Safe Harbour Rates and Margins apply only if an Assessee has Opted for them: Delhi HC [Read Order]

The Delhi High Court has held that safe harbour rates and margins apply only if an assessee has opted for them.

 Mr Bhatia appeared for the revenue and stated that the Tribunal has ruled in favour of the respondent/assessee in AYs 2007-08 and 2008-09. However, Mr Neeraj Jain, counsel for the respondent/assessee, says that no appeal has been preferred.

The respondent/assessee, Global Logic India Limited is in the business of providing software development services. The two comparables i.e., Wipro Technologies Services Ltd. and Infosys Ltd. are in the business of not only software development services but also in the sale of software products. 

Since according to the Tribunal the segmental information was not available, the comparables were ordered to be excluded. It was evident that there is no error in the approach adopted by the Tribunal, which is otherwise in line with the view taken by the coordinate bench.  

A division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia observed that the Tribunal has adverted to the notification dated 18.09.2013. This notification, on the face of it, can have no application in the instant case, as the period in issue is AY 2011-12.  

It was noted that the guidelines issued by the CBDT dated 20.12.2013 made it clear that safe harbour rates and margins would apply only if an assessee has opted for them.  Further held that the safe harbour rules don’t have retrospective application.   The appeal is closed as no substantial question of law arises for consideration. 

To Read the full text of the Order CLICK HERE

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