Xchanging Solutions Limited, Bangalore V. The Deputy Commissioner of Income Tax, Circle - 7(1)(2), Bangalore

MA 61/BANG/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3100 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 8 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-08-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 17-07-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANKAR GANESH
• Assessee Lawyers: VIKRAM RAGHAVAN

Judgement Text

MA No.61 & 62/Bang/2022 M/s. Xchanging Solutions Ltd., Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “A’’ BENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER M.A. No.61 & 62/Bang/2022 (Arising out of IT(TP)A No.422/Bang/2016 & IT(TP)A No.556/Bang/2016) Assessment Years: 2010-11 & 2011-12 Xchanging Solutions Ltd. (formerly Cambridge Solutions Limited) Plot No.13, 14, 15, SJR I Park EPIP Industrial Area, Phase-I Whitefield Bangalore 560 066 PAN NO : AAFCS9303L Vs. Deputy Commissioner of Income-tax Circle-7(1)(2) Bangalore APPELLANT RESPONDENT Appellant by : Shri Vikram Raghavan, A.R. Respondent by : Shri Sankar Ganesh, K., DR Date of Hearing : 26.08.2022 Date of Pronouncement : 26.08.2022 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: By these miscellaneous petitions, assessee seeks rectification of order of Tribunal in ITA No.492/Bang/2015 & 556/Bang/2016 for the assessment years 2010-11 & 2011-12 dated 19.1.2022. M.A. No.61/Bang/2022:- 2. The Ld. A.R. submitted that the assessee has raised ground No.13 as follows:- MA No.61 & 62/Bang/2022 M/s. Xchanging Solutions Ltd., Bangalore Page 2 of 5 “13. Corporate guarantee commission imputed at INR 2,83,32,477 13.1 The learned TPO and the learned AO have erred, in law and in facts, by considering corporate guarantee transaction as an intra- group service, warranting an arm’s length remuneration by ignoring the fact that such a transaction is a mere shareholder activity. 13.2 Without prejudice to the above, the learned TPO and the learned AO have erred, in law and in facts, in not objectively selecting the rate of commission for making the adjustment.” 3. The Tribunal recorded the findings in its order in para No.16 at page 11 that these grounds are not pressed. The Ld. A.R. submitted that these grounds have been pressed as in assessment year 2011- 12, wherein the Tribunal remitted the issue to the file of AO/TPO to consider this issue afresh by following the order of the Tribunal in assessee’s own case in assessment years 2008-09 & 2009-10 dated 31.10.2016 in para Nos.39 & 40. Thus, he submitted that the Tribunal may give same direction on the ground No.13 to 13.2 for the assessment year 2010-11. 4. The Ld. D.R. not put any serious objection on this issue. 5. We have heard the rival submissions and perused the materials available on record. In our opinion, the Tribunal committed error in para No.16 by observing that these grounds have not been pressed by Ld. A.R. In our opinion, the error has to be corrected and accordingly, we direct the AO to consider this issue afresh as directed in para Nos.39 & 40 in the said order for the assessment year 2011-12 in ITA No.556/Bang/2016. Ordered accordingly. MA filed by the assessee is allowed. MA No.62/Bang/2022:- 6. Ld. A.R. submitted that with respect to the software development service transaction, one of the issues raised in the appeal before the Tribunal was that the AO/TPO had erroneously accepted the following companies as a comparable company (based MA No.61 & 62/Bang/2022 M/s. Xchanging Solutions Ltd., Bangalore Page 3 of 5 on detailed arguments presented during the hearing and relying on available judicial precedents). 1. Acropetal Technologies Ltd. 2. E-Zest Solutions Ltd. 3. E-Info Chips Ltd. 4. ICRA Techno Analytics Ltd. 5. Persistent Systems & Solutions Ltd. 7. According to the Ld. A.R., the Tribunal for the assessment year 2011-12 in ITA No.556/Bang/2016 in para 31 stated as follows:- “31. However, we find that the assessee has not put any objections about exclusion of these comparables before the DRP, but raised this issue for the first time before us. Hence, we remit this issue in respect of above comparables to the file of DRP for adjudication of this issue after considering the submissions and case laws cited by the assessee.” 8. The Ld. A.R. submitted that assessee has putforth contention before this Tribunal, which was not duly considered by the Tribunal and more so, Ld. A.R. relied on the decision of the Tribunal in the case of Blue Yonder India Pvt. Ltd. in IT(TP)A No.352/Bang/2016 for the assessment year 2011-12, which covers all the above comparables and sought a suitable direction to be given on this issue. 8.1 The Ld. D.R. not put any serious objections to the arguments of Ld. A.R. 9. We have heard the rival submissions and perused the materials available on record. In this case, the above comparables has been remitted to Ld. DRP for fresh adjudication. Now, the contention of the Ld. A.R. is that the Tribunal has not mentioned the judgement cited by him. As such, there was a mistake apparent on record. We make it clear that when the Tribunal remitted the issue to the file of Ld. DRP for fresh consideration, it is left open to the assessee to place necessary evidence before Ld. DRP to support its claim and being so, we are in the opinion that there is no mistake MA No.61 & 62/Bang/2022 M/s. Xchanging Solutions Ltd., Bangalore Page 4 of 5 apparent on record, which warrants correction of the order on this issue. However, we once again make it clear that assessee is at liberty to place all the materials which support the assessee’s case before Ld. DRP. 10. Ld. A.R. submitted that assessee has raised ground No.19 before this Tribunal as follows:- “Ground No.19: Without prejudice to our contention that the provision for onerous lease is an ascertained liability, the provision reversed during the year amounting to INR 3,74,90,455, out of provision of INR 6,41,61,438 created during Assessment year 2009- 10 and added to book profit for that year, should be excluded in book profit computation for Assessment year 2011-12 in terms of clause (i) of Explanation I to section 115JB(2) of the Act.” 11. According to Ld. A.R., the Tribunal has adjudicated this ground in assessment year 2010-11 and admitted this additional ground in assessment year 2010-11. However, there was no adjudication of this ground in the assessment year 2011-12, which may be considered and appropriate order may be passed. 12. The Ld. D.R. not put any objections on this issue. 13. We have heard the rival submissions and perused the materials available on record. The grievance of the assessee’s counsel in this MA on this issue is justified as the Tribunal has admitted this additional ground in assessment year 2010-11 and given findings on this issue in para 20 by observing as follows:- “We have heard both the parties and perused the material on record. In our opinion, if the book profit is increased by provision created in that year and on reversal of that provision in the present assessment year, net profit of this assessment year to be reduced so as to compute the correct book profit. With these observations, we remit this issue to the AO for fresh consideration.” 14. However, in the assessment year 2011-12, though there was a ground before this Tribunal by way of ground No.17 on the above issue in assessment year 2011-12, the Tribunal failed to consider the same. Hence, there was a mistake apparent on record, which is to be rectified. Accordingly, we admit this additional ground as in MA No.61 & 62/Bang/2022 M/s. Xchanging Solutions Ltd., Bangalore Page 5 of 5 assessment year 2010-11 and remit to the file of AO for fresh consideration on similar lines in assessment year 2010-11. 15. In the result, the miscellaneous application No.61/Bang/2022 filed by the assessee is allowed and Miscellaneous application No.62/Bang/2022 is partly allowed. Order pronounced in the open court on 26 th Aug, 2022. Sd/- (N.V. Vasudevan) Vice President Sd/- (Chandra Poojari) Accountant Member Bangalore, Dated 26 th Aug, 2022. VG/SPS 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.