Assistant Commissioner of Income-tax, Pune V. M/s. Nalco Water India Ltd., Pune

ITA 1219/PUN/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4828 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-01-2021
• Assessment Year: 2010-2011
• Appeal Filed On: 15-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: IS DIRECTED AGAINS T PASSED
• Keywords: Transfer pricing; International transaction

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH, C PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER . / ITA NO.1219/PUN/2017 / ASSESSMENT YEAR : 2010-11 ACIT, CIRCLE-2, PUNE VS. M/S.NALCO WATER INDIA LIMITED, S.NO.238/239, 3 RD FLOOR, QUADRA-1, PANCHSHIL, MAGARPATTA ROAD, SADE SATRA NALI, PUNE 411 028 PAN : AAACO4994N APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER PAS SED BY THE CIT(A) ON 08-02-2017 IN RELATION TO THE ASSESSMENT Y EAR 2010-11. 2. THE ONLY GROUND EFFECTIVE RAISED BY THE REVENUE IN TH E APPEAL IS AS UNDER : ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) H AS ERRED IN HOLDING THAT INTRA GROUPS ACTIVITIES PERFORMED BY NALCO US UNDER SA AND BY NALCO PACIFIC UNDER THE RMASA CONSTITUTE INTRA GROUP SERVICES AND THE SAID ACTIVITIES ARE NOT IN THE NATURE OF STEWARDSHIP ACTIVITY. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSES SEE FILED ITS RETURN DECLARING TOTAL INCOME OF RS.9,78,44,129/-. THE INTE RNATIONAL ASSESSEE BY SHRI KETAN VED REVENUE BY SHRI JAGDISH P. CHANDRAKER DATE OF HEARING 29-09-2021 DATE OF PRONOUNCEMENT 30-09-2021 ITA NO.1219/PUN/2017 NALCO WATER INDIA LIMITED 2 TRANSACTIONS OF RECEIPT OF HEADQUARTER SERVICES FROM NALCO, USA AND MANAGEMENT ASSISTANCE SERVICES FROM NALCO PACIFIC PTE LTD., SINGAPORE TOTALING WORTH RS.17,21,93,000/- WERE REPORTED. THE ASSESSING OFFICER (AO) MADE A REFERENCE TO THE TRANSFER PRICING OFFICER (TPO) FOR DETERMINING THE ARMS LENGTH PRICE (ALP) O F THE INTERNATIONAL TRANSACTIONS. THE TPO TOOK NOTE OF THE RELEVANT CLAUSES OF THE AGREEMENTS ENTERED INTO BY THE ASSESSEE WITH NALCO, USA AND NALCO PACIFIC PTE LTD., SINGAPORE. AFTER CONSIDERING E NTIRE GAMUT OF THE RELEVANT FACTS, THE TPO HELD THAT THE SERVICES A VAILED BY THE ASSESSEE WERE IN THE NATURE OF STEWARDSHIP ACTIVITY AND NOT INTRA GROUP SERVICES. THIS IS HOW, HE DETERMINED NIL ALP OF TH E INTERNATIONAL TRANSACTIONS AND PROPOSED TRANSFER PRICING ADJUST MENT OF RS.17,21,93,000/-. THE AO MADE SUCH AN ADDITION. THE LD . CIT(A) DELETED THE ADDITION BY HOLDING THAT THE SERVICES AVAILED BY THE ASSESSEE WERE IN THE NATURE OF INTRA GROUP SERVICES AND NOT STEWARDSHIP ACTIVITY. HE FURTHER HELD THE INTERNATIONAL TRANSACTION TO BE AT ALP, RESULTING INTO THE DELETION OF THE ADDITION. AGGRIEVED THEREBY, THE REVENUE HAS COME UP IN APPEAL BEFORE THE TR IBUNAL IN THE TERMS INDICATED ABOVE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. IT IS COMMON SUBMISSION BY B OTH THE ITA NO.1219/PUN/2017 NALCO WATER INDIA LIMITED 3 SIDES THAT THE ISSUE RAISED IN THIS APPEAL IS SIMILAR TO THE ONE RAISED IN THE REVENUES APPEAL FOR THE IMMEDIATELY PRECEDING ASSESS MENT YEAR, 2009-10. EXCEPT FOR INCREASE IN MARK-UP RATE UNDER THE TWO AGREEMENTS, BOTH THE SIDES FAIRLY CONCEDED, THAT NATURE OF THE SERVICES IS UNCHANGED. THE APPEAL FOR THE ASSESSMENT YEAR 2009- 10 WAS FIXED SIMULTANEOUSLY WITH THE EXTANT APPEAL. DURING THE COURSE OF HEARING OF THE APPEAL FOR THE IMMEDIATELY PRECEDING YEAR, BOTH TH E SIDES MADE ELABORATE SUBMISSIONS. IN FACT, THE PARTIES ADOPTED THEIR SU BMISSIONS MADE FOR THE EARLIER YEAR INSOFAR AS THE INSTANT APPEAL IS C ONCERNED. THIS SHOWS THAT THE NATURE OF SERVICES AVAILED BY THE ASSESS EE FROM NALCO, USA AND NALCO PACIFIC PTE LTD., SINGAPORE IS SIMILAR TO THA T OF THE PRECEDING ASSESSMENT YEAR. WE HAVE PASSED SEPA RATE ORDER FOR THE ASSESSMENT YEAR 2009-10 APPROVING THE VIEW TAKEN BY THE LD. CIT(A) TO THE EFFECT THAT THE SERVICES RECEIVED BY THE ASSES SEE WERE IN THE NATURE OF INTRA GROUP SERVICES AND NOT STEWARDSHIP ACTIVITY . SINCE THE DISPUTE IN THE INSTANT APPEAL, AS APPEARING FROM THE GROU ND EXTRACTED ABOVE, IS ONLY ON THE NATURE OF THE SERVICES, F OLLOWING OUR VIEW TAKEN FOR THE IMMEDIATELY PRECEDING YEAR, WE COUNTENA NCE THE IMPUGNED ORDER ON THIS SCORE. 5. IT IS MADE CLEAR THAT THE REVENUE HAS CHALLENGED ONLY THE ASCERTAINMENT OF THE NATURE OF SERVICES BY THE LD. FIRST APPE LLATE ITA NO.1219/PUN/2017 NALCO WATER INDIA LIMITED 4 AUTHORITY AND NOT THE ALP DETERMINATION OF THE INTERNATIONAL TRANSACTION BY THE LD. CIT(A). 6. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH SEPTEMBER, 2021. SD/- SD/- ( S.S. VISWANETHRA RAVI ) (R.S.SYAL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 30 TH SEPTEMBER, 2021 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE CIT(A)-22, KOLKATA 3. THE PR.CIT-4, KOLKATA 4. 5. DR, ITAT, C BENCH, PUNE / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE ITA NO.1219/PUN/2017 NALCO WATER INDIA LIMITED 5 DATE 1. DRAFT DICTATED ON 29-09-2021 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 30-09-2021 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *