M/S DELL INTERNATIONAL SERVICES INDIA PVT. LTD.

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ITA - 683 / 2010HC Delhi28 April 20101 pages
For Petitioner: H RAGHAVENDRA RAO
AI SummaryPartly Allowed

What did the High Court hold?

The High Court has admitted the appeals, framing two substantial questions of law. The first question concerns whether the ITAT erred in sustaining the arm's length price adjustment on interest-free loans provided by the appellant to its foreign subsidiaries. The second question, contingent on the first being answered in the negative, asks whether the ITAT erred in not allowing a +/-5% variation from the arm's length interest as per Section 92C(2) of the Income Tax Act, 1961. The court has heard the counsel for the parties and admitted the appeals. No findings or decisions on the merits of these questions have been rendered at this stage; the judgment only records the admission of the appeals and the framing of the substantial questions of law. Therefore, the specific findings, reasoning, ratio, and operative directions are not yet determined by the High Court.

What were the facts?

The appellant, Perot Systems TSI India Pvt Ltd, is challenging an order passed by the Income Tax Appellate Tribunal (ITAT). The appeals are filed before the High Court of Delhi. The core of the dispute revolves around adjustments made by the revenue authorities concerning arm's length price for interest-free loans provided by the appellant to its wholly owned foreign subsidiaries. The procedural history indicates that the High Court has admitted the appeals, signifying that substantial questions of law have been identified for consideration. Applications for condonation of delay (CM 7783/2010, 7864/2010 and 7870/2010) were allowed, while other applications (CM 7782/2010, 7863/2010 and 7869/2010) were not pressed at this stage.

What were the issues?

The High Court is to decide two substantial questions of law: 1. Whether the Income Tax Appellate Tribunal erred in law by upholding the adjustment made to the arm's length price concerning interest-free loans granted by the appellant to its foreign subsidiaries. 2. If the first question is answered in the negative, whether the Income Tax Appellate Tribunal erred in law by failing to allow a +/-5% variation from the arm's length interest, as provided under Section 92C(2) of the Income Tax Act, 1961. The appellant's contentions, as implied by the questions, are that the ITAT's decision to sustain the arm's length price adjustment was incorrect. Furthermore, if an adjustment is to be made, the appellant argues that the benefit of a +/-5% variation should have been granted. The judgment does not record specific arguments made by the revenue.

Which sections of the Income-tax Act were involved?

Section 92C(2)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF DELHI AT NEW DELHI ITA 683/2010, ITA 684/2010 and ITA 685/2010 . PEROT SYSTEMS TSI INDIA PVT LTD ..... Appellant Through : Mr Ajay Vohra with Ms Kavita Jha, Mr H. Raghavendra Rao, Mr Mukesh Butani, Mr Arijit Prasad and Mr Sriram Krishna . versus . CIT ..... Respondent Through : Mr Abhishek Maratha . CORAM: HON'BLE MR. JUSTICE BADAR DURREZ AHMED HON'BLE MR. JUSTICE V.K. JAIN . O R D E R 28.04.2010 CM 7783/2010, 7864/2010 and 7870/2010 Allowed subject to all just exceptions. ITA 683/2010, ITA 684/2010 and ITA 685/2010 We have heard the counsel for the parties. Admit. The following substantial questions of law arise for the consideration of this Court:- (1) Whether the Income Tax Appellate Tribunal erred in law in sustaining the adjustment on account of arm?s length price in respect of interest free loans provided by the appellant to its wholly owned foreign subsidiaries? . (2) If the answer to question No.1 is in the negative, whether on the facts and circumstances of the case, the Income Tax Appellate Tribunal erred in law in not holding that +/-5% variation from the arm?s length interest should have been allowed to the appellant in terms of the provisions of Section 92 C (2) of the Income Tax Act, 1961? . The appellant shall file paper books within three months as per rules. List in due course. CM 7782/2010, 7863/2010 and 7869/2010 Not pressed at this stage. BADAR DURREZ AHMED, J . . . . V.K. JAIN, J APRIL 28, 2010 . . SR . . . 66

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