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2017 (6) TMI 722 - AT - Income TaxAddition on adjustment to Arm’s Length Price (ALP) - Held that:- As the assessee is in the business of providing call centre services / business process outsourcing services to the clients of its parent company the companies functionally dissimilar with that of assessee need to be de-selcted from final list of comparable. If 13 comparables are excluded (ie comparables having RPT more than 25%, functionally not comparable, irregular business operations and having brand value as stated supra) and one comparable is included (i.e. Ask Me Info Hubs Ltd) and if the arithmetic mean of 15% is applied on the reduced Operating Cost of ₹ 28,16,08,026/- ( i.e. 31,09,36,578 – 2,92,51,866 – 76,686) as discussed above, then the ALP @ 115% of Operating Cost would be ₹ 32,38,49,230/-. If the 5% tolerance limit is applied on the same (i.e. 32,38,49,230 * 5% = 1,61,92,462), then the price charged by the assessee on its international transactions could range between ₹ 30,76,56,768 to ₹ 34,00,41,692/-. In the instant case, the price charged by the assessee for its BPO services (international transaction) was ₹ 31,21,86,866/-. Hence we hold that the price charged by the assessee for its international transaction is at Arm’s Length as it falls within the permitted range as supra and hence no adjustment is required to be made to its ALP - Decided in favour of assessee.
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