NTT DATA GLOBAL DELIVERY SERVICES LTD.,BANGALORE V. DCIT, NEW DELHI

MA 227/DEL/2021

AI Insights

The case involves NTT Data Global Delivery Services Ltd., which filed a miscellaneous application under Section 254(2) of the Income-tax Act, 1961, seeking to recall the Tribunal's earlier order. The application was necessitated by the inability to settle certain grounds of appeal under the Vivad Se Vishwas Scheme, specifically those related to transfer pricing adjustments for non-US transactions and various corporate tax issues. The Tribunal had previously dismissed the appeal with a liberty to reinstitute, which the assessee now seeks to exercise.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31540 (ITAT-DELHI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2010-2011
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMIT KATOCH
• Assessee Lawyers: NAGESHWAR RAO
• Keywords: Business income; Transfer pricing; TDS
• Section: 254(2); 22; 234B; 244A; 10AA; 92C; 20

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘I-FRIDAY’ : NEW DELHI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER Miscellaneous Application No.227/Del/2021 (In ITA No. 1877/DEL/2015) Assessment Year : 2010-11 NTT Data Global Delivery Services Ltd., No. 17, South End Road, Basavanagudi, Bengaluru, Karnataka-560004 (PAN : AABCK7777J) Vs. DCIT, Circle 18(2), New Delhi (Appellant) (Respondent) Appellant by : Shri Nageshwar Rao, Adv. Respondent by : Shri Amit Katoch, Sr. DR Date of hearing : 21.03.2025 Date of pronouncement : 04.04.2025 ORDER PER MAHAVIR SINGH, VP By way of this miscellaneous application, the assessee under Section 254(2) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) has requested for recalling of the Tribunal’s order in ITA No. 1877/Del/2015 (AY 2010-11) dated 16.11.2020. 2. At the outset, Ld. AR for the assessee submitted that issues / grounds involved in ITA No. 1877/Del/2015 filed by NTT GDS, the successor company, could not be settled under Vivad Se Vishwas Scheme necessitating present misc. application under section 254(2) of the Act, requesting for reinstitution of the appeal bearing ITA No. 1877/Del/2015 with respect to grounds pertaining to transfer pricing adjustment in relation to non-US transactions and corporate tax issues which were dismissed with a liberty to reinstitute. Hence, it was submitted that since ground of Appeal Nos. 10 to 22 has not been resolved pursuant to the provisions of the VSV Act, therefore, assessee seeks to resolve the said dispute under the normal provisions of the Act. 3. Ld. DR did not have any objection to the aforesaid proposition. 4. We have heard the rival contentions and perused the records. We find that Tribunal while deciding the ITA No. 1877/Del/2015 vide order dated 16.11.2020 has passed the following directions:- MA-227/Del/2021 2 “12 Insofar as Ground Nos. 10 to 18 relating to transfer pricing adjustment to the transactions entered with Non-USA entities; Ground Nos. 19 relating to non-grant of deduction under section 10A/10AA in respect of interest income, and Ground Nos. 20 to 22 relating to short grant of credit for TDS/Advance Tax and determination of total income and interest are concerned, the say of the ld. Representatives is that the assessee is contemplating to settle the dispute under The Direct Tax Vivad Se Vishwas Act, 2020. 13. In view of the submissions made, the appeal in ITA No. 1877/Del./2015 is consigned to records and treated as dismissed.” 4.1 In view of the aforesaid factual matrix, we find considerable cogency in the contention of the Ld. AR that since ground of Appeal Nos. 10 to 22 has not been resolved pursuant to the provisions of the VSV Act, therefore, assessee deserve to resolve the issues/dispute under the normal provisions of the Act. Accordingly, we recall the Tribunal’s order dated 16.11.2020 passed in ITA no. 1877/Del/2015 (AY 2010-11), qua the following ground nos. 10 to 22 only and direct the Registry to fix the appeal for hearing in the normal course. (Il) Transfer pricing adjustment made to the transactions entered with Non-US AEs On the facts and in the circumstances of the case and in law, 10. The learned AO erred in completing the assessment proceedings by admittedly not giving effect to the directions of the Hon'ble DRP under section 144C(5) of the Act and thereby violating the provisions of section 144C(13) the Act. Since the impugned order does not take into account all the directions of the Hon'ble DRP, the same is bad in law and void ab initio. 11. The learned AO/ Transfer Pricing Officer ('TPO) erred in making an addition of INR 11,91,74,817 to the total income of the Appellant on account of adjustment in the arm's length price of the software development services transaction entered by the Appellant with its Non-US AEs; 12. The learned TPO/AO erred, in law and in facts, by not accepting the economic analysis undertaken by the appellant in accordance with provisions of the Income-tax Act, 1961 ('the Act') read with the Income-tax Rules, 1962 ('the Rules'), and modifying the same for determination of arm's length prices ('ALP') of the impugned transaction to hold that the same are not at arm's length; 13. The learned AO/ TPO erred, in law and in facts, by determining the arm's length margin/ price using only FY 2009-10 data which was not available to the Appellant at the time of complying with the transfer pricing documentation requirements; MA-227/Del/2021 3 14. The learned AO/ TPO erred in rejecting certain comparable companies by applying the following quantitative and qualitative filters: (a) The learned TPO/AO erred, in law and in facts, by rejecting certain comparable companies using 'Turnover less than INR 5 crores as a comparability criterion; (b) The learned AO/ TPO erred, in law and in facts, by rejecting certain comparable companies identified by the Appellant for having different accounting year (i.e. companies having accounting year other than March 31 or companies whose financial statements were for a period other than 12 months); (c) The learned TPO/AO erred, in law and in facts, by rejecting certain comparable companies identified by the Appellant on account of showing diminishing revenues trend; (d) The learned TPO/AO erred, in law and in facts, by rejecting certain comparable companies identified by the Appellant using 'Employee cost greater than 25 percent of total cost' as a comparability criterion; (e) The learned TPO/AO erred, in law and in facts, by rejecting certain comparable companies identified by the Appellant using 'Export earnings less than 75 percent of operating revenues' as a comparability criterion; 15. The learned TPO/AO has erred, in law and in facts, by accepting / rejecting companies based on unreasonable comparability criteria. 16. The learned TPO/AO erred, in law and in facts, by not considering gains/losses arising out of foreign exchange fluctuations while computing the operating margins of the Appellant as well as comparable companies. 17. The learned AO/TPO erred, in law and in facts, by not making suitable adjustments on account of differences in the risk profile of the Appellant vis-a-vis the comparables, while conducting comparability analysis; 18. The learned AO/TPO erred, in law and in facts, by computing the arm's length price without giving benefit of +/- 5 percent under the proviso to section 92C of the Act; (IlI) Corporate tax and other grounds On the facts and in the circumstances of the case and in law, 19. The learned AO has erred in law and in facts by not granting deduction under section 10A / 10AA of the Act in respect of interest income and miscellaneous income amounting to INR 29,31,95,455 and INR 30,01,004 respectively, which forms part of the business income of the Appellant; 20. The learned AO has erred in law and facts, in not granting full credit in respect of TDS and advance tax claimed by the Appellant; 21. The learned AO has erred, in law and facts, in determining the total income of the Appellant at INR 118,06,06,788 and the total tax and interest payable (as reduced by the tax deducted at source and advance tax) by the appellant at INR 40,24,50,570; MA-227/Del/2021 4 22. The learned AO has erred in levying interest of INR 10,87,65,428 under Section 234B of the Act, INR 9,25,620 under Section 234C of the Act, INR 1,01,14,656 under Section 234D of the Act and INR 70,06, 190 under Section 244A of the Act.” 5. In the result, the miscellaneous application of the assessee is allowed. Order pronounced on 04th April, 2025. Sd/- Sd/- (SHAMIM YAHYA) (MAHAVIR SINGH) ACCOUNTANT MEMBER VICE PRESIDENT SR BHATNAGAR Copy forwarded to: - 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT Assistant Registrar "