M/s. Amserve Consultants Ltd., New Delhi V. ACIT, New Delhi

ITA 3062/DEL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4112 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 15-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY GOEL
• Assessee Lawyers: C S AGGARWAL SENIOR
• Keywords: Transfer pricing
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.3062/DEL./2015 (ASSESSMENT YEAR : 2011-12) M/S. AMSERVE CONSULTANTS LTD., VS. ADIT, CIRCLE 2 (1), 1 ST FLOOR, ELEGANCE TOWER, PLOT NO.8, INTERNATIONAL T AXATION, NON HIERARCHICAL COMMERCIAL CENTRE, NEW DELHI. JASOLA, NEW DELHI 110 025. (PAN : AAACM2303F) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI C.S. AGGARWAL, SENIOR ADVOCATE REVENUE BY : SHRI SANJAY GOEL, CIT DR DATE OF HEARING : 25.10.2018 DATE OF ORDER : 29.10.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, M/S. AMSERVE CONSULTANTS LTD. (HEREI NAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESE NT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 09.02.2015 PASSE D BY LD. CIT (APPEALS)-I, NEW DELHI QUA THE ASSESSMENT YEAR 2011 -12 ON THE GROUNDS INTER ALIA THAT :- 1. THAT ON FACTS AND IN LAW, CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE OF DATA PROCESSING CHARG ES OF RS. 28,55,85,573/- PAID BY THE APPELLANT TO M/S AMWAY INDIA ENTERPRISES. ITA NO.3062/DEL./2015 2 1.1 THAT ON THE FACTS AND IN LAW, THE CIT(A) ERRED IN UPHOLDING THE ACTION OF AO IN APPLYING THE PROVISIO NS OF SECTION 40A(2) OF THE ACT TO THE FACTS OF INSTAN T CASE. 2. THAT ON THE FACTS AND IN LAW THE AO/CIT(A) ERRE D IN HOLDING: (A) THAT THE APPELLANT RECEIVED ONLY RS. 5,6001- P ER POLICY AS SERVICE INCOME BUT PAID SERVICE PROCESSIN G CHARGES OF RS. 5,778/- PER POLICY TO MIS AMWAY INDI A ENTERPRISES. (B) THAT IT WAS AN AFTER THOUGHT TO DECIDE AS TO H OW MUCH PAYMENT WAS REQUIRE TO BE MADE TO MIS AMWAY INDIA ENTERPRISES. 3. THAT ON FACTS AND IN LAW THE AO/CIT(A) ERRED IN IGNORING THE TRANSFER PRICING REPORT SUBMITTED BY T HE APPELLANT TO JUSTIFY THE ARM'S LENGTH NATURE OF THE TRANSACTION FOR PAYMENT OF DATA PROCESSING CHARGES TO MIS AMWAY INDIA ENTERPRISES. 4. THAT ON FACTS AND IN LAW THE ORDERS PASSED BY ASSESSING OFFICER {HEREIN ABOVE REFERRED TO AS THE 'AO') AND THE COMMISSIONER OF INCOME TAX (APPEALS) {HEREIN ABOVE REFERRED TO AS THE 'CIT(A)'} ARE VOID AB INTIO AND BAD IN LAW. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICA TION OF THE CONTROVERSY AT HAND ARE : THE ASSESSEE IS INTO THE BUSINESS OF PROVIDING ADVISORY AND CONSULTING BUSINESS SUPPORT SERVICES TO COMPANIES AND ALSO ENGAGED IN THE BUSINESS OF GENER AL INSURANCE AND LIFE INSURANCE. ASSESSING OFFICER MADE ADDITIO N OF RS.28,55,85,573/- I.E. 75% OF THE PAYMENT CLAIMED T O HAVE BEEN PAID BY THE ASSESSEE ON ACCOUNT OF DATA PROCESSING CHARGES TO M/S. AMWAY INDIA ENTERPRISES FOR NEW INSURANCE POLICY BU SINESS ON THE ITA NO.3062/DEL./2015 3 GROUND THAT THE PAYMENTS MADE BY ASSESSEE TO M/S. A MWAY INDIA ENTERPRISES ARE EXCESSIVE AND UNREASONABLE AS REGAR DS LEGITIMATE NEEDS OF BUSINESS OR BENEFITS DERIVED BY IT. 3. ASSESSEE CARRIED THE MATTER BY WAY OF APPEAL BEF ORE THE LD. CIT (A) WHO HAS CONFIRMED THE ADDITION ON ACCOUNT O F DISALLOWANCE MADE BY THE AO BY DISMISSING THE APPEA L. FEELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIB UNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. AT THE VERY OUTSET, THE LD. AR FOR THE ASSESSEE CONTENDED THAT THE ISSUE IN CONTROVERSY IS COVERED IN ASSESSEES O WN CASE FOR AYS 2009-10 AND 2010-11, COPY OF ORDERS ARE AVAILABLE A T PAGES 185 TO 213 OF THE PAPER BOOK. HOWEVER, ON THE OTHER HAND, THE LD. DR FOR THE REVENUE RELIED UPON ORDER PASSED BY THE AO AS W ELL AS LD. CIT (A). 6. IT IS NOWHERE CASE OF THE REVENUE THAT THE ASSES SEE COMPANY HAS EVADED ANY PAYMENT OF TAX. MOREOVER, M/S. AMWA Y INDIA ENTERPRISES HAS DULY DISCLOSED THE AMOUNT RECEIVED FROM THE ASSESSEE COMPANY ON ACCOUNT OF DATA PROCESSING CHAR GES AND PAID ITA NO.3062/DEL./2015 4 TAX THEREON AND HAS BROUGHT ON RECORD WRITTEN CONFI RMATION OF M/S. AMWAY INDIA INTERNATIONAL PVT. LTD. ALONG WITH COPY OF THEIR ITR- V FOR AYS 2009-10, 2010-11 AND 2011-12, AVAILABLE A T PAGES 180 TO 184 OF THE PAPER BOOK, WHICH SHOWS THAT M/S. AMW AY INDIA ENTERPRISES HAS DULY DISCLOSED AND OFFERED FOR THE TAX THE AMOUNTS RECEIVED FROM THE ASSESSEE. FURTHERMORE, THE ASSES SEE COMPANY HAS COME UP WITH TRANSFER PRICING STUDY, AVAILABLE AT PAGES 55 TO 110 OF THE PAPER BOOK, AND FOUND ITS TRANSACTIONS Q UA PAYMENT MADE TO M/S. AMWAY INDIA ENTERPRISES AT ARMS LENGT H. 7. MOREOVER, PERUSAL OF THE ORDER PASSED BY THE COO RDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY S 2009-10 AND 2010-11, AVAILABLE AT PAGES 185 TO 213 OF THE PAPE R BOOK, GOES TO PROVE THAT THE ISSUE IN CONTROVERSY IN THIS CASE WA S DIRECTLY AND SUBSTANTIALLY IN QUESTION AND WAS DECIDED IN FAVOUR OF THE ASSESSEE COMPANY. COORDINATE BENCH OF THE TRIBUNAL BY RELYI NG UPON THE DECISION OF CIT VS. B. DALMIA CEMENT (P) LTD. (2001) 254 ITR 377 (DEL.) AND DECISION RENDERED BY HONBLE SUPREME COURT IN CIT VS. M/S. GLAXO SMITHKLINE ASIA (P) LTD. 236 C TR 113 CONCLUDED THAT WHEN THE EXPENDITURE INCURRED BY THE ASSESSEE COMPANY TOWARDS DATA PROCESSING CHARGES WAS AT ARM S LENGTH AND NOT EXCESSIVE AND UNREASONABLE, DISALLOWANCE MADE B Y THE AO IS NOT SUSTAINABLE. FURTHERMORE, IT IS BROUGHT TO THE NOTICE OF THE ITA NO.3062/DEL./2015 5 BENCH BY THE LD. AR FOR THE ASSESSEE THAT DECISION RENDERED BY THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2009-10 AND 2010-11 HAS BEEN ACCEPTED BY THE REVENU E IN SUBSEQUENT ASSESSMENT YEARS 2012-13 AND THIS FACTUA L POSITION HAS NOT BEEN CONTROVERTED BY THE REVENUE. 8. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE AND BY FOLLOWING THE DECISION RENDERED BY THE COORDINATE BENCH OF TH E TRIBUNAL IN ASSESSEES OWN CASE FOR AYS 2009-10 AND 2010-11, WE ARE OF THE CONSIDERED VIEW THAT WHEN THE DATA PROCESSING CHARG ES PAID BY THE ASSESSEE COMPANY TO M/S. AMWAY INDIA ENTERPRISES HA VE BEEN FOUND TO BE AT ARMS LENGTH AS PER TP STUDY WHICH H AS GONE UNCONTROVERTED, THE SAME CANNOT BE TREATED AS EXCES SIVE AND UNREASONABLE AND AS SUCH, NO DISALLOWANCE COULD BE SUSTAINED THEREON. CONSEQUENTLY, THE DISALLOWANCE OF DATA PR OCESSING CHARGES INCURRED BY THE ASSESSEE TO THE TUNE OF RS. 28,55,85,573/- IS ORDERED TO BE DELETED AND APPEAL FILED BY THE ASSES SEE IS HEREBY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 29 TH DAY OF OCTOBER, 2018. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 29 TH DAY OF OCTOBER , 2018/TS ITA NO.3062/DEL./2015 6 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-I, NEW DELHI 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.