9911796707
TMI Blog2025 (3) TMI 526X X X X Extracts X X X X X X X X Extracts X X X X ..... rection originally has confirmed the action of the TPO. On rectification application filed by the assessee, the learned DRP directed the TPO to calculate the interest on delayed period falling with the year under consideration only for the purpose of making addition to the total income of the assessee for the year. The revised direction of learned DRP was not considered in the final assessment order passed by the AO as the same was passed before the issue of revised direction. Therefore we direct the AO to compute the interest on delayed receivable as per revised direction of the learned DRP and after taking the interest at LIBOR + 200 basis point. Hence the grounds of appeal raised by the assessee is partly allowed for statistical purposes. Scope of the provisions of section 143(1) - whether the adjustment made in the intimation order u/s 143(1) can be agitated in the proceedings u/s 143(3) or in the appeal proceeding arising out of assessment order u/s 143(3) - Disallowance of deduction u/s 43B - deduction on account of payment of bonus - HELD THAT:- We are not inclined to encourage the assessee not to prefer separate appeal against the intimation generated u/s 143(1) but in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is order passed under section 92CA(3) of the Act dated 11/05/2023 proposed upward adjustment of Rs. 35,58,85,941/- and Rs. 11,21,05,193/- towards software development services and IT Enabled services respectively. 6. The aggrieved assessee preferred to file objection before the learned DRP. 6.1 The learned DRP in its direction dated 22nd May 2024 granted partial relief to the assessee and thereby the TPO in giving effect order dated 05th June 2024 reduced the TP adjustments towards software development services and IT Enabled services to Rs. 29,03,39,555/- and Rs. 9,08,96,274/- respectively. Based on the direction of learned DRP dated 22nd May 2024 and giving effect order by the TPO dated 05th June 2024 the AO passed final assessment order u/s 143(3) r.w.s. 144(13) of the Act as on 26th June 2024. 6.2 In the meantime, the assessee against the learned DRP direction dated 22nd May 2024 filed rectification application under Rule 13 of DRP Rule 2009 as on 6th June 2024 which was accepted. Accordingly the learned DRP passed the rectification order under section 144C(5) r.w.r. 13 of DRP rule as on 9th July 2024. The TPO in the giving effect order dated 10th July 2024 in pursuance to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passing the final assessment order in compliance with original direction was expiring on 30th June 2024 which was also before passing of revised direction of ld. DRP. Therefore, in our view there is no error in the final assessment order to this extent. 11.2 However, it is also imperative for the AO to revise the final assessment order to comply with the revised direction of the learned DRP. Therefore, we hold that the AO is bound to give effect to the revised directions of the learned DRP and the giving-effect order passed by the TPO. Therefore, we direct the AO to consider the rectified direction of the learned DRP and the corresponding revised giving-effect order of the TPO and delete the entire TP adjustment made in respect of Software Development and IT-enabled services. Accordingly, the ground of appeal of the assessee is allowed. 12. The issue raised by the assessee in Grounds Nos. 4 & 5 of its appeal pertains to the action of the learned DRP/TPO/AO in benchmarking the interest on outstanding receivables. 12.1 During the proceedings, the TPO noticed that the assessee has outstanding receivable from its AEs beyond the agreed credit period. The TPO opined that the delay in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e have not incurred borrowing cost, therefore interest on outstanding receivable was not required to be charged etc. The learned DRP in rejecting the assessee's ground of objection referred the various case laws. 14.1 Based on learned DRP direction, the TPO passed giving effect order, and the AO passed final assessment order dated 26th June 2024 making an addition of interest on outstanding receivable for ₹ 3,14,25,633/- only. 14.2 Subsequently the learned DRP revised its direction as there was inadvertence mistake crept in the direction as on 9th July 2024. The learned DRP in rectified direction directed the TPO to compute the ALP of interest on delayed receivable only for the period pertaining to year under consideration. Accordingly, the TPO passed revised giving effect order and thereby computed the interest amount at Rs. 2,09,17,377/- only. The impugned revised computation of the interest was not incorporated by the AO in the final assessment order as the AO has not received the revised direction issued by the ld. DRP. 15. Being aggrieved by the final assessment order/ the learned DRP direction the assessee is in appeal before us. 16. The learned AR before us submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the comparables but the purpose is to compare the prices charged by the tested, party with the prices charged by the comparables although when TNMM is adopted as MA.M, the process of such price comparison is by comparing profits of tested party with that of the comparables and therefore, if the profit of the tested party is equal or above the profit of comparables, even after taking into account the effect of working capital adjustment and the ALP is less that the price charged by the tested party, it cannot be said that the extra credit allowed is not an independent international transaction and not required to be separately benchmarked. In our considered opinion, the first requirement is this that it has to be first decided that whether it is an independent international transaction or not and if it is found that it is not so, then obviously, no separate benchmarking is required but if it is found that it is an independent international transaction then separate bench making has to be done and TP adjustment is to be made as per law irrespective of whether any TP adjustment is required to be made in respect of main transaction of sale. 11. Hence, we first decide this aspect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment of the Bombay High Court in the case of CIT v. Aurionpro Solutions Ltd., 99 CCH 0070 (Mum HC). It is ordered accordingly." 18.3 The above finding was further followed by coordinate bench of this tribunal in case of M/s IHS Global Pvt Ltd vs. ACIT bearing IT(TP) No. 1424/Bang/2024. Thereby respectfully following the view taken by this Tribunal in aforementioned cases, we hold that the appropriate rate of interest shall be LIBOR + 200 basis point. 18.4 Before parting, it also important to note that the TPO originally calculated the interest with respect to entire delayed period weather falling in the year under consideration or in the subsequent year. The learned DRP in his direction originally has confirmed the action of the TPO. However, on rectification application filed by the assessee, the learned DRP directed the TPO to calculate the interest on delayed period falling with the year under consideration only for the purpose of making addition to the total income of the assessee for the year. The revised direction of learned DRP was not considered in the final assessment order passed by the AO as the same was passed before the issue of revised direction. 18.5 Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 143(1) of the Act should be filed separately. Once a regular assessment is completed under section 143(3) or 144 of the Act, the tax paid under 143(1) is considered part of that assessment, but this does not mean a merger of the two orders. 22. Being aggrieved the learned DRP's direction and final assessment order by the AO, the assessee is in appeal before us. 23. The learned AR before us submitted that there was no appeal preferred against the adjustment made under section 143(1) of the Act as the case of the assessee was picked up under scrutiny. Therefore, the assessee was of the view that the issue arising from the intimation under section 143(1) of the Act can be agitated in the proceedings under section 143(3) of the Act. The Ld. AR further submitted that there is only calculation error in the intimation generated under section 143(1) of the Act and accordingly he prayed to the bench to issue direction only to the AO for necessary verification as per the provisions of law. 24. On the other hand, the learned DR contended that the issue arising from the intimation generated under section 143(1) of the Act cannot be agitated in the proceedings under section 143(3) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement of deductions, or tax evasion. To assess the correctness of income, deductions, exemptions, and tax liability, the AO issues several notices to the assessee in the form of questionnaire, show cause etc. The assessee is required to provide supporting documents, explanations, and evidence as demanded by the AO. This may include books of accounts, bank statements, invoices, agreements, etc. After examining all details, the AO may either accept the return as filed, or Make additions/disallowances, leading to higher tax liability. 25.4 From the above, there remains no ambiguity to the fact that the intimation under section 143(1) of the Act is not an assessment order. But any adjustment made under section 143(1) of the Act can be challenged either by filing rectification application under section 154 of the Act or by way of filing appeal before the learned CIT(A) under section 246 of the Act. Thus, as per the provisions of law the right course of action for the assessee is either to file rectification application under section 154 of the Act or appeal under section 246 of the Act. The assessee is required to choose the right course of action diligently which depends upon diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the NFAC about the adjustment made under section 143(1) of the Act which can be verified from the details available on pages 367 to 371 of the appeal set. 25.9 We further find that the Jodhpur Tribunal in the case of Akbar Mohammad vs. ACIT bearing ITA No. 108 & 109/Jodh/2021 in the identical facts and circumstances held as under: 6.0 We have considered the submission of both the parties and perused the material available on record. In the present cases, it is not in dispute that the assessee deposited the contribution of PF & ESI belatedly in terms of section 36(1)(va) of the Act. However, the said deposits were made prior to filing of return of income u/s 139(1) of the Act. 6.1 Of course, it is a case in point that the assessee did not file any appeal against the intimations passed us 143(1) of the Act and the Ld. Sr. DR is right to the extent that the assessee cannot be given relief for that reason. However, it is also a settled law that the assessee cannot be taxed on an amount on which tax is not legally imposable. Although, the assessee might have chosen a wrong channel for redressal of his grievance, all the same, it is incumbent upon the Tax authorities to burden the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
