Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, PUNE BENCH “C”, PUNE
Before: SHRI R.S. SYAL & SHRI PARTHA SARATHI CHAUDHURY
PER R.S.SYAL, VP :
These two cross appeals – one by the assessee and the other
by the Revenue along with one cross objection by the assessee arise
out of the final assessment order dated 29-01-2016 passed by the
Assessing Officer u/s.143(3) r.w.s.144C(13) of the Income-tax Act,
1961 (hereinafter called ‘the Act’) in relation to the assessment year
2011-12.
The Revenue’s appeal is time-barred by 09 days. The
Revenue has filed an affidavit explaining the reasons which led to
the late filing of the appeal. We are satisfied with such reasons.
The delay is condoned and the appeal is admitted for hearing on
merits.
The appeal by the Revenue and cross objection by the assessee
rotate around the transfer pricing adjustment in respect of three sets
of international transactions, namely, Software research and
development segment, Support services segment and Marking
services segment.
3 Tibco Software India Private Limited A.Y. 2011-12
Succinctly, the facts of the case are that the assessee is an
Indian subsidiary of TIBCO, US. The assessee entered into
Software Research and Development Services agreement with
TIBCO, US, for providing Software Research and Development
Services in accordance with the Design, Production orders, Plans,
Process and Specifications and Production Schedules. The assessee
filed its return declaring certain international transactions. The
Assessing Officer (AO) made reference to the Transfer Pricing
Officer (TPO) for determining the Arm’s Length Price (ALP) of the
international transactions. The TPO tinkered with certain
comparables selected by the assessee in all the three segments and
eventually proposed a total transfer pricing adjustment of
Rs.6,70,03,680/- covering Software Development Services
Segment, ITES Segment and Marketing Segment. The assessee
approached the Dispute Resolution Panel (DRP), which gave certain
directions on the inclusion/exclusion of certain comparables in all
the three segments. As a result of such directions, total transfer
pricing adjustment came to be deleted. That is how, the Revenue is
mainly aggrieved by the directions given by the DRP on
inclusion/exclusion on certain companies in the list of comparables
in all the three segments. The assessee in its cross objection is also
Tibco Software India Private Limited A.Y. 2011-12
aggrieved by certain issues concerning the transfer pricing
adjustment.
We have heard the rival submissions and gone through the
relevant material on record. At the outset, the ld. Counsel for the
assessee submitted that even if all the grounds taken by the
Department are accepted still there will not arise any transfer
pricing adjustment because of the assessee’s margin falling within
the permissible range of the average margin of the comparable
companies. The ld. AR filed a segment-wise computation on the
basis of which it has been claimed that no transfer pricing addition
is sustainable even if the Revenue’s grounds are accepted. Such a
submission made by the assessee in respect of all the three segments
is reproduced as under:
Software Development Services Segment Sr.No. Name of company Working Capital Adjusted OP/TC As per TPO report If Dept. Appeal dated 22 Jan 16 allowed 1 Thinksoft Global Services -3.24% -- Ltd. 2 Persistent Systems & 20.52% -- Solutions Ltd. 3 Thirdware Solutions Ltd. -29.20% -29.20% 4 Acropetal Technologies Ltd. 22.06% 22.06% (IT segment) 5 E-Infochips Ltd. 54.90% 54.90% 6 Akshay Software 1.24% 1.24% Technologies Ltd. 7 Goldstone Technologies Ltd. -.0.28% -0.28% 8 L.G. S. Global Ltd. 10.76% 10.76% 9 L&T Infotech Ltd. 17.95% 17.95% 10 Persistent Systems Ltd. 20.83% 20.83%
Tibco Software India Private Limited A.Y. 2011-12
11 Sasken Communication 24.03% 24.03% Technologies Ltd. (Telecom Services Segment) 12 Mindtree Ltd. (IT Services) 10.40 10.40% Average 12.50% 13.27% TIBCO India PLI 12.87% 12.87% Conclusion At ALP At ALP +/-5%
TC(A) 266,572,957 ALP(B) 13.27% AL Revenue 301,944,523 +/-5% range [C=A+(A*B)] computation Revenue (D) 300,870,267 5% higher (D*1.05) 315,913,780 5% higher (D*0.95) 285,826,754
Support Services Segment Sr.No. Name of company Working Capital Adjusted OP/TC As per TPO report If Dept. Appeal dated 22 Jan 16 allowed 1 Caliber Point 9.12% 9.12% 2 Microland Ltd. (ITeS 8.50% -- segment) 3 Accentia Technologies Ltd. 25.86% 25.86% 4 Informed Technologies India 11.60% 11.60% Ltd. 5 Jindal Intellicom pvt. Ltd. 13.79% 13.79% 6 Microgenetics Systems Ltd. 0.97% 0.97%
1 Eclerx Services Ltd. NA 56.34% 2 Cosmic Global Ltd. NA 10.82% Average 11.64% 18.36% TIBCO India PLI 16.18% 16.18% Conclusion At ALP At ALP +/-5%
TC(A) 466,037,961 ALP(B) 18.36% AL Revenue 551,589,215 +/-5% range [C=A(A*B)] computation Revenue (D) 541,426,337 5% higher (D*1.05) 568,497,654 5% higher (D*0.95) 514,355,020
Tibco Software India Private Limited A.Y. 2011-12
Marketing Support Services Segment Sr.No. Name of company Working Capital Adjusted OP/TC As per TPO report If Dept. Appeal dated 22 Jan 16 Allowed 1 IDC (India) Ltd. (MSS 9.88% -- Segment) 2 Quadrant Communications 18.49% 18.49% Ltd. 3 Empire Industries Ltd. 22.63% 22.63% (Trading & Indenting segment) 4 Entertainment Networks 1.35% 1.35% (India) Ltd. (Event Segment) 5 Priya International Ltd. 4.20% 4.20% (Indenting Segment) 6 Asian Business Exhibition & 20.29% 20.29% Conferences Ltd. 7 ICC International Agencies 36.76% 36.76% Ltd. (Commission & Service Activity Segment) Average 16.23% 17.29% TIBCO India PLI 12.84% 12.84% Conclusion At ALP+/-5% At ALP +/-5%
TC(A) 44,731,847 44,731,847 ALP(B) 16.23% 17.29% AL Revenue [C=A+(A*B)] 51,991,187 52,464,492 Revenue (D) 50,475,698 50,475,698 5% higher (D*1.05) 52,999,483 52,999,483 5% higher (D*0.95) 47,951,913 47,951,913
Per contra, the ld. DR submitted that the above calculation has
been placed on record for the first time and hence the Bench should
not rely on the same unless the same is confirmed by the AO/TPO.
We agree with such a justifiable submission made on behalf of the
Revenue. As such, the impugned order is set-aside and the matter is
restored to the file of the AO/TPO for verifying the calculations as
7 Tibco Software India Private Limited A.Y. 2011-12
reproduced above for ascertaining if the submission made on behalf
of the assessee is correct. Needless to say, the assessee will be
allowed a reasonable opportunity of hearing. In the otherwise
scenario, the concerned authority will proceed as per law.
The only issue which is raised in the assessee’s appeal is
against denial of deduction on interest income of Rs.29,23,652/-
u/s.10A of the Act.
We have heard the rival submissions and gone through the
relevant material on record. The AO did not allow deduction
u/s.10A in respect of the interest income. The ld. AR submitted that
similar issue came up for consideration before the Tribunal for the
immediately preceding assessment year. A copy of the order dated
31-01-2017 passed by the Tribunal in ITA No.276/PUN/2015 has
been placed on record, as per which this issue has been restored
with certain directions. The relevant discussion has been made on
page 22 para 34 of the order. The ld. DR could not point out any
distinguishing feature in the facts and relevant law in sofaras the
preceding year vis-à-vis the instant year is concerned. Respectfully
following the precedent, we set-aside the impugned order on this
issue as well and remit the matter to the file of the AO for deciding
8 Tibco Software India Private Limited A.Y. 2011-12
it afresh in accordance with the directions given by the Tribunal in
its order for the preceding year.
In the result, the cross appeals as well as the cross objection
are allowed for statistical purposes.
Order pronounced in the Open Court on 20th November, 2019.
Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; �दनांक Dated : 20th November, 2019 सतीश आदेश क� क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order is forwarded to: अ�ेिषत आदेश आदेश आदेश अपीलाथ� / The Appellant; 1. 2. ��यथ� / The Respondent; 3. The CIT(A)-13, Pune 4. The Pr.CIT-V, Pune िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे 5. “सी” / DR ‘C’, ITAT, Pune; 6. गाड� फाईल / Guard file. आदेशानुसार आदेशानुसार/ BY ORDER, आदेशानुसार आदेशानुसार // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune
Tibco Software India Private Limited A.Y. 2011-12
Date 1. Draft dictated on 19-11-2019 Sr.PS 2. Draft placed before author 19-11-2019 Sr.PS 3. Draft proposed & placed JM before the second member 4. Draft discussed/approved JM by Second Member. 5. Approved Draft comes to Sr.PS the Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *