Case Number: ITA 868/DEL/2021
Appellant: GlobalLogic India Ltd. (Formerly known as GlobalLogic India Limited), New Delhi
Respondent: DCIT, Circle-10(1), New Delhi
Assessment Year: 2016-17
Result: Adjustments Partly Allowed
Case Filed on: 2021-07-16
Order Type: Final Tribunal Order
Date of Order: 2021-11-12
Pronounced on: 2021-11-12
GlobalLogic India Ltd. (hereinafter referred to as ‘the taxpayer’) filed an appeal before the Income Tax Appellate Tribunal (ITAT), Delhi Bench ‘I-1’, New Delhi, challenging the order passed by the Deputy Commissioner of Income Tax (DCIT), Circle-10(1), New Delhi, for the assessment year 2016-17. The appeal focused on the transfer pricing adjustments made to the taxpayer’s income and the inclusion and exclusion of certain comparable companies for benchmarking purposes.
The case was heard by Shri Anil Chaturvedi, Accountant Member, and Shri Kuldip Singh, Judicial Member, via video conference on 15.09.2021, and the order was pronounced on 12.11.2021.
The primary issues in the appeal were:
The appellant, represented by Shri Neeraj Jain, Advocate, and Shri Abhishek Aggarwal, Advocate, argued that the adjustments made by the Transfer Pricing Officer (TPO) and upheld by the Dispute Resolution Panel (DRP) were incorrect. They contended that the comparable companies chosen by the TPO were not appropriate, and the adjustments for delayed receivables were unwarranted.
The respondent, represented by Shri Surender Pal, CIT DR, supported the adjustments made by the TPO and the order passed by the DRP.
The Tribunal analyzed the submissions and the relevant case laws presented by both parties. The key findings are as follows:
The TPO had selected 13 comparable companies and proposed an adjustment of Rs. 14,18,95,876/- to the ALP of the taxpayer’s international transactions. The Tribunal examined the suitability of each comparable company challenged by the taxpayer:
The TPO had proposed an adjustment of Rs. 5,30,71,340/- on account of delayed receivables, treating them as unsecured loans to the AEs. The Tribunal referred to the judgment in Pr. CIT vs. Kusum Health Care Pvt. Ltd., where it was held that not every receivable constitutes an international transaction. The Tribunal ruled in favor of the taxpayer, stating that no adjustment for delayed receivables was warranted as the taxpayer had not incurred any interest cost and was a debt-free company.
The Tribunal directed the AO to grant credit for TDS deducted in respect of amalgamating companies, IP Unity Communications Ltd. and GL Software Ltd., after due verification.
The Tribunal partly allowed the appeal, directing the exclusion of certain comparable companies and the deletion of the adjustment for delayed receivables. The AO was also directed to grant credit for TDS as claimed by the taxpayer.
In conclusion, ITA No. 868/DEL/2021 filed by GlobalLogic India Ltd. was partly allowed, with significant adjustments in favor of the taxpayer. The Tribunal’s order provided clarity on the inclusion and exclusion of comparable companies and the treatment of delayed receivables in transfer pricing assessments.
Order pronounced in open court on this 12th day of November, 2021.
Sd/- (Anil Chaturvedi)
ACCOUNTANT MEMBER
Sd/- (Kuldip Singh)
JUDICIAL MEMBER
Date: 12.11.2021
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. DRP
5. CIT(ITAT), New Delhi
Assistant Registrar, ITAT, New Delhi
GlobalLogic India Ltd. vs DCIT: Dispute Over Transfer Pricing Adjustments
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