Case Law Details
Conduent Business Services India LLP Vs ACIT (ITAT Bangalore)
Conclusion: MAP rate should be applied by AO/TPO for the rest of the transitions of Rs.25,09,87,512 which was 4.42% of the total transactions. Accordingly, AO was directed to apply the MAP rate on the rest of the transactions for determination of the margin on the international transactions.
Held: Assessee was engaged in 2 segments software development services , IT Enabled Services and Marketing Support Services during the impugned assessment year to US affiliate Companies and Non-US affiliate Companies. Assessee submitted that in terms of resolution dated 13.12.2021 the entire transaction of software development which comprised of USA portion alone was settled under MAP at a margin of 17.27%. Assessee had undertaken deemed international transaction in the nature of BPO support services with non US AE’s and unrelated parties amounting to Rs.25,09,87,512/-. In this regard, assessee had filed additional ground as per rule 29 of the Income-tax Rules and as per written synopsis he requested that total transaction which consisted of 4.42% and requested to apply MAP margin rate. Considering the argument of the Revenue that the margins might be affected because of the geographical risks, the transaction undertaken by assessee consisting of 4.42% was made in the European countries. Considering the objections of the Revenue, the lower authorities had not given any findings in regard to margin will affect as per the geographical area. Respectfully following the judgment of the Hon’ble Bombay High Court of Bombay and the decision of the co-ordinate bench, the prayer of assessee was accepted and MAP rate should be applied by the AO/TPO for the rest of the transitions of Rs.25,09,87,512/- which was 4.42% of the total transactions. Accordingly, AO was directed to apply the MAP rate on the rest of the transactions for determination of the margin on the international transactions. Further in support of MAT credit brought forward from the previous year, AO was directed to verify the correct poison and give credit as per law.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This is an appeal filed by the assessee against the final assessment order passed by the AO u/s 143(3) r.w.s 144C(13) of the Income-tax Act dated 30/10/2018 on the following grounds of appeal:-
That on the facts and circumstances of the case and in law:
A. Grounds of appeal relating to corporate tax matters 1.The learned AO/DRP erred, in law and in facts, in making an addition for undisclosed income on account of an inadvertent error made by the Appellant in the Service Tax Return without specifying the relevant provisions of the Act.
2. The learned AO/DRP erred, in law and in facts, in not providing the relief of additional Minimum Alternate Tax credit brought forward from earlier years, which the Appellant is entitled to set off against the tax liability computed by the Learned AO on account of above additions made in the final order of assessment.
3. The learned AO/DRP erred, in law and in facts, in not providing the claim of withholding tax credit as per the revised return of income in case of the Appellant.
B. Grounds of appeal relating to transfer pricing matters common to software development services segment and Information Technology enabled services segment
4. The learned AO/TPO/DRP erred, in law and in facts, by not appreciating the economic analysis undertaken by the Appellant in accordance with the provisions of the Act read with the Rules, conducting a fresh economic analysis for the determination of the ALP in connection with the impugned international transaction and holding that apellant’s international transaction is not at arm’s length.
5. The learned AO/TPO/DRP erred, in law and in facts, by determining the arm’s length margin/price using only FY 2013-14 data, which was not available to the Appellant at the time of complying with the transfer pricing documentation requirements.
6. The learned AO/TPO/DRP erred, in law and in facts, by not making suitable adjustments to account for differences in the working capital levels of the Appellant vis-à-vis the corn pa rabies.
7. The learned AO/TPO/DRP erred, in law and in facts, by not making suitable adjustments to account for differences in the risk profile of the Appellant v/s-a -v/s the comparables.
8. The learned AO/TFO/DRP erred, in law and in facts, by rejecting certain comparable companies identified by the Appellant using turnover less than 1 crore as a comparability criterion.
9. Without prejudice to above Ground No. 5, the learned AO/TPO/DRP erred, in law and in facts, by not adopting the filter of 10% to 10 times of the turnover of the Appellant as a comparability criterion.
10. The learned AO/TPO/DRP erred, in law and in facts, by rejecting certain comparable companies identified by the Appellant using software development service/ITeS income less than 75% of the operating income as a comparability criterion.
11. The learned AO/TPO/DRP erred, in law and in facts, by rejecting certain comparable companies identified by the Appellant using export turnover less than 75% of the total turnover as a comparability criterion.
12. The learned AO/TPO/DRP erred, in law and in facts, by rejecting certain comparable companies identified by the Appellant using the employee cost less than 25% of the total revenues as a comparability criterion.
13. The learned AO/TPO/DRP erred, in law and in facts, by rejecting certain comparable companies identified by the Appellant using the filter of companies having different accounting year for rejecting the comparable companies (i.e., companies having accounting year other than March 31 or companies whose financial statements were for a period other than 12 months).
14. The learned AO/TPO/DRP erred, in law and in facts, by not adopting the filter of manufacturing plus trading income less than 50% of the sales to reject companies as adopted by the Appellant in its TP documentation.
15. The learned AO/TPO/DRP erred, in law and in facts, by using the information by exercising powers under section 133(6) of the Act.
16. The learned AO/TPO/DRP erred in law and in facts in computing the a WAct ie without giving the benefit of 3
percent under the proviso to section 920 of
C. Grounds of appeal relating to transfer pricing matters specific to software development services segment
17. The learned AO/TPO/DRP erred , in law and in facts, by erroneously including following companies based on unreasonable comparability criteria:
a) Larsen & Toubro Infotech Limited (‘LTI)
b) Infosys Limited (‘Infosys)
c) ICRA Techno Analytics Limited (‘ICRA)
d) Persistent Systems Limited (‘Persistent)
e) Mindtree Limited (‘Mindtree)
f) Cigniti Technologies Limited (‘Cigniti)
g) Thirdware Solutions Limited (‘Thirdware)
h) Tata Elxsi Limited (‘Tata Elxsi)
i) R S Software (India) Limited
18. Without prejudice to above Ground No. 4, the learned AO/TPO/DRP erred, in law and in facts, by excluding the following companies as appearing in Appellant’s transfer pricing documentation based on unreasonable comparability criteria:
a) Goldstone Technologies Limited
b) Akshay Software Technologies Limited (‘Akshay Software)
c) Evoke Technologies Private Limited (‘Evoke)
19. Without prejudice to above Ground No. 17, the learned AO/TPO/DRP erred, in law and in facts, by committing factual/computational errors while calculating the operating margins of following companies:
a) /C R A Techno Analytics Limited
b) Infosys Limited
c) Tata Elxsi Limited
d) Grounds of appeal relating to transfer pricing matters specific to Information Technology enabled services segment
20. The learned AO/TPO/DRP erred , in law and in facts, by erroneously including following companies based on unreasonable comparability criteria:
a) Infosys BPO Limited (‘Infosys BPO)
b) Micro gene tic Systems Limited (‘Micro genetic)
c) BNR Udyog Limited (‘BNR Udyog)
d) Micro land Limited
e) Cross domain Solutions Private Limited (‘Cross domain)
21. Without prejudice to above Ground No. 4, the learned AO/TPO/DRP erred, in law and in facts, by excluding the following companies as appearing in Appellant’s rncing documentation based on unreasonable comparability criteria:
a) Al/sec Technologies Limited (‘Al/sec)
b) Informed Technologies India Limited (‘Informed Technologies)
c) Jindal Intel//corn Limited (‘Jindal)
d) Sundered Business Services Limited (‘Sundaram)
22. Without prejudice to above Ground No. 20, the learned AOITPO/DRP erred, in law and in facts, by committing factual/computational errors while calculating the operating margins of following companies:
a) Micro/and Limited
b) B N R Udyog Limited (segmental)
E. Grounds of appeal relating to transfer pricing matters specific to trade receivables
23. The learned AO/TPO/DRF erred, in law and in facts, by re-characterizing the outstanding receivables as loan transaction and not considering the busines/ commercial expediencies of the arrangement, thereby computing notional interest on the same.
24. The learned AO/TPO/DRP erred, in law and in facts, in charging interest in relation to outstanding receivables due from Associated Enterprises of the Appellant.
F. Grounds of appeal relating to other matters
25. That the learned AC/DRP erred, in law and in facts, in levying the interest of INR 16,71,36,310 under Section 234B of the Act.
The Appellant submits that each of the above grounds is independent and without prejudice to one another.
The Appellant craves leave to add, alter, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal, so as to enable the Hon’ble Tribunal to decide on the appeal in accordance with the law.”
2.1 The assessee has also filed additional grounds:-
26. In the facts and in the circumstances of the case and in law, the Arm’s Length margin determined under MAP between the Indian and US Competent Authorities for the BPO Support Services transaction ought to also be applied to the international/deemed international transactions relating to provision of similar BPO Support Services not covered by MAP. Without prejudice to the above grounds requesting the application of Arm’s Length margin determined under the MAP, to the international/ deemed international transactions of the Appellant not covered under the MAP, our grounds of appeal contending on the factual & technical he merits of the case are here below:
27. The learned AO/TPO/DRP erred, in law and in facts, by not appreciating the economic analysis undertaken by the Appellant in accordance with the provisions of the Act read with the Rules, conducting a fresh economic analysis for the determination of the ALP in connection with the impugned international transaction and holding that the Appellant’s international transaction is not at arm’s length.
28. The learned AO/TPO/DRP erred, in law and in facts, by determining the arm’s length margin/price using only FY 2013-14 data, which was not available to the Appellant at the time of complying with the transfer pricing documentation requirements.
29. The learned AO/TPO/DRP erred, in law and in facts, by rejecting certain comparable companies identified by the Appellant using ITeS income less than 75% of the operating income as a comparability criterion, rejecting the filter applied by the Appellant in this regard to exclude comparables with trading/manufacturing income greater than 50% of sales.
30. The learned AO/TPO/DRP erred, in law and in facts, by rejecting certain comparable companies identified by the Appellant using export turnover less than 75% of the total turnover as a comparability criterion.
31. The learned AO/TPO/DRP erred, in law and in facts, by rejecting certain comparable companies identified by the Appellant using the employee cost less than 25% of the total revenues as a comparability criterion.
32. The learned AO/TPO/DRP erred, in law and in facts, by rejecting certain comparable companies identified by the Appellant using the filter of companies having different accounting year for rejecting the comparable companies (i.e., companies having accounting year other than March 31 or companies whose financial statements were for a period other than 12 months).
33. The learned AOITPO/DRP erred, in law and in facts, by using the information by exercising powers under section 133(6) of the Act.
34. The learned AO/TPO/DRP erred in facts and in law, by erroneously including following companies based on unreasonable comparability criteria:
(a) Infosys BPO Limited
(b) Microgenetic Systems Limited
(c) BNR Udyog Limited
(d) Microland Limited
(e) Crossdomain Solutions Private Limited
35. Without prejudice to above, the learned AO/TPO/DRP erred, in law and in facts, by excluding the following companies appearing in the Appellant’s transfer pricing documentation based on unreasonable comparability criteria:
(a) Alisec Technologies Limited
(b) Jindal Intellicom Limited
(c) Informed Technologies India Limited
(d) Sundaram Business Services Limited
36. Without prejudice to above, the learned AOITPO/DRP erred, in law and in facts, by committing factual/computational errors while calculating the operating margins of following companies:
(a) BNR Udyog Limited
(b) Micro land Limited
37. The learned AO/TPO/DRP erred, in law and in facts, by not making suitable adjustments to account for differences in the risk profile of the Appellant vis-a-vis the comparables.
38. The learned AOITPO/DRP erred, in law and in facts, in computing the arm’s length price without giving the benefit of 3 percent under the proviso to section 920 of the Act. The Appellant craves leave to add, alter, amend, vary, omit or substitute the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal, so as to enable the Hon’ble Tribunal to decide on the appeal in accordance with the law.”
3. Since the assessee has filed additional grounds of appeal, in which legal issue is involved, therefore, respectfully following the decision of the National Thermal Power Co. Ltd. Vs. CIT, 229 ITR 383 (SC), the additional ground filed by the assessee is admitted.
4. The brief facts of the case are that the assessee filed return of income on 29/11/2014 declaring a total income of Rs.77,56,32,720/-. Subsequently, on 30/03/2016 the assessee revised his return of income at Rs.77,73,32,230/- . The case was selected for scrutiny under CASS and other statutory notices were issued to the assessee. The assessee is engaged in the business of software development, IT enabled services and market support services to its group companies. From the information submitted by the assessee in which it was observed that the assessee had undertaken international transactions, therefore, after obtaining approval from the Pr.CIT, the case was referred to the TPO. The TPO analyzed the documents and observed that the assessee has undertaken international transaction with its associated enterprises as under:-
5. The TPO after analyzing all the financial results observed as under:-
6. The TPO on the basis of TP study and other documents available before him, applied certain filters for selection of the comparable and from the comparables, he rejected some of the companies and included some new comparable companies, thereafter he computed the adjustments on 31/10/2017, which is as under:-
7. After receipt of the TP order, the AO passed draft assessment order on 11/12/2017. He considered the revised return of income filed by the assessee declaring income of Rs.77,73,37,230/- and making adjustments as per the TPO order of Rs.98,51,79,027/-. HE further disallowed under the service tax of Rs.2,29,95,198/- and determined the taxable income at Rs.178,55,06,455/-.
8. Aggrieved from the draft assessment order, the assessee field objections before the DRP. The DRP passed his order on 11/09/2018 after receipt of the DRP directions, the AO passed the final assessment order on 30/10/2018 by making adjustments as under:-
1st adjustment of international transactions was of Rs.99,74,41,241/-
2nd adjustment..for.want.of.detailed..documents.of.service..
tax.of.Rs.2,29,95,198/-..
9. Aggrieved from the final order of the AO, the assessee filed appeal before Income-tax Appellate Tribunal. He has also filed written synopsis on 12/05/2022, which is as under:-
“Conduent India operates as a captive service provider rendering Software Support Services & BPO Support services primarily to its Associated Enterprise (AEs’). The Appellant had filed an application under the provisions of Article 25 Mutual Agreement Procedure (MAP’)I of the India-United States (‘US’) Double Taxation Avoidance Agreement (‘India- US tax treaty’) in respect of the transfer pricing adjustments made by the learned Transfer Pricing Officer (TPO’)/AO under 2 segments: (i) software development services (100% transaction with USA affiliate) (ii) BPO/ ITES (95.58% transaction with USA affiliate and 4.42% with non-USA affiliate)
2. In terms of resolution dated 13.12.2021 (pg 369 of factual paper-book), the entire transaction of software development which comprised of USA portion alone was settled under MAP at a margin of 17.27% (pg 371 of factual paper-book). Out of the total transaction value of INR 5,67,89,57,293 pertaining to ITES/ BPO, the portion attributed to USA of INR 5,42,79,69,781 was settled under MAP at a margin of 16.25% (pg 371 of factual paper-book).
3. Appellant accepted the resolution arrived at by the Competent Authority of India and USA and accordingly under Rule 44G(8) of the Income Tax Rules, 1962, withdrew grounds No. 4 to No. 24 of appeal vide letter filed with the Tribunal on 10.01.2022.
4. Since the Appellant had also undertaken international/deemed international transactions in the nature of BPO support services with non-US AE’s & unrelated parties amounting to INR 25,09,87,512 against which a demand still sustains, the Appellant filed additional grounds of appeal vide letter filed with the Tribunal on 11.05.2022. Additionally, the Appellant also filed application for additional evidence under Rule 29 of Income-tax (Appellate Tribunal) Rules, 1963, in relation to corporate tax made additions made by Ld. AO for the present Assessment Year, AY 2014-15.
5. Without prejudice to merits of Additional ground of appeal nos. 27 to 38 (which are duly supported by decisions of Hon’ble Tribunal / Courts), if relief prayed for in Ground of appeal no. 26 is considered, Appellant does not wish to press the grounds 27 to 38 at this stage. Thus, Appellant respectfully requests for consideration of Grounds of appeal 1, 2, 3 and 26.
6. By way of additional ground of appeal no. 26, the Appellant submits that the Arm’s Length margin determined under Mutual Agreement Procedure (MAP’) between the Indian and US Competent Authorities for the BPO Support Services of 16.25% ought to also be applied to the international/deemed international transactions relating to provision of similar BPO Support Services not covered by MAP amounting to INR 25,09,87,5 12.
7. As per bifurcation of ITES transaction entered into by the Appellant, it can be understood that non-USA portion of the entire transaction value only amounts to 4.42% of the total transaction value, whereas MAP resolution covers the remaining 95.58% of the total transaction value. Attention, in this regard. is invited to the decision of Hon’ble Murnbai Bench of the Tribunal in -the case of J.P. Morgan vs. DCIT (ITA 7822/Mum/2011) (enclosed at pages 12-37) dated 30.11.2015, wherein, the Hon’ble Tribunal (in para 3.6 at pg 17) held that USA- MAP margins determined for 96% of total transaction value by Competent Authority can be applied to remaining 4% of the non-USA portion of the transaction. It is submitted that Hon’ble Bombay High Court preferred not to interfere in appeal preferred by the Revenue Department in ITA 4/2017 dated 25.03.20 19 (enclosed at pages 4-12). Further, in the case of CCI Information Systems Management vs. DCIT (ITTPA 1117/ Bang! 2011) (‘enclosed at pages 38-44), Hon’ble Bangalore Bench of the Tribunal followed the decision of J.P. Morgan (supra) and upheld application of MAP margins determined by Competent Authority to the portion of the transaction not covered under the MAP resolution (copies of these decisions are annexed to present synopsis for ready reference). We pray for consideration of the same.
8. By way of ground of appeal no. I, the Appellant objects to addition of INR 2,29,95,198 made by Ld. AO misconstruing discrepancy in revenue reported in service tax return filed by the Appellant and revenue receipt shown in Income-tax return filed by the assessee. Appellant’s submission that they inadvertently reported revenue for the months of June to September was considered twice in the service tax return was not accepted. Revenue for the period of June to September got clubbed with the invoice of the period October to December resulting in it getting reported twice in the service tax return. Ld. DRP also upheld the disallowance on the pretext the transactions which were double counted were not identified. To resolve this issue kind attention is invited to the Certificate by Chartered Accountant certifying the reconciliation of revenue as per financial statements and the service tax return (at pg 430433 of additional evidence application filed on 27.04.2022). It is submitted that the Hon’ble Bench after considering, verifying and examining additional evidence by way of letter of permission (LoP) for setting up export-oriented unit under software technology park scheme, letter intimating date of commencement of operations, annual performance report for Indore STP Unit and softex forms for Indore STP Unit, allow the claim of assessee.
9. By way of ground of appeal no. 2, the Appellant submits Minimum Alternate Tax (‘MAT’) credit of INR 1,21,42,780 brought forward from AY 2011-12 may kindly be set off! adjusted against tax liability computed by Ld. AO in the final assessment order as per revised return on income filed by the Appellant.
10. In relation to ground of appeal no. 3, it is submitted that as per revised return of income filed, Appellant claimed withholding tax credit of INR 3,91.16,490, however credit of only INR 3,90.77.420 was allowed by Ld. AO. While considering these objections, Dispute Resolution Panel (Ld. DRP’) on pg 59 of the appeal set refrained from adjudicating on both the abovementioned issues stating that Ld. Panel can adjudicate only variations to income.
II. It is prayed that this Hon’ble Bench may after due verification/ examination of documents/ records, accept the claim of the assessee and direct allowance of adjustment of MAT credit of INR 1,21,42,780 brought forward from earlier years against tax liability of present assessment year 2014-15 as per ground of appeal no. 2 and direct acceptance of claim of the assessee of short credit of INR 39,070 as per ground of appeal no. 3 after verification, if necessary.”
10. He has also filed written synopsis on 23/04/2022 bearing acknowledgment number 940, which is as under:-
11. The ld.AR has also filed additional evidence bearing page no. 399 to 432, which is placed on record vide his letter dated 27/04/2022, which is as under:-
The above appeal relates to AY 2014-15 challenging the order of Assistant Commissioner of Income-Tax dated 30 October 2018.
The Appellant submits that the additional evidence is vitally connected to and is important for a proper appreciation and adjudication of the issues involved. In this regard. we wish to submit additional supporting documents/evidence in respect of the following issues in appeal before your Honours:
Addition of undisclosed income on account of an inadvertent error made by the Appellant in the Service Tax Return (Ground No.1 – appeals in relation to corporate tax matters)
The Appellant on a conservative basis wishes to file additional evidence before your Honours to substantiate its claim that an inadvertent error was made by the Appellant in the Service Tax Return.
We request the Honble Bench to kindly admit the following additional supporting documents/ evidence in the interest of justice and decide the appeal on merits:
The Appellant further submits that the non-filing of additional evidence at the time of assessment/ appellate proceedings were neither wilful nor wanton.
In the above circumstances and in the interest of justice it is prayed that the additional evidence, which is relevant to the matter involved, may kindly be admitted and the appeal be decided taking into account of the above documents/ evidence and grave prejudice would be caused to the Appellant if the additional evidence is not admitted.”
11.1 In addition to the above he submitted that as per above written synopsis, the assessee does not want to press ground Nos.4 to 24 because the issue has been settled in MAP. He further submitted that in terms of resolution dated 13/12/2021 (page 369 of factual paper book), the entire transaction of software development which comprised of USA portion alone was settled under MAP at a margin of 17.27% (page 371 of factual paper book). Out of the total transaction value of INR 567,89,57,293/-pertaining to ITES/BPO, the portion attributed to USA of INR 542,79,69,781/- was settled under MAP at a margin of 16.25% (page 371 of factual paper book). The total transactions which consists with US affiliates is Rs.95.58% and for the remaining business which non US affiliates is 4.42% of the total turnover consisting amounting of Rs.25,09,87,512/-. The total turnover achieved by the assessee during the year is Rs.567,89,57,293/- out of which he has not gone for MAP is Rs.25,09,87,512/-. It was very less and which consists of 4.42% and if the bench accepts that the margin applied in the MAP for US affiliated transactions, the similar rate can be applied for the non US affiliate transactions and in support he relied on the judgment as cited (supra). In the case of Pr. CIT Vs. JP Morghan Service India Pvt. Ltd., in ITA No.04 & 170 of 2017 (Bom Trib.) and the decision of the coordinate bench of the Tribunal in the case of M/s CGI Information Systems Management Consultancy Pvt. Ltd. Vs.. DCIT, Circle-11(2) Bangalore. He further submitted that in respect of ground No.1 complete details were notified before the lower authorities, which has been filed before the Hon’ble Bench, as it is evidenced. Inadvertently, the assessee reported revenue for the month of June to September was considered twice in the service tax return, which was not accepted by the lower authorities. HE reiterated the written submission submitted on 24/05/2022 as cited supra. He further submitted in respect of ground No. 2 which is relates for MAT credit that the directions may be given to the AO for giving MAT credit. In respect of ground No.3 he has also requested for not giving tax credit as per revised return and this issue may also be sent back to the AO for verification for giving tax credit. He further submitted that if the ground No.26 is accepted, then he will not press ground Nos.27 to 38.
12. The ld. DR relied on the order of the lower authorities and he objected for submitting the additional evidences as well as additional ground taken by the assessee. He further submitted that the assessee had sufficient time before the lower authorities and full opportunity was given to the assessee and in spite of this, he did not file any evidence in support of the service tax.
13. After hearing both the parties and perusing the entire material and orders of the authorities, we observe that the assessee was engaged in 2 segments software development services , IT Enabled Services and Marketing Support Services during the impugned assessment year to US affiliate Companies and Non-US affiliate Companies . We observe from the written submissions made by the assessee in which he has submitted that In terms of resolution dated 13.12.2021 (pg 369 of factual paper-book), the entire transaction of software development which comprised of USA portion alone was settled under MAP at a margin of 17.27% (pg 371 of factual paper-book). As per the above it is clear that the assessee has settled the issue under MAP, we also gone through the above cited letter which is placed on paper book page No.369 to 372.
13.1 Considering the prayer of the assessee since the matter has been settled under MAP as per letter No.480/24/2019 – APA-I-Govt. of India, Ministry of Finance, Department o Revenue, Central Board of Direct Taxes, Foreign Tax and Tax Research Division – IAPA –I secs. dated 13/12/2021, 906B, 9th Floor, C Wing Hudco Vishala Building, 14, Bhikaji Cama Place, New Delhi-110066, we dismiss ground no.4 to 24 as per the request of the assessee cited above.
13.2 We also observe that the assessee had undertaken deemed international transaction in the nature of BPO support services with non US AE’s and unrelated parties amounting to Rs.25,09,87,512/-. In this regard, the assessee has filed additional ground as per rule 29 of the Income-tax Rules and as per written synopsis he requested that total transaction which consists of 4.42% . If the MAP margin rate is applied then he will not press ground No.27-38 as per ground No. 26. The AR of the assessee relied on the 2 judgments cited (supra), respectfully following the above 2 judgments, the prayer of the assessee is accepted. Considering the argument of the ld.DR that the margins may be affected because of the geographical risks, the transaction undertaken by the assessee consisting of 4.42% was made in the European countries. Considering the objections of the ld.DR, the lower authorities have not given any findings in regard to margin will affect as per the geographical area. Respectfully following the judgment of the Hon’ble Bombay High Court of Bombay and the decision of the co-ordinate bench, we accept the prayer of the assessee and MAP rate shall be applied by the AO/TPO for the rest of the transitions of Rs.25,09,87,512/- which is 4.42% of the total transactions. Accordingly the ground No.26 is accepted and AO is directed to apply the MAP rate on the rest of the transactions for determination of the margin on the international transactions. Accordingly, the ground Nos.27 to 38 is dismissed as per the request of the assessee.
14. Now coming to the ground No.1 which relates inadvertent error in the service tax return. The AR of the assessee filed additional evidences which is placed on record. Considering to the issue involved and documents submitted by the assessee, we accept the prayer of the assessee and AO is directed to verify from the documents submitted by the assessee as additional evidences for the correct claim of the assessee. Further in support of MAT credit brought forward from the previous year, the AO is directed to verify the correct poison and give credit as per law. Further in support of ground No.3, the AO is directed to give credit after verifying all the documents as per law.
15. In the result, ground No.1 to 3 is allowed for statistical purposes.
16. The ground No.25 is consequential in nature. Hence does not require any adjudication.
17. In the result, the appeal of the assessee is partly allowed for
statistical purposes.
Order pronounced in the open court on 13th September, 2022.
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