Sap Labs India Pvt. Ltd., Bangalore V. DCIT, Bangalore

ITA 1173/BANG/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5353 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-04-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 11-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Set aside
• Section: 143(3); 263

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE DR. O.K NARAYANAN, VICE PRESIDENT AND SMT. P MADHAVI DEVI, JUDICIAL MEMBER ITA NO.1173 / BANG/2009 (AS ST. YEAR - 2002-03) SAP LABS INDIA PVT. LTD., NO.138, EXPORT PROMOTION INDUSTRIAL PARK, WHITEFILED, BANGALORE-560 066. . APPELLANT VS. THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-12(3), BANGALORE. . RESPONDENT ITA NO. 1193 /BANG/2009 (AS ST. YEAR - 2002-03) THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-12(3), BANGALORE. . APPELLANT VS. SAP LABS INDIA PVT. LTD., NO.138, EXPORT PROMOTION INDUSTRIAL PARK, WHITEFILED, BANGALORE-560 066. . RESPONDENT REVENUE B BY : SMT. SWATHI S PATIL, COMMISSION ER OF INCOME-TAX ASSESSEE BY : SHRI CHAVALI S NARAYAN, CHARTERE D ACCOUNTANT O R D E R ITA NO.1173 & 1193/B/09 2 PER DR. O.K NARAYANAN, VICE PRESIDENT THESE TWO APPEALS ARE CROSS-APPEALS FILED BY THE A SSESSEE AND THE REVENUE RESPECTIVELY. THE RELEVANT ASSESSMENT YEAR IS 2002-03. THESE CROSS-APPEALS ARE DIRECTED AGAINST THE ORDERS OF THE CIT(A) - IV AT BANGALORE DATED 16/09/2009. THE ASSESSMENT IN T HIS CASE HAS BEEN COMPLETED U/S 143(3) READ WITH SEC. 263 OF THE INCO ME-TAX ACT 1961. 2. THE ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLET ED U/S 143(3) READ WITH SEC. 147. THE CIT ON GOING THROUGH THE R ECORDS OF THE CASE HELD THAT THE ASSESSMENT ORDER WAS ERRONEOUS AND PR EJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, CIT SET ASIDE THE ASSESSMENT ORDER WITH A DIRECTION TO MAKE A FRESH ASSESSMENT IN THE LIGHT OF HIS OBSERVATION AND TO COMPUTE THE ARMS LENGTH PRICE IN THE INTERNATIONAL TRANSACTIONS AND AFTER GIVING THE ASSESSEE AN OPPOR TUNITY. THIS REVISION ORDER PASSED BY THE CIT WAS TAKEN IN APPEA L BEFORE THE INCOME-TAX APPELLATE TRIBUNAL, BANGALORE BENCHES. THE ITAT, BANGALORE B BENCH THROUGH ITS ORDER DATED 30.4.20 08 PASSED IN ITA NO.799/BANG/2007 HELD THAT THE ASSESSMENT ORDER COU LD NOT BE HELD AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE AND, THEREFORE, THE CIT HAS NO JURISDICTION TO PASS A REVISION ORDE R U/S 263. ITA NO.1173 & 1193/B/09 3 ACCORDINGLY THE TRIBUNAL SET ASIDE THE REVISION ORD ER PASSED BY THE CIT. 3. THE ASSESSING OFFICER, MEANWHILE, EVEN AFTER THE TRIBUNAL HAS SET ASIDE THE REVISION ORDER PASSED BY THE CIT, PAS SED CONSEQUENTIAL ASSESSMENT ORDER IN THE LIGHT OF THE REVISION ORDER PASSED BY THE CIT U/S 263. WHEN THE ASSESSING OFFICER PASSED THE REV ISED ASSESSMENT ORDER, IT WAS KNOWN THAT THE REVISION ORDER ITSELF HAS BEEN QUASHED BY THE TRIBUNAL AND THERE WAS NO SAID ORDER SURVIVING. THE ASSESSING OFFICER HAD NOTHING BEFORE HIM TO REVISE THE ASSESS MENT. BUT, STILL THE SAID LEGAL CAUSALITY WAS MADE OUT BY THE ASSESSING OFFICER. 4. WHEN THE SAID ASSESSMENT ORDER WAS TAKEN IN FIRS T APPEAL, OBVIOUSLY, THE CIT(A) HELD THAT THE ASSESSING AUTHO RITY HAD NO JURISDICTION TO ACT UPON THE REVISION ORDER PASSED BY THE CIT U/S 263, AS THE SAID ORDER HAS ALREADY BEEN SET ASIDE BY THE TRIBUNAL. ACCORDINGLY, CIT(A) ALLOWED THE APPEAL FILED BY THE ASSESSEE AND ANNULLED THE REVISED ASSESSMENT ERRONEOUSLY FRAMED BY THE ASSESSING AUTHORITY. IN THE ABOVE CONTEXT, THE CONTENTION OF THE REVENUE IS THAT THE CIT HAS ERRED IN SETTING ASIDE THE REVISED ASSE SSMENT ORDER AND CIT(A) SHOULD HAVE RESTORED THE MATTER BACK TO THE ASSESSING OFFICER. ITA NO.1173 & 1193/B/09 4 THE CONTENTIONS RAISED BY THE ASSESSEE IN THE APPEA L ARE THAT THE CIT HAS NOT ADDRESSED THE GROUNDS RAISED BY THE ASSESSE E BEFORE HIM REGARDING FUTURE CONSEQUENCE, IF ANY, THAT MAY ARIS E OUT OF THE JURISDICTIONAL HIGH COURT REVERSED THE ORDER OF THE TRIBUNAL. 5. WE HEARD BOTH SIDES IN DETAIL. THE CIT(A) HAS RIGHTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AND SET ASIDE THE REVISION ASSESSMENT. THE APPEAL FILED BY THE REVENUE IS, THEREFORE, LIAB LE TO BE DISMISSED. REGARDING THE CONTENTIONS OF THE ASSESSEE PERTAININ G TO THE CONSEQUENCES THAT MAY ARISE IN FUTURE THOSE ARGUMENTS AND CONTENTIONS ARE PREMATURE. WE ARE NOT TO ENTERTAIN ANTICIPATORY BAIL PETITIONS. THEREFORE, WE FIND THE APPEAL FILED BY THE ASSESSEE IS NON- EST. THE SAID APPEAL IS ALSO LIABLE TO DISMISSED. 6. BY THE BY, WE ARE VERY MUCH ASTONISHED TO OBSERV E THAT THE ASSESSING OFFICER HAS PASSED A REVISED ASSESSMENT O RDER EVEN AFTER KNOWING THAT THE REVISION ORDER PASSED BY THE CIT H AS BEEN SET ASIDE BY THE TRIBUNAL. THE ACTION OF THE ASSESSING OFFICE R COULD BE TREATED AS ASSAULT ON THE RULE OF LAW. HIS ACTION AMOUNTS TO CONTEMPT OF COURT AS WELL. THE REVENUE COULD HAVE PREFERRED TO FILE AN APPEAL BEFORE THE JURISDICTIONAL HIGH COURT AGAINST THE ORDER OF THE TRIBUNAL SETTING ITA NO.1173 & 1193/B/09 5 ASIDE THE REVISION ORDER PASSED BY THE CIT. IF SUC H AN APPEAL HAS BEEN ALREADY FILED, WELL AND GOOD. OTHERWISE, REVENUE HA S NO REMEDY WHEN THE TRIBUNAL HAS SET ASIDE THE REVISION ORDER OF THE CIT. THE SAID ORDER NO MORE EXISTS AND THE ASSESSING OFFICER HAS NO SUBSTRATUM TO BUILD A SECOND ROUND OF REVISED ASSESSMENT. WE DO NOT THINK THAT ALL THESE MATTERS ARE UNKNOWN TO THE ASSESSING AUTHORI TY. 7. BUT GIVING DUE CONSIDERATION TO THE EXPLANATIONS OFFERED BY THE LEARNED SENIOR OFFICERS APPEARING FOR THE REVENUE A ND ALSO FOR THE REASON THAT THE ASSESSING OFFICER MIGHT HAVE PROMPT ED TO ACT IN A HASTE, ONLY IN PUBLIC INTEREST, WE DO NOT PROCEED F URTHER IN THIS MATTER. BUT WE WISH THAT BEFORE JUMPING INTO SUCH CONTROVER SIAL GAMES, THE ASSESSING OFFICER OUGHT TO HAVE TAKEN ADVICE FROM H IS SENIORS. IN RESULT, THE APPEAL FILED BY THE ASSESSEE AS WELL AS THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THURSDAY THE 22ND DAY OF APRIL, 2010, AT BANGALORE. SD/- SD/- (P MADHAVI DEVI) (DR. O.K NARAYANAN) JUDICIAL MEMBER VICE PRESIDENT VMS. ITA NO.1173 & 1193/B/09 6 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF 7..GF, ITAT, NEW DELHI. BY ORD ER ASST. REGISTRAR, ITAT, BANGALORE.