Income Tax Appeal v. B. D. Prithiani

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 821 OF 2018 Pr. Commissioner of Income Tax-10…Appellant Versus J. P. Morgan Services India Pvt. Ltd.…Respondent ****** Mr. Suresh Kumar for the Appellant. Mr. Porus F. Kaka, Senior Advocate a/w Mr. Divesh Chawla i/byMr.Atul K. Jasani for the Respondent. ****** CORAM: DHIRAJ SINGH THAKUR AND ABHAY AHUJA, JJ. DATE : 12[th] AUGUST, 2022 P.C. (Per Abhay Ahuja, J.) :- .This is an appeal filed under Section 260-A of the Income TaxAct, 1961 (‘the Act’) by the revenue for the assessment year 2009-10impugning the order dated 31[st] January, 2017 passed by the Tribunalpartly allowing assessee’s appeal. The revenue has proposed thefollowing questions as substantial questions of law : “6.1Whether on the facts and circumstances of the case andin Law, the Tribunal was correct in directing the AO/TPO toadopt 15.32% as the Arm's Length Margin for transactionswith the non US associated enterprises as against the marginof 39.20% taken by the AO/TPO based only on marginsdecided in MAP proceedings concluded by the Indiancompetent authority with the USA competent authority,ignoring the fact that agreement under MAP is based onnegotiations between competent authorities reach a set ofterms which are acceptable to both the competent authorities,whereas arm's length price is to be determined in other casesin accordance with the Indian transfer pricing regulations? 6.2Whether on the facts and circumstances of the case andin Law, the Tribunal was correct in directing the AO/TPO toadopt 15.32% as the Arm's Length Margin for transactionswith the non US associated enterprises, based purely on MAPproceedings concluded with the USA competent authority,even though MAP proceedings are country specific andcannot, therefore, be applied directed to transactions withenterprises in other jurisdictions? 6.3Whether on the facts and circumstances of the case andin Law, the Tribunal was justified in holding that interestincome is business income ignoring the fact that this incomewas derived from Fixed Deposits and not from the businessof the undertaking?" 2.Learned counsel for the parties are ad-idem that question nos. 6.1and 6.2 as proposed are similar and that the proposed questions arecovered by the decisions of this Court in the assessee’s own case forearlier assessment years. 3.With respect to questions 6.1 and 6.2 pertaining to the MutualAgreement Procedure (MAP) proceedings, Mr. Porus Kaka, learnedsenior counsel for the respondent company would submit that this issueis covered against the revenue in the assessee’s own case for theassessment years 2005-06, 2006-07, 2007-08 and 2008-09. He submitsthat the SLP filed by the revenue for assessment year 2008-09 (ITA No.662 of 2017) in respect of this question has been dismissed on 7[th]February, 2020. He also draws the attention of this Court to paragraph8 of the impugned order to submit that the Tribunal after consideringthe view of the co-ordinate bench that there was no distinction betweenthe services rendered by the assessee to the US and non-US entitieswith respect to the tested transactions relying upon the decisions of theTribunal in the assessee’s own case, where there is a complete itxa-821.18.docsimilarity of facts for the assessment years 2006-07 and 2007-08 hasdirected the Assessing Officer to adopt the MAP approved margin of15.32% for assessment year 2009-10 for bench marking theinternational transactions of rendering ITE services to non-USassociated enterprises. Learned senior counsel further submits that theAdvance Pricing Agreement (APA) dated 28[th] March, 2018 entered intobetween the Central Board of Direct Taxes (CBDT) and the assesseeclearly records that the outcome agreed under the Mutual Agreementwith US for assessee’s international transactions with US AssociatedEnterprises (AEs) would also be applied to its transactions with non-US AEs and as such the same has been accepted by the revenue for allsubsequent years. 4.With respect to question 6.3, learned senior counsel submits thatthis question is also covered against the revenue by the decisions ofthis Court in the assessee’s own case for the assessment years 2007-08and 2008-09 and as mentioned the revenue had filed SLP against theorder in assessment year 2008-09 (ITA No. 662 of 2017) which asstated earlier, came to be dismissed on 7[th] February, 2020 concludingthis issue as well in favour of the assessee. 5.He submits that therefore, the questions as proposed do not raiseany substantial question of law and the appeal be dismissed. 6.Having heard Mr. Porus Kaka, learned senior counsel as well asMr. Suresh Kumar, learned counsel for the revenue and with their ableassistance having perused the relevant orders, agreement and theproceedings in the matter, we are of the view that the questions asproposed are conclusively covered in favour of the assessee and against itxa-821.18.doc the revenue as mentioned above. The issues having been concluded inthe previous years in the assessee’s own case and the revenue beingsignatory to the APA as noted above, it would not be open to therevenue to re-agitate covered issues. The Appeal therefore does notraise any substantial question of law and is dismissed. No costs. [ABHAY AHUJA, J.] [DHIRAJ SINGH THAKUR, J.] Digitally signedby BIPINBIPINDHARMENDERDHARMENDERPRITHIANIPRITHIANIDate:2022.08.1810:51:24 +0530