M/s. IHS Global Pvt Ltd, Bangalore V. Deputy Commissioner Of Income Tax, Circle-11(3), Bangalore

ITA 1921/BANG/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4176 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 01-06-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SMARAK SWAIN
• Assessee Lawyers: UMASHANKAR
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER A ND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO . 1921 /BANG/201 8 ASSESSMENT YEAR : 20 1 0 - 11 M/S. IHS GLOBAL PRIVATE LIMITED (FORMERLY KNOWN AS IHS PARTS MANAGEMENTS PRIVATE LIMITED), PLOT NO 13, 14, 15, TOWER 1 MOBIUS, SJR PARK, WHITEFIELD, EPIP AREA, BANGALORE 560 066. PAN: AABCI4372D VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 11 (3), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI UMASHANKAR, ADVOCATE RESPONDENT BY : SHRI SMARAK SWAIN, JCIT (DR) DATE OF HEARING : 11 .0 2 .2019 DATE OF PRONOUNCEMENT : 15 . 0 2 .201 9 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME I S DIRECTED AGAINST THE ORDER OF LD. CIT(A)-3, BANGALORE DATED 02.04.2018 FOR ASSESS MENT YEAR 2010-11. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW: 1. THE LD. CIT(A) ERRED IN UPHOLDING THE FRESH BENC HMARKING ANALYSIS CONDUCTED BY THE LD. AO/TPO AND IN UPHOLDING THE LD . AO/TPO'S INTRODUCTION/ MODIFICATION OF CERTAIN QUANTITATIVE FILTERS FOR IDENTIFICATION OF COMPARABLES. 2. THE LD. CIT(A) HAS ERRED IN INCLUSION OF THE FOL LOWING FUNCTIONALLY UN-COMPARABLE COMPANIES AS COMPARABLES FOR THE APPE LLANT'S ITES ACTIVITY, AS DECIDED BY THE AO/TPO: ACCENTIA TECHNOLOGIES LTD; ACROPETAL TECHNOLOGIES LTD (SEGMENT); E-CLERX SERVICES LTD; FORTUNE INFOTECH LTD; ITA NO. 1921/BANG/2018 PAGE 2 OF 4 ICRA ONLINE LTD (SEGMENT); INFOSYS BPO LTD; COSMIC GLOBAL LTD; AND JEEVAN SCEINTIFIC TECHNOLOGIES LTD (SEGMENT) 3. THE LD. CIT(A) HAS ERRED IN THE EXCLUSION OF THE FOLLOWING FUNCTIONALLY COMPARABLE COMPANIES AS A COMPARABLE T O THE APPELLANT'S ITES ACTIVITY, AS CONSIDERED BY THE APP ELLANT IN IT'S TP STUDY: A O K IN-HOUSE BPO SERVICES LTD; CAMEO CORPORATE SERVICES LTD; OPTIMUS GLOBAL SERVICES LTD; SPARSH BPO SERVICES LTD; INHOUSE PRODUCTION LTD; JINDAL INTELLICOM LTD; MICROLAND LTD; 4. THAT THE LD. CIT(A) ERRED IN UPHOLDING THE LD. A O/TPO'S APPROACH OF NOT TREATING THE SUBCONTRACTING COST AS PASS THR OUGH IN NATURE. 5. THAT THE LD. CIT(A) ERRED IN UPHOLDING THE STAND OF THE LD. TPO/ LD. AO OF FOLLOWING THE APPROACH IN RESTRICTING THE WORKING CAPITAL ADJUSTMENT BY LIMITING THE AVERAGE COST OF CAPITAL AT 0.23% IN THE CASE OF COMPARABLE COMPANIES 6. THAT THE LD. CIT(A) ERRED IN UPHOLDING THE STAND OF THE LD. AO/ LD. TPO OF COMPUTATION OF WORKING CAPITAL ADJUSTMENT BY CONSIDERING ERRONEOUS RECEIVABLES AND PAYABLES FOR THE COMPARAB LE COMPANIES. 7. THE LD. CIT (A) ERRED IN LEVYING INTEREST UNDER SECTION 234B AND SECTION 234D OF THE INCOME TAX ACT, 1961. 3. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT GROU ND NO. 7 IS CONSEQUENTIAL AND OUT OF THE REMAINING GROUNDS, THE ASSESSEE IS P RESSING ONLY PART OF GROUND NO. 2 AND THE REMAINING GROUNDS ARE NOT PRES SED. REGARDING GROUND NO. 2 ALSO, HE SUBMITTED THAT AS PER THIS GR OUND, THE ASSESSEE IS REQUESTING FOR EXCLUSION OF 8 COMPARABLES BUT NOW, THE ASSESSEE DOES NOT WANT TO PRESS FOR THE EXCLUSION OF FORTUNE INFOTECH LTD., COSMIC GLOBAL LTD. AND JEEVAN SCIENTIFIC TECHNOLOGIES LTD. (SEGMENT) A ND NOW, THE ASSESSEE IS REQUESTING FOR EXCLUSION OF ONLY 5 COMPARABLES I .E. 1) ACCENTIA TECHNOLOGIES LTD. 2) ACROPETAL TECHNOLOGIES LTD. (SEGMENT) 3) E-CLERX SERVICES LTD. 4) ICRA ONLINE LTD. (SEGMENT) 5) INFOSYS BPO LTD. ITA NO. 1921/BANG/2018 PAGE 3 OF 4 4. REGARDING THE REQUEST OF THE ASSESSEE FOR EXCLUS ION OF THESE FIVE COMPARABLES, HE SUBMITTED THAT THIS ISSUE WAS DECID ED BY CIT (A) AS PER PARA NO. 5 ON PAGE NO. 7 OF HIS ORDER. HE POINTED OUT THAT IN THIS PARA, IT IS STATED BY CIT (A) THAT THE ASSESSEE HAS ARGUED FOR EXCLUSION OF CERTAIN COMPANIES FROM THE LIST OF COMPARABLES AND INCLUSIO N OF CERTAIN COMPANIES IN THE LIST OF COMPARABLES BUT THE ASSESSEE HAS NOT TAKEN ANY GROUND OF APPEAL IN RELATION TO THE SAME AND ON THIS BASIS, H E HAS NOT ADJUDICATED UPON ON THIS ISSUE. HE SUBMITTED THAT THIS IS TRUE THAT NO SPECIFIC GROUND WAS RAISED BEFORE CIT(A) IN THIS REGARD BUT SINCE, ARGUMENTS WERE MADE BEFORE HIM IN THIS REGARD, HE SHOULD HAVE DECIDED T HIS ISSUE. THEREAFTER HE DRAWN OUR ATTENTION TO PARA 9.1 ON PAGE NO. 8 OF TH E ORDER OF TPO AND POINTED OUT THAT IN THIS PARA, IT IS NOTED BY THE T PO THAT IN REPLY TO SHOW CAUSE NOTICE DATED 20.09.2013 ISSUED BY HIM, NO SUB MISSION / OBJECTION WAS RECEIVED FROM THE TAXPAYER NOR THE TAXPAYER REQ UESTED FOR ADDITIONAL TIME FOR FILING THE SUBMISSIONS. IN THIS REGARD, H E SUBMITTED THAT SUBMISSION WAS MADE BEFORE THE TPO VIDE LETTER DATED 16.01.201 4 COPY AVAILABLE ON PAGES 121 TO 196 OF PAPER BOOK AND THE SAME WAS FUR NISHED IN THE OFFICE OF TPO AT TAPAL ON 17.01.2014 AND THE ORDER OF TPO IS DATED 29.01.2014 AND HENCE, THE MATTER SHOULD BE RESTORED BACK TO THE FI LE OF TPO FOR FRESH DECISION AFTER CONSIDERING THE WRITTEN SUBMISSIONS BECAUSE THE SAME WERE NOT CONSIDERED BY THE TPO. IN REPLY, IT WAS SUBMIT TED BY LD. DR OF REVENUE THAT THE LETTER DATED 16.01.2014 AVAILABLE ON PAGES 121 TO 196 OF PAPER BOOK IS ADDRESSED TO DCIT(TP)-V, BANGALORE ALTHOUGH IT IS SUBMITTED AT TAPAL OF DCIT(TP)-IV. SINCE IT IS ADDRESSED TO DCI T(TP)-V, THE SAME MIGHT NOT HAVE REACHED THE TPO AND THEREFORE, THE TPO COR RECTLY SAID IN HIS ORDER THAT NO REPLY WAS FILED BY ASSESSEE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN VI EW OF THIS SUBMISSION OF LD. DR OF REVENUE, IT IS SEEN THAT LETTER FILED BY THE ASSESSEE ON 17.01.2014 BY ADDRESSING TO DCIT(TP)-V MIGHT NOT HAVE REACHED TO THE FILE OF TPO BECAUSE THE TPO IN THE PRESENT CASE IS DCIT(TP)-IV AND NOT DCIT(TP)-V, BANGALORE TO WHOM THE SAID LETTER WAS ADDRESSED BY THE ASSESSEE. BUT STILL THIS IS TRUE THAT THE SUBMISSIONS WERE MADE BY THE ASSESSEE BEFORE THE PASSING OF THE ORDER BY THE TPO AND ALTHOUGH IT COU LD NOT REACH TO THE FILE OF ITA NO. 1921/BANG/2018 PAGE 4 OF 4 TPO BECAUSE OF CERTAIN CLERICAL MISTAKES ON THE PAR T OF THE ASSESSEE, WE FEEL IT PROPER THAT IN THE INTEREST OF JUSTICE, THE MATTER SHOULD GO BACK TO THE FILE OF TPO FOR FRESH DECISION AFTER CONSIDERING TH E WRITTEN SUBMISSIONS FILED BY THE ASSESSEE ON 17.01.2014 OR ANY FURTHER SUBMIS SIONS WHICH THE ASSESSEE MAY MAKE IN COURSE OF SET ASIDE PROCEEDING S. HENCE, WE SET ASIDE THE ORDER OF CIT (A) AND RESTORE THE MATTER B ACK TO THE FILE OF AO/TPO FOR FRESH DECISION WITH REGARD TO ASSESSEES CLAIM FOR EXCLUSION OF FIVE COMPARABLES I.E. A) ACCENTIA TECHNOLOGIES LTD. B) ACROPETAL TECHNOLOGIES LTD. (SEGMENT) C) E-CLERX SERVICES LTD. D) ICRA ONLINE LTD. (SEGMENT) E) INFOSYS BPO LTD. 6. WE WANT TO MAKE IT CLEAR THAT SUFFICIENT OPPORTU NITIES OF HEARING SHOULD BE PROVIDED BY THE TPO TO ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (PAVAN KUMAR GADALE) (ARUN KUMAR GARODI A) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 15 TH FEBRUARY, 2019. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.