BANDO INDIA PVT. LTD.,GURGAON V. ITO, WARD- 1(3), GURGAON

ITA 606/DEL/2018

AI Insights

The case involves Bando India Pvt. Ltd., which appealed against the final assessment order passed by the Assessing Officer for the Assessment Year 2013-14. The primary contention was regarding the disallowances made on royalty payments, FTS, and service agreement fees by the TPO. The Tribunal noted that similar payments had been made in the previous year and were allowed, emphasizing the need for consistency in the Revenue's approach. The Tribunal dismissed the legal grounds not pressed by the assessee and focused on the merits of the case, particularly the treatment of international transactions and the application of transfer pricing regulations.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 315779 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2013-2014
• Other Referred Cases: Radhasoami Satsang Vs Commissioner Of Income, Cairn U.K Holdings Limited vs Director Of Income-Tax
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JADHAV
• Assessee Lawyers: ARUN KISHORE; ALOK SURI
• Keywords: Transfer pricing; International transaction; Depreciation
• Section: 147; 143(3); 142(1); 263

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘H’: NEW DELHI BEFORE SHRI PRAKASH CHAND YADAV, JUDICIAL MEMBER AND SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER ITA No.606/DEL/2018 [Assessment Year: 2013-14] Bando India Pvt. Ltd. Plot No.436, Sector-8, IMT Manesar, Gurgaon, Haryana-122050 Vs The Income Tax Officer, Ward-1(3), Vanijya Nikunj, HSIIDC Building, 5th Floor, Udyog Viohar, Phase-V, Gurgaon, Haryana- PAN-AACCB2994D Appellant Respondent Appellant by Shri Arun Kishore, CA & Shri Alok Suri, CA Respondent by Shri S K Jadhav, CIT-DR Date of Hearing 06.05.2025 Date of Pronouncement 16.05.2025 ORDER PER PRAKASH CHAND YADAV, JM The present appeal of the assessee is arising out of the order of the Ld. Assessing Officer dated 27.11.2017 and relates to Assessment year 2013-14. 2. Brief facts of the case as coming out of the orders of the authorities below are that the assessee company filed its return of income declaring a loss of Rs.(-)16,09,639/- on 30.11.2013. The return of income filed by the assessee was selected for scrutiny and statutory notices u/s 143(2) and 142(1) were issued to the assessee. Since, international transactions were 2 ITA No.606/Del/2018 involved in this case, a reference was made to the Transfer Pricing Officer (in short ‘TPO’) on 04.02.2016. The TPO after making certain adjustments, passed the order. Thereafter, the assessee filed its objection before the learned Dispute Resolution Panel (in short ‘DRP') and assailed the draft assessment order passed by the Assessing Officer. The ld. DRP could not find any force in the submission of the assessee and dismissed the objections of the assessee. However, the ld. DRP allowed 50% depreciation with respect to the service agreement fees capitalised by the assessee in its books of accounts. The Assessing Officer passed the final assessment order. 3. Aggrieved with the order of the Assessing Officer, the assessee has come up in appeal before us and challenged the orders of the authorities below on merits as well as on legal ground. The assessee has raised the legal issue by way of additional grounds. However, at the time of hearing, the ld. Counsel for the assessee did not press these legal grounds and hence these legal grounds are dismissed as not pressed. 4. So far as the grounds of appeal related to the merits of the case are concerned, the ld. Counsel for the assessee pointed out that basically, three disallowances have been made by the TPO. A. Disallowance of royalty payments amounting to Rs.49,85,420/- B. Payment of FTS amounting to Rs.17,02,912/- C. Disallowance of Rs.29,93,920/- being service agreement fees. 5. The ld. Counsel for the assessee at the outset, argued that so far as the disallowance of royalty is concerned, the TPO has erred in determining 3 ITA No.606/Del/2018 the value of royalty at NIL on the ground that no benefits have been accrued to the assessee as a result of the payments of royalty. Similarly, for the FTS also, the TPO has held that no fruitful results have been obtained by the assessee. The ld. Counsel for the assessee further argued that the assessee has paid royalty in previous year also, assessment of which year has been completed u/s 143(3) of the Act and no action u/s 147 or 263 has ever been taken by the Revenue. The same arguments were raised for FTS also. 4. The ld. Ld. DR relied upon the orders of the authorities below and contended that each year is a separate year and principle of res-judicata are not applicable to the tax proceedings. 5. We have heard the rival submissions and perused the materials available on record. It is true that principle of res-judicata is not applicable to the tax proceedings. However, it is equally true that there has to be consistent in the approach of the Revenue. We observe that similar type of payments of royalty and FTS have been made by the assessee in previous year, assessment of which year has been completed u/s 143(3) of the Act. When the Bench raised a query from the ld. Counsel for the assessee with regard to the term of agreement, in pursuance of which, the royalty and FTS have been paid, the ld. Counsel for the assessee pointed out that the same agreement was there for AY 2012-13 also and admissible for the impugned year. This has not been controverted by the ld. Sr. DR. Therefore, we are of the view that in view of principle of consistence as propounded by the Hon’ble Supreme Court in the case of Radhasoami Satsang Vs Commissioner Of Income reported in 193 ITR 321 (SC). 4 ITA No.606/Del/2018 Similarly, the Hon’ble Delhi High Court in the case of Cairn U.K Holdings Limited vs Director Of Income-Tax reported in 359 ITR 268 (Del.) has held that there has to be consistency, uniformity and certainty in the approach of the Revenue. Relevant observations of the Hon’ble Jurisdictional High Court are extracted below. “There is another aspect which should be taken into consideration and not ignored. Decision in the case of Timkin France SAS (Supra) was pronounced on 1st October, 2007, which has been followed by AAR in several cases over the last 3-4 years. Several decisions of AAR have been accepted by the Revenue on merits. We are informed that there are six such decisions and only in one case Revenue has challenged the decision of AAR. The decision of AAR in the present case dated 1st August, 2011, taking a diametrically reverse view has brought about an uncertainty in understanding the impact and the effect of the proviso to Section 112(1). Certainty is integral to rule of law. Certainty and stability form the basis foundation of any fiscal laws. Highlighting this fact in Vodafone International Holding B.V. Vs. Union of India, (2012) 341 ITR 0001, the Supreme Court has observed that foreign direct investment flows towards a location with a strong governance infrastructure which includes enforcement of laws and how well the legal system work. There should be consistency and uniformity in interpretation of provisions as uncertainties can disable and harm governance of tax laws. Authority should follow their earlier view, unless there are strong grounds and reasons to take a contrary view, but in the present case there is no compelling justification and reason to override and disturb the earlier view” 5.1 Respectfully following the view of the Jurisdictional High Court, we hold that the payments of royalty and FTS are to be allowed to the assessee as there is no change in facts and circumstances of the case, when compare to previous year. 6. So far as the last issue i.e. that 50% allowance on depreciation granted by the DRP is concerned, it is the case of the assessee that out of total payment attributable to the project cost, payment of Rs.2,45,00,000/- has been allowed to the assessee in previous year, and the balance payment of Rs 2,39,51,355/- has been disallowed to the assessee and only 50% depreciation attributable to this cost has been given by the DRP. We hereby restore this issue to the file of Assessing Officer for deciding afresh 5 ITA No.606/Del/2018 in accordance with law. The Assessing Officer will examine the nature of payment made and decide the issue in accordance with law. 7. In the result, the appeal of the assessee is allowed as indicated above. Order pronounced in the open court on 16th May, 2025. Sd/- Sd/- [BRAJESH KUMAR SINGH] [PRAKSAH CHAND YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 16.05.2025. f{x~{tÜ f{x~{tÜ f{x~{tÜ f{x~{tÜ Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi "