Trinit Advanced Software Labs Pvt ... vs Assessee

By this miscellaneous application, the assessee is seeking rectification of the mistake alleged to have crept in the order of the Tribunal dated 15.07.2011 passed in ITA.No.1129/Hyd/2005.

2. We have heard the arguments of both the parties and also perused the material on record.

3. The Learned Counsel for the Assessee has invited our attention to paragraph No.9 of the Tribunal Order dated 15.07.2011 (supra) whereby the issue relating to T.P. adjustment was restored by the Tribunal to the file of A.O. for deciding the same afresh as per the following directions :

2 MA.No.136/Hyd/2014 M/s. Triniti Advanced Software Labs P. Ltd., Secunderabad.

9. Firstly, in our opinion, comparison of assessee's price with the price of the M/s. WIPRO is not at all feasible. As submitted by the assessee's counsel, the assessee is a new entrant in the field and came into business in March, 2000 and being so the assessee is not in a position to charge at 22 USD per man hour as that of M/s. WIPRON is charging. M/s. WIPRO is a large industrial giant undertaking working independently with principles to principle relationship. On the other hand, the assessee is dependent contractor. The assessee has also stated before us that the billing rate changes depending upon the various factors as enumerated in the report of NASCOM which has been filed by the assessee before the CIT(A) and not considered the same as being additional evidence. There is a force in the arguments of the assessee's counsel. As we have observed earlier, the rate chargeable by M/s. WIPRO cannot be comparable to assessee's case. Being so, in our opinion, the Assessing Officer is required to bring on record the comparable case to determine the price. If the Assessing Officer is unable to bring on record the comparable case, the Assessing Officer is at liberty to consider the rate adopted by the assessee immediate next year and thereafter he is required to discount the same after considering the inflationary rate. Once he arrived at the discounted rate, there is no question of further giving any deduction towards any adjustment at 5%.

Accordingly, we direct the Assessing Officer to follow the CUP method as adopted by the assessee itself in this assessment year. However, he has to re-determine the TPO as per the above directions.

4. Learned Counsel for the assessee has also invited our attention to Rule 10B(4) of I.T. Rules, 1962 which reads as under :

"The data to be used in analysing the comparability of an uncontrolled transaction with an international transaction shall be the data relating to the financial year in which the international transaction has been entered into :

Provided that data relating to a period not being more than two years prior to such financial year may also be 3 MA.No.136/Hyd/2014 M/s. Triniti Advanced Software Labs P. Ltd., Secunderabad.

considered if such data reveals facts which could have an influence on the determination of transfer prices in relation to the transactions being compared."

5. Relying on the above Rule, he has submitted that the alternate direction given by the Tribunal to the Assessing Officer to consider the rate adopted by the assessee in the immediately next year by discounting the same is contrary to Rule 10C(4) as the said Rule does not permit use of data of subsequent years in analysing the comparability of uncontrolled transaction with an international transaction and this position clearly evident from the provisions of Rule 10B(4) is not disputed even by the learned D.R. In the various decisions cited by the Learned Counsel for the assessee, the Coordinate Benches of this Tribunal has also taken a consistent view relying on the provisions of Rule 10B(4) that the data of subsequent year/years cannot be used in comparability analysis. Keeping in view the clear and unambiguous provisions of Rule 10B(4) as further interpreted by the Tribunal in various decisions, we find merit in the contention of the learned Counsel for the assessee that there is a mistake of law in the order of the Tribunal in giving alternate direction to the Assessing Officer to consider the rate adopted by the assessee in the immediately next year for comparability analysis and the same being apparent from record, we rectify the same by deleting such alternate direction given by the Tribunal in paragraph No.9 (highlighted portion) of its order. To that extent, the order of the Tribunal dated 15.07.2011 is modified and the miscellaneous application of the assessee is allowed.

4 MA.No.136/Hyd/2014 M/s. Triniti Advanced Software Labs P. Ltd., Secunderabad.

6. In the result, miscellaneous application of the assessee is allowed.

Order pronounced in the open Court on 09.01.2015.

Sd/- Sd/- (ASHA VIJAYARAGHAVAN) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER

Hyderabad, Dated 09th January, 2015

VBP/-

Copy to

1. M/s. Triniti Advanced Software Labs P. Ltd., 301, Ashoka Myhome Chambers, S.P. Road, Secunderabad.

2. ACIT, Circle 2(3), Hyderabad.

3. CIT(A)-III, Hyderabad

4. CIT-II, Hyderabad.

5. D.R. I.T.A.T. "B" Bench, Hyderabad.