MAERSK GLOBAL SERVICE CENTRE INDIA P.LTD, MUMBAI V. ASST CIT 15(2)(2), MUMBAI

ITA 653/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1658 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Assessment Year: 2012-2013
• Appeal Filed On: 30-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAYANT KUMAR
• Keywords: Transfer pricing; Opportunity of being heard; International transaction
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI M ANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO. 653 / MUM/2017 ( ASSESSMENT YEAR : 20 12 13 ) MAERSK GLOBAL SERVICE CENTRE INDIA PVT. LTD. 3 RD & 4 TH FLOOR, PRUDENTIAL BUILDING CENTRAL AVENUE ROAD HIRANANDANI BUSINESS PARK POWAI, MUMBAI 400 076 PAN AADCM7786M . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 15(2)(2), MUMBAI . RESPONDENT ASSESSEE BY : SHRI PORUS KAKA, SR. COUNSEL A/W SHRI MANISH KAN T H REVENUE BY : SHRI JAYANT KUMAR DATE OF HEARING 29 .0 8 .2018 DATE OF ORDER 20.11.2018 O R D E R PER SAKTIJIT DEY, J.M. A FORESAID APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ASSESSMENT ORDER DATED 9 TH DECEMBER 2016, PASSED UNDER SECTION 144(3) R/W 144C(13) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ) FOR THE ASSESSMENT YEAR 2012 13 IN PURSUANCE TO THE DIRECTION S OF THE DISPUTE RESOLUTION PANEL (DRP). 2 MAERSK GLOBAL SERVICE CENTRE INDIA PVT. LTD. 2 . ALTOGETHER, THE ASSESSEE HAS RAISED 1 6 GROUNDS. GROUNDS NO.1 TO 12, ARE IN RELATION TO ISSUES RELATING TO TRANSFER PRICING (TP) ADJUSTMENT. WHEREAS , GROUNDS NO.13 TO 16, ARE IN RELATION TO CORPORATE / OTHER ISSUES. 3 . INSOFAR AS GROUNDS RELATING TO TP ADJUSTMENT ARE CONCERNED, THOUGH, THE ASS ESSEE HAS RAISED A NUMBER OF ISSUES CONTESTING THE ADDITION MADE ON ACCOUNT OF TP ADJUSTMENT, HOWEVER, AT THE TIME OF HEARING OF APPEAL BEFORE US, SHRI PORUS KAKA, LEARNED SR. COUNSEL, APPEARING FOR THE ASSESSEE RESTRICTED HIS ARGUMENTS ONLY TO SELECTION / REJECTION OF CERTAIN COMPARABLES. IN VIEW OF THE AFORESAID, WE ARE ONLY REQUIRED TO DECIDE THE ACCEPTABILITY OR OTHERWISE OF CERTAIN COMPARABLES AS DISPUTED BEFORE US. 4 . BRIEF FACTS RELATING TO THIS ISSUE ARE, THE ASSESSEE AN INDIAN COMPANY IS A WHOLLY OWN ED SUBSIDIARY OF MAERSK GSC HOLDINGS A/S (DENMARK), WHICH IN TURN, IS A DOWNSTREAM SUBSIDIARY OF A.P. MOLLER MAERSK A/S (APMM), A COMPANY INCORPORATED IN DENMARK. AS STATED BY THE TRANSFER PRICING OFFICER, THE ASSESSEE IS A CAPTIVE SERVICE PROVIDER AND IS ENGAGED IN PROVIDING BACK OFFICE SUPPORT SERVICES AND INFORMATION TECHNOLOGY (I.T) SUPPORT SERVICES TO ITS OVERSEAS ASSOCIATED ENTERPRISE (A.E). FOR THE ASSESSMENT YEAR UNDER DISPUTE THE ASSESSEE FILED ITS RETURN OF INCOME ON 28 TH NOVEMBER 2012, 3 MAERSK GLOBAL SERVICE CENTRE INDIA PVT. LTD. DECLARING TOTAL INCOME OF ` 41,45,16,600. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICING THAT THE ASSESSEE IN THE RELEVANT PREVIOUS YEAR HAS ENTERED INTO INTERNATIONAL TRANSACTIONS WITH ITS A.E. MADE A REFERENCE TO THE TRANSFER PRICING OFFICER FOR DETERMINING THE ARM'S LENGTH PRICE (ALP) OF THE INTERNATIONAL TRANSACTION. IN COURSE OF PROCEEDINGS BEFORE HIM THE TRANSFER PRICING OFFICER ON VERIFYING THE AUDIT REPORT IN FORM NO.3CEB, NOTICED THAT IN THE RELEVANT PREVIOUS YEAR, THE ASSESSEE HAD EARNED REVENUE OF ` 374, 07,42,875, FROM INTERNATIONAL TRANSACTIONS WITH THE A.E. FROM THE TRANSFER PRICING STUDY REPORT FILED BY THE ASSESSEE, THE TRANSFER PRICING OFFICER NOTICED THAT THE ASSESSEE BENCH MARKED THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS RELATING TO RENDERING OF ITES TO A.ES BY ADOPTING TRANSACTIONAL NET MARGIN METHOD (TNMM) AS THE MOST APPROPRIATE METHOD WITH OPERATING PROFIT TO TOTAL COST (OP/TC) AS THE PROFIT LEVEL INDICATOR (PLI). HE ALSO NOTICED THAT THE ASSESSEE HAS TREATED IT AS A TESTED PARTY AND BY CONDUCTING A SEARCH PROCESS H AS SELECTED 13 COMPANIES AS COMPARABLE HAVING ARITHMETIC MEAN OF 5.18%. SINCE , THE MARGIN SHOWN BY THE ASSESSEE AT 11.99% WAS MUCH HIGHER THAN THE ARITHMETIC MEAN OF THE COMPARABLE S , THE ASSESSEE CLAIMED THAT THE INTERNA TIONAL TRANSACTIONS WITH THE A.E. ARE AT ARM'S LENGTH. THE TRANSFER PRICING OFFICER, HOWEVER, DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE. POINTING OUT VARIOUS DEFECTS 4 MAERSK GLOBAL SERVICE CENTRE INDIA PVT. LTD. AND DEFICIENCIES IN THE TRANSFER PRICING STUDY SUBMITTED BY THE ASSESSEE AND T HE PROCESS UNDERTAKEN THEREIN FOR SELECTING COMPARABLES , THE TRANSFER PRICING OFFICER OBSERVED THAT THE ANALYSIS CONDUCTED BY THE ASSESSEE TO BENCH MARK THE ARM'S LENGTH PRICE OF INTERNATIONAL TRANSACTION IS NOT ACCEPTABLE. WHILE DOING SO, THE ASSESSING OF FICER RELYING UPON THE SPECIAL BENCH DECISION OF THE TRIBUNAL, MUMBAI BENCH, IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008 09, OBSERVED THAT IT IS NOT POSSIBLE TO FURTHER DIVIDE THE CATEGORY OF ITES INTO BUSINESS PROCESS OUTSOURCING ( BPO ) AND KNOWLED GE PROCESS OUTSOURCING ( KPO ) SERVICES. ACCORDINGLY, HE REJECTED THE TRANSFER PRICING STUDY OF THE ASSESSEE. HAIVNG DONE SO, THE TRANSFER PRICING OFFICER PROCEEDED TO SELECT COMPARABLES INDEPENDENTLY BY APPLYING CERTAIN ADDITIONAL FILTERS. IN THIS CONTEXT T HE TRANSFER PRICING OFFICER ALSO CALLED UPON THE ASSESSEE TO EXPLAIN WHY CERTAIN COMPARABLES SELECTED BY HIM IN ASSESSMENT YEAR 2011 12 SHOULD NOT BE SELECTED AS COMPARABLE IN THE IMPUGNED ASSESSMENT YEAR. THOUGH, THE ASSESSEE OBJECTED TO THE SELECTION PRO CESS UNDERTAKEN BY THE TRANSFER PRICING OFFICER, HOWEVER, REJECTING THE OBJECTIONS OF THE ASSESSEE THE TRANSFER PRICING OFFICER SHORT LISTED THREE COMPANIES AS THE FINAL SET OF COMPARABLES FOR BENCH MARKING THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANS ACTIONS WITH THE A.E. THE 5 MAERSK GLOBAL SERVICE CENTRE INDIA PVT. LTD. FINAL SET OF COMPARABLES WITH THEIR ARITHMETIC MEAN AS SELECTED BY THE TRANSFER PRICING OFFICER ARE AS UNDER: SR. NO. NAME OF COMPARABLE NCP MARGIN (%) 1. E4E HEALTHCARE BUSINESS SERVICES PVT. LTD. 14.59 2. INFOSYS BPO LTD. 33.92 3. ACROPETAL TECHNOLOGIES LTD. (HEALTHCARE SEGMENT) 29.78 ARITHMETIC MEAN 26.10 5 . APPLYING THE ARI TH METIC MEAN OF 26.10% OF THE COMPARABLE S THE TRANSFER PRICING OFFICER DETERMINED THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION AT ` 421,43,70,711. ACCORDINGLY, THE TRANSFER PRICING OFFICER PROPOSED AN UPWARD ADJUSTMENT OF ` 47,14,84,235 TO THE PRICE OF INTERNATIONAL TRANSACTION SHOWN BY THE ASSESSEE . THUS, THE ASSESSING OFFICER PASSED THE DRAFT ASSESSMENT ORDER ADDING THE TRANSFER PRICING ADJUSTMENT PROPOSED BY THE TRANSFER PRICING OFFICER. BEING AGGRIEVED OF SUCH ADDITION, THE ASSESSEE FILED OBJECTIONS BEFORE THE DRP. HOWEVER, THE LEARNED DRP DID NOT FIND MERIT IN THE OBJECTIONS OF THE ASSESSEE AND, ACCORDINGLY, UPHELD THE SELECTIO N / REJECTIONS OF COMPARABLES BY THE TRANSFER PRICING OFFICER. ON THE BASIS OF THE DIRECTIONS OF THE DRP, THE ASSESSING OFFICER PASSED THE FINAL ASSESSMENT ORDER WHICH IS UNDER CHALLENGE IN THE PRESENT APPEAL. 6 MAERSK GLOBAL SERVICE CENTRE INDIA PVT. LTD. 6 . AT THIS STAGE, IT NEEDS TO BE OBSERVED , OUT O F THREE COMPARABLES SELECTED BY THE TRANSFER PRICING OFFICER, ONE OF THE COMPANIES I.E., E4E HEALTH C ARE BUSINESS SERVICES PVT. LTD., IS A COMPARABLE APPEARING IN THE LIST OF COMPARABLES SELECTED BY THE ASSESSEE. THEREFORE, THE ASSESSEE HAS NOT OBJECTED TO SELECTION OF THE AFORESAID COMPANY BY THE TRANSFER PRICING OFFICER. HOWEVER, THE ASSESSEE IS OBJECTING TO THE OTHER TWO COMPANIES SELECTED BY THE TRANSFER PRICING OFFICER VI Z. INFO SYS BPO LTD. AND ACROPETAL TECHNOLOGIES LTD. (HEALTH C ARE SEGMENT). IN ADDITI ON, THE ASSESSEE IS ALSO CHALLENGING REJECTION OF TWO COMPARABLES PROPOSED BY IT VIZ. R. SYSTEM INTERNATIONAL LTD. (SEGMENT) AND CALIBER POINT SOLUTIONS LTD. HEREIN AFTER WE WILL DEAL WITH ACCEPTABILITY OR OTHERWISE OF EACH OF THE COMPARABLES DISPUTED BEFO RE US BY THE ASSESSEE. I ) INFO SYS BPO LIMITED 7 . AS OBSERVED EARLIER, THIS COMPANY WAS SELECTED BY THE TRANSFER PRICING OFFICER HIMSELF. THOUGH, BEFORE THE TRANSFER PRICING OFFICER, THE ASSESSEE HAD OBJECTED TO THE SELECTION OF HIS COMPANY AS A COMPARABLE, HOWEVER, THE TRANSFER PRICING OFFICER HAS SELECTED THIS COMPANY BY REJECTING ALL THE OBJECTIONS OF THE ASSESSEE. THE DRP HAS ALSO UPHELD SELECTION OF THIS COMPANY AS COMPARABLE. 7 MAERSK GLOBAL SERVICE CENTRE INDIA PVT. LTD. 8 . THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS COMPANY BEING FU NCTIONALLY DISSIMILAR TO THE ASSESSEE, CANNOT BE TREATED AS A COMPARABLE . HE SUBMITTED , IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR S 2010 11 AND 2011 12, THE TRIBUNAL HAS REJECTED THIS COMPANY AS COMPARABLE. THE LEARNED SR. COUNSEL SUBMITTED , ONLY BECAUSE T HE TRANSFER PRICING OFFICER HAS SELECTED THIS COMPANY AS A COMPARABLE IN ASSESSMENT YEAR 2011 12, IT HAS BEEN INCLUDED IN THE IMPUGNED ASSESSMENT YEAR AS WELL. THE LEARNED SR. COUNSEL SUBMITTED , THE TRIBUNAL IN ASSESSEES OWN CASE FOR PAST ASSESSMENT YEAR HAVING HELD THIS COMPANY TO BE NOT COMPARABLE TO THE ASSESSEE IT SHOULD BE EXCLUDED FROM THE LIST OF COMPARABLES. 9 . SHRI JAYANT KUMAR, THE LEARNED DEPARTMENTAL REPRESENTATIVE, SUBMITTED , THE DRP AFTER CAREFULLY ANALYS ING THE FUNCTIONALITY OF THE ASSESSEE AS WELL AS INFOSYS BPO LTD. HAVING FOUND IT TO BE FUNCTIONALLY SIMILAR H AS UPHELD ITS SELECTION. HE SUBMITTED , ONLY BECAUSE OF THE SIZE OR TURNOVER OF THE COMPANY, IT CANNOT BE SAID THAT IT IS NOT A COMPARABLE IF OTHERWISE IT IS FUNCTIONALLY SIMILAR TO THE A SSESSEE. 10 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. FROM THE MATERIAL ON RECORD, IT IS EVIDENT THAT THE ASSESSEE IS NOT ONLY A CAPTIVE SERVICE PROVIDER, BUT THE NATURE OF SERVICE PROVIDED BY THE ASSESSEE CAN BE CATEGORIZED AS SI MPLE BPO SERVICES. EVEN , THE 8 MAERSK GLOBAL SERVICE CENTRE INDIA PVT. LTD. DRP HAS ALSO ACCEPTED THAT THE NATURE OF SERVICE PROVIDED BY THE ASSESSEE WILL NOT COME WITHIN THE PURVIEW OF HIGH END BPO OR KPO SERV ICES. IT IS RELEVANT TO OBSERVE, THE TRANSFER PRICING OFFICER WHILE EXAMINING THE FUNCTIONAL PROFILE AS WELL AS SKILL SET EMPLOYED BY THE ASSESSEE HAS OBSERVED THAT 97% OF THE EMPLOYEES ARE SIMPLE GRADUATE S. WHEREAS, ONLY THREE PER CENT ARE PROFESSIONAL S . THUS, FROM THE AFORESAID FACT, IT APPEARS THAT THE ASSESSEE IS PROVIDING SIMPLE VOICE AND DAT A SERVICES TO ITS A.ES. WHEREAS, THE SAME CANNOT BE SAID ABOUT INFOSYS BPO LTD. WHICH APART FROM ITS BRAND VALUE BEING PART OF INFOSYS GROUP, IS NOT COMPARABLE TO THE ASSESSEE IN VARIOUS OTHER ASPECTS ALSO. NOTABLY, WHILE CONSIDERING THE ISSUE RELATING TO ACC EPTABILITY OF INFO SYS BPO LTD. AS A COMPARABLE IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2010 11, THE TRIBUNAL IN ITA NO.1082/ MUM./2015, DATED 29 TH JULY 2016, HAS HELD THAT THIS COMPANY CANNOT BE TREATED AS COMPARABLE TO THE ASSESSEE AND ACCORDINGLY, EXCLUDED IT FROM THE LIST OF COMPARABLE S . THE SAME VIEW WAS AGAIN EXPRESSED BY THE TRIBUNAL WHILE DECIDING ASSESSEES APPEAL FOR ASSESSMENT YEAR 2011 12 , IN ITA NO.944/MUM./2016, DATED 19 TH APRIL 2018. IT IS VERY MUCH CLEAR, THE TRANSFER PRICING OFFICER HAS INCLUDED THIS COMPANY AS COMPARABLE SIMPLY RELYING UPON HIS DECISION IN ASSESSMENT YEAR 2010 11. THEREFORE, R ESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF THE TRIBU NAL WITH REGARD TO THIS COMPANY AS EXPRESSED IN ASSESSEES OWN CASE IN 9 MAERSK GLOBAL SERVICE CENTRE INDIA PVT. LTD. THE ORDERS REFERRED TO ABOVE, WE EXCLUDE THIS COMPANY AS A COMPARABLE. II ) ACROPATEL TECHNOLOGIES LTD. (HEALTH C ARE SEGMENT) 11 . THIS IS ONE MORE COMPANY SELECTED BY THE TRANSFER PRICING OFFICER INDEPENDENTLY. AS COULD BE SEEN FROM THE FACTS ON RECORD, BEFORE THE TRANSFER PRICING OFFICER, THE ASSESSEE OBJECTED TO SELECTION OF THIS COMPANY AS A COMPARABLE ON THE GROUND THAT IT IS ENGAGED IN DIVERSIFIED ACTIVITIES AND HAS THREE SEGM ENTS NAMELY ; ENGINEERING DESIGN SERVICES, INFORMATION TECHNOLOGY SERVICES AND HEALTHCARE SEGMENT. HOWEVER, THE TRANSFER PRICING OFFICER REJECTING THE OBJECTION S OF THE ASSESSEE SELECTED THE COMPANY AS A COMPARABLE WHICH WAS UPHELD BY THE DRP. 12 . THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED , PRIOR TO ASSESSMENT YEAR 2011 12, THIS COMPANY WAS NEVER SELECTED AS COMPARABLE. HE SUBMITTED , FOR THE FIRST TIME THE TRANSFER PRICING OFFICER SELECTED THIS COMPANY AS A COMPARABLE IN ASSESSMENT YEAR 2011 12 AND FOLL OWING THE SAME, IT HAS BEEN INCLUDED AS COMPARABLE IN THE IMPUGNED ASSESSMENT YEAR. THE LEARNED SR. COUNSEL SUBMITTED , WHILE CONSIDERING THE COMPARABILITY OF THE AFORESAID COMPANY IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011 12, THE TRIBUNAL HAS 10 MAERSK GLOBAL SERVICE CENTRE INDIA PVT. LTD. RESTORE D THE ISSUE TO THE ASSESSING OFFICER / TRANSFER PRICING OFFICER FOR FRESH ADJUDICATION. HE SUBMITTED , IN CASE OF AGILIS INFORMATION TECHNOLOGIES INDIA PVT. LTD. V/S ACIT, [2018] 89 TAXMANN.COM 440 (DEL.) , THE TRIBUNAL HAS REJECTED THIS COMPANY FROM BEING TREATED AS A COMPARABLE TO A BPO SERVICE PROVIDER SINCE IT IS ENGAGED IN DIVERSIFIED ACTIVITIES INCLUDING DEVELOPMENT OF PRODUCTS. 13 . THE LEARNED DEPARTMENTAL REPRESENTATIVE JUSTIFIED SELECTION OF THIS COMPANY AS A COMPA RABLE BY SUBMITTING THAT THE TRANSFER PRICING OFFICER HAS CONSIDERED ONLY THE BPO SEGMENT FOR COMPARABILITY ANALYSIS. 14 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD, THE ASSESSEE HAS CHALLEN GED THE SELECTION OF THIS COMPANY AS A COMPARABLE PRIMARILY ON THE GROUND TH AT THE COMPANY IS INTO DIVERSIFIED ACTIVITIES IN CLUDING DEVELOPMENT OF PRODUCTS, H ENCE, CANNOT BE TREATED AS A COMPARABLE. IT IS RELEVANT TO OBSERVE , UPON CONSIDERING SIMILAR ARGUM ENT OF THE ASSESSEE IN ASSESSMENT YEAR 2011 12 THE TRIBUNAL HAS RESTORED THE ISSUE TO THE ASSESSING OFFICER / TRANSFER PRICING OFFICER FOR FRESH ADJUDICATION. THERE BEING NO MATERIAL DIFFERENCE IN FACT S , FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSMENT YEAR 2011 12 (SUPRA) WE RESTORE THE ISSUE RELATING TO THE COMPARABILITY OF THE AFORESAID 11 MAERSK GLOBAL SERVICE CENTRE INDIA PVT. LTD. COMPANY TO THE ASSESSING OFFICER / TRANSFER PRICING OFFICER FOR FRESH ADJUDICATION AFTER DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE MAY ALSO OBSERVE , THE ASSE SSING OFFICER / TRANSFER PRICING OFFICER MUST DECIDE THE ISSUE DULY CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND IN THE LIGHT OF THE DECISION S TO BE CITED BEFORE HIM. III ) R. SYSTEM INTERNATIONAL LTD. (SEG) 15 . THIS IS ONE OF THE COMPARABLES SELECTED BY THE AS SESSEE IN THE TRANSFER PRICING STUDY REPORT. HOWEVER, THE TRANSFER PRICING OFFICER REJECTED THIS COMPANY ON THE GROUND THAT THE COMPANY HAS A DIFFERENT ACCOUNTING YEAR ENDING THAN THE ASSESSEE. THE TRANSFER PRICING OFFICER OBSERVED , SINCE THE COMPANY HAS I TS FINANCIAL YEAR ENDING IN DECEMBER , WHEREAS , ASSESSEES FINANCIAL YEAR ENDS IN MARCH, THE COMPANY CANNOT BE TREATED AS COMPARABLE AS PER RULE 10B(4). THOUGH, THE ASSESSEE OBJECTED TO THE AFORESAID DECISION OF THE TRANSFER PRICING OFFICER BEFORE THE DRP, HOWEVER, THE DRP UPHELD THE REJECTION OF THIS COMPANY. 16 . THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS IS A PUBLIC LIMITED COMPANY AND QUARTERLY FINANCIAL STATEMENTS ARE AVAILABLE IN PUBLIC DOMAIN. THEREFORE, IT WILL NOT BE DIFFICULT TO WORK OUT THE MARGIN OF THE COMPANY. HE SUBMITTED , IN SPITE OF THE FACT THAT THIS COMPANY WAS HAVING DECEMBER ENDING ACCOUNT PERIOD , STILL , THE DRP 12 MAERSK GLOBAL SERVICE CENTRE INDIA PVT. LTD. ACCEPTED IT AS A COMPARABLE IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2011 12. THE LEARNED SR. COUNSEL SUBMITTED , THE OBSERVATIONS OF THE DRP THAT THE COMPANY IS A CONSISTENT LOSS MAKING COMPANY IS FACTUALLY INCORRECT . IN THIS CONTEXT, HE DREW OUR ATTENTION TO THE FINANCIAL RESULTS OF THE COMPANY AS SUBMITTED IN THE PAPER BOOK. HE SUBMITTED , IN DECEMBER 2009, THE COMPANY HAS REPORTED PROFIT , WHEREAS , IN DECEMBER 2010 AND 2011, THERE ARE LOSSES . HE FURTHER SUBMITTED , IN ASSESSMENT YEAR 2013 14 ALSO, THE COMPANY HAS SHOWN PROFIT. THEREFORE, HE SUBMITTED , THE COMPANY CANNOT BE TREATED AS A CONSISTENT LOSS MAKING COMPANY. FURTHER, HE SUBMITTED , THE DRP HAS TAKEN CONT RADICTORY STAND WHILE UPHOLDING THE REJECTION OF THIS COMPANY. HE SUBMITTED , WHILE APPLYING THE FILTER OF CONSISTENT LOSS MAKING COMPANY, THE DRP HAS CONSIDERED THE FINANCIAL RESULTS FOR THE ACCOUNTING PERIOD ENDING IN DECEMBER , WHEREAS , THE DRP HAS REJECT ED THIS COMPANY AS A COMPARABLE FOR HAVING A DIFFERENT FINANCIAL YEAR ENDING. THE LEARNED SR. COUNSEL SUBMITTED , WHILE DECIDING REVENUES APPEAL AGAINST SELECTION OF THE AFORESAID COMPANY IN ASSESSMENT YEAR 2011 12, THE TRIBUNAL HAS UPHELD THE DECISION OF THE DRP IN ACCEPTING THIS COMPANY AS A COMPARABLE. THUS, HE SUBMITTED , THE COMPANY SHOULD BE TREATED AS A COMPARABLE IN THE IMPUGNED ASSESSMENT YEAR ALSO. 13 MAERSK GLOBAL SERVICE CENTRE INDIA PVT. LTD. 17 . THE LEARNED DEPARTMENTAL REPRESENTATIVE JUSTIFYING EXCLUSION OF THIS COMPANY SUBMITTED , SINCE THE C OMPARABLE HAS A DIFFERENT ACCOUNTING PERIOD THAN THE ASSESSEE, IT CANNOT BE TREATED AS A COMPARABLE. HE SUBMITTED , AT NO STAGE IT HAS BEEN EXAMINED WHETHER NINE MONTHS DATA AVAILABLE OF THE COMPANY CAN BE EXTRAPOLATED TO THE SUBSEQUENT THREE MONTHS FOR DE RIVING THE MARGIN OF THE COMPANY. AS REGARDS THE ISSUE WHETHER THE COMPANY CAN BE TREATED AS A CONSISTENT LOSS MAKING COMPANY, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , ASSESSEES CONTENTION THAT IT HAS MADE PROFIT IN DECEMBER 2009 NEEDS TO BE EXA MINED KEEPING IN VIEW THE FACT, WHETHER THE PROVISION FOR EXPENDITURE IS OPERATIVE OR NON OPERATIVE. 18 . IN REJOINDER, LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN SPITE OF THE FACT THAT THIS COMPANY IS HAVING DECEMBER ENDING ACCOUNTING PERIOD , STILL , TAKING NOTE OF THAT FACT THE TRIBUNAL HAS ACCEPTED IT AS A COMPARABLE IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2009 10. HE ALSO SUBMITTED THAT THE SAME VIEW WAS REITERATED BY THE TRIBUNAL IN ASSESSMENT YEAR 2010 11 AND 2011 12. IN REPLY TO THE LEA RNED DEPARTMENTAL REPRESENTATIVES CONTENTION THAT IT NEEDS TO BE EXAMINED WHETHER THE PROVISION FOR EXPENDITURE IS OPERATIVE OR NON OPERATIVE, THE LEARNED SR. COUNSEL SUBMITTED , PROVISION FOR EXPENDITURE IS NON OPERATIVE IN NATURE WHICH CAN BE VERIFIED BY THE ASSESSING OFFICER. 14 MAERSK GLOBAL SERVICE CENTRE INDIA PVT. LTD. 19 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. IT IS EVIDENT , THE TRANSFER PRICING OFFICER HAS REJECTED THIS COMPANY AS A COMPARABLE SIMPLY FOR THE REASON THAT ITS ACCOUNTING PERIOD ENDS IN DECEMBER , WHEREAS , ASSESSEES ACCOUNTING PERIOD ENDS IN MARCH. IT IS WORTH MENTIONING, THE DRP HAS NOT DISPUTED THE FACT THAT THE COMPANY IS OTHERWISE FUNCTIONALLY COMPARABLE TO THE ASSESSEE. THE DRP HAS UPHELD THE REJECTION OF THE COMPANY SUBSCRIBING TO THE VIEW OF THE TRA NSFER PRICING OFFICER . W HILE DOING SO THE DRP HAS OBSERVED THAT SINCE SUFFICIENT NUMBER OF COMPARABLE COMPANIES HAVING SAME ACCOUNTING PERIOD AS THE ASSESSEE ARE AVAILABLE , THERE IS NO NEED TO CONSIDER THI S COMPANY FOR COMPARABILITY. OF COURSE, THE DRP HAS ALSO OBSERVED THAT THE COMPANY HAS CONSISTENTLY SHOWN LOSS FOR PAST THREE YEARS WHICH HAS BEEN CONTESTED BY THE ASSESSEE. AS REGARDS THE ISSUE WHETHER THIS COMPANY CANNOT BE TREATED AS COMPARABLE TO THE ASSESSEE ONLY BECAUSE IT HAS A DIFFERENT ACCOUNTING PERIOD, WE FIND THAT THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2009 10 IN ITA NO.2594/MUM./2014, DATED 15 TH JANUARY 2015, A.Y. 2010 11 IN ITA NO.1082/MUM./2015, DATED 29 TH JULY 2016, AND A.Y. 2011 12 IN ITA NO.944/MUM./2016, DATED 19 TH APRIL 2018, HAS HELD THAT THIS COMPANY CAN BE TREATED AS COMPARABLE TO THE ASSESSEE NOTWITHSTANDING THE FACT THAT IT HAS A DIFFERENT ACCOUNTING PERIOD. THEREFORE, RESPECTFULLY FOLLOWING THE CONSISTENT VIEW OF THE TRIBUNAL, 15 MAERSK GLOBAL SERVICE CENTRE INDIA PVT. LTD. WE HOLD THAT THE COMPANY CANNOT BE REJECTED AS A COMPARABLE MERELY BECAUSE IT HAS ACCOUNTING PERIOD ENDING IN DECEMBER. AS REGARDS THE OBSERVATIONS OF THE DRP THAT IT IS A CONSISTENT LOSS MAKING COMPANY, THE LEARNED SR. COUNSEL HAS SUBMITTED BEFORE US THAT THE COMPANY HAS SHOWN PROFIT FOR THE PERIOD ENDI NG ON DECEMBER 2009 AS WELL AS ASSESSMENT YEAR 2013 14. THEREFORE, IT DOES NOT COME IN TH E CATEGORY OF CONSISTENT LOSS MAKING COMPANY. SINCE , THE AFORESAID ASPECT REQUIRES FACTUAL VERIFICATION, WE ARE INCLINED TO RESTORE THE ISSUE TO THE ASSESSING OFFICER FOR THE LIMITED PURPOSE OF VERIFYING WHETHER THE COMPANY HAS INCURRED LOSS CONSISTENTLY FOR THE PAST THREE YEARS AND DECIDE THE ISSUE ACCORDINGLY AFTER DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IV ) CALIBER POINT SOLUTION LTD. 20 . THIS COMPARAB LE WAS PROP OSED BY THE ASSESSEE. H OWEVER, THE TRANSFER PRICING OFFICER REJECTED IT ON THE GROUND THAT THE ACCOUNTING PERIOD OF THE COMPANY ENDS IN DECEMBER, W HEREAS, ASSESSEES ACCOUNTING PERIOD ENDS IN MARCH. 21 . THE DRP HAS ALSO UPHELD THE REJECTION OF THE COMPANY AS A COMPARABLE FOR THE VERY SAME REASON. 16 MAERSK GLOBAL SERVICE CENTRE INDIA PVT. LTD. 22 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIALS ON RECORD. AS COULD BE SEEN FROM THE OBSERVATION S OF THE DRP, THE FACT THAT THE COMPANY IS OTHERWISE FUNCTIONALLY SIMILAR TO THE ASSESSEE HAS BEEN ACCEPTED B Y THE DRP. HOWEVER, THE DRP HAS UPHELD THE REJECTION OF THE COMPANY ON THE GROUND OF DIFFERENT ACCOUNTING PERIOD ON THE REASONING THAT WHEN SUBSTANTIAL COMPARABLES HAVING SAME ACCOUNTING PERIOD AS THE ASSESSEE ARE AVAILABLE THERE IS NO NEED TO CONSIDER A C OMPARABLE HAVING DIFFERENT ACCOUNTING PERIOD. WE DO NOT FIND SUBSTANCE IN THE AFORESAID REASONING OF THE DRP. AS COULD BE SEEN FROM THE MATERIAL ON RECORD AS WELL AS WHILE CONSIDERING SIMILAR ISSUE ARISING IN RESPECT OF COMPARABILITY OF R. SYSTEM INTERNATI ONAL LTD. , THIS COMPANY WAS TREATED AS COMPARABLE TO THE ASSESSEE IN ASSESSMENT YEAR S 2009 10, 2010 11 AND 2011 12 BY THE TRIBUNAL IN THE ORDERS REFERRED TO ABOVE NOTWITHSTANDING THE FACT THAT IT HAS A DIFFERENT ACCOUNTING PERIOD. THAT BEING THE CASE, FOLL OWING THE CONSISTENT VIEW OF THE TRIBUNAL, WE DIRECT THE ASSESSING OFFICER TO TREAT THIS COMPANY AS A COMPARABLE. 23 . G ROUND NO.13, BEING PRE MATURE AT THIS STAGE, DOES NOT REQUIRE ADJUDICATION. 24 . GROUND NO.14, CHALLENGING LEVY OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT BEING CONSEQUENTIAL IN NATURE, DO NOT REQUIRE ADJUDICATION AT THIS STAGE. 17 MAERSK GLOBAL SERVICE CENTRE INDIA PVT. LTD. 25 . IN GROUNDS NO.15 AND 16, THE ASSESSEE HAS RAISED THE ISSUE OF SHORT CREDIT / GRANT OF TDS AND ADVANCE TAX. 26 . WE DIRECT THE ASSESSING OFFICER TO FACTUALLY VERIFY A SSESSEES CLAIM AND GRANT CREDIT TO THE ASSESSEE IN RESPECT OF TDS AND ADVANCE TAX AS PER LAW. 27 . IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON SD/ - MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI