A comprehensive cases summary of Captive Service Providers_January '19 to July '19.

1. Low High
1
Black Rock
Services India (P.)
Ltd. v ITO [2019]
107 taxmann.com
93 (Delhi - Trib.)
ITES TNMM
2010-11
2011-12
12% 26.61%
Partly in
Favour of
Assessee
1. Accentia
Technologies Ltd.
2. Infosys BPO
3. TCS E-Serve
International Ltd.
4. E-Clerx Services Ltd.
Companies providing or having:
1. healthcare and management services and LPO services
2. huge brand value
3. outsourced services for healthcare industry
4. KPO services
could not be considered as comparables.
NA NA
SDS TNMM 10.15 24.48% Assessee
1. Helios and
Matheson
Informational
Technology Ltd
ITES TNMM 11.76 22.20% Assessee
1. Informed
Technologies
2. Maple E solutions
CASES SUMMARY ON CAPTIVE SERVICE PROVIDERS_2019
CA. REETIKA G AGARWAL
NA
NA
NA
NA
ITeS Segment: Companies providing or having:
1. wide fluctuations in margins with wide fluctuation in
revenue generation
2. abnormal profit margins in comparison to profit margins
of preceding and succeeding years
3. fluctuating ratio of increase in employee cost
4. increase in sales was disproportionate to costs incurred
and did not reflect a normal business trend
5. company engaged in call centre activities
Sales Support Services Segment - Companies engaged in
1. rendering of services and training,
2. call centre activities
3. event business
4. technical assistance, HRD and institutional development
projects
5. implementation of rural electrification projects
could not be considered as comparables
1. Working
Capital
Adjustment
2. Risk
Adjustment
On Risk
Adjustment:
1. Philips
Software
Centre (P.) Ltd.
v. Asstt. CIT
[2008] 119 TTJ
(Bang) 721
2. M/s. Sony
India (P) Ltd. v.
DCIT (2008) 114
ITD 448 (Delhi
ITAT)
Other Adjustments allowed to
the assessee
Companies excluded
by ITAT/HC/SC
ITAT/HC/SC Decision
Adjustments
Cases relied
upon towards
such
adjustments
Revenue Authorities' Margins/
Range
Range of Margin
BMC Software
India (P.) Ltd. v.
Dy. CIT [2019] 104
taxmann.com 373
(Pune - Trib.)
S.
N.
Case Name with
Citation
Services
Method
Used
2
AYs
Assessee's
Margin
Margin
In Favour of
Assessee/
Revenue
2007-08
ITES TNMM 11.76 22.20% Assessee
1. Informed
Technologies
2. Maple E solutions
MSS TNMM 10.34 24.19% Assessee
1. Cyber Media Events
Ltd
2. Educational
Consultants India Ltd
3. NTPC Electric Supply
Co Ltd
4. ICRA Online Ltd
3
Capstone
Securities Analysis
(P.) Ltd. v. Dy. CIT,
Pune [2019] 105
taxmann.com 62
(Pune - Trib.)
ITES TNMM 2011-12 4.07% 13.65%
Partly in
favor of
Assessee
1. Accentia
Technologies Ltd.
Companies providing KPO services
could not be considered as comparables.
1. Working
Capital
Adjustment
NA
NA
NA
NA
ITeS Segment: Companies providing or having:
1. wide fluctuations in margins with wide fluctuation in
revenue generation
2. abnormal profit margins in comparison to profit margins
of preceding and succeeding years
3. fluctuating ratio of increase in employee cost
4. increase in sales was disproportionate to costs incurred
and did not reflect a normal business trend
5. company engaged in call centre activities
Sales Support Services Segment - Companies engaged in
1. rendering of services and training,
2. call centre activities
3. event business
4. technical assistance, HRD and institutional development
projects
5. implementation of rural electrification projects
could not be considered as comparables
1. Working
Capital
Adjustment
2. Risk
Adjustment
On Risk
Adjustment:
1. Philips
Software
Centre (P.) Ltd.
v. Asstt. CIT
[2008] 119 TTJ
(Bang) 721
2. M/s. Sony
India (P) Ltd. v.
DCIT (2008) 114
ITD 448 (Delhi
ITAT)
BMC Software
India (P.) Ltd. v.
Dy. CIT [2019] 104
taxmann.com 373
(Pune - Trib.)
2 2007-08
Page 1

2. Low High
Other Adjustments allowed to
the assessee
Companies excluded
by ITAT/HC/SC
ITAT/HC/SC Decision
Adjustments
Cases relied
upon towards
such
adjustments
Revenue Authorities' Margins/
Range
Range of MarginS.
N.
Case Name with
Citation
Services
Method
Used
AYs
Assessee's
Margin
Margin
In Favour of
Assessee/
Revenue
4
Carlyle India
Advisors (P.) Ltd.
v. ITO, Mumbai
[2019] 104
taxmann.com 332
(Mumbai - Trib.)
Investment
advisory
TNMM
2012-13
2013-14
15.00% 46.76% 29.78% 61.21% Assessee
1. Ladderup Corporate
Advisory (P.) Ltd.
2. e-clerx Services Ltd.
3. Hartron
Communications Ltd.
4. Acropetal
Technologies Limited
(by DRP)
5. Excel Infoways
Limited (by DRP)
6. MPS Ltd. (by DRP)
7. IRIS Business
Services Ltd. (by DRP)
Companies providing or having:
1. research and survey,
2. merchant banking
3. investment banking,
4. KPO and BPO services
5. abnormal fluctuation in margins
could not be considered as comparables
NA NA
5
Dy. CIT v Siemens
Power Engg. (P.)
Ltd. [2019] 107
taxmann.com 73
(Delhi - Trib.)
SDS TNMM 2008-09 14.35% 28.26% 12.68 40.81% Assessee
1. Alphageo
2. Stup Consultants
Pvt. Ltd
Companies providing:
1. seismic services of design and preplanning of 2D and 3D
surveys, etc., for offshore drilling
2. consultancy services
could not be considered as comparables
1. Working
Capital
Adjustment
NA
1. Infosys Ltd.
2. Kals Information
systems Ltd.
1. Companies engaged in diversified activities of business,
having huge deployment of capital, resources and brand
name could not be considered as comparables
2. Company whose software segment included revenues
from software and training could not be considered as
comparables
1. Working
Capital
Adjustment
NA6
Giesecke &
Devrient (India)
(P.) Ltd. v Dy CIT
[2019] 106
taxmann.com 14
(Delhi - Trib.)
TNMM
Partly in
Favour of
Assessee
2009-10
5
Dy. CIT v Siemens
Power Engg. (P.)
Ltd. [2019] 107
taxmann.com 73
(Delhi - Trib.)
SDS TNMM 2008-09 14.35% 28.26% 12.68 40.81% Assessee
1. Alphageo
2. Stup Consultants
Pvt. Ltd
Companies providing:
1. seismic services of design and preplanning of 2D and 3D
surveys, etc., for offshore drilling
2. consultancy services
could not be considered as comparables
1. Working
Capital
Adjustment
NA
SDS 13.14% 20.85% (-)14.72% 67.84%
SIM Card
Assesmbly
Segment
17.40% -
7
Harsco India
Services (P.) Ltd. v.
Dy. CIT [2019] 106
taxmann.com 254
(Hyderabad -
Trib.)
ITES TNMM 2013-14 15.00% 21.67%
Partly in
favour of
assessee/
Matter
remanded
1. Capgemini Business
Services (India) Ltd.
2. Hartron
Communications Ltd
Companies providing:
1. BPO services, cloud business information management
and other IT related services
2. BPO, LPO and ITES services & intellectual property
services
having no separate segmental information available
could not be considered as comparables
1. Working
Capital
Adjustment
NA
NA
NA
1. Infosys Ltd.
2. Kals Information
systems Ltd.
1. Companies engaged in diversified activities of business,
having huge deployment of capital, resources and brand
name could not be considered as comparables
2. Company whose software segment included revenues
from software and training could not be considered as
comparables
1. Working
Capital
Adjustment
NA6
Giesecke &
Devrient (India)
(P.) Ltd. v Dy CIT
[2019] 106
taxmann.com 14
(Delhi - Trib.)
TNMM
Partly in
Favour of
Assessee
2009-10
Page 2

3. Low High
Other Adjustments allowed to
the assessee
Companies excluded
by ITAT/HC/SC
ITAT/HC/SC Decision
Adjustments
Cases relied
upon towards
such
adjustments
Revenue Authorities' Margins/
Range
Range of MarginS.
N.
Case Name with
Citation
Services
Method
Used
AYs
Assessee's
Margin
Margin
In Favour of
Assessee/
Revenue
8
Kaplan India (P.)
Ltd. v Asst CIT
[2019] 105
taxmann.com 210
(Delhi - Trib.)
SDS, other
support
Services
CPM 2007-08 17.04% 23.26%
Partly in
favour of
assessee.
1. Celestial Labs (by CIT-
A)
2. Infosys Ltd. (by CIT-
A)
3. Wipro Ltd. (by CIT-A)
4. Avani Cincom
Technologies Ltd
5. Helios Matheson Ltd
6. Ishirinfotech Ltd
7. Megasoft Ltd
8. Tata Elxsi Ltd
Software product company and companies involved in
design service could not be considered as comparables
1. Working
Capital
Adjustment
NA
9
Knowledge
Platform India (P.)
Ltd. v Dy CIT
[2019] 104
taxmann.com 60
(Delhi - Trib.)
ITES TNMM 2010-11 10.10% 21.97% (-)8.20% 88.25% Assessee
1. Accelya Kale
Solutions Ltd.
2. L&T Infotech
3. Mindtree Ltd.
4. Persistent Systems
Ltd.
5. R.S. Software (India)
Ltd.
6. Sasken
Communication
Technologies Ltd.
7. Sonata Software
8. Tata Elexsi
(Segment)
9. Zylog Systems Ltd.
10. Infinite Data
Systems (P.) Ltd.
11. E jest-Solutions Ltd.
12. ThirdWare
Solutions Ltd.
13. CTIL Ltd.
14. e-Infochips
Bangalore Ltd.
1. Companies providing:
i. software package and service
ii. software development and engineering
iii. ITeS with diversified business activities
iv. product engineering, technology consulting and IP-led
business
v. E-payments software development
vi. high end satellite phone production
vii. specialized embedded software development
viii. infrastructural management services
ix. emerging technologies such as cloud, SAS, business
intelligence, etc.
x. implementation and customer service
xi. technical/vocational higher education services
2. Incurring huge R & D expenditure
3. With assets ranging from Rs. 30-1000 crore (Assessee-
2.29Cr.)
4. Incurring huge AMP expenses
5. With geographical market in a number of countries
(Assessee-single geographical market)
6. Abnormal events like enhanced profit/turnover much
higher
7. Companies with substantial stock (Assessee- no stock)
could not be considered as comparables
NA NA
NA
9
Knowledge
Platform India (P.)
Ltd. v Dy CIT
[2019] 104
taxmann.com 60
(Delhi - Trib.)
ITES TNMM 2010-11 10.10% 21.97% (-)8.20% 88.25% Assessee
1. Accelya Kale
Solutions Ltd.
2. L&T Infotech
3. Mindtree Ltd.
4. Persistent Systems
Ltd.
5. R.S. Software (India)
Ltd.
6. Sasken
Communication
Technologies Ltd.
7. Sonata Software
8. Tata Elexsi
(Segment)
9. Zylog Systems Ltd.
10. Infinite Data
Systems (P.) Ltd.
11. E jest-Solutions Ltd.
12. ThirdWare
Solutions Ltd.
13. CTIL Ltd.
14. e-Infochips
Bangalore Ltd.
1. Companies providing:
i. software package and service
ii. software development and engineering
iii. ITeS with diversified business activities
iv. product engineering, technology consulting and IP-led
business
v. E-payments software development
vi. high end satellite phone production
vii. specialized embedded software development
viii. infrastructural management services
ix. emerging technologies such as cloud, SAS, business
intelligence, etc.
x. implementation and customer service
xi. technical/vocational higher education services
2. Incurring huge R & D expenditure
3. With assets ranging from Rs. 30-1000 crore (Assessee-
2.29Cr.)
