The Income Tax Appellate Tribunal (ITAT), Mumbai bench, directed the re-computation of the Arm Length Price (ALP) for international transactions conducted by ICICI Bank related to adjustments for back-office support services.
ICICI Bank Ltd, engaged in banking and related activities, had its case selected for scrutiny after filing the Income Tax Return. The Assessing Officer (AO) made a reference under section 92CA(1) to the Transfer Pricing Officer (TPO) for computing the arm’s length price in relation to the international transactions. It was noted that the assessee had reported receiving an amount of Rs. 6,03,38,090/- for back-office support services.
The assessee had benchmarked the transaction, comparing the markup to similar back-office support services with a margin of 9.18%. Despite this, the TPO rejected the Transfer Pricing (TP) study. The assessee, displeased with the outcome, appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who upheld the TPO’s adjustment. Subsequently, the assessee filed a second appeal before the tribunal.
During the proceedings, Aarti Vissanji, Counsel for the assessee, argued that many comparables chosen by the TPO differed functionally from the assessee, and some comparables did not meet the TPO’s criteria. On the other hand, Himanshu Sharma, Counsel for Revenue, supported the TPO’s order.
The tribunal observed that the assessee’s functions involved rendering back-office support services to associated enterprises (AE) in treasury, account opening, maintenance, related activities, and technology support, including website maintenance, customer information, and risk management. The revenue generated from these services amounted to Rs. 6,03,38,090, including a markup of 10%.
After reviewing the facts and records, the two-member bench of Padmavathy S (Accountant Member) and Amit Shukla (Judicial Member) directed the re-computation of the Arm Length Price (ALP) for international transactions related to ICICI Bank’s back-office support services. Consequently, the bench allowed the appeal filed by the assessee.
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