AI Drafter 
TaxTMI 
TaxTMI 
2017 (3) TMI 29
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....ry of Global Payments Asia-Pacific India Pvt. Ltd. engaged in merchant acquiring and credit card processing business. The assessee had commenced business operations during the previous year relevant to the assessment year under consideration. During the year under consideration, assessee-company acquired the assets of credit card processing and merchant banking acquiring business of Hongkong and Shanghai Banking Corporation, in India for a total consideration of Rs. 28.51 crores which, inter-alia, included consideration for the Trademarks, Customer lists and Goodwill amounting to Rs. 27.64 crores. The Assessing Officer noted that the aforesaid is an international transaction within the meaning of Sec. 92B of the Act and accordingly, made a reference to the Transfer Pricing Officer (TPO) u/s 92CA(1) of the Act for determination of its arm's length price. The TPO considered the submissions and evidence put forth by the assessee and held that the stated value of consideration was not at arm's length price and observed that assessee had paid almost 25% extra for the acquisition of intangibles - Goodwill, Trademark and Customer lists. Therefore, as against the stated value of considerat....
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.... proceeded to hold that the assessee had paid "almost 25% extra for acquisition of intangibles Goodwill, Trademark and Customer Lists". In sum and substance, the CIT(A) has also affirmed the aforesaid reasoning of TPO. 6. Before us, the assessee has made two set of arguments; firstly, in relation to transfer pricing adjustment made on account of acquisition of Goodwill and Customer lists and; secondly, with respect to adjustment on account of acquisition of Trademark. Insofar as the consideration paid for acquisition of Customer lists and Goodwill is concerned, the learned representative pointed out that assessee had not claimed any deduction on account of such payments either as a revenue expenditure or by way of depreciation. The learned representative pointed out that the aforesaid fact-situation is not disputed and, therefore, where the amount has not been considered while computing the taxable income, no adjustment on account of arm's length price can be made. In this context, reliance has been placed on the decision of Pune Bench of Tribunal in the case of Eaton Technologies (P.) Ltd., 32 taxmann.com 103 (Pune - Trib.). In support of the said proposition, reliance has also....
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....l agreement or arrangement for allocation or apportionment of, or any contribution to, any cost or expense incurred or to be incurred in connection with a benefit, services or facility provided or to be provided to any one or more of such enterprises, the cost or expenses allocated or apportioned to, or, as the case may be, contributed by any such enterprise shall be determined having regard to the arm's length price of such benefit or service or facility, as the case may be. We are only trying to emphasise that the mandate of Sec. 92 to 92CB of the Act is to determine the "income arising" from international transaction. In the present case, qua the cost of acquisition of Goodwill and Customer lists, the plea of assessee is that such international transaction is not in the nature of giving rise to any income and, therefore, the question of determination of its arm's length price does not arise. This is based on the plea that no deduction whatsoever has been claimed while computing taxable income qua the consideration paid for acquiring Goodwill and Customer lists. Per contra, the claim of Revenue is that so long as a person has undertaken an international transaction within the mea....
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....two provisions to the learned Solicitor General and he agreed that the above difference exists. However, according to him this was in view of the fact that Sections 4, 5, 14 and 56 of the Act does create a charge to income tax on deemed income earned from International taxation. Therefore, it is clear that the deemed income which was charged to tax under Section 42(2) of the 1922 Act was done away with under the Act. The charge of Income now has to be found in Section 4 of the Act. If it is income which is chargeable to tax, under the normal provision of the Act, then alone Chapter X of the Act could be invoked. Sections 4 and 5 of the Act brings /charges to tax total income of the previous year. This would take us to the meaning of the word income under the Act as defined in Section 2(24) of the Act. The amounts received on issue of shares is admittedly a capital account transaction not separately brought within the definition of Income, except in cases covered by Section 56(2) (viib) of the Act. Thus such capital account transaction not falling within a statutory exception cannot be brought to tax as already discussed herein above while considering the challenge to the grounds as....
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....o application of arm's length principle contained in Chapter X of the Act. Therefore, so far as the stand of Revenue qua the adjustment made on account of cost of acquisition of Goodwill and Customer lists is concerned, the same is hereby directed to be deleted. 11. The second proposition canvassed by the assessee is with regard to the adjustment made in the cost of acquisition of Trademark. Notably, insofar as the cost of Trademark is concerned, the same has been capitalised by the assessee and depreciation has been claimed while computing the taxable income. On this aspect, we find that the assessee sought to justify its valuation on the basis of Valuation report of an independent Valuer. On the point of allotting weightage to the different territories for which the credit card business was acquired from HSBC, assessee explained that higher weightage was given to India territory as the credit card penetration was low in comparison to other countries, which showed that there was more scope to increase the business in India. In this context, we find that the entire discussion in the order of TPO revolves around the fact that the credit card business of HSBC was acquired in India....