DCIT, CENTRAL CIRLCE-1(4),CHENNAI, CHENNAI V. M/S. FINANCIAL SOFTWARE AND SYSTEM PRIVATE LTD, CHENNAI

MA 170/CHNY/2025

AI Insights

The case involves a miscellaneous application by the revenue seeking rectification of an error in the ITAT's order dated 03.06.2025 concerning IT(TP)A No.87/Chny/2024. The original order mistakenly stated that foreign AEs should be considered as comparables, which is incorrect under transfer pricing principles. The revenue argued that this was an inadvertent error and required rectification. The assessee had no objection to the rectification. The Tribunal acknowledged the error and corrected it, stating that foreign AEs should be considered as tested parties, not comparables.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 791902 (ITAT-CHENNAI)
• Duration Of Justice: 26 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-12-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2021-2022
• Appeal Filed On: 14-11-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: WAYOFTHISMISCELLANEOUSAPPLICATIONISSEEKING
• Assessee Lawyers: SHRENIK CHORDIA
• Keywords: Additional evidence; Transfer pricing

Judgement Text

" आयकर अपील य अ धकरण, ‘डी’ \u000eयायपीठ, चे\u000eनई IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI \u0015ी मनु क ुमार ग\u0019र, \u000eया\u001aयक सद य एवं \u0015ी एस. आर. रघुनाथा, लेखा सद य क े सम$ BEFORE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER M.A. No.170/Chny/2025 [In IT(TP)A. No.87/Chny/2024] \u001aनधा%रण वष%/Assessment Year: 2021-22 DCIT, Central Circle -1(4), Chennai. Vs. Financial Software and Systems Pvt. Ltd., 42, Saradha Ground Floor, Third Main Road, Gandhi Nagar, Adyar, Chennai – 600 020. ('ाथ%क /Petitioner) [PAN: AAACF-2351-C] ('(यथ)/Respondent) 'ाथ%क क* ओरसे/ Petitioner by : Ms. R.Kavitha, Addl. C.I.T. '(यथ) क* ओर से/Respondent by : Shri. Shrenik Chordia, C.A. सुनवाई क* तार ख/Date of Hearing : 05.12.2025 घोषणा क* तार ख/Date of Pronouncement : 10.12.2025 आदेश /O R D E R PER S.R. RAGHUNATHA, AM: The Revenue by way of this Miscellaneous Application is seeking rectification of the following mistakes apparent on record in the order passed on 03.06.2025 in IT(TP)A No.87/Chny/2024 for the assessment year 2021-22: 2. The revenue in its application submitted the following: “1. In the order of the Hon’ble ITAT, the following direction is given: Printed from counselvise.com :-2-: MA No.:170 /Chny/2025 “we are remitting the issue back to the TPO with a direction to accept the assessee’s claim of following the TNMM for payments made towards marketing service fees by considering the comparable as Foreign AEs, after verification of additional evidence furnished before us to prove the nature / kind of services received by the assessee from AEs.” 2. The direction of the Hon’ble ITAT to consider the comparable as Foreign AEs is not possible to give effect to as in the TP proceedings foreign AEs can be considered as tested parties but not as comparables.” 3. The ld. DR reiterated the above contentions and submitted that the direction in the order contains an inadvertent error, which is apparent from the record, and therefore requires rectification. 4. The ld.AR submitted that for the assessee submitted that the assessee has no objection to the rectification sought by the Revenue in the above order of the Tribunal. 5. We have heard both the parties, perused the record, and also examined the order of the Tribunal dated 03.06.2025. We note that in paragraph 35 of the said order, it has been inadvertently stated that the foreign AEs are to be considered as comparables. It is an undisputed position that, under transfer pricing principles, foreign AEs cannot be treated as comparables, though they may be considered as tested parties where appropriate. Thus, the direction in the original order contains a clerical/typographical error requiring rectification under section 254(2) of the Act. Accordingly, the direction in para 35 of the order dated 03.06.2025 shall stand substituted with the following: “35. Therefore, in the present set of facts and circumstances and by relying on the judicial precedents (supra) we are remitting the issue back to the TPO with a direction to accept the assessee’s claim of following the TNMM for payments made towards marketing service fees by considering the Foreign AEs as tested party, after verification of additional evidence furnished before us to prove the nature / kind of services received by the assessee from AEs.” Printed from counselvise.com :-3-: MA No.:170 /Chny/2025 6. In the result, the miscellaneous application filed by the revenue is allowed. Order pronounced in the open court on 10th December, 2025 at Chennai. Sd/- Sd/- (मनु क ुमार ग\u0019र) (MANU KUMAR GIRI) \u000eया\u001aयक सद य/Judicial Member (एस. आर. रघुनाथा) (S. R. RAGHUNATHA) लेखा सद य/Accountant Member चे\u000eनई/Chennai, /दनांक/Dated, the 10th December, 2025 SP आदेश क* '\u001aत1ल2प अ3े2षत/Copy to: 1. अपीलाथ)/Appellant 2. '(यथ)/Respondent 3.आयकर आयु4त/CIT– Chennai/Coimbatore/Madurai/Salem 4. 2वभागीय '\u001aत\u001aन ध/DR 5. गाड% फाईल/GF Printed from counselvise.com "