Income Tax Appellate Tribunal - Bangalore
Hewlett-Packard (India) Software ... vs Dcit, Circle-3(1)(2), Bangalore on 5 December, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
"B" BENCH : BANGALORE
BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER
AND
SMT BEENA PILLAI, JUDICIAL MEMBER
M.P.Nos.120 & 121/Bang/2019
(in IT(TP)A Nos.668 & 583/Bang/2016)
(Assessment years : 2011-12)
M/s Hewlette Packard India
The DCIT, Circle-3(1)(2),
Software Operation Pvt.Ltd., Vs
Bangalore
Bangalore
APPELLANT RESPONDENT
Petitioner by : Shri Sharath Rao, CA
Respondent by : Smt. Lakshmi, JCIT
Date of hearing 15-11-2019
:
Date of Pronouncement : 05-12-2019
ORDER
PER SMT. BEENA PILLAI, JM:
It is noted that assessee filed MP Nos.120 & 121(B)/2019 for assessment years: 2011-12 against order passed by this Tribunal dated 02-08-2019. In both these miscellaneous petitions assessee sought to rectify certain alleged mistakes, apparent from record in assessee's appeal.
2. We fail to understand why MP No.121(B)/2019 is filed in department appeal being IT(TP)A No.583(B)/2016 raising same issues as in MP No.120(B)/2019. We therefore, consider only MP No.120(B)/2019 in IT(TP)A No.668(B)/2016.
M.P. Nos.120 & 121/Bang/2019 (in IT(TP)A Nos.668 & 583/Bang/2016) Page 2 of 5 2.1 Assessee in miscellaneous No.120(B)/2019 pointed out the following alleged mistake apparent from record. I. With respect to "Evoke Technologies Pvt.Ltd". and "Mindtree Ltd.," having reference to paragraph 18. (a) page-24 of impugned order.
II. Typographic mistake in paragraph 18(b) and III. Non-adjudication of one comparable sought for exclusion in additional ground raised vide application dated 16-12- 2017.
2.2 We have perused submission of Ld.AR viz. paper book filed and our noting in log book we find certain specific observation of DRP has been disputed by the Ld.AR which has not been recorded while setting aside the comparable. We accordingly, incorporate the arguments advanced by Ld.AR as under:
I. Following para would be henceforth be read as 18(a) in impugned order dated 02-08-2019.
18(a) Evoke Technologies Pvt.Ltd., and Mindtree Ltd., It has been submitted by Ld.AR that Evoke Technologies Pvt.Ltd was suo-moto rejected by DRP even though, was selected by Ld.TPO. Assessee did not object to its inclusion either before DRP It has been submitted that DRP while passing its direction excluded this comparable on its own. It has been submitted by Ld.AR that basis for exclusion of this comparable by DRP is not correct, as assessee is following Transactional Net Margin Method (TNMM) therefore, certain expenses cannot be selectively M.P. Nos.120 & 121/Bang/2019 (in IT(TP)A Nos.668 & 583/Bang/2016) Page 3 of 5 identified for exclusion. It has been submitted that overall effect needs to be considered. In support, Ld.AR placed reliance on decision of Co-ordinate Bench of Delhi Tribunal in the case of Sumi Motherson Innovative Engineering Ltd. in ITA No.155 & 1816/Del/2011 (Para 5.4(iii).
Ld.CIT,DR on the contrary, relied on the view of authorities below.
We have perused submission advanced by both sides in light of records placed before us. It is observed that DRP excluded this comparable due to low margin during the year. On one hand, DRP notes that there has to be abnormalities or circumstances, which infused low margin for purposes of exclusion, on the other hand, DRP in case of this comparable fails to analyse abnormalities or circumstances that led to low margin at 8.11%. We therefore, do not appreciate exclusion of this comparable as it is without any basis. We also note that assessee followed TNMM as most appropriate method that subsumes expenses. We therefore, set aside this comparable back to DRP to carry out comparability analysis with assesssee a per law, keeping in mind the MAM adopted by assessee which has not been diputed by authorities below..
M.P. Nos.120 & 121/Bang/2019 (in IT(TP)A Nos.668 & 583/Bang/2016) Page 4 of 5 M/s Mind Tree Limited.
It has been submitted by Ld.AR that this comparable was excluded by Ld.AO at the time of passing final assessment order, though, there was no such direction by DRP. This shows sheer non-application of mind. We direct Ld.AO to follow directions of DRP strictly. Accordingly, both these comparables are set aside to AO with the directions mentioned herein above. II Following para would be read as 18(b) in the impugned order.
18.b) FCS Software Solutions Ltd., and LGS Global Ltd., At the outset, it has been submitted by both sides that FCS Software Solutions Ltd., and LGS Global Ltd has not been considered by DRP. Accordingly both partied have no objection in setting aside these comparables back to DRP for comparability analysis to be carried out with assessee.
Based upon the above submissions, we set aside these comparables to DRP. Needless to say that assessee may be granted proper opportunity of being represented. Accordingly, we set aside these comparables back to Ld.DRP for verification on the basis of details available/submitted by assessee.
3. Remaining part of order dated 02-08-2019 shall remain unaltered except for para-18.(a) & 18.(b), which stand modified as hereinabove.
M.P. Nos.120 & 121/Bang/2019 (in IT(TP)A Nos.668 & 583/Bang/2016) Page 5 of 5 III. As regards, non-adjudication of additional ground in respect of M/s Sasken Communication Technologies Pvt. Ltd., it is observed that additional ground was though admitted this comparable remained to be adjudicated. This is apparent mistake on record. We therefore, recall order dated 02-08-2019 only for the limited purpose of adjudication of alleged exclusion of M/s Sasken Communication Technologies Pvt. Ltd. 3.1 Registry is directed to fix appeal No.668(B)/2016 being assessee's appeal for limited purpose to adjudicate exclusion sought by assessee in respect of M/s Sasken Communication Technologies Pvt.Ltd., Accordingly, MP No.120(B)/2019 in IT(TP)A No.668(B)/2016 assessee's appeal stands allowed and MP No.121(B)/2019 in IT(TP)A No.583(B)/2016 (Deptt. appeal)stands dismissed. Order pronounced on 05-12-2019.
Sd/- Sd/-
(B.R.BASKARAN) (BEENA PILLAI)
Accountant Member Judicial Member
Bangalore
Dated: 05-12-2019
am*
Copy to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT, Bangalore
6. Guard file
By order
Assistant Registrar