ERICSSON INDIA PVT. LTD.,NEW DELHI V. JCIT, NEW DELHI

MA 388/DEL/2022

AI Insights

Ericsson India Pvt. Ltd. filed a Miscellaneous Application under section 254(2) of the Income-tax Act, 1961, seeking rectification of the ITAT's earlier order which inadvertently dismissed all grounds of appeal as withdrawn. The appeal originally contested transfer pricing adjustments and disallowances under section 37(1) of the Act for the Assessment Year 2012-13. The Tribunal's earlier decision was based on a misunderstanding of the applicant's request to withdraw only certain grounds related to transfer pricing adjustments, following a Unilateral Advanced Pricing Agreement (APA) with CBOT. The Tribunal has now decided to recall and re-adjudicate Ground No.3, which pertains to the claim towards intra-group services under section 37(1), and the additional ground regarding the deduction of Education Cess and Secondary Higher Education Cess.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 31658 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I1
• Assessment Year: 2012-2013
• Appeal Filed On: 30-11-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARPREET KAUR
• Assessee Lawyers: VISHAL KALRA
• Keywords: Transfer pricing; International transaction; Principle of natural justice
• Section: 92CA; 37(1); 92C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “I-1”, NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER and SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER MA No.388/Del/2022 (in ITA No.1093/DEL/2017) (Assessment Year : 2012-13) Ericsson India Pvt. Ltd., vs. JCIT, Spl. Range 03, 4th Floor, Dhaka House, New Delhi. 18/17, W.E.A., Pusa Lane, Karol Bagh, New Delhi – 110 005. (PAN: AAACE0138N) (APPLICANT) (RESPONDENT) APPLICANT/ASSESSEE BY : Shri Vishal Kalra, Advocate Shri S.S. Tomar, Advocate REVENUE BY : Ms. Harpreet Kaur, Sr. DR Date of Hearing : 29.11.2024 Date of Order : 04.12.2024 O R D E R PER S. RIFAUR RAHMAN, AM : 1. Ericsson India Pvt. Ltd. (hereinafter referred to as ‘the Applicant’) by moving application under section 254 (2) of the Income-tax Act, 1961 (for short ‘the Act’) for Assessment Year 2012-13 in ITA No.1093/Del/2017 (order dated 19.05.2022) sought to rectify the mistake apparent on record. For the sake of clarity, the contents of the misc. application is reproduced below :- “1. The Applicant respectfully submits that the captioned appeal was heard on February 24, 2022 and disposed by Your Honors vide order 2 MA No.388/Del/2022 dated May 19, 2022 (hereinafter referred to as 'impugned order'). A copy of the order is attached as Annexure 1. 2. In the appeal before the Hon'ble Income-tax Appellate Tribunal the Applicant raised the Grounds of Appeal No.2 to 4 [4.1 to 4.8] (as reproduced below), pertaining to transfer pricing adjustment amounting to Rs.157,701,789/- holding that the international transactions pertaining to the receipt of second line support services do not satisfy the arm's length principle and made the disallowance under section 37(1) of the Act amounting to Rs. 157,701,789/-The grounds as raised in the appeal memo are reproduced herein below: \"2. The reference made by the Ld. AO suffers from jurisdictional error as the Ld. AO has not recorded any reasons in the assessment order based on which he reached the conclusion that it was 'necessary or expedient' to refer the matter to the Ld. TPO for computation of the Arm's Length Price (\"ALP\"), as is required under section 92CA(1) of the Act. 3. The Ld. AO, pursuant to the directions of the Hon'ble DRP, erred on facts and in law in inadvertently disallowing the expenses claimed towards intra-group services under section 37(1) when a disallowance was made under section 92CA by the Ld. TPO. 4. The Ld. AO/ Ld. TPO pursuant to the directions of the Hon'ble DRP erred on facts and in law in enhancing the income of the Appellant by Rs.157,701,789/- holding that the international transactions pertaining to the receipt of second line support services do not satisfy the arm's length principle envisaged under the Act and in doing so have grossly erred by : 4.1 not appreciating that none of the conditions set out in section 92C(3) of the Act are satisfied in the present case; 4.2 disregarding the ALP, as determined by the Appellant in the Transfer Pricing (TP) documentation maintained by it in terms of section 92C of the Act read with Rule 10D of the Indian Income Tax Rules, 1962 (\"the Rules\") without providing the Appellant with any cogent reason for rejection of the TP documentation maintained by the Appellant; 4.3 misinterpreting the concept of shareholder services and other concepts relating to intra group services contained in the Transfer Pricing Guidelines for Multinational Enterprises and 3 MA No.388/Del/2022 Tax Administrations released by the Organization for Economic Cooperation and Development (OECD Guidelines); 4.4 disregarding the computation of cost submitted by the Appellant in support of the fee paid to Associated Enterprises for receipt of second line support services without undertaking any analysis based on the facts, circumstances and evidences for determining the arm's length price of the transaction of receipt of second line support. 4.5 adopting a contrary view to the stand taken by the department in the AY 2007-08; 4.6 following the directions proposed by the Hon'ble DRP in the assessment year 2011-12 and not undertaking an independent analysis based on the facts, circumstances and evidence provided during the relevant assessment year; 4.7 not giving cognizance to the detailed analysis, arguments, explanations, evidences etc. submitted by the Appellant, in support of the arm's length nature of its related party transactions of receipt of second line support, thereby violating the principles of natural justice; 4.8 not appreciating that the Hon'ble ITA T should not question the commercial wisdom of the Appellant and the arm's length price payable for such services can be determined on the basis of the benefit received by the Appellant from the receipt of intra-group services.\" 3. It is respectfully submitted that the Hon'ble Bench has disposed the afore-mentioned Grounds of Appeal vide Para Nos. 3 to 5 of the order. The Hon'ble Bench, however, while adjudicating the appeal inadvertently dismissed all the ground placing reliance on the letter filed by the Ld. AR requesting for withdrawal of grounds of appeal (i.e., Grounds of appeal Nos. 2 and [4.1 to 4.8], pertaining to the transfer pricing adjustment due to entering into a Unilateral Advanced Pricing agreement (\"APA \") with CBOT on 04.12.2019. 4. It is further submitted that the Hon'ble Bench has also reproduced the contents of the letter for withdrawal in the order dated May 19, 2022. In this regard, it is submitted that the Ld. AR categorically submitted that the Applicant has withdrawn the grounds pertaining to the transfer pricing adjustment as mentioned in the appeal memo vide grounds of appeal Nos. 2 and 4 (4.1 to 4.8) respectively, but 4 MA No.388/Del/2022 the Hon'ble Bench in para no. 5 of the order has held that the appeal is dismissed as withdrawn. Re: Inadvertent Omission in adjudication of Grounds of Appeal No.3 pertaining to claim towards intra group services under section 37(1) of the Act. ………. 9. As stated supra, it is the respectfully submitted that the Hon'ble Bench while adjudicating the appeal has inadvertently allowed the appeal to be withdrawn in entirety, although, the Applicant filed the letter requesting to withdraw the appeal only pertaining to the transfer pricing adjustment. The aforesaid additional ground was not withdrawn but contested stating that the same is covered in Applicant's favour vide various judicial precedents as relied in the application for admission of additional ground. However, the Hon'ble Tribunal inadvertently omitted to adjudicate the said ground.” 2. At the time of hearing, ld. AR for the assessee submitted that assessee has submitted a letter dated October 27, 2020 requesting for withdrawal of Grounds of appeal no.2 and 4 (4.1 to 4.8), however while adjudicating the appeal, the Bench has inadvertently allowed the appeal to be withdrawn in entirety. He also brought to our notice that the additional ground of appeal pertaining to claim towards allowability of deduction of Education Cess and Secondary Higher Education Cess was also dismissed as withdrawn. Accordingly, he prayed that the order be recalled to the extent of deciding the Ground No.3 and additional ground as aforesaid. 3. On the other hand, ld. DR for the Revenue brought to our notice page 4 of the order wherein at para 6, it was mentioned that the appeal of the Revenue is dismissed with a liberty to examine their records and approach this Court in case of any divergence. She submitted that this observation is also uncalled for. 5 MA No.388/Del/2022 4. Considered the rival submissions and material placed on record. After considering the submissions of the assessee and material placed on record, we observed that assessee has raised four grounds along with additional ground of appeal on education cess. Assessee has submitted a letter with a prayer that it did not press grounds no.2 & 4 (4.1 to 4.8). However, by inadvertent mistake all the grounds were considered as not pressed and dismissed as such by the ITAT. Considering the facts on record, we are inclined to recall ground no.3 to adjudicate afresh. Further we observed that the assessee has filed additional ground of appeal on allowabiity of deduction of Education Cess and Secondary Higher Education Cess. Even though additional ground raised by the assessee is against the assessee by the decision of Higher Courts, still ld. AR prayed that the additional ground should be recalled and may be dismissed as such. Considering the above facts on record, we are inclined to recall Ground No.3 and additional ground raised by the assessee to be adjudicated afresh in due course. Therefore, Registry is directed to list the matter in due course and inform the parties accordingly. 5. In the result, the MA filed by the assessee is allowed as above. Order pronounced in the open court on this 4th day of October, 2024. Sd/- sd/- (YOGESH KUMAR U.S.) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 04.12.2024 TS 6 MA No.388/Del/2022 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "