Kony India Private Limited , Hyderabad V. Dy. Commissioner of Income Tax , Circle-2(1), Hyderabad

ITA 1709/Hyd/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2878 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2013-2014
• Appeal Filed On: 22-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VIVEK SHARMA
• 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. 1709/HYD/2019 ASSESSMENT YEAR: 2013-14 M/S.KONY INDIA PRIVATE LIMITED, HYDERABAD [PAN: AADCK2294C] VS DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI VIVEK SHARMA, AR FOR REVENUE : SHRI SUNIL KUMAR PANDEY, DR DATE OF HEARING : 28-04-2021 DATE OF PRONOUNCEMENT : 18-06-2021 O R D E R PER S.S.GODARA, J.M. : THIS ASSESSEES APPEAL FOR AY.2013-14 ARISES AGAINS T THE CIT(A)-6, HYDERABADS ORDER DT.01-08-2019 IN APPEAL NO.10079/2018-19/B3/CIT(A)-6, INVOLVING PROCEEDINGS U/S.143(3) R.W.S.92CA(3) OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEES SOLE SUBSTANTIVE GRIEVANCE PLEADED IN THE INSTANT APPEAL CHALLENGES CORRECTNESS OF THE LOWER AUTHO RITIES ACTION MAKING ARMS LENGTH PRICE ALP ADJUSTMENT OF RS.75,60,985/- QUA INTEREST ON RECEIVABLES INVOLVING ITS OVERSEAS ASSOCIATED ENTERPRISES AES. SUFFICE TO SAY , IT TRANSPIRES AT THE OUTSET THAT WE NEED NOT DELVE MUCH DEEPE R ITA NO.1709/HYD/2019 :- 2 -: QUA THE RELEVANT FACTS PERTAINING TO THE INSTANT ISSUE. WE FI ND THAT ASSUMING BUT NOT ACCEPTING THAT THE LEARNER LOWER AUTHORITIES HAVE RIGHTLY FOUND THE ASSESSEES INTEREST RECEIVABLES AS BEYOND THE PERIOD INVOLVING UN-CONTROL LED TRANSACTIONS, THE IMPUGNED ADJUSTMENT IS NOT LIABLE TO BE SUSTAINED FOR THE SOLE REASON THAT THE SAME HAS BEEN MA DE NOT AS PER LIBOR RATE APPLICABLE IN CASE OF INTERNATIONA L TRANSACTIONS BUT AFTER TAKING STATE BANK OF INDIAS PRIME LENDING RATE @14.45% ON TERM DEPOSITS IN THE TRANSFER P RICING OFFICERS (TPO) ORDER AND UPHELD IN THE CIT(A)S LOW ER APPELLATE ORDER. 3. LEARNED CIT-DRS VEHEMENT CONTENTION IS THAT THE TPO AS WELL AS THE CIT(A) HAVE RIGHTLY TREATED THE FOREGOI NG BENCH MARK AS PER THE SHORT TERM DEPOSIT RATE IN THE STATE BANK O F INDIA AND THEREFORE, THE SAME DESERVES TO BE UPHELD. 4. WE FIND NO MERIT IN REVENUES INSTANT ARGUMENT SINCE SUCH A SHORT TERM DEPOSIT CANNOT BE TAKEN AT PAR WITH AN INTERNATIONAL TRANSACTION U/S.92B OF THE ACT AS THE LATTER INVOLVES FOREIGN CURRENCY AND OVERSEAS MARKET CONDITI ONS. IN ADDITION TO THIS, LEARNED LOWER AUTHORITIES HAVE ALSO N OT ADOPTED ANY COMPARABLE TRANSACTION IN THE VERY SEGMEN T AS WELL SO AS TO COME TO THE CONCLUSION THAT THE ASSESSEES RECEIVABLES IN CASE OF OVERSEAS AES INVOLVED MORE TH AN THE MARKET PRACTICE OF REASONABLE TIME PERIOD. WE KEEP IN MIND ALL THESE CLINCHING ASPECTS AND DIRECT THE TPO TO DELETE THE IMPUGNED ALP ADJUSTMENT OF RS.75,60,985/- IN ISSUE. THE ASSESSEES SOLE SUBSTANTIVE GROUND TO THIS EFFECT STANDS ACCEPTED IN THE ABOVE TERMS. ITA NO.1709/HYD/2019 :- 3 -: 4.1. IN THIS CONNECTION, WE RELY ON THE FOLLOWING DECI SIONS OF THE CO-ORDINATE BENCHES: 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; NO OTHER GROUND HAS BEEN PRESSED BEFORE US IN ASSES SEES FORM-36 FILED IN THE TRIBUNAL. 5. THIS ASSESSEES APPEAL IS ALLOWED IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JUNE, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 18-06-2021 TNMM ITA NO.1709/HYD/2019 :- 4 -: COPY TO : 1.M/S.KONY INDIA PRIVATE LIMITED, SEZ UNIT II, 7 TH OFFICE LEVEL, BUILDING NO. H06, PHOENIX INFOCITY PRIVATE L IMITED, SERILINGAMPALLY, HYDERABAD. 2.THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(1 ) , HYDERABAD. 3.ADDL. COMMISSIONER OF INCOME TAX (TRANSFER PRICIN G), HYDERABAD. 4.CIT(APPEALS)-6, HYDERABAD. 5.PR.CIT-2, HYDERABAD. 6.D.R. ITAT, HYDERABAD. 7.GUARD FILE.