TaxTMI 
TaxTMI 
2018 (8) TMI 2184
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....both of these appeals were heard together, pertain to the same assessee and involve some interrelated issues, both of these appeals are being taken up, and disposed of, by way of this consolidated order. 2. The assessee before us is a subsidiary of Global Vantedge (Mauritius) Ltd and is engaged mainly in the business of debt collection services and telemarketing for its associated enterprises Global Vantedge Inc (GV Inc.), a US based company. This GV Inc USA acts as front end service provider, owning less than 5% assets and working with just a few employees of its own, to its customers but all the work is actually performed by the assessee under an arrangement with GV Inc. The assessee owns full capacity to work for the clients of GV Inc....
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....red the factual position the associated enterprise of the appellant, i.e. Global Vantedge Inc (GV Inc) has incurred losses and, as such, there is no transfer of profits by the appellant to its associated enterprises. 6. That the learned AO/TPO has erred in determining the ALP by taking the appellant as the tested party and by rejecting submission of the appellant that GV Inc has to be considered as a tested party. 3. Learned CIT(A), however, simply brushed aside the above grounds of appeal and justified the rejection of TP study on factors not relevant to the above grievance, such as inappropriate filters etc. The assessee is not satisfied and is in further appeal before us. So far as this aspect of the matter is concerned, the ....
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....sk is selected as the tested party. The fact that as per the transfer pricing regulations a less complex entity is generally selected as tested party is also supported by Para 3.43 of the OECD transfer pricing guidelines for Multinational Enterprises and Tax Administration 1995 which states as following: "The associated enterprise to which the transactional net margin method is applied should be enterprise for which reliable data on the most closely comparable transaction can be identified. This often entails selecting the enterprise that is the least complex of the enterprises involved in the controlled transaction and that does own valuable intangible property or unique assets." The above concept of selecting le....
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....on was based on inappropriate aggregation of different transactions entered into by the assessee with various associated enterprises operating in different countries. The ITAT did not reject the foreign comparable due the reason that they were operating in a foreign country. The relevant extract from the judgment, where ITAT has supported the use of foreign comparables, are reproduced hereunder: "It is no doubt true that under certain circumstances, foreign AE can be taken as a tested party for comparison. It will depend on facts and circumstances of each case." In the present case, it is GV Inc which is the less complex vis-a-vis the appellant hence it should be selected as the tested party. In support of the fac....
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....there can indeed be little dispute that least complex of the party is GV Inc. While the core business function is performed by the assessee company, and entire infrastructure and operating assets are owned by the assessee company, the foreign AE, i.e. GV Inc, is primarily responsible for procuring the work and owns relatively much less assets, employees and operating assets. On these facts, therefore, the claim of the assessee that the foreign AE was the least complex entity could hardly be summarily rejected. Of course, the next question is the availability of data and the onus to furnish the same is on the assessee, but the authorities below have not at all addressed themselves to this aspect of the matter. In view of these discussions, a....