ADP Private Limited , Hyderabad V. Dy. Commissioner of Income Tax , Circle-1(1), Hyderabad

MA 18/Hyd/2021

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5977 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 2 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-04-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2014-2015
• Appeal Filed On: 24-03-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: H SRINIVASULU
• Keywords: Additional evidence
• Section: 254(2); 43

Judgement Text

MA NO 18 OF 2021 ADP P LTD HYDERABAD PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER M.A. NO.18/HYD/2021 (ARISING OUT OF ITA NO.2233/HYD/2018) ASSESSMENT YEAR: 2014-15 M/S. ADP (P) LTD HYDERABAD PAN:AANCA8983A VS. DY. C.I.T CIRCLE 1(1) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI H. SRINIVASULU REVENUE BY : SRI SUNIL KUMAR PANDEY, DR DATE OF HEARING: 16/04/2021 DATE OF PRONOUNCEMENT: 26/04/2021 ORDER PER SMT. P. MADHAVI DEVI, J.M. THIS M.A. IS FILED BY THE ASSESSEE U/S 254(2) OF TH E I.T. ACT SEEKING RECTIFICATION OF THE ALLEGED MISTAKE IN THE ORDER OF THE TRIBUNAL. THE CONTENTIONS IN THE M.A. ARE AS UNDER: ADP PRIVATE LIMITED ASSESSMENT YEAR 2014-15 MISCELLANEOUS APPLICATION ANNEXURE - 1 BRIEF FACTS AND REASONS FOR FILING MISCELLANEOUS AP PLICATION ('MA'): 1. BRIEF FACTS: 1. THE APPELLANT, AGGRIEVED BY THE FINAL ASSESSMENT ORDER PASSED BY LEARNED ASSESSING OFFICER (LD. AO), DATED 30 OCTOBER 2018, HAS FILED AN APPEAL [ITA NO 2233/HYD/ 2018] BEFORE THE HON'BLE~ IT A T UNDER SECTION 254 OF ACT AND RAISED INTER-ALIA THE FOLLOWING GROUND: '3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN CONTRARY TO LAW, THE LD. TPO ERRED AND THE HON'BLE DRP FURTHER ERRED IN UPHOLDING/CONFIRMING THE ACTION OF THE LD. TPO IN ACCEPTING THE FOLLOWING COMPANIES ENGAGED IN MA NO 18 OF 2021 ADP P LTD HYDERABAD PAGE 2 OF 4 INFORMATION TECHNOLOGY ENABLED SERVICES AS COMPARAB LES, WITHOUT APPRECIATING THAT THE SAID COMPANIES WERE FUNCTIONALLY DISSIMILAR TO THE APPELLANT, HAVE HIGH ECONOMIES OF SCALE, FAIL THE PECULIAR ECONOMIC CIRC UMSTANCES FILTER, HAVE ONSITE EXPENSES, HAVE SIGNIFICANT SUB- CONTRACTING COSTS AND DO NOT HAVE SEGMENTAL DATA: INFOSYS BPO LIMITED ECLERX SERVICES LIMITED CROSSDOMAIN SOLUTIONS PRIVATE LIMITED MICROLAND LIMITED MPS LIMITED MICRO GENETICS SYSTEMS LIMITED II. PROCEEDINGS BEFORE THE HON'BLE ITAT IN ITA NO.2233/HYD/2018 2. THE APPELLANT HAS ARGUED FOR THE EXCLUSION OF MP S LIMITED AS COMPARABLE COMPANY; IN THIS REGARD, THE APPELLANT WOULD LIKE TO DRAW HON'BLE IT AT'S REFERE NCE TO THE PARA 34 OF THE ORDER DATED 18 DECEMBER 2020, WH EREIN HON'BLE ITAT HAS ACKNOWLEDGED THAT APPELLANT IS CHALLENGING THE COMPARABILITY OF MPS LIMITED, AMONG ST OTHERS. FURTHER, THE APPELLANT WOULD LIKE TO BRING TO THE HON'BLE ITAT'S ATTENTION, TO THE WRITTEN SUBMISSION S FILED BY THE APPELLANT ON 02 SEPTEMBER, 2020 IN WHICH SPECIF IC ARGUMENTS FOR EXCLUSION OF MPS LIMITED WERE TAKEN A ND REQUESTED FOR REMANDING BACK THE ISSUE TO LD. TPO O N THE GROUND THAT THIS COMPARABLE DID NOT FULFIL THE FILT ERS APPLIED BY LD. TPO. [REFER PAGE 40 TO 42] 3. THE APPELLANT DRAWS THE KIND ATTENTION OF THE HO N'BLE IT AT TO PAGE 43 AND 44 OF THE LD. TPO'S ORDER WHEREIN THE LD. TPO HAD APPLIED THE FILTER 'COMPANIES WHOSE REVENUE S FROM IT ENABLED SERVICES IS LESS THAN 75% OF THE TOTAL O PERATING REVENUE WERE EXCLUDED' III. REASONS FOR THE FILING THE MA 4. THE APPELLANT WOULD LIKE TO BRING TO THE HON'BLE ITAT'S NOTICE THAT, WHILE PASSING THE ORDER, INADVERTENTLY , THE HON'BLE ITAT HAS NOT GIVEN ANY DIRECTION ON THE COMPARABILITY OF MPS LIMITED [REFER PARA 34 TO 39, PAGE NO. 35 TO 40 OF THE ORDER]. 5. HENCE, BY WAY OF THIS APPLICATION, THE APPELLANT SEEKS TO MODIFY THE ORDER IN ITA NO. 2233/HYD/20 18 TO THE E XTENT OF PROVIDING THE DIRECTION ON THE COMPARABILITY OF MPS LIMITED AS DEEMED FIT BY THE HON'BLE ITAT. 2. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE IN THE MA AND HAS DRAWN OUR ATTENT ION TO PAGE 3 OF THE ORDER OF THE ITAT WHEREIN GROUND NO.3 RELA TING TO MA NO 18 OF 2021 ADP P LTD HYDERABAD PAGE 3 OF 4 EXCLUSION OF INFOSYS BPO LTD, E-CLERX SERVICES AND MPS LTD FROM THE FINAL LIST OF COMPARABLES IN RESPECT OF ITES IS REPRODUCED AND ALSO AT PAGE NO.35 (PARA NO.34) OF THE ITAT ORDER W HEREIN THERE IS A MENTION OF GROUND NO.3 AND THE ASSESSEES OBJECTI ONS TO COMPANIES MENTIONED THEREIN AND AT PARA NO.39, THE TRIBUNAL WAS PLEASED TO DIRECT EXCLUSION OF ONLY INFOSYS BPO & E-CLERX SERVICES FROM THE FINAL LIST OF COMPARABLES AND THE RE IS NO DISCUSSION ON THE ASSESSEES OBJECTION TO MPS LTD O R AS TO WHETHER IT IS TO BE CONSIDERED AS A COMPARABLE OR NOT. HE SUBMITTED THAT FOR THE FIRST TIME, THIS OBJECTION W AS TAKEN BY THE ASSESSEE BEFORE THE TRIBUNAL AND ONE OF THE OBJECTI ON ABOUT THE COMPARABILITY OF THIS COMPANY IS THAT IT DOES NOT S ATISFY THE FILTER ADOPTED BY THE TPO I.E. THE REVENUE FROM ITES IS LE SS THAN 75% OF THE TOTAL OPERATING REVENUE. HE ALSO DREW OUR ATTEN TION TO PAGE NO.40 OF THE ASSESSEES OBJECTIONS BEFORE US AND TO PARA 27.3 THEREOF, WHEREIN THE ASSESSEE HAS PLACED THE ANNUAL REPORT OF THE COMPANY IN THE FORM OF ADDITIONAL EVIDENCE AND SOUG HT TO SATISFY US THAT THIS COMPANY IS NOT COMPARABLE TO THE ASSES SEE COMPANY FOR THE REASONS MENTIONED THEREIN. HE, THEREFORE, P RAYED THAT THIS ISSUE MAY BE SET AS IDE TO THE FILE OF THE TPO/ASSE SSING OFFICER FOR RECONSIDERATION. 3. THE LEARNED DR WAS ALSO HEARD. 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THERE IS AN INADVERTENT MIS TAKE IN THE ORDER OF THE TRIBUNAL IN NOT DISCUSSING AND IN NOT ADJUDICATING ON THE OBJECTION OF THE ASSESSEE WITH REGARD TO THE CO MPARABILITY OF THE MPS LTD TO THE ASSESSEE COMPANY AND THEREFORE, THERE IS A MISTAKE APPARENT FROM THE RECORD WHICH NEEDS RECTIF ICATION. MA NO 18 OF 2021 ADP P LTD HYDERABAD PAGE 4 OF 4 5. FURTHER, WE ALSO FIND THAT THE ASSESSEE HAS FILE D ADDITIONAL EVIDENCE WITH REGARD TO THE COMPARABILIT Y OF MPS LTD TO THE ASSESSEE COMPANY AND THEREFORE, IT REQUIRES ADM ISSION AND REMAND OF THE ISSUE TO THE FILE OF THE ASSESSING OF FICER/TPO FOR VERIFICATION AND RE-CONSIDERATION. IN VIEW OF THE S AME, WE DEEM IT FIT AND PROPER TO RECTIFY THE ORDER OF THE TRIBUNAL AS UNDER: IN THE LAST LINE OF PARA NO.34, THE NAME MENTIONED AS NPS LTD SHALL BE CORRECTED AS MPS LTD. FURTHER AT THE END OF THE PARA NO.39, THE FOLLOWING SHALL BE INCLUDED: 39. RESPECTFULLY FOLLOWING .ITES. AS REGARDS THE COMPARABILITY OF MPS LTD IS CONCERNE D, WE ARE INCLINED TO ADMIT THE ADDITIONAL EVIDENCE FI LED BY THE ASSESSEE AND REMAND THE ISSUE TO THE FILE OF TH E ASSESSING OFFICER/TPO WITH A DIRECTION TO RECONSIDE R THE ISSUE IN TOTO ACCORDANCE WITH LAW AND ALSO BY EXAMINING WHETHER THIS COMPANY SATISFIES THE FILTER S ADOPTED BY THE TPO. THEREFORE, THIS GROUND OF APPEA L IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES . M.A. IS ACCORDINGLY ALLOWED. 6. IN THE RESULT, M.A FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH APRIL, 2021 . SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 26 TH APRIL, 2021. VINODAN/SPS COPY TO: S.NO ADDRES S ES 1 M/S. ADP (P) LTD 6-3-1091/C/1 FORTUNE-9 RAJ BHAVA N ROAD, HYDERABAD 500082 2 DY.CIT, CIRCLE 1(1) IT TOWERS, AC GUARD, HYDERABA D 3 DRP - 1, KENDRIYA SADAN, 4 TH FLOOR, C WING, BENGALURU 560034 4 DIRECTOR OF INCOME TAX, (INTL. TAXATION) HYDERABAD 5 DR, ITAT HYDERABAD BENCHES 6 GUARD FILE BY ORDER