LOGICA PVT. LTD,BANGALORE vs. DCIT, BANGALORE

On perusal of the order passed in MP dated 4/12/2020, we note that the order dated 30/1/2020 passed by this Tribunal is recalled only to the extent to adjudicate the comparable, Acropetal Technologies Ltd. for under ITES segment.

We note that the coordinate bench of this Tribunal in order dated 30/1/2020, the assessee before us has been characterized in TP study, based on FAR, as a captive, contract service provider in respect of ITES service segment that assume less than normal risk associated with carrying out such services. Based on the above characterisation assessee is seeking exclusion of Acropetal Technologies Ltd., under ITES Segment. 4. The Ld.Counsel submitted that, this comparable had 3 segments, being engineering design services segment, ITES segment and health care services segment. She submitted the Ld. TPO considered the engineering design services. 5. On the contrary the Ld. CIT DR placed reliance on orders passed by authorities below. 6. We have perused submissions advanced by both sides in light of records placed before us. 7. We note that is coordinate bench of this Tribunal in case of Swiss Re Shared Services (India) (P.) Ltd. vs ACIT reported in [2016] 76 taxmann.com 22, observed and held as under: 21. Arguing for exclusion of Acropetal Technologies Ltd, (seg), Ld. AR submitted that Acropetal Technologies Ltd, was rendering service in the field of engineering design for health-care enterprise solutions and IT infrastructure solutions. As per the Ld. AR, AO took the engineering design services done by Acropetal Technologies Ltd, as a comparable segment with ITES services of the assessee. Ld. AR pointed out that Page 3 of 6 IT(TP)A No.626/Bang/2016 engineering design services rendered by M/s. Acropetal was entirely different from the type of services done by the assessee. Further according to him Hyderabad bench of the Tribunal in the case of Excellence Data Research (P.) Ltd. v. ITO [2014] 66 SOT 15/49 taxmann.com 409 (Hyd. - Trib.) had held that Acropetal Technologies Ltd, was not a good comparable in the BPO segment. As per the Ld. AR M/s. Excellence Data Research P. Ltd, was rendering back office data creation, content development and support services which were not comparable to what assessee was doing. Though the decision of the Hyderabad Bench was for A. Y. 2009-10, as per the Ld. AR, M/s. Acropetal Technologies Ltd, was doing the very same business during the relevant previous year also and therefore it could be considered as a good precedent.

Per contra, Ld. DR submitted that TPO had considered the argument of the assessee that BPO and KPO had to be distinguished. According to him, Acropetal Technologies Ltd, was giving engineering design services and the assessee was rendering insurance support services. Though these services did not fit in the same mould, the level of expertise required stood more or less on the same pedestal. According to him, applying the yardsticks laid down by Hon'ble Delhi High Court in the judgment of Rampgreen Solutions (P.) Ltd. (supra), Acropetal Technologies Ltd, could be taken as a good comparable.

We have perused the orders and heard the rival contentions. There is no dispute that M/s. Acropetal was having at least three segments, namely, engineering design services, IT service and health care. TPO had taken engineering design service as a good comparable with that of the services done by the assessee. Engineering Design Services that were being rendered by Acropetal Technologies Ltd, appears at page 8 of its annual report. It comprised of architectural, structural, electrical, plumbing, steel detailing, and utilities designing. Its revenue model appears at page 9 of its annual report. It is mentioned that the said company was providing comprehensive offerings using its deep domain understanding of infrastructural healthcare, engineering design and enterprise solutions. In our opinion, the type of services that was being provided by Acropetal Technologies Ltd, was not at all comparable with the type of services that the assessee was providing. It is also mentioned in the annual report of the said company that it was providing high end services in the engineering design services. No doubt as mentioned by the Ld. DR, it may not be feasible to have comparables which fit in the exact mould as that of an assessee in TP analysis. However, when one company is giving sophisticated set of services which involves higher level of skill sets, and the other is doing it on a lower level, we cannot say that the former should be considered as a comparable to the latter. Though for a different year, comparability of Acropetal Technologies Ltd, (seg) had come up before Hyderabad bench