M/S. IHS GLOBAL PVT LTD,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11(3), BANGALORE

O R D E R

Per Shri A.K. Garodia, Accountant Member

by the assessee are as under. “On the facts and circumstances of the case and in law:

1. The Ld. CIT(A) erred in upholding the fresh benchmarking analysis conducted by the Ld. AO/TPO and in upholding the Ld. AO/TPO's introduction/ modification of certain quantitative filters for identification of comparables.

2. The Ld. CIT(A) has erred in inclusion of the following functionally un-comparable companies as comparables for the Appellant's ITeS activity, as decided by the AO/TPO: • Accentia Technologies Ltd; • Acropetal Technologies Ltd (Segment); • E-clerx Services Ltd; • Fortune Infotech Ltd; Page 2 of 4 • Icra Online Ltd (Segment); • Infosys BPO Ltd; • Cosmic Global Ltd; and • Jeevan Sceintific Technologies Ltd (Segment)

3. The Ld. CIT(A) has erred in the exclusion of the following functionally comparable companies as a comparable to the Appellant's ITeS activity, as considered by the Appellant in it's TP Study: • A O K In-house BPO Services Ltd; • Cameo Corporate Services Ltd; • Optimus Global Services Ltd; • Sparsh BPO Services Ltd; • Inhouse Production Ltd; • Jindal Intellicom Ltd; • Microland Ltd;

4. That the Ld. CIT(A) erred in upholding the Ld. AO/TPO's approach of not treating the subcontracting cost as pass through in nature.

5. That the Ld. CIT(A) erred in upholding the stand of the Ld. TPO/ Ld. AO of following the approach in restricting the working capital adjustment by limiting the average cost of capital at 0.23% in the case of comparable companies

6. That the Ld. CIT(A) erred in upholding the stand of the Ld. AO/ Ld. TPO of computation of working capital adjustment by considering erroneous receivables and payables for the comparable companies.

7. The Ld. CIT (A) erred in levying interest under Section 234B and Section 234D of the Income Tax Act, 1961.”

3. It was submitted by ld. AR of assessee that ground no. 7 is consequential and out of the remaining grounds, the assessee is pressing only part of ground no. 2 and the remaining grounds are not pressed. Regarding ground no. 2 also, he submitted that as per this ground, the assessee is requesting for exclusion of 8 comparables but now, the assessee does not want to press for the exclusion of Fortune Infotech Ltd., Cosmic Global Ltd. and Jeevan Scientific Technologies Ltd. (Segment) and now, the assessee is requesting for exclusion of only 5 comparables i.e. 1) Accentia Technologies Ltd. 2) Acropetal Technologies Ltd. (Segment) 3) E-clerx Services Ltd. 4) ICRA Online Ltd. (Segment) 5) Infosys BPO Ltd.

Page 3 of 4 4. Regarding the request of the assessee for exclusion of these five comparables, he submitted that this issue was decided by CIT (A) as per para no. 5 on page no. 7 of his order. He pointed out that in this para, it is stated by CIT (A) that the assessee has argued for exclusion of certain companies from the list of comparables and inclusion of certain companies in the list of comparables but the assessee has not taken any ground of appeal in relation to the same and on this basis, he has not adjudicated upon on this issue. He submitted that this is true that no specific ground was raised before CIT(A) in this regard but since, arguments were made before him in this regard, he should have decided this issue. Thereafter he drawn our attention to para 9.1 on page no. 8 of the order of TPO and pointed out that in this para, it is noted by the TPO that in reply to show cause notice dated 20.09.2013 issued by him, no submission / objection was received from the taxpayer nor the taxpayer requested for additional time for filing the submissions. In this regard, he submitted that submission was made before the TPO vide letter dated 16.01.2014 copy available on pages 121 to 196 of paper book and the same was furnished in the office of TPO at tapal on 17.01.2014 and the order of TPO is dated 29.01.2014 and hence, the matter should be restored back to the file of TPO for fresh decision after considering the written submissions because the same were not considered by the TPO. In reply, it was submitted by ld. DR of revenue that the letter dated 16.01.2014 available on pages 121 to 196 of paper book is addressed to DCIT(TP)-V, Bangalore although it is submitted at tapal of DCIT(TP)-IV. Since it is addressed to DCIT(TP)-V, the same might not have reached the TPO and therefore, the TPO correctly said in his order that no reply was filed by assessee.

5. We have considered the rival submissions. In view of this submission of ld. DR of revenue, it is seen that letter filed by the assessee on 17.01.2014 by addressing to DCIT(TP)-V might not have reached to the file of TPO because the TPO in the present case is DCIT(TP)-IV and not DCIT(TP)-V, Bangalore to whom the said letter was addressed by the assessee. But still this is true that the submissions were made by the assessee before the passing of the order by the TPO and although it could not reach to the file of Page 4 of 4 TPO because of certain clerical mistakes on the part of the assessee, we feel it proper that in the interest of justice, the matter should go back to the file of TPO for fresh decision after considering the written submissions filed by the assessee on 17.01.2014 or any further submissions which the assessee may make in course of set aside proceedings. Hence, we set aside the order of CIT (A) and restore the matter back to the file of AO/TPO for fresh decision with regard to assessee’s claim for exclusion of five comparables i.e. a) Accentia Technologies Ltd. b) Acropetal Technologies Ltd. (Segment) c) E-clerx Services Ltd. d) ICRA Online Ltd. (Segment) e) Infosys BPO Ltd.