TaxTMI 
TaxTMI 
2024 (10) TMI 706
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....mited as functionally non comparable on the ground that it is a KPO service company whereas KPO service is part of ITES. Further, this company cannot be treated as suitable comparable merely on the ground that it is making significant amount of expense under the head marketing and advertisement and was possessing intangible of significant amount? 3.2 Whether in the facts and circumstances of the case the Hon'ble ITAT was right in law in considering TCS E Serve, as functionally non comparable without considering the findings of the TPO with respect to the fact that the assessee company is also enjoying brand name SBI like in the case of the comparable company i.e. TATA. Further, can brand value of a company be treated as selecting criteria of suitable comparable? 3.3 Whether in the facts and circumstances of the case the Hon'ble ITAT was right in law in considering BPO Infosys Pvt. Ltd. as functionally non comparable without considering the findings of the TPO with respect to the fact that the business of the comparable company is also covered in the ITeS business and this company passes all the filters applied by the TPO. Further, should acquisition and investment....
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.... rendered the aforementioned services to various credit card companies in India and entire revenue in the present financial year (of Rs. 183.11 crores) is earned from unrelated parties. In order to provide these services, the assessee had obtained software licenses, data server '"management services, CIS training from its Associated Enterprises ("AE") located in Australia and USA. xxxx xxxx xxxx The Transfer Pricing addition made by the Transfer Pricing Officer ("TPO") is in respect to services mentioned at S.No.2. There has been no Transfer Pricing dispute in the preceding years. For purposes of benchmarking the transaction of ITeS Services, the assessee used three-year weighted average of 7 comparables and the OP/TC was calculated at 4.91% (working capital adjusted margin was 0.95%) while the OP/TC of the assessee was 2.95%. The transactions were considered to be at arm's length on the basis of permissible range of 5%. The TPO vide order dated January 21, 2016 rejected the comparability analysis in respect to transaction of ITeS Services and conducted a fresh benchmarking study on the basis of additional/ modified quantitative filters. The TPO a....
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....above narration of facts, we find that the arguments advanced by both the parties rest on the vital question whether under the facts and circumstances of the case, the payment of licnese fee, connectivity charges and co-ordination charges amounting to Rs. 2,19,60,467/- made by the assessee to GECC(USA) under the end-user agreement shall fall within the category of capital expenditure or revenue expenditure? The stand of the assessee is that it is in the nature of revenue expenditure and deductible u/s 37(1) of the Act whereas the Id. Authorities below have put it in the category of capital expenditure and disallowed the claim of assessee. The basic reasons of Assessing Officer for giving the license fee a treatment of capital expenditure are that the agreement provides exclusive right to use vision plus software which provides enduring benefits to the assessee; that the consideration is in respect of grant of licnese and that the information was not only in relation to use of license, but co-ordination and connectivity services were also provided by GECC (USA). He, therefore, held that the acquisition of license granted by the licensor in itself is a capita asset, being "intangible....
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....e medium or facility, which for any reason cannot be delivered to GECC. In addition, an officer of GECBPMS shall certify in writing to GECC that all proprietary material relating to the Licensed Program has been delivered to GECC or purged and that the use of the Licensed Program and any portion thereof has been discontinued." Under clause 3.1, the license agreement allows GECC to receive license fee from assessee on quarterly basis as mutually agreed upon. The agreement provides for periodic payment for use of software to GECC, which is subject matter of renewal and revision every calendar year. No case is made out by the department to assume that the periodic payment made by the assessee were the installments for acquisition of such software and the payment was not for mere usage of software. It is a matter of fact on record that M/s GECC(USA) itself has received the right to use the software internally including its group entities for its business and it does not have any right to commercially exploit the software. The assessee is vested with limited right to use the licensed program during the currency of license agreement. The agreement nowhere provides any exclusive ....