Case Number: ITA 801/DEL/2021
Appellant: Mavenir India Pvt. Ltd. (earlier known as Comverse Network System India Pvt. Ltd.), Gurgaon
Respondent: Deputy Commissioner of Income Tax (DCIT), Circle-3(1), Gurgaon
Assessment Year: 2016-17
Case Filed on: 2021-06-28
Order Type: Final Tribunal Order
Date of Order: 2022-05-17
Pronounced on: 2022-05-17
This case involves Mavenir India Pvt. Ltd., formerly known as Comverse Network System India Pvt. Ltd., which filed an appeal against the Deputy Commissioner of Income Tax (DCIT), Circle-3(1), Gurgaon. The appeal challenges the transfer pricing adjustments made by the DCIT for the assessment year 2016-17. The adjustments were made following the directions of the Dispute Resolution Panel (DRP).
The appellant raised several grounds of appeal:
The case was heard by the Income Tax Appellate Tribunal (ITAT) Delhi Bench “I-1” with Shri Saktijit Dey, Judicial Member, and Shri Anadee Nath Misshra, Accountant Member, presiding over the matter. The appellant was represented by S/Shri G.C. Srivastava, Adv., Mayank Patawari, CA, and Kalrav Melhotra, Adv., while the respondent was represented by Shri Surender Pal, CIT (DR).
The Registry pointed out a delay of 25 days in filing the appeal. The appellant sought condonation of the delay, citing the COVID-19 pandemic and the Supreme Court’s order extending the period of limitation. The learned Departmental Representative did not oppose the condonation, and the tribunal admitted the appeal.
The appellant objected to certain comparables selected by the TPO. The tribunal confined its decision to these specific comparables:
The appellant argued that this company is functionally different, primarily earning commission income as an agent for foreign principals. The tribunal agreed, excluding it as a comparable.
The appellant objected to this company due to insufficient information in the public domain and its supernormal profit. The tribunal excluded it as a comparable.
The appellant argued that this company operates in internet-based services and has significant intangible assets and advertising expenses. The tribunal excluded it as a comparable.
The appellant argued that this company provides offshore recruitment and staffing solutions, functionally different from the appellant’s services. The tribunal excluded it as a comparable.
The tribunal directed the AO to re-examine the margin computation of three comparables (Sasken Network Engineering Ltd., Himachal Futuristic Communications Ltd., and Cameo Corporate Services Ltd.) after providing the appellant an opportunity to be heard.
The tribunal restored the issue of transfer pricing adjustment for management services to the AO for reconsideration, following the decisions in the appellant’s previous assessment years.
The tribunal restored the issue of disallowance of deduction under Section 10AA to the AO for fresh adjudication, directing the AO to verify the fulfillment of conditions for the deduction.
The tribunal directed the AO to verify and grant the TDS credit claimed by the appellant and dismissed the grounds related to interest computation and penalty proceedings as either consequential or premature.
The ITAT partially allowed the appeal, directing the AO to re-examine the comparables and TDS credits, and to reconsider the transfer pricing adjustment for management services and the disallowance of deduction under Section 10AA. The case underscores the importance of accurate comparability analysis and adherence to procedural requirements in transfer pricing and tax assessments.
Order pronounced in the open court on 17/05/2022
Signed:
Saktijit Dey, Judicial Member
Anadee Nath Misshra, Accountant Member
Assistant Registrar, ITAT, New Delhi
Mavenir India vs. DCIT Gurgaon: Challenging Transfer Pricing Adjustments – ITA 801/DEL/2021
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