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Tax Publishers 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).

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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).