TaxTMI 
TaxTMI 
2022 (5) TMI 272
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....ce made by the Ld. AO to the Learned Additional Commissioner of Income Tax, TPO-l(l), New Delhi (hereinafter referred as 'Ld. TPO') suffers from jurisdictional error as the Ld. AO has not recorded any reason on the basis of which he reached the conclusion that it was necessary or expedient to refer the matter to the Ld. TPO. 3. The Ld. AO as well as the Ld. TPO and the Hon'ble Dispute Resolution Panel hereinafter referred as (Hon'ble DRP') have erred in law as well as facts of the case in not accepting the Arm's Length Price (hereinafter referred as 'ALP') determined by the appellant. 4. The Ld. AO / Ld. TPO / Hon'ble DRP have erred in ignoring the fact that the appellant is entitled to deduction under section 10A of the Act on its profits from provision of Information Technology Enabled Services ('ITES') and Contract Software Development ('CSD') Services to overseas associated enterprises and there is no untoward motive to derive any tax advantage by manipulating transfer prices of International Transaction undertaken by it with its associated enterprises. 5. The Ld. AO / Ld. TPO / Hon'ble DRP have erred in determini....
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....omparison is none of the 5 prescribed methods under the Indian transfer pricing regulations. 16. The Ld. AO / Ld. TPO / Ld. DRP have erred in considering the rate of interest chargeable on receivables at 300 basis points above SBI PLR on June 30, 2009, 14.75%. 17. The Ld. AO / Ld. TPO have erred in fact and in law by considering the arm's length value of some of the fixed assets imported by the appellant from its associated enterprises during the financial year 2009-10 as Nil, ignoring the valuation arrived by the Custom Authorities. 18. The Ld. AO / Ld. IPO have erred in making addition equivalent to the entire amount of fixed assets imported by the appellant instead of the corresponding depreciation amount. 19. The Ld. AO / Ld. TPO / Hon'ble DRP have erred in ignoring the judicial pronouncements relied upon by the appellant. 20. The Ld. AO has erred in initiating penalty proceedings under section 271(l)(c) of the Act." 3. Brief facts of the case are that, the assessee Company is incorporated in India on April 1, 2004 and is a part of the Colt Group of Companies ('Colt Group') and provides Information Technology Enabled Services ('ITES') and contract softwa....
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....to its international transaction to its AE based in UK. Pursuant to the same, MAP resolution dated 12/02/2018 was arrived between India and UK competent authorities and the same was accepted by Colt. In the said MAP Resolution, the appropriate margin for service rendered under ITEs segment was agreed at 15.50% as against 11.94% earned by the Colt. The appropriate margin for service rendered under CSD segment was agreed at 14.50% as against 13.93% earned by Colt. Copy of MAP resolution is filed by the assessee before the Tribunal along with the application to revise grounds of appeal to restrict only to the issues which are not covered by MAP resolution. The ld. Counsel further submitted that, after the MAP resolution, the addition sustained in the case of the assessee and which is the subject matter of the present appeal are as under:- S. No. Particulars Amount in INR TP ADDITIONS A ITES SEGMENT(Colt Luxembourg 33,131,928 B Purchase of fixed assets 1,944,137 C Interest on receivables 4,226,509 Total additions 39,302,574 7. The grounds of Appeal No. 1 to 13 are in respect of ITEs Segment on transaction with Colt Luxembourg. The ....
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....P, held hereunder:- "4.5.2 We have carefully perused and considered the arguments urged by both sides and the material on record. We observe that the CBDT letter in F.No.480/10/2011-FTD-1 dt.28.10.2015 has been issued in the case on hand in respect of the resolution of MAP proceedings for Assessment Years 2007-08 to 2009-10 on behalf of the Foreign Tax & Tax Research Division - I, APA-1, CBDT, New Delhi wherein it has been confirmed that for Assessment Year 2008- 09, for USA transactions under the ITES Segment, the margin has been determined at 18.82% as against a margin of 24.47% determined by the TPO. It has been further clarified by way of 'Note' in the said letter that apportionment between US and non-US ALP and Transfer Pricing Adjustment 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. Ev....
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....ed above and by taking into consideration that, in the MAP Resolution entered into between UK and Indian Authorities in respect of the addition pertaining to UK got settled at 3 months average Euribor plus 200 basis points applied on receivables beyond 90 days, we direct the AO/TPO to apply 3 months average Euribor plus 200 basis points on the receivables received beyond 90 days in respect of outstanding from Colt Luxembourg. Accordingly, allow the Grounds No. 14 to 16 for statistical purpose. 17. The Ground Nos. 17 & 18 are in respect of purchase of fixed assets. The Ld. TPO added the entire amount of fixed assets purchased by the assessee from its AE's during the year. The DRP in its order directed the TPO to accept the value of fixed assets in case of those invoices from AE where it is mentioned that, they have been valued at the present depreciated value of equipment. Further directed the TPO to verify the book value in the AE's book and market price of assets in the invoices, wherein it is mentioned that assets have been valued at fair market value. The Ld. TPO has accepted the fixed asset purchases at Arm's Length where the AE's have mentioned that the sale by them is at dep....
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....neral in nature and the Assessee's Grounds of Appeal No. 20 is consequential in nature. Thus, the Assessee's Grounds of Appeal No. 19 & 20 are dismissed. 23. The grounds of appeal in I.T.A. No. 1908/DEL/2017 (A.Y 2012-13) are as under:- 1. The order dated January 27, 2017, passed by the Learned Assistant Commissioner of Income Tax, Circle 6(1), New Delhi (hereinafter referred as Ld. AO ) under section 143(3) read with section 144C of the Income Tax Act, 1961 hereinafter referred as 'the Act') is bad in law and on the facts and circumstances of the case. 2. The reference made by the Ld. AO to the Learned Deputy Commissioner of Income Tax, TPO-l(2)(l), New Delhi (hereinafter referred as 'Ld. TPO') suffers from jurisdictional error as the Ld. AO has not recorded any reason on the basis of which he reached the conclusion that it was necessary or expedient to refer the matter to the Ld. TPO. 3. The Ld. AO as well as the Ld. TPO and the Hon'ble Dispute Resolution Panel -1 hereinafter referred as 'Hon'ble DRP') have erred in law as well as facts of the case in not accepting the Arm's Length Price (hereinafter referred as 'ALP') determin....
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....ered to tax by the appellant in the modified return of income u/s 92CD(1) of the Act." 24. Brief facts of the case are that, the assessee company filed its return of income for A.Y 2012-13 on 30.11.2012 declaring an income of Rs. 49,04,70,740/-. Thereafter, the case was selected for scrutiny and notice u/s 143(2) of the Act was issued and served upon the assessee within the limitation period. Questionnaire was issued to the assessee on along with the notice u/s 142(1) of the Act asking to submit the required information. In response to the statutory notices, the Representative of the assessee was duly represented, produced the books of accounts along with supporting bills and vouchers. 25. During the year under consideration, the assessee had international transactions with associated enterprises/concerns. In order to determine Arm's Length Price in relation to international transactions, the case was referred to TPO. The Ld. TPO has passed order u/s 92CA(3) of the Act dated 29.01.2016, by making an upward adjustment of Rs. 39,13,60,121/-. The assessee has been asked to explain why a sum of Rs. 39,13,60,121/- should not be added to the taxable income of the assessee as determine....
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....lows:- Particulars Amount in INR TP Additions:- ITES Segments (Colt Luxembourg) 1,47,75,630 Total addition 1,47,75,630 Further submitted that, margin agreed for the information technology (ITES) enabled services segment in advances pricing agreement is same as agreed in the MAP Resolution for ITES Services for the AY 2006-07 to AY 2010-11. 30. The grounds of Appeal No. 1 to 11 are in respect of ITEs Segment on transaction with Colt Luxembourg. The Ld. AR submitted that, there is no distinction between services rendered by the assessee to Colt UK and Colt Luxembourg. Even the TPO has not made any distinction in its order and also while computing Arm's Length margin for ITEs segment. Further, under the APA, the costs in ITEs segment with respect to the transaction with Colt UK and Colt Luxembourg have been appropriated proportionately on the basis of revenue, thereby showing there is no distinction between the natures of services rendered by the assessee. The Ld. AR further contended that quantum of UK transactions constitutes only 5.75% of the total transaction undertaken by the asssessee in ITES segment. The Ld. Counsel for the assessee has relied on the sev....
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....n.com 757 (Bombay), the Hon'ble High Court of Karnataka, while dealing with the issue of levying interest u/s sections 234A, 234B and 234C for non/short payment of advance tax installment and delay in payment of income tax held as under:- "9. Perusal of the above provisions shows that liability to pay interest arises on failure of the assessee to pay advance tax under section 208 or advance tax payable under section 210 is paid less than 90 per cent. Perusal of the provisions of sections 208 and 209 shows that for the purpose of payment of advance tax the assessee has to estimate his current income and then he has to calculate income-tax on that income at the rate in force in the financial year. Thus, the amount of advance tax is to be decided by the assessee after estimating his current income and then applying law in force for deciding the amount of tax. It is an admitted position in the present case that the date on which the appellant paid the advance tax it had estimated its income and liability for payment of advance tax in accordance with law that was in force. Therefore, it is obvious that there was no failure on the part of the appellant to pay advance tax in accordance ....