The ACIT, Circle-5, Ahmedabad V. M/s. Quintiles Data Processing Centre (India) Pvt. Ltd., Ahmedabad

ITA 1036/AHD/2014

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9837 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 11-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 09-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MAHESH SHAH
• Keywords: Transfer pricing; International transaction; Earning of tax free income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT & MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO.1036/AHD/2014 (ASSESSMENT YEAR : 2009-10) ACIT. CIR-5, AHMEDABAD. VS. M/S. QUINTILES DATA PROCESSING CENTRE (INDIA) PVT. LTD., 404/B, B-BLOCK, SHAPATH-IV, OPP. KARNAVATI CLUB, S. G. HIGHWAY ROAD, AHMEDABAD-380 051. [PAN NO. AAACQ 0698 M] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI MAHESH SHAH, CIT-DR RESPONDENT BY : SHRI SANJAY R. SHAH, A.R. DATE OF HEARING 06/09/2018 DATE OF PRONOUNCEMENT 03/12/2018 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL HAS BEEN PREFERRED BEFORE US BY THE REVENUE AGAINST THE ORDER DATED 23.01.2013 PASSED BY THE DY. COMMISSIONER OF INCOME TAX (TRANSFER PRICING OFFICER-II), AHMEDABAD FOR THE ASSESSMENT YEAR 2009 -10 WITH THE FOLLOWING GROUNDS: I) THE HON'BLE DRP HAS ERRED IN LAW AND ON FACTS IN R EJECTING THE CHARACTERIZATION OF THE ASSESSEE AS KNOWLEDGE PROCESS OUTSOURCING (K PO) AS PROPOSED BY TPO. II) THE HON'BLE DRP HAS ERRED IN LAW AND ON FACTS IN NO T RECONCILING THE DIFFERENT FUNCTIONS. ASSETS & RISKS (FARS) PROVIDED BY THE AS SESSEE IN DIFFERENT YEARS. III) THE HON'BLE DRP HAS ERRED IN LAW AND ON FACTS IN RE JECTING THE LOWER TURNOVER THRESHOLD APPLIED BY THE TPO. IV) THE HON'BLE DRP HAS ERRED IN LAW AND ON FACTS IN IG NORING THE ANALYSIS CARRIED OUT IN RESPECT OF THE LOWER TURNOVER THRESHOLD APPL IED BY THE TPO V) THE HON'BLE DRP HAS ERRED IN LAW AND ON FACTS IN RE JECTING THE COMPARABLES IDENTIFIED BY THE TPO. - 2 - ITA NO.1036/AHD/2014 ACIT VS. QUINTILES DATA PROCESSING CENTRE INDIA PV T. LTD. ASST.YEAR 2009-10 VI) THE HON'BLE DRP HAS ERRED IN LAW AND ON FACTS IN SE LECTIVE APPLICATION OF THE CRITERIA FOR REJECTION OF COMPARABLES. VII) THE HON'BLE DRP HAS ERRED IN LAW AND FACTS IN DIREC TING THE AO TO ALLOW THE FOREIGN EXCHANGE FLUCTUATION GAIN AS EXEMPT INCOME U/S 10A WHEN THE SAID INCOME HAS NOT BEEN DERIVED FROM THE EXPORT OF GOOD S/SERVICES AS REQUIRED U/S 10A. VIII) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DIS PUTE RESOLUTION COMMITTEE OUGHT TO HAVE UPHELD THE UPWARD ADJUSTMENT MADE BY THE TPO. IX) IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE HON' BLE DRP MAY BE SET-ASIDE AND THOSE OF THE T.P.O. AND THE ASSESSING OFFICER BE RE STORED. 2. AT THE VERY OUTSET OF THE PROCEEDINGS, WE NOTE T HAT THE ISSUE HAS BEEN RESOLVED UNDER THE MUTUAL AGREEMENT PROCEDURE (MAP) AND AS A RESULT WHEREOF FT & TR DIVISION-I, CBDT BY AND UNDER THE LETTER BEING F.NO .480/03/2014-APA-I DATED 13.07.2017 HAS CALCULATED THE ARMS LENGTH PRICE AR RIVED UPON SUCH MAP IN THE MANNER AS FOLLOWS. THE SAME IS APPEARING FROM THE ORDER U/ S 295(H) OF THE I.T. ACT, 1961 R.W.R. 44H OF THE I.T. RULES, 1962 ISSUED BY DCIT, CIRCLE 3(1)(2) AHMEDABAD. 3. SUBSEQUENTLY, A RESOLUTION WAS ARRIVED AT UNDE R MUTUAL AGREEMENT PROCEDURE (MAP) IN THIS CASE AND THE FT & TR DIVISI ON-1, CBDT VIDE THEIR LETTER F.NO.480/03/2014-APA-1 DATED 13.07.2017 HAD SENT TH E CALCULATION OF ARM'S LENGTH PRICE ARRIVED AT AS PER MAP. THE RELEVANT EX TRACT THE SAID LETTER IS AS UNDER: THE COMPETENT AUTHORITIES OF INDIA AND USA, DURING THEIR MEETING HELD DURING APRIL 2016 AT DELHI HAVE AGREED TO RESOLVE THE DISP UTE OF DOUBLE TAXATION ARISING DUE TO THE TRANSFER PRICING ADJUSTMENTS MADE BY THE INDIAN TAX AUTHORITIES IN THE CASE OF QDPC IN THE MANNER AS FOLLOWS: IT WAS AGREED TO RESOLVE THE CASES BY TREATING 75% OF THE MUTUAL AGREEMENTS COSTS PAID BY QDPC FOR AVAILING SHARED S ERVICES AT ARM'S LENGTH AND DISALLOWING 25% OF THE AMOUNTS PAID TOWA RDS MANAGEMENT FEES FOR AYS 2007-08 THROUGH 2010-11. THUS, IT HAS BEEN AGREED UPON BY BOTH THE COMPETENT AUTHORITIES TO RESOLVE THE CASES FOR ASST YEARS 2007-08 TO 2010-11 BY ADOPTING THE VALUES RELATING TO US RELATED INTERNATIONAL TRANSACTIONS AS BELOW: - 3 - ITA NO.1036/AHD/2014 ACIT VS. QUINTILES DATA PROCESSING CENTRE INDIA PV T. LTD. ASST.YEAR 2009-10 SR. NO AY ALLOCATED COST AS DETERMINED BY DISALLOWANCE MADE BY ADJUSTMENTS AS AGREED UNDER MAP TAXPAYER TPO MAP TPO MAP SUSTAINED WITHDRAWN 1 2007 - 08 156,84,347 0 117,63,260 156,84,347 39,21,087 39,21,087 117,63,260 2 2008 - 09 175,16,184 96,87,893 131,37,138 78,28,291 4 3,79 , 046 43,79,046 34,49,245 3 2009 - 10 147,50, 754 37,29,059 110,63,066 110,21,695 36,87,689 36,87,689 73,34,007 4 2010 - 11 223,37,918 69,19,568 167,53,439 154,18,350 55,84,480 55,84,480 98,33,871 5. A LETTER DATED 04/08/2017 WAS ISSUED TO THE ASS ESSEE INFORMING ABOUT THE ABOVE RESOLUTION OF MAP WITH A REQUEST TO SUBMIT IT S ACCEPTANCE TO THE ABOVE RESOLUTION AND WITHDRAW THE APPEAL PENDING ON THE I SSUE. 6. THE ASSESSEE VIDE LETTER FILED ON 04.10.2017 PR OVIDED HIS ACCEPTANCE TO THE SAID RESOLUTION AND VIDE LETTER DATED 11.10.2017 PR OVIDED THE PROOF OF FILING ITS REQUEST FOR WITHDRAWAL OF APPEAL FILED FOR THE YEAR CONSIDERATION TO INCOME TAX APPELLATE AUTHORITIES. 7. IN VIEW OF THE ABOVE, THE TRANSFER PRICING ADJUS TMENT TO BE MADE TO THE INCOME OF THE TAXPAYER IS RECOMPUTED AS FOLLOWS; SR. NO. DESCRIPTION AMOUNT IN RS. 1 TOTAL TRANSFER PRICING ADJUSTMENT AS PER THE FINAL ASSESSMENT ORDER 1,10,33,382 2 RELIEF AS PER MAP RESOLUTION 73,34,007 3 TOTAL TRANSFER PRICING ADJUSTMENT AFTER GIVING EFFE CT TO THE MAP RESOLUTION 36,99,376 MODIFIED TO THE ABOVE EXTENT ONLY. THIS IS SUBJECT TO PROOF OF WITHDRAWAL OF APPEAL BY THE ASSESSEE, IF ANY, PENDING ON THE ISSU E WHICH WAS THE SUBJECT MATTER FOR ADJUDICATION UNDER THE MUTUAL AGREEMENT PROCEDU RE. THEREFORE, THIS ORDER SHALL BE FINAL ONLY UPON THE AFORESAID WITHDRAWAL O F APPEALS. GIVE CREDIT OF PREPAID TAXES AFTER DUE VERIFICATION, ISSUE DEMAND NOTICE & CHALLAN/R.O. AS THE CASE MAY BE. - 4 - ITA NO.1036/AHD/2014 ACIT VS. QUINTILES DATA PROCESSING CENTRE INDIA PV T. LTD. ASST.YEAR 2009-10 IN THAT VIEW OF THE MATTER, WE FIND IT FIT AND PROP ER TO SEND THE ISSUE TO THE FILE OF THE TPO FOR VERIFICATION OF THE MATTER IN THE MANNE R AS NARRATED BY THE TERMS OF THE RESOLUTION AND TO PASS ORDER IN ACCORDANCE WITH LAW . HENCE, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 3. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 03/12/2018 SD/- SD/- ( PRAMOD KUMAR) ( MS. MADHUMITA ROY ) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD; DATED 03/12/2018 PRITI YADAV, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. () / THE DCIT(TPO)-II, AHMEDABAD. 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION03/12/2018 (DICTATION PAGE 1) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 03/12/2018 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 04/12/2018 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER