DCIT, PUNE vs. A.G.S. CUSTOMER SERVICES (INDIA) PVT LTD, PUNE

ITA 2041/PUN/2025Status: DisposedITAT Pune25 September 2026AY 2011-1224 pages
AI SummaryDismissed

What were the facts?

The appeals by the Revenue and cross-objections by the assessee, A.G.S. Customer Services (India) Private Limited, concern Assessment Years 2010-11 and 2011-12. The assessee, a subsidiary of AGSPL, Singapore, provides administrative support services to its Associate Enterprise. For AY 2010-11, the Assessing Officer (AO), based on the Transfer Pricing Officer's (TPO) report, made a Transfer Pricing (TP) adjustment of Rs. 3,51,25,912/-. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the adjustment of Rs. 2,75,91,231/- related to ITES and sustained Rs. 11,77,941/- out of Rs. 75,34,681/- for notional interest. The Tribunal had previously set aside the CIT(A)'s order, directing fresh adjudication. The CIT(A) again deleted the Rs. 2,75,91,231/- adjustment, citing turnover filters and functional dissimilarity of comparables. For AY 2011-12, the Revenue's appeal challenges a similar deletion of TP adjustment by the CIT(A).

What did the Tribunal hold?

The Tribunal dismissed the Revenue's appeals and the assessee's cross-objections. Regarding the TP adjustment for AY 2010-11, the Tribunal upheld the CIT(A)'s deletion of the Rs. 2,75,91,231/- adjustment. The reasoning was that comparables like TCS E-Serve Limited, Infosys BPO Limited, and Accentia Technologies Limited should be excluded due to significant differences in turnover (more than 10 times the assessee's turnover), functional dissimilarity, and risk profiles. The Tribunal found that even without the turnover filter, these comparables were not fit. The revised operating margin after excluding these comparables was found to be lower than the assessee's margin, indicating no upward TP adjustment was warranted. The Tribunal also noted that Eclerx Services Limited, selected for AY 2011-12, was functionally different, engaged in high-end analytical services, and failed the 10 times turnover filter, thus rightly excluded by the CIT(A). The Tribunal dismissed the grounds raised by the assessee in the cross-objections as academic or infructuous, as they were either in support of the CIT(A)'s findings or rendered moot by the dismissal of the Revenue's appeal. The issue of notional interest on receivables was not explicitly decided in the provided text but was part of the assessee's cross-objections.

What were the issues?

1. Whether the CIT(A) erred in deleting the TP adjustment of Rs. 2,75,91,231/- (AY 2010-11) and Rs. 2,85,60,388/- (AY 2011-12) by excluding comparables selected by the TPO without proper appreciation of functional comparability, turnover, risk profile, and other filters under TNMM, contrary to Section 92C of the Act? 2. Whether the CIT(A) erred in applying an arbitrary turnover filter (10x) to exclude comparables like TCS E-serve, Accentia, and Infosys BPO, ignoring judicial principles that size alone does not warrant exclusion if functional comparability exists under TNMM, contrary to Section 92C of the Act? 3. Whether the CIT(A) erred in relying on Advance Pricing Agreements (APAs) for subsequent years, which were not in effect during the assessment and not legally binding for the subject years, contrary to Sections 92CC and 92CD of the Act? 4. Whether the CIT(A) erred in accepting the use of multiple-year and non-contemporaneous financial data, contrary to Rule 10B(4) of the Income-tax Rules? 5. Whether the CIT(A) erred in concluding the margin was at arm's length based on APA-agreed margins, ignoring contemporaneous TP analysis and comparables identified by the TPO? Assessee's Contentions (Cross Objections): - Rejection of 'Aditya Birla Minacs Worldwide Limited' and 'Tech Process Solutions Limited' as comparables by AO/TPO based on export earnings filter. - Upholding of the 10 times turnover filter by CIT(A), but suggesting a turnover range of INR 1 crore to INR 200 crore if the 10x filter is not accepted. - Incorrect margin computation for 'Cosmic Global Limited' by AO/TPO. - Failure to allow the benefit of 5% variation as per the proviso to Section 92C(2). - Error in computing notional interest on outstanding receivables and making an adjustment. - Inclusion of functionally dissimilar companies like Eclerx Services Limited, Acropetal Technologies Limited, and ICRA Techno Analytics Limited by AO/TPO. - Rejection of comparable companies selected in the TP study based on a diminishing revenue filter. Revenue's Contentions: - CIT(A) grossly erred in rejecting comparables selected by TPO without proper appreciation of functional comparability, turnover, risk profile, and other relevant filters under TNMM.

Which sections of the Income-tax Act were involved?

Section 92C,Section 92CC,Section 92CD

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCHES “C”, PUNE

Before: DR.MANISH BORAD & SHRI VINAY BHAMORE

For Appellant: Shri Siddhesh Chaugule
For Respondent: Shri Gaurav Singh
Hearing: 01.07.2026Pronounced: 25.09.2026

PER DR. MANISH BORAD, ACCOUNTANT MEMBER :

The captioned appeals at the instance of Revenue and Cross Objections by the assessee pertaining to A.Y. 2010-11 and 2011-12 are directed against the separate orders of ld.CIT(A), Pune-13 dated and CO Nos. 21 and 22/PUN/2026 AGS Customer Services In

The order continues below.

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