Appeal details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 299683 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
6 month(s) 15 day(s)
Appellant
Respondent
Appeal Type
Miscellaneous Application
Pronouncement Date
12-04-2023
Appeal Filed By
Department
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
20-10-2022
Assessment Year
2011-2012
Appeal Filed On
28-09-2022
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL “K” BENCH, MUMBAI BEFORE SHRI B. R. BASKARAN, AM AND MS. KAVITHA RAJAGOPAL, JM M A N os . 27 7/ M u m/ 20 22 & 32 7 /M u m /2 02 2 ( A ri s in g ou t o f I TA N os. 1 035 /M u m / 2 0 10 & 20 41 /M u m / 20 10) (A s s ess me nt Y e a r s : 20 05 - 0 6) Tech Mahindra Ltd. (Formerly known as Mahindra British Telecom Ltd.) Gateway Building, Apollo Bunder, Mumbai-400 001 V s. DCIT, Circle-2(3) Gateway Building, Apollo Bunder, Mumbai -400 020 P A N / G I R N o. AA A CM 348 4 F (Applicant) : (Respondent) Applicant by : Shri J. D. Mistry & Harsh Kapadia Respondent by : Ms. Samruddhi Hande D a te o f H e a r i n g : 06.01.2023 D ate of P ro n ou n ce me n t : 13.04.2023 O R D E R Per Kavitha Rajagopal, J M: These Miscellaneous Applications have been filed by the assessee/applicant arising out of the cross appeals in ITA Nos. 1035/Mum/2010 & 2041/Mum/2010 for recall of the Tribunal’s order dated 23.03.2022, pertaining to ground nos. 1 &2 of ITA No. 1035/Mum/2021 and ground no. 3 of ITA No. 2041/Mum/2010 for the purpose of rectification of mistakes apparent from the record. 2. The brief facts are that the assessee/applicant has challenged the above mentioned appeal on various grounds out of which ground no. 2 pertains to the fact that the ld. CIT(A) has erred in not deleting the transfer pricing adjustment in its entirety with respect to charging interest while extending credit to its AE. It was observed that the 2 M A N o s . 2 7 7 / M u m / 2 0 2 2 & 3 2 7 / M u m / 2 0 2 2 ( A . Y . 2 0 0 5 - 0 6 ) Tech Mahindra Ltd. vs. DCIT assessee has made a submission that extended credit period was allowed by the assessee/applicant to its non AE’s without charging any interest for which no adjustment was made by the Transfer Pricing Officer (TPO for short). The assessee/applicant further contended that the Tribunal has accepted the fact that no interest was charged by the assessee/applicant to its non AE’s and the same was also accepted by the ld. CIT(A) and TPO. This was supported by the paper book filed by the assessee/applicant vide its letter dated 14.01.2021 and the assessee contended that it was also supported by the decision of the Hon'ble Jurisdictional High Court and the decision of the co-ordinate bench that where no interest is charged by the assessee to its non AE for extended credit period, no TP adjustment shall be made in respect of the extended credit granted by the assessee to its AEs. It is observed that the Tribunal has disposed of the said ground by upholding the decision of the ld. CIT(A), wherein the TP adjustment on interest was charged at the rate of USD LIBOR rate at 1.22% with mark up of 80 base points. The Tribunal has remanded this issue to the file of the A.O./TPO for verification of the period and the interest rate that was applicable at that period in open market. The assessee stated that TP adjustment ought not to be made for the said period. The ld. AR for the assessee relied on the decision of Hon'ble Jurisdictional High Court for the said proposition and prayed that the impugned order may be recalled for consideration of the settled propositions of law by the Hon'ble Jurisdictional High Court. The ld. AR further stated that non consideration of the decision of the Hon'ble Jurisdictional High Court amounts to mistake apparent from the record. 3 M A N o s . 2 7 7 / M u m / 2 0 2 2 & 3 2 7 / M u m / 2 0 2 2 ( A . Y . 2 0 0 5 - 0 6 ) Tech Mahindra Ltd. vs. DCIT 3. On the issue of ground no. 3 raised in the appeal pertaining to export turnover and total turnover in respect of expenses incurred in foreign currency on telecommunication rendering services outside India as adjustment is required to be made only if such expenses were included in the export turnover and total turnover. The claim of deduction u/s. 10A on this issue was also raised by the respondent/Revenue in its cross appeal in ITA No. 2041/Mum/2010. It is observed that the Tribunal has adjudicated this issue in para nos.18 & 19 of the impugned order by holding that the assessee/applicant has claimed the deduction u/s. 10A of the Act in its return of income by adjusting both ‘export and total turnover’, the amount in foreign currency expenses. The ld. AR contended that this was factually incorrect as the foreign currency expenses were never recovered from the customers and was not forming part of the export turnover or total turnover and, therefore, there cannot be any adjustment on this. The assessee/applicant has also raised an alternate plea that if the adjustment of foreign currencies expenses has to be made from export turnover then the corresponding turnover from the total turnover also needs to be made. The ld. AR relied on the decision of the assessee’s case for A.Ys. 2002-03, 2003-4 and 2004-5 and the Tribunal’s decision in ITO vs. Sak Soft Limited (in ITA No. 691, 1953 and 2477(Mad.) 2007 and 175, 500, 1130, 1138 and 1139 (Mad) 2pf 2008 dated 06.03.2009(SB)) for the said proposition. The ld. AR further contended that the Tribunal has dismissed the Revenue’s ground of appeal on this issue without adjudicating the assessee’s ground on this. The ld. AR further stated that the assessee’s ground on this issue has to be adjudicated prima facie before deciding the departments ground on the same issue. The ld. AR prayed that both the said appeals may be recalled 4 M A N o s . 2 7 7 / M u m / 2 0 2 2 & 3 2 7 / M u m / 2 0 2 2 ( A . Y . 2 0 0 5 - 0 6 ) Tech Mahindra Ltd. vs. DCIT for the above mentioned reasons as there is a mistake apparent from the record in the order of the Tribunal. 4. The learned Departmental Representative (ld. DR for short) for the Revenue, on the other hand, controverted the same and contended that the Tribunal has passed a detailed order after duly considering the submission of both the sides. The ld. DR also contended that the decision of Hon'ble Jurisdictional High Court relied on involved higher rate of interest whereas in the present case it was only a miniscule rate and contended that the said decision would not be applicable in assessee’s case. The ld. DR further contended that there was no mistake apparent from the record and submitted that the MA holds no merit. 5. We have heard the rival submissions and perused the materials available on record. The assessee/applicant has raised the issue of TP adjustment pertaining to charging interest during the extended credit period to its AEs. It is observed that the assessee has not charged the interest to its non AEs and that the same was accepted by the Tribunal and the lower authorities and the same was to be considered in deciding this issue. Though the ld. CIT(A) has given partial relief, the Tribunal has set it aside to determine the period and also the interest rate applicable for that period as per market rate. The assessee’s grievance that the decision of the Hon'ble Jurisdictional High Court has not been considered while deciding this issue is justifiable in our view. Similarly the issue related to expenditure on foreign currency was also to be considered by the Tribunal in deciding the issue raised by the assessee in ground no. 3 of its appeal. We find merit in the submission of the assessee and we hereby recall both these appeals on these issues. 5 M A N o s . 2 7 7 / M u m / 2 0 2 2 & 3 2 7 / M u m / 2 0 2 2 ( A . Y . 2 0 0 5 - 0 6 ) Tech Mahindra Ltd. vs. DCIT 6. In the result, the Miscellaneous Applications filed by the assessee are allowed. Order pronounced in the open court on 13.04.2023 Sd/- Sd/- (B. R. Baskaran) (Kavitha Rajagopal) Accountant Member Judicial Member Mumbai; Dated : 13.04.2023 Roshani , Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT - concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai
AI Insights
The case involves Tech Mahindra Ltd., which filed Miscellaneous Applications against the orders of the Income Tax Appellate Tribunal concerning transfer pricing adjustments and the inclusion of foreign currency expenses in export turnover for the assessment year 2005-06. The primary contention was that the Tribunal had not considered relevant decisions of the Hon'ble Jurisdictional High Court that could potentially alter the outcome of the issues related to the charging of interest on extended credit periods to Associated Enterprises (AEs) and the adjustment of foreign currency expenses in the export turnover. The Tribunal acknowledged the oversight and decided to recall the earlier order to re-evaluate these issues in light of the cited judicial precedents.
