Income Tax Appellate Tribunal - Hyderabad
Hitachi Consulting Software India Pvt ... vs Asst. Commissioner Of Income Tax, ... on 24 March, 2021
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD 'B' BENCH : Hyderabad
(Through Video Conference)
Before Shri S.S. GODARA, Judicial Member
and
Shri L.P. SAHU, Accountant Member
ITA No. 992/Hyd./2011
ITA No. 1911/Hyd./2011
Assessment Year: 2005-06
M/s Hitachi Consulting Software Services vs. Dy.CIT, Circle 3(2)
India Private Limited. Hyderabad
(formerly known as Sierra Atlantic Software
Services India Ltd.
Hyderabad.
[PAN: AACCS8350A]
ITA No. 1082/Hyd./2011
Assessment Year: 2005-06
ACIT, Circle 3(2) vs. M/s Sierra Atlantic Software Services India Ltd.
Hyderabad [Now known as M/s Hitachi Consulting Software
Services India Ltd.,]
Hyderabad
Cross Objection No. 53/Hyd./2011
(In ITA No. 1082/Hyd./2011)
Assessment Year: 2005-06
M/s Sierra Atlantic Software Services India Ltd. Vs. ACIT, Circle 3(2)
Hyderabad Hyderabad
ITA No. 1638/Hyd./2010
Assessment Year: 2006-07
&
ITA No. 1795/Hyd./2011
Assessment Year: 2007-08
M/s Hitachi Consulting Software Services India Ltd. Vs. ACIT, Circle 3(2)
Hyderabad Hyderabad
(Appellant) (Respondent)
ITA Nos. 992/H/11, 1911/H/11, 1082/H/11 CO 53/H/11 AY 2005-06
ITA nos. 1638/H/10 AY 2006-07
1795/Hyd/2011 AY 2007-08
Hitachi Consulting Software Services India Private Limited, Hyderabad
For Assessee: Shri PVSS Prasad, A.R.
For Revenue: Sh. YVST Sai, CIT, D.R.
Date of Hearing : 18/02/2021
Date of Pronouncement : 24/03/2021
ORDER
PER S.S. GODARA, J.M.
The instant batch of six appeals pertains to a single assessee M/s Hitachi Consulting Software Services India Pvt. Ltd (formerly known as Sierra Atlantic Software Services India Ltd). First and foremost Assessment Year 2005-06 involves assessee's and Revenue's cross appeals ITA Nos. 992 and 1082/Hyd/2011 along with former's Cross Objection in the latter appeal C.O.no. 53/Hyd/2011 preferred against the CIT(A)-III, Hyderabad order dated 29.3.2011 passed in case no.0052/CIT(A)-III/10-11 involving proceedings u/s 143(3) rws 92CA(3) of the Income Tax Act, 1961; in short 'the Act'. This is followed by the former's appeal ITA 1911/Hyd/2011 directed against the very lower appellate order imposing sec.271(1)(c ) penalty of Rs.2,65,97,751/- by invoking sec. 271(1)(c) and qua enhancement of Rs.7,26,86,351/- u/s 92CA of the Act.
The assessee's next appeals ITA 1638/Hyd/2010 and 1795/Hyd/2011 for AYs 2006-07 and 2007-08 dated 25.10.2010 and 2.92011; framed in furtherance to the Dispute Resolution Panel "DRP" Hyderabad's direction dated 24.9.2010 and 9.8.2011; respectively, invoking proceedings u/s 143(3) rws 144C of the Act.
2 ITA Nos. 992/H/11, 1911/H/11, 1082/H/11 CO 53/H/11 AY 2005-06ITA nos. 1638/H/10 AY 2006-07 1795/Hyd/2011 AY 2007-08 Hitachi Consulting Software Services India Private Limited, Hyderabad Heard both the parties. Case file perused.
It transpires during the course of hearing that almost all the issues raised in the instant batch of cases are identical/ inter- connected ones. We thus proceed assessment year wise for the sake of convenience and brevity.
A.Y. 2005-06 This first and foremost assessment year 2005-06 involves assessee's and Revenue's quantum appeals ITA 992 and 1082/H/2011 along with former's C.O. 53/Hyd/2011 in latter's case.
This is followed by assesee's appeal ITA 1911/H/2011 in penalty proceedings u/s 271(1)(c) of the Act.
2. We advert to the former 3 cases involving quantum assessment. Learned authorized representative at this stage invited our attention to the assessee's petition dated 24.9.2020 highlighting the fact that mutual agreement procedure "MAP" resolution dated 24.9.2020 has already attained finality qua its international transactions with its overseas associated enterprises 'AEs' in USA. Learned counsel first of all took us to the CBDT's communication dated 10.02.2021 to this effect as follows.
3 ITA Nos. 992/H/11, 1911/H/11, 1082/H/11 CO 53/H/11 AY 2005-06ITA nos. 1638/H/10 AY 2006-07 1795/Hyd/2011 AY 2007-08 Hitachi Consulting Software Services India Private Limited, Hyderabad 4 ITA Nos. 992/H/11, 1911/H/11, 1082/H/11 CO 53/H/11 AY 2005-06 ITA nos. 1638/H/10 AY 2006-07 1795/Hyd/2011 AY 2007-08 Hitachi Consulting Software Services India Private Limited, Hyderabad 5 ITA Nos. 992/H/11, 1911/H/11, 1082/H/11 CO 53/H/11 AY 2005-06 ITA nos. 1638/H/10 AY 2006-07 1795/Hyd/2011 AY 2007-08 Hitachi Consulting Software Services India Private Limited, Hyderabad 6 ITA Nos. 992/H/11, 1911/H/11, 1082/H/11 CO 53/H/11 AY 2005-06 ITA nos. 1638/H/10 AY 2006-07 1795/Hyd/2011 AY 2007-08 Hitachi Consulting Software Services India Private Limited, Hyderabad 7 ITA Nos. 992/H/11, 1911/H/11, 1082/H/11 CO 53/H/11 AY 2005-06 ITA nos. 1638/H/10 AY 2006-07 1795/Hyd/2011 AY 2007-08 Hitachi Consulting Software Services India Private Limited, Hyderabad The Revenue is equally fair in not disputing all these intervening developments.
3. We have given our thoughtful consideration to the foregoing pleadings regarding the clinching development of "MAP" having finalized as per Rule 46G of the Income Tax rules, 1962. The assessee's international transactions in these three assessment 8 ITA Nos. 992/H/11, 1911/H/11, 1082/H/11 CO 53/H/11 AY 2005-06 ITA nos. 1638/H/10 AY 2006-07 1795/Hyd/2011 AY 2007-08 Hitachi Consulting Software Services India Private Limited, Hyderabad years 2005-06, 2006-07 and 2007-08 covered under the above MAP are to the extent of 94.7%, to 96% and 93% forming subject matter of the ALP in these assessment years. Coming to the remaining international transactions with associated enterprises in other jurisdictions i.e. Singapore etc., the Revenue fails to dispute that even the Transfer Pricing Officer has not drawn any distinction qua the "ALP" in all the substantive grounds raised herein. We thus hold that the "MAP" margin of 15.49%, 15.34% and 15.76% deserves to be applied qua the remaining portion of non-USA based international transactions as well. Consequently, the assessee's appeals ITA 992/H/11 raising substantive grounds no.1 to 11, Revenue's cross appeal ITA 1082/H/11 canvassing the sole issue of proportionate operating cost figures qua transfer pricing mechanism of Rs.52,92,38,786/- and former's cross objection 53/H/11 therein; are dismissed as rendered infructuous. Same is the outcome in assessee's remaining appeals ITA 1638/H/10 and 1795/H/11 for latter two raising the very issue of ALP adjustment(s) involving varying sum(s). These latter two appeals are also dismissed as rendered infructuous/ dismissed as withdrawn in above terms.
4. We are now left with assessee's 12th to 14th grounds in ITA 992/Hyd/2011 challenging sec.37(1) disallowance of Rs.7,24,122/- thereby treating it's improvements to leasehold premises claimed as capital expenditure on the ground that the same resulted in major improvements. We find no merit in Revenue's stand disallowing assessee's claim in view of (i) CIT vs. Citi Financial Consumer Fin Ltd. (2012) 20 taxmann.com 452 9 ITA Nos. 992/H/11, 1911/H/11, 1082/H/11 CO 53/H/11 AY 2005-06 ITA nos. 1638/H/10 AY 2006-07 1795/Hyd/2011 AY 2007-08 Hitachi Consulting Software Services India Private Limited, Hyderabad (Delhi HC);; (ii) Amway India Enterprises vs. DCIT (2009) 27 SOT 344 (Delhi) and (iiii) CIT vs. Amway India Enterprises (2012) 22 taxmann.com 22 (Delhi HC); holding that such improvements are in the nature of revenue expenditure only. The impugned disallowance is directed to be deleted therefore. Assessee's corresponding appeal 992/H/11 is partly accepted.
5. We are now left with assessee's penalty appeal ITA 1911/Hyd/2011 involving a sum of Rs. 2,65,97,751/- qua enhancement in its income on the ground that it had failed to disclose the correct figures.
6. We notice in this factual backdrop and from a perusal of para 10 page 28 of CIT(A)'s lower appellate order in quantum proceedings that the corresponding mistake in omitting to adopt correct figures in assessee's form 3 CEB had been made at the TPO's end which stood admitted in his letter dated 7.2.2011 than involving any concealment of particulars or furnishing of inaccurate particulars of income at taxpayer's behest. This clinching fact has gone unrebutted from revenue side during the course of hearing. We thus accept assessee's instant penalty appeal ITA 1911/H/11 and direct the Assessing Officer to delete the impugned penalty.
To sum up, assessee's appeal, ITA 992/H/11 for AY 2005-06 is partly accepted. The Revenue's Cross appeal ITA no.1082/Hyd/2011 is dismissed. The assessee's Cross Objection 10 ITA Nos. 992/H/11, 1911/H/11, 1082/H/11 CO 53/H/11 AY 2005-06 ITA nos. 1638/H/10 AY 2006-07 1795/Hyd/2011 AY 2007-08 Hitachi Consulting Software Services India Private Limited, Hyderabad C.O.No.53/Hyd/2011 therein is dismissed as rendered infructuous. Its penalty appeal ITA 1911/Hyd/2011 is allowed. The assessee's appeals ITA nos.1638/H/2010 and 1795/Hyd/2011 are dismissed as rendered infructuous in above terms. A copy of this common order be placed in the respective case files.
Order pronounced in Open Court on 24/03/2021.
Sd/- Sd/-
(L.P. SAHU) (S.S. GODARA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 24th March, 2021
*gmv
Copy of Order forwarded to:
1. M/s Hitachi Consulting Software Services India Ltd. (Formerly known as Sierra Atlantic Software Services Ltd,) Plot 9, Gachibowli, Hyderabad 500 032
2. Dy.CIT, Circle 3(2), Hyderabad.
3. ACIT, Range 3, Hyderabad
4. Pr.CIT-3, Hyderabad
5. D.R. ITAT Hyderabad
6. Guard File 11