“captive service provider”

Transfer PricingSection 92CSection 92C229 judgments

The decision most relied on for captive service provider is CIT v. Agnity India Technologies (P.) Ltd. (36 Taxmann.com 289), cited in 171 judgments on BharatTax.

Leading authorities on captive service provider

CIT v. Agnity India Technologies (P.) Ltd.

36 Taxmann.com 289 · 2013 · High Court

171

citing judgments

The Delhi High Court holds that Infosys Ltd. is not comparable to a captive software development service provider for transfer pricing analysis, given its huge turnover, high profit margins, ownership of intangible intellectual property rights, branded products, and differing risk profile.

Trilogy E-Business Software India (P.) Ltd. v. Dy. CIT

29 Taxmann.com 310 · 2013 · ITAT

citing judgments

For Transfer Pricing, this case clarifies that foreign exchange gains can be considered operating revenue for ITES providers, acknowledges the impact of offshore versus onsite development pricing on margins even when using TNMM, and affirms the use of a turnover filter for selecting comparable companies.

68 (Hyd.) Genisys Integrating System (India) (P.) Ltd. v. Dy. CIT

20 Taxmann.com 715 · 2012 · Reported

citing judgments

When determining comparable companies for transfer pricing, there should be an upper limit for turnover, as size impacts business operations. Companies with significantly higher turnover than the assessee should generally be excluded.

Agnity India Pvt. Ltd. v. ITO

58 Taxmann.com 167 · 2015 · Reported

citing judgments

A company with significant brand value, intangible assets, and a business model providing end-to-end solutions leveraging cutting-edge technology cannot be considered comparable to an ordinary captive service provider in transfer pricing analysis.

Avnet India (P.) Ltd. v. DCIT (

65 Taxmann.com 187 · 2016 · Reported

citing judgments

Interest on delayed realization of sale proceeds from associated enterprises is not a separate international transaction. The realization of sale proceeds, whether early or late, is incidental to the primary transaction of sale.

DCIT v. Rehau Polymers Pvt. Ltd.

85 Taxmann.com 23 · 2017 · Reported

citing judgments

The case is cited for principles related to transfer pricing, likely concerning the benchmarking analysis of related party transactions, as indicated by the accompanying topics and keywords.

Finastra Software Solutions (India) (P.) Ltd. v. ACIT

93 Taxmann.com 460 · 2018 · ITAT

citing judgments

A company should be excluded from the list of comparable companies in transfer pricing analysis if it is functionally different, lacks segmental details, has different revenue recognition, or has undergone inorganic growth and owns significant intangible assets.

Global Logic India Ltd. v. Dy. CIT

117 Taxmann.com 39 · 2020 · Reported

citing judgments

A company undergoing restructuring activity during the relevant financial year may be rejected as a comparable in transfer pricing analysis, as such events can impact its profitability.

Judgments citing captive service provider

M/S. Acusis Software India Private Limited, Bengaluru vs. Deputy Commissioner of Income Tax, Circle-1(1)(2), Bengaluru

ITA 2702/BANG/2017[2013-14]Status: DisposedITAT Bangalore01 Feb 2022AY 2013-14

Bench: Shri. Chandra Poojari & Smt. Beena Pillaiit(Tp)A No. 2702/Bang/2017 Assessment Year : 2013-14 M/S. Acusis Software India The Deputy Pvt. Ltd., Commissioner Of No. 17/2, Dollars Chamber, Income Tax, Lalbagh Road, Circle – 1(1)(2), Bangalore – 560 027. Bangalore. Vs. Pan: Aadca2415P Appellant Respondent Assessee By : Shri Chavali Narayan, Ca : Shri Sumer Singh Meena, Cit Revenue By (Dr) Date Of Hearing : 01-02-2022 Date Of Pronouncement : 01-02-2022 Order Per Beena Pillaipresent Appeal By The Assessee Has Been Filed By Assessee Against The Final Assessment Order 12.10.2017 Passed By The Ld.Dcit, Circle-1(1)(2), Bangalore Relating To Assessment Year 2013-14 On Following Revised & Modified Grounds Of Appeal: “Based On The Facts & Circumstances Of The Case & In Law. Acusis Software India Private Limited (Hereinafter Referred To As 'Appellant). Respectfully Craves Leave To Prefer An Appeal Against The Appeal Order Passed By The Learned Assessing Officer [Hereinafter Referred To As The 'Learned Ao'] Under Section 143(3) Read With Section 144C Of The Income-Tax Act. 1961 ('The Act') On The Following Grounds:

For Appellant: Shri Chavali Narayan, CA

Section 133(6)Section 143(3)Section 144CSection 271(1)(c)

2702/Bang/2017 On the FAR analysis, it is not disputed by the revenue authorities, it is ascertained that assessee is a pure captive service provider rendering ITES services to its Associated Enterprises that do not own intangible assets and bears less than minimum risk. The Ld.AR has placed reliance

Xavient Information Systems (I) Pvt. Ltd., Noida vs. DCIT, New Delhi

The appeal of the assessee stands dismissed

ITA 472/DEL/2017[2010-11]Status: FixedITAT Delhi25 Jan 2022AY 2010-11

Section 120Section 127Section 143(1)Section 143(3)Section 92A(2)(b)

such transactions. That DCIT, New Delhi erred in failing to take cognizance of the differences in risk profile of the appellant (being a captive service provider to its AE) and the alleged comparable companies selected by him by not allowing the risk adjustment made by the appellant. Xavient Information Systems ... such transactions. That DCIT, New Delhi erred in failing to take cognizance of the differences in risk profile of the appellant (being a captive service provider to its AE) and the alleged comparable companies selected by him by not allowing the risk adjustment made by the appellant. 9. That

Swiss Re Global Business Solutions India Private Limited, Bengaluru vs. Deputy Commissioner of Income Tax, Circle-6(1)(2), Bangalore

In the result, the appeal of the assessee is partly allowed

ITA 397/BANG/2021[2016-17]Status: DisposedITAT Bangalore21 Jan 2022AY 2016-17

Bench: Shri N.V. Vasudevan & Shri Chandra Poojari

For Appellant: Shri Nageswar Rao, AdvocateFor Respondent: Shri Manjunath Karkihalli, CIT(DR)(ITAT), Bengaluru

Section 133(6)

company transfer pricing. Based on the analysis of the functions performed, assets employed and risks assumed, the TPO characterized the assessee as a captive service provider which assumes minimal risks associated with the business of providing Back Office Support Services, IT enabled services. IT(TP)A No.397/Bang/2021 Page ... Assessee, who operates as a risk-free entity. The DRP observed that as far as the limited risk in the case of captive service providers is concerned, if this argument is accepted then it cannot be compared to any company as most of the companies will be independent companies. Rather

Cisco Systems Services B.V, Bangalore vs. Deputy Commissioner of Income Tax International Taxation Circle-1(1), Bangalore

In the result, the appeal by the assessee is allowed

ITA 961/BANG/2017[2012-13]Status: DisposedITAT Bangalore19 Jan 2022AY 2012-13

Bench: Shri. Chandra Poojari & Smt. Beena Pillaiit(It)A No. 961/Bang/2017 Assessment Year : 2012-13 M/S. Cisco Systems Services B.V. – India The Deputy Branch, Commissioner Of Brigade South Parade, Income Tax, No. 10, International Taxation, Mahatma Gandhi Road, Circle – 1(1), Vs. Bangalore – 560 001. Bangalore. Pan: Aaccc4836D Appellant Respondent Assessee By : Shri Rajan Vora, Ca : Dr. Manjunath Karkaihalli, Revenue By Cit Dr Date Of Hearing : 19-01-2022 Date Of Pronouncement : 19-01-2022 Order Per Beena Pillaithis Appeal By Assessee Is Directed Against The Order Of The Ld.Ao Dated 27.02.2017 Passed U/S. 143(3) R.W.S. 144C(14) Of The Income- Tax Act, 1961 [The Act] On The Following Grounds: “Based On The Facts & Circumstances Of The Case & In Law, Cisco Systems Services B.V. - India Branch (Hereinafter Referred To As The 'Appellant.) Respectfully Craves Leave To Prefer An Appeal Against The Order Passed By The Deputy Commissioner Of Income-Tax (International Taxation) - Circle 1(1) ('Assessing Officer' Or 'Ao') Dated February 27, 2017 In Pursuance Of The Directions & The Revised Directions Issued By The Dispute Resolution Panel ('Drp'), Bangalore Dated December 29, 2016 & January 16. 2017 Respectively, Under Section 253 Of The Income-Tax Act, 1961 ('Act) On The Following Grounds:

For Appellant: Shri Rajan Vora, CA

Section 143(3)Section 253Section 92C

making negative working capital adjustment in relation to the services provided by the Appellant without appreciating the fact that the Appellant is a captive service provider and does not bear any working capital risk. 5. The learned TPO/ learned AO have erred, in law and in facts, by accepting/rejecting certain

Serco India Pvt. Ltd., Gurgaon vs. DCIT, Gurgaon

In the result, the appeal of the assessee is allowed

ITA 1460/DEL/2014[2009-10]Status: DisposedITAT Delhi10 Jan 2022AY 2009-10

Bench: Sh. Saktijit Deydr. B. R. R. Kumarita No. 1460/Del/2014 : Asstt. Year : 2009-10 Serco India Pvt. Ltd., Vs Dcit, 6Th Floor, Tower-B, Building No. 8, Circle-2, Dlf Cyber City, Phase-Ii, Gurgaon Gurgaon (Appellant) (Respondent) Pan No. Aajcs6704P Assessee By : Sh. Suraj Bhan Nain, Ca Revenue By : Sh. M. Baranwal, Sr. Dr Date Of Hearing: 04.01.2022 Date Of Pronouncement: 10.01.2022

For Appellant: Sh. Suraj Bhan Nain, CAFor Respondent: Sh. M. Baranwal, Sr. DR

Section 10ASection 143(3)Section 144C(13)Section 234BSection 271(1)(c)Section 92C

following cases that a giant company having huge turnover and high brand value cannot be compared with a smaller company working as a captive service provider to its AEs:  Pr. CIT vs. B.C. Management Services (P.) Ltd. [2018] 89 taxmann.com 68 (Delhi)  Pr. CIT-3 vs. Evalueserve SEZ (Gurgaon ... comparable company. 31. Reliance is also placed on the following decisions of the Delhi ITAT, where the assessee company was a captive service provider to its AEs, it was directed to exclude Infosys Technologies Limited from the list of comparables, considering 14 Serco India Pvt. Ltd. that

Cisco Systems Services B V India Branch, Bengaluru vs. Deputy Commissioner of Income Tax, International Taxation, Circle-1(1), Bengaluru

In the result, the appeal by the assessee is allowed

ITA 2888/BANG/2017[2013-14]Status: DisposedITAT Bangalore27 Dec 2021AY 2013-14

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri Rajan Vora, CAFor Respondent: Shri Sumer Singh Meena, CIT(DR)(OSD)

Section 143(3)

making negative working capital adjustment in relation to the services provided by the Appellant without appreciating the fact that the Appellant is a captive service provider and does not bear any working capital risk. 4. The learned TPO/ learned AO have erred, in law and in facts, by accepting/rejecting certain

M/S Software Paradigms Infotech Private Limited, Mysore vs. Assistant Commissioner of Income Tax Circle-1(1), Mysore

ITA 2828/BANG/2017[2013-14]Status: DisposedITAT Bangalore27 Dec 2021AY 2013-14

Bench: Shri. B.R. Baskaran & Smt. Beena Pillaiit(Tp)A No. 2828/Bang/2017 Assessment Year : 2013-14 M/S. Software Paradigms The Assistant Infotech Pvt. Ltd., Commissioner Of No. 316-318, Spi City, Income Tax, Hebbal Industrial Area, Circle – 1 (1), Mysuru – 570016. Mysuru. Vs. Pan: Aalcs7583C Appellant Respondent Assessee By : Shri G.S. Prashanth, Ca Revenue By : Shri Pradeep Kumar, Cit (Dr) Date Of Hearing : 29-11-2021 Date Of Pronouncement : 27-12-2021 Order Per Beena Pillaipresent Appeal By The Assessee Has Been Filed By Assessee Against The Assessment Order Dated 24.10.2017 Passed By The Acit, Circle – 1 (1), Mysuru U/S. 143(3) R.W. 92Ca R.W. 144C(5) Of The Act For Assessment Year 2013-14 On Following Grounds Of Appeal. 1. The Orders Of The Tpo / Drp / Assessing Officer In So Far As They Are Against The Appellant, Are Opposed To Law, Weight Of Evidence, Natural Justice, Probabilities, Facts & Circumstances Of The Appellant'S Case. 2. The Appellant Denies Itself To Be Assessed On A Total Income Of Rs. 10,50,75,429/- As Against Income Of Rs. 6,77,58,220/- As Declared By The Appellant.

For Appellant: Shri G.S. Prashanth, CAFor Respondent: Shri Pradeep Kumar, CIT (DR)

Section 143(3)Section 92C

consider comparables alleged by assessee for exclusion/inclusion. Summary Based on the above, it may be concluded that SPI India is a risk insulated captive service provider. Ground No. 4: 10. Ld.AR submitted that CG Vak software exports Ltd, Larsen & Toubro Infotech Ltd., Mindtree Ltd. (seg), Persistent Systems Ltd. (seg), Tech

Nokia India Pvt. Ltd., Gurgaon vs. Addl.CIT, Special Range-6, New Delhi

In the result, the appeal filed by the assessee is party allowed

ITA 6502/DEL/2017[2013-14]Status: DisposedITAT Delhi16 Dec 2021AY 2013-14

Bench: Shri R.K.Panda & Shri Kul Bharat

Section 143(3)Section 144CSection 40Section 928Section 92C(1)

No.176/2019 for Assessment Year 2013-14, to buttress the contention that no comparison can be drawn between an entity that is captive service provider to its group entities and an entity like Axis which is providing liaisoning services to a large number of entities, further reliance was placed

M/S Tecnotree Convergence Private Limited, Bangalore vs. The Deputy Commissioner of Income Tax Circle-7(1)(1), Bangalore

In the result, all the appeals of the assessee are allowed

ITA 3158/BANG/2018[2015-16]Status: DisposedITAT Bangalore15 Dec 2021AY 2015-16

Bench: Shri B.R.Baskaran, Am & Smt.Beena Pillai, Jm

For Appellant: Sri.K.R.Vasudevan, AdvocateFor Respondent: Sri.Srinath Sadanala, Addl.CIT-DR

Section 40Section 9(1)(vii)

case of 24/7 Customer.Com Pvt. Ltd. in ITA No.227/Bang/2010 has held that a company owning intangibles cannot be compared to a low risk captive service provider who does not own any intangible and hence does not have an additional advantage in the market. It is submitted that this decision ... Infosys Technologies Ltd. being a giant company and market leader assuming all risks leading to higher profits cannot be considered as comparable to captive service providers assuming limited risk ; (iii) the company has generated several inventions and filed for many patents in India and USA ; M/s.Tecnotree Convergence Private Limited

M/S. Tecnotree Convergence Pvt Ltd, Bangalore vs. Deputy Commissioner of Income Tax, Circle-7(1)(1), Bangalore

In the result, all the appeals of the assessee are allowed

ITA 3157/BANG/2018[2014-15]Status: DisposedITAT Bangalore15 Dec 2021AY 2014-15

Bench: Shri B.R.Baskaran, Am & Smt.Beena Pillai, Jm

For Appellant: Sri.K.R.Vasudevan, AdvocateFor Respondent: Sri.Srinath Sadanala, Addl.CIT-DR

Section 40Section 9(1)(vii)

M/S. Tecnotree Convergence Private Limited, Bangalore vs. Deputy Commissioner of Income Tax, Circle-7(1)(1), Bangalore

In the result, all the appeals of the assessee are allowed

ITA 3156/BANG/2018[2012-13]Status: DisposedITAT Bangalore15 Dec 2021AY 2012-13

Bench: Shri B.R.Baskaran, Am & Smt.Beena Pillai, Jm

For Appellant: Sri.K.R.Vasudevan, AdvocateFor Respondent: Sri.Srinath Sadanala, Addl.CIT-DR

Section 40Section 9(1)(vii)

Globallogic India Ltd.(Formerly Known As Globallogic India Limited), New Delhi vs. DCIT, Circle-10(1), New Delhi

ITA 868/DEL/2021[2016-17]Status: DisposedITAT Delhi12 Nov 2021AY 2016-17

Bench: Shri Anil Chaturvedi & Shri Kuldip Singh

For Appellant: Shri Neeraj Jain, AdvocateFor Respondent: Shri Surender Pal, CIT DR

Section 143Section 143(3)Section 144CSection 92BSection 92C

facts and in law in not allowing risk adjustment to establish comparability on account of the appellant being a low-risk-bearing captive service provider as opposed to the comparable companies who were independent software development service provider. 3 ITA No.868/Del./2021 1.5 That on the facts

Lockheed Martin India Pvt. Ltd., New Delhi vs. ACIT, Circle- 15(2), New Delhi

In the result of field of the assessee is partly allowed

ITA 3971/DEL/2017[2012-13]Status: DisposedITAT Delhi02 Nov 2021AY 2012-13

Bench: Shri Prashant Maharishi & Shri K.N.Chary(Through Video Conferencing)

For Appellant: Shri Sumit MangalFor Respondent: Dr. Dheeraj Jain, Sr. D. R

Section 143(3)Section 144CSection 144C(1)Section 92C

difference between the risk profile of the appellant as well as assessee. The claim of the assessee is that assessee is 100% captive service provider and therefore it has lesser risk as compared to the comparable companies. Ld TPO and ld DRP has held that it is wrong

Qualcomm India Pvt. Ltd., New Delhi vs. Addl.CIT, Special Range-7, New Delhi

In the result, the appeal of the assessee is allowed

ITA 6421/DEL/2019[2015-16]Status: DisposedITAT Delhi01 Nov 2021AY 2015-16

Bench: Ms. Suchitra Kambledr. B. R. R. Kumar(Through Video Conferencing) Ita No. 6421/Del/2019 : Asstt. Year : 2015-16 Qualcomm India Pvt. Ltd., Vs Addl. Cit, Unit No. 201, 2Nd Floor, Tolstoy House, Special Range-7, 15, Tolstoy Marg, New Delhi-110001 New Delhi-110002 (Appellant) (Respondent) Pan No. Aaacq0231C

For Appellant: Ms. Ananya Kapoor, AdvFor Respondent: Ms. Anshu Shukla Pandey, CIT DR

Section 143(3)Section 92CSection 92C(3)(c)

margins of the comparable companies taking into account the functional and risk differences between the international transaction of the assessee, being only a captive service provider and a risk free entity and the comparable transactions in accordance with the provisions of rule 10B(1)(e) of the Income Tax Rules

Cpa Global Support Services (I) Pvt. Ltd., New Delhi vs. ITO, New Delhi

In the result, the appeal of the assessee in ITA No

ITA 6815/DEL/2015[2011-12]Status: DisposedITAT Delhi01 Oct 2021AY 2011-12

Bench: Shri N.K. Billaiya & Shri Laliet Kumar

For Appellant: Shri G.C. Srivastava, AdvFor Respondent: Shri Surenderpal, CIT-DR

Section 143(3)Section 274Section 92Section 92C

reliable rather include turnover of its subsidiary companies. 21. Eclerx has been found to be not suitable comparable vis-à- vis captive service provider by the coordinate Bench of the Tribunal in Ariba India Pvt. Ltd. vs. DCIT ITA No.5201/Del/2012. 22. So, in view of what has been discussed above

Corning Technologies India Pvt. Ltd., Gurugram vs. DCIT, Gurugram

In the result, the appeal of the assessee is allowed

ITA 886/DEL/2017[2012-13]Status: DisposedITAT Delhi17 Sept 2021AY 2012-13

Bench: Sh. Kul Bharatdr. B. R. R. Kumar(Through Video Conferencing)

For Appellant: Sh. M. P. Lohia, CAFor Respondent: Sh. Surenderpal, CIT DR

Section 143(3)Section 144CSection 92C

facts and in law in not allowing appropriate risk adjustment to establish comparability on account of the appellant being a low- risk-bearing captive service provider as opposed to 3 Corning Technologies India Pvt. Ltd. the comparable companies who were independent comparable companies. 3.5 That on the facts ... service is available to users across multiple platforms such as internet, mobile, voice and text. It was argued that the assessee is a captive service provider providing services only to its AE, and is devoid of any excess remuneration attributable to “brand ownership”. 9. The ld. DR argued that what

JCIT, Special Range-1, New Delhi vs. American Express (India) Pvt. Ltd., New Delhi

In the result, the Cross-objection filed by the assessee is dismissed

ITA 4487/DEL/2018[2012-13]Status: DisposedITAT Delhi16 Sept 2021AY 2012-13

Bench: Shri R.K.Panda & Shri Kul Bharatassessment Year : 2012-13 American Express (India) Pvt.Ltd., Vs Jcit, Metropolitan Saket, 7Th Floor, Office Special Range-I, Block, District Centre, Saket, New Delhi-110002. New Delhi-110017. Pan-Aaaca8163F Appellant Respondent

Section 143(3)Section 253Section 40

applying a spread of 300 basis points to factor various risks and ignoring the fact that the Appellant is a captive service provider and does not bear any risk; e) by ignoring the fact that interest chargeable on outstanding receivable does not fit within the meaning of international transaction ... applying a spread of 300 basis points to factor various risks and ignoring the fact that the Appellant is a captive service provider and does not bear any risk; e) by ignoring the fact that interest chargeable on outstanding receivable does not fit within the meaning of international transaction

American Express (India) Pvt. Ltd., New Delhi vs. JCIT, Special, Range-1, New Delhi

In the result, the Cross-objection filed by the assessee is dismissed

ITA 3769/DEL/2018[2013-14]Status: DisposedITAT Delhi16 Sept 2021AY 2013-14

Section 143(3)Section 253Section 40

JCIT, Special, Range-1, New Delhi vs. American Express (India) Pvt. Ltd., New Delhi

In the result, the Cross-objection filed by the assessee is dismissed

ITA 3148/DEL/2018[2013-14]Status: DisposedITAT Delhi16 Sept 2021AY 2013-14

Section 143(3)Section 253Section 40

JCIT, Special Range-1, New Delhi vs. American Express (India) Pvt. Ltd., New Delhi

In the result, the Cross-objection filed by the assessee is dismissed

ITA 2834/DEL/2018[2012-13]Status: DisposedITAT Delhi16 Sept 2021AY 2012-13

Section 143(3)Section 253Section 40