2024 (6) TMI 722

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....nse, assessee has submitted the information called for through ITBA Portal from time to time. During the course of scrutiny, the case was referred to the TPO u/s 92CA of the Act for determination of Arm's Length Price. Thereafter, the TPO proposed transfer pricing adjustment of Rs. 95,16,40,000/-. On receipt of the order u/s 92CA(3) from the TPO, draft Assessment Order was completed on 25.12.2019 and the sum proposed by the TPO was added to the income of the assessee. 3. Aggrieved with such draft assessment order, assessee company filed objections with the Dispute Resolution Panel (DRP), who passed the order on 12.03.2021. On receipt of the same, the DCIT/ACIT-TP-2, Hyderabad passed the Order Giving Effect on 6/4/2021, adjusting the software development segment's TP by Rs. 91.33 Crores. Thereafter, the application u/s 154 dt.20.02.2020 filed by the assessee was technically rejected, as the DRP's order already considered the total benefits granted to employees at Rs. 29,61,94,038/- and no rectification was sought by the assessee. The final adjustments as per the DRP's directions, totaled to Rs. 91,33,00,000/- for Software Development Services was added to the total in....

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....fer Pricing adjustment in respect of Software Development Segment of the taxpayer's international transactions. Further, vide application u/s 154 dated 20-02-2020, the taxpayer has requested for exclusion of TDS payment made on stock awards. The application was technically rejected on the ground that the same will be considered while giving effect to the order of Hon'ble DRP. However, it is seen that Hon'ble DRP vide its order under reference, (para 2.3.17) has categorically stated as under: "The TPO has correctly assumed the total benefits granted to the employees of the assessee at Rs. 29,61,94,038 (22,38,17,006 + 7,23,77,032) and added to the total operating cost of the assessee" In view of the above findings of Hon'ble DRP, the undersigned hereby confirms that there is no mistake which requires rectification. Hence, the concern of the taxpayer vide its petition u/s 154 is addressed accordingly. The final adjustments after giving effect to the DRP order are as under: As per the directions of Hon'ble DRP , Adjustment towards Software Development Services is Rs. 91,33,00,000/- and therefore the Total adjustment is Rs. 91,33,00,000/-".....

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....interest under section 234B of the Act. Necessary directions may please be given to the Ld. AO in this regard." 12. At the time of argument, the assessee has only restricted his above argument to the modified ground no.3 which is as under : "3 That on facts and in law, the Ld. DRP and Ld. TPO/AO erred by incorrectly computing transfer pricing adjustment on aggregate cost base of the Appellant without excluding the cost pertaining to Appellant's domestic operations. MGSI's domestic operations do not come under the ambit of Indian Transfer Pricing provisions and hence, the costs pertaining to the same should not be included while computing transfer pricing adjustments. This ground is without prejudice to the arguments of the Appellant against erroneous approach of Ld. DRP and Ld. TPO /AO." 13. The assessee has no further argument with respect to other grounds. 14. On the other hand, ld.DR has submitted that the matter is required to be remanded back to the TPO for verification and passing the order in accordance with the law. 15. We have heard the rival submissions and perused the material on record. As clear from page 14 of the order passed by the Assess....

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.... above said purposes, we are in agreement with the submissions of the ld.DR that the matter may kindly be remanded back to the Assessing Officer / TPO with the above said direction. In view of the above, we remand the matter back to the TPO for denovo examination of the facts and decide whether the addition as made by the TPO with respect to the domestic services as mentioned hereinabove are sustainable in the eye of law. Accordingly, the appeal of the assessee is allowed for statistical purposes. 17. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 27th March, 2024. ============= Document 1 480/04/2015-APA-I Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes Foreign Tax & Tax Research Division - I APA-I Section 906B, 9th Floor, C Wing, Hudco Vishala Building. 14, Bhikaji Cama Place, New Delhi-110066 Dated: 20th July, 2023 To Microsoft Global Services Centre (India) Private Limited, 3rd to 6th Floors of Unit 1 and 2, 2nd Floors of Unit 1. Salarpuria Sattva Knowledge City, Argus Building, Parcel-2, Survey No. 83/1, Ra....

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....ubject to the condition that the ITAT has not passed its ruling for this assessment year. Yours faithfully, (Dr. Vijit Patel) Under Secretary, APA-I FT&TR-I, CBDT Email: [email protected] Document 3 Microsoft Global Services Center (India) Private Limited Statement of Profit and Loss for the Year Ended 31 March 2016 Particulars INCOME Revenue from Operations Other Income EXPENSES Note No For the Year Ended For the Year Ended 31 March 2016 Rs. In Millions 31 March 2015 Rs. In Millions 16 17 6,271.02 94.48 6,365.50 6.152.16 93.89 6,246.05 Employee Benefits Expense Depreciation and Amortisation Expense 10 Other Expenses 19 609 2,537.86 2.330.12 125.93 2,776.53 215.33 2,831.99 5,440.32 5,377.44 925.18 868.61 Profit Before Tax Tax Expense -Current Tax -Deferred Tax 31.1 31.2 324.61 341.00 (1.34) (47.20) 323.27 293.80 601.91 574.81 Profit After Tax Earnings Per Equity Share (of Rs. 10 each) 30 - Basic (In Rs.) - Diluted (In Rs.) 17,766.99 17,766.99 16,967.06 16,967.06 See accompanying ....