M/s EMC Software and Services India Private Limited , Bangalore V. Joint Commissioner of Income Tax Special Range-2 , Bangalore

MA 33/BANG/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9242 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 13-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 28-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R PREMI J
• Assessee Lawyers: T SURYANARAYANA
• Keywords: Transfer pricing; International transaction
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES C BENCH: BANGALORE BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER M.P. NO.33/BANG/2020 (IN IT (TP) A NO. 3375 /BANG/2018 (ASSESSMENT YEAR: 20 14 - 15 ) M/S. EMC SOFTWARE AND SERVICES INDIA PVT. LTD., BAGMANE DEVELOPERS PVT. LTD., DODDANEKKUNDI VILL. ROAD, BANGALORE - 560 037 .APPELLANT PAN AABCT0199B VS. JOINT COMMISSIONER OF IN COME TAX, SPECIAL RANGE 2, BANGALORE. RESPONDENT. ASSESSEE BY: SHRI T. SURYANARAYANA, ADVOCATE. REVENUE BY: S MT. R. PREMI , J CIT (D.R) DATE OF HEARING : 03.07 .20 20. DATE OF PRONOUNCEMENT : 13 .0 8 .20 20. O R D E R PER SHRI PAVAN KUMAR GADALE, JM : THE MISC. PETITION IS FILED BY THE ASSESSEE SUBMITTING THAT THERE ARE CERTAIN MISTAKES APPARENT FROM THE RECORD IN ORDER PASSED BY THE TRIBUNAL IN IT(TP)A NO.3375/BANG/2018 DT.18.12.2019 FOR THE ASST. YEAR 2014 - 15. 2 M.P. NO. 33/BANG/2020 2. THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THERE IS A MISTAKE APPARENT FROM THE RECORD IN THE ORDER OF HON'BLE TRIBUNAL IN RESPECT OF GROUND OF A PPEAL NO.3 , W H ERE THE ASSESSEE S OUGHT INCLUSION OF 7 COMPANIES IN THE LIST OF COMPARA BLE FOR ITES SEGMENT. WHEREAS THE HON'BLE TRIBUNAL HAS REJECTED THE COMPARABLE M/S. I2T2 INDIA LIMITED FOR INCLUSION IN PARA 7(IV) ON PAGE 23 OF THE ORDER AS THE INCOME FROM EXPORT SERVICES IS HIGHER AND IS READ AS UNDER : 7 (IV) I 2T2 INDIA LIMITED : THIS COMPARABLE WAS SOUGHT TO BE INCLUDED BY THE ASSESSEE BUT WAS REJECTED BY THE TPO AND RPT DATA ARE NOT AVAILABLE IN THE ANNUAL REPORT. THE DRP HAS OBSERVED THAT THE COMPANY DOES NOT SPECIFY THE FILTERS ADOPTED BY THE TPO AND ON PERUSAL OF THE ANNUAL REPORT, THE COMPANY IS IN ITES INDUSTRY SERVICES AND IS NOT COMPARABLE TO THE ASSESSEE. ON PERUSAL OF THE ANNUAL REPORT, PAPER BOOK PAGE 1581 AT PARA 2.13, THE INCOME FROM EXPORT OF SOFTWARE SERVICES IS HIGHER THEREFORE WE ARE OF TH E OPINION THAT THE OBSERVATIONS OF THE TPO AND THE DRP ARE TO BE ACCEPTED AND HENCE THIS COMPARABLE IS REJECTED FOR INCLUSION. 3. THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE TRIBUNAL HAS EXCLUDED INFOSYS LIMITED, L&T INFOTECH LTD AND THIRDWARE SOLUTIONS LTD. BY PLACING RELIANCE ON THE ORDER PASSED BY CO - ORDINATE BENCH IN THE CASE OF LG SOFT INDIA PVT. LTD. VS. DCIT [IT(TP)A NO.3122/BANG/2018 DT.28.05.2019 FOR A.Y. 2014 - 15]. IN THE SAME ORDER, THE TRIBUNAL HAS DIRECTED INCLUSION OF I2T 2 INDIA LIMITED. HE SUBMITTED THAT THE COMPANY PASSES ALL THE FILTERS SET BY TPO. ACCORDINGLY, HE SUBMITTED THAT THE TRIBUNAL HAS FELL INTO ERROR IN NOT CONSIDERING THE 3 M.P. NO. 33/BANG/2020 DECISION RENDERED BY CO - ORDINATE BENCH AND THE SAME CONSTITUTE MISTAKE APPARENT FROM RECORD. 4. WE FIND MERIT IN THE SUBMISSIONS OF LD. AR. NON - CONSIDERATION OF DECISION OF CO - ORDINATE BENCH CITED BEFORE THE TRIBUNAL IS A MISTAKE APPARENT FROM RECORD AS HELD BY HONBLE SUPREME COURT IN THE CASE OF HONDA SIEL POWER PRODUCTS LTD. 295 I TR 466 (SC). ACCORDINGLY, THE GROUND 3(L) IN SO FAR AS IT IS RELATED TO I2T2 INDIA LIMITED DESERVES TO BE RECALLED. 5. O N THE SECOND ISSUE, THE LDAR SUBMITTED THAT THE HONBLE TRIBUNAL HAS OBSERVED AT PAGE 32 PARA 10 OF THE ORDER THAT THE GROUND NOS.4C & 4D PERTAIN TO FOREIGN EXCHANGE GAIN AND WORKING CAPITAL ADJUSTMENT AND REMANDED TO THE FILE OF TPO, WHICH IS READ AS UNDER: 10. FURTHER, THE LEARNED AUTHORIZED REPRESENTATIVE ARGUED ON GROUND OF APPEAL NO.4C AND 4D IN RESPECT OF REVENUE NOT CONS IDERING THE FOREIGN EXCHANGE GAIN AN D WORKING CAPITAL ADJUSTMENT. WHEREAS T HE TP ADJUSTMENT WAS MADE TO NON - AE TRANSACTIONS AND FOREIGN EXCHANGE GAIN IN ITES HAS TO BE CONSIDERED. CONSIDERING THESE FACTS, WE RESTORE THIS DISPUTED ISSUE TO THE FILE OF THE TPO TO CONSIDER THE ASSESSEES SUBMISSIONS AND FACTS ENVISAGED FOR DETERMINATION OF ALP . ACCORDINGLY, GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 6. THE CONTENTIONS OF THE LDAR THAT GROUND OF APPEAL NO.4C PERTAINS TO ERRONE OUS COMPUTATION OF TP ADJUS TMENT OF ITES SEGMENT BY TPO TAKING INTO ACCOUNT BOTH DOMESTIC AND INTERNATIONAL TRANSACTION S. THE GROUND OF APPEAL NO.4D PERTAINS TO FOREIGN EXCHANGE GAIN S ARISING FROM THE PROVISION OF SERVICES IN ITES SEGMENT, AND 4 M.P. NO. 33/BANG/2020 WAS CORRECT LY REMANDED TO THE FILE OF TPO. BUT THE WORKING CAPITAL ADJUSTMENT REFERRED IN LINE 3 PARA 10 ABOVE DOES NOT PERTAIN TO THE ABOVE GROUND S AND HAS TO BE EXCLUDED AND WHEREAS TP ADJUSTMENT IN NON - AE TRANS A CTIONS RELATES TO GROUND OF APPEAL NO 4D AND PRAYED F OR MODIFICATION OF PARA IN THE ORDER. WE FOUND THE MIS TAKE POINTED OUT BY LDAR I S A MISTAKE APPARENT ON RECORD , ACCORDINGLY WE SUBSTITUTE THE PARA 10 OF THE ORDER WITH THE FOLLOWING PARAGRAPH: 10. FURTHER THE LEARNED AUTHORIZED REPRESENTATIVE ARG UED ON GROUND OF APPEAL NOS.4C&4D IN RESPECT OF REVENUE NOT CONSIDERING THE FOREIGN EXCHANGE GAIN . WHEREAS THE TRANSFER PRICING ADJUSTMENT WAS MADE TO NON - AE TRANSACT IONS IN GROUND OF APPEAL NO.4D AND FOREIGN EXCHANGE GAIN OF ITES HAS TO BE CONSIDERED. CONSIDER ING THESE FACTS, WE RESTORE THIS DISPUTED ISSUE TO THE FILE OF THE TPO TO CONSIDER THE ASSESSEES SUBMISSIONS AND FACTS ENVISAGED FOR DETERMINATION OF ALP . ACCORDINGLY, GROUND S OF APPEAL OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 7. THE LEARN ED AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THAT THE GROUND OF APPEA L NOS.8 & 9 WERE NOT DEALT BY THE HONBLE TRIBUNAL IN THE ORDER AND PRAYED FOR ADJUDICATION OF THE GROUNDS OF APPEAL. THE GROUND S OF APPEAL IN THE TRIBUNAL ORDER AT PAGE 6 ARE READ AS U NDER: 8 THE LD. AO/LD. TPO ERRED IN LAW IN ERRONEOUSLY NOT GRANTING COMPLETE CREDIT FOR ADVANCE TAX AND SELF - ASSESSMENT TAX PAID BY THE APPELLANT, AS CLAIMED IN THE RETURN OF INCOME 9. THE LD. AO/LD. TPO ERRED IN LAW IN ERRONEOUSLY NOT GRANTING CREDIT F OR MINIMUM ALTERNATE TAX (MAT), AS CLAIMED IN THE RETURN OF INCOME UNDER SECTION 115JAA OF THE ACT. WE FOUND THAT THERE ARE NO OB SERVATIONS OF THE TRIBUNAL ON THESE TWO GROUNDS OF APPEAL AND THERE IS A MISTAKE APPARENT ON RECORD. A CCORDINGLY , WE RECALL THE 5 M.P. NO. 33/BANG/2020 IMPUGNED ORDER OF THE TRIBUNAL FOR LIMITED PURPOSE TO ADJUDICATE THESE GROUNDS OF APPEAL. ACCORDINGLY, GROUND NO.3(L ), 8 & 9 ARE RECALLED. WE DIRECT THE REGISTRY TO POST THE APPEAL FOR HEARING ON 09.09.2020 FOR LIMITED PURPOSE AND INFORM THE PARTIES. 8. IN TH E RESULT, THE M ISC. P ETITION FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/ - SD/ - ( B.R. B ASKARAN ) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13 .0 8 . 20 20 . *REDDY GP COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT (A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE TRIBUNAL BANGALORE