Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI
Before: SHRI A.MOHAN ALANKAMONY & SHRI DUVVURU RL REDDY
आदेश / O R D E R
PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER:
This appeal by the assessee is directed against the order passed by the Ld. Members of the DRP dated 05.06.2017 in F.No.288/DRP-2/BANG/2016-17 U/s.144C(5) r.w.s. 143(3), 144C(1) & 92CA of the Act for the assessment year 2013-14.
The assessee has raised several grounds in its appeal however the Ld.AR submitted before us that the only ground pressed for hearing in the appeal is that the Ld.Revenue Authorities had erred in adopting M/s. Infosys BPO as comparable while arriving at the NCP margin in the case of the assessee.
The brief facts of the case are that the assessee is a private limited company engaged in the business of providing security services and investment operation solutions, filed its return of income for the assessment year 2013-14 on 28.11.2011 admitting total income of Rs.15,03,34,900/-. The case was selected for scrutiny under CASS and thereafter assessment order was passed by the Ld.AO on 25.07.2017 pursuant to the directions of the Ld. Members of the DRP dated 05.06.2017.
At the outset the Ld.AR submitted before us stating the only grievance of the assessee is that the Ld.Revenue Authorities has adopted M/s. Infosys BPO as the comparable company which has a turnover of Rs.1831.34 crores though the assessee companies’ turnover is only Rs.107.13 crores which is 17 times higher than the turnover of the assessee. The Ld.AR further submitted before us that the Ld.Revenue Authorities had rightly adopted the other companies as comparable whose turnovers are near about that of the assessee. It was therefore pleaded that M/s. Infosys BPO Ltd may be excluded while arriving at the average NCP margin. The Ld.DR strongly objected to the submission of the Ld.AR and argued by stating that functionally M/s. Infosys BPO Ltd. is comparable with the assessee company, therefore the same may not be excluded while arriving at the average NCP margin. On the other hand the Ld.DR requested that the orders of the Ld.Revenue Authorities may be upheld.
We have heard the rival submissions and carefully perused the materials on record. We find merit in the submission of the Ld.AR.
On perusing the facts of the case, we find that M/s. Infosys BPO Ltd., is a much larger company compared with the assessee company and the other comparable companies. Therefore we are of the considered view that M/s. Infosys BPO Ltd., cannot be treated as a comparable company while arriving at the average NCP margins in the case of the assessee. We also draw strength from the decisions pointed out before us by the Ld.AR in the case H & S Software Development and Knowledge Management Centre Pvt Ltd (TS-9-HC-2018(DEL)-TP) wherein it was held that M/s.
Infosys BPO has a significant brand presence and cannot be compared to the assessee’s transactions whose turnover is comparatively minimal. Further as submitted by the Ld.AR the Chennai Bench of the Tribunal in the case Visual Graphics Computing Services India Pvt. Ltd vs. ACIT (ITA No.2340/Mds/2012) had held that M/s. Infosys BPO turnover being more than 10 times cannot be treated as the comparable company. The Bangalore bench of the Tribunal in the case M/s. Flextronics Technologies India Pvt. Ltd. vs. DCIT has also held that M/s. Infosys BPO cannot be treated as the comparable company because it enjoys substantial brand value and market leadership. Similar view was taken in the case Maersk Global Service Centers (India) P Limited (TS-633-ITAT-2016(Mum)-TP). Therefore following the above ratios laid down by the Tribunal and Hon’ble Delhi High Court referred by the Ld.AR, we hereby direct the Ld.AO to exclude M/s. Infosys BPO as comparable company while arriving at the NCP margin in the case of the assessee. We also make it clear that at the time of hearing no other ground was raised before us by the Ld.AR other than the ground we have adjudicated herein above.
In the result, the appeal of the assessee is allowed.
Order pronounced on the 06th March, 2018 at Chennai.