Case Number: ITA 782/DEL/2021
Appellant: Convergys India Services Pvt. Ltd., New Delhi
Respondent: DCIT, Circle-4(2), New Delhi
Assessment Year: 2016-17
Case Filed on: 2021-06-23
Order Type: Final Tribunal Order
Date of Order: 2022-08-01
Pronounced on: 2022-08-01
This case involves Convergys India Services Pvt. Ltd., a company based in New Delhi, and the Deputy Commissioner of Income Tax (DCIT), Circle-4(2), New Delhi. The appellant filed an appeal against the assessment order passed under Sections 143(3), 144C(13), and related provisions of the Income Tax Act, 1961, for the assessment year 2016-17.
The appellant was represented by Sh. K. M. Gupta, Advocate, and Ms. Shruti Khimta, AR, while the respondent was represented by Sh. Mahesh Shah, CIT DR, and Sh. Mrinal Kumar Das, Sr. DR.
The grounds of appeal as presented by the appellant were as follows:
The tribunal comprising Sh. Saktijit Dey, Judicial Member, and Dr. B. R. R. Kumar, Accountant Member, heard the case on July 20, 2022, and pronounced the order on August 1, 2022.
During the proceedings, the tribunal condoned the delay of 25 days in filing the appeal owing to reasonable cause (COVID-19). The appellant, Convergys India, a wholly-owned subsidiary of Concentrix CVG Customer Management Group Inc., USA, is engaged in providing IT-enabled customer care back-office support services. Ground Nos. 7, 8, 10, and 11 were not pressed by the appellant.
The DRP directed to allow the credit of 60 days, resulting in an addition of Rs. 16.24 lakhs on account of interest on outstanding receivables by taking 6 months LIBOR + 400 basis points. The tribunal noted that in a similar issue in the appellant’s own case for the A.Y. 2015-16, it was held that there is no need to benchmark the interest on receivables where the interest has not been charged from either party. The appeal on this ground was allowed.
The appellant claimed deduction amounting to Rs. 1,49,07,493/- under section 43B of the Act in its return of income in respect to discharge of liabilities taken over from Convergys Stream and Convergys Infowavz pursuant to their amalgamation with the appellant. The AO disallowed the claim, but the tribunal held that the appellant is eligible to claim the deduction under section 43B of the Act for such liabilities.
The appellant claimed MAT credit amounting to Rs. 99,61,130/- taken over from Convergys Infowavz pursuant to the amalgamation while computing its tax liability. The tribunal allowed the appeal on this ground, holding that the MAT credit being an asset of the earlier company would be available to the appellant for utilization.
The appellant acquired the entire shareholding of Digital Think for INR 9,41,43,377 for 3,88,974 shares. The AO proposed an addition of Rs. 31,00,122/- under section 56(2)(viia) of the Act. The tribunal, however, held that the valuation report provided by the independent chartered accountant was in accordance with prescribed rules and deleted the addition.
The tribunal directed that the credit for TDS and advance tax pertaining to Convergys Stream and Convergys Infowavz, which were taken over by the appellant, be allowed.
In conclusion, the tribunal allowed the appeal and dismissed the Stay Application as infructuous. The order emphasized the proper application of tax laws and procedures, providing relief to the appellant on multiple grounds.
Order pronounced in the open Court on 01/08/2022
Signed:
Saktijit Dey, Judicial Member
Dr. B. R. R. Kumar, Accountant Member
Assistant Registrar, ITAT, New Delhi
Convergys India Services Pvt. Ltd. vs. DCIT: Appeal on Assessment Order – ITA 782/DEL/2021
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