M/S SOFTWARE PARADIGMS INFOTECH PRIVATE LIMITED ,MYSORE vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-1(1), MYSORE

PER CHANDRA POOJARI, ACCOUNTANT MEMBER: These two appeals by assessee for the assessment years 2011- 12 & 2012-13 are directed against different orders of DCIT Circle-1, Mysuru dated 12.12.2022 and 9.12.2022 respectively passed u/s 254 r.w.s. 92CA(3) r.w.s. 143(3) r.w.s. 92CA r.w.s. 144C(13) of the Act.

IT(TP)A No.58/Bang/2023 for the AY 2011-12:

The TPO is directed to compute the ALP as per the directions given above after affording opportunity of being heard to the assessee.”

3.1 According to the ld. A.R., the Learned AO/ DRP/ TPO had erred in law and on facts by not following the directions of this ITAT, Bengaluru ("ITAT") wherein the Tribunal had required exclusion of M/s. Jeevan Scientific Solutions in case the turnover of BPO operations is less than one crore rupees.

3.2 He submitted that the Learned AO/ DRP/ TPO had erred in law and on facts by including M/s. Jeevan Scientific Solutions despite noting that the turnover of the BPO operations is INR 79.21 Lakhs and therefore, fails the minimum turnover filter of one crore rupees adopted by the TPO himself.

3.3 He further submitted that the Learned AO/ DRP/ TPO had erred in law and on facts by clubbing turnover from ERP services segment along with BPO Operations segment for the purpose of application of turnover filter.

3.4 The ld. A.R. submitted that the Learned AO/ DRP/ TPO had erred in law and on facts by not following the instructions of the CBDT in Notification No: 890(3) dated September 26, 2000 wherein it has been clearly provided that ERP services are not in nature of IT enabled services.

3.5 He further submitted that without prejudice to the above, the Learned TPO/AO/ DRP had erred by including M/s. Jeevan Scientific Solutions even though the total turnover of M/s. Jeevan Scientific Solutions (INR 2.45 Crores) is less than 10 percent of the total turnover of the Appellant (INR 51.63 Crore) and or therefore, not comparable to the Appellant.

3.6 He submitted that the Learned AO/ DRP/ TPO erred in including M/s. Jeevan Scientific Solutions even though the company fails TPOs own filter of service income being greater than 75 percent of total operating revenue.

3.7 The ld. A.R. submitted that the Learned AO/ DRP/ TPO ought to have appreciated that the revenue from BPO services amounts to only INR 79.21 Lakhs thereby constitutes only 32 percent of the total revenue from operations and hence fails the filters applied by the TPO himself.

3.8 He submitted that learned AO/ DRP/ TPO had erred in law and on facts by not appreciating that even the combined revenue from BPO Segment and ERP Segment is less than 75 percent of the total revenue from operations and still fails the filters applied by the TPO.

3.9 He further submitted that the Learned AO/ DRP/ TPO had erred in law and on facts by not considering the following judicial precedents rendered by the coordinate bench of ITAT wherein M/s. Jeevan Scientific Solutions was directed to be excluded due to service income being less than 75 percent of total revenue.

Micro Focus Software India Private Limited in ITTPA • 280/BANG/2016 • Aspect Technology Centre (India) Private Limited [ITTPA No: 187/BANG/2016]

3.10 Lastly, he submitted that the learned AO/ DRP/ TPO had erred in law and on facts in including M/s. Jeevan Scientific Solutions as comparable to the Appellant despite such company earning abnormally high profit margins of 70.66 percent which is clearly not comparable to companies operating in the ITES industry.

5.1 In our opinion, the Tribunal placed reliance on the decision of Swiss Re Services India Pvt. Ltd. Vs. ACIT (2016) 76 Taxmann.com 22 and remitted the issue back to the file of AO/TPO to examine the turnover from the BPO segment and if the turnover is less than Rs.1 crore from BPO operations and it should be excluded from the list of comparables. However, while giving effect to the Tribunal order, the AO/TPO wrongly included the turnover from ERP segment along with BPO operations and computed the turnover at Rs.172.14 lakhs, which is inappropriate. As seen from the financial of M/s. Jeevan Scientific Technologies Ltd. for the assessment year 2011-12, the total income from BPO operations was only Rs.79.21 lakhs. Accordingly, as per ratio laid down by the earlier decision, in our opinion, this company M/s. Jeevan Scientific Technologies Ltd. cannot be included as comparable to determine the ALP of international transactions. Accordingly, we direct the AO/TPO to exclude M/s. Jeevan Scientific Technologies Ltd. from the list of comparables and directed accordingly.

ITA No.59/Bang/2023 for the AY 2012-13: 7. In this appeal, assessee seeks exclusion of M/s. Universal Print Systems Ltd. from the list of comparables while determining the ALP of international transactions. The ld. A.R. submitted that on earlier occasion, in this assessment year 2012-13, assessee came in appeal before this Tribunal in IT(TP)A No.530/Bang/2017, the Tribunal vide order dated 7.8.2019 inter-alia decided the issue as follows:

“17. We have perused submissions advanced by both sides in the light of the records placed before us. Assessee is challenging functional dissimilarity of this company with that of assessee as it is into medical transcription. We have our reservation to consider medical transcription services to be one of KPO services. In our considered opinion medical transcription services is basically back-office services provided by graduates who are trained for short period of 6 months to one year. These are short crash courses undertaken by graduates who are trained to understand and speak English. There is no value addition in the services rendered by people in medical transcription. To our understanding, basically these people who carry out medical transcription services are trained to understand language spoken by doctors, outside India to whom medical reports of patience are sent for expert opinion. Medical transcriptionist simply reproduces opinion expressed by Doctor, which is then communicated to the patients. It is observed from annual report placed at page 934 of paper book Volume II that this company has segmental information of medical transcription and revenue earned under this segment is Rs.147.40 Lacs. It is also been observed that various other decisions by co-ordinate Benches of this tribunal has remanded this comparable back to Ld.TPO, for proper analysis and fresh consideration. We draw support for same from Indegene (P) Ltd vs ACIT reported in (2017) 85 Taxmann.com 60, wherein it has been held as under:

“9.3.1. We have heard the rival contentions and perused and carefully considered the material on record including the judicial pronouncements cited. From the details on record we observe that while the assessee has contended that the services rendered by this company M/s TCS E-serve Ltd are high end KPO services, it has not brought out as to which of these are the services that would come under technical services. On the other hand, w also notice that that the TPO has held all the services rendered by the assessee to be BPO services with any proper analysis. In this factual matrix of the case, we find that on similar facts, the co- ordinate Bench o ITAT Bangalore in the case of Indegene (P) Ltd., (supra) has remanded the matter of comparability of this company to the file of the TPO for fresh consideration. In view of the factual matrix of the case on hand, as laid out above and following the decision of the coordinate Bench in the case of Indegene (P) Ltd. (Supra) which is also rendered on similar facts, we deem it appropriate to remand the matter of the comparability of this company, TCS E-serve Ltd. To the file of the TPO for fresh consideration in the light of out above observations. Needless to add, the TPO shall afford the assessee adequate opportunity of being heard and to file details/submissions in this regard. It is also been observed that similar view has been taken by decision of this Tribunal in case of M/s Nielson Sports India Pvt.Ltd., Vs ACIT in IT(TP)A No.196(B))/2017 vide order dated 2806-2019. Respectfully following the same, we set aside this comparable back to Ld.TPO for considering it afresh. Needless to say that proper opportunity shall be granted to assessee as per law.

Accordingly, we set aside this comparable back to Ld. TPO

7.1 The AO/TPO while giving effect to the above order of the Tribunal has observed as under: M/s. BNR Udyog Ltd.: The Hon'ble ITAT had set aside the comparable to TPO for fresh adjudication \ the comparability of this company. Further, Vide submission dated 30.12.2021, the taxpayer has raised objection that the company is failing RPT filter and since the primary activity of this company is into medical transcription services, the company is not functionally similar to the taxpayer.

TPO's remarks on Functionally different is as under: As per 3CEB report, it can be seen that the taxpayer is also engaged in medical transcription services which is similar functions to the comparable. Hence, the comparable's functionality cannot be objected with the taxpayer's functionality. Further, as per Rule 10TA (e) of the Income Tax Rules, 1962, the definition of Information technology enabled services" also consists business process outsourcing services provided mainly with the assistance or use of information technology, namely Creation and maintenance of medical transcription excluding medical advice. Hence, the comparable company is functionally comparable to the taxpayer.

TPO's remarks on Related party transactions is as under: The related party transactions that the assessee has pointed out as under: Related party transactions 1,70,04,261 Purchase, Sales & Services 30,738 Commission 1,70,34,999 Total

The company has got three major business segments. For benchmarking purpose, the segmental results of the company's Medical transcription segment has been considered. However, the related party transactions, as pointed out above, have not happened in the medical transcription segment. Since, only the results of medical transcription segment have been taken for our study, it is only appropriate that the related party transactions pertaining to this segment alone be considered. From the notes to accounts to the financial statements of M/s. BNR Udyog Pvt. Ltd., it is seen that the entire revenue of the medical transcription segment has been earned in foreign exchange. The related party transactions during the year have been with two domestic company viz. B.N. Rathi Securities LimiFed and BNR Capital Services Private Limited. These related party transactions could not have happened in the medical transcription segment where the entire receipts viz. Rs. 147,39,9037-has been received out of exports in foreign exchange. For easy reference, the relevant portion in financial statement is extract below:

Earnings in foreign currency (Amount in Rs.) Particulars 2011-12 2010-11 Medical 1,47,39,903 94,45,903 Transcription

The segmental revenue of BNR Udyog Pvt. Ltd.

BNR Udyog Pvt. Ltd. Segmental Revenue 1,47,39,303 (seg) (Medical Transcription)

8.1 The ld. A.R. further submitted that the Learned AO/ DRP/ TPO erred in law and on facts by not considering the decision of this Tribunal in the case of M/s. Honeywell Technologies Solutions Limited (ITA 2889/BANG/2022), wherein the ITAT had directed exclusion of this company as comparable by holding that the related party turnover ratio worked out to 49.60 percent for the very same AY 2012-13.

8.2 He submitted that the Learned AO/ DRP/ TPO had erred in law and on facts by incorrectly concluding that the entire revenue of medical transcription services segment is from Non- Associated Enterprises ("Non AEs") merely based on amounts reported under earnings in foreign currency.

8.3 He further submitted that the Learned AO/ DRP/ TPO ought to have appreciated that M/s. BNR Udyog Limited had disclosed a sum of INR 1,70,04,261/- as purchases, sales and services from related parties without providing the segment wise breakup of such transactions.

8.4 He submitted that the Learned AO/ DRP/ TPO erred in law in acting based on conjecture and surmises without bringing into record any material to state M/s. BNR Udyog Limited had not provided any medical transcription services to related parties.

8.5 The ld. A.R. further submitted that without prejudice to the above, the Learned TPO/ AO/ DRP had erred by including M/s. BNR Udyog Limited even though the total turnover of M/s. BNR Udyog Limited is less than 10 percent of the total turnover of the Assessee and therefore, fails the minimum turnover filter of 10 percent upheld by various judicial precedents.

8.6 He lastly submitted that the learned AO/ DRP/ TPO had erred in law and on facts in including M/s. BNR Udyog Limited as comparable to the Assessee despite such company earning abnormally high profit margins of 50.61 percent which is clearly not comparable to companies operating in the ITES industry.

12.1 The ld. A.R. further submitted that the Learned AO/ DRP/ TPO had erred in law and on facts by not following the directions of this ITAT, Bengaluru with respect to the comparability analysis of M/s. Universal Print Systems Limited wherein the ITAT had specifically directed to adjust the margins of pre-press BPO segment after verifying whether label printing and offset, printing segment supplements pre-press BPO segment.

12.2 He submitted that the ld. AO/DRP/TPO erred in law and on facts by including M/s. Universal Print Systems despite acknowledging the non-availability of sufficient information to adjust the margins of pre-press BPO segment as directed by the ITAT.

12.3 He submitted that the Learned AO/ DRP/ TPO had erred in blatantly disregarding the directions of this Tribunal wherein it was held that this comparable company ought to be excluded if the aforesaid adjustments cannot be reasonably or accurately made.

12.4 He further submitted that the Learned AO/ DRP/ TPO had erred in law and on facts by not considering the following judicial precedents rendered by the coordinate bench of ITAT wherein it was specifically held that the services rendered by M/s. Universal Print Systems Limited under the pre-pressed services segment were functionally not comparable to ITES services in following cases: • M/s. Zyme Solutions (P) Limited [2019] (101 taxmann.com 292) • M/s. Kronos Systems India Private Limited (IT(TP)A No.2301/Bang/2016) • M/s. Eaton Technologies (P) Limited [2020] (115 taxmann.com 341)

12.5 The ld. A.R. further submitted that the Learned AO/ DRP/ TPO erred in including M/s. Universal Print Systems Limited even though the company fails TPO's own filter of service income being greater than 75 percent of total operating revenue

12.6 He submitted that the Learned AO/ DRP/ TPO ought to have appreciated that the revenue from BPO services amounts to only INR 617.67 Lakhs thereby constitutes only 22 percent of the total revenue from operations and hence fails the filters applied by the TPO himself

12.7 He submitted that the learned AO/ DRP/ TPO had erred in law and on facts in including M/s. Universal Print Systems Limited as comparable to the Appellant despite such company earning abnormal high profit margins of 52.46 percent which is clearly not comparable to companies operating in the ITES industry.

“9. We have heard submissions advanced by both sides in light of record placed before us. On perusal of annual report of this company placed in paper book, we are of considered opinion that this comparable is basically into sale of products and services unlike a captive service provider such as assessee, who works on cost plus basis, providing services only to its AE’s. It is also observed that this comparable is basically providing BPO services from its Prepress units. In written submission filed, assessee placed reliance upon decision of this Tribunal in case of Zyme Solutions Pvt Ltd., vs ACIT reported in (2019) 101 taxman.com 292, wherein this comparable has been excluded by observing as under: 10.4 We heard rival submissions and perused the material on record. The issue of comparability of universal Print Systems Ltd. with that of the assessee-company has been duly considered by TPO after referring to information contained in Annual Report. The relevant findings of the TPO had not been countenanced by learned AR of the assessee. However, the issue of comparability of Universal Print Systems Ltd. has also been considered by the co-ordinate bench of this Tribunal in the case of CGI Information Systems & Management Consultants Pvt. Ltd. (supra) wherein it was held as follows: “47. The next submission of the learned counsel for the Assessee was with regard to exclusion of 2 comparable companies from the list of 7 comparable companies that remain after the order of the DRP. The first comparable company sought to be excluded is Universal Print Systems Ltd. This company was chosen as a comparable company by the TPO. In reply to the proposal of the TPO to include this company as a comparable company, the Assessee vide its letter dated 22.12.2015 had pointed out its objections to including this company as a comparable company. A copy of the said objection is at page-785 of the Assessee's paper book. The Assessee pointed out that the OP TC of this company as worked out by the TPO at 59.40% was wrong and unallocated costs as per the annual report should be allocated to BPO segment and if that is done then the OP TC of this company will be only 51.80%. The Assessee further pointed out (Page 764 of paper book) that the TPO had applied revenue filter of more than 75% being from nonfinancial service income. The Assessee pointed out that the percentage of income from ITES was only 21.6% of the total revenue from operations of this company as per its annual report. The .Assessee also pointed out that in the Pre-press BPO segment this company was providing integrated print solutions to its customers, which includes scanning, design/layout, trapping, hand-outlined clipping path and image masking and magazine and catalogue publishing. The Assessee submitted that the aforesaid services are not in the nature of ITES. The Assessee pointed out that as per the safe harbour rules introduced by the CBDT ITES has been defined as business process outsourcing services provided mainly with the assistance or use of information technology. It was also submitted that this company does not satisfy the definition of ITES as contained in Rule IOTA(e) of the Rules. Since use of information technology is absent .in the various services provided by this company, it cannot be regarded as ITES company. The Assessee also submitted that this company fails the employee cost filter. The employee cost filter requires that the employees cost incurred by the company must be more than 25% of its revenue. 48. The TPO at page-20 of his order has dealt with the above objections by observing as follows: (a) Pre-Press BPO unit provides back office support services. (b) This company has four major segments viz., Repro, Label Printing, Offset Printing and pre-press BPO. The employee cost of pre-press BPO was more than 25% of the revenue from pre-press BPO and therefore the employee cost filter is satisfied in the case of this company. (c )On the service revenue filter viz., the requirement that a comparable company must have revenue from rendering services of more than 75% of its total revenue, the TPO again held that the pre-press BPO segment's entire income is from services and therefore this objection is not to be accepted. 49. On objections by the Assessee before the DRP, the DRP confirmed the action of the TPO. One of the objection before the DRP was that this company did not figure in the list of companies engaged in ITES. On this objection the DRP held that though this company did not figure in the list of companies in 1TES in the main search of capital line and prowess database but on a segmental search these two companies satisfied the requirement of being considered as companies engaged in providing ITES. Aggrieved by the directions of the DRP, the Assessee is in appeal before the Tribunal. The learned counsel for the Assessee reiterated submissions that were made before the TPO/DRP. In particular it was submitted that the service revenue filter was applied by the TPO himself at the entity level and on such search this company was not regarded as engaged in providing ITES. At this stage the TPO ought to have dropped this company as a comparable company because this filter has to be applied at the entity level and not at the segmental level. The learned DR submitted that if the service revenue filter is applied at the segmental level there can be no objection by the Assessee. She relied on the order of the DRP/TPQ. 50. The requirements of Rule 10B(1)(2) & (3) of the Rules in the matter of comparability of companies under TNMM needs to be seen. The same reads as follows: "10B. (1) For the purposes, of sub-section (2) of section 92C, the arm's length price in relation to an international transaction shall be determined by any of the following methods, being the most appropriate method, in the following manner, namely: —

(a) to (d). ******

(e) transactional-margin method, by which, (i) the net profit margin realised by the enterprise from an international transaction entered into with an associated enterprise is computed in relation to costs incurred or sales effected or assets employed or to be employed by the enterprise or having regard to any other relevant base; (ii) the net profit margin realised by the enterprise or by an unrelated enterprise from a comparable uncontrolled transaction or a number of such transactions is computed having regard to the same base; (iii) the net profit margin referred to in sub-clause (if) arising in comparable uncontrolled transactions is adjusted to take into account the differences, if any, between the international transaction and the comparable uncontrolled transactions, or between the enterprises entering into such transactions, which could materially affect the amount of net profit margin in the open market; (iv) the net profit margin realised by the enterprise and referred to in sub-clause (i) is established to be the same as the net profit margin referred to in sub-clause (iii): (v) the net profit margin thus established is then taken into account an arm's length price in relation to the international transaction. (2) For the purposes of sub-rule (1), the comparability of an

(a) the specific characteristics of the property transferred or services provide: either transaction; (b) the functions performed, taking into account assets employed or to be employed and the risks assumed, by the respective parties to the transactions (c) the specific characteristics of the property transferred or services provide: either transaction; (d) the functions performed, taking into account assets employed or to be employed and the risks assumed, by the respective parties to the transactions (e) the contractual terms (whether or not such terms are formal or in writing) of the transactions which lay down explicitly or Implicitly how the responsibilities, risks and benefits are to be divided between the respective parties to the transactions:

d)conditions prevailing in the markets in which the respective parties to the transactions operate, including the geographical location and size of the markets, the laws and Government orders in force, costs of labour and. capital in the markets, overall economic development and level of competition and whether the markets are wholesale retail (3) An uncontrolled transaction shall be comparable to an international (i) none of the differences, if any, between the transactions being compared or between the enterprises entering into such transactions are likely materially affect the price or cost charged or paid in, or the profit arising from such transactions in the open market; or (ii) reasonably accurate adjustments can be made to eliminate the material effects of such differences." 5.2. There appears to be no bar in the Rules referred to above to considering segmental data under TNMM because the comparison is of "net profit margin realized by the enterprise from an international transaction" with the "net profit realized from a comparable uncontrolled transaction". Therefore, comparison is of similar transaction. When segmental information is available and is not disputed, it cannot be argued that filters have to be applied at entity level. It cannot be argued that when the TPO himself applied the filters at the entity level he was not entitled to apply the filters at segmental level. As we have already stated if clear segmental information is available the filters can be applied at the segmental level in TNMM. Therefore the objection with regard to this company failing the employee cost filter and service revenue filter in our view was rightly rejected by the TPO and DRP. It is however seen that this company has four segments viz., Repro. Label Printing, Offset Printing and Pre-press BPO. Whether the label printing and offset printing segments supplement the functions performed in the Pre-press BPO segment has to be seen. We therefore set aside the order of the DRP in this regard and remand for fresh consideration by the TPO the comparability of this company. In terms of Rule 10B(3) of the rules the profit margins of Pre-Press BPO have to be adjusted taking into account the fact that two other segments supplement the pre-press BPO segment. If such adjustment cannot be reasonably or accurately made then this company has to be excluded from the list of comparable companies. The TPO for this purpose can use his powers u/s. 133(6) of the Act to get required details from this company. As far as the argument that this company fails functional comparability, we find that none of the objections raised the Assessee in this regard about lack of information about allied services performed by the pre-press BPO segment of this company and the break-up of the revenue from such allied services have been dealt with specifically by the TPO or DRP. Since the comparability of this company is being remanded to be TPO for consideration of adjustments as mentioned above, the objection with regard to functional comparability should also be looked into by the TPO in the remand proceedings on the basis of materials which he may gather u/s. 133(6) of the Act, The Assessee should be given opportunity of being heard by the TPO before the issue is decided by the TPO.' Respectfully following the decision, we remand this comparable to the file of the TPO/AO for fresh adjudication on the above lines. Respectfully following aforesaid decision, we remand this comparable to file of Ld.AO/TPO, for fresh adjudication, on the basis of directions reproduced hereinabove. Needless to say that proper opportunity shall be granted to assessee as per law.

Accordingly we set aside this comparable back to Ld. TPO.”

14.1 While giving effect to the order, TPO issued notice u/s 133(6) of the Act vide letter dated 30.12.2021 to M/s. Universal Print Systems Ltd. to furnish the required information on or before 7.1.2022. The requisite information is not received by the TPO. Hence, he passed the order u/s 92CA(3) of the Act on 16.12.2022 by observing as under:

“The company operates in four major segments viz. Repro, Label Printing, Offset Printing, and Pre-press BPO and for our study. only the pre-press BPO has been considered. Therefore, filters are to be applied only on the figures of this segment. The employee cost of pre-press BPO is more than 25% of the revenue from pre-press BPO. Therefore, the employee cost filter is satisfied in the case of this company.

Further, on the service revenue filter, the requirement that a comparable company must have revenue from rendering services of more than 75% of its total revenue, the Pre-press BPO segment's entire income is from services. Therefore, the service income filter is satisfied in the case of this company.

On the issue of export filter being more than 75%, the filter are to be applied only on the figures of this segment. The total revenue from Pre-press BPO segment is from exports only. Therefore. the export filter is satisfied in the case of this company. On the issue adopting segmental data for applying filter. the Hon'ble ITAT in the case of Zyme Solutions Pvt. Ltd.. vs ACTT reported in (2019) 101 taxman.com 292.

itself upheld that if clear segmental information is available the filters can be applied at the segmental level in TNMM. The relevant extracts of the order is reproduced as under: "5.2 There appears to be no bar in the Rules referred to above to considering segmental data under TNMM because the comparison is of "net profit margin realized by the enterprise from an international transaction" with the "net profit realized from a comparable uncontrolled transaction". Therefore comparison is of similar transaction. When segmental information is available and is not disputed. it cannot be argued that filters have to be applied at entity level. it cannot be argued that when the TPO himself applied the filters at the entity level he was not entitled to apply the filters at segmental level. as we have already stated if clear segmental information is available the filters can be applied at the segmental level in TNMM. Therefore, the objection with regard to this company failing the employee cost filter and service revenue filter in our view was rightly rejected by the TPO and DRP……..”

In view of the above. the objection raised regarding failing filters are not acceptable. On the issue of functionally dissimilar: The TPO has applied TNMM method as most appropriate method to determine the ALP in this case. This method requires broad comparability of the functionality of the comparable. So, in the case. the company is into ITES/BPO, it would not matter as to what kind of customer it serves as the broad range of services remain the same and that is back end support. The functions of the comparable are similar in the sense that the Pre-press BPO unit provides back office support services. As seen from page 70 of annual report of the company for AY 2012-13, the business segregation is provided segment wise:

a). This business segregation forms the basis for review of. operational performance by the management The Repro business comprises two repro houses which are engaged in Pre- Press activities. The Label business comprises a Label printing unit. The Offset Printing business comprises Offset Printing Machine alongwith all standard Finishing Equipments The Pre-press BPO business unit is engaged in Pre-press Services Export As seen from the above. it is clear that the comparable is engaged in pre-press BPO services which is similar as backoffice support services. As seen from the activities of Label and -Offset printing segment. it can be seen that the both the segments supplement the functions performed in the Pre-press BPO segment. Hence, the claim of the taxpayer is rejected and this company is considered as comparable to the taxpayer.”

14.2 Against this the assessee is in appeal before us. In our opinion, Tribunal on earlier occasion given the finding that if the adjustment cannot be made reasonable or accurately, this company M/s. Universal Print Systems Ltd. to be excluded from the list of comparable companies. For this purpose, the TPO should exercise power u/s 133(6) of the Act. Actually the AO issued a notice u/s 133(6) of the Act to M/s. Universal Print Systems Ltd. and no reply has been received from them. Having no option, he considered this company as comparable to the assessee company and included in the lists of comparables. In our opinion, the required information u/s 133(6) of the Act is not made available to the TPO, in such circumstances, T.P. adjustment on this count cannot be made reasonable or accurately made in this regard. Accordingly, this company is to be excluded from the list of comparable companies as reliance placed by this Tribunal while deciding this issue in assessee’s own case on the decision of Zyme Solutions Pvt. Ltd. Vs. ACIT (2019) 101 Taxmann.com 292. Accordingly, we direct the AO/TPO to exclude this company M/s. Universal Print Systems Ltd. from the list of comparables. 15. In the result, the appeal in IT(TP)A 59/Bang/2023 is partly allowed for statistical purposes. Order pronounced in the open court on 17th May, 2023

Sd/- Sd/- (Beena Pillai) (Chandra Poojari) Judicial Member Accountant Member

Bangalore, Dated 17th May, 2023. VG/SPS Copy to:

Asst. Registrar, ITAT, Bangalore.