Agilent Technologies (International) Pvivate Limited., Gurgaon V. ACIT, Gurgaon

ITA 5352/DEL/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7853 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-04-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 30-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; Principle of natural justice
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.G. BANSAL ITA NO. 5352/DEL/11 A.Y. 2007-08 AGILENT TECHNOLOGIES (INTERNATIONAL) VS. ACIT, GU RGAON CIRCLE, PVT. LTD. PLOT NO. 11, SECTOR-8, GURGAON. MT MANESAR, GURGAON. PAN/ GIR NO.AAACB8891K ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI VIJAY IYER ADV. & SHRI MANONEET DALAL ADV. RESPONDENT : SHRI PEEYUSH JAIN CIT DR O R D E R PER R.P. TOLANI, J.M: : THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF ACIT , CIRCLE-1(1), GURGAON DATED 31-10-2011 PASSED U/S 143(3)/R.W.S. 144C OF THE I.T. ACT, 1961 (PURSUANT TO DRP DIRECTIONS DATED 10-08-2011), RELATING TO A.Y. 2007- 08. 2. ASSESSEE HAS RAISED AS MANY AS 17 GROUNDS OF APP EAL TO CHALLENGE THE DETERMINATION OF ARMS LENGTH PRICE (ALP) OF THE I NTERNATIONAL TRANSACTIONS, HELD OUT BY THE ASSESSEE. THE MAIN CHALLENGES ARE: (I) REJECTING CERTAIN COMPARABLES, ECONOMIC PERFORM ANCE DATA; (II) TPOS EXERCISING POWER S U/S 133(6) OF THE ACT TO OBTAIN INFORMATION WHICH IS NEITHER IN THE PUBLIC DOMAIN N OR THE DETAILS WHEREOF WERE PROVIDED TO ASSESSEE TO MEET THE CONTE NTS/DATA. (III) ADOPTING THE DATA OF CERTAIN COMPANIES ON AD HOC BASIS. 2 3. LEARNED COUNSEL FOR THE ASSESSEE CONTENDS THAT THE ASSESSEE IS ENGAGED IN PROVIDING ROUTINE IT-ENABLED AND SOFTWA RE DEVELOPMENT SERVICES TO ITS ASSOCIATED ENTERPRISES (AES). THE ASSESSEE FILED NECESSARY TRANSFER PRICING REPORT (T.P. REPORT) WHICH WAS BASED ON D ATA AVAILABLE IN PUBLIC DOMAIN, AO DID NOT ACCEPT THE SAME. 3.1. IN ARRIVING AT THE SET OF COMPARABLE COMPANIES , THE TPO HAS RELIED ON THIS INFORMATION GATHERED FOR NON PUBLIC DOMAIN BY USING POWERS U/S 133(6). IT IS PERTINENT TO NOTE THAT THIS INFORMATI ON IS NEITHER CONTAINED IN THE ANNUAL REPORTS NOR IN THE PUBLIC DOMAIN DATA BASE A ND IS NOT ACCESSIBLE TO THE APPELLANT. IT IS FURTHER SUBMITTED THAT IN MANY INS TANCES, INFORMATION GATHERED BY 133(6) NOTICES WAS THE APPELLANT NOR AN Y OPPORTUNITY WAS GIVEN TO PRESENT ITS ARGUMENTS. IN OTHER INSTANCES, THE INFORMATION GATHERED WAS VERY SKETCHY AND INCOMPLETE, INSUFFICIENT TO DECIDE THE COMPARABILITY OF DATA. 3.2. SUCH DATA IS COLLECTED FROM FOLLOWING COMPANIE S - ACCEL TRANSMATIC LTD. (SEG.) - AVANI CIMCON TECHNOLOGIES LTD. - CELESTIAL LABS LTD. - DATAMATICS LTD. - E-ZEST SOLUTIONS LTD. - GEOMETRIC LTD. (SEG.) - HELIOS & MATHESON INFORMATION TECHNOLOGY LTD. - ISHIR INFOTECH LTD. - KALS INFORMATION SYSTEMS LTD. (SEG.) - LUCID SOFTWARE LTD. - MEDIASOFT SOLUTIONS LTD. - MEGASOFT LTD. 3 - MINDTREE LTD. - PERSISTENT SYSTEMS LTD. - QUINTEGRA SOLUTIONS LTD. - R.S. SOFTWARE (INDIA) LTD. - SASKEN COMMUNICATION TECHNOLOGIES LTD. (SEG.) - TATA ELXSI LTD. (SEG.) - THIRDWARE SOLUTIONS LTD. 3.3. LD. COUNSEL THUS CONTENDS THAT THE TPO HAS GAT HERED THE INFORMATION FROM NON-PUBLIC DOMAIN AND CONTRARY TO METHODOLOGY AS PRESCRIBED BY RULE 10B(2) THUS THE COMPARABILITY ANALYSIS ARRIVED AT B Y TPO IS ERRONEOUS AND UNTENABLE. IT IS VEHEMENTLY ARGUED THAT THE T.P. AD JUSTMENT MAY BE DELETED OR ALTERNATIVELY THE ISSUE MAY BE RESTORED BACK TO THE FILE OF TPO TO EXAMINE THE SAME AFRESH AFTER PROVIDING THE ASSESSEE THE MA TERIAL BEING USED AGAINST IT. RELIANCE IS PLACED ON M/S GENISYS INTEGRATING S YSTEMS (INDIA) PVT. LTD. [ITA NO. 1231/BANG/2010], FOR THE PROPOSITION THAT IN ORDER TO USE THE INFORMATION GATHERED BY USING SEC. 133(6), IT IS IN CUMBENT ON TPO TO FURNISH SUCH INFORMATION TO THE ASSESSEE AND ARRIVE AT THE ALP AFTER CONSIDERING THE OBJECTIONS RAISED BY THE ASSESSEE IN THAT BEHALF. F URTHER RELIANCE IS PLACED ON M/S KODIAK NETWORKS (INDIA) PVT. LTD. [ITA NO. 1413 /BANG/2010] FOR THE SAME PURPOSE. 4. LD. DR IS HEARD WHO SUPPORTS THE ORDER OF AO. 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE RELEVANT MATERIAL AVAILABLE ON RECORD. FROM THE MATERIAL PLA CED BEFORE US IT EMERGES THAT TPO HAS UTILIZED INFORMATION FOR COMPARABILITY FROM THE COMPANIES WHICH ARE NOT IN PUBLIC DOMAIN. THE INFORMATION HAS BEEN OBTAINED BY ISSUING NOTICES U/S 133(6) AND THE GATHERED INFORMA TION IS NOT SUPPLIED TO ASSESSEE TO ENABLE IT TO MEET THE OBJECTIONS. THE P RINCIPLE OF NATURAL JUSTICE 4 ENUNCIATE THAT BEFORE PROCEEDING TO USE SOME MATERI AL AGAINST ASSESSEE, THE SAME SHOULD BE SUPPLIED AND THE ISSUE SHOULD BE DEC IDED AFTER HEARING THE OBJECTIONS IN THIS BEHALF. THIS VIEW IS SUPPORTED B Y THE COORDINATE BENCHES OF THE ITAT IN THE CASES OF M/S GENISYS INTEGRATING SYSTEMS (INDIA) PVT. LTD.; AND M/S KODIAK NETWORKS (INDIA) PVT. LTD. (SU PRA). CONSEQUENTLY, WE ARE OF THE VIEW THAT SUCH INFORMATION GATHERED BY T HE TPO U/S 133(6) SHOULD BE PROVIDED TO THE ASSESSEE TO ENABLE IT TO VERIFY THE COMPARABLE FIGURES WITH A RIGHT TO FILE OBJECTION/ APPLY THEREON. THE TPO S HALL ARRIVE AT THE ALP AFTER PROVIDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEIN G HEARD IN ACCORDANCE WITH LAW. CONSEQUENTLY, WE SET ASIDE THE MATTER BAC K TO THE FILE OF AO/TPO ACCORDINGLY. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES ONLY. ORDER PRONOUNCED IN OPEN COURT ON 15-6-2012. SD/- SD/- ( K.G. BANSAL ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15-6-2012. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR 5