ITAT remits the protective adjustment issue back to AO to decide in the light of the MAP resolution [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi Bench remitted the protective adjustment issue back to AO to decide in the light of the MAP resolution dated 29th January 2018.

The assessee, BT Communications India Pvt. Ltd is a company engaged in the business of providing telecom services under ILD, ISP, and Voice Mail/Audiotex Services license and earns service revenues from the provision of such services. It filed its return of income on 29th November 2013 declaring total income. Since the assessee had entered into certain international transactions, the AO referred the matter to the TPO for the determination of ALP of the international transactions.

The TPO proposed an upward adjustment to the total income of the assessee. The AO accordingly, in the draft assessment order, passed on 20th December 2016 added the same to the total income of the assessee, which was further upheld by the DRP.

The assessee submitted that the only issue involved in the present appeal related to protective adjustment on account of business restructuring that has taken place in Assessment Year 2010-11.

It was further submitted that the TPO/DRP have made adjustments on substantive basis for the assessment year 2010-11. However, since proceedings in assessment year 2010-11 were subjudice, protective adjustment was made for assessment year 2013-14. He submitted that similar protective adjustments were also made for the assessment years 2011-12, 2012-13 and 2014-15.

The two-member bench of Judicial Member, Suchitra Kamble and Technical Member, R.K. Panda found that TPO/DRP have made adjustments on a substantive basis in the assessment year 2010-11. However, since the proceedings in the assessment year, 2010-11 were subjudice, the protective adjustment was made in the impugned assessment order making the addition of Rs.100,69,37,657 which is in line with similar addition for the assessment year 2011-12, 2012-13, and 2014-15.

“Under these circumstances, we deem it appropriate to restore the issue to the file of the AO/TPO for deciding the issue afresh in the light of the MAP resolution dated 29th January 2018 and the order passed by the DRP in assessee’s own case for the assessment year 2014-15 vide order dated 7th August 2018,” the tribunal said.