DCIT, New Delhi V. M/s. Convergys India Services Pvt. Ltd., Gurgaon

ITA 2194/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4719 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: I1
• Next Hearing Date: 21-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 11-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMRENDER KUMAR
• Keywords: Transfer pricing; International transaction

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I - 1 , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH. K. N. CHARY , JM ITA NO. 2194 /DEL/201 4 : ASSTT. YEAR : 2008 - 09 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE - 6(2), NEW DELHI VS M/S CONVERGYS INDIA SERVI CES PVT. LTD., DLF - ATRIA, JACARANDA MARG, DLF CITY, PHASE - II, GURGAON, HARYANA - 122002 (APPELLANT) (RESPONDENT) PAN NO. A A BCC5056G ASSESSEE BY : ANUBHAV RASTOGI, AR REVENUE BY : SH. AMRENDER KUMAR, CIT DR & SH. KUMAR P RANAV, SR. DR DATE OF HEARING : 30 .08 .201 7 DATE OF PRONOUNCEMENT : 31 . 0 8 .201 7 ORDER PER N. K. SAINI, AM: THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 2 0 .01.2014 OF LD. CIT(A) - XX, NEW DELHI 2 . FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD, CIT(A) HAS ER RED IN ALLOWING RELIEF OF RS.65, 88,93,477/ - TO TH E ASSESSEE IN THE COMPUTATION OF ALP OF THE INTERNATIONAL TRANSACTIO N PERTAINING T O THE PROVISION OF IT ENABLED CUSTOMER CARE AND EMPLOYE E CARE SUPPORT SERVICES SEGMENT. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, TH E LD. CIT(A) HAS ERRED IN EXCLUDING SIX COMPARABLES (ARCROPET AL TECHNOLOGIES, ASIT C MEHTA, ITA NO. 2194 /DEL /201 4 CONVERGYS INDIA SERVICES PVT. LTD. 2 ECLERX SERVICES, CORAL HUB, GENESY S INTERNATIONAL AND MOLD TEK TECHNOLOGIES ON THE GROUND OF FUNCTIONAL COMPARABILITY WITHOUT APPRECIATING THE FACT THAT THE TPO HAS TAKEN THE ENTIRE VERTICAL OF ITES (BPO AS WELL AS K.PO) FOR SELECTING COMPA RABLES AND HAD INCLUDED THEM AFTER CONSIDERING THEIR BROAD FUNCTIONAL COMPARABILITY WITH THE ASSESSEE UNDER TNMM. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. C1T(A) HAS ERRED IN NOT EXAMINING THE OTHER COMPARABLES FROM THE POINT OF VIEW OF STRICT FUNCTIONAL COMPARABILITY WHICH THE ASSESSEE HAD NOT OBJECTED PRIMARILY BECAUSE OF THEIR LOW MARGINS. . 4. WHETHER ON THE FACTS AND IN THE CIRCUMS TANCES OF THE CASE AND IN LAW, T HE LD. CIT(A) HAS ERRED IN NOT APP RECIATING THAT THE TP STUDY REPORT THE INDEPENDENT TP AUDITOR HAD ALSO TAKEN THE ENTIRE VERTICAL OF ITE S FOR SELECTING COMPARABLE AND HAD INCLUDED THEM AFTER CONSIDERING THEIR BROAD FUNCTIONAL COMPARABILITY WITH ASSESSEE. 5. WHETHER ON THE FACTS AND IN TH E CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. C1T(A) HAS ERRED IN NOT APPRECIATING THAT THE ASSESSEE IS NOT ALLOWING TO APPROBATE AND REPROBATE, AS HELD BY HON'BLE COURTS IN PLETHORA OF JUDGEMENTS, AFTER ACCEPTING THE PRINCIPLE OF SELECTING THE COMPARABL ES UNDER TNMM FROM ENTIRE VERTICAL AND CONSIDERING THEIR BROAD FUNCTIONAL COMPARABILITY WITH THE ASSESSEE AT THE TIME OF TP STUDY AND LATER ON RESORTING TO STRICT FUNCTIONAL COMPARABILITY AT THE APPELLATE STAGE. 6. WHETHER ON THE FACTS AND IN THE CIRCUMST ANCES OF THE CASE AND IN LAW, THE MATTER MAY BE RESTORED TO THE FILE OF TPO DE NOVO FOR SELECTING THE COMPARABLES AFTER EXAMINING THEIR STRICT FUNCTIONAL COMPARABILITY WITH THE ASSESSEE. ITA NO. 2194 /DEL /201 4 CONVERGYS INDIA SERVICES PVT. LTD. 3 7. THE APPELLANT CRAVE LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY , ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 3 . DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE PREFERRED MUTUAL AGREEMENT PROCEDURE (MAP) AND THE COM PETENT AUTHORITIES OF INDIA & USA AGREED UPON A FRAMEWORK TO RESOLVE PENDING TRANSFER PRICING CASES RELATING TO THE ASSESSMENT YEAR 2008 - 09 BY ADOPTING THE VALUES RELATING TO US RELATED INTERNATIONAL TRANSACTIONS AS UNDER: IT ENABLED SERVICES US RELAT ED TRANSACTIONS S. NO. AY OPERATING REVENUE OPERATING COST DETERMINE D MARGIN ARM S LENGTH PRICE ADJUSTMENTS 1. 2008 - 09 6,759,591,295 5,808,035, 507 15. 56 6,711,571,829 NIL AND IN PURSUANCE OF THE MUTUAL AGREEMENT, THE CORRESPONDING RELIEF TO THE ADJUSTM ENTS MADE BY THE TPO HAD BEEN COMPUTED AS UNDER: ADJUSTMENT MADE TOWARDS US TRANSACTIONS INCOME ADJUSTED BY TPO NOT UNDER MAP TOTAL ADJUSTED INCOME S. NO . AY TPO AS PER MAP TPO AFTER GIVING EFFECT TO MAP RELIEF 1. 2008 - 09 655,862,567 NIL 3,030,910 65 8,893,477 3,030,910 655,862,567 4 . THE LD. CIT DR COULD NOT CONTROVERT THE AFORESAID CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE . IN THE PRESENT CASE, BOTH THE PARTIES AGREED THAT THE MATTER MAY BE SENT BACK TO THE AO TO BE ADJUDICATED IN ITA NO. 2194 /DEL /201 4 CONVERGYS INDIA SERVICES PVT. LTD. 4 ACCORDANCE WITH THE MAP. ACCORDINGLY, THIS ISSUE IS SET ASIDE TO THE FILE OF THE AO TO GIVE EFFECT TO THE ORDER DATED 16.08.2017 PASSED IN MAP. 5 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ( ORDER PRON OUNCED IN THE COURT ON 31 /0 8 /2017 ) SD/ - SD/ - ( K. N. CHARY ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DAT ED: 31 /08 /2017 *SUBODH* COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR