DCIT, BANGALORE vs. M/S TEXTRON INDIA PVT.. LTD., BANGALORE

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ITA 104/BANG/2015Status: DisposedITAT Bangalore19 March 2020AY 2010-118 pages
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What did the Tribunal hold?

The Tribunal restored the disputed issues related to non-MAP transactions to the TPO for fresh adjudication. Non-TP issues were also restored to the DRP for a decision on merits, following similar directions.

What were the facts?

The assessee, engaged in IT and software development, had transfer pricing adjustments and other additions made by the Assessing Officer. The assessee filed objections with the DRP and subsequently appealed to the ITAT. A Mutual Agreement Procedure (MAP) application was filed for US transactions.

What were the issues?

Whether MAP relief granted for US transactions should extend to non-US transactions, and the adjudication of non-TP issues not addressed by the DRP.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 142(1),Section 92CA,Section 143(3),Section 144C,Section 80IA

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Income Tax Appellate Tribunal, BANGALORE BENCHES “ A ” BENCH: BANGALORE

Before: SHRI A.K. GARODIA & SHRI PAVAN KUMAR GADALE

For Appellant: Shri Sumeet Khurana, C.A
For Respondent: Ms. Neera Malhotra, CIT (D.R)
Hearing: 05.03.2020Pronounced: 19.03.2020

2 IT(TP)A Nos.104 & 223/Bang/2015 & C.O. No.80/Bang/2015 O R D E R PER SHRI PAVAN KUMAR GADALE, JM : These are the cross appeals filed by the assessee and the Revenue.The assessee has filed Cross Objection in Revenue appeal Asst. Year 2010-11. Since the appeals and C.O. are interconnected, they are clubbed and heard together and consolidated order is passed.

2.

We shall take up the assessee appeal in IT(TP)A No.223/Bang/2015 and the facts narrated therein. The assessee is engaged in the business of IT and Software Development and filed the Return of Income on 28.09.2010 with total income of Rs.1,22,37,226/-.The case was selected for scrutiny and Notice under Section 143(2) and 142(1) of the Act were issued. In compliance, the learned Authorized Representative appeared on various dates and furnished details. Since there are international transactions, the matter was referred to the Transfer Pricing Officer (TPO) and order under Section 92CA of the Act was passed on30-01-2014 with transfer pricing adjustment of Rs7, 00,68,451/-.Further Draft Assessment order was passed u/sec 143(3) rws144C of the Act.The objections were filed in Form35A against the draft assessment order with DRP. The DRP considering the submissions and facts granted relief to the assessee on Working Capital Adjustment and Risk Adjustments, to the extent of Rs.2,03,54,469/-and the remaining Rs.4,97,13,982 was considered as Transfer Pricing Adjustment. Further 3 IT(TP)A Nos.104 & 223/Bang/2015 & C.O. No.80/Bang/2015 on addition in respect of STPI Unit Secondment expenses of Rs.71,26,878, Broad Band charges of Rs.1,19,042/-, depreciation on software of Rs.9,74,272/- and restriction of deduction under Section 80IA of the Act, the AO has passed the final assessment order under Section 143(3) r.w.s. 144C(13) of the Act dt.30.12.2014 with assessed income of Rs.6,71,57,886/-. Against the final assessment order, the assessee has filed the appeal with the Tribunal in pursuance to the directions of the DRP.

3.

At the time of hearing, the learned Authorized Representative submitted that the ground of appeal

No.12 pertains to STPI Unit Secondment expenses. Further there are no observations or findings of DRP on objections raised by the assessee and the related grounds of appeal Nos.13 to 18 before the tribunal. The learned Authorized Representative submitted that the assessee has filed a Mutual Agreement Procedure (MAP) application with the competent authority in respect of U S Related transactions and requested for withdrawal of TP grounds relating to the transactions with U.S. Associated Enterprises. The company has received MAP Resolution dt.4.10.2019 in respect of adjustments made with U S related transactions. Hence the assessee company likes to withdraw the appeal for the U S related transactions. Whereas, other grounds of appeal on corporate taxes and non U S related transactions and the related transactions not covered under MAP Shall be continued. Further, the contentions raised by the ld. AR are that the MAP shall

4. IT(TP)A Nos.104 & 223/Bang/2015 & C.O. No.80/Bang/2015 also apply to the other transactions and supported his arguments with paper book. Contra, the learned Departmental Representative objected for the MAP application to non-US transactions and supported with judicial decisions.

4.

We heard the rival submissions and perused the material on record. The disputed issues are with respect to the MAP application made by the assessee for US transactions and the same be applied to the non-US transactions. We find in the case of Oracle Solutions Services (India) Pvt. Ltd. Vs. DCIT in IT(TP)A No.1041/Bang/2018 Dt.6.2.2020 relied on the decision of Tribunal in the case of DCIT Vs. Global E-Business Operations (P) Ltd. in IT(TP)A No.298 & 318/Bang/2014 Dt. 16.08.2017 86 taxmann.com 197 (Bang. – Tribunal) has dealt on the margin accepted in MAP and non-MAP transactions, and the matter was remanded. We consider it appropriate to restore the matter to the file Of TPO and refer to the observations at page 4 and Para 5 of Oracle Solutions (India) Pvt. Ltd. Vs. DCIT (supra) as under :

“ 5. We heard the rival contentions and perused the material on record. Prima facie, the contention of the learned Authorized Representative that there is no finding by the CIT(Appeals) and non-adjudication of Map percentage on other entities. We find the co-ordinate bench of the Tribunal in the case of DCIT Vs. 5 IT(TP)A Nos.104 & 223/Bang/2015 & C.O. No.80/Bang/2015 Global e-Business (supra) has dealt on the margin accepted in the Map and non- Map transactions at page 10 para 6.5.5 which is read as under:

6 IT(TP)A Nos.104 & 223/Bang/2015 & C.O. No.80/Bang/2015 We found that the facts of the present case are similar to the decision dealt by the tribunal, and fallow the judicial precedence. Accordingly, we restore the disputed issue to the file of CIT(Appeals) for fresh adjudication and findings on the margin adopted for UK transactions and non-UK transactions and pass a speaking order, and the assessee should be allowed adequate opportunity of hearing and shall cooperate in early disposal of appeal and allow the grounds of appeal of assessee for statistical purposes.”

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