RABO SHARED SERVICES PRIVATE LIMITED ,MUMBAI V. ADDL/JT/DY/ASSTT/CIT/ITO/NFAC DELHI, DELHI

ITA 489/MUM/2022

AI Insights

Rabo Shared Services Pvt. Ltd. appealed against the final assessment order for the assessment year 2017-18, which included adjustments to the Arm's Length Price (ALP) of international transactions and other tax-related issues. The primary contention was the upward adjustment of INR 7,23,01,619 for payments made for business support services to an Associated Enterprise (AE). The assessee argued that the Assessing Officer (AO) and the Dispute Resolution Panel (DRP) erred in rejecting their documentation and evidence, questioning the business rationale of the expenditures, and misapplying the provisions of the Indian Evidence Act, 1897. Additionally, issues regarding the initiation of penalty proceedings under section 270A of the Income Tax Act, non-grant of credit for TDS and advance tax, and incorrect computation of consequential interest under sections 234B and 234C were raised. However, the appeal was dismissed following the assessee's withdrawal under the aforementioned tax dispute resolution scheme.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471344 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: J
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASIF KAR MALI
• Keywords: Transfer pricing; TDS; Initiation of penalty proceedings
• Section: 92CA; 234B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “J” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAHUL CHAUDHARY (JUDICIAL MEMBER) ITA No. 489/MUM/2022 Assessment Year: 2017-18 Rabo Shared Services Pvt. Ltd., 20F, Tower A Peninsula Business Park, Senapati Bapat Marg, Lower Parel, Mumbai-400013. Vs. Add./Joint/Dy./Asst. CIT \\/ITO, National E-Assessment Centre, Delhi. PAN NO. AACCR 5316 H Appellant Respondent Assessee by : None Revenue by : Mr. Asif Karmali, Sr. DR Date of Hearing : 24/02/2025 Date of pronouncement : 25/02/2025 ORDER PER OM PRAKASH KANT, AM This appeal by the assessee is directed against final assessment order dated 17.01.2022 passed by the Ld. Assessing Officer [National Faceless Assessment Centre] for assessment year 2017-18, raising following grounds: Ground 1: Determining the Arm's Length Price (ALP) of the international transaction pertaining to payment of business support services as NIL On the facts and circumstances learned AO, based on the directions of the Hon'ble DRP, erred in law and on facts, in determining the ALP of the international transaction pertaining to payment of business support services to the Associated Enterprise (AE) as adjustment of INR 7,23,01,619. Ground 2: In making an upward adjustment of INR 7,23,01,619 for the payment of business support services, the Hon'ble DRP and the learned AO, inter the following grounds: 2.1 In rejecting the documentation and evidence submitted by the Appellant in support of the services received by the Appellant from its AEs and in incorrectly concluding that no services were actually received by the Appellant. 2.2 In exceeding his authority under questioning the business rationale of the expenditure by calling for evidence to evaluate the benefits derived by the Appellant. 2.3 In not taking into account the independent auditor's certificate which show the cost of service provision of each category of support service by each of the AEs and also by disregarding the independent and scientific allocation of cost of each category to the benefitting entities including the Appellant. 2.4 In failing to appreciat the overseas AEs is different and distinct from the services availed locally and based on merely the nomenclatures of the services as appearing in the Profit and Loss account of the Appellant, by arriving at the conc availed are duplicate in nature. 2.5 In wrongly evaluating that the support services provided are in the nature of shareholder activities without bothering to evaluate the nature of services actually provided by the AEs to the Appellant. 2.6 In erroneously relying upon the provisions of the Indian Evidence Act, 1897 to conclude that in the event the Appellant provided the required evidences, the same would have gone Rabo Shared Services ITA No. 489/MUM/2022 Ground 1: Determining the Arm's Length Price (ALP) of the international transaction pertaining to payment of business support services as NIL On the facts and circumstances of the case and in law, the learned AO, based on the directions of the Hon'ble DRP, erred in law and on facts, in determining the ALP of the international transaction pertaining to payment of business support services to the Associated Enterprise (AE) as NIL, and in making an upward adjustment of INR 7,23,01,619. Ground 2: In making an upward adjustment of INR 7,23,01,619 for the payment of business support services, the Hon'ble DRP and the learned AO, inter-alia, erred on the following grounds: ecting the documentation and evidence submitted by the Appellant in support of the services received by the Appellant from its AEs and in incorrectly concluding that no services were actually received by the Appellant. In exceeding his authority under section 92CA of the Act and questioning the business rationale of the expenditure by calling for evidence to evaluate the benefits derived by the Appellant. In not taking into account the independent auditor's certificate which show the cost of services incurred for the provision of each category of support service by each of the AEs and also by disregarding the independent and scientific allocation of cost of each category to the benefitting entities including the Appellant. In failing to appreciate that the support services provided by the overseas AEs is different and distinct from the services availed locally and based on merely the nomenclatures of the services as appearing in the Profit and Loss account of the Appellant, by arriving at the conclusion that the support services availed are duplicate in nature. In wrongly evaluating that the support services provided are in the nature of shareholder activities without bothering to evaluate the nature of services actually provided by the AEs to the Appellant. In erroneously relying upon the provisions of the Indian Evidence Act, 1897 to conclude that in the event the Appellant provided the required evidences, the same would have gone Rabo Shared Services Pvt. Ltd 2 ITA No. 489/MUM/2022 Ground 1: Determining the Arm's Length Price (ALP) of the international transaction pertaining to payment of of the case and in law, the learned AO, based on the directions of the Hon'ble DRP, erred in law and on facts, in determining the ALP of the international transaction pertaining to payment of business support services to NIL, and in making an upward Ground 2: In making an upward adjustment of INR 7,23,01,619 for the payment of business support services, alia, erred on ecting the documentation and evidence submitted by the Appellant in support of the services received by the Appellant from its AEs and in incorrectly concluding that no services were section 92CA of the Act and questioning the business rationale of the expenditure by calling for evidence to evaluate the benefits derived by the Appellant. In not taking into account the independent auditor's s incurred for the provision of each category of support service by each of the AEs and also by disregarding the independent and scientific allocation of cost of each category to the benefitting entities e that the support services provided by the overseas AEs is different and distinct from the services availed locally and based on merely the nomenclatures of the services as appearing in the Profit and Loss account of the lusion that the support services In wrongly evaluating that the support services provided are in the nature of shareholder activities without bothering to evaluate the nature of services actually provided by the AEs to In erroneously relying upon the provisions of the Indian Evidence Act, 1897 to conclude that in the event the Appellant provided the required evidences, the same would have gone against it and thus, the Appellant purposely could not furn requisite documents Ground 3: Initiation of penalty proceedings under section 270A of the Act On the facts and circumstances of the case, the learned AO erred in initiating penalty proceedings under section 270A of the Act for under-reporting of i misreporting thereof for addition made with respect to payment for availing business support services in the final assessment order. Ground 4: Non (TDS) and advance tax On the facts and circumstances of the case, the learned AO erred in not granting credit for TDS amounting to INR 55,861,302 and advance tax paid amounting to INR 67,000,000 under the PAN of 'Rabo India Finance Limited' [RIFL], being the amalgamating entity [appointed fact that income earned by RIFL corresponding to the said tax.credit has been consolidated with income of the Appellant offered to tax during the year under consideration. Ground 5: Consequential interest un 234C of the Act On the facts and circumstances of the case, the learned AO erred in computing consequential interest under section 234B and 234C of the Act. Each of the grounds of appeal referred above is separate and may kindly be con 2. At the outset, the a letter filed and submitted that the assessee has opted for the “Direct Tax Vivad Se Vishwas Scheme, 2024” filed the prescribed Furthermore, Form No. 2 issued to the assessee. issued by the Department, no tax liability is payable, and the Rabo Shared Services ITA No. 489/MUM/2022 against it and thus, the Appellant purposely could not furn requisite documents Ground 3: Initiation of penalty proceedings under section 270A of the Act On the facts and circumstances of the case, the learned AO erred in initiating penalty proceedings under section 270A of the Act for reporting of income which is in consequence of misreporting thereof for addition made with respect to payment for availing business support services in the final assessment Ground 4: Non-grant of credit for tax deducted at source (TDS) and advance tax s and circumstances of the case, the learned AO erred in not granting credit for TDS amounting to INR 55,861,302 and advance tax paid amounting to INR 67,000,000 under the PAN of 'Rabo India Finance Limited' [RIFL], being the amalgamating entity [appointed date of 1 April 2017], without appreciating the fact that income earned by RIFL corresponding to the said tax.credit has been consolidated with income of the Appellant offered to tax during the year under consideration. Ground 5: Consequential interest under section 234B and 234C of the Act On the facts and circumstances of the case, the learned AO erred in computing consequential interest under section 234B and 234C of the Act. Each of the grounds of appeal referred above is separate and may kindly be considered independent of each other. At the outset, the Learned Counsel for the assessee submitted that the assessee has opted for the “Direct Tax Vivad Se Vishwas Scheme, 2024” and has already filed the prescribed Form No. 1 before the appropriate authority. Form No. 2, determining the tax liability, has been issued to the assessee. The assessee stated that, as per issued by the Department, no tax liability is payable, and the Rabo Shared Services Pvt. Ltd 3 ITA No. 489/MUM/2022 against it and thus, the Appellant purposely could not furnish the Ground 3: Initiation of penalty proceedings under section On the facts and circumstances of the case, the learned AO erred in initiating penalty proceedings under section 270A of the Act for ncome which is in consequence of misreporting thereof for addition made with respect to payment for availing business support services in the final assessment grant of credit for tax deducted at source s and circumstances of the case, the learned AO erred in not granting credit for TDS amounting to INR 55,861,302 and advance tax paid amounting to INR 67,000,000 under the PAN of 'Rabo India Finance Limited' [RIFL], being the amalgamating date of 1 April 2017], without appreciating the fact that income earned by RIFL corresponding to the said tax.credit has been consolidated with income of the Appellant der section 234B and On the facts and circumstances of the case, the learned AO erred in computing consequential interest under section 234B and Each of the grounds of appeal referred above is separate and other. for the assessee referred to submitted that the assessee has opted for the and has already before the appropriate authority. , determining the tax liability, has been The assessee stated that, as per Form No. 2 issued by the Department, no tax liability is payable, and the assessee is in the proce the provisions of the Scheme. withdraw the present appeal, the same is dismissed as infructuous. 3. In the result, the appeal of the assessee is dismissed. Order pronounced Sd/ (RAHUL CHAUDHARY JUDICIAL MEMBER Mumbai; Dated: 25/02/2025 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// Rabo Shared Services ITA No. 489/MUM/2022 assessee is in the process of filing Form No. 3 in accordance with the provisions of the Scheme. In light of the assessee’s request to withdraw the present appeal, the same is dismissed as In the result, the appeal of the assessee is dismissed. Order pronounced in the open Court on 25/02/2025. Sd/- (RAHUL CHAUDHARY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai Rabo Shared Services Pvt. Ltd 4 ITA No. 489/MUM/2022 in accordance with In light of the assessee’s request to withdraw the present appeal, the same is dismissed as In the result, the appeal of the assessee is dismissed. /02/2025. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai "