGMENTAL DATA WERE UNAVAILABLE. AGAIN THE FINDINGS OF THE ITAT ARE REASONABLE AND BASED ON RECORD. THE THIRD COMPARABLE THAT THE AO/TPO EXCLUDED IS TCS ESSERVE. THE ITAT OBSERVED THAT THOUGH THERE IS A CLOSE FUNCTIONAL SIMILARITY B ETWEEN THAT ENTITY AND THE ASSESSEE, HOWEVER, THERE IS A CLOSE ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 21 CONNECTION BETWEEN TCS E - SERVE AND TATA CONSULTANCY SERVICE LTD. WHICH WAS HIGH BRAND VALUE; THAT DISTINGUISHED IT AND MARKED IT OUT FOR EXCLUSION. THE ITAT RECORDED THAT THE BRAND VALUE ASSOCI ATED WITH TCS CONSULTANCY REFLECTED IMPACTED TCS E - SERVE PROFITABILITY IN A VERY POSITIVE MANNER. THIS INFERENCE TOO IN THE OPINION OF COURT, CANNOT BE TERMED AS UNREASONABLE. THE RATIONALE FOR EXCLUSION IS THEREFORE UPHELD. THE ASSESSEE WAS AGGRIEVED BY T HE INCLUSION OF ACCENTIA A SOFTWARE DEVELOPMENT COMPANY. THE REVENUE IS AGGRIEVED BY THE EXCLUSION OF ACCENTIA FROM THE TP ANALYSIS. THE DRP HAD DIRECTED ITS DELETION. WE OBSERVE THAT THE ITAT HAS NOTICED THE UNAVAILABILITY OF THE SEGMENTAL DATA SO FAR AS THESE COMPARABLES ARE CONCERNED. FURTHERMORE, THE FUNCTIONALITY OF THIS ENTITY WAS CONCERNED, IT IS DIFFERENT FROM THAT OF THE ASSESSEE; ACCENTIA WAS ENGAGED IN KPO SERVICES IN THE HEALTHCARE SECTOR. 14. IN VIEW OF THE ABOVE FINDINGS, THIS COURT IS OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES. THE APPEALS ARE DISMISSED. ' 6. THE ITAT NOTED THAT M/S. ACCENTIA TECHNOLOGIES LTD. WAS MAINLY PERFORMING MEDICAL TRANSCRIPTION SERVICES. IT WAS O F THE OPINION THAT ITS SERVICE WAS SIMILAR TO THE ONE THAT THE ASSESSEE WAS ENGAGED IN. HOWEVER, IT ALSO NOTED THAT THERE WAS NO SEGMENTED DATA AND ON THAT ACCOUNT, DIRECTED THE EXCLUSION OF THAT ENTITY FROM THE LIST OF COMPARABLES. LIKEWISE, IN THE CASE O F M/S. ICRA TECHNO ANALYSIS LTD., IT WAS FOUND THAT THE SAID ENTITY WAS ENGAGED IN BUSINESS INTELLIGENCE AND ANALYTICS SUPPLIES, SOFTWARE DEVELOPMENT, CONSULTANCY SERVICES, ENGINEERING SERVICES, WEB DEVELOPMENT AND HOSTING SERVICES. BESIDES FUNCTIONAL DISS IMILARITY, THE ITAT ALSO NOTED ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 22 THAT THERE WAS NO SEGMENTED DATA TO COMPARE ITS ACTIVITY WITH THE ASSESSEE. LIKEWISE, IN THE M / S. ECLARX SERVICES, THE ITAT NOTED THAT ITS ACTIVITY WAS FUNCTIONALLY DISSIMILAR BECAUSE IT PERFORMED KPO FUNCTION WHEREAS THE AS SESSEE WAS CLASSIFIABLE AS BPO. 7.3. ON THE CONTRARY LD.CIT , DR VEHEMENTLY OBJECTED THE ARGUMENTS OF THE ASSESSEE FOR EXCLUSION OF VARIOUS COMPARABLES AND PLA CED RELIANCE UPON THE ORDERS OF THE AUTHORITIES BELOW . 8. WE HAVE PERUSED THE SUBMISSIONS ADVA NCED BY BOTH THE SIDES IN THE LIGHT OF THE RECORDS PLACED BEFORE US. 8.1. WE HAVE ALSO PERUSED THE DECISION OF THIS TRIBUNAL IN ITA NO. 1467/DEL/2017 FOR ASSESSMENT YEAR 2010 - 11 PASSED ON 30/06/17. IT IS OBSERVED THAT THE FUNCTIONS PERFORMED BY ASSESSEE DU RING ASSESSMENT YEAR 2010 - 11 ARE IDENTICAL AND SIMILAR TO THE FUNCTIONS PERFORMED BY ASSESSEE FOR THE YEAR UNDER CONSIDERATION. ALSO FROM THE FINANCIAL REPORTS PLACED IN PAPER BOOK AT PAGE 1 - 454 IN RESPECT OF ALL THE COMPARABLES ARGUED BEFORE US FOR EXCLU SION IT IS OBSERVED THAT THERE IS NO DIFFERENCE OR EXCEPTION TO THE FUNCTIONS PERFORMED BY THESE COMPARABLES FOR ASSESSMENT YEAR 2010 - 11. 8.2. IT IS OBSERVED THAT THIS TRIBUNAL IN ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 2010 - 11 VIDE PARAGRAPH NOS. 9 - 14 AN D 16 - 29 EXCLUDED THESE COMPARABLE BY ANALYSING THESE COMPARABLES AND ITS FUNCTIONS AS UNDER: 9. ACCENTIA TECHNOLOGIES IS SELECTED BY THE LD TPO BUT IS CHALLENGED NOW BY THE ASSESSEE SUBMITTING THAT IT HAS AN EXTRA ORDINARY EVENT DURING THE YEAR, ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 23 FUNCTIONALLY DIS - COMPARABLE AS IT IS ENGAGED IN MEDICAL TRANSCRIPTION, HAS SIGNIFICANT INTANGIBLES AND ABNORMALLY HIGH PROFIT MARGIN. FOR THIS PROPOSITION THE LD AR RELIED UPON SEVERAL JUDICIAL PRECEDENTS. THE LD DRP REJECTED ALL THE ABOVE CONTENTION OF TH E ASSESSEE WITH RESPECT TO THIS COMPARABLE AT PAGE NO. 23 TO 26 OF ITS ORDER. 10. THE LD DR REITERATED THE SAME FACTS AS STATED BY LOWER AUTHORITIES. 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AS WELL AS PERUSED THE ANNUAL ACCOUNTS OF THE C OMPARABLES. AT PAGE NO. 1172, WE HAVE PERUSED SCHEDULE 10 OF THE NOTES ON ACCOUNT WHEREIN IT HAS MENTIONED THAT W.E.F. 01.04.2008 A COMPANY WHICH WAS ENGAGED IN THE BUSINESS OF MEDICAL TRANSCRIPTION AND CODING HAS BEEN AMALGAMATED WITH THE COMPARABLE. IT I S FURTHER STATED FIGURES FOR THIS YEAR ARE RELATED TO AMALGAMATING COMPANY ALSO. THE PROFIT AND LOSS ACCOUNT OF THE COMPARABLE SHOWS THAT SALES AND SERVICES OF THE COMPANY ARE ACCORDING TO SCHEDULE NO. 8. THERE IS NO CHANGE IN THE INCOME SEGMENT OF THE ASS ESSEE AFTER AMALGAMATION AS AMALGAMATING COMPANY WAS ALSO HAVING THE SAME BUSINESS, HENCE, THERE IS NO IMPACT OF AMALGAMATION ON THE COMPANY WITH RESPECT TO FUNCTIONS PERFORMED. THEREFORE, MERELY THERE IS A AN AMALGAMATION DURING THE YEAR IT CANNOT BE E XCLUDED AS COMPARABLE AS IT DOES NOT CHANGE THE FUNCTIONAL PROFILE OF THE COMPARABLE COMPANY. HOWEVER, AT PAGE NO. 27 THE LD TPO HAS CONFIRMED THAT THIS COMPANY IS ENGAGED IN THE BUSINESS OF HEALTHCARE CYCLE MANAGEMENT WHICH COMPRISES OF MEDICAL TRANSCR IPTION, CODING AND BILLING AND COLLECTION. THE MEDICAL TRANSCRIPTION BUSINESS REQUIRE SPECIAL SKILL AND ALSO EMPLOYS MEDICAL PROFESSIONAL WHO FINALLY VET THE ACTUAL TRANSCRIPTION. FURTHER MEDICAL CODING IS RELATED TO PROCEDURE OF FINANCIAL ASSESSMENT. MEDI CAL BILLING IS MAINTENANCE OF FINANCIAL ACCOUNTS ON INSURANCE COMPANY ETC FOR THE PURPOSES OF RECOVERY OF SUMS BY DOCTORS. THEREFORE, MEDICAL TRANSCRIPTION IS A SERVICE WHICH REQUIRES EMPLOYMENT OF MEDICAL PROFESSIONAL ALSO. HOWEVER, THE MEDICAL CODING THE BILLING MAY NOT REQUIRE HIGHER TECHNICAL SKILL. IN ANNUAL REPORT THE COMPANY HAS MENTIONED THAT IT HAS ONLY ONE SEGMENT AND THEREFORE IT DOES NOT HAVE SEGMENTAL RESULTS PERTAINING TO MEDICAL TRANSCRIPTION VIS - - VIS CODING ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 24 AND BILLING ACTIVITY. ACCORDING TO US THE MEDICAL TRANSCRIPTION ITSELF CANNOT BE SAID TO BE COMPARABLE WITH THE FUNCTIONS PERFORMED BY THE ASSESSEE. HOWEVER, THE MEDICAL CODING AND BILLING ACTIVITIES ARE SIMILAR TO THE FUNCTIONS PERFORMED BY THE ASSESSEE. BUT , IN ABSENCE OF THE SEGMENTA L ACCOUNTS WITH RESPECT TO MEDICAL CODING AND BILLING ACTIVITIES THIS COMPARABLE CANNOT BE INCLUDED. HENCE, TPO IS DIRECTED TO EXCLUDE IT. 12. THE NEXT COMPARABLE BY THE ASSESSEE IS THAT ECLARX SERVICES SUBMITTING THAT IT IS A KNOWLEDGE PROCESS OUTSOURCIN G (KPO) UNIT AND THEREFORE CANNOT BE COMPARED WITH THE ITES SERVICE PROVIDER LIKE ASSESSEE. THE ASSESSEE HAS RELIED ON THE DECISION OF HON'BLE DELHI HIGH COURT OF RAMGREEN SOLUTIONS PVT. LTD VS. CIT. 13. THE LD DR SUBMITTED THAT THE ASSESSEE IS ALSO A K NOWLEDGE PROCESS OUTSOURCING UNIT AS IT EMPLOYS 616 PERSONNEL. HE REFERRED TO PAGE NO. 6 OF THE ORDER OF THE LD TRANSFER PRICING OFFICER FOR THIS. HE SUBMITTED THAT ASSESSEE S CASE FALLS INTO ALL THREE HORIZONTAL SEGMENTS OF ITES INDUSTRIES SUCH AS CALL CE NTRE AND TECHNICAL SUPPORT, PAYMENT SUPPLY CHAIN AND ANALYTICS. HE THEREFORE, STATED THAT ECLARX IS THE RIGHT COMPARABLE 14. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ANNUAL REPORT OF THE COMPARABLE FOR AY 2010 - 11 AT PAGE NO. 734 TO 83.7 OF THE PAPER BOOK. THE FUNCTIONS OF THE COMPANY ARE DESCRIBED AT PAGE NO. 23 OF ITS ANNUAL REPORT UNDER MANAGEMENT DISCUSSION AND ANALYSIS. IT PROVIDES THAT ECLERX SUPPORTS ITS CLIENTS THROUGH ITS TWO BUSINESS UNITS - CAPITAL MARKETS AND SALES A ND MARKETING SUPPORT. ACROSS BOTH THESE UNITS, THE COMPANY SUPPORTS AND IMPROVES PROCESSES THAT ARE CORE OF ITS CUSTOMERS DAY TO DAY BUSINESS OPERATIONS. THE COMPANY CONTINUES TO FOCUS ON ENGAGEMENTS WHERE IT CAN TAP THE LARGEST PERCENTAGE OF CLIENT SPEND BY LEVERAGING ITS DOMAIN EXPERTISE AND BY BRINGING TOGETHER CONSULTING, PROJECT MANAGEMENT AND SOLUTION BASED SERVICE DELIVERY. IN THE CAPITAL MARKETS DIVISION, THE COMPANY TODAY PROVIDES END - TO - END FINANCIAL TRANSACTION SUPPORT SERVICES SUCH AS TRADE BOOK ING, TRADE CONFIRMATION, ASSET SERVICING CASH SETTLEMENTS, CLIENT SERVICING RISK MANAGEMENT AND REFERENCE ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 25 DATA INTEGRITY ACROSS ALL ASSET CLASSES, AND ITS SERVICES SPAN BOTH SELL SIDE ( THE LARGE BANKS) AND BUY SIDE ( THE FUNDS AND ASSETS MANAGERS) FURTHER MORE, THE COMPANY PROVIDES STRATEGIC AND PROCESS CONSULTING SERVICES HELPING CLIENTS DEVISE SOLUTIONS TO IMPROVE EFFICIENCY, REDUCE RISK AND MEET REGULATORY AND MARKET DEMANDS. SIMILARLY IN THE SALES AND MARKETING SUPPORT DIVISION, THE COMPANY TODAY SUPPOR TS CLIENTS IN ALL ELEMENTS OF PRODUCT AND SERVICES MARKETING AND SALES WITH A FOCUS ON ONLINE SUPPORT TO INCLUDE CONTENT DEVELOPMENT AND MANAGEMENT, SEARCH ENGINE MANAGEMENT, WEB OPERATIONS, PRICING AND CUSTOMER ANALYTICS, PRODUCT DATABASE MANAGEMENT AND C ATALOG AUDITS. THE COMPANY IS ALSO PURSUING A STRATEGY OF CREATING A PORTFOLIO OF PLATFORM ATTACHED SERVICES, BY CREATING A SUITE OF SERVICES THAT ARE COMPLEMENTARY TO INDUSTRY STANDARD IT PLATFORMS. A GLANCE AT THE FUNCTIONAL PROFILE OF THIS COMPANY DIVU LGES THAT IT IS BASICALLY A KNOWLEDGE PROCESS OUTSOURCING (KPO) COMPANY PROVIDING DATA ANALYTICS AND DATA PROCESS SOLUTIONS TO GLOBAL CLIENTS. THIS COMPANY PROVIDES END TO END SUPPORT THROUGH TRADE LIFE CYCLE INCLUDING TRADE CONFIRMATIONS AND SETTLEMENTS E TC. IT ALSO PROVIDES SALES AND MARKETING SUPPORT SERVICES TO LEADING GLOBAL MANUFACTURING, RETAIL, TRAVEL AND LEISURE COMPANIES THROUGH ITS PRICING AND PROFITABILITY SERVICES. FURTHER THIS COMPANY HAS ALSO DEVELOPED IT TOOL AND PROCESS AUTOMATION. FROM T HE ABOVE DISCUSSED NATURE OF BUSINESS CARRIED ON BY E - CLERX SERVICES LTD., IT IS PATENT THAT THE SAME BEING A KPO COMPANY, IS QUITE DIFFERENT FROM THE ASSESSEE, PROVIDING ONLY IT ENABLED SERVICES TO ITS AE, WHICH FALL IN THE REALM OF BPO SERVICES. APART F ROM THAT, IT IS FURTHER OBSERVED THAT THIS COMPANY HAS SIGNIFICANT INTANGIBLES WHICH IT USES IN RENDERING KPO SERVICES, AGAINST WHICH THE ASSESSEE DOES NOT HAVE ANY INTANGIBLES. THE HON'BLE JURISDICTIONAL HIGH COURT IN RAMPGREEN SOLUTIONS (P.) LTD. V. CIT [2015] 234 TAXMAN 573/60 TAXMANN.COM 355 (DELHI) , HAS HELD THAT E - CLERX SERVICES LTD., BEING ENGAGED IN KPO, CANNOT BE TREATED AS COMPARABLE OF AN ASSESSEE ENGAGED IN REN DERING BPO SERVICES. IN VIEW OF THE DIRECT JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT ON THE POINT, WE DIRECT TO ELIMINATE E - CLERX FROM THE LIST OF COMPARABLES. AS SUCH, E - CLERX SERVICES LTD. CANNOT BE CONSIDERED AS COMPARABLE. ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 26 16. THE NEXT COMPARAB LE CONTESTED BY THE LD AR IS ICRA TECHNO ANALYTICS LTD STATING THAT THIS COMPANY IS FUNCTIONALLY NOT COMPARABLE AS IT IS ENGAGED IN BUSINESS INTELLIGENCE AND ANALYTICS. 