Appeal details
Counselvise Citation
[2016] 132 COUNSELVISE.COM (IT) 6259 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 month(s) 4 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-07-2016
Appeal Filed By
Assessee
Bench Allotted
A
Next Hearing Date
17-08-2016
Assessment Year
2011-2012
Appeal Filed On
22-02-2016
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO. A.Y. APPELLANT RESPONDENT 200/HYD/16 2011-12 S&P CAPITAL IQ (INDIA) PRIVATE LIMITED, HYDERABAD [PAN: AACCS8657G] DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(1), HYDERABAD 435/HYD/16 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(1), HYDERABAD S&P CAPITAL IQ (INDIA) PRIVATE LIMITED, HYDERABAD [PAN: AACCS8657G] STAY APPLICATION NO. 22/HYD/2016 (ARISING OUT OF ITA NO. 200/HYD/2016) ASSESSMENT YEAR : 2011-12 S&P CAPITAL IQ (INDIA) PRIVATE LIMITED, HYDERABAD [PAN: AACCS8657G] VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(1), HYDERABAD (APPLICANT) (RESPONDENT) FOR ASSESSEE : SHRI G.C. SRIVASTAVA, AR FOR REVENUE : SHRI K. DEVARATHNA KUMAR, DR DATE OF HEARING : 20-07-2016 DATE OF PRONOUNCEMENT : 27-07-2016 O R D E R PER B. RAMAKOTAIAH, A.M. : THESE ARE CROSS-APPEALS BY ASSESSEE AND REVENUE ON THE ORDER PASSED BY THE ASSESSING OFFICER (AO) U/S. 14 3(3) R.W.S. 144C(5) R.W.S. 92CA(3) OF THE INCOME TAX ACT [ACT], CO NSEQUENT TO S&P CAPITAL IQ (INDIA) PVT LTD., :- 2 -: THE DIRECTIONS OF THE DISPUTE RESOLUTION PANEL [DRP], BA NGALORE DATED 02-12-2015. 2. BRIEFLY STATED, ASSESSEE IS WHOLLY OWNED SUBSIDIA RY OF CAPITAL IQ, INC AND HAS ITS UNIT REGISTERED UNDER STP OF INDIA SCHEME AT HYDERABAD. ASSESSEE IS PROVIDING IT ENAB LED SERVICES (ITES) TO THE ASSOCIATED ENTERPRISE [AE] WHICH INCLUDE S UPDATING DATABASE, PROCESSING ANNUAL REPORTS, QUARTERLY FINANC IAL REPORTS, PRESS RELEASES OF VARIOUS COMPANIES, EXTRACTING DATA F ROM FINANCIAL STATEMENTS AND AUDIT REPORTS ETC., AND PREPARATION OF BUS INESS DESCRIPTIONS, BIOGRAPHIES OF KEY EXECUTIVES AND TRACK KEY DEVELOPMENTS IN THE COMPANIES. FOR THE YEAR UNDER CON SIDERATION, ASSESSEE ADMITTED INCOME OF RS. 32,61,91,953/- UNDER NORMAL PROVISIONS OF THE ACT AND RS. 32,43,92,789/- UNDER TH E PROVISIONS OF SECTION 115JB. AS ASSESSEE HAS INTERNATIONAL TRANSA CTIONS WITH ITS AE, AO MADE A REFERENCE TO THE TPO AS PER THE PROVI SIONS OF SECTION 92CA FOR DETERMINATION OF ARMS LENGTH PRICE [ ALP]. ASSESSEE PROVIDES THE SERVICES TO ITS AE ON COST+15% MARK UP. HOWEVER, ASSESSEE CHOOSES TRANSACTIONAL NET MARGIN ME THOD [TNMM] AS THE MOST APPROPRIATE METHOD AND PLI WAS DETE RMINED AT 15.04% BY TAKING OP/OC. ASSESSEE IN ITS TP STUDY US ED PROWESS AND CAPITALINE + DATABASE AND SELECTED CERTAIN COMPARABLE COMPANIES AND ARRIVED AT ALP OF 14.81%. SINCE THAT IS LESS THAN MARGIN OF ASSESSEE, ASSESSEE SUBMITTED THAT TRA NSACTIONS ARE WITHIN ARMS LENGTH. ASSESSEE HAD 248.14 CRORES RECEIPTS FROM ITS AE. ITS OPERATING COST WAS TAKEN AT 215.70 CROR ES AND OPERATING PROFIT AT RS. 32.44 CRORES. THE TPO IN HIS STUDY WAS OF THE OPINION THAT THE METHOD OF SEARCH PROCESS SUFFERS FROM DEFECTS WHICH RESULTED IN SELECTION OF INAPPROPRIATE COMPARABL ES AND S&P CAPITAL IQ (INDIA) PVT LTD., :- 3 -: REJECTION OF CERTAIN APPROPRIATE COMPARABLES. FURTHER , MULTIPLE YEAR DATA WAS ALSO TAKEN. THE TP DOCUMENT OF ASSESSEE WAS REJECTED AND AN INDEPENDENT ANALYSIS HAS BEEN MADE B Y THE TPO. AFTER GIVING SHOW CAUSE LETTER AND OBTAINING OBJECTIONS FROM ASSESSEE, THE TPO ADOPTED THE FOLLOWING FILTERS WHICH W ERE ACCEPTED BY ASSESSEE. I. COMPANIES WHOSE DATA IS NOT AVAILABLE FOR THE FY. 2010 -11 WERE EXCLUDED; II. COMPANIES WHOSE IT ENABLED SERVICES INCOME
