M/s. Sitel Operating Corporation India Private Limited, Mumbai V. Income Tax Officer, Ward-6(1)(2), Bangalore

MA 300/BANG/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4299 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 08-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 10-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKAS K SURYAWANSHI
• Keywords: Transfer pricing

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER A ND SHRI LALIET KUMAR, JUDICIAL MEMBER M.P. NO. 300/BANG/2018 (IN IT (TP) A NO . 598/BANG/2015 ) ASSESSMENT YEAR : 20 1 0 - 1 1 M/S. SITEL OPERATING CORPORATION INDIA LTD. (SINCE AMALGAMATED WITH SITEL INDIA PRIVATE LIMITED), 501, WING A&B, BOOMERANG, CHANDIVALI FARM ROAD, CHANDIVALI, ANDHERI (EAST), MUMBAI 400 072. PAN: AACCC0408M VS. THE INCOME-TAX OFFICER, WARD 6(1) (2), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI CHAVALI NARAYAN, CA RESPONDENT BY : SHRI VIKAS K. SURYAWANSHI, ADDL. CIT (DR) DATE OF HEARING : 25 .0 1 .2019 DATE OF PRONOUNCEMENT : 08 . 0 2 .201 9 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS M.P. IS FILED BY THE ASSESSEE STATING THAT THE RE ARE CERTAIN APPARENT MISTAKES IN THE IMPUGNED TRIBUNAL ORDER DATED 25.04 .2018. 2. AS PER THE M.P., THE FIRST MISTAKE IS THIS THAT IT IS NOTED BY THE TRIBUNAL IN PARA 10 OF THE IMPUGNED TRIBUNAL ORDER THAT THE ASS ESSEE HAS MADE REQUEST FOR EXCLUSION OF 7 COMPARABLES INCLUDING IC RA ONLINE LTD. BUT IN PARA NOS. 11 TO 16 OF THE IMPUGNED TRIBUNAL ORDER, THE TRIBUNAL HAS DECIDED REGARDING ASSESSEES REQUEST FOR EXCLUSION OF 6 COM PARABLES BUT ASSESSEES REQUEST FOR ONE COMPARABLE I.E. ICRA ONL INE LTD. WAS INADVERTENTLY NOT DECIDED BY THE TRIBUNAL. 3. IN THE SAME M.P., THERE IS ONE MORE SUBMISSION T HAT AS PER TWO ADDITIONAL GROUNDS RAISED BY THE ASSESSEE, THE ASSESSEE HAS MA DE REQUEST THAT M.P. NO. 300/BANG/2018 (IN IT(TP)A NO. 598/BANG/2015) PAGE 2 OF 4 REDUCTION OF TELECOMMUNICATION EXPENSES FROM THE TO TAL TURNOVER FOR COMPUTING THE RELIEF U/S. 10A OF THE IT ACT SHOULD BE ALLOWED. BUT THESE TWO GROUNDS WERE ALSO NOT DECIDED BY THE TRIBUNAL IN TH E IMPUGNED TRIBUNAL ORDER AND AS PER THE ASSESSEE, THIS IS THE SECOND A PPARENT MISTAKE IN THE IMPUGNED TRIBUNAL ORDER. 4. IN COURSE OF HEARING OF THIS M.P., THE LD. AR OF ASSESSEE MADE THE SAME SUBMISSIONS WHICH ARE MADE BY THE ASSESSEE IN THE M .P. AS NOTED ABOVE. THE LD. DR OF REVENUE SUBMITTED THAT THERE IS NO AP PARENT MISTAKE IN THE IMPUGNED TRIBUNAL ORDER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT IN PARA 10 OF THE IMPUGNED TRIBUNAL ORDER, THIS IS NOTED BY THE TRIBU NAL THAT THE ONLY EFFECTIVE GROUND OF APPEAL RAISED BY THE ASSESSEE IS CHALLENG ING REJECTION OF TWO COMPARABLES I.E. CG-VAK SOFTWARE & EXPORTS LTD., (S EGMENTAL) AND R SYSTEMS INTERNATIONAL LTD. (SEGMENTAL) AND ASSESSEE HAS ALSO CHALLENGED THE INCLUSION OF FIVE COMPARABLE COMPANIES SELECTED BY THE TPO BEING 1. ACCENTIA TECHNOLOGIES LTD. 2. ACROPETAL TECHNOLOGIES LTD. 3. ECLERX SERVICES PVT. LTD. 4. ICRA ONLINE LTD. 5. INFOSYS BPO LTD. 6. AS PER PARA 11 OF THE IMPUGNED TRIBUNAL ORDER, T HE TRIBUNAL DECIDED REGARDING CG VAK SOFTWARE & EXPORTS LTD., AS PER PA RA 12 OF THE IMPUGNED TRIBUNAL ORDER, THE TRIBUNAL DECIDED REGARDING R SY STEMS INTERNATIONAL LTD. AS PER PARA 13 OF THE IMPUGNED TRIBUNAL ORDER, THE TRIBUNAL DECIDED ABOUT ACCENTIA TECHNOLOGIES LTD., AS PER PARA 14 OF THE I MPUGNED TRIBUNAL ORDER, THE TRIBUNAL DECIDED REGARDING ACROPETAL TECHNOLOGI ES LTD. (SEG), IN PARA 15 OF THE IMPUGNED TRIBUNAL ORDER, THE TRIBUNAL DEC IDED REGARDING ECLERX SERVICES LTD. AND AS PER PARA 16 OF THE IMPUGNED TR IBUNAL ORDER, THE TRIBUNAL DECIDED REGARDING INFOSYS BPO LTD AND THER E IS NO DECISION REGARDING THE ASSESSEES REQUEST FOR EXCLUSION OF I CRA ONLINE LTD. HENCE, IN OUR CONSIDERED OPINION, THIS IS AN APPARENT MIST AKE IN THE IMPUGNED TRIBUNAL ORDER WHICH SHOULD BE RECTIFIED. M.P. NO. 300/BANG/2018 (IN IT(TP)A NO. 598/BANG/2015) PAGE 3 OF 4 7. IN THE APPEAL FILE, THIS IS SEEN THAT THERE ARE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE OUT OF WHICH TWO ADDITIONAL GROUNDS ARE RE GARDING NOT REDUCING THE TELECOMMUNICATION EXPENSES INCURRED IN FOREIGN CURRENCY AMOUNTING TO RS. 57,83,610/- FROM THE TOTAL TURNOVER WHEN THE SA ME WAS REDUCED FROM EXPORT TURNOVER FOR THE PURPOSE OF COMPUTING DEDUCT ION ALLOWED TO ASSESSEE U/S. 10A OF THE IT ACT. IT IS SEEN THAT ON PAGE NO . 9 OF THE IMPUGNED TRIBUNAL ORDER, THE FOLLOWING TWO ADDITIONAL GROUND S ARE NOTED BY THE TRIBUNAL IN PARA 9 OF THE IMPUGNED TRIBUNAL ORDER A ND HENCE, WE REPRODUCE PARA 9 OF THE IMPUGNED TRIBUNAL ORDER FOR READY REF ERENCE. 9. THE ASSESSEE-COMPANY ALSO RAISED THE FOLLOWING A DDITIONAL GROUNDS: 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO- NON-REDUCTION OF TELECOMMUNICATION EXPENSES INCURRE D IN FOREIGN CURRENCY OF RS 57,83,610 FROM THE TOTAL TURNOVER FO R COMPUTING THE RELIEF UNDER SECTION 10A OF THE ACT 22 ERRED IN NOT REDUCING THE TELECOMMUNICATION EXPE NSES INCURRED IN FOREIGN CURRENCY AMOUNTING TO RS 57,83,610 FROM THE TOTAL TURNOVER, WHEN THE SAME WAS REDUCED FROM THE EXPORT TURNOVER 23 FAILED TO APPRECIATE THAT WHERE THE AMOUNT HAS B EEN REDUCED FROM THE 'EXPORT TURNOVER' UNDER EXPLANATION 2(IV) TO SE CTION 10A OF THE ACT, THE SAME AMOUNT SHOULD ALSO BE REDUCED FROM TH E 'TOTAL TURNOVER' WHILE COMPUTING THE DEDUCTION UNDER SECTION 10A OF THE ACT TRANSFER PRICING GROUND: 24 THE HON'BLE DRP ERRED IN NOT ADJUDICATING ON THE APPELLANT'S GROUND RELATING TO 'MISCELLANEOUS INCOME' OF RS 485 ,207 TO BE CONSIDERED AS OPERATING IN NATURE FOR THE PURPOSE O F COMPUTING THE OPERATING MARGIN OF THE APPELLANT. THE APPELLANT CRAVES, TO CONSIDER EACH OF THE ABOVE GROUNDS OF APPEAL WITHOUT PREJUDICE TO EACH OTHER AND CRAVES TO LEAVE OR ADD, ALTER, DELETE OR MODIFY ALL OR ANY OF THE ABOVE GROUNDS OF APPEAL. 8. WE HAVE ALREADY SEEN THAT AS PER PARA NOS. 10 TO 16 OF THE IMPUGNED TRIBUNAL ORDER, THE TRIBUNAL HAS DECIDED REGARDING THE ASSESSEES REQUEST FOR INCLUSION / EXCLUSION OF CERTAIN COMPARABLES AN D THEREAFTER, IN PARA 17 OF THE IMPUGNED TRIBUNAL ORDER, THE TRIBUNAL SAYS THAT ONLY OTHER GROUND IS M.P. NO. 300/BANG/2018 (IN IT(TP)A NO. 598/BANG/2015) PAGE 4 OF 4 ABOUT RISK ADJUSTMENT. THIS GROUND WAS REJECTED BY THE TRIBUNAL AND HENCE, IT IS SEEN THAT THERE IS NO DISCUSSION OR DECISION REGARDING THESE TWO ADDITIONAL GROUNDS WHICH ARE NOTED BY THE TRIBUNAL IN PARA 9 OF THE IMPUGNED TRIBUNAL ORDER AS REPRODUCED ABOVE. IN OU R CONSIDERED OPINION, THIS IS ALSO AN APPARENT MISTAKE WHICH SHOULD BE RE CTIFIED. 9. IN VIEW OF ABOVE DISCUSSION, WE RECALL THIS TRIB UNAL ORDER FOR THE LIMITED PURPOSE OF DECIDING THESE TWO ISSUES. THE FIRST IS SUE TO BE DECIDED IS REGARDING REQUEST OF ASSESSEE FOR EXCLUSION OF ICRA ONLINE LTD. THE SECOND ISSUE TO BE DECIDED IS REGARDING NON-REDUCTI ON OF TELECOMMUNICATION EXPENSES INCURRED IN FOREIGN CURRENCY OF RS. 57,83, 610/- FROM TOTAL TURNOVER FOR COMPUTING RELIEF U/S. 10A OF THE IT ACT. THIS TRIBUNAL ORDER IS RECALLED FOR THE LIMITED PURPOSE FOR DECIDING THESE TWO ISSUES. 10. THE REGISTRY IS DIRECTED TO FIX THIS APPEAL FOR HEARING ON 04.03.2019. SINCE THE DATE OF HEARING IS PRONOUNCED IN THE OPEN COURT , NO SEPARATE NOTICE OF HEARING IS REQUIRED TO BE ISSUED. 11. IN THE RESULT, THE M.P. FILED BY THE ASSESSEE I S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (LALIET KUMAR) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 08 TH FEBRUARY, 2019. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.