M/s. IFS Solutions India Pvt. Ltd., Noida V. DCIT, New Delhi

ITA 6149/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6184 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 18-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Assessee Lawyers: S K SAINI
• Keywords: Opportunity of being heard; Wholly owned subsidiary
• Section: 143(3)

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL, DELHI BENCH F, NEW DELHI BEFORE : SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 6149/DEL/2015 ASSESSMENT YEAR: 2010-11 IFS SOLUTIONS INDIA PVT. LTD., OFFICE NO. 14, GROUND FLOOR, TOWER-1 STELLAR IT PARK, PLOT NO. C-25, SECTOR 62, NOIDA. PAN- AAACL 0195J (APPELLANT) VS. DCIT, CIRCLE 11(1), NEW DELHI. (RESPONDENT) APPELLANT BY SH. S.K. SAINI, C.A. RESPONDENT BY SH. SURENDER PAL, SR. DR ORDER PER L.P. SAHU, A.M.: THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R OF LD. CIT(A)-4, NEW DELHI DATED 21.08.2015 FOR THE ASSESSMENT YEAR 2010 -11. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE APPELLA NT IS A PRIVATE LIMITED COMPANY, WHICH IS WHOLLY OWNED SUBSIDIARY OF IFS SO LUTIONS ASIA PACIFIC PTE LTD., HAVING ITS REGISTERED OFFICE AT 15 FLOE CHIAN G ROAD, 11-01/02, TOWER FIFTEEN, SINGAPORE - (089316), WHICH IS ALSO A WHOL LY OWNED SUBSIDIARY OF INDUSTRIAL & FINANCIAL SYSTEMS AB (PUBL) ('IFS AB' OR 'THE PARENT COMPANY'), HAVING ITS REGISTERED OFFICE AT TEKNIKRINGEN 5, BOX 1545, SE-58115 LINKOPING, SWEDEN. THE PARENT COMPANY, INDUSTRIAL & FINANCIAL SYSTEMS ('IFS') IS A DATE OF HEARING 24.01.2019 DATE OF PRONOUNCEMENT 28.01.2019 ITA NO. 6149/DEL/2015 2 SWEDISH MULTINATIONAL FOUNDED IN THE YEAR 1983 TRAD ED IN THE STOCKHOLM STOCK EXCHANGE IN ORDER TO BOOST ITS PRESENCE IN I NDIA, THE PARENT COMPANY, IFS SET UP IFS INDIA (THE APPELLANT HERE) OPERATI ONS SINCE JANUARY 2003 AND THE APPELLANT IFS INDIA IS AN INTERNATIONAL COMPETE NCY CENTRE FOR IFS GLOBAL OPERATIONS. THE MAJOR ACTIVITIES OF APPELLANT ARE S UB-LICENSING OF RIGHT TO USE OF IFS APPLICATIONS IN INDIA; IMPLEMENTATION FOR BO TH INDIA AND OVERSEAS CUSTOMERS; LOCALIZATION FOR INDIA STATUTORY REQUIR EMENTS; SUPPORT FOR BOTH INDIA AND OVERSEAS CUSTOMERS; DEVELOPMENT OF NEW CO MPONENTS AS PER CUSTOMER'S REQUIREMENT. THE APPELLANT FILED ITS INC OME TAX RETURN FOR AY 2010-11 ON 13.10.2010 DECLARING INCOME OF RS. 1,16, 83,275/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT ORDER WAS COMPLETED U/S. 143(3) ON 28.02.2014 AT AN INCOME OF RS.1,41,55,760/- AFTER M AKING FOLLOWING DISALLOWANCES: (I). DISALLOWANCE OF ROYALTY ON LICENSE PURCHASE R S.19,77,113/- (II). DISALLOWANCE OF MISC. EXPENSES RS.2,79,817/ - (III). DISALLOWANCE OF ROC FEES RS.2,15,553/- THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CI T (APPEALS), WHO AFTER INCORPORATING THE WRITTEN SUBMISSIONS OF THE ASSESS EE IN THE IMPUGNED ORDER, CONFIRMED THE ACTION OF ASSESSING OFFICER VIDE ORDE R DATED 21.08.2015. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRI BUNAL, INTER ALIA, ON THE FOLLOWING GROUNDS : 1. THAT THE IMPUGNED ORDER PASSED BY LD. CIT(APPEAL) IS BAD IN LAW AS WELL AS FACTS OF THE CASE. 2. THAT THE PASSED ORDER BY THE LD. CIT (APPEAL) IS BAD AS THE ORDER IS NOT EXPLANATORY. THE LD. CIT (APPEAL) PASSED THE ORD ER WITHOUT EXPLAINING THE REASONS AND/OR ANY CASE LAWS WHILE DISMISSING T HE APPEAL OF THE ITA NO. 6149/DEL/2015 3 APPELLANT. THE ARGUMENTS SUBMITTED BY THE APPELLANT ALONGWITH ARE NOT DISCUSSED IN THE ORDER ITSELF. 3. THAT THE LD. CIT (APPEAL) PASSED THE ORDER IGNORI NG THE FACTS THAT THE AO HAD JUST COPIED THE ORDER OF THE A.Y 2009-10 AND PASTED FOR A.Y 2010-11. THEREFORE THERE WAS MORE AND MORE RESPONSIB ILITIES UPON LD. CIT(APPEAL) TO VERIFY ALL THE FACTS IN DETAIL BEFORE DISMISSING THE APPEAL. FURTHER, FOR ARGUMENTS SAKE IF THE CONTENTION OF TH E AO WAS JUSTIFIED AS MENTIONED BY THE LD. CIT(APPEAL THEN, HE SHOULD HAVE DISCUSSED THE ORDERS PASSED BY THE LD. CIT (APPEAL) FOR THE A.Y 2009-10, IN WHICH FULL RELIEF WAS GIVEN TO THE APPELLANT. 3. WE HAVE HEARD THE SUBMISSIONS OF BOTH THE PARTIE S AND HAVE GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. PL ACING RELIANCE ON THE GROUNDS OF APPEAL, THE LD. AR SUBMITTED THAT THE LD . CIT(A) HAS PASSED THE IMPUGNED ORDER IN A VERY SLIP-SHOD MANNER WITHOUT A SSIGNING ANY REASON TO SUPPORT THE ACTION OF THE ASSESSING OFFICER AND WIT HOUT REPUDIATING THE SUBMISSIONS MADE BY APPELLANT BEFORE HIM. SUCH A NO N-SPEAKING ORDER IS NOT TENABLE IN THE EYE OF LAW. IT WAS SUBMITTED THAT WI THOUT VERIFICATION OF FACTS AND WITHOUT GIVING REASON FOR DECISION, THE SUSTENA NCE OF ADDITIONS MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED. HE, THEREFO RE, URGED FOR SENDING THE MATTER BACK TO THE FILE OF CIT(A) FOR PASSING A SPE AKING ORDER ON ALL THE ABOVE THREE ISSUES RAISED BEFORE HIM. THE LD. DR, THOUGH SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW, BUT COULD NOT CONTROVERT THE CON TENTION OF THE LD. COUNSEL FOR ASSESSEE AFTER GOING THROUGH THE IMPUGNED ORDER . IN PRESENCE OF THESE FACTS, WE FIND THAT THE LD. CIT(A) WAS REQUIRED TO MAKE OUT THE POINTS FOR DETERMINATION AND TO ASSIGN REASON FOR ENDORSING TH E VIEW OF ASSESSING OFFICER AND REPUDIATING THE CONTENTIONS OF THE ASSE SSEE MADE BEFORE HIM. THE IMPUGNED ORDER IS FOUND LACKING REASONS FOR THE DEC ISION REACHED BY THE LD.CIT(A) WHICH WE ARE NOT INCLINED TO SUPPORT. WE, THEREFORE, REMIT THE ITA NO. 6149/DEL/2015 4 MATTER BACK TO THE FILE OF THE LD. CIT(A) TO DECIDE THE APPEAL AFRESH BY WAY OF SPEAKING ORDER, AS OBSERVED ABOVE, IN ACCORDANCE WI TH LAW AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO BOTH THE P ARTIES. ACCORDINGLY, THE APPEAL OF THE ASSESSEE DESERVES TO BE ALLOWED FOR S TATISTICAL PURPOSES. 4. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28.01.2019. SD/- SD/- (H.S. SIDHU) (L.P. SA HU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 28.01.2019 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI