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2020 (9) TMI 485 - AT - Income TaxTP Adjustment - Comparable selection - TCS E Serve International Ltd., TCS E Serve Ltd. chosen by the ld. TPO in order to benchmark its international transactions qua ITES segment - HELD THAT:- TCS E Serve International has been found to be not a suitable comparable vis-o-vis ITES provider in case of Avaya India Pvt. [2019 (7) TMI 1279 - DELHI HIGH COURT] on ground of having given huge amount to Tata Sons Ltd. towards brand equity; having no segmental bifurcation between transaction processing and technical services; having huge intangible in the form of brand value having considerable effect on its PLI. All the aforesaid facts go to prove that TCS E Serve International, admittedly rejected by the ld. TPO in AY 2011-12, is not a suitable comparable for benchmarking the international transactions qua ITES segment, hence ordered to be excluded. TCS E Serve as not a suitable comparable vis-o-vis routine service provider on grounds of its large scale of operation and clientele base having huge turnover and having given huge amount to Tata Sons Ltd. towards brand loyalty and having no segmental bifurcation between transaction processing and technical services. Rectification u/s 154 - operating cost of the appellant instead of actual operating cost which is a mistake apparent from record thereby resulting in decrease in the operating margin of the Appellant from 17.00% to 9.06% - HELD THAT:- Since both the ld. AR for the taxpayer as well as ld. DR for the Revenue have fairly conceded that it is a mistake apparent on record, the AO/TPO are directed to rectify the mistake after duly verifying the records/documents. MAM selection - TPO rejected the method adopted by the taxpayer, applied Comparable Uncontrolled Price (CUP) method and computed the ALP of the transaction at nil - HELD THAT:- Issue is remitted back to the ld. TPO/AO to follow the directions given by the ld. DRP and to pass the order accordingly. Disallowance of Travelling and conveyance expenses appearing as credit card payment in the AIR - AO/DRP disallowed the same on the ground that no document evidence viz. bills/vouchers in support of its claim has been brought on record by the taxpayer to establish that the expenses reimbursed by the taxpayer to the employees have been duly considered in computing the taxpayer's income - HELD THAT:- No doubt, the taxpayer is having details of expenses claimed as reimbursement by the employees but in order to authenticate the same it has not taken on record the copies of the credit card bills of its employees to prove that the expenses have been incurred by the employees for the business purposes. In these circumstances, we are of the considered view that the issue is required to be remitted back to the AO to decide afresh by providing an opportunity of being heard to the taxpayer to explain the details of the amount reimbursed to the employees. Ground is allowed in favour of the taxpayer for statistical purposes. Determining arm's length interest rate at 10.85% on account of interest on delayed collection of receivables from its AE - HELD THAT:- Undisputedly, in AY 2010-11, in taxpayer's own case, ld. DRP held that the period of delay may be restricted to the very same accounting year for which benchmarking is being done i.e., till 31st March and interest should be computed accordingly to the period of delay only. It being an identical issue consistent approach by the Revenue authorities is required to adopt in order to stop unnecessary litigation. So, we are of the considered view that the issue is required to be remitted back to the AO/TPO to decide in accordance with the view taken in AY 2010-11 as well as law laid down in Kusum Healthcare Pvt. Ltd. i [2017 (4) TMI 1254 - DELHI HIGH COURT]. So, Ground determined in favour of the taxpayer for statistical purposes.
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