Company with huge asset base cannot be compared with company having insignificant assets

Evalueserve.com Pvt. Ltd. Vs DCIT (ITAT Delhi)

We find that TCS E-serve Ltd. like Infosys BPO is a giant company which has high brand value and intangibles and in terms of risk profile, skill, nature of service, revenue etc. this comparable has been rejected in various judicial rulings. The turnover of TCS is more than Rs. 1578 crore and this company is having huge assets and is under taking high risk which have direct impact on turnover and in profitability. If a company is having huge asset base, brand value, goodwill and presence in global market with significant R & D, then it cannot be compared with a company which is purely captive service provider in ITeS/BPO, having low risk and insignificant assets. Even the deployment of human resources shows that TCS has 14,785 employees whereas the assessee has 1163 employees. This factor itself shows that in the terms of human resources, there is huge difference in the assets deployed.

Now there is latest judgment of Hon’ble Delhi High Court dated 24t^h July, 2019 in the case of M/s. Avaya India Pvt. Ltd. vs. ACIT in ITA no. 532/2019 which had considered the comparability of TCS E-serve Ltd. and TCS serve International Ltd. with the company providing ITeS services.

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.

FULL TEXT OF THE ITAT JUDGEMENT

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