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2020 (12) TMI 589 - AT - Income TaxTP Adjustment - comparable selection - functional, asset and risk ('FAR') profile of the assessee - stand of revenue the assessee is not a captive BPO service provider - HELD THAT:- The assessee provides BPO services to its holding company as a captive service provider in relation to some of the clients. The BPO services includes various types of services including e-recruitment services, financial accounting services and routine back office services which could be like indexing and enrollment for clients. The assessee reconciles claims to confirm that all payments required to be made to client's employees have been processed by the holding company. All client relations are maintained by the holding company and only a part of the data entry functions is outsourced to the assessee. The holding company, on the other hand, undertakes the entire marketing and business development activity to generate business, negotiates and enters into contracts with customers, bears the costs of the entire project transition phase, renders the requisite training to its employees or the employees of the respondent and oversees the running of the entire project. The assessee functions all along under the guidance and supervision of the holding company. The assessee's resources log into the application to retrieve the said data. Based on the claims submitted by the clients, the assessee performs the necessary data entry functions. In case any clarification or guidance is required by the assessee, these are provided by the holding company's subject matter experts. Respectfully following the judgment of the Coordinate Bench in assessee's case [2015 (6) TMI 677 - ITAT KOLKATA] we hold that assessee is engaged in providing captive BPO services to its holding company and hence we dismiss grounds Nos. 1, 2 and 3 raised by the Revenue. Comparable o selection - HELD THAT:- We note that the comparables chosen by the Ld. TPO are primarily engaged in KPO services, unlike the assessee which is engaged in providing BPO services. We note that the assessee is engaged in performing captive BPO services to its holding company and such view has been accepted by the Ld. CIT(A). When a tested party is a BPO service provider (akin to the assessee), KPOs cannot be considered as comparables from a transfer pricing perspective. Accentia Technologies Ltd should be rejected as a comparable as company is engaged in development of software products and rendering KPO services in the healthcare sector. TCS E-Serve International Ltd - Since the services are being provided as a part of an acquisition deal, pricing and the terms on which TCS E-serve International provided services would not have been at market defined rates. TCS E serve international is a subsidiary of Tata consultancy services Ltd. Behind the above comparable company, there is a Tata brand. For this reason that it belongs to Tata group and has also contributed to Tata brand which is one of the largest brand in the information technology segment, there is a definite impact on the pricing capacity of the comparable which the assessee lacks. Hence, we find that TCS E serve international Ltd. deserves to be excluded. e4e Healthcare Business Services Pvt. Ltd Company was engaged in business of providing healthcare outsourcing services and software development for the healthcare industries, the same cannot be compared with the assessee which was engaged in providing BPO services. Crossdomain Solutions Pvt. Ltd. should be rejected as a comparable as the said concern operates as a Knowledge Process Outsourcing services provider (KPO) and not a simple business process outsourcing services provider and cannot therefore be compared with the assessee. Cosmic Global Ltd is not comparable to the assessee as it has different functions which cannot be compared to those of the assessee. Timex Group India Ltd-Segment is engaged in providing IT and finance related back office support services which are similar to that provided by the assessee. AOK In-House BPO Services Ltd . should be accepted as a comparable as company is engaged in providing BPO services. As per their annual report, the company is a BPO service provider. Aditya Birla Minacs Worldwide Ltd company provides a variety of business process outsourcing services which are non-voice based. The services provided by Aditya Birla Minacs Worldwide Ltd, being non-voice based BPO services, are similar to those provided by the assessee. Omega Healthcare Management Services Pvt. Ltd. - services provided are similar to those provided by the assessee. Thus it should be accepted as a comparable. We agree with the view taken by the ld CIT(A). In House Productions Ltd-Segment - As per its annual report, the year under review has seen the company having income from Medical BPO activities - Therefore, based on the facts narrated above, the In House Productions Ltd-Segment should be accepted as a comparable.e Fortune Infotech Ltd. should be accepted as a comparable as this company is engaged in providing IT Enabled Services such as claims and document processing. Since the margin earned by the assessee is higher than the margin of the comparables, therefore the transaction of "services rendered" is at arm's length. We do not find any infirmity in the order of ld CIT(A) except that we have rejected Cosmic Global Ltd, and this does not give any impact so far the arm's length price adjustment is deleted by the ld CIT(A).That being so, we decline to interfere with the order of Id. C.I.T.(A) in deleting the aforesaid ALP adjustment.
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