TaxTMI 
TaxTMI 
2026 (6) TMI 554
X X X X Extracts X X X X
X X X X Extracts X X X X
....er No. ITBA/COM/F/17/2024-25/ 1068460347(1)) passed by ld. Transfer Pricing Officer to the Directions of ld. Dispute Resolution Pane-1. New Delhi, dated 07.08.2024 u/s 144C(5) of the Act ( ITBS/DRP/M/ 144C(5) / 2024-25 / 1067392929(1)). The AO had earlier issued draft assessment order dated 20.11.2023(DIN & Order No. ITBA/AST/F/144C/2023-24/1058056639(1)) u/s. 144C(1) of the Act wherein the AO proposed an addition of Rs. 1,08,17,941/- on account of ALP adjustment u/s 92C as proposed by ld. TPO in its Transfer pricing order dated 12.12.2023 passed u/s 92CA(3), which were subjected to challenge by the assessee by filing objection before the ld. DRP which culminated into an order passed by ld. DRP dated 07.08.2024 u/s 144C(5) of the Act. TPO passed order giving effect to the directions of ld. DRP vide order dated 09.09.2024, wherein ALP adjustment to the international transactions was proposed at Rs. 61,42,097/-. The AO passed final assessment order dated 11.09.2024 in pursuance to directions given by ld. DRP which assessment order is in challenge in appeal by the assessee before us. 2. The grounds of appeal raised by the assessee in its appeals filed with the Income-Tax Appellate ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....imetions, assets and risks (FAR) of the Appellant; 4.6 excluding Cosmic Global Pvt Ltd., Crystal Hues Ltd., Allsee Technologies Ltd. and One Point One Solutions Ltd. from the final comparable set on ground that it fails export filter applied by Ld. TPO; and 4.7 not considering the correct computation of the return on total operating cost (including computation of working capital adjusted margin) of certain companies used as comparable by the Ld. TPO. 5. On the facts and circumstances of the case and in law, the Ld. AO erred in proposing to initiate penalty proceedings under section 270A of the Act. That the above grounds and sub grounds of objections are without prejudice to each other. The Appellant craves leave to add, alter, amend or withdraw all or any of the Grounds of appeal herein. 2. The brief facts of the case are that the assessee is engaged in the business of providing tech enabled education and industry-oriented training services and mission statement enabling careers success in the Digital Economy. Thus, the assessee is an Ed-tech Company that offers higher education degree and certificate programs. The main source of rev....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 4.7 The assessee has applied TNMM Method while computing ALP of the international transactions entered into by it with its AE's with respect to provision of learner support and customer care services provided by the assessee to its Associated Enterprises. In its TPSR(Page 12/TPSR), it is stated that as per agreement between assessee and its AE, the assessee has provided business support services to its AE, namely Great Learning Singapore which include Marketing research and support services, customer support services, technological support and accounting support services. It is further stated in page 15-16 of TPSR that business support services provided by the assessee include following activities:- a) Marketing Research and Business Support Services i) Conducting Marketing Research on the products of AE and research data analysis ii) Appraising potential customers about AE's product services iii) Guidance to customers in terms of course enrolment process, fee payments etc. b) Customer Service and Support: i) On boarding AE's customers, scheduling of the program sessions, updating on students progress and orientation process. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ited The company is classified into the ITES industry. The company is engaged in the business of providing Information Technology enabled services/BPO. Since, it is providing similar services as provided by the assessee and qualifies all filters applied by the TPO; therefore, this company is a good comparable. Proposed by TPO 3. Sagacious Research Private Limited The company is classified into the ITES industry. The company is engaged in the business of providing Information Technology enabled services/BPO. Since, it is providing similar services as provided by the assessee and qualifies all filters applied by the TPO; therefore, this company is a good comparable. Proposed by TPO 4. Designed Products Limited The company is classified into the ITES industry. The company is engaged in the business of providing Information Technology enabled services/BPO. Since, it is providing similar services as provided by the assessee and qualifies all filters applied by the TPO; therefore, this company is a good comparable Proposed by TPO 5. XS Cad India Private Limited The company is classified into the ITES industry. The company is engaged in the business ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ting margin of final set of comparables @20.32%. The AO passed final assessment based on order giving effect passed by TPO, wherein adjustment to the ALP to the tune of Rs. 61,42,097/- was made by the AO to the income of the assessee. 3.3.5 Now, during the proceedings before the Tribunal during the course of hearing before the Bench, the ld. Counsel for the assessee has restricted its arguments to the selection of ANZ Support Services India Private Limited(hereinafter called 'ANZ') by TPO. It was submitted by ld. Counsel for the assessee forcefully that its selection by TPO is so blatantly wrong that it needs to be excluded as comparable to the assessee (tested party) while computing ALP under TP regime, and if the said comparable is excluded, the ALP adjustment will be reduced to Nil. Thus, it was prayed that the Bench should adjudicate the inclusion of ANZ Support Services India Private Limited, and other issues should be kept open as they have become academic in nature. 3.3.6 Thus, We are confining ourselves to the said comparable ANZ. During the course of proceedings before the TPO, the assessee company has submitted that this company is functionally dissimilar and annual re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....023, Further the comparable passes all the quantitative filters applied by the TPO, Company is included in the final list of comparables. Relevant screen shot from the annual report of the company is reproduced below: Disclosure of principal product or services [Table] .........(1) Unless otherwise specified, all monetary values are in Millions of INR Types of principal product or services [Axis] Column I 01/04/2020 to 31/03/2021 Disclosure of general information about company [Abstract] Disclosure of principal product or services [Abstract] Disclosure of principal product or services [Line Items] Product or service category (ITC 4 digit) code 9983 Description of product or service category Other Professional. Technical and Business Services Turnover of product or service category 7.445:33 Highest turnover contributing product or service (ITC 8 digit) code 99831329 Description of product of service Other IT Support Turnover of highest contributing product or service 7.445 33 Thus, the ld. TPO while giving order effect to ld. DRP directions included ANZ as compara....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ground of objection of RPT of ANZ being in excess of 25% of the sales is taken by the assessee for the first time before the ITAT as this objection was not taken by the assessee before TPO nor even before the ld. DRP, and it was prayed by ld. CIT-DR that the matter can be restored back to the ld. TPO for necessary verifications. It was submitted that the authorities below has rightly included ANZ as the assessee is also engaged in business of ITES. 3.3.12 The ld. Counsel for the assessee submitted in rebuttal that the ld. DRP gave clear directions to the TPO to include ANZ as comparable if it qualifies all filters. It was submitted that the assessee is not in the business of ITES, as it is rendering services in the field of book keeping, accounting and customer relationship. The ld. Counsel for the assessee drew our attention to the directions of ld. DRP to that effect, which are reproduced hereunder: "The TPO is directed to highlight the functional profile of the company and include this in the set of comparable only if it satisfies broad functional similarity criteria as required under TNMM and passes all the quantitative filters applied by him. The TPO will pass a sp....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 1. ANZ, Hongkong 176.82 Sale of Services 2. ANZ, Hongkong 83.12 Sale of Services 3. ANZ, Vietnam 31.66 Sale of Services 4. ANZ, Vietnam 38.41` Sale of Services 5. ANZ, Australia 23.90 Sale of Services 6. ANZ, Australia 277.23 Other related party transactions income Interest Income 7. ANZ, Australia 26.88 Sale of Services 8. ANZ, Australia 446.76 Other related party transactions income Interest Income 9. ANZ, UK 17.00 Sale of services 10. ANZ, UK 20.08 Sale of Services 11. ANZ, Japan 6.38 Sale of Services 12. ANZ, Japan 6.64 Sale of Services 13. ANZ, Taiwan 11.04 Sale of Services 14. ANZ, Taiwan 12.70 Sale of Services 15. ANZ, USA 9.29 Sale of Services 16. ANZ, USA 10.57 Sale of Services 17. ANZ, China 5.54 Sale of Services 18. ANZ, China 7.16 Sale of Services 19. ANZ, Korea 4.46 Sale of Services ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y TPO). Under these circumstances, ANZ fails as comparable, and thus needs to be excluded. It is also equally true that this contention is raised by the assessee before us for the first time, and hence we are directing TPO to verify this fact of ANZ having failed on the search filter of Related Parties Transactions as adopted by TPO itself while passing order u/s 92CA(3) of the 1961 Act, and if the contentions of the assessee is found to be correct that ANZ has failed RPT filter as adopted by TPO, then in that eventuality the ld. TPO is directed to exclude ANZ as comparable. The assessee has forcefully contended that if ANZ is excluded as comparable, then other grounds concerning TP Adjustment to ALP are academic and hence become infructuous, thus, the same are not adjudicated by us and are kept open. We order accordingly. 3.4. Ground No. 9 Penalty u/s 270A is premature at this stage and is dismissed accordingly. 4. In the result, the appeal of the assessee in ITA No. 5142/Del/2024 for assessment year 2021-22 is partly allowed in the manner as indicated above. Order pronounced in the open court on 08.06.2026. ============= Document 1S. No. Comparable Company 1. A N Z ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The Company is a wholly owned subsidiary of ANZ Banking Group Linuted, Melbourne. The principal place of business is at Eucalyptus, Manyata Embassy Business Park, Special Economic Zone. Outer Ring Road, Rachenahalli, Nagavara Village, Hobli, Bengaluru, Karnataka - 560 045. The Company is into the business of rendering IT enabled services to the ANZ Group companies. The Company obtained an approval on 30 October 2007 for setting up a unit in Special Economic Zone ("SEZ") which was operational from 1 August 2008. 5. Significant developments during the year Yo ur Directors are pleased to present the significant business developments during the year: SUPPORT SERVICES INDIA PRIVATE LIMITED Standalone Financial Statements for period 01/04/2020 to 31/03/2021 i. Customer Service Operations : Radical thinking: Home Loan Assessment team had a challenge in bringing the WIP/SLA down in the complex queues (CAD B. CAD C and LMT). The building the capability for these buckets is time consuming and would not solve the issue within a short period of time. In order to support the Ops team and provide better service to customers. the Home Loan Credit team volunteered to help in reducin....