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2016 (1) TMI 932 - ITAT DELHI

2016 (1) TMI 932 - ITAT DELHI - TMI - Validity of order passed u/s. 143(3) read with section 144C(13) - Held that:- Section 144C(13) provides that the order should have been passed within one month from the end of the month in which such direction is received. In the instant case, the ld. DRP gave directions on 24.09.2014 and as per above referred letter dated 03.11.2015, such directions were received by concerned AO on or before 28.10.2014. Therefore, the final order should have been passed on .....

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of the case, we do not deem it appropriate to adjudicate upon the other grounds raised before us on merits of the addition. - Decided in favour of assessee. - ITA No. 1019/Del./2015 - Dated:- 30-11-2015 - SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER For The Appellant : Sh. Atul Jain, C.A., Sh. Rohit Sharma, CA, Ms. Suchita Kanodia,CA, Ms. Rashmi Kathuria, CA For The Respondent : Sh. Amrendra Kumar, CIT/DR ORDER Per L.P. Sahu, Accountant Member: This appeal has been fil .....

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nces of the case and in law,, the Ld. AO and Learned Dispute Resolution Panel-1, New Delhi ( Ld. Penal ) erred in confirming the action of Additional Commissioner of Income Tax, Transfer Pricing Officer-1 (2) ( Ld. TPO ) of enhancing the income of the Assessee by INR 14,155,941 holding that the international related party transactions pertaining to provision of IT enabled Services ( ITeS ) do not satisfy the arm s length principle envisaged under the Income-tax Act, 1961 ( the Act ). 3. . On fac .....

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rovision of section 92C of the Act read with Rule 10B and Rule 10D of the Income Tax Rules, 1962 ( the Rules ). 5. On facts and in law, the Ld. Panel and Ld. AO/Ld. TPO erred in disregarding the doctrine of impossibility of performance in contravening section 92D of the Act read with Rule 10D(4) of the Rules, which mandate the use of contemporaneous data for the determination of arm s length price ( ALP ) of international transaction. 6. On facts and in law, the Ld. Panel and Ld. AO/Ld. TPO erre .....

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umed. In doing so, the Ld. Panel and Ld. AO erred in selecting the following as functionally comparable companies: a. Accentia Technologies Limited; b. Cosmic Global Limited; c. Fortune Infotech Limited; d. iGate Global Solutions Limited; e. Infosys BPO Limited; f. TCS E-serve international Limited; and g. TCS E-serve Limited. 8. On facts and in law, the Ld. Panel and Ld. AO/Ld. TPO erred in not allowing a risk adjustment under Rule 10B(1)(e) for determination of the ALP to account for the diffe .....

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f INR 40,03,709 as non-operating and not considering it as operational item. 11. On facts and in law, the Ld. AO/Ld. TPO erred in proposing to initiate penalty proceedings under section 271(1)© of the Act when the facts of the case and provision of the law do not warrant such initiation of penalty proceedings. 2. The brief facts of the case are that the assessee company, a wholly owned subsidiary of Intercontinental Hotels Group (Asia Pacific) Pte Ltd, Singapore, is engaged, inter alia in t .....

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ssessment proceedings, the AO found that the assessee is engaged in International transaction for ₹ 49,05,94,612/-.Therefore, the case was referred to Transfer Pricing Officer (TPO) for computation of arm s length price (ALP) for the said international transaction. Before the TPO, the assessee gave comparables of 8 companies. However, the TPO after considering the issue at length and modifying/adding certain selection filters, rejected 6 comparables from the assessee s set and selected sev .....

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in the case of assessee was computed as under : Operational cost 432,539,798 Arm s Length Price at a margin of 35.19% 584,750,553 Price Received 490,594,612 105% of the Price Received 515,124,343 Proposed Adjustment u/s 92CA 94,155,941 This order was received by the AO on 10.01.2014. On 14.02.2014, the assessee was confronted with the observations made in the order u/s. 92CA(3) of the Act and was required to furnish its explanation. On 20.02.2014, the assessee furnished its submissions. The Asse .....

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to complete the assessment as per the directions of the Panel as above. The AO shall place a copy of the Panel s order for Assessment Year 2010-11 at Annexure to the final order to be read as a part of the order. AO shall incorporate the reasons given by the Panel at appropriate places in respect of the various objections while passing the final order. The objections of the taxpayer are disposed off as above. Meanwhile on 25.09.2014, an order u/s. 127 was passed by CIT, Delhi-IV and the jurisdic .....

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id letter was returned by the then DCIT, Circle-2, Gurgaon to Income-tax Officer ward 11(3), New Delhi requesting him to forward the order of DRP for A.Y. 2010- 11. The Income-tax Officer thereafter provided the order of DRP to the office of DCIT Circle -2 Gurgaon on 30.01.2015 and the final order was passed by the then AO on 30.01.2015 whereby the AO confirmed the ALP determined by the TPO u/s. 92CA(3) of the Act and made addition of ₹ 9,41,55,941/-, being the difference between the adjus .....

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by DRP u/s. 144C are shown to have been received before 28.10.2014 to the then AO. The ld. AR further submitted that accordingly, the assessment order in compliance to the directions of DRP, ought to have been passed within one month, i.e., upto 30.11.2014. However, the same has been passed on 30.01.2015, which is not sustainable having been passed beyond the period of limitation. 4. On the other hand, the ld. DR relied upon the final assessment order passed by the AO (DCIT Circle-2, Gurgaon) i .....

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f the proposed order of assessment (hereafter in this section referred to as the draft order) to the eligible assessee if he proposes to make, on or after the 1st day of October, 2009, any variation in the income or loss returned which is prejudicial to the interest of such assessee. (2) On receipt of the draft order, the eligible assessee shall, within thirty days of the receipt by him of the draft order,- (a) file his acceptance of the variations to the Assessing Officer; or (b) file his objec .....

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b-section (3) within one month from the end of the month in which,- (a) the acceptance is received; or (b) the period of filing of objections under sub-section (2) expires. (5) The Dispute Resolution Panel shall, in a case where any objection is received under sub-section (2), issue such directions, as it thinks fit, for the guidance of the Assessing Officer to enable him to complete the assessment. (6) The Dispute Resolution Panel shall issue the directions referred to in subsection (5), after .....

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sub-section (5),- (a) make such further enquiry, as it thinks fit; or (b) cause any further enquiry to be made by any income-tax authority and report the result of the same to it. (8) The Dispute Resolution Panel may confirm, reduce or enhance the variations proposed in the draft order so, however, that it shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order. Explanation.-For the removal of doubts, it is h .....

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ery direction issued by the Dispute Resolution Panel shall be binding on the Assessing Officer. (11) No direction under sub-section (5) shall be issued unless an opportunity of being heard is given to the assessee and the Assessing Officer on such directions which are prejudicial to the interest of the assessee or the interest of the revenue, respectively. (12) No direction under sub-section (5) shall be issued after nine months from the end of the month in which the draft order is forwarded to .....

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