American Express Services India Ltd., New Delhi V. Deputy Commissioner of Income-tax, New Delhi

ITA 1982/DEL/2015

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 4520 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2010-2011
• Appeal Filed On: 06-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S CHAKRABARTY; NAGESHWAR RAO ADVCAT E
• Keywords: Depreciation; Transfer pricing; Principle of natural justice; International transaction; Question of law; Cost of acquisition; Revenue expenditure
• Section: 271(1)(c); 143(3); 144C; 13; 32; 92

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-2, NEW DELHI , ! ' % , & ' ! BEFORE MS. SUSHMA CHOWLA, VP & SHRI R.K. PANDA, AM [THROUGH VIDEO CONFERENCING] ( / ITA NO. 1982/DEL/2015 ) / ASSESSMENT YEAR: 2010-11 M/S. AMERICAN EXPRESS SERVICES INDIA PRIVATE LIMITED ( EARLIER KNOWN AS AMERICAN EXPRESS SERVICES INDIA LIMITED ), METROPOLITAN SAKET, 7 TH FLOOR, OFFICE BLOCK, DISTRICT CENTRE, SAKET, NEW DELHI-110017 PAN- AABCT0555D ............. /APPELLANT VS THE DCIT, CIRCLE-2(2), CENTRAL REVENUE BUILDING, NEW DELHI . / RESPONDENT / APPELLANT BY: SH. NAGESHWAR RAO, ADVCAT E, & SH S. CHAKRABARTY, AR / RESPONDENT BY: SH. ANUPAM KANT GARG, CI T-DR ) / DATE OF HEARING : 17.09.2020 / DATE OF PRONOUNCEMENT: 21.10.2020 / ORDER PER SUSHMA CHOWLA, VP THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE FI NAL ASSESSMENT ORDER DATED 28.01.2015, RELATING TO ASSESSMENT YEAR 2010- 11 PASSED UNDER SECTION 143(3) R.W.S. 144C OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2 ITA NO.1982/DEL/2015 ASSESSMENT YEAR: 2010-11 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL:- 1. THE ORDER PASSED BY THE LEARNED ADDITIONAL COMMISSI ONER OF INCOME TAX, TRANSFER PRICING OFFICER- 1(1), NEW DEL HI (THE LEARNED TPO), DRAFT ASSESSMENT ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 1(1), NEW DELHI (THE THEN LEARN ED AO) AND FINAL ASSESSMENT ORDER PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2(2), NEW DELHI (THE LEARNED AO), PURSUANT TO THE DIRECTIONS OF THE HONBLE DISPUTE RESOLUTION PANEL - I (THE HON BLE DRP), ARE BAD IN LAW AND VOID- AB-INITIO. 2. THE LEARNED AO FOLLOWING THE ORDER OF THE LEARNED TPO AND DRP HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DE TERMINING THE TOTAL INCOME OF THE APPELLANT AT RS 48,980,680/- AS AGAIN ST THE RETURNED INCOME OF RS 45,254,000/- THEREFORE, TO THE EXTENT OF ADDITIONS/DISALLOWANCES MADE BY THE LEARNED AO, THE ORDER OF THE LEARNED AO IS BAD IN LAW AND NEEDS TO BE ANNULLED. PART I - TRANSFER PRICING GROUNDS OF APPEAL 3. THAT ON FACTS OF THE CASE AND IN LAW, THE TPO/AO/ DRP HAVE ERRED IN REJECTING THE ECONOMIC ANALYSIS UNDERTAKEN BY TH E APPELLANT BY CONDUCTING A FRESH ECONOMIC ANALYSIS FOR INTERNATIO NAL TRANSACTION PERTAINING TO PROVISION OF BACK OFFICE SUPPORT SERV ICES ('IMPUGNED TRANSACTION'). 4. THAT ON FACTS OF THE CASE AND IN LAW, THE TPO/AO/D RP HAVE ERRED IN CONDUCTING A FRESH ECONOMIC ANALYSIS BY USING AR BITRARY FILTERS FOR IDENTIFYING COMPANIES COMPARABLE TO THE APPELLANT. THE ARBITRARY FILTERS APPLIED BY THE TPO AND CONFIRMED BY THE AO/ DRP INTER-ALIA INCLUDE THE FOLLOWING: TO REJECT COMPANIES HAVING TURNOVER LESS THAN INR 5 CRORES; TO REJECT COMPANIES HAVING DIFFERENT ACCOUNTING YEA R THAN THAT OF THE APPELLANT; TO REJECT COMPANIES HAVING PECULIAR ECONOMIC CIRCUM STANCES WHICH ARE NOT IN LINE WITH THE INDUSTRY TREND AND COMPANI ES WHICH SHOWED DIMINISHING REVENUE TREND; AND TO REJECT COMPANIES HAVING EXPORT REVENUE LESS THAN 75 PERCENT OF THE OPERATING REVENUE. 5. THAT ON FACTS OF THE CASE AND IN LAW, THE TPO/AO/DR P HAVE ERRED IN USING SINGLE YEAR DATA FOR FINANCIAL YEAR ('FY') 2009-10 OF ALLEGED COMPARABLE COMPANIES WITHOUT CONSIDERING THE FACT T HAT THE SAME WAS NOT AVAILABLE TO THE APPELLANT AT THE TIME OF COMPL YING WITH THE TRANSFER PRICING DOCUMENTATION REQUIREMENTS AND DIS REGARDING THE APPELLANT'S CLAIM FOR USE OF MULTIPLE YEAR DATA FOR COMPUTING THE ARM'S LENGTH PRICE. 3 ITA NO.1982/DEL/2015 ASSESSMENT YEAR: 2010-11 6. THAT ON FACTS AND IN LAW, THE TPO/AO/DRP HAVE GROSS LY ERRED IN APPLYING THE TURNOVER FILTER ON SEGMENTAL REVENUE I NSTEAD OF THE TOTAL REVENUE OF THE COMPANY AS A WHOLE IN CASE OF COMPAN Y NAMELY CG- VAK SOFTWARE & EXPORTS LIMITED WITHOUT APPRECIATING THE SEGMENTAL REVENUE OF THE APPELLANT WHICH IS FAR LESS THAN THE INR 5 CRORE THRESHOLD OF THE TURNOVER FILTER. 7. THAT ON FACTS OF THE CASE AND IN LAW, THE TPO/AO/DR P HAVE ERRED IN SELECTING COMPANIES IN THE FINAL SET OF ALLEGED COMPARABLES WHICH ARE FUNCTIONALLY DIFFERENT AS COMPARED TO THE APPEL LANT FOR THE IMPUGNED TRANSACTION. 8. THAT ON FACTS OF THE CASE AND IN LAW, THE TPO/AO/DR P HAVE ERRED IN LAW AND IN FACTS BY SELECTING CERTAIN COMPANIES WHICH ARE EARNING SUPER NORMAL PROFITS AS COMPARABLE TO THE APPELLANT . 9. THAT ON FACTS OF THE CASE AND IN LAW, THE TPO/AO/DR P HAVE ERRED IN REJECTING CERTAIN COMPANIES AND ADDING CERTAIN C OMPANIES TO THE FINAL SET OF ALLEGED COMPARABLE COMPANIES ON AN AD- HOC BASIS, THEREBY RESORTING TO CHERRY PICKING OF COMPARABLE COMPANIES FOR BENCHMARKING THE IMPUGNED TRANSACTION. 10. THAT ON FACTS OF THE CASE AND IN LAW, THE TPO/AO/DR P WITHOUT APPRECIATING THE FUNCTIONAL ANALYSIS UNDERTAKEN BY THE APPELLANT IN ITS TRANSFER PRICING STUDY, HAVE ERRED BY IDENTIFYING C OMPANIES WHICH ARE ENGAGED IN PROVIDING KNOWLEDGE PROCESS OUTSOURCING SERVICES BY STATING THAT THE APPELLANT IS ENGAGED IN PROVIDING HIGH END SERVICES WHEREAS THE APPELLANT IS ONLY ENGAGED IN RENDERING PROVISION OF BACK OFFICE SUPPORT SERVICES. 11. THAT ON FACTS OF THE CASE AND IN LAW, THE DRP WITHO UT APPRECIATING THE RISK PROFILE OF THE APPELLANT, HAVE ERRED IN ST ATING THAT THE APPELLANT BEARS THE SIGNIFICANT RISKS AND ACCORDING LY FAILED TO MAKE APPROPRIATE ADJUSTMENTS TO ACCOUNT FOR VARYING RISK PROFILES OF THE APPELLANT VIS-A-VIS THE ALLEGED COMPARABLES FOR IMP UGNED TRANSACTION 12. THAT ON FACTS OF THE CASE AND IN LAW, THE DRP IGNOR ED THE PRINCIPLE OF NATURAL JUSTICE BY NOT GIVING A FINDING ON THE A DDITIONAL EVIDENCE FILED BY THE APPELLANT WITH RESPECT TO COMPARABLE C OMPANY NAMELY MICROLAND LIMITED. 13. THAT ON FACTS OF THE CASE AND IN LAW, THE TPO/AO/DR P HAVE ERRED AND VITIATED THE PRINCIPLE OF NATURAL JUSTICE BY NO T GIVING DUE COGNIZANCE TO THE DETAILED ANALYSIS AND TECHNICAL A RGUMENTS SUBMITTED BY THE APPELLANT IN RESPECT OF CERTAIN COMPANIES. 14. THAT ON FACTS OF THE CASE AND IN LAW, THE DRP HAS GROSSLY ERRED IN GIVING A DIRECTION TO RECTIFY THE ARITHMETICAL ERRO RS IN THE COMPUTATION 4 ITA NO.1982/DEL/2015 ASSESSMENT YEAR: 2010-11 OF THE OPERATING MARGINS OF ALLEGED COMPARABLE COMP ANIES IN COMPLIANCE WITH THE INCOME TAX ACT ('THE ACT') WITH OUT APPRECIATING THAT INDIAN REGULATIONS DO NOT ENUMERATE THE METHOD OLOGY FOR COMPUTING OPERATING MARGINS WHICH MAY APPLY TO THE APPELLANT. THE DRP HAS ERRED IN DIRECTING THE TPO TO RECTIFY THE M ARGINS OF ALLEGED COMPARABLES USING SAFE HARBOUR RULES WITHOUT UNDERS TANDING THAT: A. APPELLANT HAS NOT APPLIED FOR BEING ASSESSED UNDER SAFE HARBOR PROVISIONS B. SAFE HARBOUR PROVISIONS DO NOT REFLECT ARM'S LENGT H NATURE OF MARGINS C. SAFE HARBOUR RULES CANNOT BE APPLIED RETROSPECTIVE LY AND ARE ONLY APPLICABLE FOR ASSESSMENT YEAR ('AY') 2013-14 AND A Y 2014-15 ON SPECIFIC APPLICATION BY A TAXPAYER 15. THAT ON FACTS OF THE CASE AND IN LAW, THE TPO/AO/D RP HAVE ERRED BY NOT CONSIDERING THAT THE ADJUSTMENT TO THE ARM'S LENGTH PRICE, IF ANY, SHOULD BE LIMITED TO THE LOWER END OF THE 5 PE RCENT RANGE AS THE APPELLANT HAS THE RIGHT TO EXERCISE THIS OPTION UND ER THE SECOND PROVISO TO SECTION 92C(2) OF THE ACT. 16. THAT ON FACTS AND IN LAW, THE TPO/AO/DRP HAVE GROS SLY ERRED BY CHARGING INTEREST ON CREDIT PERIOD GRANTED BY THE C OMPANY UNDER NORMAL TRADE PRACTICES. 14 . THAT ON FACTS OF THE CASE AND IN LAW, THE DRP/ AO HAS ERRED IN CONFIRMING THAT AO/TPO HAS DISCHARGED HIS STATUT ORY ONUS BY ESTABLISHING THAT THE CONDITIONS SPECIFIED IN CLAUS E (A) TO (D) OF SECTION 92C(3) OF THE ACT HAVE BEEN SATISFIED BEFORE DISREG ARDING THE ARMS LENGTH PRICE DETERMINED BY THE APPELLANT AND PROCEE DING TO DETERMINE THE ARMS LENGTH PRICE. PART II - CORPORATE TAX GROUNDS OF APPEAL DISREGARD OF ACQUISITION COST OF BUSINESS DATABASE 4.1 THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE DRP HAS ERRED IN CONFIRMING AND ACCORDINGLY , THE LEARNED AO HAS ERRED IN RESTRICTING THE COST OF ACQUIRED DATAB ASE TO RS 30,000,000 INSTEAD OF RS 120,000,000 AS CONFIRMED BY THE LEARN ED TPO FOR AY 2002-03. 4.2 THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE DRP AND THE LEARNED AO HAS ERRED IN NOT FOL LOWING THE DECISION OF HONBLE INCOME TAX APPELLATE TRIBUNAL ( HONBLE ITAT), MUMBAI IN APPELLANTS OWN CASE FOR AY 2002-03 WHICH IS BINDING ON THEM. 5 ITA NO.1982/DEL/2015 ASSESSMENT YEAR: 2010-11 DISALLOWANCE OF DEPRECIATION ON SUCH DATABASE 5.1 THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE DRP HAS ERRED IN CONFIRMING AND ACCORDINGLY , THE LEARNED AO HAS ERRED IN DISALLOWING THE CLAIM OF THE APPELLANT FOR RS. 1,238,745, BEING THE AMOUNT OF DEPRECIATION ON THE ACQUIRED BU SINESS DATABASE UNDER SECTION 32 OF THE ACT. 5.2 . THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE DRP HAS ERRED IN CONFIRMING AND ACCORDINGLY , THE LEARNED AO HAS ERRED IN FOLLOWING THE ASSESSMENT ORDERS PASSED BY HIS PREDECESSOR FOR ASSESSMENT YEARS 2002-03 TO 2009-10 THAT THE ACQUIRED BUSINESS DATABASE COULD NOT BE REGARDED AS PLANT AND MACHINERY. 5.3 THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE DRP HAS ERRED IN CONFIRMING AND ACCORDINGLY THE LEA RNED AO HAS ERRED IN NOT APPRECIATING THAT THE DATABASE FALLS U NDER THE HEAD OF INTANGIBLE ASSET' AND ACCORDINGLY, DEPRECIATION OF RS. 3,003,387 SHOULD BE ALLOWED ON THE SAME. 5.4 THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE DRP AND LEARNED AO HAS ERRED IN NOT FOLLOWI NG THE DECISION OF HONBLE ITAT, MUMBAI IN APPELLANTS OWN CASE FOR AY 2002-03 WHICH IS BINDING ON THEM. DISREGARD OF COST OF GOODWILL 6. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE DRP HAS ERRED IN CONFIRMING AND ACCORDINGLY THE LEARNED AO HAS ERRED IN RESTRICTING THE COST OF GOODWILL TO RS NIL INSTEAD OF RS 80,000,000 ON THE BASIS THAT NO GOODWILL EXISTS IN THE BUSINESS A CQUIRED. ALLOWABILITY OF DEPRECIATION ON GOODWILL 7. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONBLE DRP HAS ERRED IN CONFIRMING AND ACCORDINGLY THE LEARNED AO HAS ERRED IN NOT APPRECIATING THE FACT THAT GOODWIL L PURCHASED FOR THE PURPOSE OF BUSINESS SHOULD BE CONSIDERED AS INTANG IBLE ASSETS AND ACCORDINGLY, DEPRECIATION OF RS. 2,002,258 SHOULD B E ALLOWED AS PER SECTION 32 OF THE ACT. PART III- GENERAL GROUNDS OF APPEAL 8. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO HAS ERRED IN WITHDRAWING INTEREST U/S 24 4A OF THE ACT OF 6 ITA NO.1982/DEL/2015 ASSESSMENT YEAR: 2010-11 RS 82,335 AND ALSO ERRED IN CHARGING INTEREST OF RS 310,278 UNDER SECTION 234D OF THE ACT. 9. THAT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED HAVE GROSSLY ERRED IN INITIATING PENALTY PR OCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINS T THE TRANSFER PRICING ADJUSTMENT MADE IN THE SEGMENT OF BUSINESS SUPPORT SERVICES. THE ASSESSEE HAS RAISED SEVERAL GROUNDS OF APPEAL IN THIS REGARD , BUT THE MAIN ISSUE TO BE DECIDED IS THE SELECTION OF COMPARABLES IN ORDER TO BENCHMARK THE INTERNATIONAL TRANSACTIONS UNDERTAKEN BY THE ASSESSEE WITH ITS AS SOCIATE ENTERPRISES (IN SHORT AE). THE OTHER LINKED ISSUE RAISED IS VID E GROUNDS OF APPEAL NOS. 7, 13 AND 14 AGAINST THE APPLICABILITY OF SAFE HARBOR RUL ES OR NOT TO THE YEAR UNDER CONSIDERATION. FURTHER THE ASSESSEE IS ALSO AGGRIEV ED BY CHARGING OF INTEREST ON RECEIVABLES AND MAKING ADJUSTMENT IN THIS REGARD, T HOUGH WORKING CAPITAL ADJUSTMENT HAS BEEN ALLOWED TO THE ASSESSEE. FURTHE R, THE CORPORATE TAX GROUNDS OF APPEAL RAISED BY THE ASSESSEE IS AGAINST THE RESTRICTION OF COST OF ACQUIRED DATABASE TO RS.3,00,00,000/- INSTEAD OF RS .12,00,00,000/- AND THE CONSEQUENT DISALLOWANCE OF DEPRECIATION ON SUCH DAT ABASE. ANOTHER ISSUE RAISED IS AGAINST THE ORDER OF THE ASSESSING OFFICE R IN RESTRICTING THE COST OF GOODWILL TO NIL AND IN NOT ALLOWING DEPRECIATION ON SUCH GOODWILL. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, HAD FURNISHED THE RETURN OF INCOME D ECLARING TOTAL INCOME AT RS.4,52,54,004/-. THE CASE OF THE ASSESSEE WAS SELE CTED FOR SCRUTINY. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MARKETING A ND DISTRIBUTION OF CREDIT CARDS AND PERSONAL LOANS. THE ASSESSEE WAS ALSO ENG AGED IN BUYING AND SELLING 7 ITA NO.1982/DEL/2015 ASSESSMENT YEAR: 2010-11 OF FOREIGN CURRENCY AND TRAVELERS CHEQUE AND IS AN AUTHORIZED FULL FLEDGED MONEY CHANGER. DURING THE YEAR UNDER CONSIDERATION , THE ASSESSEE HAD UNDERTAKEN INTERNATIONAL TRANSACTIONS WITH ITS AE. THE ASSESSING OFFICER MADE REFERENCE UNDER SECTION 92CA(1) OF THE INCOME TAX A CT, 1961 (IN SHORT THE ACT) TO THE TPO TO BENCHMARK THE ARMS LENGTH PRICE (IN SHORT ALP) OF THE INTERNATIONAL TRANSACTIONS UNDERTAKEN BY THE ASSESS EE. THE TPO CONDUCTED FAR ANALYSIS OF THE INTERNATIONAL TRANSACTIONS UNDE RTAKEN BY THE ASSESSEE AND NOTED THAT THE ASSESSEE WAS PROVIDING SERVICES TO I TS AE UNDER THE HEAD PROVISION OF MARKETING SUPPORT SERVICES AND ALSO UN DER ITES SEGMENT. 5. THE ASSESSEE WAS COMPENSATED BY AE FOR SERVICES RENDERED ON COST PLUS 15% MARKUP BASIS. THE COST COMPRISED OF STAFF SALAR IES, ALL ADMINISTRATIVE COSTS INDIRECTLY INCURRED IN RESPECT OF THE SERVICE S RENDERED AFTER UNDERTAKING THE FUNCTIONS PERFORMED AND THE RISK ASSUMED. THE TPO PROPOSED CERTAIN REVISED FILTERS TO BENCHMARK THE INTERNATIONAL TRAN SACTIONS UNDERTAKEN BY THE ASSESSEE. THE ASSESSEE HAD SELECTED 10 COMPARABLES FOR BENCHMARKING THE INTERNATIONAL TRANSACTIONS BUT ONLY 4 OUT OF 10 COM PARABLES WERE FINALLY SELECTED BY THE TPO. THE TPO ALSO PROPOSED ANOTHER SIX COMPARABLES FOR TRANSFER PRICING ANALYSIS AND THUS IN ALL 10 COMPAN IES WERE SELECTED AS COMPARABLES. THE MEAN MARGIN OF THE COMPARABLES WOR KED OUT TO 34.73% AND THE ASSESSEE WAS SHOW CAUSED AS TO WHY ADJUSTMENT O F RS.15,44,931/- SHOULD NOT BE MADE IN ITS HANDS IN ITES SEGMENT. IN RESPEC T OF OTHER SEGMENT I.E. PROVISION OF MARKETING SERVICE, THE TPO FINALLY SEL ECTED 8 COMPANIES AS COMPARABLES WHOSE MEAN MARGINS WORKED OUT TO 24.76% AND ADJUSTMENT OF RS.3.51 CRORES WAS PROPOSED IN THE SAID SEGMENT. TH E TPO AFTER CONSIDERING 8 ITA NO.1982/DEL/2015 ASSESSMENT YEAR: 2010-11 THE OBJECTIONS OF THE ASSESSEE TO THE SELECTION OF THE COMPARABLES UNDER THE SEGMENT PROVISION OF MARKETING SUPPORT SERVICES PRO POSED ADJUSTMENT OF RS.2.86 CRORES. SIMILARLY, IN THE SEGMENT OF PROVIS ION OF IT ENABLED SERVICES, THE TPO SELECTED 10 COMPARABLES AND FINALLY WORKED OUT THE MEAN MARGIN OF THE COMPARABLES AT 35.77% AND PROPOSED ADJUSTMENT O F RS.15,44,931/-. THE ASSESSING OFFICER ISSUED DRAFT ASSESSMENT ORDER AGA INST WHICH THE ASSESSEE FILED OBJECTIONS BEFORE THE DRP, IN-TURN THE DRP IS SUED DIRECTIONS TO THE ASSESSING OFFICER/TPO. CONSEQUENT TO THE SAID DIRE CTIONS, THE ASSESSING OFFICER/TPO PASSED CONSEQUENT ORDER, WHEREIN, UNDER THE SEGMENT OF PROVISION OF MARKETING SUPPORT SERVICES, NO ADJUSTMENT WAS MA DE. HOWEVER, UNDER THE SEGMENT OF PROVISION OF IT ENABLED SERVICES, ADJUST MENT OF RS.14,12,058/- WAS MADE IN THE HANDS OF THE ASSESSEE. FURTHER, ADJUSTM ENT WAS MADE ON ACCOUNT OF INTEREST DUE ON RECEIVABLES WHICH WAS NOT RECEIV ED WITHIN THE DUE PERIOD AND APPLYING RATE OF INTEREST @14.88%, AN ADJUSTMENT O F RS.10,75,876/- WAS MADE. THE ASSESSEE IS IN APPEAL AGAINST BOTH THESE ADJUSTMENTS. IN ADDITION, IT HAS ALSO RAISED THE ISSUE AGAINST THE CORPORATE TAX ADDITIONS MADE IN THE HANDS OF THE ASSESSEE. 6. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT MAJ OR BUSINESS OF THE ASSESSEE IS PROVISION OF MARKETING SUPPORT SERVICES AND THE RESULTS OF THE SAID SEGMENT HAD BEEN ACCEPTED. HOWEVER, ADJUSTMENT HAS BEEN MADE IN THE SECOND SEGMENT OF PROVISION OF IT ENABLED SERVICES. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE TPO HAD FINALLY SELEC TED 10 COMPANIES AS COMPARABLE, WHOSE MEAN MARGIN WAS WORKED OUT AT 34. 98% AND ON A TURNOVER OF RS.1.17 CRORES ADJUSTMENT OF RS.14,12,058/- WAS MADE. THE ASSESSEE 9 ITA NO.1982/DEL/2015 ASSESSMENT YEAR: 2010-11 POINTED OUT THAT IT IS AGGRIEVED BY THE INCLUSION O F CERTAIN CONCERNS WHICH ARE FUNCTIONALLY NOT COMPARABLE TO THE ASSESSEE, WHICH ARE AS UNDER:- ACCENTIA TECHNOLOGIES LTD. INFOSYS BPO LIMITED ECLERX SERVICES LIMITED TCS E-SERVE LIMITED TCS E-SERVE INTERNATIONAL LTD. 7. THE ASSESSEE IS ALSO AGGRIEVED BY THE NON-INCLUS ION OF R SYSTEMS INTERNATIONAL LIMITED (SEGMENTAL) AND CALIBER POINT BUSINESS SOLUTIONS LIMITED. THE LD. AR FOR THE ASSESSEE POINTED OUT T HAT IN CASE, THE REVISED LIST OF COMPARABLES IS ACCEPTED, THEN THE MARGIN SHOWN B Y THE ASSESSEE WOULD BE WITHIN +/-5% OF THE MEAN MARGINS OF THE COMPARABLES . THE LD. AR FOR THE ASSESSEE ALSO POINTED OUT THAT AFTER THIS ALL OTHER ISSUES RAISED IN RELATION TO TRANSFER PRICING ADJUSTMENT WOULD BECOME ACADEMIC. 8. THE LD. DR FOR THE REVENUE STRONGLY PLACED RELIA NCE ON THE ORDERS OF THE AUTHORITIES BELOW. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ASSESSEE IS MAINLY ENGAGED IN PROVIDING BUSINESS SU PPORT SERVICES TO ITS GROUP ENTITIES AS PER SERVICE AGREEMENT ENTERED INTO BETW EEN THE PARTIES. THE MAJOR BUSINESS OF THE ASSESSEE IS THE PROVISION OF MARKET SUPPORT SERVICES. THE AO AND TPO HAD BENCHMARKED THE AFORESAID INTERNATIONAL TRANSACTIONS AND AFTER DIRECTIONS OF THE DRP, THE SAME WAS ACCEPTED TO BE AT ARMS LENGTH. NOW, COMING TO THE NEXT SEGMENT OF PROVISION OF IT ENABL ED SERVICES, THE TPO HAD 10 ITA NO.1982/DEL/2015 ASSESSMENT YEAR: 2010-11 SELECTED 10 CONCERNS AS COMPARABLES TO THE ASSESSEE WHOSE MEAN MARGINS WORKED OUT TO 34.98% ON FINAL ANALYSIS. THE ASSESSE E IS AGGRIEVED BY THE INCLUSION OF CERTAIN CONCERNS AND BY THE EXCLUSION OF TWO CONCERNS WHICH WERE FUNCTIONALLY SELECTED BY IT TO BENCHMARK THE INTERN ATIONAL TRANSACTION. THE LIST OF THE FINAL COMPARABLES SELECTED BY THE TPO READ A S UNDER:- S. NO. NAME OF THE COMPANY 1 ACCENTIA TECHNOLOGIES LTD. 2 COSMIC GLOBAL LTD. 3 E4E HEALTHCARE BUSINESS PRIVATE LIMITED 4 FOTUNE INFOTECH LIMITED 5 IGATE GLOBAL SOLUTIONS LIMITED 6 INFOSYS BPO LIMITED 7 JINDAL INTELLICOM PRIVATE LIMITED 8 TCS E SERVE LIMITED 9 TCS E SERVE INTERNATIONAL LIMITED 10 ECLERX SERVICES LIMITED 11 OMEGA HEALTHCARE MANAGEMENT SERVICES PVT. LTD. 10. AN INITIAL ADJUSTMENT OF RS.15,44,931/- WAS PRO POSED IN THE SAID SEGMENT; HOWEVER, AFTER THE DIRECTIONS OF THE DRP, THE SAME WAS REDUCED TO RS.14,12,058/-. AS POINTED OUT IN THE PARAS ABOVE, THE ASSESSEE WAS ENGAGED IN THE MARKETING AND DISTRIBUTION OF CREDIT CARDS A ND PERSONAL LOANS. IT WAS ALSO ENGAGED IN BUYING AND SELLING FOREIGN CURRENCY AND TRAVELERS CHEQUE AND IS 11 ITA NO.1982/DEL/2015 ASSESSMENT YEAR: 2010-11 AN AUTHORIZED FULL FLEDGED MONEY CHANGER. AS PART OF SERVICES, IT WAS PROVIDING SUPPORT SERVICES TO ITS AE. 11. THE ASSESSEE IS AGGRIEVED BY THE INCLUSION OF T HE ACCENTIA TECHNOLOGIES LTD. IN THE FINAL SET OF COMPARABLES. THE PLEA OF T HE ASSESSEE BEFORE US IS THAT THE SAID CONCERN IS ENGAGED IN DIVERSIFIED SERVICES WHICH INCLUDES HRCM (USING SAAS MODEL), ALSO IS KPO AND NOT BPO. FURTHER IT OW NS SIGNIFICANT INTANGIBLE ASSETS TO THE EXTENT OF 67%. ANOTHER ASPECT POINTE D OUT WAS THAT DURING THE YEAR, THERE WAS EXTRA-ORDINARY ACTIVITY OF AMALGAMA TION. THE ASSESSEE ALSO POINTED OUT THAT THE TPO HAD INCLUDED THE SAID CONC ERN ON THE GROUND THAT THE CONCERN WAS ENGAGED IN HCRM CONSISTING OF VARIOUS C LOSELY RELATED ACTIVITIES, BUT NO REVENUE WAS GENERATED FROM SAAS. IT WAS AL SO POINTED OUT THAT THE AMALGAMATION DID NOT AFFECT THE PROFITABILITY OF TH E COMPANY. THE DRP HAD HELD SUCH CONCERN TO BE ENGAGED IN RENDERING ITES SERVIC ES AND THUS WAS SIMILAR TO THE PROFILE OF THE ASSESSEE. THE LD. AR FOR THE ASS ESSEE POINTED OUT THAT THE ISSUE STANDS COVERED BY THE ORDER OF THE TRIBUNAL I N THE CASE OF SISTER CONCERN I.E. AMERICAN EXPRESS (I) P. LTD. IN ITA NO.1426/DE L/2015, RELATING TO ASSESSMENT YEAR 2010-11, VIDE ORDER DATED 17/07/201 9. IN THE ENTIRETY OF THE SUBMISSIONS MADE BY THE LD. AR FOR THE ASSESSEE AND IN VIEW OF THE SERVICES PROVIDED BY THE ASSESSEE, WHICH ARE BACK OFFICE SER VICES, THE CONCERN ACCENTIA TECHNOLOGIES LTD. CANNOT BE HELD TO BE COMPARABLE T O THE ASSESSEE ON THE GROUND OF IT BEING NOT FUNCTIONALLY COMPARABLE. THE SAID PROPOSITION IS LAID DOWN IN THE CASE OF SISTER CONCERN (SUPRA) VIDE PAR A 28 AT PAGE 19 OF THE ORDER. ANOTHER ASPECT TO BE KEPT IN MIND IS THE EXTRAORDIN ARY EVENT OF AMALGAMATION, WHICH HAS OCCURRED DURING THE YEAR AND SUCH CONCERN WITH EXTRAORDINARY EVENT 12 ITA NO.1982/DEL/2015 ASSESSMENT YEAR: 2010-11 CANNOT BE HELD TO BE COMPARABLE IN THE YEAR OF THE AMALGAMATION. ACCORDINGLY, WE HOLD SO. THE AO/TPO IS DIRECTED TO EXCLUDE ACCEN TIA TECHNOLOGIES LTD. FROM THE FINAL LIST OF COMPARABLES. 12. NOW COMING TO THE CONCERN INFOSYS BPO LIMITED, WHICH IS SELECTED AS FUNCTIONALLY COMPARABLE CONCERN TO THE ASSESSEE. I N THE FIRST INSTANCE, IT HAS LARGE SCALE OF OPERATIONS TOTALLING RS.1126 CRORES AGAINST THE TOTAL TURNOVER OF THE ASSESSEE AS RS.1.17 CRORES. FURTHER, THE SAID CONCERN IS ENGAGED IN WIDE SET OF SERVICES AND THE MARGINS OF THE SAID CONCERN CANNOT BE COMPARED WITH THE MARGINS OF THE ASSESSEE. WE FIND SUPPORT FROM T HE RATIO LAID DOWN BY THE TRIBUNAL IN THE CASE OF SISTER CONCERN ITSELF. SIM ILAR IS THE PROPOSITION FOR THE TCS E-SERVE LTD. AND TCS E-SERVE INTERNATIONAL LTD. 13. SIMILAR ISSUE OF EXCLUSION OF TCS E-SERVE LIMIT ED AND TCS E-SERVE INTERNATIONAL LTD. HAS BEEN ADJUDICATED IN THE CASE OF INTEGREON (INDIA) PVT. LTD. VS DCIT IN ITA NO.1277/DEL/2017, RELATING TO ASSESS MENT YEAR 2012-13, VIDE ORDER DATED 31.08.2020 AND IT WAS HELD AS UNDER:- 9. WE FIND THAT THE ISSUE OF EXCLUSION OF TCS E-S ERVE LTD. FROM THE FINAL LIST OF COMPARABLES ON THE GROUND OF THE SAID CONCERN HAVING BOTH BRAND VALUE AND HIGH TURNOVER WAS AGITATED BEFORE THE TRIBUNAL (SUPRA) IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2011-12. THE TRIBUNAL IN TURN R ELIED ON THE RATIO LAID DOWN BY THE DELHI BENCH OF TRIBUNAL IN B.C. MANAGEMENT SERVICES P.LTD. 83 TAXMANN.COM 346. THE RELEVANT FINDING OF THE SAID CASE ARE REPRODUCED BY THE TRIBUNAL IN PARA 14 AND ARE BEING REFERRED, BUT NOT BEING REPRODUCED FOR THE SAKE OF BREVITY. IT MAY FURTHE R BE POINTED OUT THAT AGAINST THE SAID ORDER IN B.C. MAN AGEMENT SERVICES P.LTD.(SUPRA), THE REVENUE FILED AN APPEAL BEFORE THE HONBLE HIGH COURT AND THE QUESTION OF LAW RAIS ED WAS AS UNDER:- 13 ITA NO.1982/DEL/2015 ASSESSMENT YEAR: 2010-11 1. WHETHER THE EXCLUSION OF FOUR COMPARABLES I.E. E- CLERX PVT.LTD., M/S ICRA TECHNO ANALYTICS LTD., M// S. TCS E-SERVE LTD. AND M/S. ACCENTIA TECHNOLOGIES PVT .LTD., ARE SUSTAINABLE AND NOT ERRONEOUS? 10. THE HONBLE JURISDICTIONAL HIGH COURT DISMISSED THE APPEAL OF THE REVENUE OBSERVING AS UNDER:- 'THE THIRD COMPARABLE THAT THE AO/TPO EXCLUDED IS T CS E-SERVE. THE ITAT OBSERVED THAT THOUGH THERE IS A C LOSE FUNCTIONAL SIMILARITY BETWEEN THAT ENTITY AND THE ASSESSEE, HOWEVER, THERE IS A CLOSE CONNECTION BETW EEN TCS E-SERVE AND TA T A CONSULTANCY SERVICE LTD. WHI CH WAS HIGH BRAND VALUE; THAT DISTINGUISHED IT AND MAR KED IT OUT FOR EXCLUSION. THE ITAT RECORDED THAT THE BR AND VALUE ASSOCIATED WITH TCS CONSULTANCY REFLECTED IMPACTED TCS E-SERVE PROFITABILITY IN A VERY POSITI VE MANNER. THIS INFERENCE TOO IN THE OPINION OF COURT, CANNOT BE TERMED AS UNREASONABLE. THE RATIONALE FOR EXCLUS ION IS THEREFORE UPHELD.' 11. THE HONBLE HIGH COURT THUS WAS OF THE VIEW THA T WHERE TCS E-SERVE LTD. HAS HIGH BRAND VALUE THEN IT CANNOT BE SELECTED AS COMPARABLE WITH A CONCERN WHOSE BRAN D VALUE IS LESS. THE LD.DR FOR THE REVENUE STRESSED THAT THE GLOBAL ENTITY OF WHICH THE ASSESSEE IS THE SUBSIDIA RY HAS HIGH BRAND VALUE. WE FIND NO MERIT IN THE STAND OF THE REVENUE IN THIS REGARD. EVEN ON THE SECOND ISSUE O F HIGH TURNOVER, THE SAID CONCERN I.E. TCS E-SERVE LTD. CA NNOT BE SELECTED AS COMPARABLE. THE TOTAL TURNOVER OF THE ASSESSEE DURING THE YEAR IS RS.30.92 CRORES. ON THE OTHER H AND, THE TURNOVER OF THE TCS E-SERVE LTD. IS RS.1578 CRORES. ACCORDINGLY WE HOLD THAT THE TCS E-SERVE LTD. IS TO BE EXCLUDED FROM THE FINAL LIST OF COMPARABLES. SIMIL ARLY, INFOSYS BPO LTD. WHICH HAS BOTH BRAND VALUE AND HIG H TURNOVER OF RS.1312 CRORES CANNOT BE SELECTED AS A CONCERN COMPARABLE TO THE ASSESSEE WHOSE TOTAL TURNOVER IS ONLY RS.31 CRORES (APPROX.). ACCORDINGLY, WE HOLD SO. 14. FOLLOWING THE SAME PARITY OF REASONING, SINCE T HE SAID CONCERNS ARE FUNCTIONALLY DISSIMILAR, THERE IS NO MERIT IN INCLU DING THE SAME IN THE FINAL LIST 14 ITA NO.1982/DEL/2015 ASSESSMENT YEAR: 2010-11 OF COMPARABLES. THE ASSESSING OFFICER/TPO IS DIRECT ED TO EXCLUDE INFOSYS BPO LTD, TCS E-SERVE LTD. AND TCS E-SERVE INTERNATIONAL LTD. ACCORDINGLY. 15. THE LAST CONCERN WHICH THE ASSESSEE WANTS TO EX CLUDE FROM FINAL SET OF COMPARABLES IS ECLERX SERVICES LIMITED, ON THE GROU ND THAT IT IS ENGAGED IN PROVIDING KPO SERVICES AS AGAINST THE ASSESSEE PROV IDING BPO SERVICES. THE HONBLE DELHI HIGH COURT IN RAMPGREEN SOLUTIONS PVT . LIMITED IN ITA NO.102/2015, VIDE ORDER DATED 10.08.2015 HAS HELD T HAT THE MARGINS OF THE CONCERNS PROVIDING KPO SERVICES CANNOT BE COMPARED WITH THE MARGINS OF THE CONCERN PROVIDING BPO SERVICES. SINCE, THE ASSESSE E IS ENGAGED IN PROVIDING BPO SERVICES AND ECLERX SERVICES LIMITED IS ENGAGED IN KPO SERVICES, WE FIND NO MERIT IN THE INCLUSION OF SAID CONCERN IN FINAL SET OF COMPARABLES. ACCORDINGLY, WE DIRECT THE AO/TPO TO EXCLUDE THE SA ID CONCERN FROM THE FINAL SET OF COMPARABLES. 16. NOW, COMING TO THE INCLUSION OF THE TWO CONCERN S I.E. M/S. R SYSTEMS INTERNATIONAL LIMITED (SEGMENTAL) AND M/S. CALIBER POINT BUSINESS SOLUTIONS LIMITED. THE CASE OF THE ASSESSEE IS THAT THE SAID CONCERNS HAVE BEEN ACCEPTED TO BE FUNCTIONALLY COMPARABALES TO THE ASSESSEE IN ASSESSMENT YEARS 2008-09 AND 2009-10, HOWEVER, THE SAID CONCERNS WERE EXCLUD ED ON THE GROUND THAT THE YEAR ENDING OF BOTH THE CONCERNS WAS OTHER THAN MAR CH CLOSING. 17. THE LD. AR FOR THE ASSESSEE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF M/S. MCKINS EY KNOWLEDGE CENTRE INDIA PVT. LTD. IN ITA NO. 217 OF 2014, JUDGMENT DATED 27 .03.2015. WE FIND THAT THE HONBLE HIGH COURT HAS HELD THAT IN CASE THE DATA I S AVAILABLE ON RECORD AND 15 ITA NO.1982/DEL/2015 ASSESSMENT YEAR: 2010-11 RESULTS FOR FINANCIAL YEAR CAN REASONABLY BE EXTRAP OLATED, THEN THE COMPARABLE CANNOT BE EXCLUDED SOLELY ON THE GROUND THAT THE CO MPARABLES HAVE DIFFERENT FINANCIAL YEAR ENDINGS. WE HOLD THAT IN CASE FROM THE AVAILABLE DATA ON RECORD, THE RESULTS FOR THE FINANCIAL YEAR AS THAT OF THE T ESTED PARTY CAN BE MADE AVAILABLE BY THE ASSESSEE, THE AO/TPO MAY VERIFY TH E SAME AND INCLUDE THE SAID CONCERNS I.E. M/S. R SYSTEMS INTERNATIONAL LIM ITED (SEGMENTAL) AND M/S. CALIBER POINT BUSINESS SOLUTIONS LIMITED IN THE FIN AL LIST OF COMPARABLES. WE DIRECT THE ASSESSING OFFICER TO AFFORD REASONABLE O PPORTUNITY OF HEARING TO THE ASSESSEE IN ORDER TO DECIDE THE SAME AND ACCORDINGL Y RE-COMPUTE THE ARMS LENGTH PRICE OF ITES SEGMENT. 18. THE GROUNDS OF APPEAL NO. 1 AND 2 RAISED BY THE ASSESSEE BEING GENERAL IN NATURE DO NOT REQUIRE ANY SEPARATE ADJUDICATION. 19. UNDER PART-I, THE ASSESSEE HAS RAISED THE ISSUE OF TRANSFER PRICING ADJUSTMENT. WE HAVE ALREADY ELABORATED ON THE ISSUE IN PARAS ABOVE AND THE ASSESSING OFFICER IS THUS DIRECTED TO RE-COMPUTE TH E ADJUSTMENT ON ACCOUNT OF TRANSFER PRICING IN THE HANDS OF THE ASSESSEE, IF A NY, AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE ON THE GROUN D OF INCLUSION OF TWO CONCERNS I.E. M/S. R SYSTEMS INTERNATIONAL LIMITED (SEGMENTAL) AND M/S. CALIBER POINT BUSINESS SOLUTIONS LIMITED, AS PER OU R DIRECTIONS IN THE PARAS ABOVE. OTHER CONCERNS AS DIRECTED ARE TO BE EXCLUDE D FROM FINAL LIST OF COMPARABLES. WE HOLD SO. 20. THE GROUND OF APPEAL NSO.7, 13 AND 14 ARE AGAIN ST THE APPLICATION OF SAFE HARBOR RULES. THE HONBLE DELHI HIGH COURT IN PR. C IT VS FISERV INDIA PVT. LTD., 16 ITA NO.1982/DEL/2015 ASSESSMENT YEAR: 2010-11 IN ITA NO.17/2016, ORDER DATED 06.01.2016, VIDE PAR A-10 HAS HELD THAT SAFE HARBOUR NOTIFICATION DATED 18 TH SEPTEMBER 2013 RELIED UPON BY THE REVENUE IS PROSPECTIVE. SINCE, SAFE HARBOUR RULES ARE NOT OPER ATIVE FOR THE YEAR UNDER CONSIDERATION; HENCE, THE ORDERS OF AUTHORITIES BEL OW ARE REVERSED ON THIS GROUND. 21. NOW, COMING TO THE GROUND NO.16 UNDER PART-I I. E. ON ACCOUNT OF INTEREST CHARGEABLE ON RECEIVABLES. THE CASE OF THE AO/TPO I S THAT WHERE THE ASSESSEE HAD NOT RECEIVED THE AMOUNT DUE FROM AES WITHIN SPE CIFIED PERIOD, THEN INTEREST IS CHARGEABLE ON THE AFORESAID RECEIVABLES . THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THIS ISSUE STANDS COVERED BY THE R ATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN PR. CIT VS KUSUM HEALTH CARE PV T. LTD. IN ITA NO.765/2016, JUDGMENT DATED 25.04.2017, AS WORKING CAPITAL ADJUSTMENT HAS BEEN ALLOWED TO THE ASSESSEE. 22. THE LD. DR FOR THE REVENUE PLACED RELIANCE ON T HE ORDERS OF AUTHORITIES BELOW. 23. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED THE RECORDS. THE ASSESSEE IS AGGRIEVED BY THE ADJUSTMENT MADE ON ACC OUNT OF INTEREST ON RECEIVABLES. THE ISSUE ARISING IN THE PRESENT APPEA L BEFORE US IS SIMILAR TO THE ISSUE BEFORE THE HONBLE DELHI HIGH COURT IN PR. CI T VS KUSUM HEALTH CARE PVT. LTD.(SUPRA), WHEREIN IT WAS HELD THAT IF WORKING CA PITAL ADJUSTMENT IS ALLOWED TO THE ASSESSEE, THEN NO FURTHER ADJUSTMENT IS TO BE M ADE ON ACCOUNT OF INTEREST ON RECEIVABLES. APPLYING THE RATIO LAID DOWN BY T HE HONBLE DELHI HIGH COURT IN PR. CIT VS KUSUM HEALTH CARE PVT. LTD. (SUPRA), WE FIND NO MERIT IN THE 17 ITA NO.1982/DEL/2015 ASSESSMENT YEAR: 2010-11 ADJUSTMENT MADE BY THE AO/TPO IN THIS REGARD AS WOR KING CAPITAL ADJUSTMENT HAS BEEN ALLOWED IN THE HANDS OF THE ASSESSEE. 24. NOW, COMING TO PART-II OF THE GROUNDS OF APPEAL , THE ASSESSEE HAS RAISED CORPORATE TAX GROUNDS OF APPEAL AGAINST THE RESTRIC TION OF COST OF ACQUIRED DATABASE TO RS.3,00,00,000/- INSTEAD OF RS.12,00,00 ,000/- AND THE CONSEQUENT DISALLOWANCE OF DEPRECIATION ON SUCH DATABASE. 25. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT TH E ISSUE OF VALUE AND DEPRECIATION ON ACQUIRED DATABASE STANDS COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.4106/MUM/2007, REL ATING TO ASSESSMENT YEAR 2002-03, VIDE ORDER DATED 03.02.2012. 26. THE LD. DR FOR THE REVENUE STRONGLY PLACED RELI ANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 27. WE FIND THAT THIS ISSUE STANDS COVERED BY THE O RDER OF THE TRIBUNAL IN ASSESSEES OWN CASE. THE RELEVANT OBSERVATION OF TH E TRIBUNAL IS REPRODUCED HEREUNDER:- 8. WE FIND THAT IT IS NOT IN DISPUTE THAT THE TRAN SACTION BETWEEN THE ASSESSEE AND AMERICAN EXPRESS BANK, INTER ALIA, INC LUDING FOR PURCHASE OF ACQUIRED BUSINESS DATABASE WERE SUBJECTED TO TRANSF ER PRICING SCRUTINY AND, THE TRANSFER PRICING OFFICER VIDE ORDER DATED 15.2.2005 HAS ACCEPTED THE TRANSACTION WITHOUT MAKING ANY ADJUSTMENT TO TH E ARMS LENGTH PRICE. IN THIS VIEW OF THE MATTER AND AS HELD BY HONBLE DELH I HIGH COURT IN THE CASE OF CIT VS. ORACLE INDIA PVT LTD (243 CTR 103), WHEN THE PRICE FIXED IS ACCEPTABLE AS ARMS LENGTH PRICE BY TRANSFER PRICING OFFICER (TPO) UNDER SECTION 92 OF THE ACT, IT CANNOT BE OPEN TO THE ASS ESSING OFFICER TO DISTURB THAT PRICE SO PAID AS UNREASONABLE. WE HAVE ALSO NO TED THAT THE ASSESSING OFFICER HAS DOUBTED THE APPROPRIATENESS OF THE CONS IDERATION OF RS.12 CRORES WITHOUT ANY COGENT MATERIAL TO COME TO THE C ONCLUSION THAT THIS IS EXCESSIVE OR UNREASONABLE, BUT THEN THE TPO WHOSE D UTY IS IT TO EXAMINE WHETHER OR NOT THE PRICE PAID IN INTRA ASSOCIATE EN TERPRISES TRANSACTIONS ARE AT ARMS LENGTH PRICE OR NOT HAS ACCEPTED THE TR ANSACTION WITHOUT 18 ITA NO.1982/DEL/2015 ASSESSMENT YEAR: 2010-11 MAKING ANY ARMS LENGTH PRICE ADJUSTMENT. THERE IS N O MATERIAL WHATSOEVER TO ESTABLISH OR EVEN INDICATE THAT THE P RICE OF RS.12 CRORES PAID FOR THE ACQUIRED BUSINESS DATABASE IS EXCESSIVE OR UNREASONABLE AND ONLY THE BASIS OF ASSESSING OFFICERS COMING TO THE CONC LUSION ABOUT HIS SUBJECTIVE JUDGMENT. WHEN THE VALUATION OF ACQUIRED BUSINESS DATABASE HAS BEEN EXAMINED BY TPO WHILE CONCLUDING THAT THE DATABASE PRICE ADJUSTMENT FOR THE SAID YEAR AND NO ADVERSE INFEREN CES HAVE BEEN RECORDED IN RESPECT OF THE SAME, THERE COULD BE NO GOOD REASON FOR THE AO TO DEVIATE FROM THE STAND OF THE TPO AND SUBSTITUTE HIS OWN OPINION AS TO WHAT SHOULD BE THE CORRECT PRICE AT WHICH ACQUIRED BUSINESS DATABASE SHOULD HAVE BEEN PURCHASED. IN THIS VIEW OF THE MAT TER AND IN THE LIGHT OF THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CAS E OF ORACLE INDIA P. LTD (SUPRA), WE ARE OF THE CONSIDERED VIEW THAT THE CIT (A) WAS INDEED IN ERROR IN RESTRICTING THE VALUE OF ACQUIRED BUSINESS DATAB ASE AT RS.3 CRORES AS AGAINST RS.12 CRORES PAID BY THE ASSESSEE. TO THIS EXTENT, WE VACATE THE ORDER OF THE CIT(A). WE FURTHER FIND THAT SO FAR AS THE QUESTION ABOUT ADMISSIBILITY OF DEPRECIATION OF ACQUIRED BUSINESS DATABASE IS CONCERNED, THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. HINDUSTAN C OCA COLA BEVERAGES PVT LTD (331 ITR 192), WHEREIN, THEIR LORDSHIPS, INTER ALIA, HAVE OBSERVED THAT IT IS WORTH NOTING, THE SCOPE OF SECTION 32 HAS BE EN WIDENED BY THE FINANCE (NO. 2) ACT, 1998 WHEREBY DEPRECIATION IS N OW ALLOWED ON INTANGIBLE ASSETS ACQUIRED ON OR AFTER 1ST APRIL, 1 998. AS PER SECTION 32(1)(II), DEPRECIATION IS ALLOWABLE IN RESPECT OF KNOW-HOW, PATENTS, COPYRIGHTS, TRADEMARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE. IN VIEW OF TH ESE DISCUSSIONS AS ALSO BEARING IN MIND THE ENTIRETY OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE CIT(A) OUGHT TO HAVE ALLOWED THE DEPRECIAT ION ON THE ENTIRE PAYMENT OF RS.12 CRORES TOWARDS ACQUIRED BUSINESS D ATABASE. WE, THEREFORE, REJECT THE APPEAL FILED BY THE ASSESSING OFFICER AGAINST PARTIAL RELIEF GRANTED BY THE CIT(A) AND UPHOLD THE GRIEVAN CE OF THE ASSESSEE IN THIS REGARD. 9. AS REGARDS THE QUESTION OF CLAIMING PAYMENT TOWA RDS ACQUIRING DATABASE AS REVENUE EXPENDITURE, LEARNED COUNSEL FO R THE ASSESSEE DID NOT PRESS THE SAME. ACCORDINGLY, THE GRIEVANCE IS DISMI SSED AS NOT PRESSED. 28. IN THE ENTIRETY OF THE SUBMISSIONS MADE BY THE LD. AR FOR THE ASSESSEE AND FOLLOWING THE SAME PARITY OF REASONING AS IN AS SESSEES OWN CASE FOR EARLIER ASSESSMENT YEAR, WE FIND NO MERIT IN RESTRICTION OF COST OF ACQUIRED DATABASE AND THE CONSEQUENT DISALLOWANCE OF DEPRECIATION ON SUCH DATABASE BY THE ASSESSING OFFICER/TPO. THUS, THE ASSESSING OFFICER IS DIRECTED TO ALLOW 19 ITA NO.1982/DEL/2015 ASSESSMENT YEAR: 2010-11 DEPRECIATION ON ENTIRE PAYMENT OF RS.12 CRORES TOWA RDS ACQUIRED BUSINESS DATABASE. 29. ANOTHER ISSUE RAISED BY THE ASSESSEE IS AGAINST THE ORDER OF THE ASSESSING OFFICER IN RESTRICTING THE COST OF GOODWILL TO NIL AND NOT ALLOWING DEPRECIATION ON IT. THE LD. AR FOR THE ASSESSEE AGAIN POINTED OUT T HAT THIS ISSUE IS ALSO COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN C ASE IN CROSS OBJECTION NO.202/MUM/2009 (ARISING OUT OF ITA NO.4106/MUM/200 7), RELATING TO ASSESSMENT YEAR 2002-03, ORDER DATED 29.10.2014. 30. THE LD. DR FOR THE REVENUE STRONGLY PLACED RELI ANCE ON THE ORDERS OF THE AUTHORITIES BELOW. 31. WE FIND THAT THIS ISSUE IS ALSO COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE. THE RELEVANT FINDINGS OF THE TRIBUNAL READ AS UNDER:- 3. AT THE TIME OF HEARING BEFORE US, THE AR POINTE D OUT THAT THE ISSUE WAS IMPUGNED IN THE ASSESSMENT YEAR AND THE I SSUE OF VALUATION OF GOODWILL TRAVELLED UPTO THE ITAT, MUMB AI AND THE COORDINATE BENCH IN THE ORIGINAL ORDER HELD THAT TH E VALUATION OF GOODWILL WAS CORRECT AND HELD THAT ENTIRE PAYMENT O F RS.12CRORES WAS TOWARDS ACQUIRE BUSINESS, THEREBY ALLOWING A CL AIM. 4. RESPECTFULLY FOLLOWING THE ORDER OF THE ITAT IN ASSESSEE'S OWN CASE, WE HOLD THAT THE ASSESSEE ACQUIRED THE BUSINE SS ALONG WITH GOODWILL AND ALSO THAT THE VALUATION THEREOF WAS CO RRECT. 5. WE NOW COME TO THE ISSUE OF ALLOWANCE OF DEPREC IATION OF GOODWILL, ACQUIRED BY THE ASSESSEE. THE AO DISALLOW ED THE CLAIM OF DEPRECATION ON GOODWILL, BECAUSE, GOODWILL DID N OT FEATURE AS A DEPRECIABLE INTANGIBLE ASSET IN SECTION 32. 6. THE AR POINTED OUT THAT THE ISSUE IS NOW COVERED BY THE DECISION OF CIT VS SMIFS SECURITIES LTD., REPORTED IN 348 ITR 302, RENDERED BY HON'BLE SUPREME COURT. 7. WE, THEREFORE, ALLOW GROUNDS NO.6 & 7. 20 ITA NO.1982/DEL/2015 ASSESSMENT YEAR: 2010-11 32. THE ISSUE OF DEPRECIATION ON GOODWILL STANDS CO VERED IN FAVOUR OF THE ASSESSEE IN LINE WITH THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2002-03 (SUPRA). FOLLOWING THE SAME PARITY OF REASONING, WE ALLOW THE CLAIM OF DEPRECIATION ON GOODWILL. 33. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER, 2020. SD/- SD/- (R.K. PANDA) (SUSHMA CHOWLA) /ACCOUNTANT MEMBER / VICE PRESIDENT / DATED : 21 ST OCTOBER , 2020 F{X~{T? FA P.S , * COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. + ,) / THE CIT(A) 4. / THE PR. CIT 5. 6. ) -) - / DR, ITAT, DELHI *) GUARD FILE. ) / BY ORDER , // TRUE COPY // , )- ASSISTANT REGISTRAR, ITAT, DELHI