M/s. FIL India Business Services Pvt. Ltd., Gurgaon V. DCIT, New Delhi

ITA 6867/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7938 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I2
• Next Hearing Date: 31-03-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 19-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUBHAV JAIN
• Assessee Lawyers: A M GOVIL
• Keywords: Related party transaction; Transfer pricing; International transaction; Wholly owned subsidiary
• Section: 92D; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-2 NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA : JUDICIAL MEMBER ITA NO. 6867/DEL/2014 ASSTT. YR: 2010-11 FIL INDIA BUSINESS SERVICES PVT. LTD. VS. DCIT CIR CLE 11(1), 103, ASHOKA ESTATE, BARAKHAMBA ROAD, NEW DELHI. NEW DELHI-110001 PAN: AABCF 3695 C ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI G.C. SRIVASTAVA ADV. SHRI DAKSH S. BHARDWAJ ADV. & SHRI ANUBHAV JAIN ADV. ASSESSEE BY : SHRI A.M. GOVIL CIT(DR) DATE OF HEARING : 31/03/2016. DATE OF ORDER : 12/05/2016. O R D E R PER S.V. MEHROTRA, A.M: THIS IS ASSESSEES APPEAL AGAINST THE ASSESSMENT OR DER DATED 14.11.2014, PASSED BY THE ASSESSING OFFICER PURSUA NT TO DRPS DIRECTIONS U/S144C(5) OF THE INCOME-TAX ACT, 1961, RELATING TO AY 2010-11. 2. BRIEF FACTS OF THE CASE ARE THAT FIDELITY BUSINE SS INDIA PVT. LTD. (FBS INDIA), WAS INCORPORATED ON 17.5.2002 AND IS SUBSIDIARY OF FID HOLDINGS (MAURITIUS) LTD., WHICH IS PART OF THE FMR GROUP. DURING THE YEAR, PURSUANT TO THE SCHEME OF ARRANGEMENT U/SS 391 TO 3 94 OF THE ACT, AS APPROVED BY THE HONBLE HIGH COURT OF DELHI, ON 23. 3.2010, FBS INDIA HAD TRANSFERRED ITS FIDELITY INTERNATIONAL LTD. BUSINES S UNDERTAKING TO FIL INDIA 2 ITA 6867/DEL/2014 EFFECTIVE FROM 1.4.2009. 99.99% SHARES OF FIL INDIA ARE HELD BY FID HOLDINGS (MAURITIUS) LTD., MAURITIUS. FIL INDIA PRO VIDES SERVICES TO FIL GROUP OF COMPANIES AND IS ENGAGED IN PROVIDING IT A ND IT ENABLED SERVICES RELATED TO FIDELITY GROUPS BUSINESS ACTIVITIES AND WAS COMPENSATED ON A COST PLUS MARK UP BASIS. 3. THE ASSESSEE COMPANY HAD FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 9,94,50,836/-. THE AO NOTED THAT ASSE SSEE HAD ENTERED INTO FOLLOWING INTERNATIONAL TRANSACTIONS DURING THE YEA R: S. NO. INTERNATIONAL TRANSACTION AMOUNT (IN RS.) 1 REVENUE FROM SOFTWARE DEVELOPMENT SERVICES 1,415,633,844 2 REVENUE FROM IT ENABLED SERVICES 997,425,829 3 RECHARGE TO GROUP COMPANIES 15,586,679 4 RECHARGE FROM GROUP COMPANIES 155,891,869 4. HE, THEREFORE, MADE A REFERENCE U/S 92CA TO TPO FOR DETERMINATION OF ALP FOR THESE TRANSACTIONS. 5. LD TPO, AFTER DETAILED ANALYSIS, DIRECTED FOR MA KING FOLLOWING ADJUSTMENTS: (I) SOFTWARE DEVELOPMENT SERVICES 209,228,000 (II) IT ENABLED SERVICE 138,463,000 6. THUS, LD. TPO ACCEPTED THE ARMS LENGTH PRICE ( ALP) AS DECLARED BY ASSESSEE IN REGARD TO RECHARGE TO GROUP COMPANIES ( RS. 15,586,679/-) AND RECHARGE FROM GROUP COMPANIES (RS. 155,891,869). 7. AFTER LD. DRPS DIRECTION THE ALP ADJUSTMENT AG GREGATING TO RS. 34,76,91,000/- WAS MADE BY LD. AO. BEING AGGRIEVED WITH THE ORDER OF LD. AO, THE ASSESSEE IS IN APPEAL BEFORE US AND HAS TAK EN FOLLOWING GROUNDS OF APPEAL: 3 ITA 6867/DEL/2014 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, A ND IN LAW; 1. THE ASSESSMENT ORDER PASSED BY THE LD. AO IN PAR TIAL PURSUANCE TO THE DIRECTIONS ISSUED BY THE HON'BLE D RP IS A VITIATED ORDER AS THE HON'BLE DRP ERRED BOTH ON FAC TS AND IN LAW IN CONFIRMING PART OF THE TRANSFER PRICING CTP' ) ADDITIONS MADE BY THE LD. AO/ LD. ADDITIONAL COMMISSIONER OF INCOME TAX, TRANSFER PRICING OFFICER - 1(2), NEW DELHI (LD . TPO). 1.1. THAT THE ASSESSMENT ORDER PASSED BY THE LD. AO IS BAD IN LAW IN AS MUCH AS THE SAME WAS PASSED IN COMPLETE D ISREGARD TO THE SCHEME OF THE ACT WHICH MANDATES THE AO TO I NCORPORATE THE DIRECTIONS OF THE DRP IN THE FINAL ORDER. 2, THE LD. AO / LD. TPO AND THE HON'BLE DRP ERRED I N IGNORING THE FACT THAT THE REFERENCE MADE BY THE LD .AO SUFFERS FROM JURISDICTIONAL ERROR AS THE LD. AO DID NOT REC ORD ANY REASONS IN THE DRAFT ASSESSMENT ORDER BASED ON WHIC H IT WAS CONCLUDED THAT IT WAS 'NECESSARY OR EXPEDIENT' TO R EFER THE MATTER TO THE LD. TPO FOR COMPUTATION OF THE ARM'S LENGTH PRICE CALP'), AS IS REQUIRED UNDER SECTION 92CA(1) OF THE ACT. 4. THE LD. AO / LD. TPO AND THE HON'BLE DRP ERRED I N NOT APPRECIATING THAT NONE OF THE CONDITIONS SET OUT IN SECTION 92C(3) OF THE ACT ARE SATISFIED IN THE PRESENT CASE . 5. THE LD. AO/DRP ERRED ON FACTS AND IN LAW DETERMI NING THE ARM'S LENGTH PRICE ('ALP') OF THE APPELLANT'S I NTERNATIONAL TRANSACTIONS PERTAINING RECEIPT OF SERVICE FEES (IT AND ITES ) FROM ITS ASSOCIATED ENTERPRISES (AES) AT RS. 2,656, 720,000/- AGAINST THE SUM OF RS. 2,413,060,000 RECEIVED BY TH E APPELLANT THEREBY ENHANCING THE INCOME OF THE ASSESSEE BY INR 243,660,000 AND IN DOING SO HAVE GROSSLY ERRED IN: 4.1. DISREGARDING THE ALP AS DETERMINED BY THE APPE LLANT IN THE TP DOCUMENTATION MAINTAINED BY IT IN TERMS OF SECTI ON 92D OF THE ACT READ WITH RULE 10D OF-THE INCOME-TAX RULES, 1962 4 ITA 6867/DEL/2014 (RULES') AS WELL AS FRESH SEARCH AND IN PARTICULAR MODIFYING/ REJECTING THE FILTERS APPLIED BY THE APPELLANT AND APPLYING ADDITIONAL/ REVISED FILTERS AS PER HIS CAPRICIOUS A PPROACH; 4.2. DISREGARDING MULTIPLE YEAR / PRIOR YEARS' DATA AS USED BY THE APPELLANT IN THE TP DOCUMENTATION AND HOLDING T HAT CURRENT YEAR (I.E. FINANCIAL YEAR 2009-10) DATA FOR COMPARA BLE COMPANIES SHOULD BE USED DESPITE THE FACT THAT THE SAME WAS NOT NECESSARILY AVAILABLE TO THE APPELLANT AT THE TIME OF PREPARING ITS TP DOCUMENTATION; AND 4.3. REJECTING THE ECONOMIC AND COMPARABILITY ANALY SIS UNDERTAKEN BY THE ASSESSEE IN ITS TP DOCUMENTATION / FRESH SEARCH AND APPLYING CERTAIN ERRONEOUS/ MODIFIED FI LTERS IN DETERMINING THE ALP; AND 4-4. INCLUDING HIGH-PROFIT MAKING COMPANIES IN THE FINAL COMPARABLES SET FOR BENCHMARKING A LOW RISK CAPTIVE UNIT SUCH AS THE APPELLANT (DISREGARDING JUDICIAL PRONOUNCEME NTS ON THE ISSUE) ; AND 4.5. ERRONEOUSLY INCLUDING CERTAIN FUNCTIONALLY DIS SIMILAR COMPANIES THAT ARE NOT COMPARABLE TO THE ASSESSEE I N TERMS OF FUNCTIONS PERFORMED, ASSETS EMPLOYED AND RISKS ASSU MED AND EXCLUDING CERTAIN COMPARABLE COMPANIES ON ARBITRARY / FRIVOLOUS GROUNDS; AND 4.6. ARBITRARILY INCLUDING COMPANIES HAVING HIGH MA RGIN/ VOLATILE OPERATING PROFIT MARGINS IN THE FINAL COM PARABLES' SET FOR BENCHMARKING A LOW RISK CAPTIVE UNIT SUCH AS TH E ASSESSEE; AND 4.7. IGNORING THE BUSINESS/ COMMERCIAL REALITY THAT SINCE THE APPELLANT IS REMUNERATED ON A ARM'S LENGTH COST PLU S BASIS, I.E. IT IS COMPENSATED FOR ALL ITS OPERATING COSTS PLUS A PRE-AGREED MARK-UP BASED ON A BENCHMARKING ANALYSIS, THE APPEL LANT 5 ITA 6867/DEL/2014 UNDERTAKES MINIMAL BUSINESS RISKS AS AGAINST COMPAR ABLE COMPANIES THAT ARE FULL FLEDGED RISK TAKING ENTREPR ENEURS, AND BY NOT ALLOWING A RISK ADJUSTMENT TO THE APPELLANT ON ACCOUNT OF THIS FACT; AND 4.8. NOT CONSIDERING THE CORRECT COMPUTATION OF OPE RATING PROFIT MARGINS OF CERTAIN COMPANIES USED AS COMPARABLE IN IT AND ITES SEGMENTS OF THE ASSESSEE; AND 4.9. NOT CONSIDERING THE CORRECT COMPUTATION OF WOR KING CAPITAL ADJUSTMENT TO OPERATING PROFIT MARGINS OF COMPARABL E COMPANIES USED AS COMPARABLE IN IT AND ITES SEGMENT S OF THE ASSESSEE BY CONSIDERING NON-OPERATING AND LONG TERM ITEMS AS PART OF TRADE RECEIVABLES/ PAYABLES; AND 4.10.NOT CONSIDERING THE CORRECT PRIME LENDING RATE FOR COMPUTING WORKING CAPITAL ADJUSTMENT TO OPERATING P ROFIT MARGINS OF COMPARABLE COMPANIES USED AS COMPARABLE IN IT SEGMENT OF THE ASSESSEE; AND 4.11. DISREGARDING JUDICIAL PRONOUNCEMENTS IN INDIA IN UNDERTAKING THE TP ADJUSTMENT; AND 4.12. NOT CONSIDERING THE CORRECT COMPUTATION OF OP ERATING PROFIT MARGINS OF CERTAIN COMPANIES USED AS COMPARA BLE IN IT AND ITES SEGMENTS OF THE ASSESSEE; AND 4.13.NOT ALLOWING THE APPEALLANT THE BENEFIT OFTHE +/- 5% RANGE AVAILABLE TO THE APPELLANT AS PER THE PROVISO TO SE CTION 92C(2) OF THE ACT; AND THE LD. AO/HON'BLE DRP ERRED IN IGNORING THE FACT T HAT THE ASSESSEE IS ENTITLED TO TAX HOLIDAY UNDER SECTION L OA OF THE ACT ON ITS PROFITS AND THEREFORE WOULD NOT HAVE ANY UNT OWARD MOTIVE OF DERIVING A TAX: ADVANTAGE BY MANIPULATIN G TRANSFER PRICES OF ITS INTERNATIONAL TRANSACTIONS. 6 ITA 6867/DEL/2014 THE LD.AO/HON!BLEDRP HAS ERRED BOTH-ON FACTS AND IN LAW IN INITIATING THE PENALTY UNDER SECTION 271(1)(C) OF T HE ACT THE LD. AO/HON'BLE DRP HAS ERRED BOTH ON FACTS AND IN LAW IN CHARGING INTEREST UNDER SECTION 234B AND 234D OF TH E ACT 8. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT FOR THE SAKE OF BREVITY HE IS PRIMARILY PRESSING GROUND NOS. 4.3 T O 4.7. HE POINTED OUT THAT IN THE SOFTWARE DEVELOPMENT SERVICES SEGMENT HE IS PRIMARILY DISPUTING THREE COMPARABLES AND IN THE ADJUSTMENT RELATING TO IT SE GMENT, HE IS PRIMARILY DISPUTING 4 COMPARABLES. 9. AS REGARDS ADJUSTMENT DIRECTED FOR SOFT DEVELOPM ENT SERVICES, LD. TPO NOTICED THAT THE ASSESSEE HAD USED TNMM AS THE MOST APPROPRIATE METHOD IN DETERMINING ITS INTERNATIONAL TRANSACTIONS AND OP/T C WAS TAKEN AS THE PROFIT LEVEL INDICATOR IN THE TNMM ANALYSIS. 10. LD. TPO NOTICED THAT IN THE TP STUDY THE ASSESS EE HAD ARRIVED AT A SET OF 16 COMPANIES WITH AN AVERAGE MARGIN OF 10% BY US ING MULTIPLE YEAR DATA. HE NOTICED THAT ASSESSEES OWN MARGIN OF THIS SEGME NT WAS WORKED OUT AT 12.98%. THUS, THE ASSESSEE HAD CONCLUDED THAT ITS I NTERNATIONAL TRANSACTION IN REGARD TO SOFTWARE DEVELOPMENT SERVICES WERE AT ARM S LENGTH. 11. AS REGARDS SOFTWARE DEVELOPMENT SERVICE SEGMENT , LD. COUNSEL POINTED OUT THAT IN THE TP STUDY THERE WERE 16 COMPARABLES. HOWEVER, AFTER FRESH SEARCH WAS CARRIED OUT AS PER THE VARIOUS FILTERS A DOPTED BY TPO AND MARGINS WERE UPDATES, 21 COMPARABLES WERE SELECTED BY ASSES SEE WHICH ARE MENTIONED IN PARA 4 OF THE SHOW CAUSE NOTICE CONTAI NED AT PAGES 7 & 8 OF TPOS ORDER. HE REFERRED TO PAGE 9 OF TPOS ORDER A ND POINTED OUT THAT LD. TPO REJECTED 14 COMPARABLES AND ACCEPTED 7 COMPARAB LES AND FURTHER INCLUDED 7 NEW COMPARABLES. THUS, IN FINAL ANALYSIS LD. TPO TOOK 14 7 ITA 6867/DEL/2014 COMPARABLES WHICH ARE GIVEN IN PARA 4.3 OF HIS ORDE R, THE AVERAGE MARGIN OF WHICH WAS 28.43%. THE SAME ARE REPRODUCED HEREUNDER : SL. NO. NAME OF THE COMPANY OP/OC 1 AKSHAY SOFTWARE TECHNOLOGIES LTD. - 1.04%% 2 EVOKE TECHNOLOGIES PRIVATE LIMITED 18.56% 3 INFINITE DATA SYSTEM PRIVATE LIMITED 69.94% 4 INFOSYS LIMITED 45.47% 5 LGS GLOBAL LIMITED (YBRANT DIGITAL LIMITED) 12.78% 6 LARSEN & TOUBRO INFOTECH LTD. 19.06% 7 MINDTREE LTD. (SEGMENT) 13.92% 8 PERSISTENT SYSTEMS ALIMITED 30.18% 9 SASKEN COMMUNICATIN TECHNOLOGIES LTD. 17.54% 10 SONATA SOFTWARE LTD. 35.87% 11 TATA ELXSI (SEGMENT) 20.25% 12 THINKSOFT GLOBAL SERVICES LTD. 17.05% 13 WIPRO TECHNOLOGY SERVICES LIMITED 73.35% 14 ZYLOG SYSTEMS LIMITED 25.07% AVERAGE 28.43% 12. LD. COUNSEL SUBMITTED THAT FIRST COMPARABLE DI SPUTED BY ASSESSEE IS INFOSYS TECHNOLOGIES LIMITED. HE POINTED OUT THAT T HIS COMPARABLE WAS REJECTED BY ASSESSEE IN TP STUDY. 13. LD. COUNSEL SUBMITTED THAT ASSESSEE HAD OBJECTE D TO INCLUSION OF THIS COMPARABLE BECAUSE OF THE DIVERSIFIED FUNCTIONS LI KE CONSULTING, APPLICATION DESIGN, DEVELOPMENT, RE-ENGINEERING AND MAINTENANCE , SYSTEM INTEGRATION, PACKAGE EVALUATION AND IMPLEMENTATION AND BUSINESS PROCESS MANAGEMENT ETC. BEING CARRIED OUT BY THIS COMPARABLE. HE FURTH ER POINTED OUT THAT THE TURNOVER OF THIS COMPARABLE IS RS. 21,140 CRORES, W HICH IS APPROXIMATELY 150 TIMES OF THE ASSESSEES TURNOVER WHICH WAS ONLY RS. 142 CRORES. HE 8 ITA 6867/DEL/2014 FURTHER POINTED OUT THAT THIS COMPARABLE HAS BRAND OWNERSHIP, WHICH IT HAS ACQUIRED BY INCURRING SUBSTANTIAL MARKETING EXPENSE S. FURTHER, IT OWNS PROPRIETARY PRODUCTS LIKE FINACLE, INFOSYS ACTICEDE SK, INFOSYS IPROWE, INFOSYS MCONNECT. HE POINTED OUT THAT THIS COMPANY DERIVED SUBSTANTIAL PORTION OF ITS REVENUE FROM SALE OF ITS PROPRIETARY PRODUCTS (INCLUDING ITS FLAGSHIP BANKING PRODUCT SUITE FINACLE). ON THE C ONTRARY THE ASSESSEE DOES NOT OWN ANY BRAND OR PROPRIETARY PRODUCTS. HE FURTH ER POINTED OUT THAT OTHER DISTINGUISHING FEATURES FROM ASSESSEE WERE EXPENSE S INCURRED BY INFOSYS ON RESEARCH AND DEVELOPMENT WHICH WERE RS. 440 CRORES (APPROX 2.1% OF REVENUE), WHEREAS ASSESSEE DID NOT INCUR ANY EXPEND ITURE ON R&D. FURTHER, OFFSHORE REVENUE OF THIS COMPANY WAS 98.7% (TOTAL SALES RS. 21,140 CRORES, OUT OF WHICH SOFTWARE EXPORT REVENUE WAS RS. 20,871 CRORES). HE POINTED OUT THAT ASSESSEE IS ONLY A CAPTIVE SERVICE PROVIDER AN D IS RENDERING SERVICES TO ITS AES ONLY. FURTHER, AMP EXPENDITURE OF INFOSYS W AS RS 215 CRORES (APPROXIMATELY 1.02% OF REVENUE) AS AGAINST NIL EXP ENDITURE ON AMP BY ASSESSEE. ON THE COMPARISON OF RISK BEING UNDERTAKE N BY THIS COMPARABLE VIS A VIS ASSESSEE, LD. COUNSEL POINTED OUT THAT THIS C OMPARABLE OPERATES AS FULL FLEDGED RISK TAKING ENTREPRENEUR WHEREAS ASSESSEE B EING CAPTIVE SERVICE PROVIDER DOES NOT TAKE SUCH RISK. IN SUPPORT OF VA RIOUS ARGUMENTS NOTED ABOVE, LD. COUNSEL HAS REFERRED TO ANNUAL REPORT OF THIS COMPARABLE CONTAINED IN THE PAPER BOOK. 14. LD. COUNSEL RELIED ON THE DECISION OF THE ITAT IN THE CASE OF AGNITY INDIA TECHNOLOGIES PVT. LTD. RENDERED IN ITA NO. 12 04/DEL/2011, WHEREIN THIS COMPARABLE HAS BEEN REJECTED. HE ALSO REFERRE D TO THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF RAMPGREEN S OLUTIONS PVT. LTD. RENDERED IN ITA NO. 102/2015 FOR AY 2008-09 IN SUPP ORT OF THE PROPOSITION 9 ITA 6867/DEL/2014 THAT UNLESS THE COMPARABLE SATISFIES THE TEST OF FU NCTIONAL COMPARABILITY, THE SAME CANNOT BE TAKEN AS A COMPARABLE. 15. THE SECOND COMPARABLE DISPUTED BY LD. COUNSEL I S WIPRO TECHNOLOGY SERVICES LTD. LD. COUNSEL POINTED OUT THAT THIS COM PARABLE WAS REJECTED IN TP STUDY PRIMARILY ON THE GROUND OF BUSINESS RESTRU CTURING/ EXTRA-ORDINARY CIRCUMSTANCES AND ABNORMALLY HIGH/ VOLATILE PROFIT MARGIN. LD. COUNSEL REFERRED TO THE ANNUAL REPORT OF THIS COMPANY, CONT AINED AT PAGE 97 ONWARDS OF THE PB. LD. COUNSEL POINTED OUT THAT THIS COMPAN Y CARRIES ON VARIOUS DIVERSIFIED FUNCTIONS TECHNOLOGY INFRASTRUCTURE D EVELOPMENT INCLUDING APPLICATION DESIGN, DEVELOPMENT, RE-ENGINEERING & M AINTENANCE AND SYSTEM INTEGRATION ETC. SPECIFICALLY FOR CITIGROUP INC. HE REFERRED TO PAGE 97 OF THE PB AND POINTED OUT THAT WIPRO TECHNOLOGY SERVICES LTD. HAD REACHED AN AGREEMENT WITH CITI GROUP FOR ACQUIRING CITI TECHNO LOGY SERVICES LTD. ON 21.1.2009 WIPRO LTD. SIGNED A MASTER AGREEMENT WITH CITI GROUP INC. FOR THE DELIVERY OF TECHNOLOGY INFRASTRUCTURE SERVICES AND APPLICATION DEVELOPMENT AND MAINTENANCE SERVICES FOR THE PERIOD OF SIX YEAR S WITH A GUARANTEED REVENUE OF US $ 500 MILLION. AFTER THE ACQUISITION BY WIPRO THE NAME OF CTS WAS CHANGED TO WIPRO TECHNOLOGIES SERVICES LTD. ON 16.3.2009. WITH REFERENCE TO MSA, LD. COUNSEL POINTED OUT THAT THIS IS AN EXTRAORDINARY EVENT WHICH HAS TAKEN PLACE. 16. LD. COUNSEL FURTHER SUBMITTED THAT THE TRANSACT IONS WITH WIPRO AND CITI GROUP ENTITIES FALL IN THE AMBIT OF SEC. 92B(2 ) OF THE ACT FOR THE FOLLOWING REASONS: I. WIPRO LTD., PARENT COMPANY OF THE ASSESSEE, EXECUTE D AN AGREEMENT WITH CITI GROUP INC. FOR ACQUIRING CITI T ECHNOLOGY SERVICES LTD., NOW CALLED WIPRO TECHNOLOGY SERVICES LTD. 10 ITA 6867/DEL/2014 II. ON 21.1.2009, WIPRO LTD. SIGNED A MASTER AGREEMENT WITH CITI GROUP INC., FOR THE DELIVERY OF TECHNOLOGY INFRASTR UCTURE SERVICE AND APPLICATION DEVELOPMENT AND MAINTENANCE SERVICE S FOR THE PERIOD OF SIX YEARS. III. THIS SHOWS THAT INCOME FROM SOFTWARE DEVELOPMENT S UPPORT AND MAINTENANCE SERVICERS WAS EARNED BY WIPRO TECHNOLOG Y SERVICES LTD. FROM CITI GROUP INC. BY MEANS OF MASTER SERVIC E AGREEMENT ENTERED INTO BETWEEN WIPRO LTD. ITS PARENT COMPANY AND CITI GROUP INC., A THIRD PERSON. IV. RULE 10B(1)(E)(II) THAT IT IS THE NET PROFIT MARGIN REALIZED FROM A COMPARABLE UNCONTROLLED TRANSACTION, WHICH IS CONSI DERED FOR THE PURPOSES OF BENCHMARKING. V. SECTION 92B(2) PROVIDES THAT A TRANSACTION ENTE RED INTO BY A ENTERPRISE WITH A PERSON OTHER THAN AN ASSOCIATED E NTERPRISE SHALL, FOR THE PURPOSES OF SUB-SECTION (1), BE DEEMED TO B E A TRANSACTION ENTERED INTO BETWEEN TWO ASSOCIATED ENTERPRISES, IF THERE EXISTS A PRIOR AGREEMENT IN RELATION TO THE RELEVANT TRANSAC TION BETWEEN SUCH OTHER PERSON AND THE ASSOCIATED ENTERPRISE. 17. LD. COUNSEL POINTED OUT THAT THE NATURE OF BUSI NESS OF THIS COMPANY IS NOT CLEAR FROM THE ANNUAL REPORT THE TURNOVER OF TH IS COMPANY IS RS. 400 CRORES AS AGAINST RS. 142 CRORES OF ASSESSEE. FURTH ER, THE BRAND OWNERSHIP GIVES LEVERAGE TO THIS COMPARABLE. WIPRO BRAND WAS TAKEN OVER BY THE COMPANY ON MERGER WHEREAS ASSESSEE DOES NOT HAVE AN Y BRAND OR PROPRIETARY 11 ITA 6867/DEL/2014 PRODUCTS. OFFSHORE REVENUE OF WIPRO IS RS. 3,88,46, 35,089, WHICH SHOWS ITS EXTENT OF ITS OFFSHORE OPERATIONS WHEREAS ASSESSEE IS 100% CAPTIVE SERVICE PROVIDER AND RENDERING SERVICES TO ITS AES. HE FURT HER POINTED OUT THAT NO DETAILS ARE AVAILABLE IN THE ANNUAL REPORT REGARDIN G RELATED PARTY TRANSACTIONS. FURTHER, NO SEGMENTAL INFORMATION IS AVAILABLE IN T HE ANNUAL REPORT. 18. HE FURTHER POINTED OUT THAT THIS COMPARABLE HAS ABNORMALLY HIGH MARGIN/ VOLATILE PROFIT MARGINS OF 72.48% AS PER CO RRECT COMPUTATION AND 68.84% AS PER TP ORDER. HE POINTED OUT THAT THE PR OFITABILITY EARNED BY THIS COMPANY IS 73.77%, 52.55% AND 80.81% FROM FY 2009-1 0 TO FY 2011-12 RESPECTIVELY. THUS, FY 2009-10 WAS AN ABNORMAL FY. FURTHER, THIS COMPANY IS A FULL FLEDGED RISK TAKING ENTREPRENEUR WHEREAS ASSESSEE OPERATES AS MINIMAL RISKS AS IT IS A CAPTIVE SERVICE PROVIDER RENDERING SERVICES TO FIDELITY GROUP COMPANIES. 19. LD. COUNSEL POINTED OUT THAT THIS COMPARABLE HA S BEEN REJECTED BY THE TRIBUNAL IN THE CASE OF EQUANT SOLUTIONS INDIA PVT . LTD. VS. DCIT RENDERED IN ITA NO. 1202/DEL/2015 AND IN REGARD TO FUNCTION AL DISSIMILARITY LD. COUNSEL RELIED ON THE DECISION OF THE HONBLE DELH I HIGH COURT IN THE CASE OF RAMPGREEN SOLUTIONS PVT. LTD. RENDERED IN ITA N NO. 102/2015 FOR AY 2008-09. 20. THE THIRD COMPARABLE DISPUTED BY ASSESSEE IS P ERSISTENT SYSTEMS LTD. LD. COUNSEL POINTED OUT THAT THIS COMPARABLE WAS NO T CONSIDERED IN TP STUDY AND ITS INCLUSION WAS OBJECTED BECAUSE OF FUNCTIONA L DISSIMILARITY AS THE COMPANY BEING ENGAGED IN THE PRODUCT DEVELOPMENT. F URTHER, THERE WAS NON- AVAILABILITY OF SEGMENTAL INFORMATION AND EXTRA ORD INARY CIRCUMSTANCES, BEING ACQUISITION OF ASSETS IN PAXONIC INC. TOOK P LACE DURING THE YEAR. HE POINTED OUT THAT THIS COMPANY WAS INVOLVED IN MERG ER/ DEMERGE ACTIVITIES. 12 ITA 6867/DEL/2014 HE POINTED OUT THAT THIS COMPARABLE HAS BEEN REJECT ED IN BY THE ITAT IN THE CASE OF EQUANT SOLUTIONS INDIA PVT. LTD. VS. DCIT R ENDERED IN ITA NO. 1202/DEL/2015. 21. LD. CIT(DR) SUBMITTED THAT ASSESSEE HAS NOT CON TESTED THE FILTERS AS ADOPTED BY LD. TPO. IN THIS REGARD HE REFERRED TO P AGE 8 OF TPOS ORDER WHEREIN HE HAS DISCUSSED THE COMPARABLES FINALLY SE LECTED BY HIM. LD. CIT(DR) SUBMITTED THAT ASSESSEE IS OBJECTING TO ONL Y THOSE COMPARABLES WHERE MARGIN IS HIGH AND, THUS, CHERRY PICKING THRE E COMPARABLES. HOWEVER, ASSESSEE HAS ACCEPTED THE REJECT MATRIX ADOPTED BY TPO. 22. LD. CIT(DR) REFERRED TO LD. DRPS DIRECTION AND POINTED OUT THAT LD. DRP HAS CONSIDERED ALL OBJECTIONS TAKEN BEFORE IT. HE REFERRED TO PAGE 6 OF LD. DRPS DIRECTIONS AND POINTED OUT THAT ONE OF TH E ISSUE BEFORE LD. DRP WAS WHETHER AO/ TPOS ACTION, BY APPLYING VARIOUS F ILTERS, WAS RIGHT IN REJECTING VARIOUS COMPARABLES INCLUDING NEW COMPAR ABLES. WHILE CONSIDERING THIS ISSUE LD. DRP EXAMINED IN DETAIL V ARIOUS FILTERS. HE POINTED OUT THAT LD. DRP IN PARA 7.21 HAS CONSIDERED VARIO US CASE LAWS TO BUTTRESS LD. TPOS CONTENTIONS THAT HIGH TURNOVER WAS NOT A RELEVANT FACTOR. 23. LD. CIT(DR) SUBMITTED THAT LD. DRP HAS CONSIDER ED THE BRAND, R&D AND TURNOVER FILTERS AND HAS GIVEN COGENT REASONS A S TO HOW THAT WILL NOT AFFECT PLI. HE POINTED OUT THAT LD. DRP ALSO INCLU DED CERTAIN COMPARABLES AND GRANTED A RELIEF OF APPROXIMATELY RS. 10 CRORES ADJUSTMENT TO ASSESSEE. 24. LD. COUNSEL FOR THE ASSESSEE, IN THE REJOINDER, SUBMITTED THAT ASSESSEE HAS SPECIFICALLY TAKEN GROUND NO. 4.1 WHEREIN IT HA S CONTESTED THE MODIFICATION/ REJECTION OF THE FILTERS APPLIED BY A SSESSEE AND LD. TPOS ACTION IN APPLYING ADDITIONAL/ REVISED FILTERS. HE SUBMITT ED THAT ASSESSEE HAS NOT CONCEDED THIS GROUND BUT IN ORDER TO AVOID DETAILED HEARING HAS NOT SERIOUSLY 13 ITA 6867/DEL/2014 CONTESTED THE GROUND. HE SUBMITTED THAT ASSESSEE IS NOT PER SE DISPUTING THE CONTENTIONS OF LOWER REVENUE AUTHORITIES THAT TURNO VER PER SE CANNOT BE A RELEVANT FACTOR FOR ACCEPTING/ REJECTING THE COMPAR ABLE. BUT WHEN IT BECOMES PART OF OTHER DISSIMILARITY, WHICH HE HAS DEMONSTRA TED WITH REFERENCE TO THE THREE COMPARABLES NOTED ABOVE, THEN IT ASSUMES SIGN IFICANCE. LD. COUNSEL POINTED OUT THAT ASSESSEE HAS RELIED ON THE DECISIO N IN THE CASE OF EQUANT SOLUTIONS INDIA PVT. LTD. (SUPRA) AND NO DISTINCTIO N HAS BEEN SHOWN IN THE PROFILE OF ASSESSEE VIS A VIS EQUANT SOLUTIONS INDI A PVT. LTD. (SUPRA) THEREFORE, THE DECISION IS FULLY APPLICABLE TO THE FACTS OF THE CASE. 25. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE RECORD OF THE CASE. THERE IS NO DISPUTE AS REGARDS THE APPLICABILITY OF TNM METHOD AND THE PLI BEING OP/TC . ALL THE THREE COMPARABLES, WHICH HAVE BEEN DISPUTED BY ASSESSEE, ARE PRIMARILY DISPUTED ON THE FUNCTIONAL PROFILE OF THE COMPARABLES. 26. AS FAR AS LD. CIT(DR)S SUBMISSION THAT SINCE T HE ASSESSEE HAS NOT CONTESTED THE FILTERS, THEREFORE, COMPARABLES WHICH HAVE PASSED THE FILTER, CANNOT BE DISPUTED, IS CONCERNED, WE ARE NOT INCLIN ED TO ACCEPT THIS PLEA OF LD. CIT(DR), FIRSTLY BECAUSE LD. COUNSEL FOR THE AS SESSEE HAS NOT CONCEDED ON VARIOUS FILTERS BUT IN ORDER TO CUT SHORT THE CONTR OVERSY DID NOT AGITATE ON SEPARATE FILTERS. BE THAT AS IT MAY, MERELY BECAUSE A PARTICULAR COMPARABLE SATISFIES ALL THE FILTERS CONSIDERED BY LD. TPO AND ALSO BY ASSESSEE, IT CANNOT BE CONCLUDED THAT THE COMPARABLE HAS TO BE ACCEPTED ON THAT BASIS ALONE. A COMPARABLE MIGHT HAVE PASS THE EXPORT FILTER BUT AT THE SAME TIME THERE MAY BE OTHER FACTORS LIKE BRAND OWNERSHIP, RISK ETC., W HICH INFLUENCE THE PROFITABILITY OF A COMPARABLE AND THAT CANNOT BE IG NORED. IN THE CASE OF WIPRO TECHNOLOGIES LTD., WHICH IS ONE OF THE COMPAR ABLE UNDER 14 ITA 6867/DEL/2014 CONSIDERATION, THERE WAS AN EXTRAORDINARY FACTOR, W HICH WAS ACQUISITION OF CITI TECHNOLOGIES SERVICES LTD., RENAMED AS WIPRO TECHNOLOGIES SERVICES LTD. THOUGH THE COMPANY WAS TAKEN OVER BUT THE PRI CING ARRANGEMENT CONTINUED AS IT WAS THE OLD AGREEMENT. THIS DEFINI TELY INFLUENCED ON PROFITABILITY OF COMPARABLE BUT THERE WAS NO FILTER WHICH COULD FILTER ATE THIS COMPARABLE FROM THE LIST OF COMPARABLES. IN VIEW OF ABOVE DISCUSSION WE ARE NOT INCLINED TO ACCEPT THE PLEA OF LD. DR THAT MER ELY BECAUSE ASSESSEE HAS ACCEPTED THE VARIOUS FILTERS, THEREFORE, IT CANNOT CHALLENGE THE EXCLUSION OF COMPARABLES WHICH PASSES ALL THE FILTERS ON SEPARAT E GROUNDS., 27. THE HONBLE DELHI HIGH COURT IN THE CASE OF SON Y ERICSSON MOBILE COMMUNICATIONS INDIA PVT. LTD. VS. CIT (ITA NO. 16/ 2014 DATED 16.3.2015), WHILE CONSIDERING THE ATTRIBUTES OF TNM METHOD HAS OBSERVD IN PARA 90 OF THE DECISION AS UNDER: 90. THE STRENGTH OF THE TNM METHOD IS THAT NET PROF IT INDICATORS ARE AFFECTED BY TRANSACTIONAL DIFFERENCES IN COMPAR ISON WITH SOME OTHER METHODS. THIS METHOD IS MORE TOLERANT TO FUNCTIONAL DIFFERENCES BETWEEN CONTROLLED AN UNCONTROLLED TRAN SACTIONS IN COMPARISON WITH RESORT TO GROSS PROFIT MARGINS. YET THE NET PROFIT INDICATORS HAVE POTENTIALITY TO INTRODUCE AN -ELEMENT OF VOLATILITY PRIMARILY FOR TWO REASONS. FIRSTLY, FACT ORS WHICH DO NOT AFFECT GROSS PROFIT MARGIN AND PRICES CAN INFLU ENCE NET PROFIT INDICATORS DUE TO VARIATION OF OPERATING EXP ENSES OR VICE- VERSA. THIS POTENTIALITY HAS REFERENCE TO VARIATION IN OPERATIONAL EXPENSES INCLUDING AMP EXPENSES. THE OT HER FACTORS INCLUDE TAX- PAYERS COMPETITIVE POSITION IN THE FORM OF PRICE AND MARGINS AND IN SOME CASES, IT MAY BE DIFF ICULT TO ELIMINATE OR COMPUTE THE EFFECT OF THESE FACTORS. THESE DIFFICULTIES IN APPLYING OR ACCEPTING THE TNM METHO D ARISE WHEN THERE IS COMPLEXITY OF FUNCTIONS AND EACH PART Y TO THE TRANSACTION(S) MAKES VALUABLE UNIQUE CONTRIBUTION. RELIABILITY OF THE TNM METHOD IS SUFFICIENTLY CERTAIN WHERE ONE OF THE 15 ITA 6867/DEL/2014 PARTIES MAKES ALL CONTRIBUTION INVOLVED IN THE CONT ROLLED TRANSACTION . THIS IS THE POSITION EVEN AS PER THE REVENUE'S CA SE IN THE PRESENT SET OF APPEALS. REVENUE HAS ASSERTED THAT THE INDIAN SUBSIDIARIES, I.E. THE ASSESSEES ARE MERE DU MMIES WHICH IMPLEMENT, PROMOTE AND INCUR AMP EXPENSES FOR BUILD ING BRAND VALUE OF THE FOREIGN AE. VALUE ADDITION FOR T HE INDIAN AE IS NOT PLEADED OR ARGUED. SELECTION OF THE TNM METH OD WHERE ADOPTED BY THE ASSESSEE REMAINS UNCHALLENGED BY THE TPOI ASSESSING OFFICER. (EMPHASIS SUPPLIED BY US) 28. THEREFORE, WE ARE IN AGREEMENT WITH THE SUBMISS IONS ADVANCED BY LD. COUNSEL FOR THE ASSESSEE THAT THOUGH TURNOVER PER S E CANNOT BE A BASIS FOR REJECTING/ ACCEPTING A COMPARABLE, BUT, WHEN TNM ME THOD IS APPLIED THEN FUNCTIONAL SIMILARITY ASSUMES CONSIDERABLE SIGNIFIC ANCE AND IF THE FUNCTIONS PERFORMED ALONG WITH OTHER FEATURES, AS NOTICED BY US, WHILE CONSIDERING THE COMPARABLE, ARE SIGNIFICANTLY DIFFERENT, THEN THE S AID COMPANY CANNOT BE TAKEN AS A COMPARABLE TO THE TESTED PARTY. 29. ONE OF THE SUBMISSION OF LD. COUNSEL IS THAT WI PRO TECHNOLIOGY SERVICES PVT. LTD. AND PERSISTENT SYSTEMS LTD. HAVE BEEN EXCLUDED IN THE CASE OF EQUANT SOLUTIONS INDIA PVT. LTD. (SUPRA). T HIS DECISION IS CONTAINED AT PAGE 30 ONWARDS OF THE PB AND PARA 5 OF THIS DEC ISION READS AS UNDER: 05. FACTS APROPOS ARE THAT EQUANT SOLUTIONS INDIA P RIVATE LIMITED ASSESSEE IS A SUBSIDIARY OF EGN BV, NETHERL ANDS. THE COMPANY IS ENGAGED IN PROVIDING INFORMATION TECHNOL OGY ENABLES NETWORK MANAGEMENT AND OTHER BACK OFFICE SU PPORT SERVICES TO ITS GROUP COMPANIES. IT ALSO UNDERTAKES SOFTWARE DEVELOPMENT SERVICES FOR DEVELOPING SOFTWARE APPLIC ATIONS, WHICH ARE USED WITHIN THE EQUANT GROUP. THE IT ENAB LES NETWORK MANAGEMENT AND OTHER BACK OFFICE SUPPORT SE RVICES PERFORMED BY ASSESSEE PRIMARILY INCLUDE REMOTE MONI TORING AND MAINTENANCE OF EQUANT GLOBAL NETWORK PLATFORMS AND FURTHER UNDER THE CATEGORY OF SOFTWARE DEVELOPMENT SERVICES IMPLEMENTATION OF QUALITY CUSTOMER NETWORKING SOL UTIONS. 16 ITA 6867/DEL/2014 SERVICES, COORDINATION, REMOTE CONFIGURATION, AND A SSESSEE IS ENGAGED IN THE PROVIDING ROUTINE CONTRACT SOFTWARE DEVELOPMENT SERVICES RELATING TO THE DEVELOPMENT AN D MAINTENANCE OF APPLICATION COMPANIES LIKE HR AND ACCOUNTING. 30. FROM THE ABOVE OBSERVATIONS IT IS EVIDENT THAT THIS COMPANY WAS ALSO UNDERTAKING SOFTWARE DEVELOPMENT SERVICES FOR DEVEL OPING SOFTWARE APPLICATION WHICH WERE USED WITHIN THE EQUANT GROUP . THEREFORE, THE FUNCTIONS CARRIED OUT BY THIS COMPANY WERE SIMILAR TO THAT OF ASSESSEE. THEREFORE, THIS DECISION IS APPLICABLE TO THE FACTS OF THE CASE. WE FIND THAT AS REGARDS PERSISTENT SYSTEMS LTD., TRIBUNAL HAS OBSER VED IN PARA 13 OF THE DECISION AS UNDER: 13. PERSISTENT SYSTEMS LIMITED A. TPO HAS TAKEN PERSISTENT SYSTEMS LIMITED (PERSIS TENT) WHICH HAS A MARGIN 29.02% AS COMPARABLE HOLDING THAT THE COMPANY IS ENGAGED IN SOFTWARE DEVELOPING SERVICES. THE ID DRP REJECTED THE CLAIM OF THE ASSESSEE FOR ITS EXCLUSIO N. BEFORE US, THE ID AR SUBMITTED THAT THIS COMPANY IS FUNCTIONAL LY DIFFERENT BECAUSE IT RENDERS OUTSOURCED PRODUCT DEVELOPMENT S ERVICES AND DEVELOPED PRODUCT AS PAXPRO, CHEMLMS ETC. HE FU RTHER CONTENDED THAT SEGMENTAL INFORMATION OF SALE OF SOF TWARE SERVICES AND SALE OF PRODUCT ARE NOT AVAILABLE AND THEREFORE IT SHOULD BE EXCLUDED. HE RELIED ON THE DECISION OF 3D PLM SOFTWARE SOLUTIONS LIMITED V 42 TAMANN.COM 333 ( BA NG.) AND YADLEE INFOTECH PVT LIMITED TS- 465-ITAT 2014 ( BAN G.) B. LD. DR RELIED ON THE ORDER OF AO AND SUBMITTED T HAT AO HAS GIVEN SUFFICIENT REASON FOR SELECTION OF THIS COMPA RABLE. C. WE HAVE PERUSED THE ARGUMENTS ON THE SAME. FIRST LY ON PERUSAL OF THE BALANCE SHEET OF THIS COMPARABLE IT IS NOTED THAT THAT THIS COMPANY HAS NOT PROVIDED SEGMENTAL INFORM ATION FOR 17 ITA 6867/DEL/2014 SALE OF SERVICES AND SALE OF PRODUCTS OF SOFTWARE'S . FURTHER IT IS SEEN FROM THE DETAILS ON RECORD THAT THIS COMPANY I .E. PERSISTENT SYSTEMS LTD., IS ENGAGED IN PRODUCT DEVELOPMENT AND PRODUCT DESIGN SERVICES WHILE THE ASSESSEE IS ENGAGED IN CO NTRACT SOFTWARE DEVELOPMENT SERVICES. WE FIND THAT, AS SUB MITTED BY THE ASSESSEE, THE SEGMENTAL DETAILS ARE ALSO NOT AV AILABLE SEPARATELY. THEREFORE, FOLLOWING THE PRINCIPLE ENUN CIATED IN THE DECISION OF THE MUMBAI TRIBUNAL IN THE CASE OF TELC ORDIA TECHNOLOGIES INDIA (P.) LTD. V. ASSTT. EIT [2012J 1 37 ITD 1/22 TAXMANN.COM 96 (MUM.) THAT IN THE ABSENCE OF SEGMEN TAL DETAILS/INFORMATION A COMPANY IT CANNOT BE TAKEN IN TO ACCOUNT FOR COMPARABILITY ANALYSIS, WE HOLD THAT THIS COMPA NY I.E. PERSISTENT SYSTEMS LTD. OUGHT TO BE OMITTED FROM TH E SET OF COMPARABLES FOR THE YEAR UNDER CONSIDERATION. IT IS ORDERED ACCORDINGLY. 31. AS REGARDS WIPRO TECHNOLOGY SERVICES PVT. LTD., WE FIND THAT TRIBUNAL HAS OBSERVED IN PARA 15 OF THE DECISION AS UNDER: 15. WIPRO TECHNOLOGY SERVICES LIMITED. A. TPO HAS INCLUDED WIPRO TECHNOLOGY SERVICES LTD H AVING A MARGIN OF 73.35% AND IT HAS BEEN UPHELD BY DRP. BEF ORE US, THE ID AR SUBMITTED THAT THIS COMPANY HAS HUGE RELA TED PARTY TRANSACTION AS COMPANY'S TOTAL REVENUE IS GOVERNED BY MASTER SERVICE AGREEMENT WITH CITI TECHNOLOGY SERVICES LIM ITED WHERE THE 100 % OF THE EQUITY IS OWNED BY WIPRO. THEREFOR E, THE ENTIRE REVENUE OF THIS IS MUCH RELATED PARTY. IT WA S FURTHER SUBMITTED THAT IT HAS TURNOVER OF MORE THAN 24 TIME S OF THE ASSESSEE AND HAS HUGE BRAND VALUE OF WIPRO AND THER EFORE IT SHOULD BE EXCLUDED. HE FURTHER BUTTRESSED HIS CLAIM OF EXCLUSION BY SUBMITTING THE VOLATILE PLI OF THE COMPANY FROM 52.55 % TO 80.81 % IN A CHART FOR THREE YEARS. B. LD. DR RELIED ON THE ORDER OF TPO AND DRP FOR TH E REASON GIVEN FOR SELECTION OF THIS COMPARABLE. 18 ITA 6867/DEL/2014 C. WE CAREFULLY CONSIDERED THE RIVAL CONTENTION REG ARDING EXCLUSION OF THIS COMPARABLE. THIS COMPANY HAD AGR EED AN AGREEMENT WITH CITI TECHNOLOGY SERVICES LTD, WHICH IS 100% SUBSIDIARY OF WIPRO TECHNOLOGY LTD. THE ENTIRE REVE NUE DURING THE YEAR IS COVERED BY A MASTER SERVICE AGREEMENT E NTERED INTO BY WIPRO WITH CITI GROUP SERVICES. FURTHER, THIS CO MPANY IS ALSO A SUBSIDIARY OF WIPRO LTD., WHICH COMPANY HAS A CONSIDERABLE BRAND NAME, THEREFORE BENEFIT ACCRUING TO THIS COMPANY FROM THE BRAND NAME OF WIPRO CANNOT BE DENI ED. THEREFORE RELYING ON THE DECISION OF THE COORDINATE BENCH IN THE CASE OF AGNITY TECHNOLOGY PVT. LTD, IN ITA NO.955JD ELJ2015 FOR ASSESSMENT YEAR 2010--11, WHEREIN THE INFOSYS O WNS OF ITS BRAND NAME WAS HELD TO BE INCOMPARABLE ON THE SAME ANALOGY, BRAND VALUE OF 'WIPRO' DOES HELP THIS COMPARABLE. H ENCE, WE DIRECT TPO TO EXCLUDE THIS COMPARABLE, IT IS ORDERE D ACCORDINGLY. 32. APART FROM THESE CONSIDERATIONS, WE FURTHER FIN D CONSIDERABLE FORCE IN THE SUBMISSION OF LD. COUNSEL FOR THE ASSESSEE AS R EGARDS WIPRO TECHNOLOGY SERVICES PVT. LTD. THAT THE AGREEMENT BETWEEN WIPRO AND CITI GROUP HAD BEARING ON THE PRICING. IT IS TRUE THAT AFTER THE M ERGER OF CITI TECHNOLOGY SERVICES LTD. WITH WIPRO THE EXISTENCE OF THE CITI TECHNOLOGY SERVICES LTD. WAS NO MORE THERE BUT THE PRICING AGREED BY EARLIE R AGREEMENT BETWEEN WIPRO AND CITI GROUP REMAINED OPERATIONAL. THE BRAN D OF WIPRO CONTINUED EVEN AFTER ACQUISITION. THEREFORE, IN VIEW OF THE PROVISION OF SECTION 90B(2), THE PRICING GOT AFFECTED BY THE AGREEMENT AND THIS FACTOR ON STANDALONE BASIS WAS SUFFICIENT ENOUGH TO REJECT THIS COMPARABLE FRO M THE LIST OF COMPARABLES. WE, ACCORDINGLY, DIRECT FOR EXCLUSION OF WIPRO TECH NOLOGY SERVICES PVT. LTD. AND PERSISTENT SYSTEMS LTD. FOLLOWING THE DECI SION IN THE CASE OF EQUANT SOLUTIONS INDIA PVT. LTD. (SUPRA) AND ALSO FOR THE REASONS GIVEN ABOVE. 33. AS REGARDS INFOSYS TECHNOLOGIES LTD. WE FIND CO NSIDERABLE FORCE IN THE SUBMISSION OF LD. COUNSEL FOR THE ASSESSEE AS N OTED EARLIER, THAT THOUGH 19 ITA 6867/DEL/2014 TURNOVER PER SE CANNOT BE THE BASIS FOR REJECTION O F A COMPARABLE, BUT WHEN IT BECOMES PART OF OTHER SIMILAR LIKE BRAND, OWNERSHIP , R&D EXPENSES, OFFSHORE REVENUE, AMP SPENT ETC. AS NOTED EARLIER, THEN THE TURNOVER ASSUMES SIGNIFICANCE AND, THEREFORE, INFOSYS TECHNOLOGIES L TD. CANNOT BE TAKEN AS A COMPARABLE IN THE PRESENT SET OF FACTS. 34. IN VIEW OF THE DECISION OF HONBLE DELHI HIGH C OURT IN THE CASE OF RAMPGREEN SOLUTIONS PVT. LTD. (SUPRA), WHEREIN IT H AS BEEN HELD THAT TURNOVER PER SE CANNOT BE THE BASIS FOR REJECTION O F A COMPARABLE AND OTHER ASPECTS HAVE TO BE TAKEN INTO CONSIDERATION. ACCOR DINGLY, THIS COMPARABLE IS DIRECTED TO BE EXCLUDED FROM THE LIST OF COMPARABLE S. I.T. SEGMENT : 35. FIDELITY GROUP IS AN INTERNATIONAL PROVIDER OF FINANCIAL SERVICES AND INVESTMENT RESOURCES THAT HELP INDIVIDUAL AND INSTI TUTIONS TO MEET THEIR RESPECTIVE FINANCIAL OBJECTIVES. FIDELITY GROUP INC LUDES A LARGE FAMILY OF MUTUAL FUNDS, RETIREMENT SAVINGS PLANS, THEIR DISTR IBUTORS AND INVESTMENT ADVISORS AND A RETAIL BROKERAGE AS WELL AS UNRELATE D BUSINESS. THE GROUP MAINLY OPERATES IN THREE BUSINESS AREAS (I) FINA NCIAL SERVICES; (II) EMPLOYER SERVICES; AND (III) TECHNOLOGY. 36. FINANCIAL SERVICES PRIMARILY INCLUDES FUND MANA GEMENT, RETAIL AND INSTITUTIONAL SERVICES. FMR COMPANY ACTS AS THE INV ESTMENT ADVISOR OF FIDELITYS MUTUAL FUNDS. FIDELITY BROKERAGE COMPANY PROVIDES A FULL RANGE OF INVESTMENT AND BROKERAGE PRODUCTS AND SERVICES T O INDIVIDUAL INVESTORS AND INSTITUTIONAL CLIENTS. FIDELITY INVESTMENT LIFE INSURANCE COMPANY OFFERS A VARIETY OF ANNUITY AND LIFE INSURANCE PRODUCTS. IT ALSO DEVELOPS, MARKETS AND SUPPORTS ALL F THE LIFE INSURANCE AND ANNUITY PRODU CTS THAT FIDELITY OFFERS. 20 ITA 6867/DEL/2014 37. FOR CATERING TO THE NEEDS OF FIDELITY GROUP THE INDIAN UNIT I.E. THE ASSESSEE UNDERTAKES TO PROVIDE SERVICES FOR EUROPEA N RETAIL ( INDIVIDUAL INVESTORS) AND THE INDIAN ASSET MANAGEMENT COMPANY BASED IN MUMBAI. THE BACK-OFFICE OPERATIONS ARE SEGREGATED INTO ONSHORE AND OFFSHORE ACTIVITY. VARIOUS FUNCTIONAL OWNERS OF SPECIFIC PROCESSES ARE SPREAD GLOBALLY. THE ASSESSEE PROVIDES CUSTOMER SUPPORT SERVICES VIDE P HONE WHEREIN IT RSOLVES ISSUES AND CONCERNS OF CUSTOMERS IN TERMS OF THEIR INDIVIDUAL PORTFOLIO OF INVESTMENTS. FURTHER, IT ALSO PROVIDES SUPPORT TO V ARIOUS INDIVIDUAL INVESTORS WHOSE FUNDS ARE BEING MANAGED BY FIDELITY, BROKERS, FINANCIAL ADVISORS ETC., RESOLVING VARIOUS QUERIES AND ISSUES ON SPECIFIC FU NDS. 38. IN THE BACKDROP OF ABOVE FUNCTIONAL ANALYSIS, I T IS EVIDENT THAT ASSESSEE IS PRIMARILY CAPTIVE SERVICE PROVIDER AND IS PRIMAR ILY CATERING TO THE NEEDS OF INDIVIDUAL INVESTORS OF FIDELITY GROUP. 39. IN REGARD TO THE IT ENABLED SERVICES, RENDERED BY ASSESSEE, THE PLI OF THE COMPANY WAS ARRIVED AT 14.98% ON COST IN THE TP STUDY WHEREAS THE AVERAGE PLI OF THE COMPARABLES WAS ARRIVED AT 13% B Y TAKING INTO ACCOUNT 15 COMPARABLES. THUS, ASSESSEES CLAIM WAS THAT INT ERNATIONAL TRANSACTION WAS AT ARMS LENGTH. 40. AFTER THE FRESH SEARCH WAS CONDUCTED DURING THE COURSE OF T.P. PROCEEDINGS, ASSESSEE PROVIDED IN TOTAL 20 COMPARAB LES, WHICH HAVE BEEN LISTED IN PARA 9 OF LD. TPOS ORDER AT PAGE 12. OUT OF THIS 16 WERE REJECTED BY TPO AND FOLLOWING 4 COMPARABLES WERE ACCEPTED: - COSMIC GLOBAL LTD. - INFOSYS BPO LTD. - JINDAL INTELLICOM LTD. - MICROLAND LTD. 41. LD. TPO FURTHER ADDED 5 COMPARABLES WHICH WERE AS UNDER: 21 ITA 6867/DEL/2014 - ACCENTIA TECHNOLOGY LTD. - E4E HEALTHCARE BUSINESS SERVICES PVT. LTD. - FORTUNE INFOTECH LTD. - TCS E-SERVE LTD. - TCS E-SERVE INTERNATIONAL LTD. 42. TOTAL MARGIN OF THESE 9 COMPARABLES WAS COMPUTE D AT 30.58%. 43. LD. DRP CONFIRMED THE TPOS ACTION IN REGARD T O FOLLOWING COMPARABLES: - TCS E-SERVE LTD. - TCS E-SERVE INTERNATIONAL LTD. - INFOSYS BPO LTD. - ACCENTIA TECHNOLOGY LTD. 44. THE FIRST COMPARABLE DISPUTED BY LD. COUNSEL FO R THE ASSESSEE IS TCS E-SERVE LTD. LD. TPO HAD INCLUDED THIS COMPARABLE A S RPT AS PER ANNUAL REPORT WAS FOUND TO BE LESS THAN 25% OF SALES. THE ASSESSEE HAD REJECTED THIS COMPANY PRIMARILY ON THE GROUND THAT THIS COMPANY W AS HAVING RPT. 45. BEFORE LD. DRP THE ASSESSEE RAISED OBJECTION ON FOLLOWING GROUNDS: 46. FUNCTIONAL DISSIMILARITY :- LD. COUNSEL POINTED OUT THAT THIS COMPANY PROVIDES BUSINESS PROCESS MANAGEMENT SERVICES IN BA NKING AND FINANCIAL SERVICES VERTICALS. PROVIDES SERVICES COMPRISING TR ANSACTION PROCESSING AND TECHNICAL SERVICES. TRANSACTION PROCESSING INCLUDES PROCESSING, COLLECTIONS, CUSTOMER CARE AND PAYMENTS IN RELATION TO THE SERVI CES BY CITIGROUP TO ITS CORPORATE AND RETAIL CLIENTS. 47. TECHNICAL SERVICES INVOLVE SOFTWARE TESTING, VE RIFICATION AND VALIDATION OF SOFTWARE AT THE TIME OF IMPLEMENTATIO N AND DATA CENTRE 22 ITA 6867/DEL/2014 MANAGEMENT ACTIVITIES. SEGMENTAL DETAILS FOR INCOME FROM TRANSACTIONS PROCESSING SERVICES NOT AVAILABLE IN ANNUAL REPORT. 48. HE FURTHER POINTED OUT THAT THIS COMPANY IS ENG AGED IN THE BUSINESS PROCESS OUTSOURCING( TRANSACTION PROCESSING) SERVIC ES TO THE BANKING & FINANCIAL SERVICES INDUSTRY, WHICH IS SINGLE SEGMEN T AND THERE IS NO SEPARATE SEGMENTAL REPORT OF ITES SEGMENT. THIS COMPANY HAS ONLY GIVEN ITS FINANCIAL DETAILS OF ON GEOGRAPHICAL BASIS. 49. LD. COUNSEL FURTHER POINTED OUT THAT TURNOVER O F THIS COMPANY IS RS. 1440 CRORES, WHEREAS ASSESSEES IT SEGMENT TURNOVER IS ONLY RS. 100 CRORES. FURTHER, THIS COMPANY HAS THE ECONOMIC BENEFIT ON A CCOUNT OF PAYMENT FOR TATA BRAND EQUITY. HE POINTED OUT THAT BRAND EQUITY PAYMENT MADE BY THE COMPANY WERE RS. 4.2 CRORES WHEREAS NO BRANDED OR P ROPRIETARY PRODUCTS ARE OWNED BY FIL INDIA. 50. FURTHER OFFSHORE REVENUE EXPORT INCOME/ SALES I S 74.67% WHREAS THAT OF FIL INDIA IS 93.67%. FURTHER AMP SPENT OF THIS COMPANY IS 0.15 CRORES WHEREAS ASSESSEE HAS NOT INCURRED ANY EXPENDITURE O N ADVERTISEMENT. HE FURTHER POINTED OUT THAT THE COMPANY LARGELY RENDE RS SERVICES TO WORLDWIDE CITIGROUP ENTITIES. SUCH SERVICES ARE RENDERED IN C ONTINUATION OF THE RELATED PARTY AGREEMENTS WHICH WERE EXECUTED WHEN THE COMPA NY WAS UNDER THE MANAGEMENT OF CITI GROUP. 51. AS REGARDS RISK PROFILE OF THIS COMPANY, LD. CO UNSEL POINTED OUT THAT THIS COMPANY OPERATES AS FULL FLEDGED RISK TAKING E NTREPRENEUR, WHEREAS ASSESSEE IS A CAPTIVE SERVICE PROVIDER TO FIDELITY GROUP COMPANIES. FURTHER, DURING THE YEAR THERE IS ABNORMALLY HIGH MARGIN/ VO LATILE PROFIT MARGINS EARNED BY THIS COMPANY WHICH IS 60.49% AS PER CORRE CT COMPUTATION. HE POINTED OUT THAT PROFITABILITY EARNED BY THIS COMPA NY IN FY 2007-08 WAS 23 ITA 6867/DEL/2014 24.50%; FY 2008-09 45.94%; FY 2009-10 60.49%. LD. C OUNSEL RELIED ON THE DECISION OF ITAT IN THE CASE OF EQUANT SOLUTION S INDIA PVT. LTD. (SUPRA). 52. LD. DRP WHILE CONSIDERING THE ASSESSEES OBJECT ION HAS POINTED OUT THAT THIS COMPANY IS PRIMARILY IN ITES FIELD WHICH IS EVIDENT FROM VARIOUS EXTRACTS REPRODUCED IN DRPS DIRECTION FROM THE ANN UAL REPORT. LD. DRP FURTHER CONSIDERED THE ASSESSEES OBJECTION ON TAKI NG OVER OF THIS COMPANY BY THE TCS GROUP AND REFERRING TO PAGE 13 OF ANNUAL REPORT OBSERVED THAT THE COMPANY WAS TAKEN OVER BY THE TCS IN THE PRECEDING YEAR AND NOT DURING THE RELEVANT YEAR UNDER CONSIDERATION. 53. AS REGARDS THE OBJECTION RAISED BY THE ASSESSEE OF THE EXHORBITANT GROWTH IN THE REVENUE, LD. DRP DEMONSTRATED WITH REFERENCE TO THE DATA CONTAINED IN THE ANNUAL REPORT THAT THE COMPANY WAS DOING EVEN BETTER BEFORE THE TAKING OVER BY THE TCS GROUP AND THE GRO WTH HAD IN FACT SLOWED DOWN AFTER THE TAKEOVER. 54. AS REGARDS THE ASSESSEES OBJECTION THAT THE EX PORT TURNOVER OF THIS COMPANY WAS LESS THAN 75%, LD. DRP DEMONSTRATED THA T ON CORRECT COMPUTATION THE EXPORT TURNOVER WAS 79.15% AND NOT 74.68%. 55. AS REGARDS THE ASSESSEES OBJECTION THAT TCS E- SERVE LTD. HAD NOT SHOWN TRANSACTIONS UNDERTAKEN BY IT WITH ITS RELATE D PARTIES, NAMELY, CITI GROUP COMPANY, LD. DRP POINTED OUT THAT AFTER THE A CQUISITION BY TATA GROUP, THERE WAS NO REASON TO ASSUME THAT CITI GROU P WAS A RELATED PARTY. 56. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. THIS COMPARABLE HAS BEEN DIREC TED TO BE EXCLUDED IN THE CASE OF EQUANT SOLUTIONS INDIA PVT. LTD. (SUPRA). T HE BUSINESS PROFILE OF EQUANT SOLUTIONS INDIA PVT. LTD. (SUPRA), INTER ALI A, COMPRISED OF RENDERING IT ENABLED NET WORK MANAGEMENT AND OTHER BACK OFFIC E SUPPORT SERVICES, 24 ITA 6867/DEL/2014 WHICH INCLUDED REMOTE MONITORING AND MAINTENANCE OF EQUANT GLOBAL NETWORK PLATFORMS AND SERVICES, COORDINATION, REMOT E CONFIGURATION AND IMPLEMENTATION OF QUALITY CUSTOMER NETWORKING SOLUT IONS. THE ASSESSEE PRIMARILY UNDERTAKES TO PROVIDE SERVICES FOR EUROPE AN AND THE INDIAN ASSET MANAGEMENT COMPANY BASED IN MUMBAI. THE ASSESSEE IS PRIMARILY CATERING TO THE RETAIL SITE (INDIVIDUAL INVESTOR) TO FIDELIT Y GROUP BUSINESS. THUS, BROADLY THE FUNCTIONS PERFORMED BY ASSESSEE ARE SIM ILAR TO THAT OF EQUANT SOLUTIONS INDIA PVT. LTD. (SUPRA) AND, THEREFORE, T HIS COMPANY DESERVES TO BE EXCLUDED. WE FIND THAT FUNCTIONS PERFORMED BY TCS- E-SERVE LTD. INCLUDED RENDERING OF TECHNICAL SERVICES LIKE SOFTWARE TESTI NG ETC., WHICH REQUIRED SKILLED PERSONS. AS FAR AS THE OBJECTION REGARDING RELATED PARTY TRANSACTION IS CONCERNED, WE ARE IN AGREEMENT WITH THE REASONING G IVEN BY DRP THAT SINCE THIS COMPANY WAS TAKEN OVER BY TCS GROUP, THEREFORE , THERE WAS NO QUESTION OF ANY SEPARATE DETAILS BEING GIVEN ABOUT RELATED P ARTY TRANSACTION. HOWEVER, KEEPING IN VIEW THE VARIOUS FACTORS, POINTED OUT BY LD. COUNSEL FOR THE ASSESSEE, WHICH WE HAVE NOTED EARLIER, THIS COMPANY CANNOT BE TAKEN AS A COMPARABLE TO THE TESTED PARTY. 57. AS FAR AS TCS E-SERVE INTERNATIONAL LTD. IS CON CERNED, LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT AS PER THE ANNUAL REP ORT, THE FUNCTIONS PERFORMED BY THIS COMPANY IS TO PROVIDE BUSINESS P ROCESS MANAGEMENT SERVICES IN BANKING AND FINANCIAL SERVICES VERTICAL S. IT PROVIDES SERVICES COMPRISING TRANSACTION PROCESS AND TECHNICAL SERVIC ES. TRANSACTION PROCESSING INCLUDES PROCESSING, COLLECTIONS, CUSTOM ER CARE AND PAYMENTS IN RELATION TO THE SERVICES BY CITIGROUP TO ITS CORPOR ATE AND RETAIL CLIENTS. TECHNICAL SERVICES INVOLVE SOFTWARE TESTING, VERIFI CATION AND VALIDATION OF SOFTWARE AT THE TIME OF IMPLEMENTATION AND DATA CEN TRE MANAGEMENT 25 ITA 6867/DEL/2014 ACTIVITIES. SEGMENTAL DETAILS FOR INCOME FROM TRANS ACTIONS PROCESSING SERVICES ARE NOT AVAILABLE IN ANNUAL REPORT. 58. LD. COUNSEL POINTED OUT THAT OTHER DISSIMILARIT IES WHICH HAVE BEEN REFERRED WITH REFERENCE TO TCS-E-SERVE, ARE ALSO IN THIS COMPARABLE. HE, THEREFORE, SUBMITTED THAT THIS COMPARABLE SHOULD BE EXCLUDED. HE RELIED ON THE ORDER OF THE ITAT IN THE CASES OF EQUANT SOLUTI ONS INDIA PVT. LTD. (SUPRA) AND BECHTEL INDIA PVT. LTD. (ITA NO. 1478/DEL/2015) . 59. WE HAVE HEARD BOTH THE PARTIES. WE FIND THAT TH E FUNCTIONS PERFORMED BY THIS COMPARABLE ARE ALMOST SIMILAR TO THAT OF TC S-E-SERVE LTD. AND SINCE THIS COMPANY IS ALSO RENDERING TECHNICAL SERVICES A ND SEGMENTAL DETAILS FOR INCOME FROM TRANSACTION PROCESSING SERVICE ARE NOT AVAILABLE, THEREFORE, WE DIRECT FOR EXCLUSION OF THIS COMPARABLE, AS HAS BEE N DONE IN THE CASE OF EQUANT SOLUTIONS INDIA PVT. LTD. (SUPRA) AND BECHT EL INDIA PVT. LTD. (SUPRA). 60. AS REGARDS ACCENTIA TECHNOLOGY LTD., LD. COUNSE L POINTED OUT THAT THIS COMPARABLE PROVIDES HIGH END FUNCTIONS SUCH AS KNOW LEDGE PROCESSING OUTSOURCING LEGAL PROCESS. OUTSOURCING, DATA PROCES S OUTSOURCING, HIGH END SOFTWARE SERVICES DELIVERY BESIDES OFFERING SOFTWAR E AS A SERVICE (SAAS) MODEL IN THE HEALTHCARE OUTSOURCING AREA. IT ALSO D EVELOPED SOFTWARE PRODUCTS SUCH AS BUSINESS PROCESS OUTSOURCING MANAG EMENT (BPOM) SOLUTIONS AND HEALTHDOX (HRCM SOLUTION), APART FROM IT ENABLED SERVICES. HE FURTHER POINTED OUT THAT DURING FY 2009-10 A SUB SIDIARY OF ACCENTIA GOT AMALGAMATED WITH THE LATTER AND THE SAID EXTRAORDIN ARY EVENT HAS AFFECTED THE OVERALL PROFITABILITY OF ACCENTIA. HE RELIED ON TH E DECISIONS OF THE ITAT IN THE CASES OF EQUANT SOLUTIONS INDIA PVT. LTD. (SUPR A) AND BECHTEL INDIA PVT. LTD. (SUPRA). 26 ITA 6867/DEL/2014 61. HAVING HEARD BOTH THE PARTIES WE FIND THAT AT P AGE 114 OF THE PB IN THE ANNUAL REPORT OF THIS COMPANY, IT HAS BEEN STATED A S UNDER: ACCENTIA HAS GONE A LONG WAY FROM BEING A SINGLE L OCATION, SINGLE SERVICE FIRM TO A MULTI LOCATION, DIVERSIFIE D KNOWLEDGE PROCESS OUTSOURCING COMPANY, OPERATING FROM MULTIPL E LOCATIONS IN INDIA, USA, UK AND THE MIDDLE EAST. NO T RESTING AT BEING THE FASTEST GROWING HEALTHCARE RECEIVABLES CY CLE MANAGEMENT COMPANY, WE HAVE NOW VENTURED INTO LEGAL PROCESS OUTSOURCING, DATA PROCESSING OUTSOURCING AN D HIGH END SOFTWARE SERVICES DELIVERY, BESIDES OFFERING SO FTWARE. AS A SERVICE MODEL IN THE HEALTHCARE OUTSOURCING AREA. 62. THUS, IT IS CLEAR THAT THIS COMPANY IS PRIMARIL Y DIVERSIFIED KNOWLEDGE PROCESS OUTSOURCING COMPANY AND COUPLED WITH THE FA CT THAT EXTRAORDINARY CIRCUMSTANCE OF AMALGAMATION TOOK PLACE DURING THE YEAR, THIS COMPARABLE IS DIRECTED TO BE EXCLUDED FROM THE LIST OF COMPARABLE S. 63. AS REGARDS INFOSYS BPO LTD., LD. COUNSEL POINTE D OUT THAT THE FUNCTIONS PERFORMED BY THIS COMPANY ARE HIGH END IN TEGRATED SERVICES ASSISTING IN IMPROVING COMPETITIVE POSITIONING AND MANAGING BUSINESS PROCESSES IN ADDITION TO PROVIDING INCREASED VALUE. THE TURNOVER OF THIS COMPANY IS RS. 1127 CRORES AS AGAINST RS. 100 CRORE S OF ITES SEGMENT OF ASSESSEE. THIS COMPANY HAS BRAND OWNERSHIP, WHICH I S EVIDENT FROM THE BRAND RELATED EXPENSES INCURRED BY THIS COMPANY OF RS. 69,16,780/-, WHEREAS ASSESSEE DOES NOT HAVE ANY BRAND OR PROPRIETARY PRO DUCTS. FURTHER, OFFSHORE REVENUE, EXPORT INCOME HAS NOT BEEN SPECIFIED SEPAR ATELY. THEREFORE, IT COULD NOT BE FOUND OUT AS TO WHETHER EXPORT TURNOVE R IS 75% OF TOTAL INCOME OR NOT. FURTHER, SELLING AND MARKETING SPEND IS 7% OF REVENUE, WHICH IS NOT PRESENT IN ASSESSEES CASE. THIS COMPANY OPERATES A S A FULLFLEDGED RISK TAKING ENTREPRENEUR WHEREAS ASSESSEE IS AT MINIMAL BASISS. HE RELIED ON THE 27 ITA 6867/DEL/2014 TRIBUNALS DECISION IN THE CASES OF EQUANT SOLUTION S INDIA PVT. LTD. (SUPRA) AND BECHTEL INDIA PVT. LTD. (SUPRA). 64. LD. DRP HAS ACCEPTED THE TPOS CONTENTION, INTE R ALIA, OBSERVING ON THE ISSUE OF BRAND OWNERSHIP THAT CREATION OF BRAND VALUE IS NOT ON ACCOUNT OF MARKETING EXPENSES BUT BECAUSE OF SUPERIOR SERV ICES. LD. DRP HAS OBSERVED THAT THIS SERVICE IS GIVEN BY EMPLOYING B ETTER PROCESS AND EMPLOYEES, THEREFORE, THE COST ARE HIGHER ON ACCOUN T OF THE SAME AND MOST OF THE EXTRA PROFITS ON ACCOUNT OF BRAND VALUE ARE SE T OFF BECAUSE OF THE COST OF THIS HIGHER SERVICE. 65. WE ARE UNABLE TO AGREE WITH THESE FINDINGS OF L D. DRP BECAUSE IT IS NOT DEMONSTRATED AS TO WHAT IS THE ACTUAL BASIS FOR THESE FINDINGS. THE FINDINGS ARE PURELY ON THE BASIS OF LD. DRPS ASSUM PTIONS. AS WE HAVE OBSERVED EARLIER, ACCEPTING LD. COUNSELS PLEA THAT MERE HIGH TURNOVER CANNOT BE THE BASIS FOR ACCEPTING OR REJECTING COMPARABLE, BUT COUPLED WITH THE OTHER DISSIMILARITIES THE COMPANY IS TO BE REJECTED . WE, THEREFORE, FOLLOWING THE TRIBUNALS DECISIONS IN THE CASES OF EQUANT SO LUTIONS INDIA PVT. LTD. (SUPRA) AND BECHTEL INDIA PVT. LTD. (SUPRA), DIREC T FOR EXCLUSION OF THIS COMPARABLE. ORDER PRONOUNCEMENT IN OPEN COURT ON 12/05/2016. SD/- SD/- (SUDHANSHU SRIVASTAVA) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12/05/2016. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 4. CIT(A) 3. CIT 5. DR, ITAT, NEW DELHI.