M/s Cisco Systems Capital India Private Limited , Bangalore V. Deputy Commissioner of Income Tax Circle-2(1)(1), Bangalore

MA 2/BANG/2020

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2822 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 13-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 26-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJEET SINGH
• Assessee Lawyers: RAHUL KAMATH
• Keywords: Transfer pricing; International transaction
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI. A. K. GARODIA, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER MP 2/BANG/2020 (IN IT(TP)A 219/BANG/2018) ASSESSMENT YEAR : 2013 14 M/S. CISCO SYSTEMS CAPITAL (INDIA) PVT. LTD., BRIGADE SOUTH PARADE, # 10, M. G. ROAD, BANGALORE 560 001. PAN NO : AACCC 4552 A VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2(1) (1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI. RAHUL KAMATH, CA RESPONDENT BY : SHRI. MANJEET SINGH, ADDL. CIT DR DATE OF HEARING : 14-02-2020 DATE OF PRONOUNCEMENT : 13-03-2020 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT MISCELLANEOUS PETITION HAS BEEN FILED BY AS SESSEE FOR ASSESSMENT YEAR 2010 11. 2. IN THE ORDER DATED 7/07/2109 FOR YEAR UNDER CONSIDERATION, IT IS SUBMITTED THAT, CERTAIN OBSERV ATIONS MADE BY THIS TRIBUNAL IN THE IMPUGNED ORDER IS INCONSISTENT WITH SUBMISSIONS MADE DURING THE COURSE OF HEARING. ASS ESSEE SUBMITS TO RECTIFY THE SAME. LD. AR SUBMITTED AS UNDER: PAGE 2 OF 5 MP 2/BANG/2020 (IN IT(TP)A 219/BANG/2018 A. Y : 2013 14 PAGE 7, PARAGRAPH 16 AND PAGE 10 PARAGRAPH 23, OF O RDER DATED 7/07/2019, READS AS UNDER; 16. THE LD. COUNSEL FOR THE ASSESSEE, MR. RAJAN VO RA SUBMITTED THAT RETURN ON CAPITAL EMPLOYED (ROCE) EARNED BY THE C OMPARABLE COMPANIES WERE CONSIDERED BY THE ASSESSEE WAS HIGHE R THAN THAT EARNED BY THE COMPARABLE COMPANIES, IT CONCLUDED TH AT THE LEASING SERVICE TRANSACTIONS UNDERTAKEN BY THE ASSESSEE IS AT ARMS LENGTH. MR. VORA DISPUTES THE ADOPTION OF TNMM AS THE MAM AND P LI OF ROCE AND SUBMITS THAT THIS METHOD CANNOT BE USED TO DETERMIN E THE ALP OF THE EQUIPMENT PURCHASED BY THE ASSESSEE FROM ITS AE. .. 23. THE LD. COUNSEL, ON THE OTHER HAND, RELIED A NU MBER OF CASE LAWS FOR THE PROPOSITION THAT THE ASSESSEE CAN, AT THE FIRST AVAILABLE OPPORTUNITY, BRING TO THE NOTICE OF THE AUTHORITIES THAT THE TP STUDY WAS WRONGLY MADE. HE SUBMITTED THAT THE TP STUDY IS NOT SACROS ANCT AND AS THERE WAS A MISTAKE, THE ASSESSEE HAD MADE THIS CLAIM BEF ORE THE DRP. HE PLEADED THAT HE RETURN OF CAPITAL EMPLOYED AT THE E NTITY LEVEL USING TNMM CANNOT DETERMINE THE PURCHASE PRICE OF EQUIPME NT AND THEREFORE CANNOT DETERMINE THE ALP OF EQUIPMENT PURCHASED BY THE ASSESSEE FROM THE AE. 3. LD. AR SUBMITS THAT, THE OBSERVATIONS IN UNDERLINED PORTION OF ABOVE REPRODUCED PARAGRAPHS IN IMPUGNED ORDER DATED 07/07/2019, NEEDS TO BE CHANGED. HE SUBMITTED THAT , DURING THE HEARING OF APPEAL, IT SUBMITTED WITHOUT PREJUDI CE TO THE CONTENTION THAT ANALYSIS CARRIED OUT BY ASSESSEE IN TP DOCUMENTATION THOUGH APPROPRIATE (I.E TNMM), HOWEVE R IN VIEW VARIOUS DECISIONS, ASSESSEE SUBMITTED THAT, APPLYIN G CUP WOULD HAVE BEEN BETTER FOR DETERMINING ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTION. IN SUPPORT OF HIS SUBM ISSIONS, LD. AR REFERRED TO PARA 1.2 OF WRITTEN SUBMISSION DATED 6/06/2019. PAGE 3 OF 5 MP 2/BANG/2020 (IN IT(TP)A 219/BANG/2018 A. Y : 2013 14 4. LD. AR SUBMITTED THAT, BY EXPUNGING NAMES REFERRED TO PARAGRAPHS REPRODUCED HEREIN ABOVE, NO MATERIAL CHA NGES ARE CAUSED TO THE VIEW TAKEN BY THIS TRIBUNAL IN THE IMPUGNED ORDER DATED 07/07/2019. 5. LD. SR. DR DID NOT OBJECT TO THE EXPUNGING OF CERTA IN OBSERVATIONS BY THIS TRIBUNAL IN THE IMPUGNED ORDER DATED 07/07/2019. WE HAVE CONSIDERED CONTENTIONS ADVANCED BY BOTH SID ES ALONG WITH SYNOPSIS OF ARGUMENTS FILED ON 6/06/2019. 6. IN OUR OPINION CERTAIN WORDS/SENTENCE IN PARA 16 AND 23 OF IMPUGNED ORDER ARE TO BE CHANGED. IT IS NOTED THAT VIEW TAKEN IN PARA 27 OF IMPUGNED ORDER IS INDEPENDENT OF THE WOR DS/SENTENCE THAT IS BEING REFERRED HEREUNDER. WE THUS RECTIFY PARA 16 & 23, WHICH SHALL BE HENCE FORTH READ AS UNDER : 16. THE LD. COUNSEL FOR THE ASSESSEE, MR. RAJAN V ORA SUBMITTED THAT RETURN ON CAPITAL EMPLOYED (ROCE) EARNED BY THE COMPARABL E COMPANIES WERE CONSIDERED BY THE ASSESSEE WAS HIGHER THAN THAT EAR NED BY THE COMPARABLE COMPANIES, IT CONCLUDED THAT THE LEASING SERVICE TR ANSACTIONS UNDERTAKEN BY THE ASSESSEE IS AT ARMS LENGTH. MR. VORA SUBMITS THAT ALTERNATIVE CUP INSTEAD OF TNMM AS THE MAM AND PLI OF ROCE MAY BE USED. HE ALS O SUBMITTED THAT CUP MAY ALSO BE USED TO DETERMINE AL P OF EQUIPMENTS PURCHASED BY THE ASSESSEE FROM ITS AE. . 23.THE LD. COUNSEL, ON THE OTHER HAND, RELIED ON A NUMBER OF CASE LAWS FOR THE PROPOSITION THAT THE ASSESSEE CAN, AT THE FIRST AVAILABLE OPPORTUNITY, BRING TO THE NOTICE OF THE AUTHORITIES THAT THE IN-TP STU DY CUP COULD BE THE MAM FOR DETERMINING ALP OF THE INTERNATIONAL TRANSACTIO NS. HE SUBMITTED THAT THE TP STUDY IS NOT SACROSANCT AND USE OF AN A LTERNATE/BETTER METHOD, COULD BE SOUGHT TO BE USED AT ANY STAGE OF PENDING PAGE 4 OF 5 MP 2/BANG/2020 (IN IT(TP)A 219/BANG/2018 A. Y : 2013 14 PROCEEDINGS. LD.AR SUBMITTED THAT ASSESSEE HAD MADE THIS CLAIM BEFORE THE DRP. HE PLEADED THAT THE RETURN OF CAPITAL EMPLOYED AT THE ENTITY LEVEL USING TNMM CANNOT DETERMINE THE PURCHASE PRIC E OF EQUIPMENT AND THEREFORE CANNOT DETERMINE THE ALP OF EQUIPMENT PUR CHASED BY THE ASSESSEE FROM THE AE. IN THE RESULT MISCELLANEOUS PETITION FILED BY ASSES SEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH MARCH, 2020. SD/- SD/- (A. K. GARODIA) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL ME MBER BANGALORE, DATED, THE 13 TH MARCH, 2020. /MK/ 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 TRIBUNAL. BANGALORE PAGE 5 OF 5 MP 2/BANG/2020 (IN IT(TP)A 219/BANG/2018 A. Y : 2013 14 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR 12-03-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 12-03-2020 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 12-03-2020 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 12-03-2020 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 05-03-2020 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -03-2020 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -03-2020 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS