TPO failed to provide details of comparables obtained u/s 133(6), restores the issue for providing information, as a relief to HSBC Professional Services. The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) restored the issue for providing information.
These cross-appeals by the Revenue and the assessee have assailed against the order dated 24/10/2011 passed by the Ld. Commissioner of Income-tax (Appeals)-15, Mumbai [CIT(A)’] for the assessment year 2006-07.
The assessee company M/s HSBC Professional Services (India) Private Limited is incorporated in India and 98% of the shareholding is held by HSBC holdings BV, Netherlands and the balance of two per cent is held by Hong Kong and Shanghai banking Corp Ltd., India. The assessee company is engaged in providing personnel to various entities of the HSBC group for conducting audit services.
The assessee filed its return of income on 17/11/2006 declaring a total income of ₹1,02,39,397/-. The return of income filed by the assessee has selected for scrutiny assessment any statutory notices under the Income-tax Act, 1961 ( the Act) that were issued and complied with.
On perusal of the transfer pricing study submitted by the assessee, the Ld. TPO noticed certain international transactions carried out by the assessee, which is reproduced in para 4 of his order dated 21/10/2009.
Under the TNMM, for comparison of the assessee with the comparable companies, functions carried out, assets deployed and risk assumed (FAR) by the assessee are to be compared with the FAR analysis of the comparable companies.
The assessee has agreed to the provision of audit services with Associated Enterprises. It was contended that there is no separate segment for IT-enabled services and therefore the company cannot be considered comparable at the entity level.
A Coram of Shri Aby T Varkey (judicial member) and Shri Om Prakash Kant (accountant member) found that the TPO has gathered financial and functional details of the company by way of using his authority under section 133(6) of the Act. Since the said information has not been provided to the assessee.
The Bench restored the issue to the file of the AO/TPO with the direction to provide all the information gathered under section 133(6) about the company to the assessee and decide the issue of exclusion/inclusion of the company after providing adequate opportunity of being heard to the assessee.
Mr Niraj Sheth appeared for the assessee and Mr V.K. Agarwal appeared for the revenue.
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