ERICSSON INDIA PVT. LTD.,NEW DELHI vs. JCIT, NEW DELHI

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ITA 1093/DEL/2017Status: HeardITAT Delhi19 May 2022AY 2012-134 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal allowed the assessee to withdraw grounds of appeal related to transfer pricing adjustments. This was permitted because the assessee had entered into an Advance Pricing Agreement (APA) covering the disputed transactions.

What were the facts?

The assessee filed an appeal against an assessment order that confirmed an addition made by the Transfer Pricing Officer. The addition pertained to international transactions related to the receipt of second line support services.

What were the issues?

Whether the appeal grounds concerning transfer pricing adjustments can be withdrawn due to a subsequent Advance Pricing Agreement. The validity of the TPO's reference and disallowance of intra-group services were also raised.

Which sections of the Income-tax Act were involved?

Section 92CA,Section 37(1),Section 143(3),Section 144C(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘I-1’, NEW DELHI

Before: Dr. B. R. R. KumarMs. Astha Chandra

For Appellant: Adv. &
Hearing: 24.02.2022Pronounced: 19.05.2022

ORDER

Per Dr. B. R. R. Kumar, Accountant Member:

1.

The present appeal has been filed by the assessee against the order passed by the AO dated 22.12.2016 u/s 143(3) r.w.s. 144C(3) of the Income Tax Act, 1961.

2. Following grounds have been raised by the assessee:

“1. That the assessment order passed by the Ld. Assessing Officer (“Ld. AO”) under section 143(3) read with section 144C(3) of the Income Tax Act, 1961 (“the Act”), in pursuance to the directions issued by the Hon’ble Dispute Resolution Panel (“Hon’ble DRP”) is a vitiated order as the Hon’ble DRP has erred both on facts and in law in confirming the addition of INR 157,701,789/- made by the Ld. Transfer Pricing Officer (“Ld. TPO”) to the Appellant’s income, is without appropriate application of mind and in undue haste.

2.

The reference made by the Ld. AO suffers from jurisdictional error as the Ld. AO has not recorded any reasons in the assessment order based on which he reached the conclusion that it was ‘necessary or expedient’ to refer the matter to the Ld. TPO for computation of the Arm’s Length Price (“ALP”), as is required under section 92CA(1) of the Act.

3. The Ld. AO, pursuant to the directions of the Hon’ble DRP, erred on facts and in law in inadvertently disallowing the expenses claimed towards intra group services under section 37(1) when a disallowance was made under section 92CA by the Ld. TPO.

4.

The Ld. AO/ Ld. TPO pursuant to the directions of the Hon’ble DRP erred on facts and in law in enhancing the income of the Appellant by Rs.157,701,789/- holding that the international transactions pertaining to the receipt of second line support services do not satisfy the arm’s length principle envisaged under the Act and in doing so have grossly erred by:

……….”

3.

At the outset, the ld. AR submitted that the same issue mentioned above which is pending before the Tribunal has been a subject matter of APA and the assessee has entered into the unilateral advance pricing agreement with Government on 04.12.2019, hence, the appeal may be allowed to be withdrawn.

Ericsson India Pvt. Ltd. 4. The withdrawal letter of the assessee is being reproduced for ready reference:

ERICSSON October 27, 2020 The Hon'ble Members, '1-1' Bench, Income Tax Appellate Tribunal Loknayak Bhawan, Khan Market, New Delhi – 110003 Re: Ericsson India Private Limited ( EIL" or "the Appellant" or "the Company")

Sub : Request for withdrawal of grounds of appeal pertaining to transfer pricing adjustment in relation to appeal bearing Assessment Year 2012-13 in compliance to Rule 10RA(4) of the Income Tax Rules, 1962 ("Rules").

May it please your Honours; In relation to the subject appeal, it is humbly submitted that the Appellant has entered into a Unilateral Advance Pricing Agreement ('the Agreement') with the Central Board of Direct Taxes on 4 December 2019 in respect of the international transactions undertaken by the Appellant in the System Segment. The subject international transaction which is currently under dispute in relation to the captioned appeal includes receipt of Second Line Support services by the Appellant from its Associated Enterprises ("AEs").

In view of the above, it is respectfully prayed that the ground of appeal pertaining to the determination of arm's length price of the international transaction of receipt of Second Line Support services

Ericsson India Pvt. Ltd. (viz. Grounds of appeal nos. 2 and 4 [4.1 to 4.8]) be allowed to be withdrawn in accordance with Rule 10RA(4) of the Rules.

We trust that our request shall be acceded to and regret any inconvenience caused in this regard.

5.

Hence, the appeal is being dismissed as withdrawn.

6.

The revenue is at liberty to examine their records and approach this Court in case of any divergence.

Order Pronounced in the Open Court on 19/05/2022.

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