DCIT, Circle-17(2), Hyd, Hyderabad V. LGS Global Ltd., Hyd, Hyderabad

ITA 478/Hyd/2015

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 8456 (ITAT-HYDERABAD)
• Duration Of Justice: 6 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2010-2011
• Appeal Filed On: 27-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Assessee Lawyers: P.MURALI MOHANA RAO
• Keywords: Transfer pricing

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD ‘B’ BENCH, HYDERABAD. BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI L. P. SAHU, ACCOUNTANT MEMBER (Through Virtual Hearing) ITA No.478/Hyd/2015 (Assessment Year : 2010-11) Dy. Commissioner of Income Tax, Circle 17(2), Hyderabad. .....Appellant. Vs. M/s. LGS Global Limited, (formerly “Lanco Global Systems Ltd.”) (Presently “Lycose Internet Ltd.”) Hyderabad. PAN AAACL5827B .....Respondent. Appellant By : Shri YVST Sai (D.R) Respondent By : Shri P. Murali Mohana Rao. (A.R.) Date of Hearing : 05.10.2021. Date of Pronouncement : 16.11.2021. O R D E R Per Shri S.S. Godara, J.M. : This Revenue’s appeal for Assessment Year 2010-11 raises against the DCIT, Circle 17(2), Hyderabad’s assessment framed in furtherance to Dispute Resolution Panel (DRP), Hyderabad’s directions 2 ITA No.478/Hyd/2015 dt.24.12.2014 involving proceedings u/s.143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 ('the Act'). Heard both the parties. Case file perused. 2. The Revenue raises the following substantive grounds in the instant appeal : “ 2. Whether in the facts and circumstances of the case the Hon’ble DRP is correct in law in holding that the interest rate should be taken at LIBOR +2% without giving any rational reason. 3. Whether in the facts and circumstances of the case, the Hon’ble DRP is correct in law in holding that telecommunication charges and statutory disallowances should be excluded from total turnover for the purpose of computation of allowable deduction u/s.10A of the Income Tax Act, 1961 when there is no such specific provision under the act to reduce from the total turnover.” 3. Learned CIT-DR vehemently contended during the course of hearing that the Dispute Resolution Panel (DRP) herein has erred in law and on facts in directing the lower authorities to adopt interest rate @ LIBOR + 2% qua the assessee's investment in subsidiaries to the tune of Rs.50,17,31,400 than that @ 12.25% adopted by the Transfer Pricing Officer (TPO) in light of the corresponding PLR applicable in the relevant financial year involving 3 ITA No.478/Hyd/2015 foreign currency directions. We further note that the TPO’s order has neither adopted any method nor comparable whilst benchmarking the assessee's international transactions herein with domestic market SBI’s PLR. We therefore decline the Revenue’s instant first and foremost substantive grievance and uphold the DRP’s directions in issue. 4. Next comes the Revenue’s second substantive grievance that the DRP has erred in law and on facts in holding that the assessee’s telephone charges and statutory disallowances ought to be excluded both from export as well as total turnover. We find the instant latter grievance is no more res integra in light of hon'ble apex court decision in Addl. CIT Vs. HCL Technologies Limited (2018) 404 ITR 719 (SC) followed by the CBDT Circular 4 of 2018 dt.14.8.2018 that such an item(supra)) has to be excluded both from export as well as total turnover. We thus affirm the learned DRP’s directions under challenge for this precise reason alone. 4 ITA No.478/Hyd/2015 No other ground has been pressed before us. 5. This Revenue’s appeal is dismissed in above terms. Order pronounced in the open court on 16th Nov., 2021. Sd/- Sd/- (L.P. SAHU) (S.S. GODARA) Accountant Member Judicial Member Hyderabad, Dt.16.11.2021. * Reddy gp Copy to : 1. M/s. LGS Global Limited, (formerly “Lanco Global Systems Ltd.”) (Presently “Lycose Internet Ltd.”) 8-2-293/82/A/796/B, Road No.36, Jubilee Hills, Hyderabad-500 033. 2. DCIT, Circle 17(2), Hyderabad. 3. DRP, Hyderabad. 4. CIT(Appeals)- Hyderabad. 5. DR, ITAT, Hyderabad. 6. Guard File. By Order Sr. Pvt. Secretary, ITAT, Hyderabad.