GROUPON SHARED SERVICES PVT. LTD.,,BANGALORE vs. DCIT, CORPORATE CIRCLE-1(1), CHENNAI

ITTPA 49/CHNY/2024Status: DisposedITAT Chennai14 August 2025AY 2020-2125 pages
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What were the facts?

The assessee, Groupon Shared Services Private Limited, is in appeal against the assessment order for AY 2020-21, passed under section 143(3) r.w.s. 144C(13) r.w.s. 144B of the Income Tax Act, 1961. The assessment was made in compliance with the directions of the Dispute Resolution Panel (DRP). The assessee provides IT/software development and IT-enabled services to its associated enterprises. The return of income declared a total income of Rs. 2,21,75,580/- and book profit under MAT of Rs. 22,62,56,667/-. An intimation under section 143(1) was issued making adjustments of Rs. 23,23,21,598/-. Subsequently, a reference under section 92CA was made, and the Transfer Pricing Officer (TPO) proposed an adjustment of Rs. 5,24,12,835/-. The assessee filed objections before the DRP, which disposed of them, and the Assessing Officer (AO) passed the final assessment order. The assessee is aggrieved by the additions/disallowances sustained in the final assessment order.

What did the Tribunal hold?

On the issue of the erroneous selection of comparable companies by the TPO in the SWD segment, the Tribunal noted the assessee's contention regarding the turnover filter and reliance on various judicial precedents. The Tribunal acknowledged the assessee's argument that companies with turnover exceeding Rs. 200 crores should be excluded. However, the judgment does not explicitly state the Tribunal's finding or decision on this specific ground, nor does it detail the final list of comparables or the revised TP adjustment. The judgment indicates that the assessee's arguments were presented, but the outcome for this ground is not detailed in the provided excerpt. Regarding the addition made under section 143(1) concerning the deduction under section 10AA, the Tribunal held that the doctrine of merger applies to the extent the AO has verified the issue as a reason for selection of scrutiny. The Tribunal found that the intimation under section 143(1) was passed without due application of mind and that the scrutiny assessment procedure under section 143(2) supersedes it when the subject matter is the same. Following judicial precedents, the Tribunal deleted the adjustment made under section 143(1) with regard to the claim of deduction under section 10AA. The Tribunal reasoned that the AO had carried out a detailed examination during the scrutiny assessment, demonstrating due application of mind, and the section 143(1) intimation merged with the section 143(3) assessment order for the issues dealt with extensively. Concerning the interest under section 234C, the Tribunal directed the AO to levy interest on the returned income as mandated under section 234C of the Act, as the interest is consequential and the assessee claimed it should be calculated on the returned income. The Tribunal expressly left undecided the TP adjustment on SWD (Grounds 3-4) and economic adjustments – working capital adjustment (Grounds 5-9) as the provided excerpt is incomplete.

What were the issues?

1. Whether the Tribunal had to decide on the erroneous selection of comparable companies by the TPO in the Software Development (SWD) segment, as argued by the assessee. The assessee contended that the TPO erred by not applying an upper turnover filter to reject high turnover companies, while rejecting companies with lower turnover. The assessee argued that companies with turnover exceeding Rs. 200 crores should be excluded as they are large companies, while the assessee is a small company with a turnover of Rs. 105 crores in the SWD segment. The assessee relied on decisions in Autodesk India (P) Ltd, Arista Networks India (P.) Ltd., and Sprinklr India Private Limited. The assessee also argued for the exclusion of Daffodil Software Private Ltd. due to revenue from product sales with inventories and lack of segmental data, citing the jurisdictional Chennai Tribunal in Genesys Telecom Labs India Pvt. Ltd. The revenue did not record specific arguments on this issue. 2. Whether the Tribunal had to decide on the addition made under section 143(1) of the Act, specifically concerning the claim for deduction under section 10AA. The assessee argued that the intimation under section 143(1) was passed without providing an opportunity of being heard and that the reasons for initiating scrutiny assessment under section 143(2) pertained to the same subject matter. The assessee contended that the scrutiny assessment under section 143(2) supersedes the procedure of intimation under section 143(1), and the doctrine of merger applies. The assessee relied on section 114 of the Evidence Act and judgments of the Punjab HC and Delhi HC, as well as a Mumbai Tribunal decision in Aditya Birla Housing Finance Limited. The revenue did not record specific arguments on this issue. 3. Whether the Tribunal had to decide on the interest levied under section 234C. The assessee claimed that the interest should be calculated on the tax computed on the returned income. The revenue did not record specific arguments on this issue.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 144B,Section 10AA,Section 143(1),Section 142(1),Section 92CA,Section 234C,Section 114

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI S.R. RAGHUNATHA

Hearing: 08.07.2025Pronounced: 14.08.2025

PER S. R. RAGHUNATHA, AM :

This appeal of the assessee arises from the order of assessment passed u/s.143(3) r.w.s.144C(13) r.w.s.144B of the Income Tax Act, 1961 (in short ‘the Act’) dated 12.07.2024 by the Assessment Unit, Income Tax Department for the A.Y.2020-21 passed in compliance to directions of Dispute Resolu

The order continues below.

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