KSB LTD. (EARLIER KNOWN AS "KSB PUMPS LTD."), PUNE V. THE DY CIT, NATIONAL FACELESS ASSESSMENT CENTRE (NAFAC) DELHI, MUMBAI

ITA 1210/MUM/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 1671 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Assessment Year: 2016-2017
• Appeal Filed On: 17-06-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMBIT MISHRA
• Keywords: Transfer pricing
• Section: 271(1)(c); 143(3); 115JB; 274; 22; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “K”, MUMBAI BEFORE SHRI BASKARAN BR, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA No.1210/M/2021 Assessment Year: 2016-17 M/s. KSB Ltd. (Earlier known as “KSB Pumps Limited), Mumbai-Pune Road, Pimpri, Pune-411018 PAN: AAACK5918J Vs. The Deputy Commissioner of Income Tax, National Faceless Assessment Centre (NFAC), Delhi (Appellant) (Respondent) Present for: Assessee by : Shri Nikhil Tiwari, A.R. Revenue by : Shri Sambit Mishra, D.R. Date of Hearing : 17 . 05 . 2022 Date of Pronouncement : 29 . 07 . 2022 O R D E R Per : Kuldip Singh, Judicial Member: Appellant, M/s. KSB Ltd., Pune (hereinafter referred to as ‘the assessee company’) by filing the present appeal sought to set aside the impugned order dated 16.03.2021 passed by the Assessing Officer (AO) in consonance with the orders passed by the Transfer Pricing Officer (TPO)/Commissioner of Income Tax (Appeals)[CIT (A)] under section 92CA(3) of the Income-tax Act, 1961 (for short ‘the Act’) qua the assessment year 2016-17 on the grounds inter alia that :- ITA No.1210/M/2021 M/s. KSB Ltd. 2 “Based on the facts and circumstances of the case, KSB Limited (earlier known as 'KSB Pumps Limited') (hereinafter referred to as 'KSB India' or 'the Appellant'} respectfully craves leave to prefer an appeal under section 253(1)(d) of the Income-tax Act, 1961 (hereinafter referred to as the 'Act'), against the order dated 22 April 2021 (received by the Appellant on 22 April 2021) passed by the Additional / Joint / Deputy / Assistant Commissioner of Income Tax, National Faceless Assessment Centre ('NaFAC'), Delhi (hereinafter referred to as the 'learned 'AO') under section 143(3) read with section 144C(13) read with section 144B of the Act, on the following grounds, which are independent of and without prejudice to each other. On the facts and in the circumstances of the case and in law, the learned AO has: A. The Final Assessment Onjer passed is infructuous in nature and ought to be quashed: 1. Erred in passing the final assessment order under section 143(3) read with section 144C(13) read with section 144B of the Act along with notice of demand on 22 April 2021 without appreciating the fact that the Appellant had filed for dispute resolution under Direct Tax Vivad Se Vishwas Act, 2020 on 20 January2021, received Form 3 on 15 February 2021, paid the disputed taxes on 24 April 2021 and filed Form 4 on 30 April 2021, thereby rendering the final assessment order along with the notice of demand bad in law and infructuous, which is ought to be quashed. B. General Grounds 2. Without prejudice to the abovementioned ground, erred in making transfer pricing adjustment amounting to INR 9,36.97,464 to the value of international transactions of the Appellant by rejecting the economic analysis undertaken by the Appellant in accordance with the provisions of the Act read with the Income- tax Rules, 1962 {'the Rules') for the international transaction of payment of commission to its associated enterprise. Erred in making corporate tax adjustment in respect of the following: 3. Claim of deduction pertaining to education cess of INR 1,26,67,386 paid by the Appellant for Assessment Year 2016-17; 4. Addition amounting to INR 63,23,192 made to the returned income of the Appellant on account of disallowance of provision made for liquidated damages; 5. Addition amounting to INR 7,52,535 made to the returned income of the Appellant allegedly on the ground of provision for expenses did ITA No.1210/M/2021 M/s. KSB Ltd. 3 not pertain to actual expenses incurred by the Appellant during the year. C. Penalty proceedings Erred in initiating penalty proceeding under section 274 read with section 271(1)(c) of the Act.” 2. Briefly stated facts necessary for adjudication of the controversy at hand are: assessee company is into the business of manufacturing and sales of pump and bulbs used in various fields such as industrial, commercial, agricultural and nuclear etc. Pursuant to the adjustment proposed by Transfer Pricing Officer (Ld. TPO) and directions issued by Disputes Resolution Panel (DRP), Transfer Pricing (TP) adjustment of Rs.9,36,97,464/- has been made to the total income of the assessee. Assessing Officer (AO) also made disallowance of provision for liquidated damages and disallowance of provision of expenses to the tune of Rs.63,23,192/- and Rs.7,52,535/- respectively and thereby framed the assessment at the total income of Rs.1,26,83,74,121/- under normal provisions and at Rs.1,20,77,56,393/- as per MAT calculation under section 115JB of the Income Tax Act, 1961 (for short ‘the Act’). 3. Feeling aggrieved with the assessment order passed by the AO pursuant to the TP order and directions issued by Ld. DRP the assessee has come up before the Tribunal by way of filing present appeal. 4. We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light ITA No.1210/M/2021 M/s. KSB Ltd. 4 of the facts and circumstances of the case and law applicable thereto. 5. At the very outset, it is brought to the notice of this Bench by the assessee that during the assessment proceedings assessee company has opted to settle the dispute under Vivad Se Vishwas Scheme, 2020 (VSVS) and has paid the settled amount of tax due i.e. Rs.3,28,94,146/- as per form 4 available at page 104 of the appeal set. Assessee also brought on record the fact that since dispute has already been settled under VSVS, 2020 assessment order passed by the AO has become infructuous and for this the assessee has also moved a rectification application under section 154 of the Act which is pending consideration. 6. In view of the matter when tax dispute under consideration is already claimed to have been settled between the parties to the appeal under VSVS, 2020 present appeal is not maintainable. So in view of the matter file is remitted back to the AO to decide afresh along with rectification application pending adjudication before him after due verification of the facts as to the alleged claim of the assessee that it has already settled the dispute under VSVS, 2020 as per form 4 (supra). Resultantly, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 29.07.2022. Sd/- Sd/- (BASKARAN BR) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 29.07.2022. * Kishore, Sr. P.S. ITA No.1210/M/2021 M/s. KSB Ltd. 5 Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.