Bentley Systems India Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 533/DEL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1555 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 02-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Additional evidence
• Section: 143(3); 144C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI I BEN CH, NEW DELHI BEFORE PRAMOD KUMAR, VICE PRESIDENT AND SHRI K.N. CHARY, JUDICIAL MEMBER, ITA NO.533/DEL/2016 [ASSESSMENT YEAR: 2011-12] BENTLEY SYSTEMS INDIA PRIVATE LIMITED, 203, 02MND FLOOR, OKHLA INDUSTRIAL ESTATE, PHASE-III, NEW DELHI-110020 DCIT, CIRCLE-4(2), NEW DELHI PAN-AABCB5645E ASSESSEE REVENUE ASSESSEE BY SHRI AJITKORDE REVENUE BY SHRI SANDEEP KUMAR MISHRA DATE OF HEARING 31/07/2019 DATE OF PRONOUNC EMENT 02/09/2019 ORDER PER K.NARASIMHA CHARY, JUDICIAL MEMBER, AGGRIEVED BY THE ORDER DATED 24/11/2015 PASSED U/S 143(3) READ WITH SECTION 144C OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) PURSUANT TO DIRECTION DATED 30/09/2015 ISSUED BY THE DISPUTE RESOLUTION P ANEL-1, NEW DELHI (IN SHORT DRP). M/S BENTLEY SYSTEMS INDIA PRIVATE LIMITED ( THE ASSESSEE) PREFERRED THIS APPEAL STATING THAT DETERMINATION OF COMPARABLE UNC ONTROLLED PRICE METHOD AS MOST APPROPRIATE METHOD BY THE TPO IS ERRONEOUS. 2. BRIEFLY, STATED THAT THE FACTS OF THE CASE ARE T HAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING COLLABORATIVE SOFTWARE SOLUTIONS BESIDES UNDERTAKING SOFTWARE DEVELOPMENT, TRAINING AND CONSULTANCY SERV ICES. FOR THE ASSESSMENT YEAR 2011-12, THEY HAVE FILED ITS RETURN OF INCOME ON 30/11/2011 DECLARING TOTAL 2 ITA NO.533/DEL/2016 ASSESSMENT YEAR 2011-12 INCOME OF RS.1,36,28,120/-UNDER NORMAL PROVISIONS O F THE ACT AND BOOK PROFIT OF RS.1,57,57,136/- UNDER SPECIAL PROVISIONS OF THE AC T. 3. IT WAS NOTICED BY THE LD. AO THAT DURING THE YEA R UNDER CONSIDERATION, THE ASSESSEE ENTERED IN TO INTERNATIONAL TRANSACTIONS W ITH ASSOCIATE ENTERPRISES, AS SUCH DETERMINATION OF ARMS LENGTH PRICE (IN SHORT ALP) WAS REFERRED TO THE LD. TPO. LD. TPO, BY ORDER DATED 12/01/2015 SUGGESTED A N ADJUSTMENT OF RS.1,48,36,064/- COMPRISING OF RS.1,17,19,732/- ON ACCOUNT OF SOFTWARE DEVELOPMENT SERVICES OF RS.31,16,332/- ON ACCOUNT O F CORPORATE SERVICES CHARGE. THE ASSESSEE CONDUCTED TNMM USING OP/TC AS THE PLI TO BENCHMARK THE INTERNATIONAL TRANSACTIONS. LD. TPO SEGREGATED THE TRANSACTIONS AND APPLIED CUP METHOD AS MORE APPROPRIATE METHOD, SUGGESTED THE AD JUSTMENT IN RESPECT OF THE INTRA GROUP SERVICES. LD. DRP HELD THAT THE PAYMENT FOR INTRA GROUP SERVICES TO AE IS A SEPARATE INTERNATIONAL TRANSACTION INDEPENDENT OF FINANCIAL RESOLUTIONS AND THE CAPABLE OF VERIFICATION SEPARATELY. BEING AGGRIEVED BY THE SAME, THE ASSESSEE PREFERRED THIS APPEAL. 