S&P Capital IQ (India)Private Limited , Hyderabad V. Deputy Commissioner of Income Tax ,Circle-3(1), Hyderabad

ITA 1559/Hyd/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7066 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2015-2016
• Appeal Filed On: 21-10-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NO. 1559/HYD/2019 ASSESSMENT YEAR: 2015-16 S&P CAPITAL IQ (INDIA) PRIVATE LIMITED, HYDERABAD [PAN: AACCS8657G] VS DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.C.DEVDAS, AR FOR REVENUE : SHRI P.CHANDRA SEKHAR, DR DATE OF HEARING : 21-06-2021 DATE OF PRONOUNCEMENT : 24-08-2021 O R D E R PER S.S.GODARA, J.M. : THIS ASSESSEES APPEAL FOR AY.2015-16 ARISES AGAINS T THE DCIT, CIRCLE-3(1), HYDERABADS ASSESSMENT DATED 28-0 8-2019 FRAMED IN FURTHERANCE TO THE DISPUTE RESOLUTION PANEL (DRP)- 1, BENGALURUS DIRECTIONS DT.28-06-2019 IN F.NO.16/DR P-1/ BNG/2019-20, INVOLVING PROCEEDINGS U/S.143(3) R.W.S . 144C(13) OF THE INCOME TAX ACT, 1961 [IN SHORT, THE AC T]; RESPECTIVELY. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEES SUBSTANTIVE GRIEVANCE PLEADED IN THE INSTANT APPEAL CHALLENGES CORRECTNESS OF THE LOWER AUTHO RITIES ACTION MAKING ARMS LENGTH PRICE ALP ADJUSTMENT OF ITA NO.1559/HYD/2019 :- 2 -: RS.4,93,85,837/- REGARDING INTEREST ON RECEIVABLES IN VOLVING ITS OVERSEAS ASSOCIATED ENTERPRISES AES. SUFFICE TO SAY, IT TRANSPIRES AT THE OUTSET THAT WE NEED NO T DELVE MUCH DEEPER QUA THE RELEVANT FACTS PERTAINING TO THE INSTANT ISSUE. WE FIND THAT ASSUMING BUT NOT ACCEPTING TH AT THE LEARNER LOWER AUTHORITIES HAVE RIGHTLY FOUND THE AS SESSEES INTEREST RECEIVABLES AS BEYOND THE PERIOD INVOLVING UN- CONTROLLED TRANSACTIONS, THE IMPUGNED ADJUSTMENT IS NOT L IABLE TO BE SUSTAINED FOR THE SOLE REASON THAT THE SAME HAS NOT ONLY BEEN MADE AS PER LIBOR RATE APPLICABLE IN CASE OF INTERNATIONAL TRANSACTIONS BUT AFTER TAKING STATE BANK OF INDIAS TERM DEPOSIT(S) RATE ONLY BUT ALSO NO COMPARABL E TO THIS EFFECT HAS BEEN FOCUSED SO AS TO FORM THE NECESSARY BENCHMARKING IN UNCONTROLLED CIRCUMSTANCES. THE ASSES SEE HAS ALSO PLACED RELIANCE ON THE FOLLOWING CASE LAW TO THE VERY EFFECT: I. PROGRESS SOFTWARE DEVELOPMENT PRIVATE LIMITED, ITA NOS.347 & 391/HYD/2015, DT.15-03-2021; II. VALUEMOMENTUM SOFTWARE SERVICES PRIVATE LIMITED, ITA NO.2197/HYD/2017, DT.19-05-2021; III. OPEN TEXT CORPORATION INDIA PRIVATE LIMITED, ITA NO.152/HYD/2017, DT.19-05-2021; IV. HEXAGON CAPABILITY CENTER INDIA PRIVATE LIMITED, ITA NO.2032/HYD/2017, DT.26-11-2020; WE KEEP IN MIND ALL THESE CLINCHING ASPECTS IN LIGHT OF THE FOREGOING JUDICIAL PRECEDENTS AND DIRECT THE TPO TO DE LETE THE IMPUGNED ALP ADJUSTMENT OF RS.4,93,85,837/- IN ISSU E. THE ITA NO.1559/HYD/2019 :- 3 -: ASSESSEES SOLE SUBSTANTIVE GROUND TO THIS EFFECT STANDS ACCEPTED IN THE ABOVE TERMS. 3. NEXT COMES ASSESSEES PETITION DT.07-06-2021 SEEKIN G FOR ADMISSION OF ADDITIONAL GROUND(S). THE REVENUES CAS E IS THAT THE ASSESSEES INSTANT PETITION GIVES ALTOGETHER A NEW TEXTURE TO ALREADY RAISED PLEADINGS WHICH IS NOT PERMISSIBLE IN LAW. 3.1. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVA L PLEADINGS. SUFFICE TO SAY, HON'BLE APEX COURTS LANDM ARK DECISION IN NATIONAL THERMAL POWER CO. LTD., VS., CIT [229 ITR 383] (SC); AS CONSIDERED IN TRIBUNALS SPECIAL BENCH S DECISION ALL CARGO GLOBAL LOGISTICS LTD., VS. DCIT (2012) [1 37 ITD 217](SB) (MUMBAI), HOLDS THAT THE TRIBUNAL CAN VERY WELL ENTERTAIN A NEW GROUND GOING TO ROOT OF THE MATTER SO AS TO DETERMINE CORRECT TAX LIABILITY OF A TAXPAYER PROVI DED ALL THE RELEVANT FACTS ARE ALREADY ON RECORD . WE GO BY THE VERY ANALOGY AND ACCEPT THAT THE ASSESSEES FOREGOING PETITION SEEKS TO RAISE ITS ADDITIONAL SUBSTANTIVE GROUND. WE NOW ADVERT TO THE ASSESSEES ADDITIONAL GROUND SEEKING TO CLAIM SECONDA RY AND HIGHER EDUCATION CESS AMOUNT OF RS.90,32,079/- U/S.3 7 OF THE ACT. THE REVENUES CASE RELIES ON SECTION 40(A)(II) THAT THE STATUTORY EXPRESSION TAX ALSO INCLUDES A CESS AS WE LL. WE FIND THAT THE INSTANT ISSUE IS NO MORE RES INTEGRA AS CASE LAW SESA GOA LTD. VS. JCIT (2020) 117 TAXMANN.COM 96 (BOM ) AND CHAMBAL FERTILIZERS AND CHEMICALS LTD. 102 CCH 202 (R AJ. HC) CONSIDER CBDTS CIRCULAR DT.18-05-1967 TO HOLD THA T SECTION 40(A)(II)S TERM USED TAX DOES NOT INCLUDE A CESS AND THEREFORE, IT IS ALLOWABLE U/S.37(1) OF THE ACT. WE THE REFORE ACCEPT THE ASSESSEES INSTANT ADDITIONAL GROUND IN PRINC IPLE ITA NO.1559/HYD/2019 :- 4 -: AND DIRECT THE ASSESSING OFFICER TO FRAME CONSEQUENTIAL COMPUTATION. 4. THIS ASSESSEES APPEAL IS ALLOWED IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH AUGUST, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 24-08-2021 TNMM ITA NO.1559/HYD/2019 :- 5 -: COPY TO : 1.S&P CAPITAL IQ (INDIA) PRIVATE LIMITED, SURVEY NO .12P, KONDAPUR VILLAGE, SERILINGAMPALLY MANDAL, HYDERABAD . 2.THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(1 ), HYDERABAD. 3.DISPUTE RESOLUTION PANEL (DRP)-1, BENGALURU 4.DIRECTOR OF INCOME TAX (IT & TP), HYDERABAD. 5.ADDL. COMMISSIONER OF INCOME TAX (TRANSFER PRICIN G), HYDERABAD. 6.D.R. ITAT, HYDERABAD. 7. GUARD FILE.