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TMI Blog2020 (9) TMI 1257X X X X Extracts X X X X X X X X Extracts X X X X ..... not earned any exempt income during the year, there cannot be any reason to disallow any expenditure during the year. This principle has been laid down by many judicial authorities. In view of this we direct the learned assessing officer to delete the disallowance u/s 14 A of the act as assessee has not earned any exempt income. Thus ground number 4 of the appeal is allowed. Non granting the full credit of tax deduction at source claimed by the appellant in its return of income - HELD THAT:- AO is directed to verify the credit claim of the assessee and if found in order may allow the credit claimed by the assessee for tax deduction at source. Accordingly, ground number 6 of the appeal is allowed. - ITA No. 5503/Del/2016 - - - Dated:- 16-9-2020 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER Assessee by : Shri Sachit Jolly, Adv Shri Aayush Nagpal, Adv Revenue by : Shri H. K. Choudhary, CIT DR ORDER PER PRASHANT MAHARISHI, A. M. 1. This appeal is filed by GE India business services private limited, assessee, appellant against the order passed by The Additional Commissioner Of Income Tax, Special Range 4, New Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs: 2.4.1 rejecting the filter of research and development expenditure/ sales applied by the assesse in its TP documentation; 2.4.2 exclusion of companies in whose employee cost is less than 25 percent of the total cost 2.4.3 exclusion of companies having export sales less than 75% of total income; 2.4.4 exclusion of companies having different FY ( i.e. not March 31, 2012) or the data of the company does not fall within 12 month period i.e. 1 April 2011 to 31 March 2012; 2.4.5 increasing threshold for exclusion of companies having related party transactions from 20% to 25% of sales. 2.5 including companies having abnormal/ volatile margins, disregarding judicial pronouncements on the issue and with the intention of making an addition to the returned income of the Appellant; 2.6 including certain companies that are not comparable to the Appellant in terms of functions performed, assets employed and risks assumed; 2.7 rejecting certain companies and adding certain companies to the final set of comparables for the impugned transaction on an ad- hoc basis. The Ld. TPO has resorted to cherry picking of comparables to determine ALP for the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roviding information technology enabled remote processing and financial support services. It is set up as a captive service provider to provide offshore outsourcing services to its GE entities. It renders ITeS and financial support services to those entities. Assessee prepared its transfer pricing documents related to various international transactions. Assessee entered into an international transaction of (1) of provision of ITeS services and finance support services amounting to ₹ 343,010,158/ , (2) payment of services 74,41,458/ , (3) reimbursement of expenses received of ₹ 3,081,754, (4) contribution Under employees sale purchase plan of ₹ 58,411 and (5) reversal of invoices raised in earlier years amounting to ₹ 1,828,687/ . 6. Assessee benchmarked these international transaction relating to IT enabled services using transactional net margin method (TNMM) as the most appropriate method adopting the profit level indicator of return on total cost (ROTC) . It selected 7 comparable companies and computed the comparable margins at 5.52%. It further computed the margin of the comparable companies after working capital adjustment at 3.42 perc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the comparability analysis for determination of the arm s-length price of the international transactions. With respect to E Clerx services private limited he referred to the order of the coordinate bench for assessment year 2009 10 in its own case ITA number 1423/del/2014 dated 18th of May 2018 wherein in para number 18 the above comparable company was excluded. He therefore submitted that in assessee s own case all these three comparable companies are excluded in earlier years and therefore they should also be excluded for this year. 10. The learned departmental representative payment please supported the orders of the lower authorities. He referred to page number 28 of the order of the learned transfer pricing officer where E clrex services Ltd was held to be comparable. He submitted that all the objections of the assessee has been considered by the learned transfer pricing officer. Therefore same cannot be excluded. He further referred to page number 30 of the order of the learned transfer pricing officer where Infosys BPO Ltd is considered and found to be a suitable comparable. He also referred to page number 31 of the order wherein TCS E serve Ltd is also held to be c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial precedent of other assesses, judicial discipline requires that we follow the same, unless (1) specifically revenue can bring on record the difference in the functional analysis of the assessee or comparable itself with reference to those years, (2) Or those orders are upset by higher judicial forums. It is not brought on record that those decisions in case of assessee are challenged before higher forum and are upset. In absence of this they bind us. 14. In view of this, respectfully following the decision of the coordinate benches in assessee zone case for earlier years, we direct the learned transfer pricing officer/assessing officer to exclude (1) E Clrex Services Ltd, ( 2 ) Infosys BPO Limited and ( 3) TCS E Serve Limited and then work out the margins of the comparable. Accordingly, ground number 2 3 of the appeal of the assessee is allowed. 15. Ground number 4 of the appeal of the assessee is with respect to the disallowance u/s 14 A of the act of ₹ 71,851 made by the learned assessing officer and confirmed by the learned dispute resolution panel. During the course of assessment proceedings, the learned assessing officer asked the assessee to explain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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