EY entitled to Deduction under Section 10AA on Voluntary Transfer Pricing Adjustment: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT), Bangalore Bench held that the assessee is entitled to deduction under Section 10AA on voluntary transfer pricing adjustment.

The assessee, EYGBS (India) LLP is a 100% subsidiary of EYGI B.V., Netherlands. It is engaged in the business of providing back-office support services, which are in the nature of ‘Information Technology Enabled Services’ (ITES).

The nature of services provided by the assessee to its Associated Enterprises (AEs) includes financial analysis and reporting functions such as standard reporting/analysis, work-in-progress details, timesheet details etc., accounting center processing activities/functions such as accounts receivable, accounts payable functions, billing analysis and invoice preparation etc and financial assistance/administration functions such as time and expenses review, helpdesk providing assistance on employee queries, etc. The assessee is remunerated at “cost-plus” basis for the services provided to its AEs.

The only issue contested before the Tribunal relates to eligibility to claim deduction under section 10AA of the Act on transfer pricing adjustment made by the assessee voluntarily.

The Coram headed by Vice President, N.V. Vasudevan and Accountant member, B.R. Baskaran observed that the assessee’s claim for deduction under section 10A of the Act in respect of suo-moto TP adjustment made by the assessee has been allowed.

“We notice that an identical issue has been examined by the Bengaluru bench of Tribunal in the assessee’s own case in the assessment year 2010-11 and it has been decided in favor of the assessee by following the decision rendered by the Pune Bench of Tribunal in the case of Apoorva Systems Pvt. Ltd,” the ITAT said.