Brahma Center Development Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 1215/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5201 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I1
• Next Hearing Date: 08-06-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 01-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRENDRA KUMAR
• Assessee Lawyers: ATUL JAIN CAS; TILAK VAISH
• Keywords: Transfer pricing; International transaction; Additional evidence
• Section: 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : I-1 : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NO.1215/DEL/2017 ASSESSMENT YEAR : 2012-13 BRAHMA CENTER DEVELOPMENT PVT. LTD., FLAT NO.B-8, CABIN NO.11, ANSAL TOWER-38, NEHRU PLACE, NEW DELHI. PAN: AAECB1294N VS. ACIT, CIRCLE-5(1), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI TILAK VAISH & SHRI ATUL JAIN, CAS DEPARTMENT BY : SHRI AMRENDRA KUMAR, CIT, DR DATE OF HEARING : 01.08.2017 DATE OF PRONOUNCEMENT : 02.08.2017 ORDER PER R.S. SYAL, VP: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE FINAL ASSESSMENT ORDER DATED 31.01.2017 PASSED BY THE ASS ESSING OFFICER ITA NO.1215/DEL/2017 2 (AO) U/S 143(3) READ WITH SECTION 144C OF THE INCOM E-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT) IN RELATION TO THE ASSESSMENT YEAR 2012-13. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE ADDITION ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT AMOUNTING TO RS.17,62,93,726/-. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE, AN INDIAN COMPANY, IS ENGAGED IN THE DEVELOPMENT OF TOWNSHIP, HOUSING, BUILT UP INFRASTRUCTURE IN ACCORDANCE WITH THE FOREIGN DIREC T INVESTMENT POLICY. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE D ECLARED TWO INTERNATIONAL TRANSACTIONS OF INTEREST ON COMPULSOR ILY CONVERTIBLE DEBENTURES IN FORM NO.3CEB. THE ASSESSING OFFICER (AO) MADE REFERENCE TO THE TRANSFER PRICING OFFICER (TPO) FOR DETERMINING THE ARMS LENGTH PRICE (ALP) OF THE REPORTED INTERNATIO NAL TRANSACTIONS. THE TPO OBSERVED THAT THE ASSESSEE PAID INTEREST @ 12% AMOUNTING TO RS.17.17 CRORE AND RS.9.26 CRORE ON COMPULSORILY CO NVERTIBLE DEBENTURE (CCDS) TO ITS TWO ASSOCIATED ENTERPRISES, NAMELY, JM ASIAN CYPRUS LTD. AND NEPTUNE ASIAN CYPRUS LTD. THE ASSES SEE APPLIED ITA NO.1215/DEL/2017 3 COMPARABLE UNCONTROLLED PRICE (CUP) METHOD FOR DEMO NSTRATING THAT ITS INTERNATIONAL TRANSACTIONS OF PAYMENT OF INTERE ST ON CCDS WERE AT ALP. THE TPO DID NOT AGREE WITH THE ALP SO DETERMI NED. TAKING COGNIZANCE OF THE DIRECTIONS GIVEN BY THE DISPUTE R ESOLUTION PANEL (DRP) IN RELATION TO THE ASSESSMENT YEAR 2011-12, T HE TPO CONSIDERED AN INTEREST RATE OF 4.00% (BASED ON SIX MONTHS LIB OR RATE AS ON 31.03.2012 PLUS 350 BASIS POINTS) AS ALP. THAT IS HOW, THE TPO PROPOSED TRANSFER PRICING ADJUSTMENT AMOUNTING TO R S.17,62,93,726/-. THE ASSESSEE REMAINED UNSUCCESSFUL BEFORE THE DRP. THE A.O. IN THE FINAL ORDER MADE THE ABOVE ADDITION. THE ASSESSEE I S AGGRIEVED AGAINST SUCH ADDITION. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT HAS BEEN NOTICED ABOVE THAT THE TPO TOOK NOTE OF THE DIRECTIONS GIVEN BY THE DRP IN RELATION TO THE ASSESSMENT YEAR 2011- 12 IN DETERMINING THE ALP OF THE INTERNATIONAL TRAN SACTIONS FOR THE YEAR UNDER CONSIDERATION. THE ORDER FOR THE ASSESSMENT YEAR 2011-12 CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL. VIDE ITS ORDER DATED ITA NO.1215/DEL/2017 4 29.07.2016 IN ITA NO.373/DEL/2016 FOR ASSESSMENT YE AR 2011-12, THE TRIBUNAL RESTORED THE MATTER TO THE TPO IN THE LIGH T OF CERTAIN ADDITIONAL EVIDENCE FILED BEFORE IT. ON THE BASIS OF CERTAIN A DDITIONAL EVIDENCE, IT WAS OBSERVED BY THE TRIBUNAL THAT THE ASSESSEE CARR IED OUT AN ANALYSIS OF BSE DATABASE WHICH PROVIDED THE DETAILS OF COMPARAB LE INSTRUMENTS AND THE AVERAGE RATE OF RETURN AT 13.66%. THE TPO WAS DIRECTED TO CONSIDER ADDITIONAL EVIDENCE AND DETERMINE THE ALP AFRESH. PURSUANT TO SUCH ORDER OF THE TRIBUNAL, THE TPO PASSED CONSEQUENTIAL ORDER U/S 92CA(5) READ WITH SECTION 254 OF THE ACT ON 30.11.2016. A COPY OF SUCH ORDER HAS BEEN PLACED AT PAGE 986 ONWARDS OF THE PAPER BO OK. THE TPO NOTICED THAT THE AVERAGE COMPARABLE UNCONTROLLED LE NDING RATE WAS 13.66% AS AGAINST THE ASSESSEE PAYING INTEREST @ 12 %. THE SAME WAS THUS FOUND AT ALP AND, HENCE, THE ADJUSTMENT HAS BE EN REDUCED TO NIL. THE FACTS FOR THE INSTANT YEAR ARE, MUTATIS MUTANDIS , SIMILAR. PAGE 254 OF THE PAPER BOOK IS THE ANALYSIS OF COMPARABLE TRANSA CTIONS FOR THE EXTANT YEAR IN THE SAME MANNER AS IT WAS DONE FOR THE PREC EDING YEAR. THE OVERALL AVERAGE RATE OF INTEREST HAS BEEN DETERMINE D AT 14.65% WITH THE REAL-ESTATE AVERAGE RATE OF 17%. THE FIGURES SO SH OWN HAVE NOT BEEN ITA NO.1215/DEL/2017 5 CONTROVERTED ON BEHALF OF THE REVENUE. THE ASSESSEE S PAYMENT OF INTEREST DURING THE YEAR AT THE RATE OF 12%, BEING THE SAME RATE AT WHICH THE ASSESSEE PAID IN THE PRECEDING YEAR IS, THEREFO RE, HELD TO BE AT ARMS LENGTH. WE, THEREFORE, ORDER FOR THE DELETION OF A DDITION. 5. IN THE RESULT, THE APPEAL IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 02.08.201 7. SD/- SD/- [BEENA A. PILLAI] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 02 ND AUGUST, 2017. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.