Dy. Director of Income Tax (International Taxation) Circle-2,, Pune v. Schlumberger India Technology Centre Pvt.Ltd,(earlier known as Schlumberger Global Support Centre Ltd),, Pune

ITA 2095/PUN/2017 | 2013-2014
Pronouncement Date: 27-11-2019 | Result: Dismissed

Appeal Details

RSA Number 209524514 RSA 2017
Assessee PAN AALCS2048C
Bench Pune
Appeal Number ITA 2095/PUN/2017
Duration Of Justice 2 year(s) 2 month(s) 19 day(s)
Appellant Dy. Director of Income Tax (International Taxation) Circle-2,, Pune
Respondent Schlumberger India Technology Centre Pvt.Ltd,(earlier known as Schlumberger Global Support Centre Ltd),, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 27-11-2019
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 27-11-2019
Date Of Final Hearing 27-11-2019
Next Hearing Date 27-11-2019
Last Hearing Date 25-09-2019
First Hearing Date 03-07-2019
Assessment Year 2013-2014
Appeal Filed On 07-09-2017
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH PUNE BEFORE SHRI R.S.SYAL VP AND SHRI PARTHA SARATHI CHAUDHURY JM . / I TA NO.2095 /PUN/20 17 / ASSESSMENT YEAR : 2013 - 14 THE DEPUTY DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) CIRCLE - 2 PUNE. ....... / APPELLANT / V/S. M/S. SCHLUMBERGER INDIA TECHNOLOGY CENTRE PVT. LTD. (EARLIER KNOWN AS SCHLUMBERGER GLOBAL SUPPORT CENTRE LTD.) OFFICE NO.701 7 TH FLOOR BLDG. NO.9 COMMERZONE SURVEY NO .144/145 SAMRAT ASHOK PATH OFF. AIR PORT ROAD YERWADA PUNE - 411 006. PAN: AALCS2048C / RESPONDENT . /CO.NO.36 /PUN/2019 /ASSESSMENT YEAR: 201 3 - 14 (ARISING OUT OF ITA NO.2095 /PUN/201 7 ) M/S. SCHLUMBERGER INDIA TECHNOLOGY CENTRE PVT. LTD. (EARLIER KNOWN AS SCHLUMBERGER GLOBAL SUPPO R T CENTRE LTD.) OFFICE NO.701 7 TH FLOOR BLDG. NO.9 COMMERZONE SURVEY NO.144/145 SAMRAT ASHOK PATH OFF. AIR PORT ROAD YERWADA PUNE - 411 006. PAN: AALCS2048C .. / CROSS OBJECT OR / V/S. 2 ITA NO. 2095 /PUN/20 17 CO NO. 36/PUN/2019 A.Y. 2013 - 14 THE DEPUTY DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) CIRCLE - 2 PUNE. / RESPONDENT A SSESSEE BY : SHRI ARIJIT CHAKRABART Y & SHRI SUJIT THAKKAR REVENUE BY : SHRI B.Y. CHAUHAN / DATE OF HEARING : 2 7 .11 .2019 / DATE OF PRONOUNCEMENT : 27 .11 .2019 / ORDER PER PARTHA SARATHI CHAUDHU RY JM : THIS APPEAL PREFERRED BY THE REVENUE EMANATES FROM THE ORDER OF THE LD. CIT(APPEALS) - 13 PUNE DATED 27.06.2017 FOR THE ASSESSMENT YEAR 2013 - 1 4 AS PER THE GROUNDS OF APPEAL ON RECORD. THE ASSESSEE FILED CROSS OBJECTION AGAINST THE APPEAL OF THE REVENUE IN CO NO.36/PUN/2019. FIRST WE WOULD TAKE UP REVENUES APPEAL IN ITA NO.2095/PUN/2017 FOR ASSESSMENT YEAR 2013 - 14 FOR ADJUDICATION. ITA NO.2095/PUN/2017 ( BY REVENUE ) A SSESSMENT Y EAR 2013 - 14 2. THAT AS REGARDS THE REVENUES APPEAL THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED A CALCULATION S TATING THAT IT IS BELOW THE TAX EFFECT AS PER THE CBDT 3 ITA NO. 2095 /PUN/20 17 CO NO. 36/PUN/2019 A.Y. 2013 - 14 CIRCULAR NO.17/2019 [F NO.279/MISE.142/2007 - ITJ (PT)] DATED 08.08.2019 READ WITH CIRCULAR NO.3 OF 2018 DATED 11.07.2018 REVISING THE UPWARD MONETARY LIMITS FOR FILING OF APPEALS IN INCOME TAX CASES BE FORE VARIOUS APPELLATE FORUMS. THE EARLIER CBDT CIRCULAR NO.03/2019 DATED 11.07.2018 FIXED MONETARY LIMIT FOR FILING OF APPEALS BEFORE THE TRIBUNAL AT RS.20 LAKHS. SUCH LIMIT HAS BEEN ENHANCED IN THE RECENT CBDT CIRCULAR DATED 08.08.2019 FROM RS.20 LAKHS T O RS.50 LAKHS. THIS CALCULATION CHART WAS SUBMITTED TO THE LD. DR. 3. AT THE TIME OF HEARING THE LD. DR CONFIRMED THAT THE TAX EFFECT OF THE REVENUES APPEAL IS BELOW TAX EFFECT OF RS.50 LAKHS. 4. AFTER HEARING THE SUBMISSIONS OF BOTH THE PARTIES HEREIN WITHOUT GOING INTO THE MERITS OF THE CASE WE DISMISS THE REVENUES APPEAL ON LOW TAX EFFECT AS PER THE CBDT CIRCULAR NO.17/2019 [F NO.279/MISE.142/2007 - ITJ (PT)] DATED 08.08.2019. HOWEVER REVENUE SHALL BE AT LIBERTY TO APPROACH THE TRIBUNAL FOR RESTOR ATION OF APPEAL WITH THE REQUISITE MATERIAL TO SHOW THAT THE APPEAL IS PROTECTED BY THE EXCEPTIONS PRESCRIBED IN PARA 10 OF THE CIRCULAR DATED 11 - 07 - 2018 AND ITS AMENDMENT DATED 20 - 08 - 2018. 5. IN THE RESULT APPEAL OF THE REVENUE IN ITA NO.2095/PUN/2017 IS DISMISSED. CO NO.36/PUN/2019 (BY ASSESSEE) ASSESSMENT YEAR 2013 - 14 6. AT THE OUTSET THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PRESENT CROSS OBJECTION IS TIME BARRED BY 12 DAYS. THE ASSESSEE HAS FILED 4 ITA NO. 2095 /PUN/20 17 CO NO. 36/PUN/2019 A.Y. 2013 - 14 CONDONATION OF DELAY PETITION DATED 02 .08.2019. WE HAVE GONE THROUGH THE CONDONATION PETITION AND HAVE FOUND THAT REASONS SPECIFIED THEREIN ARE JUSTIFIED AND THAT THE DELAY CANNOT BE ATTRIBUTED TO THE DELIBERATE CONDUCT OF THE ASSESSEE NEITHER THROUGH INTENTION NOR THROUGH ACTION. THE REASONS FOR DELAY IN FILING THE CROSS OBJE C TION LATE WERE BEYOND THE CONTROL OF THE ASSESSEE AND EVEN THE LD. DR STATED THAT HE HAS NO OBJECTION IF THE DELAY IS CONDONED. IN VIEW OF THE MATTER WE CONDONE THE DELAY AND PROCEED TO HEAR THE CROSS OBJECTION OF THE ASSESSEE ON MERITS. 7. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ONLY TRANSACTION IN DISPUTE IS WITH REGARD TO TECHNICAL SUPPORT SERVICES . THAT FURTHER IN THIS REGARD THE TRANSFER PRICING OFFICER (TPO) HAS INCLUDED E4E HEALTHCARE PVT. LTD. AND BNR UDYOG LTD. (SEGMENT) AS COMPARABLE WITH THAT OF THE ASSESSEE COMPANY. IN THIS REGARD ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE IS THAT IF E4E HEALTHCARE BUSINESS SERVICES PVT. LTD. IS EXCLUDED FROM THE FINAL LIST OF COMPARABLES THEN THE ASSESSEE WOULD BE WITHIN RANGE. 7.1 THE LD. COUNSEL FOR THE ASSESSEE FURTHER INVITED OUR ATTENTION AT PARA - (V) PAGE - 18 OF THE TPOS ORDER WHICH IS THE FINA L FINDING OF THE TPO WHEREIN HE HAS STATED THAT E4E HEALTHCARE PVT. LTD. IS SELECTED AS COMPARABLE. WHEN WE PERUSE THE FINDINGS OF THE TPO IT IS APPARENT THAT THERE ARE NO SPECIFIC REASONS AND FINDINGS SET FORTH BY THE TPO FOR INCLUDING E4E HEALTHCARE PVT . LTD. AS COMPARABLE COMPANY WITH THAT OF THE ASSESSEE. HE HAS ONLY STATED THAT THE REASONS FOR THE TURN FILTER HAVE BEEN DISCUSSED WHILE DISPOSING COMMON GROUNDS OF APPEAL. 5 ITA NO. 2095 /PUN/20 17 CO NO. 36/PUN/2019 A.Y. 2013 - 14 7.2 THE LD. COUNSEL FURTHER SUBMITTED THAT THE LD. CIT(APPEALS) AT PARA 2.4.1.3.2 PAGE 30 OF HIS ORDER STATED THAT E4E HEALTHCARE BUSINESS IS A HEALTHCARE BPO AND AS PER REASONS MENTIONED IN HIS FINDINGS ON COMPA RABILITY OF JINDAL INTELLICOM T HE LD. CIT(APPEALS) HELD THAT ON SIMILAR REASONS E4E HEALTHCARE BUSINESS SERVICES PVT. LTD. IS FUNCTIONALLY COMPARABLE WITH THAT OF THE ASSESSEE. THE LD. COUNSEL ELABORATING ON THIS FINDING OF THE LD. CIT(APPEALS) SUBMITTED THAT THE LD. CIT(APPEALS) SIMPLY STATED SINCE E4E HEALTHCARE BUSINESS IS A HEALTHCARE BPO AND THEREFORE SIMILARLY COMPARAB LE WITH THAT OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THIS IS EXACTLY THE REASONS GIVEN IN RESPECT OF COMPARABILITY OF JINDAL INTELLICOM AT PARA 2.3.1.1.3 OF THE LD. CIT(APPEALS) ORDER. 7.3 THEREAFTER THE LD. COUNSEL FOR TH E ASSESS EE TOOK US THROUGH THE N OT ES ON FINANCIAL STATEMENTS IN THE CASE OF ASSESSEE COMPANY WHICH IS PLACED AT PAGE 13 OF THE PAPER BOOK. THEREIN IN THE NOTE - 1 SPECIFICALLY STATES THAT THE ASSESSEE COMPANY PRESENTLY ENGAGED IN RENDERING SUPPORT SERVICES TO THE ASSOCIATED COMPANIES OF HEAD OFFICE SITUATED OUTSIDE INDIA. SPECIFICALLY WHAT THE ASSESSEE IS DOING IS ONLY PROVIDING SUPPORT SERVICES. THEREAFTER PAGE - 18 IN THE PAPER BOOK ON THE SAME FINANCIAL STATEMENT OF THE ASSESSEE COMPANY IT IS SHOWN THAT THE TYPE OF TRANSACTION IN WHICH THE ASSESSEE COMPANY IS ENG AGED IN AND DERIVING INCOME IS SERVICE INCOME. 7.4 THE LD. COUNSEL FOR THE ASSESSEE FURTHER INVITED OUR ATTENTION TO BALANCE SHEET OF THE ASSESSEE COMPANY WHICH IS ANNEXED AT PAGE 7 OF THE PAPER BOOK. AFTER DEMONSTRATING THE FACT THAT THE ASSESSEE IS EN GAGED IN TECHNICAL SUPPORT SERVICES AND INCOME DERIVED IS FROM SERVICE INCOME THE LD. 6 ITA NO. 2095 /PUN/20 17 CO NO. 36/PUN/2019 A.Y. 2013 - 14 COUNSEL ALSO TOOK US TO THE ANNUAL REPORT OF E4E HEALTHCARE PVT. LTD. AT PAGE 439 OF THE PAPER BOOK RELEVANT PAGE BEING 461 WHEREIN IT IS STATED THAT E4E HEALTHCARE BUS INESS SERVICES PVT. LTD. THE COMPANYS SOFTWARE DEVELOPMENT CENTRES IN INDIA ARE 100% EOUS UNDER THE STPI GUIDELINES ISSUED BY THE GOVERNMENT OF INDIA. THE LD. COUNSEL VEHEMENTLY ARGUED THAT ON THE CONTRARY THE ASSESSEE COMPANY IS NOT IN THE SOFTWARE DE VELOPMENT AT ALL. THAT FURTHER AT PAGE 460 OF THE PAPER BOOK UNDER THE HEAD OF OTHER EXPENSES E4E HEALTHCARE BUSINESS SERVICES PVT. LTD. HAS UNDER TAKEN FOLLOWING EXPENSES : I) BUSINESS PROMOTION EXPENSES; II) MANAGEMENT SERVICES FEES; & III) SUB - CONTRACT CHARGES. IT IS CATEGORICALLY SUBMITTED BY THE LD. COUNSEL THAT AGAIN THE ASSESSEE ON THE OTHER HAND DOES NOT HAVE THESE HEADS AS EXPENSES. THAT WITH THESE DISTINCTIONS AS DEMONSTRATED BY THE LD. COUNSEL HE CONTENDED THAT E4E HEALTHCARE BUSINESS SERVICES PVT. LTD. SHOULD NOT BE INCLUDED IN THE FINAL LIST OF COMPARABLES WITH THAT OF THE ASSESSEE COMPANY. 7.5 THAT FURTHER THE LD. COUNSEL FOR THE ASSESSEE INVITED OUR ATTENTION TO THE DECISION OF THE PUNE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 640/PUN/2014 FOR THE ASSESSMENT YEAR 2010 - 11 DATED 10.01.2018 WHEREIN THIS ISSUE WHETHER TO INCLUDE OR EXCLUDE THE E4E HEALTHCARE BUSINESS SERVICES PVT. LTD. WAS DISCUSSED AND THE TRIBUNAL VIDE PARA 32 AND 33 HAS HELD AS FOLLOWS: 32 . THE NEXT AND LAST CONCERN WHICH THE ASSESSEE WANTS EXCLUSION IS E4E HEALTHCARE BUSINESS SERVICES PVT. LTD. ON THE GROUND THAT THE SAME 7 ITA NO. 2095 /PUN/20 17 CO NO. 36/PUN/2019 A.Y. 2013 - 14 IS NOT FUNCTIONALLY COMPARABLE BEING ENGAGED IN PROVIDING HEALTHCARE OUTSOURCING SERVICES. WE FIND THAT THE TRIBUNAL I N HOV SERVICES LTD. VS. JCIT (2016) 73 TAXMANN.COM 311 (PUNE - TRIB) HAD REJECTED E4E HEALTHCARE BUSINESS SERVICES PVT. LTD. HOLDING AS UNDER: - 25. SINCE THE ABOVE COMPANY IS ENGAGED IN BUSINESS OF PROVIDING HEALTHCARE OUTSOURCING SERVICES FOR THE HEALTHCA RE INDUSTRIES THE SAME IN OUR OPINION CANNOT BE COMPARED WITH THE ASSESSEE WHICH IS ENGAGED IN PROVIDING ITES ENABLED SERVICES. THEREFORE WE FIND MERIT IN THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ABOVE COMPANY SHOULD BE EXCLUDED FROM THE LIST OF COMPARABLES. GROUND OF APPEAL NO.1 RAISED BY THE AS SESSEE IS ACCORDINGLY ALLOWED. 33. THE TRIBUNAL HAD DECIDED THE ISSUE IN ASSESSMENT YEAR 2009 - 10. HOWEVER THE ASSESSEE POINTED OUT THAT THE FUNCTIONS OF SAID CONCERN WERE SAME IN ASSESSMEN T YEAR 2010 - 11 ALSO. ACCORDINGLY WE HOLD THAT THE SAID CONCERN E4E HEALTHCARE BUSINESS SERVICES PVT. LTD. IS NOT FUNCTIONALLY COMPARABLE TO THE ASSESSEE BEING ENGAGED IN PROVIDING HEALTHCARE OUTSOURCING SERVICES. THE ASSESSING OFFICER THUS IS DIRECTED TO EXCLUDE THE SAME FROM FINAL SET OF COMPARABLES. PLACING RELIANCE ON THIS DECISION THE LD. COUNSEL PRAYED THAT E4E HEALTHCARE BUSINESS SERVICES PVT. LTD. SHOULD BE EXCLUDED FROM THE FINAL SET OF COMPARABLES WITH THAT OF THE ASSESSEE COMPANY. 8. PER CONTRA THE LD. DR HAS PLACED STRONG RELIANCE ON THE ORDER OF THE SUB - ORDINATE AUTHORITIES. 9. WE HAVE PERUSED THE CASE RECORDS AND HEARD THE RIVAL CONTENTIONS. WE HAVE ALSO ANALYZED THE JUDICIAL PRONOUNCEMENT PLACED BEFORE US BY THE LD. COUNSEL FOR THE ASSESSEE. WE HAVE GIVEN CONSIDERABLE THOUGHT TO THE NOTES GIVEN IN THE FINANCIAL STATEMENTS IN RESPECT OF THE ASSESSEE COMPANY VIS - - VIS E4E HEALTHCARE BUSINESS SERVICES PVT. LTD. AND ALSO CORRESPONDING BALANCE SHEET FOR BOTH THE COMPANIES. WE FIND THERE I S SUBSTANTIAL DIFFERENCE BETWEEN THE ASSESSEE COMPANY AND THE E4E HEALTHCARE BUSINESS SERVICES PVT. LTD. THE E4E HEALTHCARE BUSINESS SERVICES PVT. LTD. HAS SOFTWARE DEVELOPMENT 8 ITA NO. 2095 /PUN/20 17 CO NO. 36/PUN/2019 A.Y. 2013 - 14 CENTRE IN INDIA WHEREIN THE ASSESSEE IS NOT AT ALL IN THE AREA OF SOFTWARE. THA T FURTHER ON THE VARIOUS HEADS OF EXPENSES SUCH AS BUSINESS PROMOTION EXPENSES MANAGEMENT SERVICES FEES & SUB - CONTRACT CHARGES THESE HEADS ARE NOT THERE IN THE CASE OF ASSESSEE COMPANY . IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2010 - 11 THIS ISSUE HAS BEEN CATEGORICALLY DISCUSSED AND HELD BY THE OUR ORDER WHERE THE TRIBUNAL HAS DIRECTED THE ASSESSING OFFICER TO EXCLUDE E4E HEALTHCARE BUSINESS SERVICES PVT. LTD. FROM THE FINAL SET OF COMPARABLES. 10 . BOTH THE PARTIES HEREIN HAS AGREED THAT FACTS AND CIRCUMSTANCES IN THIS YEAR ARE SIMILAR TO THAT OF THE ASSESSMENT YEAR 2010 - 11. THE LD. DR COULD NOT BRING ON RECORD ANY CONTRARY FINDING OR ANY DECISION OF THE HIGHER FORUM CONTRADICTING THE VIEW TAKEN BY THE TRIBUNAL ON THIS ISSUE. THEREFORE WE ARE OF THE CONSIDERED VIEW THAT PARITY OF REASONS SHOULD BE MAINTAINED SINCE WE HAVE EXAMINED ON FACTS AND ALSO AS PER LAW THAT THIS COMPANY I.E. E4E HEALTHCARE BUSINESS SERVICES PVT. LTD. HAS TO BE EXCLUDED FROM THE FINAL SET OF COMPARABLES AND WE HOLD ACCORDINGLY. 1 1 . AT THE VERY INITIAL STAGE THE LD. COUNSEL HAD SUBMITTED IF THIS COMPANY I.E. E4E HEALTHCARE BUSINESS SERVICES PVT. LTD. IS EXCLUDED THEN THE ASSESSEE WOULD BE WITHIN RANGE. SINCE THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSE E OTHER GROUNDS IN THE CROSS OBJECTION BECOME ACADEMIC IN NATURE. 12 . IN THE RESULT CROSS OBJECTION (CO NO.36/PUN/2019) FILED BY THE ASSESSEE IS ALLOWED. 9 ITA NO. 2095 /PUN/20 17 CO NO. 36/PUN/2019 A.Y. 2013 - 14 13 . IN THE COMBINED RESULT APPEAL OF THE REVENUE IN ITA NO.2095/PUN/2017 IS DISMISSED AND CROSS OBJECTION FILED BY THE ASSESSEE IN CO NO.36/PUN/2019 IS ALLOWED. ORDER PRO NOUNCED ON 27 TH DAY OF NOVEMBER 201 9 . SD/ - SD/ - R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 27 TH NOVEMBER 2019 . SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - 13 PUNE. 4. THE PR. CIT - 5 PUNE. 5 . / DR ITAT C BENCH PUNE. 6 . / GUARD FILE. // TRUE COPY // / BY ORDER / PRIVATE SECRETARY / ITAT PUNE . 10 ITA NO. 2095 /PUN/20 17 CO NO. 36/PUN/2019 A.Y. 2013 - 14 DATE 1 DRAFT DICTATED ON 27 . 11 .2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 27 .11 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER