M/S REPUCOM MEDIA ANALYSIS INDIA PRIVATE LIMITED,BANGALORE vs. ASSISTANT COMMISSIONER OF INCOME-TAX, BANGALORE

At the time of hearing, the assessee did not press ground No.14 relating to disallowance of bad debts due to smallness of the amount. Accordingly the said ground is dismissed as not pressed.

Ground Nos.15 and 16 relates to interest charged u/s 234B and 234C of the Income-tax Act 1961 (‘the Act’). Both are consequential in nature and hence they do not require any adjudication.

The other grounds relate to transfer pricing adjustment.

The assessee is a part of Communication group of companies. It is engaged in the business of rendering media analysis services to its associates enterprises. The communication group is associated with television and print media advertisements and accordingly involved in all types of marketing, advertisements, users ratings, print media user readership surveys and other things to make decision on the allocation of marketing levers, like branded contents and sponsorship etc.

The assessee has provided ITES activities to its Associated Enterprise. It has adopted TNMM as most appropriate method for bench marking the income received from its AE. The Profit level indicator (PLI) was taken as OP/OC. The assessee declared PLI of 20.14%. The TPO selected 10 comparables as given below:-

Before us, the ld AR sought exclusion of 2 companies viz., M/s Infosys BPO Ltd., and TCS-E-Serve Ltd., on the ground that the turnover of both these companies are more than 200 cores while the turnover of the assessee company was only 20.23 crores. By placing reliance rendered in the case of Northern Operating Services IT(TP)A No.101/Bang/2016, more particularly paragraph

The ld AR further submitted that the ld DRP has confirmed inclusion of Universal Print Systems Ltd., and BNR Udyog Ltd. The coordinate bench in the case of Mobility Infotech India Pvt. Ltd., (2018) 97 taxmann.com 2 has restored both these comparable companies to the file of AO/TPO for examining the same afresh by duly considering the contentions of the company.

The ld DR on the contrary supported the order passed by the AO.

We have heard the rival contentions on this issue and perused the record. Admittedly the turnover of the assessee company is 20.43 crores for the year under consideration. The turnover of Infosys BPO Ltd., for the year under consideration was 1312.41 crores and the turnover of TCS-E-Serve Ltd., was 1578.40 crores. The co-ordinate bench in the case of Northern Operating Services (Supra) has held that the decision rendered in the case of Genisys Integrating Systems in IT(TP)A No.1231/Bang/2010 is good law. In the case of Genisys Integrating Systems (supra) a guideline in the matter of turnover filter was suggested and the categorization of software companies in the Dun and Brad Street Study to be adopted as the method of classification by size. According to this study, 3 categories of firms are identified i.e small with turnover less than 200 cores, medium with turnover of 200 to 2000 crores and large with turnover greater than 2000 crores. Accordingly it

With respect to Universal Print Systems Ltd., and BNR Udyog Ltd., we noticed that the coordinate bench has restored both the comparables to the file of AO/TPO in the case of Mobility Infotech India Pvt. Ltd. (supra) to consider the objections of the assessee with regard to both the companies. With regard to Universal Print Systems Ltd (Seg. BPO), the assessee has contended in the above said case that it is functionally different and it fails on RPT filter also. With regard to BNR Udyog Ltd (Seg – Medical Transcription), the assessee has contended in the above said case that it is functionally different, fails on RPT filter and error in margin computation. Hence the co-ordinate bench has restored both the comparables in the case of Mobility Infotech India P Ltd to the file of AO/TPO and for that purpose, the co-ordinate bench has taken support of decisions rendered in the case of CGI Information Systems and Management Consultants (P) Ltd (2018)(94 taxmann.com 97 (Bang. Trib) and Indegene P Ltd (2017)(85 taxmann.com 60)(Bang.).

Since the facts are identical in the instant case also, following the decision rendered in the case of Mobility Infotech India P Ltd (supra), we restore both the comparables to the file of AO/TPO for IT(TP)A No.196/Bang/2017 Page 6 of 7 examining them afresh by duly considering the objections and explanations of the assessee.

In the result, the appeal filed by the assessee is treated as allowed for statistical purpose.