WELLIS PROCESSING SERVICES INDIA P.LTD,MUMBAI vs. DCIT RG 2(3)(1), MUMBAI

O R D E R Per B.R.Baskaran (AM) :-

The assessee has filed this appeal challenging the final assessment order dated 30-12-2015 passed by the Assessing officer for assessment year 2007-08 u/s 143(3) r.w.s. 144C(13) of the Act in pursuance of directions issued by Ld Dispute Resolution Panel (DRP).

2 WTW Global Delivery and Solutions India Pvt. Ltd. round, the Transfer Pricing Officer (TPO) selected 30 companies as comparables. In the first round, the Ld CIT(A) excluded 1 company. The ITAT, vide its order 01-03-2013, excluded certain comparable companies, remanded certain comparable companies to the file of TPO. In the mean time, the revenue and assessee challenged the order passed by the ITAT by filing appeal before Hon’ble High Court of Bombay.

3 WTW Global Delivery and Solutions India Pvt. Ltd. 20. Wipro Ltd Yes Yes

HIGH COURT REMANDED CASES - ADDITIONAL 21. AllsecTehnologies Ltd 22. Flextronics Software Sys Ltd (Seg) 23. HCL Comnet Sys &Ser Ltd 24. ICRA Techno Analytics Ltd (Seg) 25. R Systems International Ltd

4 WTW Global Delivery and Solutions India Pvt. Ltd. The assessee submitted that this company is a KPO company and hence it is functionally different. Further, during the year under consideration, it has demerged its Plastics division into a separate listed entity, which is an extra ordinary event. The Tribunal has excluded this company in AY 2008-09 (ITA No.6877/Mum/2012) in the assessee’s own case. The TPO himself has excluded this company in the assessee’s own case in AY 2006-07. The Ld A.R also relied upon the decision rendered by the Tribunal in the case of Stream International Services (ITA No.8290/Mum/ 2011 dated 10th October, 2014 ) in AY 2007-08. Thus, we notice that this company has been held as not a good comparable in various years in the assessee’s own case and in the hands of other assessee’s also. Accordingly, we direct exclusion of this company. (iii) E-clerx Services Ltd:- The assessee submitted that is functionally different, as it is engaged in KPO activities. The Tribunal has excluded this company in AY 2008-09 (ITA No.6877/Mum/2012) and in AY 2010-11 (ITA No.1890/Mum/2015) in the assessee’s own case. The Ld A.R also relied upon the decision rendered by the Tribunal in the case of Stream International Services (ITA No.8290/Mum/2011 dated 10th October, 2014) in AY 2007-08. Thus, we notice that this company has been held as not a good comparable in various years in the assessee’s own case and in the hands of other assessee’s also. Accordingly, we direct exclusion of this company. (iv) Vishal Information Technologies Ltd:- The assessee submitted that this company follows different business model, which is evidenced by the fact that this company’s personnel cost works out 2.3% of the turnover. This company has been excluded by the Tribunal in the assessee’s own case in AY 2005-06 (ITA No.1832/Mum/ 2016), in AY 2006-07 (ITA No.690/Mum/2016) and in AY 2008-09 (ITA No.6877/Mum/2012). The Ld A.R also relied upon the decision rendered by the Tribunal in the case of Stream International Services (ITA No.8290/ Mum/2011 dated 10th October, 2014) in AY 2007-08. Thus, we notice that 5 WTW Global Delivery and Solutions India Pvt. Ltd. this company has been held as not a good comparable in various years in the assessee’s own case and in the hands of other assessee’s also. Accordingly, we direct exclusion of this company. (v) Asit C Mehta Financial Services Ltd:- The assessee submitted that this company is rendering ITES services and also engaged in providing portfolio management services. However, segmental details are not available with regard to the above said two segments. The Tribunal has excluded this company in the assessee’s own case in AY 2006-07 (ITA No.690/Mum/2016). The Ld A.R also relied upon the decision rendered by the Tribunal in the case of Stream International Services (ITA No.8290/Mum/2011 dated 10th October, 2014 ) in AY 2007-08. Thus, we notice that this company has been held as not a good comparable in various years in the assessee’s own case and in the hands of other assessee’s also. Accordingly, we direct exclusion of this company. (vi) Bodhtree Consulting Ltd:- The assessee submitted that this company is functionally different, i.e., it is engaged in development of software products and provides end to end solutions, software consultancy, design and development of software using latest technologies etc. Further, the revenue recognition method followed by this company is peculiar. The Ld A.R submitted that this company has been excluded in the case of Affinity Express India P Ltd (ITA No.595/PN/2013) in AY 2007-08. He submitted that the Hon’ble Bombay High Court has excluded this company in AY 2008-09 in the case of PCIT vs. John Deere India P Ltd (ITA No.63/2017) and there is no different in facts between AY 2007-08 and 2008-09. Thus, we notice that this company has been held to be not a good comparable for captive ITES provider. Accordingly, we direct exclusion of this company. (vii) Infosys BPO Ltd:- The assessee submitted that this company belongs to “Infosys” group, which enjoys goodwill and brand value in the market. This company has been rejected in the assessee’s own case by the Tribunal in AY 2010-11 (ITA

6 WTW Global Delivery and Solutions India Pvt. Ltd. No.1890/Mum/2015) and by Ld DRP in 2008-09. The Ld A.R submitted that this company has been held to be not a good comparable in the case of Hinduja Global Solutions Ltd (ITA No.4933 & 4950/Mum/2012). Accordingly, we direct exclusion of this company. (viii) WIPRO Ltd:- The assessee submitted that this company is a leading market player and is possessing significant intangibles. This company has spent about 8.5% of its revenue towards R & D Activities. Further, this company has had 9 acquisition arrangements during this year. The Ld A.R also relied upon the decision rendered by the Tribunal in the case of Stream International Services (ITA No.8290/Mum/2011 dated 10th October, 2014 ) in AY 2007-08. Thus, we notice that this company has been held as not a good comparable in various years in the assessee’s own case and in the hands of other assessee’s also. Accordingly, we direct exclusion of this company. (ix) Maple E-Solutions Ltd:- The assessee contended that the promoters of this company have been charged with fraud cases by CBI. Further, the profit trend is very much fluctuating, i.e., the operating margin was -2.49%, 30.60%, 32.38%, 15%, - 16.96% and -97.26% in FY 2004-05 to 2009-10 respectively. The Ld A.R also relied upon the decision rendered by the Tribunal in the case of Stream International Services (ITA No.8290/Mum/2011 dated 10th October, 2014 ) in AY 2007-08. Thus, we notice that this company has been held as not a good comparable in various years in the assessee’s own case and in the hands of other assessee’s also. Accordingly, we direct exclusion of this company. (x) HCL Comnet Sys & Ser Ltd:- The assessee submitted that this company is a unlisted company and it follows different accounting year, i.e., it ends its accounts on 30th June and not on 31st March. The Ld A.R submitted that the companies following different accounting year was excluded by the Tribunal in the case of American Express (India) P Ltd (ITA No.1674/Del/2015 dated 7th June 2017)

7 WTW Global Delivery and Solutions India Pvt. Ltd. relating to AY 2007-08. The Ld A.R also submitted that the Hon’ble Bombay High Court has also excluded this company in the case of CIT vs. PTC Software (I) Pvt Ltd (2017)(395 ITR 176)(Bom). Accordingly, we direct exclusion of this company.

Order pronounced in the open court on 29.08.2022.