The Ahmedabad Bench of the Income-tax Appellate Tribunal held that the tax authorities cannot take different positions in separate years, concerning the same international transaction agreement.
For one year, the Transfer Pricing Officer found the activities conducted by the taxpayer to be low-end services, whereas in a earlier year, they were found to be “knowledge process outsourcing” services. The case is: SNL Financial (India) Pvt. Ltd. v. DCIT (ITA No. 770/Ahd/2014)
The taxpayer—a wholly owned subsidiary of a U.S. based company—was engaged in the business of gathering collating, organizing, arranging, storing, and transmitting financial information. The taxpayer entered into international transactions with a related party, to render data analysis and data entry services.
The tribunal returned the case back to the Assessing Officer, with directions to consider why for the same transactions, the taxpayer would be subject to different treatment in separate years.
Read a June 2016 report [PDF 330 KB] prepared by the KPMG member firm in India: Taxpayer considered as BPO in subsequent years, cannot be considered as KPO in earlier year for providing same services