Wipro GE Healthcare Private Limited, Bangalore V. Assistant Commissioner Of Income Tax, Circle-7(1)(1), Bangalore

MA 168/BANG/2023

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The case revolves around a Miscellaneous Petition filed by M/s. Wipro GE Healthcare Pvt. Ltd. seeking rectification of an earlier Tribunal order concerning transfer pricing adjustments and the treatment of certain comparables in the Software Development Segment for the assessment year 2018-19. The Tribunal acknowledged errors in the extraction of paragraphs related to the 'Royalty' issue and the misdirection to the 'DRP' instead of 'TPO/AO' for certain actions regarding comparables and adjustments. The Tribunal's corrections aimed to align the order with previous decisions and ensure proper procedural adherence.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 129980 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 24-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-08-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 05-07-2023
• Other Referred Cases: ITA No.803/Bang/2022, ITA No.291/Bang/2022, ITA No.285/Bang/2021
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V. PARITHIVEL
• Section: 37; 153

Judgement Text

MP No.168/Bang/2023 M/s. Wipro GE Healthcare Pvt. Ltd., Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “C’’ BENCH: BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER MP No.168/Bang/2023 (Arising out of IT(TP)A No.803/Bang/2022) Assessment Year: 2018-19 M/s. Wipro GE Healthcare Pvt. Ltd. 4, Kadugodi Industrial Area Whitefield Bangalore 560 067 PAN NO : AAACW1685J Vs. ACIT Circle 7(1)(1) Bangalore APPELLANT RESPONDENT Appellant by : Ms. Girija G.P., A.R. Respondent by : Shri V. Parithivel, D.R. Date of Hearing : 25.08.2023 Date of Pronouncement : 25.08.2023 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: In this Miscellaneous petition the assessee seeks rectification of order of the Tribunal in IT(TP)A No.803/Bang/2022 dated 17.5.2023. 2. The ld. A.R. submitted that while adjudicating the ground No.12, the Tribunal in page 6 para 6 has relied on the earlier order in assessee’s own case for the assessment year 2017-18 in ITA No.291/Bang/2022 dated 15.3.2023 in turn it was followed the order of Tribunal in A.Y. 2016-17 in ITA No.285/Bang/2021 dated 3.2.2023 and extracted the portion regarding “Royalty” issue which is commencing from pages 7 to 14 of that order. While issuing directions, error has crept in pages 12 to 14 by extracting para nos.4 to 4.5, which is not relevant to the assessee and appears to be typographical error. Hence, para nos.4 to 4.5 reproduced in para 6 MP No.168/Bang/2023 M/s. Wipro GE Healthcare Pvt. Ltd., Bangalore Page 2 of 4 of the Tribunal order cited (supra) to be deleted, so that paras 6 & 6.1 are in line with each other. 2.1 We have heard the rival submissions and perused the materials available on record. In this case, while adjudicating ground No.12 on the issue relating to “Royalty”, taken support of earlier order of the Tribunal in assessee’s own case for the assessment year 2017- 18 in ITA No.291/Bang/2022 dated 15.3.2023 in turn it was followed the order of Tribunal in A.Y. 2016-17 in ITA No.285/Bang/2021 dated 3.2.2023 and extracted para nos.4 to 4.5 which are reproduced in page nos.12 to 14 of the Tribunal order cited (supra), which are not relating to the “Royalty” payment but related to incurring the allowability of expenditure u/s 37 of the Act and the same to be deleted. In our opinion, there is merit in the argument of the ld. A.R. Accordingly, there was an error crept in pages 12 to 14 by wrongly extracting the para nos.4 to 4.5 of earlier order of the Tribunal cited (supra). Accordingly, this portion reproduced in pages 12 to 14 of impugned order is deleted. 3. Next objection of the ld. A.R. by this MA is that while dealing with the issue of Software Development Segment in Ground No.14 (para 11 page 27), the Tribunal in para 14 dealt with each of the comparables and given its directions. In doing so, the Tribunal has directed the 'DRP' to remove the comparables/delete the TP adjustment, remitting the issue to DRP appears to be an oversight and in fitness of things it would serve the purpose to direct the 'AO/TPO' for giving effect to the order of the Tribunal which will be in line with section 153 of the Act. The relevant paras where the direction is given to DRP is extracted hereunder: (emphasis supplied) "14.7 The Tribunal in assessee's own case for AY 2016-17 in ITA 285/Bang/2021 dated 03.02.2023 considering the above decision in Sandisk has rejected Persistent Systems Ltd. and Nihilentltd as comparables. The Tribunal in assessee's own case for AY 2017-18 in ITA 291/Bang/2022 dated 15.03.2023 has rejected these companies as comparables. In consideration of the same, we direct the Id. DRP to remove the companies Persistent Systems Ltd. and Nihilent Ltd. from the list of comparablesVr the impugned year. MP No.168/Bang/2023 M/s. Wipro GE Healthcare Pvt. Ltd., Bangalore Page 3 of 4 14.9 The Tribunal in assessee's own case for AY 2017-18 in ITA 291/Bang/2022 dated 15.03.2023 considering the above decision in ADP Pvt Ltd has rejected Tata Elxsi as comparable. In consideration of the same, we direct the Id. DRP to remove Tata Elxsi Ltd. 4 from the list of comparables for the impugned year. 14.12 The Tribunal in assessee's own case for AY 2016-17 in ITA 285/Bang/2021 dated 03.02.2023 considering the above decisions in Optiva and Infor has rejected Cybage Software Pvt Ltd as comparable. The Tribunal in assessee's own case for AY 2017-18 in ITA 291/Bang/2022 dated 15.03.2023 has rejected this company as comparable. In consideration of the above, we direct the Id. DRP to remove the company Cybage Software Pvt Ltd. from the list of comparables for the impugned year. 14.15 In view of the said decision, we direct the Id. DRP to allow the working capital adjustment. 14.16 From the above it can be seen that assessee's margin for the SWD segment is 10.72% and the margins of the comparable companies i.e, 11.37% (before working capital adjustment) which is within the tolerance range of 3% and in view of the above submissions, the transaction is at arm's length and therefore we direct the Id. DRP to delete the TP adjustment made in the interest of justice.” 3.1 The ld. D.R. not put any serious objection on this issue. 4. We have heard the rival submissions and perused the materials available on record. Admittedly, while adjudicating the comparables, namely M/s. Persistent Systems Ltd., M/s. Nihilent Ltd., M/s. Tata Elxsi Ltd. & M/s. Cybage Software Ltd., it was mentioned that the ld. DRP has to remove these companies from the list of comparables instead of mentioning TPO/AO. Accordingly, in our opinion, there is a mistake crept in these para nos.14.7, 14.9 & 14.12 of the impugned order. Accordingly, we direct the TPO/AO to remove the companies i.e. M/s. Persistent Systems Ltd., M/s. Nihilent Ltd., M/s. Tata Elxsi Ltd. & M/s. Cybage Software Ltd. from the list of comparables. 5. Further, the ld. A.R. submitted that in para 14.15, the Tribunal while adjudicating the issue relating to granting of working capital adjustment, it has wrongly directed the ld. DRP to allow TP adjustment made in this regard. Hence, there is an error crept in this regard. Accordingly, we direct the TPO/AO to allow the working capital adjustment. MP No.168/Bang/2023 M/s. Wipro GE Healthcare Pvt. Ltd., Bangalore Page 4 of 4 6. Further, it was submitted that in para no.14.16 of the impugned order of the Tribunal, while adjudicating the assessee’s margin for SWT Segment, it was wrongly mentioned in this para that ld. DRP to delete the TP adjustments instead of TPO/AO. 6.1 Admittedly, there is an error crept in this para no.14.16 of the impugned order by mentioning ld. DRP to delete the TP adjustments while computing the assessee’s margin for SWT segment and instead of ld. DRP, it should be read as AO/TPO. Ordered accordingly. 7. In the result, the MP filed by the assessee is allowed. Order pronounced in the open court on 25 th Aug, 2023 Sd/- (Beena Pillai) Judicial Member Sd/- (Chandra Poojari) Accountant Member Bangalore, Dated 25 th Aug, 2023. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(DRP) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore.