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TMI Blog2025 (5) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer' or 'the Ld. AO') in pursuance to the directions issued by the Hon'ble Dispute Resolution Panel - I, Bengaluru (hereinafter referred to as 'the Hon'ble DRP') on the following grounds which are without prejudice to one another: General ground: 1. On the facts and circumstances of the case and in contrary to law, the Deputy Commissioner/Assistant Commissioner of Income Tax, Transfer Pricing Officer - 1, Hyderabad (hereinafter referred to as 'the Ld. TPO') and the Ld. AO pursuant to the directions issued by the Hon'ble DRP erred in making transfer pricing adjustment of INR 24,37,97,528 and INR 22,10,05,184 on corporate tax issues, aggregating to INR 46,48,02,712, and the same being wholly unjustified are liable to be deleted. Validity of the assessment order: 2. On the facts and in the circumstances of the case, the final assessment order passed by the Ld. AO under Section 143(3) read with Section 144C(13) read with Section 144B of the Act is barred by limitation as the same is passed beyond the time limit prescribed under Section 153 of the Act and hence, the order is barred by limitation and liable to be quashed. Advan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely rejecting the transfer pricing documentation maintained by the Appellant, without appreciating that none of the conditions mentioned in clauses (a) to (d) of Section 92C(3) of the Act were satisfied. 7. On the facts and circumstances of the case and in contrary to law, the Ld. TPO erred in and the Ld. AO further erred in upholding / confirming the action of the Ld. TPO in rejecting certain appropriate filters adopted by the Applicant in its transfer pricing documentation and in applying certain inappropriate filters to select new comparable companies. 8. On the facts and circumstances of the case and in contrary to law, the Ld. TPO erred in and the Ld. AO further erred in upholding / confirming the action of the Ld. TPO in accepting the following inappropriate companies as comparable to the Appellant: i. Great Software Laboratory Pvt. Ltd ii. Robosoft Technologies Ltd iii. Daffodil Software Pvt Ltd iv. Sagarsoft (India) Ltd. v. Wipro Limited vi. Nihilent Ltd. vii. L&T Infotech Ltd viii Virinchi Limited ix. C G-V A K Software & Exports Ltd. x. X S Cad India Pvt. Ltd. xi. Tata Elxsi Ltd. xii. Infosys Limited xiii. Cybage Software Pvt. Ltd. 9. With ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances of the case and in contrary to law, the Ld. TPO erred in and the Ld. AO further erred in upholding / confirming the action of the Ld. TPO in not allowing risk adjustment in accordance with the provisions of Rule 10B of the Rules to account for differences between the international transactions undertaken by the Appellant, being a captive unit, and those undertaken by the alleged comparables. Interest on delayed receivables: 15. On the facts and circumstances of the case and in contrary to law, the Ld. TPO erred in and the Ld. AO further erred in law and on facts by treating the delayed receivables as unsecured loan advanced by the Appellant to its AEs and treating the delayed receivables as an international transaction and computing notional interest on the same. 16. On the facts and circumstances of the case and in contrary to law, the Ld. TPO erred in and the Ld. AO further erred in upholding/ confirming the action of the Ld. TPO in simply applying the short term deposit rates of the State Bank of India ('SBI') to compute the TP adjustment without undertaking proper benchmarking analysis and completely ignoring the fact that as a banking com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considering the adjusted total income determined as per intimation dated 21 December 2021 issued under Section 143(1) of the Act, instead of considering the returned income as the starting point for assessing the taxable income. 24. On the facts and in circumstances of the case and contrary to the law, the Ld. AO erred in not granting an opportunity of being heard as per Section 144B(1)(xii) of the Act read with the Faceless Assessment Scheme, 2019, which provides that where a proposed modification/variation is prejudicial to the interest of the Assessee, a reasonable opportunity of being heard must be provided. 25. On the facts and in circumstances of the case and contrary to the law, the Ld. AO has erred in not complying with the principle of 'audi alteram partem' by denying an opportunity to explain to the Appellant. 26. On the facts and in circumstances of the case and contrary to the law, the Ld. AO has erred in reiterating the adjustments made in the intimation issued under Section 143(1) of the Act, in an absolute disregard of the submissions made to him during the course of assessment proceedings and the Hon'ble DRP has further erred in not adjudicating u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32. On the facts and circumstance of the case and in law, the Ld. AO has erred in computing the consequential levy of interest under section 234A and 234B of the Act of INR 24,56,533 and 6,69,09,388 respectively, on the assessed income of the Appellant. 33. On the facts and circumstance of the case and in law, the Ld. AO has erred in computing the interest under section 234C of the Act on the assessed income instead of returned income of the Appellant. The Appellant Company craves leave to add / alter / amend / substitute any of the above grounds of appeal, at the time, before or at the time of hearing of the appeal, so as to enable the Appellate authority to decide this appeal according to law. 3. Ground No.1 is general in nature and does not require any specific adjudication. 4. Ground No.2 is regarding validity of assessment order being barred by limitation of prescribed u/s 153C of the I.T. Act, 1961. At the time of hearing, the learned AR of the assessee has stated at Bar that the assessee does not press Ground No.2 and the same may be dismissed as not pressed. The learned DR has raised no objection, if Ground No.2 challenging the validity of the assessment order is dism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement. 7. The learned DR, on the other hand, has relied upon the orders of the authorities below and submitted that the Assessing Officer is bound by the order of the TPO and therefore, cannot tinker with the TP adjustment proposed by the TPO. 8. We have considered the rival submissions as well as the relevant material available on record. The TPO while passing the order dated 19/05/2022 u/s 92CA(3) of the I.T. Act, 1961 made the transfer pricing adjustment on the international transactions, the summary of which are given at page No. 108 of the TP order as under: Nature of transaction Adjustment (Rs.) Provision of software development services 24,37,80,880/- Interest on delayed receivables 16,648/- Total 24,37,97,528/- 9. Thus, it is clear that the TPO proposed the TP adjustment in respect of two international transactions namely provisions of software development services and interest on delayed receivables. On the basis of the said order of the TPO, the Assessing Officer framed a draft assessment order against which the assessee filed its objections before the DRP. In the meantime, the advance pricing agreement u/s 92CC of the I.T. Act, 1961 was signed by the compete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d circumstances of the case when the assessee has already paid the tax in respect of the international transactions and in terms of the price agreed between the parties as per the APA, then the TP adjustment made in respect of these two international transactions namely provision of software development services and interest on delayed receivables is not sustainable and the same is deleted. 12. Ground Nos.22 to 29 are regarding the disallowance made by the CPC while processing the return of income u/s 143(1) of the I.T. Act, 1961 on account of delayed payment of Employees' Contribution to PF and ESI. 13. We have heard the learned AR as well as the learned DR and perused the material available on record. The assessee has not disputed the fact that there was a delay in making the payment towards employees' contribution to PF & ESI and therefore, this issue is no longer res integra in view of the judgment of the Hon'ble Supreme Court in the case of Checkmate Services (P) Ltd vs. CIT reported in (2022) 448 ITR 518. Accordingly, Ground Nos. 22 to 29 raised by the assessee are dismissed. 14. Ground No.30 is regarding the deduction u/s 80G claimed by the assessee during the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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