Forum
Read and express views
× Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India

These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.

25-10-2019, CMA CGM Shared Service, Section 80JJAA, 92CA, Tribunal Chennai

  • amit
  • amit's Avatar Topic Author
  • Offline
  • Administrator
  • Administrator
More
1 week 4 days ago #11265 by amit
Section - 80JJAA, 92CA
Order Date - 25-10.2019
Favouring - Partly allowed for statistical purposes
Court - Tribunal Chennai
Appellant - CMA CGM Shared Service Centre (India) Pvt. Ltd.
Respondent - DCIT
Justice - DUVVURU RL REDDY JM & S. JAYARAMAN AM
Citation - 1119Taxpundit7
Appeal No. - I.T. (TP) A. No. 76/CHNY/2018
Asstt. Year - 2014- 15

Order

PER : S. JAYARAMAN

The assessee filed this appeal against the assessment order passed by the ACIT(OSD), Corporate Circle -1(2), Chennai U/s.143(3) r.w.s. 92CA for the assessment year 2014-15 in pursuance of the directions issued by the Dispute Resolution Panel (hereinafter ‘DRP’) in F.No.54/DRP-2/BANG/2017-18 dated
20.09.2018.

2. M/s. CMA CGM Shared Service Centre, the assessee, is a subsidiary of M/s. CMA CGM SA, France (its AE) provides shared services to its AE. Towards this service, the assessee company has received Rs. 64,81,42,222/- during the period relevant to the assessment year 2014-15. In order to benchmark this transaction, the assessee company adopted TNMM as the most appropriate method. It has shortlisted 10 comparable companies, 3 years weighted average cost, working capital adjusted for the comparable companies is 7.78%, as against the assessee’s PLI of 12.04%. Accordingly, the assessee claimed that its transactions are at arm’s length. However, the TPO rejected certain comparable companies which was part of the TP documentation maintained by the
assessee, introduced certain additional companies as comparable and recomputed the operative margins of the comparables at 20.5% for provision of ITES. Consequently, the TPO proposed an upward TP adjustment of Rs.4,89,40,407/- and the AO also made a disallowance of Rs.51,95,729 U/s.80JJAA of the Act. The assessee filed objection before the DRP which largely upheld the approach of the TPO. Consequently, the AO passed the order U/s.143(3) r.w.s. 144C & 92CA incorporating the directions of the ld.DRP. Aggrieved against that order, the assessee filed this appeal.

3. Though the assessee filed various grounds of appeal, the ld.AR argued on the issues viz the exclusion of Infosys BPO Ltd from the comparable list, to consider the segmental margins for Microland Ltd, the exclusion of Informed Technologies India Ltd, for the consideration of working capital adjustment margins of the comparable companies and on the issue of disallowance of claim U/s.80JJAA alone, as under.

4.1 On the issue of Infosys BPO Ltd. to be excluded from the comparable list, the ld.AR submitted that there is significantly difference in turnover, Infosys turnover for the subject assessment year is INR 2323 Crores as against the assessee’s turnover of INR 64.81 Crores, significant brand value in the market, difference in nature of services, varied nature of services across diversified industries and significant asset base i.e., Infosys BPO's fixed asset is INR 217 Crores as against assessee’s fixed asset of INR 16.56 Crores and hence he pleaded that Infosys should be excluded from comparable list. In support of his claim, the ld.AR relied on the following judicial judgments:-

• BNP Paribas Global Securities (I.T.A.No.2141/ CHNY/2017)
• M/s. Cameron Manufacturing India Pvt. Ltd. Vs DCIT, Chennai [ITA No. 336/Chny/2018]and invited our attention to the following portion:-

“5. Ground No.2.1: M/s. Infosys BPO Limited as the comparable company:

The Ld.AR submitted before us that the export turnover of M/s. Infosys BPO Limited is quite high which is approx Rs.1356 crores while as the export turnover of the assesse company is only Rs.14.50 crores; hence M/s. Infosys BPO Limited cannot be taken as a comparable company with that of the asses ee company. We find merit in the submission of the Ld.AR. When there is wide gap between the size and turnover of the company which is not dispute, they cannot be taken as comparable company. Hence, we hereby direct the Ld.TPO to exclude M/s. Infosys BPO Limited as comparable company while computing the ALP in the ITes Segment.”

• Bombay High Court in case of Pentair Water India Pvt Ltd (ITA No.6/PNG/2013) and invited our attention to the following portion:-

“In this case also we noted the turnover in respect of this Company is Rs.649.56 crores while the turnover of the Assessee company is around Rs.11 crores which is much more than 65 times of the Assessee’s turnover. We, therefore, do not find any illegality or infirmity in the order of CIT(A) in excluding this Company out of the comparables. Accordingly, we confirm the order of the CIT(A).”

4.1.1 Per contra, the ld.DR supported the orders of the lower authorities.

Click to view and download Full Free Judgement of CMA CGM Shared Service Centre (India) Pvt. Ltd. vs. DCIT

Unable to display Google Map.




Please Log in or Create an account to join the conversation.

Time to create page: 0.073 seconds

If You Appreciate What We Do Here On TaxPundit, You Should Consider:

We are thankful for your never ending support.

Latest Analysis - High Courts

Akrati Promoters And Developers vs. DCIT

Akrati Promoters And Developers vs. DCIT

Akrati Promoters And Developers vs. DCIT Read More
CIT vs. ANOOP JAIN

CIT vs. ANOOP JAIN

CIT vs. ANOOP JAIN Read More
PCIT vs. LALIT BAGAI

PCIT vs. LALIT BAGAI

PCIT vs. LALIT BAGAI  Read More
ROHIT KUMAR GUPTA vs. PCIT

ROHIT KUMAR GUPTA vs. PCIT

ROHIT KUMAR GUPTA vs. PCIT Read More
  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42

Forum Features

Latest Case Laws
Latest Case Laws are instantly updated in the Forum into their respective section
Latest from CBDT
Latest Circulars, Notifications, Orders etc. from CBDT is updated in the Forum
Ask Experts
You can ask questions to the community
Support
Support queries are either replied via mail or in the Forum so that others can be benefited
Press Releases
Latest Press Notes and Press Releases are updated in the Forum
Connect with Members
You can connect with our community members by replying to their queries

Recommended Articles

 

SITE INFORMATION

All content herein is the copyright of Taxpundit. No images, text, or any other content may be, reproduced or redistributed without the express written consent of Taxpundit.

All Rights Reserved. All Content Copyright.

Newsletter

Subscribe to our newsletter and stay updated on the latest developments and special offers!

Company Master Data Since 1900. More than 1.75 Million Records. Register/Login to get FREE access. Read more
Toggle Bar