GBT INDIA PRIVATE LIMITED,NEW DELHI V. ACIT,OSD, DELHI

ITA 1764/DEL/2022

AI Insights

The case involves GBT India Private Limited, a wholly owned subsidiary of GBT III BV, Netherlands, which appealed against the order of the Assistant Commissioner of Income Tax for the Assessment Year 2018-19. The primary issues in the appeal were related to transfer pricing adjustments and disallowances concerning the depreciation on goodwill and bad debts written off. The Tribunal examined the methods used for determining the Arm's Length Price (ALP) of services provided by associated enterprises and the appropriateness of selected comparables for benchmarking. The Tribunal found that the adjustments made by the tax authorities were not justified and that the appellant had adequately demonstrated the necessity and receipt of the disputed services.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 788047 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: misc
• Appeal Filed On: 03-08-2022
• Other Referred Cases: CIT v. EKL Appliances [2012] 345 ITR 241 (Delhi), Magneti Marelli Power Train India 389 1TR 469, Gates India (P.) Ltd. [2024] 166 taxmann.com 29 (Del. Trib), Arcient Technologies (Holdings) Ltd. [2019] 109 taxmann.com 47 (Del.Trb), Amphenol Interconnect India (P.) Ltd. [2019] 410 ITR 373, Mercer Consulting [2024] 465 ITR 381, Agnity India Technologies (I) Ltd. [2013] 262 CTR 291, Pentair Water India (P.) Ltd. [2016] 69 taxmann.com 180, Thermo Fisher Scientific India (P.) Ltd., I & B Seeds (P.) Ltd., SAP India Pvt. Ltd. [ITA Nos. 682, 683/Bang/2017], Eagle Flask Industries Ltd. [ITA No.896/PN/2014]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DHARM VEER SINGH
• Assessee Lawyers: PRASHANT MEHARCHANDANI
• Keywords: Set aside; Transfer pricing; International transaction; Business expenditure; Bad and doubtful debts; Depreciation; Rule of consistency; Commercial expediency; Capital expenditure; Capital Gains; Valuation report; Wholly owned subsidiary
• Section: 143(3); 271(1)(c); 234B

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘I’: NEW DELHI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER AND SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER ITA No.1764/Del/2022, A.Y. 2018-19 GBT India Private Limited G-21, Ground Floor, Salcon Rasvilas, Plot No. D-1, Saket District Centre, New Delhi PAN: AAFCG5409D Vs. Assistant Commissioner of Income Tax, OSD, Civic Centre, Minto Road, New Delhi (Appellant) (Respondent) Appellant by Sh. Prashant Meharchandani, Adv. Shri Jinendra Kataria, Advocate Respondent by Shri Dharm Veer Singh, CIT(DR) Shri Ajay Kumar Arora, Sr. DR Date of Hearing 21/11/2025 Date of Pronouncement 26/11/2025 ORDER PER AVDHESH KUMAR MISHRA, AM This appeal of the assessee for Assessment Year (‘AY’) 2018-19 is directed against the order dated 30.06.2022 of the Assistant Commissioner of Income Tax, OSD, New Delhi passed under section 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (‘Act’). 2. The assessee has raised following grounds of appeal: “1. 1. That, on the facts and circumstances of the case and in law, the Ld. AO erred in assessing the total income of the Appellant for the relevant AY at Rs.28,50,39,521/- as against the returned income of Rs.11,70,14,540/-. Grounds Against Transfer Pricing Adjustment Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 2 2. That on the fact and circumstances of the case and in law, the Hon'ble Dispute Resolution Panel (\"DRP\")/Ld. AO/Ld. Transfer Pricing Officer (\"TPO\") erred in determining the Arm's Length Price (\"ALP\") of transition support services as NIL, by rejecting the Transactional Net Margin Method (\"TNMM\") applied by the Appellant, applying the Comparable Uncontrolled Price (\"CUP\") method and consequentially making an upward adjustment of Rs.7,34,54,905/Thus, erred in 2.1 inappropriately characterizing transition support services to be in the nature of stewardship activities without appreciating the evidence and documents filed by the Appellant demonstrating the nature of services availed from its Associated Enterprise (\"AE\"); 2.2 exceeding its jurisdiction by applying the cost benefit analysis in determining ALP of transition support services and erred in not following precedent laid down by the jurisdictional High Court in CIT v. EKL Appliances [2012] 345 ITR 241 (Delhi); 2.3 not following the principle of consistency by failing to appreciate that transfer pricing adjustment qua transition support services is covered in favour of the Appellant by the decision of this Hon'ble Tribunal in the Appellant's own case for earlier AYs (AY 2015-16 and 2016-17): 2.4 disregarding the fact that the disallowance of such costs would have a corresponding negative impact on the Appellant's taxable income and resultant profits which is against the intent of the provisions of Chapter X of the Act, 3. That, on the facts and circumstances of the case and in law, the Hon'ble DRP/Ld. AO/Ld. TPO erred in making an adjustment of Rs. 3,25,36,272/- on account of provision of operational and business support services. The authorities erred in: 3.1 rejecting the comparables selected by the Appellant, without assigning any cogent reasons for the same and 3.2 selecting companies which are functionally not comparable to the Appellant 4. That on the facts and circumstances of the case and in law, the Ld. AO/Ld. TPO erred in computing the PLI of the comparable companies selected by the Lad. TPO. Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 3 5. That on the facts and circumstances of the case and in law, the Hon'ble DRP/LE AO/Ld. TPO erred in not allowing risk adjustment under Rule 108(1)(e) of the Income Tax Rules, 1962 for determination of ALP to account for difference in the risk profile of the Appellant. Grounds Against Corporate Tax Adjustment 6. That, on the facts and circumstances of the case and in law, Hon'ble DRP/Ld. AO erred in making an addition of Rs.46,152,224/- by disallowing depreciation on the cost of goodwill capitalized in the books of account, arising as a result of acquisition of Corporate Travel Business Division of American Express India Pvt. Ltd. (\"AIEPL\") during FY 2014-15 by the Appellant by the way of a slump sale. 7. That, on the facts and circumstances of the case and in law, Hon'ble DRP/Ld. AO erred in disallowing expenses on account of bad debts written off, amounting to Rs.15,912,680/-, despite the fact that the twin conditions for allowance of deduction of bad debts contained in Section 36(1)(vii) read with Section 36(2) of the Act are satisfied 8. That, on the facts and circumstances of the case and in law, the Hon'ble DRP/Ld. AO erred in not following the principle of consistency by failing to appreciate that the adjustment qua depreciation on goodwill and disallowance of bad debts, are covered in favour the Appellant by the decision of this Hon'ble Tribunal in Appellant's own case for previous AYs (AY 2015-16 and 2016-17). Other Grounds 9. That, on the facts and circumstances of the case and in law, the Ld. AO erred in levying interest under Section 234A and 234B of the Act. 10. That, on the facts and circumstances of the case and in law, the Ld. AO erred in initiating penalty proceedings under Section 271(1)(c) of the Act Each of the above grounds are independent and without prejudice to the other grounds of appeal preferred by the Appellant. Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 4 The Appellant prays for leave to add, alter, vary, omit, substitute, or amend the above grounds of appeal, at any time before, or at, the time of hearing of the appeal.” 2.1 Ground No. 1, being general, stands dismissed and Ground Nos. 9 and 10, being consequential, do not require specific adjudication. So these grounds also stand dismissed. 3. The relevant facts giving rise to this appeal are that the assessee, a wholly owned subsidiary of GBT III BV, Netherlands, engaged in the business of arranging travel for domestic customers (within India and outside) by facilitating services entailing booking of air tickets, accommodation, cab, conference rooms, catering services, management of corporate events, public relation services etc. filed its Income Tax Return (‘ITR’) on 29.11.2018 declaring income of INR.11,70,14,540/-. The case was picked up for scrutiny. GBT III BV, parent company, is a joint venture between American Express Company, USA (AmEx) and Certares LP (Investment Group) having equal share of each member, with effect from 01.07.2014. Prior to 01.07.2014, Global Business Travel (GBT), was the corporate travel segment of AmEx. 3.1 In March 2014, a Master Reorganization agreement was entered between AmEx and GBT III BV. AmEx spun off its corporate travel business segment and transferred GBT assets, operations, employees and share of certain AmEx affiliates to GBT III BV. In India, the above business of AmEx was being carried out by American Express India Pvt. Ltd. (‘AEIPL’). AEIPL transferred its corporate travel division to the appellant assessee in a slump Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 5 sale as a going concern with effect from 01.06.2014 for consideration of INR 454,885,303. The sum of INR 454,885,303 includes payment for Goodwill also. Among various business expenditure, the appellant assessee also claimed deductions of (i) INR 46,152,224 as depreciation on goodwill and (ii) INR 15,912,680 on account of bad debts written off. 3.2 Following international transactions of the appellant assessee with its Associate Enterprises (‘AE’) are relevant for deciding this appeal: S. N. Particulars Amount (in INRs.) 1. Availing of transition Support services 73,454,905 2. Provision of operational and business support services 779,519,197 3.3 The draft assessment proposing following additions/disallowances was sent to the appellant assessee: (i) the transfer pricing adjustment of INR 73,454,905 on account of availing transition support services from the AE, (ii) the transfer pricing adjustment of INR 32,536,272 on account of provision of operational and business support services to AE (iii) the disallowance of depreciation of INR 46,152,224 on Goodwill and (iv) the disallowance of expenses of INR 15,912,680 on account of bad debts written off. 3.4 The appellant assessee, raising disputes on the above-mentioned four issues, went before the Dispute Resolution Panel (‘DRP’), but did not succeed. Hence, the final assessment was completed at income of INR 285,039,520/- Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 6 wherein the above-mentioned additions/disallowances were made. Aggrieved, the appellant assessee filed this appeal. 4. At the outset, the Ld. Counsel submitted that following two transfer pricing issues and two corporate issues were in this appeal: a) Transfer pricing adjustment of INR 73,454,905 (Ground No. 2 as per revised grounds filed on 01.02.2023); b) Transfer pricing adjustment of INR 32,536,272 (Ground No. 3, 4 & 5 as per revised grounds); c) Disallowance of depreciation of INR 46,152,224 on Goodwill capitalized in the books of accounts since FY 2014-15 (Ground No. 6 and 8 as per revised grounds) and d) Disallowance of bad debts written off INR 15,912,680 (Ground No. 7 and 8 as per revised grounds). Transfer pricing adjustment of INR 73,454,905: 5. The Ld. Counsel submitted that AmEx transferred certain expertise supporting the travel business to GBT BV and kept certain expertise supporting the travel business with it. Due to selective transfer of business from AmEx to GBT BV; they entered into a master Transition Services Agreement (‘Master TSA’) in March, 2014 [Page 810-942 of the Paper Book (PB)], wherein AmEx agreed to provide certain transition services to GBT BV, and correspondingly, agreed to receive certain services from GBT BV to ensure Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 7 the continuity of its business maintained even after the spin-off; March 2014. It was brought to our notice by the Ld. Counsel that the benchmarking of \"India Business Segment\" was accepted by the Ld. Transfer Pricing Officer (‘TPO’). 6. During the relevant AY, the appellant assessee availed certain transition support services in lieu of payment of INR 73,454,905/- to its AE; GBT BV. The appellant assessee benchmarked the said transaction after aggregating entire international transactions under the \"India Business Segment\" and applied TNMM. However, the Authorities below, while accepting the profitability of \"India Business Segment\" considered only transactions of transition support service and determined the ALP of the said transactions as 'NIL' by adopting CUP as Most Appropriate Method (MAM) on the reasoning that the appellant assessee failed to demonstrate whether such services were actually required and were availed by the appellant assessee. 7. At the outset, the Ld. Counsel submitted that the issue of availing transition support services in AYs 2015-16 to 2017-18 was decided by the coordinate bench in the favour of appellant assessee in its own case in ITA No 8965/Del 2019. Hence, this issue was a covered matter. 8. The Ld. Counsel submitted that once the Ld. TPO had accepted the benchmarking of \"India Business Segment under TNMM, separate evaluation Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 8 of transition support services was neither called for nor permissible in the eyes of law. Reliance was placed on the following decisions: i. Magneti Marelli Power Train India 389 1TR 469, ii. Gates India (P.) Ltd. [2024] 166 taxmann.com 29 (Del. Trib), iii. Arcient Technologies (Holdings) Ltd. [2019] 109 taxmann.com 47 (Del.Trb) iv. Amphenol Interconnect India (P.) Ltd. [2019] 410 ITR 373. 9. The Ld. Counsel further argued that the determination of ALP at 'NIL' was contrary to law as the Ld. TPO had not only exceeded his jurisdiction by applying cost benefit analysis for determination of ALP but also had not brought any comparable uncontrolled transaction on the record to determine the ALP at \"NIL. To buttress his arguments, the Ld. Counsel placed reliance on the following decisions of the Hon’ble Delhi High Court in the case of: i. EKL Appliance Ltd.: [2012] 345 ITR 241 (please refer para nos. 22-24 of this decision) ii. Cushman and Wakefield (India) (P.) Ltd.: [2014] 367 ITR 730 (please refer para nos. 34-36 of this decision) 10. The Ld. Counsel argued that the TSA charge was part of the cost base under the India Business Segment, which was recovered along with the mark- up from its AEs. Hence, the disallowance of such costs would have a corresponding negative impact on its taxable income/profits (please refer page nos. 400-402 of the PB). It was contended that such approach was specifically prohibited under section 92(3) of the Act as evident from the decision of the Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 9 Hon’ble Delhi High Court in the case of Mercer Consulting [2024] 465 ITR 381. The Ld. Counsel submitted that the appellant assessee had already provided detailed explanations of the necessity of said services (refer page nos. 345-347 of the PB) and proof of actual receipt of services in form of e-mails (refer page nos. 985-1009 of the PB). 11. The Ld. CIT(A) argued this issue vehemently. The Ld. CIT-DR submitted that the Ld. TPO’s finding was based on three factors, i.e. (i) benefit test, (ii) rendition test, and (iii) no method for allocation of cost and that same amount was paid to the Associated enterprise every month irrespective of whether services were received or not. It was further submitted that the services under the Transition Services Agreement were merely in the general IT services and that the appellant assessee had wrongly aggregated these transactions for benchmarking only with the India Business Segment while they would form part of the appellant’s entire business including the Business Support Services Segment and the Services Hub Segment. 12. In rebuttal, the Ld. Counsel submitted that the cost benefit test for determination of rendition of services had been rejected by the Hon’ble Delhi High Court in the case of EKL Appliances (relied upon by this Hon’ble Tribunal in Appellant’s own case for AY 2015-16 and subsequent two assessment years). Rendition of services had been demonstrated by way of emails and supporting data [pg. nos. 985-1009 of the PB] and invoices raised for such services [pg 974-975 of PB]. It was submitted that the Tribunal, based on Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 10 similar evidence, had approved the rendition of services in previous years. Further, the Ld. Counsel submitted that the cost was allocated on actual basis and the amount of payment accordingly differed every month [page nos. 974- 975 of the PB] as evident from invoiced amounts [pg. nos. 977-979 of PB]. 13. The Ld. Counsel further submitted that these services were required because of the corporate spinoff of the India Business Segment of AMEX which was acquired by the appellant assessee. Since certain expertise supporting the travel business shifted out of AMEX and other remained therein, AMEX and GBT BV entered into a master TSA transition services agreement wherein AMEX agreed to provide certain transition services to GBT BV, and correspondingly, agreed to received certain services from GBT BV to ensure that continuity of business is maintained even after the spin-off [pg. no. 345- 346 of Paperbook]. Further, the nature of transition support was also evident from the evidence submitted which showed that the support was provided to the employees for migration from AMEX domain to the GBT domain. [pg 989 of PB]. It was further submitted that these transition services had nothing to do with the other two business segments of the appellant assessee, i.e., Business Support Services Segment and the Services Hub Segment which were started in 2015 and 2016 respectively while the transition support services agreement was entered into in the year 2014 itself for the India Business Segment (Global Business Travel) which was acquired from AEIPL by way of slump sale. Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 11 14. We have heard both parties and have perused the material available on the record. After careful consideration of material on the record and facts in entirety, we find force in the argument of the Ld. Counsel that this issue is squarely covered by the decision of the Tribunal in the appellant assessee’s own case in ITA No 8965/Del/2019. We therefore, respectfully following the said decision in ITA No 8965/Del/2019, delete the Transfer pricing adjustment of INR 73,454,905. We therefore, direct the Ld. AO/TPO to allow the consequential relief to the appellant assessee. Transfer pricing adjustment of INR 32,536,272 for provision of operational & business support services: 15. The Ld. Counsel submitted that the appellant assessee had benchmarked its international transaction of provision of operational & business support services on TNMM basis and determined a range of 2.94% to 13.34% after arriving at a set of 6 comparables and reported its transaction at ALP since its margin was 9.58%. However, the Ld. TPO by including certain comparables worked out the TP adjustment of INR 32,536,272. The Ld. AO/TPO, vide impugned order, excluded (i) Cosmic Global Ltd., (ii) Silgate Solutions Ltd., and (iii) BNR Udyog ((Business Support Segment) and included (i) Infosys BPM Ltd., (ii) Interactive Manpower Solutions Ltd., and (iii) Karvy Data Management Services Ltd. The appellant assessee has challenged inclusion of (i) Infosys BPM Ltd., (ii) Interactive Manpower Solutions Ltd., and (iii) Karvy Data Management Services Ltd. and exclusion of (i) Cosmic Global Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 12 Ltd., (ii) Silgate Solutions Ltd., and (iii) BNR Udyog ((Business Support Segment). The Ld. Counsel submitted that certain comparables included/included by the Ld. AO for benchmarking this segment were not proper comparable; hence, he prayed for inclusion of those comparables which were excluded by the Ld. AO and vice-versa. Infosys BPM Ltd.: 16. The Ld. Counsel argued that the Ld. AO was not justified in including this comparable on the following reasoning: a. Incomparable size and scale: A giant company having more than 200 times revenue that that of the assessee was engaged into diversified business of consulting, software product development, etc. b. Product Company. Its substantial revenue was from sale of proprietary products like Finacle, Infosys Acticedesk, while the assessee’s revenue was from services. c. High Brand Valued, a market leader and giant Company. d. Huge expenditure on R & D. During the relevant year, the Infosys had its own patent. On the other hand, the assessee was not in R & D and any patent of its own. The R & D expenditure of Infosys was quite more than that of the assessee. 17. In support of the above submission for exclusion of Infosys, the Ld. Counsel drew our attention to the relevant pages of the Paper Book (PB). He placed reliance on the decision of Hon'ble Delhi High Court in the case of Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 13 Agnity India Technologies (I) Ltd. [2013] 262 CTR 291 and the decision of Hon'ble Bombay High Court in the case of Pentair Water India (P.) Ltd. [2016] 69 taxmann.com 180, where Infosys was excluded on similar grounds. 18. The Ld. CIT-DR justified inclusion of Infosys. He submitted that high turnover or brand value could not be the reason for exclusion of this comparable as the assessee had failed to demonstrate that how the brand name, high R & D expenditure had impacted the margins of Infosys. The Ld. CIT-DR, emphasizing the Rule 10(B)(3) of Income Tax Rules, argued that an uncontrolled transaction should be comparable if differences between comparables did not have any material impact on the profit margins. To buttress his submission, the Ld. CIT-DR placed reliance on the decision of the Hon'ble Delhi High Court in the case of Chryscapital Investment Advisors (India) (P) Ltd. [2015] 56 taxmann.com 417 wherein it had been observed that huge profit or huge turnover, ipso facto did not lead to exclusion of a comparable. Further, he also placed reliance on the decisions of the Tribunal in cases of Willis Processing Services (I) (P.) Ltd. [2013] 30 taxmann.com 350 (Mum.), Deloitte Consulting India (P.) Ltd. [2011] 12 taxmann.com 500 (Hyd.) and Capgemini India (P.) Ltd. [2013] 33 taxmann.com (Mum.) to submit that the order of the Ld. AO/TPO was justified in this regard. 19. The Ld. Counsel, in rebuttal, submitted that the Ld. CIT-DR had misconstrued the Rule 10(B)(3) of the Income Tax Rules as this Rule did not impose an onus upon an assessee to show that a difference had a material Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 14 bearing on the margins. The language used in this Rule \"likely to have a material bearing\", clearly meant thereby that as long as there was a difference between the comparable, which likely might have a material bearing on the margins, such comparable would have to be excluded. 20. The Ld. Counsel further submitted that the decision of Hon'ble Delhi High Court in Chryscapital (supra) had been subsequently considered by the Hon'ble Delhi High Court in the cases of Sanvih Info Group (P.) Ltd. [2019] 108 taxmann.com 655 and Symphony Marketing Solutions India (P) Ltd. [2020] 113 taxmann.com 77, wherein the Hon'ble High Court had clarified that giant corporations like Infosys could not be compared to a company like the assessee. In response to the Tribunal decisions relied upon by the Ld. CIT- DR, the Ld. Counsel submitted that these decisions did not reflect the correct position of law and had been rendered prior to the decision of the Hon'ble Delhi High Court in the case of Agnity India Technologies (P) Ltd. (supra). Hence, these decisions had no binding precedent here. Further, the Ld. Counsel submitted that Infosys BPM Ltd. had incurred significant costs (Rs.165 crores) on technical subcontractors which indicated that it had a different business model and so the FAR profile than that of the appellant assessee (Note 2.16 at page 31 of the Annual Report for FY 2017-18 and the ARC). Further, our attention was invited to the fact that Infosys BPM had recognized revenue in three schemes i.e., on time and material basis, transaction-based basis and fixed price contracts. Revenue from fixed price contracts was recognized as per the proportionate completion method. On Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 15 time and material contracts, revenue was recognized as the related services were rendered. (Note 1.5 at pg. 14 of the Annual Report for FY 2017-18 and the ARC). 21. We have heard both parties and have perused the material available on record. After careful consideration of material on the record and facts in entirety, we find force in the argument of the Ld. Counsel that this comparable, in view of the decision of the Hon'ble Delhi High Court in the cases of Agnity India Technologies (P) Ltd. (supra), Sanvih Info Group (P.) Ltd. (supra) and Symphony Marketing Solutions India (P) Ltd. (supra), is held not suitable comparable in the present case. We therefore, following the reasoning in the above cited cases, hold that the Ld. AO/TPO is not justified in including Infosys in the final set of comparables. We therefore, direct the Ld. AO/TPO to exclude this comparable; Infosys BPM Ltd. from the final set of comparables. Interactive Manpower Solutions Ltd.: 22. At the outset, the Ld. Counsel submitted that Interactive Manpower Solutions Ltd. should be excluded from the list of final comparables because it was functionally different being engaged in providing Knowledge Process Outsourcing (KPO) services; such as staffing services, which fell in Human Resource services distinctly categorized as “knowledge process outsourcing services” as per Rule 10TA(g) of Income Tax Rules, 1962. Further, it was submitted that a KPO service provider was functionally different from BPO service providers (like the appellant assessee) and this distinction was well Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 16 recognized by the Hon’ble High Court of Delhi in the case of Rampgreen Solutions (P.) Ltd. 377 ITR 533, wherein it had been specifically held that KPO service providers could not be compared to BPO service providers even under TNMM. The Ld. Counsel contended that the assessee’s functions were different as it was a Business Process Outsourcing (BPO). Thus, it was contended that this comparable was functionally dissimilar. It was also submitted that Interactive Manpower Solutions Ltd. was engaged in recruitment of manpower services and derived entire revenue from the said activity. (Pages 12 and 2 of Annual Report FY 2017-18/ 42 of the ARC) whereas the appellant assessee had a very different business model whereby it paid royalty and marketing commission of 2% sales to its AE. (Pages 6 and 13 of the Annual Report/pages 46 and 53 of the ARC). Further, it was submitted that Interactive Manpower Solutions Ltd. owned significant amount of intangibles [19.3% of the assets (Page 29 of Annual Report FY 2017-18/ 69 of the ARC)] unlike the appellant assessee which did not have any intangibles. In support of his contention, the Ld. Counsel placed reliance on the decision of the Tribunal in the case of Mavenir India Pvt Ltd. [2022] 141 taxmann.com160 (Del). 23. On the other hand, the Ld. CIT-DR justified inclusion of Interactive Manpower Solutions Ltd. by submitting that the recruitment of manpower services was functionally similar to activities undertaken by the appellant assessee as it did not fall exclusively in KPO services. Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 17 24. We have heard both parties and have perused the material available on record. After careful consideration of material on the record and facts in entirety, we find force in the argument of the Ld. Counsel that Interactive Manpower Solutions Ltd. has not been rightly included by the Ld. AO/TPO in final sets of comparables in view of the decision of Hon'ble Delhi High Court in the case of Rampgreen Solutions (P.) Ltd. (supra). We therefore, following the reasoning given in the case of Rampgreen Solutions (P.) Ltd. (supra) and above mentioned distinguishable facts hold that the Ld. AO/TPO is not justified in including Interactive Manpower Solutions Ltd. in the final set of comparables. We therefore, direct the Ld. AO/TPO to exclude this comparable; Interactive Manpower Solutions Ltd. from the final set of comparables. Karvy Data Management Services Ltd.: 25. The Ld. Counsel submitted that Karvy Data Management Services Ltd. should be excluded from the list of final comparables because it was functionally different as it was engaged in providing diversified business activities such as transaction processing, system integration which included sale of products and data management services. (Pages 8 and 109 of Annual Report for FY 2017-18/ 83 and 184 of the ARC). Karvy Data Management Services Ltd. was also engaged in purchase and sale of products and derived 38.81% of the total revenue from the import. Further, our attention was drawn to the fact that Karvy Data Management Services Ltd. did not disclose a separate segmental result for the trading business. (Pages 10, 11 and 113 of Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 18 Annual Report for FY 2017-18/85, 86 and 188 of the ARC). Further, it was also submitted that Karvy Data Management Services Ltd. had intangibles worth INR 255,281,962 out of total fixed assets of INR1,877,501,429; i.e. 13.60% (Pages 49, 69,87,89,90 of Annual Report FY 2017-18/ 124,144,162,164,165 of the ARC) whereas it was not so in the case of the appellant assessee. Further, our attention was drawn to the fact that Karvy Data Management Services Ltd. had no income from export as against 100% of export income of the appellant assessee. Thus, it was contended that Karvy Data Management Services Ltd. operated in completely dissimilar markets and thus unsuitable as per Rule 10B(2) of the Income Tax Rules. 26. On the other hand, the Ld. CIT-DR justified inclusion of Karvy Data Management Services Ltd. and defended the order of the Ld. AO/TPO. 27. We have heard both parties and have perused the material available on the record. After careful consideration of material on the record and facts in entirety, we find force in the argument of the Ld. Counsel that Karvy Data Management Services Ltd. has not been rightly included by the Ld. AO/TPO as there are functional dissimilarities and so in factual and financial as emphasized by the Ld. Counsel. We therefore, in view of the above mentioned distinguishable facts and finacials hold that the Ld. AO/TPO is not justified in including Karvy Data Management Services Ltd. in the final set of comparables. We therefore, direct the Ld. AO/TPO to exclude this comparable; Karvy Data Management Services Ltd. from the final set of comparables. Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 19 Cosmic Global Ltd.: 28. The Ld. Counsel submitted that Cosmic Global Ltd. should be included in the list of final comparables because it was not a consistent loss making company as alleged by the Ld. AO/TPO and this comparable was included in final set of comparables in the appellant assessee in preceding three years. It was demonstrated before us that Cosmic Global Ltd. had made operational profits in two years out of three years including the concerned financial year (relevant to AY 2018-19) as evident from its Profit & Loss accounts. Further, the Ld. Counsel submitted that the principles of consistency should be followed and this comparable should be included as a valid comparable as it was functionally similar and not a consistent loss making company. Reliance was placed on the decisions of the Tribunal in cases of Marubeni India (P) Ltd: [2023] 146 taxmann.com 98 (Delhi) and Syngenta India Ltd. [2016] 71 taxmann.com 259 (Mumbai) 29. On the other hand, the Ld. DR argued against inclusion of Cosmic Global Ltd. as comparable by submitting that it was engaged in providing translation services which was not comparable to the BPO functions provided by the appellant assessee. 30. In rebuttal, the Ld. Counsel submitted that the translation services were categorized under ITeS (BPO services) under Rule 10TA(e) of the Income Tax Rules. Therefore, both appellant and Cosmic Global Ltd. were BPO/ITeS Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 20 service providers and hence, this comparable was selected by the Ld. TPO in preceding years. 31. We have heard both parties and have perused the material available on record. After careful consideration of material on the record and facts in entirety, we find force in the argument of the Ld. Counsel that Cosmic Global Ltd. is not a consistent loss making company and it is functionally similar that is why the Ld. TPO has included it in preceding years as suitable comparable. We therefore, in view of the above mentioned distinguishable facts hold that the Ld. AO/TPO is not justified in excluding Cosmic Global Ltd. from the final set of comparables. We therefore, direct the Ld. AO/TPO to include this comparable; Cosmic Global Ltd. in the final set of comparables. Silgate Solutions Ltd.: 32. The Ld. Counsel submitted that Silgate Solutions Ltd. should be included in the list of final comparables because it was functionally similar. It was submitted that the Ld. TPO rejected this comparable on the ground that the company was engaged in the business of providing software development and IT services which were different from the services rendered by the appellant assessee (Page 101 of the appeal set). On the other hand, the Ld. DRP directed the Ld. TPO to conduct a comparative analysis of functional profile of the comparable company vis-à-vis the appellant assessee. However, the consequential order could not be termed as speaking order. The Ld. Counsel submitted that Silgate Solutions Ltd. was Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 21 engaged in the providing back-end support services (Refer to page 16 of the annual report for FY 2017-18/ 491 of the ARC). It was further submitted that since the appellant assessee was also engaged in the providing back-end support services to its AEs globally; therefore, Silgate Solutions Ltd. was functionally similar to the appellant assessee. Hence, it should be included as a valid comparable. (FAR of this segment was at pages 20, 55-61 of the PB). Our attention was drawn to the FAR and fact that the Ld. TPO had himself included similar comparables such as We Win Ltd. (Surevin BPO) engaged in providing BPO services similar to the services provided by the appellant assessee, which come under the definition of ITeS under 10TA(e) of Income Tax Rules and therefore, it was functionally similar to the ITeS/BPO services provided by the appellant assessee. Hence, following the principles of consistency, Silgate Solutions Ltd. should be included as a valid comparable. 33. The Ld. CIT-DR argued against inclusion of above company as comparable by submitting that Silgate Solutions Ltd. was engaged in the business of providing software development and IT services and as such it was functionally different. 34. We have heard both parties and have perused the material available on record. After careful consideration of material on the record and facts in entirety, we find force in the argument of both parties. Therefore, without offering any comment on the merit of this comparable, we set aside the finding Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 22 on this comparable; i.e. Silgate Solutions Ltd. and remit this comparable to the file of Ld. AO/TPO with direction to carry out a comparative analysis of the functional profile of Silgate Solutions Ltd. vis-à-vis the appellant assessee and decide it a fresh. BNR Udyog (business support segment): 35. The Ld. Counsel submitted that BNR Udyog (business support segment) should be included in the list of final comparables because the business support segment of this comparable was functionally similar and that was why this comparable was included in preceding years in the appellant assessee’s case of AY 2015-16 and AY 2016-17. Now the Ld. TPO holding that this comparable failed the employee cost filter at entity level, excluded this comparable. It was submitted that employee cost filter was inapplicable to the BPO segment of this comparable as the employee cost for this segment of BNR Udyog was not available in the financials (Segmental results are at page 57 of the annual report for FY 2017-18/ page 556 of the ARC). The Ld. Counsel further submitted that BNR Udyog was engaged in the providing business support services and had derived more than 90% of its revenue from provision of business support services. (Refer to page 30 of the annual report for FY 2017-18/ 529 of the ARC). 36. On the other hand, the Ld. CIT-DR argued against inclusion of BNR Udyog as comparable by submitting that this comparable failed employee cost Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 23 filter and thus, the Ld. TPO was justified in excluding it from final set of comparables. 37. In rebuttal, the Ld. Counsel submitted that for benchmarking, only the business service support segment of BNR Udyog as per its financials [pg. no. 556 of the Annual Reports Compilation] was considered. There was no identifiable allocation of employee cost to this segment and hence, it was not discernible as to on what basis, had the TPO or the Ld. DR argued that the employee cost filter had failed in the case of this comparable. 38. We have heard both parties and have perused the material available on record. After careful consideration of material on the record and facts in entirety, we find force in the argument of both parties as there is no identifiable allocation of employee cost to the business support segment of BNR Udyog. Therefore, without offering any comment on the merit of this comparable, we set aside the finding on this comparable; i.e. BNR Udyog (business support segment) and remit this comparable to the file of Ld. AO/TPO with direction to examine the employee cost factor of BNR Udyog (business support segment) vis-à-vis the appellant assessee and decide it a fresh. Disallowance of depreciation on goodwill: 39. The next issue is the disallowance of depreciation on goodwill. The appellant assessee acquired the Corporate Travel Division of AEIPL under a slump sale for Rs.45,48,85,303/-, which comprised of net assets worth Rs.1,72.93.846/- only. The difference of acquisition price and value of assets; Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 24 Rs.43,75,91,457/- (Rs.45,48,85,303/- minus Rs.1,72.93.846/-) has been recorded as goodwill in the books of accounts of the appellant assessee. It has claimed depreciation on goodwill arising out of slump sale from AYs 2015-16 to 2017-18. The relevant year is the fourth year of such claim. The appellant assessee has claimed depreciation of Rs.4,61,52,224/- on goodwill. 40. At outset, the Ld. Counsel submitted that the issue of depreciation on goodwill is squarely covered by the decisions of the Tribunal in the assessee’s own case AY 2015-16 in ITA No. 8965/Del/2019 and also in AYs 2016-17 and 2017-18. The Ld. Counsel, drawing our attention to the Explanation 3(b) to section 32(1) of the Act, submitted that the goodwill is an asset eligible for depreciation. Reliance was placed on the decision of the Hon'ble Supreme Court in the case of Smifs Securities Ltd. [2012] 348 ITR 302. Further, placing reliance on the decision of the Hon'ble Delhi High Court in the case of Triune Energy Services (P.) Ltd. [2016] 65 taxmann.com 288, it was submitted that the consideration paid in excess of net value of assets pursuant to a slump sale was nothing but goodwill. 41. The Ld. CIT-DR submitted that the appellant assessee and the seller ‘AEIPL’ were related parties and hence, slump sale was chosen as a method of business transfer instead of demerger to overcome the tax burden. Hence, the business transfer between related parties, no goodwill could come into the picture as both parties had the same brand name which continued even after the transfer. Thus, the Ld. CIT-DR contended that the decision of ITAT Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 25 Bangalore in the case of United Breweries Ltd. [2016] 76 taxmann.com 103 (Bang. - Trib.) was applicable here as the valuation of goodwill and slump sale was not amongst independent parties and thus, was questionable because it could not be ruled out that this arrangement was not with the intent to avoid tax. The Ld. CIT-DR drew our attention to the valuation report based on which the consideration was arrived using DCF method solely based on the projections given by the management, an interested party as there was no mention of goodwill in the valuation report. Further, the Ld. CIT-DR mentioned that in another valuation report prepared before the acquisition, the value of the business was determined in negative. 42. The Ld. CIT-DR, drawing our attention to the Explanation 7 and 7A to section 43(1) of the Act, Explanation 2 to section 43(6) of the Act and sixth proviso to section 32(1)(ii) of the Act, submitted that the depreciation on goodwill was not allowable. He placed reliance on the decision in United Breweries Ltd. 76 taxmann.com 103. 43. In rebuttal, the Ld. Counsel submitted that the decision in United Breweries Ltd. was completely misplaced as the said decision dealt with the claim of depreciation on goodwill in case of an amalgamation. It was further submitted that similar restrictions also existed in case of acquisition of subsidiary. However, none such restrictions existed in the Act for a transaction of slump sale irrespective of whether the parties were related or Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 26 not. Moreover, this was not even a case of slump sale between holding and subsidiary companies. 44. In rebuttal, the Ld. Counsel continued to submit that the commercial decisions of the taxpayer could not be challenged by tax authorities. Transfer of business by way of a slump sale was a permissible option available to the parties and the Revenue could not challenge the commercial expediency of the taxpayers. Moreover, this was not even the case of the Ld. AO/TPO. Further, it was submitted that the seller, i.e., AEIPL, assessable in India, had duly offered the capital gains derived from the concerned slump sale for tax. Thus, the argument of the Revenue was duly considered and rejected by this Tribunal in appellant’s own case for AY 2015-16, which was further followed for two consecutive years. 45. The Ld. Counsel further submitted that there was no restriction on claim of depreciation in case of slump sale as Explanation 7 and 7A to section 43(1) of the Act, Explanation 2 to section 43(6) of the Act and sixth proviso to section 32(1)(ii) of the Act did not get attracted. The decision in the case of United Breweries Ltd. (supra) was in respect of amalgamation between group companies. It was contended that the Act did not put any restriction on depreciation on goodwill acquired in the slump sale between related parties. The issue of allowability of depreciation on goodwill in case of slump sale, the tribunal has held in following decisions that the case of United Breweries Ltd. (supra) was not applicable: Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 27 i. Thermo Fisher Scientific India (P.) Ltd. [paras 5.18 - 5.27 at pg. nos. 111-113 of Case Law Compilation on Legal issues]; and ii. I & B Seeds (P.) Ltd. [para 13.10 - 13.13 at pg. nos. 127 of Case Law Compilation on Legal issues]. 46. The Ld. Counsel contended that the valuation report as per the DCF method was never questioned by the Ld. AO. This was not even the case of the AO. The Ld. CIT-DR could not make a new case/issue. The issue of depreciation had already been allowed by the Tribunal in the preceding three years. The argument of the Ld. CIT-DR that the valuation report did not mention goodwill had been dealt by the Tribunal in AY 2015-16. The valuation done by KPMG was for only of the GBT business division as on the date of acquisition and the goodwill was created and recognized in the books of accounts for the first time post transfer of business. Further, the entire arguments of the Ld. CIT-DR had been dealt by the tribunal while allowing depreciation on goodwill in AY 2015-16. 47. We find merit in submissions/contentions/arguments of the Ld. Counsel that this issue is squarely covered by the decision of the coordinate bench in the appellant assessee’s own case in AY 2015-16 in ITA No.8965/Del/2019. Hence, following the decision of the coordinate bench in the appellant assessee’s own case (supra), we allow the claim of depreciation on goodwill. The appellant assessee gets consequential relief. Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 28 Disallowance of claim of bad debts written off: 48. The last issue is the disallowance of claim of bad debts written off. In the relevant AY, the appellant assessee, based on the fact that such bad debts written off as per law has claimed the deduction of Rs.1,59,12,680/- towards bad debts written off out of the provision made for doubtful debts. 49. The Ld. Counsel submitted that the claim of the requirements of section 36(1)(vii) of the Act stood fulfilled since the entire amount of Rs.12,92,586/- representing provision made during the year was added back to the computation of income and offered to tax and the amount of Rs.3,44,20,539/- representing opening balance of provision made for doubtful debts was also added back to the computation and offered to tax in earlier years. Hence, appellant assessee had claimed the bad debts actually written of in its books of account. Reliance was placed on the decision of Hon'ble Supreme Court in the case of T.R.F. Ltd. [2010] 323 ITR 397. He also placed emphasis on CBDT circular 12/2016 dated 30.05.2016. 50. The Ld. CIT-DR defended the order of the Authority below and drew our attention to the decision in the case of Khyati Realtors Pvt. Ltd. [2022] 141 taxmann.com 461 (SC) and Embassy Classic Pvt. Ltd. [2011] 7 ITR(T) 287 (Bangalore). 51. In rebuttal, the Ld. Counsel submitted that the Ld. CIT-DR’s reliance upon the decision of Hon'ble Supreme Court in the case of Khyati Realtors Pvt. Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 29 Ltd. (supra) was misplaced in light of materially different facts in that case. The disallowance in that case was upheld by the Hon’ble Supreme Court because it was not discernible in the facts of the assessee therein as to whether the advance sought to be written off was in the nature of capital expenditure or related to the business operations of the assessee. Whereas in the present case, the financials of the appellant assessee established that these were debts on the revenue account and in relation to the business operations of the appellant assessee as the Ld. AO neither doubted the nature of the provisions for bad/doubtful debts written off nor was any doubt casted upon the appellant assessee’s books of accounts during assessment. He placed reliance on the decision of Hon’ble Supreme Court in TRF Ltd. [2010] 323 ITR 397 to submit that the assessee fulfilled all conditions for allowability of bad debt written off. 52. Further, in rebuttal, the Ld. Counsel submitted that the case of Embassy Classic Pvt. Ltd. had no bearing to the facts of the instant case. The aforesaid case dealt with a situation where the assessee claimed deduction of writing off bad debts at the date of closing the books where, in fact, such debts were recovered before filing of the ITR. In this backdrop and section 41(4) of the Act, the claim was disallowed as the said debts were recovered before filing of the ITR. Whereas in the instant case, neither the appellant assessee had recovered such bad debts nor an allegation suggesting the same had been made by the Ld. AO. The Ld. Counsel also placed reliance on decisions in the Printed from counselvise.com ITA No.1764 /Del/2022 GBT India Pvt. Ltd. 30 cases of SAP India Pvt. Ltd. [ITA Nos. 682, 683/Bang/2017] and Eagle Flask Industries Ltd. [ITA No.896/PN/2014]. 53. We find merit in submissions/contentions/arguments of the Ld. Counsel. We find merit in the arguments/submission of the Ld. Counsel. In view of the ratio laid down by the Hon’ble Supreme Court and various Hon’ble High Courts in cases mentioned above, we are of the considered opinion that the bad debts written off is allowable under the Act. Hence, the same is deleted. The appellant assessee gets consequential relief. 54. In the result, the assessee’s appeal is allowed as above. Order pronounced in open Court on 26th November, 2025. Sd/- Sd/- (C. N. PRASAD) (AVDHESH KUMAR MISHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 26/11/2025 Binita, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(Appeals) 5. CIT-DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "