BA Call Centre India Pvt. Ltd., New Delhi V. DCIT, New Delhi

CO 37/DEL/2018

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3862 (ITAT-DELHI)
• Duration Of Justice: 4 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 08-06-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I2
• Assessment Year: 2010-2011
• Appeal Filed On: 08-02-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR YADAV SENIOR
• Assessee Lawyers: MANONEET DALAL SHRI JIBIN BABU
• Keywords: Related party transaction; Transfer pricing; International transaction; Wholly owned subsidiary
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I-2 : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.387/DEL./2015 (ASSESSMENT YEAR : 2010-11) DCIT, CIRCLE 4 (1), VS. M/S. BA CALL CENTRE INDIA PVT. LTD., NEW DELHI. F 42, EAST OF KAILASH, NEW DELHI 110 065. (PAN : AACCB8975E) CO NO.37/DEL/2018 (IN ITA NO.387/DEL./2015) (ASSESSMENT YEAR : 2010-11) DCIT, CIRCLE 4 (1), VS. M/S. BA CALL CENTRE INDIA PVT. LTD., NEW DELHI. F 42, EAST OF KAILASH, NEW DELHI 110 065. (PAN : AACCB8975E) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MANONEET DALAL, ADVOCATE SHRI JIBIN BABU, ADVOCATE REVENUE BY : SHRI SANJAY KUMAR YADAV, SENIOR DR DATE OF HEARING : 07.06.2018 DATE OF ORDER : 08.06.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : ITA NO.387/DEL/2015 2 THE AFORESAID APPEAL FILED BY THE REVENUE AND CROSS OBJECTIONS FILED BY THE ASSESSEE ARE BEING DISPOSED OF BY WAY OF CONSOLIDATED ORDER TO AVOID REPETITION OF DISCUSSIO N. 2. THE APPELLANT, M/S. BA CALL CENTRE INDIA PVT. LT D. (HEREINAFTER REFERRED TO AS THE TAXPAYER) BY FILI NG THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 24.11.2014, PASSED BY THE AO IN CONSONANCE WITH THE ORDERS PASS ED BY THE LD. DRP/TPO UNDER SECTION 143 (3) READ WITH SECTION 144 C OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) QUA THE ASSESSMENT YEAR 2009-10 ON THE GROUNDS INTER ALIA THAT :- 1. THE LD. DRP HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE TPO TO EXCLUDE THE INFOSYS BPO LTD. A S COMPARABLE WITHOUT APPRECIATING THAT THE ASSESSEE I TSELF WAS CONVINCED ON THE INCLUSION OF THE SAME AS COMPARABL E AND IN IGNORING THAT THE ASSESSEE ITSELF HAD INCLUDED T HE SAME IN THE TP STUDY SUBMITTED FOR A.Y 2011-12. 2. THE LD DRP HAS ERRED IN LAW AND ON FACTS IN IGNORING TCS E-SERVE LIMITED AND TCS E-SERVE INTERNATIONAL LTD. AS COMPARABLES WITHOUT APPRECIAT ING THAT THESE COMPANIES WERE ALSO ENGAGED IN THE SIMILAR BU SINESS AS INFOSYS.. 3. THE OBJECTOR, M/S. BA CALL CENTRE INDIA PVT. LTD ., BY FILING THE PRESENT CROSS OBJECTIONS CHALLENGED THE ASSESSM ENT ORDER DATED 24.11.2014 PASSED BY THE ASSESSING OFFICER QUA THE ASSESSMENT YEAR 2010-11 ON THE GROUNDS INTER ALIA THAT :- 1. THE LD. AO/ LD. TPO/ HON'BLE DRP ERRED IN LAW A ND FACTS BY REJECTING CERTAIN FUNCTIONALLY COMPARABLE COMPANIES ITA NO.387/DEL/2015 3 SELECTED/PROPOSED BY THE ASSESSEE/RESPONDENT BASED ON THE APPLICATION OF CERTAIN ARBITRARY QUANTITATIVE FILTE RS. 2. THE LD. AO/ LD. TPO/ HON'BLE DRP ERRED IN LAW AN D FACTS BY REJECTING CERTAIN FUNCTIONALLY COMPARABLE COMPANIES SELECTED BY THE ASSESSEE/RESPONDENT ALLEGING FUNCTI ONAL DISSIMILARITY. 3. THE HON'BLE DRP ERRED IN LAW AND FACTS BY NOT ADJUDICATING ON THE GROUND RAISED BY THE ASSESSEE W ITH REGARD TO INCLUSION OF CERTAIN COMPARABLE COMPANIES. 4. THE LD. AO/ LD. TPO/ HON'BLE DRP ERRED IN LAW AN D FACTS BY INTRODUCING/RETAINING CERTAIN FUNCTIONALLY INCOMPARABLE COMPANIES FOR ARM'S LENGTH PRICE DETERMINATION. 4. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : THE TAXPAYER CARRIES OUT ITS TELE- MARKETING ACTIVITY OF MAKING/RECEIVING CALLS FOR BA UKS DOMESTIC CUSTOMERS IN INDIA AND INTERNATIONAL CUSTOMERS OUTS IDE INDIA. BA, JK HAS INCORPORATED A WHOLLY OWNED SUBSIDIARY IN IN DIA, NAMELY, BA CALL CENTRE INDIA PVT. LTD., THE TAXPAYER. THE TAXPAYER RENDERS SERVICES IN THE NATURE OF CUSTOMER CARE SERVICES WH ICH ENTAIL PROVISION OF ASSISTANCE AND INFORMATION REGARDING F LIGHT DETAILS, SUCH AS, FLIGHT DESTINATIONS, FLIGHT SCHEDULES, SEA T AVAILABILITY, INTER- CONNECTING FLIGHT INFORMATION AND ANSWERING SPECIFI C CUSTOMER QUERIES. SUCH ACTIVITIES WOULD PRIMARILY UNDERTAKE THROUGH THE MEDIUM OF TELEPHONES. DURING THE YEAR ASSESSMENT, THE TAXPAYER ENTERED INTO INTERNATIONAL TRANSACTIONS WITH ITS AE AS UNDER :- ITA NO.387/DEL/2015 4 S.NO. INTERNATIONAL TRANSACTION AMOUNT (IN RS.) 1 PROVISION OF CALL CENTRE SERVICES 137,881,198 2 COST ALLOCATION BY AE 23,019,188 3 CROSS CHARGE OF EXPENSES 3,332,762 5. THE TAXPAYER BY APPLYING TRANSACTIONAL NET MARGI N METHOD (TNMM) WITH OPERATING PROFIT/TOTAL COST (OP/TC) AS PROFIT LEVEL INDICATOR (PLI) HAS CHOSEN 8 COMPARABLES WITH AVERA GE MARGIN OF 11.79% BY USING MULTIPLE YEAR DATA AS AGAINST ASSES SEES OWN MARGIN OF 17.75% AND FOUND ITS INTERNATIONAL TRANSA CTIONS AT ARMS LENGTH. HOWEVER, TPO BY APPLYING VARIOUS FILTERS I N HIS TP ANALYSIS CHOSEN 10 COMPARABLES WITH AVERAGE OF 29.8 6% AS AGAINST ASSESSEES MARGIN OF 17.75% AND PROPOSED TP ADJUSTM ENT TO THE TUNE OF RS.1,19,58,830/-. 6. THE TAXPAYER CARRIED THE MATTER BEFORE THE LD. D RP VIDE RAISING OBJECTIONS WHO HAS GRANTED PART RELIEF TO T HE TAXPAYER BY DIRECTING THE TPO TO EXCLUDE INFOSYS BPO LIMITED, T CS E-SERVE LIMITED AND TCS E-SERVE INTERNATIONAL LTD. FROM THE FINAL SET OF COMPARABLES FOR BENCHMARKING THE INTERNATIONAL TRAN SACTIONS. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE T HE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. THE TAXPAYER ALSO FILED CROSS OBJECTIONS. ITA NO.387/DEL/2015 5 7. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 8. TPO, AFTER REJECTING ALL THE COMPARABLES CHOSEN BY THE TAXPAYER FOR ITS TP ANALYSIS, PROPOSED FILTERS INTE R ALIA THAT COMPANIES WHOSE DATA IS NOT AVAILABLE FOR THE FY 20 09-10 ARE EXCLUDED; COMPANIES WHOSE ITES INCOME