Tieto I.T. Services India P. Ltd., .,, Pune v. Deputy Commissioner of Income-tax,, Pune

ITA 340/PUN/2016 | 2011-2012
Pronouncement Date: 06-11-2019 | Result: Allowed

Appeal Details

RSA Number 34024514 RSA 2016
Assessee PAN AAACF3424C
Bench Pune
Appeal Number ITA 340/PUN/2016
Duration Of Justice 3 year(s) 8 month(s) 2 day(s)
Appellant Tieto I.T. Services India P. Ltd., .,, Pune
Respondent Deputy Commissioner of Income-tax,, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 06-11-2019
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 06-11-2019
Date Of Final Hearing 19-08-2019
Next Hearing Date 19-08-2019
Last Hearing Date 26-07-2018
First Hearing Date 11-06-2019
Assessment Year 2011-2012
Appeal Filed On 04-03-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI R.S. SYAL VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI JUDICIAL MEMBER . / ITA NO. 340/PUN/2016 / ASSESSMENT YEAR : 2011-12 TIETO INDIA PRIVATE LIMITED (PURSUANT TO CHANGE IN NAME FROM TIETO IT SERVICES INDIA PRIVATE LIMITED) PLOT NO.23 WING 1 CLUSTER D EON FREE ZONE MIDC KHARADI KNOWLEDGE PARK PUNE 411 014 PAN : AAACF3424C VS. DCIT CIRCLE-7 PUNE (APPELLANT) (RESPONDENT) . / ITA NO.668/PUN/2016 / ASSESSMENT YEAR : 2011-12 DCIT CIRCLE-7 PUNE VS. TIETO INDIA PRIVATE LIMITED (FORMERLY KNOWN AS TIETO SOFTWARE TECHNOLOGIES LTD.) WING 1 CLUSTER D EON FREE ZONE MIDC KHARADI KNOWLEDGE PARK PUNE 411 014 PAN : AAACF3424C (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI ALI ASGAR REVENUE BY SHRI S.B. PRASAD DATE OF HEARING 05-11-2019 DATE OF PRONOUNCEMENT 06-11-2019 ITA NOS. 340 & 668/PUN/2016 TIETO INDIA PRIVATE LIMITED 2 / ORDER PER BENCH: THESE TWO CROSS APPEALS EMANATE FROM THE FINAL ASSESSM ENT ORDER DATED 29-01-2016 PASSED BY THE ASSESSING OFFICER (AO) U/S. 143(3) R.W.S. 144C(13) OF THE INCOME-TAX ACT 1961 (H EREINAFTER CALLED THE ACT) IN RELATION TO THE ASSESSMENT YEAR 2011-12. 2. THE REVENUES APPEAL IS TIME-BARRED BY 13 DAYS. TH E REVENUE HAS FILED AN AFFIDAVIT EXPLAINING THE REASONS WHICH LED TO THE LATE FILING OF THE APPEAL. WE ARE SATISFIED WITH SUCH REAS ONS. THE DELAY IS CONDONED AND THE APPEAL IS ADMITTED FOR HEARING ON MERITS. 3. SHORN OFF UNNECESSARY DETAILS IT IS SEEN THAT THE ASSESSE E FILED ITS RETURN DECLARING TOTAL INCOME OF RS.56 99 014/- INTER ALIA CLAIMING DEDUCTION U/S.10B OF THE ACT. APART FROM THE TRANSF ER PRICING ADDITION AMOUNTING TO RS.5.61 CRORE THE AO DISALLOWED THE CLAIM OF DEDUCTION U/S.10B AMOUNTING TO RS.7 91 16 965/-. THE ASSESSEE APPROACHED THE DISPUTE RESOLUTION PANEL (DRP) AGAINS T THE DRAFT ORDER. THE DRP VIDE ITS DIRECTION DATED 15-12-2 015 ACCEPTED THE CASE OF THE ASSESSEE QUA THE TRANSFER PRICING ADDITION AND DIRECTED TO DELETE THE SAME. IN SO FAR AS THE DENIAL OF DEDUCTION ITA NOS. 340 & 668/PUN/2016 TIETO INDIA PRIVATE LIMITED 3 U/S 10B OF THE ACT IS CONCERNED THE DRP FOUND THE ACTION O F THE AO JUSTIFIED AND HELD THAT THERE WAS NO MERIT IN THE ASSESSEE S CONTENTION. IT FURTHER ENTERTAINED THE ALTERNATE CLAIM OF THE ASSESSEE FOR GRANTING OF DEDUCTION U/S.10A AND VIDE PARA NO.3.23 OF ITS DIRECTION REQUIRED THE AO TO EXAMINE THE ALTERNATE CLAIM OF THE ASSESSEE FOR ELIGIBILITY OF DEDUCTION US/.10A. 4. THE REVENUE IN ITS APPEAL IS AGGRIEVED BY THE DIRECTIO N GIVEN BY THE DRP FOR EXAMINING THE CLAIM OF DEDUCTION U/S.10A. TH E ASSESSEE IS AGGRIEVED BY DENIAL OF CLAIM U/S.10A OF THE A CT AMOUNTING TO RS.7 91 16 965/- BY THE AO IN THE FINAL ORDER PASSED PURSUANT TO THE DIRECTION GIVEN BY THE DRP. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH TH E RELEVANT MATERIAL ON RECORD. IT IS SEEN THAT THE DRP VIDE PAR A 3.23 OF ITS DIRECTION HAS OBSERVED: `WE DIRECT THE AO TO EXAMINE TH E ALTERNATIVE CLAIM OF THE ASSESSEE BASED ON THE MATERIAL AV AILABLE ON RECORD AND GRANT THE ELIGIBLE DEDUCTION U/S 10A IF THE ASSE SSEE IS FOUND TO SATISFY THE CONDITIONS LAID DOWN UNDER THE SAID SECTIO N. THE CLAIM OF THE REVENUE IS THAT THE DRP COULD NOT HAVE GIVEN ANY SUCH DIRECTION TO THE AO FOR EXAMINING THE CLAIM U/S.10A W HICH IS BEYOND ITS AMBIT. ITA NOS. 340 & 668/PUN/2016 TIETO INDIA PRIVATE LIMITED 4 6. IT IS RELEVANT TO LOOK INTO THE PROVISIONS OF SECTION 144C OF THE ACT WHICH DEAL WITH REFERENCE TO DISPUTE RESOLUTION PANEL . SUB-SECTION (1) OF SECTION 144C STATES THAT: THE ASSESSING O FFICER SHALL NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS ACT IN THE FIRST INSTANCE FORWARD A DRAFT OF THE PROPOSED ORDER OF ASSESSMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE DRA FT ORDER) TO THE ELIGIBLE ASSESSEE IF HE PROPOSES TO MAKE ON OR AFTER THE 1ST DAY OF OCTOBER 2009 ANY VARIATION IN THE INCOME OR LOSS RETURNED WHICH IS PREJUDICIAL TO THE INTEREST OF SUCH ASSESSEE. SUB-SE CTION (2) OF SECTION 144C STATES THAT THE ASSESSEE SHALL EITHER FILE HIS ACCEPTANCE TO THE AO ON THE VARIATIONS PROPOSED IN THE DRAF T ORDER OR FILE HIS OBJECTIONS IF ANY WITH THE DRP. IN CASE THE AS SESSEE ACCEPTS THE VARIATION IN THE DRAFT ORDER OR NO OBJECTIONS AR E RECEIVED WITHIN 30 DAYS THEN SUB-SECTION (3) STATES THAT: `THE ASSESSIN G OFFICER SHALL COMPLETE THE ASSESSMENT ON THE BASIS OF THE DRA FT ORDER. IN CASE THE ASSESSEE DOES NOT AGREE WITH THE DR AFT ORDER IT CAN INTER ALIA RAISE OBJECTIONS BEFORE THE DRP WHICH SHALL ISSUE DIRECTIONS UNDER SUB-SECTION (5) OF SECTION 144C. UPON RE CEIPT OF THE DIRECTIONS FROM THE DRP THE AO COMPLETES THE ASSESSMENT UNDER SUB-SECTION (13) IN CONFORMITY WITH THE DIRECTIONS GIVEN BY THE DRP. ITA NOS. 340 & 668/PUN/2016 TIETO INDIA PRIVATE LIMITED 5 7. SCOPE OF DIRECTIONS BY THE DRP HAS BEEN SET OUT IN SUB- SECTION (8) WHICH STATES THAT THE DRP MAY CONFIRM REDUCE O R ENHANCE THE VARIATIONS PROPOSED IN DRAFT ORDER SO HOWEV ER THAT IT SHALL NOT SET ASIDE ANY PROPOSED VARIATION OR ISSUE ANY DIREC TION UNDER SUB-SECTION (5) FOR FURTHER ENQUIRY AND PASSING OF THE ASSESSMENT ORDER . IT IS MANIFEST FROM THE PRESCRIPTION OF SUB- SECTION (8) THAT THE DRP HAS BEEN EMPOWERED TO CONFIRM RE DUCE OR ENHANCE THE VARIATIONS PROPOSED IN DRAFT ORDER. THERE IS SPECIFIC PROHIBITION CONTAINED IN THE PROVISION TO THE EFFECT THAT THE DRP CANNOT SET-ASIDE ANY PROPOSED VARIATION OR ISSUE ANY DIREC TION FOR FURTHER ENQUIRY AND PASSING OF THE ASSESSMENT ORDER. 8. ADVERTING TO THE FACTS OF THE INSTANT CASE IT IS SEEN THAT TH E DRPS DIRECTION TO THE AO FOR CARRYING OUT A FRESH EXAMINATIO N OF THE CLAIM OF THE ASSESSEE U/S.10A OF THE ACT IS IN VIOLATION OF THE CLEAR MANDATE OF THE PROVISIONS AS DISCUSSED SUPRA AND HENCE CANNOT BE COUNTENANCED. ON OUR VACATING SUCH A DIRECTION THE POSITION WHICH WOULD EMERGE IS THAT THE DENIAL OF THE ASSESSEE S CLAIM FOR DEDUCTION U/S 10B WOULD ATTAIN FINALITY BUT THE ALTERNATE CLAIM FOR ALLOWING DEDUCTION U/S.10A DESPITE THE DRP FINDING SOME MERIT IN THE SAME WOULD GET JEOPARDISED AT THE THRESHOLD EVEN WITHOUT VERIFICATION THEREBY CAUSING IRREPARABLE PREJUDIC E TO ITA NOS. 340 & 668/PUN/2016 TIETO INDIA PRIVATE LIMITED 6 THE ASSESSEE. IT IS PERTINENT TO NOTE THAT THE LD. DRP ITSELF FOUND SOME MERIT IN THE CONTENTION OF THE ASSESSEE ON THE ELIGIBILITY OF CLAIM U/S.10A FOR WHICH THE RELEVANT DISCUSSION HAS BEEN M ADE IN PARA NOS. 3.19 TO 3.22. ALBEIT THE DRP IS NOT EMPOWERED TO DIRECT THE AO TO ENTERTAIN AND EXAMINE SUCH A CLAIM BUT THERE ARE NO FETTERS ON ITS OWN POWERS TO UNDERTAKE SUCH AN EXERCISE ITSE LF FOR ASCERTAINING IF THE CLAIM OF THE ASSESSEE IS LEGALLY TENABLE. UNDER THE GIVEN CIRCUMSTANCES WE SET-ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE DRP FOR ADJUDICATING THE ISSUE ITSELF WITHOUT REMITTING THE MATTER TO THE FILE OF THE AO. 9. IN THE RESULT BOTH THE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH NOVEMBER 2019. SD/- SD/- (S.S. VISWANETHRA RAVI) (R.S. SYAL) JUDICIAL MEMBER VICE PRESIDENT PUNE; DATED : 06 TH NOVEMBER 2019 ITA NOS. 340 & 668/PUN/2016 TIETO INDIA PRIVATE LIMITED 7 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-13 PUNE 4. THE PR.CIT-5 PUNE 5. / DR A ITAT PUNE 6. / GUARD FILE / BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY / ITAT PUNE DATE 1. DRAFT DICTATED ON 05-11-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 05-11-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *