TMI Blog2015 (6) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... T indicate the software expenses at NIL and engineering expenses at ₹ 10,76,77,131/-. However, the orders of TPO as considered in this impugned order indicate that amount was at ₹ 17,88,20,166/-. Even though in principle, we agree with the findings of the ITAT with reference to the nature of services being rendered by the said company, we, however, direct the Assessing Officer to examine the amounts involved and reconcile the payments considered in the order of ADIT, International Taxation u/s.201(1A) and the amounts considered for disallowance in this order by the Assessing Officer.Subject to the above observations and reconciliation of the amounts involved, the disallowance of entire amount does not arise. Even though assessee has objected to the inclusion of various comparables, not giving adjustment on account of difference in depreciation policy and other objections with reference to determination of ALP, we are of the opinion that this issue has to be restored to the file of DRP for fresh adjudication. - Decided in favour of assesse for statistical purposes. - I.T.A. No. 86/HYD/2014 - - - Dated:- 4-3-2015 - Shri B. Ramakotaiah, ACCOUNTANT And Smt. Asha Vij ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of reimbursement of expenses, there was an additional cash inflow/profits in the Appellant Company as against alleged shifting of cash/profits to its AE. 2.5 The Ld. AO/Ld. TPO erred and the Hon'ble DRP thereon further erred in upholding/confirming the action of the Ld. TPO in arriving at 'Nil' ALP for reimbursement of expenses. 2.6 The Hon'ble DRP, while rejecting the submissions made by the Appellant, have erred in not following the decisions of the Hon'ble Jurisdictional Income Tax Appellate Tribunal laying down the jurisdictional power of a TPO under section 92CA of the Act. 3 On the facts and in the circumstances of the case and in law, the Ld.TPO erred in arriving at ₹ 12,12,82,509/- as an alternate TP adjustment to the international transaction of providing Information Technology/software development ('IT') service! to its AE should the primary TP adjustment is deleted/ruled in favour of the Appellant by the higher Appellate authorities. 3.1 The Ld. TPO erred on facts and in law in selecting certain companies as comparables though functionally not comparable to the Appellant. 3.2 The Ld. TPO erred on facts and in law by accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gineering services paid by ATI Canada on behalf of assessee to one M/s. Soctronics India Pvt. Ltd., and towards software license payments on cost to cost basis. Concurrently, there were separate proceedings u/s.195 r.w.s. 201(1) of the Income Tax Act for AYs.2007-08 to 2010-11 initiated by ADIT, (IT)-I, International Taxation. ADIT( International Taxation) had passed an order u/s.201(1) and 201(1A) of the Act on 28-01-2013, wherein the reimbursement of engineering services and towards software applications was held as income distributed to parent company without receiving any services/software. On 29-01-2013, the TPO also adopted the same stand and held that assessee did not receive any services and therefore claim of reimbursement of expenses cannot be allowed. Accordingly, he determined the Arm's Length Price [ALP] of the said expenses reimbursed at NIL and proposed an adjustment of ₹ 17,88,20,166/-. 6. The TPO also analysed the assessee's international transactions with AE to an extent of ₹ 98,25,47,908/-. Assessee maintained documentation in terms of Section 92 and for the purpose of bench marking, the international transactions in the nature of provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der, the ITAT has indeed allowed the software expenses and reimbursement of expenses, therefore, the disallowance per se of ₹ 17,88,20,166/- as services not provided and ALP at NIL does not stand. Therefore, ground No.2 raised before us on the issue of disallowance of entire reimbursement of expenditure is to be held in favour of assessee. 9. However, we notice from the orders of the authorities and from the order of ITAT that for the Financial Year 2008-09 i.e., relevant for AY.2009-10 before us, the order of the ITAT indicate the software expenses at NIL and engineering expenses at ₹ 10,76,77,131/-. However, the orders of TPO as considered in this impugned order indicate that amount was at ₹ 17,88,20,166/-. Even though in principle, we agree with the findings of the ITAT with reference to the nature of services being rendered by the said company, we, however, direct the Assessing Officer to examine the amounts involved and reconcile the payments considered in the order of ADIT, International Taxation u/s.201(1A) and the amounts considered for disallowance in this order by the Assessing Officer. 10. Subject to the above observations and reconciliation of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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