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CRM Services India Pvt. Ltd., 220, Vinobha Puri, Lajpat Nagar-II, New Delhi. Vs. ACIT, Circle-6(2), CR Building, New Delhi
October, 18th 2019
        IN THE INCOME TAX APPELLATE TRIBUNAL
              DELHI BENCH : I-1 : NEW DELHI

     BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER
                         AND
         SHRI KULDIP SINGH, JUDICIAL MEMBER
                              ITA No.6674/Del/2016
                             Assessment Year: 2012-13

CRM Services India Pvt. Ltd.,               Vs ACIT,
220, Vinobha Puri,                             Circle-6(2),
Lajpat Nagar-II,                               CR Building,
New Delhi.                                     New Delhi

PAN: AABCC6211B

       (Appellant)                                    (Respondent)

             Assessee by               :      Shri Neeraj Jain, Advocate &
                                              Shri Ramit Katyal, CA
             Revenue by                :      Shri Kumar Pranav, Sr. DR

             Date of Hearing       :           10.10.2019
             Date of Pronouncement :           18.10.2019

                                      ORDER

PER R.K. PANDA, AM:

       The appeal filed by the assessee is directed against the order dated

30.11.2016 passed u/s 143(3) r.w.s. 144C of the IT Act, 1961 relating to

assessment year 2012-13.


2.     Facts of the case, in brief, are that the assessee is a 99.99% owned subsidiary

of TPUSA Inc., USA and during the relevant previous year was engaged in
                                                                        ITA No.6674/Del/2016


running of voice based call centre facilities in Gurgaon (Haryana). It filed its

return of income on 29.11.2012 declaring total income of Rs.21,34,95,460/-. Since

the assessee had entered into international transactions with its associated

enterprise, the Assessing Officer made reference to the TPO for determining the

ALP of the international transactions entered into by it. The Transfer Pricing

Officer, vide order dated 29th January, 2016, passed u/s 92CA(3) of the Act has

done an upward adjustment of Rs.2,83,07,290/- while determining the ALP of the

international transaction. The Assessing Officer, therefore, asked the assessee to

explain why a sum of Rs.2,83,07,290/- should not be added to the taxable income

as done by the TPO.        Rejecting the explanations given by the assessee, the

Assessing Officer passed the draft assessment order on 4th March, 2016. The

assessee approached the DRP, who, vide order dated 18.10.2016, following its

order for assessment year 2009-10, directed the A.O./TPO to examine the facts and

allow part of the royalty expenditure in accordance with the directions of the DRP

for assessment year 2009-10.

3.    Aggrieved with such order of the A.O./TPO/DRP, the assessee is in appeal

before the Tribunal raising the following grounds:-

     "1. That the assessing officer / Dispute Resolution Panel (DRP) erred on facts
     and in law in completing the assessment under section 144C/143(3) of the
     Income-tax Act, 1961 (the Act') at an income of Rs, 24,18,02 750 as against
     income of Rs. 21,34,95,460 returned by the appellant.

     2. That the assessing officer/ DRP erred on facts and in law in making
     transfer pricing adjustment of Rs. 2,83,07,290 allegedly on account of
     difference in the arm's length price of the international transaction of payment

                                            2
                                                                     ITA No.6674/Del/2016


of royalty holding that the appellant was not required to pay royalty in respect
of services provided to the associated enterprise.

2.1 That the assessing officer/ DRP erred on facts and in law in holding that
in terms of `Intangible and Proprietary Property and Licensing agreement'
("the Agreement") dated 02-01-2002, royalty was required to be paid only on
the proportionate sales made to unrelated third parties.

2.2 That the assessing officer/ DRP erred on facts and in law in not
appreciating that the entire revenues of the appellant are from sale of services
to third parties - whether such third parties are direct customers of the assessee
or customers of the associated enterprise, and accordingly royalty was payable
on the total revenue.

2.3 Without prejudice, the assessing officer/ TPO erred on facts and in law in
making transfer pricing adjustment of Rs. 2,83,07,290, being the entire
amount of royalty paid to the associated enterprise, without giving effect to the
binding direction of the DRP of allowing part relief as directed in the DRPs
order for assessment year 2009-10, restricting the adjustment only to the
extent of royalty paid on sales made to the associated enterprise.

2.4 That the assessing officer/ TPO erred on facts and in law in allegedly
holding that the assessee has not submitted documentary evidence to verify
and compute proportionate adjustment of royalty expense as directed by the
DRP, when the entire details were already on record.

3. That the assessing officer/ TPO erred on facts and in law in making a
transfer pricing adjustment of Rs. 2,83,07,290 allegedly applying CUP method
for benchmarking the transaction of payment of royalty by undertaking cost
benefit analysis without placing on record any comparable data for
comparison.






3.1 That the assessing officer/ TPO erred on facts and in law in not
appreciating that the transaction of payment of royalty has already been
benchmarked applying TNM method as the most appropriate method and
accordingly, no adjustment is required to be made on this account.

3.2 Without prejudice, that the assessing officer/DRP erred on facts and in
law in not appreciating that the payment of royalty was made in respect of sale
of services to the customers of the associated enterprise in terms of the
agreement and was incurred wholly and exclusively for purposes of business.

The appellant craves leave to add, alter, amend or vary from the aforesaid
grounds of appeal before or at the time of hearing."



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                                                                    ITA No.6674/Del/2016


4.      At the time of hearing, the ld. counsel for the assessee filed an application

for filing additional evidence in terms of Rule 29 of the Income-tax (Appellate

Tribunal) Rules, 1963 in the shape of the following document:-

     "Addendum to Intangible and Proprietary Property and Licensing
     agreement by way of additional evidence."

5.      Referring to the copy of the order of the Tribunal in assessee's own case,

vide ITA No.432/Del/2016, order dated 15th July, 2019 for assessment year 2011-

12, he submitted that under identical circumstances the Tribunal has restored the

issue to the file of the A.O./TPO for deciding the issue afresh and in accordance

with the law in the light of the directions of the Tribunal.        He accordingly

submitted that he has no objection if the matter is restored to the file of the

A.O./TPO with similar directions as given in the immediately preceding

assessment year.

6.      The ld. DR, on the other hand, while supporting the order of the

A.O./TPO/DRP, fairly conceded that the Tribunal in assessee's own case in the

immediately preceding assessment year has restored the issue to the file of the

A.O./TPO. Therefore, he has no objection if the matter is restored to the file of the

A.O./TPO for adjudication of the issue afresh in the light of the directions of the

Tribunal in the immediately preceding assessment year.


7.      We have considered the rival arguments made by both the sides and

perused the orders of the A.O./TPO/DRP and the paper book filed on behalf of the


                                         4
                                                                         ITA No.6674/Del/2016


assessee. We find, the DRP, following the order of the DRP for assessment year

2009-10 has directed the A.O./TPO to examine the facts and allow part of the

royalty expenditure in accordance with the directions of the DRP for assessment

year 2009-10. We find the Tribunal, vide order passed for assessment year 2009-

10 had accepted the additional evidence filed by the assessee in respect of the issue

pertaining to ALP of royalty and restored the issue to the file of the A.O./TPO for

deciding the issue of royalty afresh after duly considering the agreement after

giving due opportunity to the assessee to present its case. We find, following the

order of the Tribunal for assessment year 2009-10, the Tribunal for assessment

year 2010-11 also restored the issue to the file of A.O./TPO. We find the Tribunal

in assessee's own case in the immediately preceding assessment year, following

the order for assessment year 2010-11 has restored the issue to the file of

A.O./TPO for deciding the issue afresh and in accordance with law by observing as

under:-

     "9.     We have considered the rival arguments made by both the sides and
     perused the orders of the A.O./TPO/DRP and the paper book filed on behalf of
     the assessee. We find, in the immediately preceding assessment year i.e.,
     2010-11, vide ITA No.1161/Del/2015, order dated 27th July, 2018, the
     Tribunal has restored the issue to the file of the A.O./TPO for fresh
     adjudication by observing as under:-

          "6. We have considered the submissions of both the parties and
          perused the material available on record. It is noticed that an identical
          issue having similar facts was a subject matter of the assessee's appeal
          for the earlier assessment years 2008-09 and 2009-10 in those years
          also assessee furnished the additional evidences as has been done in
          the year under consideration. This Bench of the ITAT in assessee's
          own case for the aforesaid assessment years 2008-09 and 2009-10
          while deciding the identical issue in ITA Nos. 5930/Del/2012 and
          1630/Del/2014 has restored the issue back to the file of the AO / TPO.

                                            5
                                                             ITA No.6674/Del/2016


The relevant findings have been given in para 7.1 to 9 which read as
under:-

  "7.1 As far as the assessee's plea regarding adjustment in
  respect of royalty is concerned, we have duly considered the
  assessee's application for admission of additional evidence
  which has been filed under Rule 29 of the Income Tax (Appellate
  Tribunal) Rules, 1963 and looking to the facts and
  circumstances, it is our considered opinion that this Addendum
  to the agreement goes to the very root of the matter and it will
  suitably assist the lower authorities did not have the benefit of
  examining this document, the matter has to be necessarily
  restored to the file of the Assessing Officer / TPO for deciding
  the issue of royalty afresh after duly considering this agreement
  and after giving due opportunity to the assessee to present its
  case. Accordingly, ground no. 17 in assessee's appeal for
  assessment year 2008-09 also stands allowed for statistical
  purposes.

  7.2 Since the Ld. AR has stated that if ground nos. 3 and 17 are
  decided in favour of the assessee, the other grounds will become
  academic in nature, we are not proceeding to hear the
  arguments of either of the parties on the remaining grounds at
  the present moment. We, however, note that the assessee will be
  at liberty to raise these grounds again before the Tribunal at a
  future date, if it is so required.






  8. In the result, the assessee's appeal ITA No. 5930/Del/2013
  stands partly allowed for statistical purposes in terms of our
  directions as contained in the preceding paragraphs.

  9. Coming to the assessee's appeal in ITA No. 1630/Del/2014,
  since we have already admitted additional evidence in respect of
  the issue pertaining to ALP of royalty in assessment year 2008-
  09, on identical reasoning, we admit additional evidence in this
  year as well. Since the lower authorities did not have the benefit
  of examining this document, the matter has to be necessarily
  restored to the file of the Assessing Officer / TPO for deciding
  the issue of royalty afresh after duly considering this agreement
  and after giving due opportunity to the assessee to present its
  case."

7. So respectfully following the aforesaid referred to order dated
14.5.2018 for the assessment years 2008-09 and 2009-10 in assessee's
own case. The issue under consideration in the present case relating to
payment of royalty is also set aside to the file of the AO / TPO to be

                                 6
                                                                       ITA No.6674/Del/2016


            adjudicated afresh in accordance with law by keeping in view the
            directions given in the aforesaid referred to order dated 14.5.2018."

     10.      Since the facts of the impugned assessment year are identical to the
     facts of the preceding assessment year, therefore, following the order of the
     Tribunal in assessee's own case for the immediately preceding assessment
     years, we restore the issue to the file of the A.O./TPO with a direction to
     decide the issue afresh and in accordance with the law in the light of the
     directions of the Tribunal. The ground of appeal No.2 raised by the assessee is
     accordingly allowed for statistical purposes."


8.      Following the consistent view taken by the Tribunal in assessee's own case

in respect of ALP of royalty, we restore the issue to the file of the A.O./TPO for

deciding the issue afresh in accordance with the law in the light of the directions of

the Tribunal. The grounds raised by the assessee are accordingly allowed for

statistical purposes.


9.      In the result, the appeal filed by the assessee is allowed for statistical

purposes.

        The decision was pronounced in the open court on 18.10.2019.

              Sd/-                                                         Sd/-

  (KULDIP SINGH)                                              (R.K. PANDA)
 JUDICIAL MEMBER                                          ACCOUNTANT MEMBER

Dated: 18th October, 2019

dk




                                            7
                                         ITA No.6674/Del/2016


Copy forwarded to

1.   Appellant
2.   Respondent
3.   CIT
4.   CIT(A)
5.   DR
                        Asstt. Registrar, ITAT, New Delhi




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