IN THE INCOME TAX APPELLATE TRIBUNAL

MUMBAI BENCH “K” MUMBAI

BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND

SHRI N.K. PRADHAN (ACCOUNTANT MEMBER)

ITA No. 7600/MUM/2012

Assessment Year: 2008-09

The Boston Consulting Group The Assistant Commissioner of

th

(India) Pvt. Ltd.,14 Floor, Vs. Income Tax, Circle-3(1),

th

Nariman Bhavan, 227, Room No. 607, 6 Floor,

Nariman Point, Mumbai- Aayakar Bhavan, M.K. Road,

PAN No. AABCB3524G

400021. Mumbai-400020.

Appellant Respondent

Assessee by : Mr. Jehangir D. Mistri/Aditya Kastiya, AR

Revenue by : Mr. Michael Jerald, DR Last Date of Hearing : 0 6/03/2020

Date of Pronouncement : 31/07/2020

ORDER

PER N.K. PRADHAN, A.M.

This is an appeal filed by the assessee. The relevant assessment year is

2008-09. The appeal is directed against the order passed by the Asst. Commissioner of Income Tax, Circle 3(1), Mumbai (in short ‘AO’) u/s 143(3)

r.w.s. 144C(13) of the Income Tax Act 1961, (the ‘Act’).

2. The grounds of appeal filed by the assessee read as under :

On the facts and circumstances of the case and in law, the AO erred in concluding the

assessment u/s 143(3) r.w.s. 144C(13) of the Act, as follows:

1. determining the arm's-length price of the Appellant's international transaction of payment of license fees for time and billing software at Nil instead of Rs.1,62,74,359/- as determined by the Appellant.

2. determining the arm's length price of the Appellant's international transaction of payment of regional administration and regional co- ordination cost allocation at Nil instead of Rs.2,83,61,859/- as determined by the Appellant.

3. determining the arm's length price of the Appellant’s international transaction of payment of information technology cost allocation at Rs.50,00,000/- instead of Rs.260,06,610/- as determined by the Appellant.

4. deeming an adjustment of Rs.15,20,688 on account of late recovery of expenses from associated enterprises.

5. disallowing the foreign travel expenses of Rs.7,41,721.

6. erred in not granting credit of Tax Deducted at Source of Rs.1,91,87,629 pertaining to income offered to tax in AY 2008-09.

3. Briefly stated, the facts of the case are that the appellant filed its return of income for the assessment year (AY) 2008-09 on 29.09.2008 declaring total taxable income of Rs.32,11,98,407/-. The appellant is a wholly owned subsidiary of BCG Holding Corporation, USA (‘BCG Hold Co.’). It commenced its operations from May 2000. The appellant, like the group worldwide is mainly into strategy consulting. It is also engaged in the business of rendering strategy consulting services such as business strategy, marketing and sales strategy, portfolio strategy etc. During the year under consideration, the appellant entered into the following international transactions with its AEs :

 

Provision of Management Consultancy Service;



Payment of License Fees for Time and Billing Software;

Regional Training, Administration and Co-ordinate Cost Allocation;

 

Information Technology Cost Allocation;



Worldwide Training Cost Allocation;



Global Finance Cost Allocation; and Reimbursement of expense received and paid.

The appellant has adopted the Comparable Uncontrolled Price (‘CUP’)

method to determine the arm’s length price (ALP) in respect of the above international transactions entered by it with its AEs. The Transfer Pricing Officer (TPO) has made an adjustment in respect of the following international

International Transaction entered into with AEs
	Amount of adjustment (Rs.)
Payment of License Fees for Time and Billing Software	16,274,359
Regional and Worldwide Training cost allocation	37,307,488
Information Technology Cost Allocation	21,006,610
Reimbursement of Expenses recovered	76,109,145

The AO passed an order u/s 143(3) r.w.s. 144C(13) making an adjustment of Rs.6,78,51,641/- towards transfer pricing.

In addition to the above transfer pricing adjustments, the AO made an addition of Rs.7,41,721/- (foreign travel expenses) in the order u/s 143(3)

r.w.s. 144C(13).

st nd rd

4. We discuss together

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