Appeal details
Counselvise Citation
56722514 RSA 2014
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 month(s) 30 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
27-08-2014
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
A
Assessment Year
2009-2010
Appeal Filed On
28-03-2014
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 567/HYD/2014 ASSESSMENT YEAR 2009-10 M/S. BROADRIDGE FINANCIAL SOLUTIONS (INDIA) PVT. LTD. HYDERABAD PAN: AADCB0321R VS. THE DEPUTY CIT CIRCLE-1(3) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI S. RAGHUNATHAN RESPONDENT BY: SRI P. SOMA SEKHAR REDDY DATE OF HEARING: 17 .0 7 .2014 DATE OF PRONOUNCEMENT: 27 .08.2014 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE TRANSFER PRICING OFFICER/DCIT, CIRCLE- 1(3), HYDERABAD DATED 11.2.2013 FOR A.Y. 2009-10. 2. THE ASSESSEE IS A PART OF BFS INDIA GROUP AND THE RANGE OF SERVICES PROVIDED BY BFS INDIA IS AS FOLLO WS: IT SERVICES INCLUDE: MAINTENANCE INSTALLATION SUPPORT QUALITY ASSURANCE SOFTWARE DEVELOPMENT; AND PRODUCT INFORMATION DOCUMENTATION ITES INCLUDES CUSTOMER SUPPORT SERVICES THIS INCLUDES VOICE BASED SERVICES. TRANSACTION PROCESSING SERVICES THIS INCLUDES NON-VOICE BASED SERVICES. 2 ITA NO. 567/HYD/2014 M/S. BROADRIDGE FINANCIAL SOLUTIONS (INDIA) PVT. LT D. ======================================== 3. DURING THE YEAR UNDER APPEAL, THE ASSESSEE EARNED A MARGIN OF 16.67% FOR THE PROVISION OF IT AND ITES SERVICES IN COMPARISON TO THE ARITHMETIC MEAN OF 22 BROADLY COMPARABLE INDEPENDENT COMPANIES AT 14.48%. ACCORDINGLY, IT WAS CONCLUDED BY THE ASSESSEE THAT ITS INTERNATIONAL TRANSACTIONS RELATING TO PROVISION OF IT AND ITES ARE IN COMPLIANCE WITH THE ARMS LENGTH PRINCIP LE. 4. THE TPO DID NOT ACCEPT THE ASSESSEE'S TRANSFER PRICING STUDY AND MADE A SEPARATE SEARCH AND ANALYS ED THE TRANSACTION TAKING THE COMPANY AS ITES COMPANY ONLY. EVEN THOUGH THE ASSESSEE OBJECTED, THE DRP H AS APPROVED THE TPO ORDER. AGGRIEVED, THE ASSESSEE HA S RAISED ABRIDGED GROUND NO. 1 WHICH IS AS FOLLOWS: 1. THE LEARNED ASSESSING OFFICER / LEARNED TRANSFER PRICING OFFICER AND THE HON'BLE DISPUTE RESOLUTION PANEL (DRP') HAS ERRONEOUSLY CLASSIFIED THE APPELLANT AS A MERE INFORMATION TECHNOLOGY ENABLED SERVICE PROVIDER THOUGH THE APPELLANT IS A BLENDED INFORMATION TECHNOLOGY ('IT') AND ITES PROVIDER. (GROUND NO. 3 OF THE MAIN APPEAL) 5. AT THE TIME OF HEARING IN THE TRIBUNAL THE LEARNED COUNSEL FOR THE ASSESSEE SRI SAMPATH RAGHUNATHAN BROUGHT TO OUR NOTICE THE ORDER OF THE TRIBUNAL IN ASSESSEE'S OWN CASE IN ITA NO. 1785/HYD/2012 FOR A. Y. 2008-09 WHEREIN THE SAME ISSUE HAD BEEN ADJUDICATED . IT WAS BROUGHT TO OUR NOTICE THAT PARA 6 OF THAT THE I TAT HELD AS FOLLOWS: 6. ... IN THIS CONTEXT, THE LEARNED AR HAD SUBMITTED A SWORN AFFIDAVIT DATED 29TH MAY, 2013 OF SRI RAVICHANDER RAMAMURTHI, 3 ITA NO. 567/HYD/2014 M/S. BROADRIDGE FINANCIAL SOLUTIONS (INDIA) PVT. LT D. ======================================== FINANCIAL CONTROLLER OF THE ASSESSEE COMPANY WHEREIN IT IS AVERRED THAT THE ASSESSEE COMPANY IS REGISTERED AS A 100% EOU UNDER THE STPI FOR PROVIDING INFORMATION TECHNOLOGY AND ITES SERVICES TO ITS GROUP COMPANIES. IT HAS BEEN FURTHER AVERRED IN THE SAID AFFIDAVIT THAT THE REVENUE FROM PROVISION OF IT SERVICES IS AT 67.06% AND THAT OF ITES IS 32.94% TO THE TOTAL TURNOVER. IN SUPPORT OF SUCH AVERMENT MADE IN THE AFFIDAVIT, THE ASSESSEE ALSO PLACED RELIANCE UPON THE CERTIFICATE ISSUED BY THE STPI DATED 19-2-2007 AND 18-4-2007 AS WELL AS SOME OTHER DOCUMENTS SUBMITTED ALONG WITH THE AFFIDAVIT.' 6. THE TRIBUNAL DECIDED THE ISSUE AT PARA 8 OF THE ORDER AS FOLLOWS: '8. WE HAVE CONSIDERED RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL ON RECORD AS WELL AS ORDERS OF THE AUTHORITIES BELOW. ON PERUSAL OF THE ORDER PASSED BY THE TPO, IT IS SEEN THAT THE ASSESSEE HAS BEEN CATEGORISED AS ITES COMPANY. ACCORDING TO THE TPO, COMPANIES WITHIN THE CATEGORY OF DATA PROCESSING SERVICES COME WITHIN THE BACK OFFICE OPERATION AS PER THE CBDT CIRCULAR NO. SO 890 (E) DATED 26-9-2000. HE THEREFORE HELD THAT THE OVERALL BUSINESS OF THE ASSESSEE IS ITES. THIS VIEW OF THE TPO WAS ALSO UPHELD BY THE DRP. HOWEVER, CONSIDERING THE AVERMENT MADE IN THE AFFIDAVIT SUBMITTED BEFORE US AS WELL AS THE ACCOMPANYING DOCUMENTS, WE ARE OF THE VIEW THAT THE MATTER IS REQUIRED TO BE CONSIDERED AFRESH BY THE TPO. WE THEREFORE REMIT THE ISSUE BACK TO THE FILE OF THE TPO FOR DECIDING AFRESH AFTER CONSIDERING THE AVERMENTS OF THE ASSESSEE AS WELL AS OTHER FACTS AND MATERIALS AVAILABLE ON RECORD BEFORE HIM. THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE.' 7. SINCE IDENTICAL ISSUE HAS BEEN DECIDED BY THE CO- ORDINATE BENCH OF THE TRIBUNAL, RESPECTFULLY FOLLOW ING THE SAME, WE REMIT THE ISSUE BACK TO THE FILE OF THE TP O FOR 4 ITA NO. 567/HYD/2014 M/S. BROADRIDGE FINANCIAL SOLUTIONS (INDIA) PVT. LT D. ======================================== DECIDING THE ISSUE AFRESH AFTER CONSIDERING THE AVE RMENTS OF THE ASSESSEE AS WELL AS THE OTHER FACTS AND MATE RIALS BROUGHT ON RECORD BEFORE HIM. THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8. SINCE WE HAVE DECIDED ABRIDGED GROUND NO. 1, ABRIDGED GROUND NO. 2 IS NOT ADJUDICATED. 9. ABRIDGED GROUND NO. 3 IS AS FOLLOWS: 3. COMPUTATION OF RELIEF U/S. 10A OF THE INCOME TAX ACT, 1961 ('THE ACT') (GROUND NO. 11 OF THE MAIN APPEAL) THE LD. AO AND THE HON'BLE DRP WHILE EXCLUDING THE DATA LINK CHARGES FROM THE 'EXPORT TURNOVER' ERRED IN NOT MAKING A CORRESPONDING ADJUSTMENT IN THE 'TOTAL TURNOVER' FOR THE PURPOSE OF COMPUTING THE DEDUCTION UNDER SECTION 10A OF THE ACT. 10. DURING THE YEAR UNDER CONSIDERATION THE COMPANY HAS INCURRED AN AMOUNT OF INR 1,16,01,185. THE ASSESSEE HAS SUBMITTED A DETAILED NOTE ON WHY THE L EASE LINE AND COMMUNICATION INCURRED BY THE COMPANY SHOU LD NOT BE EXCLUDED FOR THE PURPOSE OF COMPUTING 'EXPOR T TURNOVER' AND EVEN IF THE SAME IS EXCLUDED FROM EXP ORT TURNOVER IT WAS SUBMITTED THAT IT IS ALSO TO BE EXC LUDED FROM THE TOTAL TURNOVER OF THE COMPANY FOR THE PURP OSE OF CALCULATING DEDUCTION U/S. 10A OF THE ACT. THE ASS ESSEE PLACED RELIANCE ON THE FOLLOWING JUDGEMENTS: (A) CIT VS. GEM PLUS JEWELLERY I. LTD. (330 ITR 175) (B OM) (B) CIT VS. DELL INTERNATIONAL SERVICES INDIA PVT. LTD. (ITA NO. 70/2009) (KARN) (C) ITO VS. SAK SOFT LTD. (121 TTJ 865) (MUM) (D) PATNI TELECOM (P) LTD. VS. ITO (120 TTJ 967) (E) BROADRIDGE FINANCIAL SOLUTIONS (INDIA) PVT. LTD. VS . DCIT-1(3) (ITA NO. 1795/HYD/2012) 5 ITA NO. 567/HYD/2014 M/S. BROADRIDGE FINANCIAL SOLUTIONS (INDIA) PVT. LT D. ======================================== 11. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND FOLLOWING THE RATIO OF THE DECISION IN CIT VS. GEMPLUS JEWELLERY INDIA LTD. (330 ITR 175) (MUM), WE ARE OF THE VIEW THAT THE ISSUE IS SQUARELY SETTLED IN FAVOUR O F THE ASSESSEE. WE, THEREFORE, DIRECT THE ASSESSING OFFI CER TO RECOMPUTE THE DEDUCTION CLAIMED U/S. 10A OF THE ACT AFTER REDUCING THE COMMUNICATION CHARGES BOTH FROM THE EX PORT TURNOVER AND TOTAL TURNOVER. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 27 TH AUGUST, 2014 SD/ - (B. RAMAKOTAIAH) ACCOUNTANT MEMBER SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER HYDERABAD, DATED THE 27 TH AUGUST, 2014 TPRAO COPY TO: 1. M/S. BROADRIDGE FINANCIAL SOLUTIONS (INDIA) PVT. LT D., SURVEY NO. 64, HI TECH CITY, SERILINGAMPALLY, RANGAREDDY DISTRICT, HYDERABAD-500 081. 2. THE DEPUTY CIT, CIRCLE - 1(3), AAYAKAR BHAVAN, HYDERABAD. 3 . THE DRP , HYDERABAD . 4 . THE ACIT (TRANSFER PRICING) , HYDERABAD. 5 . THE DR, A - BENCH, ITAT, HYDERABAD.
