Quislex Legal Services Private Limited, Hyderabad, Hyderabad V. ACIT, Circle-16(1), Hyderabad, Hyderabad

ITA 270/HYD/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7376 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 18-08-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 17-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Keywords: Transfer pricing; International transaction
• Section: 143(3); 144C; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 104 & 270/H/2017 ASSESSMENT YEAR: 2010 - 11 & 2012 - 13 QUISLEX LEGAL SERVICES PRIVATE LIMITED, HYDERABAD. PAN: AAACQ 1153 H VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 16(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI K.C. DEVDAS REVENUE BY: SRI Y.V.S.T. SAI, CIT - DR DATE OF HEARING: 18/08/2020 DATE OF PRONOUNCEMENT: 2 5 /08/2020 ORDER PER BENCH .: BOTH THESE APPEALS ARE FILED BY THE ASSESSEE AGGRIEVED BY THE ASSESSMENT ORDER DATED 21/11/2016 AND THE ORDER OF THE LD. MEMBERS OF THE DRP DATED 31/10/2016 PASSED U/S. 143(3) R.W.S 263, 92CA(3) AND 144C OF THE ACT FOR THE AY 2010 - 11 AND THE ASSESSMENT ORDER DATED 19/12/2016 AND THE ORDER OF THE LD. MEMBERS OF THE DRP DATED 31/10/2016 PASSED U/S. 143(3) R.W.S 92CA(3) AND 144C OF THE ACT FOR THE AY: 2012 - 13. 2 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN BOTH THE APPEALS HOWEVER, AT THE TIME OF HEARING THE LD. AR SUBMITTED THAT THE BENCH ON THE EARLIER OCCASION HAD DIRECTED THE LD. AO TO FURNISH A REMAND REPORT IN ORDER TO DETERMINE THE CORRECT NATURE OF ACTIVITIES CARRIED OUT BY THE ASSESSEE WITH RESPECT TO ITS CLIENTS WHICH GOES TO THE ROOT OF THE MATTER AS TO WHETHER THE ASSESSEE FUNCTIONS IN THE NAT URE OF KNOWLEDGE PROCESS OUTSOURCING (KPO) OR BUSINESS PROCESS OUTSOURCING (BPO) AS STATED IN THE ACT SO THAT THE APPROPRIATE COMPARABLE ENTITIES CAN BE APPRECIATED FOR ARRIVING AT THE ARMS LENGTH PRICE FOR THE INTERNATIONAL TRANSACTIONS ENTERED BETWEEN T HE ASSESSEE COMPANY AND ITS ASSOCIATE ENTERPRISES (AE). THE LD. AR FURTHER SUBMITTED THAT THE ASSESSEE HAD DEMONSTRATED ITS ACTIVITIES WITH RESPECT TO TWO OF ITS CLIENTS BEFORE THE TRIBUNAL ON THE EARLIER OCCASION AND THE SAME WAS ALSO PRESENTED BEFORE TH E LD. REVENUE AUTHORITIES IN THE REMAND PROCEEDINGS. THE LD. AR FURTHER ARGUED BY STATING THAT THE LD. REVENUE AUTHORITIES WITHOUT CONSIDERING THE FACTUAL DETAILS SUBMITTED AND THE EXPLANATIONS TENDERED BY THE ASSESSEE AND FURTHER WITHOUT PROVIDING PROPER OPPORTUNITY , ARRIVED AT THE CONCLUSION THAT THE ASSESSEE CARRIES OUT ITS ACTIVITIES WITH RESPECT TO ITS AES WHICH IS IN THE NATURE OF KPO AND NOT BPO AS DEMONSTRATED BY THE LD. AR. THE LD. AR THEREFORE PLEADED THAT ONE MORE OPPORTUNITY MAY BE PROVIDED TO THE ASSESSEE TO PRESENT ITS CASE BEFORE THE LD. REVENUE AUTHORITIES. THE LD. DR THOUGH OBJECTED TO THE SUBMISSION OF THE LD. AR FINALLY CONCEDED TO THE REQUEST OF THE LD. AR. 3 3. AFTER HEARING BOTH THE PARTIES AND K EEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF BOTH THE CASE S , W E ARE OF THE CONSIDERED VIEW THAT A CATEGORIC FINDING IS REQUIRED TO BE MADE IN THE CASE OF THE ASSESSEE AS TO WHETHER THE ACTIVITIES OF THE ASSESSEE WITH RESPECT TO ITS AES FALL UNDER THE C ATEGORY OF KPO OR BPO BASED ON WHICH ONLY THE APPROPRIATE COMPARABLE ENTITIES CAN BE IDENTIFIED FOR COMPUTING THE ALP WITH RESPECT TO THE TRANSACTIONS MADE BY THE ASSESSEE WITH ITS AES. FURTHER, IT IS ALSO PERTINENT TO MENTION THAT THE ASSESSEE HAS EMPLOY ED ONLY SKILLED LABOUR SUCH AS QUALIFIED LAW GRADUATES FOR PERFORMING THE WORK ASSIGNED BY THE ASSOCIATE COMPANIES TO THE ASSESSEE COMPANY. HENCE, A MINUTE ANALYSIS ON THE NATURE OF WORK CARRIED BY THE ASSESSEE FOR ITS AES IS REQUIRED TO BE ANALYSED FOR H OLDING WHETHER THE ASSESSEE COMPANY FALLS IN THE NATURE AS KPO OR BPO . THEREFORE, IN THE INTEREST OF JUSTICE, W E HEREBY REMIT BACK THE ENTIRE MATTER IN BOTH THE APPEALS TO THE FILE OF THE LD. AO FOR DE NOVO CONSIDERATION. WE ALSO MAKE IT CLEAR THAT THE LD. REVENUE AUTHORITIES ARE AT LIBERTY TO DIRECT THE ASSESSEE TO FURNISH THE DETAILS OF THE ACTIVITIES CARRIED OUT BY THE ASSESSEE COMPANY FOR ANY OF ITS AES AS THEY DEEM FIT IN ORDER TO ARRIVE AT THE CONCLUSION WHETHER THE ACTIVITIES CARRIED OUT BY THE ASSE SSEE WITH ITS AES FALLS UNDER THE CATEGORY OF KPO OR BPO. IT IS ORDERED ACCORDINGLY. 4. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES AS INDICATED HEREIN ABOVE. 4 PRONOUNCED IN THE OPEN COURT ON 2 5 TH AUGUST, 2020. SD/ - SD/ - (P. MADHAVI DEVI) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 2 5 TH AUGUST, 2020. OKK COPY TO: - 1. QUISLEX LEGAL SERVICES PRIVATE LIMITED, 2 ND FLOOR, DHFLVC SILICON TOWERS, MADHAPUR ROAD, KONDAPUR, HYDERABAD 500 032. 2. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 16(1), R.NO.121, BLOCK - 1B, 1 ST FLOOR, INCOME TAX TOWERS, A C GUARDS, MASAB TANK, HYDERABAD. 3 . THE DISPUTE RESOLUTION PANEL - 1, G - 18, CENTRAL REVENUE BUILDING, QUEENS ROAD, BENGALURU. 4. THE DCIT (TRANSFER PRICING OFFICER) - 3, 3 RD FLOOR, D - BLOCK, IT TOWERS, AC GUARDS, HYDERABAD - 500 004. 5. THE DR, ITAT, HYDERABAD. 6. GUARD FILE.