Ivensys India Private Limited, CHENNAI V. DCIT, CHENNAI

ITA 1116/CHNY/2014

• Counselvise Citation: 111621714 RSA 2014
• Duration Of Justice: 1 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 30-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 30-04-2014
• Court: TRIBUNAL
• Department Lawyers: DR KOTEESWARA RAO
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Depreciation; Transfer pricing; International transaction

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , ! ' ! # . $ , % &' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ ITA NO. 1116/MDS/2014 / ASSESSMENT YEAR 2009-10 INVENSYS INDIA PVT. LTD., TAMARAI TECH PARK, SP PLOT # 16-20 & 20A, THIRU VI KA INDUSTRIAL ESTATE, INNER RING ROAD, GUINDY, CHENNAI 600 032. PAN AABCS8027M APPELLANT) V. THE DEPUTY COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-II(3), CHENNAI. RESPONDENT) / APPELLANT BY : SHRI B. RAMAKRISHNAN, CA / RESPONDENT BY : DR. KOTEESWARA RAO, CIT ! / DATE OF HEARING : 30.11.2015 '# ! / DATE OF PRONOUNCEMENT: 31.12.2015 ( / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE DIRECTIONS OF THE DISPUTE RESOLUTION PANEL DATED 20 .12.2013 FOR - - ITA 1116/14 2 THE ASSESSMENT YEAR 2009-10. 2. THE FACTS OF THE CASE ARE THAT HE ASSESSEE COMPA NY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YE AR 2009-10 ON 30.9.2009 ADMITTING A TOTAL INCOME OF ` 34,76,03,653/-. THE ASSESSING OFFICER REFERRED THE CASE OF M/S. INVENSY S INDIA PRIVATE LIMITED UNDER SEC.92CA OF THE INCOME-TAX AC T, 1961 TO THE TRANSFER PRICING OFFICERIN SHORT TPO) FOR DETER MINING THE ARMS LENGTH PRICE (IN SHORT ALP) IN RELATION TO TH E FOLLOWING INTERNATIONAL TRANSACTIONS ENTERED INTO BY THE ASSE SSEE WITH ITS ASSOCIATED ENTERPRISE (IN SHORT AE). INTERNATIONAL TRANSACTION AMOUNT IMPORT OF COMPONENTS AND SERVICES PURCHASE OF COMPONENTS FOR DISTRIBUTED CONTROL SYSTEMS (DCS) 452,409,757 RECEIPT OF SERVICES 59,434,388 RENDERING OF PROJECT SERVICES 53,474,930 SALE OF PANELS 51,095,472 PROVISION OF SOFTWARE DEVELOPMENT SERVICES 156,674,557 REIMBURSEMENT OF EXPENSES 30,150,876 TOTAL 803,239,980 2.1 THE TPO BASED ON THE TRANSFER PRICING STUDY WHI CH WAS MADE IN THE CASE OF THE ASSESSEE, PASSED THE OR DER U/S.92CA OF THE ACT ON 27.12.2012. THE AO PREPARED THE DRAFT ASSESSMENT ORDER DATED 18.3.2013 INCORPORATIN G THE - - ITA 1116/14 3 ADJUSTMENT SUGGESTED BY THE TPO AND FORWARDED A COP Y THEREOF TO THE ASSESSEE. THE ASSESSEE FILED ITS OB JECTIONS BEFORE THE DRAFT RESOLUTION PANEL(IN SHORT DRP) ON 22.4.2013. ACCORDINGLY, A NOTICE WAS ISSUED U/S.14 4C(11) AND SERVED UPON THE ASSESSEE FOR PROVIDING AN OPPOR TUNITY OF BEING HEARD AND THE DRP HEARD THE ASSESSEE. 2.2 THE AO INCORPORATED IN THE ASSESSMENT ORDER TH E ADJUSTMENT PROPOSED BY THE TPO. THE AO HAS ALSO MA DE CERTAIN OTHER ADJUSTMENT ON CORPORATE ISSUES IN THE RETURNED INCOME AND PASSED THE DRAFT ORDER. AGAINST THE DRA FT ORDER, THE ASSESSEE WENT IN APPEAL BEFORE THE DRP. 3. ON APPEAL, THE DRP CONFIRMED THE ORDER OF THE TP O WITH REFERENCE TO THE ADJUSTMENT AMOUNTING TO ` 4,60,23,300/- WITH RESPECT TO TECHNICAL SERVICES AN D THE ADJUSTMENT OF ` 98,99,156/- WITH RESPECT TO CREDIT FACILITY SUPPORT SERVICES RECEIVED BY THE ASSESSEE FROM ITS AES. FURTHER, DISALLOWANCE OF DEPRECIATION OF 20% ON ASS ETS IS ALSO CONFIRMED BY THE DRP. IT WAS ALSO NOT CONSIDER ED THE FOREIGN TAX CREDIT AVAILABLE TO THE ASSESSEE AND NO TDS CREDIT WAS GIVEN TO THE ASSESSEE. AGAINST THIS, TH E - - ITA 1116/14 4 ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. AR SUBMITTED THAT THE ISSUE RELATING TO ADJUSTMENTS IN RESPECT OF TECHNICAL SERVICES AND CR EDIT FACILITY SUPPORT SERVICES RECEIVED BY THE ASSESSEE FROM ITS AES IS SUBJECT MATTER IN THE ASSESSMENT YEARS 2010- 11 AND 2011-12. IN THE ASSESSMENT YEAR 2010-11, THE DRP ACCEPTED THE TP ADJUSTMENT MADE BY THE ASSESSEE ON THIS ISSUE. FURTHER, IN THE ASSESSMENT YEAR 2011-12, TH E TPO ACCEPTED THE ADJUSTMENT FOR TECHNICAL SERVICES RECE IVED BY THE ASSESSEE FROM ITS AES. ACCORDING TO THE LD. AR , THE TRANSACTION IN THE ASSESSMENT YEAR UNDER CONSIDERAT ION IS ALSO EMANATED FROM THE SAME AGREEMENT WITH THOSE AE S DATED 17.11.2006, WHICH IS KEPT ON RECORD AT PAGES 112 TO 134 OF THE PAPER BOOK. BEING SO, THERE IS NO MATER IAL CHANGES IN THESE TWO ASSESSMENT YEARS WHICH IS APPL ICABLE TO ASSESSMENT YEAR UNDER CONSIDERATION AND THE SAME SHALL BE APPLIED FOR THE ASSESSMENT YEAR 2009-10. ACCORD ING TO THE LD. AR, THERE SHOULD BE CONSISTENCY IN INCOME-T AX PROCEEDINGS, THOUGH RELATING TO DIFFERENT ASSESSMEN T YEARS. 5. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THE - - ITA 1116/14 5 ASSESSEE HAS NOT FURNISHED SUFFICIENT INFORMATION A ND DOCUMENTS TO JUSTIFY THE RECEIPTS AND VALUE OF TECH NICAL SERVICES RECEIVED. BEING SO, THE DEPARTMENT HAS TA KEN A VIEW IN THE ABSENCE OF SUFFICIENT EVIDENCE IN THE ASSESSMENT YEAR UNDER CONSIDERATION IN RESPECT OF T ECHNICAL SERVICES RECEIVED BY THE ASSESSEE FROM ITS AES THAT IT REQUIRES TP ADJUSTMENT AS CONFIRMED BY THE DRP. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE T RANSACTION IN THIS ASSESSMENT YEAR IS ALSO EMANATING FROM THE AGREEMENT CONSIDERED FOR THE ASSESSMENT YEARS 2010- 11 AND 2011-12, WHICH IS ENTERED INTO BY THE ASSESSEE WITH THE AES FOR RECEIPT OF TECHNICAL SERVICES. SINCE THE T RANSACTIONS WHICH ARE CONSIDERED FOR TP ADJUSTMENT IN THIS ASSE SSMENT YEAR AS EMANATED FROM THE SAME AGREEMENT FOR TECHNI CAL SERVICES, ARE CONSIDERED FOR THE ASSESSMENT YEARS 2 010-11 AND 2011-12. THEREFORE, IN OUR OPINION, IT IS APPR OPRIATE TO REMIT THE ENTIRE ISSUE IN DISPUTE TO THE FILE OF TH E AO TO CONSIDER THE SAME AFTER RECEIPT OF TP ORDER AND DEC IDE THE ISSUE AFRESH. IT IS NEED NOT TO SAY THAT TP ADJUST MENT SHALL CONSIDER THE FINDINGS OF THE OTHER TWO ASSESSMENT Y EARS I.E. 2010-11 AND 2011-12, WHICH IS HAVING BEARING ON THI S ASSESSMENT YEAR ALSO. ACCORDINGLY, WE REMIT THE IS SUE IN DISPUTE TO THE FILE OF THE AO FOR HIS CONSIDERATION . - - ITA 1116/14 6 7. NEXT GROUND IS WITH REGARD TO DEPRECIATION. IN T HE ABSENCE OF BILLS AND VOUCHERS, THE DEPRECIATION WAS DISALLOWED BY THE AO. BEFORE US, THE LD. AR SUBMIT TED THAT THE ASSESSEE HAS FILED ALL BILLS AND VOUCHERS IN IT S POSSESSION FOR ACQUISITION OF ASSETS. BEING SO, WE REMIT THIS ISSUE ALSO TO THE FILE OF THE AO FOR FRESH CONSIDER ATION. 8. NEXT GROUND IS WITH REGARD TO DISALLOWANCE OF FO REIGN TAX CREDIT AND TDS CREDIT. IN OUR OPINION, IF THE ASSESSEE PRODUCES NECESSARY EVIDENCE IN SUPPORT OF THE CLAIM S, THE SAME TO BE CONSIDERED BY THE AO IN ACCORDANCE WITH LAW. ACCORDINGLY, THESE ISSUES ARE ALSO REMITTED TO THE FILE OF THE AO FOR FRESH CONSIDERATION. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THURSDAY, THE 31 ST OF DEC. , 2015 AT CHENNAI. SD/- SD/- ( $ % . & '( ) ( ) * + , ) DUVVURU RL REDDY - ./012304556037- 8 9: /JUDICIAL MEMBER ! 9:;<<5=1>01>?@AB@3 )8 /CHENNAI, C9 /DATED, THE 31 ST DEC., 2015. MPO* - - ITA 1116/14 7 9D EFGF /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. H- /CIT(A) 4. H /CIT 5. FIJ K /DR 6. J(L /GF.