IBM India (P) Ltd. v. Asstt. CIT [IT(TP)A No.
725/Bang/2018, dt. 31-7-2020] : 2020 TaxPub(DT) 3023 (Bang.-Trib.)
APA roll back on IT/ITES services and claim of section 10AA
SEZ benefit thereon
Facts:
Assessee entered into an Advance Pricing Agreement (APA)
under section 92CC with CBDT on 29-12-2016 whereby its margin on its IT/ITES
services stood affirmed at a certain percentage. As part of the roll back
facility available under APA (within its legal limitations), the assessee
invoked the APA and offered the difference in the ALP for the assessment year
2013-14, besides claiming benefit of section 10AA thereafter on enhanced ALP.
This claim of assessee under section 10AA did not meet eye of the assessing
officer and DRP. Aggrieved assessee knocked doors of ITAT -
Held in favour of the assessee that they were entitled to
the benefit of section 10AA on the post APA enhanced ALP.
Applied : Dar Al
Handasah Consultants (Shair & Partners) India Private Limited v. DCIT, [ITA
No. 1413/PUN/2019/Assessment Year 2010-11/Pune ITAT/Dated 2-12-2019] : 2019
TaxPub(DT) 7929 (Pune-Trib)
The principle held by ITAT are --
1. Once APA is signed the said
APA pricing becomes ALP.
2. A revised return is to be
filed by assessee which would substitute in lieu of the earlier return for all
legal purposes.
3. Benefits which accrue on the
original return should accrue to assessee in the same manner thereafter on the
post APA filed return.
4. The time duration to
repatriate the money to India of the APA price minus erstwhile AE pricing will
be as per APA. That limitation imposed for repatriation as per APA cannot be
read so as to dilute time limits imposed in section 10A for repatriation as
well. In section 10AA the provision of repatriation is even more liberal by
permitting offshoring it in a foreign bank account with RBI permission as this
decision also discussed that point elsewhere.
5. With ALP increase post APA
the deduction under section 10AA also stands enhanced by a similar amount
thereby making it tax neutral.
Editorial Note: The above
principle in para materia would apply for Mutual Agreement
Procedure (MAP) proceedings as held recently in Dell International Services
India Private Limited v. DCIT [IT(TP)A No. 879/Bang/2018/Assessment Year
2007-08/Bangalore ITAT/Dated 24-6-2020] : 2020 TaxPub(DT) 2644 (Bang-Trib).