4. AT THE OUTSET, IT IS AN ARGUMENT OF THE LD. AR, IN SO FAR AS, THE INTRA GROUP SERVICES ARE IN RESPECT OF THE AY 2007-08, 2009-10 AND 201-11 ALSO, LD. TPO DETERMINED THE COMPARABLE UNCONTROLLED METHOD (CUP) AS THE MOST APPROPRIATE METHOD TO BENCHMARK THE INTERNATIONAL TRANSACTION O F CORPORATE SERVICES AND THE SAME WAS UPHELD BY THE LD. DRP. HE FURTHER SUBMITTE D THAT IN APPEAL, THE TRIBUNAL HAD TAKEN THE CONSISTENT VIEW THAT THE INT ERCOMPANY AGREEMENTS FOR AVAILING OF CORPORATE SERVICES HAVE TO BE CONSIDERE D AFRESH AND FOR SUCH PURPOSE THE MATTER HAD TO BE REMANDED BACK TO THE FILE OF T HE LD. TPO FOR CONSIDERATION OF THE EVIDENCE MADE AVAILABLE BY THE ASSESSEE. IT I S PRAYED THAT SIMILAR COURSE MAY BE ADOPTED FOR THIS ASSESSMENT YEAR ALSO. 5. THE LD. DR HEAVILY RELIED UPON THE ORDERS OF AUT HORITIES BELOW. HE, HOWEVER REPORTED NO OBJECTION FOR REMANDING THE MAT TER TO THE FILE OF LD. TPO. 3 ITA NO.533/DEL/2016 ASSESSMENT YEAR 2011-12 6. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS MADE BY EITHER SIDE. FOR AY 2007-08, UNDER SIMILAR CIRCUMST ANCES, A CO-ORDINATE BENCH OF THIS TRIBUNAL IN ITA NO.6160/DEL/2013 HELD THAT THE RECORD WAS NOT CONSIDERED PROPERLY BY THE DRP IN THE LIGHT OF THE INTERCOMPAN Y AGREEMENTS FOR AVAILING OF CORPORATE SERVICESAND THERE WAS NEED TO SET-ASIDE T HE ISSUE TO THE FILE OF THE LD. AO FOR AFRESH ADJUDICATION AFTER OBTAINING A REPORT FROM THE LD. TPO. SO ALSO, FOR THE ASSESSMENT YEARS 2009-10 AND 2010-11, THIS ISSU E WAS CONSIDERED BY THE TRIBUNAL IN ITA NO.6161/DEL/2013 AND ITA NO.6261/DE L/2015 AND BY ORDER DATED 04/11/2015 GAVE SPECIFIC DIRECTIONS THAT THERE WAS NEED TO CONSIDERATION OF ADDITIONAL EVIDENCE FILED BEFORE THE LD. DRP. 7. IT IS SUBMITTED BY THE LD. AR THAT MATERIAL PLAC ED BEFORE THE TRIBUNAL IN THIS APPEAL BY WAY OF PAPER BOOK HAS BEARING ON THE ON T HE ISSUE WHICH GOES TO THE ROOT OF THE MATTER AND THEREFORE IT IS JUST AND PRO PER TO SET-ASIDE THE IMPUGNED ORDER AND REMANDED THE MATTER TO THE FILE OF THE LD . TPO/AO FOR CONSIDERATION OF THE MATERIAL PRODUCED/TO BE PRODUCED BY THE ASSESSE E FOR TAKING AFRESH VIEW IN THE LIGHT OF THE INTER COMPANY AGREEMENT OF AVAILIN G OF CORPORATE SERVICES AND ADDENDUM TO THE TRANSFER PRICE AGREEMENT. WHILE ACC EPTING THIS SUBMISSION OF THE LD. AR, WE ARE OF THE CONSIDERED OPINION THAT THIS MATERIAL HAS TO BE TAKEN INTO CONSIDERATION BY THE LD. TPO BY AR FOR PROPER DETER MINATION OF THE ALP IN RESPECT OF CORPORATE SERVICES. WE, ACCORDINGLY, SET-ASIDE T HE ISSUE TO THE FILE OF THE LD. TPO/AO FOR DETERMINATION OF THE ARMS LENGTH PRICE. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS THE 02 ND SEPTEMBER, 2019 SD/- SD/- [PRAMOD KUMAR] [K. NARASIMHA CHARY] VICE PRESIDENT JUDICIAL MEMBER DELHI; DATED: /09/2019. F{X~{T? F{X~{T? F{X~{T? F{X~{T? FA FA FA FA P.S P.SP.S P.S 4 ITA NO.533/DEL/2016 ASSESSMENT YEAR 2011-12 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI