Case summary, Income Tax

Inclusion/Exclusion of a government company as a comparable: Determination of Arm’s Length Price

Case: Intercontinental Hotels Group (India) Pvt Ltd vs Dy. CIT, Delhi ITAT

Case Outcome: Partial

Facts

  • The Assessee was aggrieved by the inclusion of Apitco Ltd. and Global Procurement Consultants Ltd. as a comparable for computation of Arm’s Length Price of international transaction of providing marketing and ancillary management support services to the Associated Enterprises on the ground that government companies were not comparable to business concerns.

Key Points

  • Reliance was placed on the decision of the Hon’ble Delhi High Court in case of Philip Morris, wherein for M/s. Apitco Ltd. it was concluded that it was not good comparable of concerns providing business support services on the ground that in case of government enterprises profit motive was not relevant consideration and the government company worked for public undertakings and for Global Procurement Consultants Ltd. it was concluded that it was not held to be comparables on the ground that the company was established by the government to provide ancillary management support services to government departments or their agencies.
  • In the present facts of the case, the Assessee was also engaged in providing marketing and ancillary management support services to its Associated Enterprises and hence, the said case was applicable to the facts of the case.
  • Therefore, following the ratio laid down by the Hon’ble Delhi High Court in Philips Morris the concerns Apitco Ltd. and Global Procurement Consultants Ltd. being government concerns were not comparable and the same needed to be excluded from the final list of comparables.
  • Issue Outcome- In favour of Assessee

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