Case Number: ITA 620/DEL/2019
Appellant: Addl. Special Range-1, New Delhi
Respondent: Axis Risk Consultancy Services Pvt. Ltd., New Delhi
Assessment Year: 2012-13
Result: 2012-13
Case Filed On: 2019-01-29
Order Type: Final Tribunal Order
Date of Order: 2022-11-23
Pronounced On: 2022-11-23
The case of Axis Risk Consultancy Services Pvt. Ltd. vs Addl. Special Range-1 in the Income Tax Appellate Tribunal (ITAT) for the assessment year 2012-13 centers around a transfer pricing adjustment dispute. This article provides a detailed analysis of the case, the proceedings, and the final judgment that led to the dismissal of the Revenue’s appeal due to low tax effect.
Axis Risk Consultancy Services Pvt. Ltd., a wholly-owned subsidiary of Genpact India Holdings, Mauritius, which in turn is ultimately held by Genpact Ltd., Bermuda, is engaged in the business of providing risk consultancy, advisory, and risk assurance services. For the assessment year 2012-13, the company filed its income tax return on 30.09.2012, declaring a total income of Rs. 24,62,85,760/-. The case was selected for scrutiny and was referred to the Transfer Pricing Officer (TPO) for the computation of Arms Length Price (ALP) in relation to the international transactions.
The TPO, in an order dated 25.02.2016, made a transfer pricing adjustment of Rs. 4,24,02,911/- on account of interest on outstanding receivables. The Assessing Officer (AO) completed the assessment under section 144C (3) read with section 143(3) on 22.03.2016, incorporating the transfer pricing adjustment.
The assessee moved an application under section 154 of the Income Tax Act, 1961, for rectification of errors in the TPO’s order. The TPO, in a subsequent order dated 13.07.2016, revised the transfer pricing adjustment to Rs. 1,26,66,468/-. Following an appeal by the assessee, the CIT(A) further reduced the transfer pricing adjustment to nil in an order dated 01.11.2018.
The Revenue, dissatisfied with the CIT(A)’s order, filed an appeal with the ITAT. The primary ground of appeal was whether notional income on account of delayed payments made by the Associated Enterprise (AE) could be treated as part of the income and subjected to transfer pricing adjustment.
The ITAT Bench, comprising Shri Shamim Yahya, Accountant Member, and Ms. Astha Chandra, Judicial Member, heard the case. The hearing took place on 28.07.2022, and the order was pronounced on 23.11.2022.
During the proceedings, the assessee’s representatives, Shri S.S. Tomar and Shri Ankit Sahani, argued that the transfer pricing adjustment considered by the TPO in his order was incorrect. They further argued that the correct tax effect of the impugned appeal was below the monetary limits prescribed by the Central Board of Direct Taxes (CBDT) for filing appeals by the Revenue. The assessee demonstrated that the correct tax effect in the impugned appeal was Rs. 41,09,636/-, contrary to the Revenue’s computation of Rs. 1,43,74,587/-.
The Revenue, represented by Shri Mrinal Kumar Das, Senior Departmental Representative (Sr. DR), did not object to the assessee’s submission regarding the low tax effect.
After considering the submissions and examining the records, the ITAT agreed with the assessee’s contention that the correct tax effect was below the prescribed monetary limits for filing an appeal. Consequently, the ITAT dismissed the Revenue’s appeal due to the low tax effect.
In conclusion, the ITAT’s decision in the case of Axis Risk Consultancy Services Pvt. Ltd. vs Addl. Special Range-1 for the assessment year 2012-13 highlights the importance of adhering to prescribed monetary limits for filing appeals. The dismissal of the Revenue’s appeal due to low tax effect underscores the need for accurate computation and consideration of tax effects before pursuing litigation. This case serves as a reference for similar disputes, emphasizing the significance of following CBDT guidelines in transfer pricing adjustments and related appeals.
Order pronounced in the open court on 23.11.2022 by the Accountant Member Shri Shamim Yahya and the Judicial Member Ms. Astha Chandra.
Source: Income Tax Appellate Tribunal Delhi Bench “I”, New Delhi
Disclaimer: This article provides a general overview of the case and is not a substitute for professional legal advice. For detailed information, readers are encouraged to refer to the official case documents and consult with a qualified legal professional.
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform