DCIT, New Delhi V. M/s. Convergys India Service (P) Ltd., New Delhi

ITA 206/DEL/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82093 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 26-11-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 14-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ROHIT TIWARI C AS
• Keywords: Transfer pricing; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : I : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI I.C. SUDHIR, JM ITA NO.206/DEL/2010 ASSESSMENT YEAR : 2005-06 ACIT, CIRCLE 3(1), CR BUILDING, NEW DELHI. VS. CONVERGYS INDIA SERVICE (P) LTD., DLF ATREA, JACARANDA MARG, DLF CITY, PHASE II, GURGAON 122 022. PAN : AABCC5056G ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI PAWAN KUMAR & SHRI ROHIT TIWARI, CAS DEPARTMENT BY : S HRI PIYUSH JAIN, CIT, DR ORDER PER R.S. SYAL, AM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER PASSED BY THE CIT(A) ON 11.12.2009 IN RELATION TO T HE ASSESSMENT YEAR 2005-06. 2. THE ONLY GROUND RAISED BY THE REVENUE IS AGAINST ACCEPTING FRESH EVIDENCE BY THE LD. CIT(A) IN CONTRAVENTION O F RULE 46A(3) OF THE IT RULES, WITHOUT GIVING OPPORTUNITY TO THE TPO. T HE LD. DR ITA NO.206/DEL/2010 2 CONTENDED THAT THE DISPUTE IN THE PRESENT APPEAL IS ABOUT THE ADOPTING OF A DIFFERENT RATE OF OP/TC OF TWO COMPAN IES, NAMELY, ASIAN CERC INFORMATION TECHNOLOGY LTD. (SEGMENT) AND ACE ITES EXPORTS LTD. IN THE FINAL COMPUTATION OF THE ARITHMETIC MEA N OF THE PROFIT RATE OF THE COMPARABLE COMPANIES. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN SO FAR AS THE FIRST COMPANY, NAMELY, ASIAN CERC INFORMATION TECHNOLOGY LTD., IS CONCERNED, WE FIND FROM THE TPOS ORDER THAT HE ADOPTED OP/TC OF THIS COMPANY AT 37.4 % IN THE FINAL COMPUTATION OF ARMS LENGTH PRICE. THE ASSESSEE AR GUED BEFORE THE LD. CIT(A) THAT THIS PERCENTAGE WAS INADVERTENTLY T AKEN BY THE TPO, WHICH OUGHT TO HAVE BEEN 16.15%. THE LD. CIT(A) AC CEPTED THE ASSESSEES CONTENTION AND REPLACED THE OP/TC MARGIN OF THIS COMPANY WITH 16.15%, AS AGAINST 37.4% TAKEN BY THE TPO IN THE COMPUTATION OF ALP. THE DEPARTMENTS GRIEVANCE IS ONLY AGAINST THE ADMISSION OF ADDITIONAL EVIDENCE IN THE CALCULATION OF THIS OP/TC MARGIN. 4. IT IS NOTICED THAT THE ASSESSEE, VIDE ITS LE TTER DATED 13.10.2008 ADDRESSED TO THE TPO, A COPY OF WHICH IS PLACED ON PAGES 233 ONWARDS OF THE PAPER BOOK, CALCULATED UNADJUSTED OP /TC OF THIS ITA NO.206/DEL/2010 3 COMPANY AT 16.15%. THE DETAILED CALCULATION IS GIV EN ALONG WITH THIS LETTER. WITHOUT ADVERSELY COMMENTING ON SUCH CALC ULATION, THE TPO PROCEEDED TO INCLUDE A DIFFERENT PERCENTAGE WHILE C ALCULATING THE ARITHMETIC MEAN OF OP/TC OF THE COMPARABLE COMPANIE S. THE LD. CIT(A) SUBSTITUTED THE CORRECT OP/TC AS WAS GIVEN T O THE TPO. IN OUR CONSIDERED OPINION, THERE IS NO ADMISSION OF ANY AD DITIONAL EVIDENCE AT THE LD. CIT(A)S END. HE HAS SIMPLY TAKEN THE F IGURE FROM THE LETTER GIVEN BY THE ASSESSEE TO THE TPO ACCOMPANIED BY THE DETAILED CALCULATION, WHICH WAS NOT CONTROVERTED BY THE TPO. THE REVENUE FAILS. 5. THE SECOND COMPANY IS ACE SOFTWARE EXPORTS LTD. THE TPO INCLUDED OP/TC OF THIS COMPANY AT 15.46% IN THE FIN AL COMPUTATION OF ALP. THE LD. CIT(A) REDUCED SUCH MARGIN TO 13.65%. THE DEPARTMENT IS AGGRIEVED AGAINST THE REDUCTION IN THE OP/TC OF THIS COMPANY ON THE BASIS OF ADMISSION OF ADDITIONAL EVIDENCE. 6. HERE AGAIN, WE FIND THAT THERE IS NO ADMISSION O F ADDITIONAL EVIDENCE BY THE LD. CIT(A). THIS FIGURE OF 13.65% WAS GIVEN BY THE ASSESSEE TO THE TPO VIDE THE SAME LETTER IN THE SAM E TABLE NO.4, A COPY OF WHICH IS AVAILABLE ON PAGE 252 OF THE PAPER BOOK. A DETAILED CALCULATION OF THIS OP/TC WAS ALSO SUBMITTED BEFORE THE TPO. WITHOUT ITA NO.206/DEL/2010 4 ADVERSELY COMMENTING ON THE CALCULATION OF OP/TC AT 13.65%, THE TPO PROCEEDED TO ADOPT OP/TC AT 15.46%. IN OUR CON SIDERED OPINION, NO INFIRMITY CAN BE TRACED IN THE ORDER OF THE LD. CIT(A) IN CORRECTING THE OP/TC MARGIN OF THIS COMPANY, WHICH IS WITHOUT THE ASSISTANCE OF ANY ADDITIONAL EVIDENCE FILED BEFORE THE LD. CIT(A) IN CONTRAVENTION OF RULE 46A(3). THE REVENUE FAILS. 7. IN THE RESULT, THE APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 28.11.201 4. SD/- SD/- [ I.C. SUDHIR ] [ R.S. SYAL ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 28 TH NOVEMBER, 2014. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.