Appeal details
Counselvise Citation
[2021] 107 COUNSELVISE.COM (IT) 7670 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 2 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-08-2021
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
DB-B
Next Hearing Date
30-06-2021
Assessment Year
2008-2009
Appeal Filed On
19-06-2018
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES : BENCH B HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER I.T.A. NO. 1308 /HYD./201 8 A.Y : 20 08 - 09 M/S CAPGEMINI TECHNOLOGY SERVICES INDIA LTD. VS. ITO, WARD 2 ( 1 ) HYDERABAD HYDERABAD [PAN: AACCA4255G ] (APPELL ANT) (RESPONDENT) FOR ASSESSEE: S HRI A.V. RAGHURAM , AR FOR REVENUE: SRI ROHIT MUJUMDAR, DR DATE OF HEARING : 30 /0 6 /2021 DATE OF PRONOUNCEMENT : 27 /0 8 /2021 O R D E R PER S.S. GODARA, J.M. TH IS ASSESSEES APPEAL ARISE S AGAINST THE CIT (A) - 1 , HYDERABADS ORDER DATED 26.02.2018 IN CASE NO. 0 209 /201 5 - 16 FOR AY 20 08 - 09 , INVOLVING PROCEEDINGS U/S 1 54 OF THE INCOME TAX ACT, 1961 [ IN SHORT THE ACT ]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEE HAS PLEADED THE FOLLOWING SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - L, GUNTUR, IS ERRONEOUS, ILLEGAL AND UNSUSTAINABLE IN LAW. 2. THE COMMISSI ONER (APPEALS) ERRED IN SUSTAINING THE ACTION OF THE AO IN ITA NO. 1308 /HYD/18 AY 20 08 - 09 M/S CAPGEMINI TECHNOLOGY SERVICES INDIA LTD. 2 DETERMINING THE TRANSFER PRICING ADJUSTMENT U/S 92CA OF THE ACT AT RS . 4, 21,74,122 AND IN DETERMINING THE TOTAL INCOME OF THE APPELLANT AT RS. 4,33,98,267 UNDER NORMAL PROVISIONS OF THE ACT. ( TAX EFFECT - 1,30,31,804) 3. THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT NO ADJUSTMENT WAS CALLED FOR UNDER SECTION 92CA OF THE ACT AS THE ALP DETERMINED BY THE ASSESSEE AND THE ALP ARRIVED AT BY THE AO IS WITHIN 5% PERMISSIBLE RANGE. 4. THE AUTHORITIES BELOW ERRED IN NOT ALLOWING THE APPELLANT TO CARRY FORWARD THE MAT CREDIT AVAILABLE BASED ON THE TAX ES PAID UNDER SECTION 115JB OF THE A CT TO THE EXTENT OF RS.1,47,25,878. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE FINDING OF THE COMMISSIONER (APPEALS) IN RESPECT OF THE ABOVE ISSUES ARE FACTUALLY AND LEGALLY INCORRECT. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED, IT IS PRAYED THAT THE HON'BLE TRIBUNAL MAY BE PLEASED TO ALLOW THE APPEAL. 3. LD.COUNSEL STATES VERY FAIRLY AT THE OUTSET THAT THE ABOVE LATTER ISSUE OF SEC. 115 JB COMPUTATION DOES NOT ARISE FROM THE IMPUGNED SEC. 154 PROCEEDINGS. THE SAME STANDS REJECTED THEREFORE. 4. NEXT COMES THE SOLE SURVIVING ISSUE OF ASSESSEES SEC . 154 PLEA PERTAINING TO THE COMPUTATION OF ITS ARM S LENGTH PRICE [ALP]. THERE IS HARDLY ANY DISPUTE THAT THIS IS THE SECOND ROUND OF PROCEEDINGS BETWEEN THE PARTIES QUA THE IMPUGNED TRANSFER PRICING ISSUE UNDER CHAPTER X OF THE ACT. THIS TRIBUNALS EARLIER ORDER IN SECOND APPELLATE PROCEEDINGS DATED 25.4.2013 HAD DIRECTED TO COMPUTE THE ASSESSEES ALP @ 21 . 62 % AS IT EMANATES FROM A PERUSAL OF ASSESSING OFFICERS GIVING EFFECT ORDER DATED 22 . 