Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (8) TMI 129 - AT - Income TaxTP Adjustment - inclusion of TCS e-Serve International Limited and Tech Mahindra Limited only and solely on the ground that both these companies do not pass the filter of 25% of Related Party Transactions [RPT] - HELD THAT:- After going through the computation of RPT as mentioned elsewhere, we are of the considered opinion that the TPO/Ld. CIT(A) should have examined the calculation provided by the assessee. Thereafter, should have rejected the contention of the assessee. Therefore, in the interest of justice and fair play, we deem it fit to restore this issue to the file of the AO/TPO with a direction to examine the arithmetical accuracy of computation of RPT and, if found correct, both these companies should be excluded from the final set of comparables. Otherwise, the Assessing Officer/TPO shall demonstrate how these two companies passed the RPT filter. TP adjustment relates to not accepting Ace BPO Services Pvt Ltd as a valid comparable to the ITES segment of the appellant - HELD THAT:- A perusal of the Annual Report of Ace BPO Services Ltd shows that under Schedule “Types of Principal Products or Services”, it has been mentioned that this company is engaged in BPO services, though in the health care segment. Nevertheless, in our considered opinion, since this company is engaged in BPO services, the TPO should not have rejected this company merely by stating that this company is in the health care segment and is functionally dissimilar. We restore the inclusion or otherwise of this company to the file of the TPO/Assessing Officer to examine the same in light of the directions of the co-ordinate bench. Accordingly, all the grounds related to TP adjustments in so far as these two comparable companies are concerned are treated as allowed for statistical purposes. Disallowance of rebates/discounts paid to the holding company - HELD THAT:- The assessee provides services as required, from time to time and BV overseas entities computes the global sale of services made to the overseas customers and accordingly computed the volume discount payable to them. Such discount percentage is allocated amongst the affiliates of BV overseas entities which also included the assessee company based upon their proportionate sales vis-à-vis global sale and such discounts are recovered from its affiliates which also included the assessee company and finally, rebate is passed upon to third party vendor. Some sample proof of remittances are placed in the paper book. These agreements/MOUs were before the lower authorities and nowhere the Assessing Officer has demonstrated that these are sham transactions. Assessing Officer should have examined the transactions in light of agreements/MOUs and related documentary evidences before coming to any conclusion. We further find that all the documents were not furnished before the Assessing Officer as the same has been placed before us in the form of Additional Evidences to demonstrate that the discounts/rebates have ultimately been passed on to the customers. We deem it fit to restore this issue to the file of the AO. The assessee is directed to demonstrate that discounts/rebates have ultimately been passed on to customers and the Assessing Officer is directed to verify the same in light of Agreements/MOUs. Appeal of the assessee allowed for statistical purposes.
|