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10-01-2019, Synova Innovative, Section 92CA, 260A, Tribunal Bangalore

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2 months 6 days ago #8357 by amit
Section - 92CA, 260A
Order Date - 10-01-2019
Favouring - Assessee allowed for statistical purpose
Court - Tribunal Bangalore
Appellant - Synova Innovative Technologies Pvt. Ltd.
Respondent - ACIT
Justice - JASON P BOAZ AM & PAVAN KUMAR GADALE JM
Citation - 119Taxpundit153
Appeal No. - IT(TP)A No.36/Bang/2011
Asstt. Year - 2004-05

Order

PER : PAVAN KUMAR GADALE

The Cross-objection is filed by the assessee in Revenue’s appeal in ITA No.36/Bang/2015 for the asst. year 2004-05. The said Cross-objection was dismissed by the ITAT by order dated 23/12/2016 due to delay in filing the Cross-objection by 951 days.

2. The assessee approached the Hon’ble High Court of Karnataka, Bengaluru and after hearing the submissions, the Hon’ble Court has condoned the delay and passed the order on 12 Aug, 2018 and observed at para 5 & 6 of page 9, 10which reads as under:

“5. Having heard the learned counsels for the parties, we are of the opinion that though the condonation of delay is a discretionary matter and normally it would not give rise to any substantial question of law requiring consideration u/s.260A of the Act, but in the peculiar facts and circumstances of the ca e, the cross objections came to be filed later on, in view of the retrospective amendment of the law and on the anvil of which the Assessee had conceded vide para10 of the Tribunals' order that it could not get the benefit of 5% Standard Deduction, but in the alternative, the only course upon the Assessec was to urge before the learned Tribunal, the final fact finding body to consider its claim on merits about the determination of ALP, ignoring the said 5% Standard Deduction and therefore, even if the cross objections for A.Y.2004-05 were belatedly filed with a delay of 1760 days, as noted in para14 of the Tribunal's order, the part of which the delay was found to be duly explained by the learned Tribunal that on that account but the later part of 951 days having occurred after the Special Bench decision of the Tribunal rendered on 30.04.2013, whereas the cross objections filed by the Assessee on 07.12.2015, the said later part of 951 days found by the learned Tribunal was not sufficiently explained and therefore, the learned Tribunal chose to not to condone the said delay and reject the cross objections of the Assessee.

5. We are of the opinion that the Assessee could not be deprived of its opportunity to contend in the alternative on the merits of its claim, if the aspect relating to 5% Standard Deduction was negatived by a retrospective statutory amendment by Finance Act, 2012 and therefore, in the peculiar facts and position of law as amended, the learned Tribunal ought to have allowed the Assessee to raise the cross objections in the matter and consider the claim of the Assessee on merits. Therefore, we are inclined to remand the case back to the learned Tribunal for considering the cross objections raised by the Assessee on merits. The said impugned part of the learned Tribunal in para-16 is therefore set aside and the matter is remanded back to the learned Tribunal for considering the matter afresh in accordance with law.”

3. As per the directions of the Hon’ble High Court the matter is posted for hearing today and the assessee has raised the following grounds in the Cross-objection:-

“1. The order of the Commissioner of Incometax (Appeals) ["CIT(A)'] in so far as it relates to the following ground is opposed to law and facts of the case.

2. The learned CIT(A) and the learned AO has erred in law in relying on the order under section 92CA of the Act passed by the learned TPO, which in itself is bad in law and on facts as the same was passed on incorrect understanding of the business model of the Cross-objector and is therefore liable to be quashed.

3. The learned CIT(A) and the learned TPO have erred in law and facts in not considering the submissions made by the Appellant on the description of the functions performed, the risks assumed and assets employed by the Cross-objector and its AE.

4. The learned CIT(A), having considered the detailed submission filed by the Cross-objector has erred in law in not adjudicating on the following grounds raised by the Cross-objector:

* That the learned TPO has erred in benchmarking the 'international transactions' of the Cross-objector with companies providing software services on the basis that the Cross- objector was engaged in providing software services to the Associated Enterprise (AE") whereas majority of the international transactions of the Cross-objector pertain to services received by the appellant from the AE.

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