4. Incurring huge AMP expenses
5. With geographical market in a number of countries
(Assessee-single geographical market)
6. Abnormal events like enhanced profit/turnover much
higher
7. Companies with substantial stock (Assessee- no stock)
could not be considered as comparables
NA NA
Page 3

4. Low High
Other Adjustments allowed to
the assessee
Companies excluded
by ITAT/HC/SC
ITAT/HC/SC Decision
Adjustments
Cases relied
upon towards
such
adjustments
Revenue Authorities' Margins/
Range
Range of MarginS.
N.
Case Name with
Citation
Services
Method
Used
AYs
Assessee's
Margin
Margin
In Favour of
Assessee/
Revenue
10
MACOM
Technology
Solutions (India)
(P.) Ltd. v Dy CIT
[2019] 107
taxmann.com 58
(Pune - Trib.)
Designe and
development
TNMM 2012-13 16.11% 23.57% 8.43% 59.15% Assessee
1. E Clerx Services Ltd.
2. Genesys
International
Corporation Ltd.
Companies providing:
1. data analytics services
2. geographical information system services
could not be considered as comparables
1. Working
Capital
Adjustment
2. Risk
Adjustment
On Risk
Adjustment:
1. Philips
Software
Centre (P.) Ltd.
v. Asstt. CIT
[2008] 119 TTJ
(Bang) 721
2. M/s. Sony
India (P) Ltd. v.
DCIT (2008) 114
ITD 448 (Delhi
ITAT)
3. MSC
Software
Corporation
India Pvt. Ltd. v.
ACIT (Pune)
10
MACOM
Technology
Solutions (India)
(P.) Ltd. v Dy CIT
[2019] 107
taxmann.com 58
(Pune - Trib.)
Designe and
development
TNMM 2012-13 16.11% 23.57% 8.43% 59.15% Assessee
1. E Clerx Services Ltd.
2. Genesys
International
Corporation Ltd.
Companies providing:
1. data analytics services
2. geographical information system services
could not be considered as comparables
1. Working
Capital
Adjustment
2. Risk
Adjustment
On Risk
Adjustment:
1. Philips
Software
Centre (P.) Ltd.
v. Asstt. CIT
[2008] 119 TTJ
(Bang) 721
2. M/s. Sony
India (P) Ltd. v.
DCIT (2008) 114
ITD 448 (Delhi
ITAT)
3. MSC
Software
Corporation
India Pvt. Ltd. v.
ACIT (Pune)
11
Schneider Electric
IT Business India
(P.) Ltd. V JCIT
[2019] 106
taxmann.com 70
(Bangalore - Trib.)
SDS TNMM 2009-10 9.59% 23.11% 5.52% 62.27%
In favour of
assessee.
1. Kals Information
Systems Ltd.
2. Bodhtree Consulting
Ltd.
3. Tata Elxsi Ltd.
4. Persistent Systems
Ltd
5. Infosys Ltd.
6. Sasken
Communication
Technologies Ltd.
7. Larsen & Toubro
Infotech Ltd
Companies providing:
1. general insurance services
2. software consultancy and design and development of
software using latest technology
3. embedded product design services, industrial design
and engineering services and visual computing labs and
system integration services segment
4. both product designing services and software product
development
could not be considered as comparables
NA NA
12
ST
Microelectronics
(P.) Ltd. v Addl CIT
[2019] 104
taxmann.com 337
(Delhi - Trib.)
SDS TNMM 2007-08 13.61% 19.07%
Partly in
favour of
assessee.
1. Helios and
Matheson Information
Technology Ltd.
2. Sasken
Communication
Technologies Ltd.
3. TATA ELXSI Ltd.
1. Software product company
2. Company having abnormal event like merger &
acquisition during the year
3. Engaged in development and sale of niche software
products and also exploited TATA brand
could not be considered as comparables
1. Working
Capital
Adjustment
NANA
Page 4