J P MORGAN SERVICES INDIA PRIVATE LIMITED ,MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 2(2)(1), MUMBAI

ITA 4781/MUM/2024

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The case involves J P Morgan Services India Private Limited, which appealed against the order of the Deputy Commissioner of Income-tax, Circle 2(2)(1), Mumbai, concerning the Assessment Year 2020-21. The appeal was primarily focused on the Transfer Pricing adjustments made by the Assessing Officer (AO) and the Dispute Resolution Panel (DRP), which amounted to INR 630,27,78,876. The appellant contested the adjustments and the methodology used in the Transfer Pricing study, arguing that the adjustments were not in line with the previously agreed APA and involved incorrect data and filters. The Tribunal considered the APA agreement finalized on 26.03.2025, which covered the international transactions in question, and found that the grounds related to TP adjustments did not require further adjudication. Additionally, the Tribunal addressed the applicability of section 115JB to the assessee, concluding that it was not applicable as per section 115BAA, thus favoring the appellant on this issue as well.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 781388 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Assessment Year: 2020-2021
• Appeal Filed On: 19-09-2024
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEENA JEPH
• Assessee Lawyers: FENIL BHATT
• Keywords: Transfer pricing; International transaction; Period of limitation; Competent authority; Initiation of penalty proceedings; Time period of passing order
• Section: 143(3); 234B; 115JB; 92D

Judgement Text

"IN THE INCOME-TAX APPELLATE TRIBUNAL “K” BENCH, MUMBAI BEFORE SHRI BEENA PILLAI, JUDICIAL MEMBER & SMT. RENU JAUHRI, ACCOUNTANT MEMBER ITA No. 4781/MUM/2024 (A.Y. 2020-21) J P Morgan Services India Private Limited (‘the Appellant’) Tower A Blk 9, Tower B Blk 10, Tower C Blk 11, Nirlon Knowledge Park, Western Express Highway, Goregaon East, Mumbai Suburban, 400063. Vs. Deputy Commissioner of Income-tax, Circle 2(2)(1) Aayakar Bhawan, Maharishi Karve Road, New Marine Lines, Churchgate, Mumbai-400020. स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AABCD0503B Appellant .. Respondent Appellant by : Shri Fenil Bhatt Respondent by : Ms. Neena Jeph (CIT DR) Date of Hearing 06.08.2025 Date of Pronouncement 30.09.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the DCIT, Circle 2(2)(1), Mumbai dated 27.06.2024 passed u/s. 143(3)/144C(13) of the Income- tax Act, 1961 [hereinafter referred to as “Act”] for the Assessment Year [A.Y.] 2020-21. 2. The grounds of appeal are as follows: Printed from counselvise.com P a g e | 2 ITA NO. 4781/MUM/2024 A.Y.2020-21 “1. On facts and in the circumstances of the case & in law, the final assessment order (final order') passed under section 143(3) r.w.s. 144C(13) read with section 144B of the Act dated 22 July 2024 by Assessment Unit, National Faceless Assessment Centre, Income Tax Department (Ld. AO') and directions issued under section 144C(5) of the Act dated 27 June 2024 by the Hon'ble Dispute Resolution Panel (Hon'ble DRP'), to the extent prejudicial to the Appellant, is erroneous and bad in law. 2. On the facts and in the circumstances of the case and in law, the final assessment order dated 22 July 2024, passed by the Ld. AO under section 143(3) read with section 144C(13) of the Act, having been passed beyond the limitation period provided in terms of section 153 of the Act, is void-ab-initio, illegal and bad in law and is therefore, liable to be quashed. 3. On the facts and in the circumstances of the case and in law, the Hon'ble DRP erred in partially confirming the action of the Ld. AO and the Office of Joint Commissioner of Income Tax, Transfer Pricing ADDL/JCIT TP 2(3) (Ld. TPO') and making an adjustment of INR 630,27.78,876/- in relation to the international transaction of provision of back office support services in the nature of information technology (IT) Support Services and IT enabled services (ITeS') to the associated enterprises. 4. On the facts and in the circumstances of the case and in law, the Ld. AO/ Ld. TPO/Hon'ble DRP erred in law and in facts by: a) rejecting the TP Study maintained by the Appellant under Section 92D of the Act in good faith and with due diligence; b) rejecting the economic analysis undertaken by the Appellant in the TP Study maintained under section 92D of the Act read with Rule 10D of the Income-tax Rules, 1962 ('the Rules') on the basis that the Appellant did not apply appropriate filters and accordingly contended that the data used in computation of arm's length price is not reliable or correct; c) conducting a fresh economic analysis by using data which is non- contemporaneous and against the principles contained under Rule 10D of the Rules. 5. On the facts and in the circumstances of the case and in law, the Id. AO/Ld. TPO/Hon'ble DRP erred in conducting a fresh comparability analysis by way of: a) rejection of the filters applied by the Appellant and consequent rejection of comparable companies in the TP Study: b) application of new/modified filters and rejection of comparable companies of the Appellant. 6. On the facts and in the circumstances of the case and in law, the Ld. AO/Ld. TPO/Hon'ble DRP erred in not excluding certain companies from the final set of comparable(s), which are functionally in the nature of IT Support services and IT enabled services. dissimilar to the Appellant's international transaction of provision of back office support services 7. On the facts and in the circumstances of the case and in law, the Id. AO/Ld TPO/Hon'ble DRP erred in not including certain companies in the final set of comparable(s), which are functionally similar to the Appellant's international transaction of provision of back-office support services in the nature of IT Support services and IT enabled services: Printed from counselvise.com P a g e | 3 ITA NO. 4781/MUM/2024 A.Y.2020-21 8. On the facts and circumstances of the case and in law, the Ld.AO/Ld. TPO/Hon'ble DRP erred in not allowing/granting the working capital adjustment. 9. On the facts and circumstances of the case and in law, the Ld.AO/Ld. TPO/Hon'ble DRP erred in not allowing/granting the risk adjustments. 10. On the facts and circumstances of the case and in law, the Ld.AO/Ld. TPO/Hon'ble DRP erred in ignoring the terms of the Original BAPA signed with Central Board of Direct Taxes ('CBDT\") for FY 2014-15 to FY 2018-19 inter-alia covering the transactions in the nature of provision of back-office support in the nature of IT and ITeS without appreciating the uncontested fact that Functions, Assets and Risks for the impugned AY is same as earlier concluded APA. 11. On the facts and in the circumstances of case and in law, Ld.AO/Ld. TPO/Hon'ble DRP erred in not taking cognizance of the Mutual Agreement Procedure ('MAP') for AY 2006-07 to AY 2014-15 concluded in Appellant's own case having similar set-of facts, pricing policy and assumptions. 12. On the facts and in circumstances of the case and in law, the Ld.AO/ Hon'ble DRP erred in making adjustment/addition of the impugned Transfer pricing addition proposed by the Ld. TPΟ amounting to Rs.630,27,78,876 to the 'book profits' to be determined under section 115JB of the Act. 13. On the facts and in the circumstances of the case and in law, the Id.AO/ Hon'ble DRP erred in making adjustment/addition in respect of health and education cess addition proposed by the Ld. AO amounting to Rs. 16,17,66,335 to the 'book profits' to be determined under section 115JB of the Act. 14. On the facts and in the circumstances of the case, the Ld.AO has erred in levying interest under section 234A of the Act amounting to Rs. 1,49,74,780. 15. On the facts and in the circumstances of the case, the Ld.AO has erred in levying interest under section 234B of the Act amounting to Rs. 77,86,88,560. 16. On the facts and in the circumstances of the case and in law, the Ld. AO has erred in initiating penalty proceedings under Section 270A of the Act. 17. Without prejudice to the aforesaid grounds, on the facts and in the circumstances of the case, the Ld. AO has erroneously totaled the \"Total Interest and Fees Payable (ie. row no. 42 of the Computation sheet attached with the final Assessment order) to Rs. 81,19,43,717 instead of Rs. 80,79,09,169 for the current year. The Appellant prays that appropriate relief be granted. That the Appellant craves leave to add, to and/or to alter, amend, rescind, substitute, modify and/or withdraw all or any of the grounds of appeal herein and to submit such statements, documents and papers as may be considered necessary either at or before the appellate hearing.” 3. Brief fact of the case are that the assessee company is engaged in providing back office support services in the nature of IT & IT enabled services Printed from counselvise.com P a g e | 4 ITA NO. 4781/MUM/2024 A.Y.2020-21 to its group entities across the world. Assessee filed its return for A.Y. 2020-21 declaring income of Rs. 1673,59,84,020/- on 31.12.2021. The case was selected complete scrutiny. After incorporating the directions of ld. DRP, final assessment was completed after making the following additions: i. Variation in respect of TP adjustment as per direction u/s. 144C 6,30,27,78,876 ii. Variation with regard to disallowance of deduction claimed of Health and Education cess 16,17,66,335 4. We have heard the rival submissions and perused the material placed on record. At the outset, ld. AR submitted that the assessee has finalized APA agreement with the competent Authority and a copy of the APA agreement u/s. 92CC dated 26.03.2025 with regard to the ALP of the international transactions covered therein has been filed. 5. Accordingly, the grounds of appeal is decided as under: i. Ground No. 1 being general needs no adjudication. ii. Ground No. 2 pertains to ROCA issue which is being left open iii. Ground No. 3 to 11 relate to the TP adjustments which are covered by the APA. Relevant portion of the APA is reproduced below: “2. The term of the Agreement The Agreement shall apply to consecutive five years commencing from previous year 2019-20 to previous year 2023-24 (relevant to assessment years 2020-21 to 2024-25) (hereinafter referred to as \"APA Years\"). 3. Covered Transactions Printed from counselvise.com P a g e | 5 ITA NO. 4781/MUM/2024 A.Y.2020-21 3.1. The international transactions between the Applicant and its AEs covered by this APA (the \"Covered Transactions\") are as follows: i. Provision of (a) IT-enabled services and (b) information technology support services (collectively referred to as \"back-office support services\") by JPM India to its AEs and; ii. Reimbursements to and Recoveries from its AEs. 3.2. This Agreement shall apply to the above-mentioned international transactions only. 3.3. The AEs with whom the Applicant has undertaken the covered transactions are listed in Appendix I(A).” Accordingly, these grounds need no further adjudication being covered by the APA. 6. Ground no. 12 & 13 relates to adjustment to book profits u/s. 115JB of the addition on account of TP addition and disallowance of deduction claimed w.r.t Health & Education cess. Ld. AR has submitted that the assessee is covered u/s. 115BAA of the Act. Accordingly, as per section 115JB(5A), the provisions of section 115JB shall not be applicable to the assessee company. After hearing rival submissions, and considering the relevant legal provisions, we are of the considered opinion that section 115JB is not applicable in this case and hence these grounds are decided in favour of the assessee. 7. Grounds no. 14, 15 and 17 relate to charging of interest u/s. 234A, 234B and are consequential in nature. Hence these require no separate adjudication. 8. Ground no. 16 relates to initiation of penalty proceedings. This ground being premature is also not required to be adjudicated. Printed from counselvise.com P a g e | 6 ITA NO. 4781/MUM/2024 A.Y.2020-21 9. In the result, assessee’s appeal is allowed. Order Pronounced in Open Court on 30.09.2025 Sd/- Sd/- (BEENA PILLAI) (RENU JAUHRI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Place: Mumbai Date 30.09.2025 Anandi.Nambi/STENO आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अतिकरण/ ITAT, Bench, Mumbai. Printed from counselvise.com "