GREAT LEARNING EDUCATION SERVICES PRIVATE LIMITED,DELHI vs. INCOME TAX OFFICER, DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: H: NEW DELHI BEFORE SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER AND SHRI SUDHIR KUMAR, JUDICIAL MEMBER ITA No.5142/Del/2024 Assessment Year: 2021-22 Great Learning Education Services v. The Assessing Officer Private Limited Assessment Unit S40,Second Floor, Vasant Square Income Tax Department Mall, Plot No. A , Sector B, New Delhi Pocket V, Vasant Kunj, (The ITO , Ward 10(3), C R New Delhi-110070 Building, Income Tax Department, New Delhi-110002) PAN: AAECB3694E (Appellant) (Respondent)

Assessee by : Shri Kshitij Bansal , CA and Ms. Kashish Gupta, CA Revenue by : Shri S.K.Jadhav, CIT, DR Date of Hearing : 12.03.2026 Date of Pronouncement : 08.06.2026

ORDER PER RAMIT KOCHAR, AM: The appeal in ITA No.5142/Del/2024 for assessment year: 2021-22 has been filed by the assessee against the assessment order dated 11.09.2024 passed by the learned Assessing Officer, Assessment Unit, Income Tax Department u/s 143(3) r.w.s. 144C(13) read with Section 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) (DIN:ITBA/AST/S/143(3)/2024-

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25/1068573333(1) , wherein addition of Rs. 61,42,097/- on account of ALP adjustment u/s 92C were made in the hands of the assessee, which assessment order has been passed by the AO in pursuance to order giving effect order dated 09.09.2024 (DIN & Order No. ITBA/COM/F/17/2024-25/ 1068460347(1)) passed by ld. Transfer Pricing Officer to the Directions of ld. Dispute Resolution Pane-1. New Delhi, dated 07.08.2024 u/s 144C(5) of the Act ( ITBS/DRP/M/ 144C(5) / 2024-25 / 1067392929(1)). The AO had earlier issued draft assessment order dated 20.11.2023(DIN & Order No. ITBA/AST/F/144C/2023- 24/1058056639(1)) u/s. 144C(1) of the Act wherein the AO proposed an addition of Rs.1,08,17,941/- on account of ALP adjustment u/s 92C as proposed by ld. TPO in its Transfer pricing order dated 12.12.2023 passed u/s 92CA(3) , which were subjected to challenge by the assessee by filing objection before the ld. DRP which culminated into an order passed by ld. DRP dated 07.08.2024 u/s 144C(5) of the Act. TPO passed order giving effect to the directions of ld. DRP vide order dated 09.09.2024, wherein ALP adjustment to the international transactions was proposed at Rs. 61,42,097/-. The AO passed final assessment order dated 11.09.2024 in pursuance to directions given by ld. DRP which assessment order is in challenge in appeal by the assessee before us.

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support and customer care services provided by the assessee to its Associated Enterprises. The assessee has rendered international transactions with its AE’s with respect to provision of learner support and customer care services provided by the assessee to the tune of Rs. 13,27,70,884/-. Admittedly, there is no other dispute between the rival parties with respect to other international transactions entered into by the assessee with its AE. We will now deal with the issues/grounds raised by the assessee in this appeal. 3. Ground No. 1 to 5-Computation of ALP of International Transaction with respect to provision of learner support and customer care services provided by the assessee to its Associated Enterprises to the tune of Rs.13,27,70,884/- , wherein ALP adjustment to international transactions was made finally by to the tune of Rs. 61,42,097/-

3.1 Ground No. 1 and 2 are General in nature and does not require separate adjudication, and hence accordingly disposed off. 3.2 Ground No. 3 with respect to the assessment being barred by limitation, is not pressed by the assessee, and hence accordingly dismissed. 3.3 Ground No. 4 to 4.7 The assessee has applied TNMM Method while computing ALP of the international transactions entered into by it with its AE’s with respect to provision of learner support and customer care services provided by the assessee to its Associated Enterprises. In its TPSR(Page 12/TPSR) , it is stated that as per agreement between assessee and its AE , the assessee has provided business support services to its AE , namely Great Learning Singapore which include Marketing research and support services , 5

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customer support services , technological support and accounting support services. It is further stated in page 15-16 of TPSR that business support services provided by the assessee include following activities:- a) Marketing Research and Business Support Services i) Conducting Marketing Research on the products of AE and research data analysis ii) Appraising potential customers about AE’s product services iii) Guidance to customers in terms of course enrolment process, fee payments etc. b) Customer Service and Support: i) On boarding AE’s customers , scheduling of the program sessions, updating on students progress and orientation process. ii) Follow-up with the faculty, assessors and evaluators to track and ensure scheduled delivery of the programs. c) Technological Support i) Managing and providing technological support to the customers for cloud-based products of AE. ii) Providing technical support for the website and portal maintenance and administration of cloud infrastructure to ensure uninterrupted program delivery. d) Booking Keeping and Accounting Support Services- i) All the basic book-keeping services line recording , storing and retrieval of financial transactions etc. ii) Other accounting services like a) Providing bills for services provided to clients b) Scheduling the payment of suppliers c) Monitoring individual accounts receivables and accounts payable d) Recording depreciation and other adjustment entries e) General Ledger maintenance f) Bank account reconciliations. 3.3.3 The assessee has chosen itself to be tested party.The Profit Level Indicator(PLI) for benchmarking purposes adopted by assessee is OP/OC(OP- Operating Profit, OC-Operating Cost), and the operating margin computed by 6

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assessee is 15%. The assessee adopted search criteria which are listed by TPO in

its order at page no.3. The assessee for the purposes of computing ALP proposed

13 comparables in its Transfer Pricing Study Report. The Median margin of the

Comparables selected by the assessee was to the tune of 6.25% , and since the

margin of the assessee was higher , the ALP adjustment was Rs. NIL as per the

assessee. The TPO modified search criteria, which is listed at page 3 and 4 of the

its order. The TPO rejected 9 comparables as proposed by assessee, and finally

proposed 12 comparables(including 4 proposed by assessee in its TP Study

Report) and issued SCN with observations , inter-alia, wrt comparables , as

under:

S.No. Company Name TPO’s Remarks Observation

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TPO; therefore, this company is a good comparable. 4. Designed Products The company is classified into the Proposed by TPO ITES industry. The company is Limited engaged in the business of providing Information Technology enabled services/BPO. Since, it is providing similar services as provided by the assessee and qualifies all filters applied by the TPO; therefore, this company is a good comparable 5. XS Cad India Private The company is classified into the Proposed by TPO Limited ITES industry. The company is engaged in the business of providing Information Technology enabled services/BPO. Since, it is providing similar services as provided by the assessee and qualifies all filters applied by the TPO; therefore, this company is a good comparable 6. Vitae International The company is classified into the Proposed by TPO Accounting Services ITES industry. The company is Private Limited engaged in the business of providing Information Technology enabled services/BPO. Since, it is providing similar services as provided by the assessee and qualifies all filters applied by the TPO; therefore, this company is a good comparable 7. Inteq BPO Services The company is classified into the Proposed by TPO Private Limited ITES industry. The company is engaged in the business of providing Information Technology enabled services/BPO. Since, it is providing similar services as provided by the assessee and qualifies all filters applied by the TPO; therefore, this company is a good comparable 8. Datamatics Business The company is classified into the Proposed by TPO Solutions Limited ITES industry. The company is engaged in the business of providing Information Technology enabled services/BPO. Since, it is providing similar services as provided by the assessee and qualifies all filters applied by the TPO; therefore, this company is a good comparable 9 Suprawin Technologies Proposed by assessee in its TPSR Proposed by assessee in Limited and accepted by TPO its TPSR and accepted by TPO 10 CES Ltd. Proposed by assessee in its TPSR Proposed by assessee in and accepted by TPO its TPSR and accepted by TPO 11. Sundaram Business Proposed by assessee in its TPSR Proposed by assessee in 8

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Services Limited and accepted by TPO its TPSR and accepted by TPO 12. Conga Software Proposed by assessee in its Proposed by Private Limited TPSR and accepted by TPO assessee in its TPSR and accepted by TPO 3.3.4 The TPO computed Median Margin of 24.37% , and since assessee margin was 15% , the TPO proposed adjustment to ALP to the tune of Rs. 1,08,17,941/-, and accordingly draft assessment was passed by the AO. The assessee filed objections with ld. DRP and the ld. DRP issued directions. Based on the directions issued by ld. DRP, the TPO gave order giving effect proposing adjustment to ALP to the tune of Rs. 61,42,097/- by re-computing margin of final set of comparables @20.32%. The AO passed final assessment based on order giving effect passed by TPO, wherein adjustment to the ALP to the tune of Rs. 61,42,097/- was made by the AO to the income of the assessee. 3.3.5 Now , during the proceedings before the Tribunal during the course of hearing before the Bench, the ld. Counsel for the assessee has restricted its arguments to the selection of ANZ Support Services India Private Limited(hereinafter called ‘ANZ’) by TPO. It was submitted by ld. Counsel for the assessee forcefully that its selection by TPO is so blatantly wrong that it needs to be excluded as comparable to the assessee (tested party) while computing ALP under TP regime, and if the said comparable is excluded, the ALP adjustment will be reduced to Nil. Thus, it was prayed that the Bench should adjudicate the inclusion of ANZ Support Services India Private Limited,

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and other issues should be kept open as they have become academic in nature. 3.3.6 Thus, We are confining ourselves to the said comparable ANZ. During the course of proceedings before the TPO, the assessee company has submitted that this company is functionally dissimilar and annual report of ANZ is not available.Thus, prayer was made to exclude the same from the list of comparable. As could be seen, the TPO proposed ANZ ,while issuing SCN with following remarks : “The company is classified into the ITES industry. The company is engaged in the business of providing Information Technology enabled services/BPO. Since, it is providing similar services as provided by the assessee and qualifies all filters applied by the TPO; therefore, this company is a good comparable.” 3.3.7 The TPO observed while rebutting assessee contentions that the annual report of ANZ is easily available in public domain. The TPO in its order at page 24 observed from the financial statement of ANZ that the ANZ is rendering IT support services and description of services are ‘Other Professional , Technical and Business Services’. The TPO rejected the contentions of the assessee. 3.3.8 Before ld. DRP, the assessee contended that ANZ is functionally dissimilar as ANZ is providing banking , financial products and various banking solutions related to bank accounts, credit cards, home loans etc. It was contended that ANZ is similar to bank and offers saving interest to its customers. It was submitted that it was engaged in banking activities and it can be considered as a part of banking company, engaged in undertaking banking operations. It was submitted by the assessee that ,thus, ANZ cannot be compared with the assessee

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as the assessee is engaged in learner support and customer care services. The ld. DRP directed TPO to highlight the functional profile of the company and include this in set of comparables only if it satisfied the broad functional similarity criteria as required under TNMM and pass all quantitative filters applied by him, and TPO was directed to pass speaking order. While passing order giving effect to the aforesaid directions of the ld. DRP, the 3.3.9 The ld TPO while passing order giving effect to ld. DRP directions, observed as under: “ From the perusal of the annual report of the company it can be seen that the company derives revenue primarily from the said Services (Other Professional , Technical and Business Services and also other IT Support services). From the below, it is observed that the company is similar in function to the assessee. The clarification in this regard has already been provided vide TPO order dated 30.10.2023 , Further the comparable passes all the quantitative filters applied by the TPO, Company is included in the final list of comparables . Relevant screen shot from the annual report of the company is reproduced below:

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Thus, the ld. TPO while giving order effect to ld. DRP directions included ANZ

as comparable for computing ALP adjustment.

3.3.10 The assessee has filed copy of Annual Financial statement of ANZ for

financial year 2020-21 in the paper book filed with the Tribunal (Page 1-192 of

Annual Report Compilation). The assessee has also filed its financial statements

for financial year 2020-21 before the Tribunal. The assessee has also filed

Master Agreement dated 01.04.2019 along with copy of statement of work in

related to the Master Service Agreement dated 01.04.2019 as well sample

invoices raised by it to its AE. The ld counsel for the assessee submitted that

ANZ was wrongly included as comparable by the TPO for the following reasons:

a) The Related party filter adopted by TPO was to exclude companies

where RPT exceeds 25% of the sales . It was submitted that ANZ has

RPT of more than 25% of the sales, and it could not be included as

comparable. It was submitted that RPT/total Sales of ANZ during the

year was as high as 97.59% , so thus it is not a good comparable. The

assessee submitted following chart as under in its written submissions,

with respect to RPT of ANZ with its AE’s to total sales, as under:

S.No. Particulars FY 2018-19 FY 2019-20 FY 2020-21 1. Revenue from rendering of Rs. 742.10 Cr. Rs.754.70 Cr. Rs. 722.78 Cr. services related party transactions(A) 2. Other related party Rs. 4.30 Cr. Rs. 1.90 Cr. Rs. 3.84 Cr. transactions expense(B) 3. Total related party Rs. 746.40 Cr. Rs. 756.60 Cr. Rs. 762.62 Cr. transaction[(C)=(A)+(B)] 4. Total Sales(D) Rs. 741.90 Cr. Rs.803.70Cr. Rs.744.53 Cr. RPT/Sales[ 100.60% 94.14% 97.59% 12

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(E)=(C)/(D)]

Thus, it was submitted that on this short ground of ANZ having RPT of more than 25% of total sales , ANZ has to be excluded as comparable, as TPO has adopted a filter of RPT of not more than 25% of total sales, while ANZ during the year under consideration has RPT of 97.59% of sales. The assessee has also challenged inclusion of ANZ on the ground that ANZ is functionally dissimilar to the assessee’s functions. It was submitted that ANZ is providing high end IT enable services related to core banking operations of ANZ group, and hence functionally not comparable. The assessee has given submissions wrt ANZ , as under to this effect:-

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3.3.11 The ld. CIT-DR on the other hand submitted in rebuttal that this ground of objection of RPT of ANZ being in excess of 25% of the sales is taken by the assessee for the first time before the ITAT as this objection was not taken by the assessee before TPO nor even before the ld. DRP, and it was prayed by ld. CIT- DR that the matter can be restored back to the ld. TPO for necessary verifications. It was submitted that the authorities below has rightly included ANZ as the assessee is also engaged in business of ITES. 15

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3.3.12 The ld. Counsel for the assessee submitted in rebuttal that the ld. DRP gave clear directions to the TPO to include ANZ as comparable if it qualifies all filters. It was submitted that the assessee is not in the business of ITES , as it is rendering services in the field of book keeping, accounting and customer relationship. The ld. Counsel for the assessee drew our attention to the directions of ld. DRP to that effect, which are reproduced hereunder: “ The TPO is directed to highlight the functional profile of the company and include this in the set of comparable only if it satisfies broad functional similarity criteria as required under TNMM and passes all the quantitative filters applied by him. The TPO will pass a speaking order.” 3.3.13 We have carefully gone through the entire factual matrix and the material placed before us, The facts are enumerated above and not repeated. We are confining our adjudication to comparable ANZ, as the assessee has strongly contended before us that there was blatant error on the part of TPO in including ANZ as comparable as RPT is more than 25% of sales, and hence ANZ is to be excluded as comparable.It is also contended that if ANZ is excluded, the ALP adjustment will be Reduced to Rs. Nil. We have observed that the TPO admittedly has adopted one of the search criteria for comparable viz. that the RPT should not be more than 25% of the sales i.e. when RPT exceed 25% , the comparable cannot be included while computing ALP and the same has to be rejected . The search filter adopted by TPO wrt RPT reads as under: “ f) Reject companies where related party transactions exceed 25% of sales:

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There is no doubt that companies with significant related party transactions need to be excluded from the benchmarking process. On the issue of threshold of related party transactions, it can be stated that when the RPT exceeds 25% of sales , it can be said to be the stage when it will start affecting the price paid/received. The rationale given for the use of the limit of 25% is sound and this threshold limit has been approved explicitly an implicitly in quite a few judicial pronouncements.”

3.3.14 We have gone through the financial statements of ANZ for financial year

2020-21 , placed on record in file by the assessee(page 1-192/Annual Report

compilation). We have observed that the total sales/income of ANZ during the

financial year 2020-21 was Rs. 7759.87 Millions. The business of ANZ as stated

in its audited accounts is IT Enabled services to ANZ group Companies. ANZ was incorporated on 27th September, 2007 . ANZ is a wholly owned subsidiary

of ANZ Banking Group Limited, Melbourne. ANZ has principle place of

business at Eucalyptus, Manyata Embassy Business Park, SEZ, Outer Ring

Road, Nagavara Village, Hobli, Bengaluru, Karnataka-560045. ANZ has set up a unit in SEZ which was operational from 01st August, 2008. We have observed

that it has RPT with following AE’s as disclosed in its financial statement (Page

173-179) :

S.No. Details of Related Party Amount of Nature of Details Transaction Transaction (Rs. In Million) 1. ANZ, Hongkong 176.82 Sale of Services 2. ANZ, Hongkong 83.12 Sale of Services 3. ANZ, Vietnam 31.66 Sale of Services 4. ANZ, Vietnam 38.41` Sale of Services 5. ANZ, Australia 23.90 Sale of Services 6. ANZ , Australia 277.23 Other related party Interest Income transactions income 7. ANZ, Australia 26.88 Sale of Services

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3.3.15 ANZ has also reported RPT with respect to Expenses, receivables and

payables in its audited financial statements. The same are not reproduced by us,

but the same are available in financial statements filed by the assessee. The same

are also not included by us while computing RPT/Sales ratio. Thus, it can be

seen that RPT of rendering of services and other income aggregates to Rs.

2290.98 Millions , while total revenue reported is Rs.7759.87 Million, which

translates to income with RPT to total sales/income ratio of 29.5% which is

more than 25% . While calculating the above , we have not included other RPT

transactions viz. expenses , receivables , payables and remuneration , entered

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into by the assessee with related parties. However, this contention that ANZ could not be accepted as comparable as the related party transactions to sales ratio exceeds 25% and hence fails the search criteria adopted by ld. TPO, is raised by the assessee for the first time before the Bench, and none of the authorities below have verified the truthfulness of this contention. Thus, this contention needs verification by TPO. The ld. DRO has directed TPO to include ANZ as comparable only if it satisfies to be functionally comparable to the assessee and also that it qualifies all the filters adopted by TPO. Thus, clearly it does not pass RPT filter of having related party transactions of sales of not exceeding 25% of total sales(subject to verification by TPO). Under these circumstances, ANZ fails as comparable, and thus needs to be excluded. It is also equally true that this contention is raised by the assessee before us for the first time, and hence we are directing TPO to verify this fact of ANZ having failed on the search filter of Related Parties Transactions as adopted by TPO itself while passing order u/s 92CA(3) of the 1961 Act, and if the contentions of the assessee is found to be correct that ANZ has failed RPT filter as adopted by TPO , then in that eventuality the ld. TPO is directed to exclude ANZ as comparable. The assessee has forcefully contended that if ANZ is excluded as comparable, then other grounds concerning TP Adjustment to ALP are academic and hence become infructuous, thus, the same are not adjudicated by us and are kept open. We order accordingly.

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3.4. Ground No. 9 Penalty u/s 270A is premature at this stage and is dismissed accordingly. 4. In the result, the appeal of the assessee in ITA No. 5142/Del/2024 for assessment year 2021-22 is partly allowed in the manner as indicated above. Order pronounced in the open court on 08.06.2026.

Sd/- Sd/- (SUDHIR KUMAR) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 08th June , 2026. Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. DRP 5. DR Asstt. Registrar, ITAT, New Delhi