TaxTMI 
TaxTMI 
2024 (1) TMI 494
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....rder passed by the Deputy Commissioner of Income Tax, Circle 1(1), New Delhi ("the learned AO") and the order passed by Hon'ble Commissioner of Income Tax (Appeals) - XX, New Delhi ("CIT(A)"), are bad in law and void- ab-initio. 2. The Hon'ble CIT(A) following the order of the learned TPO and AO has erred in law and on the facts of the case in determining the total income of the Appellant at INR 77,07,6401- as against the returned loss of INR 65,96,611/- and thereby made an upward adjustment of INR 1,43,04,251/-. Transfer Pricing Grounds of Appeal 3. That on facts and circumstances of the case and in law, the Learned TPO/AO/CIT(A} have erred in rejecting certain companies and adding certain functionally dissimilar companies to the final set of alleged comparable companies on an ad-hoc basis, thereby resorting to cherry picking of comparable companies for benchmarking the International transaction pertaining to provision of marketing support services ("impugned transaction"). 4. That on facts of the case and in law, the learned TPO/AO/CIT(A) have grossly erred by not making appropriate adjustments to account for differences in the working ....
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....al arguments submitted by the Appellant in its submissions before the learned CIT(A); b) issuing an order without giving any detailed findings and merely upholding the order given by the Learned AO/TPO 12. That on facts and circumstances of the case and in law, the learned TPO/AO/CIT(A) have erred in using single year data of alleged comparable companies without considering the fact that the same was not available to the Appellant at the time of complying with the transfer pricing documentation requirements and disregarding the Appellant's claim for use of multiple year data for computing the arm's length price. 13. That on facts and circumstances of the case and in law, the learned AO/TPO/CIT(A) have erred by not considering that the adjustment to the arm's length price, if any, should be limited to the lower end of the 5 percent range as the Appellant has the right to exercise this option under the pre-amended second proviso to section 92C(2) of the Act. 14. That on facts and circumstances of the case and in law, the learned TPO/AO/CIT(A) have erred in appreciating the fact that there was no motive to shift profits outside India sin....
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....ing grounds of appeal 3.1 That on facts and circumstances of the case and in law, the learned AO/ TPO/ the DRP have erred in rejecting the economic analysis undertaken by the Appellant by conducting a fresh economic analysis for provision of marketing services ("impugned transaction") to find new comparable companies. 3.2 That on facts and circumstances of the case and in law, the learned AO/TPO and the DRP have erred in using single year data of alleged comparable companies without considering the fact that the same was not available to the Appellant at the time of complying with the transfer pricing documentation requirements and disregarding the Appellant's claim for use of multiple year data for computing the arm's length price. 3.3 That on facts and circumstances of the case and in law, the Learned AO/TPO/ the DRP have erred by applying inappropriate additional filters for selecting/rejecting companies as comparable to the Appellant for the impugned transaction. 3.4 That on facts and circumstances of the case and in law, the DRP and TPO/AO have erred in rejecting certain companies and adding certain companies to the final set of alle....
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....he Additional Director of Income Tax, Transfer Pricing Office - 1 (1) under Section 92CA(1) of the Act and in not providing an opportunity of being heard before referring the transfer pricing issues to the Learned TPO. Corporate tax grounds of appeal Disregard of acquisition cost of business database 4.1 That on the facts and circumstances of the case and in law, the DRP has erred in confirming and accordingly, the learned AO has erred in restricting the cost of acquired database to Rs 30,000,000 instead of Rs 120,000,000 as confirmed by the learned TPO for AY 2002-03. 4.2 That on facts and circumstances of the case and in law, the DRP and the learned AO has erred in not following the decision of ITA T, Mumbai in appellant's own case for AY 2002-03 which is binding on them. Disallowance of depreciation on such database 5.1 That on facts and circumstances of the case and in law, the DRP has erred in confirming and accordingly, the learned AO has erred in disallowing the claim of the appellant for Rs. 9,492,188, being the amount of depreciation on the acquired business database under section 32 of the Act. 5.2 That on....
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.... 11. That on facts and circumstances of the case and in law, the learned have grossly erred in initiating penalty proceedings under section 271 (1)(c) of the Act. The above grounds of appeal are mutually exclusive & without prejudice to each other. The appellant prays for leave to add, alter, amend and 1 or modify any of the grounds of appeal at or before the hearing of the appeal." 4. Apropos transfer pricing issue : the assessee is incorporated on 31st August, 1999 under Companies Act, 1956 and is engaged in the business of buying and selling foreign currency and traveler cheques and is also involved in the marketing and distribution of credit cards and personal loan products of American Express Bank Limited. 4.1 At the outset, ld. Counsel of the assessee prayed for admission of additional evidences and pleaded that the matter may be remanded to AO/TPO for fresh consideration. He submitted that in similar facts and circumstances in assessee's own case for AY 2004-05 in ITA No.3524/Del/2014 vide order dated 30.11.2023, the ITAT restored the matter on this issue to the authorities below. The submission of the ld. Counsel of the assessee read as under :- ....
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.... segment of market support services CMSS'), as accepted by TPO in all subsequent years. In support of such request Appellant relied on order of this Hon'ble Tribunal relating to A Y 2004-05 (supra). Ld. CIT(DR) raised the very same objections as already considered by coordinate bench in said order of A Y 2004-05. As identical facts and contentions were already considered by coordinate bench of this Hon'ble Tribunal in relation to appeal for A Y 2004- 05 (Para 10 -13 011 page 15-16 of said order), Appellant prays that same may kindly be followed for present appeals as it would ensure that benchmarking is carried out in accordance with law and by considering correct facts." 5. Per contra, ld. DR for the Revenue opposed the admission of additional evidences. 6. Upon careful consideration, we find that in identical circumstances, the ITAT in assessee's own case in AY 2004-05 (supra) admitted the additional evidences and remanded the matter to TPO for fresh adjudication. ITAT in its order dated 30.11.2023 has held as under :- "6. We have considered the facts and circumstances canvassed before us for admitting the additional evidences. The first thing that come....
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....onal evidence can be called for. Further the Rule 29 provides that for 'any other substantial cause' also the Tribunal can allow the additional evidences. The decision of the Delhi Bench 'F' in the case of UOP LIC v Additional Director of Income tax, International taxation, Circle 2(2) New Delhi (2007) 108 ITD 186 is relevant where in para 30 it is observed; "30. It is a settled position that production of additional evidence at the appellate stage is not a matter of right to litigating public and allowing of production of additional evidence is in the discretion of the Tribunal. The said discretion, however, is to be exercised judicially and not arbitrarily. As held by Hon'ble Madhya Pradesh High Court in the case of CIT V. Kum. Satya Setia (1983) 143 ITR 486, it is within the discretion of the appellate authority to allow production of additional evidence if the said authority requires any document to enable it to pass orders or for any other substantial cause. The Tribunal is the final fact finding body under the scheme of the Income Tax Act, 1961 and powers, therefore, have necessarily to be exercised by it for deciding the questions of fact. While exercising its power....
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....even the lower revenue authority had fallen in error to rely an incorrect set of evidences of the assessee. The question of delay in filing of additional evidence is not of any consequence unless a malafide is alleged and established, which is not the case here. 13. Thus, we are inclined to allow the application of the assessee. Accordingly, impugned final assessment order is set aside and the TPO is directed to accept the fresh evidence and report of the assessee for the purpose of Section 92C of the Act r.w. Rule 10B of the Income-tax Rules, 1962 and, after giving further opportunity of hearing to the assessee pass a fresh order. The assessee will be at liberty to raise further incidental issues afresh before the TPO/AO." 7. Respectfully following the precedent as above, we give similar directions and accept the assessee's plea. Accordingly, the impugned final assessment order is set aside and the AO/TPO is directed to accept the fresh evidences and report of the assessee for the purpose of Section 92C of the Income-tax Act, 1961 (for short 'the Act') read with Rule 10B of the Incometax Rules, 1962 and after giving further opportunity to the assessee pass fres....