Convergys Customer Management Group Inc., Gurgaon V. DCIT, New Delhi

MA 261/DEL/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1119 (ITAT-DELHI)
• Duration Of Justice: 1 month(s) 8 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 18-12-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 09-11-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PARUL SINGH
• Keywords: Transfer pricing; Double taxation relief; International transaction; Reasonable cause
• Section: 92C; 92D; 92E; 254(2)

Judgement Text

1 M.A NO. 261 & 262/DEL/2020 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: FRIDAY NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER MA NO. 261/DEL/2020 IN I.T.A. NO. 3529//DEL/2015 (A.Y 2006-07) MA NO. 262/DEL/2020 IN I.T.A. NO. 3530//DEL/2015 (A.Y 2008-09) CONVERGYS CUSTOMER MANAGEMENT GROUP INC. C/O. PRICE WATERHOUSE COOPERS PVT. LTD. BUILDING NO. 10, 17 TH FLOOR, TOWER-C, DLF CYBER CITY, GURGAON PAN: AACCC8989M (APPLICANT) VS DCIT CIRCLE-1(2)(1), INTERNATIONAL TAXATION, ROOM NO. 409, E-2 BLOCK, 4 TH FLOOR, CIVIC CENTRE, NEAR MINTO ROAD NEW DELHI (RESPONDENT) APPLICANT BY SH. KANCHAN KAUSHAL, ADV & SH. RAVI SHARMA, ADV RESPONDENT BY MS. PARUL SINGH, SR. DR ORDER PER SUCHITRA KAMBLE, JM THESE TWO MISCELLANEOUS APPLICATIONS ARE FILED BY THE ASSESSEE IN RESPECT OF ORDER DATED 13.10.2020 PASSED BY THE TRIBUNAL. 2. THE LD. AR SUBMITTED THAT THE APPEALS OF THE REVENUE DEPARTMENT IN THE MATTER PERTAINING TO CONVERGYS CUSTOMER MANAGEMENT GROUP INC [NOW KNOWN AS CONCENTRIX CVG CUSTOMER MANAGEMENT GROUP INC.] (RESPONDENT/ APPLICANT) FOR AYS 2006-07 AND 2008-09 WERE DISPOSED-OFF BY THE TRIBUNAL VIDE COMMON ORDER DATED OCTOBER 13, 2020. THE ISSUE BEFORE THIS TRIBUNAL DATE OF HEARING 20.11.2020 DATE OF PRONOUNCEMENT 18.12.2020 2 M.A NO. 261 & 262/DEL/2020 PERTAINED TO LEVY OF PENALTY UNDER SECTION 271AA OF THE INCOME-TAX ACT, 1961 ('THE ACT') BY THE ASSESSING OFFICER [AO]. THE PENALTY WAS DELETED BY THE COMMISSIONER OF INCOME TAX (APPEALS) ['CIT(A)] VIDE A DETAILED ORDER DATED MARCH 02,2015 AFTER TAKING THE FOLLOWING UNDISPUTED FACTS INTO CONSIDERATION: I. DURING THE YEAR UNDER CONSIDERATION, THE APPLICANT, A NON-RESIDENT COMPANY, HAD ENTERED INTO CERTAIN INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTERPRISE IN INDIA. FORM 3CEB WAS OBTAINED FROM AN INDEPENDENT CHARTERED ACCOUNTANT DULY DISCLOSING THE AFORESAID INTERNATIONAL TRANSACTIONS. II THE LD. AO IN TERMS OF HIS POWERS UNDER SECTION 92C(3) OF THE INCOME- TAX ACT OF 1961 (THE ACT) ANALYZED THE INTERNATIONAL TRANSACTIONS AND FOUND THE SAME TO BE AT ARMS LENGTH. ACCORDINGLY, NO TRANSFER PRICING ADJUSTMENT WAS MADE IN THE CASE OF THE APPLICANT. IN THE COURSE OF THE HEARING ON SEPTEMBER 07, 2020, THE APPLICANT RELIED UPON THE ORDER OF THE CIT(A) AS WELL AS VARIOUS CASE LAWS TO SUBMIT THAT THE ORDER PASSED BY THE CIT(A) MAY BE UPHELD. NEVERTHELESS, THIS TRIBUNAL SUSTAINED THE IMPOSITION OF PENALTY UNDER SECTION 271AA OF THE ACT AND ALLOWED THE APPEALS OF THE REVENUE DEPARTMENT. HOWEVER, WHILE ADJUDICATING THE CAPTIONED MATTERS, THE FOLLOWING MISTAKES HAVE INADVERTENTLY CREPT INTO THE ORDER PASSED BY THIS TRIBUNAL: A. DURING THE COURSE OF THE HEARING BEFORE THE TRIBUNAL, THE COUNSEL FOR THE APPLICANT HAD SUBMITTED THAT THE APPLICANT HAD MAINTAINED ALL RELEVANT EVIDENCES AND DOCUMENTS AS REQUIRED UNDER SECTION 92D OF THE ACT READ WITH RULE 10D OF THE INCOME-TAX RULES OF 1962 AND NO TRANSFER PRICING ADJUSTMENT WAS MADE IN THE PRESENT CASE. IN SUCH A SITUATION IMPOSITION OF PENALTY UNDER SECTION 271AA OF THE ACT WAS NOT WARRANTED. RELIANCE IN THIS REGARD WAS PLACED 3 M.A NO. 261 & 262/DEL/2020 ON THE DECISION RENDERED BY THE INCOME TAX APPELLATE TRIBUNAL IN THE CASE OF DCIT VS. BEBO TECHNOLOGIES ([2013] 40 TAXMANN.COM 168) AND KIND ATTENTION WAS DRAWN TO PARA 9.7, PARA 9.11, PARA 10.2 AND 10.3 OF THE ORDER PASSED BY THE CIT(A). THE AFORESAID CONTENTION WAS NEITHER REBUTTED BY THE LD. DEPARTMENTAL REPRESENTATIVE NOR HAS BEEN ADJUDICATED UPON BY THIS TRIBUNAL WHILE DISPOSING OFF THE APPEAL. THE LD. AR THEREFORE, SUBMITTED THAT TO THIS EXTENT THERE IS A MISTAKE APPARENT FROM THE RECORD AND THEREFORE, IT IS PRAYED THAT THE ORDER MAY BE RECALLED, AND THE APPLICANT MAY BE REHEARD. B. THE LD. AR ALSO SUBMITTED THAT WHILE DECIDING THE APPEAL, INADVERTENTLY CERTAIN FACTS HAVE BEEN STATED IN THE ORDER WHICH ARE NOT RELEVANT TO THE CASE OF THE APPLICANT. AT PARA 8 OF THE ORDER, THE TRIBUNAL HAS OBSERVED THAT THE APPLICANT SHOULD HAVE OBTAINED A REPORT FROM AN INDEPENDENT ACCOUNTANT IN RESPECT OF THE INTERNATIONAL TRANSACTIONS. IT WAS FURTHER OBSERVED THAT EVEN IF THERE IS NO INTERNATIONAL TRANSACTION, THE REPORT UNDER SECTION 92D IS TO BE MAINTAINED FOR SPECIFIED DOMESTIC TRANSACTION. BASING THE AFORESAID FACTS, THE HONBLE TRIBUNAL HAS DRAWN AN ADVERSE INFERENCE AGAINST THE RESPONDENT ASSESSEE AND CONFIRMED THE IMPOSITION OF PENALTY. RELEVANT EXTRACT IS REPRODUCED BELOW: 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE PERUSAL OF THE RECORDS IT SEEMS THAT THE ASSESSEE WAS NOT MAINTAINING ITS SEPARATE TP DOCUMENTS. THE CONTENTION OF THE ASSESSEE IS THAT THERE IS NO INTERNATIONAL TRANSACTION, THEREFORE, THERE WAS NO NEED TO MAINTAIN THE TP DOCUMENTS . BUT AS PER SECTION 92D OF THE INCOME TAX ACT, EVERY PERSON HAS TO MAINTAIN ITS OWN DOCUMENT. SECTION 92D OF THE ACT READS AS UNDER :- .... IT IS MANDATORY FOR ALL TAXPAYERS, WITHOUT EXCEPTION, TO OBTAIN AN INDEPENDENT ACCOUNTANT'S REPORT IN RESPECT OF ALL INTERNATIONAL TRANSACTIONS BETWEEN ASSOCIATED ENTERPRISES OR SPECIFIED DOMESTIC TRANSACTIONS. THE REPORT HAS TO BE FURNISHED BY THE DUE DATE OF THE TAX RETURN FILING. EVEN (FIT IS 4 M.A NO. 261 & 262/DEL/2020 SUBMITTED THAT THERE IS NO INTERNATIONAL TRANSACTION, IT CANNOT ESCAPE THE ASSESSEE AT LEAST TO OBTAIN INDEPENDENT ACCOUNTANT'S REPORT FOR SPECIFIED DOMESTIC TRANSACTIONS.. THUS, THE ASSESSES MANDATORILY HAS TO MAINTAIN DOCUMENTS OF ITS OWN. NON MAINTAINING DOCUMENTS' ON ACCOUNT THAT THERE IS NO INTERNATIONAL TRANSACTION AND MERELY RELYING ON THE SUPPORTING DOCUMENTS OF ASSOCIATED ENTERPRISE, CANNOT BE TERMED AS REASONABLE CAUSE FOR NOT MAINTAINING THE DOCUMENTS ON ITS OWN UNDER SECTION 27B OF THE INCOME TAX ACT IN RESPECT TO THE INTERNATIONAL TRANSACTIONS AS WELL AS THE SPECIFIED DOMESTIC TRANSACTIONS AS WELL. IN FACT, IT IS MANDATORY REQUIREMENT TO OBTAIN AN INDEPENDENT ACCOUNTANTS REPORT/DOCUMENTS IN RESPECT OF SPECIFIED DOMESTIC TRANSACTIONS WITH ASSOCIATED ENTERPRISES AS PER SECTION 0 2D OF THE ACT AND THIS MANDATE CANNOT BE DILUTED BY THE SO CALLED REASONABLE CAUSE GIVEN UNDER SECTION 27B OF THE ACT. (EMPHASIS SUPPLIED) WITH REGARD TO THE ABOVE, THE LD. AR SUBMITTED THAT THE APPLICANT HAD OBTAINED AN INDEPENDENT ACCOUNTANTS REPORT IN THE PRESCRIBED FORMAT (FORM 3CEB). THE SAME WAS FILED ALONG WITH RETURN. IT HAS ALSO BEEN CONSIDERED BY THE CIT(A) AND THE SAME IS EVIDENT FROM PARA 10.1 OF THE CIT(A) ORDER. FURTHER, SINCE, THE RESPONDENT APPLICANT IS A NON-RESIDENT ASSESSEE, THERE CANNOT BE ANY CASE OF SPECIFIED DOMESTIC TRANSACTION. ACCORDINGLY, BY INADVERTENTLY STATING AND RELYING ON THESE FACTS WHICH ARE NOT RELEVANT TO THE CASE OF THE APPLICANT AND DRAWING AN ADVERSE INFERENCE AGAINST THE APPLICANT IS A MISTAKE APPARENT FROM THE RECORD WHICH HAS CREPT INTO THE ORDER. HENCE, TO THIS EXTENT THE ORDER MAY BE RECALLED, AND THE APPLICANT BE REHEARD. C. ONE MORE ASPECT THAT HAS INADVERTENTLY NOT BEEN EXAMINED BY THIS TRIBUNAL IS THAT THE AO HAD NOT BROUGHT IN ANY SPECIFIC REQUIREMENT AS TO WHICH DOCUMENTS HAVE NOT BEEN MAINTAINED WHILE SEEKING INFORMATION FROM THE APPLICANT ON THE INTERNATIONAL TRANSACTION. IN THIS REGARD RELIANCE HAD BEEN PLACED BY THE APPLICANT ON THE DECISION RENDERED BY THE INCOME TAX APPELLATE TRIBUNAL IN THE CASE OF CARGILL INDIA PVT. LTD. VS. DCIT (2008) 110 ITD 616 5 M.A NO. 261 & 262/DEL/2020 WHICH CLEARLY HELD THAT THE AO CANNOT CALL FOR ALL INFORMATION PRESCRIBED UNDER RULE 10D IN A ROUTINE OR CASUAL MANNER WITHOUT APPLICATION OF MIND. THIS FACT AS WELL AS LEGAL POSITION WAS PROPERLY RECORDED AND ADJUDICATED BY THE CIT(A) IN PARA 10.3. HOWEVER, THE AFORESAID CONTENTION HAS NEITHER BEEN CONSIDERED NOR HAS BEEN DISPOSED-OFF BY THIS TRIBUNAL. IN VIEW OF THE AFOREMENTIONED FACTS AND CIRCUMSTANCES, THE LD. AR PRAYED THAT THE TRIBUNAL MAY RECTIFY THE MISTAKES APPARENT FROM THE FACE OF THE RECORD AND RECALL ITS ORDER AND HEAR THE MATTER AFRESH. THE LD. AR FURTHER SUBMITTED THAT NO APPLICATION U/S 254(2) OTHER THAN THE INSTANT APPLICATION HAS BEEN FILED AGAINST THE ORDER OF THE TRIBUNAL. 3. THE LD. DR RELIED UPON THE ORDER OF THE TRIBUNAL AND SUBMITTED THAT THERE IS NO MISTAKE APPARENT ON RECORD IN THE ORDER OF THE TRIBUNAL. IN FACT, THE ASSESSEE IS NOW SEEKING REVIEW OF ITS OWN ORDER DATED 13.10.2020 BY THE TRIBUNAL WHICH IS NOT PERMISSIBLE UNDER THE PROVISIONS OF INCOME TAX ACT, 1961. THE LD. DR FURTHER SUBMITTED THAT THE POINTS NOW RAISED BY THE LD. AR WERE NEVER TAKEN DURING THE HEARING OF THE APPEAL, SO THE LD. AR IS NOW MAKING A FRESH PLEA. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIAL AVAILABLE ON RECORD. DURING THE HEARING OF THE MAIN APPEAL, THE THEN ARGUING COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS NO TRANSFER PRICING ADJUSTMENT IN THESE PARTICULAR YEARS AND FURTHER RELIED UPON THE ORDER OF THE CIT(A) STATING THEREIN THAT NO SEPARATE DOCUMENTATION WAS MAINTAINED BY THE ASSESSEE BUT ASSESSEE OBTAINED AN INDEPENDENT ACCOUNTANTS REPORT IN RESPECT OF INTERNATIONAL TRANSACTIONS IN THE PRESCRIBED FORMAT I.E. FORM 3CEB. WE HAVE GIVEN CATEGORICAL FINDING THAT EVERY PERSON HAS TO MAINTAIN ITS OWN DOCUMENTS. BUT IN THE PRESENT CASE THE ASSESSEE FAILED TO SUBMIT ITS OWN DOCUMENTS. IN FACT, THE ASSESSING OFFICER ON PAGE 2 PARA 2.3 OF THE ASSESSMENT ORDER HAS CATEGORICALLY MENTIONED THAT THE ASSESSEE SOUGHT CERTAIN REIMBURSEMENTS (IN THE NATURE OF LINK CHARGES, SOFTWARE PAYMENTS ETC.) ON A COST TO COST BASIS FROM 6 M.A NO. 261 & 262/DEL/2020 CIS IN ADDITION TO THE PAYMENTS OF INTEREST AND FTS AND ASSESSEE FURTHER CLAIMED THAT THE AMOUNTS INVOLVED ARE NOT SUBJECT TO TAX IN INDIA IN ACCORDANCE WITH THE PROVISIONS OF THE DTAA. THE ASSESSING OFFICER FURTHER POINTED OUT THAT THE COMPANY IN FORM NO. 3CEB (REPORT FROM AN ACCOUNTANT TO BE FURNISHED U/S 92E RELATING TO INTERNATIONAL TRANSACTIONS), HAS NOT DISCLOSED THESE TRANSACTIONS, WHICH IT WAS REQUIRED TO DISCLOSE AS PER ITEM NO. 12 OF THE REPORT. IN PENALTY ORDER U/S 271AA, THE ASSESSING OFFICER SPECIFICALLY HELD THAT THE INFORMATION AND DOCUMENTS REQUIRED TO BE KEPT AND MAINTAINED WERE NOT AVAILABLE WITH THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AND ASSESSEE KEPT ON RELYING ON THE TP STUDY OF ITS INDIAN SUBSIDIARY, A SEPARATE LEGAL ENTITY. IF THE ASSESSEE AS PER THE MANDATE OF SECTION 92C WOULD HAVE MAINTAINED ITS OWN DOCUMENTS RELATING TO THE TP ADJUSTMENT, THE ASSESSING OFFICER WOULD HAVE PROPERLY BEEN ABLE TO DETERMINE ALP OF THE INTERNATIONAL TRANSACTIONS. BUT THESE FACTS WERE TOTALLY IGNORED BY THE CIT(A) AND WAS NOT CONTESTED OR DISPUTED BY THE ASSESSEE DURING THE HEARING BEFORE US IN MAIN APPEAL. FURTHER, FORM 3CEB IS TO BE FURNISHED ACCORDING TO THE PROVISIONS OF SECTION 92E AND FOR THE DOCUMENTS MAINTAINED UNDER SECTION 92D ARE DIFFERENT. THUS, THE MERE SUBMISSION OF FORM 3CEB WITH ACCOUNTANTS REPORT WILL NOT BE TREATED AS DOCUMENTS SUBMITTED UNDER SECTION 92D OF THE ACT. AS REGARDS THE CASE LAWS, THE SAME WERE CONSIDERED AT THE TIME OF DECIDING THE APPEAL, BUT THE ARGUING COUNSEL FOR THE ASSESSEE AT THE TIME HEARING OF THE MAIN APPEAL HAS NOT CATEGORICALLY POINTED OUT THE SUPPORTING FACTUAL ASPECTS TO THE PRESENT ASSESSEES CASE AND TO THOSE CITED CASE LAWS. IN FACT, ALL THE CASE LAWS ARE ON DIFFERENT FACTUAL ASPECT WHEREIN THE REQUISITE DOCUMENTS WERE FILED BY THOSE ASSESSES, BUT THAT IS NOT THE CASE IN PRESENT ASSESSEE. IN CASE OF BEBO TECHNOLOGIES (SUPRA), THE TRIBUNAL DELETED THE PENALTY ON THE GROUND THAT SHOW CAUSE NOTICE WAS NOT ISSUED BEFORE PASSING THE ORDER UNDER SECTION 271AA OF THE ACT. THUS, AT THIS JUNCTURE, THE LD. AR IS SEEKING REVIEW OF THE ORDER DATED 13.10.2020 BY THE TRIBUNAL WITHOUT POINTING OUT ANY MISTAKE APPARENT ON RECORD AS PER SECTION 254 OF THE INCOME TAX ACT, 1961 AND THEREFORE, THE SAME IS NOT PERMISSIBLE UNDER THE PROVISIONS OF INCOME TAX ACT. IN FACT, AFTER TAKING 7 M.A NO. 261 & 262/DEL/2020 COGNIZANCE OF ALL THE RELEVANT MATERIAL ON RECORD AND THE PENALTY ORDER UNDER SECTION 271AA, WE HAVE ARRIVED AT THE CONCLUSION. A MISTAKE APPARENT ON THE RECORD MUST BE AN OBVIOUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG-DRAWN PROCESS OF REASONING ON POINTS WHICH WERE NOT EMERGING FROM THE ORIGINAL FACTS OF THE CASE. THUS, THE ASSESSEE IN THE PRESENT MISC. APPLICATIONS IS SEEKING REVIEW OF ITS OWN ORDER BY THE TRIBUNAL WHICH IS NOT PERMISSIBLE IN LAW AND HENCE BOTH THE MISC. APPLICATIONS ARE DISMISSED. 5. IN RESULT, BOTH THE MISC. APPLICATIONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 18 TH DAY OF DECEMBER, 2020 SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18/12/2020 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 8 M.A NO. 261 & 262/DEL/2020 DATE OF DICTATION 15.12.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 15.12.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 18.12.2020 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 18.12.2020 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 18.12.2020 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 18.12.2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 18.12.2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 18.12.2020 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER