Income Tax Appellate Tribunal - Chennai
Bny Mellon Technology Private Limited, ... vs Dcit Corporate Circle 1(2), Chennai on 9 November, 2018
आयकर अपील य अ
धकरण, डी' यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL, ''D' BENCH : CHENNAI
ी अ ाहम पी. जॉज , लेखा सद य एवं
ु आर.एल रे &डी, या(यक सद य के सम* ।
ी ध$ु व%
[BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER]
S.P.No. 350/CHNY/2018
(in आयकर अपील सं./I.T.A. No.65/CHNY/2018).
नधा रण वष /Assessment years : 2014-15.
BNY Mellon Technology Private Vs. The Deputy Commissioner of
Limited, Income Tax,
(formerly known as iNautix Corporate Circle 1(2)
Technoloiges Private Limited) Chennai.
10th floor, Tidel Park,
4, Canal Bank Road,
Taramani, Chennai 600 113.
[PAN AAACI 6177K]
(Petitioner) (,-यथ//Respondent)
Petitioner by : Shri. N.V. Balaji, Advocate
Respondent by : Shri. AR.V. Sreenivasan, JCIT.
सन
ु वाई क तार ख/Date of Hearing : 09.11.2018
घोषणा क तार ख /Date of Pronouncement : 09.11.2018
आदे श / O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
Assessee through this stay petition pleads for stay of recovery of tax and interest of C36,59,73,786/-.
2. Ld. Counsel for the assessee submitted that total assessed tax came to C 50,66,04,720/- and interest thereon came to :- 2 -: S.P.No.350//18 C14,33,93,004/-. As per the ld. Authorised Representative a sum of C24,10,62,127/- out of the above stood paid as TDS and advance tax and assessee had made further payment of C4,29,81,816/-. Contention of the ld. Authorised Representative was that demand arose due to selection of certain functionally uncomparable companies by the ld. Transfer Pricing Officer, while making transfer pricing adjustment in relation to software development services segment and due to wrong classification of the Manpower Supply Services ('MSS') segment. As per the ld. Authorised Representative, assessee company was incorporated in Chennai and was a wholly owned subsidiary of BNY Mellon APAC Services Holdings which was a part of the Bank of New York Mellon Group. Contention of the ld. Authorised Representative was that in addition to selecting functionally uncomparable companies for Arms Length Pricing adjustment for the software development segment, the ld.TPO had also reckoned man power supply services segment as provision for onsite software development services, without any reasonable basis. Contention of the ld. Authorised Representative was that this resulted in a transfer pricing adjustment of C85,47,87,653/- and the consequent demand. As per the ld. Authorised Representative, though ld. DRP had given some relief with regard to foreign exchange fluctuation and service tax refund, while computing operating margins of the assessee, this :- 3 -: S.P.No.350//18 reduced the demand only to C79,45,25,337/-. As per the ld. Authorised Representative, in a proceeding for assessment year 2010- 11, where also there were adjustments done by the ld. TPO for software development segment and Information Technology enabled services segment ('ITES'), this Tribunal had held the margins shown by the assessee to be at Arms Length price. Contention of the ld. Authorised Representative was that the comparability study made by the lower authorities were wrong since they took into consideration companies doing Knowledge Process Outsourcing also. As per the ld. Authorised Representative, though assessee was not incurring any loss, there could be unnecessary hardship and inconvenience caused to it, if the demand was persisted upon by the lower authorities. Reliance was placed on the decision of Delhi Bench of the Tribunal in the case of Reuters India (P) Ltd (2004) 84 TTJ Delhi 95.
3. Ld. Departmental Representative, on the other hand submitted that assessee could not show any good reason for grant of a stay.
4. We have heard both the parties, perused the orders of lower authorities and the stay petitions filed by the assessee. Touch stone on which a stay petition against a demand, is to be decided are existence of a prime facie case, balance of convenience and irreparable :- 4 -: S.P.No.350//18 damage. Contention of the ld. Authorised Representative is that lower authorities had taken comparables which were not in line with its software development services segment while doing the transfer pricing analysis. There is also a contention that the manpower supply services was wrongly considered as onsite services. Though the assessee states that for assessment year 2010-2011, it's own margin in these segments were held by this Tribunal to be at Arms Length Price, in our opinion, margins earned for different segments for different years are dependent on the fact situation prevailing in respective years. Rates found to be appropriate for an earlier year cannot be considered as a correct measure for a succeeding year. As per the assessee, it had adopted mark up of 12% on cost on software development services, 16% for provision of ITeS and 5% on provision of MSS. Ld. DRP while considering the grounds raised by the assessee had clearly held that ld. TPO had adopted correct filters while arriving at the comparables and each of objections raised by the assessee was dealt by the ld. DRP. That apart, assessee has not been able to demonstrate any financial difficulties faced by it. Coming to the decision of Delhi Bench of the Tribunal in the case of Reuters India (P) Ltd (supra), there, both the concerned assessee and the company in the U.K. were taxed in India and there was a prime facie case of double taxation. Nothing of that sort has been shown by the assessee :- 5 -: S.P.No.350//18 here. However, considering the facts and circumstances of the case, we are of the opinion that if assessee pays a sum of C 5,00,00,000/- on or before 30th November, 2018, and another C2,50,00,000/- on or before 31st December, 2018, balance of the demand can be kept in abeyance for a period of 180 days or the date of hearing of the appeal, whichever falls earlier. Ordered accordingly.
5. In the result, the stay petition filed by the assessee is partly allowed.
Order pronounced in the open court at the time of hearing on Friday, the 9th November, 2018 at Chennai.
Sd/- Sd/-
(ध$ु व%
ु आर.एल रे &डी) (अ ाहम पी. जॉज )
(DUVVURU RL REDDY) (ABRAHAM P. GEORGE)
या(यक सद य/JUDICIAL MEMBER लेखा सद य /ACCOUNTANT MEMBER
चे नई/Chennai
दनांक/Dated:09.11.2018.
KV
आदे श क " त#ल$प अ%े$षत/Copy to:
1. Petitioner 3. आयकर आयु-त (अपील)/CIT(A) 5. $वभागीय " त न2ध/DR
2. "3यथ5/Respondent 4. आयकर आयु-त/CIT 6. गाड फाईल/GF