Hydro BS India Private Limited Vs DCIT (ITAT Bangalore)
Small Captive vs. Industry Giants- TP Adjustment Recast – Big Brand Comparable Out- Tribunal Removes Giant Companies from Comparable
Bangalore Tribunal has excluded Infosys BPM Ltd. & Tech Mahindra Business Services Ltd. from the set of comparable, holding that giant companies with huge turnover & brand value cannot be compared to a small captive service provider rendering low-end ITES services.
Assessee, a subsidiary of Hydro Group, provides back-office support services to its Associated Enterprise. It filed its return declaring Nil income after set-off of a current year loss of ₹27.94 crore. During assessment, TPO rejected the TP study report & conducted an independent search. He proposed an adjustment of ₹2.27 crore which was reduced to ₹1.46 crore by DRP. AO passed final order u/s 143(3) r.w.s. 144C(13) r.w.s. 144B determining total income at ₹1.51 crore.
Before Tribunal, Assessee contended that two large companies, Infosys BPM Ltd. (turnover ₹4,595 crore) & Tech Mahindra BPO (turnover ₹7,036 crore), were wrongly retained as comparables despite their giant size & brand-driven advantage, while the Assessee’s turnover was only ₹11 crore. It was also argued that Savitriya Technologies Pvt. Ltd. had an extraordinary merger event making it non-comparable, & that smaller companies like Scionspire Consulting, MAA Business Solutions, & iSN Global should be included. Assessee also raised grievance that AO failed to grant set-off of current year losses while computing ALP adjustment.
