IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘I’: NEW DELHI BEFORESHRISUDHIR KUMAR, JUDICIAL MEMBER AND SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER ITA No.5939/Del./2012, A.Y. 2007-08 ITA No.2387/Del./2014, A.Y. 2008-09 Dy. Commissioner FIS Global Business Solution India of Income Tax, (P) Ltd.[formerly known as E-Funds Circle 11(1), Vs. International India (P) Ltd.]

Room No. 312, S-405 (LGF), Greater Kailash, Part-II C.R.Building, New Delhi-110048 New Delhi PAN: AAACH2815H (Appellant) (Respondent)

C.O. No. 03/Del/2013 (Arising out of ITA No.5939/Del./2012, A.Y. 2007-08)

C.O. No. 02/Del/2015 (Arising out of ITA No.2387/Del./2014, A.Y. 2008-09)

FIS Global Business Solution India Dy. Commissioner (P) Ltd.[formerly known as E-Funds of Income Tax, International India (P) Ltd.] Vs. Circle 11(1), S-405 (LGF),Greater KailashPart-II Room No. 312, New Delhi-110048 C.R.Building, PAN: AAACH2815H New Delhi (Appellant) (Respondent)

Revenue by Shri Dharm Veer Singh, CIT(DR)

Assessee by Shri Himanshu S. Sinha, Advocate Shri Jainender Kataria, Advocate Date of Hearing 11/02/2025 Date of Pronouncement 09/05/2025 ORDER PER AVDHESH KUMAR MISHRA, AM Common grounds and facts arise in the above captioned appeals of the Revenue and Cross Objections (hereinafter, the ‘CO’) of the assessee; therefore, these appeals and COs were heard together and are being disposed off by this common order.

2. The above captioned appeals and COs pertaining to Assessment Years (hereinafter, the ‘AY’) 2007-08 and 2008-09arise against orders dated September 20, 2012 and January 31, 2014 of the Commissioner of Income Tax (Appeals)-XX, New Delhi [hereinafter, the “CIT(A)”] respectively.

3. Grounds taken by the Revenue and assessee in the above captioned appeals & COs raise the sole issue that whether the TPO was justified on facts and in law in excluding and or including certain comparables by applying additional & modified filters, which resulted upward adjustment?

ITA No.5939/Del/2012 & CO No.03/Del/2013 AY 2007-08:

4. The relevant facts giving rise to these appeals and COs are that the assessee; FIS Global Business Solutions India Private Limited (earlier known as "eFunds International India Private Limited") is engaged in providing software development services and IT enabled services to its Associated enterprises (eFunds corporation US). Its business has two segments:

(i) Software Development Services (SDS)

(ii) IT enabled services(ITeS)

The ITeS consist of three types services; viz, (i) financial shared services (FSS), (ii) data entry services and (iii) call center services. The Associated enterprises (hereinafter, the “AE”); eFunds corporation is a US based company engaged in business of providing integrated information, payment and technology solutions. Its customer includes financial service providers, retailers, networks and gateways remarketers and e-commerce providers.

4.1 The assessee adopted the Transactional Net Margin Method (TNMM) on segmental basis as the most appropriate method for both segments i.e. SDS and ITeS and Operating Profit by Operating Cost as the profit level indicator ("PLI"), which, in principle, has been accepted by the Assessing Officer (AO)/Transfer Pricing Officer (TPO) for benchmarking the assessee’s international transactions with its Associate Enterprise (AE). However, the TPO has included and or excluded certaincomparables by applying different/modified filters. The TPO selected 26 comparables for each segment separately. For SDS Segment, the TPO took (i) 8 comparablesout of the Assessee's TP Study, (ii) 15 new comparables chosen after modifying filters for selection of comparablesand (iii) 3 comparables proposed by the assessee during proceedings before the TPO. For ITeS Segment, the TPO took (i) 5comparables out of the Assessee's TP Study, (ii) 20 new comparables chosen after modifying filters for selection of comparables and (iii) 1 comparable proposed by the assessee during proceedings before the TPO.The controversy involved in these ap