CPA Global Support Services (I) Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 6815/DEL/2015

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3334 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 28-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Keywords: Related party transaction; Transfer pricing; Principle of natural justice; International transaction; Wholly owned subsidiary; Notional interest
• Section: 271(1)(c); 143(3); 201; 274; 13; 22; 92

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI I-1 B ENCH, NEW DELHI (THROUGH VIDEO CONFERENCING] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO. 6815/DEL/2015 [A.Y 2011-12] CPA GLOBAL SUPPORT SERVICES [I] PVT LTD. VS. THE I.T.O 1/3, 2 ND FLOOR, SIR GANGARAM HOSPITAL WARD - 6(4) MARG, OLD RAJINDER NAGAR NEW DELHI NEW DELHI PAN : AABCJ 1509 C [APPELLANT] [RESPONDENT] DATE OF HEARING : 29.09.2021 DATE OF PRONOUNCEMENT : 01.10.2021 ASSESSEE BY : SHRI G.C. SRIVASTAVA , ADV. SHRI MAYANK PATWARI, ADV REVENUE BY : SHRI SURENDERPAL, CIT- DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST OR DER DATED 29.06.2021 FRAMED U/S 143(3) R.W.S 144C(13) R.W.S 1 44B OF THE INCOME- TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' ] PERTAINING TO A.Y. 2016-17. 2 2. THE GRIEVANCES OF THE ASSESSEE READ AS UNDER: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE HONBLE DISPUTE RESOLUTION PANEL (DRP )/ LEARNED ASSESSING OFFICER (AO)/ LEARNED TRANSFER PRICING OFFICER (TPO) ERRED IN MAKING AN ADDITION TO THE RETURNED INCOME OF THE APPELLANT BY INR 103,601,764/- BY RE-COMPUTING THE ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS UNDER SECTI ON 92 OF THE INCOME TAX ACT (THE ACT) AND THE ORDERS ARE BAD I N LAW AND VOID AB-INITIO. 2. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE REFERENCE MADE BY THE LD. AO SUFFERS FROM JURISDICT IONAL ERROR AS THE LD. AO DID NOT RECORD ANY REASONS IN THE DRAFT ASSESSMENT ORDER BASED ON WHICH HE REACHED THE CONCLUSION THAT IT WAS EXPEDIENT AND NECESSARY TO REFER THE MATTER TO TH E LD. TPO FOR COMPUTATION OF THE ARMS LENGTH PRICE, AS IS REQUIR ED UNDER SECTION 92CA(1) OF THE ACT. 3. THE LD. DRP/LD. AO/LD. TPO ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW BY REJECTING T HE ASSESSEES CLAIM OF BEING A LOW END IP SUPPORT SERVICE PROVIDE R (ITES) AND RE- CHARACTERIZING IT AS A CORE SOFTWARE DEVELOPER WITH OUT PROVIDING SUFFICIENT OPPORTUNITY TO THE ASSESSEE AND BY SELEC TIVELY AND NARROWLY INTERPRETING THE FACTS OF THE CASE. 3 4. THE LD. DRP/LD. AO/LD. TPO ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW BY MAKING AN A DDITION OF INR. 10,36,01,764/- TO THE RETURNED INCOME OF THE APPELL ANT BY RE- COMPUTING THE ARMS LENGTH PRICE OF THE INTERNATION AL TRANSACTIONS UNDER SECTION 92 OF THE ACT BY: 4.1 INAPPROPRIATELY APPLYING THE FILTERS TO ARRIVE AT A CHERRY- PICKED RESULT; 4.2 REJECTING COMPANIES SELECTED BY THE APPELLANT IN ITS TRANSFER PRICING DOCUMENTATION EVEN WHEN SUCH COMPA NIES WERE FUNCTIONALLY COMPARABLE TO THE APPELLANT; 4.3 ACCEPTING COMPANIES WHICH ARE FUNCTIONALLY NOT COMPARABLE TO ME TERMS OF FUNCTIONS, ASSETS AND RISK PROFILE; AND 4.4 THE LD. DRP/LD. AO/LD. TPO ERRED IN FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW BY DISREGARDIN G THE MULTIPLE YEAR DATA SELECTED BY THE APPELLANT IN THE TP DOCUM ENTATION AND IN SELECTING THE CURRENT YEAR (I.E. FINANCIAL YEAR 201 0-11) DATA FOR COMPARABILITY. 5. THE LD. DRP/LD. AO/LD. TPO ERRED IN FACTS AND IN LAW BY NOT PROVIDING THE BENEFIT OF ECONOMIC ADJUSTMENTS TO TH E APPELLANT IN ARRIVING AT THE ARMS LENGTH PRICE. 4 6. THAT THE LD. DRP/LD. AO/LD. TPO ERRED ON FACTS A ND IN LAW IN MAKING A NOTIONAL ADDITION OF INR 64,40,609/- ON ACCOUNT OF ALLEGED INTEREST ON PERCEIVED DELAY IN COLLECTION O F RECEIVABLES FROM THE AES WITHOUT TAKING DUE COGNIZANCE OF THE B USINESS MODEL AND BY WRONGLY TREATING THE ACCOUNTS RECEIVABLE AS MEDIUM TERM LOAN COMPUTED AT 6 MONTHS USD LIBOR + 400 BPS. 7. THE LD. AO/LD. TPO ERRED IN FACTS AND IN LAW BY FAILING TO GIVE EFFECTS TO DIRECTIONS PASSED BY DRP IN MARGIN COMPUTATION AND INTEREST COMPUTATION ON ACCOUNTS RECEIVABLE. 8. THAT THE LD. DRP/LD. AO/LD. TPO ERRED IN FACTS A ND IN LAW IN INITIATING PENALTY PROCEEDINGS UNDER SECTION 274 READ WITH 271(1)(C) OF THE ACT. THAT THE ABOVE GROUNDS ARE INDEPENDENT AND WITHOUT PREJUDICE TO EACH OTHER. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, DE LETE, RESCIND, FORGO OR WITHDRAW ANY OF THE ABOVE GROUNDS OF OBJEC TION EITHER BEFORE OR DURING THE COURSE OF PROCEEDINGS IN THE I NTEREST OF THE NATURAL JUSTICE 5 3. IN ADDITION TO THE ABOVE GROUNDS TAKEN IN THE AP PEAL MEMO, THE ASSESSEE HAS RAISED THE FOLLOWING ADDITIONAL GROUND S OF APPEAL: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ('.'LD.') DISPUTE - RESOLUTION PAN EL ('DRP')/ LD. ASSESSING OFFICER ('AO')/LD. TRANSFER PRICING OFFIC ER ('TPO') ERRED IN COMPUTING OPERATING MARGIN (OPERATING PROF IT/OPERATING COST) OF THE APPELLANT BY: TREATING FOREIGN EXCHANGE GAIN/LOSS AS A NON-OPERAT ING; AND INCLUDING REIMBURSEMENT RECEIVED FROM ASSOCIATED ENTERPRISES ('AES') IN BOTH, OPERATING INCOME AS WE LL AS IN OPERATING EXPENSES. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. DRP/LD. AO/LD. TPO ERRED IN IGNORING THE FA CT THAT WORKING CAPITAL ADJUSTMENT ALREADY TAKES INTO ACCOU NT THE IMPACT OF OUTSTANDING RECEIVABLES ON PROFITABILITY AND THE REFORE, NO FURTHER IMPUTATION OF INTEREST IS WARRANTED. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. DRP/LD. AO/LD. TPO ERRED IN IGNORING THE FA CT THAT EVEN IF THE NOTIONAL INTEREST ON DELAYED RECEIVABLES IS BEI NG CHARGED, THE SAME SHOULD BE NETTED OFF AGAINST OUTSTANDING PAYAB LES. 6 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. DRP/LD. AO/LD. TPO ERRED IN NOT INCLUDING T HE NOTIONAL INTEREST ON DELAYED RECEIVABLES AS AN OPERATING ITE M FOR COMPUTING OPERATING MARGIN OF THE APPELLANT. IT IS FURTHER SUBMITTED THAT THE AFORESAID ADDITION AL GROUND OF APPEAL DOES NOT INVOLVE ANY FRESH INVESTIGATION INT O FACTS OF THE CASE. THE APPELLANT BY WAY OF THIS APPLICATION, CRA VES LEAVE OF THE HON'BLE BENCH TO RAISE THE AFORESAID ADDITIONAL GRO UND. IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COUR T IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS CIT: 229 ITR 383 AS ALSO THE DECISION IN THE CASE OF JUTE CORPORATION OF IND IA VS. CIT:187 ITR 688 AND THE DISCRETION VESTED WITH YOUR HONOURS UNDER RULE 11 OF THE INCOME-TAX (APPELLATE TRIBUNAL) RULES, 1963, IT IS PRAYED THAT THE AFORESAID ADDITIONAL GROUNDS OF APPEAL MAY KINDLY BE ADMITTED AND ADJUDICATED ON MERITS. 3. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSE SSEE STATED THAT HE IS CONTESTING GROUND NO 4 WITH ALL ITS SUB GROUNDS AND GROUND NO. 6. THE LD. COUNSEL FOR THE ASSESSEE FURTHER STATED THA T GROUND NOS. 2, 3, AND 4 OF THE ADDITIONAL GROUNDS ARE RELATED TO GROU ND NO. 6 AND THEREFORE, NEEDS NO SEPARATE ADJUDICATION. 7 4. ON SUCH CONCESSION, THE REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LENGTH, THE CASE RECORDS CAREFULLY PERUSED AND WITH THE ASSISTANCE OF THE LD. COUNSEL, WE HAVE CONSIDERED T HE DOCUMENTARY EVIDENCES BROUGHT ON RECORD AND JUDICIAL DECISIONS RELIED UPON THE BY THE LD. COUNSEL FOR THE ASSESSEE. 5. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A WHOLLY OWNED SUBSIDIARY OF CPA LLC. THE ASSESSEE I S REGISTERED WITH THE SOFTWARE TECHNOLOGY PARK OF INDIA [STPI] AND IS AN IT ENABLED SUPPORT SERVICE PROVIDER RENDERING INFORMATION TECH NOLOGY ENABLED SERVICES RELATED TO IP ADMINISTRATION/RENEWAL AND D ATA MANAGEMENT SERVICES, PROOF READING SUPPORT, CUSTOMER SUPPORT S ERVICES ETC. THE ASSESSEE CATERS EXCLUSIVELY TO THE SERVICE NEEDS OF ITS GROUP COMPANIES AND DOES NOT PROVIDE SERVICE TO ANY THIRD PARTY CUS TOMERS. 6. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSE E HAS UNDERTAKEN THE FOLLOWING INTERNATIONAL TRANSACTIONS: NATURE OF TRANSACTIONS METHOD VALUE (RS.) PROVISION OF 1TES TNMM USING OPERATING PROFIT 810259233 REIMBURSEMENT OF EXPENSES TO AES 5929073 PAYMENT OF INTEREST ON ECB CUP 1467823 REIMBURSEMENT OF EXPENSES FROM AES CUP 20377465 8 7. THE ASSESSEE SELECTED TNMM AS THE MOST APPROPRIA TE METHOD AND NET COST AND MARGIN I.E. OPERATING PROFIT/OPERATING COST AS PROFIT LEVEL INDICATOR AND THE SAME HAS BEEN ACCEPTED BY THE ASS ESSING OFFICER/TPO. THE ASSESSEE SELECTED THE FOLLOWING 1 4 COMPARABLES OUT OF WHICH ONLY 3 COMPARABLES WERE ACCEPTED BY THE TP O: S L . N O NAME OF THE COMPANY R EMARKS OF THIS OFFICE I ACCENTIA TECHNOLOGIES LTD. ACCEPTED 2 ADITYA BIRLA MINACS WORLDWIDE LTD. DATA NOT AVAILABLE, REJECTED 3 CG - VAK SOFTWARE & EXPORTS LTD. (SEG.) INCOME FROM BPO BUSINESS IS LESS THAN RS. 5 CRORE. REJECTED. 4 CALIBER POINT BUSINESS SOLUTIONS LTD. FY DECEMBER ENDING. REJECTED. 5 CEPHA IMAGING PVT. LTD. FUNCTIONALLY NOT COMPARABLES. REJECTED 6 COSMIC GLOBAL LTD. FAILS EXPORT SALES FILTER. REJECTED. 7 CORAL HUB LTD. (VISHAL INFO. TECH. LTD.) FUNCTIONALLY NOT COMPARABLES. REJECTED 8 FORTUNE INFOTECH LTD. RPT, REJECTED 9 INFORMED TECHNOLOGIES INDIA LTD. SALES LESS THAN RS. 5 CRORE. REJECTED. 10 INFOSYS BPO LTD. ACCEPTED 11 JEEVAN SOFTECH LTD. (SEG.) SALES LESS THAN RS. 5 CRORE. REJECTED. 12 JINDAL INTELLICOM PVT. LTD. ACCEPTED 13 MICROGENETICS SYSTEMS LTD. INCOME FROM BPO BUSINESS IS LESS THAN RS, 5 CRORE. REJECTED. 14 R SYSTEMS INTERNATIONAL LTD. (SEG.) FY DECEMBER ENDING. REJECTED. 9 8. THE TPO, IN ADDITION TO THE THREE COMPARABLES AC CEPTED FROM THE ASSESSEES CHART SELECTED FURTHER 5 COMPARABLES AS UNDER: S. NO. COMPANY NAME 1 ACROPETAL TECHNOLOGIES LIMITED(SEG) 2 ICRA TECHNO ANALYTICS LIMITED 3 E4E HEALTHCARE BUSINESS SERVICES PVT LTD 4 ECLERX SERVICES LTD. 5 TCS E-SERVE LTD 9. ADOPTING AVERAGE OF 29.53%, THE TPO RECOMPUTED T HE OPERATING MARGIN AS UNDER: S. NO. COMPANY NAME OP / TC (%) 1 ICRA TECHNO ANALYTICS LIMITED 25.24% 2 JINDAI INTELLICOM LTD. 13.70% 3 ACROPETAL TECHNOLOGIES LIMITED(SEG) 14.36% 4 E4E HEALTHCARE BUSINESS SERVICES PVT 9.77% 5 ACCENTIA TECHNOLOGIES LTD. 29.18% 6 ECLERX SERVICES L TD. 56.82% 7 INFOSYS B P 0 LTD. 17.86% 8 T C S E-SERVE LTD. \X 69.31% AVG 29.53% 10 10. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS ARGUED ONLY FOR EXCLUSION OF TWO COMPARABLES, NAMELY E-CLERX SERVIC ES LTD AND TCS E- SERVE LTD. IT IS THE SAY OF THE LD. COUNSEL FOR TH E ASSESSEE THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, IN ASSESSEE S OWN CASE, THE TRIBUNAL HAS EXCLUDED THESE TWO COMPARABLES FROM TH E FINAL SET OF COMPARABLES AND DREW OUR ATTENTION TO THE RELEVANT FINDINGS OF THE TRIBUNAL. 11. WE HAVE CAREFULLY PERUSED THE FAR ANALYSIS OF T HE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WITH THAT OF THE IMMED IATELY SUCCEEDING ASSESSMENT YEAR. WE FIND THAT THE FACTS ARE MUTATI S MUTANDIS SAME. THIS TRIBUNAL IN ITA NO. 1524/DEL/2017 ORDER DATED 03.02.2021 HAS CONSIDERED THE QUARREL RELATING TO THE INCLUSION OF E-CLERX SERVICES LTD AND TCS E-SERVE LTD. THE RELEVANT FINDINGS OF THE CO-ORDINATE BENCH READ AS UNDER: ECLERX SERVICES LIMITED (ECLERX) 12. THE TAXPAYER SOUGHT EXCLUSION OF ECLERX ON THE GROUNDS INTER ALIA THAT IT IS FUNCTIONALLY DISSIMILAR; THAT IT IS ALSO OUTSOURCING SUBSTANTIAL AMOUNTS OF WORK TO OUTSIDER AND THAT EC LERX HAS UNRELIABLE DATA. 13. HOWEVER, ON THE OTHER HAND, LD . DR FOR THE REVENUE DREW OUR ATTENTION TOWARDS FINDINGS GIVEN B Y THE LD. DRP 11 AT PAGE 22 OF ITS ORDER AND THEREBY RELIED UPON THE DRP FINDINGS. 14. WHEN WE EXAMINE FINANCIALS OF THE ECLERX AT PAG E 766 OF THE PAPER BOOK, ITS PROFILE IS AS UNDER :- WHO WE ARE INCORPORATED IN 2000, ECLERX SERVICES L IMITED (ECLERX) IS A KNOWLEDGE PROCESS OUTSOURCING COMPANY PROVIDING DATA ANALYTICS AND CUSTOMIZED PROCESS SOLUTIONS TO GLOBAL ENTERPRISE CLIENTS. ECLERX SUPPORTS CORE AND COMPLE X ACTIVITIES FOR ITS CLIENTS USING PROPRIETARY PROCESSES AND A SCALA BLE OFFSHORE DELIVERY MODEL. IN MAY 2012, WE ACQUIRED AGILYST INC, A NICHE OPERA TIONAL AND ANALYTICS COMPANY FOCUSED ON THE U.S. MEDIA AND TEL ECOM INDUSTRY. IN JULY 2007 WE HAD ACQUIRED IGENTICA GROUP WHICH I NTRODUCED THE COMPANY TO A CLIENT BASE OF GLOBAL CORPORATION IN T RAVEL AND HOSPITALITY INDUSTRY AND STRENGTHENED THE COMPANY'S PRESENCE IN WESTERN EUROPE. ECLERX EQUITY SHARES ARE LISTED ON THE BOMBAY STOCK EXCHANGE AND THE NATIONAL STOCK EXCHANGE OF I NDIA. AS ON MARCH 31, 2012 THE MARKET CAPITALIZATION OF THE COM PANY WAS RS. 21,338 MILLION. WHAT WE DO THE COMPANY SUPPORTS CRI TICAL PROCESSES FOR MORE THAN 50 CLIENTS THAT INCLUDE GLO BAL LEADERS IN FINANCIAL SERVICES, MANUFACTURING, RETAIL, MEDIA, T RAVEL AND HOSPITALITY. ABOUT 97% OF OUR REVENUES COME FROM FO RTUNE 500 OR FINANCIAL TIMES 500 CLIENTS. 15. FUNCTIONAL PROFILE OF ECLERX SHOWS THAT IT IS A KNOWLEDGE PROCESS OUTSOURCING (KPO) COMPANY AND IS PROVIDING DOMAIN SPECIFIC REENGINEERING EXPERTISE IN PARTNERSHIP WIT H FINANCIAL 12 SERVICES FIRMS TO INCREASE CONTROL AND EXECUTE ONGO ING FUNCTIONS. IT IS ALSO PROVIDING CONSULTING, BUSINESS ANALYSIS AND SOLUTION TESTING SERVICES WHICH PROVIDES A BROAD SUITE OF SERVICES T HAT ALLOWS ITS CLIENTS TO OPERATE ON DAY-TO-DAY BASIS INCLUDING TR ADE PROCESSING, REFERENCE DATA, ACCOUNTING & FINANCE AND EXPENSE MA NAGEMENT ACTIVITIES. SIMILARLY, UNDER SALES AND MARKETING SE RVICES SEGMENT, AS HAS BEEN DESCRIBED AT PAGE 767 OF THE ANNUAL REPORT PAPER BOOK, ECLERX PROVIDES WEB CONTENT MANAGEMENT & MERCHANDIS ING EXECUTION, WEB ANALYTICS, SOCIAL MEDIA MODERATION A ND ANALYTICS, SEARCH ENGINE ANALYTICS & SUPPORT, CRM PLATFORM SUP PORT, LEAD GENERATION, SUPPLY CHAIN AND CHANNEL ANALYTICS, PRI CE & CATALOGUE COMPETITIVE INTELLIGENCE ETC. 16. COORDINATE BENCH OF THE TRIBUNAL IN CASE OF AMERIPRISE INDIA PVT. LTD. IN ITA NO.201 0/DEL/2014 HELD THAT ECLERX IS HAVING SIGNIFICANT INTANGIBLES TO PR OVIDE KPO SERVICES WHEREAS THE TAXPAYER ON THE OTHER HAND IS A CAPTIVE ITES SERVICE PROVIDER ON COST PLUS MARK-UP MODEL WITH MINIMAL RI SK. OPERATIVE PART OF THE ORDER OF THE COORDINATE BENCH OF THE TR IBUNAL IS AS UNDER :- 14.2. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT IT IS A K NOWLEDGE PROCESS OUTSOURCING (KPO) COMPANY PROVIDING DATA ANALYTICS AND DATA PROCESS SOLUTIONS TO GLOBAL CLIENTS. THIS COMPANY P ROVIDES END TO END SUPPORT THROUGH TRADE LIFE CYCLE INCLUDING TRAD E CONFIRMATIONS AND SETTLEMENTS ETC. IT ALSO PROVIDES SALES AND MAR KETING SUPPORT SERVICES TO LEADING GLOBAL MANUFACTURING, RETAIL, T RAVEL AND. LEISURE COMPANIES THROUGH ITS PRICING AND PROFITABILITY SER VICES. FROM THE ABOVE NARRATION OF THE NATURE OF BUSINESS CARRIED O N BY E-CLERX 13 SERVICES LTD., IT IS MANIFEST THAT THE SAME BEING A KPO COMPANY, IS QUITE DIFFERENT FROM THE ASSESSEE, PROVIDING ONLY I T ENABLED SERVICES TO ITS AE. APART FROM THAT, IT IS FURTHER OBSERVED THAT THIS COMPANY HAS SIGNIFICANT INTANGIBLES WHICH IT U SES IN RENDERING KPO SERVICES, AGAINST WHICH THE ASSESSEE DOES NOT H AVE ANY INTANGIBLES. AS SUCH, E- CLERX SERVICES LTD. CANNOT BE CONSIDERED AS COMPARABLE. THE SAME IS DIRECTED TO BE ELIMINATED . 17. IN OTHER WORDS, THE TAXPAYER IS A BPO/ITES SERV ICE PROVIDER WHICH CANNOT BE COMPARED WITH KPO. 18. FURTHERMORE, WHEN WE PERUSE FINANCIALS OF ECLERX AT PAGE 835 OF THE PAPE R BOOK, IT SHOWS THAT ECLERX IS OUTSOURCING ITS SUBSTANTIAL AMOUNT O F WORK TO OUTSIDERS UNDER THE HEAD CONTRACT FOR SERVICES TO THE TUNE OF RS.66,08,10,000/- IN ADDITION TO PAYMENT OF SALARY TO THE TUNE OF RS.158,38,70,000/- WHICH IS 41% OF THE TOTAL ACTIVI TY CARRIED OUT BY THE COMPANY. SO, FOR AVAILING ITES SERVICES FROM THE OUTSIDERS, IT IS OUTSOURCING ITS WORK AND AS SUCH, CANNOT BE C OMPARED WITH THE TAXPAYER WHICH IS WORKING AS A CAPTIVE ITES SERVICE PROVIDER ON COST PLUS MARK-UP MODEL WITH MINIMAL RISK. 19. LD. AR FOR THE TAXPAYER ALSO CONTENDED THAT FIN ANCIAL DATA OF ECLERX IN THE PUBLIC DOMAIN IS NOT RELIABLE ONE BEC AUSE TURNOVER APPEARING IN CONSOLIDATED FINANCIAL STATEMENTS IS N OT MERELY A SUM OF TURNOVER OF ECLERX (AS PER STANDALONE FINANCIALS ) AND ITS SUBSIDIARIES. RATHER IT INCLUDES THE TURNOVER OF SU BSIDIARY COMPANIES AND DREW OUR ATTENTION TO PAGES 821, 849 AND 872 OF THE PAPER BOOK WHICH IS TABULATED AS UNDER :- 14 XXXXX 20. SO, THE FINANCIALS OF ECLERX AVAILABLE IN THE P UBLIC DOMAIN, REFERRED TO ABOVE, ARE NOT RELIABLE RATHER INCLUDE TURNOVER OF ITS SUBSIDIARY COMPANIES. 21. ECLERX HAS BEEN FOUND TO BE NOT SUITABLE COMPAR ABLE VIS-- VIS CAPTIVE SERVICE PROVIDER BY THE COORDINATE BENCH OF THE TRIBUNAL IN ARIBA INDIA PVT. LTD. VS. DCIT ITA NO.5201/DEL/2012 . 22. SO, IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, W E ARE OF THE CONSIDERED VIEW THAT ECLERX IS NOT A SUITABLE COMPA RABLE VIS--VIS THE TAXPAYER, HENCE ORDERED TO BE EXCLUDED. 23. THE TAXPAYER SOUTH EXCLUSION OF TCS E-SERVE ON GROUNDS OF FUNCTIONAL DISSIMILARITY; PROVIDING SERVICES PREDOM INANTLY TO CITI GROUP; HAVING HIGH TURNOVER AND PRESENCE AND PAYMEN T FOR BAND; SEGMENTAL INFORMATION NOT AVAILABLE; HAVING ABNORMA L PROFITABILITY TREND AND RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN AVAYA INDIA PVT. LTD. VS. ACIT IN ITA 532/2019, DEC ISIONS OF COORDINATE BENCH OF THE TRIBUNAL IN CASE OF ARIBA I NDIA PVT. LTD. VS. DCIT ITA NO.876/DEL/2015, AND BAXTER INDIA PVT. LTD . IN ITA NO.6185/DEL/2016. 24. HOWEVER, ON THE OTHER HAND, LD. DR FOR THE REVE NUE DREW OUR ATTENTION TOWARDS FINDINGS GIVEN BY THE LD. DRP AT PAGES 22 & 23 OF ITS ORDER AND THEREBY RELIED UPON THE DRP FINDINGS. 15 25. WHEN WE EXAMINE FUNCTIONAL PROFILE OF TCS E-SER VE AT PAGE 903 OF THE PAPER BOOK WHICH SHOWS THAT TCS E-SERVE IS INTO PROVIDING SERVICES FROM VARIOUS PROCESSING FACILITI ES WHICH INCLUDES PROCESSING, COLLECTIONS, CUSTOMER CARE PAYMENTS IN RELATION TO SERVICES OFFERED TO CITI GROUP, SOFTWARE TESTING, V ERIFICATION AND VALIDATION OF SOFTWARE. FURTHERMORE, IT IS PREDOMIN ANTLY PROVIDING SERVICES TO CITI GROUP, AS IS EVIDENT FROM NOTES TO ACCOUNTS TO ANNUAL REPORT FOR FINANCIAL YEAR 2010-11 AND DESCRI BED AT PAGES 1090 TO 1092 OF THE PAPER BOOK. FROM PAGES 1093 TO 1102 OF THE PAPER BOOK, IT IS PROVED THAT TCS E-SERVE ALSO ACQU IRED BPO ARM OF CITI GROUP WITH A $ 2.5 BILLION CONTRACT FOR A P ERIOD OF 9.5 YEARS AND AS SUCH, CITI GROUP BECAME A RELATED PARTY DURI NG FY 2009-10. 