AMERIPRISE INDIA PVT. LTD. Vs. ACIT

JUDGEMENT

(1.) THESE two cross appeals - one by the assessee and the other by the Revenue - arise out of the final order dated 28.2.2014 passed by the Assessing Officer (AO) u/s. 143(3) read with section 144C of the Income -tax Act, 1961 (hereinafter also called 'the Act') in relation to the assessment year 2009 -10.

(2.) Only two issues were pressed before us. First is a challenge to the inclusion/exclusion of certain companies in/from the list of comparables, and second is treatment of foreign exchange gain/loss as an item of non -operating nature. No other issue projected through various grounds, was pressed. As such, the grounds dealing with such other issues stand dismissed.

(3.) BRIEFLY stated, the facts of the case are that the assessee is a wholly owned subsidiary of Ameriprise, US, which parent company is engaged in the business of insurance, annuities, asset management and brokerage. The primary object of Ameriprise US is to provide services towards financial planning and other areas like institutional asset management and advisory, pension fund management, the management and administration of certain plans. The assessee was incorporated in August, 2005 and started operations in October, 2005. It is engaged in providing Information Technology (IT) enabled services to Ameriprise US. The assessee reported two international transactions, including remuneration from the 'Provision of IT -enabled back office services' with transacted value of Rs. 41,78,36,037/ -. The assessee applied the Transactional Net Margin Method (TNMM) as the most appropriate method for benchmarking the international transaction of provision of IT enabled back office support services. Profit level indicator (PLI) of Operating Profit/Total Cost (OP/TC) was computed by the assessee at 14.66%. Six companies were considered as comparable which have been listed on page 10 of the Transfer Pricing Officer's (TPO) order. It was shown that their arithmetic mean of operating profits compared favourably with assessee's profit rate and, hence, the international transaction of 'Provision of IT enabled back office services' was at arm's length price (ALP). On a reference made by the AO for determining the ALP of the international transactions, the TPO treated only three companies as comparable from the assessee's list. He added four new companies, thereby making a total of seven companies, considered comparable, as under: - -