Global e-Business Operations Private Limited , Bangalore Assistant Commissioner of Income Tax Circle-3(1)(2), Bangalore

This Income Tax Appellate Tribunal (ITAT) ruling addresses an appeal by Global e-Business Operations Pvt. Ltd. against the Assistant Commissioner of Income Tax for the 2012-13 assessment year. The primary issues debated were the exclusion of two comparable companies (Infosys BPO Ltd and TCS E-Serve Limited) from the benchmarking analysis and the classification of foreign exchange gains or losses as operating income/expenses. The assessee, part of the HP group, provides ITES services and was compensated at cost plus 8%.

IN THE INCOME TAX APPELLATE TRIBUNAL
“A’’ BENCH: BANGALORE

BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER
AND
SHRI B.R. BASKARAN, ACCOUNTANT MEMBER

IT(TP)A No.725/Bang/2017
Assessment Year: 2012-13

M/s. Global E-Business
Operations Pvt. Ltd.
2nd Floor Kalyani Platina, Phase-II
Building Survey Number 16 & 24
of Kundanahalli Village
K.R. Puram, Hobli
Bangalore-560 066
PAN NO : AABCG2843D
APPELLANT 

Vs.

ACIT
Circle-3(1)(2)
Bangalore
RESPONDENT

Appellant by : Shri Sarath Rao, A.R.
Respondent by : Shri Sanjay Kumar, D.R.
Date of Hearing : 01.12.2020
Date of Pronouncement : 04.12.2020

O R D E R

PER B.R. BASKARAN, ACCOUNTANT MEMBER:

The assessee has filed this appeal challenging the assessmentorder dated 23.01.2017 passed by the assessing officer u/s 143(3)r.w.s 144C of the Income-tax Act,1961 ['the Act' for short] for assessment year 2012-13 in pursuance of directions given by Ld Dispute Resolution Panel (DRP).

2. Though the assessee has raised many grounds, at the time of hearing the Ld A.R pressed the grounds relating to the issue of

(a) Exclusion of two comparable companies viz., M/s Infosys BPO Ltd and M/s TCS E-Serve Limited and

(b) Treatment of foreign exchange gain/loss as operating income/expenses or not.

3. The assessee is a company belonging to M/s. Hewlette Packard (HP) group. The assessee is engaged in ITES services. The assessee undertakes HP’s worldwide accounting and transaction processing work, provision of back office operation and customer support services to various associated enterprises. The assessee is beingcompensated at cost + 8%. The assessee adopted TNMM method to benchmark his transactions and the profit level indicator was taken as operating profit by operating cost (OP/OC). The assessee declared net margin of 19.08%. The TPO recomputed the margin of the assessee by excluding interest income and non-operating income and also reducing the expenditure. Accordingly, he computed the net margin of the assessee at 15.75%.

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