Delhi High Court
The Pr. Commissioner Of Income ... vs Evalueserve.Com Pvt. Ltd. on 26 April, 2022
$~84
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 127/2022
THE PR. COMMISSIONER OF INCOME TAX -3 ..... Appellant
Through: Mr.Ruchir Bhatia, standing counsel.
versus
EVALUESERVE.COM PVT. LTD. ..... Respondent
Through: Ms.Ananya Kapoor with Mr.Salil
Kapoor and Mr.Sumit Lalchandani,
Advocates.
% Date of Decision: 26th April, 2022
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
HON'BLE MR. JUSTICE DINESH KUMAR SHARMA
JUDGMENT
MANMOHAN, J (Oral):
1. Present Income Tax Appeal has been filed challenging the Order
dated 01st November, 2019 passed by the Income Tax Appellate Tribunal
('ITAT') in ITA No. 1814/Del./2017 for the Assessment Year 2012-13.
2. Learned counsel for the Appellant states that the ITAT has erred in
excluding M/s Eclerx Services Pvt. Ltd, TCS E-Serve Ltd, BNR Udyog Ltd.
and Excel Infoways Ltd as comparables for determining arm's length price
in the case of the respondent.
3. It is settled law that exclusion or inclusion of one or other comparable
would by itself not constitute a question of law unless it is shown that there
are important functional dissimilarities or vital material facts which go to the
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:27.04.2022
19:51:09
root of profitability or where other material circumstances are involved.
[See: Principal Commissioner of Income Tax-9 vs. WSP Consultants India
(P.) Ltd., (2017) 87 taxmann.com 266 (Delhi) and Principal Commissioner
of Income Tax -2 vs. Becton Dickinson India (P) Ltd., (2018) 92
taxmann.com 45 (Delhi)].
4. A perusal of the impugned order reveals that the ITAT has given
cogent reasons for excluding the aforesaid four companies as comparables.
The relevant portion of the impugned order is reproduced hereinbelow:-
"Eclerx Services Ltd.
7.5 When on similar facts and circumstances, Eclerx has been found
to be incomparable with the assessee, which finding has been
affirmed by Hon'ble Delhi High Court and there is no change in the
material facts and circumstances in this year, then we do not find
any reason to deviate from such finding. Accordingly, respectfully
following the same, we direct the TPO/AO to exclude Eclerx from
comparability list.
xxx xxx xxx
TCS E-Serve Ltd.
18. Respectfully following the aforesaid principle of Hon'ble
Jurisdictional High Court which applies in the present case also we
direct the TPO to exclude the said comparable.
xxx xxx xxx
BNR Udyog Ltd.
11. After considering the aforesaid submissions, we find that, first of
all, on perusal of the annual report it is seen that apart from medical
transcription activities, it is also into medical billing and coding
services. The functional profile of the medical transcription segment
is almost akin to functions of Accentia Technologies Ltd. and again
for the various activities of medical transcription, medical billing
and coding services there is no separate segment. In the case of
Evalueserve SEZ, the Tribunal after detail analysis has excluded the
said comparable. The finding of the Tribunal now stands confirmed
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:27.04.2022
19:51:09
by the Hon'ble Delhi High Court (supra). Accordingly, respectfully
following the same, this comparable is also directed to be excluded.
xxx xxx xxx
Excel Infoways Ltd.
13. After considering aforesaid submissions, we find that apart from
ITeS-BPO segment, this company is also carrying business of
infrastructure facility which almost constitutes 49% of the revenue.
There are no segmental details for these two activities. The profit
margin on such activity of development of infrastructure facility
cannot be identified and therefore, it cannot be held that such a huge
margin reported by the said company is on account of ITeS/BPO
segment or development of infrastructure facility. On this ground
alone, we do not find it to be fit comparable. Other aspect of
employee cost filter and diminishing revenues and profits are not
being considered."
5. The aforesaid reasoning is factual and discloses the functional and
other reasons to elucidate, dissimilarities between the four entities and the
Respondent/Assessee. Keeping in view the aforesaid factual background,
which is neither doubted nor challenged on the ground of perversity, we do
not find any substantial question of law for consideration in this appeal. The
appeal is accordingly dismissed.
MANMOHAN, J
DINESH KUMAR SHARMA, J
APRIL 26, 2022
KA
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ
Signing Date:27.04.2022
19:51:09
