The Pr. Commissioner of Income-tax-4, Pune v. Visteon Engineering Centre (India) Pvt. Ltd
[Citation -2019-LL-0903-72]

Citation 2019-LL-0903-72
Appellant Name The Pr. Commissioner of Income-tax-4, Pune
Respondent Name Visteon Engineering Centre (India) Pvt. Ltd.
Court HIGH COURT OF BOMBAY
Relevant Act Income-tax
Date of Order 03/09/2019
Assessment Year 2009-10
Judgment View Judgment
Keyword Tags transfer pricing adjustment • related party transactions • international transaction • risk adjustment • ae transaction • super profits • comparables • arm length price
Bot Summary: M/s. Sandvik Asia Pvt. Ltd., dated 26th April, 2018; In fact, the impugned order of the Tribunal has placed reliance upon the order of the Co-ordinate bench of the Tribunal in the case of M/s. Sandvik Asia to hold that the Transfer Pricing adjustment has to be done only in respect of related party transactions and not on all transactions. We shall deal with the exclusion of each of the two so-called comparable separately as under:- I M/s. Genesys:- The impugned order of the Tribunal excluded M/s. Genesys from the list of comparable while bench marking the Arms Length Price of the Respondent s activity of providing of IT based engineering services related to developing CAD/CAM of Auto Parts made available to its Associate Enterprises; The impugned order of the Tribunal noted that functionally M/s. Genesys was different from the Respondent. The impugned order placed reliance upon its order dated 21st October, 2015 in respect of the same Respondent for A. Y. 2008-09 to discard M/s. Genesys from the list of comparables. M/s. Visteon Engineering Centre; In fact, today we dismissed the Revenue s above appeal being Income Tax Appeal No. 1366 of 2017 relating to the same Respondent-Assessee for the Assessment Year 2008-09 on an identical issue. For the reasons in the above order passed today in S.R.JOSHI 3 of 5 ::: Uploaded on - 09/09/2019 ::: Downloaded on - 10/09/2019 10:14:47 ::: itxa-411-2017 Income Tax Appeal No.1366 of 2017, no substantial question of law arises in excluding M/s. Genesys from the list of comparables. II M/s. Cosmic Global Ltd., The impugned order of the Tribunal records the fact that, functionally M/s. Cosmic Global Ltd., is different from the Respondent-Assessee. M/s. Cosmic Global stands excluded from the list of comparables by virtue of fact that it is functionally different from the Respondent.


IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 411 OF 2017 Pr. Commissioner of Income Tax-4, Pune .. Appellant. v/s. M/s. Visteon Engineering Centre (India) Pvt. Ltd., .. Respondent. Mr. Sham Walve with Mr. Pritish Chatterjee, for Appellant. CORAM: M.S.SANKLECHA & NITIN JAMDAR, JJ. DATE : 3rd SEPTEMBER, 2019. P. C:- This Appeal under Section 260-A of Income Tax Act, 1961 (the Act), challenges order dated 11 th April, 2016 passed by Income Tax Appellate Tribunal (the Tribunal). impugned order dated 11th April, 2016 is in respect of Assessment Year 2009-10. 2 Revenue urges following questions of law, for our consideration: (a) Whether on facts and in circumstance of case and in law, Tribunal was justified in law in directing AO/TPO to make transfer pricing adjustment in respect of international transaction only and not on entire sales without considering fact that assessee had failed to prove that margin of profit of AE transaction is same as margin of profit of non-AE transaction? (b) Whether on facts and in circumstances of case and in law, Tribunal was justified in directing TPO to exclude Genesys International Corporation Ltd. And Cosmic Global Ltd., from set of comparables without considering that assessee had failed to prove that said comparable did not satisfy specific conditions prescribed in Rule 10B(2)? S.R.JOSHI 1 of 5 ::: Uploaded on - 09/09/2019 ::: Downloaded on - 10/09/2019 10:14:47 ::: itxa-411-2017 (c) Whether on facts and in circumstances of case and in law, Tribunal was justified in excluding Cosmic Global Ltd. as comparable without appreciating that earning high profits cannot be ground for excluding company as comparable in view of Delhi High Court s decision in case of Chryscapital Investment Advisors (India) Pvt. Ltd. v/s. DCIT [TS-HC-2015(Delhi)-TP] (d) Whether on facts and in circumstances of case and in law, Tribunal was justified in directing to grant risk adjustment without appreciating that assessee has failed to show why risk adjustment is warranted by demonstrating link of risk with financial results of comparable? 3 Re. Question (a):- (i) Mr. Walve, learned Counsel for Revenue very fairly states that issue raised herein stands concluded against Revenue and in favour of Respondent-Assessee by decision of this Court in Pr. CIT v/s. M/s. Sandvik Asia Pvt. Ltd., (Income Tax Appeal No.1088 of 2015) dated 26th April, 2018; (ii) In fact, impugned order of Tribunal has placed reliance upon order of Co-ordinate bench of Tribunal in case of M/s. Sandvik Asia (supra) to hold that Transfer Pricing adjustment has to be done only in respect of related party transactions and not on all transactions. This view of Tribunal has been upheld by this Court in M/s. Sandvik Asia (supra). (iii) Thus, for reasons given by us in M/s. Sandvik Asia (supra), this question does not give rise to any substantial question of law. Thus, not entertained. 