TaxTMI 
TaxTMI 
2026 (8) TMI 1113
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....services to M/s Second Foundation Inc, USA. 3. On 29.04.2017, the petitioner filed its income-tax return for the assessment year 2016-17 which was subjected to scrutiny and in this regard a notice under Section 143(2) of the Income-tax Act, 1961 (for short, the Act) was served upon the petitioner. The petitioner filed a written response to such notice. The petitioner's income-tax return involved international transactions with a foreign associate enterprise and therefore, on 19.06.2018, the petitioner's Assessing Officer (for short, the AO), to get determined the arm's length price of such international transactions, referred the matter to the Transfer Pricing Officer (for short, the TPO). Through order of the TPO dated 20.02.2019, no variance was found in the petitioner's income-tax return and this was because on 06.02.2017, the petitioner had entered into an advance pricing agreement with the Central Board of Direct Taxes which agreement was applicable to the assessment year in question. After considering the order of the TPO dated 20.02.2019, the AO proposed to add to the petitioner's declared income Rs. 13,73,32,347/- by disallowing foreign travelling expenses incurred by th....
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...., the petitioner received an intimation informing it that a final assessment order under Section 143(3) of the Act, pertaining to the assessment year 2016-17, dated 28.02.2020, had been passed in the petitioner's case which order bore (DIN) ITBA/AST/M/143(3)/2019-20/1025906680(1). The petitioner wrote to the respondent-revenue authorities bringing to their notice that no order dated 28.02.2020, under Section 143(3) of the Act, had been served upon it and asked for a copy of the same. A request to the same effect was made by the petitioner on the Income of Tax Business Application Portal (for short-ITBA). On 17.03.2020, the petitioner received a notice, for the assessment year in question, under Section 274 read with Section 271(1)(c) of the Act through which the petitioner was now informed that for the assessment year 2016-17 no assessment order dated 28.02.2020, under Section 143(3) of the Act had been passed and that the final assessment order, for the assessment year 2016-17, had already been passed in the petitioner's case on 28.12.2019 which had also been served upon the petitioner on 28.12.2019. The assessment order dated 28.12.2019, pertaining to the assessment year 2016-17,....
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....a Cars India Ltd. vs. Deputy Commissioner of Income Tax (2016) SCC OnLineDel 921; 3. Pankaj Extrusion Ltd. vs. Assistant Commissioner of Income-tax (OSD) (2011) SCC OnLine Guj 1309; 4. Assistant Commissioner of Income-tax, Media Circle-11, Chennai vs. Vijay Television (P) Ltd. (2018) SCC OnLineMadras 13752; 5. Aldrin Alberto Araujo Soares vs. Deputy Commissioner of Income-tax (2024) SCC OnLine Bom 1384; 6. Classic Legends (P) Ltd. vs. Assessment Unit (2025) SCC OnLine Bom 3331; 7. Hitachi Energy India Ltd. vs. Deputy Commissioner of Income-tax (2025) SCC OnLine Kar 30893 8. SHL (India) (P.) Ltd. vs. Deputy Commissioner of Income-tax (2021) SCC OnLine Bom 1312. 6. Per contra, learned counsel for the respondent-revenue submitted that it is clearly mentioned in the draft assessment order dated 28.12.2019 that such order has been passed under Section 143(3) of the Act; reference in the said order to Section 144C of the Act was only a result of human error at the time when such order was uploaded because at that time, by mistake, a wrong tab had been pushed by the AO; as the petitioner was not an "eligible assessee" there was no r....
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....t assessment order dated 28.12.2019 under Section 144C read with Section 143(3) of the Act proposing therein to add to the petitioner's declared income Rs. 13,73,32,347/- which were the expenses incurred by the petitioner on foreign travelling. The said draft assessment order dated 28.12.2019 was served upon the petitioner informing it about its right under Section 144C(2) of the Act to either file objections within thirty days against such order or to accept it. The petitioner challenged the draft assessment order before this Court through CWP-2334-2020-Fidelity Information Service India Pvt. Ltd. vs. Commissioner of Income Tax-1, Chandigarh and another, which petition came up for preliminary hearing before a Division Bench of this Court on 29.01.2020 on which date notice was issued. At the time of accepting such notice, learned counsel for the revenue stated that the draft assessment order dated 28.12.2019 was in fact the final assessment order passed under Section 143(3) of the Act. Nonetheless, the matter was adjourned to 06.02.2020 on which date learned counsel for the revenue reiterated that the draft assessment order dated 28.12.2019 was actually the final assessment order a....
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....ia PAN: AAGCS0395D AY: 2016-17 DIN & Order No : ITBA/AST/F/144C/2019-20/1023349922(1) Dated: 28/12/2019 Name of the assessee FIDELITY INFORMATION SERVICES INIDA PRIVATE LIMITED Address of the assessee S-405, LGF, GREATER KAILASH PART II, NEW DELHI 110048, Delhi, India Status COMPANY Range/Circle/Ward DCIT CIR 1(1), CHANDIGARH Resident/Resident but not Ordinary resident/Non-resident Resident Date of Hearing 18/07/2017, 29/09/2017, 24/06/2019, 25/07/2019, 23/08/2019, 03/09/2019, 12/11/2019, 04/12/2019 Section/Sub-section under which assessment is made 143(3) of the I.T. Act, 1961 Date of Order 28/12/2019 Draft Order u/s 144C of the Income-tax Act 1961 1. The assessee filed its original return of income for the A.Y. 2016-17 on 30.11.2016 declaring a total income of Rs. 57,57,85,770/-. The assessee company revised its ITR on 29.04.2017 for the AY 2016-17 declaring total income of Rs. 62,14,07,780/-. The case was selected for scrutiny through CASS. Statutory notice under section 143(2) was issued on 03.07.2017 which was duly served on the assessee. Subsequently, questi....
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....: Company 4 Assessment Year : 2016-17 5 Previous Year : 2015-16 6 Order U/S : 92CA(3) 7 Dates of Hearing : As per record 8 Date of Order : 20/2/19 1. A reference u/s 92CA(1) of the I.T. Act, 1961 was received from DCIT, Circle-1(1), Chandigarh, to determine the 'Arm's Length Price' in respect of International transactions entered into by M/s Fidelity Information Service India Private Limited (here-in-after called as "the assessee") with its Associate Enterprises (AEs) during the FY 2015-16. In response to notice u/s 92CA(2) of the I.T. Act, 1961 Mr. Chirag Aggarwal, the authorized representatives of the Company, appeared from time to time. The Transfer pricing documentation containing functional and economic analysis prescribed under Rule 10D of the Income Tax Rules was submitted and placed on record. 2. Business Profile of the Assessee The assessee company was incorporated on 15th April 2002 as a private limited company in New Delhi, India. The assessee company acts as a captive service provider and is engaged in the provision of software services primarily comprising custom application devel....
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.... year under consideration, has debited travelling expenses amounting to Rs.18,69,28,806/- in the profit and loss account. Out of this, the foreign traveling expenses were Rs. 13,73,32,347/-. As per the assessee these travelling expenses have been incurred for providing services to M/s Second Foundation Inc., USA and Fidelity information Services Inc., USA. As per the agreement with M/s Second Foundation, Inc. USA, a copy of which is already on record in earlier years, the assessee company is not required to incur any expense on account of foreign travelling for servicing of the clients of M/s Second Foundation Inc., USA. During the course of assessment proceeding, the assessee company vide notice u/s 142(1) dated 30.11.2019 was asked to justify foreign traveling expenses incurred by the assessee company amounting to Rs. 13,73,32,347/-. 2.2 In response thereto, the assessee company vide letter dated 11.12.2019 stated as under on this issue: xxxx xxxx xxxx xxxx 2. After considering the facts of the case, it is held that providing of service to the foreign clients on behalf of M/s SF USA and M/s Fidelity Information Services Inc, USA was not the responsibili....
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....gn travelling expenses were added back during the A.Y. 2011-12. However, the Hon'ble ITAT has deleted the addition made on foreign travelling expense but the order was not acceptable to the Department but further appeal u/s 260A of the Act was not filed as the tax effect involved was below the monetary limits prescribed. 2.4 Further, the assessee has not been successful to explain how these expenses related to the normal business of the assessee. It is also pertinent to mention here that the reason for the disallowance is not based on whether the expenses have been incurred by the assessee or not, but on the allowability of the expense as such. 2.5 The assessee company had to provide the services for development of computer software and allied products on specific orders and specifications provided from time to time by M/s SF Inc. USA. Further, M/s. SF Inc USA was to provide technical support for the development of the software to the assessee company. It was further seen from the various clauses of the agreement that the assessee company was to develop specific software as per the direction of the company M/s SF Inc USA. Therefore, the assessee company was only e....
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....ed this issue in favour of the assessee. In this regard, it is pertinent to mention that the department has not accepted the decision of the Hon'ble ITAT for the AY 2011-12 and 2012-13 but further appeals u/s 260A were not filed due to tax effect being less than monetary limits prescribed. Further, it is worthwhile to mention here that the Ld. CIT(A) in the case of the assessee for the A.Y. 2014-15 has deleted the addition made on the issue of foreign travelling expenses by simply relying upon the order of Hon'ble ITAT in the case of the assessee for the A.Y. 2011-12 & 2012-13. The said order of the Ld. CIT(A) has not been found acceptable and the department has filed further appeal which is pending for adjudication before the Hon'ble ITAT. 2.9 Keeping in view above and in the facts and circumstance in the case, it is found that the expenditure on account of foreign travelling of Rs. 13,73,32,347/-for A.Y. 2016-17 is not allowable to the assessee and therefore an amount of Rs. 13,73,32,347/-is proposed to be added to the returned income of the assessee. I am satisfied that the case of the assessee is fit for initiating penalty u/s 271(1)(c) for furnishing inaccurate partic....
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....e from the petitioner is unsustainable. 15. Before raising of a demand under Section 156 of the Act, Section 143(3) of the Act clearly provides for the determination of a sum payable by the assessee through passing of a final assessment order which in the case in hand is found missing. In this regard Section 143(3) of the Act may usefully be referred to. The same reads as follows:- "143(3) On the day specified in the notice issued under sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such order evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him on the basis of such assessment." (emphasis supplied) 16. As per learned counsel appearing for the respondent-revenue the impugned draft assessment order dated 28.12.2019 was a result of a mistake resulting from pressing of a wrong tab by the petitioner's AO at the time of uploading of such order on the ITBA portal and kee....
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....9. Viewed from yet another angle, the impugned demand made from the petitioner on the strength of the impugned assessment order dated 28.12.2019 would be unsustainable in law. It is not disputed that the petitioner was not an "eligible assessee" in terms of Section 144C(15)(b) of the Act. This is for the reason that there was no variance found by the TPO in the income tax return furnished by the petitioner with regard to its international transactions with its associate enterprise because on 06.02.2017, the petitioner had entered into an advance pricing agreement with the Central Board of Direct Taxes which agreement was applicable to the assessment year in question. Thus, in the petitioner's case there was no occasion to pass a draft assessment order under Section 144C(1) of the Act. 20. In this regard, reference can usefully be made to the following observations made by a Division Bench of the Delhi High Court in Honda Cars India Ltd.'s case (supra): - "12. First of all, the petitioner is admittedly not a foreign company. Secondly, the Transfer Pricing Officer has not proposed any variation to the return filed by the petitioner. The consequence of this is that the Ass....