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Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: SHRI PRAMOD KUMAR&
The instant appeal has been preferred before us by the revenue against the order dated 23.01.2013 passed by the Dy. Commissioner of Income Tax (Transfer Pricing Officer-II), Ahmedabad for the Assessment Year 2009-10 with the following grounds: i) “The Hon'ble DRP has erred in law and on facts in rejecting the characterization of the assessee as Knowledge Process Outsourcing (KPO) as proposed by TPO. ii) The Hon'ble DRP has erred in law and on facts in not reconciling the different functions. Assets & Risks (FARs) provided by the assessee in different years. iii) The Hon'ble DRP has erred in law and on facts in rejecting the lower turnover threshold applied by the TPO. iv) The Hon'ble DRP has erred in law and on facts in ignoring the analysis carried out in respect of the lower turnover threshold applied by the TPO v) The Hon'ble DRP has erred in law and on facts in rejecting the comparables identified by the TPO.
- 2 - ACIT vs. Quintiles Data Processing Centre India Pvt. Ltd. Asst.Year – 2009-10 vi) The Hon'ble DRP has erred in law and on facts in selective application of the criteria for rejection of comparables. vii) The Hon'ble DRP has erred in law and facts in directing the AO to allow the Foreign Exchange Fluctuation Gain as exempt income u/s 10A when the said income has not been derived from the export of goods/services as required u/s 10A. viii) On the facts and circumstances of the case, the Dispute Resolution Committee ought to have upheld the upward adjustment made by the TPO. ix) It is, therefore, prayed that the order of the Hon'ble DRP may be set-aside and those of the T.P.O. and the Assessing Officer be restored.”
At the very outset of the proceedings, we note that the issue has been resolved under the Mutual Agreement Procedure (MAP) and as a result whereof FT & TR Division-I, CBDT by and under the letter being F.No.480/03/2014-APA-I dated 13.07.2017 has calculated the arm’s length price arrived upon such MAP in the manner as follows. The same is appearing from the order u/s 295(h) of the I.T. Act, 1961 r.w.r. 44H of the I.T. Rules, 1962 issued by DCIT, Circle – 3(1)(2) Ahmedabad. “3. Subsequently, a resolution was arrived at under Mutual Agreement Procedure (MAP) in this case and the FT & TR Division-1, CBDT vide their letter F.No.480/03/2014-APA-1 dated 13.07.2017 had sent the calculation of arm's length price arrived at as per MAP. The relevant extract the said letter is as under: “The Competent Authorities of India and USA, during their meeting held during April 2016 at Delhi have agreed to resolve the dispute of double taxation arising due to the transfer pricing adjustments made by the Indian Tax Authorities in the case of QDPC in the manner as follows: � It was agreed to resolve the cases by treating 75% of the mutual agreements costs paid by QDPC for availing shared services at arm's length and disallowing 25% of the amounts paid towards management fees for AYs 2007-08 through 2010-11. Thus, it has been agreed upon by both the Competent Authorities to resolve the cases for Asst Years 2007-08 to 2010-11 by adopting the values relating to US related international transactions as below:
- 3 - ACIT vs. Quintiles Data Processing Centre India Pvt. Ltd. Asst.Year – 2009-10 Sr. AY Allocated Cost as determined by Disallowance made by Adjustments as No agreed under MAP
Taxpayer TPO MAP TPO MAP Sustained Withdrawn 1 2007-08 156,84,347 0 117,63,260 156,84,347 39,21,087 39,21,087 117,63,260 2 2008-09 175,16,184 96,87,893 131,37,138 78,28,291 43,79,046 43,79,046 34,49,245 3 2009-10 147,50,754 37,29,059 110,63,066 110,21,695 36,87,689 36,87,689 73,34,007 4 2010-11 223,37,918 69,19,568 167,53,439 154,18,350 55,84,480 55,84,480 98,33,871
A letter dated 04/08/2017 was issued to the assessee informing about the above resolution of MAP with a request to submit its acceptance to the above resolution and withdraw the appeal pending on the issue.
The assessee vide letter filed on 04.10.2017 provided his acceptance to the said resolution and vide letter dated 11.10.2017 provided the proof of filing its request for withdrawal of appeal filed for the year consideration to Income Tax Appellate Authorities.
In view of the above, the transfer pricing adjustment to be made to the income of the taxpayer is recomputed as follows;
Sr. Description Amount in Rs. No. 1 Total Transfer Pricing adjustment as per the final assessment 1,10,33,382 order 2 Relief as per MAP Resolution 73,34,007 3 Total Transfer Pricing adjustment after giving effect to the MAP 36,99,376 resolution
Modified to the above extent only. This is subject to proof of withdrawal of appeal by the assessee, if any, pending on the issue which was the subject matter for adjudication under the Mutual Agreement Procedure. Therefore, this order shall be final only upon the aforesaid withdrawal of appeals. Give credit of prepaid taxes after due verification, issue demand notice & Challan/R.O. as the case may be.”
- 4 - ACIT vs. Quintiles Data Processing Centre India Pvt. Ltd. Asst.Year – 2009-10 In that view of the matter, we find it fit and proper to send the issue to the file of the TPO for verification of the matter in the manner as narrated by the terms of the resolution and to pass order in accordance with law. Hence, assessee’s appeal is allowed for statistical purposes.