TaxTMI 
TaxTMI 
2023 (12) TMI 863
X X X X Extracts X X X X
X X X X Extracts X X X X
....g been agreed in the APA, the same ought to be applied for the year under consideration as well." 2. Brief facts for Addl. Ground no. - 8 It is submitted that the margin of the Assessee for the assessment year 2011-12 under consideration computed in terms of the APA stands at 18%. It is submitted that there is no difference in the facts pertaining to the methodology for preparation of segmental accounts as agreed upon in the APA and the year under consideration, and therefore the methodology as agreed upon in the APA may be adopted for the year under consideration as well. It is also submitted that there is no difference in the functions performed, assets employed and risks assumed ("FAR") between the year under consideration, and the years covered in the APA. 2.1 It is submitted that, various Hon'ble High Courts and Tribunals have consistently held that, even if, the year under dispute is not covered by the APA, if the FAR is same, APA should be adopted for the international transactions for the year under dispute. Reliance in this placed on the following decisions: • PCIT v. Springer India (P.) Ltd ([2023] 151 taxmann.com 251 (Delhi)); â€....
X X X X Extracts X X X X
X X X X Extracts X X X X
....comparables, assessee seeks exclusion of ICRA Online Ltd. only that has been alleged in Ground 3(m) and assessee seeks inclusion of three comparables in Ground no. 3(h), 3(j) and 3(l) which are as under: 3(h) - Informed Technologies India Ltd. 3(j) - Inhouse Production Ltd. 3(l) - Cosmic Global Ltd. The Ld.AR submitted that apart from the above comparables sought for inclusion / exclusion, assessee do not wish to press any other comparables raised in the sub grounds of Ground no. 4. However liberty is granted to the assessee to raise the issues that are not argued and considered in an appropriate circumstances. 5. Before we undertake the comparability analysis, it is sine qua non to understand the functions performed by the assessee under the ITeS segment. Functions performed, assets owned and risks assumed by assessee are as under: 6. Based on the above, we shall carryout the comparability analysis of the assessee that the alleged comparables sought for exclusion / inclusion. A. ICRA Online Ltd. - Ground no. 3(m) It is submitted that ICRA Online Ltd. is engaged in the business of outsourced services, information services and software....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ompany cannot be held as a comparable to the assessee." In the above observation, the Tribunal has categorically noted that this company is into provision of high end consultancy services. The assessee before us is providing assistance to the AE while interacting with the client when the service module is being conceptualized, client interaction in the initial stages of the contract negotiations, client interaction when the service goes live and decisions regarding and in the interaction when the service goes live and decisions regarding general administration, accounting, legal, finance and personnel matters in the US etc. In our considered opinion, this company cannot be held to be a fit comparable with that of assessee. We accordingly, direct the Ld.AO/TPO to exclude this company from the final list. Accordingly, ground no. 3(m) stands partly allowed. 7. Comparables sought for inclusion : - 3(h), 3(j) & 3(l) A. Inhouse Production Ltd. The Ld.AR submitted that in this regard it is submitted that the company was excluded by the TPO for the reason that no data was available. The DRP upheld the exclusion of the company by holding that the company incurred expenditu....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... decision of Hon'ble Supreme Court in case of CIT vs. Smifs Securities Ltd. reported in 348 ITR 302. 8.1 During the financial year relevant to the assessment year 2011-12, the Assessee acquired the assets and liabilities of the BPO Solutions business of e4e Business Solutions India Private Limited for a consideration of USD 5,000,000 (Rs.22,81,50,000/-) on 09.02.2011, on a going concern basis. Out of the above consideration, after adjusting for the value of tangible fixed assets, current assets and current liabilities, the value of goodwill was arrived at Rs. 18,17,47,278/- in the financial statements. It is submitted that for tax audit purposes, out of the above goodwill, a sum of Rs. 1,36,89,000/- was identified as being towards customer relationships. In the return of income filed for assessment year 2011-12, the Assessee had claimed depreciation of Rs. 17,11,125/- on customer relationships of Rs. 1,36,89,000/- which was accepted by the Assessing Officer. It is submitted that the Hon'ble Supreme Court in Commissioner of Income Tax, Kolkata v. Smifs Securities Ltd. (reported in [2012] 24 taxmann.com 222 (SC)) held that that goodwill is an intangible asset eligible for d....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Smifs Securities Ltd. (supra) and also in accordance with law. Accordingly, Ground no. 5 raised by assessee stands allowed for statistical purposes. The appeal filed by the assessee for A.Y. 2011-12 stands partly allowed as indicated hereinabove. 9. For A.Ys. 2012-13 & 2014-15, the only issue raised by the assessee is regarding the disallowance of depreciation on goodwill. As we have already remanded similar issue for A.Y. 2011-12 hereinabove applying mutatis mutandis this issue for the year under consideration also stands remanded to the Ld.AO for necessary verification in line with the decision of Hon'ble Supreme Court in case of CIT vs. Smifs Securities Ltd. (supra) and in accordance with law. Accordingly, the appeal filed by the assessee for A.Y. 2012-13 and the appeal by revenue for A.Y. 2014-15 stands allowed for statistical purposes. Order pronounced in the open court on 13^th October, 2023. ============= Document 1 4.1.1 Functions performed by Concentrix Concentrix BPO is engaged in the business of providing customer relationship, infrastructure management services and related business process outsourcing services. The service delivery of C....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....); Diagnostic processing and gathering of technical troubleshooting information; Escalation to Level 2 for problems which cannot be resolved at Level 1; Case ownership to resolution on 24 X 7 basis; Level 2 support-escalation handling from Level 1 i.e open issues from Level 1; and. Level 3 support-simulation and interaction with engineering offered through multi-channel -voice, web, mail, chat Infrastructure Management Services Concentrix BPO's infrastructure management services provides visibility into the service quality and health of the IT environment by continuously monitoring critical applications, services and underlying infrastructure on 24x7 bases. Using remote management services, customers are able to identify and resolve infrastructure problems before they can adversely impact business and reduce overall cost of operations. This business ensures that all the applications and services are available, all the time, on a 24*7 basis. Staffing and training Three shifts of personnel provide '24 X 7' service to Concentrix's clients located in the US. Concentrix BPO employs Indians with graduate degrees, particularly in related te....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 4 Concentrix. However, a slump in business volumes for Concentrix may result in lower volumes, and thus an indirect but limited market risk for Concentrix BPO. However, Concentrix BPO bears risk in relation to the services provided to the unrelated customers. 4.1.4.2 Contract Risk Contract risks arise when a company enters into a contract and thus has to bear the liabilities associated with such contracts. The contract for rendering services is between Concentrix BPO and its associated enterprises, and accordingly the contract risk bome by Concentrix BPO is limited. However, Concentrix BPO bears the contract risk in terms of its contracts with third party customers. 4.1.4.3 Credit Risk A firm faces customer credit risk when it supplies products to a customer and the customer fails to make payment or the payment is deferred. Concentrix BPO bears the credit risk in respect of its services provided to third party customers, as it is responsible for collection of the accounts receivables. However, as regards the international transactions between Concentrix BPO and it's associated enterprises, the credit risk is limited as Concentrix BP....