M/s. NTT Data Global Delivery Services Ltd., New Delhi V. ACIT, New Delhi

ITA 6905/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3524 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2009-2010
• Appeal Filed On: 22-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Bonafide belief; Reasonable cause
• Section: 92D

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.:-6905/DEL/2014 ASSESSMENT YEAR: 2009-10 NTT DATA GLOBAL DELIVERY SERVICES LTD. (FORMERLY KNOWN AS KEANE INDIA LTD.) 1-5(LGF) LAJPAT NAGAR, PART-1 NEW DELHI 110 024 PAN AABCK7777J VS. ACIT CIRCLE-13(1) NEW DELHI. (APPELLANT) (RESPONDENT) O R D E R PER AMIT SHUKLA, J.M. THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST IMPUGNED ORDER DATED 30 TH SEPTEMBER, 2014 PASSED BY LD. CIT (APPEALS) XVI DELHI IN RELATION TO THE PENALTY PROCEE DINGS U/S 271G FOR THE ASSESSMENT YEAR 2009-10. THE ASSESSEE IS AGGRIEVE D BY LEVY OF PENALTY OF RS. 12,71,40,065/- ON THE GROUND THAT ASS ESSEE HAS FAILED TO FURNISH THE DOCUMENTS MAINTAINED U/S 92D(1) IN RESP ONSE TO THE NOTICE ISSUED BY THE TPO WITHIN 30 DAYS. THE DOCUMEN TATION WAS ONLY FILED AFTER A DELAY OF 33 DAYS FROM THE TIME PRESCRIB ED IN THE NOTICE. ASSESSEE BY: SHRI PURUSHOTTAM ANAND, ADVOCATE DEPARTMENT BY : SMT. PARAMITA TRIPATHY, CIT DR DATE OF HEARING 01/11/2017 DATE OF PRONOUNCEMENT 07/11/2017 ITA NO. 6905/DEL/2014 M/S. NTT DATA GLOBAL DELIVERY SERVICES LIMITED VS. .ACIT 2 2. BRIEF FACTS QUA THE ISSUE ARE THAT ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PROVIDING IT AND ITES SERVICES PR IMARILY TO ITS GROUP COMPANIES. SINCE ASSESSEE HAD REPORTED INTERNATIONAL TRANSACTION IN FORM 3 CEB THE AO HAS REFERRED THE MATTER TO THE TPO TO EXAMINE THE ARMS LENGTH PRICE OF INTERNATIONAL TRANSACTION. FURTH ER IN SUCH A REFERENCE, LD. TPO VIDE ORDER DATED 17.12.2012 HAS ACCEPTED THE ARMS LENGTH PRICE OF INTERNATIONAL TRANSACTIONS UNDERTAK EN BY THE ASSESSEE WITH ITS AE AND NO ADJUSTMENT U/S 92CA WAS P ROPOSED. HOWEVER, THE TPO HAS RECOMMENDED FOR INITIATION OF LE VY OF PENALTY U/S 271G ON THE GROUND THAT ASSESSEE HAS FAILED TO FUR NISH THE DOCUMENTS REQUIRED BY HIM WITHIN THE STIPULATED TIME GIV EN IN THE NOTICE ISSUED BY HIM FOR FILING OF DOCUMENTATION UNDE R RULE 10D ON 12.7.2011 TO BE FURNISHED U/S 92D (1) BY 12.08.2011 . HOWEVER AS NOTED BY THE LD. TPO THE ASSESSEE NEITHER FILED ANY DOC UMENTATION NOR WAS ANY EXTENSION OF TIME SOUGHT. THE ASSESSEE FILED THE REQUIRED DOCUMENTS BUT THERE WAS A DELAY OF 33 DAYS IN FILING THE SAME AND ACCORDINGLY, AO HAS BEEN LEVIED OF RS. 12,71,40,065 /- WHICH IS A SUM EQUAL TO TWO PERCENT OF THE TOTAL VALUE OF THE INTERNATION AL TRANSACTIONS WHICH WAS RS. 636.70 CRORES. 3. THE ASSESSEES CASE BEFORE TPO WAS THAT THE COMPANY WAS EARLIER ASSESSED TO TAX AT DELHI BASED ON THE REGISTERE D OFFICE SITUATED IN DELHI, HOWEVER THE LATER ON PRINCIPAL PLACE FOR BUSINESS WAS SHIFTED TO BANGALORE PURSUANT TO THE MERGER OF KEANE INTERNATIO NAL (INDIA) LTD. AND KEANE WORLDZEN INDIA PVT. LTD WITH KEANE INDI A LIMITED, NOW KNOWN AS NTT DATA GLOBAL DELIVERY SERVICES LIMITED. SINCE THE HEAD OFFICE AND ALL THE TAX PERSONNEL WERE BASED IN BANGAL ORE, THEREFORE, ASSESSEE COMPANY HAD FILED AN APPLICATION WITH THE C HIEF COMMISSIONER OF INCOME TAX NEW DELHI ON 3 RD MAY 2011 WITH A COPY TO CCIT BANGALORE TO TRANSFER ITS JURISDICTION OF TAX AS SESSMENT FROM ITA NO. 6905/DEL/2014 M/S. NTT DATA GLOBAL DELIVERY SERVICES LIMITED VS. .ACIT 3 DELHI TO BANGALORE AS PER THE PROVISIONS OF SECTION 1 27. THE ASSESSEE COMPANY KEPT ON FOLLOWING THIS MATTER WITH THE OFFICE OF CCIT FOR ITS REQUEST FOR SHIFTING OF TAX ASSESSMENTS FROM DELHI TO BANGALORE ON VARIOUS DATES. WHEN THE NOTICE FROM THE TPO WAS RECEIV ED ON 12 TH JULY, 2011, THE ASSESSEE FILED THE LETTER BEFORE THE TPO THAT SUCH AN APPLICATION IS PENDING BEFORE THE CCIT FOR TRANSFER OF FILE FROM DELHI TO BANGALORE AND THEREFORE, IT WAS REQUESTED THAT MATTER SH OULD BE KEPT IN ABEYANCE UNTIL THE FILES ARE TRANSFERRED. HOWEVER, THE LD. TPO REFUSED TO ACCEPT THE SAID LETTER. IT WAS FURTHER STATED T HAT THE DELHI OFFICE OF THE ASSESSEE COMPANY REMAINED CLOSED FROM 12 TH AUGUST, 2011 TO 15 TH AUGUST, 2011 ON ACCOUNT OF INDEPENDENCE DAY PREPARATIONS, DURING WHICH PERIOD DATE OF COMPLIANCE AS PER NOTICE FELL. THUS, COMPLIANCE COULD NOT BE MADE ON THE GIVE N DATE. OTHERWISE ALSO THE COMPANY WAS UNDER BONAFIDE BELIEF THAT FILES WILL BE SHIFTED TO BANGALORE AS APPLICATION WAS FILED BY THE ASSESSEE CO MPANY WAY BACK IN MAY, 2011 WITH PERIODICAL FOLLOW UP AT THE OFFICE OF CCIT. LASTLY, IT WAS CONTENTED THAT OTHERWISE ALSO THE ASSESSEE HAS FULL Y COOPERATED BEFORE THE TPO BY FURNISHING ALL THE RELEVANT DOCUMENTS AND INFORMATION THAT WERE REQUIRED TO DETERMINE THE ARMS L ENGTH PRICE AS WAS CALLED FROM TIME TO TIME. THEREFORE, NO PENALTY SH OULD BE LEVIED IN VIEW OF THE PROVISIONS OF SECTION 273B. THE ASSESSEE S EXPLANATION IN THIS REGARD BEFORE THE A.O. HAS BEEN DEALT WITH AND IN CORPORATED IN THE IMPUGNED PENALTY ORDER FROM PAGES 3 TO 7. 3. HOWEVER, THE LD. A.O. HELD THAT SINCE THERE WAS DELA Y OF 33 DAYS FOR MAKING COMPLIANCE AND GIVING AN APPLICATION FOR TRANSFER OF PLACE BEFORE CCIT CANNOT BE A REASONABLE CAUSE AND MATTER C OULD NOT HAVE BEEN KEPT IN ABEYANCE BY THE TPO, BECAUSE UNTIL AND U NLESS ORDER IS PASSED ON UNDER SECTION 127, CASE COULD NOT BE TRANSFE RRED AND TPO/ AO HAD TO PROCEED WITH THE MATTER AND MERE FILING OF APPLICATION ITA NO. 6905/DEL/2014 M/S. NTT DATA GLOBAL DELIVERY SERVICES LIMITED VS. .ACIT 4 BEFORE CCIT DOES NOT TANTAMOUNT TO AN ORDER U/S 127, HE NCE PENALTY HAS TO BE LEVIED IN ACCORDANCE WITH LAW. 4. BEFORE THE LD. CIT (A) AGAIN DETAILED SUBMISS ION WERE REITERATED WHICH HAS BEEN INCORPORATED IN THE IMPUGNED APPELLATE ORDER UPTO PAGE 24. HOWEVER, LD. CIT(A) TOO HAS CONFIRMED THE SA ID PENALTY ON THE GROUND THAT REQUIRED DOCUMENT WAS NOT FILED ON OR B EFORE 30 DAYS FROM THE DATE OF RECEIPT NOTICE ISSUED ON 12.7.2011 AN D THE REQUIRED DOCUMENTS WERE FILED BEFORE THE TPO ONLY ON 14.9.2011 AND HENCE THERE WAS A CLEAR CUT DELAY OF 33 DAYS. NO EFFORT WAS MADE BY THE ASSESSEE TO SEEK EXTENSION OF TIME OF FILING OF INFOR MATION AND DOCUMENTS WITHIN THE PERIOD PRESCRIBED U/S 271G AND T HEREFORE, THERE IS A CLEAR CUT VIOLATION AND ACCORDINGLY PENALTY HAS TO BE LEVIED AS THE SAME IS CLEAR IN VIOLATION OF 92D(3). HE FURTHER HEL D THAT IN ANY CASE THE A.O. COULD NOT HAVE EXTENDED THE FURTHER TIME BEYON D ANOTHER 30 DAYS WHICH TOO HAD EXPIRED ON 11.9.2011. THUS, PENA LTY WAS CONFIRMED BY HIM. 5. WE HAVE HEARD THE BOTH PARTIES AT LENGTH AND A LSO THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER AS WELL AS THE MATERIAL REFERRED TO BEFORE US. THE DETAILED CHRONOLOGY OF EVENTS LEADI NG TO IMPOSITION OF PENALTY U/S 271G HAS BEEN FILED BY THE LD. COUNSE L WHICH WAS FOR THE SAKE OF READY REFERENCE IS REPRODUCED HEREIN BEL OW :- DATE PARTICULARS 1. 03.05.2011 APPLICATION DATED 3 RD MAY 2011 (FILED ON 6 TH MAY 2011) ADDRESSED TO CCIT, NEW DELHI WITH A COPY TO CCIT, BANGALORE REQUESTING TRANSFER OF TAX JURISDICTION OF THE COMPANY TO BANGALORE AND EXPLAINING IN DETAIL THE REASONS FOR SUCH REQUEST. FOLLOW UP LETTER WAS FILED WITH CIT, ITA NO. 6905/DEL/2014 M/S. NTT DATA GLOBAL DELIVERY SERVICES LIMITED VS. .ACIT 5 NEW DELHI DATED 16 JANUARY 2012 (FILED ON 23 JANUARY 2012) REGARDING REQUEST FOR TRANSFER OF JURISDICTION. FURTHER KIND REFERENCE IS INVITED TO TABLE ON INTERNAL PAGE 11 OF LD. CIT(A) ORDER WHICH GIVES MORE DETAILED LIST OF FOLLOW UP ACTIONS. FOR COMPLETION OF DETAILS IT MAY BE POINTED OUT THAT AS ON DATE OF LD. CIT(A)S ORDER PROCESS TO TRANSFER STILL REMAINED PENDING AND WAS COMPLETED ONLY ON 28.1.2015 BY ISSUANCE OF ORDER U/S 127 ( COPY OF THIS ORDER IS HANDED OVER AT HEARING OF APPEAL ONLY FOR COMPLETION OF FACTS AS IT WAS NOT AVAILABLE BEFORE LOWER AUTHORITIES AND COULD NOT BE PART OF PAPER BOOK) . 2. 12.07.2011 TPO ISSUED NOTICE U/S 92CA(2) AND 92D(3) TO ASSESSEE ASKING TO FURNISH CERTAIN DETAILS ON OR BEFORE AUGUST 12, 2011 AT 11 AM 3. 16.08.2011 RESPONSE TO ABOVE LETTER. SINCE TAX OFFICES WERE CLOSED FROM 12.08.2011 TO 15.08.2011 ON ACCOUNT OF INDEPENDENCE DAY CELEBRATIONS, ASSESSEE FILED A LETTER (DATED 10 TH AUGUST 2011) ON 16.8.2011 INFORMING ADDITIONAL COMMISSIONER OF INCOME TAX, TPO AND COPYING LD. DCIT CIRCLE 5(1) ABOUT PENDENCY OF APPLICATION DATED 06.05.2011 WITH A REQUEST TO KEEP TRANSFER PRICING PROCEEDINGS IN ABEYANCE CONSIDERING PENDENCY OF REQUEST FOR TRANSFER OF THE CASE FROM DELHI TO BANGALORE. KIND REFERENCE IS INVITED TO TABLE AT BOTTOM OF INTERNAL PAGE 15 AND 16 OF LD. CIT(A) ORDER SHOWING SEQUENCE OF DATES AND EVENTS. 4. 14.09.2011 ASSESSEE FILED ALL DOCUMENTS AS REQUIRED, AS LD. TPO INSISTED THAT PROCEEDINGS WILL CONTINUE IN DELHI IN SPITE OF PENDENCY OF REQUEST FOR TRANSFER ( COPY OF SAID LETTER AT PAGES 22 AND 23 OF PAPER BOOK FILED ON 13.9.2017 WITH HONBLE TRIBUNAL ) ITA NO. 6905/DEL/2014 M/S. NTT DATA GLOBAL DELIVERY SERVICES LIMITED VS. .ACIT 6 6. FROM THE PERUSAL OF THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER AS WELL AS THE AFORESAID CHRONOLOGY OF EVENTS, IT IS UNDISPUTED FACT THAT:- FIRSTLY, THE ASSESSEE HAD MADE A REQUEST FOR TRANSFER OF FILES AND JURISDICTION FROM NEW DELHI TO BANGALORE ON 3 RD MAY, 2011 WHICH WAS MUCH PRIOR TO INITIATION OF TRANSFER PRICING PRO CEEDINGS IN JULY, 2011 AND THE SAID APPLICATION WAS MADE FOR A G ENUINE REASON THAT ENTIRE OFFICE HAS BEEN SHIFTED TO BANGALORE IN THE WAKE OF AMALGAMATION; SECONDLY, THE TPO VIDE ORDER DATED 17.12.2012 HAS ACCEPTED THE INTERNATIONAL TRANSACTIONS AT ARMS LENGTH AFTER CARRYING OUT DETAILED SCRUTINY OF DOCUMENTS AND DETAILS FURNISHED BE FORE HIM FROM TIME TO TIME AND ACCORDINGLY, NO ADJUSTMENT WAS PRO POSED BY HIM; AND LASTLY, BEFORE THE A.O. AS WELL AS LD. CIT (A) IN THE COURS E OF THE PENALTY PROCEEDINGS ASSESSEE HAS GIVEN DETAILED AND EXHAUSTIVE EXPLANATION TO PROVE THE REASONABLE AND BONAFIDE BELIE F FOR NOT 5. 17.12.2012 SATISFIED WITH DOCUMENTS FILED BY ASSESSEE, TPO HELD INTERNATIONAL TRANSACTIONS OF ASSESSEE ARE AT ARMS LENGTH AND PASSED AN ORDER WITHOUT PROPOSING ANY ADJUSTMENT (KINDLY REFER COPY OF ORDER AT PAGES 24 AND 25 OF PAPER BOOK FILED ON 13.9.2017). HOWEVER, TPO RECOMMENDED PENALTY UNDER SECTION 271G ON THE GROUND THAT TRANSFER PRICING DOCUMENTATION WAS NOT FILED BY ASSESSEE WITHIN STIPULATED TIME ( KINDLY REFER PARAS 6 AND 7 OF TPO ORDER AT PAGE 25 OF PAPER BOOK FILED ON 13.9.2017) ITA NO. 6905/DEL/2014 M/S. NTT DATA GLOBAL DELIVERY SERVICES LIMITED VS. .ACIT 7 FILING OF THE DOCUMENTS WITHIN THE PRESCRIBED TIME LIMI T OF 30 DAYS GIVEN IN THE NOTICE. FROM THE PERUSAL OF THE ENTIRE MATERIAL SPECIFICALLY V ARIOUS LETTERS WRITTEN TO THE AO/TPO AND ALSO THE APPLICATIONS FOR TRANS FER OF JURISDICTION FROM NEW DELHI TO BANGALORE, WE FIND THAT DESPITE SUCH A GENUINE REQUEST MADE BY THE ASSESSEE BEFORE THE DEPARTM ENTAL AUTHORITIES FOR TRANSFER OF JURISDICTION AND REGULAR F OLLOW UP, NO ACTION WAS TAKEN NOR ANY INTIMATION WAS GIVEN TO THE ASSESSEE THAT SUCH A TRANSFER IS NOT POSSIBLE FOR IT WILL TAKE SOME TIME. ONC E THE ENTIRE OFFICE OF NEWLY AMALGAMATED COMPANY WAS BASED AT BANGALORE ALONGWITH THE FINANCE CONTROLLER, MANAGER TAXATION AND OTHER OFFICI ALS LOOKING AFTER THE MATTER THEN, MAKING SUCH COMPLIANCE WOULD HAVE BEE N VERY DIFFICULT AND CUMBERSOME. INSTEAD OF RESPONDING TO AS SESSEES APPLICATION ON TRANSFER OF JURISDICTION, THE ASSESSEE HAS BEEN SADDLED WITH SUCH A HUGE PENALTY OF MORE THAN RS.12.71 CRORE S ESPECIALLY WHEN ALL ITS INTERNATIONAL TRANSACTIONS HAVE BEEN FOUND AT ARMS LENGTH PRICE. WHEN THE ASSESSEE HAD REQUESTED THE TPO TO KEPT THE MATTER IN ABEYANCE FOR THE REASON THAT IT HAS BEEN FOLLO WING THE TRANSFER OF ITS FILE, THEN A.O. SHOULD HAVE CONSIDER TH E SAME AND PURSUED THE MATTER WITH HIGHER AUTHORITIES TO EXPEDITE THE TRANSFER OR SHOULD HAVE GIVEN THE OPPORTUNITY TO THE ASSESSEE WITH FURTHER TIME AND ASK THE ASSESSEE TO FILE ALL THE RELEVANT DOCUMENTS WHEN TRANSFER APPLICATION GOT DELAYED. ULTIMATELY, ASSESSEE DID FILE ALL THE DOCUMENTS NECESSARY FOR DETERMINATION OF ARMS LENGTH PRICE OF ITS INTERNATIONAL TRANSACTION WITH ITS AE. THUS, UNDER THESE FACTS AND CIR CUMSTANCES, WE HOLD THAT ASSESSEE WAS NOT IN DEFAULT AND WAS UNDE R GENUINE AND BONAFIDE BELIEF FOR NOT FILING THE DOCUMENTATION WITHIN 30 DAYS AS REQUIRED IN THE NOTICE ISSUED U/S 92D(3). IN THE WAKE OF SUCH REASONABLE CAUSE AS DISCUSSED ABOVE, WE HOLD THAT NO PENALTY CAN BE ITA NO. 6905/DEL/2014 M/S. NTT DATA GLOBAL DELIVERY SERVICES LIMITED VS. .ACIT 8 LEVIED U/S 271G IN TERMS OF SECTION 273B; AND THEREFOR E, IMPUGNED PENALTY IS DIRECTED TO BE DELETED. THUS, THE IMPUGNED ORDER OF THE LD. CIT (A) IS REVERSED AND ASSESSEE GETS RELIEF FROM THE PENALTY OF RS. 12,71,40,065/-. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH NOVEMBER, 2017. SD/- SD/- (PRASHANT MAHARISHI) (AMIT SHU KLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7 /11/2017 VEENA COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI