In the case ITA No. 5582/DEL/2019, the appellant Bureau Veritas Consumer Products Services (I) Pvt. Ltd. from Noida challenged the transfer pricing adjustments made by the ACIT, Circle-5(1), New Delhi for the assessment year 2013-14. The case was filed on 26th June 2019, and the final tribunal order was pronounced on 5th August 2020.
The transfer pricing adjustments were based on the selection of comparable companies and disallowance of certain expenses. The appellant argued against the inclusion of certain companies in the comparables set and the disallowance of rebates and discounts paid to its holding company.
The appellant raised multiple grounds, challenging the transfer pricing adjustments and the disallowance of expenses. Key points included:
The tribunal noted that the appellant had raised valid points regarding the selection of comparables and the disallowance of expenses. The tribunal addressed the following key issues:
The appellant argued against the inclusion of TCS E-Serve International Ltd. and Tech Mahindra Ltd. due to high RPT. The tribunal directed the TPO/AO to verify the RPT calculations and exclude these companies if they failed the filter.
The appellant also argued for the inclusion of Ace BPO Services Pvt. Ltd., which the TPO rejected as functionally dissimilar. The tribunal found that Ace BPO Services was engaged in BPO services and should be considered comparable, subject to verification of RPT compliance.
The appellant argued that rebates/discounts were paid to the holding company per global agreements and MOUs. The tribunal found that the Assessing Officer did not properly consider these agreements and directed a re-examination of the transactions in light of the agreements/MOUs and related evidence.
The tribunal referred to various legal provisions and judicial precedents to support its decision, including:
The tribunal allowed the appeal of Bureau Veritas for statistical purposes, directing a re-examination of the inclusion of comparables and the disallowance of rebates/discounts. The tribunal emphasized the need for proper verification and consideration of all relevant agreements and documentary evidence.
The final judgment underscores the importance of accurate and thorough analysis in transfer pricing cases, particularly regarding the selection of comparables and the justification of expenses. It also highlights the need for proper documentation and compliance with applicable legal provisions.
Order pronounced in open court on 5th August 2020.
Members of the Tribunal:
Accountant Member: N.K. Billaiya
Judicial Member: Suchitra Kamble
Bureau Veritas vs ACIT, Circle-5(1), New Delhi: Transfer Pricing Dispute for AY 2013-14
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