UTStarcom India Telecom Pvt. Ltd., Gurgaon V. DCIT, New Delhi

ITA 1017/DEL/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8484 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2010-2011
• Appeal Filed On: 26-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: JASMIT SINGH
• Keywords: Transfer pricing
• Section: 10B; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : I - 2 , NEW DELHI BEFORE SHRI AMIT SHUKLA , JUDICIAL M EMBER AND SH RI O.P. KANT , ACCOUNTANT MEMBER ITA NO S.1016 & 1017 /DE L/ 2016 ASSESSMENT YEAR S : 2009 - 10 & 2010 - 11 M/S. UTSTARCOM INDIA TELECOM PVT. LTD., 10 TH FLOOR, SIGNATURE TOWER - B, SOUTH CITY - 1, GURGAON VS. DCIT, CIRCLE - 18(1), NEW DELHI PAN : AAACU7110N (APPELLANT) (RESPONDENT) APPELLANT BY SHRI JASMIT SINGH, ADVOCATE RESPONDENT BY SHRI H.K. CHOUDHARY, CIT(DR) ORDER PER O.P. KANT, A .M. : THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST TWO SEPARATE ORDERS DATED 15/10/2015 PASSED BY THE LD. COMMISSIONER OF INCOME - TAX (APPEALS) - 44, NEW DELHI [IN SHORT THE LD. CIT(A) ] FOR ASSESSMENT YEAR S 2009 - 10 AND 2010 - 11 RESPECTIVELY. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE REPRODUCED AS UNDER: DATE OF HEARING 14.02.2019 DATE OF PRONOUNCEMENT 04.04.2019 2 ITA NO .1016 & 1017 /DEL/ 2016 G ROUNDS OF APPEAL FOR AY : 2009 - 10 IN VIEW OF THE FACTS OF THE CASE AND RELEVANT LEGAL PROVISIONS UNDER THE INCOME - TAX ACT, 1961 ('THE ACT'), THE TAXPAYER - APPELLANT BELIEVES THAT THE IMPUGNED ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) - 44, NEW DELHI ('LEARNED CIT')DATED OCTOBER 15, 2015, IS NOT SUSTAINABLE IN THE EYES OF LAW SINCE: 1. LEARNED CIT(A) ERRED IN MISCONSTRUING THE FUNCTIONAL AND RISK PROFILE OF THE APPELLANT. 2. LEARNED CIT(A) ERRED IN TERMS OF APPROVING TPO'S APPROACH OF SUMMARIL Y REJECTING THE TRANSFER PRICING ANALYSIS CARRIED OUT BY THE APPELLANT, SELECTING ERRONEOUS FILTERS AND FUNCTIONALLY DISSIMILAR COMPANIES WHILE APPLYING TRANSACTIONAL NET MARGIN METHOD ('TNMM'). 3. LEARNED CIT(A) ERRED IN NOT GRANTING APPROPRIATE ADJUSTME NTS AS WARRANTED UNDER RULE 10B OF THE INCOME - TAX RULES, 1962 ('THE RULES'). THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE AND NOTWITHSTANDING EACH OTHER. ANY CONSEQUENTIAL RELIEF, TO WHICH THE APPELLANT MAY BE ENTITLED UNDER THE LAW IN PURSUANCE OF THE AFORESAID GROUNDS OF APPEAL, OR OTHERWISE, MAY BE THUS GRANTED. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, OMIT OR SUBSTITUTE ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL, AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. G ROUNDS OF APPEAL FOR AY: 2010 - 11 IN VIEW OF THE FACTS OF THE CASE AND RELEVANT LEGAL PROVISIONS UNDER THE INCOME - TAX ACT, 1961 ('THE ACT'), THE TAXPAYER - APPELLANT BELIEVES THAT THE IMPUGNED ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) - 44, NEW DELHI ('LEARNED CIT')DATED OCTOBER 15, 2015, IS NOT SUSTAINABLE IN THE EYES OF LAW SINCE: 1. LEARNED CIT(A) ERRED IN MISCONSTRUING THE FUNCTIONAL AND RISK PROFILE OF THE APPELLANT. 2. LEARNED CIT(A) ERRED IN TERMS OF APPROVING TPO'S APPROACH OF SUMMARILY REJECTING THE TRANSFER PRICING ANALYSIS CARRIED OUT BY THE APPELLANT, SELECTING ERRONEOUS FILTERS AND FUNCTIONALLY DISSIMILAR COMPANIES WHILE APPLYING TRANSACTIONAL NET MARGIN METHOD ('TNMM'). 3. LEARNED CIT(A) ERRED IN NOT GRANTING APPROPRIATE ADJUSTMENTS AS WARRANTED UNDER RU LE 10B OF THE INCOME - TAX RULES, 1962 ('THE RULES'). 3 ITA NO .1016 & 1017 /DEL/ 2016 THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE AND NOTWITHSTANDING EACH OTHER. ANY CONSEQUENTIAL RELIEF, TO WHICH THE APPELLANT MAY BE ENTITLED UNDER THE LAW IN PURSUANCE OF THE AFORESAID GROUNDS OF APPEAL, OR OTHERWISE, MAY BE THUS GRANTED. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, OMIT OR SUBSTITUTE ANY OR ALL OF THE ABOVE GROUNDS OF APPEAL, AT ANY TIME BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2. A T THE OUTSET, BEFORE US THE LEARNED COUNS EL OF THE ASSESSEE SUBMITTED THAT IN THE INSTANT APPEALS, THE ASSESSEE IS AGGRIEVED WITH THE TRANSFER PRICING ADJUSTMENT. HE SUBMITTED THAT THOUGH THE ASSESSEE F ILED APPEAL BEFORE THE TRIBUNAL AND S IMULTANE OUSLY, REQUESTED THE ASSESSING OFFICER TO GIVE APPEAL EFFECT OF THE ORDER OF THE LD. CIT(A) . HE FURTHER SUBMITTED THAT NOW BY WAY OF LETTER DATED 07/02/2019, THE LEARNED TRANSFER PRICING OFFICER (TPO) HAS GIVEN EFFECT TO THE ORDER OF THE LD. CIT(A) AND AS A RESU LT OF WHICH, THE TRANSFER PRICING ADJUSTMENT HAS BEEN REDUCED TO NIL. THE LEARNED DR ALSO ON PERUSAL OF THE LATTER DATED 7/02/2019 OF THE LEARNED TPO, COULD NOT CONTROVERT THE FACT THAT THE RESULTANT TRANSFER PRICING ADJUSTMENT AFTER THE EFFECT OF THE ORD ER OF THE LD. CIT(A) IS N IL . WE HAVE BEEN ALSO INFORMED THAT NO APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A). 3. WE HAVE PERUSED THE ORDER OF LEARNED TPO DATED 7/02/2019 GIVING EFFECT TO THE FINDING OF THE LD. CIT(A) OF EXCLUD ING CERTAIN COMPARABLES AND ALLOWING THE RISK ADJUSTMENT. THE RELEVANT PART OF THE ORDER GIVING EFFECT OF THE LEARNED TPO IN ASSESSMENT YEAR 2009 - 10 AND 2010 - 11 IS REPRODUCED AS UNDER: 4 ITA NO .1016 & 1017 /DEL/ 2016 IN AY: 2009 - 10 PARTICULARS PROPOSED TP ADJUSTMENT OPERATING COST(A) 8,05,41,591/ - OP/TC 17.29% MARGIN 1,39,25,641/ - ARM S LENGTH PRICE 9,44,67,232/ - PRICE CHARGED BY THE ASSESSEE 9,26,22,829/ - DIFFERENCE 18,44,403/ - ( +), ( - ) 5% DIFFERENCE 46,31,141/ - ADJUSTMENT REQUIRED NIL IN AY: 2010 - 11 4. THE ASSESSEE HAS REQUESTED BEFORE US THAT THE LEARNED ASSESSING OFFICER MIGHT BE DIRECTED TO INCORPORATE THE ORDER OF THE LEARNED TPO DATED 7/02/2019 AND PASS THE RESULTANT DEMAND OF TAXES ACCORDINGLY. SINCE THE TPO HAS ALREADY INTIMATED THE ASSESSING OFFI CER THE RESULT OF EFFECT GIVING ORDER OF THE LD. CIT(A) , WE DIRECT THE ASSESSING OFFICER TO TAKE NECESSARY ACTION TO GIVE EFFECT OF THE ORDER OF THE LD. CIT(A) . 5. W E FIND THAT AS A RESULT OF THE ORDER OF THE TPO GIVING EFFECT TO THE ORDER OF THE LD. CIT( A), THE TRANSFER PRICING ADJUSTMENT HAS BEEN REDUCED TO NIL, IN SUCH CIRCUMSTANCES, THE ASSESSEE IS NOT HAVING ANY GRIEVANCE AGAINST THE ORDER OF THE LD. CIT(A). I N VIEW OF THE ABOVE, THE APPEAL S FILED BY THE ASSESSEE HAVE BEEN RENDERED INFRUCTUOUS. PARTICULARS PROPOSED TP ADJUSTMENT OPERATING COST(A) 6,46,59,702/ - OP/TC 14.35% ARM S LENGTH MARGIN(B) 7.39,38,369/ - PROFIT OF THE ASSESSEE AS PER SEGMENTAL(C) 7,43,58,657/ - DIFFERENCE TO BE ADJUSTED(B - C) ( - )4 20288 5 ITA NO .1016 & 1017 /DEL/ 2016 6. IN THE RESULT, BOTH THE APPEAL S OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUN CED IN THE OPEN COURT ON 4 T H APRIL , 201 9 . S D / - S D / - [ AMIT SHUKLA ] [ O.P. KANT] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 4 T H APRIL , 2019 . RK / - COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI