TaxTMI 
TaxTMI 
2022 (11) TMI 444
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....ion 144B of the Act in pursuance of the directions dated 23 March 2021 issued by the Honorable Dispute Resolution Panel -3, WZ (hereinafter referred to as 'Hon'ble DRP'), on the following grounds: On the facts and in the circumstances of the case and in law, the Hon'ble DRP and consequentially the learned AO have: Grounds of Objections in respect of transfer pricing adjustment 1. General ground challenging the transfer pricing adjustment of INR 44,64,54,953 consequential to non-consideration of comparability analysis as documented in the transfer pricing study report Erred in making transfer pricing adjustment of INR 33,06,35,792 to Appellant's international transactions in the nature of provision of software development services and of INR 11,58,19,161 to the international transactions in the nature of information technology enabled services (hereinafter referred to as 'ITeS') and not considering the comparability analysis documented in the transfer pricing study report for benchmarking analysis. 2. Non-consideration of comparability analysis as documented in the transfer pricing study report Erred in law on facts and in circumstances of the....
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....umstances of the case and in law by including companies having supernormal profits in the set of comparable companies in respect of international transactions pertaining to provision of software development services and provision of IT enabled services. 6. Rejection of certain comparable companies identified by the Appellant in the transfer pricing study report Erred in rejecting certain comparable companies from the comparable set identified by the Appellant in the transfer pricing report in respect of international transactions pertaining to provision of software development services and ITeS. 7. Accepting certain additional companies as com parable in relation to provision of software development services and ITeS Erred in accepting certain additional companies as comparable to the Appellant in relation to provision of software development services and ITeS. 8. Accepting MPS Ltd. as a comparable company to ITeS segment of the Appellant Erred in accepting MPS Ltd. (company identified as comparable by the Appellant in ITP report but provided detailed contentions to reject the same after review of the financial statements for FY 2015-16) on account of it being functiona....
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....er section 40(a)(ia) by treating the same as leased line charges and not appreciating the fact that the above charges are for standard PRI line charges, which require no human intervention and consequently, does not qualify as fees for technical services 14. Erred in disallowance of expenditure of INR 3,50,51,094 made pursuant to ESOP scheme floated by the Appellant's parent company Erred in disallowance of the expenses incurred pursuant to ESOP scheme treating the same as a capital item akin to securities premium and not appreciating the fact that these expenses are deductible under section 37 of the Act III. Other grounds of appeal 15. Erroneous levy of interest under section 234B and 234C of the Act Erred in levying additional interest under section 234B and section 234C of the Act of INR 11,33,09,568 and INR 3,37,970 respectively on account of unanticipated additions made to the total income of the Appellant on account of transfer pricing and corporate tax adjustment which is due to difference of opinion and as at the due date of payment of advance tax by no means the Appellant could have estimated such adjustments and consequential tax on such adjustment. 16. I....
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....us years 2011-12 to 2019-20 if the operating profit margin in relation to operating cost of the Applicant in each previous year is not less than 16.00%. (b) The international transaction related to provision of information technology enables services shall be considered to be at arm's length for previous years 2011-12 to 2019-20 if the operating profit margin in relation to operating cost of the applicant in each previous year is not less than 15.00%. 3. In this background the assessee further submitted as follows: 2. For your honour's consideration it is submitted that BMC India had filed the captioned appeal against the additions made by the A.O on transfer pricing issues as well as corporate tax disallowances and the same is pending for adjudication with the Hon'ble ITAT. The details of the transfer pricing adjustment as well as corporate tax disallowances as per the final assessment order is provided below: Sr.No. Nature of international transaction Amount INR) A. Related oto transfer pricing 1. Provision of software development services 33,06,35,792 2. Provision of IT enabled services ('ITeS) 11,58,19,161 Total B. Related to Cor....
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.... 33,06,35,792 33,06,32,712 (99.99%)** 3,080 (0.0014%)** 2 Information Technology enabled services 11,58,19,161 11,58,19,161 (100%) 0 Total 44,64,54,953 44,64,51,873 3,080 **Percentage (%) of transactions with covered AEs and Non-covered AEs as computed In Annexure 2 7. ln view of the above, BMC India would like to mention that the international transactions pertaining to software development services and information technology enabled services and undertaken with AEs covered under signed APA do not require any further adjudication by the Hon'ble ITAT as they have been settled through the APA between the Appellant and the CBDT. 8. In view of this it is required to file modify the general ground of appeal contesting the quantum of transfer pricing addition of Rs 3,080 only as against total quantum of transfer pricing addition challenged in original ground of Rs 44,64,54,953. The appellant is submitting the modified ground to alter the quantum of addition for adjudication of the Hon'ble Bench. Kindly refer Attachment 2 for modified ground of appeal. " 4 Therefore, as per the submissions of the assessee, the quantum of transfer pricing additions after....
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....nd at para 16.6 and 16.7 it was held as follows: 16.6 The above mentioned contentions of the assessee have been carefully examined and they are found to be untenable for the following reasons: (a) While the A.O. stated that the payments made by the assessee to the telecom service providers are towards dedicated leased lines, the assessee claimed that the payments were made towards use of PRI lines which are not dedicated leased lines. However, it is noticed that the assessee has not furnished any documentary evidences in support of this factual claim. In the absence of the same, this claim of the assessee needs to be disregarded. (b) Though the assessee sought to apply the ratio of the decision of the Hon'ble Supreme Court in the case of Kotak Securities Ltd. to contend that the payments made by it for the use of PRl lines cannot be treated as fees for technical services as PRI lines are standard facilities available to any consumer, it is seen that the assessee has not furnished any documentary evidence by way of authentic technical literature in support of its claim that PRI lines are in the nature of standard facilities. The ratio of the decision of the Hon'ble Sup....
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....to Vi9desh Sanchar Nigam Ltd. Towards leased line charges. On merits, the Revenue had placed reliance on a decision of this Court in case of CIT Vs. Kotak Securities Ltd. [2012] 20 taxmann.com 846/340 ITR 333 (Bom. The Tribunal however, held that the amount in question was below Rs. 10 lakhs which was a minimum monetary limit enabling the Revenue to prefer appeal against the Commissioner's Appellate orders before the Tribunal. Revenue argues before us that the Tribunal should have seen the monetary limit of the combined appeals of the assessee as well as the Revenue arising out of the common judgment of the CIT(A) pertaining to the assessee for the same assessment year. In our opinion, this question is not required to be examined in view of the fact that the decision of this Court in case of Kotak Securities (supra) has been revised by the Supreme Court in the case of CIT Vs. Kotak Securities Ltd. [2016] 67 taxmann.com 356/239 Taxman 139/383 ITR 1 (SC). Resultantly, on the merits also, the Revenue would have no ground to succeed." Respectfully following the aforesaid decision, we direct the A.O/T.P.O to delete the addition on lease line charges from the hands of the assessee. Acc....