ACIT, Gurgaon V. Teradata India Pvt. Ltd., Gurgaon

MA 84/DEL/2018

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3771 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s) 20 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-06-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I2
• Assessment Year: 2012-2013
• Appeal Filed On: 07-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJAT KUREEN
• Keywords: Transfer pricing
• Section: 143(3); 144C; 254(2)

Judgement Text

1 MA no. 84/Del/2018 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “I-2”: NEW DELHI BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER M.A. No. 84/Del/2018 ( In ITA No. 87/DEL/2017 [Assessment Year: 2012-13 ACIT, Circle-4(1), Gurgaon PAN- Vs Teradata India Pvt. Ltd., 301-302, 3 rd Floor, Tower-4A, S-Block, DLF Corporate Park, DLF City, Phase-III, Gurgaon. PAN: AACCT6715A APPLICANT RESPONDENT Applicant by Sh. S. Chakraborty, Adv. Respondent by Sh. Rajat Kureen, Sr. DR Date of hearing 08.04.2022 Date of pronouncement 28.06.2022 O R D E R PER KUL BHARAT, JM: This miscellaneous application has been preferred by the Revenue, seeking rectification of the order dated 08.08.2017 passed by the ITAT Delhi Bench “I-2” in ITA no. 87/Del/2017 for assessment year 2012-13. 2. Learned DR reiterated the submissions as made in the misc. application. For the sake of clarity the contents of the misc. application are reproduced as under: “2. Brief facts of the case are that the assessee is a tax resident of India and is a subsidiary of Teradata Belgium Holdings LLC. Assessee’s primary 2 MA no. 84/Del/2018 purpose is to serve as the local sales and distribution affiliate for the Indian market and serve as the local sales and distribution affiliate for the Indian market. The assessee e-filed its return of income on 30.11.2012 showing the total income of Rs. 29,28,47,853/-. 2.1. Draft assessment order u/s 144C was passed on 01.03.2016, proposing transfer pricing adjustment of Rs. 20,53,64,035/- to the income of the assessee. Aggrieved with the proposed additions, the assessee company filed an appeal with the DRP, which vide its order dated 18.10.2016 had considered the objections of the assessee had given directions to the TPO. The TPO-l(3)(2) , New Delhi had given effect to the Hon’ble DRP directions vide order dated 24.11.2016. The assessment order u/s 143(3) was issued on 29.W.2016 assessing the income to Rs 32,71,95,010/- after incorporating the Transfer pricing adjustment of Rs 2,78,86,053/-. 2.2 The assessee being aggrieved filed an appeal before Hon’ble ITAT. The Hon’ble ITAT has allowed the appeal of the assessee for statistical purposes vide ITA No. 87/Del/2017 dated 08.08.2017(copy enclosed in Triplicate). The TP adjustment on account of the receivables has been deleted by the Hon’ble ITAT relying upon the order of jurisdictional High Court in the case of Kusum Health Care Pvt. Ltd(2017-TlI-28-HC-DEL-TP dated 25.4.2017). 3. In this regard, your kind attention is sought to the below mentioned points/issues, as the same were ignored and not considered while passing the order. It is requested that filing of MA may be considered on this issue. 3.1 The issue of receivables is considered in the above mentioned case, wherein The Hon'ble ITAT has deleted the TP adjustments on account of receivables by relying upon the order of jurisdictional High Court in the case of Kusum Health Care Pvt. Ltd. It is brought to your kind attention that the contents of the decision of Kusum Health Care Pvt. Ltd. have not been analyzed for the comparison of the facts of the instant case of Teradata India Pvt. Ltd. 3.2 In the case of Kusum Health Care Pvt. Ltd., Hon'ble Delhi High Court has dearly mentioned in para no. 11: "With the assessee having already factored in the impact of the receivable on the working capital and thereby on its pricing/profitability vis-a-vis that of comparables ... , 3 MA no. 84/Del/2018 Whereas in the instant case of the assessee Teradata India Pvt. Ltd. the receivable are not factored in the working capital, thereby the decision of Hon'ble Delhi High Court is not applicable. Further, the Hon'ble Delhi High Court has also stated in para no. 10 of its order:- "... there may be a delay in collection of monies for supplies made, even beyond the agreed limit, due to a variety of factors which will have to be investigated on a case to case basis. Importantly, the impact this would have on the working capital of the assessee will have to be studied. In other words, there has to be e proper inquiry by the TPO by analyzing the statistics over a period of time to discern a pattern which would indicate that vis-a-vis the receivables for the supplies made to an AE, the arrangement reflects an international transaction intended to benefit the AE in some way. ” 3.3 Accordingly, the Hon'ble ITAT should have considered these aspects before deleting the TP adjustments, alternatively the issue should have been restored back to AO/TPO for following the direction placed by the Hon'ble Delhi High Court. Hence, filing of MA may be considered on this issue with the following grounds of appeal: “The Hon'ble ITAT has erred In deleting the TP adjustments on account of receivables which are not factored in working capital (therefore the decision of the Hon'ble Delhi High Court reached in the case of Kusum Health Care Pvt. Ltd. is not applicable). 3. On the contrary, learned counsel for the assessee opposed the submissions and submitted that by filing the present misc. application the Revenue is seeking review of the order of the Tribunal which is not within the purview of Section 254(2) of the Act and beyond the mandate of law in the light of judgment of Hon’ble Apex Court rendered in the case of CIT Vs. Reliance Telecom Ltd. in civil appeal no. 7110 of 2021. 4 MA no. 84/Del/2018 4. We have heard rival submissions and perused the material available on record. We find that the Tribunal in this case has followed the decision of the Hon’ble Delhi High Court rendered in the case of McKinsey Knowledge Centre (P) Ltd. Vs. DCIT . We find merit into the contention of the learned counsel for the assessee that by way of present misc. application the Revenue is seeking review of the Tribunal’s order which is not permissible under law and is outside the scope of Section 254(2) of the Act, in the light of the judgment of the Hon’ble Supreme Court rendered in the case of CIT Vs. M/s Reliance telecom Ltd. in Civil appeal No. 7110 of 2021, observing as under: “5. From the impugned judgment and order passed by the High Court, it appears that the High Court has dismissed the writ petitions by observing that (i) the Revenue itself had in detail gone into merits of the case before the ITAT and the parties filed detailed submissions based on which the ITAT passed its order recalling its earlier order; (ii) the Revenue had not contended that the ITAT had become functus officio after delivering its original order and that if it had to relook/revisit the order, it must be for limited purpose as permitted by Section 254(2) of the Act; and (iii) that the merits might have been decided erroneously but ITAT had the jurisdiction and within its powers it may pass an erroneous order and that such objections had not been raised before ITAT. 6. None of the aforesaid grounds are tenable in law. Merely because the Revenue might have in detail gone into the merits of the case before the ITAT and merely because the parties might have filed detailed submissions, it does not confer jurisdiction upon the ITAT to pass the order de hors Section 254(2) of the Act. As observed hereinabove, the powers under Section 254(2) of the Act are only to correct and/or rectify the mistake apparent from the record and not beyond that. Even the observations that the merits might have been decided erroneously and the ITAT had jurisdiction and within its powers it may pass 5 MA no. 84/Del/2018 an order recalling its earlier order which is an erroneous order, cannot be accepted. As observed hereinabove, if the order passed by the ITAT was erroneous on merits, in that case, the remedy available to the Assessee was to prefer an appeal before the High Court, which in fact was filed by the Assessee before the High Court, but later on the Assessee withdrew the same in the instant case. 5. Therefore, respectfully following the judgment of Hon’ble Supreme Court in Reliance Telecom Ltd. (supra), the misc. application moved by the Revenue is hereby dismissed. 6. Revenue’s misc. application is dismissed. Order pronounced in open court on 28.06.2022. Sd/- Sd/- (ANIL CHATURVEDI ) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI