CONVERGYS INDIA SERVICES PRIVATE LIMITED,GURGOAN V. DCIT CIRCLE-4(2), NEW DELHI

ITA 1412/DEL/2023

AI Insights

The case involves Convergys India Services Private Limited, which appealed against the order of the CIT(A) concerning the assessment year 2014-15. The primary issues in the appeal were the adjustments made to the income of the assessee based on the Arm's Length Price of international transactions and the application of Dividend Distribution Tax under section 115-O of the Income Tax Act, 1961. The Tribunal's decision was influenced by a precedent set by the Special Bench of ITAT, Mumbai, which ruled that the DDT is a charge to tax on the profits of the company and not on the hands of the shareholder, thus not triggering the benefits of the DTAA.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 711547 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: 2014-2015
• Other Referred Cases: DCIT vs Total Oil India (P.) Ltd
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S.K. JADHAV
• Assessee Lawyers: K.M. GUPTA; SHRUTI KIMTA
• Keywords: Transfer pricing; International transaction; Deemed to accrue or arise in india; Double taxation relief

Judgement Text

"ITA No.1412/Del/2023 Page | 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “H” BENCH: NEW DELHI BEFORE PRAKASH CHAND YADAV, JUDICIAL MEMBER & SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.1412/Del/2023 [Assessment Year : 2014-15] Convergys India Services Private Limited, Industrial Plot N-243, Tower-A, 1st, 3rd, 4th, 5th and Tower-B, Ground, 2nd 5th Floor, S.P. Infocity, Udyog Vihar, Dundahera, Gurgaon, Haryana, 122016 PAN-AABCC5056G vs DCIT, Circle-4(2), New Delhi. APPELLANT RESPONDENT Appellant by Shri K.M.Gupta & Ms. Shruti Kimta, AR Respondent by Shri S.K.Jadhav, CIT DR Date of Hearing 22.07.2025 Date of Pronouncement 25.07.2025 ORDER PER MANISH AGARWAL, AM : The present appeal is filed by the assessee against order of Ld.CIT(A)-44, Delhi in Appeal No.CIT(A), Delhi-2/10401/2017-18 dated 07.03.2023 for AY 2014-15 passed u/s 250 of the of the Income Tax Act, 1961 [“the Act”]. 2. Brief facts of the case are that the assessee is a company, declaring total income at INR 1,52,79,96,910/- in the return of income filed on 29.11.2014. Since the assessee has entered into international transactions therefore, the matter was referred to TPO for determination of the Arm’s Length Price (“ALP”) of such transactions. The TPO vide order dated NIL has proposed certain Printed from counselvise.com ITA No.1412/Del/2023 Page | 2 adjustments and accordingly, the draft assessment order was passed on 11.12.2017 wherein the adjustment to the tune of INR 52,26,19,385/- as proposed by TPO were added and total income was proposed at INR 2,05,06,16,300/-. 3. Against the said order, the assessee has not filed any objections before Ld. Dispute Resolution Panel (“DRP”) and thus, the AO has passed final assessment order on 23.02.2018 wherein adjustment of INR 51,44,93,354/- towards provision of IT enable services and INR 81,26,031/- towards interest on receivables were made and accordingly, total income of the assessee was computed at INR 32,05,06,16,300/-. 4. Against the said order, the assessee preferred the appeal before Ld. CIT(A) who vide impugned order dated 07.03.2023 partly allowed the appeal of the assessee. 5. Aggrieved by the said order, the assessee is in appeal before the Tribunal wherein following grounds of appeal are taken:- 1 “That on the facts and circumstances of the case, the Ld. CIT(A) erred in not admitting the additional ground raised by the Appellant with respect additional claim of the to restrict the levy of the dividend distribution tax (\"DDT\") on dividend declared and paid to its non-resident shareholders in accordance with Double Tax Avoidance Agreement (Tax Treaty') between India and USA by holding that fresh claim making first time in appellate proceedings is not permitted in the absence of such claim made in the return of income. 2. That on the facts and circumstances of the case and in law and on merits, the Ld. CIT(A) erred in rejecting the claim of the appellant in respect of levy of the dividend distribution tax (\"DDT\") on dividend declared and paid to its non-resident shareholders in accordance with the Tax Treaty between India and USA and upheld the Printed from counselvise.com ITA No.1412/Del/2023 Page | 3 applicability of section 115-0 of the Act on such distribution of dividend in the year under consideration. 3. On the facts and circumstances of the case and in law, the Ld. AO/Ld. TPO/Ld. CIT(A) erred in treating provision written back (amounting to INR 25.79 lakhs) as non-operating in nature on alleged ground that provision written back being an extra-ordinary item, thus cannot be treated operating in nature while computing the Profit Level Indicator ('PLI\"). 4. On the facts and circumstances of the case and in law, the Ld. AO/Ld. TPO/Ld. CIT(A) erred in not including the comparable namely Karvy Data Mgmt. Services Ltd. and ACE BPO Services Pvt Ltd, though both such comparables satisfied the filters proposed by the Ld. TPO and being engaged in the similar line of business of appellant. 5. On the facts and circumstances of the case and in law, the Ld. AO/ Ld. TPO/Ld. CIT(A) erred in not excluding Infosys Ltd., Mindtree Ltd. and Wipro Ltd in-spite of the fact the said companies are not comparable to the Appellant in terms of functions performed, assets employed, and risks assumed.” 6. With respect to Ground No.1 to 1.2 during the course of hearing, Ld.AR fairly admitted that this issue is decided against the assessee by the Special Bench of ITAT, Mumbai Tribunal in the case of DCIT vs Total Oil India (P.) Ltd in ITA No.6997/Mum/2019 & Others [2023] reported in 149 taxmann.com 332 (Mumbai-Trib.). 7. Heard the contentions of both the parties and perused the material available on record. As admitted by Ld.AR for the assessee, the issue of application of section 115O of the Act on the distribution of dividend and levy of dividend distribution tax on the dividend declared and paid to non-resident, Special Bench of the Tribunal in the case of DCIT vs Total Oil India (P.) Ltd (supra) has held as under:- Printed from counselvise.com ITA No.1412/Del/2023 Page | 4 Section 9, read with section 115-0, of the Income-tax Act, 1961, read with article 10 of DTAA between India and France Income - Deemed to accrue or arise in India (Dividend-General) -Assessment years 2011-12 to 2018-19 Whether where dividend is declared, distributed or paid by a domestic company to a non-resident shareholder(s), which attracts additional income-tax (tax on distributed profits) referred to in section 115-0, such additional income-tax payable by domestic company would be at rate mentioned in section 115-0 and not at rate of tax applicable to non- resident shareholder(s) as specified in relevant DTAA with reference to such dividend income - Held, yes - Whether DDT is a charge to tax on profits of company and not a charge in hands of shareholder or tax paid on behalf of shareholder by domestic company, and therefore, DTAA does not get triggered at all when a domestic company pays DDT under section 115-0 Held, yes Whether, however, wherever contracting states to a tax treaty intend to extend treaty protection to domestic company paying dividend distribution tax, only then, domestic company can claim benefit of DTAA -Held, yes [Paras 77, 82 and 83] [In favour of revenue].” 8. The assessee in Ground No.1 claimed that Ld. CIT(A) has not admitted the additional ground in this regard for the reason that this claim was not made in the return of income filed. From the perusal of the records and by considering the claim of the assessee, we find that though the claim was not made in the return of income filed and was made before the appellate authorities before the first time. Since, it is a valid claim thus, we admitted the same however, as observed above, this issue stood decided against the assessee by Special Bench of ITAT, Mumbai in the case of DCIT vs Total Oil India (P.) Ltd. therefore, is hereby rejected. Accordingly, these Grounds of appeal raised by the assessee are dismissed. 9. During the course of hearing the ld. AR of the assessee has not pressed the Grounds of appeal Nos. 3 to 5 thus, they are dismissed. Printed from counselvise.com ITA No.1412/Del/2023 Page | 5 10. In the result, the appeal of the assessee is dismissed as discussed above. Order pronounced in the open Court on 25.07.2025. Sd/- Sd/- (PRAKASH CHAND YADAV) JUDICIAL MEMBER *Amit Kumar, Sr.P.S* (MANISH AGARWAL) ACCOUNTANT MEMBER Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT 6. Guard File ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "