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07-06-2019, Schneider Electric IT Business, Section 133(6), Tribunal Bangalore

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3 months 1 week ago #9681 by amit
Section - 133(6), 92C(2), 10A, 234B, 234D, 92B
Order Date - 07-06-2019
Favouring - Assessee
Court - Tribunal Bangalore
Appellant - Schneider Electric IT Business India Private Limited
Respondent - DCIT
Justice - J. SUDHAKAR REDDY AM & BEENA PILLAI JM
Citation - 619Taxpundit97
Appeal No. - IT(TP)A No. 1415/Bang/2010
Asstt. Year - 2006-07

Order

PER : BEENA PILLAI

Present appeal has been filed by assessee against final assessment order dated 05/10/10 passed by Ld.DCIT, LTU, Bangalore on following grounds of appeal:

“The grounds mentioned herein are without prejudice to one another.

Transfer Pricing

1. That the order of the Learned Deputy Commissioner of Income-tax, LTU, Bangalore (Assessing Officer' or 'Learned AO') which is in conformity with the directions of the Dispute Resolution Panel. Bangalore (learned Panel'), to the extent prejudicial to the Appellant, is bad in law and liable to be quashed.

2. That the Assessment Order passed in pursuance the directions issued by the Learned Panel is a vitiated order as the Learned Panel erred both on facts and in law in confirming the addition made by the Learned AO to the Appellant's income by issuing a non-speaking order without appropriate application of mind.

A) Payment of License Fee (Royalty):

3. That on the facts and in the circumstances of the case the Learned AO/ the Learned Joint Director of Income Tax (Transfer Pricing) - I, Bangalore (Transfer Pricing Officer' or Learned TPO') and the Learned Panel erred in making adjustment in arm's length price of the Appellant's international transactions with related parties of Rs. 69,264,977 /- (pertaining to payment of license fee).

4. That the Learned AO and the Learned Panel erred in not appreciating the fact that the Appellant had prepared the TP documentation bona fide and in good faith in compliance with the Act and Income tax Rules, 1962 (the Rules).

5. The Learned AO and the Learned Panel erred in disregarding the determination of the arm's length pricing for the international transactions relating to the payment of license fee (royalty) as per the Transfer Pricing Documentation, maintained by the Appellant.

6. In connection with the payment of license fee, the Learned AO and the Learned Panel erred in facts and in law in confirming the action of the Learned TPO in determining the arm's length price of payment of license fee to be NIL, and in doing so grossly erred in;

6.1. concluding that the Appellant has not received any tangible economic benefit.

6.2. did not appreciate the fact that the Appellant is a licensed manufacturer in India and is entirely dependent on the associated enterprise for the related technical know-how, expertise, etc.

6.3 concluding that no supporting evidence were furnished to justify the payment of license fee;

6.4 erred in ignoring the fact that the Appellant had used Comparable Uncontrollable Price (CUP') Method to benchmark the transaction.

7. Learned AO and the Learned Panel erred in ignoring the fact that the Learned TPO has transgressed the powers provided u/s 92CA of the Act.

B) Provision of Technical Support Services (Software Development):

8. That on the facts and in the circumstances of the case the Learned AO/ the Learned TPO and the Learned Panel erred in making adjustment in arm's length price of the Appellant's international transactions with related parties by Rs. 7,078.623/- (pertaining to software development services).

9. That on the facts and circumstances of the case. the Learned AO and the Learned Panel erred in upholding the rejection of Transfer Pricing (TP) documentation by the Learned. TPO

10. That the Learned AO/TPO and the Learned. Panel erred in ignoring the limited risk nature of the software development services provided by the Appellant and not providing adjustment on account of risk differential with entrepreneurial comparables, as required. while determining the Arm's Length Price of the international transactions of the Appellant.

10.1 That the Learned TPO and the Learned Panel erred in collecting selective information of the companies by exercising power granted to him under section 133(6) of the Act that was not available to the Appellant in the public domain and relying on the same for comparability purposes

10.2. That the Learned TPO erred in not applying multiple year/prior year data for comparable companies while determining arm's length price.

10.3. That the Learned TPO erred in using data as at the time of assessment proceedings. instead of that available during financial year 2005-06 wherein the Appellant was required to prepare and maintain the TP documentation.

10 4. That the Learned TPO erred in including companies in the comparability analysis, which are different from the Appellant in functions, assets and risk profile.

10.5. That the Learned TPO erred in rejecting companies that are similar to the Appellant, while performing the comparability analysis.

10.6. That the Learned TPO erred in not allowing the benefit of range of +/- 5% as provided in proviso to Section 92C(2) of the Act, while determining the arm's length price.

10.7. The Learned TPO erred in not providing appropriate adjustment towards the working capital difference.

10.8. That the Learned Panel erred in upholding the erroneous actions of the Learned TPO as stated in Grounds 10.1 to 10.7 above.

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