AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (2) TMI 1003
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....l. "Based on the facts and circumstances of the case, BMC Software India Private Limited (hereinafter referred to as 'the Appellant') respectfully craves leave to prefer an appeal under section 253(1 )(d) of the Income-tax Act, 1961 (hereinafter referred to as 'Act'), against the order dated 30 May 2022 (received on 30 May 2022) passed by the Assistant Commissioner of Income Taxi Circle 1 (1), Pune (hereinafter referred to as 'learned AO') under section 143(3) r.w.s. 144C(13) of the Act in pursuance of the directions dated 25 April 2022 issued by the Honorable Dispute Resolution Panel (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, Erred in retaining the transfer pricing adjustment of INR 32,83,79,248 while passing the final assessment order 1.1 Erred in retaining the transfer pricing adjustment made to software development segment (amounting to INR 21,49,88,149) and IT enabled service segment ....
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....ted 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. 5. Initiation of penalty proceedings under sec 270A of the Act Erred in initiating penalty proceedings under section 270A of the Act without appreciating the facts that transfer pricing adjustment to the international transactions of the Appellant and corporate tax adjustment made is on account of difference of opinion as to application of selection criterion for selection of comparable companies, incoherent approach, interpretation of the provisions, interpretation of case laws etc. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing of the appeal, so as to enable the Honourable Income-tax Appellate Tribunal to decide this appeal according to law." 4. Ground No. 1 contested in this appeal by the assessee can be understood in consonance with para 2.4.4 o....
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....ct that pursuant to this APA agreement, the assessee had filed modified return on 17-03-2022 which was within the time stipulated u/s 92CD(1) of the Act. Once the modified return has been filed section 92CD(4) of the Act spells out that the A.O shall proceed to complete the assessment order or re-assessment proceedings in accordance with agreement taking into consideration the modified return so furnished. Unfortunately in this case, the A.O has retained original transfer pricing adjustment without considering the modified return filed as per the mandate of section 92CD(4) of the Act. We further observe that the modified return was filed on 17-03-2022 and the ld. D.R.P has given their findings on 25-04-2022. Thereafter, the final assessment order was completed by the A.O on 30-05- 2022 which means that already the modified return was before the A.O., but he has not considered the same violating the provisions of section 92CD(4) of the Act. The ld. Counsel had submitted before us, at the time of hearing that this ground may be remanded back to the file of the A.O for giving appropriate consideration to the modified return filed by the assessee. The ld. D.R did not raise any objectio....
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....e‟s own case in ITA No.2038/PUN/2018 for A.Y. 2015-16, order dated 07-06-2022, wherein also relief was given to the assessee. The Tribunal had relied on the decision of Hon‟ble Bombay High Court in the case of Pr. CIT-2 Vs. Lee & Murihead (P) Ltd. (2020) 119 taxmann.com 499 (Bombay) and in that decision the Hon‟ble High Court referred to the decision of Hon‟ble Supreme Court in the case of CIT Vs. Kotak Securities Ltd. (2016) 67 taxmann.com 356 (SC) while providing relief to the assessee. The relevant para is extracted as follows: 6. The next ground for adjudication is Ground No. 13 as per the original grounds of appeal which pertains to disallowance of Primary Rate Interface (PRI) line charges paid to telecom companies amounting to Rs. 1,18,04,423/- on account of non-withholding of taxes. In the draft assessment order this issue has been discussed from para 6 onwards. After considering the submissions of the assessee, the A.O held that the assessee is engaged in the software development and production of software products. Telephone with high quality of network is required for such work. Therefore, it is technical service and hence TDS has to be de....
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....und of objection is rejected. " 7. We find that this issue is squarely covered in favour of the assessee by the order of Pune Tribunal in assessee's own case in ITA No. 2038/PUN/2018 for A.Y. 2015-16, order dated 07-06-2022 wherein it was held as follows: ITA No. 2038/PUN/2019 for A.Y. 2015-16 The assessee has submitted revised/modified grounds of appeal and at the time of hearing, the ld. Counsel submitted that broadly there are three issues for adjudication in the present appeal. The first issue is addition in respect of disallowance of Primary Rate Interface (PRI) Line charges paid to Telecom Companies amounting to Rs. 60,45,238/- on account of non-withholding of taxes. The submission of the assessee is that the subordinate authorities have erred in disallowing the charges paid to Telecom Companies such as Bharati Airtel, Tata Communications and Vodafone Cellular u/s 40(a)(ia) of the Act by treating the same as leased line charges and not appreciating the fact that the above charges were for standard PRI line charges which require no human intervention and consequently does not qualify as fees for technical services. In this regard, at the very outset,....
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....espectfully following the same, on the same parity of reasoning this ground of appeal of the assessee is allowed and the A.O/T.PO is directed to delete addition on lease line charges from the hands of the assessee. Ground No. 13 is allowed." 11 In fact this issue is consistently held in favour of the assessee from A.Ys. 2012-13 to 2016-17. The ld. D.R could not place on record any contrary facts and therefore, maintaining the same parity of reasoning and consistency on the issue, following our earlier orders, this ground is allowed in favour of the assessee. Ground No. 3 is allowed. 12. Ground Nos. 4 and 5 are consequential. 13. In the combined result, the appeal in ITA No. 597/PUN/2022 for A.Y. 2017-18 is partly allowed for statistical purposes. 14. In ITA No. 598/PUN/2022 for A.Y. 2018-19 the assessee has raised the following grounds: "Based on the facts and circumstances of the case, BMC Software India Private limited (hereinafter referred to as 'the Appellant') respectfully craves leave to prefer an appeal under section 253(1 )(d) of the Income-tax Act, 1961 (hereinafter referred to as 'Act'), against the order dated 30 May 2022 (received on....
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....d accordingly, disallowing the amount under section 37 of the Act. 3. Erred in disallowance of expenditure of INR 1,56,57,518/* made pursuant to ESOP scheme floated by the Appellant's parent company Erred in disallowance of 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 4. Erroneous levy of interest under section 234B of the Act. Erred in levying additional interest under sections 2348 and 234C of the Act of INR 8,57,20,422 and 3,54,132 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. 5. Initiation of penalty proceedings under sec 270A of the Act Erred in initiating penalty proceedings under section 270A of the Act without appreciating the facts th....
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.... On the facts and in the circumstances of the case and in law, the Honorable DRP and consequentially the learned AO have: 1. Non-consideration of the directions given by the Hon'ble IT AT to the learned AO during the remand back proceedings in relation to computation of risk adjustment and thus exceeding the powers conferred Erred in disregarding the directions given by the Hon'ble ITAT and thereby rejecting the grant of risk adjustment while passing the Final Assessment Order; Consequentially, the Final Assessment Order passed is bad in law as it has resulted into transfer pricing adjustment of INR 13,81,22,786 in relation to international transaction of provision of software development services which is liable to be set side; In view of the above, as the learned AO has exceeded the powers conferred under the statute the said transfer pricing adjustment be deleted. 2. Non-consideration of the fact that the assessee is a risk mitigated entity and when the said finding has been recorded by the Hon'ble ITA T; there is no reason for not granting the risk adjustment Erred on the facts and circumstances of the case a....
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....nly to the issue of risk adjustment. He further submitted that this issue was first adjudicated in assessee‟s case in ITA No. 1425/PUN/2010 for A.Y. 2006-07, order dated 16-03-2016 where the Tribunal observed and held as follows: "42. Now, coming to the plea of assessee of allowing risk adjustment. It was the case of assessee before us that since it was pricing its services at cost plus markup and was making supplies to its associate enterprises, there was no risk taken by the assessee. However, risk adjustment was to be allowed in the case of comparables. The learned Authorized Representative for the assessee pointed out that the TPO nowhere in its order had stated that the comparables were risk mitigated. The learned Authorized Representative for the assessee in this regard placed reliance on the ratio laid down by Pune Bench of Tribunal in Schlumberger Global Support Centre Limited Vs. DDIT in ITA No.86/PN/2013, relating to assessment year 2009-10, order dated 30.10.2015. 43. The learned Departmental Representative for the Revenue on the other hand, pointed out that there were various types of risks, which have to be quantified and in the absence of detai....