Income Tax Appellate Tribunal - Mumbai
Maersk Global Services Centres (India) ... vs Assessee on 16 January, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL,
MUMBAI BENCH "K", MUMBAI
BEFORE SHRI R. C. SHARMA, ACCOUNTANT MEMBER AND
SHRI AMIT SHUKLA, JUDICIAL MEMBER
ITA No. 2594/Mum/2014
Assessment Year: 2009-10
M/s. Maersk Global Service DCIT Circle- 6(3)
Centres (India) Pvt. Ltd. Aayakar Bhavan
4th and 5th Floor, Prudential Mumbai
Building, Central Avenue Road, Vs.
Hiranandani Business Park,
Powai, Mumbai- 400 076
PAN:AADCM 7786 M
(Appellant) (Respondent)
ITA No. 2492/Mum/2014
Assessment Year: 2009-10
DCIT Circle- 6(3) M/s. Maersk Global Service
Aayakar Bhavan Centres (India) Pvt. Ltd.
Mumbai 4th and 5th Floor, Prudential
Vs. Building, Central Avenue Road,
Hiranandani Business Park,
Powai, Mumbai- 400 076
PAN:AADCM 7786 M
(Appellant) (Respondent)
Assessee by Shri Porus Kaka & Shri
:
Manish Kanth
Revenue by : Shri S.D. Srivastava
Date of hearing : 07.01.2015
Date of Order : 16.01.2015
ITA No. 2594/Mum/2014
2 ITA No. 2492/Mum/2014
M/s. Maersk Global Service Centres (India) Pvt. Ltd.
Assessment Year: 2009-10
ORDER
PER AMIT SHUKLA, JM:
These are the cross appeals filed by the either parties, against order/direction dated 18.12.2013 given by Dispute Resolution Panel-I, Mumbai (DRP) u/s 144 C(5) to the Assessing Officer for the quantum of assessment u/s 143(3) for the A.Y. 2009-10.
2. We will first take up assessee's appeal being ITA No. 2594/M/2014. From Ground No. 1 to 12, the assessee has mainly challenged transfer pricing adjustment of Rs.18,03,47,422/- made to the assessee's total income on various legal and factual grounds. At the outset learned senior counsel, Shri Porus Kaka submitted that most of the issues have been decided by the Hon'ble Special Bench in the case of the assessee in the A.Y. 2008-09 in ITA No. 7466/M/2012. The only issue which is now been contested before the Tribunal is, exclusion and inclusion of certain comparables.
3. The brief facts of the case are that, the assessee company is wholly own subsidiary of Maersk GSC Holdings A/S, which in term is a downstream subsidiary of APMM Group [called as Maersk Group] which is world's largest shipping company/group. The assessee company is mainly engaged in providing back office support to its AEs, which relates to processing, data entry, reconciliation of statements, audit of shipping documents such as bills of lading and other is technical support services. It also provides IT enabled services such as process support, process optimization and technical support. The functional profile of the assessee company whether it is a low end services or high end services has been ITA No. 2594/Mum/2014 3 ITA No. 2492/Mum/2014 M/s. Maersk Global Service Centres (India) Pvt. Ltd.
Assessment Year: 2009-10 dealt by the Hon'ble Special Bench in the case of the assessee in para 80, which reads as under:-
80. A perusal of the functional profile of the assessee company shows that although the services claimed to be provided by it to the AEs as - services such as process support, process optimization and technical support are not in the nature of low end services such as voice or processing as they require some degree of special knowledge and domain expertise in the concerned field, the revenue generated from services was only about 10% of the total revenue generated during under consideration. There were also' some other services rendered to the assessee company to its AEs as IT enabled services such as the difference between equipment management system and transfer plan in global custom services study, contract drafting, various audit functions based on different business strategy, tender handling etc. which, as rightly submitted by the ld, D.R., cannot be strictly considered as low-end services as they involved some degree of special knowledge and expertise in the relevant field. However, these services again only incidental to the main services rendered by the assessee involved a information collation from shipper customer/AE and populating the same into various processes and systems provided by the AE. These main services rendered by the assessee to its AE'S thus involved primarily data entry. transcription, consolidation, co-ordination, preparation, processing and review of shipping documents and such other similar support services which were Plainly comprising of ' back office support services rendered by the assessee to its AEs in the nature of low-end services. The profile of work-force employed by the assessee during the year under consideration comprised of 96% of graduates and post- graduates whereas only 4% work force was professional such as CA, B.Tech etc. which again goes to show that the functions performed by the assessee company to its AEs ere mainly in the nature of providing back office support services of low end nature. Going by the functions performed by the assessee to its AEs during the year under consideration, we are of the vi w the assessee was a captive contract service provider mainly rendering back office support services and such services rendered by: it to. its A s involving some degree of special knowledge and expertise formed only small portion of the services rendered by it which essentially were in the nature of incidental services."ITA No. 2594/Mum/2014 4 ITA No. 2492/Mum/2014
M/s. Maersk Global Service Centres (India) Pvt. Ltd.
Assessment Year: 2009-10
4. In the transfer pricing document for the A.Y. 2009-10 the assessee reported following international transaction with its AE in respect of the following services:-
Nature of services Amount (Rs.) IT enabled services such as transaction 112,06,18,971/- processing, data entry, accounting and other support services IT Service Centre activity-IT Services 22,92,64,214/-
The assessee had shown its operating profit upon total cost at 13.29%. In the transfer pricing study report, the assessee had chosen 13 comparable which were as under:-
1. Allsec Technologies Ltd.
2. Cosmic Global Ltd.
3. Systems International (Segmental)
4. Spanco Telesystems and Solutions Ltd. (Segmental)
5. Informed Technologies India Ltd.
6. ICRA Online Ltd.
7. ICRA Techno Analytics Ltd.
8. Datamatics Financial Services Ltd.
9. Caliber Point Business Solutions Ltd.
10. Inhouse Productions Limited
11. KPIT Cummins Global Business Solutions Ltd.
12. e4e Healthcare Business Services Pvt. Ltd. (formerly, Nittany Outsourcing Pvt. Ltd.
13. Shreejal Info Hubs Ltd.ITA No. 2594/Mum/2014 5 ITA No. 2492/Mum/2014
M/s. Maersk Global Service Centres (India) Pvt. Ltd.
Assessment Year: 2009-10 The average OP/TC of such comparables worked out at 10.93% and hence it was reported that assessee's margin are at arm's length. However, the TPO rejected all the comparables selected by the assessee, except for one comparable namely, Cosmic Global Ltd. The assessee's comparables were rejected on the ground that they were not engaged into KPO kind of activities or did not fulfilled the selection criteria adopted by him. The TPO's reasoning for rejecting the comparables of the assessee have been illustrated from pages 17 to 19 of the TPO's order. The other relevant factors adopted by the TPO for rejecting the assessee's comparables and searching for his own comparables has been elaborately discussed in the TPO's order which are not being discussed. The TPO after detailed discussion has finally adopted 5 comparables with an average margin of 43.07%. The list of such comparables with their OP/TC are as under:-
Sr. No. Particulars OP/TC
1 Accentia Technologies Ltd. 52.50%
2 Coral Hub Ltd. 35.48%
3 Eclerx Services Ltd. 57.34%
4 Cosmic Glogal 40.61%
5 Crossdomain Solutions Pvt. Ltd. 29.40%
Average 43.07%
5. The DRP by and large has upheld the comparables finally chosen by the TPO, after giving direction to the AO for making certain adjustments as per discussion appearing in para 4.4 onwords.
ITA No. 2594/Mum/2014 6 ITA No. 2492/Mum/2014M/s. Maersk Global Service Centres (India) Pvt. Ltd.
Assessment Year: 2009-10
6. Before us, learned senior counsel, Shri Porus Kaka submitted that at this stage and in wake of Special Bench decision, the assessee is mainly challenging 3 comparables selected by the TPO namely:
(i) Coral Hubs Ltd. [Vishal Information Technology Ltd.]
(ii) Eclerx Services Ltd.
(iii) Accentia Technologies Ltd.
and is also challenging the rejection of 2 comparables companies by the TPO which were selected by the assessee. These two comparable companies are: (i) Allsec Technologies Ltd. and (ii) R. International Ltd. (Segmental).
7. Regarding Coral Hubs Ltd. ( erstwhile Vishal Information Technologies Ltd.), the learned senior counsel submitted that, the TPO had selected the said comparable on the ground that it is engaged in the high end IT enable services and data processing services and further, this company clears all the filters adopted by the assessee as well as by the TPO. He submitted that, the said company cannot be taken as comparable, because in the earlier years such a comparable has been rejected by the Tribunal in assessee's own case right from A.YL. 2005-06 to 2008-09. In the A.Ys. 2008-09, the DRP itself has rejected this comparable. The main reason for rejecting this comparable was that the said company has mainly outsourced its ITES services. Not only this, in A.Y. 2006-07 also the Tribunal has rejected the said company as comparable on same reasoning. Therefore, there being no change in the facts and circumstances of the case, consistent view should be taken. Regarding Eclerx Services Ltd. He submitted that, it too has been rejected by the Special Bench in the earlier years. Regarding, Accentia Technologies Ltd.
ITA No. 2594/Mum/2014 7 ITA No. 2492/Mum/2014M/s. Maersk Global Service Centres (India) Pvt. Ltd.
Assessment Year: 2009-10 he made his detail submissions, as to why, same cannot be included. The same shall be dealt in later part of this order.
8. On the other hand Ld. DR strongly relied upon order of the TPO as well as the DRP and submitted that earlier years precedence cannot be followed in such cases as the financials of the current year has to be seen for the comparability analysis.
9. We have heard the rival submissions and also perused the relevant material placed before us. The only dispute before us, as contended by the learned senior counsel, is restricted to exclusion of 3 comparables adopted by the TPO, that is, M/s. Coral Hubs Ltd. (erstwhile Vishal Information Technologies Ltd.); M/s. Eclerx Services Ltd.; and Accentia Technologies Ltd.; and inclusion of 2 comparables selected by the assessee, that is, Allsec Technologies Ltd. and R. System International Ltd. (Segmental),
10. First of all, we shall discuss Vishal Information Technologies Ltd. now known as Coral Hubs Ltd. This company has been subject matter of dispute in assessee's case, whether to be included as comparable or not, since earlier years. In A.Y. 2005-06, the Tribunal has excluded the said comparable on the ground that this company has outsourced its considerable portion of its ITES business, whereas the assessee is carrying out entire operation by itself. Similarly in A.Y. 2006-07 also the Tribunal has excluded the said comparable on similar ground. In A.Y. 2008-09, DRP itself has directed the AO not to include Coral Hubs as a comparable company, which fact has been noted by the Special Bench in assessee's own case in para 13 of the order. Thus, consistent with the view taken in the earlier years and there being no change in facts and circumstances in this year, we accept the assessee's contention that the ITA No. 2594/Mum/2014 8 ITA No. 2492/Mum/2014 M/s. Maersk Global Service Centres (India) Pvt. Ltd.
Assessment Year: 2009-10 Coral Hubs Ltd. (Vishal Information Technologies Ltd.) has to be excluded from the list of final comparables. Accordingly, Coral Hubs Ltd is directed to be excluded.
11. Regarding to M/s. Eclerx Services Ltd., it has been submitted by the Ld. Counsel that Hon'ble Special Bench in A.Y. 2008-09 has directed the TPO to exclude this company from the list of final comparables. The relevant discussion and finding regarding M/s. Eclerx Services Ltd. by the Hon'ble Special Bench is as under:-
"In so far as M/s. Eclerx Services Limited is concerned, the relevant information is available in the form of annual report for financial year 2007-08 placed at page 166 to 183 of the paper book. A perusal of the same shows that the said company provides data analytics and data process solutions to some of the largest brands in the world and is recognized as experts in chosen markets financial services and retail and manufacturing. It is claimed to be providing complete business solutions by combining people, process improvement and automations. It is claimed to have employed over 1500 domain specialists working for the clients. It s claimed that Eclerx is a different company with industry specialized services for meeting in two business verticals financial services and retail and manufacturing. It is claimed to be engaged in providing solutions that do not just reduce cost, but help the clients increase sales and reduce risk by enhancing efficiencies and by providing valuable insights that empower better decisions. M/s. eClerx Services Pvt. Ltd. is also claimed to have a scalable delivery model and solutions offered that include data analytics, operations management, audits and reconciliation, metrics management and reporting services. It also provides tailored process outsourcing and management services along with a multitude of data aggregation, mining and maintenance services. It is claimed that the company has a team dedicated t development automation tools to support service delivery. These software automation tools increase productivity, allowing customers to benefit from further cost saving and output gains with better control over quality. Keeping in view the nature of services rendered by M/s. eClerx Services Pvt. Ltd. and its functional profile, we are of the view that this company is also mainly engaged in providing high end services involving specialized knowledge and domain expertise in the field and the ITA No. 2594/Mum/2014 9 ITA No. 2492/Mum/2014 M/s. Maersk Global Service Centres (India) Pvt. Ltd.
Assessment Year: 2009-10 same cannot be compared with the assessee company which is mainly engaged in providing low end services to the group concerns.
83. For the reasons given above, we are of the view that if the functions actually performed by the assessee company for its AEs are compared with the functional profile of M/s. eClerx Services Pvt. Ltd. and Mold-Tec Technologies Ltd., it is difficult to find out any relatively equal degree of comparability and the said entities cannot be taken as comparables for the purpose of determining ALP of the transactions of the assessee company with its AEs. We, therefore, direct that these two entities be excluded from the list of 10 comparables finally taken by the AO/TPO as per the direction of the DRP."
In this year also, there being no change in the facts and circumstances, therefore, respectively following the decision of the Special Bench we direct the TPO to exclude this company from the list of comparables as it is not functionally comparable with the assessee.
12. Now coming to the Accentia Technologies Ltd., as pointed out by the Ld. Counsel, it is seen form the annual report of the said company, it is a parent company providing high end management solutions in health care. It is mainly medical transcription company doing medical coding, medical billing and receivables management services. The BPO services has not been started in this year that is in the F.Y. 2008-09. The TPO has included this company mainly on the ground that it is a KPO and is providing high end ITES related services in the field of health care. Once it is evident from the annual report for the A.Y. 2008-09 that it has not started its data processing outsourcing or KPO services, it cannot be held to be a good comparable for bench marking the assessee's margin for the F.Y. 2008-09, that is, for A.Y. 2009-10. Moreover this company has substantial goodwill being a parent company and therefore, cannot be held to be comparable with the company which is mainly a captive ITA No. 2594/Mum/2014 10 ITA No. 2492/Mum/2014 M/s. Maersk Global Service Centres (India) Pvt. Ltd.
Assessment Year: 2009-10 service provider. Therefore, we are of the opinion that this company cannot be considered to be comparable in the present year for bench marking the margin of the assessee's company. Accordingly, the same is rejected.
13. Now coming to the two comparables included by the assessee. So far as R. System International Ltd. (Segmental) is concerned, it has been pointed out by the learned senior counsel that this company was accepted as a comparable by the TPO in assessee's own case in the A.Y. 2007-08 and also by the DRP in A.Y. 2008-09. The TPO has rejected this comparable in this year, simply on the ground that it is not purely a KPO service provider and having calendar year ending. On the contrary the BPO segment of R. System is functionally comparable to the assessee and simply because it is following calendar year accounting it cannot be rejected. In A.Y. 2008-09, the DRP in the light of functions performed by the assessee as well as BPO segment of R. System International, has accepted the same to be comparable company. This fact has also been noted by the Special Bench in para 12 of the order.
14. Thus, consistent with the fact that in A.Y. 2007-08, TPO himself has accepted R. System as a good comparable and DRP in A.Y. 2008-09 has also accepted the same to be comparable, which has been upheld by the Special Bench, therefore, we do not find any reasons to deviate from such a precedence of the earlier years, so as to come to a different conclusion without any material difference on record for this year. Thus, we direct the TPO/AO to include R. System International Ltd. in the list of final comparables for bench marking the assessee's margin.
ITA No. 2594/Mum/2014 11 ITA No. 2492/Mum/2014M/s. Maersk Global Service Centres (India) Pvt. Ltd.
Assessment Year: 2009-10
15. Lastly, with regard to Allsec Technologies Ltd. it is seen that TPO has rejected the said comparables on the ground that it is a consistent loss making company and moreover this company does not qualify 75% export filter. The additional ground for rejecting the said comparable is that, it is not engaged in KPO services. On the other hand the case of the learned senior counsel before us is that, department/Tribunal has accepted this to be comparable in A.Y. 2005-06, 2006-07 & 2007-08. In A.Y. 2008-09 company was rejected on account of extraordinary event of merger which fact is not prevalent in this year and therefore, the same should be accepted as comparable in A.Y. 2009-10 as it is functionally comparable with the assessee's profile and functions. Regarding TPO objection with regard to export filter, he submitted that export in this year was around 74.45% which is almost near to 75% threshold. Further, it is not a persistent loss making company which is evident from the following profit margin in the various assessment years. A.Y. 2005-06 : 28.70%; 2006-07 : 28.51%; 2007-08 : 27.31%; 2009-10 : (-)8.90%. It was only in this year that the company had incurred losses, therefore, this cannot be the ground for rejecting it to be a comparable company.
16. After considering the rival submissions and material on record, we find that this company was considered to be a good comparable right from the A.Y. 2005-06 to 2007-08. In A.Y. 2008-09, it was not accepted to be comparable as there was an extraordinary event of merger. So far as TPO's allegation that it is a consistent loss making company, we find that it is only in this year i.e., in A.Y. 2009-10 it has incurred loss, otherwise it was profit making company as stated above. This cannot be the sole ground for rejecting it as comparable. As functional ITA No. 2594/Mum/2014 12 ITA No. 2492/Mum/2014 M/s. Maersk Global Service Centres (India) Pvt. Ltd.
Assessment Year: 2009-10 comparability is to be seen. However, whether, loss is on account of normal operating business or some other factors has neither been discussed nor analyzed by the TPO. If this comparable has been accepted to be good comparable in the earlier years as well as in the subsequent year then, there is no reason to reject the same in this year. However, TPO is directed to carry out comparability analysis of this company and also examine the operating margin of this company to see whether loss is on account of some other factors other than business operations. Thus, this comparable is set aside to the file of the TPO/AO to carry out fresh analysis after giving opportunity to the assessee.
17. In view of the aforesaid finding, the TPO/AO is directed to work out the final average mean of the comparables as per the directions given above and bench mark the assessee's margin. If the margin of the comparables falls within +/- 5 range, then needless to say that, no adjustment should be made. Thus the grounds relating to TPO adjustment (ground no. 1 to 12) is treated as partly allowed for the statistical purpose.
18. In ground No. 13, the assessee has challenged the disallowance of Rs.1,47,48,864/- on account of software license expenses. The assessing officer noted that assessee has incurred following expenses for obtaining software licenses:-
i License cost of software paid to Hewlett Packard India Sales 1,25,91,473/-
P. Ltd.
ii Clementine License Software to South Asia Pvt. Ltd. 12,14,131/- Iii CISCO Call Manager License to JQ Network Pvt. Ltd. 8,07,046/- iv Dame ware Remote Control license to Income Systems P. 1,36,214/-
Ltd.
1,47,48,864/-ITA No. 2594/Mum/2014 13 ITA No. 2492/Mum/2014
M/s. Maersk Global Service Centres (India) Pvt. Ltd.
Assessment Year: 2009-10 The Assessing Officer treated the said expenditure as capital in nature and allowed depreciation @ 25%. The DRP on the other hand upheld the AO's finding that it is a capital expenditure, however directed the AO to allow depreciation @ 60%.
19. Before us, learned counsel submitted that the issue of allowability of software expenses is now covered by the decision of the CIT Vs. Asahi India Safety Glass Ltd. reported in (2012) 346 ITR 329; and Bombay High Court in the case of CIT Vs. Ray Chem RPG Ltd. 346 ITR 138 (Bom), therefore, the software expenses should be allowed as revenue expenses. On the other hand Ld. CIT/DR strongly relied upon the order of the DRP.
20. After considering the rival submission and the relevant finding of the DRP, we are of the opinion that this matter should be restored back to the file of the AO to consider the allowabilty of software expenses in the light of decision of Delhi High Court in the case of CIT Vs. Asahi India Safety Glass Ltd. (supra) and CIT Vs. Raychem RPG Ltd. (supra). Accordingly the ground raised by the assessee is treated as partly allowed for statistical purpose.
21. In ground No. 14, the assessee has challenged the addition of Rs.15,64,558/- on account of mismatch of interest income as per certificate of TDS vis-a-vis interest income shown as per books of account. During the course of the assessment proceedings, the assessee was required to furnish reconciliation of interest receipts as per the information given in AIR data and P& L Account. In response, the assessee submitted a reconciliation vide letter dated 27.02.2013, which has been incorporated at page 3 of the assessment order. The assessee's main explanation was that the difference is on account of ITA No. 2594/Mum/2014 14 ITA No. 2492/Mum/2014 M/s. Maersk Global Service Centres (India) Pvt. Ltd.
Assessment Year: 2009-10 interest which has accrued to the assessee and shown in the books in the earlier years on which tax has been paid, whereas the bank has considered the interest income in this year in the TDS certificate. However, the AO rejected the assessee's contention and added the amount of Rs.15,64,558/-, being the difference in 26AS and interest receipts declared in P&L Account. Before the DRP it was reiterated that difference is due to interest accrued and shown in the books of account in the earlier years but considered by the Bank for the year under consideration as per the TDS certificate issued by them. The reconciliation for such difference of interest which was filed before the AO was also filed before the DRP which has been reproduced by the DRP, at pages 15 and 16 of its order. However, the DRP upheld the contention of the AO on the ground that taxability of income has to be taken on the basis of income of that assessment year and the income of any other year cannot be assessed.
22. Before us learned senior counsel, Shri Porus Kaka submitted that the interest income in question has already been offered for tax on accrued basis in the earlier years and therefore same cannot be doubly taxed in this year on the ground that the bank has considered the income in this year as per their TDS certificate. Therefore, no addition is called for. The Ld. CIT/DR on the other hand submitted that this matter should be remitted back to the file of the AO to see that, there is no double taxation and if some interest income has been taxed in the earlier years then it should be excluded in this year, provided the assessee is able to demonstrate and reconcile the same.
ITA No. 2594/Mum/2014 15 ITA No. 2492/Mum/2014M/s. Maersk Global Service Centres (India) Pvt. Ltd.
Assessment Year: 2009-10
23. After considering the rival submissions and on perusal of the assessee's submissions filed before the TPO as well as the DRP, we find that the assessee had shown accrued interest for Rs.39,64,386/- in its P&L Account in the A.Y. 2008-09. As per the TDS certificate for the year ending 31st March, 2008, interest of Rs.26,92,977/- has been shown to be earned in A.Y. 2008-09. Thus the assessee seems to have offered excess interest income on accrual basis. There is thus apparent mismatch in the interest income as per the books and TDS certificate. Therefore, in the interest of justice, we restore this matter back to the file of the AO, to examine this issue and if the interest income which is a part of TDS certificate in this year has already been taxed in the earlier years, then the same should not be doubly taxed here in this year also. The assessee will furnish requisite reconciliation and information to the AO. Accordingly, this ground is set aside and restored back to the file of the AO.
24. Ground no. 15 relates to initiation of penalty proceedings u/s 271(1)(c). Since this ground is premature, therefore, no adjudication is required, hence dismissed.
25. Ground no. 16 relates to levy of interest u/s 234B. Since no argument has been placed before us, therefore, we treat the said ground as consequential. Accordingly ground no. 16 is dismissed.
26. In the result the appeal filed by the assessee is partly allowed for the statistical purpose.
ITA No. 2594/Mum/2014 16 ITA No. 2492/Mum/2014M/s. Maersk Global Service Centres (India) Pvt. Ltd.
Assessment Year: 2009-10 Revenue's Appeal; ITA No. 2492/Mum/2014
27. Now we will take department's appeal, vide which following grounds have been raised:-
"Whether on the facts and in the circumstances of the case and in law, The Hon'ble DRP was correct in law in considering companies, performing low end Income Technology Enables Services as comparables for the purpose of conducting FAR (Functions, Assets and Rises) Analysis for determining the arm's length price of international transaction of the assessee, who is engaged in providing high end Income Technology Enables Services (ITES)?
Whether on the facts and in the circumstances of the case and in law, The Hon'ble DRP was correct in considering loss making as well as abnormally low margin companies as comparables for the purpose of benchmarking analysis under Transactional Net Margin Method (TNMM)?
Whether on the facts and in the circumstances of the case and in law, The Hon'ble DRP was correct in law in granting working capital adjustment to the assessee when it has failed to furnish scientifically worked out 'working capital adjustment' with respect to the comparables adopted by it?
28. At the outset, learned senior counsel submitted that so far as ground no. 1 is concerned, the same has been discussed by the Hon'ble Special Bench in detail and in view of the finding given therein, there is not much merit in the grounds raised by the department. So far as ground no., 2 and 3 is concerned, learned senior counsel submitted that the ground raised by the revenue is factually incorrect as the DRP has not taken any loss making comparable or has directed the TPO to grant any working capital adjustment. Ld. CIT/DR admitted this fact raised by the senior counsel.
ITA No. 2594/Mum/2014 17 ITA No. 2492/Mum/2014M/s. Maersk Global Service Centres (India) Pvt. Ltd.
Assessment Year: 2009-10
29. So far as the issue raised in ground no. 1, we find that the Special Bench has discussed in detail the functional profile of the assessee company and also whether the ITES services provided by the assessee company is a low end service or high end service. This has been discussed in para 80 of the order of the Special Bench. In view of the order of the Special Bench, we do not find any merits in the grounds raised by the department and accordingly ground no. 1 raised by the department is dismissed. Regarding ground no. 2 and 3, we agree with the contention of the learned senior counsel that in the impugned order, DRP has not given any direction to the AO/TPO to consider any loss making company as comparable for the purpose of bench marking the assessee's margin. Further no direction with regard to the working capital adjustment has been given by the DRP. Therefore, ground raised by the revenue does not stand and hence the same are dismissed. Accordingly the departmental appeal is dismissed.
30. In the result, the appeal filed by the Assessee is partly allowed for statistical purpose, whereas the Revenue's appeal is dismissed.
Order pronounced in the open court on this 16th day of January, 2015.
Sd/- Sd/-
(R.C. SHARMA) (AMIT SHUKLA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated: 16.01.2015
*Srivastava
ITA No. 2594/Mum/2014
18 ITA No. 2492/Mum/2014
M/s. Maersk Global Service Centres (India) Pvt. Ltd.
Assessment Year: 2009-10 Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT(A) Concerned, Mumbai The DR "K" Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.