4 Re. Question (b):- This question involves exclusion of two companies i.e. M/s. Genesys International Corporation Ltd., (Genesys) and M/s. Cosmic S.R.JOSHI 2 of 5 ::: Uploaded on - 09/09/2019 ::: Downloaded on - 10/09/2019 10:14:47 ::: itxa-411-2017 Global (Cosmic). We shall, therefore, deal with exclusion of each of two so-called comparable separately as under:- I M/s. Genesys:- (i) impugned order of Tribunal excluded M/s. Genesys from list of comparable while bench marking Arms Length Price (ALP) of Respondent s activity of providing of IT based engineering services related to developing CAD/CAM of Auto Parts made available to its Associate Enterprises (AE); (ii) impugned order of Tribunal noted that functionally M/s. Genesys was different from Respondent. Therefore, , would not be appropriate comparable. In fact, impugned order placed reliance upon its order dated 21st October, 2015 in respect of same Respondent for A. Y. 2008-09 to discard M/s. Genesys from list of comparables. This after recording that there is no change in business profile of two companies in subject Assessment Year from that in Assessment Year 2008-09; (iii) Being aggrieved by order dated 21st October, 2015 of Tribunal for Assessment Year 2008-09, Revenue filed appeal to this Court being Pr. CIT v/s. M/s. Visteon Engineering Centre (Pvt. Ltd.) (Income Tax Appeal No.1366 of 2017); (iv) In fact, today we dismissed Revenue s above appeal being Income Tax Appeal No. 1366 of 2017 relating to same Respondent-Assessee for Assessment Year 2008-09 on identical issue. As Revenue is not able to show any distinction in facts and/or law in Assessment Years 2008-09 and 2009-10, we see no reason to take different view. (v) Therefore, for reasons in above order passed today in S.R.JOSHI 3 of 5 ::: Uploaded on - 09/09/2019 ::: Downloaded on - 10/09/2019 10:14:47 ::: itxa-411-2017 Income Tax Appeal No.1366 of 2017, no substantial question of law arises in excluding M/s. Genesys from list of comparables. II M/s. Cosmic Global Ltd., (i) impugned order of Tribunal records fact that, functionally M/s. Cosmic Global Ltd., is different from Respondent-Assessee. It noted that M/s. Cosmics Global Ltd., is engaged in BPO providing services while Respondent-Assessee is engaged in providing Information Technology Enabled (ITE) Services. It also records finding that, M/s. Cosmic Global Ltd., had out-sourced services which it provides unlike Respondent who used their own engineers to provide services.Thus, found on fact that, M/s. Cosmic would not be comparable; (ii) above finding of fact is not shown to be perverse in any manner to give rise to any substantial question of law; (iii) In above view, this question relating to exclusion of M/s. Genesys and M/s. Cosmic Global from list of comparable does not give rise to any substantial question of law. Thus, not entertained. 5 Re. Question (c):- (i) In view of our answer to question (b), this question become academic. M/s. Cosmic Global stands excluded from list of comparables by virtue of fact that it is functionally different from Respondent. Thus, question of exclusion of M/s. Cosmic Global Ltd., on account of super profits become academic; (ii) In above view, question (c) does not give rise to any substantial question of law. Thus, not entertained. S.R.JOSHI 4 of 5 ::: Uploaded on - 09/09/2019 ::: Downloaded on - 10/09/2019 10:14:47 ::: itxa-411-2017 6 Re. Question (d):- (i) impugned order of Tribunal allows Respondent s appeal by way of remand to Assessing Officer to examine issue of risk adjustment while arriving at ALP. In fact, it follows its earlier order dated 21st October, 201 in respect of Assessment Year 2008-09 in respect of same Respondent; (ii) Revenue being aggrieved by order dated 21st October, 2015 passed by Tribunal in respect of Assessment Year 2008-09, had filed appeal to this Court being Visteon Engineering Centre (supra) (Income Tax Appeal No. 1336 of 2017). Today, by separate order, we dismissed Revenue s above appeal on this very issue. In absence of any change in facts and/or law being pointed out to us, we are following our order passed today in Income Tax Appeal No. 1336 of 2017; (iii) Therefore, for reasons indicated in our order passed today in Income Tax Appeal No. 1336 of 2017 in respect of same Respondent, question as proposed does not give rise to any substantial question of law. Thus, not entertained. 7 Accordingly, Appeal dismissed. (NITIN JAMDAR,J.) (M.S.SANKLECHA,J.) S.R.JOSHI 5 of 5 Pr. Commissioner of Income-tax-4, Pune v. Visteon Engineering Centre (India) Pvt. Ltd
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