26. FURTHERMORE, WHEN WE EXAMINE THE TURNOVER OF TC S E- SERVE, IT IS 180 TIMES OF THE TAXPAYER AND IS DULY SUPPORT ED BY TATA CONSULTANCY SERVICES (TCS)/TATA GROUP HAVING LARGE SCALE AND LARGE CLIENT BASE. TCS E-SERVE ALSO CONTRIBUTED BRAND EQU ITY TO THE TUNE OF RS.3.67 CRORES TO TATA SONS LTD. BY USING ITS BR AND NAME TATA WHICH MAKES IT INCOMPARABLE VIS--VIS THE TAXPAYER. 27. HONBLE DELHI HIGH COURT IN CASE OF AVAYA INDIA PVT. LTD. IN ITA 532/2019 ORDER DATED 24.07.2019 EXCLUDED TCS E-SERVE AS A COMPARABLE FOR THE PURPOSE OF DETERMINING THE ALP O F INTERNATIONAL TRANSACTIONS INVOLVING THE ASSESSEE A ND ITS AE ON ACCOUNT OF HUGE TURNOVER AND NON-AVAILABILITY OF SE GMENTAL REVENUES BY RETURNING FOLLOWING FINDINGS :- 16 27. THERE IS MERIT IN THE CONTENTION OF THE ASSESS EE THAT THE SCALE OF OPERATIONS OF THE COMPARABLES WITH THE TES TED ENTITY IS A FACTOR THAT REQUIRES TO BE KEPT IN VIEW. TCS E-SERV E HAS A TURNOVER OF RS.1359 CRORES AND HAS NO SEGMENTAL REV ENUE WHEREAS THE ASSESSEES ENTIRE SEGMENTAL REVENUE IS A MERE 2 4 CRORES. AS OBSERVED BY THIS COURT IN ITS DECISION DATED 5TH AU GUST 2016 IN ITA 417/2016(PCIT V. ACTIS GLOBAL SERVICES PRIVATE LIMITED) 'SIZE AND SCALE OF TCS S OPERATION MAKES IT AN INAPPOSITE COMPARABLE VIS-A- VIS THE PETITIONER.' AS ALREADY POINTED OUT EARLIER THERE IS A CLOSER COMPARISON OF TCS E-SERVE LIMITED WITH INFOS YS BPO LIMITED WITH EACH OF THEM EMPLOYING 13,342 AND 17,9 34 EMPLOYEES RESPECTIVELY AND MAKING RS.37 CRORES AND RS.19 CROR ES AS CONTRIBUTION TOWARDS BRAND EQUITY. WHEN RULE 10(B) (2) IS APPLIED I.E. THE FAR ANALYSIS, NAMELY, FUNCTIONS PERFORMED, ASSETS OWNED AND RISKS ASSUMED IS DEPLOYED THEN BRAND AND HIGH E CONOMIC UPSCALE WOULD FALL WITHIN THE DOMAIN OF 'ASSETS' AN D THIS ALSO WOULD MAKE BOTH THESE COMPANIES AS UNSUITABLE COMPARABLES . 28. THE DIRECTORS REPORT OF TCS E-SERVE LIMITED BEARS OUT THE CONTENTION OF THE ASSESSEE THAT BOTH ENTITIES HAVE BEEN LEVERA GING TCSS SCALE AND LARGE CLIENT BASE TO INCREASE THEIR BUSINESS IN A SIGNIFICANT WAY. THE SUBMISSION THAT THE TWO COMPARABLES OFFER AN IL LUSTRATION OF 'AN IDENTICAL TRANSACTION BEING CONDUCTED IN AN UNC ONTROLLED MANNER' OVERLOOKS THE EFFECT OF THE TATA BRAND ON T HE PERFORMANCE OF THE IMPUGNED COMPARABLES. THE QUESTI ON WAS NOT MERELY WHETHER THE MARGINS EARNED BY THE TATA GROUP IN PROVIDING CAPTIVE SERVICE TO THE CITI ENTITIES WERE AT ARMS LENGTH. THE QUESTION WAS WHETHER THEY OFFERED A RELIABLE BASIS TO RE-CALIBRATE THE PLI OF THE ASSESSEE WHOSE SCALE OF OPERATIONS W AS OF A MUCH 17 LOWER ORDER THAN THE TWO IMPUGNED COMPARABLES. THE MERE FACT THAT THE TRANSACTIONS WERE IDENTICAL WAS NOT, IN TE RMS OF THE LAW EXPLAINED IN THE ABOVE DECISIONS, EITHER A SOLE OR A RELIABLE YARDSTICK TO DETERMINE THE OPPOSITE CHOICE OF COMPA RABLES . 29. FOR ALL OF THE AFOREMENTIONED REASONS, THE COUR T FINDS MERIT IN THE CONTENTION OF THE ASSESSEE THAT BOTH THE IMPUGN ED COMPARABLES VIZ., TCS E- SERVE LIMITED AND TCS E-SE RVE INTERNATIONAL LIMITED OUGHT TO BE EXCLUDED FROM THE LIST OF COMPARABLES FOR THE PURPOSES OF DETERMINING THE ALP OF THE INTERNATIONAL TRANSACTIONS INVOLVING THE ASSESSEE A ND ITS AES. 28. FURTHERMORE, LD. AR FOR THE TAXPAYER DREW OUR A TTENTION TOWARDS THE ABNORMAL PROFITABILITY TREND OF TCS E-S ERVE SINCE 2004-05 TO 2012-13 IN TABULATED FORM WHICH IS EXTRA CTED FOR READY REFERENCE AS UNDER :- XXX 29. SO, THE POST ACQUISITION PERIOD SHOWS HUGE PROF ITABILITY TREND IN THE TCS E-SERVE WHICH WAS AVERAGE OP/OC MARGIN OF 1 9.96% IN FY 2004-05 TO 2007-08 AND SHOOT UP TO 60.45% IN POST A CQUISITION PERIOD OF FY 2008-09 TO 2012-13 WHICH IS ALSO A FAC TOR TO BE RECKONED WITH FOR TP ANALYSIS. 30. SO, KEEPING IN V IEW THE FUNCTIONAL DISSIMILARITY, RELATED PARTY TRANSACTION S, HIGH TURNOVER AND PAYMENT FOR BRAND FEE TO TATA AND ABNORMAL PROF ITABILITY TREND DISCUSSED IN THE PRECEDING PARAS, WE ARE OF T HE CONSIDERED VIEW THAT TCS E-SERVE IS NOT A SUITABLE COMPARABLE VIS--VIS THE 18 TAXPAYER WHO IS A BPO/ITES SERVICE PROVIDER, HENCE ORDERED TO BE EXCLUDED. 12. BEFORE US, THE LD. DR VEHEMENTLY STATED THAT TH E ASSESSEE IS NOT A LOW END ITES PROVIDER. IT IS THE SAY OF THE LD. DR THAT THE ASSESSEE IS SERVING THOUSANDS OF CLIENTS OF CPA GROUP BASED IN 12 COUNTRIES SERVING THOUSANDS OF LAW FIRMS/CLIENTS. THEREFORE, THE TPO HAS RIGHTLY INCLUDED E-CLERX SERVICES LTD AND TCS E-SERVE LTD. THE LD. DR WENT ON TO SAY THAT IN FACT, ONLY THESE TWO COMPANIES ARE F IT TO BE TAKEN AS COMPARABLES. 13. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE S UBMISSIONS OF THE LD. DR. AS MENTIONED ELSEWHERE, THERE IS NO DIFFER ENCE IN FAR ANALYSIS OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AND IN THE SUBSEQUENT ASSESSMENT YEAR I.E. 2012-13. 14. AS MENTIONED HEREINABOVE, THIS TRIBUNAL HAS EXC LUDED E-CLERX SERVICES LTD AND TCS E-SERVE LTD. FROM THE FINAL SET OF COMPARABLES. RESPECTFULLY FOLLOWING THE DECISION OF THIS TRIBUNA L, WE DIRECT THE ASSESSING OFFICER/TPO TO EXCLUDE E-CLERX SERVICES L TD AND TCS E-SERVE 19 LTD. FROM THE FINAL SET OF COMPARABLES. GROUND NO . 4 WITH ITS SUB GROUNDS IS, ACCORDINGLY, ALLOWED. 15. GROUND NO. 6 ALONGWITH GROUND NOS. 2, 3 AND 4 F ROM ADDITIONAL GROUNDS RELATE TO ADDITION ON ACCOUNT OF ALLEGED IN TEREST ON DELAY IN COLLECTION OF RECEIVABLES FROM THE AES. 16. THE TPO FOUND THAT THERE WAS A DELAY IN RECOVER ING DEBTS FROM AES. THE TPO WAS OF THE OPINION THAT SINCE IT WAS A GREED THAT THE DEBTS SHOULD BE REPAID WITHIN 45 DAYS AND HENCE THE RE IS A DELAY IN RECOVERING DEBTS. THE TPO WAS OF THE OPINION THAT INTEREST RATE OF 11.69% WOULD BE ARMS LENGTH OF LEVEL OF INTEREST T HAT NEEDS TO BE CHARGED FOR DEEMED LOANS ADVANCED FOR THE PERIOD OF RECEIVABLES OUTSTANDING BEYOND THE PERIOD STIPULATED IN THE SER VICE AGREEMENT/INVOICE AND PROPOSED AN ADJUSTMENT OF RS. 1,53,65,454/-. 17. OBJECTIONS WERE RAISED BEFORE THE DRP AND IT WA S STRONGLY CONTENDED THAT WORKING CAPITAL ADJUSTMENT TAKE INTO ACCOUNT THE IMPACT OF OUTSTANDING RECEIVABLES AND IN THE ALTERN ATIVE, IT WAS PLEADED THAT INTERNAL CUP LIBOR + 200 BASIS POINTS SHOULD BE APPLIED FOR SUCH COMPUTATION. 20 18. THE DRP AGREED AND GRANTED WORKING CAPITAL ADJU STMENT AND APPLICATION OF INTERNAL CUP I.E. LIBOR + 200 BASIS POINTS. 19. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE VEH EMENTLY STATED THAT THE INTEREST ON OUTSTANDING RECEIVABLES IS NOT A FINANCIAL DEBT BUT AN OPERATING DEBT WHICH CAN BE BENCH MARKED ONLY ON WORKING CAPITAL ADJUSTMENT WHICH ALREADY TAKES INTO ACCOUNT ALL DEB TS ARISING OUT OF OPERATIONS OF A COMPANY. STRONG RELIANCE WAS PLACE D ON THE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF K USUM HEALTH CARE IN ITA NO. 765 OF 2016 ORDER DATED 25.04.2017. 20. PER CONTRA, THE LD. DR STRONGLY SUPPORTED THE F INDINGS OF THE TPO. IT IS THE SAY OF THE LD. DR THAT IN THE GARB OF REC EIVABLES OUTSTANDING, THE ASSESSEE HAS, IN FACT, TENDERED LOAN TO ITS AES . 21. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUT HORITIES BELOW. THE AE-WISE DETAILS OF THE RECEIVABLES CAN BE UNDER STOOD FROM THE FOLLOWING CHART: 21 ENTIT Y DATE OF INVOICE CA) AMOUNT (INR) (B) DATE OF RECEIPT (C) INTERVENING PERIOD (DAYS) TILL DATE OF RECEIPT/ 31.03,2011 WHICH EVER IS EARLIER PERIOD IN EXCESS OF 45 DAYS INTEREST <> 11.69% P.A. CPA GLOBAL LIMITED 30 - APR - 10 21,184,741 21 - MAY - 10 21 0 - CPA GLOBA! LIMITED 30 - APIMO 132,434 21 - MAY - 10 21 0 IT CPA GLOBAL LIMITED 31 - MAY - 10 22,109,128 24 - AUG - 10 85 40 283,239 CPA GLOBA! LIMITED 30 - JUN - 10 22.663,414 24 - AUG - 10 55 10 72,585 CPA GLOBAL LIMITED 31 - FUL - 10 22,996,113 24 - AUG - 10 24 01 - CPA GLOBAL LIMIT ED 31 - FUL - 10 3,317,378 31 - AUG - 10 31 0 - CPA GLOBAL LIMITED 31 - AUG - 10 26,891,071 29 - APR - LL 241 196 1,68,052 CPA GLOBAL LIMITED 30 SEP - 10 27,828,462 28 - FEB - 11 151 106 944,750 CPA GLOBAL LIMITED 31 - OCT - 10 27,815,736 28 - FEB - LL 120 75 CPA GLOBAL LIMITED 3 1 - OCT - 10 2,932,043 28 - FEB - LL 120 75 70,429 CPA GLOBAL LIMITED 30 - NOV - LO 30,034,321 29 - APR - LL 121 76 731,060 CPA GLOBAL LIMITED 31 - DEC - IQ 29,244,887 22 - LUL - U 90 45 I 421,487 CPA GLOBAL LIMITED 31 - |AN - 11 30,396,519 CPA GLOBAL LIMITED 31 - JAN - LL 3,479, 132 22 - JUL - L 1 59 CPA GLOBAL LIMITED 31 - JAN - LL 1,872,251 22 - |UL - LL 59 14 8 .37 CPA GLOBAL LIMITED 31 - LAN - LL 351,531 29 - AUG - LL 59 14 1,576 CPA GLOBAL LIMITED 28 - FEB - LL 30,970,399 29 - AUK - 11 31 0 - CPA GLOBAL LIMITED 31 - MAR - LL 18,819,829 29 - AUK - 11 0 0 CPA GLOBAL LIMITED 31 - MAR - LL 2,914,820 22 - JUL - LL 0 0 - TOTAL 5,041,61 5 CPA GLOBAL SOFTWARE SERVICES AUSTRALIA 30 - APR - LO 1,172,417 8 - IUL - 10 69 24 9,012 CPA GLOBAL SOFTWARE SERVICES AUSTRALIA 31 - MAY - 10 1,174,119 8 - JUL - 10 38 0 - CPA GLOBAL SOFTWARE S ERVICES AUSTRALIA 30 - IUN - 10 1,169,264 27 - SEP - 10 89 44 16,477 CPA GLOBAL SOFTWARE SERVICES AUSTRALIA 31 - LUL - 10 1.171,197 27 - SEP - LU 58 13 4,876 CPA GLOBAL SOFTWARE SERVICES AUSTRALIA 3 L - IUL - 10 286,779 27 - SEP - 10 58 13 1,194 CPA GLOBAL SOFTWARE SERVICES AU STRALIA 31 - AUG - 10 1,341,280 19 - JAN - LL 141 96 41,239 CPA GLOBAL SOFTWARE SERVICES AUSTRALIA 30 - SEP - 10 1,358,962 19 - |AN - LL 111 66 28,726 CPA GLOBAL SOFTWARE SERVICES AUSTRALIA 31 - 0CT - 10 1,358,330 19 - |AN - LL 80 35 15,226 CPA GLOBAL SOFTWARE SERVICES AUSTRAL IA 30 - NOV - LO 1,376,799 19 - LAN - LL SO' 1 5 2,205 CPA GLOBAL SOFTWARE SERVICES AUSTRALIA 31 - DEC - 10 1,361,347 3 - OCT - LL 90 45 19,620 CPA GLOBAL SOFTWARE SERVICES AUSTRALIA 31 - LAN - LL 1,377,807 3 - OCT - LL 59 14 6,178 CPA GLOBAL SOFTWARE SERVICES AUSTRALIA 28 - FEB - U 1,368,388 3 - OCT - LL 31 0 - CPA GLOBAL SOFTWARE SERVICES AUSTRALIA 31 - MAR - LL 582,234 3 - OCT - LL 0 0 - CPA GLOBAL SOFTWARE SERVICES AUSTRALIA 31 - MAR - LL 124,481 3 - OCT - LL 0 0 - TOTAL 144,754 CPA GLOBAL SOFTWARE SERVICES FRANCE 30 - APR - 10 2.124,259 21 - IU N - 10 52 7 4,762 CPA GLOBAL SOFTWARE SERVICES FRANCE 31 - MAV - 10 2.139,565 14 - AUG - LO 75 30 20.557 CPA GLOBA! SOFTWARE SERVICES FRANCE 30 - LUN - LO 2,058,356 14 - AUG - LO 45 0 - CPA GLOBAL SOFTWARE SERVICES FRANCE 31 - JUL - 10 2,046.567 31 - AUK - 10 31 0 - CPA GLOBAL SOFTWARE SERVICES FRANCE 31 - AUG - 10 2,285.110 23 - FEB - LL 176 131 95,874 CPA GLOBAL SOFTWARE SERVICES FRANCE 30 - SEP - LG 2.696,143 23 - FEB - LL 146 101 87,214 CPA GLOBAL SOFTWARE SERVICES FRANCE 31 - OCT - 10 2,840,145 23 - FEB - LL 115 70 63,674 CPA GLOBAL SOFTWARE SE RVICES FRANCE BO - NOV - 10 2,822,353 23 - MAY - LL 121 76 68,698 CPA GLOBAL SOFTWARE SERVICES FRANCE 31 - DEC - 10 2,768,595 23 - MAY - LL 90 45 39,902 CPA GLOBAL SOFTWARE SERVICES FRANCE 31 - LAN - LL 2,704,082 23 - MAY - LL 59 14 12,125 CPA GLOBAL SOFTWARE SERVICES FRANCE 3 1 - IAN - LL 161,676 23 - MAV - LL 59 14 725 CPA GLOBAL SOFTWARE SERVICES PRANCE 28 - FEB - LL 2,689,751 26 SEP - 11 31 0 CPA GLOBAL SOFTWARE SERVICES FRANCE 31 - MAR - LL 1,969,380 26 - SEP - LL 0 0 CPA GLOBAL SOFTWARE SERVICES FRANCE 31 - MAR - LL 257,067 26 - SEN - 11 0 0 TOT AL 393,531 FOUNDATION IP 30 - APR - 10 2,852,601 31 - MAY - 10 31 0 FOUNDATION IP 31 - MAY - 10 3,014,494 24 - JUN - 10 24 0 FOUNDATION IP 30 - |UN - 10 2,933,841 14 - IUI - 10 14 0 FOUNDATION IP 31 - |UL - 10 2,881,851 18 - AUG - 10 18 0 FOUNDATION IP 31 - LUL - 10 248,084 LS - AUG - 10 18 0 FOUNDATION IP 31 - AUG - 10 3,280.873 13 - SEP - 10 13 0 FOUNDATION IP 30 - SEP - 10 3,265,715 LL - OCT - 10 11 0 FOUNDATION IP 31 - 0CT - 10 3,262,492 15 - NOV - LO 15 0 22 FOUNDATION IP 30 - NOV - 10 3,403,812 20 - DEC - 10 20 0 FOUNDATION IP 31 - DEC - 10 3,571,485 12 - | AN - LL 12 0 FOUNDATION IP 31 - LAN - LL 3,671,194 22 - FEB - LL 22 0 FOUNDATION IP 31 - LAN - LL 267,636 22 - FEB - LL 22 0 FOUNDATION IP 28 - FEB - LL 3,833,559 15 - MAR - LL 15 0 FOUNDATION IP 31 MAR 11 2,283,295 28 - ADR - LL 28 0 FOUNDATION IP 31 - MAR - LL 291,196 28 - APR - LL 28 0 TOTAL CPA GLOBAL SUPPORT SERVICES LLC 30 - APR - 10 34.764,761 19 - NOV - LO 203 158 1. 759,211 CPA GLOBAL SUPPORT SERVICES LLC 31 - MAY - 10 40,473,752 28 - LUL - 10 58 13 168,515 CPA GLOBAL SUPPORT SERVICES LLC 30 - ]UN - 10 40,847,S61 23 - DEC - 10 176 131 1,71 3,796 CPA GLOBAL SUPPORT SERVICES LLC 31 - JUL - LO 947,471 23 - DEC - 10 145 100 30,345 CPA GLOBAL SUPPORT SERVICES LLC 31 - IUL - 10 40,177,535 31 - JAN - U 184 139 1,788,627 CPA GLOBAL SUPPORT SERVICES LLC 3 L - IUL - 10 187.768 31 - LAN - LL 184 139 8,359 CPA GLOBAL SUPPO RT SERVICES LLC 31 - AUG - 10 23,934,899 28 - APR - LL 212 167 1,280,176 CPA GLOBAL SUPPORT SERVICES LLC 30 - SEP - 10 24,351,435 2 - JUN - LL 182 137 1,068,481 CPA GLOBAL SUPPORT SERVICES LLC 31 - OCT - LO 24,312,278 29 - JUN - LL 151 106 825,379 CPA GLOBAL SUPPORT SERVICES L LC 31 - 0CT - 10 778,732 29 - |UN - LL 151 106 26,437 CPA GLOBAL SUPPORT SERVICES LLC 30 - NOV - 10 24,884,845 18 - JUL - LL 121 76 605,718 A GLOBAL SUPPORT SERVICES LLC 31 DEC - 10 A GLOBAL SUPPORT SERVICES LLC 31 - JAN - LL 25,159.272 18 - LUL - LL NV _ _ | GLOBA! SUPP ORT SERVICES LLC 31 - JAN - LL 1,153,290 18 - JUL - LL 59 14 5,1/1 PA GLOBAL SUPPORT SERVICES LLC 28 - FEB - LL 25,092,043 25 - AUG - LL 31 0 PA GLOBAL SUPPORT SERVICES LLC 31 - MAR - LL 14,710,396 25 - AUE - II 0 0 PA GLOBAL SUPPORT SERVICES LLC 31 - MAR - LL 255,139 25 - AUR - II 0 0 * OTA! 9,747,021 IPA GLOBAL PATENT RESEARCH LLC 30 - APR - 10 6,602,830 23 - JUN - LO 54 9 19,032 .'PA GLOBAL PATENT RESEARCH LLC 31 - MAV - 10 6,957,579 7 LUL - 10 37 0 1PA GLOBAL PATENT RESEARCH LLC 3Q - JUN - 10 7,128.525 18 - AUG - 10 49 4 9,132 CPA GLOBAL PA TENT RESEARCH LLC 31 - IUL - LO 7,368,524 25 - AUG - LO 25 0 CPA GLOBAL PATENT RESEARCH LLC 3 L - IUL - 10 132,556 L - SEP - 10 32 0 CPA GLOBAL PATENT RESEARCH LLC 31 - AUG - 10 5,708,429 20 - 0 CT - 10 50 5 9,141 CPA GLOBA! PATENT RESEARCH LLC 30 - SEP - 10 5,734,778 20 - 0 CT - 10 2 0 0 - CPA GLOBAL PATENT RESEARCH LLC 31 - OCT - LO 5,789,857 15 - DEC - 10 45 0 CPA GLOBA! PATENT RESEARCH LLC 31 - 0CT - 10 547,274 22 - DEC - 10 52 7 1,227 CPA GLOBAL PATENT RESEARCH LLC 30 - NOV - LO 5,956,786 5 - JAN - LL 36 0 . CPA GLOBAL PATENT RESEARCH LLC 31 - DEC - 10 5 ,773,097 31 - JAN - LL 31 0 CPA GLOBAL PATENT RESEARCH LLC 31 - JAN - LL 5,934,747 14 - MAR - 11 42 0 - CPA GLOBAL PATENT RESEARCH LLC 31 - JAN - LL 327,043 14 - MAR - LL 42 0 CPA GLOBAL PATENT RESEARCH LLC 28 - FEB - LL 5,918,547 29 - MAR - LI 29 0 CPA GLOBAL PATENT RESEARCH LLC 31 - MAR - LL 4,001,321 4 - MAY - L .1 0 0 CPA GLOBAL PATENT RESEARCH LLC 31 - MAR - LL 359,154 4 - MAY - L 1 0 0 TOLA! 38,533 GRAND TOTAL 15,365,454 22. FROM THE ABOVE CHART, IT CAN BE SEEN THAT THE I NVOICES PERTAIN TO THE YEAR UNDER CONSIDERATION ONLY AND IN MOST OF TH E CASES, THE DELAY IS NIL OR LESS THAN 45 DAYS. IT IS TRUE THAT IN SOME OF THE CASES, THE DELAY IS MORE THAN THE STIPULATED PERIOD OF 45 DAYS. AT THIS JUNCTURE, IT 23 WOULD BE PERTINENT TO REFER TO THE MOST RELEVANT OB SERVATIONS OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF KUSUM HE ALTH CARE [SUPRA] 10. THE ABOVE ANALYSIS EMPIRICALLY DEMONSTRATES TH AT THE DIFFERENTIAL IMPACT OF WORKING CAPITAL OF THE VIS-A -VIS ITS COMPARABLES HAS ALREADY BEEN FACTORED IN THE PRICIN G/PROFITABILITY OF THE ASSESSEE WHICH IS MORE THAN THAT WORKING CAP ITAL ADJUSTED MARGIN OF THE COMPARABLES. HENCE, ANY FURTHER ADJUS TMENT TO THE MARGINS OF THE ASSESSEE ON THE PRETEXT OF OUTSTANDI NG RECEIVABLES IS UNWARRANTED AND WHOLLY UNJUSTIFIED. 11. IN THIS REGARD, WE WOULD ALSO LIKE TO PLACE REL IANCE ON THE JUDGEMENT OF MICRO INK LTD [TS-216-ITAT-2013(AHD)-T P] WHEREIN THE ITAT UPHELD THE ABOVE PRINCIPLE AND DELETED THE ADJUSTMENT ON ACCOUNT OF ALLEGED EXCESS CREDIT PERIOD ALLOWED TO AE. THE HON'BLE ITAT OBSERVED THE FOLLOWING IN THE JUDGMENT : 'PARA 20 - THE ONLY OTHER ALP ADJUSTMENT IN APPEAL BEFORE US IS WITH RESPECT TO WHAT THE AUTHORITIES BELOW HAVE TRE ATED AS, EXCESS CREDIT PERIOD ALLOWED TO MICRO USA. THIS ADJUSTMENT MUST BE DELETED FOR THE SHORT REASON THAT IT WAS PART OF TH E ARRANGEMENT THAT SPECIFIED CREDIT PERIOD WAS ALLOWED AND THUS T HE COST OF FUNDS BLOCKED IN THE CREDIT PERIOD WAS INBUILT IN THE SAL E PRICE. ' 23. WE HAVE BEEN TOLD THAT IN THE SUBSEQUENT YEAR, NO ADDITION HAS BEEN MADE ON THIS ACCOUNT AND IN EARLIER ASSESSMENT YEAR SMALL ADDITIONS WERE MADE WHICH WERE NOT CONTESTED ON THE SMALLNESS OF THE 24 AMOUNT. IN LIGHT OF THE AFOREMENTIONED OBSERVATION S OF THE HON'BLE HIGH COURT OF DELHI, WE ARE OF THE CONSIDERED VIEW THAT THE FIGURE OF RECEIVABLES MENTIONED ELSEWHERE DO NOT REFLECT A PA TTERN AND, AS HELD BY THE HON'BLE HIGH COURT [SUPRA], THE ASSESSEE HAS ALREADY FETTERED THE IMPACT OF RECEIVABLE ON THE WORKING CAPITAL WHI CH HAS BEEN ACCEPTED BY THE DRP. 24. CONSIDERING THE FACTS IN TOTALITY IN LIGHT OF T HE DECISION OF THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF KUSUM HE ALTH CARE [SUPRA] WE DIRECT THE ASSESSING OFFICER/TPO TO DELETE THE A DDITION OF RS. 64,40,609/-. GROUND NO. 6 ALONGWITH RELATED GROUND S IN THE ADDITIONAL GROUNDS IS ALLOWED. 25. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO . 6815/DEL/2015 IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 01.10 .2021. SD/- SD/- [LALIET KUMAR] [N.K. BIL LAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 ST OCTOBER, 2021 VL/ 25 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE DATE ON WHICH THE APPROVED DRAFT COMES TO THE DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DATE ON WHICH THE FAIR ORDER C OMES BACK TO THE DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT DATE OF DISPATCH OF THE ORDER 26