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Income Tax Appellate Tribunal, ‘A’ BENCH : BANGALORE
Before: SHRI CHANDRA POOJARI & SMT. BEENA PILLAI
ORDER
PER BEENA PILLAI, JUDICIAL MEMBER Present appeal is filed by assessee against the assessment dated 30/04/2021 passed by the National e-Assessment Centre, Delhi u/s. 143(3) r.w.s 144C(13) r.w.s. 144B of the Act on following concise grounds of appeal: “
The Grounds mentioned hereinafter are without prejudice to each other Wrong characterization
1. The Learned TPO erred in characterizing the services rendered by the appellant erroneously as ITES whereas the appellant renders staff recruitment services, which has vitiated the comparability analysis; Page 2 of 5 IT(TP)A No. 273/Bang/2021 Defective comparability analysis
2. The Learned TPO erred in collating the information that are not publicly available by using powers u/s 133(6) of the Act, without providing the same to the appellant, thereby violating the principles of natural justice;
3. The Learned TPO erred in rejecting the comparability analysis undertaken in the TP documentation and conducting a fresh comparability analysis by introducing various filters, some of which are not appropriate to the appellant's case: (a) Export earning filter of 75 % of sales (b) RPT filter at 25 Wo
4. The Learned TPO erred in not applying an upper limit to the turnover filter, even though he has applied the lower limit to the turnover Adjustment not restricted to international transactions
5. The Learned TPO erred in not restricting the transfer pricing adjustment to the international transactions, though the DRP had given a direction in this regard; Exclusion of comparables on application of upper turnover filter
6. The Learned TPO/DRP erred in not applying the upper limit to the turnover filter, thereby erred in including the following companies as comparables : i) Tech Mahindra Business Services Ltd ii) Infosys BPM Ltd iii) SPI Technologies India Pvl Ltd iv) Eclerx Services Ltd This is without prejudice to the fact that these companies are functionally not comparable with the appellant also. Erroneous inclusion of One Touch Solutions, as comparable
7. The Learned TPO/ DRP erred in including the company, One Touch Solutions (India) Pvt Ltd., as comparable : i. It is functionally not similar to the appellant ii. The TPO excluded this company as functionally not comparable in the show cause notice but included the same in the final order, without affording opportunity to the appellant Wrong computation of Margin
8. The Learned TPO has committed mistakes in computation of margin and has failed to follow the directions of the DRP in this regard; Working Capital adjustment
9. The Learned TPO/ DRP erred in not allowing the working capital adjustment, at actuals, as upheld by the judicial authorities;”
Page 3 of 5 IT(TP)A No. 273/Bang/2021 2. At the outset, the Ld.AR submitted that the main issue raked up by assessee in the present appeal is in considering the services rendered by assessee to be ITES by the Ld.TPO, as against back office support services carried considered by assessee. She submitted that the Ld.TPO himself in para 2 has observed as under:
However, while analysing the international transaction, the Ld.TPO considered assessee to be an IT enabled service provider and selected all the comparables pertaining to ITES segment. She also referred to page 15 of the order u/s. 92CA wherein the show cause notice have been issued to assessee selecting comparables pertaining to IT enabled service segment. The Ld.AR submitted that before the DRP this wrong characterisation of assessee was raised however the same has not been adjudicated. It is the prayer of the Ld.AR that the issue may be remanded to the Ld.AO/TPO to consider the international transaction of assessee in accordance with the functions performed by the assessee, assets owned and risks assumed in Page 4 of 5 IT(TP)A No. 273/Bang/2021 respect of the services rendered to its AE. She vehemently opposed assessee being characterised as an ITES segment as assessee rendered staff recruitment services which are more akin to back office support services.
On the contrary, the Ld.DR submitted that no prejudices caused to assessee if the comparables sought for exclusion are to be considered. 5. We have perused the submissions advanced by both sides in the light of records placed before us. 6. We note that analysing the international transaction based on wrong assumption of the services rendered would prejudice the computation of arms length. In the interest of justice, we remand the entire computation of arms length to the Ld.TPO for denovo assessment. Needless to say that proper opportunity of being heard must be granted to assessee in accordance with law. Accordingly, the grounds raised by assessee stands allowed for statistical purposes. In the result, the appeal filed by the assessee stands allowed for statistical purposes. Order pronounced in the open court on 02nd August, 2022.