Quislex Legal Services Pvt.Ltd., Hyd, Hyderabad V. DCIT, Circle-16(1), Hyderabad, Hyderabad

ITA 119/Hyd/2016

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2596 (ITAT-HYDERABAD)
• Duration Of Justice: 5 year(s) 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 07-10-2021
• Assessment Year: 2011-2012
• Appeal Filed On: 08-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: S RAMA RAO
• Keywords: Transfer pricing
• Section: 143(3); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD (THROUGH VIRTUAL HEARING) BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NOS.119/HYD/2016 A.Y. 2011 - 12 QUISLEX LEGAL SERVICES PRIVATE LIMITED, HYDERABAD. PAN: AAACQ 1153 H VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 16(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI S. RAMA RAO REVENUE BY: SHRI Y.V.S.T. SAI, CIT - DR DATE OF HEARING: 07/10/2021 DATE OF PRONOUNCEMENT: 26 /10/2021 ORDER PER S.S. GODARA, J.M: 1. THIS ASSESSEES A PPEAL FOR AY 2011 - 12 ARISES AGAINST THE DCIT, CIRCLE - 16(1), HYDERABAD ASSESSMENT DATED 30/11/2015 FRAMED IN FURTHERANCE TO DISPUTE RESOLUTION PANEL - 1 DRP , BANGALURUS D IRECTIONS DATED 12/11/2015 IN F. NO . 128/DRP - BNG/2015 - 16 INVOLVING PROCEEDINGS U/S . 143(3) R.W.S 144C(5) OF THE INCOME TAX ACT, 1961 (THE ACT) . HEARD BOTH THE PARTIES. CASE FILES PERUSED. 2 2. THE ASSESSEE PLEADS THE FO LLOWING MAIN GROUNDS IN THE INSTANT APPEAL: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE FINAL ASSESSMENT ORDER DATED NOVEMBER 30, 2015 PASSED BY THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 16(1), HYDERABAD (AO) U/S. 143(3) R.W.S 92CA(3) AND SEC . 144C(13) OF THE INCOME TAX ACT, 1961 PURSUANT TO THE DIRECTIONS DATED NOVEMBER 12, 2015 BY DISPUTE RESOLUTION PANEL, HYDERABAD U/S. 144C(8) OF THE ACT NEEDS RECTIFICATION IN SO FAR S IT RELATES TO DECISION OF THE FIVE COMPARABLE COMPANIES SUGGESTED BY TP O BUT DELETED BY DRP. GENERAL 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE AO / DRP ERRED IN CONFIRMING TRANSFER PRICING ADJUSTMENT OF RS. 3,76,23,862/ - WITH RESPECT TO PROVISIONS OF SERVICES BY THE APPELLANT TO ITS ASSOCIATED ENTERPRISE. REJECTION OF COMPARABLE COMPANIES 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE DRP ERRED IN REJECTING MICROGENETICS LTD AS A COMPARABLE COMPANY. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE DR P IN REJECTING INFORMED TECHNOLOGIES LTD AS A COMPARABLE COMPANY. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE DRP ERRED INI REJECTING COSMIC GLOBAL LTD., AS A COMPARABLE COMPANY. 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W, THE DRP ERRED IN REJECTING E - 4E HEALTH CARE LIMITED AS A COMPARABLE COMPANY. 7. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE DRP ERRED IN REJECTING ACCROPETAL TECHNOLOGIES LTD AS A COMPARABLE COMPANY. ARMS LENGTH RANGE OF 5% 8. THAT THE AO BE DIRECTED TO RE - WORK THE PROFIT MARGINS OF THE APPELLANT VIS - - VIS THE RESULTANT COMPARABLE COMPANIES AND TO ALLOW THE BENEFIT OF +/ - 5% RANGE AS PROVIDED IN PROVISO TO SECTION 92C(2) OF THE ACT. OTHERS 9. THE APPELLANT CRAVES, TO CONSIDER EACH OF THE A BOVE GROUNDS OF APPEAL WITHOUT PREJUDICE TO EACH OTHER CRAVES HAVE TO ADD, DELETE OR MODIFY ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. 3 3. IT TRANSPIRE S DURING THE COURSE OF HEARING THAT THIS T RIBUNALS COMMON ORDER DATED 25/08/2020 IN ASSESSEES APPEALS ITSELF ITA NO . 104 & 270/H/2017 FOR AYS: 2010 - 11 AND 2012 - 13 HAD RESTORED THE ISSUE AS TO WHETHER IT IS A B USINESS PROCESS OUTSOURCING BPO OR KNOWLEDGE PROCESS OUTSOURCING KPO AS PER THE REVENUES STAND, RESPECTIVELY. 4. LEARNED COUNS EL SOUGHT TO HIGHLIGHT THE FACT THAT CONTRARY TO THE FOREGOING ISSUE INVOLVED IN THE SAID PRECEDING AND SUCCEEDING ASSESSMENT YEARS, THE ASSESSEE HEREIN IS ENGAGED IN IT ENABLES SERVICES (ITES) ONLY AND THEREFORE, THE EARLIER REMAND ORDER DOES NOT HOLD GOO D IN THE IMPUGNED ASSESSMENT PROCEEDINGS. MR. RAMA RAO HAS MADE A STRONG ENDEAVOUR TO CAR VE OUT THE FOREGOING EX CEPTIONS IN THE INSTANT APPEAL THEREFOR . 5. WE SOUGHT TO KNOW FROM THE L EARNED COUNSEL AS TO WHETHER THE ASSESSSEES SEGMENTAL ACTIVITIES ARE I DENTICAL IN AT LEAST THESE THREE ASSESSMENT YEARS IE., 2010 - 11 TO 2012 - 13 OR NOT? THE REPLY RECEIVED FROM THE ASSESSEE IS AFFIRMATIVE ONLY. FACED WITH THIS PECULIAR SITUATION, WE ARE OF THE OPINION THAT WHATEVER IS THE CONSEQUENTIAL ORDER PASSED BY THE TR ANSFER PRICING OFFICER (TPO) IN FURTHERANCE TO THE L EARNED C OORDINATE B ENCH S DIRECTIONS HEREINABOVE, WOULD HAVE TO BE CONSIDERED IN THE IMPUGNED ASSESSMENT YEAR AS WELL SINCE THERE IS NO DISTINCTION ON ASSESSEES SEGMENT PERTAINING TO ITS INTERNATIONAL TR ANSACTIONS. 4 6. MR. RAMA RAO AT THIS STAGE VEHEMENTLY CONTENDED THAT THE ASSESSEES MAIN SUBSTANTIVE GROUND RAISED IN THE INSTANT APPEAL SEEK TO INCLUDE FIVE COMPARABLES ONLY. 7. WE, THEREFORE, OBSERVE THAT THE TRANSFER PRICING OFFICERS FRESH EXERCISE IN C ONSEQUENTIAL PROCEEDINGS SHALL ALSO TAKE INTO CONSIDERATION THE ASSESSEES CORRESPONDING OBJECTIONS REGARDING INCLUSION /EXCLUSION OF THE FIVE ENTITIES HEREIN AS PER LAW. IT WOULD BE APPRECIATED IF THE L EARNED TRANSFER PRICING OFFICER PASSES A CONTI GUOUS ORDER IN ALL THESE TH REE ASSESSMENT YEARS FOR THE SAKE OF BREVITY AND CONSISTENCY. ORDERED ACCORDINGLY. NO OTHER GROUND HAS BEEN RAISED BEFORE US. 8 . THIS ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH OCTOBER, 2021. SD/ - SD/ - ( L.P. SAHU ) ( S.S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 26 TH OCTOBER , 2021. OKK 5 COPY TO: - 1) QUISLEX LEGAL SERVICES PRIVATE LIMITED, 2 ND FLOOR, DHFLVC SILICON TOWERS, MADHAPUR ROAD, KONDAPUR, HYDERABAD 500 032. 2) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 16(1), AAYAKAR BHAVAN, BASHEER BAGH, HYDERABD. 3) (A) THE PRINCIPAL COMMISSIONER OF INCOME TAX - 1, HYDERABAD. (B)THE DEPUTY COMMISSIONER OF INCOME TAX (TRANSFER PRICING) - II, 3 RD FLOOR, D - BLOCK, IT TOWERS, AC GUARDS, HYDERABAD - 500 004. 4) THE DISPUTE RESOLUTION PANEL - 1, BENGALURU. 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE