9911796707
TMI Blog2020 (9) TMI 1257X X X X Extracts X X X X X X X X Extracts X X X X ..... d the following grounds of appeal:- "1. That on facts and in law the Assessing Officer [hereinafter referred as the "AO"] / Dispute Resolution Panel [hereinafter referred as the "DRP"] / Transfer Pricing Officer [hereinafter referred as the "TPO"] erred in making/upholding an addition to total income of Rs. 2,59,64,130 (includes Rs. 2,58,92,279 on account of transfer pricing addition) under the Income Tax Act, 1961 [hereinafter referred as "the Act"] in the order of assessment. 2. The Ld. TPO/AO erred in enhancing the income of the Appellant by Rs. 2,58,92,279 by holding that the international related party transactions pertaining to its information technology enabled (IT) and financial support services do not satisfy the arm's length principle envisaged under the Act and in doing so have grossly erred in: 2.1 not appreciating that none of the conditions set out in section 92C(3) of the Act are satisfied in the present case; 2.2 disregarding the Arm's Length Price ('ALP') as determined by the Appellant in the Transfer Pricing (TP1) documentation maintained by it in terms of section 92D of the Act read with Rule 10D of the Income-tax Rules, 1962 ('Rules'); 2.3 disregarding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the Appellant provides high end services i.e. KPO as against ITeS and financial support service, not appreciating the functional, assets and risk profile of the Appellant. 4. That on the facts and circumstances of the case and in law, the AO and DRP has erred in making disallowance of Rs. 71,851 under the provisions of section 14A of the Act read with rule 8D of Income tax Rules, 1962 ('rules') wherein the appellant has not earned any exempt income during the subject year. 5. That on the facts and circumstances of the case and in law, the AO has erred in levying interest under section 234A of the Act when appellant has filed the return within the statutory time. 6. That on the facts and circumstances of the case and in law, the AO has erred in not granting the full credit of TDS claimed by the appellant in its return of income. 7. That on the facts and circumstances of the case and in law, the AO has erred in initiating penalty proceedings under section 271 (1 )(c) of the Act." 3. Ground number 1 of the appeal is general in nature covering the transfer pricing adjustment made of Rs. 25,892,279 which is further elaborated in ground number 2 - 3 of the grounds of appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompanies were retained having their profit level indicator of operating profit/operating cost (OP/OC) was determined at 25.65% further their adjusted margin was determined at 21.96%. Thereafter the operating cost incurred by the assessee of Rs. 327,343,333/- was used against the international transactions of Rs. 373,335,650/- and the final adjustment was made of Rs. 25,892,279/-. 8. In the final list of comparables, the learned transfer pricing officer included the E Clrex services Ltd having margin of 49.49%, Infosys BPO Ltd having margin of 34.39% and TCS E serve Ltd having margin of 62.07%. 9. The learned authorised representative, Shri Sachit Jolly advocate, submitted that in assessee's own case for assessment year 2010 - 11 in ITA number 6906/del/2014 dated 27th of April 2018 the coordinate bench has considered the issue of inclusion of TCS E serve Ltd in para number 11 of that order and same was remitted back to the file of the learned transfer pricing officer to decide afresh. For assessment year 2009 - 10 coordinate bench in assessee's own case in ITA number 1423/del/2014 dated 18 May 2018 and in ITA number 6008/del/2012 for assessment year 2008 - 09 dated 25 September 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Y in every other case. He submitted that this is neither the essence of the comparability analysis nor it supports the logic. He submitted that for each of the comparable companies only the functions performed by the company, assets employed by the company and risks assumed by the company are required to be compared. He further submitted that judicial precedents cannot be used in such a blatant manner for exclusion of one comparable if excluded in case of one assessee to be always excluded for all other assesses. 12. The learned authorised representative submitted that the judicial precedent binds the coordinate bench if there rendered in assessee's own case. It is not fair to challenge them in some other proceedings where they need to be followed , unless those orders are challenged before the higher forum and are upset. 13. We have carefully considered the rival contention and perused the orders of the lower authorities. We have also carefully considered the arguments of the learned departmental representative with respect to the comparability analysis and there cannot be any dispute with respect to that for the comparability analysis the functions performed, assets employed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upported the orders of the lower authorities. 17. We have carefully considered the rival contention and find that when the assessee has not earned any exempt income during the year, there cannot be any reason to disallow any expenditure during the year. This principle has been laid down by many judicial authorities. In view of this we direct the learned assessing officer to delete the disallowance of Rs. 71,851/- u/s 14 A of the act as assessee has not earned any exempt income. Thus ground number 4 of the appeal is allowed. 18. Ground number 5 is with respect to the chargeability of interest u/s 234A of the act and ground number 7 is with respect of initiation. The chargeability of interest is consequential in nature and further ground against the initiation of penalty proceedings is premature therefore both these grounds are dismissed. 19. Ground number 6 is with respect to not granting the full credit of tax deduction at source claimed by the appellant in its return of income. The AO is directed to verify the credit claim of the assessee and if found in order may allow the credit claimed by the assessee for tax deduction at source. Accordingly, ground number 6 of the appeal is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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