TaxTMI 
TaxTMI 
2023 (12) TMI 1029
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....n Panel (DRP), New Delhi has erred both in law and on facts by summarily rejecting the Appellant's objections to the draft order dated November 24, 2011 passed by the Ld. AO under section 143(3) read with section 144C(1) of the Act. The Hon'ble DRP while issuing directions under section 144C(5) of the Act did not consider the facts and merits of Appellant's objections to the proposed adjustments, and merely relied on the reasoning given by the Additional Commissioner of Income-tax, Transfer Pricing Officer-1 (2) vide order under section 92CA(3) of the Act dated October 31, 2011 without due application of mind and without affording a reasonable opportunity of being heard in the matter to the Appellant on the following grounds: 1. By summarily rejecting/disregarding the comparability analysis without giving any cogent basis and without demonstrating the inadequacy or infirmity in the economic analysis so conducted by the Assessee. In this regard, the Ld. TPO erred in demonstrating correctness of the presumption/hypothesis so framed to reject the comparability analysis of the Assessee and has accordingly misconstrued the provisions of Section 92C....
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.... the purpose of comparison with the results of the Assessee. 13. By not appreciating that there was no intention whatsoever on the part of the Appellant to shift profits outside India by underreporting revenue since the Appellant was eligible to claim 100 percent of such profits as tax exemption under section 10A of the Act." 3. Briefly stated the facts of the case are that the assessee company is involved in the business of BPO and Technology Development Services, Human Resource Consultancy and Human Resources Outsourcing Service. 4. During the course of the scrutiny assessment proceedings the AO noticed that the assessee has international transactions for which it filed form No.3CEB as per provisions of section 92E of the Act relating to international transactions. Since the total transactions were excess of Rs. 5 crores. The case was referred to the TPO and the TPO vide order dated 31.10.2011 proposed an addition of Rs. 440638092/-. 5. Objections were raised before the DRP and the DRP vide order dated 13.06.2012 dismissed the objections and pursuant to the order of the DRP the final assessment order was framed by making addition of Rs. 440638092/-against which ....
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....m 40. The relevant findings read as under :- "2. For convenience, we may record facts from Income Tax Appeal No.4/2017. The Respondent-Assessee is a private limited company. In the return of income-tax filed by the assessee for the assessment year 2007- 2008, the question of determination of Arm's Length Price of the transaction entered into by the assessee with its international Associated Enterprises came up for consideration. The Assessee has 96% of its such transactions with its US based associated enterprise. The rest of the transactions are non-US based transactions. In relation to the US based transactions, the Government of India and that of United States of America entered into a Mutually Agreed Procedure for determining the tax to be levied in the two countries in relation to such transactions. This Mutually Agreed Procedure culminated into an order being formally passed in this regard. When it came to the question of determining the Arm's Length Price of assessee's similar transactions, which were non-US based, the tribunal by the impugned judgment, applied the same parameters and determined the Arm's Length Price on the basis of determi....
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....have been recomputed on the basis of the agreement reached with the US Competent Authority. As per the agreement, operating cost shall exclude the following: Forex loss, financial charges, donation, any provisions, any written off expenses, loss on capital and includes reimbursement of expenses (received). **As per the agreement, operating revenue is the revenue received for rendering export services excluding forex gain and including reimbursement of expenses (received). # The adjustments are restricted to the amount of adjustments made by the TPO in the TP Order. Accordingly, in pursuance of the mutual agreement, corresponding relief to the adjustments made by the TPO/ AO has been computed as follows. S.N 0. AY IT Services TPO Adjustments made towards US transactions As Income adjusted by Total adjusted income Relief Adjustment sustained per agreement TPO not under MAP TPO As per 1 2006-07 1665,02,090 131,47,756 143,99,790 1809,01,880 agreement 275,47,545 2 2007-08 1774,17,608 493,83,192 134,36,101 1908,53,709 628,19,293 3 2008-09 1885,78,57....