United online Software Development (India) Private Limited, Hyderabad V. Deputy Commissioner of Income Tax, Circle-17(2), Hyderabad

MA 35/Hyd/2020

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 0594 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2013-2014
• Appeal Filed On: 07-08-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI
• Keywords: Transfer pricing; Notional interest

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B , HYDERABAD (THROUGH VIRTUAL HEARING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER MA NO. 35/HYD/2020 (ARISING OUT OF ITA NO. 2120/HYD/2017) AND ITA NO.2120/HYD/2017 ASSESSMENT YEAR: 2013 - 14 UNITED ONLINE SOFTWARE DEVELOPMENT (INDIA) PRIVATE LIMITED, HYDERABAD. PAN: AAACJ 9549 G VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE - 17(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI RAVI BHARADWAJ REVENUE BY: SHRI Y.V.S.T. SAI, CIT - DR DATE OF HEARING: 05/02/2021 DATE OF PRONOUNCEMENT: 15 /02/2021 ORDER PER A. MOHAN ALANKAMONY, AM.: THIS MISCELLANEOUS APPLICATION IS FILED BY THE ASSESSEE SEEKING RECALL OF THE ORDER OF THE TRIBUNAL DATED 24/07/2020 IN ITA NO. 2120/HYD/2017 FOR THE AY: 2013 - 14. 2. AT THE OUTSET, THE LD. AR SUBMITTED BEFORE US THAT GROUND NO.1 ( B )(II) WAS NOT ADJUDICATED WHILE DISPOSING THE APPEAL IN ITA NO. 2120/HYD / 2017 FOR THE AY 2013 - 14 , WITH RESPECT TO ALLOWING GRACE PERIOD OF ONE MONTH BY THE LD. TPO WHILE CHARGING NOTIONAL INTEREST ON 2 THE DELAY ED PAYMENTS FROM DEBTORS AS AGAINST THE MODIFIED GRACE PERIOD OF 10 DAYS GRANDE D BY THE LD. MEMBERS OF THE DRP. THE LD. DR GRACEFULLY CONCEDED TO THE SUBMISSION OF THE LD. AR. 3. AFTER HEARING BOTH SIDES AND PERUSING THE ORDER OF THE TRIBUNAL, WE FIND THAT THIS GROUND RAISED BY THE ASSESSEE WAS NOT ADJUDICATED WHILE PASSING THE ORDER DATED 24/07/2020 IN ITA NO. 2120/HYD/2017 FOR THE AY 2013 - 14. THEREFORE, WE HEREBY RECALL THE ORDER OF THE TRIBUNAL FOR THE LIMITED PURPOSE OF ADDRESSING THE ABOVE - MENTIONED GROUND RAISED BY THE ASSESSEE IN THE APPEAL AND PROCEED TO ADJUDICATE THE SAME. 4. THE LD. AR SUBMITTED BEFORE US THAT THE LD. TPO HAD GRANTED THE GRACE PERIOD OF 30 DAYS WHILE COMPUTING THE NOTIONAL INTEREST FOR THE DELAYED PAYMENTS FROM THE DEBTORS BASE D ON THE INTEREST CHARGED BY THE ENTITIES IN THE SIMILAR INDUSTRY. THE LD. AR FURTHER SUBMITTED THAT THE LD. DRP HAD ERRO NEOUSLY MODIFIED THE GRACE PERIOD TO 10 DAYS BASED ON THE AGREEMENTS BETWEEN THE ASSESSEE COMPANY AND ITS AES. THE LD. AR ARGUED STATI NG THAT THE AGREEMENTS BETWEEN THE ASSESSEE - COMPANY AND ITS AES ARE ONLY INTERNAL MATTERS AND CANNOT BE CONSIDERED ON PAR WITH THE OVERALL SCENARIO IN THE INDUSTRY. IT WAS THEREFORE PLEADED THAT THE GRACE PERIOD OF 30 DAYS DETERMINED BY THE LD. TPO MAY BE REINSTATED. LD. DR ON THE OTHER HAND ARGUED IN SUPPORT OF THE ORDERS OF THE LD. MEMBERS OF THE DRP AND REQUESTED FOR CONFIRMING THE SAME. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. THE GRACE PERIOD OF 30 DAYS DETERMINED BY THE LD. 3 TPO WHICH IS ALSO ACCEPTED BY THE ASSESSEE BASED ON THE MARKET NORMS IN THE INDUSTRY COULD NOT BE SUCCESSFULLY CONTROVERTE D BY THE LD. DR THOUGH HE ARGUED IN SUPPORT OF THE ORDERS OF THE LD. MEMBERS OF THE DRP. HENCE, WE ARE OF THE VIEW THAT THE GRACE PERIOD DETERMINED BY THE LD. TPO IS APPROPRIATE IN THE CASE OF THE ASSESSEE . THEREFORE, IN THE CASE OF THE ASSESSEE W E HEREB Y DIRECT THE LD. TPO TO DETERMINE THE ARMS LENGTH PRICE OF INTEREST ON RECEIVABLES BASED ON 30 DAYS GRACE PERIOD. IT IS ORDERED ACCORDINGLY. 6. IN THE RESULT, THE MA OF THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE ASSESSEE IS ALSO ALLOWED AS INDICATED H EREIN ABOVE. PRONOUNCED IN THE OPEN COURT ON THE FIFTEENTH OF FEBRUARY , 2021. SD/ - SD/ - (P. MADHAVI DEVI) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 1 5 TH FEBRUARY , 2021. OKK 4 COPY TO: - 1. UNITED ONLINE SOFTWARE DEVELOPMENT (INDIA) PVT LIMITED, 6 - 3 - 1099/1100, 1 ST FLOOR, BABUKHANS MILLENNIUM CENTRE, SOMAJIGUDA, HYDERABAD 500 082. 2. DCIT, CIRCLE - 17(2), 9 TH FLOOR, SIGNATURE TOWERS, KONDAPUR, HYDERABAD. 3. THE DISPUTE RESOLUTION PANEL - 1, BENGALURU. 4. THE PRINCIPAL COMMISSIONER OF INCOME TAX - 5, HYDERABAD. 5. THE DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. 6. GUARD FILE.