TaxTMI 
TaxTMI 
2016 (5) TMI 715
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....ltation of CAD/CAM/CAE products and related customization on behalf of its customers. The assessee is entitled to exemption u/s 10A in respect of income from Export of Software services. 2.1 Assessee filed its Return of Income for the AY 2005-06 on 30.10.2005, declared a total income of Rs. 4,77,83,592/-. Subsequently, the assessment was completed u/s 143(3) of the Income Tax Act 1961 on 17/12/2008 by making an addition of Rs. 4,08,45,798/- after considering the findings of TPO vide order u/s 92CA(3) of the Act dated 20.06.2008. Aggrieved by this order, Assessee preferred an appeal before CIT(A), which was dismissed by the CIT(A) by upholding the order of the AO. Aggrieved with the above order, Assessee preferred an appeal before this coordinate bench, which is pending under appeal no ITA 197/Dyd/2011. 2.2 In the back drop of Satyam episode and the Assessee being Joint Venture of Satyam Computer Services Ltd, the case was reopened. Notice u/s 148 was served on the Assessee. In response to the notice, Assessee filed letter confirming the return filed by it on 30.10.2005 as the one in response to the notice u/s 148. Subsequently notice u/s 143(2) and 143(1) were issued. In response....
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....Rs. 3,07.745 in respect of engineering services. 7. The learned AO / DRP erred in denying the +/- 5% option to the arm's length price determined for ITES sales to AE as per Sec.92C(2) of the IT Act. 8. The learned AO / DRP erred in not applying any of the accepted methods of determining arm's length for the purpose of determining arm's length price for commission payable to venture LLC. 9. The learned AO / DRP incorrectly incorporated the commercial aspect of allowability of such expenditure based on benefit derived thereon. Non-Transfer Pricing Additions 10. The learned AO / DRP erred in denying the exclusion of other charges incurred in foreign currency from the total turnover, also, despite catena of decisions in favour of such exclusion." 4. The main issues raised by the Assessee in the above grounds are: a. Ground 1 being general, does not need any adjudication b. Ground 2 to 5, relating to reopening of the assessment u/s 147. c. Ground 6 to 9, relating to transfer pricing adjustments. d. Ground 10, relating to Non Transfer pricing additions. (relating to 10A disallowances). 5. Ground 2 to 5. Reopening of Assessment: Ld. AR submitted that when asked for....
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....e of the assessee led to escapement of income chargeable to tax. The assessee company neither disclosed the above dispute in its annual report for the AY 2004-05 nor disclosed during the original assessment proceedings. 4. Given the fact that the assessee company being a joint venture company promoted by Satyam Computer Services Ltd. under the Chairmanship of Shri B. Ramalinga Raju, who having confessed to the fact that the accounts of SCSL were fudged and charged with several offences by the investigating agencies in the aftermath of the satyam scam and on assessee company's failure to establish the genuineness of the claim of commission payment worth crores of rupees and the alleged excess levy of certain administrative charges by Satyam Computers, I have reason to believe that income chargeable to tax has escaped assessment, within the meaning of section 147 read with section 149 of the IT Act and there is failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for AY 2005-06. For the above detailed reasons, it is proposed to issue notice to the assessee u/s 148 of the IT Act to reopen the assessment in the assessee....
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.... relevance to the Assessee and AO wrongly relied on this reason to reopen the assessment. 5.4 Ld AR also expressed that the Assessee filed its objections for reopening of assessment u/s 147, vide letter dated 08.01.2014, which was not addressed by the AO while completing the reassessment order and the reassessment order was not a speaking order. 5.5 Ld AR submitted that the reference to TPO in the reopened assessment is beyond limitation of time. He argued that the AO cannot refer to the TPO, when the TPO had already examined the records relating to the International transactions and given its report. There is no fresh material enumerated which warranted the AO to refer the matter to TPO. 6. Ld DR on the other hand submitted that there was no prejudice caused to the Assessee except there was adjustment made to the allowance u/s 10A. He justified the reassessment proceedings and relied on the reassessment order. On the reason no 3, AR submitted that it is joint venture and not a dispute between shareholders. The funds withheld by the shareholders had impact on the revenue of the Assessee business. It is the failure of the assessee, who had not brought the above revenue to the boo....
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....spute Resolution Panel (DRP). 13. The DRP vide its direction dated 24/12/2014, gave its decision as under: "It is seen that the TPO has only worked out the interest rate on the receivables due to the assessee. He has not considered the fact that out of the total receivables, Rs. 6,59,65,875 was due from Satyam Computer Services Ltd., which cannot be considered for Arm's length price adjustment. Also, the amounts payable by the assessee was not taken into account. The panel is of the opinion that the TPO should consider the total amount of dues/receivables (excluding receivables/dues relating to Indian associates). If there is." 14. Since the above direction appears to be inconclusive, both the department and assessee filed application before the DRP for clear direction on the above findings. Since there was no response/order from the DRP, AO has completed the assessment u/s 143(3). 15. Aggrieved with the above order, assessee in appeal before us and raised the following grounds: "1. The order of the learned Assessing Officer is erroneous in law and on the facts of the case. Transfer Pricing Adjustment 2. The learned Assessing Officer ( AO ) / Transfer Pricing Officer ( T....