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TMI Blog2019 (10) TMI 726X X X X Extracts X X X X X X X X Extracts X X X X ..... selection of three comparables by the Transfer Pricing Officer and upheld by learned Commissioner (Appeals). 3. Brief facts are, the assessee is an Indian company and is a wholly owned subsidiary of Agilyst Inc., a company incorporated in United States of America (USA). The assessee is basically a captive service provider to the parent company and provided Information Technology Enabled Service (ITES)to its Associated Enterprises (AE) which includes identification and correction of errors within customer s accounts, performing back end remote troubleshooting, measuring the experience customers have when interacting with support agents, etc. During the year under consideration, the assessee provided ITES to its AE and earned revenue of ₹ 13,07,93,056. In its transfer pricing study report, the assessee benchmarked the aforesaid transaction with the AE by adopting Transactional Net Margin Method (TNMM) as the most appropriate method, the assessee selected ten companies as comparables with arithmetic mean of 4.31% as against the margin shown by the assessee of 15.92%. Therefore, the price charged for service rendered was claimed to be at arm's le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the company has substantial intangibles in the nature of goodwill, whereas, the assessee does not own any intangible. He submitted, extra ordinary event during the year like acquisition and amalgamation by the company also has impacted the profitability making it incomparable. Drawing our attention to the annual report of the company, he submitted, the fact that it has incurred substantial overseas marketing expenditure of ₹ 8.94 crore indicates that the company is engaged into marketing activity. Thus, he submitted, the company cannot be treated as comparable. In support, he relied upon the following decisions: i) PCIT v/s Ameriprise India Pvt. Ltd., ITA no.461/2016, dated 19.10.2016 (Del. HC); ii) PCIT v/s United Health Group Information Services Pvt. Ltd., ITA no.1180/2017, dated 21.12.2017 (Del. HC); iii) PCIT v/s B.C. Management Services Pvt. Ltd., [2018] 89 taxmann.com 68 (Del.); iv) PCIT v/s PTC Software India Pvt. Ltd., ITA no.598 of 2016, dated 16.04.2018; v) PCIT v/s BNY Mellon International Operations India Pvt. Ltd., [2018] 93 taxmann.com 363 (Bom.); vi) PCIT v/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra), B.C. Management Services Pvt. Ltd., BNY Mellon International Operations (supra) and Aptara Technologies Pvt. Ltd. (supra) have been approved by the Hon ble High Courts. Since, many of these decisions pertained to the very same assessment year, consistent with the view taken in these decisions, we hold that this company cannot be a comparable to the assessee. TCS e SERVE LTD. 9. Objecting to the selection of this company, the learned Authorised Representative submitted, this company is engaged in the business of providing business process management service in the banking and financial sectors. The company is engaged in providing ITES / BPO service primarily to Citi Group entitles globally. He submitted, since the company is an integral part of the Tata Consultancy Services Ltd., there is dissimilarity in the scale of operation with the assessee and further, the company has a strategy to build on its Full Services Offering , that offer global customers an integrated portfolio of services ranging from information technology services to BPO services. He submitted, the company provides wide range of financial products and enterprise support fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer and learned Commissioner (Appeals) submitted, this company being functionally similar to the assessee should be treated as comparable. 11. We have considered rival submissions and perused material on record. We have also applied our mind to the decisions relied upon. Undisputedly, this company is a subsidiary of Tata Consultancy Services Ltd. and has the benefit and advantage of Tata Brand. It also appears from the financial statement of the company that it has contributed towards Tata Brand equity. Thus, the brand value of Tata Group certainly has an impact on the pricing and profitability of the company, which may not be available with the assessee. It also appears that the company owned substantial intangible. Considering the aforesaid factors, in various decisions of the Tribunal it has been held that this company cannot be treated as comparable. On a careful examination of the aforesaid decisions, we have noticed that a number of these decisions pertain to the impugned assessment year as well. Thus, consistent with the view taken by the Co ordinate Benches as regards comparability of this company, we are inclined to hold t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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