Pr. Commissioner Of Income Tax -1 v. Capgemini Business Services (India) Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYO.O.C.J. INCOME TAX APPEAL NO. 178 OF 2017 Pr. Commissioner of Income Tax -1..Appellant Versus Capgemini Business Services (India) Ltd..Respondent ................... Mr. Suresh Kumar for the Appellant Mr. Suresh Kumar for the Appellant Mr. Atul Jasani for the RespondentMr. Atul Jasani for the Respondent ................... CORAM : AKIL KURESHI & SARANG V. KOTWAL, JJ. DATE : MARCH 19, 2019. P.C.: 1.This appeal is filed by the Revenue to challenge thejudgment of the Income Tax Appellate Tribunal ("the Tribunal"for short) raising following questions for our consideration:- “(i) Whether on the facts and in the circumstances of the caseand in law, the Tribunal erred in holding that thecomparable i.e M/s. Vishal Information TechnologiesLimited, should be excluded for the purpose of determiningthe arm's length pricing in the case of the assessee interms of Section 92C(1) of the I.T. Act, 1961 r/w Rule10B(2) of the I.T. Rules?and in law, the Tribunal erred in holding that thecomparable i.e M/s. Vishal Information TechnologiesLimited, should be excluded for the purpose of determiningthe arm's length pricing in the case of the assessee interms of Section 92C(1) of the I.T. Act, 1961 r/w Rule10B(2) of the I.T. Rules? (ii) Whether on the facts and in the circumstances of the caseand in law, the Tribunal erred in deleting the disallowanceof Rs. 9,53,437/- made by the AO in respect of purchase ofand in law, the Tribunal erred in deleting the disallowanceof Rs. 9,53,437/- made by the AO in respect of purchase of the shelf software from QAD Singapore Pvt Ltd u/S. 40(a)(i) of the Act on the ground that the said expenditure wassubject to deduction of tax at source u/S. 195 of the Act?" 2. In so far as the first question is concerned, the Tribunal,in the impugned judgment recorded that the case of VishalInformation Technologies Ltd cannot be taken as comparableto determine the arm's length price of the transactions of theassessee with its associates enterprise on the ground thatthe business module of the said company was entirelydifferent. It was observed that Vishal InformationTechnologies Ltd was engaged in the service of dataanalytics and providing data services solutions whereas theassess is engaged in providing business processmanagement services in the areas of finance accounts,operational control assessment, administration of foreignexchange etc. Through series of judgments this Court aswell as other High Courts have taken a view that whenfundamentally the business module of the two companiesare different, the results of a company can be taken as acomparable in order to carry out the study for arm's lengthprice of the transactions of the assessee with its associatesenterprise. Reference in this respect can be made to the decision of Delhi High Court in case of RampgreenSolutions (P) Ltd Vs. CIT[1]. This question is therefore, notentertained. 3.Learned counsel for the Revenue pointed out thatQuestion No. (ii) has been considered by this Court and theappeals have been admitted. Ordinarily, we would haveadmitted the Revenue's appeal in connection with thisquestion. However, we notice that revenue implication inrelation to such a question is quite small. This being a solequestion and the revenue effect being low, the same is notentertained. Needless to say, this would not meanconfirmation of the decision of the Tribunal on merits. 4.In view of above, the appeal is dismissed. [ SARANG V. KOTWAL, J. ] [ AKIL KURESHI, J ] 1[2015] 377 ITR 533 (Delhi)