MSCI SERVICES P.LTD, MUMBAI V. DCIT 12(3)(2), MUMBAI

ITA 6478/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6141 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: K
• Assessment Year: 2013-2014
• Appeal Filed On: 03-11-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: GANESH BASE
• Assessee Lawyers: HARSHITA PINCHA
• Keywords: Business income; Transfer pricing; International transaction; Competent authority
• Section: 144C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J , MUMBAI BEFORE S HRI SHAMIM YAHYA (AM ) AND SHRI RAM LAL NEGI (JM) ITA NO. 6478 /MUM/20 1 7 ASSESSMENT YEAR: 2013 - 14 MSCI SERVICES PRIVATE LIMITED, 12 TH & 13 TH FLOOR, IT BUILDING 3, NESCO IT PARK, NESCO COMPLEX, GOREGAON (EAST), MUMBAI - 400063 PAN: AADCM8594K VS. THE DEPUTY COMMISSIONER OF INCOME TAX 12(3)(2), ROOM NO. 147B, 1 ST FLOOR, AAYKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI HARSHITA PINCHA ( A R ) REVENUE BY : SHRI GANESH BASE (DR) DATE OF HEARING: 14/01 /201 9 DATE OF PRONOUNCEMENT: 14 / 01 /201 9 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE DIRECTIONS DATED 29.09.2017 PASSED U/S 144C (5) OF THE INCOME TAX ACT (FOR SHORT THE ACT) BY THE LD. LD. DISPUTE RESOLUTION PANEL - 3 (FOR SHORT DRP) , MUMBAI , FOR THE A S S ESSMENT YEAR 2013 - 14 , WHEREBY THE LD. DRP HAS UPHELD THE ACTION OF THE LD.TPO AND REJECTED THE OBJECTIONS FILED BY THE ASSESSEE AGAINST THE UPWARD ADJUSTMENT TO THE ARMS LENGTH PRICE IN RELATION TO THE INTERNATIONAL TRANSACTIONS ENTERED INTO BY THE ASSESSEE COMPANY WITH ITS ASSOCIATED ENTERPRISES DURING THE ASSESSMENT YEAR UNDER CONSI DERATION. 2. THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL BY RAISING THE FOLLOWING EFFECTIVE GROUNDS: 1. IN REJECTING THE TRANSFER PRICING ANALYSIS UNDERTAKEN BY THE APPELLANT WITH RESPECT TO INTERNATIONAL TRANSACTIONS PERTAINING TO THE ITES PROVIDED BY THE APPELLANT TO ARRIVE AT THE ALP OF THE 2 ITA NO. 6478 / MUM/2017 ASSESSMENT YEAR: 2013 - 14 SAID TRANSACTION AND CHARACTERIZING IT AS KNOWLEDGE PROCESSING OUTSOURCING (KPO) SERVICES. 2. IN NOT ACCEPTING THE ECONOMIC ANALYSIS UNDERTAKEN BY THE APPELLANT IN ACCORDANCE WITH THE PROVISIONS OF THE ACT READ WITH THE INCOME TAX RULES, 1962, (HEREIN AFTER REFERRED TO AS RULES) AND HOLDING THAT THE APPELLANTS INTERNATIONAL TRANSACTION IS NOT AT ARMS LENGTH. 3. BY APPLYING AN INAPPROPRIATE TURNOVER FILTER OF MORE THAN OR LESS THAN 10 TIMES OF THE APPELLANTS TURNOVER AND REJECTING THE FOLLOWING COMPANIES: INFORMED TECHNOLOGIES INDIA LIMITED, AND MICROGENETICS SYSTEMS LIMITED, COSMIC GLOBAL LIMITED, INFOSYS BPO LIMITED, 4. BY APPLYING AN INAPPROPRIATE EXPORT SALES FILTER OF GREATER THAN 75% OF TOTAL SALES AND REJECTING T HE FOLLOWING COMPANIES: ICRA ONLINE LIMITED, COSMIC GLOBAL LIMITED, DATAMATICS FINANCIAL SERVICES LIMITED 5. BY APPLYING AN INAPPROPRIATE FILTER OF DIFFERENT FINANCIAL YEAR ENDING (I.E. NOT MARC 2013 ENDING) AND REJECTING THE FOLLOWING COMPANIES: R SYSTEM S INTERNATIONAL LIMTIED (BPO SERVICE SEGMENT), CALIBER POINT BUSINESS SOLUTIONS LIMITED (BPO OPERATION SEGMENT), 6. IN REJECTING THE APPELLANTS FOLLOWING COMPARABLE COMPANIES BY CONSIDERING THE SAME AS FUNCTIONALLY NOT COMPARABLE: INFORMED TECHNOLOGIES IND IA LIMITED, ICRA ONLINE LIMITED, CALIBER POINT BUSINESS SOLUTIONS LIMITED (BPO OPERATION SEGMENT), COSMIC GLOBAL LIMITED, R SYSTEMS INTERNATIONAL LIMTIED (BPO SERVICE SEGMENT), E 4E HEALTHCARE BUSINESS SERVICES PRIVATE LIMITED, INFOSYS BPO LIMITED, 3 ITA NO. 6478 / MUM/2017 ASSESSMENT YEAR: 2013 - 14 JINDAL I NTELLICOM PRIVATE LIMITED, MICROGENETICS SYSTEMS LIMITED, 7. IN ARBITRARILY SELECTING E - CLERX SERVICES LIMITED AS A NEW COMPARABLE COMPANY WHICH IS FUNCTIONALLY NOT COMPARABLE TO THE APPELLANT AND THEREBY NOT FOLLOWING A SCIENTIFIC SEARCH PROCESS IN DETERMIN ING THE ALP. 8. IN DETERMINING THE ALP BY USING ONLY SINGLE YEAR DATA PERTAINING TO FINANCIAL YEAR (FY) 2012 - 13 WHICH WAS NOT AVAILABLE TO THE APPELLANT AT THE TIME OF COMPLYING WITH THE TRANSFER PRICING (TP) DOCUMENTATION REQUIREMENTS I.E. USING NON - CONTEMP ORANEOUS DATA FOR CALCULATING THE ALP OF THE INTERNATIONAL TRANSACTION AND 9. IN NOT PROVIDING ADJUSTMENT ON ACCOUNT OF THE DIFFERENCES IN RISKS ASSUMED BY THE APPELLANT AND THE COMPARABLE COMPANIES. 3. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE ASSESSEE HAD FILED AN APPLICATION UNDER MUTUAL AGREEMENT PROCEDURE WITH THE US COMPETENT AUTHORITY UNDER ARTICLE 27 OF THE AGREEMENT FOR AVOIDANCE OF DOUBLE TAXATION ENTERED INTO BETWEEN INDIA AND THE USA WITH RESPECT TO THE UPWARD ADJUSTMEN T PROPOSED BY THE INCOME TAX DEPARTMENT FOR THE ASSESSMENT YEARS 2008 - 09, 2009 - 10, 2010 - 11 AND 2013 - 14. THE COMPETENT AUTHORITIES IN INDIA AND USA HAVE AGREED TO RESOLVE THE DISPUTE ARISING DUE TO TRANSFER PRICING ADJUSTMENTS OF RS. 3,40,25,736/ - , 2,77,58, 231/ - , 4,88,88,194/ - AND 5,86,31,409/ - FOR AFORESAID ASSESSMENT YEARS. 4. THE LD. COUNSEL FURTHER SUBMITTED THAT IN THE LIGHT OF THE DEVELOPMENTS AFORESAID, ASSESSEE DOES NOT WANT TO PURSUE THE PRESENT APPEAL . THEREFORE, THE ASSESSEE MAY BE PERMITTED TO WITHDRAW THE SAME . 5 . THE LD. DEPARTMENTAL REPRESENTATIVE DID NOT OPPOSE THE APPLICATION FILED ON BEHALF OF THE ASSESSEE . HENCE, WE ALLOW THE APPLICATION FOR WITHDRAWAL OF THE APPEAL AND DISMISS THE PRESENT APPEAL AS WITHDRAWN. 4 ITA NO. 6478 / MUM/2017 ASSESSMENT YEAR: 2013 - 14 IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR A SSESSMENT YEAR 2013 - 14 IS DISMISSED AS WITHDRAWN. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH JANUARY, 2019 . SD/ - SD/ - ( SHAMIM YAHYA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 14 / 01/2019 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI