Dun & Bradstreet Technologies & Data Servics Pvt. Ltd., CHENNAI V. ACIT, CHENNAI

MA 221/CHNY/2016

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 5207 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 30 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 13-01-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 26-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: VIJAYARAGHAVAN
• Keywords: Transfer pricing; Opportunity of being heard; International transaction
• Section: 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , ,#$% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER M.A. NO. 221/MDS/2016 [ IN I.T.A. NO. 760/MDS/2014] ASSESSMENT YEAR: 2009-10 M/S. DUN & BRADSTREET TECHNOLOGIES & DATA SERVICES PVT. LTD., [FORMERLY D&B TRANS UNION ANALYTIC AND DECISION SERVICES PVT. LTD.], LEVEL 9, PRINCE INFOCITY PHASE-1, 286/1, KANDANCHAVADI, RAJIV GANDHI SALAI (OMR) CHENNAI 600 096. PAN: AACCD 5293M V. THE ASSTT. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE I (4), CHENNAI. ( APPLICANT) ('()* / RESPONDENT) APPLICANT BY : SHRI VIJAYARAGHAVAN, ADVOCATE RESPONDENT BY : SHRI SHIVA SRINIVAS, JCIT ,-# / DATE OF HEARING : 13.01.2017 ,-# / DATE OF PRONOUNCEMENT : 25.01.2017 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THE ASSESSEE HAS FILED THE PRESENT MISCELLANEOUS PETITION ON THE GROUND THAT THERE ARE CERTAIN ERRORS IN THE ORD ER OF THIS TRIBUNAL DATED 15.07.2016. 2 M.A. NO. 221/MDS/2016 2. SHRI R. VIJAYARAGHAVAN, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS TRIBUNAL UPHOLD THE ORDER OF TH E LOWER AUTHORITIES AND CONFIRMED THE DISALLOWANCE OF TAX HOLIDAY BENEF IT UNDER SECTION 10A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT ). REFERRING TO PARA 5 OF THE ORDER OF THIS TRIBUNAL, THIS TRIBUNAL FOUND THAT THE DRP HAS RIGHTLY DIRECTED THE ASSESSING OFFICER TO CONSI DER THE CBDT CIRCULAR NO.1 OF 2013 AND ADJUDICATED THE CLAIM OF THE ASSESSEE UNDER SECTION 10A OF THE ACT. REFERRING TO THE OR DER OF THIS TRIBUNAL FOR THE ASSESSMENT YEAR 2007-08, THE LD. COUNSEL FO R THE ASSESSEE SUBMITTED THAT THIS TRIBUNAL SET ASIDE THE ORDER OF THE ASSESSING OFFICER AND THE CIT (APPEALS) AND REMITTED BACK THE FILE TO THE ASSESSING OFFICER FOR RECONSIDERATION. ON RECONSID ERATION, THE CIT(APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE UNDE R SECTION 10A OF THE ACT. THIS TRIBUNAL WHILE CONFIRMING THE ORD ER OF THE ASSESSING OFFICER OBSERVED THAT FOR THE SAKE OF CONSISTENCY, THE DRP HAS RIGHTLY DIRECTED THE ASSESSING OFFICER TO CONSIDER THE CLAIM OF THE ASSESSEE. THE ASSESSING OFFICER HOWEVER HAS NOT FO LLOWED THE DIRECTION OF THE DRP. THEREFORE, AS DIRECTED BY DR P THE ASSESSING OFFICER HAS TO FOLLOW THE ORDER OF THE CIT (APPEALS ) FOR THE ASSESSMENT YEAR 2007-08. 3 M.A. NO. 221/MDS/2016 3. ON THE CONTRARY, SHRI SHIVA SRINIVAS, THE LD. DE PARTMENTAL REPRESENTATIVE SUBMITTED THAT THIS TRIBUNAL DIRECTE D THE ASSESSING OFFICER TO CONSIDER THE CBDT CIRCULAR AND ADJUDICAT E THE CLAIM UNDER SECTION 10A OF THE ACT. WHILE CONSIDERING THE CLAI M OF THE ASSESSEE, THE ASSESSING OFFICER DISALLOWED THE CLAI M OF THE ASSESSEE UNDER SECTION 10A OF THE ACT. THEREFORE, IT CANNOT BE SAID THAT THE DIRECTION OF THE DRP WAS NOT FOLLOWED . 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE DRP F OUND THAT THIS TRIBUNAL DIRECTED THE ASSESSING OFFICER TO FOLLOW T HE CBDT CIRCULAR IN CIRCULAR NO.1 OF 2013 DATED 17.01.2013 FOR THE A SSESSMENT YEAR 2007-08. ACCORDINGLY THE DRP DIRECTED THE ASSESSIN G OFFICER TO CONSIDER THE ASSESSEE CLAIM UNDER SECTION 10A OF TH E ACT IN THE LIGHT OF THE CBDT CIRCULAR AND THE ORDER OF THIS TR IBUNAL FOR THE ASSESSMENT YEAR 2007-08. WE HAVE CAREFULLY GONE TH ROUGH THE PROVISIONS OF SECTION 144C OF THE ACT. SECTION 144 C (7) OF THE INCOME TAX ACT CLEARLY SAYS THAT THE DRP BEFORE ISS UING ANY DIRECTIONS AS REFERRED TO SUB-SECTION (5) OF 144C M AY MAKE FURTHER ENQUIRY AS IT FEELS OR CAUSE ANY FURTHER ENQUIRY TO BE MADE BY ANY INCOME TAX AUTHORITIES AND REPORT THE RESULT TO IT. SUB-CLAUSE (8) OF 4 M.A. NO. 221/MDS/2016 144C OF THE ACT, CLEARLY SAYS THAT THE DRP MAY CONF IRM, REDUCE OR ENHANCE THE PROPOSED VARIATIONS. HOWEVER, THE DRP SHALL NOT SET ASIDE ANY PROPOSED VARIATIONS OR ISSUE DIRECTION FO R FURTHER ENQUIRY AND PASSING OF ASSESSMENT ORDER. THEREFORE THERE I S A CLEAR PROHIBITION UNDER THE SCHEME OF THE INCOME TAX ACT, THAT THE DRP HAS TO DECIDE THE CASE BY ITSELF AND ISSUE DIRECTI ON TO THE ASSESSING OFFICER UNDER SECTION 144C (5) OF THE ACT. ON RECE IPT OF THE DIRECTION UNDER SECTION 144C (5) OF THE ACT, THE AS SESSING OFFICER SHALL PASS THE ASSESSMENT ORDER IN CONFORMITY WITH THE DIRECTION OF THE DRP WITHOUT PROVIDING ANY OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THEREFORE, THE DIRECTION OF THE DRP TO C ONSIDER THE ASSESSEE CLAIM UNDER SECTION 10A OF THE ACT, IN THE LIGHT OF THE CBDT CIRCULAR IS CONTRARY TO THE SCHEME OF THE INCO ME TAX ACT AS PROVIDED UNDER SECTION 144C OF THE ACT. 5. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THIS TRIBUNAL DATED 15.07.2016. THIS TRIBUNAL IN FACT UPHOLD THE ORDER OF THE ASSESSING OFFICER WHILE OBSERVING THAT THE DRP HAS RIGHTLY DIRECTED THE ASSESSING OFFICER TO CONSIDER THE CBDT CIRCULAR . THEREFORE, TO THAT EXTENT THERE IS AN ERROR IN THE ORDER OF THIS TRIBUNAL WHICH IS APPARENT ON THE RECORD. THEREFORE, THE SAME NEEDS TO BE RECTIFIED. 5 M.A. NO. 221/MDS/2016 ACCORDINGLY, THE ORDER OF THIS TRIBUNAL DATED 15.07 .2016 IS RECTIFIED AS FOLLOWS: 6. AT PAGE 3, PARA NO.5 OF THE ORDER DATED 15.07.20 16, THE FOLLOWING SHALL BE DELETED: IT IS NOT KNOWN WHETHER THE REVENUE HAS FILED ANY A PPEAL BEFORE THIS TRIBUNAL AGAINST THE ORDER OF THE CIT(A) FOR A SSESSMENT YEAR 2007-08. HOWEVER, FOR THE SAKE OF CONSISTENCY, THI S TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE DRP HAS RIGHTLY DIRECTED THE ASSESSING OFFICER TO CONSIDER CBDT CIRCULAR NO.1 OF 2013 AND ADJUDICATE THE CLAIM OF THE ASSESSEE U/S 10A OF THE ACT. THEREFORE, THIS TRIBUNAL DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LOWER AUTHORITY AND ACCORDINGLY THE SAME IS CON FIRMED. 7. INSTEAD THE FOLLOWING SHALL BE INSERTED: THE REVENUE HAS FILED APPEAL AGAINST THE ORDER O F THE CIT (APPEALS) FOR THE ASSESSMENT YEAR 2007-08 BEFORE TH IS TRIBUNAL. THIS TRIBUNAL IN FACT REMANDED BACK THE MATTER TO T HE FILE OF THE ASSESSING OFFICER. THE YEAR UNDER CONSIDERATION IS 2009-10. THE ASSESSEE PREFERRED TO GO BEFORE THE DRP BY FILING T HE OBJECTION TO THE DRAFT ASSESSMENT ORDER. THEREFORE, THE PROCEDU RE PRESCRIBED UNDER SECTION 144C NEEDS TO BE FOLLOWED. THE DRP A T PARA 7.3 HAS FOUND THAT THIS TRIBUNAL FOR THE ASSESSMENT YEAR 20 07-08 RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER TO FOLLOW THE CBDT 6 M.A. NO. 221/MDS/2016 CIRCULAR NO.1 OF 2013 DATED 17.01.2013. ACCORDINGL Y, THE DRP DIRECTED THE ASSESSING OFFICER TO CONSIDER THE ASSE SSEE CLAIM UNDER SECTION 10A IN THE LIGHT OF THE CBDT CIRCULAR AND T HE ITAT DECISION. AS OBSERVED EARLIER UNDER THE SCHEME OF THE INCOME TAX ACT, AS PROVIDED UNDER SECTION 144C, THE DRP HAS NO AUTHORI TY TO DIRECT THE ASSESSING OFFICER TO MAKE FURTHER INVESTIGATION OR ENQUIRY WHICH IS APPARENT FROM SECTION 144C (8) OF THE ACT. SECTION 144C(7) OF THE ACT, ENABLES THE DRP TO MAKE FURTHER ENQUIRY AS IT FEELS OR CAUSE ANY ENQUIRY BY ANY INCOME TAX AUTHORITIES. THEREAF TER THE DRP MAY CONFIRM, REDUCE OR ENHANCE THE VARIATION PROPOSED I N THE DRAFT ASSESSMENT ORDER. HENCE, THE ORDER OF THE DRP DI RECTING THE ASSESSING OFFICER TO CONSIDER THE CLAIM OF DEDUCTIO N UNDER SECTION 10A OF THE ACT, IN THE LIGHT OF CBDT CIRCULAR IS CO NTRARY TO THE SCHEME OF THE ACT PROVIDED UNDER SECTION 144C OF TH E ACT. AS OBSERVED EARLIER, THE DRP ITSELF HAS TO DECIDE THE MATTER ONE WAY OR THE OTHER. IF FOR ANY REASONS FURTHER ENQUIRY IS R EQUIRED, IT MAY ENQUIRE THE MATTER BY ITSELF OR GET THE MATTER ENQU IRED THROUGH ANY ONE OF THE INCOME-TAX AUTHORITIES. IN ANY CASE, T HE DRP HAS NO AUTHORITY TO DIRECT THE ASSESSING OFFICER TO MAKE F URTHER ENQUIRY AND PASS ORDER. 7 M.A. NO. 221/MDS/2016 IN VIEW OF THE ABOVE, WE ARE UNABLE TO UPHOLD THE O RDER OF THE ASSESSING OFFICER CONSEQUENT TO THE DIRECTION OF TH E DRP. ACCORDINGLY, THE ORDER OF THE ASSESSING OFFICER AND THE DRP IS SET ASIDE IN RESPECT OF DEDUCTION UNDER SECTION 10A OF THE ACT AND THE MATTER IS RESTORED TO THE FILE OF THE DRP. THE DRP SHALL ENQUIRE THE MATTER BY ITSELF AS PROVIDED UNDER SECTION 144C (7) OF THE ACT OR IT MAY CALL FOR FURTHER ENQUIRY TO BE MADE BY ANY I NCOME TAX AUTHORITIES AND REPORT TO IT. THEREAFTER, THE FINA L DECISION SHALL BE TAKEN ONLY BY THE DRP. THEREAFTER, THE ASSESSING OFFICER SHALL PASS ASSESSMENT ORDER IN CONFORMITY WITH THE DIRECT ION AND THE DECISION OF THE DRP WITHOUT GIVING ANY FURTHER OPPO RTUNITY TO THE ASSESSEE. THE ORDER OF THE TRIBUNAL IS RECTIFIED ACCORDINGLY. 8. THE NEXT GROUND OF OBJECTION IS THAT THE LD. COU NSEL FOR THE ASSESSEE SHRI R. VIJAYARAGHAVAN, SUBMITTED THAT THE ASSESSEE COMPANY IS NOT HOLDING ANY SHARES IN THE ASSOCIATED ENTERPRISES. IN FACT, THE ASSOCIATED ENTERPRISES HOLDS SHARES IN THE ASSESSEE COMPANY THROUGH ITS SUBSIDIARIES. REFERRING TO PAR A NO. 7 OF THIS TRIBUNAL ORDER, THE LD. COUNSEL SUBMITTED THAT WHIL E RECORDING THE ARGUMENT OF THE COUNSEL FOR THE ASSESSEE, THIS TRIB UNAL FOUND THAT THE ASSESSEE WAS HOLDING 24.5% INTEREST IN THE NON- RESIDENT 8 M.A. NO. 221/MDS/2016 COMPANY. THIS IS FACTUALLY NOT CORRECT. THE ASSES SEE COMPANY IS NOT HOLDING ANY SHARES AT ALL. IN FACT, THE NON-RE SIDENT COMPANY IS HOLDING THE SHARES OF THE ASSESSEE COMPANY THROUGH ITS SUBSIDIARIES. 9. WE HEARD SHRI SHIVA SRINIVAS, THE LD. DEPARTMENT AL REPRESENTATIVE ALSO. THE LD. D.R., FAIRLY SUBMITT ED THAT THE ASSESSEE COMPANY WAS NOT HOLDING ANY SHARES IN THE NON- RESIDENT COMPANY. THEREFORE, THERE IS AN ERROR IN THE ORDER OF THIS TRIBUNAL TO THAT EXTENT. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EI THER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WHILE RECORDING THE ARGUMENT OF THE ASSESSEE, AT PARA NO. 7 OF THE ORDER, THIS TRIBUNAL FOUND THAT THE ASSESSEE WAS HOLDING 2 4.5% INTEREST IN THE NON-RESIDENT COMPANY. NOW, THE LD. COUNSEL FOR THE ASSESSEE AND THE LD. D.R., SUBMITTED THAT THE ASSES SEE WAS NOT HOLDING ANY SHARES IN THE ASSOCIATED ENTERPRISES OR NON-RESIDENT COMPANY. IT IS ALSO SUBMITTED BY BOTH PARTIES THAT THE NON- RESIDENT COMPANY HOLDS SHARES OF THE ASSESSEE COMPA NY THROUGH ITS SUBSIDIARY. IN VIEW OF THE ABOVE, THERE IS A F ACTUAL ERROR IN THE 9 M.A. NO. 221/MDS/2016 ORDER OF THIS TRIBUNAL WHICH NEEDS TO BE RECTIFIED. ACCORDINGLY, THE ORDER OF THIS TRIBUNAL IS RECTIFIED AS FOLLOWS: 11. AT PARA NO.7, THE FOLLOWING SHALL BE DELETED: ACCORDING TO THE LD. COUNSEL, THE ASSESSEE WAS HOLDING 24.5% INTEREST IN THE NON-RESIDENT COMPANY. FOR THE PURPOSE OF CONSIDERING THE ASSOCIATED ENTERPRISES, THE ASSESSEE NEEDS TO HAVE A MINIMUM OF 26% HOLDING. SINCE THE HOLDING OF THE ASSESSEE IS 24.5% WHICH IS LESS THAN 26%, THE N ON-RESIDENT COMPANY CANNOT BE CONSIDERED TO BE AN ASSOCIATED CO NCERN OF THE ASSESSEE. INSTEAD OF, FOLLOWING SHALL BE INSERTED: ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE, TH E ASSOCIATED ENTERPRISES WAS HOLDING THE SHARES OF TH E ASSESSEE COMPANY THROUGH ITS SUBSIDIARY COMPANIES. ADMITTEDL Y, THE ASSESSEE COMPANY IS NOT HOLDING ANY INTEREST ON THE NON-RESIDENT COMPANY. ACCORDINGLY THE ORDER OF THIS TRIBUNAL IS RECTIFIED. 12. SHRI R. VIJAYARAGHAVAN, THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT AT PARA NO.10 OF THE TRIBUNA L ORDER, THIS TRIBUNAL FOUND THAT THE NEXT ISSUE WAS DOMESTIC TRA NSACTION ENTERED INTO BY ONE OF THE COMPARABLE COMPANY NAMEL Y DUN & BRADSTREET INFORMATION SERVICES INDIA PVT. LTD. (DB INDIA). 10 M.A. NO. 221/MDS/2016 ACCORDING TO THE LD. COUNSEL, THIS TRIBUNAL WHILE U PHOLDING THE PRINCIPLE THAT DOMESTIC TRANSACTION SHOULD BE EXCLU DED WHILE MAKING THE ADJUSTMENT FOR INTERNATIONAL TRANSACTION HAS MISTAKENLY MENTIONED THAT DB INDIA IS A COMPARABLE COMPANY. TH EREFORE, DB INDIA HAS TO BE EXCLUDED. 13. ON THE CONTRARY, SHRI SHIVA SRINIVAS, THE LD. D .R. SUBMITTED THAT THIS TRIBUNAL ONLY REMITTED BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION THAT DOMESTIC TR ANSACTIONS SHOULD BE EXCLUDED. THEREFORE, THERE IS NO ERROR IN THE ORDER OF THIS TRIBUNAL. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EIT HER SIDE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THIS TRI BUNAL CONSIDERED THE DB INDIA AS ONE OF THE COMPARABLE AND FOUND THA T THE DOMESTIC TRANSACTION CANNOT BE CONSIDERED AS COMPARABLE. TH EREFORE, THE MATTER WAS REMITTED BACK TO THE FILE OF THE ASSESSI NG OFFICER TO CONSIDER WHETHER DB INDIA HAS ONLY DOMESTIC TRANSAC TION OR INTERNATIONAL TRANSACTION ALSO. THERE WAS A SPECIF IC DIRECTION BY THIS TRIBUNAL TO EXCLUDE THE DOMESTIC TRANSACTIONS. TH EREFORE, THIS 11 M.A. NO. 221/MDS/2016 TRIBUNAL DO NOT FIND ANY ERROR MUCH LESS PRIMA FACIE ERROR IN THE ORDER. 15. WITH THE ABOVE OBSERVATION THE MISCELLANEOUS PE TITION OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON 25 TH JANUARY, 2017 AT CHENNAI. SD/- SD/- ( ) ( . . . ) (SANJAY ARORA) (N.R.S. GANE SAN) / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, / DATED, THE 25 TH JANUARY, 2017. JR. /COPY TO: 1. APPLICANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT, 5. /DR 6. /GF.