TE Connectivity Services India Private Ltd. Vs Assessing Officer (ITAT Bangalore)
The appeal arose from an assessment order passed under Sections 143(3), 144C(13), and 144B of the Income-tax Act in the case of TE Connectivity Services India Private Ltd., a wholly owned subsidiary of Tyco Electronics Singapore Pte Ltd. The assessee is engaged in providing IT-enabled shared services, including information technology, finance back-office, human resources, and customer support services to group entities.
The principal transfer pricing dispute concerned the treatment of amortisation of goodwill arising from the slump sale acquisition of the shared services business of TE Connectivity Global Shared Services Pvt. Ltd. The assessee contended that the goodwill represented acquisition cost, constituted an extraordinary item, and should be treated as a non-operating expense while computing its operating margin for benchmarking purposes. It relied upon accounting standards, OECD Transfer Pricing Guidelines, Safe Harbour Rules, and several judicial precedents. The Revenue contended that goodwill amortisation was an operating expense forming part of the cost of business operations. Referring to an earlier Tribunal decision following ST-Ericsson India Pvt. Ltd., the Tribunal remitted the issue to the AO/TPO with directions to examine the claim in accordance with that decision.
The assessee challenged the transfer pricing comparability analysis, including rejection and application of various filters. It argued that an upper turnover filter of ₹200 crore should be applied and that companies with substantially higher turnover should be excluded. Referring to its earlier decision in Autodesk India Pvt. Ltd., the Tribunal directed the AO/TPO to reconsider comparability applying the turnover principles laid down therein. The Tribunal similarly remitted the issue relating to exclusion of companies having turnover exceeding ₹200 crore.
