DCIT-4(1)(1), MUMBAI V. DAM CAPITAL ADVISORS LIMITED, MUMBAI

MA 162/MUM/2024

AI Insights

The case involves DAM Capital Advisors Limited, which appealed against the order of the AO regarding the disallowance of professional fees paid to IDFC (USA) Inc. The AO had disallowed the fees, determining the ALP as Nil, without making a reference to the TPO. The Tribunal initially deleted the addition based on the CBDT Instruction No.15/2015, which was issued after the AO's order. The revenue's MA contended that the Instruction was not applicable as the AO's order predated the Instruction. The Tribunal agreed with the revenue, leading to the remittance of the issue back to the AO for proper assessment under the guidance of the TPO.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 25746 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 27-11-2024
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: K
• Next Hearing Date: 22-11-2024
• Assessment Year: 2012-2013
• Appeal Filed On: 03-07-2024
• Other Referred Cases: CIT vs S.G.Asia Holding (India) Pvt Ltd
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K. GOPAL; HIMANSHU JOSHI
• Keywords: Additional evidence; Transfer pricing
• Section: 143(3); 254(2); 92D

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “K” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JM & MS PADMAVATHY S, AM M.A. No. 162/Mum/2024 (ITA No. 1991/Mum/2022) (Assessment Year: 2012-13) DCIT-4(1)(1), Mumbai Aayakar Bhavan, Maharshi Karve Road, New Marine Lines, Mumbai-400 020 vs DAM Capital Advisors Limited One BKC, Tower C, 15th Floor Unit No.1511, Bandra Kurla Complex, Bandra (East), Mumbai-400 051 PAN : AAACK1586E Appellant) : Respondent) Appellant/Assessee by : Shri K. Gopal, AR Revenue/Respondent by : Shri Himanshu Joshi, Sr. DR Date of Hearing : 22.11.2024 Date of Pronouncement : 27.11.2024 O R D E R Per Padmavathy S, AM: This Miscellaneous Application (MA) filed under section 254(2) of the Income Tax Act, 1961 (the Act) by the revenue seeking rectification of the order of the Tribunal in ITA No. 1991/Mum/2024 dated 27.10.2023 for AY 2012-13. 2. The Tribunal in the above order adjudicated various grounds raised by the assessee and the Revenue pertaining to the additions / disallowances made by the 2 MA No. 162/Mum/2024 DAM Capital Advisors Limited Assessing Officer (AO) as confirmed by the CIT(A). The revenue has now raised the MA contending the that the Tribunal while adjudicating deleted the disallowance made by the Assessing Officer (AO) towards professional fees paid by the assessee to IDFC (USA) Inc. on the ground that the AO cannot make any Transfer Pricing (TP) adjustment by placing reliance on the CBDT Instruction No.15/2015 dated 16.10.2015 and that the said Instruction is not applicable in assessee's case as the order under section 143(3) of the Act, passed by the AO was passed on 16.03.2015. The revenue in the MA has also raised the contention that the issue of TP adjustment being made by the AO ought to have been remitted back to the AO as has been held in the decision of the Hon'ble Supreme Court in the case of CIT vs S.G.Asia Holding (India) Pvt Ltd (Civil Appeal No.6144 of 2019 dated 13.08.2018) and that the ld AR's submission to do so has not been considered by the Tribunal. 3. We heard the parties and perused the material on record. During the year under consideration, the assessee has paid an amount of Rs.2,87,62,981/- to IDFC Capital (USA) Inc. towards rendering of marketing support services. The AO disallowed the said amount by determining the ALP of the professional fees paid to IDFC (USA) Inc as Nil. The Tribunal while adjudicating the impugned issue held that the AO does not have the jurisdiction to propose any transfer pricing adjustment in case where he has not made any reference to the TPO and accordingly deleted the addition made by the AO. The Tribunal in this regard placed reliance on CBDT Instruction No.15/2015 dated 16.10.2015 according to which determination of ALP should not be carried out at all by the AO in a case where reference is not made to the TPO. It is relevant to note here that the AO's order under section 143(3) is dated 16.03.2015 and therefore there is merit in the submission of the revenue that the addition could not be deleted based on the 3 MA No. 162/Mum/2024 DAM Capital Advisors Limited Instruction that was issued post the completion of the assessment. Accordingly we allow the miscellaneous application filed by the assessee and replace Para Nos.31 & 32 of the above order of the Tribunal dated 27.10.2023 with the following – 31. We heard the parties and perused the material on record. During the course of assessment, the assessee submitted a copy of agreement entered into between the assessee and IDFC (USA) Inc. along with invoices in support of the claim of payment of professional fees to IDFC Capital (USA) Inc. towards rendering of marketing support services. The assessee also submitted the Transfer Pricing Study Report (TPSR) of IDFC (USA) Inc. prepared by Deloitte Haskins. The AO did not accept the TPSR of IDFC (USA) Inc, stating that the same does not meet the Indian Transfer Pricing regulations and that the ALP of the transaction is not properly substantiated. The AO accordingly determined the ALP at Nil and made addition of the entire amount. Before the CIT(A) the assessee submitted the TPSR prepared under section 92D of the Act as additional evidence. The CIT(A) though did not consider the findings of the AO in the remand report that the additional evidence should not be admitted, proceeded to admit the TPSR but rejected the same for the reason that there are certain deficiencies in the document. 32. We notice that the AO though is not satisfied with the manner of determination of the ALP of the professional fees paid by the assessee to IDFC (USA) Inc., has not made any reference to the TPO. We further notice that the AO has proceeded to determine the ALP of the impugned transaction at Nil without any bench marking. We also notice that the assessee has submitted the TPSR prepared under section 92D as additional evidence which was rejected by the CIT(A). Considering these facts and circumstances of the case we deem it appropriate to remit the issue of computing the ALP of the professional fees paid by the assessee to IDFC (USA) Inc., back to the AO. The AO is directed to make appropriate reference to the TPO keeping in mind the relevant Instructions issued by the CBDT in this regard as may be applicable. The assessee is directed to furnish the relevant document as may be called for by the AO / TPO and cooperate with the assessment / TP proceedings. It is ordered accordingly. 4 MA No. 162/Mum/2024 DAM Capital Advisors Limited 4. The rest of the findings given in order dated 27.10.2023 remain unaltered. 5. In the result, the MA of the Revenue is allowed. Order pronounced in the open court on 27-11-2024. /- Sd/- Sd/- (AMIT SHUKLA) (MS. PADMAVATHY S) Judicial Member Accountant Member *SK, Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. 5. Guard File CIT BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai "