Income Tax Appellate Tribunal - Hyderabad
Sutherland Health Care Solutions ... vs Dcit, Circle-3(2), Hyderabad, ... on 11 March, 2020
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "B" : HYDERABAD
BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER
AND
SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER
ITA No. A.Y. Appellant Respondent
Sutherland Healthcare The Dy.
213/Hyd/17 2012-13 Solutions Private Limited Commissioner of
(Formerly known as Apollo Income Tax,
Health Street Ltd),
Circle-3(2),
HYDERABAD HYDERABAD
505/Hyd/16 2011-12 [PAN: AADCA4278N]
For Assessee : Shri Ashik Shah, AR
For Revenue : Shri Y.V.S.T.Sai, CIT-DR
Date of Hearing : 05-03-2020
Date of Pronouncement : 11-03-2020
ORDER
PER Smt. P. MADHAVI DEVI, J.M. :
Both are assessee's appeals for the AYs.2012-13 & 2011- 12 respectively. The assessee was formerly known as Apollo Health Street Ltd.
2. Brief facts of the case are that the assessee-company, which is engaged in the business of IT Enabled Services and BPO service provider, filed its returns of income for the relevant assessment years and also under the provisions of Section 115JB of the Income Tax Act [Act]. The Assessing Officer (AO) observed that the assessee has having :- 2 -:
ITA Nos. 213/Hyd/2017505/Hyd/2016 international transactions with its Associated Enterprise [AE] for providing corporate guarantee. Therefore, the matter was referred to the Transfer Pricing Officer [TPO] for determination of the Arm's Length Price [ALP] of the transaction and the TPO proposed an adjustment of Rs.8,39,90,088/-. Accordingly, the draft assessment order was passed, against which the assessee preferred its objections to the Dispute Resolution Panel [DRP]. As per the directions of DRP, final assessment order was passed, against which, the assessee is in second appeal before us raising the following Grounds in ITA No.213/Hyd/2017 for the AY.2012-13:
"On the facts and in the circumstances of the case and in law, the Learned AO/DRP has:
GENERAL GROUND
1. Erred in assessing the total income of the Appellant at Rs 22,81,83,328 as against Rs 14,41,93,240 under normal provisions of the Act as computed by the Appellant in its return of income.
TRANSFER PRICING MATTERS -
2. Making adjustment of Rs. 8,39,90,088 on the shareholders corporate guarantee provided to bank at the rate of 2%:
a) Not appreciating that the shareholder corporate guarantee is not covered under the definition of international transaction u/ s 92B of the Act;
b) Not appreciating that the clarificatory amendment to section 92B would not apply to the facts of the case;
c) Discriminating the US subsidiary in determining the ALP for shareholder corporate guarantee vis-a-vis similar shareholder corporate guarantee provided by parent company to Indian subsidiaries in violation of Article 26 of India - US Double Taxation Avoidance Agreement. ('DTAA').
:- 3 -:
ITA Nos. 213/Hyd/2017505/Hyd/2016
d) Without prejudice, not undertaking an objective analysis for determining the ALP on the shareholder corporate guarantee by determining the benefit to US wholly owned subsidiary in terms of interest savings on account of the guarantee extended.
e) Without prejudice, not following the Hon'ble Tribunal rulings and judicial precedents on applicability of TP to similar guarantee and determination of ALP.
CORPORATE TAX ISSUES
3. Levying of interest u/ s 234B and 234C on the Transfer Pricing adjustments.
The Appellant craves, to consider each of the above grounds of appeal without prejudice to each other and craves leave to add, alter, delete or modify all or any of the above grounds of appeal".
3. Ld.Counsel for the assessee submitted that similar issue of the corporate guarantee and the rate of commission on such corporate guarantee had come up before the Tribunal in assessee's own case for the AYs.2009-10 & 2010-11 and the Tribunal had set aside the entire issue to the file of AO/TPO for fresh adjudication. It is submitted that in the consequential proceedings, the TPO has adopted 0.92% as the corporate guarantee commission at Arm's Length. Ld.Counsel for the assessee has placed before us the copies of the orders of the Tribunal in ITA Nos.41/Hyd/2014 & 132/Hyd/2014, (AY.2009-10) dt.30-06-2014 and also the copies of the order in ITA Nos.435/Hyd/2015 & 332/Hyd/2015 (AY.2010-11) dt.21-10-2016 in which the issue was remitted to the file of the AO/TPO for fresh consideration.
4. Ld.DR was also heard.
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ITA Nos. 213/Hyd/2017505/Hyd/2016
5. Having regard to the rival contentions and material on record, we find that the TP adjustment on corporate guarantee were referred to the AO/TPO for fresh adjudication for the AYs.2009-10 and 2010-11. It is stated that the TPO, in the consequential proceedings, has accepted 0.92% as the ALP corporate guarantee commission. Following the earlier order of ITAT, we remit the issue for the assessment year before us also to the AO/TPO and direct the AO/TPO to adopt the same rate of commission for the corporate guarantee as decided in the earlier assessment years.
5.1. Ground No.3 is in connection with levy of interest u/ss.234B and 234C of the Act. This issue is also remitted to the file of AO to give consequential relief, if any to the assessee.
6. In the result, appeal of assessee in ITA No.213/Hyd/2017 for the AY.2012-13 is treated as allowed for statistical purposes.
ITA No.505/Hyd/2016 (AY.2011-12):7. In this appeal of assessee, there are other corporate tax issues and these issue are also set aside to the file of AO for verification of the assessee's claims and granting of relief, if any to the assessee and in respect of set-off of brought forward losses, as directed by the DRP. Hence, AO/TPO is directed to give consequential relief to the assessee.
:- 5 -:
ITA Nos. 213/Hyd/2017505/Hyd/2016
8. In the result, appeal of assessee in ITA No.505/Hyd/2016 for the AY.2011-12 is also treated as allowed for statistical purposes.
9. To sum-up, both the appeals of assessee are treated as allowed for statistical purposes.
Oder pronounced in the open court on 11 th March, 2020 Sd/- Sd/-
( A. MOHAN ALANKAMONY ) ( P. MADHAVI DEVI )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Hyderabad, Dated: 11-03-2020
TNMM
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ITA Nos. 213/Hyd/2017
505/Hyd/2016
Copy to :
1. Sutherland Healthcare Solutions Private Ltd., Unit-II, Survey No.185(P), 2nd & 3rd Floor, Kalajyothi Process, Kondapur Village, Serilingampalli, Hyderabad.
2. The Deputy Commissioner of Income Tax, Circle-3(2), Hyderabad.
3. Dispute Resolution Panel (DRP), Bengaluru.
4. Director of Income Tax (IT & TP), Hyderabad.
5. Addl. Commissioner of Income Tax (Transfer Pricing), Hyderabad.
6. D.R. ITAT, Hyderabad.
7. Guard File.