TaxTMI 
TaxTMI 
2025 (2) TMI 1403
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....erred in not passing the final assessment order dated 19 July 2024 as per the directions of the Hon'ble DRP Panel as prescribed in section 144C(10) and 144C(13), thereby rendering the assessment order being null & void and liable to be quashed. 1.3. On the facts and circumstances of the case and in law, the Hon'ble DRP has erred in issuing directions in violation to provisions of section 144C(8), read with the explanation thereto, by directing the AO to compute and adopt margins of comparable companies as per law. Accordingly, the directions of the Hon'ble DRP are bad in law and ought to be quashed. Consequently, the final assessment order is bad in law and ought to be quashed. 1.4. On the facts and circumstances of the case and in law, the final assessment order dated 19 July 2024 is issued beyond the time limit as prescribed u/s 153 of the Act. Consequently, the final assessment order is time barred and deserves to be quashed. 2. Ground No. 2- Transfer Pricing - Provision of ITeS Services 2.1. On the facts and in the circumstances of the case and in law, the Ld. AO/National Faceless Assessment Centre ('NFAC") and the Ld. TPO, er....
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....pt the margin of alleged comparable companies computed based on the annual report. 2.6. Without prejudice to above, the NaFAC/Ld. TPO erred in not adjudicating the rectification application dated 19 June 2024 filed by the Assessee. 3. Ground No. 3- Transfer Pricing - Interest on Recovery of Expenses 3.1. The NaFAC/Ld. TPO erred in making an adjustment of INR 22,70,106 to the income of the Appellant by re-characterizing entire recovery of expenses as a loan granted by the Appellant to the Associated Enterprise ('AE'). 3.2. The Ld. TPO erred in law in not issuing show cause notice in relation with the adjustment made pertaining to interest on Recovery of expenses, thereby breaching the principle of natural justice and rendering the Assessment proceedings and the TPO's order to be void, bad in law and the adjustment made thereto is liable to be quashed. 3.3. The NaFAC/TPO has erred in computing the arm's length price of the international transactions relating to recovery of expenses without adopting any of the methods prescribed under section 92C(1) of the Act, for the purpose of benchmarking the said transaction, thereby ad....
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....made by the Ld. TPO/Ld. AO under the directions of the Hon'ble DRP be deleted and consequential relief be granted." Brief facts of the case are as under: 2. Assessee is engaged in the business of providing call centre services, finance and accounting shared services, human resource shared services, information technology services, networking support services and Vodafone solutions (collectively known as information technology enabled services) to the operating companies of Vodafone globally. 2.1 The Ld.AR submitted that, during the year under consideration assessee provided IT enabled services to following associated enterprises: 1. Vodafone Group Services Ltd 2. Celfocus Solucoes Informaticas Para Telecommunications, S.A. 3. Cable and Wireless India Ltd-India branch 2.2 The Ld.AR submitted that, assessee computed its margin at entity level to 16.89% by using TNMM as most appropriate method and profit level indicator to be operating profit to operating cost. Assessee identified set of 12 comparable with average median of 8.63%. The assessee thus held its transaction with the associated enterprises to be at arms length. The Ld.TPO disagreed....
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....h, if the operating profit margin (in relation to operating expenses) of the applicant in each previous year covered by this agreement is 16%. b) The covered transactions of reimbursement of expenses by the applicant to its AE, to the extent linked to the provision of ITeS shall be treated as part of operating expenses as maintained in clause 1(c) above. However, reimbursement of expenses by the applicant to its AE's, which are not linked to the provision of ITeS, shall not be treated as part of operating expenses and shall only. Burst at cost. c) Similarly, recovery of expenses by the applicant from the tea, the extent linked to the provision of ITeS, shall also be treated as part of operating expenses as mentioned in clause 1(c) above. However, recovery of expenses by the applicant from its AE's which are not linked to the provision of ITeS, shall not be treated as part of operating expense and shall only be recovered at cost. 5.2 The Ld.AR submitted that issues pertaining to ITeS services, regarding reimbursement of cost and trade advances received in relation to transactions with the UK AE has been accepted between the competent authorities at 16%.....
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....order dated 31-1-2017. The revenue preferred appeal against this decision before Hon'ble Bombay High Court. Hon'ble Bombay High Court in case of Pr. CIT v. J.P. Morgan Services India (P.) Ltd. Reported in (2019) 105 taxmann.com 40. The said decision stands approved by Hon'ble Supreme Court in Pr. CIT v. J.P. Morgan Services India (P.) Ltd. Reported in (2020) 119 taxmann.com 414. 7.3 Further, it is noted that, such view has also been taken by benches of this Tribunal in following decisions: * Decision of Hon'ble Bangalore Tribunal in case of CGI Information Systems Management Consultants (P.) Ltd. v. Dy. CIT [IT (TP) Appeal No. 1117 (Bang.) of 2011, dated 15-2-2017] * Decision of Hon'ble Bangalore Tribunal in case of Tesco Bengaluru (P.) Ltd. v. Dy. CIT [IT (TP) Appeal No. 262 (Bang.) of 2014, dated 25-10- 2021] * Decision of Hon'ble Ahmedabad Tribunal in case of IQVIA RDS (India) (P.) Ltd. in IT(TP)A No. 3161/Ahd/2010 7.4 We therefore direct the Ld.AO/TPO to adopt rates for transaction of assessee with USA AE as per rate agreed under Bilateral APA with UK AE and compute the adjustment accordingly. Accordingly, Grounds 2-3 raised b....