DCIT, Bangalore V. M/s Textron India Pvt.. Ltd., Bangalore

ITA 104/BANG/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2207 (ITAT-BANGALORE)
• Duration Of Justice: 5 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 05-03-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 03-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMEET KHURANA C A REVENU
• Assessee Lawyers: ITTPA NO BANG ASSESSMENT YEAR
• Keywords: Depreciation; Transfer pricing; Competent authority
• Section: 143(3); 142(1); 80IA; 201; 143(2); 92CA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES A BENCH: BANGALORE BEFORE SHRI A.K. GARODIA , ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER IT (TP) A NO. 104 /BANG/201 5 (ASSESSMENT YEAR: 201 0 - 11 ) DY. COMMISSIONER OF INCOME TAX, CIRCLE 5(1)(1), BANGALORE . .APPELLANT PAN VS. M/S. TEXTRON INDIA PVT. LTD., NO.12/1, GLOBAL VILLAGE, RVCE POST, MYLASANDRA, OFF MYSORE ROAD, BA NGALORE - 560 059 RESPONDENT. PAN AACCT 0118M C.O NO.80/BANG/2015 (IN IT (TP) A NO. 104 /BANG/201 5) (ASSESSMENT YEAR: 201 0 - 11 ) (BY ASSESSEE) IT(TP)A NO.223/ BANG/2015 (ASSESSMENT YEAR : 2010 - 11) (BY ASSESSEE) ASSESSEE BY: SHRI SUMEET KHURANA, C.A. REVENUE BY: MS. NEERA MALHOTRA, CIT (D.R) DATE OF HEARING : 05.03 .20 20 DATE OF PRONOUNCEMENT : 19 .03 .20 20 2 IT(TP)A NOS.104 & 223/BANG/2015 & C.O. NO.80/BANG/2015 O R D E R PER SHRI PAVAN KUMAR GADALE, JM : THE SE ARE THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE. THE ASSESSEE HAS FILE D CROSS OBJECTION IN REVENUE APPEAL ITA NO.104/BANG/2 015 FOR THE ASST. YEAR 2010 - 11. SINCE THE APPEALS AND C.O. ARE INTERCONNECTED, THEY ARE CLUBBED AND HEARD TOGETHER AND CONSOL IDATED ORDER IS PASSED. 2. WE SHALL TAKE UP THE ASSESSEE APPEAL IN IT(TP)A NO.223/BANG/2015 AN D THE FACTS NARRATED THEREIN. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF IT AND SOFTWARE DEVELOPMENT AND FILED THE RETURN OF INCOME ON 28.09.2010 WITH TOTA L INCOME OF RS.1,22,37,226 / - . THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) AND 142(1) OF THE ACT WERE ISSUED. IN COMPLIANCE, THE LEARNED AUTHORIZED REPRESENTATIVE APPEARED ON VARIOUS DATES AND FURNISHED DETAILS. SINCE THERE ARE INTERNA TIONAL TRANSACTIONS, THE MATTER WAS REFERRED TO THE TRANSFER PRICING OFFICER (TPO) AN D ORDER UNDER SECTION 92CA OF THE ACT WAS PASSED ON30 - 01 - 2014 WITH TRANSFER PRICING ADJUSTMENT OF RS7 , 00,68,451 / - .FURTHER DRAFT ASSESSMENT ORDER WAS PASSED U/SEC 143(3 ) RWS144C OF THE ACT. THE OBJECTIONS WERE FILED IN FORM35A AGAINST THE DRAFT ASSESSMENT ORDER WITH DRP. THE DRP CONSIDERING THE SUBMISSIONS AND FACTS GRANTED RELIEF TO THE ASSESSEE ON WORKING CAPITAL ADJUSTMENT AND RISK ADJUSTMENTS, TO THE EXTENT OF RS.2, 03,54,469 / - AND THE REMAINING RS.4,97,13,982 WAS CONSIDERED AS TRANSFER PRICING ADJUSTMENT. FURTHER 3 IT(TP)A NOS.104 & 223/BANG/2015 & C.O. NO.80/BANG/2015 ON ADDITION IN RESPECT OF STPI UNIT S ECONDM ENT EXPENSES OF RS.71,26,878, BROAD BAND CHARGES OF RS.1, 1 9,042/ - , DEPRECIATION ON SOFTWARE OF RS.9,74,272 / - AND RESTRICTION OF DEDUCTION U NDER SECTION 80IA OF THE ACT, THE AO HAS PASSED THE F INAL ASSESSMENT ORDER UNDER SECTION 143(3) R.W.S. 144C(13) OF THE ACT DT.30.12.2014 WITH ASSESSED INCOME OF RS.6,71,57,886 / - . AGAINST THE FINAL ASSESSMENT ORDER, THE ASSESS EE HAS FILED THE APPEAL WITH THE TRIBUNAL IN PURSUANCE TO THE DIRECTIONS OF THE DRP . 3. AT THE TIME OF HEARING, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE GROUND OF APPEAL NO. 12 PERTAINS TO STPI UNIT S ECONDME NT EXPENSES. FURTHER THERE AR E NO OBSERVATIONS OR FINDINGS OF DRP ON OBJECTIONS RAISED BY THE ASSESSEE AND THE RELATED GROUN DS OF APPEAL NOS.13 TO 18 BEFORE THE TRIBUNAL. THE LEARNED AUTHORIZED REPRESENTATIVE SU BMITTED THAT THE ASSESSEE HAS FILED A MUTUAL AGREEMENT PROCEDURE (MAP) APPLICATION WITH THE COMPETENT AUTHORITY IN RESPECT OF U S RELATED TRANSACTIONS AND REQUESTED FOR WITHDRAWAL OF TP GROUNDS RELATING TO THE TRANSACTIONS WITH U.S. ASSOCIATED ENTERPRISES. THE COMPANY HAS RECEIVED MAP RESOLUTION DT.4.10.2019 IN RESPE CT OF ADJUSTMENTS MADE WITH U S RELATED TRANSACTIONS. HENCE THE ASSESSEE COMPANY LIKES TO WITHDRAW THE APPEAL FOR THE U S RELATED TRANSACTIONS. WHEREAS, OTHER GROUNDS OF APPEAL ON CORPORATE TAXES AND NON U S RELATED TRANSACTIONS AND THE RELATED TRANSACTIONS NOT COVERED UNDER MAP SHALL BE CONTINUE D. FURTHER, T HE CONTENTIONS RAISED BY THE LD. AR ARE THAT THE MAP SHALL 4 IT(TP)A NOS.104 & 223/BANG/2015 & C.O. NO.80/BANG/2015 ALSO APPLY TO THE OTHER TRANSACTIONS AND SUPPORTED HIS ARGUM ENTS WITH PAPER BOOK . CONTRA, THE LEARNED DEPARTMENTA L REPRESENTATIVE OBJECTED FOR THE MAP APPLICATION TO NON - US TRANSACTIONS AND SUPPORTED WITH JUDICIAL DECISIONS. 4. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL ON RECORD. THE DISPUTED ISSUE S ARE WITH RESPECT TO THE MAP APPLICATION MADE B Y THE ASSESSE E FOR US TRANSACTIONS AND THE SAME BE APPLIED TO THE NON - US TRANSACTIONS. WE FIND IN THE CASE OF ORACLE SOLUTIONS SERVICES (INDIA) PVT. LTD. VS. DCIT IN IT(TP)A NO.1041/BANG/2018 DT.6.2.2020 RELIED ON THE DECISION OF TRIBUNAL IN THE CASE O F DCIT VS. GLOBAL E - BUSINESS OPERATIONS (P) LTD. IN IT(TP)A NO.2 9 8 & 318/BANG/2014 DT. 16.08.2017 86 TAXMANN.COM 197 (BANG. TRIBUNAL) HAS DEALT ON THE MARGIN ACCEPTED IN MAP AND NON - MAP TRANSACTIONS, AND THE MATTER WA S REMANDED. WE CONSIDER IT APPROPRIATE TO RESTO RE THE MATTER TO THE FILE OF TPO AND REFER TO THE OB SERVATIONS AT PAGE 4 AND PARA 5 OF ORACLE SOLUTIONS (INDIA) PVT. LTD. VS. DCIT (SUPRA) AS UNDER : 5 . WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. PRIMA FACIE, THE CONTENTION OF THE LEARNED AUTHORIZED REPRESENTATIVE THAT THERE IS NO FINDING BY THE CIT(APPEALS) AND NON - ADJUDICATION OF MAP PERCENTAGE ON OTHER ENTITIES. WE FIND T HE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. 5 IT(TP)A NOS.104 & 223/BANG/2015 & C.O. NO.80/BANG/2015 GLOBAL E - BUSINESS (SUPRA) HAS DEALT ON THE MARGIN ACCEPTED IN THE MAP AND NON - MAP TRANSACTIONS AT PAGE 10 PARA 6.5.5 WHICH IS READ AS UNDER: 6 IT(TP)A NOS.104 & 223/BANG/2015 & C.O. NO.80/BANG/2015 WE FOUND THAT THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THE DECISION DEALT BY THE TRIBUNAL, AND FALLOW THE JUDICIAL PRECEDENCE. ACCORDINGLY, WE RESTORE THE DISPUTED ISSUE TO THE FILE OF CIT(APPEALS) FOR FRESH ADJUDICATION AND FINDINGS ON THE MARGIN ADO PTED FOR UK TRANSACTIONS AND NON - UK TRANSACTIONS AND PASS A SPEAKING ORDER, AND THE ASSESSEE SHOULD BE ALLOWED ADEQUATE OPPORTUNITY OF HEARING AND SHALL COOPERATE IN EARLY DISPOSAL OF APPEAL AND ALLOW THE GROUNDS OF APPEAL OF ASSESSEE FOR STATISTICAL PURP OSES. 7 IT(TP)A NOS.104 & 223/BANG/2015 & C.O. NO.80/BANG/2015 A PPLYING THE RATIO OF DECISION TO THE PRESENT CASE, , THE DISPUTED MATTER IS RESTORED TO THE FILE OF TPO IN RESPECT OF NON - MAP TRANSA CTIONS FOR ADJUDICATION AFRESH WITH SIMILAR DIRECTIONS. FURTHER IN CASE OF GROUNDS OF APPEAL NO 12 TO 18 , WE FOUND OBJECTIONS WERE RAISED BEFORE THE DRP AS PER APPENDIX B1AT PAGE 61TO62 IN FORM35A BY THE ASSESSEE, BUT AS PER THE ORDER OF DRP ,THEY HAVE DEALT WITH THREE OBJECTIONS CONNECTED WITH TRANSFER PRIC ING ISSUE AND THEY HAVE NOT DECIDED NON T P ISSUES . A CCO R DINGL Y CONSIDERING THE FACTS AND CIRCUMSTANCE , WE RESTORE THE NON TP ISSUES TO THE FILE OF DRP TO PASS THE ORDER ON MERITS AND THE ASSESSEE SHOULD BE PROVIDED ADEQUATE OPPORTUNITY OF HEARING .SINCE THE ASSESSEE APPEAL IS RESTORED TO DRP WITH DIRECTIONS, THE REV ENUE APPEAL IS ALSO DI S POSED OFF WITH SIMILAR DIRECTIONS TO THE FILE OF DRP . T HE C.O. FILED BY THE ASS ESSEE BECOME IN FRUCTUOUS AND IS DISMISSED. 5. IN THE RESULT, THE ASSESSEE'S APPEAL AND REVENUES APPEAL IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES AND C.O. OF THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. S D / - S D / - ( A.K. GARODIA ) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 1 9 .03. 20 20 . *REDDY GP 8 IT(TP)A NOS.104 & 223/BANG/2015 & C.O. NO.80/BANG/2015 COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT (APPEALS) 4. PRIN. CIT 5. DR, ITAT 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE