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

ITA 6523/MUM/2014

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8751 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Assessment Year: 2008-2009
• Appeal Filed On: 27-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A MOHAN
• Keywords: Transfer pricing; International transaction
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUM BAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI PAWAN SINGH, JM ITA NO. 6523/MUM/2014 (ASSESSMENT YEAR: 2008-09) MORGAN STAINLEY ADVANTAGE SERVICES P. LTD. ATHENA BUILDING NO.3, SECTOR 30, MINDSPACE, GOREGAON (W) MUMBAI-400 050 VS. DY. CIT RANGE 9(2) R. NO. 218, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-400 020 PAN/GIR NO. AAECA 3400 B ( APPELLANT ) : ( RESPONDENT ) APPELLANT BY : SHRI SUNIL MOTI LALA RESPONDENT BY : SHRI A. MOHAN DATE OF HEARING : 03.02.2020 DATE OF PRONOUNCEMENT : 23.07.2020 O R D E R PER SHAMIM YAHYA, A. M.: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) (LD.CIT(A) FO R SHORT) DATED 29.08.2014 AND PERTAINS TO THE ASSESSMENT YEAR (A.Y.) 2008-09. 2. ALTHOUGH THE ASSESSEE HAS RAISED VARIOUS GROUNDS , THE ISSUE RELATES TO TRANSFER PRICING ADJUSTMENT OF RS.1,44,87,25,823/- DONE BY T HE AUTHORITIES. 3. THE ASSESSEE IS A SUBSIDIARY OF MORGAN SUBSIDIAR Y OF STANLEY INCORPORATED USA AND IS A CAPTIVE SERVICE PROVIDER, PROVIDING BACK O FFICE SUPPORT SERVICES TO ITS ASSOCIATED ENTERPRISES GLOBALLY. DURING THE YEAR UNDER CONSIDE RATION, IT HAD PROVIDED AFORESAID SUPPORT SERVICES TO ITS ASSOCIATED ENTERPRISES AND RECEIVED A FEE OF RS.1,44,87,25,823/-. THIS THE ASSESSEE BENCHMARKED UNDER THE TRANSACTION AL NET MARGIN METHOD. IT SELECTED 18 2 ITA NO. 6523/MUM/2014 MORGAN STAINLEY ADVANTAGE SERVICES P. LTD. COMPANIES AS COMPARABLE AND COMPUTED THE MARGIN ON THE BASIS OF 2 YEARS AVERAGE MARGIN. AS PER THE ASSESSEE'S COMPUTATION THE MARGI N OF COMPARABLES CAME TO 23.93%. THIS WAS LESS THAN THE ASSESSEE'S MARGIN FROM INTER NATIONAL TRANSACTIONS, I.E., 26.81%. HENCE, THE ASSESSEE CLAIMED THE VALUE OF TRANSACTIO N, I.E., THE INTERNATIONAL TRANSACTION TO BE AT ARM'S-LENGTH PRICE. THE TRANSFER PRICING OFFI CER DISREGARDED THE COMPUTATION OF MARGINS BASED ON 2 YEAR DATA. CONSEQUENT UPON THIS, THE ASSESSEE SUBMITTED SINGLE YEAR DATA OF 7 COMPARABLES WITH THE MEAN OF 16.91%. THE TRANSFER PRICING OFFICER CHARACTERIZED THE ASSESSEE AS KNOWLEDGE PROCESS OUT SOURCING (KPO) SERVICES AND REJECTED THE ASSESSEES TRANSFER PRICING STUDY. HE ACCEPTED/INCLUDED VISHAL INFORMATION TECHNOLOGIES LTD AS COMPARABLE AND REJECTED THE REM AINING 6 OF ASSESSEE'S COMPARABLES. THE TRANSFER PRICING OFFICER CARRIED OUT HIS OWN SE ARCH AND INCLUDED 5 ADDITIONAL COMPARABLES. THE MARGIN AS PER THE TRANSFER PRICING OFFICER CAME TO 51.73%. ACCORDINGLY, THE TRANSFER PRICING OFFICER MADE THE TRANSFER PRICING ADJUSTMENT. 4. UPON THE ASSESSEE APPEALS, THE LD. CIT(A) HELD T HAT THE TRANSFER PRICING OFFICER WAS NOT CORRECT IN TREATING THE ASSESSEE AS KPO, ST ILL HE HAS UPHELD THE BENCHMARKING PROCESS UNDERTAKEN BY THE TRANSFER PRICING OFFICER. IN THIS REGARD, THE LD. CIT(A) REFERRED TO THE DECISION OF SPECIAL BENCH OF THE ITAT IN THE CASE OF MAERSK GLOBAL CENTERS (INDIA )(P) LTD VS. ACIT (2014) 147 ITD 83. THE LD. CIT(A) UPHELD THE SELEC TION OF FOUR OF THE COMPARABLES BY THE TRANSFER PRICING OFFICER AND HE REJECTED THE OTHER TWO, ACCEPTING THE ASSESSEES SUBMISSION THAT THEY WERE FUNCTIONALLY DIFFERENT. ACCORDINGLY, THIS LEAD TO COMPUTATION OF ARITHMETIC MEAN OF 44.6 0 %. THE DETAILED CHART OF COMPUTATION UNDER CONSIDERATION IS AS UNDER: 3 ITA NO. 6523/MUM/2014 MORGAN STAINLEY ADVANTAGE SERVICES P. LTD. SR. NO. NAME OF THE COMPARABLE AS PER ASSESSEE AS PER TPO A S PER CIT(A) MARGIN (AVG OF TWO YEARS) MARGIN (FOR THE RELEVANT YEAR) (A) (B) (C) (D) 1. ECLERX SERVICES LTD. - - 65.88% 65.88% 2. VISHAL INFORMATION TECHNOLOGIES LTD. (COMMON COMPARABLE) 49.57% 51.72@ 50.68% 50.68% 3. CROSSDOMAIN SOLUTIONS - - 26.96% 26.96% 4. DATAMATICS FINANCIAL SERVICES - - 34.87% 34.87% 5. ALLSEC TECHNOLOGIES 27.91% -14.13% - - 6. R SYSTEMS INTERNATIONAL LTD. 13.91% 10.34% - - 7. CG VAK SOFTWARE & EXPORTS LTD. 4.38% -11.98% - - 8. COSMIC GLOBAL LTD. 14.02% 23.30% - - 9. SPANCO TELESYSTEMS AND SOLUTIONS LTD. 21.97% 5.86% - - 10. TRICOM INDIA LTD. 57.80% 53.25% - - 11. ACROPETAL TECHNOLOGIES (SEG) - - 35.30% - 12. MOLD-TEK TECHNOLOGIES - - 96.66% 13. ACE SOFTWARE EXPORTS LIMITED 0.44% - - - 14. APEX ADVANCED TECHNOLOGY PVT. LTD. 29.88% 15. CALIBER POINT BUSINESS SOLUTIONS LTD. 23.28% 16. FLEXTRONICS SOFTWARE SYSTEMS LTD. 7.69% 17. MAPLE ESOLUTIONS LTD. 32.71% 18. TRITON CORP LTD. 27.54% ARITHMETICAL MEAN 23.93% 16.91% 51.73% 44.60% 5. AGAINST THE ABOVE ORDER, THE ASSESSEE HAS FILED APPEAL BEFORE US. 6. THE ASSESSEE IS AGGRIEVED WITH REGARD TO REJECTI ON OF SOME OF ITS COMPARABLES AND INCLUSION OF SOME OF THE COMPARABLES BY THE REVENUE . THE SUBMISSION OF THE LEARNED COUNSEL OF THE ASSESSEE IN THIS REGARD IS AS UNDER: 7. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED TH AT ASSESSEE HAS BEEN DULY ACCEPTED BY THE REVENUE EARLIER AND ALSO BY THE TRIBUNAL AS DEALING IN BACK OFFICE SUPPORT SERVICES. 4 ITA NO. 6523/MUM/2014 MORGAN STAINLEY ADVANTAGE SERVICES P. LTD. THE MARGIN OF THE ASSESSEE FOR ASSESSMENT YEAR 2005 -06, 2006-07 WAS ACCEPTED BY THE REVENUE AND FOR A.Y. 2007-08 IT WAS DULY UPHELD BY THE ITAT. THE LEARNED COUNSEL OF THE ASSESSEE PLEADED THAT FOLLOWING NEED TO BE EXCL UDED, BEING K.P.OS.: ECLERX SERVICES LTD. VISHAL INFORMATION TECHNOLOGIES LTD CROSSDOMAIN SOLUTIONS DATAMATICS FINANCIAL SERVICES. THE LEARNED COUNSEL OF THE ASSESSEE FURTHER SUBMITT ED THAT FOLLOWING ARE TO BE INCLUDED, AS THEY HAVE BEEN WRONGLY EXCLUDED BY THE TPO: ALLSEC TECHNOLOGIES R SYSTEMS INTERNATIONAL LTD CG VAK SOFTWARE & EXPORTS LTD. 8. AS REGARDS THE REJECTION AND COMPARABLES, IT IS THE CONTENTION OF THE LEARNED COUNSEL OF THE ASSESSEE THAT ASSESSEE IS ENGAGED IN BACK OFFICE SUPPORT FUNCTIONS WHICH HAS BEEN ACCEPTED IN THE EARLIER ASSESSMENT YEARS. THE ENTITIES DEALING WITH THE KNOWLEDGE AND PROCESSING OUTSOURCING ARE NOT COMPAR ABLE TO THE ASSESSEE AND HENCE NEED TO BE EXCLUDED. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITS THAT THE LD. CIT(A) HAS REJECTED THE TRANSFER PRICING OFFICER'S CHARACTERIZ ATION OF THE ASSESSEE AS KPO. HENCE, KPO SELECTED BY THE TRANSFER PRICING OFFICER CANNOT BE CONSIDERED AS COMPARABLES. THE LEARNED COUNSEL FURTHER SUBMITS THAT THE HONBLE DE LHI HIGH COURT IN THE CASE OF RAMPGREEN SOLUTIONS (P.) LTD. V. CIT (2015) 377 ITR 533 (DELHI) HAS CATEGORICALLY EXPRESSED RESERVATION ON THE OBSERVATION OF THE SPE CIAL BENCH RELIED UPON BY THE LEARNED CIT(A). FURTHER, HE HAS SUBMITTED THAT THE DECISION OF HONBLE DELHI HIGH COURT IN RAMPGREEN SOLUTIONS (P.) LTD. (SUPRA) HAS BEEN FOLLOWED BY THE HONBLE BOMBAY HIG H COURT IN THE CASE OF PTC SOFTWARE (I) (P) LTD. (2017) 395 ITR 176 (BOM) AND THE OF CASE 5 ITA NO. 6523/MUM/2014 MORGAN STAINLEY ADVANTAGE SERVICES P. LTD. OF THE ASSESSEE BY ITAT IN THE EARLIER YEARS. IT IS FURTHER THE SUBMISSION OF THE LEARNED COUNSEL OF THE ASSESSEE THAT THE ECLERX SERVICES L TD. HAS EXTRAORDINARY EVENT OF ACQUISITION TRANSACTION AND HENCE SHOULD BE EXCLUDE D. AS REGARDS THE DATAMATICS FINANCIAL SERVICES, THE LEARNED COUNSEL OF THE ASSE SSEE SUBMITS THAT IT FAILS EXPORT FILTER OF 75%, AND ACCORDINGLY SHOULD BE EXCLUDED. 9. FOR THE INCLUSION OF ASSESSEES COMPARABLES, THE LEARNED COUNSEL OF THE ASSESSEE SUBMITS THAT THESE COMPARABLES HAVE BEEN ACCEPTED A S A COMPARABLE IN EARLIER ASSESSMENT YEARS. THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTE D THAT THE ASSESSEE SEEKS THAT THE TRANSFER PRICING OFFICER BE DIRECTED TO EXCLUDE KPO COMPARABLES AND INCLUDE ASSESSEE'S COMPARABLES, AS THE REJECTION IS NOT BASED UPON COG ENT REASONING. 10. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AN D PERUSED THE RECORDS. THE ASSESSEE IN THE PRESENT CASE IS A SUBSIDIARY OF MOR GAN STANLEY INTERNATIONAL HOLDINGS INCORPORATED USA. THE ASSESSEE PROVIDES BACK OFFICE SUPPORT FUNCTIONS TO ITS ASSOCIATED ENTERPRISES. THE TRANSACTIONS OF IT ENABLED SUPPORT SERVICES TO ITS ASSOCIATED ENTERPRISES AND THE ARMS LENGTH PRICE COMPUTED BY THE ASSESSEE WAS ACCEPTED BY THE REVENUE IN A.Y. 2005 06 AND A.Y. 2006-07. THE SAME WAS ALSO UPHEL D BY THE ITAT FOR ASSESSMENT YEAR 2007 08. FOR THE CURRENT ASSESSMENT YEAR, THE TRA NSFER PRICING OFFICER CHARACTERIZED THE ASSESSEE'S FUNCTIONS AS KNOWLEDGE PROCESS OUTSOURCI NG KPO. THEREAFTER, THE TRANSFER PRICING OFFICER MADE GENERAL COMMENTS ON THE SELECT ION SYSTEMS ADOPTED BY THE ASSESSEE. HE PROCEEDED TO REJECT THE SAME. HE DID NOT SPECIFY AS TO WHICH OF THE COMPARABLES IS BEING REJECTED FOR WHICH SPECIFIC REASONS THEREOF. THEREAFTER, THE TRANSFER PRICING OFFICER 6 ITA NO. 6523/MUM/2014 MORGAN STAINLEY ADVANTAGE SERVICES P. LTD. MENTIONED HIS OWN CRITERIA AND PROCEEDED TO SELECT COMPARABLES AND ACCORDINGLY MADE THE TRANSFER PRICING ADJUSTMENT. 11. UPON THE ASSESSEE'S APPEAL, THE LD. CIT(A) HAS ACCEPTED THAT THE CHARACTERIZATION BY THE TRANSFER PRICING OFFICER OF THE ASSESSEE'S F UNCTIONS AS KNOWLEDGE PROCESS OUTSOURCING WAS NOT CORRECT. THEREAFTER, THE LD. CI T(A) CONTRADICTED HIMSELF BY STATING THAT THE FUNCTIONS OF THE ASSESSEE ARE IN ALIGNMENT WITH THE KNOWLEDGE PROCESS OUTSOURCING COMPARABLE DEALT WITH BY THE TRANSFER P RICING OFFICER. IN THIS REGARD, THE LEARNED CIT APPEALS RELIED UPON THE ITAT DECISION I N THE CASE OF MAERSK GLOBAL CENTERS (INDIA )(P) LTD . THEREAFTER, THE LEARNED CIT (A) UPHELD THE ASSESS ING OFFICERS ACTION OF SELECTION OF FOUR OF THE COMPARABLES AND ACCEPTED THE ASSESSEES CONTENTION IN REJECTION OF TWO THE COMPARABLES. 12. NOW IN APPEAL BEFORE US, THE SUBMISSION OF THE LEARNED COUNSEL OF THE ASSESSEE IS THAT ASSESSEE'S FUNCTIONS ARE THAT OF ITES WHICH HA S BEEN DULY ACCEPTED BY THE REVENUE AS WELL AS BY THE ITAT IN EARLIER YEARS. HENCE, THE RE -CHARACTERISATION OF THE ASSESSEE'S FUNCTIONS AS KNOWLEDGE PROCESS OUTSOURCING IS NOT S USTAINABLE. WE ARE IN FULL AGREEMENT WITH THIS CONTENTION. FURTHERMORE, WE FIND THAT THE LD. CIT(A) HAS CLEARLY CONTRADICTED HIMSELF BY STATING BOTH THAT ASSESSEE IS NOT A KPO AND AT THE SAME TIME ACCEPTING THE COMPARABLES SELECTED BY THE TRANSFER PRICING OFFICE R FROM THE DATABASE FOR KNOWLEDGE PROCESS OUTSOURCING COMPANIES. 13. AS REGARDS THE REJECTION OF FOUR COMPANIES, IT IS THE SUBMISSION OF LEARNED COUNSEL OF THE ASSESSEE THAT THE FUNCTIONS OF ECLERX SERVIC ES LTD. AND VISHAL INFORMATION 7 ITA NO. 6523/MUM/2014 MORGAN STAINLEY ADVANTAGE SERVICES P. LTD. TECHNOLOGIES LTD. (EARLIER CORAL HUB LTD.) HAS BEEN HELD TO BE NOT COMPARABLE TO THE ASSESSEE BY THE ITAT FOR THE ASSESSMENT YEAR 2007 08. IN THIS REGARD, WE FIND THAT ITAT IN THE AFORESAID ORDER HAS OBSERVED AS UNDER: 32. AS NOTED EARLIER THE ID AR FOR THE ASSESSEE SU BMITTED THAT THE ASSESSEE SUBMITS THAT ECLERX SERVICES LTD. HAS NOT CONSIDERED AS A C OMPARABLE IN EARLIER YEARS. ECLERX SERVICES LTD. IS A KNOWLEDGE PROCESS OUTSOURCING (K PO) SERVICE PROVIDER WHICH IS NOT COMPARABLE TO ASSESSEE; ASSESSEE IS ENGAGED IN PROV IDING BACK OFFICE SUPPORT SERVICES. IN SUPPORT OF HIS SUBMISSION, THE ID. AR OF THE ASSESS EE 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 TH IS COMPANY IS IN DATE PROCESS AND ANALYTICAL SERVICES. THE ID CIT(A) CONFIRMED THE ACTION OF THE TPO BY TAKING HIS VIEW THAT THIS COMPARABLE COMPANY IS INTO THE HEALTH CARE RECEIVABLE MANAGEMENT AND THEREFORE RENDERS ITES SERVICES. THE HON'BLE DELHI COURT IN RAMPGREEN SOLUTION (P) LTD (SUPRA) HELD ENTITIES RENDERING VOICE CALL CENTER S ERVICES FOR CUSTOMER SUPPORT AND A KPO SERVICE PROVIDER EMPLOY IT-BASED DELIVERY SYSTEMS, BUT CHARACTERISTICS OF SERVICES, FUNCTIONAL ASPECTS, BUSINESS ENVIRONMENT, RISKS AND QUALITY OF HUMAN RESOURCE EMPLOYED ARE MATERIALLY DIFFERENT; AND THEREFORE, BENCHMA RKING INTERNATIONAL TRANSACTIONS ON BASIS OF COMPARISON OF PLI OF HIGH-END KPO SERVICE PROVIDERS WITH PLI OF VOICE CALL CENTERS, WOULD BE UNRELIABLE. FURTHER, MUMBAI TRIBU NAL IN WILLS PROCESSING SERVICES (INDIA) LTD. VS. ACIT (SUPRA) ON CONSIDERING SIMILA R CONTENTIONS EXCLUDED THIS COMPARABLE. 38. THE ID. AR SUBMITTED AS WE RECORDED EARLIER THA T CORAL HUBS LTD. WAS OUTSOURCING ITS SIGNIFICANT PART OF ITS OPERATION A S EVIDENT FROM ITS LOW EMPLOYEE COST AND HAVE SUBSTANTIAL DIFFERENT BUSINESS MODEL COMPARED TO ASSESSEE AND PRAYED FOR EXCLUSION. THE LD. DR HAS SUPPORTED THE INCLUSION. THE TPO WHI LE MAKING BENCHMARKING TAKING HIS VIEW THAT THIS COMPARABLE COMPANY IS IN THE BUSINES S OF IT ENABLED SERVICES TO OVERSEAS MARKETS AND INCLUDED IN THE LIST OF COMPARABLE. THE ID. CIT(A) CONFIRMED THE ACTION OF TPO HOLDING THAT THE TPO CONDUCTING BENCHMARKING AF TER CALLING INFORMATION UNDER SECTION 133(6) AND IS BENCHMARKING ANALYSIS ARE COR RECT. WE HAVE NOTED THAT, THOUGH THE ID. AR HAS RELIED UPON A NUMBER OF DECISIONS OF TRI BUNAL/CO-ORDINATE BENCH. WE HAVE NOTED THAT IN A RECENT DECISION OF TRIBUNAL IN WILL S PROCESSING SERVICES (I) PVT. LTD. (SUPRA) ON COMPARABILITY, THE TRIBUNAL HELD AS UNDE R: 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 FACIL ITATE EXCLUSION OF THE AFORESAID COMPARABLE, HOWEVER AS OBSERVED BY US HEREINABOVE T HAT THE AFORESAID COMPARABLE VIZ. CORAL HUB LIMITED (EARLIER KNOW N 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 AFORESAID V IEW STANDS FORTIFIED BY THE AFORESAID ORDER PASSED BY THE TRIBUNAL WHILE DISPOS ING OF THE APPEAL OF THE 8 ITA NO. 6523/MUM/2014 MORGAN STAINLEY ADVANTAGE SERVICES P. LTD. 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 SOLU TIONS (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 OBSERVED BY US HEREINABOVE, WE ARE THUS OF THE CONSIDERED VIEW THAT AS THE BUSINESS MODEL OF THE AFORESAID COMPARABLE, VIZ. CORAL HUB LTD. (SUPRA) IS SUBSTANTIALLY DIFFER ENT FROM THAT OF THE ASSESSEE, THEREFORE THE SAME CANNOT BE ACCEPTED AS A COMPARAB LE AND HENCE IS DIRECTED TO BE EXCLUDED FROM THE LIST OF COMPARABLES. 14. ACCORDINGLY, FOLLOWING THE AFORESAID DECISION O F THE TRIBUNAL, WE HOLD THAT THE ECLERX SERVICES LTD. AND VISHAL INFORMATION TECHNOL OGIES LTD. (EARLIER CORAL HUB LTD.) ARE LIABLE TO BE REJECTED AS INVALID COMPARABLE. AS REGARDS THE OTHER COMPARABLES NAMELY CROSSDOMAIN SOLUTIONS AND DATAMATICS FINANCIAL SERVICES, WE FIND THAT THE TRANSFER PRICI NG OFFICER AND THE LD. CTI(A) HAVE FOUND THEIR FUNCTIONS TO BE SIMILAR TO THAT OF KPO AND THAT OF E-CLERX AND VISHAL TECHNOLOGIES. SINCE, THE ITAT HAS DULY UPHELD THE R EJECTION OF THE AFORESAID COMPANIES, I.E., THESE TWO COMPANIES ARE ALSO LIABLE TO BE REJ ECTED. FURTHERMORE, DATAMATICS FINANCIAL SERVICES ALSO FAILS THE EXPORT FILTER OF 75% WHICH HAS BEEN ADOPTED BY THE TRANSFER PRICING OFFICER. HENCE, IN THE BACKGROUND OF AFORESAID, WE HOLD THAT FOLLOWING COMPARABLE ARE TO BE REJECTED: ECLERX SERVICES LTD. VISHAL INFORMATION TECHNOLOGIES LTD CROSSDOMAIN SOLUTIONS DATAMATICS FINANCIAL SERVICES. 15. NOW WE DEAL WITH THE FOLLOWING COMPARABLES WHIC H WERE SELECTED BY THE ASSESSEE, BUT HAVE BEEN REJECTED BY THE TRANSFER PRICING OFFI CER: ALLSEC TECHNOLOGIES R SYSTEMS INTERNATIONAL LTD CG VAK SOFTWARE & EXPORTS LTD. 9 ITA NO. 6523/MUM/2014 MORGAN STAINLEY ADVANTAGE SERVICES P. LTD. 16. THE TRANSFER PRICING OFFICER HAS NOT MENTIONED THE SPECIFIC REASONING IN REJECTING THE ABOVE COMPARABLE. WHILE DISCUSSING HIS GENERAL REASONING FOR ELECTION/REJECTION, THE TRANSFER PRICING OFFICER MENTIONED THAT HE IS ONLY ACCEPTING COMPARABLES WHERE THE CURRENT YEAR DATA ARE AVAILABLE. IN THIS REGARD, WE NOTE THAT THOUGH INITIALLY THE ASSESSEE HAD SUBMITTED TWO-YEAR DATA, SUBSEQUENTLY, IT HAS D ULY SUBMITTED THE CURRENT YEAR DATA. THE TRANSFER PRICING OFFICER HAS ALSO MENTIONED THA T HE IS REJECTING THE PERSISTENT LOSS MAKING COMPANIES. THOUGH SOME OF THESE COMPANIES HA VE SUFFERED LOSS IN THE CURRENT ASSESSMENT YEAR THE AVERAGE OF TWO YEARS SHOWED THE ROBUST POSITIVE FIGURE. HENCE, IT CANNOT BE SAID THAT THESE ARE PERSISTENTLY LOSS MAK ING COMPANY. FURTHERMORE, WE NOTE THAT THESE COMPARABLES HAVE BEEN DULY ACCEPTED AS COMPAR ABLE IN EARLIER ASSESSMENT YEAR BY THE OFFICER HIMSELF. HENCE, TAKING A CONTRARY STAND BY THE TRANSFER PRICING OFFICER WITHOUT GIVING A SPECIFIC REASONING IS NOT SUSTAINABLE. ACC ORDINGLY, WE DIRECT FOR INCLUSION OF THESE COMPARABLES. 17. ACCORDINGLY, THE TRANSFER PRICING OFFICER SHALL MAKE THE COMPUTATION AFRESH IN LIGHT OF ABOVE DIRECTIONS AS ABOVE. 18. BEFORE PARTYING, WE NOTE THAT THIS APPEAL WAS H EARD IN 03.02.2020. THE PRONOUNCEMENT IS DELAYED DUE TO LOCKDOWN IN VIEW OF COVID 19 PANDEMIC. THE PRONOUNCEMENT IS AS PER RULE 34(5) OF THE APPELLATE TRIBUNAL RULES AND THE HONBLE BOMBAY HIGH COURT DECISION VIDE ORDER DATED 15.04.2 020 AND 15.06.2020 EXTENDING THE TIME BOUND PERIODS SPECIFIED BY THE HONBLE HIGH CO URT BY REMOVING THE PERIOD UNDER LOCKDOWN. THIS ASPECT IS ALSO DEALT WITH IN DETAIL IN ITAT, MUMBAI ORDER IN THE CASE OF 10 ITA NO. 6523/MUM/2014 MORGAN STAINLEY ADVANTAGE SERVICES P. LTD. DCIT VS. JSW STEEL VIDE ORDER DATED 15.05.2020. 19. IN THE RESULT, THE APPEAL STANDS ALLOWED FOR ST ATISTICAL PURPOSES ORDER PRONOUNCED UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1962, ON 23.07.2020. SD/- SD/- (PAWAN SINGH) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 23.07.2020 ROSHANI , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT - CONCERNED 5. DR, ITAT, MUMBAI 6. GUARD FILE BY ORDER, (DY./ASSTT. REGISTRAR) ITAT, MUMBAI