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Income Tax Appellate Tribunal, DELHI BENCH: ‘I-2’ NEW DELHI
Before: MS SUCHITRA KAMBLE & DR. B. R. R. KUMAR&
PER SUCHITRA KAMBLE, JM These two appeals are filed by the Revenue against the order 22/03/2016 order passed by 144C(1)(3) read with Section 143 (3) of the Income Tax Act, 1961 for Assessment Year 2012-13.
The grounds of appeal are as under:- (Revised Grounds of appeals) ( A.Y 2012-13)
1. "Whether on the facts and circumstances of the case, the id, CIT(A) was justified in excluding Accentia) Technologies Ltd. as comparable when there is main functional similarity between the assessee and Accentia Technologies
Ltd. and majority of the income of the company is from ITES segment. Also, disregarding the fact that acquisition of shares has not much effect on profitability of the company?" 2. "Whether on the facts and circumstances of the case, the Ld.CIT(A) was justified in excluding Acropetal Technologies Ltd. as comparable when there is main functional similarity between the assessee and Acropetal Technologies Ltd. and disregarding the fact that acquisition/merger of companies has not much effect on profitability of the company. ? 3. "Whether on the facts and circumstances of the case, the Ld.CIT(A) was justified to direct the TPO for exclusion of M/s Eclerx Services Ltd. as comparable when the assessee and M/s Eclerx Services Ltd. both are in same ITES segment 4. "Whether on the facts and circumstances of the case, the Ld.CIT(A) was justified in excluding Infosys Ltd. From the list of comparables on the basis that this company is different in FAR and has owned significant intangible disregarding the facts that the comparable company is functionally similar and there is no linkage between significant intangibles and the margins of the company? 5. "Whether on the facts and circumstances of the case CIT(A) was justified to direct the TPO to include unbilled revenue/inventory/work in progress while calculating the working capital adjusted margin when TPO already consider inventory for the working capital adjusted margin?"
ITA No. 3436/DEL/2018 ( A.Y 2012-13) 1. Whether on the facts and circumstances of the case, the Ld.CIT(A) was justified to direct the TPO to include unbilled revenue/inventory/work in progress while calculating the working capital adjusted margin when TPO already consider inventory for the working capital adjusted margin?
SAIPL is a Private Limited Company registered in India and is a wholly owned subsidiary of Stamp Analysis Inc. (SA Inc.). SAIPL is a back and captive service provider parent company SA Inc. and renders back office research support services and is engaged in providing information research and related support Services to its AE’s. As the assessee Company provides Service primarily to its AE, the assessee is assured return on its cost for Services rendered. Therefore, the assessee is insulated from majority of business risk as it is engaged in provision of ITES/BPO Services as per the requirements and specifications provided by the AE’s. The assessee Company contended that the assessee can be considered as a Contract Service Provider and does not buyer any significant business risk. The assessee Company filed its return of income on 27/11/2012 for Ay 2012-13 declaring total income of Rs.1,20,55,020/-. During the course of assessment proceedings, the Assessing Officer made reference u/s 92CA(2) & 92 D(3) to the TPO. The TPO vide order dated 29/1/2016 made adjustments at Rs. 1,36,72,619/- being the ALP to ITES Services Provided by the assessee Company to its AE’s. The Assessing Officer vide order dated 22/3/2016 assess the total income at Rs. 2,65,71,450/-. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A) . The cit allowed the Transfer Pricing issue and partly allowed the appeal of the assessee vide order dated 31/01/2018. In the meanwhile the assessee filed rectification application before the Transfer Pricing Officer on 15/2/2016 u/s 154/92CA (3) of the Act. The Transfer Pricing Officer vide order dated 16/6/2016 disposed off the said rectification application. Being aggrieved by the said order dated 16/6/2016, the assessee field appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
During the hearing none appeared for the assessee despite sending notices to the given address under Form 36A of the appeal memo. The notice has been returned with the remark that the assessee has left the premises. From the assessee’s side no new address has been provided till date. Therefore, we are proceeding on the basis of the order of the TPO, draft assessment order, assessment orders and order of the CIT(A) as well as the contentions taken before the Revenue Authorities below by the assessee which are reproduced in those orders.
At the time of hearing, the Ld. DR submitted that the Transfer Pricing Adjustment are to the extent of 1,36,72,619/- and no other additions were challenged by the Revenue in these two appeals. Therefore, the Ld. DR submitted that as per the CBDT Circular No. 17/2019 dated 08.08.2019. The Tax Effect is below 50 lacs threshold. Thus, the appeal needs to be disposed off according to the CBDT Circular.
We have heard Ld. DR and the contentions taken by the Ld. DR that these two appeals are below the actual tax threshold which is coming under the purview of CBDT Circular No. 17/2019 dated 08.08.2019 and thus has to be withdrawn. Therefore, we are disposing both the appeals as low tax effect including the appeal which was filed by the Revenue in respect of order of the CIT(A) relating to rectification u/s 154 of the Act. Hence, both the appeals are dismissed.
In result, both the appeals of the Revenue are dismissed.