Onprocess Technology India Pvt. Ltd. Vs DCIT (ITAT Kolkata)
These cross appeals filed by the assessee and revenue respectively are against the order of Ld. CIT(A)-1, Kolkata dated 28.03.2016 for AY 2012-13.
2. First of all we take up assessee’s appeal in ITA No. 1047/Kol/2016. The ground nos. 1 to 6 of the assessee are against the action the of the Ld. CIT(A) to confirm the disallowance of marketing expenses of Rs.2,96,05,045/- paid to foreign companies u/s. 40(a)(i) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”).
3. Briefly stated facts of the case are that a company named M/s BNKe Solutions Pvt. Ltd. (in short BSPL) was engaged in the business of providing BPO services and real On Process Technoology India P. Ltd., AY- 2012-13 estate. It had established wholly owned subsidiary at USA by the name M/s. BNKe Solutions Inc. USA to provide marketing support services to the Indian assessee for securing orders abroad. Apart from the US subsidiary, it also availed market support services from other entities. Under a scheme of arrangement affirmed by the Hon’ble Calcutta High Court, M/s. BSPL transferred by way of demerger its BPO business to M/s. BNKe Software Services Pvt. Ltd. (M/s. BNKSSPL) w.e.f. 01.04.2011. The said resultant company M/s. BNKe Software Service Pvt. Ltd. (M/s. BNKSSPL) was taken over by M/s. On Process Technology Inc. of USA in the month of December, 2011 and consequently M/s. BNKSSPL i.e. the resultant company was renamed as M/s. On Process Technology India Pvt. Ltd., i.e. the present assessee before us. Thereafter, the assessee continued to carry on its BPO business from its office located at Sector V, Salt Lake, Kolkata. It was primarily catering to its clients based in USA, UK and Australia. The BPO services were primarily rendered in the field of supply chain optimisation and customer experience management services. To secure orders and solicit business from foreign customers, the assessee engaged the services of foreign marketing companies to whom market support fees of Rs.2,96,05,045/- was paid. The party wise break-up is as follows:
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