SATYAM VENTURE ENGINEERING SERVICES PRIVATE LIMITED ,SECUNDERABAD V. ASSISTANT COMMISSIONER OF INCOME TAX ,CENTRAL CIRCLE -3(2), HYDERABAD

MA 40/HYD/2024

AI Insights

The case involves Satyam Venture Engineering Services Private Limited, which filed a Miscellaneous Application (M.A.) seeking rectification of an earlier order concerning tax deductions on reimbursements made to foreign entities. The company argued that the payments made to Techno Support Co. Ltd. in Japan, Adecco Bangna Recruitment Limited in Thailand, and Tech Mahindra GmbH in Germany were mere reimbursements and not subject to tax deduction under section 195 of the Income Tax Act, 1961, and consequently not liable for disallowance under section 40(a)(i). The Tribunal recognized that the aspect of section 9(1)(vii) was overlooked in the initial consideration for the entities in Japan and Germany and directed a re-examination of these payments.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 46510 (ITAT-HYDERABAD)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Assessment Year: 2016-2017
• Other Referred Cases: Solvay Asia Pacific(P.) Ltd. Vs. DCIT [2024] 159 taxmann.com 90 (Delhi-Trib), Bangkok Glass Industry Co.Ltd. Vs. ACIT [2013] 34 taxmann.com 77, Bharti Airtel Ltd., Vs. ITO [2016] 67 taxmann.com 223 (Delhi-Trib)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SRINATH SADANALA
• Assessee Lawyers: C.S.SUBRAHMANUAM
• Keywords: Transfer pricing
• Section: 195

Judgement Text

"आयकर अपीलीय अधिकरण, हैदराबाद पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A”, HYDERABAD BEFORE SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER & SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER आ.अपी.सं / MA No.40/Hyd/2024 (Arising out of ITA No.192/Hyd/2021) (धििाारण वर्ा / Assessment Year: 2016-17) Satyam Venture Engineering Services Private Limited Secunderabad [PAN :AAFCS3287D] Vs. ACIT Central Circle-3(2) Hyderabad अपीलार्थी / Appellant प्रत्‍ यर्थी / Respondent धििााररती द्वारा/Assessee by: Shri C.S.Subrahmanuam and Shri V.Siva Kumar, AR राजस्‍ व द्वारा/Revenue by: Shri Srinath Sadanala, DR सुिवाई की तारीख/Date of hearing: 29/11/2024 घोर्णा की तारीख/Pronouncement on: 26/12/2024 आदेश / ORDER PER K. NARASIMHA CHARY, J.M: This Miscellaneous Application (M.A.) is filed, praying to rectify the mistake apparent from the record while passing the order in ITA-TP No.192/Hyd/2021 in respect of ground number 15 to 17. 2 2. The learned AR submitted that in respect of all the three entities, namely, Techno Support Co. Ltd., Japan, Adecco Bangna Recruitment Limited, Thailand and Tech Mahindra GmbH, Germany, the assessee had taken a plea that amounts paid to these entities were pure reimbursements and, therefore, not subjected to tax deduction under section 195 of the Income tax Act, 1961 (“the Act”) and consequently not liable for disallowance under section 40(a)(i) of the Act. The learned AR brought to our notice that in respect of the three entities, the assessee has simultaneously took the plea that the expenditure was incurred for earning income from the respective branches at Japan and Germany also to be considered as not recoverable under section 9(1)(vii) of the Act. The learned AR submitted that the aspect of 9(1)(vii) missed the attention of the Bench in respect of Japan and Germany entities. He prayed that the learned Assessing Officer may be directed to consider this aspect in respect of Japan and Germany entities also. 3. The learned DR submitted that the Bench reached a conclusion that the taxability in respect of the payments made to Japan is restored for verification at the end of the learned Assessing Officer/TPO and in respect of Germany, it is rightly dismissed, hence, there are no grounds to entertain this M.A. 4. We have gone though the record in the light of submissions made on either side. From the record, we find that the arguments were advanced in respect of the entities in Japan and Germany also. Also, the assessee pressed into service, the applicability of section 9(1)(vii) of the Act and such an aspect missed the attention of the Bench, while dealing with these payments in the order dated 31/05/2024. On a careful consideration of the matter, we are of the considered opinion that this mistake, apparent on record, needs rectification. 3 5. Accordingly, we restore ground number 15 to 17 to the file of the learned Assessing Officer for examining the material in light of the decision in the case of Solvay Asia Pacific(P.) Ltd. Vs. DCIT [2024] 159 taxmann.com 90 (Delhi-Trib), Bangkok Glass Industry Co.Ltd. Vs. ACIT [2013] 34 taxmann.com 77 and Bharti Airtel Ltd., Vs. ITO [2016] 67 taxmann.com 223 (Delhi-Trib), keeping in view the provisions under section 9(1)(vii) of the Act. Order is modified accordingly. 6. In the result, Miscellaneous Application is allowed in the above terms. Order pronounced in the open court on this the 26th December, 2024. Sd/- Sd/- (MADHUSUDAN SAWDIA) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated: 26/12/2024 L.Rama, SPS Copy forwarded to: 1. M/s Satyam Venture Engineering Services Private Limited, 1-8-301-306, 3rd Floor, Ashoka My Home Chambers, S.P.Road, Secunderabad 2.The Asst.Commissioner of Income Tax, Central Circle-3(2), Hyderabad 3.The Dispute Resolution Panel(DRP), Bengaluru 4. The Director of Income Tax (IT&TP), Hyderabad 5. The Addl.Commissioner of Income Tax (Transfer Pricing), Hyderabad 6. The DR, ITAT, Hyderabad 7. GUARD FILE TRUE COPY ASSISTANT REGISTRAR ITAT, HYDERABAD "