TMI Blog2018 (10) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer in its letter dated 08.10.2014. All this proved to be a futile exercise as the Assessing Officer framed assessment going by the earlier scrutiny notice(s) only and rejected the said jurisdictional plea. Thus all the three impugned assessments are non-est in the eyes of law since the DCIT/ACIT, Circle-11(4), Chennai issuing the section 143(2) notice(s) did not have jurisdiction and the assessing authority in Kolkata did not issue such scrutiny notices. We quash all these three assessments therefore for this precise reason alone - Decided in favour of assessee. - I.T.A. No. 268/Kol/2017, I.T.A. No. 72/Kol/2016, I.T.A. No. 235/Kol/2017, I.T.A. No. 2058/Kol/2017 - - - Dated:- 28-9-2018 - Shri Satbeer Singh Godara, JM And Dr. A. L. Saini, AM For the Appellant : S/Shri S. P. Singh Manoneet Dalal G.P. Srivastava, Ld. ARs. For the Respondent : Shri Sanjay Paul, Addl. CIT, Sr. DR ORDER PER SHRI SATBEER SINGH GODARA, JM The assessee has filed the instant four appeals for AYs. 2008-09, 2011-12, 2012-13 and 2013-14 against the CIT(A)-10, Kolkata s order dated 06.10.2016 in first assessment year and against the DCIT, Circle-11, Kolkata s assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of its international transactions on provision of Software development Services . It must be mentioned that the assessee-company itself has provided the updated margin of the selected comparable companies of the assessee for the F. Y 2007-08, wherein the arithmetic mean as computed by the assessee came to 17.01%. Based on the search analysis and the data of the assessee, the TPO has proposed adjustment. During the course of the Transfer Pricing proceedings, the issue of making capital adjustment to the comparable companies was never brought up before the TPO until towards the close fo the proceedings wherein, the assessee suo mottu made such submission along with the details requisitioned by the TPO. In its letter dated 24.10.2011 reproduced below, the assessee stated that: The assessee has in its transfer pricing documentation discussed this aspect of working capital even though the capital adjusted operating margins were not calculated ..... As the assessee does not employ Significant finds in working capital in comparison to comparable companies, to have a better comparability, the assessee proposes to adjust the return of the comparable companies from their return on wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus the arithmetic mean of the comparable companies after rejection of the above companies comes to 19.34. 10. Having examined the issue and the action of the Ld. AO I TPO, and the submissions made by the appellant, I find myself in agreement with the Ld. TPO, that the issue of working capital was introduced by the appellant as an afterthought, In any case, the appellant by its own admission employs a very meager working capital, and the same does not weight for consideration of comparables. A regards the filter, I find that the Ld TRP has statistically tries to balance and make rational the exercise, by taking out the extremes of very high turnovers and very low turnovers when taking the comparables. The Ld A.R has given very general and non-specific reasons as to why there ought to be a need to make any adjustments pertaining to the working capital in its case. I am not inclined to see a need for such adjustments, and do not find the theory of economy of scales' relied upon by the appellant as pertinent to its case. With that view of the matter, I find no requirement to interfere in the adjustments made by the Ld. TPO, and sustain the same. The grounds taken by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rking capital adjustment already stands restored back to the TPO, no further adjudication is required to be made at this stage in the instant appeal. We accept ITA 268/Kol/2017 partly for statistical purposes. 8. We now come to the latter three assessment years cases raising the identical substantive ground(s) challenging validity of assessments on account of the Assessing Officer s failure in not issuing sec. 143(2) notice. We make it clear that assessee s latter substantive ground identical in all cases challenges correctness of the lower authorities action making ALP adjustment in respect to its provision made for software development services to the tune of ₹ 6,90,26,873/-, ₹ 44,21,06,869/- and ₹ 49,96,24,564/-; respectively on various factual and legal aspects. The assessee raises only the former legal plea during the course of hearing before us. It first of all takes us to various judicial precedents viz. ACIT Vs. Hotel Blue Moon (2010) 188 Taxman 13 (SC) that an Assessing Officer must necessarily issue section 143(2) notice within the time prescribed in proviso thereto and absence of such a compliance renders the entire assessment unsustainable. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e jurisdictional AO Notice u/s 143(2) issued on 04.09.2014 by DCIT-II(4), Chennai, holding the PAN at that point of time. No such notice was issued by the DCIT, Circle-14(1), Kolkata 2. No copy of notice u/s. 143(1) is there as no such notice was issued by DCIT, Circle-14(1), Kol as per available records. 3. The present jurisdictional AO i.e. DCIT, Circle-14(1) continued with the notice u/s. 143(2) already issued by the DCIT-II(4), Chennai. The fact of the case is that an order u/s. 127(2) was passed by the CIT-9, Mumbai on 03.05.2010 transferring jurisdiction from DCIT, Circle-9(2), Mumbai to DCIT-11, Kol while mentioning of PAN lying with the ACIT Central Circle-II(4), Kol. Oni checking of the data base, it has been found that the assessee was having its address at Appejay Business Centre 12 Haddows Road, Chennai, Tamilnadu, Pin-600006 with another PAN AAACL7642N simultaneously with the present PAN AAACL6752B at DLF IT Park, Block-I 5th Floor, 08 Major Arterial Road, New Town, P.S. Rajarhaat, North 24 Parganas, Kolkata, W.B. Also CBN Pan based query in ITD reveals that PAN: AAACL7642A was having with OLD DCIT COY CIR-11(4) CN. Thereafter, the PAN was deleted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th inquiry before assessment. The assessee did not challenge the validity of notice u/s 142(1) ad stated the notice issued u/s. 143(2) as invalid. Moreover, while passing of over for the AY 2006-07, 2007-08, 2008- 09 by CIT, Circle-11, Kol, the PAN jurisdiction remained to be with Chennai office. Thus the assessee agreed to the assessment of earlier years, thereby accepting DCIT, Circle-11, as the assessing officer, therefore, the assessee s move in this respect for the AY 2011-12, 2012-13, 2013- 14 is not acceptable. Issue of notice u/s 142(2) by the AO holding PAN jurisdiction does not vitiate the proceedings as the same is simply a formal timely requirement before ensuring that the assessee has not understated the income or has not computed excessive loss or has not underpaid the tad in any manner as per provisions of the Act. On going through the submissions of facts and argument of the assessee it is found that the assessee has written on non-issue of notice by the DCIT, Cir-11, Kol and there is no force in the argument excepting highlight of the issuance of notice as invalid. Even relevant case law cited does not fit into the facts of the case. The assessee in its p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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