PRIMERA MEDICAL TECHNOLOGIES PRIVATE LIMITED,HYDERABAD V. DCIT, CIRCLE-5(1), HYDERABAD

MA 39/HYD/2024

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The case revolves around a Miscellaneous Application filed by Primera Medical Technologies Private Limited, seeking to recall and amend a previous order concerning the comparability of eClerk Services Ltd in the context of transfer pricing. The Tribunal had earlier applied a turnover filter but overlooked the functional comparability of eClerk Services Ltd with the assessee. The assessee argued that eClerk Services Ltd, engaged in specialized financial market analytics, did not perform similar functions as Primera Medical Technologies, which led to the filing of the Miscellaneous Application. The Departmental Representative opposed this, asserting functional similarity. However, the Tribunal, after reviewing the financial statements and relevant case law, concluded that eClerk Services Ltd should be excluded from the comparables due to functional dissimilarity.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 469628 (ITAT-HYDERABAD)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2018-2019
• Other Referred Cases: PCIT vs. Symphony Marketing Solutions India Pvt Ltd, Maersk Global Centres (India) (P.) Ltd vs. ACIT
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUMAR ADITYA
• Assessee Lawyers: PVSS PRASAD
• Keywords: Transfer pricing
• Section: 43

Judgement Text

"आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ मɅ IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A”, HYDERABAD BEFORE SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER & SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER M.A. No. 39/Hyd/2024 (In आ.अपी.सं / ITA No.381/Hyd/2022) (Ǔनधा[रण वष[ / Assessment Year:2018-19) Primera Medical Technologies Private Limited, Hyderabad. [PAN : AAICP1509J] Vs. Deputy Commissioner of Income Tax, Circle-5(1), Hyderabad. अपीलाथȸ / Appellant Ĥ× यथȸ / Respondent Ǔनधा[ǐरती ɮवारा/Assessee by: Shri PVSS Prasad, AR राजè व ɮवारा/Revenue by: Shri Kumar Aditya, Sr. AR सुनवाई कȧ तारȣख/Date of hearing: 17/01/2025 घोषणा कȧ तारȣख/Pronouncement on: 28 /01/2025 आदेश / ORDER PER K. NARASIMHA CHARY, J.M: This Miscellaneous ApplicaƟon has been filed by the assessee to recall the order dated 28/6/2024 insofar as the findings of the Tribunal in respect of the eClerk Services Ltd are concerned. It is submiƩed on behalf of the assessee that the comparability of eClerk Services Ltd was MA No.39/Hyd/2024 Primera Medical Technologies Private Limited vs. DCIT Page 2 of 4 challenged on 2 grounds, namely, on turnover filter and also non- comparability of the funcƟons performed by this enƟty vis-à-vis the assessee, and though the Bench held that the filter of 10 Ɵmes turnover on either side has to be applied in respect of comparability of the enƟƟes selected by the learned Assessing Officer/learned TPO, the funcƟonal aspect missed the aƩenƟon of the Bench. Learned AR submiƩed that though the Bench excluded the enƟƟes like Vitae InternaƟonal AccounƟng Services Pvt. Ltd, Domex E-Data Pvt Ltd and MPS Ltd to be comparables with the assessee on the parameter of funcƟonal dissimilarity, it missed the aƩenƟon of the Bench as to the funcƟons performed by the eClerk Services Ltd vis-à-vis the assessee. 2. Learned Departmental RepresentaƟve (“learned DR”) vehemently opposed the Miscellaneous ApplicaƟon on the ground that the funcƟons of the assessee and eClerk Services Ltd are similar and eClerk Services Ltd is a good comparable to the assessee and therefore, there are no merits in this Miscellaneous ApplicaƟon. 3. Having gone through the record in the light of the submissions made on either side, we find that the annual financial statement of the eClerk Services Ltd clearly shows that this company is into the financial market analyƟcs and other high-end funcƟons. As a maƩer of fact, in the case of PCIT vs. Symphony MarkeƟng SoluƟons India Pvt Ltd in ITA No. 717 of 2018, the Hon'ble Delhi High Court and the Special Bench of the Tribunal in the case of Maersk Global Centres (India) (P.) Ltd vs. ACIT (2014) 43 taxmann.com 100 (Mumbai-Trib) (SB), it was categorically held that the eClerk Services Ltd is into providing industries specialized services to meet complex clients’ needs, data analyƟcs and was a Knowledge Process Outsourcing (KPO) enƟty. Further, under Rule 10TA(g) of the Income Tax Rules, 1962, any enƟty, doing business and MA No.39/Hyd/2024 Primera Medical Technologies Private Limited vs. DCIT Page 3 of 4 financial analyƟcs, is defined as rendering KPO services. This is the seƩled principle and followed by the Coordinate Benches in many cases. 4. From record we found that the assessee had taken this plea while arguing the appeal itself but, it missed the aƩenƟon of the Bench, and therefore, it is a mistake apparent from record. 5. We therefore, recƟfy the mistake and following the reasoning given to exclude Vitae InternaƟonal AccounƟng Services Pvt. Ltd, Domex E-Data Pvt Ltd and MPS Ltd from the list of comparables with the assessee given in Paragraph Nos. 14 to 17 in the order in appeal, we direct the learned Assessing Officer to exclude eClerk Services Ltd also from the list of comparables. 6. In the result, MA filed by the assessee is allowed. Order pronounced in the open court on this the 28th January, 2025. Sd/- Sd/- (MADHUSUDAN SAWDIA) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated: 28 /01/2025 OKK MA No.39/Hyd/2024 Primera Medical Technologies Private Limited vs. DCIT Page 4 of 4 Copy forwarded to: 1. Primera Medical Technologies Private Limited C/o. Prasad and Prasad, CAs, Flat No. 301, M.J. Towers, H.No. 8-2-698, Road No. 12, Banjara Hills, Hyderabad. 2. The Deputy Commissioner of Income Tax, Circle-5(1), Hyderabad. 3. The Dispute ResoluƟon Panel (DRP), Bengaluru. 4. The Director of Income Tax (IT & TP), Hyderabad. 5. The Addl. Commissioner of Income Tax (Transfer Pricing), Hyderabad. 6. DR, ITAT, Hyderabad. 7. GUARD FILE. TRUE COPY ASSISTANT REGISTRAR ITAT, HYDERABAD "