Copal Research India Pvt. Ltd., Gurgaon V. ITO, New Delhi

ITA 3955/DEL/2010

• Counselvise Citation: 395520114 RSA 2010
• Duration Of Justice: 4 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 24-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 23-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JUDY JAMES
• Keywords: Transfer pricing; International transaction
• Section: 143(3); 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : I NEW DELHI BEFORE SHRI H.S.SIDHU, J.M. AND SHRI J.SUDHAKAR REDDY, A.M. ITA NO. 3955 /DEL/201 0 ASSESSMENT YEAR : 200 6 - 07 & ITA NO. 5776 /DEL/201 1 ASSESSMENT YEAR : 200 7 - 08 M/S COPAL RESEARCH INDIA PVT.LTD. VS. ITO, WARD 3(4) 6 TH FLOOR, VATIKA ATRIUM NEW DELHI SECTOR 53, GURGAON PAN: AACCC1159 R (APPELLANT) (RESPONDENT) A PPELLANT BY: - S/SH: KANCHAN KAUSHAL, C.A. ROHIT TIWARI, C.A. ANUBHAV RASTOGI, C.A. RESPONDENT BY: - SH.JUDY JAMES, STANDING COUNSEL, D.R. O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER BOTH THESE APPEALS ARE FILED BY THE ASSESSEE AND ARE DIRECTED AGAINST SEPARATE ORDERS OF THE ASSESSING OFFICER ( A.O. ) PASSED U/S 143(3) R.W.S. 144C OF THE INCOME TAX ACT, 1961 (THE ACT ) ON 21.7.2010 PERTAINING TO THE ASSESSMENT YEAR ( A.Y. ) 2006 - 07 AND ON 27.10.2011 FOR THE A.Y. 2007 - 08. AS THE ISSUES ARISING IN BOTH THE APPEALS ARE COMMON, FOR THE SA KE OF CONVENIENCE THEY ARE HEARD TOGETHER AND ARE DISPOSED OF BY WAY OF THIS COMMON ORDER. 2. FACTS IN BRIEF: - COPAL RESEARCH INDIA PRIVATE LTD. (THE ASSESSEE) WAS INCORPORATED IN INDIA IN DECEMBER, 2002. DURING THE FY 2005 - 06, THE ASSESSEE WAS ENGAGED IN PROVISION OF INFORMATION TECHNOLOGY ENABLE D BACK 2 OFFICE SUPPORT SERVICES ITES) TO ITS GROUP COMPANIES. IN RE TURN FOR RENDERING THESE SERVICES, THE ASSESSEE WAS REMUNERATED ON COST PLUS BASIS I.E. IT WAS COMPENSATED FOR ALL ITS COSTS, PLUS A MARK UP OF 12.20% THEREON. IN RESPECT OF ITS SERVICES, THE ASSESSEE ACTS AS A ROUTINE ITES PROVIDER THAT EM PLOYEES ROUTINE TANGIBLE ASSETS AND ASSUMES LESS THAN NORMAL RISKS ASSOCIATED WITH CARRYING OUT SUCH BUSINESS. ACCORDINGLY, THE ASSESSEE OPERATES ON A RISK INSULATED BASIS IN CARRYING OUT THIS ACTIVITY. IN RESPECT OF THE PROFITS EARNED BY IT FROM THE PROV ISION OF THE ABOVE SERVICES, THE ASSESSEE IS ENTITLED TO A TAX HOLIDAY U/S 10A OF THE ACT AND MAKES THE NECESSARY STATUTORY FILINGS WITH THE SOFTWARE TECHNOLOGY PARK OF INDIA (STPI). DURING THE RELEVANT FINANCIAL YEAR, THE ASSESSEE UNDERTOOK THE FOLLOWING INTERNATIONAL TRANSACTIONS WITH THE ASSOCIATED ENTERPRISES(AES). INTERNATIONAL TRANSACTIONS FOR FY 2005 - 06 (FOR THE AY 2006 - 07) PARTICULARS AMOUNT (IN RS.CRORES) PROVISION OF INFORMATION TECHNOLOGY ENABLES SERVICES (ITES) 12.02 INTERNATIONAL TRANSACTIO NS FOR FY 2006 - 07 (FOR THE AY 2007 - 087) PARTICULARS AMOUNT (IN RS.CRORES) PROVISION OF INFORMATION TECHNOLOGY ENABLES SERVICES (ITES) 32.99 3. T HE ASSESSEE FILED A TRANSFER PRIC ING STUDY REPORT FOR BOTH THE ASSESSMENT YEARS. THE A.O. REFERRED THE SAME TO THE TRANSFER PRICING OFFICER ( T.P.O. FOR SHORT) FOR COMPUTATION OF ARM S LENGTH PRICE ( A.L.P. ) OF THE SAID INTERNATIONAL TRANSACTION. THE T.P.O. - I, NEW DELHI PASSED ORDERS U/S 92 CA(3) OF THE ACT PROPOSING CERTAIN ADJUSTMENTS. THE A.O. PASSED A DRAFT ASSESSMENT ORDER. THE ASSESSEE FILED OBJECTIONS BEFORE THE DISPUTE RESOLUTION PANEL (D.R.P.). THEREAFTER THE D.R.P. PASSED ITS ORDER U/S 1 4 4C(5) OF THE ACT. THEREAFTER THE A.O . PASSED ORDER U/S 143(3) READ WITH SECTION 144C OF THE INCOME TAX ACT, 1961 (THE ACT ) FOR BOTH THE A.YS. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 3 4. WE HAVE HEAR D SHRI KANCHAN KAUSHAL, CA AND SHRI ROHIT TIWARI, CA ALONG WITH SHRI ANUBHAV RASTO GI, CA , THE LD.COUNSEL S FOR THE ASSESSEE AND SRI JUDY JAMES, STANDING COUNSEL, ON BEHALF OF THE REVENUE. 5. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, ON PERUSAL OF MATERIAL ON RECORD , ORDERS OF THE AUTHORITIES BELOW, CASE LAWS CITED, WE HOLD AS FOLLOWS. 6. WE FIND THAT THE D.R.P. HAS NOT PASSED A SPEAKING ORDER IN THIS CASE FOR BOTH THE A.YS. THE ASSESSEE HAS RAISED A NUMBER OF CONTENTIONS BEFORE THE D.R.P. AND NONE OF THESE CONTENTIONS WERE CONSIDERED BY THE D.R.P. UNDE R THESE CIRCUMSTANCES WE HAVE NO OTHER ALTERNATIVE BUT TO REMAND THE MATTER BACK TO THE FILE OF THE D.R.P., WITH A DIRECTION THAT D.R.P. SHALL PASS A SPEAKING ORDER ON EACH AND EVERY CONTENTION RAISED BY THE ASSESSEE. IT SHALL ALSO GIVE ITS VIEWS ON VARIO US CASE LAWS CITED BY THE ASSESSEE. IN THE RESULT BOTH THESE APPEALS ARE SET ASIDE TO THE FILE OF THE A.O. . AND ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE FOR THE AY 2006 - 07 AND 2007 - 08 STAND ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH MAY , 2015. SD/ - SD/ - ( H.S. SIDHU ) ( J. SU DHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 08 TH MAY ,2015 *MANGA COPY OF THE ORDER FORWARDED TO: 4 1.A PPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR