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| The Tax Publishers2020 TaxPub(DT) 4464 (Del-Trib) INCOME TAX ACT, 1961
Section 92C
High brand value associated with Tata group definitely had an impact on pricing policy, niche market, contractual terms, etc., as regards TCS e-Serve Ltd. Further, its employee cost base was more than 64 times than that of assessee and even turnover was also more than 67 times as compared to assessee. Hence, TCS e-Serve Ltd. could not be taken as comparable to captive ITES provider like assessee.
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Transfer pricing - Determination of ALP - Selection of comparables - Huge brand value, turnover and employees cost base, functional diversity
Assessee rendered IT-enabled data support services to its AE abroad. TPO considered TCS e-Serve Ltd. as comparable to assessee's case.Held: TCS E-Serve' was a subsidiary of Tata Consultancy Services Limited', which was one of the leading and giant company in the world and had an inherent element of very high brand value associated with it. Such a high brand value definitely had an impact on pricing policy, niche market, contractual terms, etc. and thereby affecting profit margins. Its employee cost base was more than 64 times than that of assessee and even turnover was also more than 67 times as compared to assessee. Further, operation of TCS E-Serve' broadly comprised transaction processing and technical services including software testing, verification and validation for which no semental bifurcation was available. In absence of such vital information of margins of such varied setments it was not possible to put such company in the comparability basket so as to Bench mark correct profit margin.
Followed:B.C. Management Service Pvt. Ltd. v. Dy. CIT for assessment year 2011-12 (2017) 83 Taxaman.com 346 (Del-Trib.) : 2017 TaxPub(DT) 2027 (Del-Trib).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2012-13
INCOME TAX ACT, 1961
Section 92C
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