TaxTMI 
TaxTMI 
TaxTMI 
2018 (5) TMI 343
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....as under :- 2.1 The assessee company, is a wholly owned subsidiary of Amazon.com Inc., USA and is engaged in the business of rendering Software Development Services (SWD) and IT Enabled Services (ITES) to its Associated Enterprises (AE) located in USA as well as in other countries. The assessee filed its return for Assessment Year 2008-09 on 26.9.2008 declaring total income of Rs. 26,059 after claiming deduction of Rs. 2,73,40,440 under Section 10A of the Income Tax Act, 1961 (in short 'the Act'). In view of the international transactions entered into by the assessee in the year under consideration, a reference was made to the Transfer Pricing Officer (TPO) for determining the Arm's Length Price (ALP) of its international transactions. The TPO passed an order under Section 92CA of the Act dt.31.10.2011 proposing the following Transfer Pricing Adjustments :- i) Software development services segment : Rs. 4,44,90,888. ii) ITES segment : Rs. 3,42,26,973. Total Rs.7,87,17,861 The order of assessment was concluded under Section 143(3) r.w.s. 92CA of the Act vide order dt.17.2.2011, wherein the assessee's income was determined at Rs. ....
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....roceedings under Article 27 of the India-USA DTAA with respect to the Transfer Pricing Adjustments made by the Department of the revenue earned from the SWD/IT and ITES segments from its USA resident AEs. The MAP proceedings were concluded and the decisions on the margins to be adopted was conveyed by CBDT's letter in F.No.480/10/2011-FTD1 dt.28.10.2015. Pursuant to this, the assessee filed revised grounds of appeals vide letter dt.6.6.2016. In the revised grounds of appeal, the assessee has withdrawn the grounds of appeal related to the USA transactions and has retained the grounds of appeal related to the non- USA transactions. 4.3.1 Before us, the learned Authorised Representative for the assessee submitted the CBDT letter dt.28.10.2015 and written submissions on the issue. The learned Authorised Representative drew the attention of the Bench to the submissions made in the Revised Grounds of appeal filed pursuant to the MAP Resolution, wherein the assessee has submitted that the agreed mark-up applied in the MAP Resolution for USA transactions may also be applied for non-USA transactions as well. 4.3.2 The learned Authorised Representative took us through the order of the CBDT....
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....te bench of this Tribunal in the case of Global e-Business Operations Pvt. Ltd., in its order in IT(TP)A No.297/Bang/2014, where the Tribunal did not agree for applying MAP margin for non-USA transactions and remanded the issue back to the TPO to compute the margin for non-USA transactions. It was submitted that in the above case, the facts are different, since therein, no plea was made for applying the USA margins to non-USA transactions and further, the non-USA transactions were about 1/3 rd the total transactions. Therefore, it was deemed appropriate to remand the matter to the file of the CIT (Appeals) to examine the issue as to whether the margin decided for USA transactions can be applied for non-USA transactions as well. 4.3.6 It was submitted that in the case on hand, however, the non- USA transactions constituted only 7.14% of the assessee's turnover in the ITES Segment and further a specific plea has been made before the Tribunal for adopting the same margins for non-USA transactions. Therefore, the decision of the ITAT, Mumbai Bench in the case of J.P. Morgan Services Pvt. Ltd. (supra) which was followed by the co-ordinate bench in the case of CGI Information System....
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....djustment has been carried out by the APA-1 section of FT and TR Division of CBDT on the basis of 'US' and 'non-US' revenue. It is further noted that in the annual accounts of the assessee, no distinction has been made between 'US' and 'non-US' transactions. Similarly, in the orders passed by the authorities below also no distinction has ever been made between 'US' and 'non-US' transactions. Even before us, no distinction in facts or nature of transactions has been brought on record. In these factual circumstances of the case on hand, in our considered view, whatever margin has been determined for 92.86% of the transactions, the same should be determined / applied for the remaining 7.14% transactions as well. 4.5.3 This proposition finds support in the decisions of the ITAT, Mumbai Bench in the case of JP Morgan Services Pvt. Ltd. (supra) which has been followed by the co-ordinate bench of this Tribunal in the case of CGI Information System Management Consultants Pvt. Ltd. (supra). In this regard, the relevant portion at para 3.6 of the order in the case of J P Morgan Services Pvt. Ltd. is extracted hereunder :- " 3.6 We have gone through the arguments made by both the sides and....
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....ting the AO to follow the ratio laid down by the Hon'ble Court in the case of Tata Elxsi Limited 349 ITR 98 and exclude Rs. 2,09,56,789 being Internet charges and Rs. 1,12,12,383 being expenses incurred on foreign travel in foreign currency from the total turnover also while computing the deduction u/s 10A of the I.T. Act as the decision of the High Court is binding, without appreciating the fact that there is no provision in section 10A that such expenses should be reduced from the total turnover also, as clause (iv) of the explanation to section 10A provides that such expenses are to be reduced only from the export turnover. 3. The CIT(A) erred in not appreciating the fact that the jurisdictional High Court's decision in the case of Tata Elxsi Limited 349 ITR 98 has not been accepted by the department and an appeal has been filed before the Hon'ble Supreme Court. 4. For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the CIT(A) be reversed and that of the Assessing Officer be restored. 5. The appellate craves leave to add, to alter, to amend or delete any of the grounds that may be urged at the time....