TMI Blog2019 (7) TMI 1644X X X X Extracts X X X X X X X X Extracts X X X X ..... t be a comparable to a BPO service provider. See B.C. MANAGEMENT SERVICES PVT. LTD. [ 2017 (12) TMI 255 - DELHI HIGH COURT] Acropetel Technologies Ltd. - Transfer Pricing Officer himself has stated that the company has three segments namely; engineering, design service, information technology service segment and healthcare segment. However, he has stated that only healthcare service segment was considered by him for comparability analysis. But nowhere the Transfer Pricing Officer has dealt with assessee s contention with regard to unavailability of segmental details relating to export sales, employee cost, etc. Further, he has also not dealt with assessee s objection that substantial operation of software development activities were outsourced on sub contract basis Learned DRP has also not considered the objections of the assessee property. As decided in CGI INFORMATION SYSTEMS AND MANAGEMENT CONSULTATION PVT. LTD. [ 2018 (4) TMI 567 - ITAT BANGALORE] this company from being treated as comparable since segmental information to apply certain filters are not available. Thus we exclude this company as a comparable. Crossdomain Solutions Ltd - Department has failed to substant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies in entertaining a fresh claim of deduction made by the assessee. Therefore, keeping in view the ratio laid down in the aforesaid decisions, the decision of learned DRP in rejecting assessee s claim is unsustainable, hence, deserves to be set aside. However, since the Departmental Authorities have not examined assessee s claim, both factually and legally, we are inclined to restore the issue to the Assessing Officer for examining assessee s claim on its own merit. While doing so, the Assessing Officer is also directed to take note of the fact whether such claim was allowed in any other assessment year. Ground is allowed for statistical purposes. - ITA No. 2692/Mum./2016 - - - Dated:- 12-7-2019 - SHRI SAKTIJIT DEY, JUDICIAL MEMBERAND AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER For the Revenue : Shri Anand Mohan For the Assessee : Shri J.D. Mistry a/w Shri Madhur Agarwal and Ms. Urvi Mehta ORDER PER SAKTIJIT DEY. J.M. Captioned appeal has been filed by the assessee challenging the final assessment order dated 29thJanuary 2016, passed under section 143(3) r/w section 144C(13) of the Income Tax Act, 1961 (for short the Act ) for the assessment year 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted, the major dispute between the parties is with regard to three comparables viz. Accentia Technologies Ltd., Acropetel Technologies Ltd. and Crossdomain Solutions Ltd. He submitted, in various decisions it has been held that these companies are not comparable to a BPO service provider for various reasons. He submitted, if these three comparables are excluded, assessee s margin would fall within the arm's length range of arithmetic mean of other comparables, hence, all other transfer pricing issues raised by the assessee would become redundant. In view of the aforesaid submissions of the learned Sr. Counsel, we proceed to deal with the comparables specifically disputed before us by the assessee. ACCENTIA TECHNOLOGIES LTD. 5. Objecting to the selection of this company as a comparable, the learned Sr. Counsel for the assessee submitted, the company is functionally different from the assessee as it renders knowledge process outsourcing (KPO) service in the Healthcare sector through software known as SaaS Model. He submitted, during the financial year relevant to the assessment year under dispute, it had acquired another company viz. Strategic Tangent Corporation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Revenue. Further, the Tribunal, Pune Bench, in Aptara Technologies Pvt. Ltd. (supra), following the decision of the Tribunal, Delhi Bench, in B.C. Management Services Pvt. Ltd. (supra) has held that this company cannot be a comparable to a BPO service provider. The aforesaid decisions of the Tribunal are for the very same assessment year i.e., A.Y. 2011 12. That being the case, respectfully following the decisions of the Co ordinate Bench, as referred to above, we hold that this company cannot be a comparable to the assessee. ACROPETEL TECHNOLOGIES LTD. 8. Objecting to the selection of this company as a comparable, the learned Sr. Counsel submitted, the company has various segments, whereas, the segmental details in respect of all the segments are not available. He submitted, in course of proceedings before the Transfer Pricing Officer, though, the assessee has brought all these facts to his notice, however, he has not at all considered the objections of the assessee objectively. He submitted, the company being functionally different from the assessee cannot be treated as comparable. He submitted, the DRP has also accepted it as a comparable simply following the observa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year under consideration is not available in the public domain. He submitted, the assessee is also not aware of the nature of information relating to the company available with the Transfer Pricing Officer as no details were provided to the assessee either by the Transfer Pricing Officer or by the DRP. He submitted, for this reason alone, the company cannot be treated as comparable. Further, he submitted, the company is also functionally different from the assessee as it provides re engineering pay roll service, development of product suits which are in the nature of KPO service. Thus, he submitted, the company cannot be treated as comparable. In support of such contention, he relied upon the following decisions: i) ACIT v/s Monster.com India Pvt. Ltd., ITA no.1425/Hyd./2015, etc., order dated 30.08.2017; ii) BNY Mellon International Operations India Pvt. Ltd. v/s DCIT, [2015] 55 taxmann.com 386 (Pun.); and iii) PCIT v/s BNY Mellon International Operations India Pvt. Ltd., [2018] 93 taxmann.com 363 (Bom.). 12. The learned Departmental Representative though agreed that the Transfer Pricing Officer has not discussed in detail the functional comparability of the company, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aken as nil. The net of excess liability over assets was recorded as goodwill in the books of account of Tracmail AR Services Pvt. Ltd. However, it did not claim any depreciation on the goodwill. Insofar as the assessee is concerned, the resultant gain from transfer of goodwill was offered to tax as capital gain in the assessment year 2009 10. However, the Assessing Officer assessed the goodwill as capital gain in the assessment year 2008 09 on substantive basis. Subsequently, by virtue of a scheme of amalgamation approved by the Hon'ble Jurisdictional High Court vide order dated 28th January 2011, effective from February 2010, Tracmail AR Services Pvt. Ltd. and HOV ARM Management Services Pvt. Ltd. merged with the assessee company. As a result, the goodwill in the books of Tracmail AR Services Pvt. Ltd., was transferred to the books of account of the assessee on account of such amalgamation. In the return of income filed for the impugned assessment year, the assessee claimed depreciation of ₹ 2,25,66,258, on the opening written down value of goodwill amounting to ₹ 9,02,65,033, appearing in the books of the assessee. The Assessing Officer after calling for necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 302 (SC), the assessee claimed depreciation in the impugned assessment year. He further submitted, the observation of the DRP that the assessee cannot claim depreciation on the entire amount of goodwill is also irrelevant considering the fact that the assessee has actually claimed depreciation on the opening WDV. Thus, he submitted, assessee s claim should be allowed. 17. The learned Departmental Representative submitted, both the Assessing Officer and the DRP have held the claim of depreciation as colourable device since complete details relating to such claim were not produced before them. Thus, he submitted, assessee s claim of depreciation on goodwill may be restored back to the Assessing Officer for fresh adjudication. 18. We have considered rival submissions and perused the material on record. Insofar as the factual position relating to the aforesaid issue is concerned, there is no dispute. Even the Assessing Officer has stated that the assessee had transferred its business on slump sale basis to Tracmail AR Services Pvt. Ltd. in assessment year 2008 09 which included goodwill of ₹ 11,51,01,122. The aforesaid goodwill was also reflected not only in the respecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion on goodwill of ₹ 44,55,14,491, arising as a result of amalgamation. While the Assessing Officer completely ignored assessee s claim, learned DRP disallowed the claim on the ground that assessee did not make the claim either in the original return of income or in a revised return of income. While doing so, learned DRP referred to the decision of Hon'ble Supreme Court in Goetz India Ltd. v/s CIT, [2006] 284 ITR 323 (SC). 21. The learned Sr. Counsel for the assessee submitted, the Departmental Authorities are totally wrong in disallowing assessee s claim on the ground that it was not claimed in the return of income. He submitted, even if a deduction is not claimed in return of income, the assessee can claim it subsequently either before the Assessing Officer or even before the appellate authority. In this context, he relied upon the following decisions: i) CIT v/s Pruthvi Brokers Shareholders Pvt. Ltd., [2012] 349 ITR 336 (Bom.); and ii) Franklin Templeton Asset Management India Pvt. Ltd. v/s ACIT, ITA no.4068/Mum./2011 22. Further, he submitted, the assessee s claim of depreciation on goodwill arising out of amalgamation was allowed by the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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