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2020 (11) TMI 132 - AT - Income TaxTP Adjustment made in the segment of business support services - selection of comparables in order to benchmark the international transactions undertaken by the assessee with its AE - applicability of safe harbor rules or not to the year under consideration - HELD THAT:- Accentia Technologies Ltd. - In view of the services provided by the assessee, which are back office services, the concern cannot be held to be comparable to the assessee on the ground of it being not functionally comparable. Another aspect to be kept in mind is the extraordinary event of amalgamation, which has occurred during the year and such concern with extraordinary event cannot be held to be comparable in the year of the amalgamation. Accordingly, we hold so. Infosys BPO Limited - In the first instance, it has large scale of operations totalling ₹ 1126 Crores against the total turnover of the assessee as ₹ 1.17 Crores. Further, the said concern is engaged in wide set of services and the margins of the said concern cannot be compared with the margins of the assessee. We find support from the ratio laid down by the Tribunal in the case of sister concern itself. Similar is the proposition for the TCS E-serve Ltd. and TCS E-serve International Ltd. eClerx Services Limited - Since, the assessee is engaged in providing BPO services and eClerx Services Limited is engaged in KPO services, we find no merit in the inclusion of said concern in final set of comparables. M/s. R Systems International Limited (segmental) and M/s. Caliber Point Business Solutions Limited - In case from the available data on record, the results for the financial year as that of the tested party can be made available by the assessee, the AO/TPO may verify the same and include the said concerns i.e. M/s. R Systems International Limited (segmental) and M/s. Caliber Point Business Solutions Limited in the final list of comparables. We direct the Assessing Officer to afford reasonable opportunity of hearing to the assessee in order to decide the same and accordingly re-compute the Arm’s length price of ITeS Segment. Safe Harbor Rules - Hon’ble Delhi High Court in Pr. CIT vs Fiserv India Pvt. Ltd. [2016 (1) TMI 1276 - DELHI HIGH COURT] has held that Safe Harbour Notification dated 18th September 2013 relied upon by the Revenue is prospective. Since, Safe Harbour Rules are not operative for the year under consideration; hence, the orders of authorities below are reversed on this ground. Interest chargeable on receivables - HELD THAT:- The issue arising in the present appeal before us is similar in Pr. CIT vs Kusum Health Care Pvt. Ltd. [2017 (4) TMI 1254 - DELHI HIGH COURT] wherein it was held that if working capital adjustment is allowed to the assessee, then no further adjustment is to be made on account of interest on receivables - we find no merit in the adjustment made by the AO/TPO in this regard as working capital adjustment has been allowed in the hands of the assessee. Disallowance of depreciation on such database - HELD THAT:- Following the same parity of reasoning as in assessee’s own case for earlier assessment year, we find no merit in restriction of cost of acquired database and the consequent disallowance of depreciation on such database by the Assessing Officer/TPO. Thus, the Assessing Officer is directed to allow depreciation on entire payment of ₹ 12 Crores towards acquired Business database. Order of the AO in restricting the cost of goodwill to nil and not allowing depreciation on it - The issue of depreciation on goodwill stands covered in favour of the assessee in line with the order of the Tribunal in assessee’s own case in Assessment Year 2002-03 (supra). Following the same parity of reasoning, we allow the claim of depreciation on goodwill.
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