DEUTSCHE NETWORKS SERVICES P. LTD ( THROUGH THEIR SUCCESSORS DEBOI GLOBAL SERVICES P. LTD), MUMBAI V. DCIT 6(2), MUMBAI

MA 251/MUM/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4474 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Assessment Year: 2007-2008
• Appeal Filed On: 17-10-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction
• Section: 254(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “K” BENCH, MUMBAI BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER MA No. 251/Mum./2021 IN ITA No. 2254/Mum./2012 (Assessment Year : 2007–08) Deutsche Networks Services Pvt. Ltd. (Through Their Successor Deboi Global Services P. Ltd.) Logitech Park, M.V.D. Sakinaka Andheri (East), Mumbai 400 072 PAN – AACCD2953L ................ Applicant v/s Dy. Commissioner of Income Tax Circle–6(2), Mumbai ................ Respondent Assessee by : Shri J.D. Mistry Revenue by : Shri Tejinder Pal Singh Date of Hearing – 18.02.2022 Date of Order – 05/05/2022 O R D E R PER BENCH The present Miscellaneous Application has been filed by the assessee against the order dated 11.08.2021, passed by the Tribunal in ITA No. 2254/Mum./2012, for the assessment year 2007–08. The assessee has sought rectification of the aforesaid order on the ground that while deciding assessee’s appeal, additional ground no.11, raised vide application dated 08.02.2019, was not adjudicated by the Tribunal. Deutsche Networks Services Pvt. Ltd. MA No. 251/Mum./2021 Page | 2 2. During the course of hearing, Shri J.D. Mistry, learned Sr. Counsel, appearing for the assessee submitted that the assessee, vide application dated 08.02.2019, sought admission of certain additional grounds of appeal pertaining to the transfer pricing adjustment. The learned Sr. Counsel by referring to the said application, which is annexed as Annexure–2 to the present M.A., submitted that the additional ground no.11, raised by the assessee was pertaining to computing the transfer pricing adjustment restricting it to the international transactions undertaken by the assessee. The learned Sr. Counsel by further referring to the chart on comparables filed during the course of appeal hearing, which is annexed as Annexure–4 to the present application, submitted that during the appeal hearing, the assessee had urged that if certain comparables as adopted by the learned CIT(A) are excluded and the transfer pricing adjustment is restricted to the international transactions undertaken by the assessee then its margin would fall within ±5% of the arithmetic mean and no transfer pricing adjustment would be sustained. However, vide the aforesaid order dated 11.08.2021, the Tribunal directed exclusion of 11 comparables as prayed by the assessee, but did not adjudicate additional ground no.11, raised by the assessee. The learned Sr. Counsel by referring to another application dated 31.05.2021, seeking admission of additional ground of appeal submitted that the said application inadvertently also numbered the additional ground as “Additional Ground no.11” and probably due to this mis-numbering of Deutsche Networks Services Pvt. Ltd. MA No. 251/Mum./2021 Page | 3 both the additional ground as “Ground no.11”, the additional ground raised vide application dated 08.02.2019, could not be adjudicated. 3. On the other hand, Shri Tejinder Pal Singh, learned Departmental Representative fairly agreed to the prayer of the assessee. 4. We have considered the submissions and perused the material available on record. In the present case, assessee filed application dated 08.02.2019 seeking admission of following additional grounds of appeal: “Ground no. 11 Without prejudice, the TPO erred in computing the transfer pricing adjustment on all the transactions of the Appellant instead of restricting it to the international transactiDns, i.e. transactions with the non-resident associated enterprises. Ground no. 12 Without prejudice, the Appellant and Deutsche Bank AG, India Branches ('DB India'), i.e. an associated enterprise of the Appellant, were both assessed to tax in India in AY 2007-08, and in fact DB India was assessed to tax at a higher rate (@ 41.82%) than the Appellant. Thus, the transfer pricing adjustment should be restricted to the international transactions entered into by the Appellant with the non-resident associated enterprises not taxed in India, as the Appellant has no incentive and intention to shift profits outside India in respect of the international transactions with DB India. Ground no. 13 Without prejudice, the TPO/ CIT(A) erred in applying 30.67 percent as the Net Cost Plus ('NCP') mark-up of the companies selected by the TPO instead of applying the correct NCP mark-up of 30.14 percent.” 5. Subsequently, assessee filed another application dated 31.05.2021 seeking admission of following additional ground of appeal: Deutsche Networks Services Pvt. Ltd. MA No. 251/Mum./2021 Page | 4 “11. The appellants submit that the A.O. be directed to allow deduction on account of Education Cess paid by the appellants for the assessment year 2007-08. 6. While deciding assessee’s appeal vide order dated 11.08.2021, the Co-ordinate Bench of Tribunal held as under:- “8. Learned Senior Counsel for the assessee has submitted before us that with exclusion of these eleven companies, assessee’s margin would be within (+)/(-) 5% of the arithmetic mean of the rest of the comparables selected by the TPO. In fact, learned senior counsel has also furnished a chart demonstrating the aforesaid fact. Thus, keeping in view the aforesaid submission of the learned senior counsel for the assessee, we treat the other grounds as not pressed. However, the issues raised therein are kept open for adjudication, if they arise in assessee’s case in future.” 7. The grievance of the assessee in the present miscellaneous application filed under section 254(2) of the Act is that while deciding assessee’s appeal, the Co-ordinate Bench has not adjudicated additional ground no.11 raised vide aforesaid application dated 08.02.2019. On a perusal of the order dated 11.08.2021, we find that the decision was rendered by the Co-ordinate Bench of the Tribunal, inter-alia, only on the comparables sought to be excluded by the assessee, however, there is no finding on additional ground no.11, raised vide application dated 08.02.2019, pertaining to restricting the transfer pricing adjustment only to the value of international transactions undertaken by the assessee. We, further, find that another additional ground also numbered as ‘11’, raised vide application dated 31.05.2021, was adjudicated by the Co-ordinate Bench of the Tribunal. As fairly submitted by learned Sr. Counsel, probably due to this mis-numbering of both the additional ground as Deutsche Networks Services Pvt. Ltd. MA No. 251/Mum./2021 Page | 5 “Ground no.11”, the additional ground raised vide application dated 08.02.2019, appears to have not been adjudicated by the Co-ordinate Bench vide order dated 11.08.2021. 8. Thus, as additional ground no.11 raised by the assessee was not adjudicated, to this limited extent, we are of the considered view that there is a mistake apparent on the face of record, which constitutes a rectifiable mistake u/s 254(2) of the Act. Accordingly, the order dated 11.08.2021, passed by the Co-ordinate Bench of the Tribunal is hereby recalled limited to the extent of adjudication of additional ground no.11, raised vide aforesaid application dated 08.02.2019, on merits. The registry is directed to fix the appeal for hearing in regular course on above aspect. 9. Further, in order to avoid any more confusion due to numbering of two additional grounds as ‘11’, we modify paragraph 9 of the order dated 11.08.2021, passed by the Co-ordinate Bench, only to the effect that additional ground filed by the assessee, vide aforesaid application dated 31.05.2021, shall be read as additional ground no.14. 10. In the result, Miscellaneous Application by the assessee is allowed. Order pronounced in the open court on 05/05/2022 Sd/- PRAMOD KUMAR VICE PRESIDENT Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 05/05/2022 Deutsche Networks Services Pvt. Ltd. MA No. 251/Mum./2021 Page | 6 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The CIT(A); (4) The CIT, Mumbai City concerned; (5) The DR, ITAT, Mumbai; (6) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Assistant Registrar ITAT, Mumbai