×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
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06-06-2019, Dun & Bradstreet Information, Section 133(6), Tribunal Mumbai
1. Aforesaid cross appeals for Assessment Year [AY] 2007-08 contest the order of Ld. Commissioner of Income-Tax (Appeals)-15, Mumbai [CIT(A)], Appeal No. CIT(A)-15/Arr.205/11-12 dated 09/03/2012
The Grounds raised by the assessee read as under: -
On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) ) erred in confirming the addition of Rs.66,96,877 out of the total addition of Rs.1,43,30,864 made by the learned Assessing Officer ('AO') in relation to the arms length price of the Appellant's international transactions as follows:
1. determining the arm's-length price of the Appellant's international transactions of provision of software development services at Rs.14,80,55,741 instead of
Rs.14,13,58,864 as determined by the Appel ant;
2. disregarding the appellant's Transfer Pricing documentation and conducting his own comparability analysis (and in this regard, obtaining the financial data of certain potential comparables using his powers under Section 133(6) of the Act) which is not in accordance with the contemporaneous documentation requirement of the Indian TP regulations;
3. requiring financial data of only the current year (FY 2006-07) of the comparable companies to be used fo benchmarking the Appellant's international transactions;
4. not granting risk adjustment to the Appellant to account for the differences in the risk profile of the comparables vis-a vis the Appellant; It is prayed that the learned AO be directed to consider the international transactions of the Appellant as arm's length and accordingly the transfer pricing adjustment of Rs.66,96,877 should be deleted.
The Grounds raised by the revenue read as under: -
1. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in rejecting M/s. Infosys Ltd. and M/s. Wipro Ltd. as comparables without appreciating the fact that in any service industry like software sector, the price for services is decided by the market rather than the brand value.
2. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in allowing the benefit of 5% relief to the assessee, without appreciating the fact that no standard deduction of 5% to the assessee is envisaged under section 92C(2) of the Act. The appellant prays that the order of the CIT(A) on the above ground be set aside and that of the A.O. be restored.
2.1 The Ld. Sr. Counsel representing assessee [AR], at the outset, placed on record a chart to submit that the assessee is contesting the inclusion / exclusion of certain comparable only which are covered by the various order of these Tribunals in case of assessee having similar functional profile. The issue of few comparable is stated to have been covered by the view taken by this very bench for same AY for assessee having similar functional profile in the case of Infor Global Solutions India (P.) Ltd. Vs. DCIT [102 Taxmann.com 58]. A copy of the same has been placed on record. The Ld. DR controverted the same and advanced arguments in favor of revenue.
2.2 Brief facts are that the assessee being resident corporate assessee was stated to be engaged in providing international and domestic business and financial information services, releasing publications, software development, support services and financial educational services.
2.3 The International Transactions carried out by the assessee with its Associated Enterprises [AE] as reported in Form 3CEB for impugned AY were referred to Ld. Transfer Pricing Officer-1(6), Mumbai [TPO] u/s 92CA (1) for determination of their Arm’s Length Price [ALP]. The Ld. TPO, vide order dated 28/10/2010 proposed Transfer Pricing [TP] Adjustment of Rs.143.30 Lacs which was incorporated in the draft assessment order dated 16/12/2010. Since the assessee exercised option not to contest the