TMI Blog2017 (11) TMI 716X X X X Extracts X X X X X X X X Extracts X X X X ..... s many as ten grounds running to eight pages which included detailed submissions also. 2. Ground Nos. 1 2 are on the issue that the DRP has rejected the objections raised by assessee belatedly and accordingly, the order passed by the Assessing Officer (AO) is time barred. Further, the DRP has not given any directions in view of non-admission of objections and therefore, the final order is void ab-initio and not sustainable. In addition to the issue of legal grounds, assessee has raised various grounds on the Transfer Pricing (TP) adjustments made particularly about functionality, selection of comparable companies, working capital adjustment, various filters adopted, provisions disallowed and also risk adjustments. Ground No. 10 pertain to charging of interest u/s. 234B 234C of the Act. 3. At the outset, it was submitted that the DRP has not condoned the delay in filing the objections petition as it was filed belatedly and consequently, the order passed by the AO, wherein the DRP has not given any directions for completion of assessment in a particular manner is not correct. 4. Initially, Ld. Counsel relied on the Co-ordinate Bench decision in the case of M/s. Planet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment u/s 143(2) of the Act, and further made a reference u/s 92CA(1) of the Act to the TPO (Transfer Pricing Officer) for determination of Arms Length Price (ALP) of the international transactions of the assessee-company with AE. The TPO rejected the TP documentation maintained by the assessee. TPO aggregated the software development and software distribution segment and determined the ALP for provision of software development services at 19.17% after a working capital adjustment of 0.88% and charged a notional interest on receivables at 14.75%. Accordingly, the TPO made a TP adjustment of ₹ 3,17,55,047/-. 4.3. The AO completed the draft assessment order on 19th February, 2016 and the assessee was supposed to file the objections within thirty days i.e., on or before 23-03-2016. It seems that assessee has couriered the objections in Form 35A to an address in Nrupatunga Road on 05-04-2016 along with a letter dt. 30-03-2016 seeking condonation of delay of thirteen days in filing the objections before the DRP. However, the same was returned as it was found that it was an invalid address and it was stated to have been resent to HMT Bhavan, Bellary Road on 19th April 2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch was of the opinion that AO should have passed the order within further period as provided, as if no objections were received. However, in the present case, assessee not only intimated the AO that it has filed objections but also filed the objections with a condonation petition within the time limit provided to the AO, for completion of final order after the expiry of thirty days period. In view of that, we are of the opinion that the facts are different from the facts in the case of M/s. Planet Online Private Limited Vs. ACIT (supra). 7.1. The Hon'ble Madras High Court in the case of M/s. Inno Estates Private Limited (supra) has considered similar facts as that of assessee and upheld the final order passed by the AO. The judgement of the Hon'ble Court is as under: 9. It is not in dispute that the petitioner has filed their objection before the 1st respondent only on 29.04.2016 by specifically indicating as though the draft order of assessment was served on them only on 31.03.2016. Thus, it is evident that the petitioner made the 1st respondent to believe that the objections were filed in time. However, when it was pointed out by the 2nd respondent to the 1st r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder, as contemplated under Section 144C(3) of the said Act. A perusal of Section 144C(2) of the said Act would show that the assessee, on receipt of the draft order, shall file his objections within 30 days of the receipt of the draft order with Dispute resolution Panel and the Assessing officer. Only when no objections are received within the period specified under Sub- Section 2, the Assessing Officer shall complete the assessment on the basis of the draft order, as contemplated under Section 144(C)(3) of the said Act. In this case, by communication dated 27.04.2016, the petitioner, by attaching the entire set of documents filed before the 1st respondent, asserted and made the Assessing Officer to believe that the objection was filed in time. Therefore, the 2nd respondent is justified in deferring the matter till an order is passed by the 1st respondent. At this juncture, it is to be noted that what is contemplated under Section 144C(2) is the filing of the objections by the assessee with the Dispute Resolution Panel, if he is not accepting the draft assessment order. Of course, the said provision also contemplates filing of such objection before the Assessing Officer as well. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground of delay, it goes without saying that resultant position of such rejection is nothing but confirmation of the draft order passed by the 2nd respondent, as contemplated under Section 144C(8) of the said Act. Consequently, the final order passed by the 2nd respondent on 18.11.2016 is certainly an order passed under Section 144C(13) of the said Act, more particularly, when the 1st respondent in its order dated 10.11.2016 clearly stated that the directions are communication to the assessee and the departmental authorities as per the provision of Section 144C(5) of the said Act. 14. No doubt, the learned counsel for the petitioner emphasized that there is no specific direction, whatsoever in the said order dated 10.11.2016. In my considered view, the dismissal or rejection of the objections filed by the petitioner, on whatever the ground may be, itself is a direction to the Assessing Officer to complete the assessment in accordance with draft order as contemplated under Section 144C(5) which reads as follows: ( 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 g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no merit in the grounds raised by assessee. 8. Coming to other grounds on the merits of the TP addition made, it was fairly submitted that assessee is in the specified business and the comparable companies are not at all comparable. This issue was discussed by the Co-ordinate Bench in assessee s own case for the AYs. 2008-09 and 2010-11. The decision of the Co-ordinate Bench of ITAT, Hyderabad in para 17 onwards is as under: 17. Ground no. 9 is with regard to comparables selected under section 133(6) of the Income Tax Act, 1961. Ld. AR submitted that at the time of TP study assessee had no access to such data therefore such data cannot be considered as comparables. The TPO also has selected general software development services companies and also services providers. There are no gaming companies during that period. Hence, the TP study of assessee has to be accepted. In this connection, ld. AR relied on the decision of Hewlett Packard India Software Operation Pvt. Ltd Vs ACIT 67 taxmann.com 309 (Bang Trib). 18. Ld. DR relied on the orders of revenue authorities. 19. Considered the rival submissions and perused the material facts on record as well as the order ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
