Sharp Software Development India Private Limited, Bangalore V. Asst.C.I.T., Bangalore

CO 146/BANG/2015

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6513 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 2 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 31-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE-PRESIDENT AND SHRI G.MANJUNATHA, ACCOUNTANT MEMBER IT(TP)A NO.1/BANG/201 3 ASSESSMENT YEAR : 2008 - 09 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 12(3), BANGALORE. VS. SHARP SOFTWARE DEVELOPMENT INDIA PVT. LTD., UNIT-5, LEVEL-3, INNOVATIVE BLOCK, INTERNATIONAL TECH PARK, WHITEFIELD ROAD, BENGALURU 560 066. PAN: AAECS 0269E APPELLANT RESPONDENT C.O.NO.146/BANG/2015 IN IT(TP)A NO. 1 /BAN G/201 3 ASSESSMENT YEAR : 2008 - 09 SHARP SOFTWARE DEVELOPMENT INDIA PVT. LTD., BENGALURU 560 066. PAN: AAECS 0269E VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 12(3), BANGALORE. CROSS OBJECTOR RESPONDENT ASSESSEE BY : SHRI CHAV AL I NAR AYANAN, CA REVENUE BY : SHRI C.H. SUNDAR RAO , CIT(DR - I)(ITAT), BENGALURU. DATE OF HEARING : 2 3 . 1 0.201 9 DATE OF PRONOUNCEMENT : 25 . 10 .201 9 IT(TP)A NO.1/B/2013 & CO 146/B/15 PAGE 2 OF 19 O R D E R PER N.V. VASUDEVAN, VICE-PRESIDENT ITA NO.1/BANG/2013 IS AN APPEAL BY THE REVENUE AG AINST THE ORDER DATED 31.10.2012 OF CIT(A)-IV, BENGALURU, RELATING TO AY 2008-09. THE ASSESSEE HAS FILED CROSS OBJECTION AGAINST THE VERY SAME ORDER OF THE CIT(A). 2. WE FIRST TAKE UP FOR CONSIDERATION THE APPEAL BY THE REVENUE. GROUNDS NO.1 TO 9 RAISED BY THE REVENUE ARE GROUNDS RELATING TO DETERMINATION OF ARMS LENGTH PRICE (ALP) IN RESPEC T OF AN INTERNATIONAL TRANSACTION OF RENDERING OF SOFTWARE DEVELOPMENT SE RVICES (SWD SERVICES) BY THE ASSESSEE TO ITS AE. THE GROUNDS R EAD AS FOLLOWS:- 1. THE ORDER OF THE LEARNED CIT(A) IS OPPOSED TO L AW AND FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) HAS ERRED IN ACCEPTING THE HIGHER LI MIT OF RS 200 CRORE FILTER TO EXCLUDE COMPANIES THAT HAVE TURNOVE R HIGHER THAN RS. 200 CRORE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) HAS ERRED IN REJECTING THE DIMINISHI NG REVENUE FILTER USED BY THE TPO TO EXCLUDE COMPANIES THAT DO NOT REFLECT THE NORMAL INDUSTRY TREND. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE DIFFER ENT YEAR ENDING FILTER APPLIED BY THE TPO IS NECESSARY TO EXCLUDE C OMPANIES WHICH SO NOT HAVE THE SAME OR COMPARABLE FINANCIAL CYCLE AS THE TESTED PARTY. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) HAS ERRED IN REJECTING THE EMPLOYEE COST FILTER APPLIED BY THE TPO TO SELECT COMPANIES WHICH ARE PR EDOMINANTLY INTO SOFTWARE DEVELOPMENT SERVICES.