Income Tax Appellate Tribunal - Chennai
Dun & Bradstreet Technologies & Data ... vs Acit, Chennai on 25 January, 2017
आयकर अपील य अ धकरण, 'डी' यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL
'D' BENCH, CHENNAI
ी एन.आर.एस. गणेशन, या यक सद य एवं
ी संजय अरोड़ा, लेखा सद य के सम%
BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND
SHRI SANJAY ARORA, ACCOUNTANT MEMBER
M.A. No. 221/Mds/2016
[ in I.T.A. No. 760/Mds/2014]
Assessment Year: 2009-10
M/s. Dun & Bradstreet Technologies & The Asstt. Commissioner of
Data Services Pvt. Ltd., v. Income Tax,
[formerly D&B Trans Union Analytic Company Circle I (4),
and Decision Services Pvt. Ltd.], Chennai.
Level 9, Prince Infocity Phase-1,
286/1, Kandanchavadi,
Rajiv Gandhi Salai (OMR)
Chennai - 600 096.
PAN: AACCD 5293M
(Applicant) ('(यथ* /Respondent)
Applicant by : Shri Vijayaraghavan, Advocate
Respondent by : Shri Shiva Srinivas, JCIT
सन
ु वाई क, तार ख/Date of Hearing : 13.01.2017
घोषणा क, तार ख/Date of Pronouncement : 25.01.2017
आदे श /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
The assessee has filed the present miscellaneous petition on the ground that there are certain errors in the order of this Tribunal dated 15.07.2016.
2 M.A. No. 221/Mds/2016
2. Shri R. Vijayaraghavan, the Ld. Counsel for the assessee submitted that this Tribunal uphold the order of the lower authorities and confirmed the disallowance of tax holiday benefit under Section 10A of the Income Tax Act, 1961 (in short 'the Act'). Referring to para 5 of the order of this Tribunal, this Tribunal found that the DRP has rightly directed the Assessing Officer to consider the CBDT circular No.1 of 2013 and adjudicated the claim of the assessee under Section 10A of the Act. Referring to the order of this Tribunal for the assessment year 2007-08, the Ld. counsel for the assessee submitted that this Tribunal set aside the order of the Assessing Officer and the CIT (Appeals) and remitted back the file to the Assessing Officer for reconsideration. On reconsideration, the CIT(Appeals) allowed the claim of the assessee under Section 10A of the Act. This Tribunal while confirming the order of the Assessing Officer observed that for the sake of consistency, the DRP has rightly directed the Assessing Officer to consider the claim of the assessee. The Assessing Officer however has not followed the direction of the DRP. Therefore, as directed by DRP the Assessing Officer has to follow the order of the CIT (Appeals) for the assessment year 2007-08.
3 M.A. No. 221/Mds/2016
3. On the contrary, Shri Shiva Srinivas, the Ld. Departmental Representative submitted that this Tribunal directed the Assessing Officer to consider the CBDT circular and adjudicate the claim under Section 10A of the Act. While considering the claim of the assessee, the Assessing Officer disallowed the claim of the assessee under Section 10A of the Act. Therefore, it cannot be said that the direction of the DRP was not followed.
4. We have considered the rival submissions on either side and perused the material available on record. The DRP found that this Tribunal directed the Assessing Officer to follow the CBDT Circular in circular No.1 of 2013 dated 17.01.2013 for the assessment year 2007-08. Accordingly the DRP directed the Assessing Officer to consider the assessee claim under Section 10A of the Act in the light of the CBDT circular and the order of this Tribunal for the assessment year 2007-08. We have carefully gone through the provisions of Section 144C of the Act. Section 144C (7) of the Income Tax Act clearly says that the DRP before issuing any directions as referred to sub-section (5) of 144C may make further enquiry as it feels or cause any further enquiry to be made by any income tax authorities and report the result to it. Sub-clause (8) of 4 M.A. No. 221/Mds/2016 144C of the Act, clearly says that the DRP may confirm, reduce or enhance the proposed variations. However, the DRP shall not set aside any proposed variations or issue direction for further enquiry and passing of assessment order. Therefore there is a clear prohibition under the scheme of the Income Tax Act, that the DRP has to decide the case by itself and issue direction to the Assessing Officer under Section 144C (5) of the Act. On receipt of the direction under Section 144C (5) of the Act, the Assessing Officer shall pass the assessment order in conformity with the direction of the DRP without providing any opportunity of being heard to the assessee. Therefore, the direction of the DRP to consider the assessee claim under Section 10A of the Act, in the light of the CBDT circular is contrary to the scheme of the Income Tax Act as provided under Section 144C of the Act.
5. We have carefully gone through the order of this Tribunal dated 15.07.2016. This Tribunal in fact uphold the order of the Assessing Officer while observing that the DRP has rightly directed the Assessing Officer to consider the CBDT Circular. Therefore, to that extent there is an error in the order of this Tribunal which is apparent on the record. Therefore, the same needs to be rectified. 5 M.A. No. 221/Mds/2016 Accordingly, the order of this Tribunal dated 15.07.2016 is rectified as follows:
6. At page 3, para No.5 of the order dated 15.07.2016, the following shall be deleted:
"It is not known whether the Revenue has filed any appeal before this Tribunal against the order of the CIT(A) for assessment year 2007-08. However, for the sake of consistency, this Tribunal is of the considered opinion that the DRP has rightly directed the Assessing Officer to consider CBDT Circular No.1 of 2013 and adjudicate the claim of the assessee u/s 10A of the Act. Therefore, this Tribunal do not find any infirmity in the order of the lower authority and accordingly the same is confirmed."
7. Instead the following shall be inserted:
"The Revenue has filed appeal against the order of the CIT (Appeals) for the assessment year 2007-08 before this Tribunal. This Tribunal in fact remanded back the matter to the file of the Assessing Officer. The year under consideration is 2009-10. The assessee preferred to go before the DRP by filing the objection to the draft assessment order. Therefore, the procedure prescribed under Section 144C needs to be followed. The DRP at para 7.3 has found that this Tribunal for the assessment year 2007-08 restored the matter to the file of the Assessing Officer to follow the CBDT 6 M.A. No. 221/Mds/2016 Circular No.1 of 2013 dated 17.01.2013. Accordingly, the DRP directed the Assessing Officer to consider the assessee claim under Section 10A in the light of the CBDT Circular and the ITAT decision. As observed earlier under the scheme of the Income Tax Act, as provided under Section 144C, the DRP has no authority to direct the Assessing Officer to make further investigation or enquiry which is apparent from Section 144C (8) of the Act. Section 144C(7) of the Act, enables the DRP to make further enquiry as it feels or cause any enquiry by any income tax authorities. Thereafter the DRP may confirm, reduce or enhance the variation proposed in the draft assessment order. Hence, the order of the DRP directing the Assessing Officer to consider the claim of deduction under Section 10A of the Act, in the light of CBDT Circular is contrary to the scheme of the Act provided under Section 144C of the Act. As observed earlier, the DRP itself has to decide the matter one way or the other. If for any reasons further enquiry is required, it may enquire the matter by itself or get the matter enquired through any one of the income-tax authorities. In any case, the DRP has no authority to direct the Assessing Officer to make further enquiry and pass order.7 M.A. No. 221/Mds/2016
In view of the above, we are unable to uphold the order of the Assessing Officer consequent to the direction of the DRP. Accordingly, the order of the Assessing Officer and the DRP is set aside in respect of deduction under Section 10A of the Act and the matter is restored to the file of the DRP. The DRP shall enquire the matter by itself as provided under Section 144C(7) of the Act or it may call for further enquiry to be made by any income tax authorities and report to it. Thereafter, the final decision shall be taken only by the DRP. Thereafter, the Assessing Officer shall pass assessment order in conformity with the direction and the decision of the DRP without giving any further opportunity to the assessee." The order of the Tribunal is rectified accordingly.
8. The next ground of objection is that the Ld. counsel for the assessee Shri R. Vijayaraghavan, submitted that the assessee company is not holding any shares in the Associated Enterprises. In fact, the Associated Enterprises holds shares in the assessee company through its subsidiaries. Referring to para No. 7 of this Tribunal order, the Ld. counsel submitted that while recording the argument of the counsel for the assessee, this Tribunal found that the assessee was holding 24.5% interest in the non-resident 8 M.A. No. 221/Mds/2016 company. This is factually not correct. The assessee company is not holding any shares at all. In fact, the non-resident company is holding the shares of the assessee company through its subsidiaries.
9. We heard Shri Shiva Srinivas, the Ld. Departmental Representative also. The Ld. D.R., fairly submitted that the assessee company was not holding any shares in the non- resident company. Therefore, there is an error in the order of this Tribunal to that extent.
10. We have considered the rival submissions on either side and perused the material available on record. While recording the argument of the assessee, at para No.7 of the order, this Tribunal found that the assessee was holding 24.5% interest in the non-resident company. Now, the Ld. counsel for the assessee and the Ld. D.R., submitted that the assessee was not holding any shares in the Associated Enterprises or non-resident company. It is also submitted by both parties that the non- resident company holds shares of the assessee company through its subsidiary. In view of the above, there is a factual error in the 9 M.A. No. 221/Mds/2016 order of this Tribunal which needs to be rectified. Accordingly, the order of this Tribunal is rectified as follows:
11. At para No.7, the following shall be deleted:
"According to the Ld. Counsel, the assessee was holding 24.5% interest in the non-resident company. For the purpose of considering the Associated Enterprises, the assessee needs to have a minimum of 26% holding. Since the holding of the assessee is 24.5% which is less than 26%, the non-resident company cannot be considered to be an associated concern of the assessee."
Instead of, following shall be inserted:
"According to the Ld. counsel for the assessee, the Associated Enterprises was holding the shares of the assessee company through its subsidiary companies. Admittedly, the assessee company is not holding any interest on the non-resident company." Accordingly the order of this Tribunal is rectified.
12. Shri R. Vijayaraghavan, the Ld. counsel for the assessee further submitted that at para No.10 of the Tribunal order, this Tribunal found that the next issue was domestic transaction entered into by one of the comparable company namely Dun & Bradstreet Information Services India Pvt. Ltd. (DB India). 10 M.A. No. 221/Mds/2016 According to the Ld. counsel, this Tribunal while upholding the principle that domestic transaction should be excluded while making the adjustment for international transaction has mistakenly mentioned that DB India is a comparable company. Therefore, DB India has to be excluded.
13. On the contrary, Shri Shiva Srinivas, the Ld. D.R. submitted that this Tribunal only remitted back the matter to the file of the Assessing Officer with a direction that domestic transactions should be excluded. Therefore, there is no error in the order of this Tribunal.
14. We have considered the rival submissions on either side and perused the material available on record. This Tribunal considered the DB India as one of the comparable and found that the domestic transaction cannot be considered as comparable. Therefore, the matter was remitted back to the file of the Assessing Officer to consider whether DB India has only domestic transaction or international transaction also. There was a specific direction by this Tribunal to exclude the domestic transactions. Therefore, this 11 M.A. No. 221/Mds/2016 Tribunal do not find any error much less prima facie error in the order.
15. With the above observation the miscellaneous petition of the assessee is partly allowed.
Order pronounced on 25th January, 2017 at Chennai.
Sd/- Sd/-
(संजय अरोड़ा) (एन.आर.एस. गणेशन)
(Sanjay Arora) (N.R.S. Ganesan)
लेखा सद य/Accountant Member याियक सद य/Judicial Member
चे ई/Chennai,
दनांक/Dated, the 25 January, 2017.
th
JR.
आदेश क ितिलिप अ ेिषत/Copy to:
1. Applicant
2. यथ /Respondent
3. आयकर आयु (अपील)/CIT(A)
4. आयकर आयु /CIT,
5. िवभागीय ितिनिध/DR
6. गाड फाईल/GF.