Synchrony International Services Private Limited Vs ACIT (ITAT Hyderabad)
The Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT) allowed the appeals filed by the assessee for Assessment Years 2016-17, 2017-18, and 2018-19 concerning transfer pricing adjustments relating to Information Technology Enabled Services (ITeS) rendered to Associated Enterprises (AEs).
For AY 2016-17, the assessee challenged the order of the Commissioner of Income Tax (Appeals) [CIT(A)] on the ground that the CIT(A) failed to adjudicate issues relating to international transactions with non-US based AEs that were not covered under a Bilateral Advance Pricing Agreement (BAPA) executed with the Central Board of Direct Taxes (CBDT). The assessee contended that while approximately 95.75% of its revenue from US-based AEs was covered under the BAPA, only 4.25% of the revenue related to non-US AEs remained outside the agreement.
The assessee argued that the Transfer Pricing Officer (TPO) had not undertaken any separate benchmarking for transactions with non-US based AEs and had applied a uniform approach to all international transactions. It therefore requested that the margin agreed under the BAPA for US-based AEs should also be applied to transactions with non-US based AEs. The CIT(A) rejected the claim on the basis that the judicial precedents relied upon by the assessee related to Mutual Agreement Procedure (MAP) resolutions and not BAPAs.
