Appeal details
Counselvise Citation
[2015] 134 COUNSELVISE.COM (IT) 1868 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 11 month(s) 21 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
16-12-2015
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
K
Next Hearing Date
31-07-2014
Assessment Year
2008-2009
Appeal Filed On
26-12-2012
Judgement Text
, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES K, MUMBAI , , , BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.7623/MUM/2012 ASSESSMENT YEAR: 2008-09 M/S. SYMANTEC SOFTWARE SOLUTIONS PRIVATE LIMITED UNIT 430, C WING, 4 TH FLOOR, FORTUNE 2000, BKC MUMBAI-400051 / VS. D CIT 10 ( 1 ) R.NO.461, AAYAKAR BHAVAN, MUMBAI-400020 (AS SESSEE ) (REVENUE) P.A. NO. AABCV2624B APPELLANT BY SHRI A.V. SO NDE (AR) RESPONDENT BY SHRI N.K. CHAND ( CIT - DR) / DATE OF HEARING: 29/09/2015 / DATE OF ORDER: 16/12/2015 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DERS OF DISPUTES RESOLUTION PANEL -II, MUMBAI {IN SHORT, D RP}, FOR THE ASSESSMENT YEAR 2008-09. SYMANTEC SOFTWARE 2 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE B Y SHRI A.V. SONDE (LD. COUNSEL) ON BEHALF OF THE ASSE SSEE AND BY SHRI N.K. CHAND, DEPARTMENTAL REPRESENTATIVE (LD. C IT-DR) ON BEHALF OF THE REVENUE. 3 . DURING THE COURSE OF HEARING LD. COUNSEL HAS SUBM ITTED THE ADDITIONAL GROUND AS UNDER: SYMANTEC SOFTWARE SOLUTIONS PRIVATE LIMITED ('THE APPELLANT') CRAVES LEAVE TO PREFER AN APPEAL ON THE FOLLOWING ADDITIONAL GROUND AGAINST THE FINAL ORDER PASSED BY THE LEARNED DEPUTY COMMISSIONER OF INCOME-TAX - 10(1), MUMBAI UNDER SECTION 143(3) R.W.S144C(13) OF THE INCOME-TAX ACT, 1961 ('THE ACT '). ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED AO/ DRP: 15. ERRED IN CONSIDERING MAN DIESEL INDIA LIMITED A S A COMPARABLE COMPANY TO THE APPELLANT EVEN THOUGH MAN DIESEL INDIA LIMITED HAS SIGNIFICANT RELATED PARTY TRANSACTIONS DURING FY 2007-08. 3.1. IT WAS SUBMITTED THAT THE ADDITIONAL GROUND IS PUR ELY LEGAL GROUND AND CAN BE DECIDED ON THE BASIS OF FACTS ON RECORD. ON THE OTHER HAND, LD. CIT-DR HAS SUBMITTED THAT THE A SSESSEE CANNOT CHANGE ITS STANDS AT THIS STAGE BY FILING AD DITIONAL GROUND BEFORE THE TRIBUNAL, AND THEREFORE, THE ADDI TIONAL GROUND SHOULD NOT BE ADMITTED. 3.2. WE HAVE GONE THROUGH THE SUBMISSIONS MADE BY BOTH THE SIDES. IT IS NOTED THAT THIS ISSUE CAN BE DECIDED O N THE BASIS OF FACTS ALREADY ON RECORD BEFORE THE LOWER AUTHORITIE S. IN THE INTEREST OF JUSTICE AND IN VIEW OF JUDGMENT OF HON BLE SUPREME SYMANTEC SOFTWARE 3 COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD . 229 ITR 383, WE ADMIT THIS GROUND FOR ADJUDICATION. 3.3. DURING THE COURSE OF HEARING, LD. COUNSEL HAS MADE SUBMISSIONS WITH RESPECT TO ADDITIONAL GROUND ONLY. NO ARGUMENTS HAVE BEEN MADE ON THE MAIN GROUNDS RAISED WITH THE APPEAL MEMO. THEREFORE, IN THESE CIRCUMSTANCES, ALL THE GROUNDS RAISED WITH THE APPEAL MEMO ARE DISMISSED. 4. ADDITIONAL GROUND: IN THIS GROUND THE ASSESSEE HAS CHALLENGED THE ACTION OF LOWER AUTHORITIES IN CONSI DERING THE COMPANY M/S. MAN DIESEL INDIA LIMITED, AS COMPARA BLE COMPANY TO THE ASSESSEE COMPANY, EVEN THOUGH SAID C OMPANY HAS SIGNIFICANT RELATED PARTY TRANSACTIONS DURING T HE F.Y. 2007-08. 4.1. THE BRIEF BACKGROUND OF THE CASE IS THAT THE BUSIN ESS PROFILE OF THE ASSESSEE COMPANY IS THAT IT WAS PRIM ARILY ENGAGED IN THE BUSINESS OF PROVIDING MARKETING, TEC HNICAL SUPPORT SERVICES EXCLUSIVELY TO OF ITS AE. THE MECH ANISM FOLLOWED BY THE COMPANY WAS ON THE BASIS OF COST PL US 2% OF NET SALES FOR THE VALUE OF SERVICES PROVIDED OF ITS AE. THE METHODOLOGY FOLLOWED FOR BENCHMARKING INTERNATIONAL TRANSACTIONS WAS TNMM METHOD, AS PER ITS TRANSFER P RICING STUDY REPORT. THE TPO ACCEPTED THE METHODOLOGY OF T NMM, HOWEVER CERTAIN COMPARABLES GIVEN BY THE ASSESSEE C OMPANY WERE REJECTED AND FEW OTHERS WERE ADDED BY HIM IN T HE FINAL ACCEPT-REJECT MATRIX. ONLY FIVE COMPARABLES WERE LE FT, OUT OF SYMANTEC SOFTWARE 4 WHICH M/S MAN DIESEL INDIA LTD. IS ONE OF THE COM PARABLES. THE SAID COMPANY WAS INCLUDED IN THE LIST OF COMPAR ABLES IN THE TP STUDY REPORT SUBMITTED BY THE ASSESSEE COMPA NY. 4.2. HOWEVER, NOW THE ASSESSEE HAS SUBMITTED ADDITIONAL GROUND BEFORE THE TRIBUNAL, CONTENDING THAT AS PER LAW THE SAID COMPANY COULD NOT HAVE BEEN INCLUDED IN THE LI ST OF COMPARABLES FOR THE REASON THAT THIS COMPANY HAS SI GNIFICANT RELATED PARTY TRANSACTIONS. DURING THE COURSE OF HE ARING, LD. COUNSEL OF THE ASSESSEE HAS DRAWN OUR ATTENTION ON VARIOUS PAGES OF THE PAPER BOOK SHOWING ANNUAL ACCOUNTS OF THE SAID COMPANY WHEREIN AMOUNT AND OTHER PARTICULARS OF REL ATED PARTY TRANSACTIONS OF MAN DIESEL INDIA LTD. ARE GIV EN. HE HAS DRAWN OUR ATTENTION ON PAGE NO. 57 OF THE PAPER BOO K, SHOWING THAT RELATED PARTY TRANSACTIONS OF THE SAID COMPANY ARE AS UNDER: RPT (INCOME)/ REVENUE FROM OPERATIONS- 45.76% RPT (EXPENSES + INCOME)/ REVENUE FROM OPERATIONS- 65.39% 4.3. FURTHER ATTENTION WAS DRAWN ON PAGE NO. 48 OF THE PAPER BOOK WHICH IS RELEVANT PORTION OF NOTES TO ACCOUNT S OF THE BALANCE SHEET OF THE SAID COMPANY, WHEREIN COMPLETE BREAKUP AND DETAILS OF RELATED PARTY TRANSACTIONS OF THE SA ID COMPANY HAVE BEEN GIVEN. IT WAS SUBMITTED THAT THE RELATED PARTY TRANSACTIONS ARE FAR ABOVE THE LIMIT OF 15% AND EVE N 25%, AND THEREFORE, VIEWED FROM ANY ANGLE, THIS COMPANY COUL D NOT HAVE BEEN INCLUDED IN THE LIST OF COMPARABLES, AND THERE FORE, THE TP ADJUSTMENT MADE BY THE LOWER AUTHORITIES IS CONTRAR Y TO LAW SYMANTEC SOFTWARE 5 AND FACTS, ON THE FACE OF IT. IT WAS SUBMITTED THAT ANY TAX COLLECTED WITHOUT THE AUTHORITY OF THE LAW IS NOT P ERMITTED. IN SUPPORT OF HIS CLAIM THAT AN ASSESSEE CAN DISPUTE A COMPARABLE BEFORE THE TRIBUNAL FOR THE FIRST TIME, RELIANCE HAS BEEN PLACED ON THE FOLLOWING JUDGMENTS: 1 DEPUTY COMMISSIONER OF INCOME TAX VS QUARK SYSTEMS PVT LTD. 132 TTJ (CHD) (S B) 1 2. CIT VS QUARK SYSTEMS INDIA (P) LTD 62 DTR 182 (P&H) 3. AKZO NOBEL CHEMICALS (INDIA) LTD., VS ACIT ITA NO.1169/PN/2011 4. CISCO SYSTEMS (INDIA) PRIVATE LTD. VS DCIT IT(TP)A NO271/BANG/2014 5. ACIT VS CONVERGYS INDIA SERVICE (P) LTD., ITA NO.4291/DEL/2009 6 . DELOITTE CONSULTING INDIA PVT. LTD., VS DCIT 155 TTJ (HYD) 367 7. FOUR SOFT PVT. LIMITED, VS DCIT ITA NO. 1903/HYD/11 8. IVY COMPTECH PVT. LTD VS ACIT ITA NO. 1 558/HYD/2010 9. PAREXEL INTERNATIONAL (INDIA) PRIVATE LIMITED VS ACIT (ITANO.144/HYD/2014). 10. Q LOGIC (INDIA) PRIVATE LIMITED VS DCLT ITA NO.227/PN/2014. 11. STREAM INTERNATIONAL SERVICES PVT. LTD VS ASST. CIT 23 ITR (TRIB) 70 (MUMBAI) 12. SUMITOMO CORPORATION INDIA PRIVATE LIMITED, VS DCIT ITA NO.2307/DEL/2009 13. TECHBOOKS INTERNATIONAL PRIVATE LIMITED VS ACIT ITA NO.4990/DEL/2011 14. UNITED HEALTH GROUP INFORMATION SERVICES PVT. L TD. VS ACIT ITA NO. 6312/DEL/2012 4.4. IT HAS BEEN SUBMITTED BY THE LD. COUNSEL THAT PRAY ER OF THE ASSESSEE IS WITHIN THE FRAME WORK OF LAW, AND T HEREFORE NO SYMANTEC SOFTWARE 6 ILLEGAL ACTION SHOULD BE ALLOWED TO BE SUSTAINED. I T WAS SUBMITTED BY HIM THAT IN ALL FAIRNESS, THIS MATTER SHOULD BE SENT BACK TO AO FOR VERIFICATION OF THE FACTS ALREA DY ON RECORD AND THEN APPLYING THE CORRECT POSITION OF LAW. 4.5 . ON THE OTHER HAND, LD. CIT-DR HAS OPPOSED THE SUBMISSIONS OF THE LD. COUNSEL. IT HAS BEEN SUBMITT ED BY HIM THAT IT HAS NOT BEEN DEMONSTRATED THAT RPT FILTER W AS APPLIED BY THE ASSESSEE OR PTO, AND SINCE THIS FILTER WAS N OT APPLIED, THIS ISSUE CANNOT BE RAISED HERE BEFORE THE TRIBUNA L. HOWEVER, HE WAS FAIR ENOUGH TO ADMIT THAT THE BALANCE SHEET AND OTHER CONNECTED FACTS PERTAINING TO THE AFORESAID COMPANY ARE HELD ON RECORD. HE HAS PLACED RELIANCE ON THE JUDGMENT O F HONBLE DELHI BENCH ITAT IN THE CASE OF NOKIA INDIA (P) LTD . IN ITA NO.242/DEL/2010 DATED 31.10.2014. 4.6. WE HAVE GONE THROUGH THE SUBMISSION MADE BY BOTH T HE SIDES. THE UNDISPUTED FACTS ON RECORD ARE THAT THE AFORESAID COMPANY WAS HAVING RPT TRANSACTIONS WHICH APPEAR TO BE WELL ABOVE THE ACCEPTED LIMITS. REQUISITE DOCUMENTS EVID ENCING THESE FACTS ARE ALREADY HELD ON RECORD. BUT, THESE FACTS WERE NOT EXAMINED BY THE LOWER AUTHORITIES. IN VIEW OF T HE JUDGMENTS RELIED UPON BY THE LD. COUNSEL, WE FIND T HAT SINCE THIS ISSUE GOES TO THE ROOT OF THE MATTER, THE ASSE SSEE SHOULD BE GIVEN OPPORTUNITY TO RAISE A LEGAL PLEA EVEN AT THIS STAGE BEFORE THE TRIBUNAL. IN ALL FAIRNESS AND TO MEET EN DS OF JUSTICE, WE FIND IT APPROPRIATE TO SEND THIS ISSUE BACK TO T HE FILE OF AO/TPO FOR A FRESH DECISION WITH RESPECT TO THE SAI D COMPANY. SYMANTEC SOFTWARE 7 THE ASSESSEE SHALL PUT FORTH ALL REQUISITE MATERIAL BEFORE THE AO/ TPO IN SUPPORT OF ITS CLAIM, FOR WHICH PROPER O PPORTUNITY SHOULD BE PROVIDED. WITH THESE DIRECTIONS, WE SEND THIS ISSUE BACK TO THE FILE OF THE AO/TPO. THUS, ADDITIONAL GR OUND IS TREATED TO BE ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH DECEMBER, 2015. SD/- (AMIT SHUKLA ) SD/- (ASHWANI TANEJA) ! / JUDICIAL MEMBER ' ! / ACCOUNTANT MEMBER MUMBAI; # DATED : 16/12/2015 CTX? P.S/. .. #$%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. % &' / THE APPELLANT 2. ()&' / THE RESPONDENT. 3. * * ( % ) / THE CIT, MUMBAI. 4. * * / CIT(A)- , MUMBAI 5. -./ (01 , * % 012 , / DR, ITAT, MUMBAI 6. /34 5 / GUARD FILE. / BY ORDER, )-% ( //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI
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