HP PPS INDIA OPERATIONS PRIVATE LIMITED,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-3(1)(1), BANGALORE

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ITTPA 939/BANG/2022Status: DisposedITAT Bangalore02 January 2023AY 2018-193 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal noted that the issues raised in Ground Nos. 2 (disallowance of superannuation fund) and 3 (non-granting of foreign tax credit) had been rectified by the AO through a rectification order dated 15.12.2022. Consequently, the assessee's AR submitted that these grounds were not pressed. The Tribunal accordingly dismissed these two grounds as not pressed. Regarding Ground No.4, which pertains to the computation of interest under Section 234C, the assessee contended that it should be computed on the returned income. The Tribunal accepted this contention and directed the AO to recompute the interest under Section 234C as per the provisions of the Act on the returned income. Ground No.1 was considered general and not warranting separate adjudication, and Grounds 5 & 6 were consequential. The appeal was partly allowed.

What were the facts?

The assessee, HP PPS India Operations Private Ltd., is engaged in providing software development services for printing and imaging solutions to other HP group companies. For Assessment Year 2018-19, the assessee filed a return of income declaring Rs.58,09,22,100. The case was selected for scrutiny, and due to international transactions, a reference was made to the TPO. The TPO made an adjustment of Rs.57,44,68,793. The AO passed a draft assessment order. The assessee filed objections before the DRP, which deleted the entire TP adjustment. However, in the final assessment order passed by the DCIT, Circle 3(1)(1), Bangalore, a disallowance of Rs.5,36,960 was made towards superannuation fund, and foreign tax credit of Rs.70,87,513 was not granted. The assessee appealed to the ITAT.

What were the issues?

1. Whether the disallowance of superannuation fund (Ground No.2) and non-granting of foreign tax credit (Ground No.3) were correctly made by the AO, and if not, what relief is due to the assessee? 2. Whether the interest under Section 234C should be computed on the assessed income or the returned income (Ground No.4)? Assessee's contentions: Regarding Grounds 2 and 3, the assessee's AR submitted that these issues have been rectified by the AO vide a rectification order dated 15.12.2022 and therefore, these grounds can be dismissed as not pressed. Regarding Ground No.4, the assessee prayed for a direction to the AO to compute interest under Section 234C on the returned income instead of the assessed income. Revenue's contentions: No specific contentions are recorded for the revenue on the issues that were pressed by the assessee.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 92CA,Section 234C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH : BANGALORE

Before: SHRI GEORGE GEORGE K. & Ms. PADMAVATHY S

For Appellant: Smt. Vaidehi G., Advocate
For Respondent: Shri K. Sankar Ganesh, CIT(DR)(ITAT), Bengaluru
Hearing: 02.01.2023Pronounced: 02.01.2023

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND Ms. PADMAVATHY S, ACCOUNTANT MEMBER

IT(TP)A No.939/Bang/2022 Assessment year : 2018-19

HP PPS India Operations Vs. The Deputy Commissioner Private Ltd., of Income Tax, No.24, Salarpuria Arena, Circle 3(1)(1), Hosur Main Road, Bangalore. Adugodi, Bangalore – 560 030. PAN: AADCH 5872M APPELLANT RESPONDENT

Appellant by : Smt. Vaidehi G., Advocate Respondent by : Shri K. Sankar Ganesh, CIT(DR)(ITAT), Bengaluru.

Date of hearing : 02.01.2023 Date of Pronouncement : 02.01.2023 O R D E R Per Padmavathy S., Accountant Member This appeal is against the final order of assessment passed u/s. 143(3) r.w.s. 144C (13) of the Income-tax Act, 1961 [the Act] by the DCIT, Circle 3(1)(1), Bangalore dated 29.7.2022 for the assessment year 2018-19.

2.

The assessee is engaged in the business of providing software development services for printing and imaging solutions to other HP

IT(TP)A No.939/Bang/2022 Page 2 of 3

group companies. The assessee filed the return of income for AY 2018-19 on 15.3.2019 declaring an income of Rs.58,09,22,100. The return was processed u/s. 143(1) where the income was assessed at Rs.58,14,59,060. Subsequently the case was selected for scrutiny through CASS and statutory notices were duly served on the assessee. Since the assessee had international transactions, reference was made to the TPO to compute the ALP of the international transactions. The TPO passed an order u/s. 92CA by making an adjustment of Rs.57,44,68,793. The AO passed a draft assessment order accordingly.

3.

The assessee filed objections before the DRP whereby the entire TP adjustment was deleted. In the final assessment order, the AO assessed the income at Rs.58,14,59,060 whereby a disallowance of Rs.5,36,960 was made towards the disallowance of superannuation fund. The AO also did not grant foreign tax credit for an amount of Rs.70,87,513. Aggrieved, the assessee filed an appeal before the Tribunal.

4.

During the course of hearing, the ld. AR submitted that the issue of disallowance of superannuation fund (ground No.2) and non granting foreign tax credit (ground No.3) have been rectified by the AO vide rectification order dated 15.12.2022. It is therefore submitted by the ld. AR that these two grounds can be dismissed as not pressed. Accordingly, we dismiss ground Nos.2 & 3 as not pressed.

IT(TP)A No.939/Bang/2022 Page 3 of 3

5.

Through ground No.4, the assessee is contending the computation of interest u/s. 234C on the assessed income instead of returned income. The ld. AR in this regard prayed for a direction to the AO to compute the interest u/s. 234C on the returned income and we accordingly direct the AO to recomputed the interest u/s. 234C as per the provisions of the Act on the returned income.

6.

Ground No.1 is general not warranting separate adjudication. Ground Nos.5 & 6 are consequential.

7.

In the result, the appeal by the assessee is partly allowed.

Pronounced in the open court on this 2nd day of January, 2023.

Sd/- Sd/-

( GEORGE GEORGE K. ) ( PADMAVATHY S. ) JUDICIAL MEMBER ACCOUNTANT MEMBER

Bangalore, Dated, the 02nd January, 2023. /Desai S Murthy / Copy to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order

Assistant Registrar ITAT, Bangalore.

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