PER PARTHA SARATHI CHAUDHURY, JM : This appeal preferred by the assessee emanates from the order of the Ld. CIT(Appeal)-13, Pune dated 27.12.2016 for the assessment year 2012-13 as per the grounds of appeal on record.

2. On perusal of the grounds of appeal filed by the assessee, it is noted that the assessee has preferred 7 grounds of the appeal before us. However at the time of hearing, the Ld. AR of the assessee submitted that he is only pressing ground no. 4, whereas the rest of ITA No. 377/PUN/2017 A.Y.2012-13 the grounds are not pressed. Therefore, the rest of the grounds are dismissed as not pressed. The ground No. 4 is as under:-

4. On the facts and in the circumstances of the case and in law, the honourable CIT (Appeal) - 13, Pune erred in confirming the inclusion of Universal Print Systems Limited in the list of comparable companies by the learned TPO without appreciating the fact that: a) The said company is not comparable with the appellant since the functions performed by the company are different than that performed by the appellant and the scale of operations and turnover of the said company is substantially higher than that of the appellant. b) The revenue from ITES segment is 21.63% of the total revenue and it does not satisfy the filter, "companies with income from IT enabled services > 50% of the operating revenue or segmental revenue are selected", introduced by the learned TPO.

3. The brief facts are that the assessee is wholly owned subsidiary of Credit Pointe owned, USA. The assessee is engaged in the provision of IT enable back office services related to data compilation, cleaning and structuring. The assessee also provides allied software development services linked to the data compilation and structuring activity.

4. The Ld.A.R. at the time of hearing also demonstrated from the Credit Point Services Pvt. Ltd analysis and report for FY 2011-12 at page no. 51 of the paper book wherein the exact services rendered by ITA No. 377/PUN/2017 A.Y.2012-13 the assessee is mentioned in para no. 2.2.1 of the said report which states that Credit Pointe has entered into international services agreement with Credit pointe US to provide support Services (Data processing and ancillary software Development). The scope of the said agreement requires Credit Pointe to provide Support Services (Data processing and ancillary software Development) in the nature of organizing /cleaning the data to suit the requirement of the Credit Pointe US at large and ancillary software development for integrating the said data into the systems of Credit Pointe US. The Credit Pointe India is remunerated on the basis of cost plus mark up of 9.95% for this category of service.

5. As per the TP report, eight (8) companies were selected by the assessee as comparable. However, the TPO rejected all the eight companies and started afresh search and accordingly provided a new set of comparables with the functions of the assessee in which the Universal Print Systems Ltd was also included. Even it was objected by the assessee, however in the final set of comparables, Universal Print Systems Ltd was taken as comparables with that of the functions of the assessee. Assessee objected that it is having less than 50% of the operating revenue from ITes segment, hence it is not comparable with it. Ld. TPO stated that this criteria is applicable only if the segmental revenue is not given and in this case the details of segment profit are given. Hence, the TPO did not accept the assessees objection. Before Ld. CIT(A), assessee has made the following submissions:- Universal Print Systems Ltd. (Prepress BPO Segment):- Your honour has introduced prepress BPO segment of Universal Systems Ltd in the list of comparables. The assessee wishes to state that the company Universal Print Systems Limited is not comparable to the assessee, due to the following reasons:- ITA No. 377/PUN/2017 A.Y.2012-13 Criteria of ITES segment> 50% of Operating Revenue: The assessee wishes to state that the company does not satisfy the selection criteria for the comparables with "Income from ITES > 50% of the Operating Revenue or Segmental Revenue are selected. adopted by your honour yourself. The income of company Universal Print Systems Limited from ITES segment as per the annual report is 21.63% of the total operating revenue or segmental revenue. The calculation is as under: Sr I Particulars Amount I No ! A) Revenue from ITES segment 6,17,67,000 I B) Total Operating or Segmental Revenue 28,55,14,000 C) Percentage of [TES / TotaL Revenue 21.63% The assessee wishes to state that Universal Print Systems Limited is not functionally comparable to the assessee. The assessee provides support services in the nature of data entry, data compilation data cleaning and data structuring to suit the requirements of the Credit Pointe Inc. Us. Universal Print Systems Limited derives its revenues mainly from "Pre press BPO" activity. The prepress BPO activity includes all the processes and procedures that occur between the creation of print layout and the final printing Hence, the assessee wishes to state that Universal Print Systems Limited is not functionally comparable to the assessee.

3. High-end ITES services: Universal Print Systems Limited provides much specialized services which require expertise and skilled workforce in these fields unlike ITeS activities undertaken by the assessee. The company Universal Print Systems Limited requires skilled and talented employees can be observedfrom their site: Cutting edge infrastructure & a highly skilled workforce ensure that the best possible results are achieved from any graphic input .... " The assessee provides support services in the nature of data entry, data compilation data cleaning and data structuring to suit the requirements of the Credit Pointe Inc. Us. The assessee is not required to apply any technical knowledge or experience in performing the above stated functions. In the view of above, the assessee requests your honour to kindly exclude Universal Print Systems Limitedfrom the set of comparables.

4. Super Normal Profit: , The assessee wishes to state that the company Universal Print Systems Limited has a PLIof 59.40%, which is super normal considering the line of the business of the assessee. Hence, the assessee wishes to exclude company having a super normal profit from the final set of comparables " However the Learned TPO did not accept the contention of the appellant TPO stated that the criteria of ITES segment> 50% of Operating Revenue is applicable only if the segment revenue is not given. The said contention of the Learned TPO amounts to cherry picking of the company which is convenient to the Learned TPO. The Learned TPO did not comment on the functional difference as pointed out by the appellant. Hence the appellant requests your honour to remove Universal Print Systems Limited from the final list of cornparables and recalculate the arms length price. If the above contention of the appellant is not accepted, the appellant requests your honour to calculate PLI after Working Capital Adjustments at 39.94% as per ground of ITA No. 377/PUN/2017 A.Y.2012-13 appeal no. 9(c). The learned TPO had accepted the appellants contention that working capital adjustment is to be allowed. However, the learned TPO did not consider the same while calculating the PLI after Working Capital Adjustments. The copy of calculation of PLI after Working Capital Adjustments is appearing on page no. 129 of the paper book. The Appellant prayed that the correct PLI after WCA of Universal Print Systems Ltd. be taken i.e. 39.94% for the purpose of calculating average PLI and arms length price be recomputed. The appellant requested to exclude Universal Print Systems Limited in the list of comparable companies as the revenue from ITES segment is 21.63% of the total revenue and it does not satisfy the said filter introduced by the learned TP The Ld. CIT(A) after considering the facts of the case, the submissions of the assessee has upheld the order of the TPO including thereby Universal Print Systems Ltd in the list of comparables companies.

6. At the time of hearing, the Ld.A.R. vehemently argued that the Universal Print Systems Ltd is functionally different from that of the assessee and further submitted that neither the TPO nor the Ld. CIT(A) in their respective orders have discussed and analysed the functional details of Universal Print Systems Ltd while holding it to be a comparable company with that of the assessee. The Ld.A.R. also placed reliance on the decision of the Bangalore Tribunal in the case of M/s XL Health Corporation India Pvt. ltd. Vrs. ACIT 2018 (4) TMI 82, wherein it was held that Universal Print Systems Ltd is to be excluded from the list of comparables.

7. The Ld. DR, per contra, placed reliance on the orders of Sub- ordinate Authorities.

8. We have perused the case records and heard the rival contentions and have given considerable thought on the records and ITA No. 377/PUN/2017 A.Y.2012-13 relevant documents placed before us. From the facts on record and more specifically from the Transfer Pricing Index and report of the assessee, the details of functional structure is provided and after perusal of the orders of the TPO and the Ld. CIT(A), we find that there is no specific findings as to the analysis regarding the functioning of Universal Print Systems Ltd vis a vis the function of the assessee company before holding it to be a comparable company. In the decision of the Bangalore Tribunal in the case of M/s XL Health Corporation India Pvt. ltd. Vrs. ACIT 2018 (4) TMI 82, it was held as under :- C. Universal Print Systems Ltd.:- This company was selected by the TPO by obtaining information by exercising of the power vested with him under the provisions of section 133(6) of the. The TPO held that this company satisfies all the filters selected by him. However this company was objected by the assessee-company before the TPO on the grounds of functional differences as it is engaged in the business activities such as printing and allied activities, high profit making company and also fails the employee cost filter, the objections of the assessee-company were over ruled by the TPO by holding as under: "Counter to the objection on Functional Comparability: The functions of the comparable are similar in the sense that the. Pre- Press BPO unit provides back office support services. Counter to the objection on High Margins: Reliance is placed on the decisions of the Honble Delhi High Court in the case of Chryscapital Investment Advisors and the Delhi Tribunal in Nokia India Pvt Ltd (ITA No. 24210/2010). Counter to the objection on Employee Cost Filter: The company operates in four major segments viz., Repro, Label Printing, Offset Printing and Pre-press BPO and for our study, only the Pre-press BPO segment has been considered. Therefore, filters are to be applied only on the figures of this segment. The company was specifically asked to furnish the details of employee cost U/S 133(6) of the. Vide its letter dated 18/12/2015, the company has furnished P&L a/c of Pre press BPO segment, from which it is seen that the employee cost relating to Pre-Press BPO segment is Rs. 268. 76(Lacs). The employee cost of Rs 268.76(Lacs) turnover of Rs 611.96 (Lakhs) works out to 44%. Therefore, this comparable clears the employee- cost filter. The response received from the company u/s 133(6) of the has been attached with this order. (Annexure-G) The TPO has used only current data for the F.Y 2011-12. The corrected margin is 52.46%." The Honble DRP also confirmed the findings of TPO. ITA No. 377/PUN/2017 A.Y.2012-13 ii) Being aggrieved, the assessee-company is before us. It is contended by the assessee that this company fail revenue filter more than 75% from ITES segment and also functionally not comparable with that of the assessee-company and also fails the filter of earnings from export against 75% of the total revenue and also fails the employee cost filter as employee cost is only 18.56% of the sales. iii) We heard the rival submissions and perused the material on record. We have perused the Annual Report of this company placed at pages 352 to 463 of paper book. From the page no. 354 it is stated as under. "In 2011-12, Your Company faced many challenges ranging from historically steep fuel price increases, non-availability of power throughout the year and high raw material costs. The Labels and Offset divisions in particular were negatively impacted due to non-availability of power. Tamil Nadu on the whole, faced drastic power outages and restrictions, which were mainly directed at industries in order to keep the vote banks happy. The two divisions saw as much as 6 hours of power cuts in a day in addition to two days of power holidays" in a week. Although this situation is expected to ease in the coming months, it has had an adverse impact on operations in 2011-12. The periodic fuel price increases through our 2011-12 not just ensured high inflation cutting across every input element, but also adversely affected our cost of captive power generation which became the only source of power during certain periods in 2011-12. In addition, procurement cost of raw materials such as paper, film and ink rose substantially along with, market expectation regarding price reduction of printed products." From this it is very clear that this company is into the business of printers whereas the assessee-company is into the Business Process Outsourcing. Therefore by no structure of imagination these two companies can be considered to be functionally similar and therefore we direct the AO I TPO to exclude this company from the list of comparables.

9. Therefore respectfully following the decision of the coordinate Bench of Bangalore Tribunal in the aforesaid case, we direct the AO/TPO to exclude the Universal Print System Ltd from the list of comparables with regard to the assessee herein. ITA No. 377/PUN/2017 A.Y.2012-13

10. In the result, appeal of the assessee is partly allowed. Order pronounced on 12 th March, 2019. Sd/- Sd/- R. S. SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER / Pune;  / Dated : 12 th March, 2019. dks ! "$% &% / Copy of the Order forwarded to :

1.  / The Appellant. 2.  / The Respondent.

3. The CIT(Appeal)-1, Nashik.

4. The Pr. CIT-1, Nashik.

5. " %%&,  &, *, / DR, ITAT, B Bench, Pune.

6. - / Guard File. // True Copy // / BY ORDER, % & / Private Secretary  &, / ITAT, Pune.