THOMSON REUTERS INIDA P.LTD, V. ASST CIT CIR 2(3),

MA 90/MUM/2015

• Counselvise Citation: [2015] 124 COUNSELVISE.COM (IT) 3490 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 07-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Assessment Year: 2009-2010
• Appeal Filed On: 01-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P J PARDIWALA
• Keywords: Transfer pricing; Opportunity of being heard; International transaction
• Section: 92F

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES K, MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER M.A. NO.90/MUM/2015 (ARISING OUT OF ITA NO.901/MUM/2014) ASSESSMENT YEAR: 2009-10 THOMSON REUTERS INDIA PRIVATE LIMITED, 3 RD FLOOR, PIRAMAL TOWER, B-WING, PENINSULA CORPORATE PARK, GANPATRAO KADAM MARG, LOWER PAREL(W), MUMBAI-400013 / VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2(3), MUMBAI ( /ASSESSEE) ( / REVENUE) P.A. NO. AAACR3717L / ASSESSEE BY) SHRI P.J. PARDIWALA & AARTI SATHE / REVENUE BY : SHRI RANDHIR GUPTA-DR ! ' # $ / DATE OF HEARING : 07/08/2015 DATE OF ORDER : # $ / 07/08/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) : THIS MISCELLANEOUS APPLICATION U/S 254(2) OF THE I NCOME TAX ACT, 1961 (HEREINAFTER THE ACT) IS FILED BY THE ASSESSEE SEEKING RECTIFICATION IN THE ORDER OF THE TRIBUNAL DATED 11/02/2015. THOMSON REUTERS INDIA PRIVATE LIMITED . M.A. NO.90/MUM/2015 2 2. DURING HEARING OF THIS APPLICATION, SHRI P.J. P ARDIWALA ALONG WITH AARTI SATHE, LD. COUNSEL FOR THE ASSESSE E, CONTENDED THAT THE OBSERVATION MADE BY LD. DRP, CONTAINED IN PARA-8, THAT GLOBAL TRANSFER AGREEMENT WAS NOT FURNISHED BY THE ASSESSEE IS FACTUALLY INCORRECT BY ASSERTING THAT THE GLOBAL TR ANSFER AGREEMENT WAS DULY FILED BEFORE THE LD. DRP BUT FAI RLY AGREED THAT THIS GLOBAL TRANSFER AGREEMENT WAS NOT FILED B EFORE THE ASSESSING OFFICER. IT WAS ALSO PLEADED THAT EVEN T HE ASSESSEE FILED APPLICATION UNDER RULE 13 OF THE INCOME TAX ( DISPUTE RESOLUTION PANEL) RULES, 2009 FOR RECTIFICATION OF AN INADVERTENT MISTAKE IN THE DIRECTION OF THE LD. DRP, BY ASSERTI NG THAT SUCH APPLICATION WAS NOT DISPOSED OFF BY DRP. OUR ATTEN TION WAS INVITED TO PAGE 173 OF THE PAPER BOOK CONTAINING TH E SEAL OF THE OFFICE OF THE LD. DRP-II(DATED 06/01/2004). IT WAS PLEADED THAT SINCE, THE RECTIFICATION APPLICATION/IMPUGNED DIREC TIONS WERE NOT RECTIFIED BY THE LD. DRP, THE APPEAL MAY BE SEN T TO THE FILE OF THE LD. DRP FOR FRESH ADJUDICATION INSTEAD OF BE FORE THE LD. ASSESSING OFFICER. ON THE OTHER HAND, THE LD. DR, SHRI RANDHIR GUPTA, CONTENDED THAT THERE IS NO MISTAKE APPARENT FROM RECORD IN THE ORDER OF THE TRIBUNAL. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE CO MING TO ANY CONCLUSION, WE ARE REPRODUCING HEREUNDER THE RELEVA NT PORTION FROM THE ORDER OF THE LD. DRP (AS CONTAINED IN PARA -8):- THE ASSESSEES CONTENTION HAS BEEN CONSIDERED. IT IS FOUND THAT THE MOST RELEVANT DOCUMENT IN THIS REGARD I.E. GLOBAL T RANSFER AGREEMENT HAS NOT BEEN FURNISHED BY THE ASSESSEE IN THIS CASE. IN THE ABSENCE OF THIS BASIC INFORMATION ONE CANNOT SP ECULATE WHETHER THE IMPUGNED TRANSFER WAS IN CONSEQUENCE OF GLOBAL ACQUISITION OR IT WAS A SEPARATE TRANSACTION. UNDER THE CIRCUMSTANCE S, THE TPOS THOMSON REUTERS INDIA PRIVATE LIMITED . M.A. NO.90/MUM/2015 3 ACTION IN BRINGING THE SAME TO TAX IS UPHELD. AS R EGARD, THE TPOS ACTION IN CHARGING INTEREST ON THE OUTSIDE BALANCE, IT IS FOUND THAT THE TPO HAS CHARGED INTEREST @ 15%. THE SAME IS HOW EVER REDUCED TO 12.12.% BEING THE BANK PLR RATE. SUBJECT TO THI S REDUCTION, AND ADJUSTMENT MADE BY THE TPO IS UPHELD. 2.2. NOW, WE SHALL REPRODUCED THE FINDING OF THE TRIBUNAL FOR READY REFERENCE:- 3.3. ON APPEAL, BEFORE THE LD. DRP VIDE DIRECTIONS DATED 30/12/2013, IT WAS OBSERVED THAT THE MOST RELEVANT DOCUMENT IS GLOBAL TRANSFER AGREEMENT WHICH WAS NOT FURNISHED BY THE ASSESSEE, THEREFORE, IN THE ABSENCE OF THIS BASIC I NFORMATION, IT WAS DIFFICULT TO SPECULATE WHETHER THE IMPUGNED TRA NSFER WAS IN CONSEQUENCE TO GLOBAL ACQUISITION OR IT WAS A SEPAR ATE TRANSACTION. FINALLY, THE ACTION OF THE TPO IN BRI NGING SAME TO TAX WAS UPHELD WITH REGARD TO CHARGING INTEREST ON THE OUTSIDE BALANCE, IT WAS FOUND THAT THE TPO CHARGED INTEREST @ 15% WHICH WAS REDUCED TO 12.12%, BEING THE BANK PLR RAT E, SUBJECT TO THIS DEDUCTION, THE ADJUSTMENT MADE BY THE TPO W AS UPHELD. 3.4. EVEN BEFORE THE TPO/ADDL. CIT, WE FIND THAT A SHOW CAUSE NOTICE AS TO WHY THE ASSESSEE SHOULD NOT BE CONSIDERED AS KNOWLEDGE PROCESSING OUTSOURCING WAS ISSUED TO THE ASSESSEE. WE FIND THAT IN SPITE OF SPECIFICALL Y ASKING BY THE TPO/ASSESSING OFFICER, THE GLOBAL BUSINESS TRANSFER AGREEMENT (DEEMED INTERNATIONAL TRANSACTION) WAS NEVER PRODUC ED BY THE ASSESSEE. THE LD. ASSESSING OFFICER/TPO DULY CONSID ERED THE EXTRACT FROM THE MEETING OF SHARE HOLDERS HELD ON 0 9/02/2008. THE RELEVANT OBSERVATION AS MADE IN PARA 2.4 IS REP RODUCED HEREUNDER FOR READY REFERENCE:- 1. THERE WAS A GLOBAL ACQUISITION OF REUTERS GROUP BY THOMSON REUTERS INDIA PRIVATE LIMITED . M.A. NO.90/MUM/2015 4 THOMSON GROUP, WHICH WAS COMPLETED BY 14 APRIL 2008 AND WAS AGREED UPON BY THOMSON GROUP ON MAY 15, 2007 ITSELF . (SUPRA). THIS LEAD TO PARTIAL AMALGAMATION OF THE BUSINESS I N INDIA. RIPL BASED IN INDIA SOLD THE STPI UNIT TO TCIPL. THIS W AS BASED ON THE GLOBAL ARRANGEMENT BETWEEN THOMSON AND REUTERS WHICH HAVE BECOME ONE ENTITY AS THOMSON REUTERS. 2. THERE WAS AN ARRANGEMENT BETWEEN THOMSON AND REUTERS GROUP ABROAD REGARDING THE SALE OF THE LOCA L STPI UNIT BY RIPL TO TCIPL. AS A CONSEQUENT OF THIS, RI PL SOLD THE STPI UNIT TO TCIPL. THE GLOBAL TRANSFER AGREEMENT B ETWEEN THOMSON AND REUTERS WAS ASKED FOR BUT WAS NOT PROVI DED BY THE ASSESSEE . THUS, IT CAN BE CONCLUDED THAT THE TRANSACTION OF S ALE OF STPI UNIT BY ASSESSEE TO TCIPL IS A DEEMED INTERNATIONAL TRANSACTION UNDER SECTION 92B(2) OF THE I.T. ACT, 1961. THIS IS EVIDENT FROM THE STATEMENT OF THE ACQUIRING GROUP. BY COMBINING THOMSONSS STRENGTH IN NORTH AMERICA WITH REUTERS STRENGTH IN EUROPE, THE MIDDLE EAST AND AS IA. THOMSON REUTERS WILL CREATE A BUSINESS WITH A GLOBA L BRAND AND PRESENCE THAT WILL HAVE OPPORTUNITIES TO GROW FASTER THAN EITHER THOMSON OR REUTERS COULD ON ITS OWN. THOMSON REUTERS WILL SERVE THE LEGAL, FINANCIAL SER VICE, TAX AND ACCOUNTING, SCIENTIFIC, HEALTHCARE AND MEDIA MA RKETS. BY THIS SALE, THE GLOBAL BRAND INCREASES ITS BUSINE SS SHARE IN ASIA WHICH HAS BEEN BASED ON THE GLOBAL ARRANGEMENT, BET WEEN THOMSON AND REUTERS AND WHICH HAS MERELY BEEN GIVEN EFFECT TO IN INDIA BY SALE OF STP UNIT BY RIPL TO TCIPL 3.5. ON THE ISSUE OF METHOD USED BY THE ASSESSEE F OR FAIR VALUATION OF STP UNIT, A SHOW CAUSE NOTICE DATED 11 /01/2013 WAS ISSUED TO THE ASSESSEE, WHICH HAS BEEN REPRODUC ED AT PAGE 14 ONWARDS OF THE ASSESSMENT ORDER/TPO. EVEN AT PA GE-16, IT THOMSON REUTERS INDIA PRIVATE LIMITED . M.A. NO.90/MUM/2015 5 HAS BEEN MENTIONED THAT THE GLOBAL TRANSFER AGREEME NT WAS NOT SUPPLIED TO THE ASSESSING OFFICER/TPO IN SPITE OF S PECIFICALLY ASK FOR. IF THE PROVISION U/S 92F OF THE ACT WITH RESP ECT TO THE TERM TRANSACTION IF ANALYZED IT INCLUDES AN ARRANGEMEN T, UNDERSTANDING OR ACTION IN CONCERNED WHETHER OR NOT SUCH AN ARRANGEMENT UNDERSTANDING OR ACTION IS FORMAL OR IN WRITING OR WHETHER OR NOT SUCH AN ARRANGEMENT/UNDERSTANDING OR ACTION IS INTENDED TO BE ENFORCEABLE BY LEGAL PROCEEDINGS. SO FAR AS, MEANING OF INTERNATIONAL TRANSACTION IS CONCERNED (FOR THE PURPOSE OF THIS SECTION AND SECTION 92, 92C, 92D, 9 2E) INTERNATIONAL TRANSACTION MEANS A TRANSACTION BETWEEN TWO OR MORE ASSOCIATED ENTERPRISES, EITHER OR BOTH OF WHOM ARE NON-RESIDENTS , IN THE NATURE OF PURCHASE, SALE OR LEASE OF TANGIBLE OR INTANGIBLE PROPERTY OR PROVISION OF SER VICES OR LENDING OR BORROWING MONEY, OR ANY OTHER TRANSACTIO N HAVING A BEARING ON PROFITS, INCOME, LOSSES OR ASSET OF SUCH ENTERPRISES, AND SHALL INCLUDE A MUTUAL AGREEMENT OR ARRANGEMENT BETWEEN TWO OR MORE ASSOCIATED ENTERPRISES FOR THE ALLOCATI ON OR APPORTIONMENT OF, OR ANY CONTRIBUTION TO, ANY COST, OR EXPENSE INCURRED OR TO BE INCURRED IN CONNECTION WITH A BEN EFIT, SERVICE OR FACILITY PROVIDED OR TO BE PROVIDED TO ANYONE O R MORE OF SUCH ENTERPRISES. WITHOUT GOING INTO MUCH DELIBERATION AND KEEPING IN VIEW, THE TOTALITY OF FACTS, WE FIND THAT, IN SP ITE OF REPEATED ASKING, THE ASSESSEE DID NOT PROVIDE THE GLOBAL TRA NSFER AGREEMENT NEITHER BEFORE THE ASSESSING OFFICER/TPO NOR BEFORE THE LD. DRP. EVEN BEFORE THIS TRIBUNAL, SUCH GLOBAL TRANSFER AGREEMENT WAS NOT PROVIDED, THEREFORE, KEEPING IN V IEW, THE IMPORTANCE OF THE DOCUMENT, IT IS NOT POSSIBLE FOR US TO REACH TO A PARTICULAR CONCLUSION, THEREFORE, THE ASSESSEE IS DIRECTED TO PRODUCE THE GLOBAL TRANSFER AGREEMENT BEFORE THE ASSESSING OFFICER/TPO FOR HIS EXAMINATION. THE LD. TPO/ASSES SING OFFICER IS FREE TO ASK ANY OTHER DOCUMENT FOR HIS SATISFACT ION AND AFTER THOMSON REUTERS INDIA PRIVATE LIMITED . M.A. NO.90/MUM/2015 6 EXAMINING THE SAME DECIDE THE ISSUE IN ACCORDANCE W ITH LAW. NEEDLESS TO MENTION HERE THAT DUE OPPORTUNITY OF BE ING HEARD WITH FURTHER LIBERTY TO FURNISH EVIDENCE, IF ANY, I N SUPPORT OF ITS CLAIM BE PROVIDED TO THE ASSESSEE. THUS, THIS ISSU E/CONNECTED GROUNDS ARE REMANDED BACK TO THE FILE OF THE LD. AS SESSING OFFICER/TPO FOR FRESH ADJUDICATION. OUR THIS VIEW W ILL ALSO APPLICABLE FOR THE ALTERNATIVE SUBMISSIONS MADE BY THE ASSESSEE AS THE MAIN ISSUE HAS BEEN REMANDED BACK TO THE FIL E OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE ORDER OF THE LD. DRP, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL AND T HE ORDER OF THE TRIBUNAL, IF KEPT IN JUXTAPOSITION AND ANALYZED , BROADLY, WE ARE IN AGREEMENT WITH THE FINDING CONTAINED IN THE ORDER OF THE TRIBUNAL. HOWEVER, SINCE THE ASSESSEE MOVED APPLIC ATION BEFORE THE LD. DRP UNDER RULE-13 OF THE INCOME TAX (DISPUTE RESOLUTION PANEL) RULES 2009, FOR RECTIFICATION AND THE SAME IS CLAIMED TO BE NOT DISPOSED OFF, WITHOUT GOING INTO MUCH DELIBERATION, WE DIRECT THE LD. DRP TO DISPOSE OFF THIS GROUND AFRESH. THE ASSESSEE BE GIVEN OPPORTUNITY OF BEING HEARD WITH FURTHER LIBERTY TO FURNISH EVIDENCE, IF ANY, IN SUP PORT OF ITS CLAIM. THUS, THE ORDER OF THE TRIBUNAL IS RECTIFIED ONLY TO THE EXTENT THAT INSTEAD OF SENDING THIS ISSUE TO THE FI LE OF THE LD. ASSESSING OFFICER/TPO, WE REMAND THIS ISSUE TO THE FILE OF THE LD. DRP. THUS, THE MISCELLANEOUS APPLICATION OF TH E ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. FINALLY, THE MISCELLANEOUS APPLICATION OF THE ASSES SEE IS DISPOSED OFF IN TERMS INDICATED HEREINABOVE. THOMSON REUTERS INDIA PRIVATE LIMITED . M.A. NO.90/MUM/2015 7 THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 07/08/2015. %& # '()* +,- 07 /0 8 /2015 ( # 2' 3 SD/ - (N.K.BILLAIYA) SD/ - (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER ! ,' MUMBAI; +, DATED : 07/08/2015 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. 45 67 / THE APPELLANT 2. 8967 / THE RESPONDENT. 3. % % ! : ( 45 ) / THE CIT, MUMBAI. 4. % % ! : / CIT(A)- , MUMBAI 5. < =2 8> , % 45 $ 4> * , ! ,' / DR, ITAT, MUMBAI 6. 2? @' / GUARD FILE. / BY ORDER, 9<5 8 //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ! ,' / ITAT, MUMBAI