TaxTMI 
TaxTMI 
2023 (7) TMI 1467
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....ts revised return of income and determining a demand of Rs. 2186,98,55,847 payable by the Appellant. A Transfer Pricing grounds 2 Erred in making a reference of the Appellant's case to the learned TPO under Section 92CA(1) of the Act, without satisfying any of the conditions laid down in clauses (a) to (d) of Section 92C(3) of the Act based on the information/documents available with him; 3. Erred in law and facts, by passing the transfer pricing (TP) order on 01 November 2019, which is beyond the time limit for completion of proceedings under Section 92CA(3A) of the Act. thus making the TP order invalid and unsustainable in law. Further, the learned AO has erred in passing a draft assessment order incorporating an invalid adjustment proposed in the TP order. Separate segmental margins 4. Erred in law and facts, in upholding that the international transactions of the Appellant of rendering IT and BPO services under the Delivery Centre Agreement (DCA) are two distinct transactions (i.e. rendering of IT services and rendering of BPO services) which should be benchmarked separately. Provision of IT services 5. Wit....
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....ineering, etc, and does not report separate segmental information for software development services in its the financial statements and company has significant R&D expenses. 15. Erred in accepting Persistent Systems as comparable for benchmarking the IT services transaction disregarding the fact the company has significant related party transactions, is functionally different as it is engaged in development and sale of software products and does not provide separate segmental information for software development services. Adjustment required to be made to arm's length margin 16. Erred in not allowing Appellant the benefit of working capital adjustment which is required to be undertaken to account for the difference in working capital levels between the comparable companies and the Appellant. 17. Erred in not allowing Appellant the benefit of the risk adjustment to account for the difference between the risks taken on by the Appellant and the risks taken on by the comparable companies. Transactions of royalty payment 18. Erred in rejecting the economic analysis undertaken by the Appellant using CUP method for benchmarking the....
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....x (DDT) paid 27. Erred in rejecting the additional claim filed for DDT refund claim of Rs. 294,84,70,521 towards excess DDT paid by the Appellant. 28. Erred in not appreciating that dividend paid by the Appellant to its Mauritius and Dutch shareholders, is liable to tax as per the beneficial tax rate of 5% and 10% under Article 10(2) of the India-Mauritius Tax Treaty and IndiaNetherlands tax treaty respectively, and thereby. rejecting the refund claim of Rs. 294,84,70,521 made by the Appellant with respect to the DDT paid in excess of the beneficial tax rates under the treaties. Non-grant of tax credits pertaining to Accenture Services Private Limited (ASPL), which merged into the Appellant with an appointed date of 1 April 2015 ASPL merged into the Appellant with an appointed date of 1 April 2015. Revised return was filed pursuant to merger of ASPL into the Appellant wherein all income and corresponding TDS, advance tax, MAT credit, DDT pertaining to ASPL was reported by the Appellant. The said merger was also noted by the AO in the draft assessment order dated 26 December 2019. However, still the learned ΛΟ: 29. Erred i....
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....an Company engaged in providing I.T software development, BPO and consulting services. During the course of assessment the assessee operated out of several units located in the Software Technology Park of India (STPI) and Special Economic Zone (SEZ) and claimed a deduction u/s 10AA of the Act in respect of the profits earned from the eligible SEZ units. During the year the assessee has also provided IT service and BPO services to its associated enterprises (AE's) located in various countries. During the course of assessment proceedings the assessing officer referred the case to the Transfer Pricing Officer u/s 92CA(1) of the Act in order to determine the arm's length price in relation to international transactions entered into by the assessee. The TPO vide order u/s 92CA(3) dated 01.11.2019 has made an upward adjustment to the arm's length price by Rs. 18,08,53,54,719/- in relation to the international transactions entered into by the assessee company with its associated enterprises during the financial year 2015-16 relevant to assessment year 2016-17. 3. The AO has also noticed that assessee company has claimed deduction u/s 10AA of the Act amounting to Rs. 12,32,20,7....
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....e a reference was made under sub-section (1) before the 1st day of June, 2007 but the order under sub-section (3) has not been made by the Transfer Pricing Officer before the said date, or a reference under sub-section (1) is made on or after the 1st day of June, 2007, an order under sub-section (3) may be made at any time before sixty days prior to the date on which the period of limitation referred to in section 153, or as the case may be, in section 153B for making the order of assessment or reassessment or recomputation or fresh assessment, as the case may be, expires:" Section 153(1) "Time limit for completion of assessment and reassessments- (1) No order of assessment shall be made under section 143 or section 144 at any time after the expiry of - (a) Two years from the end of the assessment year in which the income was first assessable, or (b) (b) One year from the end of the financial year in which a return or a revised return relating to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, is filed under sub-section(4) or subsection (5) of section 139, whichever is later: Provided xxxxxxx....
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....sion bench of the Hon'ble Madras High Court in the case of DCIT Vs. Saint Gobain India P. Ltd. referred by the ld. Counsel is reproduced as under: "28. The word "date" in section 92CA(3A) would indicate 31-12-2019. But the preceding words "prior to" would indicate that for the purpose of calculating the 60 days, 31-12-2019 must be excluded. The usage of the word "prior" is not without significance. It is not open to this court to just consider the word "to" by ignoring "prior". The word "prior" in the present context, not only denotes the flow of direction, but also actual date from which the period of 60 days is to be calculated. It is settled law that while interpreting a statute, it is not for the courts to treat any word(s) as redundant or superfluous and ignore the same. In this connection, it is pertinent to note the judgment of the Apex Court in Grasim Industries Ltd. v. Collector of Customs 2002 taxmann.com 1803, wherein, it was held as follows : "10. No words or expressions used in any statute can be said to be redundant or superfluous. In matters of interpretation one should not concentrate too much on one word and pay too little attention to other words....
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....ed before 1-11-2019 i.e. on or before 31-10-2019 as rightly held by the Learned Judge. 30. Even considering for the purpose of alternate interpretation, the scope of section 9 of the General Clauses Act, it is to be noted that an inverted calculation of the period of limitation takes place here. If the last date is taken to be the first date from which the period of 60 days is to be calculated, reading down the provision with the use of the word "from", which denotes the starting point or period of direction in general parlance, would mean that 60 days "from the last date". Even going by section 9 of the General Clauses Act, when the word "from" is used, then, that date is to be excluded, implying here that 31-12-2019 must be excluded. After excluding 31- 12-2019, if the period of 60 days is calculated, the 60th day would fall on 1-11-2019 and the TPO must have passed the order on or before 31-10-2019 as orders are to be passed before the 60th day. Therefore, either way the contention of the Revenue is a fallacy and has no legs to stand. Mandatory or Directory 31. The next contention that has been raised by the learned senior standing counsel for the appe....
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.... order within 60 days. 34. Further, the extension in the proviso referred above, also automatically extends the period of assessment to 60 days as per the second proviso to section 153. 35. Also, but for the reference to the TPO, the time limit for completing the assessment would only be 21 months from the end of the assessment year. It is only if a reference is pending, the department gets another 12 months. Once reference is made and after availing the benefit of the extended period to pass orders, the department cannot claim that the time limits are not mandatory. Hence, the contention raised in this regard is rejected. 36. As rightly pointed out by Mr. Ajay Vohra, learned senior counsel for the respondents in WA. Nos. 1148 and 1149/2021, the word "may" has to be sometimes read as "shall" and vice versa depending upon the context in which it is used, the consequences of the performance or failure on the overall scheme and object of the provisions would have to be considered while determining whether it is mandatory or directory. 37. At this juncture, it is noteworthy to mention the commentary of Justice G.P. Singh on the interpretation of....
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....tory nature of the time schedule. The word "may" cannot be interpreted to say that the legislature never wanted the authority to pass an order within 60 days and it gave a discretion. Therefore, the learned Judge rightly held the orders impugned in the writ petitions as barred by limitation, as the Board, in the Central Action Plan, has specified 31-10-2019 as the date on which orders are to be passed by the TPO, reiterating the time limit to be mandatory." After taking into consideration the material placed on record it is undisputed fact that transfer pricing officer has passed order u/s 92CA(3) on 01.11.2019 whereas the limitation for passing the said order u/s 92CA(3) expires on 31.10.2019 Therefore, taking into consideration the provision of the Act and decision of Hon'ble Madras High Court in the cases referred supra the order u/s 92CA(3) of the Act is time barred by 1 day. Further the ld. Counsel has mentioned the provisions of Sec. 144C(15) of the Act pertaining to the eligible assessee the same is reproduced as under: "(b) "eligible assessee" means - (i) Any person in whose case the variation referred to in sub-section (1) arises as a consequence of th....
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....he course of appellate proceedings before us the ld. Counsel submitted in his submission that amendment made by the Finance Act is a substantial amendment must be held to be applicable from assessment year 2023-24 as it is the cardinal principal of law that any amendment made is ordinarily prospective in nature. In this regard, the assessee has referred decision of Hon'ble Supreme Court in Sedco Forex International Drill Inc. Vs. CIT (2005) 149 taxman.com 352/279 ITR 310 (SC). 13. Heard both the sides and perused the material on record. In view of the amendment made by Finance Act 2022 as referred supra we don't find any merit in the ground of appeal of the assessee as it is categorically laid down in the explanation 3 to Section 40(a)(ii) that education cess is included in the term ' tax' as per the provision of Sec. 40(a)(ii) w.e.f 01.04.2005. Therefore, ground of appeal of the assessee from 24 to 26 are dismissed. Ground No. 27 & 28: 14. The assessee has claimed that dividend distribution tax ought to be taxed at the rate prescribed under the respective Double Tax Avoidance Agreement. In view of the decision of special bench of ITAT Mumbai in the case of Total Oil ....