Delhi High Court
The Pr. Commissioner Of Income Tax ... vs Macquarie Global Services Pvt. ... on 22 September, 2022
$~10
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 156/2020
THE PR. COMMISSIONER OF INCOME TAX -6 ..... Appellant
Through: Mr. Ruchir Bhatia, Sr. Standing
Counsel for Revenue along with Ms
Mansie Jain, Advocate.
versus
MACQUARIE GLOBAL SERVICES PVT. LTD. ..... Respondent
Through: Ms. Ananya Kapoor, Mr. Salil
Kapoor & Mr. Sumit Lal Chandani,
Advocates.
% Date of Decision: 22nd September, 2022
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA
JUDGMENT
MANMEET PRITAM SINGH ARORA, J (ORAL):
CM APPL. 7944/2020
Keeping in view the averments made in the application, the delay of
28 days in filing the appeal is condoned.
Accordingly, present application stands disposed of.
ITA 156/2020
1. Present appeal has been filed seeking a direction for setting aside the
order dated 31st July, 2019, passed by the Income Tax Appellate Tribunal
Digitally Signed By:PRAMOD
KUMAR VATS
Signing Date:23.09.2022
19:18:11
('ITAT') in ITA No. 1023/DEL/2016 with respect to Assessment Year
('AY') 2011-12.
2. The learned Senior Standing Counsel for the Appellant/Revenue
states that the ITAT fell in error in holding that the Assessee is not a
Knowledge Processing Outsourcing Unit ('KPO') whereas the Assessee
itself in the transfer pricing study report had declared that it is engaged in
KPO activities. He states that the ITAT erred in rejecting eClerxservices as
a comparable as it ignored the fact that the said comparable provides Data
Analysis and Outsourcing Services which are a part and parcel of the ITES
Segment. He states that similarly ITAT fell in error in rejecting ICRA
Techno Analytics Ltd. as a comparable whereas this company provides IT
enabled services. He further states that ITAT fell in error in applying the
high turnover threshold limit while excluding the comparable as it failed to
appreciate that margins in the ITES industry are not linked to the turnover of
the company.
3. We have heard the learned counsel for the appellant. In this case, in
view of the international transactions of the Assessee, the case was referred
to the Transfer Pricing Officer ('TPO'). The main international transaction
of the Assessee is provision of ITES. The Assessee adopted the
Transactional Net Margin Method (TNMM) as the most appropriate method
and Operating Profit/Operating Cost (OP/OC) as the Profit Level Indicator
(PLI). The TPO reached a final set of comparables, which included four
companies i.e., eClerxservices, TCS eServe, Accentia Technologies Ltd. and
ICRA Techno Analytics Ltd., which are the subject matter of this appeal.
The Assessee resisted the inclusion of the above said comparables and filed
objections before the Dispute Resolution Panel ('DRP') and the DRP by its
Digitally Signed By:PRAMOD
KUMAR VATS
Signing Date:23.09.2022
19:18:11
order dated 04th November, 2015, accepted the objections of the Assessee
and directed the exclusion of these four comparables on a finding of
functional diversity as well as non-availability of segmental data. While
giving effect to the directions of the DRP, the AO computed the revised
margins of the comparables after excluding the above four companies and
worked out the adjustment at 'nil'.
4. The ITAT as well in the impugned order has after examining the
financial and annual reports of each of the four comparables, concurred with
the DRP's finding that each of the four comparables are functionally
dissimilar. With respect to Accentia Technologies Ltd., the ITAT considered
that the said comparable has also been excluded in Assessee's own case in
AY 2009-10. It has also come on record that similarly, eClerxservices was
also excluded as a comparable during the AY 2009-10. The ITAT has
recorded that admittedly, there has been no change in the functions
performed by the Assessee for the earlier years and in AY 2009-10 when the
said comparables were excluded in the case of the Assessee after analyzing
its functional profile.
5. The ITAT and the DRP have thus, returned concurrent finding of facts
with respect to the functional dissimilarities of the said four comparables
with the Assessee. In the present appeal, the challenge is to the said finding
of facts and there is no perversity in the said findings. The Revenue has not
been able to demonstrate that the analysis done by ITAT and DRP while
excluding the companies suggested by Revenue from the list of
comparables, was in any manner contrary to the settled position in law.
6. This Court in Pr. Commissioner of Income Tax-9 vs. WSP
Consultants India Pvt. Ltd., 2017 SCC OnLine Del 11438 has held that
Digitally Signed By:PRAMOD
KUMAR VATS
Signing Date:23.09.2022
19:18:11
inclusion or exclusion of comparables per se cannot be treated as a question
of law unless it is demonstrated to the Court that the Tribunal took into
account irrelevant consideration or excluded irrelevant factors in the ALP
that impact significantly. In our view, the ITAT has not committed any
perversity or applied incorrect principle to the given facts and therefore, we
do not find that any substantial questions of law arise for consideration in
the present appeal. Accordingly, the same is dismissed.
MANMEET PRITAM SINGH ARORA, J
MANMOHAN, J
SEPTEMBER22, 2022/msh
Digitally Signed By:PRAMOD
KUMAR VATS
Signing Date:23.09.2022
19:18:11
