Case Number: ITA 501/DEL/2021
Appellant: Genpact Consulting (Singapore) Pte. Ltd. (earlier known as ‘Headstrong Consulting Pte. Ltd.’), Gurgaon
Respondent: ACIT, Circle-2(1)(1) Int. Tax., New Delhi
Assessment Year: 2015-16
Order Type: Final Tribunal Order
Date of Order: June 13, 2022
Date of Pronouncement: June 13, 2022
Case Filed on: May 7, 2021
This appeal by the assessee, Genpact Consulting (Singapore) Pte. Ltd. (earlier known as ‘Headstrong Consulting Pte. Ltd.’), is preferred against the order dated March 30, 2021, framed under Section 263 of the Income Tax Act, 1961, pertaining to the assessment year 2015-16.
The primary grievance of the assessee is that the order passed by the Commissioner of Income Tax (International Taxation), New Delhi under Section 263 is without jurisdiction, bad in law, and void ab initio.
1. Appellant’s Grounds of Appeal:
The representatives of both sides were heard at length, and the case records were carefully perused. The assessee, a software and computer consultancy company, filed its return of income for the year under consideration on November 30, 2015, declaring NIL income. The return was selected for scrutiny assessment, and statutory notices were issued and served upon the assessee. The case was referred to the Transfer Pricing Officer (TPO) for evaluation.
During the scrutiny assessment proceedings, the AO issued multiple notices requesting details about the international transactions and the transfer of shares held by the assessee in Genpact India. The assessee provided comprehensive replies, including explanations of why the transactions did not result in taxable capital gains under Indian tax laws or the India-Singapore Double Taxation Avoidance Agreement (DTAA).
The AO conducted thorough inquiries and was satisfied with the explanations provided by the assessee. Consequently, the AO concluded that no adverse inference was warranted and accepted the returned income as NIL in the assessment order dated December 12, 2018.
Despite the AO’s satisfaction, the CIT issued a show cause notice under Section 263, alleging that the AO’s order was erroneous and prejudicial to the interests of the revenue. The CIT’s primary contention was that the AO had not made adequate inquiries regarding the non-deduction of TDS on the transportation charges paid by the assessee.
The Tribunal examined the case records and found that the AO had indeed conducted detailed inquiries during the assessment proceedings. The AO had verified the PAN details of the payees and concluded that the assessee had complied with the provisions of Section 194C(6) by obtaining the PAN from the parties to whom the payments were made. The Tribunal held that the CIT’s order under Section 263 was based on an incorrect assumption that the AO had not made proper inquiries.
The Tribunal also considered the judicial precedents cited by both parties. The Tribunal noted that in cases where the AO has taken one of the possible views after conducting an inquiry, the CIT cannot invoke Section 263 merely because he has a different opinion. The Tribunal emphasized that the power of revision under Section 263 can only be exercised when the AO’s order is both erroneous and prejudicial to the interests of the revenue.
In this case, the Tribunal found that the AO had made sufficient inquiries and taken a plausible view. Therefore, the AO’s order was neither erroneous nor prejudicial to the interests of the revenue. Consequently, the Tribunal set aside the CIT’s order under Section 263 and restored the AO’s assessment order.
The appeal of the assessee was allowed, and the order of the CIT under Section 263 was set aside. The AO’s assessment order dated December 12, 2018, was restored.
Final Judgment:
In the result, the appeal of the assessee is allowed.
The order is pronounced in the open court on June 13, 2022.
Signed by:
Shri N.K. Billaiya, Accountant Member
Ms. Astha Chandra, Judicial Member
Dated: June 13, 2022
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