IN THE INCOME TAX APPELLATE TRIBUNAL

‘A’ BENCH, BENGALURU

BEFORE SHRI N.V.VASUDEVAN, VICE PRESIDENT

and
SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER

IT(TP)A No.1661/Bang/2016
(Assessment year:2012-13)

M/s.Zyme Solutions Pvt. Ltd.

No.459, Laksha Towers, Ashoka Pillar Road,
2nd Block, Jayanagar,
Bengaluru-560 011. … Appellant
PAN:AAACZ2465R

Vs.

Assistant Commissioner of Income-tax,

Circle 7(1)(2),
Bengaluru. … Respondent

Appellant by : Shri Padamchand Khincha, CA.

Respondent by : Shri C.H.Sundar Rao, CIT(DR)

Date of hearing : 15/10/2018

Date of pronouncement : 16/11/2018

O R D E R

Per INTURI RAMA RAO, AM :

This is an appeal filed by the assessee directed against the

assessment order passed u/s 143(3) r.w.s. 144C(13) of the Income-
tax Act, 1961 [hereinafter referred to as 'the Act' for short] by the
Assistant Commissioner of Income-tax, Circle 7(1)(2), Bengaluru for
the assessment year 2012-13.

2. The assessee-company raised the following grounds of appeal:

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2. Briefly, the facts of the case are that the appellant is a

company duly incorporated under the provisions of the Companies
Act, 1956. It is a subsidiary of Zyme Solutions Inc., USA. It is
engaged in the business of providing software services to its
Associated Enterprises (AE) on cost + markup basis. It is stated
that the nature of software services provided are in the field of data
processing services pertaining to support to data management
services with minimum application of knowledge and limited to nil
analytical and technical skills. The return of income for the
assessment year 2012-13 was filed on 28/11/2012 disclosing total
income of Rs.1,65,93,100/- under normal provisions. The said
return of income was picked up for scrutiny assessment. During the
course of scrutiny proceedings, the Assessing Officer (AO) noticed
the appellant had international transaction of providing support to
data analysis services to its AE of Rs.30,36,02,320/-. Therefore, AO
referred the matter to the Transfer Pricing Officer (TPO) for the
purpose of bench marking the above international transaction u/s
92CA(3) of the Income-tax Act, 1961 [hereinafter referred to as 'the
Act' for short].

3. The appellant submitted transfer pricing study report

classifying its activities as ITeS and software services segment and
the appellant had adopted TNMM as the most appropriate method
for the purpose of bench marking the above international
transaction. The appellant also adopted operating profit to total cost
as a profit level indicator. However, in respect of ITeS segment,
TPO had not accepted the TP study report submitted by the
appellant on the ground that the appellant has adopted multiple
year data and had not applied the filter of export revenue of more
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than 75% of sales and the employee cost filter of more than 25% of
sales and proceeded to identify different set of comparables by
adopting the following filters:

· Use of current year data.

· Companies having different financial year ending (i.e. not
March 31, 2012) or data of the company which does not fall
within 12 month period i.e. 01/04/2011 to 31/03/2012, were
rejected.

· Companies whose service income <Rs.1 cr. were excluded.

· Companies whose SWD/IT enabled Service is less than 75%

of the total operating revenues were excluded.

· Companies who have more than 25% related party

transactions of the sales were excluded.

· Companies who have export service income less than 75% of

the sales were excluded.

4. By applying above filters, TPO had rejected one comparable

out of three comparables selected by the appellant. While doing so,
TPO had rejected Datamatics Financial Services Ltd., on the ground
that financial data is not available in the public domain and the
balance two comparables viz., Jindal Intellicom Ltd., and Informed
Technologies India Ltd., were accepted by the TPO and proposed to
include the following 12 new comparables:
1) Accentia Technologies Ltd.
2) Infosys BPO Ltd.,
3) Caliber Point Business Solutions Ltd.,
4) Acropetal Technologies Ltd.,
5) Informed Technologies India Ltd.,
6) Jindal Intellicom Ltd.,
7) Microgenetic Systems Ltd.,
8) TCSE-Serve Ltd.,
9) BNR Udyog Ltd.,
10) Excel Infoways Ltd.,
11) e4e Healthcare Services Pvt. Ltd.
12) Universal Print Systems Ltd.,
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5. After considering the objections of the assessee, TPO had

finally selected the following comparables:
1. Accentia Technologies Ltd.,
2. Universal Print Systems Ltd.(Seg)(BPO)
3. Informed Technologies India Ltd.,
4. Infosys BPO Ltd.,
5. Jindal Intellicom Ltd.,
6. Microgenetic Systems Ltd.
7. TCS E-Serve Ltd.,
8. B N R Udyog Ltd.(Seg)(Medical Transcription)
9. Excel Infoways Ltd.,(Seg)(IT/BVPO)
10. e4e Healthcare Services Pvt. Ltd.,
whose arithmetical average operating margin was computed at

28.11% and after granting working capital adjustment of 0.06%,

adjusted average arithmetical mean was worked out at 28.11%.

The TPO computed ALP as under:

IT ENABLED SERVICES

Arm’s Length Mean Margin on cost 28.11%

Less: Working capital adjustment (as per -0.06%
Annex.C)
Adjusted margin 28.17%
Operating Cost 28,23,33,670
Arm’s Length Price (ALP) 36,18,67,065
128.17% of Operating Cost 30,36,02,320
Price Received 30,36,02,320
Shortfall being adjustment u/s 92CA 5,82,64,745
5% of price received 1,51,80,116
Since the shortfall is exceeding 5% of the International
Transaction, adjustment is made

Accordingly, TPO suggested upward transfer adjustment of

Rs.5,82,64,745/- u/s 92CA of the Act vide order dated 25/01/2016.

6. AO, after receipt of TPO order, had passed draft assessment

order dated 12/02/2016 proposing TP adjustment of
Rs.5,82,64,745/- and disallowance of interest on delayed payment
of TDS of Rs.7,78,870/-. The assessee-company, after receipt of
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draft assessment order, filed objections before the Hon'ble DRP
contending inter alia that very reference to TPO is not valid in law
and also contesting selection of comparables by the TPO. Hon'ble
DRP directed TPO to exclude Accentia Technologies Ltd., on the
ground of functional difference and retained all the other
comparables selected by the TPO. After receipt of directions from
the Hon'ble Hon'ble DRP, final assessment order was passed on
25/08/2016 u/s 143(3) r.w.s144C(13) of the Act.

7. Being aggrieved, the assessee-company is before us in the

present appeal.

8. Ground Nos.1 and 2 are general in nature and do not require

any adjudication. Ground Nos.3, 4, 5 & 7 are not pressed.

9. Ground No.9 challenges rejection of selection of comparables

by the TPO and also challenges appropriateness of RPT filter of more
than 25% of sales.

Learned AR of the assessee challenges M/s.Universal Print

Systems Ltd.(Seg)(BPO), M/s.TCS E-Serve Ltd., M/s.BNR Udyog
Ltd.(Seg) and M/s.Excel Infoways Ltd.,(Seg)(IT/BVPO).

11. Now, we shall deal with each of them.

11.1 Universal Print Systems Ltd.(Seg)(BPO):

This comparable was selected by TPO. The assessee has

objected its inclusion on the ground that it is not functionally
comparable, fails IT export revenue filter and also fails to pass
through export revenue filter of more than 75% and also the
employee cost filter and hence high margin. These contentions have
been rejected by TPO by saying that segmental results in respect of
pre-press BPO segmental alone to be considered, where the
employee cost is more than 40% and even 100% revenue from pre-
press BPO segmental, 100% is from ITeS services. As regards
contention of the assessee that this company earns high profit and
therefore, cannot be considered as comparable with that of the
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assessee-company has been rejected by the TPO by holding that
high profit margin by ipse facto cannot be a reason to exclude it
from list of comparables. Reliance is also placed on the decision of
the Hon’ble Delhi High Court in the case of Chryscapital Investment
Advisors (India) (P.)Ltd vs. Dy.CIT (376 ITR 183) (Delhi)

