The Tribunal dismissed the appeal and cross-appeal of Revenue Authorities and the Taxpayer respectively as the matter in dispute was resolved in MAP proceedings

Facts of the Case

Northern Operating Services Private Limited ["the taxpayer"] is an  Information Technology Enabled Services provider. For assessment year 2010-11, appeal and cross appeal were filed by the Revenue and the taxpayer respectively against the order of the Assessing Officer ["AO"] before Income-tax Appellate Tribunal ("the Tribunal").

Following grounds were raised by the Revenue before the Tribunal:

  • That the Dispute Resolution Panel ("DRP") erred in rejecting certain comparable companies citing that size and turnover of any company are reliable factors for treating it as an appropriate comparable; and
  • That the DRP erred in excluding companies on the basis of turnover being more than 200 crores.

The taxpayer, on the other side filed a cross-appeal against the order of the Revenue and raised the following objections:

  • That the lower tax authorities erred in objecting the application of upper limit of the turnover filter while selecting comparable companies without providing any empirical analysis; and 
  • That the DRP erred in not excluding a comparable company based on functionally dissimilar function.

Ruling of the Tribunal

Whilst the course of hearings before the Tribunal, the taxpayer submitted it had filed a Mutual Agreement Procedure ["MAP"] Application pursuant to the provisions of Indo-US DTAA with respect to its transfer pricing ["TP"] adjustments made by Indian tax authorities.  It was also submitted that the matter covered in MAP Application is the subject matter of the appeal before by the Tribunal.  I the light of the same, the Tribunal held that since the taxpayer agreed to the order passed by the Joint Commissioner Of Income Tax giving effect of the MAP order (passed based on the mutually agreed between the competent authorities of India and US), the grounds raised by the taxpayer as well as the Revenue before the Tribunal are infructuous and accordingly, dismissed.

Source:

Appeal: DCIT Vs M/s Northern Operating Services Private Limited [ITA (TP)A No. 112/Bang/2015]

Cross Appeal: M/s Northern Operating Services Private Limited Vs DCIT [IT(TP)A No. 210/Bang/2015 & Co. No.106/Bang/2015]

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