TMI Blog2018 (5) TMI 343X X X X Extracts X X X X X X X X Extracts X X X X ..... : Shri C.H.Sundar Rao, CIT (D.R) ORDER Per Shri Jason P Boaz, A.M. : These are a set of three appeals; cross appeals by the assessee and revenue for Assessment Year 2008-09 directed against the order of the Commissioner of Income Tax (Appeals)-IV, Bangalore dt.19.12.2013 and the assessee's appeal directed against the order of the CIT (Appeals) IV, Bangalore dt.15.12.2014 for the Assessment Year 2009-10. Since common issues and arguments put forth were similar for both these assessment years, these appeals were heard together and we therefore deem it appropriate to dispose these appeals off by way of this consolidated order. Assessment Year : 2008-09. 2. Briefly stated, the facts of the case are as under :- 2.1 The assessee company, is a wholly owned subsidiary of Amazon.com Inc., USA and is engaged in the business of rendering Software Development Services (SWD) and IT Enabled Services (ITES) to its Associated Enterprises (AE) located in USA as well as in other countries. The assessee filed its return for Assessment Year 2008-09 on 26.9.2008 declaring total income of ₹ 26,059 after claiming deduction of ₹ 2,73,40,440 under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as concluded under Section 143(3) r.w.s. 144C of the Act vide order dt.30.04.2013, wherein the assessee's income was determined at ₹ 9,46,17,689; in view of addition of ₹ 8,50,60,657 on account of Transfer Pricing Adjustment and (ii) disallowance of the assessee's claim for deduction u/s.10A of the Act to the extent of ₹ 59,72,945. 3.2 Aggrieved by the order of assessment dt.30.4.2013 for Assessment Year 2009-10, the assessee preferred an appeal before the CIT (Appeals) IV, Bangalore, who allowed the assessee partial relief vide the impugned order dt.15.9.2014. Assessee's appeal for A.Y. 2008-09 IT(TP)A No.76/Bang/2014. 4.1 Aggrieved by the order of the learned CIT (Appeals) dt.19.12.2013 for Assessment Year 2008-09, both the assessee and revenue preferred cross appeals before the Tribunal. The assessee also filed an appeal before the Tribunal directed against the order of the CIT (Appeals) dt.15.9.2014 for Assessment Year 2009-10. 4.2 Simultaneously, apart from the appellate proceedings, the assessee had filed application for Mutual Agreement Procedure (MAP) proceedings under Article 27 of the India-USA DTAA with respect to the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions also, as neither the assessee nor the TPO had made any distinction between USA transactions and non-USA transactions and treated the entire turnover as one . Considering that the non-USA transactions constitute only 7.14%, the margin adopted by MAP authorities for USA transactions may be applied to non-USA transactions as well. 4.3.4 In support of this contention, the learned Authorised Representative placed reliance on (i) the decision of the ITAT, Mumbai Bench in the case of J.P. Morgan Services Pvt. Ltd. Vs. DCIT in ITA No.8987/Mum/2010 dt.30.11.2015 (ii) of the co-ordinate bench of this Tribunal in the case of CGI Information Systems Management Consultants Pvt. Ltd. V DCIT in IT(TP)A No.439 452/Bang/2011 dt.21.4.2017. It was submitted that the facts of the assessee in the case on hand are similar; in the sense that, in those cases, the non-USA transactions constituted only 4% and therefore, the Tribunal has applied the margin decided by the MAP authorities for USA transactions and to non-USA transactions as well. 4.3.5 The learned Authorised Representative also submitted that in another decision, the co-ordinate bench of this Tribunal in the case of Global e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee can contest these adjustments, but in order to end the litigation, the assessee has made this submission notwithstanding the fact that no adjustment should have been made at all. In this regard, our attention was also drawn to the Annual Report / Accounts of the assessee, TP Study submitted to the TPO and the orders of the authorities below to show that no distinction has been made between the USA and non-USA transactions. 4.5.2 We have carefully perused and considered the arguments urged by both sides and the material on record. We observe that the CBDT letter in F.No.480/10/2011-FTD-1 dt.28.10.2015 has been issued in the case on hand in respect of the resolution of MAP proceedings for Assessment Years 2007-08 to 2009-10 on behalf of the Foreign Tax Tax Research Division I, APA-1, CBDT, New Delhi wherein it has been confirmed that for Assessment Year 2008-09, for USA transactions under the ITES Segment, the margin has been determined at 18.82% as against a margin of 24.47% determined by the TPO. It has been further clarified by way of Note in the said letter that apportionment between US and non-US ALP and Transfer Pricing Adjustment has been carried out by the APA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered view, whatever margin has been determined for the 96% of the transactions, same margin should be determined for the remaining 4% transactions as well. It is worth noting that, even before us, no distinction in facts or nature of transactions has been brought out on record. Therefore, in our considerate view, mark-up of 14.38% should be determined for the remaining 4% transactions pertaining to 'non-US' entities as well. The assessee gets part relief accordingly. Following the above decision of the ITAT, Mumbai Bench in the case of J P Morgn Services Pvt. Ltd. (supra), we hold that the margin adopted for US transactions, in ITES Segment, as was decided in the MAP Resolution, shall be adopted for non-US transactions as well. The TPO/A.O. is directed accordingly. 5. In the result, the assessee's appeal for Assessment Year 2008-09 is partly allowed for statistical purposes. Revenue s appeal A.Y. 2008-09 IT(TP)A No.78/Bang/2014 6. Revenue has raised the following grounds in its appeal :- 1. The order of the Learned CIT (Appeals) is opposed to law and the facts and circumstances of the case. 2. The CIT(A) erred in directing the AO to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ult, Revenue s appeal for Assessment Year 2008-09 is dismissed. Assessee's appeal for A.Y. 2009-10 in IT(TP)A No.1387/Bang/2014. 10.1 The only issue for consideration in this appeal before us is whether the margin adopted by the authorities in MAP Resolution, in this year, for USA transactions can be applied to non-USA transactions also. The facts of the case on hand on this issue are also similar to that of A.Y. 2008-09, which has been discussed, considered and adjudicated by us in the earlier part of this order. In this year i.e. A.Y. 2009-10, also, these were no non-USA transactions in the IT/SWD Segment and the entire transactions in the IT/SWD Segment, being only USA transactions have been resolved under MAP. 10.2 However, as regards the ITES Segment, there were non-USA transactions also, which constituted 7.72% of the total transactions. Also as per MAP Resolution, a margin of 15.27% has been accepted under MAP for US transactions in the ITES Segment for Assessment Year 2009- 10. For the reasons discussed in detail for Assessment Year 2008-09 at paras 4.1 to 4.5.3 of this order (supra), we hold and direct that the margin adopted under MAP for US transact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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