ACIT, CIRCLE- 27(2), New Delhi v. WM India Technical and Consulting Services Pvt. Ltd., New Delhi

ITA 6247/DEL/2018 | 2010-2011
Pronouncement Date: 10-03-2021 | Result: Dismissed

Appeal Details

RSA Number 624720114 RSA 2018
Assessee PAN AAACW7112N
Bench Delhi
Appeal Number ITA 6247/DEL/2018
Duration Of Justice 2 year(s) 5 month(s) 11 day(s)
Appellant ACIT, CIRCLE- 27(2), New Delhi
Respondent WM India Technical and Consulting Services Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 10-03-2021
Appeal Filed By Department
Order Result Dismissed
Bench Allotted I2
Tribunal Order Date 10-03-2021
Last Hearing Date 01-02-2021
First Hearing Date 01-02-2021
Assessment Year 2010-2011
Appeal Filed On 28-09-2018
Judgment Text
PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I-2: NEW DELHI BEFORE SHRI AMIT SHUKLA JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 6247/DEL/2018 (ASSESSMENT YEAR: 2010-11) ACIT CIRCLE-27(2) NEW DELHI VS. WM INDIA TECHNICAL AND CONSULTING SERVICES PVT. LTD E-20 FIRST & SECOND FLOOR HAUZ KHAS NEW DELHI PAN: AAACW7112N (APPELLANT) (RESPONDENT) REVENUE BY : MS. KANCHAN KAUSHAL ADV MS. SHRUTI KHIMTA ADV ASSESSEE BY: SHRI BHAVNESH KULSHESTHA CIT DR DATE OF HEARING 10/03 / 2021 DATE OF PRONOUNCEMENT 10 / 03 / 2021 O R D E R PER PRASHANT MAHARISHI A. M. 1. THIS APPEAL IS FILED BY THE LD ACIT CIRCLE-27(2) NEW DELHI (AO) AGAINST THE ORDER OF THE LD CIT(A)-44 NEW DELHI DATED 18/07/2018 RAISING FOLLOWING SOLITARY GROUND OF APPEAL:- WHETHER THE LD CIT(A) WAS CORRECT IN DELETING THE TRANSFER PRICING ADJUSTMENT MADE BY THE AO/TPO ON ACCOUNT OF EXPAT SUPPORT SERVICE RELYING ON THE ORDER OF THE HONBLE ITAT WHEREIN THE SAME ISSUE HAD BEEN SET ASIDE TO THE FILE OF THE TPO AND THE ORDER HAS NOT YET ATTAINED FINALITY? 2. BRIEF FACTS OF THE CASE SHOWS THAT THE ASSESSEE IS A COMPANY INCORPORATED ON 24.04.2007 AS AN INDIRECTLY WHOLLY OWNED SUBSIDIARY OF WAL-MART STORES INC. INCORPORATION USA WHICH IS ENGAGED IN PROVIDING VARIOUS TYPES OF CONSULTANCY SERVICES AND ASSISTANCE TO DOMESTIC INDIAN ENTITIES NAMELY WAL-MART INDIA PVT. LTD AND OTHER UNRELATED ENTITY. THE SERVICES RENDERED WERE IN CONNECTION OF DEVELOPMENT OPERATION AND MANAGEMENT OF WHOLESALE BUSINESS RENTAL BUSINESS AND OTHER RELATED OPERATIONS. 3. ASSESSEE FILED ITS RETURN OF INCOME ON 09.10.2010 DECLARING TOTAL INCOME OF RS. 3 42 31 891/-. THE LD AO PASSED ORDER U/S 143(3) READ WITH SECTION 144C(3) OF THE ACT ON 27.05.2014 DETERMINING TOTAL INCOME OF THE ASSESSEE AT RS. PAGE | 2 9 92 17 116/-. THE ADDITION MADE BY THE LD AO WAS OF RS. 11 46 45 629/- ON ACCOUNT OF ORDER OF THE LD TPO U/S 92CA(3) ON 28.01.2013 ON ACCOUNT OF DETERMINATION OF ARMS LENGTH PRICE OF AN INTERNATIONAL TRANSACTION. A SUM OF RS. 784602/- WAS DISALLOWED U/S 14A OF THE ACT. 4. THE ONLY DISPUTE IS WITH RESPECT TO TRANSFER PRICING ADJUSTMENT MADE BY THE LD TPO ON ACCOUNT EXPAT SUPPORT SERVICES. AGAINST SUCH ORDER THE ASSESSEE FILED AN APPEAL BEFORE THE LD CIT (A)-44 NEW DELHI WHO PASSED AN ORDER ON 18.07.2018. THE LD CIT(A) VIDE PARA NO. 5.2 TO 5.4 ALLOWED THE APPEAL OF THE ASSESSEE BY FOLLOWING THE ORDER OF THE COORDINATE BENCH IN ASSESSEES OWN CASE IN ITA NO. IN ITA NO. 5875/DEL/2017 FOR ASSESSMENT YEAR 2013-14 DATED 13.10.2017 WHEREIN AN IDENTICAL ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. THE LD CIT (A) HAS SPECIFICALLY NOTED THAT THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE COMMERCIAL AGREEMENT AND THE NATURE OF BUSINESS ORGANIZATION REMAINED THE SAME. THEREFORE HE DELETED THE ADDITION MADE BY THE LD TPO ON ACCOUNT OF ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTION. THEREFORE REVENUE IS AGGRIEVED WITH THE ORDER OF THE LD CIT (A) AND HAS PREFERRED THIS APPEAL. 5. AT THE OUTSET THE DR SUPPORTED THE ORDER OF THE LD TPO. 6. THE LD AR AT THE OUTSET SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS COVERED BY THE DECISION OF THE ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011-12 2012-12 AND 2013-14. THEREFORE HE SUBMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY PRECEDING AND SUBSEQUENT YEARS. HE FURTHER PLACED A CHART ON RECORD STATING THE DETAILS OF THE ORDER OF THE COORDINATE BENCH IN ASSESSEES OWN CASE. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. THE FACT SHOWS THAT DURING THE IMPUGNED YEAR CERTAIN EMPLOYEES WERE DEPLOYED BY AE TO ASSESSEE FOR CARRYING ON ITS BUSINESS FROM ITS ASSOCIATED ENTERPRISES. THOSE EMPLOYEES WERE UNDER THE EMPLOYMENT OF THE ASSESSEE BUT FOR ADMINISTRATIVE CONVENIENCE SALARY AND RELATED EXPENSES WERE PAID BY THE ASSOCIATED ENTERPRISES AND SUBSEQUENTLY SAME WERE REIMBURSED BACK TO THE ASSESSEE. THERE WAS NO MARKUP OF SUCH REIMBURSEMENT. THE ASSESSEE BENCHMARKED THIS INTERNATIONAL TRANSACTION BASED ON INTERNAL CUP METHOD. THOUGH THE COST WAS REIMBURSED ON COST-TO-COST BASIS THE SERVICES WERE RENDERED BY THE ASSESSEE TO ITS DOMESTIC ENTITIES WHICH WAS PRICED AT COST PLUS 10% MARKUP BASIS. THE ENTIRE COST OF EXPAT EMPLOYEES WAS REIMBURSED TO THE ASSOCIATED ENTERPRISES WAS ALSO INCLUDED IN THE COST BASE OF THE ASSESSEE AND CHARGE TO THE DOMESTIC ENTITIES ON COST PLUS 10% MARKUP. THE PAGE | 3 CLAIM OF THE ASSESSEE IS THAT ENTIRE COST OF EXPAT SUPPORT SERVICES AVAILABLE BY THE ASSESSEE WAS INCURRED ONLY FOR EARNING ITS OWN REVENUE. IT IS FURTHER CLAIMED THAT THE DEPLOYMENT OF EXPAT BEING REVENUE-GENERATING ACTIVITIES ASSESSEE EARNED TAXABLE INCOME IN INDIA AND SALARY PAID TO THE EXPAT WAS SUBJECT TO TAX DEDUCTION AT SOURCE U/S 192 OF THE ACT. 8. THE LD TPO QUESTIONED THE ABOVE INTERNATIONAL TRANSACTION HOLDING THAT ASSESSEE HAS NOT DERIVED ANY BENEFIT AND SUCH SERVICES ARE IN THE NATURE OF SHAREHOLDER ACTIVITIES. THEREFORE ADJUSTMENT OF RS. 11 46 45 629/- WAS PROPOSED BY DETERMINING THE ARMS LENGTH PRICE ON THIS TRANSACTION OF REIMBURSEMENT OF SALARIES OF EMPLOYEES TO BE NIL. THE LD TPO ALSO HELD THAT BENCHMARKING FOLLOWED BY THE ASSESSEE USING INTERNAL CUP IS FLAWED AS SALARY PAYMENT TO EMPLOYEES IS ITSELF A CONTROLLED TRANSACTION. HE WAS ALSO OF THE VIEW THAT THERE WAS NO BUSINESS OR COMMERCIAL NEED FOR AVAILING SUCH SERVICES. IT DID NOT RESULT IN TO ANY ECONOMIC AND COMMERCIAL BENEFIT TO THE ASSESSEE. THEREFORE ACCORDING TO THE LD TPO NO THIRD PARTY WOULD HAVE PAID SUCH AMOUNT TO ITS AE. HE FURTHER HELD THAT THE SERVICES RECEIVED BY THE ASSESSEE FROM EXPAT EMPLOYEES ARE NOTHING BUT A DUPLICATION OF SERVICES BECAUSE SIMILAR SERVICES HAVE BEEN PROVIDED BY AE FOR WHICH TECHNICAL SERVICES FEE HAS BEEN PAID. THUS THE LD TPO WAS OF THE VIEW THAT THE ABOVE TRANSACTION FAILS ON NEED TEST BENEFIT TEST AND IS DUPLICATIVE IN NATURE AS WELL AS A SHAREHOLDER SERVICES. THE LD AO INCORPORATED THE ABOVE ADDITION IN THE ASSESSMENT ORDER. APPEAL AGAINST SUCH ORDER PREFERRED BY THE ASSESSEE BEFORE THE LD CIT (A). THE LD CIT (A) DELETED THE ABOVE ADDITION FOLLOWING THE ORDER OF THE COORDINATE BENCH IN ASSESSEES OWN CASE FOR EARLIER YEARS. THE SIMILAR ADDITION WAS MADE BY THE LD TPO IN ASSESSEES OWN CASE FOR AY 2009-10 WHICH TRAVELLED TO ITAT. THE ITAT SET ASIDE THE WHOLE MATTER TO THE FILE OF THE LD TPO TO DECIDE THE ISSUE AFRESH. CONSEQUENTLY THE LD TPO FOR THE SAME ASSESSMENT YEAR IN SET ASIDE PROCEEDINGS HELD THAT IN THE LIGHT OF THE DISCUSSION MADE BY HIM AND AFTER CAREFUL PERUSAL OF THE SUBMISSION OF THE ASSESSEE NO UPWARD ADJUSTMENT IS PROPOSED TO THE INCOME OF THE ASSESSEE ON THE IMPUGNED TRANSACTION. THUS FOR THAT YEAR THE UPWARD ADJUSTMENT OF RS. 13 07 20 653/- WAS REDUCED TO NIL. FURTHER IN ASSESSMENT ORDER 2011-12 THE COORDINATE BENCH FOLLOWING ORDER OF ITAT FOR ASSESSMENT YEAR 2009-10 AS WELL AS THE APPEAL EFFECT ORDER OF THE LD TPO FOR AY 2009-10 DELETED THE ADDITION. SUBSEQUENTLY THE SIMILAR ISSUE BY ITAT FOR ASSESSMENT YEAR 2012-13 DATED 11.09.2020 WAS ALSO DECIDED IN FAVOUR OF THE ASSESSEE FOR ASSESSMENT YEAR 2013-14 THE TRIBUNAL VIDE ORDER DATED 13.10.2017 PAGE | 4 SET ASIDE THE MATTER BACK TO THE FILE OF THE LD TPO. THE TPO VIDE ORDER DATED 26.06.2019 ONCE AGAIN DELETED THE IMPUGNED ADDITION. THUS SIMILAR KIND OF ADDITION ON SAME FACTS AND CIRCUMSTANCES WAS DEALT BY THE LD TPO IN SET ASIDE PROCEEDINGS IN TWO YEARS I.E. ASSESSMENT YEAR 2009-10 AND 2013-14. FURTHER FOR AY 2012-13 AND 2011-12 THE COORDINATE BENCH DELETED THE ADDITION FOLLOWING THE ORDER OF THE COORDINATE BENCH IN THESE TWO YEARS. THE LD DR COULD NOT SHOW US ANY DISTINGUISHING FEATURE IN THIS YEAR. IT IS ALSO NOT SHOWN TO US WHETHER THE ABOVE ORDERS OF THE COORDINATE BENCH WERE ALSO DISPUTED BY THE REVENUE BEFORE THE HONBLE HIGH COURT. IN VIEW OF THE ABOVE FACTS RESPECTFULLY FOLLOWING THE ORDERS OF THE COORDINATE BENCH IN ASSESSEES OWN CASE ON SIMILAR FACTS AND CIRCUMSTANCES OF PRECEDING AND SUCCEEDING YEAR WE DISMISS THE SOLITARY GROUND OF APPEAL OF THE REVENUE. 9. THUS THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 /03/2021. -D/- SD/- SD/- (AMIT SHUKLA) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10 /03/2021 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT NEW DELHI PAGE | 5 DATE OF DICTATION 1 0 . 0 3 . 2 0 2 1 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 1 0 . 0 3 . 2 0 2 1 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 1 0 . 0 3 . 2 0 2 1 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/ PS 1 0 . 0 3 . 2 0 2 1 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 1 0 . 0 3 . 2 0 2 1 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 1 0 . 0 3 . 2 0 2 1 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 1 0 . 0 3 . 2 0 2 1 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 1 0 . 0 3 . 2 0 2 1 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER