JCIT Vs AON Servies India Pvt. Ltd. (ITAT Delhi)
BPO Not KPO: ITAT Rejects Comparables, Deletes s.14A Disallowance & Treats Forex as Operating Item
Summary: The Delhi ITAT dealt with cross-appeals involving transfer pricing comparables, disallowance u/s 14A & treatment of foreign exchange fluctuation while computing operating margins under TNMM. The Revenue challenged the CIT(A)’s directions regarding six comparables as well as deletion of ₹20.23 lakh disallowance u/s 14A. The assessee, apart from its original grounds relating to delayed employees’ contribution, raised an additional ground contending that forex fluctuation arising from normal business transactions was an operating item. The Tribunal dismissed the Revenue’s appeal in entirety & partly allowed the assessee’s appeal.
Transfer pricing battle – Revenue wanted the comparables back
The Revenue challenged the CIT(A)’s treatment of several companies while determining the assessee’s ALP. Its objections related to R Systems International Ltd., Accentia Technologies Ltd., Acropetal Technologies Ltd., E-Clerx Services Ltd., Infosys BPO Ltd. & TCS E-Serve Ltd. It also challenged deletion of the ₹20,23,500 disallowance u/s 14A r.w. Rule 8D.
The ITAT, however, found no merit in any of these grounds.
Different financial year alone cannot sink R Systems
The TPO had rejected R Systems International Ltd. because it followed a different financial year.