17. THE LD DR CONTESTED THE ARGUMENT OF THE ASSESSEE AND SUBMITTED THAT THE ASSESSEE I S ENGAGED IN SUCH HIGH END SERVICES. 18. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. THIS COMPANY AS PER ITS ANNUAL ACCOUNTS PLACED AT PAGE NO. 1210 SHOWS THAT IT IS ENGAGED IN THE BUSINESS INTELLIGENCE AND ANALYTICS SPACE. IT IS ALSO ENGAGED IN S OFTWARE DEVELOPMENT AND CONSULTANCY, ENGINEERING SERVICES, WEB DEVELOPMENT AND HOSTING SERVICES. IT IS ALSO NOTED THAT IT HAS TWO INCOME SEGMENTS OF SERVICES AND SALES AND IT DOES NOT HAVE THE COMPLETE SEGMENTAL INFORMATION WITH RESPECT TO BOTH THE SEGMEN TS OF SERVICES AND SALES AS FIXED ASSETS AND SERVICES ARE USED INTER - CHANGEABILITY. IN VIEW OF THIS WE FIND THAT THIS COMPANY IS FUNCTIONALLY NOT COMPARABLE AS WELL AS IT DOES NOT HAVE COMPLETE SEGMENTAL INFORMATION WITH RESPECT TO THE SALES AND SERVICE SE GMENTS. IN THE RESULT WE DIRECT THE TRANSFER PRICING OFFICER TO EXCLUDE THE ABOVE COMPARABLE. 19. THE ASSESSEE HAS CHALLENGED THE INCLUSION OF INFOSYS BPO LTD. THE MAIN REASON SEEKING ITS EXCLUSION WAS HIGH BRAND VALUE, INTANGIBLES, BENEFIT OF INFOSYS BRA NCH AND LARGE SCALE OPERATION. 20. THE LD DR OBJECTED TO THIS AND RELIED UPON THE ORDER OF THE LD TRANSFER PRICING OFFICER SUBMITTING THAT ALL THESE ARGUMENTS OF THE ASSESSEE HAS BEEN CONSIDERED BY THE LD TPO. 21. WE HAVE CAREFULLY CONSIDERED THE RIVAL C ONTENTIONS AND ALSO VERIFIED THE ANNUAL ACCOUNTS OF INFOSYS BPO LTD FROM PAGE NO. 943 TO 1026, UNDOUBTEDLY THE INFOSYS BPO IS DRIVING LEVERAGE FROM THE CLIENT OF INFOSYS TECHNOLOGIES LTD FOR CROSS SELLING THE BPO SERVICES OF THIS COMPANY. THE ASSETS OF THE COMPARABLE COMPANY SHOWS THAT IT HAS A GOODWILL OF APPROXIMATELY RS. 19 CRORES. THE INCOME STREAM OF COMPARABLE WAS RS. 1126.63 CRORES WHEREAS, THE ASSESSEE S INCOME STREAM WAS RS. 50.90 CRORES. HON'BLE DELHI HIGH COURT IN CASE OF PR. CIT ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 27 VS. ACTIS GLOBA L SERVICES LTD IN TS - 417 - H.C -- 2017(DEL)(TP) HAS HELD THAT EVEN THE SIZE AND SCALE OF OPERATION CAN MAKE THE COMPARABLE INAPPOSITE. IN THE PRESENT CASE THE SIZE OF THIS COMPARABLE WITH THE SIZE OF THE ASSESSEE IS MORE THAN 20 TIMES. THEREFORE, IN VIEW OF TH IS RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE DELHI HIGH COURT WE DIRECT EXCLUSION OF THIS COMPARABLE ON THE SIZE AND SCALE OF ITS OPERATION. 22. TCS ESERVE INTERNATIONAL LTD THE LD AR CONTESTED IT ON THE ISSUE OF FUNCTIONAL DISSIMILARITY, TATA BRAND AND OWNERSHIP OF INTANGIBLES. 23. LD DR REFERRED TO PAGE NO. 39 OF THE ORDER OF LD TRANSFER PRICING OFFICER AND SUBMITTED THAT ALL THESE ASPECTS HAVE BEEN CONSIDERED BY THE LOWER AUTHORITIES AND HAS GIVEN THEIR REASONS. 24. WE HAVE CAREFULLY CONSID ERED THE RIVAL CONTENTIONS AND ALSO PERUSED ANNUAL ACCOUNTS OF THIS SUBMITTED AT PAGE NO. 201 ONWARDS. THE REVENUE STREAM OF THE COMPANY IS TRANSACTION PROCESSING CHARGES AND DURING THE YEAR IT HAS EARNED RS. 150 CRORES. IT IS MAINLY ENGAGED IN THE BUSINES S OF SOFTWARE TESTING, VERIFICATION AND VALIDATION OF SOFTWARE AT THE TIME OF IMPLEMENTATION OF THE SOFTWARE AND DATA CENTRE MANAGEMENT ACTIVITIES. THE COORDINATE BENCH IN CASE OF ITA NO. 2536/PN/2012 DATED 11.02.2015 HAS DISCUSSED THE PROFILE AS TO WHAT AMOUNTS TO VERIFICATION AND VALIDATION IN CONTEXT OF SOFTWARE. IT WAS HELD THAT OSTENSIBLY VERIFICATION AND VALIDATION ARE BROADLY SPEAKING A PARCEL OF THE PROCESS OF SOFTWARE DEVELOPMENT. THIS COMPANY ALSO CONTRIBUTES TO TATA BRAND EQUITY FROM THIS YEAR AND ACCORDING TO SCHEDULE M OF THE FINANCIAL STATEMENT DURING THE YEAR IT HAS CONTRIBUTED RS. 37 CRORES TOWARDS THE BRAND. IN VIEW OF THIS THE FUNCTIONAL PROFILE OF THE ASSESSEE AS WELL AS THE ASSETS EMPLOY ARE NOT COMPARABLE. IN VIEW OF THIS LD TRANSFER P RICING OFFICER IS DIRECTED TO EXCLUDE IT. 25. THE NEXT COMPARABLE IS TCS ESERVE LTD. THE ASSESSEE HAS CONTESTED IT ON THE SIMILAR LINE AS TCS ESERVE INTERNATIONAL LTD. 26. THE LD DR RELIED ON THE ORDER OF THE LD TRANSFER PRICING OFFICER AND LD DRP. ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 28 27. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ANNUAL REPORT OF THE COMPANY FOR YEAR ENDED 31.03.2010. THE COMPANY IS MAINLY ENGAGED IN IT ENABLED SERVICES AND BUSINESS PROCESS OUTSOURCING. IT IS ALSO PROVIDING TECHNICAL SERVIC ES WHICH INVOLVE SOFTWARE TESTING, VERIFICATION AND VALIDATION. IT ALSO CONTRIBUTES SIMILARLY TO TATA BRAND EQUITY AND FOR THIS YEAR THE CONTRIBUTION WAS RS. 42 CRORES. THEREFORE, FOLLOWING THE SAME REASONING GIVEN BY US FOR EXCLUSION OF TCS ESERVE INTERNA TIONAL LTD WE ALSO DIRECT THE LD TPO TO EXCLUDE THIS COMPARABLE. 28. THE NEXT COMPARABLE CONTESTED BY THE ASSESSEE IS E4E HEALTHCARE LTD CONTESTING THAT IT IS ENGAGED IN SOFTWARE DEVELOPMENT SERVICES AND OWNS ITS OWN INTANGIBLES. THE LD DEPARTMENTAL REPR ESENTATIVE CONTESTED RELYING UPON THE ORDER OF THE LD TPO AND DRP AND SUBMITTED THAT THIS COMPARABLE IS ASSESSEE S OWN COMPARABLE. 29. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ANNUAL REPORT OF THE COMPANY PLACED AT PAGE NO. 1185 TO 1082. HOWEVER, BEFORE ANALYZING THE BALANCE SHEET IT IS VERY IMPORTANT TO NOTE THAT ABOVE COMPARABLE WAS SELECTED BY THE ASSESSEE AND HENCE IT WAS ACCEPTED BY THE TPO AS FAR ANALYSIS IS SIMILAR TO THE ASSESSEE. THE ASSESSEE HAS SELECTED THIS COMPARABL E BASED ON THE FUNCTIONAL PROFILE AND APPLYING ITS OWN FILTER. THIS COMPARABLE WAS ALSO NOT CONTESTED BEFORE THE LD DRP. BEFORE US NO REASONS WERE GIVEN THAT WHY THE ASSESSEE IS NOW WITHDRAWING THE ABOVE COMPARABLE WHICH WAS SELECTED BY THE ASSESSEE ITSELF . IT IS VERY UNFORTUNATE THAT DESPITE PREPARING ITS TRANSFER PRICING DOCUMENTS FOR FY 2009 - 10 IN 2010 THE ASSESSEE DID NOT CONTEST THIS COMPARABLE OR EVEN ADMITTED ITS MISTAKE EITHER BEFORE AO OR DRP THAT HOW IT WAS ORIGINALLY SELECTED, BEFORE US IT IS C ONTESTING FOR EXCLUSION OF THIS COMPARABLE AFTER ALMOST 7 YEARS. WE ARE CONSCIOUS OF THE DECISION OF THE HON BLE SPECIAL BENCH IN CASE OF QUARK SYSTEMS LTD WHEREIN THE ASSESSEE WAS ALLOWED TO WITHDRAW ONE OF THE COMPARABLE SELECTED BY ASSESSEE BECAUSE OF I NTIAL YEARS OF TRANSFER PRICING LAWS AND IN THAT COMPARABLE THE FAR WAS NOT IN DISPUTE BUT ERROR WAS OF FILTER. ON IDENTICAL FACTS AND CIRCUMSTANCES IN EVALUESERVE.COM PVT ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 29 LTD TS390 - ITAT - 2017 - (DEL)TP, IT HAS BEEN HELD THAT THOSE WERE THE INITIAL YEARS O F THE TRANSFER PRICING LAW BUT THE YEAR BEFORE US IS ALMOST A DECADE AFTER THE TRANSFER PRICING LAWS WERE INTRODUCED. IN VIEW OF THIS WE REJECT THE CONTENTION OF THE ASSESSEE OF WITHDRAWING OF ITS OWN COMPARABLE FOR THE REASON THAT THE ASSESSEE COULD NOT DEMONSTRATE BEFORE US THAT HOW THE ORIGINAL COMPARABLE WAS SELECTED WHEN THE SAME FUNCTIONAL PROFILE OF THE COMPANY WAS AVAILABLE AT THE TIME OF PREPARING TP DOCUMENTATION. IN VIEW OF THIS, WE REJECT THE ARGUMENT OF THE ASSESSEE FOR EXCLUSION OF THIS COMPA RABLE. 8.3. RESPECTFULLY FOLLOWING THE SAME AND FOLLOWING THE OBSERVATIONS OF HON BLE HIGH COURT IN ASSESSEE S OWN CASE FOR ASSESSMENT YEAR 2010 - 11 (SUPRA) WE DIRECT LD. TPO TO EXCLUDE THESE COMPARABLES FROM THE FINAL LIST OF COMPARABLES. 8.4. NOW CO MING TO THE COMPARABLES THAT HAVE BEEN ARGUED BY LD. COUNSEL FOR EXCLUSION, IT IS OBSERVED THAT THE TRIBUNAL FOR ASSESSMENT YEAR 2010 - 11 VIDE PARAS 30 - 32 SET ASIDE THESE COMPARABLES BY OBSERVING AS UNDER: 30. THE NEXT COMPARABLE IS R SYSTEMS PVT. LTD W HICH WAS INCLUDED BY THE ASSESSEE BUT EXCLUDED BY THE LD TPO FOR THE REASON THAT IT FOLLOWS DIFFERENT FINANCIAL YEAR COMPARED TO THE ASSESSEE. IT IS APPARENT THAT R SYSTEMS LTD IS HAVING THE JANUARY TO DECEMBER AS AN ACCOUNTING PERIOD. THEREFORE, THE LD TR ANSFER PRICING OFFICER DID NOT CONSIDER THE SAME. IT IS HELD IN SEVERAL DECISIONS THAT IF THE ASSESSEE CAN DEMONSTRATE WITH PUBLICLY AVAILABLE AUTHENTIC INFORMATION FOR THE REMAINING PERIOD AND EXCLUSIONARY PERIOD AND FURTHER PRODUCES THE TABULATED DATA FOR THE SIMILAR ACCOUNTING YEAR AS FOLLOWED BY THE ASSESSEE THEN IF THE FAR ANALYSIS OF THAT COMPANY IS COMPARABLE, IT MAY BE INCLUDED. THEREFORE, IT IS NOW THE DUTY OF THE ASSESSEE TO SATISFY THE ASSESSING OFFICER/TPO WITH SUCH INFORMATION. HENCE, WE DIR ECT THE LD TRANSFER PRICING ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 30 OFFICER TO VERIFY THE INFORMATION WITH RESPECT TO THIS COMPARABLE IN ACCORDANCE WITH THE LAW AND THEN DECIDE INCLUSION OR EXCLUSION. 31. THE NEXT COMPARABLE IS OMEGA HEALTHCARE LTD, WHICH WERE SELECTED BY THE ASSESSEE BUT REJEC TED BY THE LD TRANSFER PRICING OFFICER AND LD DRP FOR THE REASON THAT THE ANNUAL REPORT OF THE RELEVANT YEAR IS NOT AVAILABLE IN THE PUBLIC DOMAIN. THE LD AR STATED THAT SAME IS AVAILABLE IN PUBLIC DOMAIN AND FURTHER SAME IS ALSO PRODUCED BEFORE US AT PAGE NO. 1269 TO 1284 OF THE PAPER BOOK. IN VIEW OF THIS WE DIRECT THE LD TPO TO VERIFY THE ANNUAL REPORT AND DECIDE THE ISSUE ABOUT INCLUSION OF THIS COMPARABLE. 32. IN THIS APPEAL GROUND NOS. 1 TO 6 IS ON TRANSFER PRICING ISSUES, HOWEVER EXCEPT THE EXCLUSI ON OR INCLUSION OF THE COMPARABLES NO OTHER ISSUES WERE AGITATED THEREFORE, OTHER THAN THE ISSUE OF COMPARABILITY WHICH HAS ALREADY BEEN ADJUDICATED BY US IN EARLIER PARAS WE REJECT ALL OTHER CONTENTIONS IN OTHER GROUNDS OF APPEAL. 8.5. IT IS OBSERVED THAT LD. TPO FOR THE YEAR UNDER CONSIDERATION HAS REJECTED THESE COMPARABLES ON IDENTICAL REASON ING AS HAS BEEN OBSERVED BY THIS TRIBUNAL FOR ASSESSMENT YEAR 2010 - 11 (SUPRA). 8.6. RESPECTFULLY FOLLOWING THE SAME WE ALSO DIRECT ASSESSEE TO DEMONSTRATE WITH PUBLICLY AVAILABLE AUTHENTICATED INFORMATION FOR THE REMAINING PERIOD AND EXCLUSIONARY PERIOD AND PRODUCE THE TABULATED DATA FOR THE SIMILAR ACCOUNTING YEAR AS FOLLOWED BY ASSESSEE AND THE FAR ANALYSIS OF THE COMPARABLES FOR THE PURPOSES OF INCLUSION. LD. TPO SHALL VERIFY THE INFORMATION WITH RESPECT TO THIS COMPARABLE IN ACCORDANCE WITH LAW AND DECIDE THE INCLUSION/EXCLUSION OF THE SAME. ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 31 8.7. ACCORDINGLY WE ALLOW THESE GROUNDS AS DISCUSSED ABOVE. 9. GROUND NO. 17 DEALS WITH GRANTING OF WORKING CAPITAL ADJUSTMENT WHICH NOW BECOMES CONSEQUENTIAL TO THE COMPARABLES TO BE SUBJECTED TO LD. TPO S CONSIDERATION. 10. GROUND NO. 26 - 27 ARE IN RESPECT OF CHARGING OF INTEREST AND INITIATION OF PENALTY PROCEEDINGS WHICH ARE PREMATURE AT THIS STA GE AND ACCORDINGLY ARE DISMISSED. 11. IN THE RESULT , THE APPEAL FILED BY ASSESSEE STANDS PARTLY ALLOWED AS DIRECTED. ORDER PRONOUNCED IN THE O PEN C OURT ON 2 8 . 0 3 . 2 0 1 8 . S D / - S D / - ( N.K.SAINI ) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 8 . 0 3 . 2 0 1 8 . MV ITA 5147/DEL/2017 A.Y.: 2011 - 12 E - VALUESERVE SEZ (GURGAON) PVT. LTD. VS. ACIT, NEW DELHI 32 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR 6. GUARD FILE BY ORDER ASST. REGISTRAR ITAT, DELHI BENCHES, NEW DELHI