9911796707
TMI Blog2020 (7) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Services 34,98,59,203.00 TNMM 2. Reimbursement of expenses 2,14,05,189.00 CUP 3. Issue of equity shares 51,30,00,000.00 CUP Total 88,42,64,392.00 The margin of the assessee in transactions with its Associated Enterprises (AE) is stated to be 2.89% and with non-AEs is 2.99%. To benchmark international transactions with AEs, the assessee furnished list of comparables. The Transfer Pricing Officer (TPO) applied various filters and finally selected following six companies as comparables:- S.No. Name of the company Operating Margin 1. Accentia Technologies Limited 11.76% 2. eClerx Services Limited 61.21% 3. Genesys International Corporation Ltd. 30.19% 4. Jindal Intellicom Private Limited 6.08% 5. Infosys BPO Ltd. 33.92% 6. Excel Infoways Limited (Segmental) 49.38% Average 32.09% The assessee objected to inclusion of Genesys International Corporation Ltd. (in short 'Genesys') and Excel Infoways Limited (Segmental) (in short 'Excel') in the final set of comparables. The objection of the assessee against inclusion of Genesys is that it is not functionally comparable as the company is predominantly engaged in providing advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g comparables the TPO has failed to consider the objections filed by the assessee against inclusion of Genesys and Excel in the final list of comparables. The ld. Counsel for the assessee pointed that Genesys is functionally not comparable. The said company was included in the list of comparable in assessment year 2008-09. The matter travelled to the Tribunal. The Tribunal in appeal filed by the assessee in ITA No.7519/Mum/2012 for assessment year 2008-09 decided on 05/01/2018 held that Genesys is not functionally comparable with the assessee. The ld. Counsel for the assessee further pointed that in assessment year 2009-10 and 2010-11 there was no disputed with regard to the comparables as the case of the assessee was not referred to the TPO. In assessment year 2011-12, the TPO did not include Genesys in the list of comparables. The ld. Counsel for the assessee submitted that there has been no change either in the nature of business of the assessee or that of Genesys. Since the facts in assessment year 2008-09, 2011-12 and assessment year under appeal i.e. assessment year 2012-13 are same, Genesys should be excluded from the list of comparables on account of functional disparity. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contentions of the assessee, the same were rejected. The ld. Departmental Representative pointed that as regards fluctuating margins of Excel, this plea was never raised either before the TPO or before the DRP. The assessee has raised a fresh plea for exclusion of Excel from the list of comparables. In respect of depreciation/additional depreciation on goodwill, the ld.Departmental Representative fairly admitted that the issue was subject matter of appeal before the Tribunal in preceding assessment year i.e. assessment year 2011-12. However, the ld. Departmental Representative pointed that the assessee had never claimed additional deprecation in the return of income. The claim of depreciation on goodwill was raised for first time during the course of assessment proceedings. The Hon'ble Supreme Court of India in the case of Goetze (India) Limited vs. CIT, 284 ITR 323(SC) has held that the Assessing Officer has no power to accept the claim not made in the return of income. 7. We have heard the submissions made by rival sides and have perused the orders of authorities below. The grounds No.1 to 8 of the appeal are in respect of TP adjustment. The ld. Counsel for the assessee while m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein the margins of said concern being drastically dropped from 267.31% in earlier years to 41.48% during the year under consideration. The year-wise margins of said concern are as under:- Financial Year OP/TC Margin 2008-09 247.74% 2009-10 267.31% 2010-11 238.71% 2011-12 41.48% 17. Further, the said concern had closed down its ITES and BPO segment in financial year 2011-12 on account of global recession. We hold that the said concern which is in the process of closing down its ITES segment and also because of the factum of fluctuating margins, could not be selected as functionally comparable to the assessee. In this regard, we find support from the ratio laid down by the Hon'ble High Court of Gujarat in Pr. CIT Vs. Allscripts India Pvt. Ltd. in Income Tax Appeal No.258 of 2016 and Pune Bench of Tribunal in TIBCO Software India Pvt. Ltd. Vs. DCIT in ITA Nos.276/PUN/2015 & cross appeal in ITA No.334/PUN/2015, relating to assessment year 2010-11, order dated 31.01.2017 and Qlogic India Pvt. Ltd. Vs. DCIT in ITA No.227/PUN/2014, relating to assessment year 2009-10, order dated 21.10.2014." [Emphasised by us] In the case of Baxter India Pvt. Ltd vs. ACIT (supra), the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it cannot be said that the assessee has adopted a colourable device. Moreover, the scheme of amalgamation between the assessee and Tracmail AR Services Pvt. Ltd., having been approved by the Hon'ble Jurisdictional High Court, no doubt can be raised with regard to the transparency or genuineness of such transaction. Thus, when the assessee by virtue of such amalgamation has received back the goodwill in its book, depreciation has to be allowed on goodwill. As regards the doubt raised by learned DRP that the assessee cannot claim depreciation on the entire amount of goodwill, it must be observed that the assessee has claimed goodwill on the opening WDV only and not on the entire amount. It is now fairly well settled that goodwill being an intangible asset, depreciation has to be allowed. In view of the aforesaid, we direct the Assessing Officer to allow assessee's claim of depreciation of Rs. 2,25,66,258, on goodwill. Grounds are allowed." The facts in assessment year under appeal are identical. For parity of reasons mentioned above, the ground No.9 of the appeal is allowed. 10. The ground No.10 of the appeal is with respect to assessee's claim of additional depreciation on g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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