M/s. Global Logic India Ltd., New Delhi V. DCIT, New Delhi

ITA 1573/DEL/2014

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7454 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 20-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 14-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PEEYUSH JAIN
• Keywords: Transfer pricing; International transaction
• Section: 143(3); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SMT. DIVA SINGH: JUDICIAL MEMBER ITA NO. 1573/DEL/2014 A.Y. 2009-10 GLOBAL LOGIC INDIA LTD., VS. DCIT CIRCLE 12(1), 207, GUPTA ARCADE LSC NEW DELHI. PLOT NO. 5, MAYUR VIHAR PHASE-1, EXTENSION, NEW DELHI. PAN: AABCI 2526 F ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI NEERAJ JAIN ADV. & SH. ABHISHEK AGARWAL CA MS. DEEPIKA AGARWAL CA MS. NITYA GUPTA CA RESPONDENT BY : SHRI PEEYUSH JAIN CIT(DR) DATE OF HEARING : 20-11-2014 DATE OF ORDER : _____-12-2014. O R D E R PER S.V. MEHROTRA, A.M:- THIS APPEAL, PREFERRED BY THE ASSESSEE, IS DIREC TED AGAINST THE ASSESSMENT ORDER DATED 20-01-2014 PASSED BY THE AO U/S 143(3) READ WITH SECTION 144C(5) OF THE I.T. ACT, 1961 FOR A.Y. 2009 -10. 2. BRIEF FACTS OF THE CASE ARE THAT, IN THE RELEVAN T ASSESSMENT YEAR, THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF SO FTWARE DEVELOPMENT 2 AND IT ENABLED SERVICES TO ITS CUSTOMERS. IT HAD FI LED ITS RETURN OF INCOME DECLARING INCOME OF RS. 2,21,60,335/-, WHICH WAS DE TERMINED AT RS. 19,24,99,450/- AFTER MAKING FOLLOWING ADDITIONS: ADDITION ON ACCOUNT OF TPO RS. 17,01,20,851/- ADDITION ON ACCOUNT OF PRIOR PERIOD EXPENSES RS. 2,18,264/- 3. THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ADDITIONS MADE BY AO U/S 143(3)/144C(5). FOLLOWING GROUNDS OF APPEAL HAV E BEEN TAKEN: 1. THAT THE ASSESSING OFFICER ERRED ON FACTS AND I N LAW IN COMPLETING THE ASSESSMENT UNDER SECTION 143(3) REA D WITH SECTION 144C OF THE INCOME-TAX ACT, 1961 (THE ACT ) AT AN INCOME OF RS. 19,24,99,450 AS AGAINST THE RETURNED INCOME OF RS. 2,21,60,335 2. THAT THE ASSESSING OFFICER ERRED ON FACTS AND IN LAW IN MAKING AN ADJUSTMENT OF RS. 17,01,20,851 TO THE ARM S LENGTH PRICE OF THE INTERNATIONAL TRANSACTION OF PROVISI ON OF SOFTWARE DEVELOPMENT SERVICES ON THE BASIS OF THE ORDER PASS ED UNDER SECTION 92CA(3) OF THE ACT BY THE TPO. 4. APROPOS GROUND NO. 3, BRIEF FACTS ARE THAT FROM THE DETAILS FILED BY THE ASSESSEE IT WAS NOTICED THAT ASSESSEE HAD CLAIMED R S. 2,18,264/- ON ACCOUNT OF PRIOR PERIOD EXPENSES. THE AO HAS OBSERVED THAT ASSESSEE ADMITTED THAT THE ABOVE EXPENSES WERE MADE BY THE EMPLOYEES DURIN G THE MONTH OF FEBRUARY AND MARCH 2008 AND, THEREFORE, HE MADE ADD ITION OF RS. 2,18,264/-. THE AO MADE ADDITION FOLLOWING THE DRP DIRECTION. 3 5. LD. COUNSEL FOR THE ASSESSEE REFERRED TO PAGE 7 OF THE PB AND POINTED OUT THAT THE DETAILS OF THE TRAVELLING EXPENSES WER E AS UNDER: $800@40.46 PER DIEM AMIT ER 16 TH MAR TO 31 ST MAR0 $400@39.62 PER DIEM ER RUPEES 16 TH MAR TO 23TH MAR0 GBP264*1.9768=2936 @39.88 PER DIEM RAHUL 28 FEB- 31 ST MAR08 GB1893*1.9768=3742 @39.88 LODGI 28 TH FEB31 ST MAR08 6. FROM THE ABOVE, LD. COUNSEL SUBMITTED THAT SINCE EMPLOYEES WERE TRAVELLING UP TO 31 ST MARCH 2008, THEY SUBMITTED THE BILLS IN SUBSEQUENT YEARS AND, THEREFORE, THE ASSESSEE HAD CLAIMED THESE EXPE NSES IN THE FOLLOWING YEAR. 7. LD. DR SUBMITTED THAT THE AMOUNT SHOULD HAVE BEE N DEBITED IN THE EARLIER ASSESSMENT YEAR 2008-09 AND NOT IN AY 2009- 10. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORD OF THE CASE. IT IS TRUE THAT STR ICTLY APPLYING THE MATCHING PRINCIPLE, THE ASSESSEE SHOULD HAVE MADE PROVISION FOR THIS AMOUNT IN THE RELEVANT ASSESSMENT YEAR 2008-09 AND WHEN THE BILLS WERE RECEIVED, THE SAME SHOULD HAVE BEEN REVERSED IN AY 2009-10. HOWEV ER, CONSIDERING THE FACT THAT THE BILLS WERE RECEIVED IN SUBSEQUENT YEA R, THEREFORE, KEEPING IN VIEW THE SMALLNESS OF THE AMOUNT INVOLVED, WE ARE O F THE OPINION THAT THE DEDUCTION SHOULD BE ALLOWED IN THE YEAR UNDER CONSI DERATION, PARTICULARLY WHEN GENUINENESS OF THE EXPENDITURE IS NOT DOUBTED. WE HOLD ACCORDINGLY. 4 9. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED. ORDER PRONOUNCED IN OPEN COURT ON 31-12-2014. SD/- SD/- ( SMT. DIVA SINGH ) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31-12-2014. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR