ITAT BANGALORE BENCH ‘A’
CSR India (P.) Ltd.
Versus
Income-tax Officer, Ward-11(1), Bangalore
IT (TP) APPEAL NO. 1119 (BANG.) OF 2011
[ASSESSMENT YEAR 2007-08]
JANUARY 29, 2013
ORDER
George George K, Judicial Member
This appeal, at the instance of the assessee company, is directed against the order of assessment passed under section 143(3) rws 144C of the Act dated 30/9/2011. The relevant assessment year is 2007-08.
2. Briefly stated, the facts are as follows:-
The assessee is a company, which is a wholly owned subsidiary of UBiNietics VPT Limited, United Kingdom (‘UL’). The assessee company is a captive service provider and is engaged in the business of rendering software development services to its holding company. It had entered into a Research and Development Sub-contracting agreement with its holding company (UL) in terms of which, it had undertaken software development activity solely for UL in the field of wireless communications, Bluetooth technology and cellular 3G protocol solutions. During the financial year relevant to the assessment year 2007-08, the assessee company had international transactions with its associated enterprises. Since the international transaction entered into by the assessee with its Associated Enterprise (AE) exceeded the prescribed limit, reference was made under the provisions of section 92CA of the Income Tax Act, 1961 by the Assessing Officer to the Transfer Pricing Officer (TPO). The TPO, after taking cognizance of various submissions made by the assessee company, made an adjustment of Rs. 3,77,22,565/- under section 92CA of the Act. Further, the Assessing Officer had re-computed the deduction under section 10A of the Act as claimed by the assessee company in its return of income.
2.1 Aggrieved by the adjustment of the Arm’s Length Price (ALP) of the international transaction and the re-computation of deduction under section 10A of the Act in the draft assessment order, the assessee company had filed application before the Dispute Resolution Panel (DRP).
2.2 The assessee had filed comprehensive objections before the DRP on various grounds. After providing an opportunity of being heard to the assessee, the DRP passed an order on 16/9/2011, upholding the adjustment to the ALP as suggested by the TPO and the re-computation of deduction under section 10A of the Act. Thereafter, the Assessing Officer passed an order dated 30/9/2011 incorporating the direction of the DRP.
2.3 Aggrieved by the assessment order dated 30/9/2011, the assessee company is in appeal before us.
2.4 The assessee has raised elaborate grounds with reference to the transfer pricing adjustment and re-computation of deduction under section 10A of the Act.
(I) Transfer Pricing Adjustment
3. During the financial year 2006-07 relevant to the assessment year 2007-08, the assessee company had entered into the following international transactions with its AE:-
