Income Tax Appellate Tribunal Delhi Jcit, New Delhi vs M/S. Steria India Pvt. Ltd., Noida on 17 November, 2020 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH 'I2' NEW DLEHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA No. 512 & 511/Del/2016 Assessment Years: 201011 & 201112 JCIT, Spcl. Range8, vs. Steria India Pvt. Ltd., New Delhi. Sea View Special Eclonomic Zone, Building4, Plot 2021, Sector 135, Gautam Budh Nagar, Noida. PAN : AAACX0385L (Appellant) (Respondent) Appellant by : Sh. Anupam Kant Garg, CIT/DR Respondent by: Sh. Neeraj Jain, Advocate & Sh. RamitKatyal, Advocate Date of hearing: 19/10/2020 Date of order : 17/11/2020 ORDER PER K. NARASIMHA CHARY, J.M. Challenging the final assessment orders dated 30.11.2015 u/s. 143(3) read with section 144C and directions of DRP dated 20.10.2015 in the case of M/s. Steria India Pvt. Ltd. ("the assessee"), Revenue filed these appeals for assessment years 201011 and 201112. Since identical issues are involved in both these appeals, we deem it just and convenient to dispose of these appeals by way of this common order. 2. Brief facts of the case, as could be culled out from the record are that, the assessee is a subsidiary of Steria UK Corporate Ltd., UK, an I.T. service company in the United Kingdom. The assessee provides both 2 software and ITES services to its associated enterprises. For the assessment years under consideration, the assessee reported international transactions interalia on account of provision of IT enabled services and software services. 3. During the financial yearrelevant for AY 201011, the assessee entered into the international transaction of provision of IT enabled services amounting to Rs. 1,298,559,298 with its associated enterprises. Assessee considered the FOREX Fluctuation as operating income/expense the Transactional Net Margin Method (TNMM) was selected as the most appropriate method for the purpose of benchmarking the international transaction of ITES, and on that score the OP/OC of the assessee was 18.10% whereas the average OP/OC of the comparable companies selected by the assessee was 11.79%. Assessee, accordingly, treated thatthe international transaction of provision of IT enabled services was at arm's length price. 4. Ld. TPO, however, computed the operating margin of the assessee at 1.90% considering FOREX Fluctuation as nonoperating income/expense, and after conducting a fresh search for comparable companies, Ld. TPO arrived at the following set of comparables: (Adjusted S. No. Company Name OP/OC) (%) 1. Accentia Technologies 42.94% 2. Cosmic Global Ltd. 22.94% 3. E4e Healthcare 34.23% 3 4. Fortune Infotech Ltd 24.09% 5. I_Gate Global Ltd 26.79% 6. Infosys BPO Ltd. 32.87% 7. Jindal Intellicom Ltd. 17.60% 8. Omega Heatlhcare 17.43% 9. TCS E Serve International Ltd 58.08% 10. TCS E Serve Ltd 67.92% 11. Microland Ltd. 0.38% Arithmetic Mean 31.39% 5. Ld. TPO, accordingly, proposed an adjustment of Rs. 37,57,42,930 on account of the difference in the arms length price of the international transaction of provision of IT Enabled Service segment. 6. Assessee filed objections before the Ld. DRP and prayed for exclusion of certain companies from the list of comparables. Ld. DRP, after considering the submissions made on behalf of the assessee, vide order dated 20.10.2015, directed the TPO to consider FOREX fluctuation as operating income/expense and to exclude the following companies from the set of comparables: a) Infosys BPO Ltd. b) TCS EServe Ltd. c) TCS EServe International Ltd