CASE LAWS

2016-TII-398-ITAT-DEL-TP

BECHTEL INDIA PVT LTD Vs DCIT: DELHI ITAT (Dated: July 14, 2016)

Income Tax - Sections 92, 92CA, 143(3), 144C, 154, 234B, 234C, 234D & 271(1)(c).

Keywords - working capital adjustment - ALP determination - risk adjustment - business support services - selection of comparables - TNMM - most approximate method - trade receivables.

Whether when it is unequivocally demonstrated on the face of the record that the exercise of proposal and selection process of comparables by the assessee and the tax authorities has not been carried out as per settled legal precedents, the entire process has to be carried again giving an opportunity of being heard to the assessee - YES: ITAT

Whether if it all any working capital adjustments or risk adjustments in the comparables proposed by the TPO is warranted, taxpayer should be able to support its claim by way of justifying the extent of adjustments requested as the law contemplates - YES: ITAT

Whether when ITeS encompasses a wide spectrum of services that use IT based delivery which include rendering highly technical services by qualified technical personnel involving advanced skills, on the other end of the spectrum, ITeS would also include voice based call centres that render routine customer support for their clients, can the both be compared - NO: ITAT

Whether when nothing has been brought on record by the Revenue in order to rebut the precedent that the association of a comparable with Tata brand has impacted its bargaining power to negotiate premium contracts, such company cannot be considered as functional similar, as no evidence has been produced otherwise - YES: ITAT

Whether minimum guarantee of a specific amount of Revenue is a matter of fact and how it can impact pricing so as to impact net profitability has to be established and without the said exercise it can not be excluded in a method like TNMM - YES: ITAT

Whether if the assessee has merely acted as an intermediary between the AEs and the service providers for the administrative convenience and no services have been provided by the assessee in this respect, can it claim expenses in respect of that in its P&L account - NO: ITAT

Whether in case the assessee is a debt free company, in such a case, is it justifiable to presume that borrowed funds would have been utilized to pass on the facility to its AEs - NO: ITAT

Assessee's appeal partly allowed

2016-TII-02-SC-INTL

DDIT Vs SUMITOMO MITSUI BANKING CORPORATION: SUPREME COURT OF INDIA (Dated July 26, 2016)

Income Tax - Sections 36(1)(vii), 148.

Keywords - reassessment - bad debts - irrevocable debt - written off.

Whether assessment can be reopened when there is no material available on record to indicate that the bad debts have been written off as mandatorily required under Section 36(1)(vii) of the Income Tax Act - YES: SC

Revenue's appeal allowed