Cummins Turbo Technologies Ltd., UK., Pune V. Deputy Director of Income-tax,

ITA 784/PUN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2485 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 21-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K RASTOGI
• Assessee Lawyers: AMIT SINGAL
• Keywords: Related party transaction; Transfer pricing; International transaction
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA , A M . / ITA NO. 7 84 /PN/201 4 / ASSESSMENT YEAR : 20 0 9 - 1 0 CUMMINS TURBO TECHNOLOGIES LIMITED, UK C/O CUMMINS TECHNOLOGIES INDIA LTD., CUMMINS INDIA OFFICE CAMPUS, 5 TH FLOOR, TOWER A, SURVEY NO.21, BALEWADI, PUNE 41104 5 . / APPELLANT PAN: AA BCH2501H VS. THE DY . DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) - I, PUNE . / RESPONDENT / APPELLANT BY : S /S HRI KETAN VED AND AMIT SINGAL / RESPONDENT BY : SHRI S.K. RASTOGI, CIT / DATE OF HEARING : 25 . 0 2 .201 6 / DATE OF PRONOUNCEMENT: 30 . 0 3 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF DDIT (INTR.TAX.) - I, PUN E , DATED 28 . 0 1 .20 1 4 RELATING TO ASSESSMENT YEAR 20 0 9 - 1 0 PASSED UNDER SECTION 143(3) R.W.S. 144C(5) OF T HE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . ITA NO. 784 /PN/20 1 4 M/S. CUMMINS TURBO TECHNOLOGIES LTD., UK 2 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. GENERAL GROUND - CHALLENGING TRANSFER P RICING ADJUSTMENTS AMOUNTING TO RS. 2,11,83,084 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER BASED ON THE DIRECTIONS OF THE HON'BLE DRP HAS ERRED IN MAKING TRANSFER PRICING ADJUSTMENT TO THE VALUE OF INTERNA TIONAL TRANSACTIONS OF RENDERING INFORMATION TECHNOLOGY ENABLED SERVICES (' ITES') AND MARKETING SUPPORT SERVICES ENTERED INTO BY THE APPELLANT AND NOT CONSIDERING THE COMPARABILITY ANALYSIS AS DOCUMENTED IN THE TRANSFER PRICING STUDY REPORT FOR AY 2009 - 10 PROVIDED BY THE APPELLANT; 2. USE OF FINANCIAL INFORMATION OF COMPARABLE COMPANIES ONLY FOR FINANCIAL YEAR 2007 - 08 AND NON - CONSIDERATION OF CONTEMPORANEOUS DATA ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICE R BASED ON THE DIRECTIONS OF THE HON'BLE DRP HAS ERRED IN NOT CONSIDERING THE MULTIPLE YEAR DATA AND CONTEMPORANEOUS DATA I.E. DATA AVAILABLE AT THE TIME UNDERTAKING THE TRANSFER PRICING STUDY FOR DETERMINING THE ARM'S LENGTH PRICE OF INTERNATIONAL TRANSAC TION PERTAINING TO IT ENABLED AND MARKETING SUPPORT SERVICES; 3. MODIFICATION OF QUANTITATIVE AND QUALITATIVE FILTERS ADOPTED BY APPELLANT IN THE TP DOCUMENTATION ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED ASSESSING ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED ASSESSING OFFICER BASED ON THE D IRECTIONS OF THE HON'BLE DRP HAS ERRED IN MODIFYING THE QUANTITATIVE AND QUALITATIVE FILTER ADOPTED BY THE APPELLANT IN ITS TP DOCUMENTATION FOR AY 2009 - 10; 4. REJECTION OF COMPARABLE COMPANIES ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED ASSESSING OFFICER BASED ON THE DIRECTIONS OF THE HON'BLE DRP HAS ERRED ON THE FACTS BY REJECTING CERTAIN COMPARABLE COMPANIES SELECTED BY THE APPELLANT IN ITS TRANSFER PRICING STUDY REPORT; 5. INCLUSION OF NON - COMPARABLE COMPANIES ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER BASED ON THE DIRECTIONS OF THE HON'BLE DRP HAS ERRED ON THE FACTS BY SELECTING/INCLUDING CERTAIN NON - COMPARABLE COMPANIES IN THE FINAL SET OF COMPARABLE COMPANIES; 6. ADJUSTMENT FOR RISK DIFFERENCES ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER BASED ON THE DIRECTIONS OF THE HON'BLE DRP HAS ERRED IN COMPARING FULL - FLEDGED RISK BEARING ENTITIES WITH THE APPELLANT'S CAP TIVE OPERATIONS WITHOUT MAKING ANY RISK ADJUSTMENT FOR DIFFERENCES BETWEEN THE FUNCTIONAL AND RISK PROFILE OF COMPARABLE COMPANIES CONSIDERED AS COMPARABLE VIS - A - VIS THE RISK PROFILE OF THE APPELLANT; ITA NO. 784 /PN/20 1 4 M/S. CUMMINS TURBO TECHNOLOGIES LTD., UK 3 7. ACCEPTANCE / CHERRY PICKING OF HIGH PROFIT MARGIN COMPANIES FROM THE ACCEPT/REJECT MATRIX ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER BASED ON THE DIRECTIONS OF THE HON'BLE DRP HAS ERRED IN CHERRY PICKING HIGH MARGIN COMPANIES FROM ACCEPT - REJECT MATRIX OF TP REPORT OF THE APPELLANT AND DISREGARDING OTHER COMPARABLE COMPANIES FOR WHICH DATA IS NOW AVAILABLE IN THE PUBLIC DOMAIN; 8. TRANSFER PRICING ADJUSTMENT WITHOUT GIVING BENEFIT OF +/ - 5 PER CENT AS AVAILABLE UNDER PROVISO TO SECTION 92C(2) OF THE ACT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER BASED ON THE DIRECTIONS OF THE HON'BLE DRP HAS ERRED IN COMPUTING THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS, WITHOUT TAKING INTO ACCOUNT THE BENEFIT OF +/ - 5 PER CENT VARIATION FROM THE MEAN, WHICH IS PERMITTED AND OPTED FOR BY THE VARIATION FROM THE MEAN, WHICH IS PERMITTED AND OPTED FOR BY THE APPELLANT UNDER THE PROVISIONS OF SECTION 92C(2) OF THE ACT; 9. NON APPLICABILITY OF TRANSFER PRICING PROVISIONS TO APPELLANT ENJOYING TAX HOLIDAY REGIME UNDER SECTION 10 A OF THE ACT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED ASSESSING OFFICER BASED ON DIRECTIONS OF HON'BLE DRP HAS ERRED IN CONCLUDING THE TRANSFER PRICING PROVISIONS ARE APPLICABLE TO THE APPELLANT IN - SPITE OF THE FACT THAT THE APPELLANT IS E NJOYING THE TAX HOLIDAY REGIME UNDER SECTION 10 A OF THE ACT; 10. PENALTY PROCEEDINGS ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER BASED ON THE DIRECTIONS OF THE HON'BLE DRP HAS ERRED IN INITIATING PENALT Y PROCEEDINGS; 11. LEVY OF INTEREST UNDER SECTION 234A, 234B AND 234C OF THE ACT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER BASED ON THE DIRECTIONS OF THE HON'BLE DRP HAS ERRED IN LEVYING INTEREST UNDE R SECTION 234A, 234B AND 234C OF THE ACT, AS APPLICABLE, ON ACCOUNT OF UNANTICIPATED TRANSFER PRICING ADJUSTMENTS MADE TO THE TOTAL INCOME OF THE APPELLANT. 3. THE ASSESSEE FILED MODIFIED GROUND OF APPEAL, WHICH READS AS UNDER: - 3. THE ASSESSEE FILED MODIFIED GROUND OF APPEAL, WHICH READS AS UNDER: - 1. THE GROUND NO.5 INCLU SION OF NON - COMPARABLE COMPANIES IS MODIFIED AS FOLLOWS: THE LEARNED ASSESSING OFFICER PURSUANT TO THE DIRECTIONS OF THE HONBLE DRP HAS ERRED IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE FOLLOWING COMPANIES AS THE COMPARABLE COMPANIES: ACCENTIA TECHNOLOGIES LTD. CROSSDOMAIN SOLUTIONS LTD. COSMIC GLOBAL LTD. ECLERX SERVICES LTD. GENESYS INTERNATIONAL CORPORATION LTD. ITA NO. 784 /PN/20 1 4 M/S. CUMMINS TURBO TECHNOLOGIES LTD., UK 4 4. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THOUGH SEVERAL GROUND S OF APPEAL HAVE BEEN RAISED, BUT ALL RELATE TO THE TRANSFER PRICING ADJUSTMENT MADE IN THE HANDS OF ASSESSEE. 5 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT A MODIFIED GROUND OF APPEAL NO.5 HAS BEEN FILED AND THE MARGI NS OF ASSESSEE WOULD BE WITHIN +/ - 5% RANGE IN CASE THE CONCERNS AS ENLISTED IN GROUND OF APPEAL NO.5 ARE EXCLUDED. IT WAS FURTHER POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT SIMILAR COMPANIES WERE DIRECTED TO BE EXCLUDED IN THE CASE OF OTHER CONCERNS, WHO ARE ENGAGED IN PROVIDING ITES SERVICES AND ALSO IN THE CASE OF ASSESSEE FOR THE EARLIER YEARS. 6 . THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND PLACED RELIANCE ON THE ORDERS OF ASSESSING OFFICER AND DISPUTE RESOLUTION PANEL (IN SHORT DRP) AND POINTED OUT THAT AN ADJUSTMENT OF RS.2.11 CRORES PROPOSED BY THE ASSESSING OFFICER / TPO MERITS TO BE UPHELD IN THE HANDS OF ASSESSEE. 7 . BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE WAS A COMP ANY INCORPORATED IN UNITED KINGDOM AND WAS ENGAGED IN THE BUSINESS OF MANUFACTURE AND SALE OF TURBOCHARGERS. AS IN THE PAST, DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD EARNED TAXABLE INCOME IN THE FORM OF ROYALTY FROM CUMMINS TECHNOLOGY INDIA L TD. , INDIA AND WAS ALSO ENGAGED IN IT ENABLED SERVICES OPERATION IN ITS INDIA BRANCH. THE SAID INDIA BRANCH OF THE ASSESSEE WAS 100% EXPORT ORIENTED UNIT AND WAS REGISTERED UNDER SOFTWARE TECHNOLOGIES PARKS OF INDIA (STPI) . THE INDIA BRANCH PROVID ED BACK OFFICE SUPPORT SERVICES TO CUMMINS TURBO TECHNOLOGIES LTD., UK IN THE AREAS OF ITA NO. 784 /PN/20 1 4 M/S. CUMMINS TURBO TECHNOLOGIES LTD., UK 5 GLOBAL PLANNING, DATA BASE SUPPORT, PRODUCT MANAGEMENT, PROCUREMENT / SUPPLY, GENERAL MANAGEMENT, WORLDWIDE MATERIAL, GLOBAL ORDER MANAGEMENT, INFORMATION TECHNOLOGIES SERVICES , HUMAN RESOURCES, FINANCE, MARKETING AND ENGINEERING SERVICES FOR ITS PARENT OFFICE. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAD FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.4,27,42,770/ - . SINCE THE ASSESSEE HAD UNDERTAKEN INTERNATIONAL TRA NSACTIONS DURING THE RELEVANT YEAR, THE ASSESSING OFFICER MADE A REFERENCE TO THE TRANSFER PRICING OFFICER (TPO) UNDER SECTION 92CA(1) OF THE ACT IN ORDER TO DETERMINE ARM'S LENGTH PRICE OF INTERNATIONAL TRANSACTIONS ENTERED INTO BY THE ASSESSEE WITH ITS A SSOCIATE ENTERPRISES. 8 . THE TPO REJECTED SOME COMPARABLES AND ACCEPTED CERTAIN OTHER COMPANIES AS COMPARABLES AND DETERMINED FINAL SET OF COMPARABLES CONSISTED OF 9 CONCERNS WHOSE ARITHMETIC MEAN OF PLI I.E. OP/OC WORKED OUT TO 31.69% . THE TPO FURTHER DETERMINED PLI AFTER WORKING OUT CAPITAL ADJUSTMENT AT 30.13% THE TPO FURTHER DETERMINED PLI AFTER WORKING OUT CAPITAL ADJUSTMENT AT 30.13% OF THE FINAL SET OF COMPARABLES AS AGAINST PLI OF THE ASSESSEE AT 11.90% AND COMPUTED ADJUSTMENT OF RS.2,11,83,084/ - TO BE MADE TO THE INTERNATIONAL TRANSACTIONS RELATING TO PROVISION OF ITES. 9 . THE OBJECTIONS RAISED BEFORE THE DRP BY THE ASSESSEE WERE REJECTED AND THE ASSESSING OFFICER THEREAFTER, PASSED AN ORDER UNDER SECTION 143(3) R.W.S. 144C(5) OF THE ACT AND THE SAID TP ADJUSTMENT WAS MADE IN THE HANDS OF ASSESSEE. 10 . THE ASSESSEE IS IN APPEAL BEFORE US WITH REGARD TO THE AFORESAID ADJUSTMENT MADE TO THE INTERNATIONAL TRANSACTIONS CARRIED ON BY THE ASSESSEE WITH ITS ASSOCIATE ENTERPRISES. IN THE GROUNDS OF APPEAL THOUGH THE ASSESSEE HAS RAISED MULTIPLE GROUNDS OF APPEAL BUT THE LIM ITED ISSUE ARGUED BEFORE US IS ITA NO. 784 /PN/20 1 4 M/S. CUMMINS TURBO TECHNOLOGIES LTD., UK 6 WITH REGARD TO INCLUSION OF FIVE CONCERNS AS COMPARABLE IN FINAL SET OF COMPARABLES. 1 1 . ON PERUSAL OF RECORD, WE FIND THAT THE ASSESSEE HAD UNDERTAKEN SEVERAL INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATE ENTERPRISES, WHI CH ARE ENLISTED AT PAGE 2 OF THE TPOS ORDER. HOWEVER, THE ONLY TRANSACTION WHICH HAS BEEN ADJUDICATED BY THE TPO IS THE PROVISION OF IT ENABLED AND MARKETING SUPPORT SERVICES, WHEREAS ALL THE OTHER TRANSACTIONS HAVE BEEN ACCEPTED WITHOUT MAKING ANY ADJUS TMENT TO ARM'S LENGTH PRICE. THE ASSESSEE IN ITS TRANSFER PRICING STUDY REPORT HAD SELECTED TNMM METHOD AS MOST APPROPRIATE METHOD TO BENCHMARK THE INTERNATIONAL TRANSACTIONS RELATING TO PROVISION OF IT ENABLED AND MARKETING SERVICES FOR BENCHMARKING THE INTERNATIONAL TRANSACTIONS . THE ASSESSEE HAD IDENTIFIED COMPARABLE COMPANIES ON THE BASIS OF FAR ANALYSIS I.E. FUNCTIONS PERFORMED, RISK ASSUMED AND ASSET UTILIZED. THE ASSESSEE HAD USED OPERATING PROFIT / OPERATING COST AS THE PROFIT LEVEL INDICATOR (PL I) . AS USED OPERATING PROFIT / OPERATING COST AS THE PROFIT LEVEL INDICATOR (PL I) . AS PER THE TP STUDY REPORT, THE ASSESSEE HAD SELECTED 6 COMPANIES AS COMPARABLE FOR BENCHMARKING THE INTERNATIONAL TRANSACTIONS OF ITES AND ARRIVED AT AVERAGE PLI OF THE COMPARABLES AT 12.90% , WHEREAS THE PLI MARGINS OF ASSESSEE COMPANY WAS 11.90 %. T HEREFORE, IT WAS CLAIMED THAT THE TRANSACTION WAS WITHIN ARM'S LENGTH PRICE , AS PER THE ASSESSEE. THE TPO APPLIED ADDITIONAL FILTERS OF CRITERIA TO SELECT APPROPRIATE COMPARABLES WHICH WERE FUNCTIONALLY SIMILAR TO THAT OF ASSESSEE I.E. COMPANIES WHOSE DAT A FOR FINANCIAL YEAR 2008 - 09 WAS AVAILABLE WERE CONSIDERED FOR THE PERIOD FROM 01.04.2008 TO 31.03.2009 . FURTHER COMPANIES WHOSE SOFTWARE DEVELOPMENT SERVICES INCOME WAS LESS THAN RS.1 CRORE AND MORE THAN RS.200 CRORES WERE EXCLUDED . FURTHER THE COMP ANIE S HA VING MORE THAN 25% RELATED PARTY TRANSACTIONS WERE EXCLUDED AND LOSS MAKING COMPANIES WERE EXCLUDED. FURTHER, COMPANIES WHO HAD LESS ITA NO. 784 /PN/20 1 4 M/S. CUMMINS TURBO TECHNOLOGIES LTD., UK 7 THAN 75% OF OPERATING REVENUE AS EXPORT SALES WE RE ALSO EXCLUDED. FURTHER, COMPANIES HAVING DIFFERENT FINANCIAL YEARS AND SUCH COMPANIES WHICH WERE FUNCTIONALLY DIFFERENT FROM THAT OF THE ASSESSEE AND HAVING PECULIAR CIRCUMSTANCES WERE EXCLUDED. THE TPO ACCEPTED SELECT ION OF TNMM METHOD AS MOST APPROPRIATE METHOD FOR THE PURPOSE OF DETERMINING ARM'S LENGTH PRICE OF INTE RNATIONAL TRANSACTIONS. HOWEVER, THE TPO REJECTED CERTAIN COMPANIES SELECTED BY THE ASSESSEE AND INCLUDED CERTAIN OTHER COMPANIES AS COMPARABLE IN THE FINAL SET OF COMPARABLES. THE TPO APPLIED SINGLE YEAR FINANC IALS DATA OF THE SAID CONCERNS AND WORKED O UT THE ARITHMETIC MEAN PLI OF FINAL SET OF COMPARABLES AT 30.13% AS AGAINST THE MARGINS OF 12.47% DECLARED BY THE ASSESSEE. THE ADJUSTMENT WORKED OUT BY THE TPO WAS ACCEPTED BY THE DRP AND THE ASSESSING OFFICER THEREAFTER MADE AN ADDITION OF RS.2.11 CRORE S ON ACCOUNT OF ARM'S LENGTH PRICE OF INTERNATIONAL TRANSACTIONS ENTERED INTO BY THE INDIAN BRANCH OF ASSESSEE WITH ITS PARENT OFFICE. 1 2 . BEFORE US, THE FIRST PLEA OF THE ASSESSEE IS THAT THE CONCERN ACCENTIA TECHNOLOGIES LTD. IS REQUIRED TO BE EXCLUDED FROM THE FINAL SET OF COMPARABLES BECAUSE DURING THE YEAR UNDER CONSIDERATION EXTRA - ORDINARY EVENTS HAVE TAKEN PLACE I.E. THERE IS AMALGAMATION AND HENCE, THE SAID CONCERN WAS NOT FUNCTIONALLY COMPARABLE. IN THIS REGARD, THE LEARNED AUTHORIZED REPRESENTAT IVE FOR THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING DECISIONS: - A . PUNE BENCH OF TRIBUNAL IN PTC SOFTWARE (INDIA) PVT. LTD. VS. DCIT IN ITA NO.336/PN/2014, RELATING TO ASSESSMENT YEAR 2009 - 10, ORDER DATED 31.10.2014; B. PUNE BENCH OF TRIBUNAL IN BNY ME LLON INTERNATIONAL OPERATIONS (INDIA) PVT. LTD. VS. DCIT IN ITA NO.23/PN/2014 , RELATING TO ASSESSMENT YEAR 2009 - 10 , ORDER DATED 11.02.2015 C. PUNE BENCH OF TRIBUNAL IN MAXIMIZE LEARNING PVT. LTD. VS. ACIT IN ITA NO.267/PN/2014, RELATING TO ASSESSMENT YEAR 2009 - 10, ORDER DATED 29.04.2015 ITA NO. 784 /PN/20 1 4 M/S. CUMMINS TURBO TECHNOLOGIES LTD., UK 8 1 3 . WE FIND THAT THE TRIBUNAL IN MAXIMIZE LEAR NING PVT. LTD. VS. ACIT (SUPRA), WHERE THE CONCERN WAS ALSO ENGAGED IN PROVISION OF ITES SERVICES, WHILE DECIDING THE APPEAL RELATING TO ASSESSMENT YEAR 2009 - 10 HAD HELD THAT THE CONCERN M/S. ACCENTIA TECHNOLOGIES LTD. WAS NOT COMPARABLE BECAUSE OF EXTRA - ORDINARY CIRCUMSTANCES OF AMALGAMATION. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE AS UNDER: - 13. NOW, COMING TO THE NEXT CONTENTION OF THE ASSESSEE VIS - - VIS M/S ACCENTIA T ECHNOLOGIES LTD. THAT THE SAME HAS BEEN WRONGLY INCLUDED BY THE TPO AS A COMPARABLE CONCERN. THE TRIBUNAL IN ASSESSEES OWN CASE VIDE PARAS 13 TO 16 HAD HELD THAT THE SAID CONCERN COULD NOT BE CONSIDERED AS A COMPARABLE. THE RELEVANT FINDINGS OF THE TRIB UNAL ARE AS UNDER : - 13. NEXT, ASSESSEE HAD CONTENDED THAT ACCENTIA TECHNOLOGIES LTD. HAS BEEN WRONGLY INCLUDED BY THE TPO AS A COMPARABLE CONCERN. AS PER THE ASSESSEE, THE SAID CONCERN WAS ENGAGED IN FUNCTIONALLY DIFFERENT ACTIVITIES. IT WAS POINTED O UT THAT THE SAID CONCERN IS ENGAGED IN PROVIDING MEDICAL TRANSACTION, BILLING AND CODING SERVICES, APPLICATION DEVELOPMENT & CUSTOMIZATION (SEGMENTAL DATA NOT AVAILABLE). MOREOVER, IT WAS CONTENDED THAT THE SALES/TURNOVER OF THE SAID CONCERN WAS MORE THAN RS.50 CRORES FOR THE YEAR UNDER CONSIDERATION WHICH DID WAS MORE THAN RS.50 CRORES FOR THE YEAR UNDER CONSIDERATION WHICH DID NOT MEET WITH TURNOVER FILTER APPLIED BY THE ASSESSEE. ON THIS POINT, IT WAS POINTED OUT THAT THE ASSESSEE HAD SELECTED SALES/TURNOVER FILTER OF 1 - 50 CRORES I.E. ANY CONCERNS HAVING A TURNOVER EXCEE DING RS.50 CRORES WERE EXCLUDED. THIRDLY, IT WAS POINTED OUT THAT THE ACTIVITIES OF THE SAID CONCERN WERE NOT COMPARABLE TO THE ACTIVITIES OF THE ASSESSEE. 14. THE TPO HAS NOTED THE AFORESAID OBJECTIONS OF THE ASSESSEE IN PARA 18.1 OF HIS ORDER AND HAS REJECTED THE SAME BY MERELY NOTICING THAT 75% OF THE REVENUE/INCOME OF THE SAID CONCERN IS FROM ITES AND THEREFORE IT IS TO BE CONSIDERED AS A COMPARABLE. BEFORE US, THE LD. REPRESENTATIVE FOR THE ASSESSEE HAS REITERATED THE SUBMISSIONS PUT - FORTH BEFORE T HE TPO IN ORDER TO JUSTIFY EXCLUSION OF THE SAID CONCERN FROM THE LIST OF COMPARABLES. IN PARTICULARLY, IT HAS BEEN POINTED OUT THAT FOR THE VERY SAME ASSESSMENT YEAR, THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF SYMPHONY MARKETING SOLUTIONS INDIA PVT. LTD. VS. ITO, (2013) 38 TAXMANN.COM 55 (BANG.) HAS EXCLUDED THE SAID CONCERN FROM THE LIST OF COMPARABLES IN A SIMILAR SITUATION FOLLOWING THE DECISION OF THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF CAPITAL IQ INFORMATION SYSTEMS (INDIA) PRIVAT E LIMITED VS. DCIT, (2013) 32 TAXMANN.COM 21 (HYD.). 15. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. REPRESENTATIVE FOR THE ASSESSEE AND ALSO THE STAND OF THE REVENUE AS EMERGING FROM THE ORDER OF THE TPO. IN OUR VIEW, THE RATIO LAID DOWN BY THE HYDERAB AD BENCH OF THE TRIBUNAL IN THE CASE OF CAPITAL IQ INFORMATION SYSTEMS ITA NO. 784 /PN/20 1 4 M/S. CUMMINS TURBO TECHNOLOGIES LTD., UK 9 (INDIA) PRIVATE LIMITED (SUPRA) AND BY THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF SYMPHONY MARKETING SOLUTIONS INDIA PVT. LTD. (SUPRA) IS SQUARELY APPLICABLE TO THE PRESENT CASE ALSO. THE AFORESAID BENCHES OF THE TRIBUNAL FOUND THAT DURING THE YEAR UNDER CONSIDERATION THERE WERE EXTRAORDINARY EVENTS THAT TOOK PLACE IN THE SAID CONCERN WHICH WARRANTED EXCLUSION OF THIS COMPANY AS A COMPARABLE. WE THEREFORE HOLD THAT THE SAID CON CERN CANNOT BE CONSIDERED AS A COMPARABLE. 14. WE FIND THAT THE TRIBUNAL IN PTC SOFTWARE (INDIA) PRIVATE LIMITED VS. DCIT (SUPRA) AND BNY MELLON INTERNATIONAL OPERATIONS (INDIA) PRIVATE LIMITED VS. DCIT (SUPRA) AND ALSO IN M/S CAPITAL IQ INFORMATION SYST EMS (INDIA) PVT. LTD. VS. ADDL.CIT IN ITA NO.124/HYD/2014 RELATING TO ASSESSMENT YEAR 2009 - 10 VIDE ORDER DATED 31.07.2014 HAD HELD THAT M/S ACCENTIA TECHNOLOGIES LTD. WAS NOT A COMPARABLE IN IT SEGMENT FOR HAVING EXTRA - ORDINARY CIRCUMSTANCES I.E. AMALGAMAT ION. THE RELEVANT FINDING OF THE TRIBUNAL IN PTC SOFTWARE (INDIA) PRIVATE LIMITED VS. DCIT (SUPRA) IS AS UNDER : - 47. THE NEXT OBJECTION OF THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS WITH REGARD TO THE INCLUSION OF M/S. ACCENTIA TECHNOLO GIES LTD. WHICH ADMITTEDLY WAS ENGAGED IN DEVELOPING ITS OWN SOFTWARE PRODUCTS AND WAS RENDERING MEDICAL TRANSCRIPTION SERVICES. FURTHER, THE SAID COMPANY DURING THE YEAR UNDER CONSIDERATION HAD MADE CERTAIN ACQUISITIONS WHICH IN TURN AFFECTED THE MARGINS OF THE YEAR OF THE ACQUISITION. WE FIND THAT HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF CAPITAL IQ INFORMATION SYSTEMS (INDIA) PVT. LTD. (SUPRA) HAD REJECTED ACCENTIA TECHNOLOGIES LTD. FOR HAVING EXTRA - ORDINARY CIRCUMSTANCES I.E. AMALGAMATION. FOLLO WING THE PARITY OF REASONING AS ADOPTED BY THE HYDERABAD BENCH OF THE TRIBUNAL, WE HOLD THAT THE SAID COMPANY HAD DIFFERENT FUNCTIONAL PROFILE AS COMPARED TO THE ASSESSEE, COMPANY HAD DIFFERENT FUNCTIONAL PROFILE AS COMPARED TO THE ASSESSEE, WHICH IN TURN EXPLAINED THE ABNORMALLY HIGH PROFIT MARGINS EARNED BY THE SAID COMPAN Y AS COMPARED TO THE ASSESSEE. ACCORDINGLY, WE ACCEPT THE PLEA OF THE ASSESSEE AND HOLD THAT THE SAID COMPANY IS NOT TO BE USED AS COMPARABLE IN ITES SEGMENTS OF THE ASSESSEE. 1 4 . IN VIEW THEREOF, WHERE THE ASSESSEE BEFORE US IS ALSO ENGAGED IN PROVISIO N OF ITES SERVICES TO ITS PARENT OFFICE AND WHERE THE ASSESSEE IN MAXIMIZE LEARNING PVT. LTD. VS. ACIT (SUPRA) WAS ALSO ENGAGED IN PROVIDING ITES SERVICES, THE RATIO LAID DOWN BY THE TRIBUNAL IS SQUARELY APPLICABLE AND HENCE, WE HOLD THAT M/S. ACCENTIA TEC HNOLOGIES LTD. IS TO BE EXCLUDED FROM THE FINAL SET OF COMPARABLES SINCE ITS HAVING EXTRA - ORDINARY CIRCUMSTANCES OF AMALGAMATION. 1 5 . NOW, COMING TO THE NEXT CONTENTION OF ASSESSEE I.E. EXCLUSION OF CROSSDOMAIN SOLUTIONS LTD. THE CASE OF THE ASSESSEE BE FORE US IS THAT THE ITA NO. 784 /PN/20 1 4 M/S. CUMMINS TURBO TECHNOLOGIES LTD., UK 10 SAID CONCERN WAS ENGAGED IN BUSINESS OF KPO SERVICES AND WAS HAVING DIFFERENT BUSINESS MODULE AND HENCE, WAS NOT FUNCTIONALLY COMPARABLE. THE ASSESSEE BEFORE US IS ADMITTEDLY ENGAGED IN THE PROVISION OF ITES SERVICES. 1 6 . WE FIND TH AT THE TRIBUNAL IN MAXIMIZE LEARNING PVT. LTD. VS. ACIT (SUPRA) HAD ALSO TAKEN NOTE OF THE FACT THAT CROSSDOMAIN SOLUTIONS LTD. WAS ENGAGED IN HIGH END KP O SERVICES AND WAS NOT COMPARABLE WITH THE ASSESSEE WHICH WAS A NORMAL ITES PROVIDER. RELEVANT FINDIN GS OF THE TRIBUNAL ARE AS UNDER: - 19. THE LAST PLEA RAISED BY THE ASSESSEE WAS FOR EXCLUSION OF CROSSDOMAIN SOLUTIONS LTD. FROM THE LIST OF COMPARABLES. THE SAID COMPARABLE WAS PART OF THE FINAL LIST OF COMPARABLES SELECTED BY THE TPO FOR BENCHMARKING TH E INTERNATIONAL TRANSACTION OF THE ASSESSEE IN ASSESSMENT YEAR 2008 - 09. THE SAID COMPARABLE WAS ENGAGED IN HIGH END KPO SERVICES AND HENCE WERE CLAIMED TO BE NOT A COMPARABLE WITH THE ASSESSEE WHICH WAS A NORMAL ITES PROVIDER. THE TRIBUNAL ACCEPTING THE SAID PLEA OF THE ASSESSEE IN ASSESSMENT YEAR 2008 - 09 HELD THE SAID CONCERN WAS TO BE EXCLUDED FROM THE FINAL LIST OF COMPARABLES BY OBSERVING AS UNDER : - 25. THE LAST PLEA OF THE ASSESSEE IS TO EXCLUDE FROM THE LIST OF COMPARABLES CROSSDOMAIN SOLUTIONS LTD.. IN THIS CONTEXT, BEFORE THE COMPARABLES CROSSDOMAIN SOLUTIONS LTD.. IN THIS CONTEXT, BEFORE THE TPO ASSESSEE SUBMITTED THAT THE SAID CONCERN WAS NOT COMPARABLE WITH THE ASSESSEE. IT WAS POINTED OUT THAT THE SAID CONCERN WAS ENGAGED IN THE PAYROLL ACTIVITY APART FROM BEING ENGAGED IN KPO SERVICES. THE ASSESSEE ALSO REFERRED TO THE WEBSITE OF THE SAID CONCERN TO POINT OUT THAT THE SAID CONCERN WAS IDENTIFIED AS A KNOWLEDGE PROCESS OUTSOURCING SERVICES PROVIDER (KPO) AND NOT A SIMPLE BUSINESS PROCESS OUTSOURCING SERVICES PROVIDER. BEFORE THE DRP, IT WAS ALSO CONTENDE D THAT THE SAID CONCERN WAS ENGAGED IN HIGH END KPO SERVICES WHICH VARIES FROM A ROUTINE LOW END ITES PROVIDER IN TERMS OF SKILL SET USED AND NATURE OF SERVICES PROVIDED. IT WAS ALSO CONTENDED THAT THE SAID CONCERN HAS DEVELOPED PRODUCTS FOR EFFECTIVELY S ERVICING ITS CUSTOMERS AND THE SAME WAS ENTIRELY DIFFERENT THAN THAT OF THE ASSESSEES BUSINESS OF RENDERING ROUTINE IT ENABLED SERVICES. AT THE TIME OF HEARING BEFORE US, THE LD. REPRESENTATIVE FOR THE ASSESSEE HAS REFERRED TO THE FOLLOWING TABULATION WH ICH BRINGS OUT THE DIFFERENCE BETWEEN E - LEARNING ACTIVITIES CARRIED OUT BY THE ASSESSEE AND THE KPO ACTIVITIES CARRIED OUT BY THE SAID CONCERN : - E - LEARNING KPO THE ASSESSEE PROVIDES LOW - END IT ENABLED SERVICES IN THE FORM OF E - LEARNING SOLUTIONS. KPO IS A FORM OF OUTSOURCING, IN WHICH KNOWLEDGE - RELATED AND INFORMATION - RELATED WORK IS CARRIED OUT BY THE SERVICE PROVIDERS. E - LEARNING SOLUTIONS SERVICES PROVIDED BY THE ASSESSEE ARE NOT UNLIKE THE OUTSOURCING OF MANUFACTURING OR ROUTINE SOFTWARE ITA NO. 784 /PN/20 1 4 M/S. CUMMINS TURBO TECHNOLOGIES LTD., UK 11 VERY COMPLEX IN NATURE AND THUS DO NOT REQUIRE HIGHLY SKILLED PROFESSIO NALS TO PERFORM THE FUNCTIONS. SERVICES, THIS TYPICALLY INVOLVES HIGH - VALUE WORK CARRIED OUT BY THE HIGHLY SKILLED STAFF. E - LEARNING SOLUTION PROVIDES CANNOT EARN HIGH MARGINS OF PROFITS SINCE TH EY PRIMARILY DERIVE THEIR REVENUE FROM PERFORMING FUNCTIONS THAT ARE NOT EXCLUSIVELY PROVIDED BY THEM AND HAVE CLOSE SUBSTITUTES IN THE MARKET. MOST FIRMS PROVIDING KNOWLEDGE PROCESSING POSSESS EXCLUSIVE INFORMATION, KNOWLEDGE AND EXPERIENCE WHICH CANNOT B E FOUND IN MOST OF THEIR COMPETITORS. THUS, THEY TEND TO COMMAND HIGHER MARGINS OF PROFITS. LOW - END IT ENABLED SERVICE PROVIDERS EMPLOY WORKERS WHO HAVE THE BASIC KNOWLEDGE AND CAN BE TRAINED TO PERFORM THE NECESSARY FUNCTIONS. KPO FIRMS EARN EXTRAORDINA RY PROFITS DUE TO THE HIGHLY SKILLED RESOURCES THEY EMPLOY IN THE FORM OF HIGHLY - QUALIFIED PROFESSIONALS. 26. ON THE OTHER HAND, THE LD. CIT - DR APPEARING FOR THE REVENUE CONTENDED THAT THE TPO AS WELL AS THE DRP HAVE REJECTED THE PLEA OF THE ASSESSEE AS THE SUBMISSIONS WERE ON A WRONG FOOTING. IT WAS REITERATED THAT THE NATURE OF SERVICES RENDERED BY THE SAID CONCERN WERE FALLING IN THE CATEGORY OF IT ENABLED SERVICES WHICH IS ALSO BROADLY THE CATEGORY OF THE SERVICES BEING RENDERED BY THE ASSESSEE. THE REFORE, THE SAID CONCERN WAS RIGHTLY INCLUDED BY THE TPO IN THE LIST OF COMPARABLES. 27. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. OSTENSIBLY, THE REASON ADVANCED BY THE TPO TO REJECT THE PLEA OF THE ASSESSEE ARE TOO GENERAL AND ARE NOT JUSTIF IED. EVEN WHERE TWO CONCERNS MAY BE TOO GENERAL AND ARE NOT JUSTIF IED. EVEN WHERE TWO CONCERNS MAY BE UNDERTAKING ACTIVITIES WHICH CAN BE BROADLY CATEGORIZED AS ITES IN COMMON PARLANCE BUT WHERE AN ASSESSEE IS ABLE TO ESTABLISH THAT INTRINSICALLY THE ACTIVITIES ARE NOT COMPARABLE, SUCH A CONCERN WOULD NOT BE INCLUDED FO R THE PURPOSES OF COMPARABILITY ANALYSIS. IN THE CONTEXT OF THE PRESENT CASE, THE PLEA OF THE ASSESSEE IS THAT THE BUSINESS OF M/S CROSSDOMAIN SOLUTIONS LTD. RANGED FROM HIGH END KPO SERVICES, DEVELOPMENT OF PRODUCTS AND ROUTINE LOW AND IT ENABLED SERVICE S. FOR INSTANT, THE WEBSITE EXTRACT AND ALSO THE ANNUAL REPORT OF THE SAID CONCERN SHOWS THAT IT WAS ENGAGED IN PAYROLL OUTSOURCING ON A SUBSTANTIVE SCALE. THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF SYMPHONY MARKETING SOLUTIONS INDIA PVT. LTD. (S UPRA) FOR THE VERY ASSESSMENT YEAR FOUND THAT THERE WAS NO BIFURCATION AVAILABLE FOR VARIOUS DIVERSIFIED ACTIVITIES BEING CARRIED OUT BY THE SAID CONCERN AND THEREFORE ON AN ENTITY LEVEL THE SAID CONCERN COULD NOT BE COMPARED TO A NORMAL ITES PROVIDER. IN OUR VIEW, FOLLOWING THE DECISION OF THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF SYMPHONY MARKETING SOLUTIONS INDIA PVT. LTD. (SUPRA) WHICH WAS ALSO FOLLOWED BY THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF MARKET TOOLS RESEARCH PVT. LTD. VS. A CIT (ITA NO.1811/HYD/2012 DATED 24.10.2013, THE AFORESAID CONCERN IS LIABLE TO BE EXCLUDED FROM THE LIST OF COMPARABLES. 20. FURTHER, THE TRIBUNAL IN BNY MELLON INTERNATIONAL OPERATIONS (INDIA) PRIVATE LIMITED VS. DCIT (SUPRA), IN ASSESSMENT YEAR 2009 - 10 HAD EXCLUDED THE SAID CONCERN AS COMPARABLE BY OBSERVING AS UNDER : - 12. ANOTHER PLEA RAISED BY THE ASSESSEE IS FOR EXCLUSION OF CROSSDOMAIN SOLUTIONS LTD. FROM THE FINAL SET OF COMPARABLES. IN THIS REGARD, ASSESSEE CANVASSED BEFORE THE TPO THAT THE SA ID CONCERN WAS ITA NO. 784 /PN/20 1 4 M/S. CUMMINS TURBO TECHNOLOGIES LTD., UK 12 FUNCTIONALLY NOT COMPARABLE TO THE ACTIVITY OF IT ENABLED SERVICES BEING CARRIED OUT BY THE ASSESSEE. IT WAS POINTED OUT BY THE ASSESSEE BEFORE THE TPO THAT THE SAID CONCERN WAS INVOLVED IN VARIOUS ACTIVITIES WHICH INVOLVED OUTSOURCING, HUM AN RESOURCES, INSURANCE, HEALTHCARE/ ACCOUNTING AND CONSULTING, BUSINESS EXCELLENCE, MARKET RESEARCH/ANALYSIS AND IT SERVICES. IT WAS POINTED OUT THAT THE ABOVE FUNCTIONS BEING PERFORMED BY THE SAID CONCERN WERE NOT COMPARABLE TO THE ACTIVITY OF AN IT ENA BLED SERVICE PROVIDER UNDERTAKEN BY THE ASSESSEE. IT WAS ALSO CANVASSED THAT THERE WAS NO SEGMENTAL PROFITABILITY AVAILABLE FROM THE ANNUAL FINANCIAL STATEMENT OF THE ASSESSEE AND THE SAID CONCERN WAS NOT A COMPARABLE CONCERN ON THE ENTITY LEVEL. THE TPO HAS REJECTED THE PLEA OF THE ASSESSEE ON SIMILAR GROUNDS AS TAKEN BY HIM FOR REJECTING THE ASSESSEES PLEA FOR EXCLUSION OF ACCENTIA TECHNOLOGIES LTD.. 13. BEFORE US, THE LD. REPRESENTATIVE HAS RELIED UPON THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. M/S WILLIS PROCESSING SERVICES (INDIA) PVT. LTD. VIDE ITA NO.2152/MUM/2014 DATED 10.10.2014 IN ORDER TO JUSTIFY THE EXCLUSION OF CROSSDOMAIN SOLUTIONS LTD.. 14. WE FIND THAT M/S WILLS PROCESSING SERVICES (INDIA) PVT. LTD. (SUPRA) WA S A CONCERN WHERE THE TESTED PARTY WAS PROVIDING IT ENABLED SERVICES TO ITS VARIOUS GROUP CONCERNS AND ACTIVITIES WERE QUITE SIMILAR TO THE ACTIVITY OF IT ENABLED SERVICES RENDERED BY ASSESSEE TO ITS AFFILIATES. IN THIS CONTEXT, THE CONCERN, M/S CROSSDOMA IN SOLUTIONS LTD. WAS FOUND TO BE FUNCTIONALLY NOT COMPARABLE BY THE DRP AND SUCH DECISION WAS AFFIRMED BY THE TRIBUNAL BY MAKING THE FOLLOWING DISCUSSION : - 3. M/S CROSSDOMAIN SOLUTIONS LTD. THIS COMPANY HAS BEEN REJECTED BY THE DRP ON THE GROUND THAT THIS COMPANY HAS BEEN REJECTED BY THE DRP ON THE GROUND THAT IT IS INDULGED IN HIGH SKILL IT SERVICES WHICH ARE NOT COMPARABLE TO THE ROUTINE I.T. ENABLED SERVICES. THE TRIBUNAL HYDERABAD BENCH IN THE CASE OF M/S MARKET TOOLS RESEARCH PVT. LTD. IN ITA NO.1811/HYD/2012 HAS HELD THAT THIS COMPANY IS PROVIDING SERVIC ES WHICH ARE IN THE NATURE OF KPO. FURTHER, THE COMPANY IS ENGAGED IN PROVIDING NICHE SERVICES AS WELL AS DEVELOPED ITS OWN BRAND EXDION TO TARGET THE INSURANCE INDUSTRY IN US. THE TRIBUNAL FOLLOWED THE FINDINGS OF THE BANGALORE BENCH IN THE CASE OF M/ S SYMPHONY MARKETING SOLUTIONS INDIA PVT. LTD. IN ITA NO.1316/BANG/2012 WHILE REJECTING THE ISSUE OF THIS COMPANY IN THE FINAL SET OF COMPARABLES. RESPECTFULLY FOLLOWING THE FINDINGS OF THE CO - ORDINATE BENCH, WE UPHOLD THE DIRECTIONS OF THE DRP FOR THE RE JECTION OF THIS COMPANY FROM THE FINAL LIST OF COMPARABLE. 15. FOLLOWING THE AFORESAID PRECEDENT, WHICH HAS BEEN RENDERED IN THE CONTEXT OF THE SAME ASSESSMENT YEAR, WE UPHOLD ASSESSEES PLEA FOR EXCLUSION OF CROSSDOMAIN SOLUTIONS LTD. FROM THE FINAL SET OF COMPARABLES. WE HOLD SO. 21. THE BUSINESS ACTIVITY CARRIED ON BY THE SAID COMPARABLE BEING AT VARIANCE WITH BUSINESS OF THE ASSESSEE BEFORE US AND FOLLOWING THE PARITY OF REASONING LAID DOWN BY THE TRIBUNAL VIDE VARIOUS ORDERS OF DIFFERENT ASSESSEES, WE HOLD THAT THE SAID COMPARABLE IS TO BE EXCLUDED FROM THE FINAL SET OF COMPARABLES. FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT M/S CROSSDOMAIN SOLUTIONS LTD. IS TO BE EXCLUDED FROM THE FINAL SET OF COMPARABLES. ITA NO. 784 /PN/20 1 4 M/S. CUMMINS TURBO TECHNOLOGIES LTD., UK 13 1 7 . SINCE THE ASSESSEE BEFORE US IS ALSO ENGAGED IN PROVIDING ITES SERVICES TO ITS PARENT OFFICE AND THE CONCERN PICKED UP BY THE TPO I.E. CROSSDOMAIN SOLUTIONS LTD. IS ENGAGED IN KPO SERVICES, THE SAME IS FUNCTIONALLY DISSIMILAR TO THE ASSESSEE AND HENCE, NOT TO BE INCLUDED IN THE FI NAL SET OF COMPARABLES. ACCORDINGLY, WE HOLD SO. 1 8 . THE NEXT CONTENTION OF THE ASSESSEE WAS EXCLUSION COSMIC GLOBAL LTD. O N THE PREMISE THAT THE REVENUE FROM BPO SERVICES WAS ONLY RS.27.76 LAKHS AND THE SAID CONCERN WAS CARRYING ON ITS ACTIVITY THROUGH OUTSOURCING. IT IS EXPLAINED BY THE ASSESSEE BEFORE US THAT THE EMPLOYEE COST OF THE ASSESSEE WAS 42% AS AGAINST EMPLOYEE COST OF COSMIC GLOBAL LTD. WHICH WAS ONLY 21%. THE ACTIVITIES OF THE SAID CONCERN WERE CONSIDERED BY THE TRIBUNAL IN MAXIMIZE LEARNI NG PVT. LTD. VS. ACIT (SUPRA) AND IT WAS HELD THAT THE SAID CONCERN WAS OPERATING IN DIFFERENT BUSINESS MOD E L. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE AS UNDER: - AS UNDER: - 16. SIMILARLY, THE THIRD CONCERN I.E. COSMIC GLOBAL LTD. WAS HELD TO BE NOT COMPARABLE BY THE TRIBUNAL IN ITS ORDER DATED 02.02.2015 (SUPRA) IN THE HANDS OF THE ASSESSEE BECAUSE THE SAID CONCERN WAS OPERATING IN A DIFFERENT BUSINESS MODEL. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE AS UNDER : - 21. THE THIRD CONCERN, WHICH IS SOUGHT TO BE EXCLU DED BY THE ASSESSEE IS COSMIC GLOBAL LTD.. THE ASSESSEE HAS CONTENDED BEFORE THE TPO THAT THE SAID CONCERN NEEDS TO BE REJECTED ON THE GROUND THAT IT WAS ENGAGED IN BPO AND TRANSLATION SERVICES WHEREAS ASSESSEE WAS AN ITES PROVIDER, AND THEREFORE CONCERN WAS FUNCTIONALLY DISSIMILAR. HOWEVER, THE TPO REJECTED THE PLEAS OF THE ASSESSEE AND CONSIDERED THE SAID CONCERN AS A COMPARABLE ON THE GROUND THAT EXPORT INCOME OF THE SAID CONCERN WAS MORE THAN 50%. 22. BEFORE US, LD. REPRESENTATIVE FOR THE ASSESSEE REF ERRED TO THE OBJECTIONS RAISED BEFORE THE DRP TO POINT OUT THAT THE SAID CONCERN WAS LIABLE TO BE EXCLUDED FROM THE FINAL SET OF COMPARABLES. FIRSTLY, IT IS POINTED OUT THAT THE SAID CONCERN WAS OFFERING ACCOUNTS PROCESSING SERVICES AND TRANSCRIPTION SERV ICES AND WAS NOT COMPARABLE TO THE ACTIVITIES OF THE ASSESSEE AS THE SAID CONCERN WAS INTO BPO AND TRANSLATION SERVICES. IT WAS ALSO POINTED OUT BY REFERRING TO THE WEBSITE OF THE SAID CONCERN THAT IT WAS ENGAGED IN THE DIVERSIFIED BUSINESS ACTIVITY. IT WAS ALSO POINTED OUT THAT THOUGH THE ACTIVITIES OF THE SAID CONCERN ARE IN MEDICAL TRANSCRIPTION, CONSULTANCY, TRANSLATION AND ACCOUNTS BPO SERVICES BUT THERE WAS NO SEGMENTAL INFORMATION ITA NO. 784 /PN/20 1 4 M/S. CUMMINS TURBO TECHNOLOGIES LTD., UK 14 AVAILABLE IN THE ANNUAL ACCOUNTS OF THE SAID CONCERN. APART THEREFR OM, IT HAS BEEN POINTED OUT THAT THE SAID CONCERN HAS INCURRED A SUBSTANTIAL EXPENDITURE OF RS.2,86,29,348/ - TOWARDS TRANSLATION CHARGES AS IS EVIDENT FROM THE ANNUAL REPORT OF THE SAID CONCERN. THE SAID TRANSLATION CHARGES ARE APPROXIMATELY 60.17% OF THE TOTAL COST INCURRED BY THE SAID CONCERN AND THE EMPLOYEE COST COMPRISES OF MERELY 17.32% OF THE TOTAL COST. IT WAS THEREFORE CONTENDED THAT THE AFORESAID FACTS JUSTIFY AN INFERENCE THAT THE SAID CONCERN WAS NOT ADOPTING THE NORMAL AND ROUTINE BUSINESS MO DEL FOR AN OTHERWISE NORMAL ITES PROVIDER. THE PROPORTION OF EXPENDITURE INCURRED ON OUTSOURCING AND EMPLOYEE COSTS SHOW THAT THE SAID CONCERN SEEMS TO HAVE OUTSOURCED THE FUNCTIONS TO DIFFERENT VENDORS. THE AFORESAID WAS HIGHLIGHTED TO POINT OUT THAT TH E OPERATING BUSINESS MODEL OF COSMIC GLOBAL LTD. WAS TOTALLY DIFFERENT FROM THAT OF THE ASSESSEE. IN THIS CONTEXT, THE LD. REPRESENTATIVE POINTED OUT THAT THE TPO HAD REJECTED THE ACE SOFTWARE EXPORTS LIMITED FROM THE LIST OF COMPARABLES AND ONE OF THE RE ASONS ASCRIBED WAS THAT THE SAID CONCERN WAS INCURRING MAJOR EXPENDITURE ON SOFTWARE SOURCING CHARGES. THE TPO IN THE CONTEXT OF ACE SOFTWARE EXPORTS LIMITED CAME TO CONCLUDE THAT THE SAID CONCERN WAS NOT A SERVICE PROVIDER BUT A RECIPIENT OF THE SERVICES AND THEREFORE IT WAS REJECTED AS A COMPARABLE. THE LD. REPRESENTATIVE EMPHASIZED THAT IF ACE SOFTWARE EXPORTS LIMITED WAS REJECTED BY THE TPO FOR HAVING SUBSTANTIAL SOFTWARE OUTSOURCING CHARGES THEN M/S COSMIC GLOBAL LTD. ALSO NEEDS TO BE REJECTED FOR IN CURRING A HIGH PROPORTION OF EXPENDITURE ON OUTSOURCED TRANSLATION CHARGES. 23. THE LD. CIT - DR APPEARING FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND OF THE TPO WHEREIN THE SAID CONCERN WAS REJECTED REITERATED THE STAND OF THE TPO WHEREIN THE SAID CONCERN WAS REJECTED ON THE GROUND THAT ITS EXPORT INCOME WAS MORE THAN 50%. THE LD. CIT - DR REITERATED THAT PRIMARILY THE SAID CONCERN WAS ALSO ENGAGED IN ITES ACTIVITIES AND THE TPO WAS JUSTIFIED IN INCLUDING THE SAME IN THE LIST OF COMPARABLES. 24. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. THE PERTINENT POINT MA DE OUT BY THE LD. REPRESENTATIVE FOR THE ASSESSEE IS THAT THE SAID CONCERN IS OPERATING IN A DIFFERENT BUSINESS MODEL WHEREIN MUCH OF ITS ACTIVITIES ARE OUTSOURCED WHEREAS THE BUSINESS MODEL OF THE ASSESSEE IS DIFFERENT. IN AN OUTSOURCING BUSINESS MODEL OBVIOUSLY THE EXPENDITURE INCURRED ON EMPLOYEE COSTS WOULD BE LOW IN COMPARISON TO THE EXPENDITURE INCURRED ON OUTSOURCING. OSTENSIBLY, WHERE IT ENABLED SERVICES ARE OUTSOURCED TO A THIRD PARTY VENDOR THEN THE MARGIN DERIVED BY THE SAID CONCERN WOULD BE A TTRIBUTABLE TO SERVICES RENDERED BY THE OUTSOURCED VENDOR. PER CONTRA, WHERE IT ENABLED SERVICES ARE BEING RENDERED BY A CONCERN THROUGH ITS OWN EMPLOYEES, THE MARGINS FROM RENDERING OF SERVICES BY THE SAID CONCERN WOULD BE ATTRIBUTABLE TO ITS OWN EMPLOYE ES. OBVIOUSLY, THE LEVEL OF MARGINS IN THE TWO BUSINESS MODELS WOULD NOT BE COMPARABLE. THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF CAPITAL IQ INFORMATION SYSTEMS (INDIA) PRIVATE LIMITED (SUPRA) HAS HELD THAT CONCERNS WHO ACT AS INTERMEDIATERIES H AVING OUTSOURCED IT ACTIVITY CANNOT BE SAID TO BE COMPARABLE WITH A CONCERN WHO IS RENDERING SERVICES THROUGH ITS OWN EMPLOYEES. THE SAID PROPOSITION HAS ALSO BEEN UPHELD BY THE HYDERABAD BENCH OF THE ITA NO. 784 /PN/20 1 4 M/S. CUMMINS TURBO TECHNOLOGIES LTD., UK 15 TRIBUNAL IN THE CASE OF BRIGADE GLOBAL SERVICES PRIVAT E LIMITED (SUPRA). HAVING REGARD TO THE AFORESAID DISCUSSION, IN OUR VIEW, THE SAID CONCERN IS NOT A GOOD COMPARABLE TO BE INCLUDED FOR THE PURPOSES OF COMPARABILITY ANALYSIS AS IT OPERATES UNDER A DIFFERENT BUSINESS MODEL WHICH IMPACTS OPERATING MARGINS. AS A CONSEQUENCE, WE DIRECT THE ASSESSING OFFICER TO EXCLUDE THE SAID CONCERN FROM THE FINAL SET OF COMPARABLES. 17. WE FURTHER FIND THAT THE TRIBUNAL IN PTC SOFTWARE (INDIA) PRIVATE LIMITED VS. DCIT (SUPRA) AND BNY MELLON INTERNATIONAL OPERATIONS (IND IA) PRIVATE LIMITED VS. DCIT (SUPRA) AND ALSO IN M/S CAPITAL IQ INFORMATION SYSTEMS (INDIA) PVT. LTD. VS. ADDL.CIT (SUPRA) WHILE DECIDING THE APPEALS OF THE RELEVANT ASSESSEES IN ASSESSMENT YEARS 2009 - 10 HAD HELD THAT M/S COSMIC GLOBAL LTD. IS NOT TO BE CO NSIDERED AS A COMPARABLE. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL IN BNY MELLON INTERNATIONAL OPERATIONS (INDIA) PRIVATE LIMITED VS. DCIT (SUPRA) ARE AS UNDER : - 16. THE THIRD CONCERN, WHICH IS SOUGHT TO BE EXCLUDED BY THE ASSESSEE IS COSMIC GLOBAL LT D.. BEFORE THE TPO ALSO, ASSESSEE HAD CANVASSED THAT THE SAID CONCERN WAS FUNCTIONALLY NOT COMPARABLE TO THE ASSESSEE. IT WAS POINTED OUT THAT THE SAID CONCERN IS ENGAGED INTO TRANSLATION, TRANSCRIPTION OF DATA WHICH IS ENTIRELY DIFFERENT FROM THE FUNCTI ONS BEING PERFORMED BY THE ASSESSEE. THE TPO HAS REJECTED THE PLEA OF THE ASSESSEE BY MERELY NOTICING THAT IN THE PRECEDING ASSESSMENT YEAR 2008 - 09, THE STATED CONCERN WAS SELECTED BY THE ASSESSEE AS A COMPARABLE CONCERN. 17. BEFORE US, THE LD. REPRESENTA TIVE FOR THE ASSESSEE POINTED OUT 17. BEFORE US, THE LD. REPRESENTA TIVE FOR THE ASSESSEE POINTED OUT THAT THE PLEA OF THE ASSESSEE FOR EXCLUSION OF COSMIC GLOBAL LTD. IS SUPPORTED BY THE DECISION OF THE PTC SOFTWARE (INDIA) PRIVATE LIMITED (SUPRA), WHICH HAS ALSO BEEN RENDERED IN THE CONTEXT OF A CONCERN RENDERING SIMILAR SERVICES AS THE ASSESSEE. THE FOLLOWING DISCUSSION IN THE ORDER OF THE TRIBUNAL DATED 31.10.2014 IS RELEVANT IN THIS REGARD : - 50. THE NEXT COMPANY AS PER THE ASSESSEE WHICH SHOULD NOT BE TAKEN AS COMPARABLE IS COSMIC GLOBAL LTD. ADMITTEDLY, THE ASSESS EE HAD NOT OBJECTED TO ITS INCLUSION EITHER BEFORE THE TPO OR DRP. HOWEVER, THE ASSESSEE CHALLENGED THE EXCLUSION OF THE SAID COMPANY AS COMPARABLE BEFORE THE TRIBUNAL. 51. WE FIND THAT THE SPECIAL BENCH OF CHANDIGARH TRIBUNAL IN THE CASE OF QUARK SYSTE MS PVT. LTD. (SUPRA) HAD HELD THAT EVEN IF THE ASSESSEE HAD NOT CHALLENGED THE INCLUSION OF THE COMPARABLE BEFORE THE AUTHORITIES BELOW, THE SAME COULD BE CHALLENGED BEFORE THE TRIBUNAL FOR THE FIRST TIME. ACCORDINGLY, WE HOLD THAT THE ASSESSEE AT THIS PO INT CAN RAISE THE SAID ISSUE. NOW, THE SECOND PART OF THE OBJECTION WAS THAT THE COMPANY HAD OUTSOURCED ITS VENDOR AND WAS MAKING HIGH VENDOR PAYMENTS AS COMPARED TO THE SALES AND HENCE WAS NOT COMPARABLE. WHILE ADJUDICATING THE EXCLUSION OF M/S. VISHAL INFORMATION TECHNOLOGIES LTD., WE HAVE IN PARAS HEREINABOVE ALREADY CONSIDERED THIS ASPECT OF THE COMPANIES OUTSOURCING TO VENDORS AND HELD M/S. VISHAL INFORMATION TECHNOLOGIES LTD. TO BE NOT ITA NO. 784 /PN/20 1 4 M/S. CUMMINS TURBO TECHNOLOGIES LTD., UK 16 FUNCTIONALLY COMPARABLE. FOLLOWING THE SAME PARITY OF REASONING , WE HOLD THAT M/S. COSMIC GLOBAL LTD. IS NOT FUNCTIONALLY COMPARABLE. 18. APART FROM THE DECISION IN THE CASE OF PTC SOFTWARE (INDIA) PRIVATE LIMITED (SUPRA), THE DECISION OF HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF M/S CAPITAL IQ INFORMATION SYSTE MS (INDIA) PVT. LTD. VS. ADDL.CIT VIDE ITA NO.124/HYD/2014 DATED 31.07.2014 HAS ALSO BEEN RELIED UPON BY THE ASSESSEE TO JUSTIFY THE EXCLUSION OF M/S COSMIC GLOBAL LTD. FROM THE FINAL SET OF COMPARABLES. THE HYDERABAD BENCH OF THE TRIBUNAL CONSIDERED AN E ARLIER DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF M/S MERCER CONSULTING (INDIA) P. LTD. VS. DCIT VIDE ITA NO.966/DEL/2014 DATED 06.06.2014 WHEREIN ALSO THE SAID CONCERN WAS FOUND TO BE INCOMPARABLE WITH AN ITES PROVIDER. THE FOLLOWING DISC USSION IN THE ORDER OF THE HYDERABAD BENCH OF THE TRIBUNAL IS WORTHY OF NOTICE : - 19. THE MAIN OBJECTION OF ASSESSEE WITH REFERENCE TO THE INCLUSION OF THIS COMPANY IS WITH REFERENCE TO OUTSOURCING OF ITS MAIN ACTIVITY. EVEN THOUGH THIS COMPANY IS IN ASSE SSEE'S TP STUDY, IT HAS RAISED OBJECTION BEFORE THE TPO THAT THIS COMPANY'S EMPLOYEE COST IS LESS THAN 21.30% AND MOST OF THE COST IS WITH REFERENCE TO THE OUTSOURCING CHARGES OR TRANSLATION CHARGES, AND AS SUCH THIS IS NOT A COMPARABLE COMPANY. THE TPO, T HOUGH CONSIDERED THESE SUBMISSIONS, REJECTED THE SAME, ON THE REASON THAT THIS DOES NOT IMPACT THE PROFIT MARGIN OF THE COMPANY. OPPOSING THE VIEW TAKEN BY THE TPO, IT IS SUBMITTED THAT THIS COMPANY CANNOT BE SELECTED AS COMPARABLE, AS SIMILAR ISSUE COMPANY CANNOT BE SELECTED AS COMPARABLE, AS SIMILAR ISSUE WAS DI SCUSSED BY THE COORDINATE BENCH OF THE TRIBUNAL(DELHI) IN THE CASE OF MERCER CONSULTING (INDIA) P. LTD. (SUPRA), VIDE PARAS 13.2 TO 13.3 WHICH READ AS UNDER - '13.2. NOW COMING TO THE FACTUAL MATRIX OF THIS CASE, WE FIND FROM THE MATERIAL ON RECORD THAT OUT SOURCING CHARGES OF THIS CASE CONSTITUTE 57.31% OF THE TOTAL OPERATING COSTS. THIS DOES NOT APPEAR TO US TO BE A VALID REASON FOR ELIMINATING THIS CASE FROM THE LIST OF COMPARABLES. ON GOING THROUGH THE ANNUAL ACCOUNTS OF COSMIC GLOBAL LIMITED, A COPY OF W HICH HAS BEEN PLACED ON RECORD, WE FIND THAT ITS TOTAL REVENUE FROM OPERATIONS ARE AT RS.7.37 CRORE DIVIDED INTO THREE SEGMENTS, NAMELY, MEDICAL TRANSCRIPTION AND CONSULTANCY SERVICES AT RS.9,90 LACS, TRANSLATION CHARGES AT RS.6.99 CRORE AND ACCOUNTS BPO A T RS.27.76 LAC. THE ID. AR HAS MADE OUT A CASE THAT OUTSOURCING ACTIVITY CARRIED OUT BY THIS COMPANY CONSTITUTES 57% OF TOTAL EXPENSES. THE REASON FOR WHICH WE ARE NOT AGREEABLE WITH THE ID. AR IS THAT WE HAVE TO EXAMINE THE REVENUE OF THIS CASE ONLY FROM ACCOUNTS BPO SEGMENT AND NOT ON THE ENTITY LEVEL, BEING ALSO FROM MEDICAL TRANSCRIPTION AND TRANSLATION CHARGES. WHEN WE ARE EXAMINING THE RESULTS OF THIS COMPANY FROM THE ACCOUNTS BPO SEGMENT ALONE, THERE IS NO NEED TO EXAMINE THE POSITION UNDER OTHER SEG MENTS. THE ENTIRE OUTSOURCING IS CONFINED TO TRANSLATION CHARGES PAID AT RS.3.00 CRORE, WHICH IS STRICTLY IN THE REALM OF THE TRANSLATION SEGMENT, REVENUES FROM WHICH ARE TO ITA NO. 784 /PN/20 1 4 M/S. CUMMINS TURBO TECHNOLOGIES LTD., UK 17 THE TUNE OF RS.6.99 CRORE. IF THIS SEGMENT OF TRANSLATION IS NOT UNDER CONSIDERATI ON FOR DECIDING AS TO WHETHER THIS CASE IS COMPARABLE OR NOT, WE CANNOT TAKE RECOURSE TO THE FIGURES WHICH ARE RELEVANT FOR SEGMENTS OTHER THAN ACCOUNTS BPO. THUS IT IS HELD THAT THIS CASE CANNOT BE EXCLUDED ON THE STRENGTH OF OUTSOURCING ACTIVITY, WHICH I S ALIEN TO THE RELEVANT SEGMENT. 13.3. HOWEVER, WE FIND THIS CASE TO INCOMPARABLE ON THE ALTERNATIVE ARGUMENT ADVANCED BY THE ID. AR TO THE EFFECT THAT TOTAL REVENUE OF THE ACCOUNTS BPO SEGMENT OF COSMIC GLOBAL LIMITED IS VERY LOW AT RS.27.76 LACS. WE HAVE DISCUSSED THIS ASPECT ABOVE IN THE CONTEXT OF CG - VAK'S CASE AND HELD THAT A CAPTIVE UNIT CANNOT BE COMPARED WITH A GIANT CASE AND THUS EXCLUDED CG - VAK WITH TURNOVER FROM ACCOUNTS BPO SEGMENT AT RS.86.10 LACS. AS THE SEGMENTAL REVENUE OF BPO SEGMENT OF COS MIC GLOBAL LIMITED AT RS.27.76 LAC IS STILL ON MUCH LOWER SIDE, THE REASONS GIVEN ABOVE WOULD FULLY APPLY TO HOLD COSMIC GLOBAL LIMITED AS INCOMPARABLE. THIS CASE IS, THEREFORE, DIRECTED TO BE EXCLUDED FROM THE LIST OF COMPARABLES. ' IN VIEW OF THE DETAILE D ANALYSIS OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE ABOVE REFERRED CASE, IN THIS CASE ALSO WE ACCEPT THE CONTENTIONS OF ASSESSEE AND DIRECT THE ASSESSING OFFICER/TPO TO EXCLUDE THIS COMPARABLE FOR THE SAME REASONS. 19. THE AFORESAID DISCUSSION MADE BY THE RESPECTIVE BENCHES OF THE TRIBUNAL REVEALS THAT IN RELATION TO THE FINANCIAL YEAR UNDER CONSIDERATION, THE BUSINESS MODEL IN WHICH M/S COSMIC GLOBAL LTD. HAS FUNCTIONED IS QUITE DISSIMILAR TO THE BUSINESS MODEL OF THE ASSESSEE FUNCTIONED IS QUITE DISSIMILAR TO THE BUSINESS MODEL OF THE ASSESSEE WHILE CARRYING OUT THE ACTIVITY OF AN ITES PROVIDER. MOREOVER, NONE OF THE OBJECTIONS RAISED BY THE ASSESSEE HAVE BEEN MET BY THE TPO ON THE BASIS OF ANY COGENT REASONING. ON THAT COUNT ALSO, WE FIND THAT THE PLEA OF THE ASSESSEE TO EXCLUDE M/S COSMIC GLOBAL LTD. FROM THE FIN AL SET OF COMPARABLES IS JUSTIFIED. THE OBJECTION OF THE TPO THAT THE SAID CONCERN WAS FOUND COMPARABLE BY THE ASSESSEE IN EARLIER YEAR CANNOT BE THE SOLE BASIS TO INCLUDE THE SAID CONCERN IN THE LIST OF COMPARABLES, IN VIEW OF THE AFORESAID DISCUSSION. THUS, ASSESSEE SUCCEEDS ON THIS ASPECT. 18. SINCE THE SAID CONCERN, M/S COSMIC GLOBAL LTD. WAS OPERATING IN DIFFERENT BUSINESS MODEL THAN THE ASSESSEE IN THE YEAR UNDER CONSIDERATION ALSO, THE SAME NEEDS TO BE EXCLUDED FROM THE FINAL SET OF COMPARABLES A ND ACCORDINGLY WE DIRECT THE ASSESSING OFFICER TO EXCLUDE THE SAME FROM THE FINAL SET OF COMPARABLES. FOLLOWING THE SAME PARITY OF REASONING, WE HOLD THAT M/S COSMIC GLOBAL LTD. IS TO BE EXCLUDED FROM THE FINAL SET OF COMPARABLES. 1 9 . THE HONBLE HIGH C OURT OF DELHI IN RAMPGREEN SOLUTIONS PVT. LTD. VS. CIT IN ITA NO.102/2015, VIDE JUDGMENT DATED 10.08.2015 HAD UPHELD THE EXCLUSION OF COSMIC GLOBAL LTD. BECAUSE OF ITS LOW EXPENDITURE ON EMPLOYMENT COST BEING FUNCTIONALLY DIS S I MIL A R . IN VIEW OF THE FINDIN GS OF TRIBUNAL IN THE CASE ITA NO. 784 /PN/20 1 4 M/S. CUMMINS TURBO TECHNOLOGIES LTD., UK 18 OF ANOTHER IT ENABLED SERVICE PROVIDER AND THE RATIO LAID DOWN BY HONBLE DELHI HIGH COURT , WE HOLD THAT WHERE COSMIC GLOBAL LTD. WAS OPERATING IN DIFFERENT BUSINESS MODEL THAN THE ASSESSEE IN THE YEAR UNDER CONSIDERATION, THE SA ME NEEDS TO BE EXCLUDED FROM THE FINAL SET OF COMPARABLES. ACCORDINGLY, WE HOLD SO. 20 . THE NEXT CONCERN WHICH THE ASSESSEE WANTS TO BE EXCLUDED FROM FINAL SET OF COMPARABLES IS ECLERX SERVICES LTD. , WHICH WAS ENGAGED IN THE BUSINESS OF KPO SERVICES AND HENCE NOT FUNCTIONALLY SIMILAR. WE HAVE IN THE PARAS HEREINABOVE ALREADY HELD THAT THE CONCERN CROSSDOMAIN SOLUTIONS PVT. LTD. WAS ENGAGED IN THE BUSINESS OF KPO SERVICES, WAS NOT FUNCTIONALLY SIMILAR. FOLLOWING THE SAME PARITY OF REASONING, WHERE ECLERX SERVICES LTD. IS ENGAGED IN THE BUSINESS OF KPO SERVICES, IS NOT FUNCTIONALLY COMPARABLE TO THE ASSESSEE. WE FURTHER FIND THAT THE HIGH COURT OF DELHI IN RAMPGREEN SOLUTIONS PVT. LTD. VS. CIT (SUPRA) HAS ALSO NOTED THE FUNCTIONALITY OF ECLERX SERVICES LT D. PVT. LTD. VS. CIT (SUPRA) HAS ALSO NOTED THE FUNCTIONALITY OF ECLERX SERVICES LT D. BEING OF KPO SERVICES AND THE HONBLE HIGH COURT OF DELHI DIRECTED THE SAME IS TO BE EXCLUDED WHILE BENCHMARKING THE INTERNATIONAL TRANSACTIONS OF ITE S PROVIDER. FOLLOWING THE SAME LINE OF REASONING, WE HOLD THAT ECLERX SERVICES LTD. IS TO BE EXCLUDED FROM THE FINAL SET OF COMPARABLES. 2 1 . THE LAST CONCERN OBJECTED TO BY THE ASSESSEE IS GENESYS INTERNATIONAL CORPORATION LTD. THE CASE OF THE ASSESSEE BEFORE US IS THAT THE SAID CONCERN IS NOT FUNCTIONALLY COMPARABLE TO THE ASSESSEE AS IT IS ENGAGED IN T HE BUSINESS OF GEOSPATIAL S ERV ICE S CONTENT PROVIDER SPECIALIZING IN LAND BASED TECHNOLOGIES, SKILLED MANPOWER, SCIENTISTS, CIVIL ENGINEER. FURTHER, IT WAS POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT THE TRIBUNAL IN ASSESSEE S OWN CASE RELATING TO ASSESSMENT YEAR 2008 - 09 IN ITA NO. 269/PN/ 2013, VIDE ORDER DATED 29.09.2014 HAD CONSIDERED THE PROFITABILITY ITA NO. 784 /PN/20 1 4 M/S. CUMMINS TURBO TECHNOLOGIES LTD., UK 19 TREND OF COMPARABLES AND FOUND IT TO BE NOT FUNCTIONALLY COMPARABLE. FURTHER, RELIANCE WAS PLACED ON THE DECISION OF HYDERAB AD BENCH OF TRIBUNAL IN FOLLOWING CASES RELATING TO ASSESSMENT YEAR 2009 - 10, WHEREIN M/S. GENESYS INTERNATIONAL CORPORATION LTD. WAS HELD TO BE NOT FUNCTIONALLY COMPARABLE BECAUSE OF ITS ABNORMAL PROFITABILITY TREND : - I) HYUNDAI MOTORS INDIA ENGINEERING (P .) LTD. VS. DCIT IN ITA NO.255/HYD/2014, RELATING TO ASSESSMENT YEAR 2009 - 10; II) HSBC ELECTRONIC DATA PROCESSING INDIA PVT. LTD. VS. DCIT IN ITA NO.247/HYD/2014; AND III) M/S. EXCELLENCE DATA RESEARCH PVT. LTD. VS. ITO IN ITA NO.159/HYD/2014 2 2 . WE FIN D THAT THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 2008 - 09 VIDE PARA 29 HAD ANALYZED THE PROFITABILITY OF M/S. GENESYS INTERNATIONAL CORPORATION LTD. AND OBSERVED AS UNDER: - 28. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. THE O BJECTIVE OF THE TRANSFER PRICING ANALYSIS IS TO DETERMINE THE ARM'S LENGTH PRICE OF THE TESTED TRANSACTION OR IN OTHER WORDS TO DETERMINE A PRICE AT WHICH SIMILARLY PLACED UNCONTROLLED TRANSACTIONS WOULD HAVE BEEN ENTERED INTO BY TWO UNCONTROLLED UNCONTROLLED TRANSACTIONS WOULD HAVE BEEN ENTERED INTO BY TWO UNCONTROLLED ENTERPRIS ES. IN THE TNMM, THE SAID OBJECTIVE IS SOUGHT TO BE ACHIEVED BY MAKING A COMPARISON OF THE MARGINS OF THE CONCERNS WHICH ARE OTHERWISE FOUND TO BE COMPARABLE ON A FAR ANALYSIS. THEREFORE, IF ONE IS TO EXAMINE THE MARGINS OF AN ENTITY, THE NATURE AS WELL AS THE BUSINESS MODEL IN WHICH SUCH ENTITIES OPERATE WOULD DEFINITELY OF SIGNIFICANCE. IN THE PRESENT CASE, THE OBJECTION TO THE INCLUSION OF CORAL HUBS LTD. AS A COMPARABLE IS BASED ON THE FACT THAT THE SAID CONCERN OPERATES ON A DIFFERENT BUSINESS MODEL. I T HAS BEEN EXPLAINED THAT A SUBSTANTIAL PORTION OF WORK IS EXECUTED BY CORAL HUBS LTD. BY WAY OF OUTSOURCING OF ACTIVITIES. PER CONTRA, THE OPERATIONS OF THE ASSESSEE ARE THROUGH ITS OWN EMPLOYEE PERSONNEL. IN OUR VIEW, THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF MAERSK GLOBAL SERVICE CENTER (INDIA) (P) LTD. (SUPRA) RIGHTLY APPRECIATED SUCH A DIFFERENCE IN THE BUSINESS MODEL AND HELD THAT THE CONCERN, CORAL HUBS LTD. WAS NOT COMPARABLE VIS - - VIS THE TESTED PARTY BEFORE THE MUMBAI BENCH OF THE TRIBUNAL. SIMILAR IS THE SITUATION BEFORE US ALSO AND THEREFORE WE ARE INCLINED TO UPHOLD ASSESSEES PLEA OF EXCLUDING CORAL HUBS LTD. FROM THE FINAL SET OF COMPARABLES ON ACCOUNT OF THE AFORESAID DISTINCTION IN THE BUSINESS MODEL. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. 2 3 . THOUGH THE DECISION OF TRIBUNAL RELATES TO ASSESSMENT YEAR 2008 - 09 BUT THE RATIO LAID DOWN BY THE TRIBUNAL IS SQUARELY APPLICABLE TO THE PRESENT ASSESSMENT YEAR SINCE FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS SHOWN HIGH PROFIT T REND ANALYSIS. ACCORDINGLY, THE SAID CONCERN FUNCTIONALLY IS ITA NO. 784 /PN/20 1 4 M/S. CUMMINS TURBO TECHNOLOGIES LTD., UK 20 NOT COMPARABLE. IN VIEW THEREOF, WE HOLD THAT FOLLOWING CONCERNS ARE TO BE EXCLUDED FROM THE FINAL SET OF COMPARABLES WHILE BENCHMARKING INTERNATIONAL TRANSACTIONS OF THE ASSESSEE WITH ITS PARE NT OFFICE: - I ) ACCENTIA TECHNOLOGIES LTD. II ) CROSSDOMAIN SOLUTIONS LTD. III ) COSMIC GLOBAL LTD. IV ) ECLERX SERVICES LTD. V ) GENESYS INTERNATIONAL CORPORATION LTD. 24. WE DIRECT THE ASSESSING OFFICER / TPO TO COMPUTE THE ARM'S LENGTH PRICE OF INTERNATIONAL TRANSACTION S OF THE ASSESSEE ACCORDINGLY. 2 5 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 30 TH DAY OF MARCH , 201 6 . SD/ - SD/ - (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) (PRADIP KUMAR KEDIA) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 30 TH MARCH , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT ; 2. TH E RESPONDENT; 3. THE DIT (INTL. TAXATION), PUNE ; 4. THE DRP, PUNE ; 5. THE DR A , ITAT, PUNE; 6. GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITA T, PUNE