IBM India Private Limited, Bangalore V. The Joint Commissioner Of Income Tax, Circle-3(1)(1), Bangalore

ITTPA 539/BANG/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3245 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 10-08-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 01-08-2022
• Assessment Year: 2008-2009
• Appeal Filed On: 29-06-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; Rectification of order; TDS; Set aside
• Section: 154; 143(3); 10AA; 40(a)(ia); 144C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH : BANGALORE BEFORE SMT. BEENA PILLAI, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER IT(TP)A No. 539/Bang/2022 Assessment Year : 2008-09 M/s. IBM India Pvt. Ltd., No. 12, Subramanya Arcade, Bannerghatta Road, Bangalore – 560 029. PAN: AAACI4403L Vs. The Joint Commissioner of Income-tax, Circle 3 (1)(1), Bengaluru. APPELLANT RESPONDENT Assessee by : Shri Ajay Rotti, CA Revenue by : Dr. Manjunath Karkihalli, CIT-DR Date of Hearing : 02-08-2022 Date of Pronouncement : 11-08-2022 ORDER PER BEENA PILLAI, JUDICIAL MEMBER Present appeal is filed by assessee against final assessment order dated 29/10/2012 u/s. 143(3) r.w.s. 144C of the Act. 2. Brief facts of the case are as under: 2.1 The facts of the case are that, the assessee filed its return of Income for AY 2008-09 declaring total income of Rs.38,55,73,480/-. Further the case was selected for scrutiny and draft assessment order u/s 143(3) r.w.s. 144C of the Act was passed on 21.12.2011. Aggrieved by the draft assessment order, the assessee filed its objection with the DRP. The DRP vide its order dated 03.09.2012 upheld the order of the Ld.AO with certain directions. Consequently, the order Page 2 of 9 IT(TP)A No. 539/Bang/2022 u/s 143(3) r.w.s. 144C of the Act, was passed on 29.10.2012 by making following addition/disallowance : a. Deduction u/s 10A disallowed = R s . 540,05,37,759/- b. Deduction u/s10AA disallowed= Rs.12,82,96,962/- c. Provisions for warranty disallowed= Rs. 27,74,67,000/- d. Disallowance u/s 40(a)(i)/40(a)(ia)=Rs.762,67,00,886/- e. Disallowance of Membership/subscription to clubs = Rs. 94,06,677/- . Transfer pricing adjustment = Rs.729,25,32,716/- Thus, assessing total income of Rs. 2112,05,15,480/-. 2.2 Aggrieved by the order, the assessee filed an appeal before this Tribunal. This Tribunal vide order dated 20/12/2013 in IT(TP)A no. 1543/Bang/2012, partly allowed the appeal of the assessee setting aside following issues to DRP: I. a. Disallowance of deduction u/s 10A/ 10AA of the Act b. Disallowance of Provisions for warranty c. Disallowance u/s 40(a)(i)/40(a)(ia) of the Act. II. This Tribunal gave relief on the issues in respect of: a. Disallowance of Membership /subscription to clubs b. TDS claimed by the assessee c. Transfer pricing adjustment 2.3 The DRP vide order in dated 31.03.2021, upheld all the issues in set aside proceedings. Subsequently, an OGE to Tribunal was passed on 21.01.2022 considering the direction passed by the DRP. The total income was thus assessed at Rs.2111,11,08,803/-. 2.4 Further the assessee filed application u/s 154 of the Act on 21.02.2022 stating that, there are certain mistakes apparent from record with details as below: Page 3 of 9 IT(TP)A No. 539/Bang/2022 a. Non Grant of relief for Transfer Pricing Adjustment 2.5 The assessee has stated that consequent to the Tribunal’s order dated 20.12.2013, the Ld.TPO passed order dated 18.07.2016, determining NIL ALP adjustment, which was not considered in the OGE to Tribunal order. b. Short grant of TDS Credit: 2.6 The assessee stated that in the OGE to Tribunal, TDS of Rs.1,74,15,09,735/ - was considered against the claimed TDS of Rs.206,61,13,518/- thus, giving short TDS credit of Rs.172,08,96,217/-. c. Short Grant of FTC: 2.7 The assessee claimed FTC amounting to Rs. 5,77,86,364/ -in its return of Income, out of the total taxes paid of Rs. 24,10,73,621/-. The assessee during appeal proceedings claimed that in the event of relief being not allowed u/s 10A/ 10AA of the Act, the income in question would get doubly taxed and the tax credit claimed by the assessee is liable to be allowed in full. The Tribunal set aside the matter. 2.8 We have examined the contention of the assessee vis-a-vis the details placed on record. It is seen that the Ld.TPO passed OGE by determining the ALP adjustment as ‘NIL’, vide order dated 18.07.2016. 2.9 The assessee thereafter filed rectification application against the OGE passed by the Ld.AO on 21/01/2022 seeking certain rectifications. The Ld.AO passed the 154 order on 23/02/2022 by observing as under: “6. With reference to the granting of FTC credits the Hon’ble ITAT in its order dated 20.12.2013 in paragraph 7.6 has directed that “We are in view of that it would be just and proper to set aside the order of AO in the regard and remand the issue to the AO for fresh consideration in the light of the evidence filed by the assessee and in the light of ultimate outcome of the assessee's claim for deduction u/s 10A/ 10AA of the Act." Page 4 of 9 IT(TP)A No. 539/Bang/2022 7. However, on perusal of the submission of the assessee, the assessee has stated that the assessee is in the process of filing an appeal before Hon'ble ITAT. Further, the issue of 10A/ 10AA disallowance is pending before appleate forum for other years. Thus the issue has not attained finality. Thus, on this issue the OGE given dated 21.01.2022 is in compliance with the directions of Hon'ble ITAT as the ITAT has remitted the issue in the light of ultimate outcome of the issue in question. In view of the above, there is no error apparent from record on this issue.” 2.10 Against the said order, u/s. 154 assessee filed appeal before this Tribunal by order dated 15/06/2022 in IT(TP)A No. 179/Bang/2022, wherein, following observations were made and the appeal was dismissed. “4. We have heard the rival submissions and perused the materials available on record. In this case, assessee filed petition u/s 154 of the Act before AO on 21.2.2022. The AO passed order u/s 154 of the Act on 23.2.2022, wherein he has considered the issues raised by the assessee and which is evident from the paras 5 to 8 of that impugned order and given relief to the assessee. On this count, assessee cannot have any grievance which cannot be agitated before this Tribunal, which are debatable. Further, we notice that the grounds raised by the assessee before us are not emanating from the order passed u/s 154 of the Act dated 23.2.2022. On the other hand, the grounds were emanated from the order giving effect to the ITAT order Bangalore dated 21.1.2022, which inturn emanated from the direction of Ld. DRP passed u/s 144C(5) r.w.s.254 of the Act dated 31.3.2021, which is passed consequent to direction of the Tribunal in IT(TP)A No.1543/Bang/2012 dated 20.12.2013. In view of the above, we are of the opinion that grounds raised by assessee in this appeal are not emanated from the impugned order passed u/s 154 of the Act dated 23.2.2022. Accordingly, the appeal of the assessee is dismissed.” 3. The Ld.AR submitted that the assessee was under bonafide belief that the order giving effect to has merged with the original impugned order dated 21/01/2022, which is the original order giving effect to passed by the Ld.AO pursuant to the DRP directions in the remand proceedings by the Tribunal. He thus submitted that, the time limit Page 5 of 9 IT(TP)A No. 539/Bang/2022 for filing the present appeal expired on 04/04/2022, however as assessee proceeded to file appeal against wrong order, there is a delay of 87 days in filing the present appeal before this Tribunal. He prayed for condonation of the delay caused in filing the present appal as it was unintentional. On the contrary, the Ld.DR vehemently opposed the condonation petition filed by the assessee. 4. We have perused the submissions advanced by both sides in the light of records placed before us. 5. We note that admittedly, the assessee came into appeal before this Tribunal in ITA No. 179/Bang/2022 against the rectification order, subsequently passed to the order giving effect to the DRP direction passed by the Ld.AO in the remand proceedings. It is also noted that the said order u/s. 154 was immediately passed within a period of one month and assessee immediately filed the appeal before this Tribunal alleging certain issues that did not arise out of the rectification order. It is subsequently upon the appeal having dismissed by this Tribunal by order dated 15/06/2022, that, assessee took necessary steps to file the present appeal before this Tribunal that caused a delay of 87 days. 6. The Ld.DR opposed the condonation of delay but could not controvert that the delay could not be attributed to the assessee. 7. Considering the circumstances under which the delay was caused in filing the present appeal before this Tribunal and that nothing contrary could be established by the revenue before us. We place reliance on following observations by Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471 wherein, Hon’ble Court observed as under:- “The Legislature has conferred the power to condone delay by enacting section 51 of the Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on de merits ". The expression Page 6 of 9 IT(TP)A No. 539/Bang/2022 “sufficient cause” employed by the Legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice that being the life-purpose of the existence of the institution of courts. It is common knowledge that this court has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the other courts in the hierarchy. And such a liberal approach is adopted on principle as it is realized that : 1. Ordinarily, a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. ......................................................1.Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period.” 8. Considering the submissions by both sides and respectfully following the observation by Hon’ble Supreme Court, we find it fit to condone the delay caused in filing the present appeal as it is not attributable to the assessee. 9. Therefore we are of the opinion that the delay in filing the present appeal cannot be attributable to assessee under both the above accounts. We condone the delay if any caused in filing the present appeal before this Tribunal. Accordingly the condonation petition dated 30/06/2022 stands allowed. 10. Coming to the merits of the case, the Ld.AR submitted that the DRP while considering the issues referred to hereinabove in para 2.3 has not waited for the remand report from the assessing officer and therefore the issues in respect of a) disallowance u/s. 10A, 10AA (Ground nos. 2-2.9) b) disallowance of provisions of warranty (Ground nos. 3-3.6) c) disallowance u/s. 40(a)(i) & 40(a)(ia) (Ground nos. 4-4.6) 11. Referring to para 4.1.8 of the DRP order in the remand proceedings, the Ld.AR submitted that, due to persistent covid-19 Page 7 of 9 IT(TP)A No. 539/Bang/2022 pandemic during the relevant period, the Ld.AO could not file the remand report after verifying the various details filed by assessee. He submitted that, identical issues were alleged by assessee for A.Y. 2013-14 before this Tribunal in IT(TP)A No. 725/Bang/2018. This Tribunal by order dated 31/07/2020 remanded to the DRP with identical directions, as was given in the year under consideration by order dated 20/12/2013. The Ld.AR submitted that, the Ld.AO has filed the remand report for A.Y. 2013-14 dated 02/06/2022 before the DRP. It is prayed by the Ld.AR that, if these issues are once again remanded to the DRP to be considered in the similar manner, the principles of justice would be met. The Ld.DR could not controvert the inability that circumscribed the assessing officer to provide the remand report during the relevant period before the DRP. 12. We have perused the submissions advanced by both sides in the light of records placed before us. 13. We note that, these issues raised by assessee in ground nos. 2,3,4 along with its sub-grounds were consistently remanded by this Tribunal by order dated 20/12/2013 for assessment year under consideration and 31/07/2020 for A.Y. 2013-14 for due verification based on various invoices filed by assessee for the relevant financial years. 14. Considering the fact that covid-19 pandemic persisted during the period when DRP called for remand report for the year under consideration, the non-filing of the remand report cannot be held to be the fault of any of the parties contesting before us. In the interest of justice, we deem it necessary to once again direct the DRP to follow the directions given by this Tribunal vide order dated Page 8 of 9 IT(TP)A No. 539/Bang/2022 20/12/2013. We are therefore of the view that the issues alleged in Ground nos. 2,3,4 along with its sub-grounds are to be remanded denovo assessment. Needless to say that proper opportunity of being heard is to be granted to the assessee in accordance with law. Accordingly these grounds stands allowed for statistical purposes. 15. Ground nos. 5-7 has been already considered by this Tribunal in the appeal filed by assessee against the order passed u/s. 154 of the Act dated 23/02/2022. This Tribunal in IT(TP)A No. 179/Bang/2022 has already directed the Ld.AO to consider the claim based on the certificates and therefore these issues has presently become infructuous. 16. In respect of Ground no. 8, the Ld.AR submitted that the issue has been rectified by the Ld.AO vide order dated 18/07/2016 and therefore become infructuous and need not be adjudicated. The other sub-grounds under Ground no. 1 except for Ground nos. 1.2 & 1.3 are general in nature and need not be adjudicated. Accordingly, ground nos. 1.2 & 1.3 stands allowed. In the result, the appeal filed by the assessee stands partly allowed for statistical purposes. Order pronounced in the open court on 11 th August, 2022. Sd/- Sd/- (LAXMI PRASAD SAHU) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, the 11 th August, 2022. /MS / Page 9 of 9 IT(TP)A No. 539/Bang/2022 Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order Assistant Registrar, ITAT, Bangalore