M/s Symphony Infospace (India) Pvt. Ltd., Bangalore V. ITO, Bangalore

ITA 565/BANG/2016

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1847 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 09-01-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 24-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C H SUNDAR RAO
• Keywords: Transfer pricing
• Section: 10AA; 234B; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES A BENCH: BANGALORE BEFORE SHRI A.K. GARODIA, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 565/BANG/2016 (ASSESSMENT YEAR: 20 1 1 - 12 ) HARMAN CONNECTED SERVICES CORPORATION INDIA P. LTD., (ERSTWHILE SYMPHONY INFOSPACE (INDIA) P. LTD.) PLOT NO.3 & 3A, EOIZ INDL. AREA, KRISHNARAJAPURAM HOBLI, BANGAL ORE - 560 066 .APPELLANT PAN AALCS 9142F VS. INCOME TAX OFFICER , WARD 6(1)(4), BANGALORE. RESPONDENT. ASSESSEE BY: SHRI SHARATH RAO, CA REVENUE BY: SHRI C H SUNDAR RAO, CIT (D.R) DATE OF HEARING : 26.11 .2019 DATE OF PRONOUNCEMENT : 06.12 .2019 O R D E R PER SHRI PAVAN KUMAR GADALE, JM : THE ASSESSEE HA FILED MISC. PETITION NO.69/BANG/2019 IN THE PRESENT APPEAL OF IT(TP)A NO.565/BANG/2016 WAS HEARD WITH OBSERVATIONS AT PARAS 3 & 4 WHICH ARE READ AS UNDER : 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, WE REPRODUCE PARA NO. 2 OF THE IMPUGNED TRIBUNAL ORDER WHICH IS AS UNDER. 2 IT (TP) A NO. 565/BANG/2016 02. THE ASSESSEE HAS RAISED AS MANY AS 18 GROUNDS UNDER VARIOUS HEADS, BUT THE ASSESSEE AT THE TIME OF HEARING HAS PRESSED ONLY GROUND NOS. 2, 3 AND 4 WHICH GO TO THE ROOT OF THE MATTER. 4. FROM THE ABOVE PARA REPRODUCED FROM THE TRIBUNAL ORDER, IT COMES OUT THAT THE TRIBUNAL HAS ALSO NOTED IN THIS ORDER THAT THE ASSESSEE HAS RAISED 18 GROUNDS OF AP PEAL BUT THE TRIBUNAL HELD IN THIS PARA THAT AT THE TIME OF HEARING, THE ASSESSEE HAS PRESSED ONLY GROUND NOS. 2, 3 AND 4 WHICH GO TO THE ROOT OF THE MATTER. NOW THE QUESTION IS WHETHER THE GROUND NOS. 2, 3 AND 4 WHICH ARE RAISED IN RESPECT OF TP ISSUE GO TO THE ROOT OF THE MATTER IN RESPECT OF NON - TP ISSUES BEING CORPORATE TAX ISSUES RAISED BY THE ASSESSEE IN GROUND NOS. 8 TO 18 REGARDING DISALLOWANCE U/S. 40(A)(IA), RE - COMPUTATION OF DEDUCTION U/S. 10AA OF THE IT ACT AND INTEREST U/S. 234D AND 234B OF TH E IT ACT. IN OUR CONSIDERED OPINION, THIS CANNOT BE SAID THAT GROUNDS RAISED ON TP ISSUES CAN GO TO THE ROOT OF THE MATTER IN RESPECT OF NON - TP ISSUES BEING CORPORATE TAX ISSUES AND HENCE, THERE IS APPARENT MISTAKE IN THE TRIBUNAL ORDER AND THEREFORE, WE RECALL THIS TRIBUNAL ORDER FOR LIMITED PURPOSE FOR DECIDING GROUND NOS. 8 TO 18. THE REGISTRY IS DIRECTED TO FIX THIS APPEAL FOR HEARING ON 26.11.2019 AND SINCE, THE DATE OF HEARING IS PRONOUNCED IN THE OPEN COURT, NO SEPARATE NOTICE OF HEARING IS REQUIRE D TO BE ISSUED. 2. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT THE TRIBUNAL WHILE PASSING THE ORDER DT.16.01.2019 HAS NOT ADJUDICATED THE GROUND OF APPEAL NOS.8 TO 18 WHICH ARE READ AS UNDER : 3 IT (TP) A NO. 565/BANG/2016 4 IT (TP) A NO. 565/BANG/2016 3. AT THE TIME OF HEARING, THE LEARNED AUTHORISED REPRESENTATIVE HAS NOT PRESSED THE GROUNDS OF APPEAL NOS.8 TO 14 AND MADE SUBMISSIONS ON GROUND OF APPEAL NO.15 IN RESPECT OF DEDUCTION OF TRAVELLING EXPENSES INCURRED IN FOREIGN CURRENCY FROM THE TOTAL TURNOVER FOR ARRIVING AT DEDUCTION UNDER SECTION 10AA OF THE INCOME TAX ACT, 1961 ('THE ACT') . WH EREAS IN RESPECT OF GROUND OF APPEAL NOS.16 TO 18, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS FILED PETITION UNDER SECTION 154 OF THE ACT ON 18. 05.2016 , WHERE THE ASSESSING OFFICER INADVERTENTLY CONSIDERED FOR ASSESSMENT THE TOTAL INCOME OF RS.221,203,745 INSTEAD OF RS.219,480,193 BEFORE ALLOWING DEDUCTION UNDER SECTION 10AA OF THE ACT . FURTHER T HE INTEREST UNDER SECTION 234D AND INTEREST UNDER SECTION 234B ARE TO BE CHARGED A F T E R G I V I N G E F F E C T TO DEDUCTION AND SUPPORTED WITH DETAILS. CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF TRANSFER PRICING OFFICER (TPO) AND DISPUTE RESOLUTION PANEL (DRP). 3. WE HEARD THE RIVAL CONTEN TIONS AND PERUSED THE MATERIAL ON RECORD. ON THE FIRST DISPUTED ISSUE O N ALLOWING OF DEDUCTION OF TRAVELLING EXPENSES INCURRED IN FOREIGN CURRENCY FROM THE TOTAL TURNOVER, WE FOUND THE DRP HAS GIVEN AN OBSERVATION AT PARA 3.1 THAT THE ASSESSEE HAS OBJECTE D BEFORE THE ASSESSING OFFICER 5 IT (TP) A NO. 565/BANG/2016 REDUCING THE CO MMUNICA TION AND OTHER FOREIGN EXPENSES ONLY FROM THE EXPORT TURNOVER BUT NOT FROM TOTAL TURNOVER . THE DRP RELYING ON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE CASE OF TATA ELXSI LIMITED VS. CIT REPORTED IN 349 ITR 98 DIRECTED THE ASSESSING OFFICER TO REDUCE THE EXPENSES FROM TOTAL TURNOVER ALSO. BUT ON PERUSAL OF THE FINAL ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOT CONSIDERED THIS DIRECTION OF DRP IN REDUCING THE TRAVELLING EXPENSES INCURRED IN FOREIGN CURRENCY FROM THE TOTAL TURNOVER FOR ARRIVING AT DEDUCTION UNDER SECTION 10AA OF THE ACT. WE FOUND THIS ISSUE WAS CONSIDERED BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF TATA ELXSI LIMITED VS. CIT (SUPRA). WE CONSIDERING THE SUBMISSIONS OF THE LEARNED AUTHORISED REPRESENTATIVE AND ALSO ON PERUSAL OF THE ASSESSMENT ORDER FOUND THESE FACTS WERE NOT DISCUSSED IN THE ASSESSMENT PROCEEDINGS BY THE ASSESSEE AND HENC E THE LEARNED AUTHORISED REPRESENTATIVE PRAYED SUBSTANTIAT I N G WITH BILLS AND EVIDENCES OF CLAIM. ACCORDINGLY, WE FOLLOWING THE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF TATA ELXSI LTD. VS. CIT (SUPRA), DIRECT THE ASSESSING OFFI CER TO REDUCE THE TRAVELLING EXPENSES INCURRED IN FOREIGN CURRENCY FROM THE TOTAL TURNOVER AND RECALCULATE THE CLAIM OF DEDUCTION UNDER SECTION 10AA OF THE ACT AND ALLOW THIS GROUND OF APPE AL OF THE ASSESSEE. 4. SIMILARLY, IN RESPECT OF CONSIDERING THE TOTAL INCOME FOR ALLOWING DEDUCTION UNDER SECTION 10AA OF THE ACT, THE ASSESSEE HAS FILED RECTIFICATION PETITION AND IS PENDING BEFORE THE CIT(APPEALS). SINCE THE APPLICATION IS PENDING AND THE REMEDY LIES WITH THE DEPARTMENT, THE ASSESSEE SHALL PU RSUE WITH THE AUTHORITY AND IN RESPECT OF INTEREST CHARGEABLE UNDER SECTION 234D AND 234B WHICH IS CONSEQUENTIAL IN NATURE AND ORDER ACCORDINGLY. 6 IT (TP) A NO. 565/BANG/2016 5. IN THE RESULT , THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNC ED IN THE OPEN COURT ON 6 T H DEC., 2019. S D / - S D / - (A.K. GARODIA) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 0 6 .12. 2019. *REDDY GP COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT (A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE