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17-03-2020, Tektronix (India), Section 147, 144(13), Tribunal Bangalore

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4 months 2 weeks ago #12384 by amit
Section - 147, 144(13), 148, 40(a)(ia), 14A
Order Date - 17-03-2020
Favouring - Assessee
Court - Tribunal Bangalore
Appellant - Tektronix (India) Pvt. Ltd.
Respondent - DCIT
Justice - A.K.GARODIA AM & BEENA PILLAI JM
Citation - 320Taxpundit745
Appeal No. - IT(TP)A 673/Bang/2017
Asstt. Year - 2007-08

Order

PER : BEENA PILLAI

Present appeal has been filed by assessee against final assessment order dated 20/01/2017 passed by Ld.DCIT Circle 7 (1) (1), Bangalore under section 143 (3) read with section 147 and section 144C (13) of the Act on following revised grounds of appeal:

1. General grounds against the Final Assessment Order:

1.1 The Final Assessment Order ("FAO") dated January 20, 2017 (served on January 25, 2017) passed by the Learned Assessing Officer ("AO") under section 143(3) read with section 147 and section 144C(13) of the Income- tax Act, 1961 ("Act") is not in accordance with the law and is contrary to the facts and circumstances of the present case.

2. Reopening of Assessment:

2.1 The Honourable Dispute Resolution Panel ( DRP ) erred in upholding the reassessment proceedings initiated under section 147 of the Act without appreciating that no "fresh tangible material" was available with the AO for forming a belief that the Appellant not made full and true disclosure of material facts
leading to income escaping assessment.

2.2 The DRP erred in upholding the notice issued by the AO under section 148 of the Act to initiate the reassessment proceedings without appreciating that the said notice was issued by the AO bey nd four years from the end of the Assessment Year ("AY") even when there was no failure on the part of the Appellant to "fully and truly" disclose all material facts relevant for assessment.

2.3 The DRP e red in law and on facts in holding that information available in the course of initial reassessment proceedings whi h were rendered void can be used to initiate subsequent reassessment proceedings.

3. Transfer Pricing Grounds:

3.1 The TPO has erred in completing the Transfer Pricing assessment without providing an opportunity of being heard to the Appellant by simply relying on the earlier order passed by the TPO dated January 29, 2013 which itself was quashed by the DRP vide its directions dated November 18, 2013.

3.2 The DRP and the TPO / AG have erred in fact and in law in making an adjustment of Rs 17,302,490 to the Arm's Length Price ('ALP') of the international transactions of the Appellant with its Associated Enterprises ("AE") in the Software Development ('SWD") Segment.

3.3 The DRP and AG have erred in upholding the action of the Learned TPO in rejecting the TP study and modifying the filters adopted by the Appellant and adopting additional filters for undertaking a new search and arriving at a fresh set of comparables.

3.4 The DRP has erred in upholding the action of the learned TPO in finalizing the TP order with the following companies as comparable to the Appellant despite such companies being functionally different to the Appellant and/or fail to meet the legally acceptable criteria for comparability:

1. Avani Cimcon Technologies Limited
2. Celestial Labs Limited
3. E Zest Solutions Limited
4. Infosys Technologies Ltd
5. Kals Information Systems Limited (Seg)
6. Persistent Systems Limited
7. Quintegra Solutions Limited
8. Tata Elxsi Limited (Seg)
9. Wipro Limited (Seg)
10. Helios & Matheson Information Technology Ltd
11. Ishir Infotech Limited
12. Megasoft Limited
13. Thirdware S lutions Limited

3.5 Without prejudice that Megasoft Limited is functionally different to the Appellant and / or fails to meet the legally acceptable c iteria for comparability, the DRP and TPO erred in not apprecia ing that only segmental margin (23.11 percent) ought to be considered for comparability.

3.6 The DRP and AG / TPO have erred in law and on facts in not granting an appropriate working capital adjustment to the margins of the comparable companies, based on the computation provided by the Appellant.

3.7 The AO / TPO have also erred in considering the Prime Lending Rate ("PLR") at 10.25 percent that was applicable for FY 2005-06 without appreciating that the PLR rate for the subject FY 2006-07 which was 12.50 percent (the Benchmark PLR was between 12.25 percent and 12.75 percent).

3.8 The AO / TPO have further erred in discounting the PLR to its present value (9.30 percent as per the TPO's calculations)

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