Appeal details
Counselvise Citation
[2021] 107 COUNSELVISE.COM (IT) 7387 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 7 month(s) 12 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
17-08-2021
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
DB-B
Next Hearing Date
16-06-2021
Assessment Year
2014-2015
Appeal Filed On
04-01-2019
Judgement Text
ITA NO. 31/HYD/2019 AY 2014 - 15 M/S IVY COMPTECH PVT. LTD. 1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES : BENCH B HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER I.T.A. NO. 31 /HYD./201 9 A.Y : 20 14 - 15 M/S IVY COMPTECH PRIVATE LTD. VS. DY. CIT, HYDERABAD CIRCLE 2 (1) HYDERABAD [PAN: AAACI8884K ] (APPELLANT) (RESPONDENT) FOR ASSESSEE: SHRI PRASHANT MEHARCHANDANI, C.A. FOR REVENUE: SRI R AVI KIRAN, CIT - DR DATE OF HEARING : 1 6 /06/2021 DATE OF PRONOUNCEMENT : 17 /0 8 /2021 O R D E R PER S.S. GODARA, J.M. THIS ASSESSEES APPEAL FOR AY 2014 - 15 ARISES AGAINST THE DY.CIT, CIRCLE 2(1), HYDERABADS ORDER DATED 30 TH OCTOBER, 2018 FRAMED IN FURTHERANCE TO DRP - II, BANGALORES DIRECTIONS DATED 27.0 8 .2018 IN CASE NO. 100/DRP - 1/BNG/2018 - 19 INVOLVING PROCEEDINGS U/S 143(3) RWS 144C(5) RWS 144C(13) OF THE INCOME TAX ACT, 1961 [ IN SHORT THE ACT ]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. WE NOTICE WITH THE ABLE ASSISTANCE OF BOTH THE PARTIES THAT ASSESSEES FIRST AND FOREMOST SUBSTANTIVE GRI EVANCE CHALLENGES CORRECTNESS OF BOTH LOWER ITA NO. 31/HYD/2019 AY 2014 - 15 M/S IVY COMPTECH PVT. LTD. 2 AUTHORITIES ORDERS MAKING ARMS LENGTH PRICE ALP ADJUSTMENT OF RS.15,93,92,087/ - IN INFORMATION TECHNOLOGY SOFTWARE DEVELOPMENT SERVICES SEGMENT. WE MAKE IT CLEAR THAT THE LEARNED COUNSEL FOR THE ASSESSEE HAS ONLY PRESSED FOR ASSESSEES 4 TH AND 5 TH SUBSTANTIVE GROUND ALLEGING WRONGFUL INCLUSION OF M/S E - INFO CHIPS LTD., INFOBEANS TECHNOLOGIES LTD., INFOSYS LTD, PERSISTENT SYSTEMS LTD., AND THIRD WARE SOLUTIONS LTD., IN THE ARRAY OF COMPARABLES FOLLOWED B Y ITS STAND THAT FIRST AND LAST OF THE SAID ENTITIES ALSO CARRY ABNORMAL MARGINS AS WELL; RESPECTIVELY WE NOTICE IN THIS FACTUAL BACKDROP THAT INSTANT FIRST AND FOREMOST SUBSTANTIVE GROUND IS NO MORE RES INTEGRA SINCE NOT ONLY THIS TRIBUNALS CO - ORDINAT E BENCH ORDER FOR THE AY 2005 - 06 AND 2010 - 11 HAVE EXCLUDED M/S INFOSYS AND M/S PERSISTENT SYSTEMS LTD BUT ALSO YET ANOTHER COORDINATE BENCH DECISION IN ITA 2305/HYD/18 IN M/S . SONY INDIA PVT. LTD. FOR THE VERY AY 2014 HAS REJECTED ALL THESE FIVE COMPARAB LE ENTITIES IN THE VERY SEGMENT OF C APTIVE SOFTWARE DEVELOPMENT SERVICES THEREBY HOLDING THAT ALL THE SAID ENTITIES ARE NOT FUNCTIONALLY SIMILAR. WE THUS ADOPT THE VERY REASONING MUTATIS MUTANDIS AND DIRECT THE ASSESSING OFFICER TO EXCLUDE ALL THESE FIV E COMPARABLES FOLLOWED BY NECESSARY COMPUTATION AS PER LAW. ASSESSEES 4 TH AND 5 TH SUBSTANTIVE GROUNDS RAISED IN THE INSTANT APPEAL ARE ACCEPTED FOR STATISTICAL PURPOSES IN FOREGOING TERMS. 3. NEXT COMES ASSESSEES 11 TH AND 12 TH SUBSTANTIVE GROUND CHA LLENGING THE CORRECTNESS OF LEARNED LOWER AUTHORITIES ACTION ADDING INTEREST ON OUTSTANDING RECEIVABLES BY ADOPTING SBI TERM DEPOSIT RATES. WE NOTICE THAT THIS TRIBUNALS COORDINATE BENCH IN THE FOLLOWING CASES : (I) VALUEMOMENTUM (ITA NO. 2197/HYD/2017 DT. 19 TH MAY, 2021) (II) OPEN TEXT (ITA NO 152/HYD/2017 DATED 19 TH MAY, 2021) (III) PROGRESSIVE SOFTWARE (ITA NO. 347, 391/HYD/2015 DATED 15 TH MARCH, 2021) ITA NO. 31/HYD/2019 AY 2014 - 15 M/S IVY COMPTECH PVT. LTD. 3 H ELD THAT THE IMPUGNED ARMS LENGTH PRICE ( ALP FOR SHORT) ADJUSTMENT PERTAINING TO INTERNATIONAL TRANSACTIONS BASED ON SBIS DOMESTIC LENDING RATES THAN LIBOR IS NOT SUSTAINABLE. WE, THEREFORE, DIRECT THE TPO TO DELETE THE IMPUGNED ADJUSTMENT FOR THIS PRECISE REASON ALONE. 4. LASTLY COMES ASSESSEES THIRD ISSUE (ADDITIONAL GROUND NO.21) WHICH IS ADMITTED AFTER HEARING BOTH THE PARTIES REGARDING DEPRECIATION CLAIM OF RS.6,82,894/ - AS A CONSEQUENCE TO ASSESSING OFFICERS ACTION HAVING TREATING ITS FOREIGN EXCHANGE LOSS OF RS.6,82,894/ - AS CAPITAL EXPEND ITURE. BOTH THE LEARNED REPRESENTATIVES AGREE THAT THE INSTANT ISSUE BE RESTORED TO ASSESSING OFFICER FOR HIS FRESH ADJUDICATION AS PER LAW IN VIEW OF THE FACT THAT THE IMPUGNED FOREIGN EXCHANGE LOSS HAVE BEEN TREATED AS CAPITAL IN NATURE. WE ORDER ACCOR DINGLY. THIS THIRD AND LAST ISSUE IS ACCEPTED FOR STATISTICAL PURPOSES. THIS ASSESSEES APPEAL IS PARTLY ALLOWED IN ABOVE TERMS. PRONOUNCED IN OPEN COURT ON 17 TH AUGUST, 2021. SD/ - SD/ - (L.P. SAHU) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE 17 TH AUGUST, 2021. * GMV COPY OF THE ORDER FORWARDED TO: 1. M/S IVY COMPTECH PRIVATE LIMITED, 5 TH FLOOR, DIVYASREE OMEGA, BLOCK B, PLOT NO. 13/E, SURVEY NO. 13(PART), KONDAPUR, HYDERABAD 500 081 , TELANGANA. 2. DY. CIT, CIRCLE 2 ( 1 ), HYDERABAD 3. ACIT, RANGE 2 , HYDERABAD. 4. PR.CIT - 2 , HYDERABAD 5. (I) CCIT (IT) (SZ), BENGALURU ; (II) DRP - I, BENGALURU 6 . DR, ITAT, HYDERABAD. 7 . GUARD FILE.
