KPO Service Provider Is Not Comparable To ITES Service Provider For Purpose Of Benchmarking International Transactions: Delhi HC
Pankaj Bajpai
7 Sept 2024 12:00 PM IST
While condoning the delay of 815 days attributable to Revenue in filing of appeal, the Delhi High Court upheld the ITAT's order on the issue of selection of comparable for purposes of benchmarking international transactions of assessee with its AEs. The High Court maintained the status quo in excluding KPO service provider against IT enabled service provider, for...
While condoning the delay of 815 days attributable to Revenue in filing of appeal, the Delhi High Court upheld the ITAT's order on the issue of selection of comparable for purposes of benchmarking international transactions of assessee with its AEs.
The High Court maintained the status quo in excluding KPO service provider against IT enabled service provider, for benchmarking international transaction.
The Division Bench comprising Justice Yashwant Varma and Justice Ravinder Dudeja observed that “the assessee was only providing IT enabled services to banks and financial institutions and carrying on back-end activities pertaining to credit card operations. It is in the aforesaid backdrop that the Tribunal has ultimately come to exclude the comparable which were suggested and which were concerned with Knowledge Process Outsourcing activities”. (Para 3)
Facts of the case:
The Revenue Department had approached the High Court challenging the order, whereby the Tribunal had considered Eclerx Services Limited, TCS E Serve, BPO Infosys Pvt Ltd, Acropetal Technologies Ltd, and E4e Healthcare Services Pvt Ltd as non-comparable to the Assessee company.
Observations of the High Court
The Bench noted that Assessee company only provided IT enabled services to banks and financial institutions and carried on back-end activities pertaining to credit card operations.
The Bench also found that for providing those ITes services, the assessee had obtained software licenses, data server '"management services, CIS training from its AEs located in Australia and USA.
Hence, the Tribunal excluded the comparable selected by Revenue Department which are concerned with Knowledge Process Outsourcing [KPO] activities, added the Bench.
Therefore, the High Court dismissed the Revenue's appeal while maintaining status quo.
Counsel for Appellant/ Revenue: Advocates Puneet Rai, Ashvini Kumar, Rishabh Nangia and Nikhil Jain
Counsel for Respondent/ Assessee: Advocates Himanshu S. Sinha, Prashant Meharchandani and Jainender Singh Kataria
Case Title: PCIT vs SBI Business Process Management Services
Case Number: ITA No 461/2024
