DELOITTE CONSULTING INDIA PROJECTS LP,HYDERABAD V. ADIT (INT TAXN)-1, HYDERABAD

ITA 1386/HYD/2024

AI Insights

The case involves M/s. Deloitte Consulting India Projects LP, a foreign company providing professional services, which appealed against the final assessment order passed by the Assistant Director of Income Tax (International Taxation)-1, Hyderabad. The dispute centered on a transfer pricing (TP) adjustment of Rs.2,67,93,174/- proposed by the Transfer Pricing Officer (TPO) and upheld by the DRP. The assessee argued that the adjustment was unjustified as the remuneration received from its Associated Enterprise (AE) was on a 'cost + 6%' basis, which was the same as the AE's contract with the USAID under the RISE project. The ITAT admitted additional evidence that was previously rejected by the DRP on procedural grounds, emphasizing the importance of substantive justice over procedural technicalities.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 784779 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2021-2022
• Appeal Filed On: 27-12-2024
• Other Referred Cases: Mane India (P) Ltd vs. ACIT, M/s. Luminous Technologies (P) Ltd vs. Addl. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KETAN K. VED
• Keywords: Set aside; Additional evidence; Transfer pricing; International transaction
• Section: 143(3)

Judgement Text

" ITA No 1386 of 2024 Deloitte Consulting India Projects LP Page 1 of 9 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ DB-A ‘ Bench, Hyderabad ŵी रिवश सूद,Ɋाियक सद˟ एवं ŵी मधुसूदन साविड़या लेखा सद˟ समƗ | Before Shri Ravish Sood, Judicial Member A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No.1386/Hyd/2024 (िनधाŊरण वषŊ/Assessment Year: 2021-22) M/s. Deloitte Consulting India Projects LP, Hyderabad PAN:AADCD1272B Vs. Asstt. Director of Income Tax (Int.Taxation)-1 Hyderabad (Appellant) (Respondent) िनधाŊįरती Ȫारा/Assessee by: Shri Ketan K. Ved, CA राज̾ व Ȫारा/Revenue by:: Smt. U Mini Chandran, CIT(DR) सुनवाई की तारीख/Date of hearing: 04/11/2025 घोषणा की तारीख/Pronouncement: 14/11/2025 आदेश/ORDER Per Madhusudan Sawdia, A.M.: This appeal is filed by M/s. Deloitte Consulting India Projects LP (“the assessee”), feeling aggrieved by the order passed by the Learned Assistant Director of Income Tax (International Taxation)-1, Hyderabad (“Ld. AO”) dated 22.10.2024 for the A.Y. 2021-22. Printed from counselvise.com ITA No 1386 of 2024 Deloitte Consulting India Projects LP Page 2 of 9 2. The assessee has raised the following grounds of appeal: Printed from counselvise.com ITA No 1386 of 2024 Deloitte Consulting India Projects LP Page 3 of 9 Printed from counselvise.com ITA No 1386 of 2024 Deloitte Consulting India Projects LP Page 4 of 9 Printed from counselvise.com ITA No 1386 of 2024 Deloitte Consulting India Projects LP Page 5 of 9 3. The brief facts of the case are that the assessee is a foreign company engaged in the business of providing professional services. The assessee filed its return of income for the Assessment Year 2021-22 declaring total income of Rs.7,19,024/-. The case of the assessee was selected for scrutiny under the compulsory manual selection process. Accordingly, notice under section 143(2) of the Income Tax Act, 1961 (“the Act”) was issued to the assessee on 30.06.2022. Since there were international transactions entered into by the assessee with its Associated Enterprise (“AE”), the Learned Assessing Officer (“Ld. AO”) referred the matter to the Learned Transfer Pricing Officer (“Ld. TPO”) under section 92CA of the Act. The Ld. TPO, vide order dated 30.10.2023 passed under section 92CA(3) of the Act, proposed an adjustment of Rs.2,67,93,174/- on account of the provision of services by the assessee to its AE. Based on the said order, the Ld. AO passed a draft order under section 144C(1) of the Act on 28.12.2023 making an upward TP adjustment of Rs.2,67,93,174/- Printed from counselvise.com ITA No 1386 of 2024 Deloitte Consulting India Projects LP Page 6 of 9 4. Against the draft order of the Ld. AO, the assessee filed objections before the Learned Dispute Resolution Panel (“Ld. DRP”). The Ld. DRP, vide its directions dated 09.09.2024, upheld the findings of the Ld. TPO. Accordingly, the Ld. AO passed a final assessment order under section 143(3) read with section 144C(13) of the Act on 22.10.2024 making the addition on account of TP adjustment of Rs.2,67,93,174/- determining the total assessed income of the assessee at Rs.2,75,12,198/-. 5. Aggrieved with the final assessment order of the Ld. AO, the assessee is in appeal before us. At the outset, the Learned Authorized Representative (“Ld. AR”) submitted that the only dispute in appeal of the assessee relates to the TP adjustment of Rs.2,67,93,174/-. He submitted that the AE of the assessee had entered into a contract with United States Agency for International Development (“USAID”) under the Renewable Integration and Sustainability Initiative (“RISE”) project for execution of the Greening the Grid (“GTG”) project under the US–India clean energy cooperation program. As a part of the said engagement, the assessee was assigned the responsibility of carrying out project implementation activities in India. The Ld. AR submitted that the AE was remunerated on cost + 6% basis under the terms of the original contract of AE with USAID and the assessee is also remunerated on cost + 6% basis on the back-to-back assignment agreement. Therefore, the AE did not retain any extra margin over and above cost + 6%. Since the AE itself received only cost + 6%, there was no scope of any mark-up beyond the said agreed basis. Printed from counselvise.com ITA No 1386 of 2024 Deloitte Consulting India Projects LP Page 7 of 9 The Ld. AR invited our attention to para no.6 of the order of the Ld. TPO, wherein the TPO rejected the assessee’s TP study on the ground that the assessee did not furnish the original agreement of the AE with USAID in support of the contention that the assessee has been remunerated on back-to-back contract basis. The Ld. DR further submitted that, before the Ld. DRP, the assessee furnished the original contract between the AE and USAID, evidencing that the entire contractual chain was indeed on cost + 6% basis. It was further submitted that the Ld. DRP accepted that the agreement was filed before it (para nos.11 and 11.1 of DRP order), but rejected the same solely on the ground that the assessee did not follow the procedure prescribed under Rule 4 of the DRP Rules for furnishing additional evidence. The Ld. AR submitted that such rejection was merely a technical objection and the evidence was vital and goes to the root of the dispute. Therefore, the same ought to be admitted by the Ld. DRP in the interest of substantial justice. In support, the Ld. AR relied upon the decision of the Coordinate Bench of the ITAT in the case of Mane India (P) Ltd vs. ACIT (174 Taxmann.com 335 (Hyd.) and M/s. Luminous Technologies (P) Ltd vs. Addl. CIT in ITA No.6996/Del/2017, dated 30.05.2024. Finally, the Ld. AR prayed before the Bench to accept the additional evidence and make a suitable direction to the Ld. DRP to reconsider the issue afresh after considering the additional evidence. 6. Per contra, the Learned Departmental Representative (“Ld. DR”) opposed the request for admission of additional Printed from counselvise.com ITA No 1386 of 2024 Deloitte Consulting India Projects LP Page 8 of 9 evidence, contending that the assessee failed to comply with Rule 4 of the DRP Rules and therefore the Ld. DRP was justified in refusing to admit the same. 7. We have considered the rival submissions and perused the material placed on record. It is not in dispute that the assessee has filed the additional evidence before the Ld. DRP. In this regard, we have gone through para nos.11 and 11.1 of the order of the Ld. DRP which is to the following effect: 8. On perusal of the above, it is evident that the assessee had filed the said additional evidence before the Ld. DRP along with the paper book. However, the Ld. DRP declined to admit the same only on the ground of non-compliance of procedure prescribed under Rule 4 of the DRP Rules. In our considered view, rejection of crucial documentary evidence merely on procedural grounds defeats the cause of substantive justice. The said agreement is essential for determining the correct arm’s length Printed from counselvise.com ITA No 1386 of 2024 Deloitte Consulting India Projects LP Page 9 of 9 price. Therefore, the said additional evidence is admitted. Accordingly, we set aside the directions of the Ld. DRP and restore the matter to the file of the Ld. DRP with a direction to consider the additional evidence filed by the assessee and adjudicate the issue afresh after providing due opportunity to the assessee. 9. As the matter has been restored, we do not express any opinion on the alternative arguments of the assessee regarding rejection of TP study and characterization of the services as KPO, and the same is kept open to be urged before the Ld. DRP. 10. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 14th November, 2025. Sd/- Sd/- (RAVISH SOOD) JUDICIAL MEMBER (MADHUSUDAN SAWDIA) ACCOUNTANT MEMBER Hyderabad, dated 14th November, 2025 Vinodan/sps Copy to: S.No Addresses 1 Deloitte Consulting India Projects LP c/o Seshachalam and Co. 1-11-256 Street No.1 Wall Street Plaza, 6th Floor, ICICI Building, Begumpet, Hyderabad 500016 2 ADIT (Int.Taxation)-1 Aayakar Bhavan, Somajiguda, Hyderabad 500082 3 Director of Income Tax (Int. Taxation), Hyderabad 4 DRP-1 Kendriya Sadan, 4th Floor, C Wingh, Bengaluru 560034 5 DR, ITAT Hyderabad Benches 6 Guard File By Order Printed from counselvise.com "