M/s Yahoo software Development India P Ltd, Bangalore V. Deputy Commissioner of Income tax, Bangalore

MA 15/BANG/2015

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 3149 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 26-06-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 27-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: FARHAT HUSSAIN QURESHI
• Keywords: Related party transaction
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI JASON P.BOAZ, ACCOUNTANT MEMBER MISC. PETN. NO.15/BANG/2015 (IN ITA NO.1129/BANG/2010 ) (ASSESSMENT YEAR: 2006 - 07) M/S.YAHOO SOFTWAR E DEVELOPMENT INDIA P.LTD. TORREY PINES , EMBASSY GOLF LINKS, BUSINESS PARK OFF. INDIRANAGAR - KORAMANGALA INTERMEDIATE RING ROAD, BANGALORE. PETITIONER PAN:AAACY1876D VS. DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE 12(5), BANGA LORE. RESPONDENT PETITIONER BY: SHRI S HARATH RAO, CA . RESPONDENT BY: SHRI FARHAT HUSSAI N QURESHI, CIT(DR) DATE OF HEARING : 2 6 / 06/2015 . DATE OF PRONOUNCEMENT: 10 /07/2015 . O R D E R PER SMT.P.MADHAVI DEVI, JM: THIS APPLICATION IS FILE D BY THE ASSESSEE U/S 25 4 ( 2 ) OF THE INCOME - TAX ACT, 1961 [ ACT ] SEEKING RECTIFICATION OF THE ALLEGED MISTAKES APPARENT FROM RECORD IN THE ORDER OF THE TRIBUNAL DATED 31/12/2014. IT IS STATED BY THE ASSESSEE THAT THE ASSESSEE HAS CHALLENGED THE TP ADJUSTM ENT MADE BY THE AO U/S 143(3) R.W.S.144C PURSUANT TO THE DIRECTIONS OF THE DRP. IT IS SUBMITTED MISC.PETN.NO.15/BANG/2015 M/S.YAHOO SOFTWARE DEVELOPMENT INDIA P.LTD. PAGE 2 OF 5 THAT ALONG WITH THE GROUNDS OF APPEAL RAISED IN THE APPEAL, ASSESSEE HAD RAISED ADDITIONAL GROUNDS OF APPEAL SEEKING A PPLICATION OF THE TURNOVER FILTER I.E. T O EXCLUDE COMPANIES WHOSE TURNOVER IS IN EXCESS OF RS.200 CRORES FROM THE FINAL LIST OF COMPARABLES SINCE THE ASSESSEE S TURNOVER WAS ONLY RS.80 CRORE. IT IS SUBMITTED THAT 6 COMPANIES WHOSE TURNOVER EXCEED ED RS.200 CRORE OUGHT TO HAVE BEEN EXCLUDED AS C ONTENDED BY THE PETITIONER IN THE CHART FILED BY IT DURING THE COURSE OF HEARING . IT IS SUBMITTED PERSISTENT SYSTEMS LTD ., ALSO HAD TURNOVER OF MORE THAN RS.200 CRORES . IT IS SUBMITTED THAT IN PARA.2.3 OF THE ORDER, THE TRIBUNAL HAD ADMITTED AND ALLOWED T H IS ADDITIONAL GROUND OF APPEAL TO APPLY THE TURNOVER FILTER. HOWEVER, WHILE EXCLUDING THE COMPANIES HAVING MORE THAN RS.200 CRORES AS TURNOVER, THE TRIBUNAL HAS OMITTED TO DIRECT EXCLUSION OF PERSISTENT SYSTEMS LTD., FROM THE LIST OF COMPARABLE COMPANIES EVEN THOUGH ITS TURNOVER WAS RS.209.19 CRORE. THEREFORE, ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, TH IS IS AN INADVERTENT MISTAKE APPARENT FROM RECORD WHICH NEEDS RECTIFICATION U/S 254(2) OF THE ACT. 2. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE IN THE MISC. PETN. , WHILE THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THERE IS NO MISTAKE APPARENT FROM RECORD A S THE ASSESSEE ITSELF HAD STATED DURING THE COURSE OF HEARING THAT THE ASSESSEE DOES NOT WISH TO PRE SS MISC.PETN.NO.15/BANG/2015 M/S.YAHOO SOFTWARE DEVELOPMENT INDIA P.LTD. PAGE 3 OF 5 ADDITIONAL GROUND OF APPEAL NO.2 WHICH INCLUDES PERSISTENT SYSTEMS LTD. 3. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAD RAISED THE FOLLOWING TWO ADDITIONAL GROUNDS OF APPEAL : 1. THE LEARNED TP O/HONORABLE DRP HAVE ERRED IN LAW AND ON FACTS IN INCLUDING COMPANIES WHOSE TURNOVER EXCEEDS INR 200 CRORES AS COMPARABLE TO THE APPELLANT WITHOUT CONSIDERING THAT THE APPELLANT S TURNOVER IS ONLY INR 80 CRORES. 2. THE LEARNED TPO/ HONORABLE DRP HAVE ERRE D IN SELECTING PERSISTENT SYSTEMS LIMITED AND R SYSTEMS INTERNATIONAL LIMITED, AS COMPARABLE TO THE APPELLANT. THESE COMPANIES CANNOT BE RETAINED AS COMPARABLES, MERELY BECAUSE THEY WERE NOT CONTENDED BEFORE THE LOWER AUTHORITIES OR BECAUSE THEY WERE INIT IALLY PROPOSED BY THE APPELLANT AS COMPARABLE TO THE APPELLANT. THE FIRST GROUND IS FOR ADOPTION OF THE TURNOVER FILTER WHILE THE SECOND GROUND IS SEEKING EXCLUSION OF PERSISTENT SYSTEMS LTD., AND R SYSTEMS INTERNATIONAL LTD. , F ROM THE LIST OF COMPAR ABLE COMPANIES. IN THE ADDITIONAL GROUND IT IS STATED THAT THESE COMPANIES CANNOT BE RETAINED AS COMPARABLES MERELY BECAUSE THEY WERE NOT CONTESTED BEFORE THE LOWER AUTHORITIES OR BECAUSE THEY WERE INITIALLY PROPOSED BY THE ASSESSEE AS COMPARABLE TO THE A SSESSEE. AT THE TIME OF HEARING OF THE APPEAL ON THE ADDITIONAL GROUNDS OF APPEAL FILED BEFORE US , THE LEARNED COUNSEL FOR THE ASSESSEE HAS CLEARLY ENDORSED THAT THE ASSESSEE IS NOT MISC.PETN.NO.15/BANG/2015 M/S.YAHOO SOFTWARE DEVELOPMENT INDIA P.LTD. PAGE 4 OF 5 PRESSING THE SECOND GROUND OF APPEAL AND THIS HAS BEEN RECORDED BY US IN OUR ORDER DATED 31/12/2014 AT PARA.2.1 AT PAGE 3 OF THE ORDER . IT IS RECORDED THAT THE LEARNED COUNSEL FOR THE ASSESSEE DOES NOT WISH TO PRESS THE ADDITIONAL GROUND OF APPEAL NO.2 RELATING TO EXCLUSION OF R SYSTEMS INTERNATIONAL LTD., AND PERSISTENT SYSTE MS LTD., FROM THE LIST OF COMPARABLE COMPANIES. THEREFORE, WE FIND THAT THERE IS NO MISTAKE APPARENT FROM RECORD FROM THE ORDER OF THIS TRIBUNAL AND THE MISTAKE ALLEGED BY THE ASSESSEE IS NOT A MISTAKE APPARENT FROM RECORD WHICH NEEDS RECTIFICATION. 4. THE SECOND MISTAKE ALLEGED BY THE ASSESSEE IS THAT THE ASSESSEE HAD SOUGHT EXCLUSION OF MEGASOFT LTD., FROM THE LIST OF COMPARABLES ON THE GROUND THAT IT FAILS RELATED PARTY TRANSACTION (RPT) FILTER OF 15%. IT IS SUBMITTED THAT THE TRIBUNAL, WHILE DEAL ING WITH THE SAID COMPARABLE , HAD RELIED ON THE DECISION OF THE BANGALORE TRIBUNAL IN THE CASE OF AGILE SOFTWARE ENTERPRISE PVT. LTD., WHICH DEALS WITH THE DISSIMILARITY OF MEGASOFT LTD., BUT BY MISTAKE INSTEAD OF DIRECTING THAT MEGA SOFT IS TO BE EXCLUDED AT PARA.3.3 OF ITS ORDER, IT WAS MENTIONED AS MINDTREE LTD AND IT WAS DIRECTED TO BE EXCLUDED AS A COMPARABLE. THUS ACCORDING TO HIM, IT IS A MISTAKE APPARENT FROM RECORD WHICH NEEDS RECTIFICATION. 4. UPON HEARING BOTH THE PARTIES AND ON VERIF YING THE ORDER OF THE TRIBUNAL, WE AGREE THAT THE MENTION OF MINDTREE MISC.PETN.NO.15/BANG/2015 M/S.YAHOO SOFTWARE DEVELOPMENT INDIA P.LTD. PAGE 5 OF 5 LTD INSTEAD OF MEGASOFT IS A MISTAKE APPARENT FROM RECORD. THEREFORE, WE AMEND PARA.3.3 OF THE ORDER OF THE TRIBUNAL AND DIRECT THAT MINDTREE LTD BE READ AS MEGASOFT IN THIS PAR A GRAPH. 5. IN THE RESULT, THE MISC ELLANEOUS PETITION OF THE ASSESSEE IS PARTLY ALLOWED. PRO N OUNCED IN THE OPEN COURT ON 10 TH JULY , 201 5 . S D/ - SD/ - (JASON P BOAZ ) ( SMT. P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER EKSRINIVAS ULU COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNA L BANGALORE.