The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the Advance Pricing Agreement is applicable only for the specified period not exceeding five consecutive previous years u/s.92CC(4) r.w. sub section (9A) of the Income Tax Act,1961.
The Revenue challenged the correctness of the CIT(A)’s action reversing assessment findings making Transfer Pricing adjustment(s) of Rs.3,51,21,912/- in the assessee’s back office support services segment. The CIT(A) admittedly appears to have gone by the assessee’s “advance pricing arrangement (APA)” dated 29.08.2016 with the CBDT adopting cost + 15% markup to reverse the TPO’s arm’s length price computation coming to 20.75%.
Shri Piyush Kumar Singh Yadav, counsel for the revenue contended that the said agreedmarkup applies from FYs 2011-12 to 2014-15 whereas the present case is of AY 2010-11 only.
M/s. AGS Customer Services India P.Ltd., the assessee has drawn strong support from the CIT(A)that the forgoing agreed markup would indeed carry persuasive value for all collateral purposes. Shri Ajit Kumar Jain & Shri Siddhesh Chaugule appeared for the assessee and relied on the CIT(A) order.
A Coram of Shri S S Godara, JM and Shri G D Padmahshali, AM observed that an advance pricing agreement “APA” is applicable only for the specified period not exceeding five consecutive previous years u/s.92CC(4) r.w. sub section (9A) of the Income Tax Act,1961.
Chapter X in the Act is like a “SPECIAL PROVISION RELATING TO AVOIDANCE OF TAX” i.e. an anti-avoidance measure introduced by the legislature and it was a settled law that the relevant provisions in the Act ought to be put to stricter interpretation only.
The Tribunal reversed the CIT(A)’s findings in an issue going against sec. 92CC(4) r.w.s.(9A) of the Act (supra) and direct him to re-decide all of the assessee’s grounds in the lower appeal afresh as per law. The Revenue’s appeal was allowed for statistical purposes.
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