9911796707
TMI Blog2022 (5) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... rate on 30.06.2009 plus 300 basis points which amounted to 14.75% and the addition got revised - HELD THAT:- As in the MAP Resolution entered into between UK and Indian Authorities in respect of the addition pertaining to UK got settled at 3 months average Euribor plus 200 basis points applied on receivables beyond 90 days, we direct the AO/TPO to apply 3 months average Euribor plus 200 basis points on the receivables received beyond 90 days in respect of outstanding from Colt Luxembourg. Accordingly, allow the Grounds No. 14 to 16 for statistical purpose. Purchase of fixed assets - TPO added the entire amount of fixed assets purchased by the assessee from its AE s during the year - DRP in its order directed the TPO to accept the value of fixed assets in case of those invoices from AE where it is mentioned that, they have been valued at the present depreciated value of equipment - HELD THAT:- In the case of Assistant Commissioner of Income Tax Vs. Coastal Energy Pvt. Ltd, Chennai [ 2011 (7) TMI 154 - ITAT, CHENNAI ] it is held that, the custom authorities are assigning the value to imported goods on the basis of scientifically formulated methods and they are responsible for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssary or expedient to refer the matter to the Ld. TPO. 3. The Ld. AO as well as the Ld. TPO and the Hon'ble Dispute Resolution Panel hereinafter referred as (Hon'ble DRP') have erred in law as well as facts of the case in not accepting the Arm's Length Price (hereinafter referred as 'ALP') determined by the appellant. 4. The Ld. AO / Ld. TPO / Hon'ble DRP have erred in ignoring the fact that the appellant is entitled to deduction under section 10A of the Act on its profits from provision of Information Technology Enabled Services ('ITES') and Contract Software Development ('CSD') Services to overseas associated enterprises and there is no untoward motive to derive any tax advantage by manipulating transfer prices of International Transaction undertaken by it with its associated enterprises. 5. The Ld. AO / Ld. TPO / Hon'ble DRP have erred in determining the ALP on the basis of data for Financial Year ('FY') 2009-10 only and ignoring the data for two prior financial years i.e. FY 2008-09 and FY 2007-08. 6. The Ld. AO / Ld. TPO / Hon'ble DRP have erred in rejecting the analysis conducted by the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on June 30, 2009, 14.75%. 17. The Ld. AO / Ld. TPO have erred in fact and in law by considering the arm's length value of some of the fixed assets imported by the appellant from its associated enterprises during the financial year 2009-10 as Nil, ignoring the valuation arrived by the Custom Authorities. 18. The Ld. AO / Ld. IPO have erred in making addition equivalent to the entire amount of fixed assets imported by the appellant instead of the corresponding depreciation amount. 19. The Ld. AO / Ld. TPO / Hon'ble DRP have erred in ignoring the judicial pronouncements relied upon by the appellant. 20. The Ld. AO has erred in initiating penalty proceedings under section 271(l)(c) of the Act. 3. Brief facts of the case are that, the assessee Company is incorporated in India on April 1, 2004 and is a part of the Colt Group of Companies ( Colt Group ) and provides Information Technology Enabled Services ( ITES ) and contract software development ( CSD ) solutions to its associated enterprises ( AEs ). The assessee performs back-end operations in all business areas such as network operations and engineering, IT service provisioning, sales and marketi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with respect to its international transaction to its AE based in UK. Pursuant to the same, MAP resolution dated 12/02/2018 was arrived between India and UK competent authorities and the same was accepted by Colt. In the said MAP Resolution, the appropriate margin for service rendered under ITEs segment was agreed at 15.50% as against 11.94% earned by the Colt. The appropriate margin for service rendered under CSD segment was agreed at 14.50% as against 13.93% earned by Colt. Copy of MAP resolution is filed by the assessee before the Tribunal along with the application to revise grounds of appeal to restrict only to the issues which are not covered by MAP resolution. The ld. Counsel further submitted that, after the MAP resolution, the addition sustained in the case of the assessee and which is the subject matter of the present appeal are as under:- S. No. Particulars Amount in INR TP ADDITIONS A ITES SEGMENT(Colt Luxembourg 33,131,928 B Purchase of fixed assets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vanced by the Ld. AR. 11. The Bangalore Bench of the Tribunal in the case of Amazon Development Centre (India) (P.) Ltd. Vs. Income Tax Officer, Ward 11(1), Bangalore, [2018] 93 Taxmann.co 30(Bangalore-Trib.) , while dealing with issue as to whether the margins accepted by MAP to be applied or not in the similar transactions which are not covered under the MAP, held hereunder:- 4.5.2 We have carefully perused and considered the arguments urged by both sides and the material on record. We observe that the CBDT letter in F.No.480/10/2011-FTD-1 dt.28.10.2015 has been issued in the case on hand in respect of the resolution of MAP proceedings for Assessment Years 2007-08 to 2009-10 on behalf of the Foreign Tax Tax Research Division - I, APA-1, CBDT, New Delhi wherein it has been confirmed that for Assessment Year 2008- 09, for USA transactions under the ITES Segment, the margin has been determined at 18.82% as against a margin of 24.47% determined by the TPO. It has been further clarified by way of 'Note' in the said letter that apportionment between US and non-US ALP and Transfer Pricing Adjustment has been carried out by the APA-1 section of FT and TR Division of CBD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t appeal pertains to delay in receivable from Colt Luxembourg is INR 42,26,509/-. By relying on the judicial pronouncements mentioned above, submitted that, the interest rate agreed in the MAP Resolution may be applied with respect to receivable by the appellant from Colt Luxembourg. 16. In view of the above discussed ratio laid down in the judicial pronouncements mentioned above and by taking into consideration that, in the MAP Resolution entered into between UK and Indian Authorities in respect of the addition pertaining to UK got settled at 3 months average Euribor plus 200 basis points applied on receivables beyond 90 days, we direct the AO/TPO to apply 3 months average Euribor plus 200 basis points on the receivables received beyond 90 days in respect of outstanding from Colt Luxembourg. Accordingly, allow the Grounds No. 14 to 16 for statistical purpose. 17. The Ground Nos. 17 18 are in respect of purchase of fixed assets. The Ld. TPO added the entire amount of fixed assets purchased by the assessee from its AE s during the year. The DRP in its order directed the TPO to accept the value of fixed assets in case of those invoices from AE where it is mentioned that, they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvanced by the Ld. AR. In the case of Assistant Commissioner of Income Tax Vs. Coastal Energy Pvt. Ltd, Chennai Ay 2006-07 (ITA No. 2099/Mds/2010) dated 13/07/2011, it is held that, the custom authorities are assigning the value to imported goods on the basis of scientifically formulated methods and they are responsible for determining a fair value of the imported goods. 21. By considering the facts and circumstances of the case, we are of the opinion that, the fixed assets purchased by the assessee cannot be taken as NIL and the value assigned by the custom authorities are to be taken as the fair value of the fixed assets purchased by the assessee. Accordingly, we allow the Assessee s Grounds of Appeal No. 17 18. 22. The Assessee s Grounds of Appeal No. 19 is general in nature and the Assessee s Grounds of Appeal No. 20 is consequential in nature. Thus, the Assessee s Grounds of Appeal No. 19 20 are dismissed. 23. The grounds of appeal in I.T.A. No. 1908/DEL/2017 (A.Y 2012-13) are as under:- 1. The order dated January 27, 2017, passed by the Learned Assistant Commissioner of Income Tax, Circle 6(1), New Delhi (hereinafter referred as Ld. AO ) under section 143(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PO / Hon'ble DRP have erred in ignoring the judicial pronouncements relied upon by the appellant. 12. The Ld. AO has erred in levying the interest under section 234B of the Act. 13. The Ld. AO has erred in initiating penalty proceedings under section 271(l)(c) of the Act. 14. The above grounds of appeals are independent and without prejudice to one another. 15. The appellant craves leave to add / withdraw / amend any ground of appeal at the time of hearing. Additional Grounds of Appeal 1. That on the facts and circumstances of the case and in law, the Ld. AO has erred in levying interest u/s 234B and 234C of the Income-tax Act, 1961 ( Act ) on the additional income agreed as per the Advance Pricing Agreement entered between the appellant and the Central Board of Direct Taxes and offered to tax by the appellant in the modified return of income u/s 92CD(1) of the Act. 24. Brief facts of the case are that, the assessee company filed its return of income for A.Y 2012-13 on 30.11.2012 declaring an income of Rs. 49,04,70,740/-. Thereafter, the case was selected for scrutiny and notice u/s 143(2) of the Act was issued and served upon the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices rendered in ITES segment 1 Colt Technology Services Group Limited, UK ( Colt U.K) 2,44,34,41,267 94.25% 2 Colt Lux Group Holding Sarl, Luxembourg ( Colt Luxembourg ) 14,90,71,372 5.75% 29. The Ld. Counsel further submitted that, the assessee has entered into an Advance Pricing Agreement (APA) on 30/08/2017 with respect to its international transactions with its AE s based in UK for AY 2015-16 to AY 2019-20 along with roll back for the AY 2011-12 to AY 2014-15. As per the said advance pricing arrangement, the appropriate margin for the services rendered under ITEs Segment was decided at 15.50% as against 12.29% earned by assessee. The assessee has filed copy of the advance pricing agreement along with application to revised grounds of appeal to restrict the issue only to the issues which are not covered by APF. Therefore, the additions sustained in the present appeal are as follows:- Particulars Amount in INR TP Additions:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AY 2011-12 to AY 2014-15. Pursuant to the APA appellant has filed modified return for AY 2011-12 on 27/11/2017 declared an income of Rs. 58,72,70,320/- as against the income of Rs. 49,04,70,740/- declared in original return of income, thereby declared an additional income of Rs. 9,67,99,580/-. As per Section 92CD(2) of the Act the modified return filed pursuant to the APA, all other provisions shall apply as if the modified return is filed u/s 139 of the Act. Since, assessee cannot estimate the additional income at the time of advance tax instilment and at the time of filing income tax return, did not pay advance tax on such income. Therefore, submitted that interest u/s 234C and 234B of the Act for non/short payment of advance tax installment and delay in payment of income tax respectively should not be levied on such additional income declared by the assessee in its modified return of income. 34. Per contra, the Ld. DR has relied on the observations and conclusions of the Lower Authorities. 35. We have heard the Ld. AR and also Ld. DR on the issue in dispute, we are agreeing with the argument of the Ld. AR. 36. In the case of Prime Securities Ltd. Vs. Assistant Comm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax is not paid in consonance with the law in force at the time when the advance tax is paid and there is a default. Therefore, for charging interest under section 234B, committing of default in payment of advance tax is condition precedent. Perusal of the judgment of the Delhi High Court, which is relied on by the learned counsel appearing for the respondent, shows that in that case also the Delhi High Court has held that for charging of interest establishment of default in payment of advance tax is necessary. In the present case, it is nobody's case that the appellant at the time of payment of advance tax has committed any default or that payment of advance tax made by the appellant was not in consonance with law. The Division Bench of this court in its judgment in the case of the appellant, referred to above, has held that the return filed by the appellant was in consonance with law and there was only a formal defect and the moment that defect was cured, the return related back to the original date. In our opinion, when the Supreme Court in Ghaswala's case [2001] 252 ITR 1 says that charging of interest under section 234B is mandatory, what it realty means is that once ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
