TaxTMI 
TaxTMI 
2025 (3) TMI 2074
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....d the following grounds : General ground: 1. On the facts and circumstances of the case and in contrary to law, the Deputy /Assistant Commissioner of Income Tax, Transfer Pricing Officer - 2, Hyderabad (hereinafter referred to as 'the Ld. TPO') and the Ld. AO pursuant to the directions issued by the Hon'ble DRP erred in making a transfer pricing adjustment of INR 10,86,08,764 to the Appellant's income and thereby determining a total income of INR 53,33,17,004 and the said adjustment being wholly unjustified are liable to be deleted. Legal Ground: 2. On the facts and circumstances of the case and in law, the learned AO Circle - 2(2) Hyderabad has erred in make a reference u/s 92CA of the Act to the transfer pricing officer without having any powers to make such reference. Accordingly, the TP order dated 29 January 2021 is based on invalid reference and hence bad in law and ought to be quashed. 3. On the facts and circumstances of the case and in law, the Learned Jurisdictional Assessing Officer i.e., DCIT, Circle 2 (1), Hyderabad has erred in passing the final assessment order dated 29 December 2023 without having powers t....
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....ion and further erred in rejecting the benchmarking analysis conducted under TNMM for payment of global / regional management overhead allocation fee and also the benchmarking conducted under CUP method for payment of trademark license fee in the transfer pricing documentation maintained by the Appellant, 9. On the facts and circumstances of the case and in contrary to law, the Ld. TPO erred in and the Hon'ble DRP further erred in upholding / confirming the action of Ld. TPO in ignoring the fact that the expense for global/regional management overhead allocation fee is included in the cost base while computing the Net Cost Plus Markup ('NCP*) of Market Research Segment and Provision of Information Technology enabled Services segment under the TNMM analysis which have been accepted by the Ld. TPO/Hon'ble DRP to be at arm's length. 10. On the facts and circumstances of the case and in contrary to law, the Ld. TPO erred in and the Hon'ble DRP further erred in upholding / confirming the action of Ld. TPO in applying Other Method inappropriately and further erred by not bringing on record any comparable data as mandated by section 92C of the Act rea....
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....on'ble DRP further erred in upholding/ confirming the action of the Ld. TPO in simply applying the short term deposit rates of the State Bank of India ('SBI') to compute the TP adjustment without undertaking proper benchmarking analysis and completely ignoring the fact that as a banking company, SBI is not engaged in a business similar to the Appellant. 17. On facts and circumstances of the case, the Ld. AO/ Ld. TPO erred in and the Hon'ble DRP further erred in not appreciating the fact that the Appellant is fully funded by its Associated Enterprise with no working capital risk. 18. On the facts and circumstances of the case, the Ld. AO/Ld. TPO erred in and the Hon'ble DRP further erred in not appreciating that working capital adjustment under TNMM takes into account the impact of outstanding receivables of controlled transaction vis-à-vis uncontrolled transaction. 19. On the facts and circumstances of the case and in contrary to law, the Ld. TPO erred in and the Hon'ble DRP further erred in upholding/ confirming the action of the Ld. TPO in not considering the fact that the Appellant did not charge any interest on any delay....
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....nt of Global/Regional Management overhead allocation fee and Rs. 2,50,18,764/- on account of interest on Trade Receivables. Aggrieved by the order of Ld. AO, the assessee is in appeal before the Tribunal. 4. At the outset, the Learned Authorised Representative ("Ld. AR") submitted that, ground nos.1 & 23 are general in nature and they are not pressing ground nos.2 & 3. Accordingly, no separate adjudication is required on account of ground nos.1, 2, 3 & 23. 5. Ground nos.4 & 5 are related to legal ground under which the Ld. AR has raised objection against validity of impugned order passed on 29.12.2023. The Ld. AR invited our attention to page no.3 of paper book dated 14.10.2024, wherein the intimation letter dated 01.01.2024 is placed and argued that, the Ld. AO has intimated the DIN to the assessee on 01.01.2024, however, the last date for passing the impugned order was 31.12.2023. Therefore, the DIN issued after the last date of passing of impugned order, makes the order time barred under the Act. In support of their alternate argument, the Ld. AR invited our attention to page no.29 of paper book dated 14.10.2024 containing the copy of order sheet and submitted that, agains....
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.... as 'pending for income computation'. Further, the Ld. DR invited our attention to the copy of the impugned order placed at page nos.4 & 5 of the paper book dated 14.10.2024 and demonstrated that, in the impugned order itself, the Ld. AO has worked out the taxable income as well as the amount refundable to the assessee i.e. a refund of Rs. 1,17,51,024/-. Hence, there was no pendency on the part of the Ld. AO qua computation of income as well as computation of tax liability of the assessee as on 29.12.2023. He further submitted that, the intimation letter dated 01.01.2024 was only prepared to intimate the assessee about the completion of accounting by CPC. From the perusal of said intimation letter, it is evident that a copy of order was already issued prior to this notice. Hence, the contention of the Ld. AR that the order was not complete before the limitation period and the same has been sent first time along with this intimation letter is not correct. However, due to some technical glitches, the intimation letter dated 01.01.2024 could not be mailed to the assessee on that date, however, the same was mailed to the assessee on 26.01.2024. As far as the objection of Ld. AR....
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....h on perusal of the impugned order, where the Ld. AO has completed the computation of income as well as the final tax liability of the assessee and made a final calculation of Rs. 1,17,51,024/- as refundable to the assessee. Hence, in our considered opinion, the impugned order had been uploaded by the Ld. AO on ITBA portal on 29.12.2023 and no computation on the part of the Ld. AO was pending as on 29.12.2023. Accordingly, the objection of the assessee that the impugned order was not completed and was not issued before the limitation period is rejected. 7.5 As far as the third objection of the Ld. AR regarding non-issue of notice u/s.156 of the Act along with the assessment order is concerned, we have gone through the provision of section 156 of the Act which are to the following effect :- "Notice of Demand 156. (1) When any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under this Act, the Assessing Officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable : Provided that where any sum is determined to be payable by the assessee or the deductor or the coll....
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....regional management overhead allocation fees. The Ld. AR submitted that the assessee needs to file some additional documentary evidences in support of their claim, which required factual verification on the part of the Ld. AO/Ld. TPO. The Ld. AR invited our attention to decision of this tribunal placed at page nos.197 and 198 of the case law paper book and submitted that, the issues are covered by the decision of this Tribunal in assessee's own case for A.Y. 2018-19 in ITA No. 484/Hyd/2022 dated 09.05.2023, wherein under the identical issue, ITAT has set aside the issue to the file of Ld. AO/Ld. TPO. Hence, relying on the decision of this Tribunal (supra), the Ld. AR prayed before the bench to set aside the issue to the file of Ld. AO/Ld. TPO. 10. Ld. DR stated that they have no objection, if the issue is remanded to Ld. AO/Ld. TPO. 11. We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. We found that, identical issue has been decided by this Tribunal in assessee's own case for A.Y.2018-19 in ITA No. 484/Hyd/2022 (supra) at para nos. 4 & 5, which are to the following effect : " 4. Coming to....
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....tted that the Ld. AO/Ld. TPO have adopted the short term deposit rate of SBI for the purpose of bench marking the rate of interest on trade receivables, however, the assessee is seeking for LIBOR +200 points. The Ld. AR invited our attention to page nos.198 to 203 of the case law paper book and submitted that the issues are covered by the co-ordinate bench of Tribunal in assessee's own case for A.Y. 2018-19 in ITA No. 484/Hyd/2022 dated 09.05.2023, wherein the ITAT has bench marked the interest rate at LIBOR +200 points. Hence, relying on the decision of co-ordinate bench of Tribunal (supra), the Ld. AR prayed before the bench to bench mark the interest rate on trade receivables at LIBOR +200 points. 12.1 Ld. DR relied on the decision of the Ld. AO/TPO. 12.2 We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. We found that, identical issue has been decided by this Tribunal in assessee's own case for A.Y. 2018-19 in ITA No. 484/Hyd/2022 (supra), wherein this Tribunal at para nos. 6 to 12 has decided the issue, which are to the following effect : " 6. Other issue remains to be considered is i....
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....bmissions on either side. In view of the view taken by the Hon'ble Bombay High Court in Patni Computer Systems (supra), on the amendment to Section 92B of the Act by way of Finance Act, 2012 with retrospective effect from 01/04/2002, it is not open for the assessee to agitate the question as to whether or not the interest on outstanding receivables is an international transaction requiring separate benchmarking. Only issue remains to be considered is in respect of the rate of interest, while placing reliance on the decisions reported in Tecnimont ICB House Vs. DCIT [2015] 60 taxmann.com 143 (Mumbai - Trib.), Hon'ble Bombay High Court in PCIT Vs. Tecnimont (P) Ltd., (supra) and CIT Vs. Cotton Naturals (I) (P.) Ltd. [2015] 55 taxmann.com 523 (Delhi). Assessee prayed that LIBOR+200 basis points may be adopted. This aspect is no longer res integra and dealt with by the Mumbai Bench of the Tribunal in the case of Tecnimont ICB House (supra) and confirmed by the Hon'ble Bombay High Court. Cotton Naturals (I) (P.) Ltd. (supra) is also on the same aspect. 10. Insofar as the interest on receivable is concerned, Munbai Bench of the Tribunal, vs. DCIT [2015] 60 taxmann.co....
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....icable to the currency concerned in which the loan has to be repaid; that the interest rates should not be computed on the basis of interest payable on the currency or legal tender of the place or the country of residence of either party. It is further observed that the interest rates applicable to loans and deposits in the national currency of the borrower or the lender would vary and are dependent upon the fiscal policy of the Central bank, mandate of the Government and several other parameters; that the interest rates payable on currency specific loans/ deposits are significantly universal and globally applicable; that the currency in which the loan is to be re-paid normally determines the rate of return on the money lent, i.e. the rate of interest. While referring to the Klaus Vogel on Double Taxation Conventions (Third Edition) under Article 11 in paragraph 115, the Hon'ble High Court held that the PLR rate, therefore, would not be applicable and should not be applied for determining the interest rate and the PLR rates are not applicable to loans to be re-paid in foreign currency. Hon'ble Court accordingly held that whatever the principle that is applicable to the case....
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....s and circumstances of the case and in contrary to law, the Ld. TPO erred in and the Hon'ble DRP further erred in upholding / confirming the action of the Ld. TPO in inappropriately rejecting the transfer pricing documentation maintained by the Appellant, without appreciating that none of the conditions mentioned in clauses (a) to (d) of Section 92C(3) of the Act were satisfied. 4. On the facts and circumstances of the case and in contrary to law, the Ld. TPO erred in and the Hon'ble DRP further erred in upholding / confirming the action of Ld. TPO in rejecting the comparable companies selected by the Appellant under the Transactional Net Margin Method ("TNMM') for Payment for global/regional management overhead allocation fee to its Associated Enterprise ('AE'), in the TP documentation maintained by the Appellant. 5. On the facts and circumstances of the case and in contrary to law, the Hon'ble DRP erred in rejecting overseas Tested Party approach adopted by the Appellant in its transfer pricing study and further erred in rejecting the benchmarking analysis conducted under TNMM in the transfer pricing documentation maintained by the Appell....
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....Appellate Tribunal ('ITAT') ruling in the Appellant's own case for previous AYs, when the underlying facts have remained the same. Interest on trade receivables: 12. On the facts and circumstances of the case and in contrary to law, the Ld. TPO erred in and Hon'ble DRP further erred in law and on facts by treating the delayed receivables as unsecured loan advanced by the Appellant to its AEs and treating the delayed receivables as an international transaction and computing notional interest on the same. 13. On the facts and circumstances of the case and in contrary to law, the Ld. TPO erred in and the Hon'ble DRP further erred in upholding/ confirming the action of the Ld. TPO in simply applying the short term deposit rates of the State Bank of India ('SBI') to compute the TP adjustment without undertaking proper benchmarking analysis and completely ignoring the fact that as a banking company, SBI is not engaged in a business similar to the Appellant. 14. On facts and circumstances of the case, the Ld. AO/ Ld. TPO erred in and the Hon'ble DRP further erred in not appreciating the fact that the Appellant is fully fu....
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.... to the returned income, thereby not granting an opportunity to submit the appropriate response against the proposed adjustments. 21. On the facts and in the circumstances of the case and in contrary to law, the Ld. AO erred in considering income determined as per intimation issued under Section 143(1) of the Act, instead of returned income as the starting point for assessing total income. 22. On the facts and in the circumstances of the case and contrary to law, the Ld. AO has erred in sustaining the additions made in intimation issued under section 143(1) of the Act, in an absolute disregard of the submissions made to him during the course of assessment and the Hon'ble DRP has further erred in not adjudicating upon the objections raised before it in this regard. 23. On the facts and in the circumstances of the case and contrary to law, the Ld.AO has erred in considering the income as per intimation under Section 143(1) as the starting point while computing the assessed income, which indirectly subsumes the adjustment towards penalty of INR 14,864 paid as per PF laws to the total income of the Appellant, without giving cognizance to the fact that App....
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....rity to decide this appeal according to law. 14. At the outset, the Ld. AR submitted that ground no.1 is general in nature, they are not pressing ground no.2 and ground no.28 is consequential in nature. Therefore, no separate adjudication is required on ground nos.1, 2 & 28. 15. Ground nos.3 to 11 of the assessee are related to adjustment made by the Ld. AO on account of global / regional management overhead allocation fee. The issue involved under these grounds are identical to issues involved in ground nos.6 to 14 in ITA No. 274/Hyd/2024. Hence, our decision and findings in ITA No. 274/Hyd/2024 shall apply mutatis mutandis to these grounds also. Accordingly, the ground nos.3 to 11 of the assessee are allowed for statistical purposes. 16. Ground nos.12 to 19 of the assessee are related to interest on trade receivables. The facts and issues involved under these grounds are identical to facts and issues involved in ITA No. 274/Hyd/2024. Hence, our decisions and findings in ITA No. 274/Hyd/2024 applies mutatis muntandis to these grounds also. Accordingly, the ground nos. 12 to 19 of the assessee are partly allowed. 17. Ground nos.20 to 25 of the assessee are related to ad....
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....ceedings u/s.143(3) of the Act. The Ld. AO was duty bound to consider the objection before passing the final order. Therefore, as far as the ground of the assessee regarding disallowance of Rs. 14,864/- is concerned, we direct the Ld. AO to verify whether the assessee has already disallowed the same in its computation of income while filing the ROI. If so, the Ld. AO shall delete duplicate addition made by the CPC to prevent double taxation. 22. As far as the ground of the assessee related to disallowance of Rs. 34,26,382/- towards delayed deposit of employees' PF contribution after the due date specified under the relevant Act is concerned, the issue is no more res integra. The Hon'ble Supreme Court in the case of Checkmate Services P. Ltd. Vs. CIT (supra) has settled the issue, holding that employees' contribution to PF deposited after the due date prescribed under the relevant Act is not allowable as a deduction. Accordingly, following the decision of Hon'ble Supreme Court, we dismiss the claim of assessee related to disallowance of Rs. 34,26,382/- on account of delayed deposit of employees' PF contribution. 23. With regard to ground no.26, regarding in....
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.... 144C r.w.s 260 of the Income-tax Act, 1961 13 DIN ITBA/AST/M/143(3)/2023-24/1059217655(1) The assessee company M/s. Kantar GDC India Pvt. Ltd. filed its return of income for the A.Y. 2017-18 on 30.11.2017 admitting total income of Rs. 42,47,08,240/- at normal provisions. Assessment u/s. 143(3) r.w.s. 144C(13) r.w.s. 144B was passed on 24.05.2021 by NFAC, Delhi determining total income of Rs. 104,58,44,293/- on normal provisions and Rs. 30,47,57,211/- as deemed total income u/s. 115JB. A demand of Rs. 25,46,22,080/- was raised in the above assessment order. The assessee company filed a Writ petition in WP No.1899 of 2022 before Hon'ble High Court of Telangana. The Hon'ble High Court vide order dated: 13.12.2022 set aside the case lo Dispute Resolution Panel. Thereafter, Hon'ble DRP-1, Bengaluru passed an order dated: 09.11.2023 in F.No.113/DRP-1/BNG/2020-21. Consequent to the Hon'ble DRP's directions, order giving effect was passed by DCIT, (TP)-2, Hyderabad on 29.11.2023 proposing the final adjustments as under: Description As per TP order dated: 30.07.2021 As per the directions of the Hon'ble DRP IT Enabled Services Rs. 50,24,12,243 N....