DCIT, BANGALORE vs. M/S THOMSON CORPORATION (INTERNATIONAL) PVT. LTD.,, BANGALORE

ITA 234/BANG/2015Status: DisposedITAT Mumbai31 December 2025AY 2010-1165 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal decided on the issues as follows: Regarding Transfer Pricing (Issue 1): The Tribunal found that the TPO erred in rejecting the assessee's TP documentation and conducting a fresh benchmarking analysis. The Tribunal noted that the TPO had applied inappropriate filters and inconsistent comparability criteria. It was held that the TPO should not have substituted the assessee's analysis with his own conjectures and assumptions. The Tribunal also found that the TPO erred in rejecting comparables considered by the assessee while including fresh comparables based on a new search, contrary to judicial precedents. The Tribunal directed the AO to re-examine the TP adjustment by applying appropriate filters and considering the assessee's risk profile and allowing necessary adjustments under Rule 10B. The issue was remanded to the AO for fresh adjudication. Regarding Section 10A deductions (Issues 2, 3, and 4): The Tribunal held that the denial of Section 10A deduction for the UB Plaza unit, Titanium unit, and the unit acquired from RIPL was incorrect. The Tribunal relied on Circular No. 1, dated January 17, 2013, which clarifies that a slump sale does not result in splitting or reconstruction of an existing business and that a mere change in ownership cannot lead to denial of Section 10A deduction. The Tribunal found that these units were eligible for Section 10A deduction. The AO was directed to allow the deduction for these units. Regarding depreciation on goodwill (Issue 5): The Tribunal held that the claim for depreciation on goodwill was not allowable as it was not an asset acquired in a slump sale. The Tribunal noted that goodwill is not an identifiable asset for depreciation purposes unless specifically acquired as such. The claim was denied. Regarding depreciation on software (Issue 6): The Tribunal held that the denial of depreciation on software purchases due to non-deduction of tax at source under Section 40(a)(i)/40(a)(ia) was incorrect. The Tribunal found that these provisions are applicable only to payments made to non-residents and not to domestic payments. The AO was directed to allow the depreciation claim.

What were the facts?

The appeals by both the assessee, M/s. Thomson Corporation (International) Pvt. Ltd., and the revenue arise from the final assessment order dated 29/01/2025, passed under Section 143(3) read with Section 144C(13) of the Income Tax Act, 1961, for the Assessment Year 2010-11. The assessee is challenging the order to the extent it is prejudicial to it, particularly concerning the rejection of its Transfer Pricing (TP) documentation and the denial of deductions under Section 10A for various units. The revenue, through the Deputy Commissioner of Income Tax, Circle-5(1)(1), Bangalore, is also appealing certain aspects of the assessment. The Dispute Resolution Panel (DRP) had previously issued directions which were incorporated into the final assessment order.

What were the issues?

1. Whether the learned Assessing Officer (AO)/Dispute Resolution Panel (DRP) erred in rejecting the assessee's Transfer Pricing (TP) documentation and upholding the rejection by the Additional Commissioner of Income-tax (Transfer Pricing) -III, Bangalore (TPO), by disregarding the application of multiple-year data and insisting on current year data for comparable companies, and by conducting a fresh benchmarking analysis based on conjectures and assumptions, and applying inconsistent comparability criteria (Section 92C, Rule 10B). 2. Whether the learned AO/DRP erred in denying deduction under Section 10A of the Act in respect of the UB Plaza STPI Unit, by considering it a new undertaking formed by acquisition of previously used assets, and incorrectly applying Section 10A(7A) and holding that continuance of tax holiday is restricted to amalgamation or demerger, despite the unit being eligible for deduction since AY 2006-07 post-acquisition (Section 10A). 3. Whether the learned AO/DRP erred in denying deduction under Section 10A of the Act in respect of the Titanium STPI Unit, by treating it as an extension of the UB Plaza unit, despite it being a newly established undertaking eligible for deduction (Section 10A). 4. Whether the learned AO/DRP erred in denying deduction under Section 10A of the Act in respect of the unit acquired from Reuters India Private Limited (RIPL) under a slump sale, by holding that it does not fulfill conditions under Section 10A(2)(ii) due to acquisition of an STPI unit (Section 10A). 5. Whether the learned AO/DRP erred in denying the claim for depreciation on goodwill under Section 32 of the Act in respect of undertakings acquired from Thomson Business Information India Private Limited (TBI) and RIPL, despite the claim being made during assessment proceedings after the time limit for revised returns had elapsed (Section 32). 6. Whether the learned AO erred in denying depreciation on software purchases due to non-deduction of tax at source under Section 40(a)(i)/40(a)(ia) of the Act (Section 40(a)(i), Section 40(a)(ia)). Assessee's Contentions: - TP documentation was prepared bona fide and in compliance with the Act and Rules. - Multiple year/prior year data was available and used in TP documentation. - The TPO's benchmarking analysis was based on inappropriate filters and inconsistent criteria. - The assessee's risk-free profile was ignored, and no appropriate adjustments were made under Rule 10B. - The UB Plaza unit was an existing undertaking, not a new one, and eligible for Section 10A deduction. Circular No. 1, dated January 17, 2013, supports the claim post-slump sale. - The Titanium unit is a new undertaking eligible for Section 10A deduction. - The RIPL unit acquired via slump sale is eligible for Section 10A deduction, relying on Circular No. 1, dated January 17, 2013. - Depreciation on goodwill was claimed during assessment proceedings as revised return timelines had passed. - Section 40(a)(i)/40(a)(ia) are applicable only to outgoing expenditure. Revenue's Contentions: - Not recorded in the provided text.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 92C,Section 10A,Section 10A(7A),Section 10A(2),Section 32,Section 40(a)(i),Section 40(a)(ia)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “H” BENCH, MUMBAI

Before: SMT. BEENA PILLAI & SHRI GIRISH AGRAWAL

For Appellant: Shri Dhanesh Bafna a/w, Ms. Riddhi Maru & Ms. Tejal Saraf, ARs
For Respondent: Shri Ajay Chandra, CIT D/R
Hearing: 02.12.2025Pronounced: 31.12.2025

Heard together (3 matters)

I.T.A. No. 234/Bang/2015
I.T.A. No. 843/Bang/2015
I.T.A. No. 542/Bang/2015

Read from the judgment's own cause title. This page is filed under one of them.

Per Smt. Beena Pillai, JM: Present appeals filed by assessee as well as revenue arises out of final assessment order dated 29/01/2025 passed u/s 143(3) I.T.A. No. 843/Bang/2015 r.w.s.144C(13) of the Act for assessment year 2010-11 on the following grounds of appeal:- Ge

The order continues below.

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