TaxTMI 
TaxTMI 
2019 (7) TMI 1644
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.... management, collection services to its AE in USA. The assessee hitherto was earlier known as Tracmail India Pvt. Ltd. However, after acquisition of BancTec, USA, in financial year 2014-15, the assessee changed itself to its present name. During the year under consideration, the assessee provided BPO services to its AEand received an amount of Rs. 50,90,05,930. In its transfer pricing study report, the assessee benchmarked the arm's length price of the transaction with the AE by adopting internal transactional net margin method (Internal TNMM) with operating profit / total cost as the profit level indicator (PLI). Since, the margin of AE transactions worked out to 10.36% as against margin of non-A.E. transactions @ (-)4.09%, the assessee claimed the transactions with its AE to be at arm's length. The Transfer Pricing Officer, however, did not accept the transfer pricing analysis done by the assessee. He rejected the internal TNMM applied by the assessee and proceeded to benchmark the international transaction with the AE by applying external TNMM. Having done so, the Transfer Pricing Officer selected six companies as comparables with arithmetic mean of 17.06%. Applying the ....
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....o.43177/2017, dated 28.11.2017 (Del. HC); and iii) Aptara Technologies Pvt. Ltd. v/s DCIT, ITA no.291/Pun./2016, dated 05.04.2018. 6. The learned Departmental Representative strongly relied upon the decision of the DRP and the Transfer Pricing Officer. 7. We have considered rival submissions and perused the material on record. We have also applied our mind to the decisions relied upon. As could be seen, in the course of proceedings before the Transfer Pricing Officer the assessee has strenuously objected against selection of this company as a comparable. From the annual report of the company as well as other material placed on record, it is noticed that the business model of the company is different from the assessee as it provides services in healthcare sector with the aid of software which is in the nature of KPO service. Moreover, during the year under consideration, this company has acquired another company viz. Strategic Tangent Corporation which was a software development company having expertise in developing software relating to EMR, SaaS. It is also observed, due to the aforesaid acquisition the revenue of the company has substantially increased which certainly could h....
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....RP and the Transfer Pricing Officer submitted, though the company may be having various segments, however, the Transfer Pricing Officer has considered healthcare service segment which is comparable to the nature of service provided by the assessee. Thus, he submitted, there is no bar in including the company as a comparable. 10. We have considered rival submissions and perused the material on record. We have also applied our mind to the decisions relied upon. As could be seen, in the order passed by him the Transfer Pricing Officer himself has stated that the company has three segments namely; engineering, design service, information technology service segment and healthcare segment. However, he has stated that only healthcare service segment was considered by him for comparability analysis. But nowhere the Transfer Pricing Officer has dealt with assessee's contention with regard to unavailability of segmental details relating to export sales, employee cost, etc. Further, he has also not dealt with assessee's objection that substantial operation of software development activities were outsourced on sub-contract basis Learned DRP has also not considered the objections of the assess....
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....le simply on the reasoning that it was selected as a comparable in assessment year 2008-09. No material has been furnished before us by the Department to controvert the contention of the assessee that financial results of the company for the year under consideration are not available in public domain. Further, the Department has failed to substantiate the nature of information gathered by the Transfer Pricing Officer to consider the company as a comparable to the assessee. If the financial results of the company for the impugned assessment year are not available, as alleged by the assessee, the company cannot be considered as a comparable. Moreover, from the decisions relied upon by the learned Sr. Counsel for the assessee, it is noticed that the company has been excluded as a comparable in case of a BPO service provider since it is engaged in providing KPO service. In view of the aforesaid, we hold that this company cannot be treated as comparable to the assessee. Accordingly, the Assessing Officer is directed to determine the arm's length price of the international transaction with the AE after excluding the aforesaid three companies namely Accentia Technologies Ltd., Acropet....
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.... device is wholly unacceptable as the initial slump sale was through proper method and the assessee has offered the capital gain on goodwill which has been assessed to tax at the hands of the assessee in the assessment year 2008-09. In this context, he drew our attention to the assessment order passed for the assessment year 2008-09. The learned Sr. Counsel submitted, subsequent amalgamation between the assessee and Tracmail AR Services Pvt. Ltd. was a strategic decision taken by the management of the company for effective management of business to reduce operating cost, personnel cost, etc. He submitted, the scheme of amalgamation was also approved by the Hon'ble Jurisdictional High Court effective from February 2010. Thus, he submitted, when the earlier sale of assessee's business and subsequent amalgamation are through proper legal procedure and are transparent, the Departmental Authorities cannot accuse the assessee of adopting colourable device. The learned Sr. Counsel submitted, sale and purchase of goodwill having been reflected in the respective books of account of both the companies and the assessee having paid tax on transfer of goodwill in assessment year 2008-09, it....
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....e transfer of goodwill of Rs. 11,51,01,122. However, in the course of assessment proceedings for the assessment year 2008-09, the Assessing Officer was of the view that the capital gain on goodwill has to be assessed in assessment year 2008-09. Accordingly, he proceeded to assess the amount of Rs. 11,51,01,122, as short term capital gain in assessment year 2008-09. Thus, when the assessee has paid capital gain tax at the time of transfer of goodwill and the Department has accepted it, it cannot be said that the assessee has adopted a colourable device. Moreover, the scheme of amalgamation between the assessee and Tracmail AR Services Pvt. Ltd., having been approved by the Hon'ble Jurisdictional High Court, no doubt can be raised with regard to the transparency or genuineness of such transaction. Thus, when the assessee by virtue of such amalgamation has received back the goodwill in its book, depreciation has to be allowed on goodwill. As regards the doubt raised by learned DRP that the assessee cannot claim depreciation on the entire amount of goodwill, it must be observed that the assessee has claimed goodwill on the opening WDV only and not on the entire amount. It is now fa....