TaxTMI 
TaxTMI 
2022 (10) TMI 413
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....pressed income of the assessee; and (iv) Non-grant of depreciation on certain expenses incurred in earlier years and held to be capital in nature in such years. 3. The brief facts of the case are as follows: The assessee is a company engaged in the business of provision of contract Software Development (SWD) services and Information Technology Enabled (ITE) services to its AEs as a captive service provider. The assessee is a subsidiary of VMware International Limited, Ireland, which in turn is an affiliate of VMWare Inc. US. During the previous year relevant to the assessment year 2012-2013, two of the international transactions undertaken between the assessee and its AEs were the provision of SWD services by the assessee at a price of Rs.172,98,97,393, for which a TP adjustment of Rs.11,27,08,575 was made by the TPO, and the provision of ITE services by the assessee at a price of Rs.155,66,80,620 in respect of which an adjustment of Rs.15,58,34,882 was made by the TPO. Pursuant to the TPO's order, a draft assessment order dated 24.03.2016 was passed by the Assessing Officer (AO) in which he incorporated the aforesaid TP adjustments. Further, the AO made an addition ....
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....posted to the Appellant via speed post on 28 March 2016 are erroneous. Grounds of appeal relating to Corporate Tax matters 4. On the facts and in the circumstances of the case and in law, the learned Dispute Resolution Panel - 2, Bangalore ("DRP") erred in confirming the action of the learned Assessing Officer by rejecting the audit adjustments made in the financial statements amounting to INR 7,62,39,388 and thereby adding back the same to the taxable income as suppression of income. 5. That the DRP erred in not adjudicating on the ground that the action the learned Assessing Officer resulted in double taxation given the revenue has already been adjusted by the learned Additional Commissioner of Income tax, Transfer Pricing - Range 2(2) ('learned TPO') under section 92CA of the Act. 6. The learned Assessing officer erred in not granting the allowance for depreciation on expenditure treated as capital in nature in earlier years and the DRP further erred in not interfering with the same. Grounds of appeal relating to Transfer Pricing matters 7. The learned Assessing Officer in pursuance of the directions of the Dispute Re....
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....e case, the learned Assessing Officer in pursuance of the directions of the learned Panel erred in upholding the rejection of comparable companies considered in the TP documentation with respect to software development service (viz. Helios and Matheson Information Technology Limited, IDBI Intech Ltd, Allied Digital Services Ltd.) and information technology enabled services (viz. Cameo Corporate Services Ltd, In-House Productions Ltd. etc.), which are functionally comparable with the service rendered by the Appellant; 14. On the facts and circumstances of the case, the learned Assessing Officer in pursuance of the directions of the learned Panel erred in excluding a comparable company for the software development service segment (viz. RS Software Ltd.) and comparable companies for the information technology enabled services segment (viz. Informed Technologies India Ltd, and Jindal Intellicom Limited) which are functionally comparable to the information technology enabled service rendered by the Appellant; 15. On the facts and circumstances of the case, the learned Assessing Officer in pursuance of the directions of the learned Panel erred in arbitrarily arriving at....
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....ls of the assessee and the comparables, etc. The learned AR has also filed a brief written submission. The assessee has raised grounds on legal issues and also on merits. As regards the legal issue is concerned, the learned AR submitted that the final assessment order has not been passed within the time prescribed u/s 144C(13) of the I.T.Act, and therefore, the same is barred by limitation and thus void ab initio. In this context, the learned AR submitted that there is nothing on record to suggest that the final assessment order (though dated 24.01.2017), was dispatched within the time limit prescribed u/s 144C(13) of the I.T.Act so as to be beyond the control of the A.O. It was stated that the assessee has received demand from CPC on 15.03.2017 (the demand refers to the assessment order dated 13.03.2017) and interest u/s 234B of the I.T.Act was computed upto 31.03.2017. In support of the submission, the learned AR relied on the following judicial pronouncements:- (i) Maharaja Shopping Complex v. DCIT [ITA No.832/2008) (Karnataka High Court) (ii) CIT v. B J N Hotels Ltd. (2017) 79 taxmann.com 336 (Karnataka High Court) (iii) Government Wood Works v. State....
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....I.T.Act, the A.O. has to pass the final assessment order within one month from the end of the month in which such direction of the DRP is received by him. In the instant case, the final assessment order is dated 24.01.2017 (i.e., well within the time limit contemplated u/s 144C(13) of the I.T.Act). However, the learned AR contends that the final assessment order is not dispatched within the time limit prescribed, therefore, the final assessment order is barred by limitation. The above contention is raised for the reason that (i) the assessee received the final assessment order only on 15.09.2017, (ii) the assessee received the intimation from CPC (about the demand raised) which mentions that the date of the order is 13.03.2017). The point to be deliberated is whether the final assessment was passed on 24.01.2017 or on 13.03.2017 (Manual order). The learned DR has produced the assessment record. On perusal of the assessment records, it is seen that the first page of the assessment order dated 24.01.2017 shows the dispatch seal duly signed by the Tapal official (dispatch seal on 24.01.2017 itself). As regards the claim that the assessee received the intimation of demand from CPC on 1....
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....r dated 31.10.2018)] (iii) Software Paradigms Infotech Pvt. Ltd. v. ACIT [IT(TP)A No.150/Bang/2014 (order dated 05.01.2018)] (iv) Xchnging Solutions Limited v. DCIT [IT(TP)A No.2664/Bang/2017 (order dated 21.12.2020)] (v) Yokogawa India Ltd. v. ACIT [IT(TP)A No.1715 & 692/Bang/2016 (order dated 08.03.2021)] (vi) ESS Distribution (Mauritius) S.N.C. ET Compagnie v. Union of India [WP(C) No.2384/2015 & CM No.4277/2015 (judgment dated 23.03.2016)] (vii) Basware Corporation India v. DCIT [ITA No.1289/Chd/2019 (order dated 27.11.2019)] (viii) Global One India Pvt. Ltd. v. DCIT [ITA No.1980/Del/ 2014 (order dated 10.12.2019)] (ix) Olympus Medical Systems Pvt. Ltd. v. ACIT [ITA No.873/Del/2021 (order dated 13.01.2022)] (x) Nomura Research Institute Financial Technologies India Pvt. Ltd. v. DCIT [ITA No.1548/Kol/2019 (order dated 13.03.2020)] 11. The learned Departmental Representative submitted that non-compliance of direction of the DRP is not fatal so as to set aside final assessment order. It was submitted that the Tribunal may restore the matter to the A.O. for compliance of directions of the DRP. 12. We have....
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.... Issues) 13. In the above ground, the assessee is challenging the action of the AO in making an addition of Rs.6,44,37,710, which was enhanced to Rs.7,62,39,388 pursuant to the DRP's directions. The addition was made on the basis that the same represented suppressed income relatable to the difference in the assessee's revenues as per the invoices raised by it vis-àvis its financial statements. 14. The learned AR submitted that in terms of the Master Service Agreement, it enters into with its group companies for rendering captive SWD, IT and marketing support services. It was stated that the assessee works on a cost plus model wherein its invoices are raised based on the cost incurred by it after adding a certain agreed percentage of mark-up to the same. It was stated that such invoices are raised on a monthly basis based on the cost recorded by the assessee and sample copies of such invoices were submitted by the assessee to the AO during the course of assessment proceedings. However, due to certain receivables such as service tax credit, VAT refund as well as foreign exchange fluctuation, a difference arises between the revenue recorded in the assessee's financial sta....
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.... Add:Mark up 20,85,71,326 20,90,85,970 2,43,62,057 44,20,19,353 Revenue 1,81,29,66,141 1,51,58,73,289 32,88,87,771 3,65,77,27,201 Less : Foreign exchange gain 4,01,89,930 1,87,52,892 -- 5,89,42,822 Less : Adjustment on account of revenue movement across cross centres owing to change in cost centres. 4,28,78,818 (5,95,60,223) 1,66,81,406 -- Income from service 1,72,98,97,393 1,55,66,80,620 31,22,06,365 3,59,87,84,379 The reconciliation of revenue per invoice vis-à-vis financial statements is below:- Particulars Amount (Rs.) Amount (Rs.) Total invoice value 3,71,52,13,697 Add : Reversal of previous year adjustment 10,46,27,639 Less : Foreign exchange restatement (4,01,89,929) Sub total 3,77,96,51,407 Less : Closing balance of adjustment (18,08,67,027) Revenue as per financials 3,59,87,84,380 16.1 Therefore, according to the above reconciliation, it is only on account where the audit adjustments were made, i.e., in order to reverse the excess revenue to the extent overstated. A similar issue was ....