11.2 Aggrieved, assessee-company is in appeal before us in the

present appeal. It is contended before us that M/s.Universal Print
Systems Ltd., cannot be selected as comparable as it is functionally
different as it is engaged in rendering services in printing industry
and also fails employee cost filter. Reliance in this regard was
placed on the following decisions:
i. M/s XL Health Corporation India Pvt. Ltd. V. ACIT IT(TP)A No. 231
1/Bang/2016

ii. CGI Information Systems and Management Consultants Private

Ltd.-ITAT-2018(Bang)-TP

iii. First Advantage Offshore Services Pvt. Ltd. v DCIT [IT(TP)A No.
1086/Bang/2011]

11.3 On the other hand, ld.CIT(DR) opposed its exclusion.

The findings of the TPO are based on information contained in the
Annual Report and the TPO had considered only relevant segmental
details.

11.4 We heard rival submissions and perused the material on

record. The issue of comparability of M/s.Universal Print Systems
Ltd. with that of the assessee-company has been duly considered by
TPO after referring to information contained in Annual Report. The
relevant findings of the TPO had not been countenanced by learned
AR of the assessee. However, the issue of comparability of
M/s.Universal Print Systems Ltd. has also been considered by the
co-ordinate bench of this Tribunal in the case of M/s.CGI
Information Systems & Management Consultants Pvt.Ltd. vs. ACIT
in IT(TP)A No.586/Bang/2015 and 183/Bang/2017 dated
11/04/2018 wherein it was held as follows:
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“47. The next submission of the learned counsel for the Assessee was with
regard to exclusion of 2 comparable companies from the list of 7 comparable
companies that remain after the order of the DRP. The first comparable
company sought to be excluded is Universal Print Systems Ltd. This
company was chosen as a comparable company by the TPO. In reply to the
proposal of the TPO to include this company as a comparable company, the
Assessee vide its letter dated 22.12.2015 had pointed out its objections to
including this company as a comparable company. A copy of the said objection
is at page-785 of the Assessee's paper book. The Assessee pointed out that the
OP/TC of this company as worked out by the TPO at 59.40% was wrong and
unallocated costs as per the annual report should be allocated to BPO segment
and if that is done then the OP/TC of this company will be only 51.80%. The
Assessee further pointed out (Page764 of paper book) that the TPO had applied
revenue filter of more than 75% being from non-financial service income. The
Assessee pointed out that the percentage of income from ITES was only
21.63% of the total revenue from operations of this company as per its annual
report. The Assessee also pointed out that in the Pre-press BPO segment this
company was providing integrated print solutions to its customers, which
includes scanning, design/layout, trapping, hand-outlined clipping path and
image masking and magazine and catalogue publishing. The Assessee
submitted that the aforesaid services are not in the nature of ITES. The
Assessee pointed out that as per the safe harbour rules introduced by the CBDT
ITES has been defined as business process outsourcing services provided
mainly with the assistance or use of information technology. It was also
submitted that this company does not satisfy the definition of ITES as
contained in Rule IOTA(e) of the Rules. Since use of information technology is
absent .in the various services provided by this company, it cannot be regarded
as ITES company. The Assessee also submitted that this company fails the
employee cost filter. The employee cost filter requires that the employees cost
incurred by the company must be more than 25% of its revenue.
48. The TPO at page-20 of his order has dealt with the above objections by
observing as follows:

(a) Pre-Press BPO unit provides back office support services.

(b) This company has four major segments viz., Repro, Label Printing,
Offset Printing and pre-press BPO. The employee cost of pre-press
BPO was more than 25% of the revenue from pre-press BPO and
therefore the employee cost filter is satisfied in the case of this
company.
(c) On the service revenue filter viz., the requirement that a comparable
company must have revenue from rendering services of more than 75%
of its total revenue, the TPO again held that the pre-press BPO
segment's entire income is from services and therefore this objection is
not to be accepted.
49. On objections by the Assessee before the DRP, the DRP confirmed the
action of the TPO. One of the objection before the DRP was that this company
did not figure in the list of companies engaged in ITES. On this objection the
DRP held that though this company did not figure in the list of companies in
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ITES in the main search of capital line and prowess database but on a
segmental search these two companies satisfied the requirement of being
considered as companies engaged in providing ITES.
50. Aggrieved by the directions of the DRP, the Assessee is in appeal before
the Tribunal. The learned counsel for the Assessee reiterated submissions that
were made before the TPO/DRP. In particular it was submitted that the service
revenue filter was applied by the TPO himself at the entity level and on such
search this company was not regarded as engaged in providing ITES. At this
stage the TPO ought to have dropped this company as a comparable company
because this filter has to be applied at the entity level and not at the segmental
level. The learned DR submitted that if the service revenue filter is applied at
the segmental level there can be no objection by the Assessee. She relied on the
order of the DRP/TPQ.
51. The requirements of Rule 10B(1)(2) & (3) of the Rules in the matter of
comparability of companies under TNMM needs to be seen. The same reads as
follows:
"10B. (1) For the purposes, of sub-section (2) of section 92C, the arm's
length price in relation to an international transaction shall be determined
by any of the following methods, being the most appropriate method, in
the following manner, namely:—

(a) to (d)** ** **
(e) transactional-margin method, by which,

(i) the net profit margin realised by the enterprise from an international
transaction entered into with an associated enterprise is computed in
relation to costs incurred or sales effected or assets employed or to be
employed by the enterprise or having regard to any other relevant base;
(ii) the net profit margin realised by the enterprise or by an unrelated
enterprise from a comparable uncontrolled transaction or a number of
such transactions is computed having regard to the same base;
(iii) the net profit margin referred to in sub-clause (if) arising in comparable
uncontrolled transactions is adjusted to take into account the
differences, if any, between the international transaction and the
comparable uncontrolled transactions, or between the enterprises
entering into such transactions, which could materially affect the
amount of net profit margin in the open market;
(iv) the net profit margin realised by the enterprise and referred to in sub-
clause (i) is established to be the same as the net profit margin referred
to in sub-clause (iii);
(v) the net profit margin thus established is then taken into account to
arrive at an arm's length price in relation to the international
transaction.
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(2) For the purposes of sub-rule (1), the comparability of an international
transaction with an uncontrolled transaction shall be judged with reference
to the following, namely:-

(a) the specific characteristics of the property transferred or services

provided in either transaction;
(b) the functions performed, taking into account assets employed or to be
employed and the risks assumed, by the respective parties to the
transactions;
(c) the contractual terms (whether or not such terms are formal or in
writing) of the transactions which lay down explicitly or implicitly how
the responsibilities, risks and benefits are to be divided between the
respective parties to the transactions;
(d) conditions prevailing in the markets in which the respective parties to
the transactions operate, including the geographical location and size of
the markets, the laws and Government orders in force, costs of labour
and capital in the markets, overall economic development and level of
competition and whether die markets are wholesale or retail.
(3) An uncontrolled transaction shall be comparable to an international
transaction if-

(i) none of the differences, if any, between the transactions being

compared, or between the enterprises entering into such transactions
are likely to materially affect the price or cost charged or paid in, or the
profit arising from, such transactions in the open market; or
(ii) reasonably accurate adjustments can be made to eliminate the material
effects of such differences."
52. There appears to be no bar in the Rules referred to above to considering
segmental data under TNMM because the comparison is of "net profit margin
realized by the enterprise from an international transaction" with the "net profit
realized from a comparable uncontrolled transaction". Therefore comparison is
of similar transaction. When segmental information is available and is not
disputed, it cannot be argued that filters have to be applied at entity level. It
cannot be argued that when the TPO himself applied the filters at the entity
level he was not entitled to apply the filters at segmental level. As we have
already stated if clear segmental information is available the filters can be
applied at the segmental level in TNMM. Therefore the objection with regard
to this company failing the employee cost filter and service revenue filter in
our view was rightly rejected by the TPO and DRP. It is however seen that this
company has four segments viz., Repro. Label Printing, Offset Printing and
Pre-press BPO. Whether the label printing and offset printing segments
supplement the functions performed in the Pre-press BPO segment has to be
seen. We therefore set aside the order of the DRP in this regard and remand for
fresh consideration by the TPO the comparability of this company. In terms of
Rule 10B(3) of the rules the profit margins of Pre-Press BPO have to be
adjusted taking into account the fact that two other segments supplement the
pre-press BPO segment. If such adjustment cannot be reasonably or accurately
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made then this company has to be excluded from the list of comparable
companies. The TPO for this purpose can use his powers u/s. 133(6) of the Act
to get required details from this company. As far as the argument that this
company fails functional comparability, we find that none of the objections
raised by the Assessee in this regard about lack of information about allied
services performed by die pre-press BPO segment of this company and the
break-up of the revenue from such allied services have been dealt with
specifically by the TPO or DRP. Since the comparability of this company is
being remanded to be TPO for consideration of adjustments as mentioned
above, the objection with regard to functional comparability should also be
looked into by the TPO in the remand proceedings on the basis of materials
which he may gather u/s. 133(6) of the Act, The Assessee should be given
opportunity of being heard by the TPO before the issue is decided by the
TPO.”
Respectfully following the decision, we remand this comparable to
the file of the TPO/AO for fresh adjudication on the above lines.

12. TCS E Service Ltd.:

This company was selected by the TPO and objected by the
assessee for inclusion in the list of comparables on the ground that
it is functionally different as it is engaged in the business of BPO,
banking, finance, insurance domain. This contention was rejected
by the TPO by holding that it is engaged in BPO, business of
banking, finance, insurance domain, which are purely in the nature
of ITeS. Even the Hon'ble DRP confirmed the findings of the TPO.

12.1 Being aggrieved, the assessee is before us contending that

this company is functionally different as it is engaged in diversified
business activities of BPO such as banking, finance, insurance.
Learned AR of the assessee has also drawn our attention to the
Annual Report placed at pages 563 to 563 of the paper book and
reliance in this regard was placed on the following decisions:

Turnover Filter:
i. McAfee Software (India) Pvt Ltd US-136-ITAT-2016(Bang)-TP]
ii. Swiss Re Global Business Solutions India Private Limited FS-307-
ITAT-2017(Bang)

Functionally different filter:

i. M/s XL Health Corporation India Pvt. Ltd. v. ACIT IT (TP)A No.
2311/Bang/2016
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ii. Baxter India Pvt. Ltd. V. ACIT ITA No.6158/Del/2016

iii. CGI Information Systems and Management Consultants Private Ltd.

vs ACIT-TS-320-ITAT-2018(Bang)

12.2 On the other hand, ld.CIT(DR) opposed its exclusion. He

submitted that this company is engaged in KPO services and there is
no difference between KPO and ITeS.

12.3 We have heard rival submissions and perused material on

record. The issue of comparability of this company was considered
by the co-ordinate bench of Tribunal in the case of M/s.XLHealth
Corporation India Pvt. Ltd. vs. ACIT in IT(TP)A No.2311/Bang/2016
dated 09/02/2018. The relevant findings of the Tribunal are as
under:
“. . . . We have heard the rival submissions and perused the material on record.
From the perusal of the Annual Report of this entity placed at page nos. 583 to
678 of paper book, at page no. 604 it is stated as under.
“2. COMPANY OVERVIEW
Your Company, along with its subsidiary companies - TCS e-
Serve International Limited and TCS e-Serve America Inc.,
is primarily engaged in the business of providing Business
Process Services (BPO) for its customers in Banking,
Financial Services and Insurance domain.

The Company's operations include delivering core business

processing services, analytics & insights (KPO) and support
services for both data and voice processes.

Your Company is an integral part of the Tata Consultancy

Services' (TCS) strategy to build on its 'Full Services
Offerings' that offer global customers an integrated portfolio
of services ranging from IT services to BPO services.

The Company provides its services from various processing

facilities, backed by a robust and scalable infrastructure
network tailored to meet clients' needs. A detailed Business
Continuity Plan has also been put in place to ensure the
services are provided to the customers without any
disruptions.”

Thus, this company is also stated to be a Knowledge Process Outsourcing and

therefore for the reasons stated by us while dealing with this issue of comparability of
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the company Infosys BPO Ltd. shall equally hold good and therefore we direct the
AO/TPO to exclude this company from the list of comparables.”
Since the appellant company is into low end BPO, it cannot be
compared with KPO service provider.

12.4 Respectfully following the decision of the co-ordinate bench

of Tribunal, we direct for exclusion of this company from the list of
comparable.

13. BNR Udyog Ltd:

This company was selected by the TPO and objected by the
assessee on the ground that it fails to pass through RPT filter. Even
before the Hon'ble DRP, the same contention was urged. Hon'ble
DRP confirmed the finding of the TPO that segmental data pertaining
to BPO concern was considered and there are no RPT transactions
and hence, confirmed its inclusion.

13.1 Being aggrieved, the assessee is before us in the present

appeal. The issue of comparability of this company was dealt with
by the co-ordinate bench of this Tribunal in the case of M/s.CGI
Information Systems & Management Consultants Pvt.Ltd.(supra).
The relevant findings are as follows:

“53. The next comparable company retained after the order of the
DRP which the Assessee seeks to exclude is BNR Udyog Ltd. As
far as this company is concerned, it was the objection of the
Assessee before the TPO that the TPO ought not to have selected
this company as comparable company for the reason that the
related party transaction of this company at the entity level was
49.60% of the total revenue and that this company has less than-
75%-of its revenue from providing TTES. The TPO rejected The
above contention by holding that this company has 3 major
business segments and the segmental results of medical
transcription business which is providing 1TES alone was
considered for die purpose of comparison. When the segmental
results are considered the related party transaction is nil. 100% of
the segmental income was from providing 1TES, i.e., emedical
transcription and therefore 75% revenue is from providing ITES
and therefore the company passes the test of income from
providing ITES being more than 75% of the total income. The DRP
accepted the view of the TPO.
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54. The submission of the learned counsel for me Assessee was
identical as were made before the TPO and DRP. We have while
deciding the objection with regard to excluding Universal Print
Systems Ltd., already held that when clear segmental information
is available then there is no bar in applying filters at the segmental
level. The reasons given while coming to the above conclusion will
equally apply to including BNR Udyog Ltd., as a comparable.
Since this company passes RPT filter as well as income from
providing ITES being more than 75% of its revenue, this company
has to be regarded as comparable company. No other arguments
were advanced for exclusion of this company. Hence this company
is held to be comparable with that of the Assessee.”

13.2 Respectfully following the decision of the co-ordinate bench,

we direct the AO/TPO to include this company in the list of

comparables.

14. Excel Infoways Ltd.:

This company was selected by the TPO and objected by the

assessee on the ground that its functions are not comparable with
that of the assessee-company as it provides high-end BPO services
and also fails employee cost i.e. 13.24%. Even before the Hon'ble
DRP, it was urged that the company has diminishing revenue in BPO
segment including peculiar economic circumstances and also fails
employee cost. However, Hon'ble DRP had confirmed the findings of
the TPO by holding as under:

“vi. Excel Infoways Ltd.: This company was objected to on the

ground of failure in employee cost filter of 25%. The TPO has
taken the segmental data of the company for ITES/BPO services
segment. There is no dispute by the assessee as to the amount
of Rs.202.15 lakhs being employee cost for this segment. But
the assessee claims that attributing the whole amount as
employee cost elating to ITES segment is unreasonable.
However, the TPO has obtained information from the company
u/s 13396), which has been shared with the assessee, and has
worked out employee cost at 26%. Though the assessee has
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challenged the reliability of information collected u/s 133(6), the
same cannot be accepted and has been dealt with separately in
this order. Hence, the objection of the assessee is rejected.”

14.1 Being aggrieved, the assessee is before us in the present

appeal. Even before us, learned AR of the assessee re-iterated the
same contentions and also placed reliance on the following
decisions:
i. CGI Information Systems and Management Consultants Private Ltd.,
vs ACIT-TS-320-ITAT-2018(Bang)-

ii. Baxter India Pvt. Ltd. v. ACIT ITA No.6158/Del/2016

14.2 On the other hand, ld.CIT(DR) has placed reliance on the

orders of the lower authorities.

14.3 We heard rival submissions and perused the material on

record. The contention as regards employee cost filter, nothing was
shown to us that the findings of the TPO or Hon'ble DRP are contrary
to the material on record. However, as regards diminishing revenue
filter, this filter was never applied by the TPO, needless to say
application of new filter is not permissible at a later stage.
Regarding reliance placed on the decision of the co-ordinate bench
of Tribunal in the case of M/s.CGI Information Systems &
Management Consultants Pvt.Ltd.(supra), from the perusal of the
para.45 of the order, we find that the Tribunal placed reliance on
earlier decision in Baxter (I) (P.) Ltd. (supra) had deleted this
company from the list of comparables on the ground that it is
engaged in the business of software testing, verification and
validation of software.

14.4 We have perused the Annual Report placed at page 577 to

580 of the paper book. The business of this company was stated as
under:
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Even in Schedule to the balance sheet placed at page 584 of the

paper book, revenue from BPO surplus alone shown which clearly
goes to establish that the company is engaged in ITeS segment and
therefore, we do not find any reason to exclude this company from
the list of comparables. Accordingly, we confirm inclusion of this
company in the list of comparable.

14.5 Learned AR of the assessee had not pressed other

comparables such as Informed Technologies, Infosys BPO Ltd.,
Jindal Intellicom Ltd., Microgenetic Systems Ltd and e4e Healthcare
Services Pvt. Ltd.

15. The next ground of appeal relates to working capital

adjustment. Learned AR of the assessee submitted that the TPO was
not justified in considering negative working capital adjustment.
The Hon'ble DRP confirmed the negative working capital adjustment.
Even before us, it is urged that there was no need of making any
negative working capital adjustment. We find merit in the
contention of the learned AR of the assessee as there was no need
for making any negative working capital adjustment as held y the
co-ordinate bench of Tribunal in the case of NTT DATA India
Enterprise Application Services (P.) Ltd. vs. Asst.CIT (55
taxman.com 221)

16. The next ground of appeal relates to risk adjustment. As

regards risk adjustment, we find that this issue was not raised
before the TPO. It is only before Hon’ble DRP, a claim was made
towards risk adjustment. Written submissions were filed before
Hon'ble DRP are placed at pages 474 to 479 of the paper book.
Hon'ble DRP held that no accurate adjustment can be made in this
case. Even before Hon'ble DRP, no working of risk adjustment was
 IT(TP)A No.1661/Bang/2016

Page 18 of 18
furnished. We do not find any reason to interfere with the findings
of the Hon'ble DRP. Accordingly, we dismiss this ground of appeal.

17. In the result, the appeal filed by the assessee is partly

allowed.

Order pronounced in the open court on 16th November, 2018

sd/- sd/-
(N.V.VASUDEVAN) (INTURI RAMA RAO)
VICE PRESIDENT ACCOUNTANT MEMBER
Place : Bengaluru.
D a t e d : 16/11/2018
srinivasulu, sps
Copy to :
1 Appellant
2 Respondent
3 CIT(A)
4 CIT
5 DR, ITAT, Bangalore.
6 Guard file
By order

Assistant Registrar
Income-tax Appellate Tribunal
Bangalore