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Selection of functionally different companies as comparable to Business support services by TPO

Court :
ITAT Delhi

Brief :
The present appeal has been f i led by the assessee against the order dated 29.05.2019 passed by the AO u/s 143(3) r.w.s. 144C of the Income Tax Act, 1961.

Citation :
ITA No. 6421/Del/2019 : Asstt. Year : 2015-16

Before Ms. Suchitra Kamble, Judicial Member
Dr. B. R. R. Kumar, Accountant Member
(Through Video Conferencing)
ITA No. 6421/Del/2019 : Asstt. Year : 2015-16

Qualcomm India Pvt. Ltd.,
Unit No. 201, 2nd Floor, Tolstoy House,
15, Tolstoy Marg, New Delhi-110001


Addl. CIT,
Special Range-7,
New Delhi-110002

Assessee by : Ms. Ananya Kapoor, Adv.
Revenue by : Ms. Anshu Shukla Pandey, CIT DR

Date of Hearing: 06.10.2021

Date of Pronouncement: 01.11.2021


The present appeal has been filed by the assessee against the order dated 29.05.2019 passed by the AO u/s 143(3) r.w.s. 144C of the Income Tax Act, 1961.

2. The Qualcomm India Pvt. Ltd. (QIPL) is a Private Limited company incorporated in India and is engaged in the business of rendering software development services, IT support services and business support services. QIPL has a 100% Export Oriented Unit (EOU) for the development of the software at Development Centers in Hyderabad, Bangalore and Chennai which are registered under the Software Technology Parks of India (STPI) scheme. The Development Centers are engaged in rendering software development services and IT support services to its Associated Enterprises (AEs). Further, QIPL also provides business support Services (BSS) to its AEs through its Mumbai unit.

3. Reading the provisions of Section 40(a)(i i), the assessee argued that education cess paid on Income Tax doesn’t come under the purview of the definition as it is levied on the amount of Income Tax but not on prof its of business. The ld. AR relied on the Circular No. 91/58/66-ITJ(19) by CBDT dated 18.05.1967, which states the effect of the omission of the words ‘cess’ from Section 40(a)(ii) is that only taxes paid are to be disallowed in the assessment for the assessment years 1962- 63 onwards.

4. Further, we find that the Hon’ble High Court of Judicature for Rajasthan at Jaipur in ITA No. 52/2018 in the case of Chambal Fertilizers and Chemicals Ltd. held that in view of the Circular of CBDT where the word ‘cess’ is deleted, the claim of the assessee for deduction is acceptable. In that case, the Hon’ble High Court held that there is difference between the cess and tax and cess cannot be equated with the cess.

5. In the result, the appeal of the assessee is allowed.
Order Pronounced in the Open Court on 01/11/2021.

Please find attached the enclosed file for the full judgement


Poojitha Raam
on 10 November 2021
Published in Income Tax
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