10.2013 . THE ASSESSEE THEREAFTER FILED ITS RECTIFICATION PETITION DATED 23.8.2014 ONLY TO THE EFFECT THAT ITS OPERATING PROFIT OUGHT TO BE TAKEN AS RS. 14.88 CRORES THAN RS.10,33,73,048/ - . SUFFICE TO SAY THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAVE DECLINED THE SAID RELIEF AS IS THE CASE BEFORE US FROM ASSESSEES SIDE THROUGH ITS LEARNED COUNSEL SRI AV RAGHURAM, ADVOCATE. 5. WE HA VE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL PLEADINGS AGAINST AND IN SUPPORT OF LEARNED LOWER AUTHORITIES ACTION DECLINING ASSESSEES RECTIFICATION PETITION. WE SOUGHT TO KNOW THE CORRECT FIGURE OF THE ASSESSEES OPERATING PROFITS TAKEN AS INTO RS. 10,33,73,048/ - AS AGAINST OPERATING COST OF RS.86,57,70,927/ - FIRST OF ALL . THE REVENUE IS FAIR ENOUGH IN PLACING ALL THE ITA NO. 1308 /HYD/18 AY 20 08 - 09 M/S CAPGEMINI TECHNOLOGY SERVICES INDIA LTD. 3 RELEVANT ORDERS AS WELL AS THE RECORDS BEFORE US. WE COME TO THE TPOS ORDER DATED 25.10.2011 BEFORE US THAT IN PARA 4 THAT THE ASSE SSEE HAD IIPBIT OF RS. 14,88,32,257/ - AGAINST COST OF RS.86,57,70,927/ - . IT EMERGES THAT THE ASSESSING OFFICERS CONSEQUENTIAL ORDER DATED 22.10.2013 HAD ADOPTED THE ASSESSEES OPERATING COST OF RS. 86.57 CRORES FOLLOWED BY OPERATING PROFITS OF RS. 10.33 CRORES THAN RS. 14.88 CRORES. TH I S, IN OUR CONSIDERED OPINION H AS GIVEN THE ASSESSEE A VALID LOCUS STANDI I TO INVOKE THE IMPUGNED RECTIFICATION JURISDICTION. 6. LD.DR VEHEMENTLY CONTENDED THAT THE IMPUGNED COMPUTATION WOULD NOT RESULT IN ANY WA Y BENEFI CIAL TO THE ASSESSEE EVEN IN THIRD ROUND OF PROCEEDINGS. M ORE SO DUE TO THE FACT THAT THE LEARNED TPO AS WELL AS ASSESSING OFFICER APPEAR TO HAVE GONE BY ASSESSEES TOTAL COST OF RS. 86.57 CRORES AS AGAINST THE CORRECT METHOD OF CONSIDERING ONL Y ITS INTERNATIONAL TRANSACTIONS WITH THE A ES FOLLOWED BY ALP ADJUSTMENT THEREUPON AT THE RATE DETERMINED IN THE TRIBUNALS ORDER COMING TO 21.62 IN VIEW OF HONBLE BOMBAY HIGH COURT IN CIT VS FIRESTONE INTERNATIONAL P LTD. (2015) 378 ITR 558 (BOM.). THEIR LORDSHIPS HELD THAT AN ALP ADJUSTMENT UNDER CHAPTER X OF THE ACT IS TO BE COMPUTED NOT AT ENTITY LEVEL BUT ONLY QUA ON ASSESSEES INTERNATIONAL TRANSACTIONS WITH THE AES. WE THEREFORE DIRECT THE ASSESSING OFFICER TO FRAME HIS CONSEQUENTIAL COMPUTATION AFRESH IN LIGHT OF ASSESSEES INTERNATIONAL TRANSACTIONS WITH ITS A SSOCIATED ENTERPRISES O NLY AT THE FOREGOING RATE OF 21.62% . ORDERED ACCORDINGLY. 6.1. DELAY OF 37 DAYS IN THE INSTANT APPEAL STANDS CONDONED. 7. THIS ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES IN ABOVE TERMS. PRONOUNCED IN OPEN COURT ON 27 TH AUGUST, 2021. SD/ - SD/ - (L.P. SAHU) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 27 TH AUGUST, 2021. ITA NO. 1308 /HYD/18 AY 20 08 - 09 M/S CAPGEMINI TECHNOLOGY SERVICES INDIA LTD. 4 * GMV COPY OF THE ORDER FORWARDED TO: 1. M/S CAPGEMINI TECHNOLOGY SERVICES INDIA LTD (FORMERLY KNOWN AS M/S IGATE GLOBAL SOLUTIONS LTD.) M/S IGATE INFORMATION SERVICES PRIVATE LIMITED MERGED WITH IGATE GLOBAL SOLUTIONS LIMITED FLAT NO.610, 6 TH FLOOR, BABUKHAN ESTATE , BASHEERBAGH, HYDERABAD - 500 001, TELANGANA. 2. ITO, WARD 2 ( 1 ), HYDERABAD 3. CIT(A) - 1 , GUNTUR 4. PR.CIT - 2 , HYDERABAD 5 . DR, ITAT, HYDERABAD. 6 . GUARD FILE.
