GE MEDICAL SYSTEMS (INDIA) PVT. LTD.,,BANGALORE vs. ASST.C.I.T., BANGALORE

That the order of the DRP and the directions given therein are bad in law and not as per law requires to be cancelled.

That the AO/TPO/DRP erred m not providing adequate and sufficient opportunity as required under law thus violating

The AO/TPO/DRP erred in making adjustment of Rs. 7,85,33,060/- towards the Software Development Services, while determining the ALP of the international transactions of the appellant.

The AO/TPO/DRP erred in making an adjustment of Rs. 28,15,78,052/- towards the IT Enabled Services, while determining the ALP of the international transactions of the appellant. 14. The AO/TPO/DRP erred in making an adjustment of Rs. 30,72,68,521/- towards the Contract Manufacturing segment, while determining the ALP of the international transactions of the appellant. 15. That learned DRP failed to appreciate that no opportunity was provided to the appellant by the TPO before recommending adjustment in the Contract manufacturing segment. 16. The learned DRP erred in summarily rejecting the objections of the appellant with regard to the non providing of IT(TP)A No.563/Bang/2016 Page 4 of 10 adequate and sufficient opportunity as required under law by the TPO before passing order u/ s 92CA.

The learned DRP erred in adjudicating ITES Segment by overlooking and not considering the financial information of 5 companies which was available in the Capitaline database and provided by the appellant.

The AO/DRP erred in not following the orders of the CIT(A) and DRP for earlier years in the appellant's own case on similar issue, when the facts being the same for this year.

The Learned DRP erred in giving directions which enhanced the adjustment with regard to IT enabled services and Software Development services without giving adequate and sufficient opportunity as required under law.

The AO /TPO /DRP erred in not carrying out the adjustments sought by the appellant.

The Learned DRP erred in not giving clear directions on risk adjustments, selling and marketing adjustment, risk level, working capital adjustments, sought by the appellant.

That the AO/DRP erred in holding that ipso facto the determination/calculation of arm's length price amounts to earning of income by the appellant, thereby taxable in its hands.

The order of the Transfer pricing officer, directions of DRP and that of the AO is in clear violation of the law on this issue and the principles enunciated by various courts more particularly on the issue of reference, sanction of approval, recording of reasons and lack of satisfaction.

That no copy of the reasons recorded for making the reference to the TPO has been furnished nor copy of the approval obtained for making the reference has been furnished to the appellant.

The TPO erred in ignoring the fact that before making an adjustment neither a comparable transaction entered into has been identified nor the enterprise which has entered into such a transaction has been identified. Unless these two are identified as explained in Rule 10B(2) no further proceedings are IT(TP)A No.563/Bang/2016 Page 5 of 10 possible. In this case, in view of non-identification, the entire order requires to be vacated.

The authorities below erred in ignoring the method followed by the appellant. The authorities below ought to have adduced cogent reasons for rejecting the method followed by the appellant before substituting and prescribing a new method.

The onus is on the department to establish there is any tax avoidance and it is essential that incontrovertible evidences are in the possession of the AO before a reference is made as held by the Supreme Court in 131 ITR 597 and further has erred in not relying on the circular.

The Learned AO/TPO/DRP have failed to identify comparables in terms of Rule 10B(3).

The Learned AO/TPO/DRP failed to make the necessary adjustments as is required in terms of Rule 10B(2).

The AO/TPO/DRP erred in not granting the variances deduction of 5% envisaged in the Act and Circular.

No opportunity was given to the assessee before making the reference and before according the approval by the CIT. This is against the principles set out by the Hon'ble Supreme Court in Rajesh Kumar vs. DCIT - 287 ITR 91. OTHER ISSUES/ADDITIONS/DISALLOWANCES 32. The Learned DRP failed to adjudicate the disallowance u/s 40(a)(ia) of the Act of professional fees for miscellaneous services and public accountants' fees to the extent of Rs. 2,52,58,803/- inspite of proof of deduction of tax at source was produced.

The Learned DRP failed to adjudicate the disallowance u/s 40(a)(ia) of the Act the rent paid to the extent of Rs. 5,58,40,000/-.

The Learned AO failed to appreciate and consider the deduction of tax at source by the appellant.

The Learned AO / DRP failed to appreciate that no disallowance u/s 40(a)(ia) can be made for short fall in deduction of tax at source or applying lower rate.

The AO/DRP failed to appreciate and take cognizance of the fact that the payees / receivers / deductees have paid the taxes on the income, then no disallowance can be made u/s 40(a)(ia) of the Act. 37. The Learned AO/DRP erred in not providing adequate and sufficient opportunity to the appellant thus violating the principles of natural justice and on this ground alone the above disallowances requires to be deleted. ISSUE OF INTEREST U/S 234A, B AND 234C 38. The appellant denies the liabilities for interest u/s 234A, B & 234C of the Act. Further prays that the interest if any should be levied only on returned income. 39. No opportunity has been given before the levy of interest u/s 234A, B & C of the Act. 40. Without prejudice to the appellant's right of seeking waiver before appropriate authority the appellant begs for consequential relief in the levy of interest u/s 234A, Band 234C. 41. The appellant denies liability for interest u/ s 234A &B on the adjustment made u/s 92CA of the Act and relies on the decision of the Supreme Court in the case of CIT v Kwality Biscuits Ltd reported in 284 ITR 434. 42. With prior permission of the ITAT, the appellant reserves the right to add/ delete/ amend any or all the ground stated above. 43. For the above and other grounds and reasons which may be submitted during the course of hearing of this appeal, the assessee requests that the appeal be allowed as prayed and justice be rendered.

During the course of hearing, the ld. counsel for the assessee has raised the validity of assessment on the ground that assessment was IT(TP)A No.563/Bang/2016 Page 7 of 10 framed in the hands of non-existing entity. The ld. counsel for the assessee further invited our attention to the fact that assessment order was passed on 27.03.2015, whereas the merger of M/s. GE Medical Systems (India) Pvt. Ltd. with M/s. Wipro GE Healthcare Pvt Ltd. took place on 01.04.2012 vide order of Merger dated 24.07.2013 of the Hon’ble High Court of Karnataka. Despite the fact of merger of assessee company i.e., M/s. GE Medical Systems (India) Pvt. Ltd. with M/s. Wipro GE Healthcare Pvt Ltd. brought to the notice of the AO, but he has framed the assessment in the hands of the merging company i.e., M/s. GE Medical Systems (India)

The ld. DR emphatically refuted the contention of the assessee with the submission that the AO issued notice upon the erstwhile company i.e., M/s. GE Medical Systems (India) Pvt. Ltd. u/s. 143(2) dated 31.07.2012.

The ld. DR further contended that though DRP has passed an order in the hands of merged company M/s. Wipro GE Healthcare Pvt Ltd., but the PAN No. given in the order is of the erstwhile company i.e., M/s. GE Medical Systems (India) Pvt. Ltd. Therefore, the assessee has not brought the clear facts to the notice of the AO. Thus, the AO alone cannot be held responsible for passing the order in the hands of the erstwhile company i.e., M/s. GE Medical Systems (India) Pvt. Ltd. after the merger.

Having carefully examined the orders of lower authorities in the light of the rival submissions, we find that undisputedly notice was issued u/s. 143(2) on 31.07.2012 and till then, there is nothing on record to establish that the fact of merger was brought to the notice of AO. The assessment was completed on 27.03.2015 and in the assessment order, the AO has mentioned against the name of assessee as M/s. GE Medical Systems (India) Pvt. Ltd. (Since merged with M/s. Wipro GE Healthcare Pvt Ltd.), meaning thereby that during the assessment proceedings, these facts were brought to the notice of the AO. While passing the order, the DRP has also passed the order though in the name of merged company i.e., M/s.

Keeping the totality of facts of the case, we are of the view that complete facts were not brought to the notice of AO at the time of completion of assessment as nothing has been placed on record by the assessee to demonstrate that assessee has furnished the name of the merged company along with their PAN No. Therefore, we are of the view that for the mistake in the assessment order, the AO alone cannot be held responsible and the assessee is also equally responsible for it. We therefore set aside the order of the AO and restore the matter to his file with a direction to pass appropriate order in the name of merged company against its PAN No., after affording opportunity of being heard to the assessee.

In the result, the appeal of assessee is allowed for statistical purposes.