THE COMMISSIONER OF INCOME TAX -LTU vs. EXL SERVICES.COM INDIA PVT. LTD.

ITA 487 of 2019 Page 1 of 3 $~34 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 487/2019 THE COMMISSIONER OF INCOME TAX –LTU..... Appellant Through: Mr. Ruchir Bhatia, Advocate versus EXL SERVICES.COM INDIA PVT. LTD. ..... Respondent Through: Mr. Vishal Kalra and Mr. S.S.Tomar, Advocates CORAM: JUSTICE S.MURALIDHAR JUSTICE I.S.MEHTA O R D E R % 10.05.2019 CM APPL. 22485/2019 (Delay of 145 days in refiling appeal) 1. For the reasons stated in the application, the delay in re-filing the appeal is condoned. The application is disposed of. ITA 487/2019 2. This appeal by the Revenue is directed against an order dated 18th June, 2018 passed by the Income-tax Appellate Tribunal (ITAT) in ITA No. 2559/Del/2014 for Assessment Year (AY) 2009-10. 3. The question sought to be urged by the Revenue in this appeal is whether the ITAT erred in deleting Genesys International Corporation Ltd. (GICL) from the final list of comparables for the transfer pricing exercise on the ground that it was not functionally similar to the Assessee? 4. The Respondent Assessee, a wholly owned subsidiary of EXL Service Holdings, is engaged in rendering business and knowledge process This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 24/06/2026 at 14:09:05

ITA 487 of 2019 Page 2 of 3 outsourcing, research and analysis and risk advisory (known as IT Enabled Services) for customers of the EXL group entities. 5. The return filed by the Assessee for AY in question was selected for scrutiny. Since the Assessing Officer (AO) noticed international transactions having been entered into by the Assessee in relation to the IT enabled services, and that the Assessee had selected TNMM for computation of Arm’s Length Price (ALP), the matter was referred to the Transfer Pricing Officer (TPO). By the order dated 14th December, 2012 the TPO did not agree with the various filters used by the Assessee for the transfer pricing study. The TPO used some more filters and required the Assessee to submit the comparables on the basis of the new filters. 6. The Assessee selected a set of 14 comparables of which 9 were accepted by the TPO. He included two more comparables out of the accepted/rejected matrix. The TPO selected a final set of 11 comparables whose average margin was 22.26% as against the Assessee's margin of 7.14%. Accordingly, the TPO proposed an adjustment of Rs. 72,36,07,916/- to the income to the Assessee. 7. A draft assessment order under Section 144C was framed by the AO on the basis of the order of the TPO. The Assessee filed its objections before the Dispute Resolution Panel (DRP). By an order dated 23rd December, 2014, the DRP disposed of the objections and directed the AO to delete the transfer pricing adjustment. The DRP accepted the submission of the Assessee that GICL should be omitted from the list of comparables. A final assessment order was then passed under Section 143(3) of the Act by the This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 24/06/2026 at 14:09:05

ITA 487 of 2019 Page 3 of 3 AO deleting the earlier proposed transfer pricing adjustment. 8. The Revenue being aggrieved by the said order of the AO, filed an appeal before the ITAT. By the impugned order, the ITAT upheld the order of the AO. Although GICL had been included by the Assessee itself earlier in the list of comparables submitted by it, later it was noticed that GICL was engaged in diversified operations providing high-end and complex services such as GIS Consulting, 3D Mapping, Navigation Maps, Remote sensoring, etc. On the other hand the Assessee was engaged only in providing back office IT enabled services. Further GICL operated as a full-fledged risk taking entrepreneur whereas the Assessee was not. Therefore, apart from the functionality aspect, the comparison failed even on the basis of the scale of risk. From the Annual Report of GICL, it was noticed that it had significant intangibles in the form of computer software and GIS data base whereas the Assessee did not own any significant intangibles. It depended entirely on the intellectual property rights owned by the holding company. 9. The reasons given by the DRP, concurred with ITAT, for excluding GICL as a comparable appears to be justified. No substantial question of law arises that calls for interference by this Court. 10. Accordingly, the appeal is dismissed. S. MURALIDHAR, J. I.S. MEHTA, J. MAY 10, 2019/rr This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 24/06/2026 at 14:09:05