ValueMomentum Software Services Private Limited , Hyderabad V. Deputy Commissioner of Income Tax , Circle -17(2), Hyderabad

ITA 253/Hyd/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3028 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 29-09-2021
• Assessment Year: 2016-2017
• Appeal Filed On: 23-06-2021
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction
• Section: 143(3); 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD. BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI L . P . SAHU, ACCOUNTANT MEMBER (THROUGH VIRTUAL HEARING) ITA (TP) NO. 253 /HYD/20 21 (ASSESSMENT YEAR : 20 16 - 17 ) M/S. VALUE MOMENTUM SOFTWARE SERVICES PVT. LTD., HYDERABAD. PAN AAACI7400H ..APPELLANT. VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 17(2), HYDERABAD. ..RESPONDENT. APPELLANT BY : SHRI H.S RINIVASULU. RESPONDENT BY : SHRI YVST SAI. (D.R.) DATE OF HEARING : 29.09 . 2021. DATE OF PRONOUNCEMENT : 20 . 10 .2021. O R D E R PER SHRI S.S. GODARA, J.M. : THIS ASSESSEE'S APPEAL FOR ASSESSMENT YEAR 2016 - 17 ARISES AGAINST THE ASSESSMENT HEREIN DT.22.3.2021 FRAMED BY THE N ATIONAL E - A SSESSMENT C ENTRE , DELHI IN FURTHERANCE TO THE DISPUTE RESOLUTION PANEL (DRP) BANGALORES DIRECTION S DT.5.2.2021 IN F.NO. 7 4/DRP - I/BNG/2019 - 20 2 ITA NO. 253/HYD/2021 INVOLVING PROCEEDINGS U/S. 143(3) R.W.S. 144C(1 3 ) R.W.S. 143(3A) AND 143(3B) OF THE INCOME TAX ACT, 1961 ('THE ACT'). HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. WE NO TICE AT THE OUTSET THAT ASSESSEE'S INSTANT APPEAL SUFFERS FORM 33 DAYS DELAY IN FILING. LEARNED COUNSEL SUBMITTED THAT DUE TO THE OUTBREAK OF PANDEMIC COVID 19 UNABLE TO GET THE DOCUMENTS FORM THE DEPARTMENT WHICH CAUSED THE IMPUGNED DELAY IN FILING OF THE INSTANT APPEAL. CASE LAW COLLECTOR LAND ACQUIS ITION VS. MST. KATIJI & ORS, 1987 AIR 1353 (SC) AND UNIVERSITY OF DELHI VS. UNION OF INDIA, CIVIL APPEAL NO.9488 & 9489/2019 DATED 17 TH DEC., 2019, HOLD THAT SUCH A DELAY; SUPPORTED BY COGENT REASONS, DESERVES TO BE CONDONED SO AS TO MAKE WAY FOR THE CAUSE OF SUBSTANTIAL JUSTICE. WE ACCORDINGLY HOLD THAT ASSESSEE'S IMPUGNED DELAY OF 33 DAYS IS NEITHER INTENTION NOR DELIBERATE BUT DUE TO THE CIRCUMSTANCES BEYOND HIS CONTROL. THE SAME STANDS CONDONED. CASE IS NOW TAKEN UP FOR ADJUDICATION ON MERITS. 3 . THE ASSESSEE RAISE S THE FOLLOWING SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL : 3 ITA NO. 253/HYD/2021 4 ITA NO. 253/HYD/2021 5 ITA NO. 253/HYD/2021 4 . LEARNED COUNSEL STATED VERY FAIRLY AT THE BAR THAT THE ASSESSEE SEEKS TO PRESS FOR ITS TWO SUBSTANTIVE ARGUMENTS ONLY IN THE INSTANT APPEAL. ITS FORMER CONTENTION IS THAT THE L EARNED LOWER AUTHORIT IES HAVE COMPUTED ENTITY LEVEL MARGIN WHILE DETERMINING THE IMPUGNED ARMS LENGTH PRICE 6 ITA NO. 253/HYD/2021 (ALP) ADJUSTMENT PERTAINING TO SOFTWARE DEVELOPMENT SERVICES RESULTING IN ADDITION OF RS.5,33,10,552. MR. SRINIVASULU NEX T SOUGHT TO INVITE OUR ATTENTION TO THE CLINCHING FACT THAT IT IS ONLY THE ASSESSEES INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTERPRISES (AES) THAT HAVE TO BE THE SUBJECTED TO THE IMPUGNED ALP MECHANISM THAN ALSO THOSE INCLUDING NON - AES. WE NOTE I N THIS FACTUAL BACKDROP THAT INSTANT ISSUE OF CHAPTER X COMPUTATION TO BE RESTRICTED TO THE ASSESSEE'S INTERNATIONAL TRANSACTIONS ONLY IS NO MORE RES INTEGRA IN LIGHT OF HONBLE BOMBAY HIGH COURT DECISION IN CIT VS. FIRESTONE INTERNATIONAL (P) LTD. (2015) 378 ITR 558 (BOM). WE THUS DECLINE REVENUES VEHEMENT ARGUMENT S SUPPORTING THE LEARNED LOWER AUTHORITIES ACTION COMPUTING THE ASSESSEE'S IMPUGNED ALP AT ENTITY LEVEL THAN ONLY PERTAINING TO ITS INTERNATIONAL TRANSACTIONS WITH THE AES INVOLVING AN AMOUNT OF RS.78,13,59,281 IN ISSUE. WE ACCORDINGLY FIND PRIMA FACIE MERIT IN THE ASSESSEE'S INSTANT FOREGOING ARGUMENT AND RESTORE THE INSTANT FORMER ISSUE BACK TO TRANSFER PRICING OFFICER (TPO) FOR HIS AFRESH 7 ITA NO. 253/HYD/2021 ADJUDICATION AS PER LAW WITHIN THREE EFFECTIVE OP PORTUNITIES OF HEARING. 5 . NEXT COMES THE LATTER ISSUE PERTAINING TO INTEREST ON RECEIVABLES AT ALP ADJUSTMENT OF RS.4,01,30,490 COMPUTED AS PER THE SBI SHORT TERM DEPOSIT RATE. WE FIND FROM A PERUSAL OF THE TPOS ORDER DT.29.10.2019 PAGE 61 THAT HE APPEARS TO HAVE GONE BY EARLIER ESTIMATION ONLY WHLIST DETERMINING A CREDIT PERIOD OF 30 DAYS ONLY. LEARNED COUNSEL QUOTE CASE LAW TECHNIMONT ICB LIMITED VS. DCIT (THIRD MEMBER) (2013) 32 TAXMAN.COM 357 (MUM) THAT AN AE ITSELF DOES NOT FORM A COMPARAB LE SINCE THE CORRESPONDING TRANSACTION S WOULD BE RENDERED AS CONTROLLED ONE S ONLY . WE THUS DELETE THE IMPUGNED ALP ADJUSTMENT ON RECEIVABLES IN PRINCIPLE AND LEAVE IT OPEN FOR THE TPO TO VERIFY NECESSARY FACTS AS PER LAW. 6 . THIS ASSESSEE'S APPEAL I S PARTLY ALLOWED IN ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 20TH OCT . , 2021. SD/ - SD/ - (L .P. SAHU) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DT. 20 . 10 .2021. * REDDY GP 8 ITA NO. 253/HYD/2021 COPY TO : 1. M/S. VALUEMOMENTUM SOFTWARE SERVICES PVT. LTD., PLOT NOS.36 & 37, VALUEMOMENTUNMTOWERS,FINANCIAL DISTRICT NANAKRAMGUDA, HYDERABAD - 500 032 2. DCIT, CIRCLE 17(2), HYDERABAD. 3. DRP - I, BANGALORE . 4. 5. DR, ITAT, HYDERABAD. 6. GUARD FILE. BY ORDER SR. PVT. SECRETARY, ITAT, HYDERABAD.