M/s. Unisys India Private Limited, Bangalore V. Deputy commissioner of Income Tax, Circle - 7(1)(1), Bangalore

MA 29/BANG/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4564 (ITAT-BANGALORE)
• Duration Of Justice: 29 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 30-03-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHI MISHRA
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH : BANGALORE BEFORE SHRI. B.R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER M.P. No. 29/Bang/2022 (in ITA No. 584/Bang/2019) Assessment Year : 2012-13 M/s. Unisys India Pvt. Ltd., 5 th to 8 th & 10 th Floor, RGA Tech Park, Sy#31 Wing B, Blk No. 3, Bangalore - 560035. PAN: AAACU1502G Vs. The Deputy Commissioner of Income-tax, Circle – 7(1)(1), Bangalore. APPELLANT RESPONDENT Assessee by : Shri Dhanesh Bafna, CA Revenue by : Shri Priyadarshi Mishra, Addl. CIT (DR) Date of Hearing : 29-04-2022 Date of Pronouncement : 29-04-2022 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present miscellaneous petition is preferred by assessee seeking certain rectification in order dated 01.11.2021 passed by this Tribunal. 2. It is submitted by the Ld.AR that in the impugned order passed by this Tribunal two comparables being TCS E-serve Ltd. and Infosys BPO Ltd. in ITES segment has been inadvertently not adjudicated. On perusal of the records, we note that the submissions of the Ld.AR are correct. It is submitted that the above comparables alleged for exclusion by the assessee has been excluded by following the decisions of Page 2 of 5 M.P. No. 29/Bang/2022 (in ITA No. 584/Bang/2019) the Coordinate Bench of this Tribunal under identical circumstances as that of assessee. a. M/s. Micro Focus Software India Pvt. Ltd. vs. ACIT in ITA No. 368/Bang/2017 by order dated 17.03.2020 b. M/s. Zyme Solutions Pvt. Ltd. vs. ACIT in IT(TP)A No. 1661/Bang/2016 by order dated 28.06.2019 c. M/s. Arctern Consulting Pvt. Ltd. vs. DCIT in IT(TP)A No. 352/Bang/2017 by order dated 15.10.2019 Infosys BPO Ltd. 3. It is also submitted that in assessee’s own case for Assessment Year 2009-10, this Tribunal excluded Infosys BPO Ltd. from the final list, by observing as under: “Infosys BPO Ltd : 47. The comparability of this company with an ITES company was considered by this Tribunal in the case of Symphony Marketing Solutions India P. Ltd v. ITO (IT (TP)a no.1316/Bang/2012 for AY 2008-09 order dt 14.08.2013. This Tribunal in para 24 of its order, on considering this company as a comparable held as follows :- "This company is listed at sl. 13 in the list of comparable companies chosen by the TPO. As far as this company is concerned, it is the submission of the learned counsel for the assessee that this company has a brand value and therefore there would be significant influence in the pricing policy which will impact the margins. Schedule 13 to the profit and loss account of this company for the F.Y. 2007-08 shows that this company incurred huge selling and marketing expenses. Page 133 of the annual report of this company for the F.Y. 2007-08 shows that this company realizing its brand value has chosen to value the same on the basis of its earnings and that of Infosys. The brand value of the Assessee and Infosys has been valued at Rs.31,863 crores. Infosys BPO, being a subsidiary of Infosys, has an element of brand value associated with it. This is also clear from the presence of brand related expenses incurred by this company. Presence of a brand commands premium price and the customers would be willing to pay, for the services/products of the company. Infosys BPO is an established player who is not only a market leader but also a company employing sheer breadth in terms of economies of scale and diversity and geographical dispersion of customers. The presence of the aforesaid factors will take this company out of the Page 3 of 5 M.P. No. 29/Bang/2022 (in ITA No. 584/Bang/2019) list of comparables. We therefore accept the contention of the assessee that this company cannot be regarded as a comparable." 48. Following the aforesaid decision of the Tribunal and taking note of the fact that the facts and circumstances in the case of the assessee for the current assessment year are identical, we direct that Infosys BPO be excluded as a comparable.” Respectfully following the above, we do not find any reason to include this comparable in the final list. Accordingly, we direct the Ld.AO/TPO to exclude Infosys BPO Ltd. from the final list. TCS E-serve Ltd. 4. We have already followed the decision of M/s. Zyme Solutions Pvt. Ltd. vs. ACIT (supra) for exclusion of M/s. BNR Udyog Ltd. in para 5.2, wherein, assessee therein was also a capital service provider like the present assessee before us. We note that in M/s. Zyme Solutions Pvt. Ltd. vs. ACIT (supra), this Tribunal excluded TCS E-serve Ltd. by observing as under. “12. TCS E Service Ltd.: This company was selected by the TPO and objected by the assessee for inclusion in the list of comparables on the ground that it is functionally different as it is engaged in the business of BPO, banking, finance, insurance domain. This contention was rejected by the TPO by holding that it is engaged in BPO, business of banking, finance, insurance domain, which are purely in the nature of ITeS. Even the Hon'ble DRP confirmed the findings of the TPO. 12.1 Being aggrieved, the assessee is before us contending that this company is functionally different as it is engaged in diversified business activities of BPO such as banking, finance, insurance. Learned AR of the assessee has also drawn our attention to the Annual Report placed at pages 563 to 563 of the paper book and reliance in this regard was placed on the following decisions: Turnover Filter: i. McAfee Software (India) Pvt Ltd US-136-ITAT- 2016(Bang)-TP] Page 4 of 5 M.P. No. 29/Bang/2022 (in ITA No. 584/Bang/2019) ii. Swiss Re Global Business Solutions India Private Limited FS-307-ITAT-2017(Bang) Functionally different filter: i. M/s XL Health Corporation India Pvt. Ltd. v. ACIT IT (TP)A No. 2311/Bang/2016 ii. Baxter India Pvt. Ltd. V. ACIT ITA No.6158/Del/2016 iii. CGI Information Systems and Management Consultants Private Ltd. vs ACIT-TS-320-ITAT-2018(Bang) 12.2 On the other hand, ld.CIT(DR) opposed its exclusion. He submitted that this company is engaged in KPO services and there is no difference between KPO and ITeS. 12.3 We have heard rival submissions and perused material on record. The issue of comparability of this company was considered by the co-ordinate bench of Tribunal in the case of M/s.XLHealth Corporation India Pvt. Ltd. vs. ACIT in IT(TP)A No.2311/Bang/2016 dated 09/02/2018. The relevant findings of the Tribunal are as under: ". . . . We have heard the rival submissions and perused the material on record. From the perusal of the Annual Report of this entity placed at page nos. 583 to 678 of paper book, at page no. 604 it is stated as under. "2. COMPANY OVERVIEW Your Company, along with its subsidiary companies - TCS e- Serve International Limited and TCS e-Serve America Inc., is primarily engaged in the business of providing Business Process Services (BPO) for its customers in Banking, Financial Services and Insurance domain. The Company's operations include delivering core business processing services, analytics & insights (KPO) and support services for both data and voice processes. Your Company is an integral part of the Tata Consultancy Services' (TCS) strategy to build on its 'Full Services Offerings' that offer global customers an integrated portfolio of services ranging from IT services to BPO services. The Company provides its services from various processing facilities, backed by a robust and scalable infrastructure network tailored to meet clients' needs. A detailed Business Continuity Plan has also been put in place to ensure the services are provided to the customers without any disruptions." Page 5 of 5 M.P. No. 29/Bang/2022 (in ITA No. 584/Bang/2019) Thus, this company is also stated to be a Knowledge Process Outsourcing and therefore for the reasons stated by us while dealing with this issue of comparability of the company Infosys BPO Ltd. shall equally hold good and therefore we direct the AO/TPO to exclude this company from the list of comparables." Since the appellant company is into low end BPO, it cannot be compared with KPO service provider. 12.4 Respectfully following the decision of the co-ordinate bench of Tribunal, we direct for exclusion of this company from the list of comparable.” Respectfully following the above view, we direct the Ld.AO/TPO to exclude TCS E-serve Ltd. from the final list of comparables. Accordingly, the present M.P. filed by assessee stands allowed. In the result the miscellaneous petition filed by assessee stands allowed. Order pronounced in the open court on 29 th April, 2022. Sd/- Sd/- (B.R. BASKARAN) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 29 th April, 2022. /MS / Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order Assistant Registrar, ITAT, Bangalore