ITO, Bangalore V. M/s AT & T Global Business Bangalore Services India Pvt. Ltd., Bangalore

ITA 342/BANG/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7677 (ITAT-BANGALORE)
• Duration Of Justice: 5 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-06-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 09-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 92C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER I T (TP) A NO. 342 /BANG/201 2 ITO WARD 11 (1), BANGALORE. VS. M/S A T & T GLOBAL BUSINESS BANGALORE S ERVICES INDIA (P) LTD., (FORMERLY KNOWN AS USI INTERNET WORKING SOLUTIONS PVT. LTD.), SALARPURIA SOFT ZONE, BLOCK A, GROUND FLOOR, BELLANDUR VILLAGE, VARTHUR HOBLI, BANGALORE - 560037 PAN AACCA9362N APPELLANT RESPONDENT. A SSESSEE B Y : SHRI DHANEESH , C. A. REVENUE BY : SHRI G. KAMALADHAR, STANDING COUNSEL DATE OF HEARING : 21.08.2017. DATE OF PRONOUNCEMENT : 24.08.2017. O R D E R PER SHRI A.K. GARODIA, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IV, BANGALOR E DT.05.01.2012 FOR A. Y. 2005 - 06. 2. AS PER GROUND NO. 1 TO 4, THE ISSUE INVOLVED IS REGARDING THE COMPUTATION OF THE AMOUNT OF DEDUCTION ALLOWABLE U/S 10A AND THE S PECIFIC GRIEVANCE IS ABOUT 2 IT(TP)A NO.342/BANG/2012 THE DIRECTION OF CIT (A) TO THE A. O. TO REDUCE THE COMMUNICATION CHARGES REDUCED BY THE A.O. FROM EXPORT TURNOVER FROM TOTAL TURNOVE R ALSO FOR THIS PURPOSE. THE SECOND SPECIFIC GRIEVANCE IS ALSO ABOUT THE COMPUTA TION OF THE DEDUCTION ALLOWABLE U/S 10A WITHOUT ADJUSTING THE BROUGHT FOR WARD BUSINESS LOSS AND UNABSORBED DEPRECIATION FROM PROFIT. THE THIRD GRIE VANCE AS PER GROUNDS 7 TO 11 IS ABOUT T. P. ADJUSTMENT AND THE SPECIFIC GRIEVANC E IS REGARDING THE DIRECTION OF THE CIT (A) TO ADOPT 0% RPT FILTER, TURNOVER FILTER AND HIGH PROFIT FILTER OF 50% IN SELECTING THE COMPARABLES. THERE IS ONE MORE GRIEVA NCE THAT AS PER CIT (A) 5% STANDARD DEDUCTION IS TO BE ALLOWED UNDER THE PROVI SO TO SECTION 92C (2). 3. BOTH SIDES AGREED THAT THE FIRST TWO ISSUES ABOU T COMPUTATION OF THE DEDUCTION ALLOWABLE U/S 10A IS COVERED IN FAVOUR OF THE ASSESSEE BY TWO JUDGMENTS OF HONBLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF TATA ELXSI, 349 ITR 98 AND IN THE CASE OF CIT VS. YOKOGAWA INDIA LT D., 341 ITR 385. REGARDING THE T. P. ISSUE, THE BENCH POINTED OUT THAT NOW THE TRIBUN AL IS RESTORING BACK THE MATTER TO AO/TPO FOR FRESH DECISION IN THOSE CASES WHERE, THE CLAIM OF THE ASSESSEE IS TO APPLY TURNOVER FILTER AND/OR HIGH PROFIT FILTER IN THE LIGHT OF THE JUDGMENT OF HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF CH RYSCAPITAL INVESTMENT ADVISORS (INDIA) PVT. LTD. VS. DCIT, 376 ITR 183 BECAUSE IT WAS HELD IN THIS JUDGMENT THAT 3 IT(TP)A NO.342/BANG/2012 HUGE PROFIT OR HUGE TURNOVER, IPSO FACTO DOES NOT L EAD TO THE EXCLUSION OF A COMPARABLE AND THE TPO HAS TO BE SATISFIED THAT SUC H DIFFERENCE DO NOT MATERIALLY AFFECT THE PRICE OR COST AND SECONDLY, AN ATTEMPT S HOULD BE MADE TO MAKE REASONABLE ADJUSTMENT TO ELIMINATE THE MATERIAL EFF ECT OF SUCH DIFFERENCES. THE BENCH ALSO POINTED OUT THAT NOW THE TRIBUNAL IS ADO PTING 25% RPT FILTER AND THEREFORE, SEVERAL COMPARABLES WILL COME ONCE RPT F ILTER IS ADOPTED AT 2%5 AS AGAINST 0% BY CIT (A) AND THOSE COMPARABLES HAVE TO BE EXAMINED ON OTHER ASPECTS. IN REPLY, LEARNED DR OF THE REVENUE SUBMIT TED THAT THE ENTIRE TP MATTER MAY GO BACK TO CIT (A) FOR FRESH DECISION WITH SUIT ABLE DIRECTIONS. LEARNED AR OF THE ASSESSEE SUBMITTED THAT AS PER THE TABLE ON PAG E 26 OF THE ORDER OF CIT (A), CIT (A) HAS EXCLUDED 12 COMPARABLES BY APPLYING 0% RPT FILTER BUT OUT OF THOSE 12, THE MATTER MAY BE RESTORED TO CIT (A) TO EXAMIN E 4 COMPARABLES ON FUNCTIONALITY ASPECT BEING 1) THIRDWARE SOLUTIONS L TD., 2) TATA ELXSI LTD. 9SEG.), 3) SATYAM COMPUTER SERVICES LTD. AND 4) INFOSYS TECHNO LOGIES LTD. OUT OF REMAINING 8 COMPARABLES, HE SUBMITTED THAT THE COMPARABLE FLE XTRONICS SOFTWARE LTD. (SEG.) MAY BE EXAMINED BY THE CIT (A) ON TURNOVER ASPECT I N THE LIGHT OF THE JUDGMENT OF HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF CH RYSCAPITAL INVESTMENT ADVISORS (INDIA) PVT. LTD. VS. DCIT (SUPRA) AND REMAINING 7 COMPARABLES MAY BE INCLUDED. 4 IT(TP)A NO.342/BANG/2012 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN VIE W OF THE DISCUSSION IN PARA 3 ABOVE, WE RESTORE THE MATTER BACK TO CIT (A) WITH THE DIRECTION THAT HE SHOULD DECIDE THE ISSUE AFRESH BY APPLYING RPT FILTER OF 2 5% AND EXAMINE THE ASPECT OF HIGH PROFIT AND HIGH TURNOVER IN THE LIGHT OF THE J UDGMENT OF HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF CHRYSCAPITAL INVESTME NT ADVISORS (INDIA) PVT. LTD. VS. DCIT (SUPRA) AND THE COMPARABLES WHICH SURVIVE AFTE R THAT OUT OF THE 12 COMPARABLES LISTED ON PAGE 26 OF THE IMPUGNED ORDER BE EXAMINED ON FUNCTIONALITY ASPECT. REGARDING STANDARD DEDUCTION UNDER THE PROVISO TO SECTION 92C (2) , WE HOLD THAT AFTER THE AMENDMENT, THE BEN EFIT IS ALLOWABLE ONLY IF THE ALP IS WITHIN 5% OF THE PRICE CHARGED AND NO BENEFI T IS AVAILABLE UNDER THIS PROVISO IF THE DIFFERENCE EXCEEDS 5%. 5. IN THE RESULT, THE APPEAL OF THE REVENUE I S PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH DAY OF AUGUST, 2017. SD/- SD/- (SUNIL KUMAR YADAV) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 24 TH AUGUST, 2017. / MS/ 5 IT(TP)A NO.342/BANG/2012 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR , ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.