Hewlett-Packard (India) Software Operation Private Limited, Bangalore V. DCIT, Circle-3(1)(2), Bangalore

MA 120/BANG/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1705 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 12-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LAKSHMI
• Keywords: Set aside
• Section: 12; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI B.R.BASKARAN , ACCOUNTANT MEMBER AND SMT BEENA PILLAI, JUDICIAL MEMBER M .P. NO S . 12 0 & 121 /BANG/2019 (IN IT (TP) A NO S . 668 & 583 /BANG/20 1 6 ) (ASSESSMENT YEAR S : 20 11 - 12 ) M/S HEWLETTE PACKARD INDIA SOFTWARE OPERATION PVT.LTD., B A NGALORE VS THE DCIT, CIRCLE - 3(1)(2), BANGALORE APPELLANT RESPONDENT PETITIONER BY : SHRI SHARATH RAO, CA RESPONDENT BY : SMT. LAKSHMI, JCIT DATE OF HEARING : 15 - 11 - 2019 DATE OF PRONOUNCEMENT : 05 - 12 - 2019 O R D E R P ER SMT. BEENA PILLAI, JM: IT IS NOTED THAT ASSESSEE FILED MP NOS.120 & 121(B)/2019 FOR ASSESSMENT YEARS: 2011 - 12 AGAINST ORDER PASSED BY THIS TRIBUNAL DATED 02 - 08 - 2019. IN BOTH THESE MISCELLANEOUS PETITIONS ASSESSEE SOUGHT TO RECTIFY CERTAIN ALLEGED MISTAKES , APPARENT FROM RECORD IN ASSESSEES APPEAL. 2. W E FAIL TO UNDERSTAND W HY MP N O .121(B)/2019 IS FILED IN DEPARTMENT APPEAL BEING IT(TP)A NO.583(B)/2016 RAISING SAME ISSUES AS IN MP NO.120(B)/2019 . W E THEREFORE, C ONSIDER ONLY MP NO.1 2 0(B)/2019 IN IT(TP)A NO.668(B)/2016 . M .P. NO S . 12 0 & 121 /BANG/2019 (IN IT (TP) A NO S . 668 & 583/B ANG/201 6 ) PAGE 2 OF 5 2.1 ASSESSEE IN M ISCELLANEOUS NO.120(B)/2019 POINTED OUT THE FOLLOWING ALLEGED MISTAKE APP ARENT FROM RECORD. I. W ITH RESPECT TO EVOKE TECHNOLOGIES PVT.LTD. AND MINDTREE LTD., HAVING REFERENCE TO PARAGRAPH 18. ( A) PAGE - 24 OF IMPUGNED ORDER. II. TYPOGRAPHIC MISTAKE IN PARAGRAPH 18 (B) AND III. NON - ADJUDICATION OF ONE COMPARABLE SOUGHT FOR EXCLUSION IN ADDITIONAL GROUND RAISED VIDE APPLICATION DATED 16 - 12 - 2017. 2.2 WE HAVE PERUSED SUBMISSION OF L D.AR VIZ. PAPER BOOK FILED AND OUR NOTING IN LOG BOOK WE FIND CERTAIN SPECIFIC OBSERVATION OF DRP HAS BEEN DISPUTED BY THE LD. AR WHICH HAS NOT BEEN RECORDED WHILE SETTING ASIDE THE COMPARABLE. WE ACCORDINGLY, INCORPORATE THE ARGUMENTS ADVANCED BY LD.AR AS UNDER: I. FOLLO W ING PARA WOULD BE HENCEFORTH BE READ AS 18( A ) IN IMPUGNED ORDER DATED 02 - 08 - 2019 . 18(A) EVOKE TECHNOLOGIES PVT.LTD., AND MINDTREE LTD., IT HAS BEEN SUBMITTED BY LD.AR THAT EVOKE TECH NOLOGIES PVT.LTD WAS SUO - MOTO REJECTED BY DRP EVEN THOUGH, WAS SELECTED BY LD. TPO. ASSESSEE D ID NOT OBJECT TO ITS INCLUSION EITHER BEFORE DRP IT HAS BEEN SUBMITTED THAT DRP WHILE PASSING ITS DIRECTION E X CLUDED THIS COMPARABLE ON ITS OWN. IT HAS BEEN SUBMITTED BY L D.AR THAT BASIS FOR EXCLUSION OF THIS COMPARABLE BY DRP IS NOT CORRECT , AS ASSES S EE IS FOLLOWING TRANSACTIONAL NET MARGIN METHOD (TNMM) THEREFORE, CERTAIN EXPENSES CANNOT BE SELECTIVELY M .P. NO S . 12 0 & 121 /BANG/2019 (IN IT (TP) A NO S . 668 & 583/B ANG/201 6 ) PAGE 3 OF 5 IDENTIFIED FOR EXCLUSION. IT HAS BEEN SUBMITTED THAT OVERALL EFFECT NEEDS TO BE CONSIDERED. IN SUPPORT, LD.AR PLACED RELIANCE ON DECISION OF CO - ORDINATE BENCH OF D E LHI TRIBUNAL IN THE CASE OF SUMI MOTHERSON INNOVATIVE ENGINEERING LTD . IN ITA NO.155 & 1816/DEL/2011 (PARA 5.4(III). LD.CIT,DR ON THE CONTRARY, RELIED ON THE VIEW OF AUTHORITIES BELOW. WE HAVE PERUSED SUBMISSION ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. IT IS OBSERVED THAT DRP EXCLUDED THIS COMPARABLE DUE TO LOW MARGIN DURING THE YEAR. ON ONE HAND, DRP NOTES THAT THERE HAS T O BE ABNORMALITIE S OR CIRCUMSTANCES, WHICH I NFUSED LOW MARGIN FOR PURPOSES OF EXCLUSION, O N THE OTHER HAND, DRP IN CASE OF THIS COMPARABLE FAILS TO ANALYSE ABNORMALITIES OR CIRCUMSTANCES THAT LED TO LOW MARGIN AT 8.11%. WE THEREFORE, DO NOT A PPRECIATE EXCLUSION OF THIS COMPARABLE AS IT IS WITHOUT ANY BASIS. WE ALSO NOTE THAT ASSE S SEE FOLLOWED TNMM AS MOST APPROPRIATE METHOD THAT SUBSUMES EXPENSES. WE THEREFORE, SET ASI D E THIS COMPARABLE BACK TO DRP TO CARRY OUT COMPARABILITY ANALYSIS WITH ASSE SS SEE A PER L A W , KEEPING IN MIND THE MAM ADOPTED BY ASSESSEE WHICH HAS NOT BEEN DIPUTED BY AUTHORITIES BELOW. . M .P. NO S . 12 0 & 121 /BANG/2019 (IN IT (TP) A NO S . 668 & 583/B ANG/201 6 ) PAGE 4 OF 5 M/S MIND TREE LIMITED . IT HAS BEEN SUBMITTED BY L D.AR THAT THIS COMPARABLE WAS EXCLUDED BY LD.AO AT THE T IME OF PASSING FINAL ASSE SSMENT O R DER, THOUGH , T HERE WAS NO SUCH DIRECTION BY DRP. THIS SHOWS SHEER NON - APPLICATION OF MIND. WE DIRECT LD.AO TO FOLLOW DIRECTIONS OF DRP STRICTLY. ACCO R DINGLY, BOTH THESE COMPARABL ES ARE SET ASIDE TO AO WITH THE DIRECTIONS MENTIONED HEREIN ABOVE. II FOLLOWING PARA WOULD BE READ AS 18(B) IN THE IMPUGNED ORD E R. 18.B) FCS SOFTWARE SOLUTIONS LTD., AND LGS GLOBAL LT D., AT THE OUTSET, IT HAS BEEN SUBMITTED BY BOTH SIDES THAT FCS SOFTWARE SOLUTIONS LTD., AND LGS GLOBAL LTD HAS NOT BEEN CONSIDERED BY DRP. ACCORDINGLY BOTH PARTIED HAVE NO OBJECTION IN SETTING ASIDE THESE COMPARABLES BACK TO DRP FOR COMPARABILITY ANALYSIS T O BE CARRIED OUT WITH ASSESSEE. BASED UPON THE ABOVE SUBMISSIONS, WE SET ASIDE THESE COMPARABLES TO DRP. NEEDLESS TO SAY THAT ASSESSEE MAY BE GRANTED PROPER OPPORTUNITY OF BEING REPRESENTED. ACCORDINGLY , WE SET ASIDE THESE COMPARABLES BACK TO LD. DRP FOR VERIF ICATION ON THE BASIS OF DETAILS AVAILABLE/SUBMITTED BY ASSESSEE. 3. REMAINING PART OF ORDER DATED 02 - 08 - 2019 SHALL REMAIN UNALTERED EXCEPT FOR PARA - 18. (A) & 18. (B) , WHICH STAND MODIFIED AS HEREINABOVE. M .P. NO S . 12 0 & 121 /BANG/2019 (IN IT (TP) A NO S . 668 & 583/B ANG/201 6 ) PAGE 5 OF 5 III. AS REGARDS , NON - ADJUDICATION OF ADDITIONAL GROUND IN RESPECT OF M/S SASKEN COMMUNICATION TECHNOLOGIES PVT. LTD ., I T IS OBSERVED THAT ADDITIONAL GROUND WAS THOUGH ADMITTED THIS COMPARABLE REMAINED TO BE ADJUDICAT ED. THIS IS APPAR E NT MISTAKE ON RECORD. WE THEREFORE, RECALL ORDER DATED 02 - 08 - 2019 ONLY FOR THE LIMITED PURPOSE OF ADJUDICATION OF ALLEGED EXCLUSION OF M/S SASKEN COMMUNICATION TECHNOLOGIES PVT. LTD. 3.1 REGISTRY IS DIRECTED TO FIX APPEAL NO.668(B)/2016 BEING ASSESSEES APPEAL FOR LIMITED PURPOSE TO ADJUDICATE EXCLUSION SOUGHT BY ASSESSEE IN RESPECT OF M/S SASKEN COMMUNICATION TECHNOLOGIE S PVT.LTD., ACCORDINGLY, MP NO.120(B)/2019 IN IT(TP)A NO.668(B)/2016 ASSESSEES APPEAL STANDS ALLOWED A ND MP NO.121(B)/2019 IN IT(TP)A NO.583(B)/2016 (DEPTT. APPEAL)STANDS DISMISSED. ORDER PRONOUN CED ON 05 - 12 - 2019. SD/ - S D / - ( B.R.BASKARAN ) (BEENA PILLAI) ACCO UNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED: 05 - 12 - 2019 A M* COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR