M/s. Xchanging Solutions Limited, Bangalore V. The Deputy Commissioner Of Income Tax, Circle- 7(1)(2), Bangalore

MA 60/BANG/2023

AI Insights

The case involves M/s Xchanging Solutions Ltd., the appellant, seeking corrections in the Income Tax Appellate Tribunal's order dated 16/08/2022. The corrections pertained to typographical errors and the omission of conclusions and headings in the original judgment concerning the assessment year 2015-16. The Tribunal acknowledged the errors and made the necessary amendments, including the addition of specific paragraphs and headings to ensure clarity and completeness in the judgment. The Tribunal also addressed the substantive issues raised by the assessee regarding the benchmarking of arm's length price in international transactions, emphasizing the preference for internal comparables over external ones when sufficient data is available.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124277 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 10 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 05-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-06-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 26-02-2023
• Other Referred Cases: Tecnimont ICB (P.) Ltd. v. ACIT
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PADAMCHAND KHINCHA
• Keywords: Transfer pricing; International transaction; Notional interest
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH : BANGALORE BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI BEENA PILLAI, JUDICIAL MEMBER M.P No.60/Bang/2023 (In IT(TP)A No.2570/Bang/2019) Assessment year : 2015-16 M/s Xchanging Solutions Ltd., (A DXC Company), Finance Department, 1 st Floor, Times Block, HP Avenue, 39/40, Electronics City, Hosur Road, Bangalore-560 100. PAN – AAFCS 9303 L Vs. The Dy. Commissioner of Income- tax, Circle-7(1)(2), Bangalore. APPELLANT RESPONDENT Assessee by : Shri Padam Chand Khincha, C.A Revenue by : Shri Sankar Ganesh K, Addl. CIT Date of hearing : 09.06.2023 Date of Pronouncement : 09.06.2023 O R D E R Per Beena Pillai, Judicial Member Present miscellaneous petition has been filed by the assessee seeking certain typographical errors that has crept in the order dated 16/08/2022 passed by this Tribunal in the above appeal. 2. The ld.AR submitted that while deciding ground No.4.14, this Tribunal has not given a conclusion finding in respect of the same. On verification of the record vis-avis the order passed, we note that M.P No.60/Bang/2023 Page 2 of 5 the submission of the assessee is correct. Accordingly, following paras shall be read after para 5 in the impugned order. 5.1. Hon’ble Mumabi Special Bench, in case of Tecnimont ICB (P.) Ltd. v. ACIT reported in (2012) 24 taxmann.com 28 , held that when the data is available showing the profit margin of that enterprise itself from third parties, it is always safe and advisable to have recourse to such internal comparable case. The reason is patent that the various factors having bearing on the quality of output, assets employed, input cost etc. continue to remain by and large same in case of an internal comparable. The effect of difference due to such inherent factors on comparison made with the third parties, gets neutralized when comparison is made with internal comparable. Ex consequent, it follows that an internal comparable uncontrolled transaction is more noteworthy vis-a-vis its counterpart i.e. external comparable. 5.2. We note that admittedly, the transactions in a controlled transaction with a related party and an uncontrolled transactions with unrelated parties will result into more appropriate bench marking of arm's length price. Under the circumstances, if there is availability of sufficient data of internal comparables, the Ld.TPO first should have recourse to such internal compares before moving on to external comparables. Only on insufficiency of data in respect of internal comparables, support must be drawn from the external comparables. 5.3. We therefore, direct the Ld.TPO to carry out detailed analysis of the international transactions using TNMM as MAM, based on the materials filed by assessee related to M.P No.60/Bang/2023 Page 3 of 5 internal comparables. In the event the details filed are satisfactory, the determination must be confined to the internal comparables so filed by assessee. In the event, the details filed by assessee is not verifiable or not in accordance with law, the Ld.AO/TPO is open to carry out analysis in accordance with law. Accordingly Ground No.4.14 raised by the assessee stands allowed for statistical purposes. 3. We also note that from para 6-13 of the impugned order, this Tribunal has decided the issues raised by the assessee in ground Nos.4.12 and 4.15 – 4.20, for which clear heading has not been given. The same has been added as under and it shall be read before para 6 starts. Ground No.4.12 & 4.15 to 4.20 are raised by the assessee against non granting of working capital adjustment and computation of notional interest on outstanding receivables. 3.1 The, conclusion at the end of the para 13 shall accordingly be read as under:- Accordingly Ground No.4.12, 4.15 to 4.20 raised by assessee stands allowed for statistical purposes. 4. In the result, the miscellaneous petition filed by the assessee is allowed. Order pronounced in court on day of 9 th June, 2023 Sd/- Sd/- (CHANDRA POOJARI) (BEENA PILLAI) Accountant Member Judicial Member Bangalore, Dated, 9 th June, 2023 / vms / M.P No.60/Bang/2023 Page 4 of 5 Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore. M.P No.60/Bang/2023 Page 5 of 5 1. Date of Dictation .......................................... 2. Date on which the typed draft is placed before the dictating Member ......................... 3. Date on which the approved draft comes to Sr.P.S ................................... 4. Date on which the fair order is placed before the dictating Member .................... 5. Date on which the fair order comes back to the Sr. P.S. ....................... 6. Date of uploading the order on website................................... 7. If not uploaded, furnish the reason for doing so ................................ 8. Date on which the file goes to the Bench Clerk ....................... 9. Date on which order goes for Xerox & endorsement.......................................... 10. Date on which the file goes to the Head Clerk ......................... 11. The date on which the file goes to the Assistant Registrar for signature on the order ..................................... 12. The date on which the file goes to dispatch section for dispatch of the Tribunal Order ............................... 13. Date of Despatch of Order. .....................................................