ITAT recalls order to adjudicate unadjudicated transfer pricing and software services grounds for A.Y. 2015-16

ITAT Mumbai allowed a miscellaneous application to recall its order dated 18.12.2023 to rectify an apparent mistake. The assessee's grounds 8-11.5 relating to transfer pricing issues and Revenue's grounds 9-12.5 concerning software services, technical consultancy, financial guarantees, brand royalty, and performance guarantees for A.Y. 2015-16 were inadvertently not adjudicated despite being reflected in Form No. 36. The tribunal recalled the impugned order to the limited extent of adjudicating these remaining grounds and directed the registry to list the cases for hearing on 18.06.2024.

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Issues Involved:
1. Non-adjudication on Transfer Pricing Grounds raised by the Applicant.
2. Non-adjudication on Transfer Pricing Grounds raised by the Department.

Detailed Analysis:

Non-adjudication on Transfer Pricing Grounds raised by the Applicant:
The assessee filed a miscellaneous application against the ITAT's order dated 07.11.2023, contending that grounds of appeal relating to Transfer Pricing issues (Ground Nos. 8 to 11.5) were not adjudicated. The grounds included:
- Transfer Pricing Adjustments: The assessee argued that the CIT(A) erred in not deleting the transfer pricing adjustments made by the DCIT, claiming non-compliance with Section 92C(3) of the Act, lack of proof of tax evasion intent, and improper initiation of proceedings by the TPO.
- Provision of Software & Consultancy Services: The assessee contended that the CIT(A) erred in not accepting the Appellant as the tested party, disregarding the legally binding agreements, rejecting the functional and economic analysis, and disregarding the benchmarking analysis.
- Granting of Loans to AEs: The assessee argued that the CIT(A) erred in disregarding the nature of loans as quasi-equity and in holding that the interest charged on loans to AEs was not at arm's length.
- Provision of Guarantees to AEs: The assessee contended that the CIT(A) erred in holding that the provision of various guarantees was international transactions and in not following earlier ITAT orders regarding guarantee fees.

Non-adjudication on Transfer Pricing Grounds raised by the Department:
The Department filed a miscellaneous application arguing that its grounds of appeal (Ground Nos. 9 to 12.5) were not adjudicated. The grounds included:
- Provision of Software, Technical and Consultancy Services: The Department questioned the CIT(A)'s direction to restrict the adjustment made on account of Provision of Software & Consultancy Services and the adoption of GP/Sales as the appropriate PLI instead of OP/VAE.
- Financial Guarantee: The Department contended that the CIT(A) erred in reducing the rate of Financial Guarantee fee and in not recognizing the risks undertaken by the assessee in providing guarantees.
- Performance/Lease Guarantee: The Department argued that the CIT(A) erred in deleting the adjustment on account of Performance and Lease Guarantees and in directing a lower guarantee fee rate.
- Receipt of Brand Royalty: The Department contended that the CIT(A) erred in directing the deletion of the adjustment made on account of Receipt of Brand Royalty, arguing that the assessee was the economic owner of the brand "TCS" and "TATA CONSULTANCY SERVICES."

Tribunal's Decision:
Upon hearing both sides and reviewing the material on record, the Tribunal acknowledged the apparent mistake in not adjudicating the specified grounds of appeal. Consequently, the Tribunal decided to recall the ITAT order dated 18.12.2023 to the limited extent of adjudicating the grounds of appeal mentioned by the assessee and the Department. The registry was directed to list these cases for hearing on 18.06.2024. Both parties were informed about the hearing date, and no separate notice was required.

Conclusion:
The miscellaneous applications were allowed for statistical purposes, and the order was pronounced in the open court on 29.04.2024.

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